Judge: Daniel M. Crowley, Case: 22SMCV01313, Date: 2023-04-13 Tentative Ruling
Case Number: 22SMCV01313 Hearing Date: April 13, 2023 Dept: 207
Background
This case arises from a dispute regarding construction
activities at a property located at 9675 Brighton Way in Beverly Hills,
California. Plaintiff Glenn Vallecillos, M.D. “(“Plaintiff”) is the lessee of
the subject property and brings this action against Defendant Michael Keyes dba
Global Ocean and Land Construction (“Defendant”), arguing Defendant performed
defective construction work and ultimately abandoned work on the property prior
to the project’s completion. Plaintiff’s operative Complaint, filed August 10,
2022, asserts eleven causes of action against Defendant. Defendant now brings a
demurrer which asserts challenges to the Complaint as well as to ten of these
eleven causes of action. Plaintiff opposes Defendant’s demurrer.
Legal Standard
When considering demurrers, courts read the allegations
liberally and in context. (Wilson v. Transit Authority of City of Sacramento
(1962) 199 Cal.App.2d 716, 720-21.) In a demurrer proceeding, the defects must
be apparent on the face of the pleading or via proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the
pleading alone, and not on the evidence or facts alleged.” (E-Fab, Inc. v.
Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such,
the court assumes the truth of the complaint’s properly pleaded or implied
factual allegations. (Id.) However, it does not accept as true
deductions, contentions, or conclusions of law or fact. (Stonehouse Homes
LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)
The general rule is that the plaintiff need only allege
ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles
(2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter
of pleading, even as against a special demurrer, is that his complaint set
forth the essential facts of the case with reasonable precision and with
sufficient particularity to acquaint the defendant with the nature, source and
extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp.
(1945) 26 Cal.2d 149, 156-157.)
Analysis
1. Meet and
Confer Requirement
The Court
finds Defendant has not complied with the meet and confer requirements set
forth in Code Civ. Proc. § 430.41. Before filing a demurrer, the demurring party is required to “meet and
confer in person or by telephone” with the party who filed the pleading
demurred to for the purposes of determining whether an agreement can be reached
through a filing of an amended pleading to resolve the objections to be raised
in the demurrer. (C.C.P. § 430.41(a).) “If the parties are not able to meet and
confer at least five days prior to the date the responsive pleading is due, the
demurring party shall be granted an automatic 30-day extension of time within
which to file a responsive pleading” if that party files and serves a
declaration “stating under penalty of perjury that a good faith attempt to meet
and confer was made and explaining the reasons why the parties could not meet
and confer.” (C.C.P. § 430.41(b).)
On December 12, 2022, Defendant
filed a declaration seeking to trigger the 30-day extension under Code Civ.
Proc. § 430.41(b). However, this declaration does not state a good faith
attempt was made to meet and confer in person or by telephone and does not
explain why the parties could not meet and confer. Instead, the declaration
states the parties did not “resolve the issues regarding the defects of the
complaint by meet and confer.” (Silver Decl. at ¶2.) The declaration also
attaches correspondence sent to counsel for Plaintiff dated December 5, 2022,
which identifies alleged defects in the Complaint and demands counsel “review
and advise immediately as to when plaintiff wil [sic] resolve the complaint
defects and deficiencies prior to defendant’s response.” (Ex. A to Silver
Decl.) The correspondence does not make any attempt to schedule an in-person or
telephonic meet and confer as required by the statute.
In a letter dated December 9,
2022, Plaintiff responded to the substance of Defendant’s December 5, 2022,
letter. (Ex. C to Glaubiger Decl.) Defendant then proceeded to file the
December 12 declaration to trigger the 30-day extension and made no further effort
to meet and confer with Plaintiff prior to filing the instant demurrer.
(Glaubiger Decl. at ¶¶5-9.)
On these facts, the Court finds
Defendant failed to satisfy the meet and confer requirements imposed by Code
Civ. Proc. § 430.41 as Defendant made no attempt to meet and confer in person
or by telephone at any point. Defendant’s demurrer is also untimely. Defendant
acknowledges his deadline to file a demurrer was December 12, 2022, unless
extended by Code Civ. Proc. § 430.41(b). (Silver Decl. at ¶2.) As Defendant’s
December 12 declaration did not indicate a good faith attempt was made to meet
and confer by telephone or in-person and did not offer any reason why the
parties could not have met and conferred by telephone or in person under the
time limits set forth by statute, it was insufficient to trigger an extension
of the December 12 deadline for Defendant to bring this demurrer. Defendant
filed the instant demurrer on January 12, 2023, well past the expiration of
this deadline.
