Judge: Cherol J. Nellon, Case: 23STCV04240, Date: 2023-10-26 Tentative Ruling
Case Number: 23STCV04240 Hearing Date: March 6, 2024 Dept: 14
Poulos vs. Franework
Case Background
Plaintiff hired the Defendants to
perform extensive construction work in her back yard, including the
installation of a pool and barbecue. Plaintiff alleges that there were issues
with the Defendant’s licensing status, and that their project manager absconded
with her payments without doing any actual work.
On November 6, 2023, Plaintiff filed
her verified Second Amended Complaint (“SAC”) for (1) Breach of Contract, (2) Negligence,
(3) Fraud, (4) Unjust Enrichment, (5) Common Count, (6) Conversion, (7) Intentional
Interference with Contractual Relations, (8) Negligent Interference with
Prospective Economic Relations, and (9) Intentional Interference with
Prospective Economic Relations against Defendants Framework Construction and
Remodeling, Inc. (“Framework”), Regev Cohen (“Cohen”), Snir Amrusi (“Amrusi”),
Marilyn Elizabeth Alcantara (“Alcantara”), Amos Ezrachi (“Ezrachi”), and DOES
1-100.
The 1st-3rd causes
of action are asserted against Defendants Framework, Cohen, Alcantara, and
Ezrachi. The 3rd-9th causes of action are asserted
against Defendant Amrusi.
Defendant Amrusi has not yet
been served.
No trial
date has yet been set.
Instant Pleading
Defendants Framework,
Cohen, Alcantara, and Ezrachi now demur to the first, second, and third, causes
of action in the SAC on the grounds that the facts alleged are insufficient to
support those causes of action.
Decision
Defendants’
initial Request for Judicial Notice is GRANTED.
Plaintiff’s
Request for Judicial Notice is GRANTED.
Defendant’s
Objections to Plaintiff's Request for Judicial Notice are OVERRULED, and the
accompanying additional Request for Judicial Notice is DENIED on the grounds
that new material should not be submitted for the first time on reply. See Scott v. CIBA Vision Corp. (1995)
38 Cal.App.4th 307, 322.
The
demurrer to the first cause of action is OVERRULED.
The demurrer to the second and
third causes of action is SUSTAINED, with 10 days leave to amend.
First Cause of Action: Breach of Contract
“’A cause
of action for damages for breach of contract is comprised of the following
elements: (1) the contract, (2) plaintiff's performance or excuse for
nonperformance, (3) defendant's breach, and (4) the resulting damages to
plaintiff.’ (Careau & Co. v. Security Pacific Business Credit, Inc.
(1990)
“Further, the complaint must
indicate on its face whether the contract is written, oral, or implied by conduct. (Code
Civ.Proc., § 430.10, subd. (g).).” Otworth v. Southern Pac. Transportation
Co. (1985) 166 Cal.App.3d 452, 458-459 (implicitly overruled on other
grounds as recognized by Miles v. Deutsche Bank National Trust Company
(2015) 236 Cal.App.4th 394, 401-402).
To plead a written contract, a
party must either (a) attach a copy of the contract to the complaint or (b)
plead all the material terms in a comprehensive and detailed manner. Heritage
Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 993.
Defendants’ argument on this cause
of action misstates what happened at the prior hearing on demurrer, as well as
the prior state of the pleadings. Plaintiff had attached a document, identified
as the contract between the parties, as Exhibit A to the original Complaint. That
document was, apparently inadvertently, not attached when Plaintiff filed the
First Amended Complaint (“FAC”). Defendants challenged the FAC by way of
demurrer.
This court sustained the demurrer
on October 26, 2023, holding that (1) Exhibit A to the original Complaint might
constitute a contract between Plaintiff and Defendant Framework only, but (2)
was not attached to the FAC and did not seem to be enforceable against
Defendants Cohen, Alcantara, and Ezrachi. The court instructed counsel to
attach the document to the SAC and plead the theory by which it could be enforced
against Cohen, Alcantara, and Ezrachi. (Minute Order of October 26, 2023).
Exhibit A to the SAC is identical
to the document attached as Exhibit A to the original Complaint, with two
exceptions: (1) the exhibit attached to the SAC is a color copy, and (2) the
exhibit attached to the original Complaint has a bunch of hand-written,
unsigned notes scribbled on it. Neither difference is material at this point; certainly
neither difference is significant enough to trigger the sham pleading doctrine.
Either way, the document is on
Defendant Framework’s letterhead and identifies Plaintiff by name and address.
It breaks down the work to be done by task, with an amount to be paid on
completion of each task. Any argument that Defendant Framework did not assent,
or that there was no meeting of the minds, or that the terms were
insufficiently definite, must depend on the production of evidence. This is a
question for summary judgment or trial, not demurrer. Plaintiff has pled a contract
between herself and Defendant Framework.
Defendants Cohen, Alcantara, and
Ezrachi are not named as parties to that document. Nevertheless, Plaintiff
contends that they are liable as alter egos of Defendant Framework. In
California courts, alter ego can be pled in a conclusory fashion. See Los
Angeles Cemetery Asso. v. Superior Court of Los Angeles County (1968) 268
Cal.App.2d 492, 494. This is partly because the ordinary plaintiff will not
know the facts that would support alter ego at this early stage (see Doe v.
