Judge Bruce G. Iwasaki, Case Number: 24STCV09175, Date: 2024-08-08 Tentative Ruling

Responding Party: Unopposed

Tentative Ruling: The Court therefore sustains Defendant Jon Allen’s Demurrer with leave to amend.

This is an action in which Plaintiff Jeanie Bryant alleges she was defrauded out of money paid to Defendants Jon Allen dba Jon Allen Construction, Michael Zatorski dba Ubuild Construction, David O’Brien, and Efrain Olalde, in exchange for promises to build two tiny homes for her by September 13, 2022. On April 11, 2024, Plaintiff filed a Complaint for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) fraud—intentional misrepresentation, (4) negligent misrepresentation, (5) deceit – Civil Code §§ 1709-10, (6) conspiracy to commit fraud or other tort, (7) conversion, (8) monies had and received, (9) breach of oral contract, (10) promissory estoppel, and (11) Business & Professions Code § 17200.

On July 5, 2024, Defendant Allen filed the instant demurrer. The demurrer is unopposed.

“The primary function of a pleading is to give the other party notice so that it may prepare its case [citation], and a defect in a pleading that otherwise properly notifies a party cannot be said to affect substantial rights.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.)¿

“A¿demurrer¿tests the legal sufficiency of the factual allegations in a complaint.” (Ivanoff v. Bank of America, N.A.¿(2017) 9 Cal.App.5th 719, 725.) The Court looks to whether “the complaint alleges facts sufficient to state a cause of action or discloses a complete defense.” (Id.) The Court does not “read passages from a complaint in isolation; in reviewing a ruling on a demurrer, we read the complaint ‘as a whole and its parts in their context.’ [Citation.]” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 804.) The Court “assume[s] the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken.” (Harris, supra, 56 Cal.4th p. 240.) “The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.]” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)¿¿¿

A general demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted or under section 430.10, subdivision (a), where the court has no jurisdiction of the subject of the cause of action alleged in the pleading. All other grounds listed in Section 430.10, including uncertainty under subdivision (f), are special demurrers. Special demurrers are not allowed in limited jurisdiction courts. (Code Civ. Proc., § 92, subd. (c).)¿¿¿

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)¿¿

Per Code of Civil Procedure Section 430.41(a), parties are supposed to meet and confer in person or by telephone before filing a demurrer. (Code Civ. Proc., § 430.41(a).) Defendant Allen attempted to meet and confer with Plaintiff and her former counsel but was unsuccessful. (Mackay Decl. ¶¶1-6, Exs. 1-5.)

First, Defendant Allen argues the allegations in the complaint as currently pled fails to distinguish whether the contract purportedly breached is oral or written.

“Establishing that claim requires a showing of “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (D’Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.) “Further, the complaint must indicate on its face whether the contract is written, oral, or implied by conduct.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458–459.)¿

The Complaint alleges that on or about March 17, 2022, Plaintiff and Defendants entered into a written agreement for the construction and purchase of two tiny homes. (Compl., ¶¶6-7.) The Complaint further alleges that Plaintiff paid Defendants $120,000.00 in cash to substantially remit the total cost of the construction and purchase in the amount of $191,000.00. (Id. at ¶8.) The Complaint further alleges that Defendant failed to perform under the agreement. (Id. at ¶¶17.)

Although the allegations in the first cause of action appear to allege the parties entered into a written contract, the ninth cause of action is labeled “breach of oral contract” and re-alleges the facts set forth in the first cause of action. (Compl., ¶¶72-73.) Moreover, the ninth cause of action alleges that to the extent any of the oral promise made required a writing, the writing is excused by estoppel and part performance. (Id. at ¶77.) As such, the Complaint fails to indicate on its face whether Plaintiff is pleading breach of oral or written contract.

Therefore, the demurrer is sustained with leave to amend as to the first and ninth causes of action.

Second Cause of Action for Breach of Covenant of Good Faith and Fair Dealing

Next, Defendant Allen argues that the second cause of action fails to state sufficient facts to constitute a cause of action because it is based on the same operative breach of contract allegations.

“The [implied] covenant of good faith and fair dealing [is] implied by law in every contract. The covenant is read into contracts and functions ‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract.’” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) As such, “[i]f the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek 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.)

