Judge: Frank M. Tavelman, Case: 23BBCV00225, Date: 2023-12-01 Tentative Ruling

Case Number: 23BBCV00225    Hearing Date: December 1, 2023    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

DEMURRER & MOTION TO STRIKE

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS: 

Elliot Shell (“Plaintiff”), as an individual and as trustee of the Shell Family Trust, the Elliot Lewis Shell Exempt Trust, and the Elliot Lewis Shell Exempt Trust U/D/T brings this action against Carla Christofferson (“Christofferson”) and Adam Shell (collectively “Defendants”). Christofferson and Adam Shell were formerly married, and Adam Shell is Plaintiff’s son. Plaintiff alleges that he and Defendants entered into an oral loan agreement whereby Plaintiff would loan the Defendants money thorough various trusts. Plaintiff alleges these funds were used to purchase a home for Defendants among other expenses.

The First Amended Complaint (“FAC”) contains causes of action for (1) Breach of Contract, (2) Money Had and Received, (3) Money Lent, (4) Account Stated, and (5) Unjust Enrichment.

Christofferson now demurs to each cause of action on grounds that Plaintiff alleged insufficient facts. Christofferson also moves to strike various portions of the FAC and its exhibits. Plaintiff opposes both the demurer and the motion to strike and Christofferson replies.

ANALYSIS: 

I.                    LEGAL STANDARD 

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (C.C.P. § 430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Id.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.  (Blank, supra, 39 Cal. 3d at 318.)

Pursuant to Code of Civil Procedure (“C.C.P.”) §§ 430.10(e) and (f), the party against whom a complaint has been filed may demur to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action, or that the pleading is uncertain, ambiguous and/or unintelligible. It is an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable probability that the defect can be cured by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1082.)

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer, such as words, phrases, and prayers for damages. (See C.C.P. §§ 435, 436, and 437.) The proper procedure to attack false allegations in a pleading is a motion to strike. (C.C.P. § 436(a).) In granting a motion to strike made under C.C.P. § 435, “[t]he court may, upon a motion made pursuant to Section 435 [notice of motion to strike whole or part of complaint], or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (C.C.P. § 436(a).) Irrelevant matters include immaterial allegations that are not essential to the claim or those not pertinent to or supported by an otherwise sufficient claim. (C.C.P. § 431.10.)

The court may also “[s]trike out 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.” (C.C.P. § 436 (b).)

II.                 MERITS

Demurrer

Breach of Contract - First COA

To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

In order to show a contract was created a plaintiff must prove that (1) the terms of the contract were clear enough that the parties could understand their obligations, (2) that there was consideration for the contract, and (3) that the parties mutually consented to the contract. (CACI No. 302.)

The allegations in the FAC pertaining to the formation of the contract are as follows:

·         Commencing in or about July of 2012 and continuing until about September of 2017, the parties entered into an oral agreement pursuant to which Plaintiffs agreed to loan money to Defendant from time to time for household and other purposes, including the purchase of a home. (FAC ¶ 8.)

·         Defendants agreed to repay the principal amount when they were able to do so. (FAC ¶ 8.)

·         Defendants would pay quarterly interest at the lowest rate permitted by the IRS. (FAC ¶ 8.)

·         Plaintiff sent quarterly statements stating the amounts owed beginning in July 2012. (FAC. ¶ 10.)

·         A summary of the quarterly statements was sent to Christofferson on December 31, 2020 and is attached to the FAC as Exhibit A. (FAC ¶ 10.)

Christofferson argues that the cause of action for breach of contract states insufficient facts as to the existence of a contract between the parties. Christofferson argues the allegations of an oral contract to loan monies are too vague for the Court to adjudicate the rights and obligations of the parties.  The Court finds this argument unpersuasive.

