Judge Elaine Lu, Case 21STCV12274 2023-02-02 Tentative Ruling

Plaintiff Hector Orlando Araujo (“Plaintiff”) filed the instant action against Defendant Rosa M. Araujo (“Defendant”) on April 1, 2021. The complaint alleged one cause of action for common counts.

On November 29, 2021, Plaintiff filed a First Amended Complaint against Defendant. On January 31, 2022, Defendant filed a demurrer to the First Amended Complaint. On February 7, 2022, Plaintiff confirmed receipt of Defendant’s demurrer in open court. (Minute Order 2/7/22.) On May 25, 2022, Plaintiff filed a second amended complaint which the Court struck as improperly filed. (Order 5/26/22.) On May 26, 2022, the Court sustained Defendant’s demurrer with leave to amend. (Order 5/26/22.)

On June 15, 2022, Plaintiff filed the operative Third Amended Complaint (“TAC”) against Defendant. The TAC asserts two causes of action for (1) Breach of Contract and (2) Account Stated.

On August 15, 2022, Defendant filed a demurrer to the TAC. No opposition or reply has been filed.

On January 4, 2023, Plaintiff filed a request for dismissal but failed to check off in item 1 what it is that Plaintiff is seeking to dismiss, i.e., only certain causes of action or the entire complaint. Accordingly, the Court Clerk rejected Plaintiff’s January 4, 2023 request for dismissal.

On January 6, 2022, the Court continued the instant motion to February 2, 2023 for lack of proof of service of the instant motion. (Order 1/6/23.) On January 9, 2023, Defendant filed proof of service of the instant motion.

On January 10, 2023, Plaintiff filed a request for dismissal but failed to complete page 2. Accordingly, the Court Clerk rejected Plaintiff’s January 10, 2023 request for dismissal.

“Defendant filed a Chapter 7 bankruptcy while having the family estate in her name causing damages and an immediate need to save the Property from Bankruptcy Liquidation. Plaintiff paid approximate $100,000.00 to avoid liquidation paying some $30,000.00 just for creditors and other trustees fees totaling $100,000.00.” (TAC ¶ 10.)

“Defendant was apologetic when this happened and offered to pay back the funds, being the standup guy he is, Plaintiff offered to cancel the Debt if Defendant transferred property to a Trust he directed. For over two years Defendant said she would transfer the property to Trust Plaintiff controlled Trust [sic]. Defendant show her the Trust she set up in her own name but did not [sic] what Plaintiff demanded to cancel the Debt.” (TAC ¶ 11.)

“As of result of her failing to provide the trust, damages now are $100,000.00 as in account stated.” (TAC ¶ 15.)

A. Order Re: Defendant’s Demurrer to First Amended Complaint (signed and filed in the instant action on May 26, 2022

As the Court may take judicial notice of court records and actions of the State, (See Evid. Code, § 452(c)(d)), Defendant’s request for judicial notice is GRANTED. However, the Court will not take judicial notice of the truth of assertions within the Court records. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

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. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

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 Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.) 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 pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.) “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.)

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer¿in person or by telephone¿with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension. (CCP § 430.41(a)(2).) The demurring party must also file and serve a declaration detailing the meet and confer efforts. (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading. (Id.¿at (a).)

Defendant has satisfied the meet and confer requirement. (Meagher-Leonard Decl. ¶ 2.)

Defendant contends that the first cause of action fails because (1) Plaintiff fails to allege a contract, and (2) the action is time barred.

The elements that must be alleged for a breach of contract are “(1) the contract, (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 contract is an agreement to do or not to do a certain thing.” (Civ. Code, § 1549.) The essential elements of a contract are parties capable of contracting; their consent; a lawful object; and a sufficient cause or consideration. (Civ. Code, § 1550.)