City of Los Angeles (2007) 42 Cal.4th 531, 549-550), and partly because
alter ego can be raised at trial even if it isn’t part of the pleadings (see Hennessey's
Tavern, Inc. v. American Air Filter Co. (1988) 204 Cal.App.3d 1351, 1358).
In fact, alter ego may still return on a post-judgment motion even if it was
removed pursuant to a pre-trial motion. See Leek v. Cooper (2011) 194
Cal.App.4th 399, 419. The challenge to Plaintiff’s alter ego theory
is therefore premature.
Second Cause of Action: Negligence
“Actionable
negligence is traditionally regarded as involving the following: (a) a legal
duty to use due care; (b) a breach of such legal duty; (c) the breach as the
proximate or legal cause of the resulting injury.” Seo v. All-Makes Overhead
Doors (2002) 97 Cal.App.4th 1193, 1202.
“[I]n
California, an employer can be held liable for negligent hiring if he knows the
employee is unfit, or has reason to believe the employee is unfit or fails to
use reasonable care to discover the employee's unfitness before hiring him.” Evan
F. v. Hughson United Methodist Church (1992) 8 Cal.App.4th 828,
843.
This court
sustained the prior demurrer to the FAC because it did not clearly allege that
Defendants Framework, Cohen, Alcantara, and Ezrachi had any knowledge of
Defendant Amrusi’s unfitness before he disappeared. The court advised Plaintiff
to allege that the Defendants knew Amrusi was unfit before they hired him, or
at least before he was assigned to Plaintiff’s project. The court also advised Plaintiff
to also allege some facts to show that the individual defendants were
personally involved in the decision to hire or keep Amrusi. (Minute Order of October
26, 2023).
The SAC is,
if anything, even more sparse than the FAC. Plaintiff still does not allege
that Defendants Framework, Cohen, Alcantara, and Ezrachi had any knowledge or
notice or way of discovering Defendant Amrusi’s unfitness before he disappeared.
In the opposition, Plaintiff refers the court to Business & Professions
Code § 7068.1, which imposes an obligation on certain licensed individuals
to supervise “construction operations” and “secure compliance” with the regulations
that apply to contractors. But this begs the question; the duty of supervision
under this statute appears to be no different than the general duty of
supervision to which Defendants already concede.
The issue is whether Defendants had
any knowledge or notice or way of discovering Defendant Amrusi’s unfitness
before he disappeared. Plaintiff failed to plead such knowledge before and has
failed to plead it once again.
Third Cause of Action: Fraud
The
elements of a cause of action for fraud are: (1) a false representation, actual
or implied, or concealment of a matter of fact material to the transaction
which defendant had a duty to disclose or defendant’s promise made without the
intention to perform; (2) defendant’s knowledge of the falsity; (3) defendant’s
intent to deceive; (4) plaintiff’s justifiable reliance thereon; and (5)
resulting damage to plaintiff. Mosier v.
Fraud must be specifically pled,
and the particularity requirement necessitates the pleading of facts that “show
how, when, where, to whom, and by what means the representations were
tendered.” Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. The
purpose of the rules of fraud pleading is to inform the defendant and the court
of the specific grounds of the charge and enable them to evaluate it. See Chapman
v. Skype Inc. (2013) 220 Cal.App.4th 217, 231.
The fraud
alleged here is that Defendant Amrusi induced Plaintiff to pay the contractual
fees to him, based on the representation that he would then transmit the
payments to Framework. (SAC ¶¶ 39-45). Of course, this fraud was not committed
by any of the demurring Defendants. Plaintiff brings Defendant Framework into
the claim on a theory of respondeat superior. (Opposition p. 11:14-15).
Plaintiff then brings Defendants Cohen, Alcantara, and Ezrachi into the claim
as the alleged alter egos of Defendant Framework. (Opposition p. 11:17-27).
However, as
Defendants point out, Plaintiff’s theory of respondeat superior is no longer
pled. While it was present in the FAC, at paragraph 41, it has been removed
from the SAC. While that removal appears to be inadvertent, it is nevertheless
temporarily fatal to Plaintiff’s claim. Plaintiff has properly pled a claim for
fraud, but only against Defendant Amrusi, who has not been served and is not
party to this demurrer.
Conclusion
Plaintiff
has properly pled a contract between herself and Defendant Framework. Whether
that contract is ultimately enforceable remains an open question which the
parties are free to argue on the evidence at some other stage in the
proceedings. Likewise, whether Defendants Cohen, Alcantara, and Ezrachi will be
liable as the alter egos of Defendant Framework is a factual question which
cannot be finally resolved at this moment. Therefore, the demurrer to the first
cause of action is OVERRULED.
However,
Plaintiff has not properly pled the necessary facts to establish a negligence
claim. As previously stated, she must plead that the Defendants had some way of
knowing or discovering Defendant Amrusi’s unfitness. Likewise, Plaintiff has
failed to properly plead fraud against Defendant Framework because she removed
the respondeat superior allegations from the SAC. That in turn prevents an
alter ego recovery against Defendants Cohen, Alcantara, and Ezrachi. Therefore,
the demurrer to the second and third causes of action is SUSTAINED, with 10
days leave to amend.