Judge: Deirdre Hill, Case: 20TRCV00891, Date: 2022-08-04 Tentative Ruling

Case Number: 20TRCV00891    Hearing Date: August 4, 2022    Dept: M

Hearing Date:                          August 4, 2022

Moving Parties:                      Defendants Jayem Enterprises, Inc. and Jack Goldberg, as an

individual and Trustee of the Goldberg Family Trust Dated April 23, 1997

Responding Party:                  Plaintiffs Avalino Garcia, Joe Martinez, Gustalvo Arellano, and Corey Emanuel

Motion for Judgment on the Pleadings

            The court considered the moving, opposition, and reply papers.

RULING

            The motion is GRANTED, without leave to amend.  The court considered the opposition even though it was filed markedly late.

BACKGROUND

On December 20, 2020, plaintiffs Avalino Garcia, Joe Martinez, Gustalvo Arellano, and Corey Emanuel filed a complaint against Jack Goldberg, Millee Goldberg, Jayem Enterprises, Inc., ACME Metals & Steel Supply, Inc., and the trustees of the Goldberg Family Trust Dated April 23, 1997, for (1) fraud in the inducement, (2) breach of oral contract, (3) breach of the covenant of good faith and fair dealing, (4) tortious breach of the covenant of good faith and fair dealing, (5) promise made without intent to perform, (6) intentional misrepresentation, (7) negligent misrepresentation, and (8) fraud and deceit.

LEGAL AUTHORITY

A defendant may move for judgment on the pleadings if the complaint does not state facts sufficient to constitute a cause of action against that defendant. CCP § 438(c)(1)(B). The standard for granting a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer. Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1064. Thus, it may be granted if, from the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law. CCP § 438(d); Saltarelli & Steponovich v. Douglas (1995) 40 Cal.App.4th 1, 5.

In considering a motion for judgment on the pleadings, courts consider whether the factual allegations, assumed true, are sufficient to constitute a cause of action. Fire Ins. Exchange v. Sup. Ct. (2004) 116 Cal.App.4th 446, 452-453. Judgment on the pleadings, like a general demurrer, does not lie as to a portion of a cause of action and, if any part of a cause of action is properly pleaded, the motion will be denied. Id. at p. 452. 

A party moving for judgment on the pleadings must meet and confer in person or telephonically with the party who filed the pleading that is subject to the motion to determine if an agreement can be reached regarding the claims raised in the motion. CCP § 439(a). The moving party must file a declaration detailing the meet and confer efforts.  CCP § 439(a)(3).)

DISCUSSION

Defendants Jayem Enterprises, Inc. and Jack Goldberg, as an individual and Trustee of the Goldberg Family Trust Dated April 23, 1997, move for judgment on the pleadings on the ground that the complaint fails to state sufficient facts to constitute each of the eight causes of action.

Meet and Confer

            Defendants have filed a code-compliant meet and confer declaration. Motion, Demirjian Decl., ¶ 2.

1st cause of action for fraud in the inducement

The elements of a fraud claim are (1) misrepresentation; (2) knowledge of falsity; (3) intent to deceive; and (4) reliance and resulting damage. Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal. App. 4th 282, 290. “To withstand demurrer, the facts constituting every element of fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal. App. 4th 772, 782.

“[I]n a promissory fraud action, to sufficiently allege[] defendant made a misrepresentation, the complaint must allege (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false.” Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060. “To sufficiently plead the first requirement, that the defendant made a promise, the complaint must state ‘“facts which “show how, when, where, to whom, and by what means the representations were tendered.”’” [Citation.]’ [Citation.]” Id. [emphasis added].)

            Here, plaintiffs have alleged facts sufficient to constitute misrepresentation against the Defendants. Plaintiffs allege that defendant Jack Goldberg, as an officer of his Jayem (previously named ACME), promised plaintiffs that the company would reward Plaintiffs with certain financial incentives (including a year-end bonus) for remaining with the company during difficult times. Compl., ¶¶ 5, 31-33, 42, 43, 44. When the defendants made the promises, they had no intention of performing them. Id. ¶¶ 69. The promises were false because when the plaintiffs sent defendants a letter on October 3, 2019, formally demanding payment of the sums promised to them for staying on as employees, the company denied that any promises were made to the plaintiffs and rejected their claims outright. Id. ¶¶ 39, 40.

