Judge: Bruce G. Iwasaki, Case: 23STCV04425, Date: 2023-10-24 Tentative Ruling
Case Number: 23STCV04425 Hearing Date: October 24, 2023 Dept: 58
Hearing
Date: October 24, 2023
Case
Name: Shnayder, et al v.
Western Fertility Institute, LLC
Case
No.: 23STCV04425
Matter: (1.) Demurrer
(2.) Motion to Strike
Moving Party: (1.) Defendant Western Fertility
Institute LLC and Ashim Kumar
(2.) Defendants Western
Fertility Institute LLC and Ashim Kumar
Responding
Party: (1.) Plaintiffs Olga Shnayder
and Mehmet Dogru
(2.)
Plaintiffs Olga Shnayder and Mehmet Dogru
Tentative Ruling: The
Demurrer to the First Amended Complaint is sustained without leave as to the
first and second causes of action as to Defendant Kumar only, overruled as to
the third and fourth causes of action, and sustained with leave as to the fifth
cause of action. The Motion to Strike is granted with leave to amend.
On
February 28, 2022, Plaintiffs Olga Shnayder and Mehmet Dogru (Plaintiffs)
sued Defendants Western Fertility Institute LLC (Western
Fertility) and Ashim Kumar (Kumar) (jointly, Defendants) for various
contractual breaches and related tort claims arising from Defendants’ provision
of in vitro fertilization and surrogacy services.
Plaintiffs
allege that, in August 2021, Plaintiffs engaged Defendants for in vitro fertilization (IVF) and surrogacy services.
Plaintiffs agreed to pay a total of $165,000 for a “live birth guarantee” and
various associated services (e.g., ultrasounds, blood tests, egg retrievals,
embryo transfers). Plaintiffs made a down-payment of $45,000 for the fertility
treatments.
Plaintiffs allege that
Defendants disregarded pre-existing health conditions of Plaintiff Shnayder – the
intended embryo recipient – ignored medical tests, overprescribed medication,
and otherwise failed to perform under the parties’ contract. As a result, Plaintiffs
have incurred more than $30,000 in additional, unnecessary medical costs and
Plaintiff Shnayder “continues to experience pain and other symptoms” as result
of Defendants’ breaches.
On May 4, 2023,
Defendants demurred to Plaintiffs’ Complaint. The Court sustained the demurrer
in its entirety.
On July 10, 2023,
Plaintiffs filed a First Amended Complaint, alleging causes of action for (1.)
breach of contract, (2.) breach of the implied duty of good faith and fair
dealing, (3.) money had and received, (4.) declaratory relief, and (5.)
intentional infliction of emotional distress.
Defendants
demurred to the entire First Amended Complaint. Defendants also filed a motion
to strike. Plaintiffs filed an opposition to both the demurrer and the motion
to strike.
The Court sustains without leave to amend the demurrer to the
first and second causes of action as to Defendant Kumar only, overrules as to
the third and fourth causes of action and sustains with leave as to the fifth
cause of action. The motion to strike is granted with leave to amend.
Legal Standard for
Demurrers
A demurrer is an objection to a
pleading, the grounds for which are apparent from either the face of the
complaint or a matter of which the court may take judicial notice. (Code
Civ. Proc. § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39
Cal.3d 311, 318.) The purpose of a demurrer is to challenge the
sufficiency of a pleading “by raising questions of law.” (Postley v.
Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a
pleading, for the purpose of determining its effect, its allegations must be
liberally construed, with a view to substantial justice between the parties.”
(Code Civ. Proc. § 452.) The court “ ‘ “treat[s] the demurrer as admitting
all material facts properly pleaded, but not contentions, deductions or
conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007)
152 Cal.App.4th 518, 525.) In applying these standards, the court
liberally construes the complaint to determine whether a cause of action has
been stated. (Picton v. Anderson Union High School Dist. (1996) 50
Cal.App.4th 726, 733.)
Analysis
Defendants demur to each cause of action on the grounds
that none of the claims allege facts sufficient to state a claim.
First
Cause of Action for Breach of Contract
To prevail on a
breach of contract cause of action, a plaintiff must prove: (1) the contract;
(2) plaintiff's performance or excuse for nonperformance; (3) defendant's
breach; and (4) resulting damages to plaintiff. (Careau & Co. v.
Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)
According to the FAC, the contract required Defendants to
provide Plaintiffs with IVF/surrogacy services in exchange for payment of
$155,000. (FAC ¶ 8.) Specifically, the Contract agreed to perform certain services
required to achieve a live birth with a gestational carrier, including a “live
birth guarantee,” unlimited egg retrievals, and unlimited embryo transfers;
Defendants were required to provide Plaintiffs these services until a live
birth is achieved. (FAC ¶ 8.) The Contract states that if a live birth is not
achieved, all money paid by Plaintiff must be refunded. (FAC ¶ 8.)
The FAC further alleges that Defendants breached the terms
of the Contract by “failing to provide a “live birth guarantee” including
unlimited egg retrievals and unlimited embryo transfers,” “[f]ailing to provide
approved GC profiles for review within 4-6 weeks of commencement of treatment
as required under the Contract,” “[f]ailing to perform ultrasound and blood
tests required under the Contract,” and “[f]ailing to refund the monies” that Plaintiffs
paid to Defendants under the Contract.” (SAC ¶ 16.)
On demurrer, Defendants argue that the entire action alleges
that the Defendants were negligent in rendering IVF services, and that these allegations
cannot support a breach of contract claim. (Dem. 5:3-6 [citing Bellah v.
Greenson (1978) 81 Cal. App.3d 614, 625 [“It is settled that an action
against a doctor arising out of his negligent treatment of a patient is an
action sounding in tort and not one based upon contract.”].) Further, to the
extent the contract makes any representations as to results, Defendants argue
that they were not sufficiently clear to be actionable on the Contract. (Dem. 5:7-13
[citing Depenbrok v. Kaiser Foundation Health Plan, Inc. (1978) 79
Cal.App.3d 167, 170-171].)
Defendants are correct that a breach of contract claim
will be treated as a medical malpractice claim where the basis of the claim is
the defendant’s failure to comply with a medical standard of care. However, the
breach of contract claim contains other alleged breaches that do not arise out
of negligence, which were not addressed by Defendants’ demurrer. (See FAC ¶ 16.)
That is, the demurrer only addresses the ‘guaranteed live birth” allegation: “Plaintiffs
contend that Defendants are required to provide Plaintiffs with IVF services
until a live birth is achieved. There are zero facts providing that Defendants
did not agree to provide such a service, or when such denial occurred.” (Dem.
5:14-16.)
However, because Defendants do not address
the remaining alleged breaches – such as the allegation that Defendants have
not refunded monies paid by Plaintiffs as required under the Contract – the demurrer
to this cause of action fails as to Defendant Western Fertility. There are
allegations to support a breach of contract even if not all of Plaintiffs’
alleged breaches are actionable.
However, the demurrer must be sustained
as to Defendant Kumar. The FAC alleges that both Defendants entered into the
Contract, and that both Defendants breached said contract. (See FAC, ¶¶ 8, 10.)
However, this allegation conflicts with the attached Exhibit A, which shows
that the Contract only contained a signatory line for the “representative” of
Defendant Western Fertility. (FAC, Ex. A.) This exhibit undermines the allegations
in the pleadings. (Holland v. Morse
Diesel Intern., Inc. (2001) 86
Cal.App.4th 1443, 1447 [“If facts appearing in the exhibits contradict those
alleged, the facts in the exhibits take precedence.”].) Thus, Defendant Kumar,
in his individual capacity, was not a signatory to the Contract. Only a
signatory to a contract may be liable for breach. (Clemens v. American
Warranty Corp. (1987) 193 Cal.App.3d 444, 452.)
The
FAC alleges that “each of the DEFENDANTS was the agent, partner, joint venture,
associate and/or employee of one or more of the other defendants and was acting
in the course and scope of such agency, partnership, joint venture, association
and/or employment . . ..” (FAC ¶ 7.) This alleged agency relationship between the
parties does not make Kumar liable for the actions of its principal. That is, “[d]irectors and officers are not personally
liable on contracts signed by them for and on behalf of the corporation unless
they purport to bind themselves individually.” (United States Liab. Ins. Co.
v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 595.) Based
on the foregoing, Plaintiffs have not alleged facts demonstrating that
Defendant Kumar was a party to the contract.
The
demurrer to this cause of is overruled as to Defendant Western Fertility and
sustained as to Defendant Kumar without leave to amend.
Second
Cause of Action for Breach of the Implied Duty of Good Faith and Fair Dealing
Defendant argues that the breach of contract claim and breach
of implied duty of good faith and fair dealing claim “rest
on the same alleged facts and damages” such that it fails to state a claim. (Dem.
6:4-6.)
