Judge Christian R. Gullon, Case Number: 22PSCV00796, Date: 2023-10-03 Tentative Ruling

Judge: Christian R. Gullon, Case: 22PSCV00796, Date: 2023-10-03 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, attorneys are advised to check this website to determine if any changes or updates have been made to the tentative ruling.

Counsel may submit on the tentative rulings by calling the clerk in Dept. O at 909-802-1126 before 8:30 the morning of the hearing. Submission on the tentative does not bind the court to adopt the tentative ruling at the hearing should the opposing party appear and convince the court of further modification during oral argument.

The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

DEMURRER OF DEFENDANT PINNACLE LIMOUSINES MANUFACTURING, INC. TO THE SECOND AMENDED COMPLAINT OF PAUL BOHN AND LIMO WORLD, LLC is SUSTAINED in its entirety, with leave to amend, because the SAC alleges an oral contract and one for services (not goods).

This is a contracts case. Plaintiffs Bohn and Limo World (collectively, “Plaintiffs”) allege the following against Defendants FRANKLIN FIGUEROA, an individual and PINNACLE LIMOUSINES MANUFACTURING, INC (“Defendant” or “Pinnacle”): On April 24, 2017, the parties into express Warranty Agreements for the conversion of a Corvette String into a limo conversion. After a near one year delay from the promised completion date, the Corvette limo conversion had numerous defects. The parties also entered into another agreement on November 6, 2019 for the conversion of a Chevrolet Camaro into a limo conversion, but that work too was defective. Despite notifying Defendant of the defects that are covered by the warranty, Defendant has not repaired the vehicles, leaving Plaintiffs damaged in the amount of $182,776.90.

On January 9, 2023, Plaintiffs filed their First Amended Complaint (“FAC”) 1) Breach of Express Warranty; 2) Breach of Implied Warranty and 3) Fraudulent Inducement, rendering the 12/05/22 ruling moot. (See 1/24/23 ruling.)

On March 28, 2023, Plaintiff dismissed Defendant Franklin Figueroa. And that same day, Plaintiff filed a Second Amended Complaint (SAC) against Pinnacle alleging the following five causes of action (COAs):

On June 30, 2023, according to the court’s minute order, the court continued the hearing on the demurrer in light of settlement discussions between the parties.

On September 25, 2023, Defendant filed a substitution of attorney replacing Counsel Thomas F. Nowland with James Gutierrez of the Gutierrez Law Firm.

To date, as of 9/27/23 at 8 AM, no reply has been received [Due 5 court days before hearing (9/26)].

In turn, a demurrer may be asserted the grounds that: (e) The pleading does not state facts sufficient to constitute a cause of action and/or (f) The pleading is uncertain (“uncertain” includes ambiguous and unintelligible). (Code of Civ. Proc., § 430.10, subds. (e), (f).) As for testing the sufficiency of a pleading, the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.[1] (Code of Civ. Proc., § 430.30 subd., (a); Blank v. Kirwan, (1985) 39 Cal.3d 311, 318; see also Melikian v. Truck Ins. Exchange (1955) 133 Cal.App.2d 113, 114 [“In approaching that issue we are bound, just as the trial court was bound, by the allegations in the verified complaint and cannot consider the outré-judicial statements of counsel nor the additional facts found in the briefs.”].)

Defendant demurs to the 1^st through 3^rd COAs. More specifically, Defendant demurs to the 1^st and 2^nd COAs on two grounds: (i) the contract was for services, not goods and (ii) if the court determines the contract was for a sale of goods (not services), the contract is barred by the statute of limitations (SOL). Defendant demurs to the 3^rd COA for breach of contract on the grounds that it fails to set forth “essential facts with reasonable precision and particularity.” (Demurrer p. 2.)

A COA for breach of contract contains the following elements: (i) existence of a contract, (ii) party’s performance of the contract or excuse from nonperformance, (iii) defendant’s breach, and (iv) resulting damages. (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) If the contract is written, “the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Ibid.)

