Judge: Elaine Lu, Case: 22STCV01334, Date: 2022-10-21 Tentative Ruling

Case Number: 22STCV01334    Hearing Date: October 21, 2022    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On January 12, 2022, Plaintiffs Elle B. Mambetov (“Elle Mambetov”) and Mambetova Holdings LLC (“Mambertova”) (jointly “Plaintiffs”) filed the instant breach of contract action against Defendants Ashley Sean Thomas (“Thomas”) and Brandy Norwood (“Norwood”) (jointly “Defendants”).  On June 30, 2022, Plaintiffs filed the operative First Amended Complaint (“FAC”) against Defendants.  The FAC asserts eight causes of action for (1) Breach of Contract, (2) Fraud and Intentional Misrepresentation, (3) Negligent Misrepresentation, (4) Intentional Infliction of Emotional Distress, (5) Negligence, (6) Conversion, (7) Unjust Enrichment, and (8) Violation of Penal Code section 496.

On July 11, 2022, Defendants filed the instant demurrer and motion to strike portions of the FAC.  No opposition or reply have been filed.

Allegations of the Operative Complaint

The FAC alleges in relevant part that:

            In August and September 2021, Defendant Thomas – a Celebrity Stylist – approached Plaintiff Elle Mambetov seeking to rent multiple clothing items for his client Defendant Norwood – a well-known singer, songwriter, actress, model, and television personality – to possibly wear for the American Music Awards (“AMAs”) on November 21, 2021.  (FAC ¶¶ 6-8, Exhs. 1-2.)  On “September 1, 2021, Thomas, on his behalf as a celebrity stylist and in the course and scope of his professional business, and on behalf of Norwood, entered into a written ‘Loan of Goods’ agreement with Mambetova (the ‘Loan of Goods Agreement’) under which Thomas on his own behalf and on behalf of Norwood agreed for himself and on behalf of Norwood to borrow the Loaned Items for Norwood to wear at the AMAs.”  (FAC ¶ 11, Exh. 3.)  The Loan Items included certain clothing items and a “certain Dreamboule 18k rose gold Chic and Shine Big Bang Diamond Ring (the ‘Big Bang Ring’) which ring alone has a retail value of $44,200[.]”  (FAC ¶ 8.)

            Under the Loan of Goods Agreement, Mambetova would provide the Loaned Items to Thomas for himself and for Norwood to use on November 19, 2021.  (FAC ¶ 12.)  Under the agreement, the items were to be returned on November 22, 2021 by 12:30pm.  (FAC ¶ 13.)  “The Loan of Goods Agreement also provides that Thomas, on his own behalf and on behalf of Norwood, is responsible for the collection and freight charges of all goods listed thereon, which includes the Big Bang Ring and other Loaned Items.”  (FAC ¶ 16.)

“Thomas for himself and for Norwood represented to Elle Mambetov and Mambetova, prior to entering into the Loan of Goods Agreement and also at the time that he entered into said agreement on his behalf and on behalf of Norwood that he and Norwood would return the Big Bang Ring and other Loaned Items to Mambetova pursuant to the terms of the Loan of Goods Agreement (such representations collectively, the ‘Return Representations’).”  (FAC ¶ 14.)  However, Thomas failed to return the Big Bang ring on November 22, 2021.  (FAC ¶ 15.) 

            “[I]n or about late November 2021, a representative of Thomas went to the boutique owned and operated by Mambetova and returned to a representative of Mambetova certain of the Loaned Items but failed to return the Big Bang Ring and also failed to return other of the Loaned Items, and further that such representative of Thomas represented that the Big Bang Ring had been lost or misplaced.”  (FAC ¶ 17.)

            On November 29, 2021, Plaintiffs issued to Thomas an invoice for $48,399.00 representing the retail price and sales tax for the Big Bang Ring.  (FAC ¶ 18, Exh. 4.)  However, Thomas failed to pay the invoice amount.  (FAC ¶ 19.)