Exhibit A, in combination with the material allegations of the FAC, shows that Plaintiff alleges several loans were made to Defendants. From July 10, 2012 to August 2017, Plaintiff provided Defendants seven loans from his ELS Exempt Trust totaling $1,014,000. (FAC Exh. A, p. 1.) From July 2, 2012 to September 1, 2017, Plaintiff provided Defendants 11 loans from his ELS/EPS Trust totaling $514,000. (Id.) Plaintiff alleges that in exchange, Defendants agreed to repay the loans when able and also agreed to pay interest on the amounts quarterly. The Court finds these allegations, taken together, comprise the element of clear terms. Plaintiff is alleged to have understood he was to loan monies to Defendants and Defendants are alleged to have understood they would repay the amount as well as render quarterly interest payments.

Further, the FAC alleges the parties mutually consented to the agreement. The FAC alleges that pursuant to the agreement, Plaintiff loaned approximately $1,500,000 to Defendants and Defendants made quarterly interest payments. (FAC ¶ 9.) The Court finds these allegations sufficient to allege mutual consent to the loan agreement. 

Christofferson argues that the FAC is insufficient because it alleges an indeterminate amount of loans. As stated above, the FAC contains allegations of precisely 18 loans.  Christofferson further argues the FAC is insufficient because it does not state any communication prior to the loans, any specific date on which a “meeting of the minds” occurred, a maximum amount of the loans, and various other missing terms. Christofferson cites to no authority that the absence of these terms is grounds to sustain her demurrer. While not every material term is alleged in the FAC, the essential terms of the contracts to determine the obligations and liabilities of the parties are alleged.

Christofferson further argues that the FAC does not sufficiently allege breach of the contract. Christofferson argues that because the repayment of the loan was due only when Defendants were able to repay, there has been no breach. The Court finds this argument unpersuasive. One of the material terms alleged was Defendants would pay quarterly interest on the loans. Plaintiff alleges that on April 1, 2021, Defendants ceased to make the quarterly payments in violation of the contract (FAC ¶ 15.) Regardless of when payment on the principle was due, the fact remains that Plaintiff has alleged a breach of the loan contract by virtue of failure to pay interest.

Further, Plaintiff also alleges that Defendants had the capacity to pay the principal loan amount. Plaintiff alleges that at least two years prior to the original complaint filing, Defendants had the ability to pay the loan by virtue of selling the Residence, which the loans were used to purchase. (FAC ¶ 17.)

Accordingly, the demurrer to the first cause of action is OVERRULED.

Money Had and Received – Second COA

“A cause of action for money had and received is stated if it is alleged the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff.” (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460, [citation and quotation marks omitted].) “The plaintiff must prove that the defendant received money “intended to be used for the benefit of [the plaintiff],” that the money was not used for the plaintiff's benefit, and that the defendant has not given the money to the plaintiff.” (Avidor v. Sutter’s Place, Inc. (2013) 212 Cal. App. 4th 1439, 1454.)

Plaintiff’s allegations do not speak to a cause of action for money had and received. The FAC contains no allegations that the funds received by Defendants were intended to benefit Plaintiff and were instead misappropriated for some other purpose. In fact, the FAC alleges Plaintiff loaned the funds for the benefit of Defendant for the purchase of a home and household expenses. In light of the factual circumstances here, the Court does not view it as possible that Plaintiff could amend the FAC to add allegations speaking to this cause of action. Accordingly, the demurrer to the second cause of action is SUSTAINED without leave to amend.

Money Lent – Third COA

“A claim for ‘money lent’ is one of the common counts. The common counts arose from the action of assumpsit in the common law. Such an action permitted a plaintiff to recover money that, under the circumstances, the defendant should be required to repay to avoid inequity.” (Rubenstein v. Fakheri (2009) 49 Cal. App. 5th 797, 809. [internal quotations and citations omitted].)

“A common count claim broadly applies wherever one person has received money which belongs to another, and which in equity and good conscience, or in other words, in justice and right, should be returned. The claim does not require privity of contract. Although the plaintiff's right to recover under a common count is based on equitable principles, the claim is legal in nature.” (Id. [internal quotations and citations omitted].)