The Court has discretion as to
whether to consider an untimely demurrer. (See Jackson v. Doe (2011) 192
Cal.App.4th 742, 750 [trial court had discretion to consider untimely demurrer
where plaintiff did not demonstrate any prejudice from the delay].) Plaintiff
here has raised no objection to the untimeliness of Defendant’s demurrer, has
responded to the merits of Defendant’s arguments, and does not argue it has
been prejudiced as a result of the delay. Accordingly, the Court in its
discretion will consider Defendant’s demurrer on its merits.
2. Breach of
Contract
To state a cause of action for breach
of contract, Plaintiff must be able to establish “(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.” (Oasis
West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of
contract claim “is based on 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
agreement must be attached and incorporated by reference.” (Harris v. Rudin,
Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances,
a plaintiff may also “plead the legal effect of the contract rather than its
precise language.” (Construction Protective Services, Inc. v. TIG Specialty
Ins. Co. (2002) 29 Cal.4th 189, 198-199.)
Plaintiff alleges it leases real
property located at 9675 Brighton Way, Basement Suite, in Beverly Hills,
California. (Complaint at ¶1.) Plaintiff states its principals met with
Defendant in June 2021 to discuss a remodel of a surgical center located on
this property, and subsequently hired Defendant to do the remodel. (Id.
at ¶¶7-8.) The Complaint alleges Plaintiff entered into a contract and
subsequent change orders with Defendant to perform this work (Id. at
¶9.) The Complaint acknowledges the initial contract only identifies
Plaintiff’s co-tenant, Dr. Feiz, M.D., but states Plaintiff is nonetheless a
party to the contract or an intended third-party beneficiary of the contract
known to Defendant. (Id. at ¶9, fn. 1.) The Complaint attaches the
initial contract, subsequent change orders, and Defendant’s invoices for the
work. (Ex. B to Complaint.) At least one change order and several invoices were
addressed by Defendant to Plaintiff, not Dr. Feiz. (Id.) Plaintiff was
also named as an additional insured on Defendant’s insurance policy. (Ex. A to
Complaint.) The Complaint also alleges Plaintiff paid Defendant a total of
$258,020 and attaches records of such payments. (Complaint at ¶10; Ex. C to
Complaint.)
Defendant argues Plaintiff cannot
assert a cause of action against him for breach of contract because Plaintiff
was not named in the original contract document and thus cannot be a party to
the contract. Defendant argues the Complaint demonstrates at a minimum that it
was an intended beneficiary of the contract and thus may bring a claim against
Defendant for its breach.
Civil Code § 1559 provides: “A contract,
made expressly for the benefit of a third person, may be enforced by him at any
time before the parties thereto rescind it.” A person seeking to enforce a contract
as a third party beneficiary must plead a contract which was made expressly for
his benefit and one in which it clearly appears that he was a beneficiary. (Schauer
v. Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 957.) ‘Expressly’
means “‘in an express manner; in direct or unmistakable terms; explicitly; definitely;
directly.’ [Citations.] ‘[A]n intent to make the obligation inure to the benefit
of the third party must have been clearly manifested by the contracting parties.’”
(Sofias v. Bank of America (1985) 172 Cal. App. 3d 583, 587.) However,
this does not mean both of the contracting parties must intend to benefit the third
party, rather it means the promisor must have understood that the promisee had such
intent. (Schauer, supra, 125 Cal.App.4th at 958.) No specific manifestation
by the promisor of an intent to benefit the third person is required. (Id.)
The Court finds the Complaint
sufficiently alleges Plaintiff’s standing to sue for breach of contract as an
intended beneficiary. The purpose of the contract was to remodel a surgical
center to be used by Plaintiff, Defendant added Plaintiff as an additional
insured on the contract, submitted change orders for Plaintiff’s approval, and
billed Plaintiff for the work performed. These factual allegations, when
accepted as true, are sufficient to demonstrate an express intention that
Plaintiff would benefit from the contract. Defendant’s claim that the Complaint
does not “allege that the plaintiff is an intended beneficiary” (Reply at 3) is
belied by the express language of the Complaint stating Plaintiff is “an
intended third party beneficiary known to defendant Keyes” (Complaint at ¶9,
fn. 1) as well as these additional factual allegations concerning the change
orders and invoices. Defendant’s demurrer to the first cause of action for
breach of contract is OVERRULED.
3. Unjust
Enrichment
The right to restitution or
quasi-contractual recovery is based upon “unjust enrichment,” i.e., where a
person obtains a benefit that the person may not justly retain, the person is
unjustly enriched. (Prakashpalan v. Engstrom, Lipscomb and Lack (2014)
223 Cal.App.4th 1105, 1132, as modified on denial of reh’g (Feb. 27, 2014) [quoting
Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452,
460]; see also Civ. Code, §§ 2223-2224.)
