Judge: Edward B. Moreton, Jr, Case: 23SMCV05304, Date: 2024-09-26 Tentative Ruling
Case Number: 23SMCV05304 Hearing Date: December 13, 2024 Dept: 205
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CARL BARNEY, Plaintiff, v. SIENNA CHARLES, LLC, et al., Defendants. |
Case No.:
23SMCV05304 Hearing Date: December 13, 2024 [TENTATIVE]
order RE: DEFENDANTs’ demurrer to and motion to strike third AMENDED complaint |
BACKGROUND
This
is a breach of contract and fraud case.
Defendants Sienna Charles LLC and Jaclyn Sienna India-Reinert (“Ms.
India”) provide “ultra-luxury” travel services for high-wealth individuals. (Third Amended Complaint (“TAC”) ¶8.)
In mid-2021, Plaintiff Carl Barney “desired to obtain the services of a
high level, full service VIP travel agency to arrange all of the details for
his three-week trip to Europe.” (Id. ¶9.) He therefore spoke with Defendants about
their services. (Id. ¶10.)
Ms.
India assured Plaintiff that she knew how to get her clients access to
exclusive experiences that would otherwise be unavailable to them and would be
able to provide “extraordinary private travel.”
(Id.) She promised Plaintiff that she would “take
care of all of the details” for his travel.
(Id.)
Relying
on these oral representations, Plaintiff paid $75,000 for the Europe trip and
multiple additional trips he desired to have planned over a one year period
(“July 1st Agreement”). (Id. ¶ 11.) Prior to making the payment of $75,000,
Plaintiff was not provided with any written terms or conditions or written
invoices. (Id.)
Plaintiff claims Defendants breached the July
1st Agreement by refusing to provide “anything approaching competent
services and ignoring communications from Plaintiff.” Instead, Plaintiff’s staff was forced to
provide the services Defendants promised to provide. (Id. ¶13.) Specifically, Plaintiff’s staff was forced to
book VIP suites, arrange last minute flights that could have been scheduled
weeks in advance and book other appointments for things such as required
Covid-19 testing. (Id.)
Pursuant to the July 1st
Agreement, Plaintiff then sought to use Defendants’ services for a three-week
trip to the Middle East. (Id. ¶14.) Plaintiff asked Defendants to prepare a
proposed itinerary by September 7, 2021.
(Id. ¶
16.) Defendants ignored the request, instead providing a
proposed “agenda” on September 14, 2021 which failed to include any specific
dates (or even number of days) for visiting any of the countries and no details
of available activities that Defendants could curate. (Id.)
This action ensued.
The
operative TAC alleges claims for (1) breach of contract, (2) fraud, (3) unfair
business practices, (4) money had and received, (5) rescission of contract
(void contract), (6) quasi-contract (void contract due to indefiniteness) and
(7) conversion.
This
hearing is on Defendants’ demurrer to and motion to strike the TAC. Defendants’ demurrer is based on the grounds that
(1) the TAC does not allege any actual contract or contractual terms; (2)
Defendants’ alleged breach of contract doesn’t equal fraud, and the fraud claim
is not alleged with specificity; (3) Plaintiff has not alleged any unlawful,
unfair or fraudulent business practice; (4) recission is not a valid cause of
action; (5) the claim for quasi contract-void contract improperly seeks an
advisory opinion; and (6) Plaintiff has no claim for conversion because one
cannot convert a non-specific sum of money.
Defendants also move to strike (1) Plaintiff’s punitive damages
allegations because Plaintiff’s fraud claim fails, and (2) Plaintiff’s claim
for unfair business practices based on Sienna’s supposed lack of a proper agent
for service of process.
REQUEST FOR JUDICIAL
NOTICE
Defendants ask the Court to take judicial
notice of records from the Secretary of State’s website. The Court grants the request pursuant to Cal.
Evid. Code §§ 452(c) and 452 (h).
LEGAL STANDARD
“[A] demurrer tests the legal sufficiency of
the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235
Cal.App.4th 385, 388.) A demurrer can be
used only to challenge defects that appear on the face of the pleading under
attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994 (in ruling on a demurrer, a court may not
consider declarations, matters not subject to judicial notice, or documents not
accepted for the truth of their contents).)
For purposes of ruling on a demurrer, all facts pleaded in a complaint
are assumed to be true, but the reviewing court does not assume the truth of
conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962,
967.)
Further, the court may, upon motion, or at
any time in its discretion, and upon terms it deems proper, strike any
irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc. § 436, subd. (a).) The court may also strike all or any part of
any pleading not drawn or filed in conformity with the laws of this state, a
court rule, or an order of the court. (Code Civ. Proc. § 436, subd. (b).) The grounds for moving to strike must appear
on the face of the pleading or by way of judicial notice. (Code Civ. Proc. §
437.)