The Court finds Plaintiff has alleged sufficient facts to sustain this cause of action. As stated above, the FAC contains clear allegations that Defendants were given the money with the intention that it be paid back. Plaintiff’s argument that the FAC only alleges a gift of the money is unpersuasive. The FAC contains allegations of a condition of repayment and the charging of quarterly interest which are at odds with allegations of a gift.

Accordingly, the demurrer to the third cause of action is OVERRULED.

Account Stated – Fourth COA

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. (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.)

Christofferson argues that Plaintiff has not stated sufficient facts because the FAC does not allege Christofferson’s assent to pay the full amount due. As discussed above, the Court finds the FAC contains allegations that Christofferson agreed to repay the loans. Whether Plaintiff will be able to show a promise to repay remains to be seen, but Plaintiff’s allegations are sufficient at the pleading stage.

Accordingly, the demurrer to this fourth cause of action is OVERRULED.

Restitution Based on Unjust Enrichment – Fifth COA

The Court notes there is a split of authority on whether unjust enrichment is a cause of action. “The phrase ‘Unjust Enrichment’ does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so.” (Lauriedale Associates, Ltd. v. Wilson (1992) 7 Cal. App. 4th 1439, 1448.) “Unjust enrichment is ‘a general principle, underlying various legal doctrines and remedies,’ rather than a remedy itself.” (Melchior v. New Line Cinema (2003) 106 Cal. App. 4th 779, 793.)

“[A]s 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; see also Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 650) Here, Plaintiff has pled no facts which differentiate his cause of action for breach of contract and his cause of action for unjust enrichment.

Accordingly, the demurrer to the fifth cause of action is SUSTAINED with 20 days’ leave to amend. Leave to amend is granted only in so far as Plaintiff may add facts separate of the loan agreement which constitute unjust enrichment.

Motion to Strike

Allegations of Ability to Pay

Christofferson requests the Court strike the following allegations as improper:

“Within two (2) years prior to the filing of the original Complaint in this action, Defendants further breached the Agreement, in that Defendants were able to repay to Plaintiffs, and are presently able to repay to Plaintiffs, the remaining outstanding balance of the Loans, and/or Defendants have been derelict in their efforts to acquire the means to repay the Loans, including but not limited to the failure and refusal to sell the Residence.” (FAC ¶ 17.)

Christofferson contends that these allegations are conclusory statements of law supported by facts. Christofferson argues that the statements are conclusory because they contain no facts which explain the condition upon which the loan must be repaid. Christofferson argues Plaintiff alleges no facts as to her ability to repay the loan which would trigger the repayment condition. Christofferson cites to no authority that supports Plaintiff is required to state such facts at the pleading stage. The Court finds Plaintiff’s allegations are not conclusory statements of law. Such statements in this instance would be akin to “Christofferson is in breach of the loan agreement”. Here, Plaintiff has alleged that Christofferson has assets which could satisfy the loan if sold. The value of those assets and whether they cover the loan amounts is a matter for discovery and the current uncertainty does not merit the striking of the allegations.

Accordingly, the motion to strike these allegations is DENIED.

Marital Privilege

Christofferson’s motion requests that Exhibits A-F attached to the FAC to be stricken, however she withdraws this request as to Exhibit A in her reply.

Portions of Exhibits B-F are email exchanges between Christofferson and her former husband Adam Shell. Christofferson argues these communications fall under the marital privilege of Evidence Code § 980, which provides “[A] a spouse... whether or not a party, has a privilege during the marital or domestic partnership relationship and afterwards to refuse to disclose, and to prevent another from disclosing, a communication if he or she claims the privilege and the communication was made in confidence between him or her and the other spouse while they were spouses.”

A review of the material shows that these communications were private emails from Christofferson to Adam Shell regarding their personal finances. Plaintiff argues that there is no expectation of privacy in these communications such that the privilege would be invoked. The Court disagrees. To make a marital communication “in confidence” one must intend nondisclosure and have reasonable expectation of privacy;¿both factors must be shown before invocation of marital privilege will be honored. (People v. Von Villas (1992) 11 Cal.App.4th 175, 229.) “While a communication between a husband and wife is presumed to be confidential, if the facts show that the communication was not intended to be kept in confidence, the communication is not privileged.” (People v. Cleveland (2004) 32 Cal.4th 704, 743 [internal citation omitted].)