However, “there are two causation elements in a fraud cause of action. First, the plaintiff’s actual and justifiable reliance on the defendant’s misrepresentation must have caused him to take a detrimental course of action. Second, the detrimental action taken by the plaintiff must have caused his alleged damage.” Beckwith, supra, 205 Cal.App.4th at p. 1062.

Here, plaintiffs have failed to allege facts sufficient to constitute actual and justifiable reliance.

“‘“[A]ctual reliance occurs when a misrepresentation is ‘“‘an immediate cause of [a plaintiff’s] conduct, which alters his legal relations,’”’ and when, absent such representation,’ the plaintiff ‘“‘“would not, in all reasonable probability, have entered into the contract or other transaction.”’”’ [Citation.]” Beckwith, supra, 205 Cal.App.4th at pp. 1062-1063. “To allege actual reliance with the requisite specificity, ‘[t]he plaintiff must plead that he believed the representations to be true ... and that in reliance thereon (or induced thereby) he entered into the transaction. [Citation.]’ [Citation.]” Id. at 1063.

“‘“‘In an action for [common law] fraud, damage is an essential element of the cause of action.”’ [Citation.] ‘“‘Misrepresentation, even maliciously committed, does not support a cause of action unless the plaintiff suffered consequential damages.’’”’ [Citation.]” Beckwith, supra, 205 Cal.App.4th at p. 1064. “[I]t is not enough for the complaint to allege damage was suffered. The fraud plaintiff must also allege his damages were caused by the actions he took in reliance on the defendant’s misrepresentations.” Id. (emphasis added).

Here, the complaint fails to allege facts sufficient to show actual reliance and the detrimental course of action the plaintiffs took in reliance of the alleged promises.

The complaint alleges that each plaintiff was already an employee when the alleged promises were made. The complaint then alleges that the plaintiffs would not have stayed at the company if they knew the alleged promises were false. However, the complaint fails to allege what detriment the plaintiffs suffered (if any) as a result of staying in the company.

For example, the complaint does not allege that plaintiffs had other employment options and were ready to resign but changed their minds because they would receive their share of the sale proceeds that Goldberg had promised. Garcia alleges that Goldberg approached him in 2013 and offered him a general manager position with ACME/Jayem. Compl., ¶ 20. Garcia then alleges that he was reluctant to work for the company because he was living out of state and had already established a successful career. Id. ¶ 21. At a dinner to discuss the offer, Goldberg “advised him that the Company was going to be put up for sale and needed a competent General Manager to firmly take the reins of the Company in order to make it marketable for a future purchaser.” Id. ¶ 21. Based on those representations, Garcia accepted the general manager position. Id. ¶ 22. Therefore, Garcia left a successful career out of state to join the company because Goldberg told him that the company needed a general manager and it was going to be sold. Garcia did not accept the offer in reliance of the alleged promise that he would get a share of the sale proceeds once the company was sold or some other financial incentive.

Mere failure to perform is not sufficient to establish promissory fraud. Tenzer v. Superscope (1985) 39 Cal. 3d 18, 30-31 (“‘something more than nonperformance is required to prove the defendant’s intent not to perform his promise.’ . . . [I]f plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.”) (citations omitted).

Plaintiffs have failed to allege something more than the nonperformance of an oral promise.

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.” Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290. To satisfy that burden, a plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Here, plaintiffs have failed to meet their burden of articulating how they can amend their complaint and how the amendment will change the legal effect of the pleading. Instead, their opposition only states (without explaining) that the complaint states sufficient to constitute each cause of action.

            Accordingly, the court grants the motion as to the first cause of action for fraud in the inducement, without leave to amend.

2nd cause of action for breach of oral contract

Plaintiffs allege that the parties entered into oral agreements to stay on as valued and dedicated employees of the Company until it was sold, at which time they would receive a significant benefit promised by the defendants, as alleged herein. Complaint, ¶ 51.

There is no enforceable contract until there has been a complete “meeting of the minds” on all material points. See Krasley v. Superior Court (1980) 101 Cal. App. 3d 425, 431-32. A missing or inadequately defined material term can render a contract unenforceable. See Weddington Productions, Inc. v. Flick (1998) 60 Cal. App. 4th 793, 815-16. A contract “is unenforceable if the parties fail to agree on a material term or if a material term is not reasonably certain.” Lindsay v. Lewandowski (2006) 139 Cal. App. 4th 1618, 1623 (citation omitted).