After a review of the SAC and parties’ arguments, the court determines that while the COA is labeled as a written contract, the SAC alleges an oral contract.[3]

In support of its contention that the invoices do not form a contract, Defendant cites to India Paint and Lacquer Co. v. United Steel Products Corp. (1954) 123 Cal.App.2d 597 (India Paint). Indeed, the appellate court stated that “[T]he prevailing rule is that an invoice, standing alone, is not a contract.” (Id. at p. 607.) More specifically, the court, relying upon Professor Corbin Williston’s contract theories, observed that:

The handwritten documents accompanying India's shipments of merchandise, which are labeled ‘shipping copy invoices' but which are actually, as found by the trial court, bills of parcels, clearly do not represent anything more than receipts attesting to the delivery of merchandise . . .they contain only data as to the date of shipment and the quantity of a particular item delivered to the purchaser. Their informality, incompleteness, and lack of contractual character show on the face of the documents.

Here, similarly, the invoices provide certain data such as a “bill to” address, a “ship to” address, item codes (e.g., “disco floor”), description (e.g., “disco floor with color changing lighting), price for each item code, and job total balance for the work (SAC, Exs. 4-5, pp. 28-31 of 34 of PDF.) The invoices do not bear the (1) signatures from either party nor (2) identifies either party.

To the extent that the invoices provide the “bill to” and “ship to” addresses, not only is that insufficient to identify the parties in the contract, but the “bill to” and “ship to” addresses are not consistently addressed to Plaintiffs. For example, on invoice 20209 (Ex. 4), the “bill to” address is Innovative Lease Services, Inc.; the court is uncertain from the pleadings if Innovative Lease Services is related to Limo World L.L.C or the individual Plaintiff.

Next, the invoices do not bear certain material terms such as the completion date of the two conversions, a material term as so alleged in the SAC. (SAC ¶15 [“As a condition precedent and part of the inducement for Limo World to enter into the Agreement, Defendant, on or about April 24, 2017, promised Bohn and Limo World that Defendant would complete the Corvette Limo conversion per the invoice by in and around July 2017 and at latest August 2017.”], emphasis added.) Accordingly, as the SAC alleges that the complete date was a material, relevant term, then said term should have been in the invoice.

Thus, while certain aspects as to the scope of the projects may have been mentioned, the invoices are incomplete because not all material forms were found within the invoices. (See also Kreuzberger v. Wingfield (1892) 96 Cal.251, 255-256 [“[The writing] does not define the mutual obligations of the parties, and is only signed by the plaintiff. In fact, it does not purport to bind any one. It contains no contract stipulations, and shows upon its face that it was only intended as an informal memorandum, to be considered in connection with the oral negotiations which preceded it.”].)[4] Additionally, as mentioned by Defendant in its demurrer, unlike the form in Marin Storage & Trucking, Inc. v. Benco Contracting and Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049 wherein the appellate court determined that ‘Work Authorization and Contract’ forms amounted to a binding contract because the form explicitly state the form “is a contract” and the form explicitly stated the contract “includes all terms and conditions” (included ten terms), here, however, the form is labeled as an invoice and does not bear any terms nor conditions.

To the extent that Plaintiffs cite to India Paint for its rule that an invoice would “not ipso facto transform it into the contract between the parties, unless so intended by them or unless such effect is given to it by the application or operation of some principle of contract law” (India Paint, supra, p. 607, emphasis added), the court is unpersuaded. (Opp. p. 7:15-19.) Even if “the parties engaged in numerous telephone conversations and orally agreed to the terms of the limo conversions. Defendant codified the terms of the limo conversions in Invoices that detailed the relevant terms of the agreements” (SAC ¶48) Plaintiffs appear to misconstrue that the mere fact of the meeting of the minds automatically forms a written contract.

To the extent that Plaintiffs aver the lack of a signature are inapposite, it relies upon E.O.C. Ord, Inc. v. Kovakovich (1988) 200 Cal.App.3d 1194 but that actually undermines Plaintiffs’ argument as that too requires that the writing to bear relevant terms. (Id. at p. 1199 [“In other words, the writing must contain the terms of the contract. It cannot be only remotely or indirectly connected with the transaction or only a link in the chain establishing the cause of action.”].)

In sum, as Plaintiffs’ very own citation provides, absent relevant terms, a writing does not amount to a written contract. (Opp. p. 6, citing Martini E. Ricci Iamino S.P.A.-Consortile Societa Agricola v. Western Fresh Marketing Services, Inc. (E.D. Cal. 2014) 54 F.Supp.3d 1094, 1104 [“In order for a contract to be “founded on a writing,” the writing must contain the relevant terms of the agreement and the defendant must have “accepted” the writing.”].)