Here, the Court finds both factors have been shown by Christofferson. The email communications between them are presumed confidential as a matter of law and no facts have been alleged which indicate Christofferson ever intended the communications to become public. It also stands to reason that an individual has an expectation of privacy in their private email communications. Accordingly, the motion to strike these portions of Exhibits B-F is GRANTED.

Accountant Privilege

Christofferson also requests the Court strike the portions of Exhibits B-F which are communications between herself and Plaintiff, as Plaintiff served as her accountant. Christofferson argues the communications contain information which would be subject to the accountant-client privilege established by Business and Professions Code § 5063.3.  The Court notes that Plaintiff provides no argument to this point in his opposition.

The Court has granted the striking of these exhibits pursuant to Evidence Code § 980, as such, a ruling as to accountant-client privilege is moot..

Exhibit C

Exhibit C contains an email exchange which the Court has already determined to be subject to the marital communications privilege. The remaining portion of the Exhibit is a communication between Christofferson and another representative from Plaintiff’s accounting firm. Plaintiff concedes that this communication was inadvertently included and is irrelevant to the instant action. (Oppo. p. 6.) Accordingly, the motion to strike this portion of Exhibit C is GRANTED.

Sealing of First Amended Complaint / Filing of Revised First Amended Complaint

Having ruled that Exhibits B-F of the First Amended Complaint are protected by Evidence Code § 980 from disclosure, permitting these records to remain public would countervene the purpose of the marital communication privilege and Evidence Code § 980.   As such, pursuant to California Rules of Court, Rule 2.550 the Court finds an overriding interest in maintaining he confidentiality set for the in Evidence Code § 980 as balanced against the right of public access to records.  The Court further finds that the overriding interest supports sealing the records, a substantial probability exists that the protection afforded by Evidence Code § 980 will be prejudiced if the record is not sealed.   The sealing is narrowly tailored to the First Amended Complaint only.   Due to technical issues regarding e-filing with the Court, part of the document cannot be sealed once it is already filed.   As such, the entire document must be sealed; however, Defendants shall file within 10 court days a revised FAC which includes Exhibit A, but excludes Exhibits B-F such that an unredacted FAC may be on file.  No less restrictive means exist to achieve the overriding interest.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records. 

ORDER 

Carla Christofferson’s Demurrer came on regularly for hearing on December 1, 2023, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows: 

THE DEMURRER TO THE FIRST, THIRD, AND FOURTH CAUSES OF ACTION ARE OVERRULED.

THE DEMURRER TO THE SECOND CAUSE OF ACTION IS SUSTAINED WITHOUT LEAVE TO AMEND.

THE DEMURRER TO THE FIFTH CAUSE OF ACTION IS SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.

THE MOTION TO STRIKE ALLEGATIONS LOCATED IN FAC PARAGRAPH 17 IS DENIED.

THE MOTION TO STRIKE EXHIBITS B THROUGH F IN THE COMPLAINT IS GRANTED.   THE COURT FURTHER ORDERS THAT THE FIRST AMENDED COMPLAINT BE SEALED TO PROTECT THE CONFIDENTIAL INFORMATION.   TO COMPLY WITH CRC 2.550, DEFENDANT SHALL FILE A REVISED FIRST AMENDED COMPLAINT WHICH EXCLUDES THE PROTECTED EXHIBITS B-F WITHIN 10 COURT DAYS. THE COURT ORDERS PLAINTIFF TO EXCLUDE SUCH COMMUNICATION IN ANY SUBSEQUENT COMPLAINT.

UNLESS ALL PARTIES WAIVE NOTICE, CHRISTOFFERSON TO GIVE NOTICE.

IT IS SO ORDERED. 

DATE:  December 1, 2023                          _______________________________ 

                                                                        F.M. TAVELMAN, Judge 

Superior Court of California 

County of Los Angeles