“The covenant of good faith and fair dealing, implied
by law in every contract, exists merely to prevent one contracting party from
unfairly frustrating the other party's right to receive the benefits of the
agreement actually made.” (Italics omitted.) The covenant thus has no existence
independent of its contractual underpinnings, and cannot impose substantive
duties or limits on contracting parties beyond those in the specific terms of
their agreement. (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317,
349-350.)
The FAC alleges the following breaches to the implied covenant
of good faith and fair dealing: “a. failing to consider Ms.
Shnayder’s history of PCOS and overprescribing medications which caused severe
Ovarian Hyperstimulation Syndrome OHSS; b. ignoring blood tests and failing to
monitor Ms. Shnayder’s medical condition in the face of repeated complaints; c.
representing to PLAINTIFFS that Ms. Shnayder’s complaints were normal and that
everything was going as planned, while knowing it was not; d. failing to
perform necessary diagnostic testing to rule out complications; e. altering Ms.
Shnayder’s medical records to conceal DEFENDANTS’ negligence; and f. attempting
to induce PLAINTIFFS to sign a general liability waiver in order to release Ms.
Shnayder’s embryos to a different facility.” (FAC ¶ 17.)
The
majority of these “breaches” constitute claims for medical malpractice arising
from Defendants’ failure to comply with a certain standard of care. That is,
these claims arise from a tortious duty and not from the contract itself.
However, this cause of action alleges Defendants
attempted to induce Plaintiffs “to sign a
general liability waiver in order to release Ms. Shnayder’s embryos to a
different facility” and altered Plaintiffs’ medical records. (FAC ¶¶ 13,
16.) This allegation may support a breach of implied covenant where it may arguably
frustrate the purpose of the fertility service contract.
To establish a claim for
breach of the implied covenant,
the plaintiff must show that the defendant “lacked subjective good faith in the
validity of its act” or that “the act was intended to and did frustrate the
common purpose” of the underlying contract. (Wolf v. Walt Disney Pictures
& Television (2008) 162 Cal.App.4th 1107, 1123.)
Thus, this claim is overruled as to Defendant Western
Fertility. However, this claim fails as to Defendant Kumar for the same reasons
as the first cause of action: there can
be no breach of an implied duty of good faith and fair dealing when there is no
contract between the parties.
Third
Cause of Action for Money Had and Received
“The essential
allegations of a common count ‘are (1) the statement of indebtedness in a
certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.’”
(Allen v. Powell (1967) 248 Cal.App.2d 502, 510.)
The FAC, here, alleges fertility
services were sought from Defendants in exchange for money paid by Plaintiffs.
However, the service sought were allegedly not provided and Defendants have not
returned the funds paid. (FAC ¶¶ 31-36.) The demurrer to this cause of action
is overruled.
Fourth
Cause of Action for Declaratory Relief
The declaratory relief cause of action is largely derivative
of the breach of contract claim. (FAC ¶¶ 37-39.)
“Any person
interested ... under a contract ... may, in cases of actual controversy
relating to the legal rights and duties of the respective parties, bring an
original action ... in the superior court for a declaration of his or her
rights and duties ... including a determination of any question of construction
or validity arising under the ... contract. He or she may ask for a declaration
of rights or duties, either alone or with other relief; and the court may make
a binding declaration of these rights or duties, whether or not further relief
is or could be claimed at the time. The declaration may be either affirmative
or negative in form and effect, and the declaration shall have the force of a
final judgment. The declaration may be had before there has been any breach of
the obligation in respect to which said declaration is sought.” (Code Civ.
Proc., § 1060.) “The court may refuse to exercise the power granted by this
chapter in any case where its declaration or determination is not necessary or
proper at the time under all the circumstances.” (Code Civ. Proc., § 1061.) Sections
1060 and 1061 “must be read together . . ..” (Meyer v. Sprint Spectrum L.P.
(2009) 45 Cal.4th 634, 647.)
“ ‘[T]he court's decision to grant or deny
[declaratory] relief will not be disturbed on appeal unless it be clearly shown
... that the discretion was abused.’ ” (Pellegrini v. Weiss (2008) 165
Cal.App.4th 515, 529.) At the same time, “[t]his discretion is not boundless:
‘Where ... a case is properly before the trial court, under a complaint which
is legally sufficient and sets forth facts and circumstances showing that a
declaratory adjudication is entirely appropriate, the trial court may not
properly refuse to assume jurisdiction....’ ” (Meyer, supra, 45 Cal.4th
at p. 647.)
“The mere circumstance that another remedy is
available is an insufficient ground for refusing declaratory relief, and doubts
regarding the propriety of an action for declaratory relief ... generally are
resolved in favor of granting relief.” (Filarsky v. Superior Court
(2002) 28 Cal.4th 419, 433.)
