Judge: Daniel S. Murphy, Case: 23STCV31214, Date: 2024-04-17 Tentative Ruling

Case Number: 23STCV31214    Hearing Date: April 17, 2024    Dept: 32

BACKGROUND

            On December 21, 2023, Plaintiff Trocadero International filed this action for breach of contract and fraud against Defendants Dr. Sebi, LLC; Dr. Sebi’s Office, Inc.; and Agustin Ruiz Miller.

The complaint alleges that Plaintiff entered into an oral agreement with Defendants to provide packaging for Defendants’ tea product in exchange for $58,462.80. Defendants have allegedly failed to pay the balance of $30,082.80.

On March 13, 2024, Defendants Dr. Sebi’s Office, Inc. (DSOI) and Agustin Ruiz Miller (Miller) filed the instant demurrer to the complaint. Plaintiff filed its opposition on April 4, 2024. Defendants filed their reply on April 10, 2024.

LEGAL STANDARD

A demurrer for sufficiency tests whether a pleading states a cause of action or defense. (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 pleading, as it stands, unconnected with extraneous matters, states a cause of action or defense. (Hahn, supra, 147 Cal.App.4th at 747.)

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 Defendants have complied with the meet and confer requirement. (See Pizarro Decl.)

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 breach of contract can be alleged by simply “plead[ing] the legal effect of the contract rather than its precise language.” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.)

The complaint sets forth the basic elements for breach of contract. (See Compl. ¶¶ 8-11.) Defendants do not dispute this but argue that the claim cannot be asserted against Miller because he is not a party to the contract in his individual capacity and could not have conspired with his employer (DSOI) in his capacity as an employee. Defendants argue that according to the complaint, Miller was only acting on behalf of DSOI and not in his individual capacity.

These are factual matters that cannot be resolved on a demurrer. The complaint asserts breach of contract against all of the defendants. For pleading purposes, it must be assumed true that Plaintiff contracted with all of the defendants and that all of the defendants breached the contract by failing to pay. It may be reasonably inferred that all of the defendants, including Miller, received consideration in the form of packaging services. Plaintiff alleges in the fraud claim that Miller said he was authorized to act on behalf of Dr. Sebi, not that Miller was actually acting on behalf of Dr. Sebi. (Compl. ¶ 13.) That allegation does not constitute an admission that Miller only acted on behalf of DSOI. Furthermore, Plaintiff alleges that Miller promised to personally pay for Plaintiff’s services: “Miller orally promised to Plaintiff that he and Dr. Sebi would pay all sums due Plaintiff under the Agreement.” (Compl. ¶ 13.) This suggests that Miller dealt with Plaintiff in his personal capacity and may be personally liable for the debt. Even if Miller acted on behalf of DSOI, he could also have been acting in his individual capacity at the same time. Neither the allegations in the complaint nor Defendant’s legal authority foreclose this possibility.     

Defendants also argue that if Plaintiff is claiming Miller promised to answer for DSOI’s debt, the alleged oral promise violates the statute of frauds. (See Civ. Code, § 1624(a)(2).) This again is a factual issue. It cannot be determined at the pleading stage whether Miller was promising to cover DSOI’s debt or personally promising to pay.

Therefore, 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.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. (Lazar, supra, 12 Cal.4th at p. 645.)

Here, the fraud claim alleges the following: “In or about April, 2023, at the time the Agreement was made, defendant Miller represented to Plaintiff that he was authorized to act on behalf of Dr. Sebi, and that Miller was in charge of the ‘tea deal’ which was the subject of the Agreement. In April, 2023, Miller orally promised to Plaintiff that he and Dr. Sebi would pay all sums due Plaintiff under the Agreement. This representation was made by Miller to Richard Benichou and Alex Benichou, Plaintif’s representatives, over the telephone.” (Compl. ¶ 13.) This contains the requisite specificity.

Defendants reiterate their argument that Miller was not acting on his own behalf or for his own benefit. However, the allegation is that Miller said he was authorized to act on behalf of Dr. Sebi, not that Miller was actually doing so. It remains a factual issue whether Miller was speaking on his own behalf or someone else’s. Furthermore, fraud does not require the defendant to speak on his own behalf. If Miller made a false representation on behalf of DSOI, he still made a false representation and may therefore be liable for fraud. Defendants cite no authority absolving an employee from fraud simply because the employee was acting within the scope of employment. Fraud also does not require the defendant to personally benefit from the wrongdoing; it only requires damage to the plaintiff.

Lastly, Defendants argue that for promissory fraud, Plaintiff fails to allege nonperformance by Defendants. However, the complaint must be read as a whole. The complaint clearly alleges that Defendants failed to perform by refusing to pay. (See Compl. ¶ 10.) The fraud claim incorporates all prior allegations. (Compl. ¶ 12.)  

Therefore, the demurrer is overruled as to the second cause of action.

CONCLUSION

            Defendants DSOI’s and Miller’s demurrer is OVERRULED.