Judge Christopher K. Lui, Case Number: 22STCV12227, Date: 2024-11-20 Tentative Ruling

The following tentative ruling is issued pursuant to Rule of Court 3.1308 at 1:42 p.m. on November 19, 2024.

Notice of intent to appear is REQUIRED pursuant to California Rule of Court 3.1308(a)(1). The Court does not desire oral argument on the motion addressed herein.

As required by Rule 3.1308(a)(1), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 by 4:00 p.m. on November 19, 2024.

Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.

Per Rule of Court 3.1308(a)(1), if notice of intention to appear is not given, oral argument will not be permitted.

Plaintiff alleges that Defendants obtained possession of Plaintiff’s 1996 Porsche 933 Turbo Andial pursuant to a Vehicle Consignment Agreement. Plaintiff alleges that Defendants sold the vehicle to a third party with modifications, but have failed to pay Plaintiff the specified purchase price.

Defendant Canepa Group, Inc. filed a Cross-Complaint alleging that Plaintiff owes sums for goods and services provided to Plaintiff.

Plaintiff/Cross-Defendant Tim Pappas demurs to the First Amended Cross-Complaint and move to strike portions thereof.

Plaintiff/Cross-Defendant Tim Pappas’s demurrer to the First Amended Cross-Complaint is SUSTAINED without leave to amend as to the first, sixth and seventh causes of action and OVERRULED as to the second, third, fourth, and fifth causes of action.

The motion to strike is DENIED as to the entire First Amended Cross-Complaint. The motion to strike is GRANTED without leave to amend as to the following invoices attached at Exhibit A to the Cross-Complaint: Nos. 36102 (3/12/18, $164,595.34), 36293 (6/21/18, $107,775.63), 38539 (2/27/00 $169,030.69) and 41079 (9/10/19, $11,675.29. The motion to strike is GRANTED in part without leave to amend as t0 ¶¶ 19, 34, and 40, whereby $453,076.94 is ordered stricken as time-barred. The motion to strike is GRANTED in part without leave to amend as to ¶ 72, whereby $1,359,230.85 (3 x $453,076.94) is ordered stricken as time-barred.

Cross-Defendant is to answer the remaining allegations of the First Amended Cross-Complaint within 10 days.

Cross-Defendant requests that the Court take judicial notice of the following: (1) Cross-Complaint dated January 4, 2024; (2) Notice of Ruling dated March 7, 2024.

Cross-Complainant requests that the Court take judicial notice of the following: (1) Complaint dated April 11, 2022; (20 Notice of Ruling dated March 7, 2024.

The Declaration of Matthew E. Hess reflects that Cross-Defendant’s counsel satisfied the meet and confer requirement set forth in Civ. Proc. Code, § 430.41.

Plaintiff/Cross-Defendant Tim Pappas demurs to the First Amended Cross-Complaint as follows:

Cross-Defendant argues that the First Amended Cross-Complaint (1ACC) does not attach a copy of the contract, plead the terms of the contract in haec verba, or expressly allege the substance of the material terms.

Although older case law states that “[i]f the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal. App. 3d 452, 458-459), the modern view is to permit a plaintiff to plead the legal effect of a written contract rather than its precise language:

The Wise court stated, “where a written instrument is the foundation of a cause of action, it may be pleaded in haec verba by attaching a copy as an exhibit and incorporating it by proper reference.” (Citation omitted.) It is readily apparent that the Otworth court read more into that statement than is actually there. The Wise court was simply stating one available method of pleading the contract—it was not specifying the exclusive means of pleading a contract. The correct rule is that “a plaintiff may plead the legal effect of the contract rather than its precise language.” (Citation omitted.) Because it is apparent that the Otworth court misread Wise , and because, in any event, we are bound by our Supreme Court, we decline to follow Otworth. Accordingly, plaintiff's failure either to attach or to set out verbatim the terms of the contract was not fatal to his breach of contract cause of action.

¶ 21 of the 1ACC alleges that the agreements were memorialized in writing, and attached as Exhibit A. These invoices are unsigned, and thus cannot constitute written contracts.

Unsigned invoices, however, cannot on their own create a contract or add terms to a contract. “The prevailing rule is that an invoice, standing alone, is not a contract [citations]; and a buyer is ordinarily not bound by statements thereon which are not a part of the original agreement.” (Citation omitted.) “After the orders were placed the seller transmitted certain invoices on which it attempted to place certain additional covenants into the contract. Such additions were mere self-serving declarations on the part of the seller and were not binding on the purchasers.” (Citation omitted.) “An invoice, as such, is no contract.” (Citation omitted.)