In ruling on defendant Mille Goldberg’s demurrer on February 18, 2022, the court made the following findings concerning the second cause of action for breach of oral contract: “The allegations are insufficient as the material terms are either missing or are not reasonably certain. Plaintiffs allege that two of the plaintiffs are entitled to 5% of the proceeds but then it changed to 2.5%. Plaintiffs also allege that they were promised a ‘minimum’ of one year’s salary. Further, the allegation that Goldberg promised that they would be ‘rewarded’ is vague.” Minute Order dated February 18, 2022, p. 5, first full paragraph.

In light of the court’s ruling on February 18, 2022, and the plaintiffs’ failure to explain how they can amend their complaint to render it sufficient, the court grants the motion as to the second cause of action for breach of oral contract, without leave to amend.

3rd cause of action for breach of the covenant of good faith and fair dealing

To state a cause of action for breach of the implied covenant of good faith and fair dealing, a plaintiff must allege that the “conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal. App. 3d 1371, 1395. “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” Id. “Thus, absent those limited cases where a breach of a consensual contract term is not claimed or alleged, the only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” Id.

            In its demurrer ruling on February 18, 2022, the court found that the third cause of action “relies upon the same allegations of the 2nd cause of action for breach of an oral contract and is thus superfluous.” Minute Order dated February 18, 2022, p. 5.

In light of that ruling and the plaintiffs’ failure to explain how they can amend the complaint to render it sufficient, the court grants the motion as to the third cause of action for breach of the covenant of good faith and fair dealing, without leave to amend.

4th cause of action for tortious breach of the covenant of good faith and fair dealing

            As ruled by the court on February 18, 2022, a claim for “tortious breach of the implied covenant is generally limited to insurance contracts, which is not applicable here.” Minute Order dated February 18, 2022, p. 5, citing Foley v. Interactive Data Corp. (1988) 47 Cal. 3rd 664.

            Plaintiffs have failed to explain how they can amend the complaint to render it sufficient. Therefore, the court grants the motion as to the fourth cause of action for tortious breach of the covenant of good faith and fair dealing, without leave to amend.

5th cause of action for promise made without intent to perform

            The court has found that the complaint has failed to state facts sufficient to constitute causation, a required element for promissory fraud. The court has also found that plaintiffs have failed to articulate how they can amend their complaint to render it sufficient.

            Therefore, the court grants the motion as to the fifth cause of action for promise made without intent to perform, without leave to amend.

6th cause of action for intentional misrepresentation

            The court has found that the complaint has failed to state facts sufficient to constitute causation, a required element for intentional misrepresentation. The court has also found that plaintiffs have failed to articulate how they can amend their complaint to render it sufficient.

            Therefore, the court grants the motion as to the sixth cause of action for intentional misrepresentation, without leave to amend.

7th cause of action for negligent misrepresentation

“[T]he same elements of intentional fraud also comprise a cause of action for negligent misrepresentation, with the exception that there is no requirement of intent to induce reliance [citation] ….” Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 845.

Here, the court has found that the complaint has failed to state facts sufficient to constitute causation, a required element for intentional misrepresentation. The court has also found that plaintiffs have failed to articulate how they can amend their complaint to render it sufficient.

Therefore, the court grants the motion as to the seventh cause of action for promise made without intent to perform, without leave to amend.

8th cause of action for fraud and deceit

The court has found that the complaint has failed to state facts sufficient to constitute causation, a required element for fraud and deceit. The court has also found that plaintiffs have failed to articulate how they can amend their complaint to render it sufficient.

Therefore, the court grants the motion as to the eighth cause of action for fraud and deceit, without leave to amend.

Attorney’s Fees

Defendants seek “judgment on the pleadings to allegations for recovery of attorney’s fees.” Notice of Motion, p. 4:10 (emphasis removed). Defendants argue that the prayer for attorney’s fees in Paragraph 55 of the complaint violates Civil Code § 1717.

However, a demurrer (and therefore a motion for judgment on the pleadings) is an improper vehicle to attack the relief sought in a complaint. Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1561-1562. An attack on the pleadings concerns the sufficiency of a cause of action pled, and even if a demand for relief is improper, it may not vitiate an otherwise valid cause of action. Ibid.

            Therefore, the court declines to grant the motion on the ground that the request for attorney’s fees is improper.

The motion is GRANTED, without leave to amend.

The court orders Jayem Enterprises, Inc. and Jack Goldberg, as an individual and Trustee of the Goldberg Family Trust Dated April 23, 1997, in Complaint filed by Avalino Garcia, et al. on 12/01/2020 dismissed without prejudice.

            Defendants are ordered to give notice of ruling.