            On December 10, 2021, Plaintiffs sent a demand letter to Thomas noting that a lawsuit would be filed if Thomas failed to pay the amount owed.  (FAC ¶ 20, Exh. 5.)  In multiple emails and texts in November and December 2021, Thomas represented that he would meet with Elle Mambetov to deliver payment to Mambetova for the value of the Big Bang Ring.  (FAC ¶ 21(a).)  Thomas represented that on December 3, 2021, Thomas’ accountant had sent a wire payment to Mambetova but Mambetova never received any wire payment.  (FAC ¶ 21(b).)  “Thomas informed Elle Mambetov that he would deliver a cashier’s check to Elle Mambetov on Tuesday, December 7, 2021, between 11:00 pm and 12:00 pm; however, Thomas never arrived, and neither did any check or other form of payment.”  (FAC ¶ 21(c).)  Thomas then stopped answering phone calls and text messages from Elle Mambetov inquiring about the Big Bang Ring and payment.  (FAC ¶ 22.)

Legal Standard

Demurrer Standard 

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.) 

Motion to Strike Standard

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.).  (See CCP §§ 435-437.)  A party may file a motion to strike in whole or in part within the time allowed to respond to a pleading.  However, if a party serves and files a motion to strike without demurring to the complaint, the time to answer is extended.  (CCP §§ 435(b)(1), 435(c).)

A motion to strike lies only where the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws.  (CCP § 436.)  The grounds for moving to strike must appear on the face of the pleadings or by way of judicial notice.  (CCP § 437.)

Meet and Confer Requirement

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).)  There is a similar meet and confer requirement for motions to strike.  (CCP § 435.5.)

Here, the Court notes that Defendants have fulfilled the meet and confer requirement. (Ackerman Decl. ¶¶ 4-6, Exh. A.)^[1]

Discussion

Entire Complaint

            Defendants contend that the entire complaint fails because (1) the FAC fails to join indispensable parties or allege standing and (2) that as to Defendant Norwood there is no allegation of any wrongful conduct.

            Indispensable Parties and Standing

            “‘Standing is the threshold element required to state a cause of action and, thus, lack of standing may be raised by demurrer.’ [Citation.]”  (Robinson v. Southern Counties Oil Company (2020) 53 Cal.App.5th 476, 481.)

            “A person subject to service of process whose joinder will not deprive the court of subject matter jurisdiction ‘shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.’ [Citation.]”  (Pinto Lake MHP LLC v. County of Santa Cruz (2020) 56 Cal.App.5th 1006, 1013.)  “If a necessary person cannot be joined as a party, the trial court considers specific factors to ‘determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable.’ [Citation.]”  (Ibid.) 
            Here, Defendants contend that the instant action is improper because Plaintiffs do not allege standing because there is no allegation that Plaintiffs owned the Big Bang Ring.  Similarly, Defendants contend that Plaintiffs have failed to include a necessary party – i.e., the owner of the Big Bang Ring.  The Court disagrees.  While the FAC does not explicitly allege ownership of the Big Bang Ring, the FAC and attached exhibits clearly indicate as such.  The FAC alleges that the Big Bang Ring was obtained “from” Plaintiffs.  (FAC ¶ 8.)  Further, the Loan of Goods Agreement notes that the items were loaned from Plaintiff Mambetova.  (FAC, Exh. 3.)  There is no indication of any third-party having claim to the Big Bang Ring nor have Defendants presented any judicially noticeable documents indicating that a third party is the owner of the Big Bang Ring.  Accordingly, there is no indispensable party alleged.

            Lack of Allegations against Defendant Norwood

            Defendants contend that the FAC fails to allege any conduct against Defendant Norwood.  The Court agrees.  The only allegations against Defendant Norwood are that Defendant Thomas acting on his and Defendant Norwood’s behalf.  (FAC ¶¶ 8, 11, 12, 14-16, 19, 21, 24, 26.) 