Leave to amend must be allowed where there is
a reasonable possibility of successful amendment. (See Goodman v. Kennedy
(1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to
amend if there is any reasonable possibility that the defect can be cured by
amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency
(2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without
leave to amend if the complaint, liberally construed, can state a cause of
action under any theory or if there is a reasonable possibility the defect can
be cured by amendment.”).) The burden is
on the complainant to show the Court that a pleading can be amended
successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
MEET AND CONFER
Code Civ. Proc. §§ 430.41 and 435.5 requires
that before the filing of a demurrer or motion to strike, the moving party
“shall meet and confer in person or by telephone” with the party who filed the
pleading that is subject to demurrer or motion to strike for the purpose of
determining whether an agreement can be reached that would resolve the
objections to be raised in the demurrer or motion to strike. (Code Civ. Proc. §§ 430.41(a),
435.5(a).) The parties are to meet and
confer at least five days before the date the responsive pleading is due. (Code
Civ. Proc. §§ 430.41(a)(2), 435.5(a)(2).)
Thereafter, the moving party shall file and serve a declaration
detailing their meet and confer efforts. (Code Civ. Proc. §§ 430.41(a)(3), 435.5(a)(3).) Defendants submit the Declaration of Kenneth
Ruttenberg which fails to show the parties met and conferred by telephone or in
person. While this fails to satisfy the
meet and confer requirements of Code Civ. Proc. §§430.41 and 435.5, the Court
cannot overrule a demurrer or deny a motion to strike based on an insufficient
meet and confer. (Code Civ. Proc.
§§430.41(a)(4) and 435.5(a)(4).)
DISCUSSION
Defendants demur to the breach of contract claim on the ground
that the contract terms are so vague that no one could judge whether Defendants
supposedly breach those terms. The Court
disagrees.
The TAC further alleges Plaintiff entered into the partially
oral and partially written agreement on or about July 1, 2021. The terms of the
agreement were that “Plaintiff would make a payment of $75,000.00 to Defendants
in exchange for Defendants providing full-service planning and implementation
of travel itineraries over the course of one year – from July 1, 2021, through
June 30, 2022.” (TAC ¶26.) The services
include “hand-picking
and coordinating all the logistics” for those vacations. (TAC ¶10.)
In other words, Plaintiff hired Defendants to be his travel agent. A contract to provide travel services is
sufficiently definite.
Accordingly,
the Court overrules the demurrer to the breach of contract claim.
Fraud
Defendants demur to Plaintiff’s fraud claim as duplicative of
the contract claim, as insufficiently plead and as failing to allege an intent not
to perform. The Court agrees in part.
To
allege promissory fraud, Plaintiff must plead Defendants made promises that
they had no intention of performing. (Lazar
v. Super. Court (1996) 12 Cal.4th 631, 638.) The fact that a promise was made and not
fulfilled is insufficient to establish fraud by false promise. (Tenzer v. Superscope (1985) 39 Cal.3d
18, 31.) Rather, “something more than
nonperformance is required to prove the defendant’s intent not to perform his
promise.” (Id.) “Making a promise with an honest but
unreasonable intent to perform is wholly different from making one with no
intent to perform and, therefore, does not constitute a false promise.” (Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal.App.4th 153, 159.)
Here,
Plaintiff has alleged that Defendants did not intend to perform on their
promises. (TAC ¶ 37.) Citing
Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060, Plaintiff argues
that a general allegation that Defendants did not intend to perform can
withstand a demurrer. Beckwith held
that: “Purely evidentiary matters—usually
circumstantial evidence or admissions showing lack of that intention—should not
be pleaded. Hence, the only necessary averment is the general statement that
the promise was made without the intention to perform it, or that the defendant
did not intend to perform it.” (Beckwith, 205 Cal.App.4th at
1060 (citing 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 725, p. 142).)
However,
here, Plaintiff’s general allegation that Defendants had no intent to perform conflicts
with the more specific allegation that Defendants partially performed on their
promises, which undercuts any claim that Defendants did not intend to perform on
their promises. (Castaic Village Ctr. LLC v. Gymcheer USA, Inc., 2021 Cal. Super. LEXIS 6377 at *5
(partial performance negates an intent not to perform).) “Where a pleading includes a general
allegation, such as an allegation of an ultimate fact, as well as specific
allegations that add details or explanatory facts, it is possible that a
conflict or inconsistency will exist between the more general allegation and
the specific allegations.” (Perez v.
Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1235.) “To handle
these contradictions, California courts have adopted the principle that
specific allegations in a complaint control over an inconsistent general
allegation.” (Id. at 1235–1236.) “Under this
principle, it is possible that specific allegations will render a complaint
defective when the general allegations, standing alone, might have been
sufficient.” (Id. at 1236.)
Plaintiff
next argues that he has also alleged a claim for fraudulent concealment, which
Defendants do not address in their demurrer.
As concealment is a species of fraud, it
must also be pled with specificity. (Blickman
Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162
Cal.App.4th 858, 878.) Less specificity is
required where the defendant necessarily possesses the information. (Committee
on Children's Television, Inc. v. General Foods Corp
(1983) 35 Cal.3d 197, 216.) Furthermore, as noted by one court,
it is not practical to allege facts showing how, when and by what means
something did not happen. (Alfaro
v. Community Housing Improvement System Planning Assn.
(2009) 171 Cal.App.4th 1356, 1384.) However, if the
concealment is based on providing false or incomplete statements, the pleading
must at least set forth the substance of the statements at issue. (Id.) Here, Plaintiff’s complaint adequately alleges
that Defendants “took credit” for services actually provided by Plaintiff’s
staff, thereby concealing the fact that they were not actually providing the
services Plaintiff paid for. (TAC ¶37.)
Accordingly, the Court overrules the demurrer
to Plaintiffs’ fraud claim.
Unfair Business
Practices
Defendants
argue that Plaintiff’s claim under Cal. Bus. & Prof. Code §17200 (“UCL”)
fails because Plaintiff has not alleged any unlawful, unfair or fraudulent
business practices. The Court
agrees.
UCL
prohibits “unfair competition,” which is defined as any “unlawful, unfair or
fraudulent business act or practice.” To
state a cause of action based on an unlawful business act or practice under the
UCL, a plaintiff must allege facts sufficient to show a violation of some
underlying law. (People v. McKale
(1979) 25 Cal.3d 626, 635; Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th
608, 618.)
Here,
Plaintiff alleges unlawful business practices based on Defendants “(1)
illegitimately inducing Mr. Barney to give $75,000.00 for travel services
without it having the ability and/or intention of providing them through
deceptive marketing; and (2) failing to maintain a proper agent for service of
process as is required under California law.”
(TAC ¶47.) Plaintiff does not
identify any laws that were violated in relation to (1), and as to (2), judicially
noticed facts show Sienna Charles has always maintained a proper agent for
service of process in California. (RJN,
Exs. A-C.)
As to “unfair” business
practices, California courts have not uniformly settled on a single approach to
defining what is an “unfair” business practice under the UCL. Prior to 1999, California courts applied what
is known as the “balancing test.” Courts
“defined ‘unfair’ business practices as those ‘offend[ing] an established
public policy or when the practice is immoral, unethical, oppressive,
unscrupulous or substantially injurious to consumers,’” or where the utility of
the defendant’s conduct does not outweigh the gravity of the harm to the
victim. (Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular
Tel. Co. (1999) 20 Cal. 4th 163, 184.) Under the balancing test, “a determination of
unfairness involves an examination of [the practice’s] impact on its alleged
victim, balanced against the reasons, justifications and motives of the alleged
wrongdoer.” (McKell v. Washington Mut., Inc. (2006) 142 Cal. App. 4th 1457,
1473 (internal citations omitted).)
In 1999, the California Supreme
Court rejected that test and held that a finding of unfairness must instead “be
tethered to some legislatively declared policy or proof of some actual or
threatened impact on competition.” (Cel-Tech, 20 Cal. 4th at 186-87.) The Cel-Tech court, however, expressly declined to extend
this standard to consumer actions. (Id. at 187 n.12.)
Here,
Plaintiff alleges Sienna Charles “engaged in unfair business
practices by inducing Mr. Barney to pay a large sum of money under the
assumption that his travel needs would be taken care of. However, Sienna
Charles did not perform their side of the agreement and only partially
performed once they began to face persistent inquiries from Mr. Barney when he
suspected he had been lied to.” (TAC ¶48.) These allegations do not show a
threatened impact on competition or meet the balancing test. For example, Plaintiff does not allege that Defendants’
conduct was not motivated by legitimate business or economic need or that the
harm and adverse impact of Defendants’ conduct outweighed these needs. Accordingly, Plaintiff has not
stated a UCL claim based on either test for unfairness.