Defendant contends unjust
enrichment is not a cause of action under California law. There is a split in
California authority on this question. (Compare Durell v. Sharp Healthcare
(2010) 183 Cal.App.4th 1350, 1370 [“There is no cause of action in California
for unjust enrichment. Unjust enrichment is synonymous with restitution”] with Peterson
v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593 [recognizing a
cause of action for unjust enrichment under California law].) As there is
authority recognizing a cause of action for unjust enrichment, the Court
declines to find Plaintiff’s cause of action for unjust enrichment fails as a
matter of law.
Defendant also argues the Complaint
fails to state sufficient acts to constitute a cause of action for unjust
enrichment. The Court disagrees. Plaintiff’s cause of action for unjust
enrichment is set forth at paragraphs 21-24 of the Complaint. The Complaint
alleges Plaintiff conferred a benefit on Defendant by paying him for remodeling
work which was defective and incomplete. (Complaint at ¶¶10-14; 22-23.) It
further states it would be unjust and inequitable for Defendant to retain the
benefit of this money. (Id. at ¶24.) The Court finds these allegations
are sufficient to plead unjust enrichment and OVERRULES Defendant’s demurrer to
the second cause of action for unjust enrichment.
4. Intentional
and Negligent Misrepresentation
The elements of a claim for intentional
misrepresentation are “(a) a misrepresentation (false representation,
concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c)
intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.”
(Hinesley v. Oakshade Town Ctr.
(2005) 135 Cal.App.4th 289, 294.) The elements of a cause of action for
negligent misrepresentation include “[m]isrepresentation of a past or existing
material fact, without reasonable ground for believing it to be true, and with
intent to induce another’s reliance on the fact misrepresented; ignorance of
the truth and justifiable reliance on the misrepresentation by the party to
whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates,
Inc. (2004) 115 Cal.App.4th 1145, 1154 [quotation marks omitted].) The
facts constituting the alleged fraud must be alleged factually and specifically
as to every element of fraud, as the policy of “liberal construction” of the
pleadings will not ordinarily be invoked. (Lazar
v. Superior Court (1996) 12 Cal.4th 631, 645.)
Defendant argues Plaintiff has not
alleged either of these causes of action with the requisite level of heightened
specificity. The Complaint alleges Defendant misrepresented that he carried worker’s
compensation insurance. (Complaint at ¶¶7, 16, 27.) Alternatively, the
Complaint asserts Defendant did not disclose that he did not have worker’s
compensation insurance. (Id. at ¶26.) It further alleges Defendant knew
these misrepresentations were false or had no reasonable basis for believing
them to be true, and that Plaintiff reasonably relied on them to it detriment.
(Id. at ¶¶29-30, 34-35.) The Complaint also claims Defendant
“intentionally did not advise Plaintiff of the truth of the above-described
material facts.” (Id. at ¶29.) However, as set forth above, the question
is not simply whether Defendant acted intentionally in making
misrepresentations or concealing material facts from Plaintiff, Plaintiff must
allege Defendant acted with the intent to induce reliance by Plaintiff. Neither
cause of action contains factual allegations as to Defendant’s intent to induce
Plaintiff’s reliance. The Court thus SUSTAINS Defendant’s demurrer to the third
and fourth causes of action with leave to amend.
Defendant also argues Plaintiff
cannot assert either cause of action for misrepresentation against him because
the Complaint alleged Defendant made these misrepresentations to Plaintiff’s
principals and not to Plaintiff. As set forth in the Complaint, Plaintiff is a
corporation, and it is a “well-established rule that a corporation acts through
its agents and employees.” (Provost v. Regents of University of California
(2011) 201 Cal.App.4th 1289, 1296.) Defendant cites to no authority for the proposition
that a corporate entity cannot bring a claim for intentional or negligent
misrepresentation based on misrepresentations made to the corporation’s agents
and employees, and the Court is not aware of any such authority. Accordingly,
the Court rejects this argument.
5. Unfair
Business Practices
California’s Unfair Competition Law
(“UCL”), codified at Business and Professions Code section 17200 et seq.,
prohibits “any unlawful, unfair, or fraudulent business act or practice.” (Bus.
& Prof. Code § 17200; see Clark v. Superior Court (2010) 50 Cal.4th
605, 610.) A UCL plaintiff must plead and prove the defendant engaged in a
business practice which was either unlawful (i.e., is forbidden by law) or
unfair (i.e., harm to victim outweighs any benefit) or fraudulent (i.e., is
likely to deceive members of the public). (Albillo v. Intermodal Container
Services, Inc. (2003) 114 Cal.App.4th 190, 206.) “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.)