            “[A] principal may be liable for the wrongful conduct of its agent, even if that conduct is criminal, in one of three ways: (1) if the ‘ “principal directly authorizes ... [the tort or] crime to be committed” ’ [Citation]; (2) if the agent commits the tort ‘in the scope of his employment and in performing service on behalf of the principal.’ [Citations], ‘regardless of whether the wrong is authorized or ratified by [the principal]’ [Citations], and even if the wrong is criminal [Citations]; or (3) if the principal ratifies its agent's conduct ‘after the fact by ... voluntar[ily] elect[ing] to adopt the [agent's] conduct ... as its own’ [Citations.]”  (Doe v. Roman Catholic Archbishop of Los Angeles (2016) 247 Cal.App.4th 953, 969.) 

Moreover, a principal can be bound to a contract if “its agent, had either actual or ostensible authority to enter into such a contract on its behalf. Actual authority stems from conduct of the principal which causes the agent reasonable to believe that the principal has consented to the agents act; ostensible authority, from conduct of the principal which leads the third party reasonably to believe that the agent is authorized to bind the principal.”  (Mannion v. Campbell Soup Co. (1966) 243 Cal.App.2d 317, 320.)  However, “‘[a]n agency[, whether actual or ostensible,] cannot be created by the conduct of the agent alone; rather, conduct by the principal is essential to create the agency.’ [Citation.]”  (Rogers v. Roseville SH, LLC (2022) 75 Cal.App.5th 1065, 1074.)

Here, there is no allegation of an agency relationship between Thomas and Norwood.  (See Garton v. Title Ins. & Trust Co. (1980) 106 Cal.App.3d 365, 376, [“Generally, an allegation of agency is an allegation of ultimate fact and is, of itself, sufficient to avoid a demurrer.”].)  At most the FAC alleges that Norwood was a client of Thomas and that Thomas represented that the purpose for obtaining the loaned items was to use for styling Norwood for the AMAs.  However, there is no allegation that Norwood did anything.  This is not an allegation of agency nor is there allegation of conduct by Norwood suggesting that Thomas was acting as an agent.  Accordingly, the FAC fails to allege any conduct against Defendant Norwood.  Therefore, as to Norwood, the demurrer to the entire FAC is SUSTAINED.

First Cause of Action: Breach of Contract

            Defendants contend that the first cause of action fails because the FAC fails to plead who the parties are to the purported agreement.

            “The elements of a cause of action for breach of contract are: ‘(1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.’”  (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391 [internal citations omitted].)  “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.) 

            Here, the FAC alleges that “on or about September 1, 2021, Thomas, on his behalf as a celebrity stylist and in the course and scope of his professional business, and on behalf of Norwood, entered into a written ‘Loan of Goods’ agreement with Mambetova[.]”  (FAC ¶ 11, Exh. 3.)  The Loan of Goods Agreement list Thomas as the “to” party and Plaintiff Mambetova as the “from” party.  (FAC, Exh. 3.)  The agreement also clarifies that Mambetova is the loaning party.  (FAC, Exh. 3)  The Loan of Goods Agreement is signed by a Grace Blumenstein on behalf of the borrowing party and an illegible signature on behalf of the borrowing signature.  (FAC, Exh. 3.)  The FAC further notes that the first cause of action is only brought by Plaintiff Mambetova. 

            Taken as a whole, the FAC alleges that Defendant Thomas and Mambetova entered into the Loan of Goods Agreement together.  The attached exhibit does not contradict this contention.  While the FAC does not exactly specify who Grace Blumenstein is, the FAC clearly alleges that this person had authority to bind Mambetova to the agreement.  However, as noted above as there is no allegation that Thomas was an agent of Defendant Norwood and had actual or ostensive authority to bind Norwood to this agreement.  Accordingly, as discussed above, the demurrer to the first cause of action is SUSTAINED as to Defendant Norwood. 