“[A] bare promise to make a gift in the future, in the absence of consideration, is not legally enforceable.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1053.) “The validity of the consideration does not depend upon its value, the law does not ordinarily weigh its quantum.” (Blonder v. Gentile (1957) 149 Cal.App.2d 869, 875.) “Consideration consists of either a benefit to the promisor or a detriment to the promisee. It is enough that something is promised, done, forborne, or suffered by the party to whom the promise is made as consideration for the promise made to him.” (Speirs v. BlueFire Ethanol Fuels, Inc. (2015) 243 Cal.App.4th 969, 987.) Previous acts of consideration are insufficient to support consideration. (See Lagomarsino v. Giannini (1905) 146 Cal. 545, 547; see also Leonard v. Gallagher (1965) 235 Cal.App.2d 362, 373 [“It appears to be the universal rule throughout the United States that past consideration will not support a promise which is in excess of the promisor's existing debt or duty”].)

Here, the TAC concedes that there is no consideration for any alleged agreement between Plaintiff and Defendant. The TAC alleges in relevant part that “Defendant filed a Chapter 7 bankruptcy while having the family estate in her name causing damages and an immediate need to save the Property from Bankruptcy Liquidation. Plaintiff paid approximate $100,000.00 to avoid liquidation paying some $30,000.00 just for creditors and other trustees fees totaling $100,000.00.” (TAC ¶ 10.) There is no allegation that Defendant made a contemporaneous promise to pay back the funds at any time before Plaintiff paid the $30,000 to creditors and other trustee fees totaling $100,000. Nor is there any allegation that any amount of the $100,000 that Plaintiff paid to creditors was to be treated as a loan from Plaintiff to Defendant. In fact, the FAC indicates that Plaintiff made the payment as a gift to address the “immediate need to save the [family] Property from Bankruptcy Liquidation.” (TAC ¶ 10.) Moreover, the TAC then alleges “Defendant was apologetic when this happened and offered to pay back the funds[.]” (TAC ¶ 11, [italics and bold added].) Defendant’s offer to pay the funds back would logically occur after Plaintiff had already made the payment to the bankruptcy creditors and trustee fees. Therefore, Plaintiff’s payment of $100,000.00 to the bankruptcy creditors was past consideration and thus was insufficient to serve as consideration for Defendant’s later promise. Hence, Defendant’s offer to pay back the funds lacked consideration.

Similarly, Plaintiff’s offer to cancel the “debt” if Defendant transferred property to a Trust that Plaintiff directed could not constitute consideration because there was no “debt” to cancel.[1]

Accordingly, the TAC has alleged at most that Defendant made a promise to make a gift by agreeing to transfer property to a trust owned by Plaintiff. The TAC fails to allege consideration for this promise. In the absence of consideration, Defendant’s promise was legally unenforceable. There could be no breach of contract because there was no contract.

As the TAC fails to allege an enforceable contract between the parties, Defendant’s demurrer to the second cause of action is SUSTAINED.

The statute of limitations for an action based on a written contract is four years. (CCP § 337(a).) However, for contracts not based on writing, the statute of limitations is two years. (CCP § 339(1).) Due to the COVID-19 pandemic, the statutes of limitations for civil actions were further extended. “Notwithstanding any other law, the statutes of limitations and repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.” (Emergency rule 9(a); See Judicial Council of Cal., Advisory Com. com., Emergency rule 9 [“Emergency rule 9 is intended to apply broadly to toll any statute of limitations on the filing of a pleading in court asserting a civil cause of action”].)

“The statute of limitations usually commences when a cause of action ‘accrues,’ and it is generally said that ‘an action accrues on the date of injury.’” (Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 743, [internal citations omitted].) Moreover, the limitations period begins to run from the date of loss and is tolled from the date the insured reports the claim until the insurer unequivocally denies the claim in writing. (Prudential-LMI Com. Ins. V. Superior Court (1990) 51 Cal.3d 674, 678– 679.) “‘A tolling provision suspends the running of a limitations period.’ [Citation.] In other words, ‘the limitations period stops running during the tolling event, and begins to run again only when the tolling event has concluded. As a consequence, the tolled interval, no matter when it took place, is tacked onto the end of the limitations period, thus extending the deadline for suit by the entire length of time during which the tolling event previously occurred.’ [Citation.]” (Committee for Sound Water & Land Development v. City of Seaside (2022) 79 Cal.App.5th 389, 403.)

