Judge: Daniel S. Murphy, Case: 22STCV26639, Date: 2023-04-10 Tentative Ruling

Case Number: 22STCV26639    Hearing Date: April 10, 2023    Dept: 32

BACKGROUND

            On September 2, 2022, Plaintiff New Vision Contractors, Inc. filed this action against Defendant Stealth Consulting Management Inc., alleging causes of action for (1) breach of contract, (2) false promise, and (3) unjust enrichment.

            The complaint is about an alleged sublease between Plaintiff and Defendant for Defendant to occupy a commercial property in Los Angeles. (Compl. ¶ 11.) According to the sublease, the term of Defendant’s occupancy was to be January 15, 2021 to January 31, 2022. (Id., ¶ 14.) Upon execution of the contract, Defendant was to pay $25,000 directly to the master lessor, consisting of a security deposit and approximately one month rent. (Id., ¶ 15.) Defendant was then responsible for monthly rent paid directly to the master lessor. (Id., ¶ 16.) After executing the sublease, Defendant never moved in and has not paid any money to Plaintiff or the master lessor. (Id., ¶¶ 17-18.)

            On February 27, 2023, Defendant filed the instant demurrer to all three causes of action in the complaint.

LEGAL STANDARD

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.) A complaint will survive demurrer if it sufficiently apprises the defendant of the issues, and specificity is not required where discovery will clarify the ambiguities. (See Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 608.) All reasonable inferences are drawn in favor of the complaint. (Kruss v. Booth (2010) 185 Cal.App.4th 699, 713.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court notes that Defendant has complied with the meet and confer requirement. (See Lamoureux Decl. ¶¶ 2-3.)

DISCUSSION

I. Breach of Contract

To establish breach of contract, a plaintiff must show: (1) the contract existed, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

a. Statute of Frauds

            Certain contracts, including “[a]n agreement for the leasing for a longer period than one year,” are “invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent.” (Civ. Code, § 1624(a)(3).)

            Defendant argues that the breach of contract claim fails because the contract attached to the complaint is not signed by either party. But the fact that the copy shown in the attached exhibit is not signed does not mean the parties never executed the agreement. Plaintiff has alleged that the parties executed the written contract, presumably by signing it. (See Compl. ¶¶ 10, 17.) Whether Defendant actually signed the lease is a matter of proof outside the purview of a demurrer.

Defendant cites no authority for the proposition that a complaint must attach the actual executed contract. In fact, no contract needs to be attached at all, as a plaintiff can state a breach of contract by simply pleading “the legal effect of the contract.” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.) The attached exhibit does not contradict the allegations because the terms stated in the exhibit are consistent with the alleged terms.

b. Existence of a Contract

Defendant argues that the complaint fails to plead the existence of a contract since it was not signed and Defendant never moved in. Defendant contends that this shows the parties never had a meeting of the minds, and Defendant never accepted the offer.    

However, as discussed above, the complaint does not reveal on its face that the contract was not signed. This is a factual issue. Additionally, Defendant’s choice to not move in is immaterial to whether a contract existed and was executed. According to the complaint, the terms of the sublease required Defendant to pay rent during a certain period in exchange for access to the premises. Defendant’s failure to pay rent constitutes a breach regardless of whether Defendant actually moved in, so long as Plaintiff granted access to the premises.

c. Plaintiff’s Performance

Defendant argues that Plaintiff did not perform or have its performance excused because Defendant never moved in. However, as discussed above, Defendant’s choice not to move in is immaterial. Plaintiff had no obligation under the contract to force Defendant to move in. Rather, Plaintiff alleges that it performed by making the premises available. (Compl. ¶ 27.) There is no indication that Plaintiff prevented Defendant from taking possession. Under the complaint, Plaintiff performed while Defendant did not. Therefore, a breach of contract has been properly stated.

The demurrer is OVERRULED as to the first cause of action.

II. Fraud

            “The elements of fraud that will give rise to a tort action for deceit are: ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974, quoting Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) However, “conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law. An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 551, internal citations omitted.)

            Here, Plaintiff alleges nothing more than a failure to abide by contract terms. According to the complaint, the false “promise” that Defendant allegedly made is simply the “promise to Plaintiff to make all rent payments outlined in the Sublease.” (Compl. ¶ 31.) Plaintiff argues that the economic loss rule does not apply to instances of fraudulent inducement. However, the complaint alleges no specific statements that induced Plaintiff into executing the sublease. Again, the only alleged promise is that made in the sublease itself. Defendant’s failure to perform that “promise” is really just a failure to perform the contract terms. Plaintiff has not alleged any other statements, and certainly not with the requisite specificity. (See Lazar, supra, 12 Cal.4th at p. 645.)   

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

III. Unjust Enrichment

            The elements for a claim of unjust enrichment are: (1) receipt of a benefit; and (2) unjust retention of the benefit at the expense of another. (Elder v. Pacific Bell Telephone Co. (2012) 205 Cal.App.4th 841, 857.) Courts have construed unjust enrichment claims as quasi-contract claims seeking restitution. (Rutherford Holdings LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.)

            Defendant argues that there is no unjust enrichment because Defendant gained nothing, since it never moved in. Once again, Defendant’s choice not to move in does not mean Plaintiff never conferred a benefit. The complaint alleges that Plaintiff made the premises available to Defendant and refrained from moving in. (Compl. ¶ 41.) This sufficiently establishes a benefit conferred. Assuming it is true that Defendant never paid for this benefit, restitution would be warranted.  

            Defendant argues that Plaintiff was not harmed because Plaintiff “refrained” from moving in, which is a personal choice, as opposed to being prevented from moving in. First, unjust enrichment does not require a benefit to be forcibly conferred. Additionally, Plaintiff was under contract to provide the premises to Defendant. Although Defendant never moved in, that does not mean Plaintiff was free to occupy the premises for the duration of the sublease. The complaint adequately pleads a claim for unjust enrichment.

            The demurrer is OVERRULED as to the third cause of action.

CONCLUSION

            Defendant’s demurrer is SUSTAINED without leave to amend as to the second cause of action and OVERRULED in all other respects.