            As to Defendant Thomas, the FAC sufficiently alleges an agreement between Mambetova and Defendant Thomas.  Accordingly, Defendant Thomas’ demurrer to the first cause of action is OVERRULED.

Second and Third Causes of Action: Fraud and Negligent Misrepresentation

            Defendants contend that the second and third causes of action are not pled with sufficient specificity.

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.”  (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.)

            “The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege that the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true.” (Bains v. Moores (2009) 172 Cal.App.4th 445, 454 [internal citations omitted].)  “Under California law, negligent misrepresentation is a species of actual fraud and a form of deceit.”  (Wong v. Stoler (2015) 237 Cal.App.4th 1375, 1388.) 

Both a claim for intentional misrepresentation and a claim for negligent misrepresentation must be pleaded with specificity rather than with general and conclusory allegations.  (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)  “Fraud allegations ‘involve a serious attack on character’ and therefore are pleaded with specificity.  [Citation.]  General and conclusory allegations are insufficient.  [Citation.]  The particularity requirement demands that a plaintiff plead facts which ‘‘‘show how, when, where, to whom, and by what means the representations were tendered.’’’  [Citation.]”  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)  Moreover, “each element must be pleaded with specificity.  [Citations.]”  (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166 disapproved of on other grounds by Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905.)

            Here, the FAC alleges that prior to entering into and while entering the Loan of Goods Agreement Thomas represented to Elle Mambetov that Thomas would return the Big Bang Ring pursuant to the agreement.  (FAC ¶ 14.)  There is no allegation of how this representation was made, where the misrepresentation was made, or any context as to the misrepresentation.  Further, there is no allegation that Plaintiffs took any action or relied on this misrepresentation in any way.  The FAC merely alleges that Plaintiffs “reasonably relied” on this representation without any explanation as to what actions Plaintiffs took or failed to take based on this representation.  Given the lack of alleged reliance there is also no damage specified to be cause by this misrepresentation.

            The FAC also alleges that in multiple communications by telephone, text message, or email during November and December 2021, Thomas represented to Plaintiffs that Thomas “would meet with Elle Mambetov at specific locations and on specific dates and times to deliver payment to Mambetova of the value of the Big Bang Ring; that on Friday, December 3, 2021, Thomas’ accountant had in fact sent payment by wire to Mambetova; … that Thomas informed Elle Mambetov that he would deliver a cashier’s check to Elle Mambetov on Tuesday, December 7, 2021, between 11:00 pm and 12:00 pm[.]”  (FAC ¶ 21.)  While these allegations have some specificity to them, there is no allegation of any actions taken or not taken because of these representations.  Further, there does not appear to be any damages that could have been caused by these representations.  Plaintiffs were already owed the funds for the missing Big Bang Ring.  The fact that Defendant Thomas misrepresented that he would repay the amount owed does not create any additional harm. 

            As to Norwood, in addition to the above stated deficiencies, there is no allegation that Thomas is an agent of Norwood.  Thus, there would be no basis for any misrepresentations by Thomas to be attributable to Norwood. 

            Accordingly, Defendants’ demurrer to the second and third causes of action are SUSTAINED.

Fourth Cause of Action Intentional Infliction of Emotional Distress

            Defendants contend that Plaintiffs fail to allege any extreme or outrageous conduct.

“A cause of action for intentional infliction of emotional distress exists when there is ‘(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.’ A defendant’s conduct is ‘outrageous’ when it is so ‘extreme as to exceed all bounds of that usually tolerated in a civilized community.’ And the defendant’s conduct must be ‘intended to inflict injury or engaged in with the realization that injury will result.’”  (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050–1051.)   With regard to the first element, IIED “calls for intentional, or at least reckless conduct—conduct intended to inflict injury or engaged in with the realization that injury will result.”  (Davidson v. City of Westminster (1982) 32 Cal.3d 197, 210.) 