The Complaint alleges that Defendants violated the duty to act fairly and in good faith as described in the paragraphs set forth in the first cause of action and common allegations. (Compl., ¶21.) The Complaint alleges that Defendants violated the duty good faith and fair dealing by making false promises and otherwise inducing Plaintiff to pay $120,000.00. (Id.)

As currently pled, these allegations merely re-allege the acts set forth in the breach of contract claims. (Id. at ¶¶9-11.) Duplicative causes of action are subject to being stricken.

Therefore, the demurrer is sustained with leave to amend as to the second cause of action.

Defendant Allen further argues that third, fourth, and fifth causes of action fail because Plaintiff does not plead them with specificity.

“The elements of intentional misrepresentation “are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage.” (Aton Center, Inc. v. United Healthcare Ins. Co. (2023) 93 Cal.App.5th 1214, 1245 (emphasis added).)

By contrast, “[t]he elements of negligent misrepresentation are ‘(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’” (National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50 (emphasis added).)

Finally, pursuant to Civil Code Section 1709, “One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.” (Civ. Code, § 1709, see also Civ. Code, § 1710 (defining “deceit”).) The facts constituting the alleged fraud must be pled with specificity not is a general or conclusory matter. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) However, “[l]ess specificity should be required of fraud claims ‘when “it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy,”[citation].’” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

The Complaint alleges that Defendants presented to Plaintiff that they would construct and deliver the two tiny homes by September 13, 2022 in order to induce her to pay them $120,000.00. (Compl., ¶29.) The Complaint alleges that Defendants knew their representations were false at the time they were made with the intent to defraud Plaintiff of $120,000.00. (Id. at ¶30.) The Complaint further alleges that Defendants had no reasonable grounds to believe these representations were true when they were made to Plaintiff. (Id. at ¶39.) The Complaint also alleges that Defendants represented to Plaintiff that they would willfully discharge their duties under the agreement, which they knew was false. (Id. at ¶¶45-46.)

These allegations are insufficient to support the fraud claims are currently pled because they allege facts in a conclusory matter without specifying which Defendants made what statements to Plaintiff, when these statements were made, or even how these alleged misrepresentations were communicated to Plaintiff.

Therefore, the demurrer is sustained with leave to amend as to the third, fourth, and fifth causes of action.

Additionally, Defendant Allen argues that the sixth cause of action fails to state sufficient facts to constitute a cause of action because there are no allegations that Defendants’ conduct was wrongful.

“To support a conspiracy claim, a plaintiff must allege the following elements: (1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct.” (AREI II Cases (2013) 216 Cal.App.4th 1004, 1022 (internal citations omitted).)

The Complaint alleges that Plaintiff was harmed by Defendants’ fraud and deceit. (Compl., ¶54.) The Complaint alleges that Defendants’ are all responsible for the harm because they conspired to commit fraud and deceit and to commit wrongful acts. (Id.)

As discussed above, the Complaint fails to plead the fraud and deceit claims with the required specificity. Likewise, a reasonable jury could infer on the face the Complaint what are the actual wrongful acts of the Defendants’ to which they conspired against Plaintiff.

Therefore, the demurrer is sustained with leave to amend as to the sixth cause of action.

Lastly, Defendant Allen argues that the eleventh cause of action fails to state sufficient facts to constitute a cause of action because it is based on the breach of contract and fraud claims, which Plaintiff fails to sufficiently plead.

“To bring a UCL claim, a plaintiff must show either an (1) ‘unlawful, unfair, or fraudulent business act or practice,’ or (2) ‘unfair, deceptive, untrue or misleading advertising.’” (Adhav v. Midway Rent A Car, Inc. (2019) 37 Cal.App.5th 954, 970.) A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.) “An ‘unlawful’ business practice or act within the meaning of the UCL ‘is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law.’” (Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 351.)

The Complaint alleges that the foregoing conduct of Defendants constituted either fraud and/or breach of contract, and other unlawful conduct. (Compl., ¶86.)

As explained above, the Complaint fails to (1) distinguish whether the parties entered into a written or oral contract, (2) adequately plead breach of oral contract in the alternative, and (3) plead the fraud claims with specificity.

Therefore, the demurrer is sustained with leave to amend as to the eleventh cause of action.

The Court therefore sustains Defendant Jon Allen’s Demurrer. Plaintiff shall serve and file her amended Complaint on or before August 30, 2024.

Department 58