A private plaintiff has standing to
bring a UCL claim if the plaintiff “has suffered injury in fact and has lost
money or property as a result of the unfair competition.” (Bus. & Prof.
Code § 17204.) In other words, the plaintiff must have suffered a “loss or
deprivation of money or property sufficient to qualify as injury in fact, i.e.,
economic injury … .” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310,
322.) In drafting the UCL, “the Legislature deliberately traded the attributes of
tort law for speed and administrative simplicity. As a result, to state a claim
under the act one need not plead and prove the elements of a tort. Instead, one
need only show that members of the public are likely to be deceived.” (Bank of
the West v. Superior Court (1992) 2 Cal.4th 1254, 1266-1267 [internal
quotation omitted].)
Plaintiff’s cause of action for
unfair business practices is based on Defendant’s alleged violation of Business
& Professions Code §§ 7107, 7109, 7113, and 7116 by falsely representing he
had worker’s compensation insurance, departing from accepted trade standards
for construction work, failing to complete the project for the agreed upon
price, and providing a false insurance certificate to Plaintiff. (Complaint at
¶38.) These violations are alleged to satisfy the “unlawful” prong of the UCL.
Defendant argues Plaintiff has not
sufficiently alleged harm to the general public. But as Plaintiff points out,
the Legislature has specifically determined the actions of employers who
failure to secure payment of workers’ compensation impacts the general public,
as they “harm employees, cause unfair competition for honest employers, and
increase costs to taxpayers.” (Insurance Code § 1871.) Defendant also argues
Plaintiff “cannot pray personal damages” in connection with a UCL cause of
action. Plaintiff’s UCL claim “seeks restitution of all money paid to defendant
by any consumer, including, but not limited to, plaintiff.” (Complaint at ¶40.)
As the California Supreme Court explained in Korea Supply, overall, only
two remedies are available to redress violations of the UCL: injunctive relief and
restitution. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th
1134, 1147 [plaintiffs may “combat unfair competition by seeking an injunction against
unfair business practices. Actual direct victims of unfair competition may obtain
restitution as well”].) Plaintiff’s Complaint thus properly seeks restitution.
Defendant’s demurrer to the fifth cause of action for unfair business practices
is OVERRULED.
6. Negligence
In order to state a claim for
negligence, Plaintiff must allege the elements of (1) “the existence of a legal
duty of care,” (2) “breach of that duty,” and (3) “proximate cause resulting in
an injury.” (McIntyre v.
Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.) Defendant argues
Plaintiff cannot state a claim for negligence against him concerning his
performance of the remodeling work because Plaintiff was not a party to the
construction contract.
It is well established that
privity is not required to assert a claim for negligence. “The determination whether in a specific case the
defendant will be held liable to a third person not in privity is a matter of
policy and involves the balancing of various factors, among which are the
extent to which the transaction was intended to affect the plaintiff, the
foreseeability of harm to him, the degree of certainty that the plaintiff
suffered injury, the closeness of the connection between the defendant's
conduct and the injury suffered, the moral blame attached to the defendant's conduct,
and the policy of preventing future harm.” (Biakanja v. Irving
(1958) 49 Cal.2d 647, 650.) As the Court noted in Beacon Residential Community
Assn. v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th 568, “The declining
significance of privity has found its way into construction law” and Court have
recognized the standing of third-parties to bring claims for negligence related
to construction. (Id. at 574-584.)
Plaintiff’s opposition offers
argument as to how the Biakanja factors are satisfied here. Defendant offers no
response to this argument other than to argue the Biakanja factors are
irrelevant because Plaintiff was not in privity with Defendant. Contrary to
Defendant’s claims, the Biakanja factors apply expressly because there
is a lack of privity between Plaintiff and Defendant. The Court finds the
Complaint adequately pleads the existence of a duty owed by Defendant.
Defendant also argues Plaintiff
has not sufficiently alleged damages. The Court disagrees. Paragraphs 10, 12,
and 13 of the Complaint, which are incorporated into Plaintiff’s negligence
claim, assert Plaintiff suffered damages in the form of paying $258,020 for
work that was not completed, spending $100,000 on alternate contractors to
finish the construction project, spending $100,000 to repair work done by
Defendant. The Court finds Plaintiff has adequately pled damages in connection
with its negligence claim. Defendant’s demurrer to the sixth cause of action
for negligence is OVERRULED.