For “[c]onduct to be outrageous[, it] must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.”  (Davidson v. City of Westminster (1982) 32 Cal.3d 197, 209.)  “[W]hether conduct is outrageous is ‘usually a question of fact’ … [however] many cases have dismissed intentional infliction of emotional distress cases on demurrer, concluding that the facts alleged do not amount to outrageous conduct as a matter of law.” (Bock v. Hansen (2014) 225 Cal.App.4th 215, 235, [internal citations omitted].)  “‘Behavior may be considered outrageous if a defendant (1) abuses a relation or position that gives him power to damage the plaintiff’s interests; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably with the recognition that the acts are likely to result in illness through mental distress. . . .’” (Molko v. Holy Spirit Ass’n (1988) 46 Cal.3d 1092, 1122, superseded by statute as noted in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853, fn. 19 [internal citation omitted].)  “[T]he requisite emotional distress may consist of any highly unpleasant mental reaction such as fright, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment or worry.”  (Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 397.) 

Here, the only conduct alleged is that Defendants failed to repay the value of the lost Big Bang Ring to Plaintiffs.  (FAC ¶¶ 6-26.)  The FAC merely alleges the of loss of funds.  However, “‘serious emotional distress is not an inevitable consequence of the loss of money....’”  (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1038.)  The FAC does not suggest, Defendants were informed of any unusual susceptibility on Plaintiff Elle Mambetov’s part to emotional injury if the funds were unpaid. 

In addition, as discussed above, there is no conduct alleged as to Defendant Norwood and there is no allegation that Thomas was Defendant Norwood’s agent. 

Accordingly, Defendants’ demurrer to the fourth cause of action is SUSTAINED.

Fifth Cause of Action: Negligence

            Defendant contends that the fifth cause of action is barred by the economic loss doctrine.

            “ ‘The elements of a negligence cause of action are the existence of a legal duty of care, breach of that duty, and proximate cause resulting in injury.’ ”  (McIntyre v. The Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.)  However, “a preexisting contractual relationship, without more, will not support a recovery for mental suffering where the defendant's tortious conduct has resulted only in economic injury to the plaintiff.”  (Erlich v. Menezes (1999) 21 Cal.4th 543, 554–555.)  “[L]iability in negligence for purely economic losses, which is ‘the exception, not the rule’ under [the Supreme Court’s] precedents.”  (Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 400.)  However, “[t]ort damages have been permitted in contract cases where a breach of duty directly causes physical injury [Citation]; for breach of the covenant of good faith and fair dealing in insurance contracts [Citation}; for wrongful discharge in violation of fundamental public policy [Citation]; or where the contract was fraudulently induced. [Citation.] In each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” (Erlich, supra, 21 Cal.4th at pp.551–552.)

            Here, the only conduct alleged is that Defendants failed to repay the value of the lost Big Bang Ring to Plaintiffs.  (FAC ¶¶ 6-26.)  This is merely a claim that Defendants breached the contract.  Absent allegations providing for a duty beyond those imposed by the contract, a claim for negligence is barred by the economic loss doctrine.

In addition, as discussed above, there is no conduct alleged as to Defendant Norwood and there is no allegation that Thomas was Defendant Norwood’s agent. 

            Accordingly, Defendants’ demurrer to the fifth cause of action is SUSTAINED.

Sixth Cause of Action: Conversion

            Defendants assert that the sixth cause of action for conversion fails because the FAC fails to sufficiently allege conversion.