Thus, as the terms of the parties’ agreement surely was not solely for “disco lights, Red laser and interior strobe lights, a kill switch, and chevy logos,” amongst other features, then the invoices are not contracts.

Therefore, as the court determines that the contract was oral, not written, the court SUSTAINS the demurrer WITH leave to amend as to the 3^rd COA for breach of written contract.

Next, Defendant argues that the 1^st and 2^nd COAs for breach of express and implied warranties, respectively, fail because the work was for services, not goods, precluding any warranty. (Demurrer pp. 9-10, citing to Commercial Code sections 2313-2316; see also Fogo v. Cutter Laboratories, Inc. (1977) 68 Cal.App.3d 744, 759 [“a sale is ordinarily an essential element of any warranty, express or implied”]; see also Shepard v. Alexian Bothers Hosp. (1973) 33 Cal.App.3d 606, 615 [“since the furnishing of a blood transfusion is, by law, a service and not a sale (s 1606), respondent cannot be held liable under a breach of warranty theory.”].)[5]

In Opposition, Plaintiffs rely upon Gonsalves v. Montgomery (N.D. Cal., Sept. 20, 2006, No. C 06-2747 SBA) 2006 WL 2711540 to support its proposition that the construction of the limos is a good. (Opp. p. 5.)

But the case is inapposite. For one, in Gonsalves, the parties entered into a written contract for defendants to construct a boat for a certain purchase price. (Id. at p. 1.) Here, however, the cars already exist and are not being purchased. Next, the case is not instructive as it does not discuss the distinction between a service and good; in fact, neither party in Gonsalves disputed that the boat is good. Rather, the parties disputed whether the boat was for the sale of a future good or an existing good, which would affect whether plaintiffs obtained a special property interest in the boat.

In any event, the SAC tacitly concedes that the contract was for services. (SAC ¶9 [“Around this same time, a friend of Plaintiff’s spoke very highly of Defendant and had recommended their SERVICES.”], emphasis and capitalization added.)

Therefore, as this involves a question of law, not fact, the demurrer is SUSTAINED with leave to amend.[6] With that, the court need not address Defendant’s last argument regarding the SOL under the UCC.

[1] Plaintiffs seek judicial notice of the invoices pertaining the Corvette, which were inadvertently omitted from the SAC. (See also Demurrer pp. 8-9 [arguing inconsistent facts because Corvette invoice(s) not attached]. The court DENIES the request for judicial notice because the invoices are not records of this court. That said, as the court is unpersuaded that that the lack of the Corvette invoice amounts to inconsistent factual allegations, the failure to attach the invoices to the SAC was inapposite for purposes of this demurrer. Plaintiff may use its opportunity for leave to amend to submit the Corvette invoices with their third amended complaint.

[2] As the parties mainly focus on the invoice and not the warranty, the court’s analysis will focus on whether the invoices are the written contract.

[3] See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38-39 [“The courts of this state have ... long since departed from holding a plaintiff strictly to the ‘form of action’ he has pleaded and instead have adopted a more flexible approach of examining the facts alleged to determine if a demurrer should be sustained.”]; see also Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1283 [“We ignore erroneous or confusing labels in the pleading and look to its gravamen to determine what cause of action is stated.”].)

[4] Kreuzberger was cited in India Paint.

[5] Defendant also argues that absent transfer of title, the sale is for services, not goods.

[6] As both parties dispute whether the UCC or common law applies, the court directs both parties to the predominant purpose test as it would best resolve the issue. (See Daniel P. O'Gorman, Contract Law's Predominant-Purpose Test and the Law-Fact Distinction, 45 Fla. St. U. L. Rev. 443 (2019) . https://ir.law.fsu.edu/lr/vol45/iss2/3; see also 1 E. Allan Farnsworth, Farnsworth on Contracts § 1.9, at 44 (3d ed. 2004) (“Courts usually determine whether a transaction is one in goods, services, or land by looking for the ‘predominant factor’ of the contract.”); 1 Howard O. Hunter, Modern Law of Contracts § 9:11, at 519–20 (2014) (“The general test for U.C.C. coverage is to determine whether the primary purpose and main thrust of the contract is the sale of goods or services.”). But as the issue was not brief by either party, it is not the court’s obligation to do so.