To
state a claim under the “fraudulent” prong of the UCL, a plaintiff must
“show that members of the public are likely to be deceived.” (Bank of the W. v. Superior Ct. (1992) 2 Cal. 4th 1254, 1267.) “The determination as to whether a business practice is deceptive
is based on the likely effect such [a] practice would have on a
reasonable consumer.” (McKell, 142 Cal.App.4th at 1471.) Here, Plaintiff has
not alleged that members of the public were likely to be deceived by
Defendants’ conduct. The TAC only
alleges that Plaintiff was deceived.
(TAC ¶
49 (“Sienna
Charles engaged in fraudulent business practices by misleading Mr. Barney into
believing they would provide him with an itinerary, luxury services, and top of
the line accommodations. Sienna Charles never provided those accommodations,
and their actions evidence they never intended to.”)). Accordingly, Plaintiff has not met the
fraudulent prong of the UCL.
Accordingly, the Court sustains the demurrer
to Plaintiff’s UCL claim without leave to amend.
Rescission of Contract (Void Contract)
Defendants argue that
rescission is not a cause of action, it is a remedy. Civ. Code Civil Code § 1689 provides various grounds on
which a party may seek recission. Courts have considered recission a cause
of action. (Paularena
v. Superior Court of San Diego Cty. (1965) 231 Cal. App. 2d 906, 913 (“Obviously
it is a cause of action to obtain relief on account of a rescission by the
plaintiffs. The bringing of this action, as well as the allegations
contained therein, constituted compliance with the requirements that the party
rescinding must give notice of rescission and an offer to restore the benefits
received under the contract.”))
The
court finds that while recission is ultimately a remedy, much like declaratory
relief, specific performance, restitution, etc., statutes and/or common law
have allowed a party to file a suit alleging a cause of action for such
affirmative relief. The court,
therefore, holds that a cause of action for recission, in general, stands.
Moreover,
the Court finds that Plaintiff has alleged the terms of the existence of an
underlying, enforceable contract with specificity, such that the right to
rescission is available. Accordingly, the Court overrules the demurrer to the
rescission claim.
Quasi Contract
Defendants argue that Plaintiff’s
claim for quasi contract improperly seeks an advisory opinion. The Court disagrees.
A claim for quasi contract, or
contract implied by law, is a recognized cause of action. A quasi-contract, or contract implied in law,
is an obligation created by law, without regard to the intention of the
parties, designed to restore the aggrieved party to their former position
through restitution. (Maglica
v. Maglica (1998) 66 Cal.App.4th 442, 449.) Whenever there is an
invalid or unenforceable express contract, recovery is nevertheless allowed on
a quasi-contractual basis. (See 1 Witkin (2023) Summary 11th Contracts §
1072.) The Court may recognize a cause
of action based on quasi-contract to obtain the remedy of
restitution. (McKell v.
Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1490.)
Accordingly, the Court overrules the
demurrer to the quasi contract claim.
Conversion
Defendants argue that Plaintiff’s
conversion claim fails because it cannot be based on a non-specific sum of
money. The Court agrees.
Plaintiff’s
claim for conversion alleges that Plaintiff held the right to the $75,000 that
he paid Defendants, and that Defendants wrongfully converted the money. (TAC,
¶¶ 59-60.) But “the simple failure to
pay money owed does not constitute conversion”.
(Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284;
see also PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil
& Shapiro, LLP (2007) 150 Cal.App.4th 384, 395 (citing and compiling
cases).
Defendants
did not wrongfully “take” the money.
They were lawfully given the money in exchange for travel services.
There was no conversion of Plaintiff’s property. Plaintiff
cannot turn a simple breach of contract into a
tort claim for conversion. (Melkumyan
v. Diaz (2022) 2022 Cal. Super. LEXIS 25543 at *20.) Accordingly, the Court sustains the demurrer
to the conversion claim.
Punitive Damages
Defendants
argue that Plaintiff has not alleged fraud and therefore cannot seek punitive
damages. As the Court concludes
Plaintiff has sufficiently alleged a fraud claim, punitive damages are available.
UCL Claim
Defendants argue that allegations that Sienna
Charles violated the UCL by “failing to maintain a proper agent for service of
process as is required under California law” should be stricken because based
on judicially noticed facts, Sienna Charles always maintained a proper agent
for service of process in California. Even
if Sienna Charles failed to do so, Defendants argue that third parties like
Plaintiff could not sue Sienna Charles for what is essentially an
administrative or regulatory matter. The
Court agrees on the first point, and grants the motion to strike.
CONCLUSION
Based on the foregoing, the Court SUSTAINS
IN PART and OVERRULES IN PART Defendants’ demurrer without leave to
amend and GRANTS IN PART and DENIES IN PART their motion
to strike without leave to amend.
IT IS SO ORDERED.
DATED: December 13, 2024 ___________________________
Edward
B. Moreton, Jr.
Judge
of the Superior Court