7. Declaratory
Relief
Defendant’s demurrer to
Plaintiff’s seventh cause of action for declaratory relief is based on the same
assertions of lack of privity or duty which the Court has rejected above in
connection with Plaintiff’s claims for negligence and breach of contract. The
same result follows here and Defendant’s demurrer to this cause of action is
OVERRULED.
8. Disgorgement
Plaintiff seeks disgorgement of
the $258,020 it paid to Defendant pursuant to Business & Professions Code §
7031(b), which provides “a person who utilizes the services of an unlicensed
contractor may bring an action in any court of competent jurisdiction in this
state to recover all compensation paid to the unlicensed contractor for
performance of any act or contract.” Defendant argues Plaintiff cannot seek
disgorgement of the money it paid to him because Plaintiff was not a party to
the construction contract. As set forth above, the Complaint sufficiently
alleges Plaintiff was a third party beneficiary with standing to enforce the
contract. “Third party beneficiaries may under appropriate circumstances
possess the rights of parties to the contract” (Bily v. Arthur Young &
Co. (1992) 3 Cal.4th 370, 406, fn. 16.) As the Complaint alleges Plaintiff
was a third party beneficiary of the contract and paid money to Plaintiff in
satisfaction of that contract, the Court finds Plaintiff has standing to bring
a claim for disgorgement of the sums it paid to Defendant pursuant to that
contract under Business & Professions Code § 7031(b). The Court OVERRULES
Defendant’s demurrer to the eighth cause of action for disgorgement.
9. Conversion
“Conversion is the wrongful
exercise of dominion over the property of another. The elements of a conversion
claim are: (1) the plaintiff’s ownership or right to possession of the
property; (2) the defendant’s conversion by a wrongful act or disposition of
property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th
1225, 1240.)
Plaintiff’s cause of action for
conversion is based on Defendant’s alleged conversion of two sinks and
associated plumbing which Plaintiff alleges were rightfully owned by Plaintiff.
(Complaint at ¶67.) Defendant claims the sinks in question were owned by Dr.
Feiz and were not converted by Defendant but instead were “trashed and left
onsite.” (Demurrer at 9.) Such factual claims go beyond the scope of a
demurrer, which is limited to the four corners of the Complaint and judicially
noticeable information. The Complaint alleges Plaintiff owned the sinks in
question and Defendant wrongfully converted them. Defendant’s contrary
assertions go to the underlying merits of Plaintiff’s conversion claim and not
to the sufficiency of its pleading. Defendant’s demurrer to the tenth cause of
action for conversion is OVERRULED.
10. Violation
of Penal Code § 496
Penal Code § 496 imposes criminal
liability on a 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.” Plaintiff’s claim for
violation of section 496 incorporates the allegations of the prior cause of
action for conversion regarding Defendant’s alleged taking of two sinks
belonging to Plaintiff. (Complaint at ¶70.)
Defendant argues section 496 is a
criminal statute and thus cannot be asserted in a civil action. However,
section 496(c) expressly gives a private right of action to “Any person who has
been injured by a violation” of section 496. Defendant also claims “Plaintiff
has not and cannot place a required value for this criminal statute.” (Reply at
4.) But section 496 does not require a minimum threshold to assert a violation
of the statute, it merely provides the offense shall be punished as a
misdemeanor offense if the value of the property does not exceed $950. There is
no minimum threshold to assert a private cause of action under section 496(c).
Defendant’s demurrer to the eleventh cause of action is OVERRULED.
11. Misjoinder
Defendant alleges Plaintiff “is
misjoined because he lacks the legal capacity and standing to sue because he
cannot and does not allege any factual contract, privity, duty, or obligation
due from defendant.” (Demurrer at 10.) This is a restatement of the same
arguments the Court has rejected above in the context of Defendant’s demurrer
to the causes of action for breach of contract and negligence and this
misjoinder argument thus fails for the same reasons.
12. Uncertainty
A special demurrer
for uncertainty under Section 430.10(f) is disfavored and will only be
sustained where the pleading is so unintelligible that a defendant cannot
reasonably respond—i.e., cannot reasonably determine what issues must be
admitted or denied, or what counts or claims are directed against him/her. (Khoury
v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even
if the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Id.) The Court has reviewed the Complaint and finds
it is not ambiguous or unintelligible such that defendant cannot reasonably
respond. The Complaint sets out a straightforward basis for the claims being
asserted against Defendant and expressly advises Defendant of the claims being
raised against him. Defendant’s arguments concerning privity and duty do not render
the Complaint uncertain.
Conclusion
Defendant’s demurrer is SUSTAINED as to the third and fourth
causes of action with 30-days’ leave to amend. In all other respects, the
Demurrer is OVERRULED.