Here, it is not clear that the claim for breach of contract is barred on the face of the FAC. The contract is alleged to have been oral. (TAC ¶ 11.) Thus, the two-year statute of limitations applies. Even if the Court were to deem Defendant’s promise to transfer property to be an enforceable contract notwithstanding the absence of consideration, as described above, the TAC does not allege when Defendant made the promise except that it appears that Defendant made the promise after Plaintiff had paid off the bankruptcy creditors. Nor does the FAC allege whether Defendant ever agreed to transfer the property to Plaintiff’s trust by a certain date, and if so, what that agreed upon date was. In the absence of such an allegation, it is unclear that Defendant’s obligation to transfer the property is overdue and whether there has been a breach at all. In any event, it is not apparent from the face of the TAC that any breach of Defendant’s contractual obligation to transfer the property to Plaintiff’s trust is time-barred. Thus, the breach of contract claim is not necessarily barred due to the 119-day tolling under Emergency Rule 9. (Committee for Green Foothills, supra, 48 Cal.4th at p.42.)

Thus, the Court does not sustain the demurrer to the first cause of action on this additional basis (the statute of limitations).

Defendant asserts that the second cause of action fails because it fails to state a cause of action and is barred by the statute of limitations.

“An account stated is ‘an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing.’ ” (Professional Collection Consultants v. Lujan (2018) 23 Cal.App.5th 685, 691 (“Lujan”).) “The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due. [Citations.]” (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.)

Here, the sole allegation as to the claim for account stated is that “Defendant filed a Chapter 7 bankruptcy while having the family estate in her name causing damages and an immediate need to save the Property from Bankruptcy Liquidation. Plaintiff paid approximate $100,000.00 to avoid liquidation paying some $30,000.00 just for creditors and other trustees fees totaling $100,000.00. As this was Defendant’s Bankruptcy she knew the amount expended.” TAC ¶ 7.) Notably, there is no allegation of a previous transaction between Plaintiff and Defendant establishing a prior debtor/creditor relationship as required for an account stated claim. In fact, the TAC concedes that the creditor/debtor relationship first arose when Plaintiff paid Defendant’s debt owed from a 2016 settlement of a bankruptcy proceeding. However, there is no allegation of a later writing establishing “that the items of an account are true and that the balance struck is due and owing.” (Lujan, supra, 23 Cal.App.5th at p.691.) Accordingly, the TAC fails to state a claim for account stated.

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. In order for the bar ... to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, [internal citations omitted].)

The statute of limitations for an open book account is four years. (CCP § 337(b).) As noted above, due to the COVID-19 pandemic, the statutes of limitations for civil actions were tolled from April 6, 2020, until October 1, 2020.” (Emergency rule 9(a); See Judicial Council of Cal., Advisory Com. com., Emergency rule 9 [“Emergency rule 9 is intended to apply broadly to toll any statute of limitations on the filing of a pleading in court asserting a civil cause of action”].)

Here, the “last item” or entry on the account stated is alleged to be the bankruptcy settlement which was executed and required payment on August 31, 2016. (TAC ¶ 10.) Adding the tolling from Emergency Rule 9, Plaintiff had until February 25, 2021 to timely file the instant claim for account stated. Accordingly, the instant action filed April 1, 2021 is time barred on its face.

Therefore, Defendant’s demurrer to the second cause of action is SUSTAINED on this additional, independent ground.

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Goodman v. Kennedy, supra, 18 Cal.3d at p.348; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.)

Here, the Court has already previously sustained a demurrer to these causes of action on identical grounds. The additional allegations a near identical if not the same to the prior operative complaint. Accordingly, the Court concludes that there does not appear to be a reasonable possibility of a successful amendment. Therefore, leave to amend is DENIED.

Based on the forgoing, Defendant Rosa M. Araujo’s demurrer to the third amended complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

Defendant is to file a proposed judgment of dismissal within ten (10) days of notice of this order.

[1] In addition to the defects identified above, the TAC fails to allege a date or deadline by which Defendant promised to complete the transfer of property to the trust controlled by Plaintiff. In the absence of such an allegation, it is unclear that Defendant’s obligation to transfer the property is overdue and whether there has been a breach at all.

Superior Court of California

County of Los Angeles

Department 26