1. 1995 Porsche GT2 993 - Initially a complete exterior and interior ground up restoration per original estimate. Later there were added upgrades to suspension, engine, and brake system. The labor bill rates agreed to were $125/$75. Parts and materials were billed at cost plus

markup. Total billed for this car was $510,312.92, well within the cost estimates negotiated and agreed to by the parties. ($237,941.95 remains due on the account for this work.)

2. 1987 RUF CTR Yellowbird - Engine upgrades, transaxle repairs, body/paint restoration, interior upgrades, new tires, and restoration detail. The labor bill rates agreed to were $135/$75. Parts and materials were billed at cost plus markup. The total billed for this car was $169,030.69 well within the cost estimates negotiated and agreed to by the parties.

3. 1988 Porsche 959SC - Extensive upgrades including engine performance, brake system upgrade, audio system upgrade, interior lighting upgrade and new Porsche 959SC 18” wheel and tire package. The labor bill rates agreed to were $140/$75. Parts and materials were billed at cost plus markup. The total billed for this car was $174,960.16 well within the cost estimates negotiated and agreed to by the parties. (75,960.16 remains due on the account for this work.)

These appear to simply be historical summaries without any reference to the documents in which they were embodied. To the extent the unsigned invoices were the embodiment of the terms, as discussed above, they do not constitute written contracts.

This cause of action is not adequately pled, and it appears that Cross-Complainant will not be able to cite any written contracts.

This cause of action was contained in the original Cross-Complaint, but Cross-Defendant did not demur to it. In this regard, Civ. Proc. Code, § 430.41(b) states:

(b)A party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint, cross-complaint, or answer on grounds that could have been raised by demurrer to the earlier version of the complaint, cross-complaint, or answer.

As such, Cross-Defendant may not demur to the second cause of action. The demurrer to the second cause of action is OVERRULED.

This cause of action was not asserted in the original Cross-Complaint, so Cross-Defendant may demur to it now.

However, Cross-Defendant’s argument is that, because the second cause of action is barred in part by the statute of limitations, this cause of action may not be used to avoid the limitations period. Because this argument is derivative of the second cause of action argument, as to which Cross-Defendant may not demur per Civ. Proc. Code, § 430.41(b), the demurrer fails.

This cause of action was contained in the original Cross-Complaint, but Cross-Defendant did not demur to it. As such, Cross-Defendant may not demurrer to the second cause of action. (Civ. Proc. Code, § 430.41(b).) The demurrer to the fourth cause of action is OVERRULED.

Cross-Defendant argues that this cause of action is not pled with the requisite specificity.

Moreover, Cross-Defendant argues, the specific allegations regarding what Pappas said in July 2021, occurred after the work had already been performed prior to July 2021.

The elements of a cause of action for a false promise constituting fraud or deceit are: “(1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent at the time of making the promise; (3) the promise was made with intent to deceive or with intent to induce the party to whom it was made to enter into the transaction; (4) the promise was relied on by the party to whom it was made; (5) the party making the promise did not perform; (6) the party to whom the promise was made was injured.” (Regus v. Schartkoff (1957) 156 Cal.App.2d 382, 389.)

As stated in Service By Medallion v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816:

"An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract." (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 638 [49 Cal. Rptr. 2d 377, 909 P.2d 981].) The action is one of deceit, which requires proof that the defendant made a misrepresentation of fact or a promise without any intention of performing it. (Civ. Code, § 1710.) A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. (Croeni v. Goldstein (1994) 21 Cal. Cal. App. 4th 754, 758 [26 Cal. Rptr. 2d 412].) Every element must be specifically pleaded. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal. Cal. App. 4th 153, 157 [2 Cal. Rptr. 2d 861].)

“Consequently, in pleading the tort it is indispensable to set forth the falsity of the promise at the time it was tendered. (Citation omitted.) In so differentiating a false promise from the great bulk of broken promises, the allegations necessary to show contemporaneous intention not to perform should be clear, specific, and unequivocal. (Citations omitted.)” (Hills Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 708.)

“The mere failure to carry out a promise is not a tort, and it is therefore essential, in pleading fraud consisting of a false promise, to allege the elements of fraud.” (Maynes v. Angeles Mesa Land Co. (1938) 10 Cal.2d 587, 589.)

Fraud must be pleaded with specificity rather than with “ ‘general and conclusory allegations.’ ” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184 [132 Cal. Rptr. 2d 490, 65 P.3d 1255].) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court, supra, 12 Cal.4th at p. 645.)