Defendants
have properly alleged a cause of action for declaratory relief. The demurrer is
overruled.
Fifth
Cause of Action for Intentional Infliction of Emotional Distress (IIED)
The FAC alleges that Defendant Kumar, acting as individual
and officer of Defendant Western Fertility, engaged in “wrongful conduct” “with
the intention of interfering with and violating the public policy of the State
of California.” (FAC ¶ 41.)
To allege a cause of action for
IIED, plaintiff must plead facts showing: (1) outrageous
conduct by the defendant with the intention of causing or reckless disregard of
the probability of causing emotional distress, (2) severe emotional suffering
and (3) actual and proximate causation of emotional distress. (Hughes v.
Pair (2009) 46 Cal.4th 1035, 1050.)
“Outrageous conduct” is that which exceeds “all bounds
tolerated by a decent society” and that “which is especially calculated to
cause” emotional distress. (Stoiber v. Honeychuck (1980) 101 Cal.App.3d
903, 921.) Severe emotional suffering is “emotional distress of such
substantial quality or enduring quality that no reasonable person in civilized
society should be expected to endure it.” (Potter v. Firestone Tire &
Rubber Co. (1993) 6 Cal.4th 965, 1004.)
Here, the FAC is vague as to the specific conduct underlying
this claim. Moreover, none of the acts alleged in the FAC are sufficiently
extreme and outrageous to support this cause of action. The demurrer to this cause
of action is sustained with leave to amend.
Legal Standard for Motions to Strike
Defendants also move to strike the request for punitive damages in the
FAC. Specifically, Defendants move to strike the punitive damages request on
the grounds that Plaintiffs have failed to allege fact supporting malice,
fraud, or oppression.
“The court may, upon a motion made pursuant to
Section 435, or at any time in its discretion, and upon terms it deems proper:
(a) Strike out any irrelevant, false, or improper matter inserted in any
pleading. (b) Strike out all or any part of any pleading not drawn or filed in
conformity with the laws of this state, a court rule, or an order of the
court.”¿(Code Civ. Proc. § 436.) “Immaterial” or “irrelevant” matters include
allegations not essential to the claim, allegations neither pertinent to nor supported
by an otherwise sufficient claim or a demand for judgment requesting relief not
supported by the allegations of the complaint. (Code Civ. Proc. § 431.10,
subds. (b)(1)-(3).)
Punitive
damages are recoverable where the defendant has been guilty of oppression,
fraud, or malice, express or implied. (Civ. Code § 3294.) “Something more than
the mere commission of a tort is always required for punitive damages. There
must be circumstances of aggravation our outrage, such as spite or malice, or a
fraudulent or evil motive on the part of the defendant, or such a conscious and
deliberate disregard of the interests of others that his conduct may be called
willful or wanton.” (Taylor v. Superior
Court (1979) 24 Cal.3d 890, 894.) Specific intent to injure is not
necessary for a showing of malice—it is sufficient that the defendant’s conduct
was so “wanton or so reckless as to evince malice or conscious disregard of
others’ rights.” (McConnell v. Quinn (1925)
71 Cal. App. 671, 682.)
A request
for punitive damages that is not supported with specific allegations of
oppression, fraud, or malice is subject to a motion to strike. Conclusory
allegations that defendants acted “willfully,” “maliciously,” or with
“oppression, fraud, or malice” are not, without more, sufficient to give rise
to a claim for punitive damages, but such language is permissible where the
complaint contains sufficient factual support for the conclusions. (Perkins v. Superior Court (1981) 117
Cal.App.3d 1, 6-7.)
As a result
of the Court sustaining the demurrer to the IIED cause of action, there are no
longer any causes of action to support the request for punitive damages. (Purcell
v. Schweitzer (2014) 224 Cal.App.4th 969, 976 [“Punitive damages are not
recoverable in breach of contract actions.”]; Spinks v. Equity Residential
Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1054 [“Since a party “may
not recover in tort for ... breach of the implied covenant of good faith and
fair dealing,” an “award of punitive damages” is not permitted on such a
claim.”].) The
motion to strike is granted with leave to amend.
Conclusion
The demurrer is sustained without
leave to amend as to the first and second causes of action as to Defendant
Kumar only, and otherwise overruled. The
demurrer is overruled as to the third and fourth causes of action, and
sustained with leave to amend as to the fifth cause of action. The motion to
strike is granted with leave to amend. The amended complaint shall be served
and filed on or before November 27, 2023.