            “Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages.”  (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240, [internal citations omitted].)  “Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.”  (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)  “The gravamen of the tort is the defendant's hostile act of dominion or control over a specific chattel to which the plaintiff has the right of immediate possession.”  (Ibid.) 
            Here, the FAC alleges that Defendants “wrongfully obtained, transferred, secreted, absconded with, sold, misappropriated or otherwise converted the Loaned Items or proceeds thereof to their own use and benefit.”  (FAC ¶ 66.)  However, the FAC alleges that on “November 29, 2021, Plaintiffs issued to Thomas an invoice in the amount of $48,399.00, which amount is the retail value of the Big Bang Ring plus sales tax, on account that the Big Bang Ring was not returned by November 22, 2021, pursuant to the terms of the Loan of Goods Agreement.”  (FAC ¶ 18, [italics added].)  Thus, pursuant to the Loan of Goods Agreement after the Big Bang Ring was not returned, Plaintiff Mambetova was entitled to the retail value (plus applicable tax) for the nonreturned items – i.e., money.  As noted above, money is not a proper subject of conversion unless it is a specific identifiable sum of money.  Here, the money sought is not some specific identifiable sum of money.  Further, since Plaintiff Mambetova was only entitled to the retail value of the Big Bang Ring, there is no allegation that Plaintiff Mambetova was entitled to immediate possession of the Big Bang Ring.

In addition, as discussed above, there is no conduct alleged as to Defendant Norwood and there is no allegation that Thomas was Defendant Norwood’s agent. 

            Accordingly, Defendants’ demurrer to the sixth cause of action is SUSTAINED.

Seventh Cause of Action: Unjust Enrichment

            Defendants contends that there is no cause of action for unjust enrichment.

Strictly speaking, “ ‘[t]here is no cause of action in California for unjust enrichment.’ [Citation.]”  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.)  However, Courts have recognized that this is “ ‘an effect: the result of a failure to make restitution under circumstances where it is equitable to do so.’ [Citation.] ... It is synonymous with restitution.” (Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793.) Ordinarily, restitution is required only if “ ‘the benefits were conferred by mistake, fraud, coercion or request.’ ” (Nibbi Brothers, Inc. v. Home Federal Sav. & Loan Assn. (1988) 205 Cal.App.3d 1415, 1422, [italics omitted].)  “However, as a matter of law, a quasi-contract action for unjust enrichment does not lie where, as here, express binding agreements exist and define the parties' rights.”  (California Medical Ass'n, Inc. v. Aetna U.S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151, 172.)  “When parties have an actual contract covering a subject, a court cannot—not even under the guise of equity jurisprudence—substitute the court's own concepts of fairness regarding that subject in place of the parties' own contract.”  (Ibid. [internal citations omitted].)

Here, there is no basis for a claim for unjust enrichment.  The FAC alleges that an express agreement existed between Mambetova and Defendant Thomas.  (FAC ¶ 11, Exh. 3.)  Accordingly, a claim for quasi-contract such as unjust enrichment would be improper.  Further there is no allegation that Defendants have been enriched as the FAC alleges that Defendants lost the Big Bang Ring.  (FAC ¶ 17.)

Accordingly, Defendants’ demurrer to the seventh cause of action is SUSTAINED.

Eighth Cause of Action: Penal Code § 496

            Defendants assert that the eighth cause of action fails because Plaintiffs have not alleged any of the elements of obtaining stolen property under Penal Code section 496.

Penal Code section 496 provides, in pertinent part, as follows:

(a) Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170. However, if the value of the property does not exceed nine hundred fifty dollars ($950), the offense shall be a misdemeanor, punishable only by imprisonment in a county jail not exceeding one year, if such person has no prior convictions for an offense specified in clause (iv) of subparagraph (C) of paragraph (2) of subdivision (e) of Section 667 or for an offense requiring registration pursuant to subdivision (c) of Section 290.

A principal in the actual theft of the property may be convicted pursuant to this section. However, no person may be convicted both pursuant to this section and of the theft of the same property.

…

(c) Any person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney’s fees.

(Penal Code § 496.)

“Section 496(a) extends to property ‘that has been obtained in any manner constituting theft.’ Penal Code section 484 describes acts constituting theft. The first sentence of section 484, subdivision (a) states: ‘Every person . . . who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, . . . is guilty of theft.’”  (Bell v. Feibush (2013) 212 Cal.App.4th 1041, 1048, [finding that Penal Code section 496(c) could impose liability for a loan given based on fraudulent misrepresentations].)

