Judge: Bruce G. Iwasaki, Case: 23STCV30065, Date: 2024-04-26 Tentative Ruling

Case Number: 23STCV30065    Hearing Date: April 26, 2024    Dept: 58

Judge Bruce G. Iwasaki

Department 58

Hearing Date:             April 26, 2024

Case Name:                Storyfile, Inc. v. Maven Arena, Inc.  

Case No.:                    23STCV30065

Motion:                       Demurrer

Moving Party:             Defendant Maven Arena, Inc.

Opposing Party:          Plaintiff Storyfile, Inc.

             On December 8, 2023, Storyfile, Inc. (Plaintiff) filed a Complaint against Maven Arena, Inc (Defendant) alleging a breach of a licensing agreement. Specifically, on May 1, 2022, Plaintiff entered into a license agreement (Agreement) with Defendant “for various rights, licenses, and services provided by” Plaintiff. Plaintiff then invoiced for those licensing services and Defendant paid all invoices until November 2022. On November 2, 2023, Plaintiff sent a notice of termination to Defendant, terminating the Agreement with immediate effect. Plaintiff alleges that the unpaid invoices owed by Defendant total $490,094.65.  

The Complaint alleges causes of action for (1.) breach of contract; (2.) breach of implied covenant of good faith; (3.) account stated; and (4.) quantum meruit.

Defendant Maven Arena, Inc. now demurs to the second cause of action in the Complaint. Plaintiff opposes the demurrer.

The demurrer is sustained.

Demurrer

            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.) 

Analysis

            Defendant demurs to the second cause of action for breach of implied covenant of good faith and fair dealings on the grounds that this claim is duplicative of the first cause of action for breach of contract.

            “There is implied in every contract a covenant by each party not to do anything which will deprive the other parties thereto of the benefits of the contract. [Citations.] This covenant not only imposes upon each contracting party the duty to refrain from doing anything which would render performance of the contract impossible by any act of his own, but also the duty to do everything that the contract presupposes that he will do to accomplish its purpose.” (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417.) “The covenant of good faith finds particular application in situations where one party is invested with a discretionary power affecting the rights of another. Such power must be exercised in good faith.” (Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 372.)

However, an implied covenant claim does not extend so far as to impose enforceable duties that are beyond the scope of the contract, nor does the covenant prohibit actions that are expressly authorized by the contract's terms. (Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094 [“ ‘implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.’ ”]; Carma Developers (Cal.), Inc. v. Marathon Development California, Inc., supra, 2 Cal.4th at p. 373 [“[i]t is universally recognized the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.”].)

Further, if a plaintiff's allegations of breach of the covenant of good faith “do[es] not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek[s] the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)

Here, the allegations in the second cause of action of the Complaint are nearly identical to the first cause of action. (Compare Compl., ¶¶ 12-19 with ¶¶ 20-24.) Thus, the second cause of action is impermissibly duplicative of the first cause of action.          

            In opposition, Plaintiff suggests that the good faith and fair dealing cause of action may be pled in an alternative to the breach of contract claim. Plaintiff is correct that alternative pleading is permitted. However, this doctrine holds that “[w]hile a complaint may not plead inconsistent facts, it may plead inconsistent legal theories or causes of action.” (Vichy Springs Resort, Inc. v. City of Ukiah (Cal. Ct. App., Mar. 29, 2024, No. A165345) 2024 WL 1340842, at *9 [citing Berman v. Bromberg (1997) 56 Cal.App.4th 936, 944–945].)

Thus, this doctrine does nothing to alleviate Plaintiff of its duty to sufficiently plead a cause of action for breach of implied covenant of good faith and fair dealings; that is, Plaintiff is still required to distinguish the allegations in the breach of contract claim from the breach of the implied covenant claim.

Conclusion

            The demurrer is sustained. Plaintiff shall have leave to amend. The amended pleading shall be filed and served on or before May 24, 2024.