We enforce the specificity requirement in consideration of its two purposes. The first purpose is to give notice to the defendant with sufficiently definite charges that the defendant can meet them. (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216 [197 Cal. Rptr. 783, 673 P.2d 660].) The second is to permit a court to weed out meritless fraud claims on the basis of the pleadings; thus, “the pleading should be sufficient ‘ “to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.” ’ ” (Id. at pp. 216–217.)

Here, the 1ACC alleges in general terms that Pappas agreed to timely pay for all work invoiced by Canepa Group. (1ACC, ¶ 47). The 1ACC does not allege exactly what Pappas said, when and in what matter (orally or in writing), and why such representation was known to be false when made. Moreover, the 1ACC does not allege that such representations were made before Cross-Complainant performed services.

The allegation that Pappas misrepresented his intention on July 14, 2021 to have Canepa Group perform future work in order to obtain possession of the Porsche to have a third party perform interim mechanical work could constitute actionable fraud, but it is not pled with sufficient specificity, as the exact misrepresentation is not specifically pled. (1ACC, ¶¶ 48, 49, 50.)[1]

Cross-Complainant was given an opportunity to plead fraud with specificity but failed to do so. As such, the demurrer to the sixth cause of action is SUSTAINED without leave to amend.

Cross-Defendant argues that this is a garden-variety civil dispute which does not violate Penal Code, § 496. First, the 1995 Porshe was Pappas’ own car, not the property of another. Second, the fraud claim fails, so the property was not obtained by defrauding Canepa Group.

(a) Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170. However, if the value of the property does not exceed nine hundred fifty dollars ($950), the offense shall be a misdemeanor, punishable only by imprisonment in a county jail not exceeding one year, if such person has no prior convictions for an offense specified in clause (iv) of subparagraph (C) of paragraph (2) of subdivision (e) of Section 667 or for an offense requiring registration pursuant to subdivision (c) of Section 290.

A principal in the actual theft of the property may be convicted pursuant to this section. However, no person may be convicted both pursuant to this section and of the theft of the same property.

(c) Any person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney's fees.

The Court finds to be persuasive Cross-Defendant’s argument that he cannot violate Penal Code, § 496 for taking his own property. At most, he took his own property subject to a mechanic’s lien, but this does not violate § 496. However, Cross-Defendant can violate § 496 by obtaining labor by false or fraudulent representation, which constitutes theft.

(a) Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, . . ., is guilty of theft. . . . For the purposes of this section, any false or fraudulent representation or pretense made shall be treated as continuing, so as to cover any money, property or service received as a result thereof, and the complaint, information or indictment may charge that the crime was committed on any date during the particular period in question. The hiring of any additional employee or employees without advising each of them of every labor claim due and unpaid and every judgment that the employer has been unable to meet shall be prima facie evidence of intent to defraud.

However, Cross-Complainant was given an opportunity to sufficiently plead fraud upon which Cross-Complainant relied in performing services. As discussed above, this pleading standard was not met.

As such, the demurrer to the seventh cause of action is SUSTAINED without leave to amend.

The Declaration of Matthew E. Hess reflects that Cross-Defendant’s counsel satisfied the meet and confer requirement set forth in Civ. Proc. Code, § 435.5.

Cross-Defendant moves to strike the entire First Amended Cross-Complaint because it is a sham pleading. This request is DENIED as unpersuasive as to the entire 1AC.

[U]nder the sham pleading doctrine, the trial court may disregard amendments that omit harmful allegations in the original complaint or add allegations inconsistent with it. (Citations omitted.)

(Falcon v. Long Beach Genetics, Inc. (2014) 224 Cal.App.4th 1263, 1281 [bold emphasis added].)

Cross-Defendant also moves to strike the following portions of the First Amended Cross-Complaint

GRANTED in part without leave to amend. $453,076.94 is ordered stricken as time-barred. See below.

GRANTED in part without leave to amend. $1,359,230.85 (3 x $453,076.94) is ordered stricken as time-barred. See below.

As discussed above re: the demurrer, unsigned invoices do not themselves constitute written contracts and, at most, memorialize oral or implied-in-fact contracts, which this Court previously ruled are subject to the two-year statute of limitations set forth in Civ. Proc. Code, § 339(1)(action upon a contract, obligation or liability not founded upon an instrument of writing). As such, the amounts reflected in the above invoices are time-barred, as pled.

Cross-Defendant is to answer the remaining allegations of the First Amended Cross-Complaint within 10 days.

[1] The amount of out-of-pocket damages to Cross-Complainant would be the amount of parts of labor which Cross-Complainant provided to Pappas’ 1995 Porsche, of which Cross-Complainant allowed Pappas to take possession in expectation the vehicle would be returned to Canepa Group’s possession.