“While section 496(a) covers a spectrum of impermissible activity relating to stolen property, the elements required to show a violation of section 496(a) are simply that (i) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property.”  (Switzer v. Wood (2019) 35 Cal.App.5th 116, 126.)  Moreover, “‘when the property in question comes into the defendant's hands, it must already have the character of having been stolen.’ [Citation.]”  (Lacagnina v. Comprehend Systems, Inc. (2018) 25 Cal.App.5th 955, 971.)  Further, “[t]o prove theft, a plaintiff must establish criminal intent on the part of the defendant beyond ‘mere proof of nonperformance or actual falsity.’ [Citation.]”  (Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 361–362.) 

Here, there is no allegation that Defendants obtained the Big Bang Ring by theft as required to state a claim under Penal Code section 496.  As noted by the FAC, Defendant Thomas obtained the Big Bang Ring through the Loan of Goods Agreement.  (FAC ¶ 11, Exh. 3.)  Thus, when the property came into Defendants hands it did not have the character of having been stolen.  Moreover, there is no allegation that Defendants even possess the Big Bang Ring.  The FAC alleges that Defendants lost the Big Bang Ring.  (FAC ¶ 17.)  Thus, as the Big Bang Ring is lost, Defendants could not be in possession of such. 

Accordingly, the FAC fails to allege circumstances such that a claim under Penal Code section 496 would be applicable.  Therefore, Defendants’ demurrer to the eighth cause of action is SUSTAINED.

Discussion – Motion to Strike

            Defendants seek to strike the claim for punitive damages, the claim for lost profits, the claim for attorneys’ fees, paragraphs 7, 27, and 28, and exhibits 2, 6, and 7 attached to the FAC.

Punitive Damages

California Civil Code section 3294 authorizes the recovery of punitive damages in non-contract cases where “the defendant has been guilty of oppression, fraud, or malice . . . .” (Civ. Code, § 3294(a).) “‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Id. at (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id. at (c)(2).) “‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Id. at (c)(3).) Punitive damages thus require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.)

            As the Court has sustained Defendants’ demurrer to all of the claims except for the claim for breach of contract against Defendant Thomas, there is no basis for punitive damages.  Accordingly, Defendants’ motion to strike the prayer for punitive damages is GRANTED.

Lost Profits

            “Lost profits may be recoverable as damages for breach of a contract.”  (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773.)  “Lost profits, if recoverable, are more commonly special rather than general damages [Citation], and subject to various limitations. Not only must such damages be pled with particularity [Citation], but they must also be proven to be certain both as to their occurrence and their extent, albeit not with ‘mathematical precision.’”  (Lewis Jorge Construction Management, Inc. v. Pomona Unified School Dist. (2004) 34 Cal.4th 960, 975.)

            Here, the FAC merely identifies that it seeks lost profits.  However, no particularity has been provided stating the circumstances that would provide for the alleged lost profit.  Accordingly, Defendants’ motion to strike the prayer for lost profits is GRANTED.

Attorney Fees

            Attorney’s fees shall only be recoverable as provided for by statute, contract or other law. (CCP §§1021, 1033.5(a)(10).) 

            Here, the sole claim remaining is the claim for breach of contract against Defendant Thomas.  However, there is no allegation nor does the Loan of Goods Contract provide for attorneys’ fees.  Accordingly, as there is no statutory or contractual basis for attorneys’ fees, Defendant’s motion to strike the prayer for attorneys’ fees is GRANTED.

Relevance

            Defendants seek to strike paragraphs 7, 27, 28, and the corresponding exhibits 2, 6, and 7 on the basis that they are irrelevant.

