Judge: Christopher K. Lui, Case: 21STCV28536, Date: 2022-08-23 Tentative Ruling

Case Number: 21STCV28536    Hearing Date: August 23, 2022    Dept: 76

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the demurrer and motion addressed herein.  As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.  Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.  If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.

            Plaintiffs alleges that Defendant defamed Plaintiff Srivastava and intentionally interfered with a business deal that would have netted Plaintiff approximately $40,000,000 in profit, then tried to extort $500,000 out of Plaintiff. Plaintiffs also alleges a breach of a settlement agreement by Defendant whereby the parties agreed not to disparage each other.

Defendant Jill Small demurs to the Second Amended Complaint and moves to strike portions thereof.

TENTATIVE RULING

Defendant Jill Small’s demurer to the Second Amended Complaint is OVERRULED as to the first, second and fourth causes of action and SUSTAINED without leave to amend as to the third cause of action.

Defendant’s motion to strike the first and second causes of action is DENIED.   

Defendant is ordered to answer the remaining allegations of the Second Amended Complaint within 10 days.

ANALYSIS

Demurrer

Meet and Confer

            The Declaration of Eitan Yehoshua attached to the motion to strike indicates that counsel met and conferred as to the demurrer, as required by CCP § 430.41. The Yehoshua Declaration attached to the demurrer does not reflect a meet and confer effort at all.

Request For Judicial Notice

            Defendant’s request that the Court take judicial notice of the court records pertaining to Jill Small v. Sharon Johnson and Gaurav Srivastava, Case Number BC699586 is GRANTED per Evid. Code, § 452(d).

            Plaintiff’s request that the Court take judicial notice of the receipt for payment from the LA County Sheriff’s Department, accompanying cashier’s check dated June 22, 2022 in the sum of $210,393.90 with levy in LASC, case number BC699586 is GRANTED per Evid. Code, § 452(d).

Discussion

1.         First Cause of Action (Slander Per Se); Second Cause of Action (Intentional Interference with Prospective Business Advantage).

            Defendant argues that these causes of action were amended, even though the Court only granted leave to amend as to the third and fourth causes of action in connection with the order granting motion for judgment on the pleadings as to the First Amended Complaint.

            However, Defendant does not specify what amendments were made. No new arguments will be considered in connection with the Reply.

 “Points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before. To withhold a point until the closing brief deprives the respondent of the opportunity to answer it or requires the effort and delay of an additional brief by permission.” (Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3 [67 Cal. Rptr. 2d 350]; see Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764 [60 Cal. Rptr. 2d 770] [“ ‘[p]oints raised for the first time in a reply brief will ordinarily not be considered’ ”].)

(People v. JTH Tax, Inc. (2013) 212 Cal.App.4th 1219, 1232.)8

The demurrer to the first and second causes of action is OVERRULED.

2.         Third Cause of Action (Intentional Misrepresentation of Facts [Promise made without Intent to Perform].

            “To establish a claim for deceit based on intentional misrepresentation, the plaintiff must prove seven essential elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff. (Citations omitted.)” (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498 [italics omitted].) 

            Here, as Defendant argues, Plaintiffs do not plead resulting damage in reliance on the alleged fraud. Plaintiffs do not plead out-of-pocket losses and expenditures.

[A] defrauded party may recoup his out-of-pocket losses and expenditures in reliance on the fraud, but he may not recover benefit-of-the-bargain damages (i.e., damages placing him in the economic position he would have occupied had the representation been true), at least where the recovery is not premised on a specific property actually acquired by the defrauded party.

(Kenly v. Ukegawa (1993) 16 Cal.App.4th 49, 54 [bold emphasis added].)

            The fact that Plaintiffs may have paid money pursuant to a judgment does not constitute out-of-pocket damages in reliance on the alleged fraud. Rather, such damages would be payment pursuant to the judicial process.            

            The demurrer to the third cause of action is SUSTAINED without leave to amend.

3.         Fourth Cause of Action (Breach of Contract [Rescission/Damages]).

To state a cause of action for breach of contract, [plaintiff] must plead the contract, his performance of the contract or excuse for nonperformance, [defendant]’s breach and the resulting damage. ( Lortz v. Connell (1969) 273 Cal.App.2d 286, 290 [78 Cal.Rptr. 6].)

(Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458.)

            Defendant argues that this cause of action fails because Plaintiffs failed to make any payments pursuant to the settlement agreement, and thus cannot assert a breach of contract. However, this a factual/evidentiary matter outside the scope of the pleadings and cannot be considered on demurrer.           

“The demurrer admits the facts pleaded in the complaint and raises the question whether those facts are sufficient to state a cause of action on any legal theory. . . . ‘The function of a demurrer is to test the sufficiency of the complaint alone and not the evidence or other extrinsic matters. [Citation.]’ (Citation omitted.)” (Hellum v. Breyer (2011) 194 Cal.App.4th 1300, 1308-09.) “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.” (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)

            Moreover, this cause of action is one for rescission of the settlement agreement based upon Defendant immediately breaching that agreement by violating the nondisparagement clause. (2AC, ¶¶ 12, 37.) This would constitute a failure of consideration, i.e., a total breach by Defendant.

A party is entitled to restitution when the contract has failed, such as when it is void, or has been rescinded or “the consideration has wholly failed.” (1 Witkin, supra, Contracts, § 1042, pp. 1132–1133.) Thus, a failure of performance generally gives rise to a claim for restitution of money had and received only when there has been a total breach—i.e., total failure of consideration or repudiation. (Gaffey v. Welk (1920) 46 Cal.App. 385, 389–390 [189 P. 300]; see Richter v. Union Land & Stock Co. (1900) 129 Cal. 367, 373 [62 P. 39]; 3 Dobbs, Law of Remedies (2d ed. 1993) § 12.7(1), fn. 18(1), p. 794 [“More commonly, a restitutionary recovery is merely an alternative remedy for total or substantial breach of contract … . A partial breach will not normally suffice”]; Calamari & Perillo on Contracts (6th ed. 2009) § 15.3, p. 542 [“Restitution is available as a remedy for total breach only, not for a partial breach … the non-breaching party must elect to cancel the contract”]; Rest.2d Contracts, § 373; 13 Corbin on Contracts, supra, § 68.5(2), p. 216.)

(Brown v. Grimes (2011) 192 Cal.App.4th 265, 281.)

            The demurrer to the fourth cause of action is OVERRULED.

Motion To Strike

Meet and Confer

The Declaration of Eitan Yehoshua attached to the motion to strike indicates that counsel met and conferred as to the demurrer, but not as to the motion to strike, as required by CCP § 435.5. Nonetheless, the Court will proceed to address the merits of the motion to strike, with the warning that future failure to submit sufficient meet and confer declaration may result in a continuance to permit meet and confer efforts.

Discussion

Defendant’s request that the Court strike the first and second causes of action because they were amended without leave of court is DENIED for the reasons discussed above re: the demurrer to the first and second causes of action.   

Defendant is ordered to answer the remaining allegations of the Second Amended Complaint within 10 days.