            Paragraph 7 of the FAC alleges that Plaintiff Norwood “is a nationally well-known singer, songwriter, actress, model and television personality.”  (FAC ¶ 7.)  This paragraph also refers to a Wikipedia article noting as such.  (FAC ¶ 7, Exh. 2.)  This paragraph and corresponding exhibit does have some relevance as to the under lying contract and purpose for the contract – i.e., loaning various clothing for Norwood to wear at the AMAs.

            Paragraphs 28 and 29 and the corresponding exhibits relate to a small claims case from 2013 in which Defendant Thomas and Defendant Norwood failed to return loaned clothing as a basis to claim that Defendants have a repeated pattern and practice of misrepresenting their intentions to borrow and return fashion items.  (FAC ¶¶ 27-28, Exhs. 6-7.)  A small claims action involving Defendants failing to return fashion items nearly a decade ago does not establish a “pattern and practice” of failing to return items.  Moreover, little weight is given to the evidentiary findings of a small claims’ judgment as “collateral estoppel does not apply to small claims judgments due to ‘the characteristics of informality inherent in the small claims proceeding.’”  (Sanders v. Walsh (2013) 219 Cal.App.4th 855, 867.)

            Accordingly, Defendants’ motion to strike is GRANTED as to paragraphs 27 and 28 and exhibits 6 and 7.

Leave to Amend

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, it is unclear whether Plaintiffs can successfully amend the complaint.  However, this is the first time that a complaint has been sustained against Plaintiffs’ complaint. Therefore, the court finds it is proper to allow Plaintiff an opportunity to cure the defects discussed in this order. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037.)   

CONCLUSION AND ORDER

            Based on the foregoing, Defendant Brandy Norwood’s demurrer to the First Amended Complaint is SUSTAINED WITH LEAVE TO AMEND.

            Defendant Ashley Sean Thomas’ demurrer to the First Amended Complaint is SUSTAINED WITH LEAVE TO AMEND as to the second, third, fourth, fifth, sixth, seventh, and eighth causes of action and otherwise OVERRULED.

            Defendants’ motion to strike is GRANTED WITH LEAVE TO AMEND as to the prayer for punitive damages, the prayer for lost profits, the prayer for attorneys’ fees, paragraphs 27 and 28, and exhibits 6 and 7 to the First Amended Complaint.  Defendants’ motion to strike is otherwise DENIED.

            Plaintiffs are to file an amended complaint within thirty (30) days of notice of this order.

            The Court notes that on September 26, 2022 Plaintiffs filed a substitution of attorney noting that Plaintiff Mambetova Holdings LLC is now representing itself.  This is improper.

The Court notes that while a corporation has the capacity to bring a lawsuit because it has all the powers of a natural person in carrying out its business, under a long-standing common law rule of procedure, a corporation, unlike a natural person, cannot represent itself before courts of record in propria persona, nor can it represent itself through a corporate officer, director or other employee who is not an attorney.  (CLD Const., Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1145.)  “[A corporation] must be represented by licensed counsel in proceedings before courts of record.”  (Id.) 

In light of these authorities, the Court will require that Mambetova Holdings, LLC timely retain new counsel and file a substitution of counsel within 14 days of service of this order.  The court hereby sets an OSC regarding status of Mambetova Holdings, LLC’s representation for November 7, 2022 at 8:30 am in Department 26.  Mambetova Holdings, LLC is ordered to appear on November 7, 2022 with its new counsel. 

If Mambetova Holdings, LLC fails to file a substitution of counsel within 14 days of service of this order, Mambetova Holdings, LLC is ordered to appear on November 7, 2022 at 8:30 am in Department 26 and show cause why Mambetova Holdings, LLC’s complaint should not be dismissed. Mambetova Holdings, LLC’s failure to appear on November 7, 2022 at 8:30 am in Department 26 shall be deemed consent to dismissal of the complaint.

            Moving Parties are to give notice and file proof of service of such.

DATED:  October 21, 2022                                                    _____________________________

                                                                                                  Elaine Lu

                                                                                                  Judge of the Superior Court