Judge: Frank M. Tavelman, Case: 24BBCV00244, Date: 2024-05-17 Tentative Ruling
Case Number: 24BBCV00244 Hearing Date: May 17, 2024 Dept: A
LOS
ANGELES SUPERIOR COURT
NORTH
CENTRAL DISTRICT - BURBANK
DEPARTMENT
A
TENTATIVE
RULING
MAY 17, 2024
DEMURRER
Los Angeles Superior Court
Case # 24BBCV00244
|
MP: |
Gary English and Gary English
Construction (Defendants) |
|
RP: |
Judy Choi (Plaintiff) |
The Court is not
requesting oral argument on this matter. The Court is guided by
California Rules of Court, Rule 3.1308(a)(1) whereby notice of intent to appear
is requested. Unless the Court directs argument in the Tentative Ruling,
no argument is requested and any party seeking argument should notify 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 argument is received.
Notice may be given
either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.
ALLEGATIONS:
Judy Choi (Plaintiff) brings this
action against Gary English and Gary English Construction (Defendants).
Plaintiff alleges she contracted with Defendants to build an Alternative
Dwelling Unit (ADU) on her property. Plaintiff alleges that despite payment
made to Defendants, the project remained unfinished and much of the work that
was completed was defective.
The Complaint contains five causes of
action for (1) Breach of Contract, (2) Fraud, (3) Unfair Business Practices,
(4) Accounting, and (5) Rescission.
Defendants now bring a special demurrer
to the entire Complaint on grounds that it does not direct its causes of action
to specific Defendants. Defendants also generally demur to each cause of action
in the Complaint arguing that Plaintiff fails to allege sufficient facts.
Plaintiff opposes the demurrer and Defendants reply.
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 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.)
II.
MERITS
Meet and Confer
C.C.P. §§ 430.41(a) requires that the moving party meet
and confer with the party who filed the pleading that is subject to the
demurrer. Upon review the Court finds the meet and confer requirements were met.
(Stone Decl. ¶ 3.)
Special
Demurrer for Uncertainty – Overruled
California
Rules of Court Rule 2.112 provides each cause of action must specifically state
the number, nature, party asserting (if there is more than one) the cause of
action, and the party at whom it is directed. Failure to comply with Rule 2.
112 presumably renders a complaint subject to a motion to strike (C.C.P. §
436), or a special demurrer for uncertainty.” (Grappo v. McMills (2017)
11 Cal. App. 5th 996, 1014.) Defendants argue that because the Complaint fails
to identify a specific Defendant for each cause of action, the Complaint is
subject to a special demurrer for uncertainty.
Plaintiff’s
Complaint does not identify which Defendant each particular cause of action is
asserted against. However, in reviewing a demurrer, the Court evaluates the
Complaint liberally, and in context. Here, Plaintiff identifies both Gary
English and Gary English Construction as Defendants. The Complaint alleges that
Gary English is the sole-proprietor of Gary English Construction and that the
causes of action stem from a construction contract. As a result, any cause of
action leveled at Gary English related to the construction can be reasonably
construed as being directed at both Defendants. Defendants provide no reason
why this failure is fatal to the Complaint, save for strict code compliance.
Given the liberal interpretation Complaints are entitled to on demurrer and
that special demurrers for uncertainty are disfavored, the special demurrer for
uncertainty is OVERRULED. (see Khoury v. Maly’s of California, Inc.
(1993) 14 Cal. App. 4th 612, 616 [“A demurrer for uncertainty is strictly
construed, even where a complaint is in some respects uncertain, because
ambiguities can be clarified under modern discovery procedures.”].)
First COA
– Breach of Contract – Overruled
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.)
If a
breach of contract claim “is based on alleged breach of a written contract, the
terms must be set out verbatim in the body of the complaint or a copy of the
written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999)
74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead
the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v.
TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)
Here,
Plaintiff alleges that she and Defendants entered into an “oral contract,
memorialized in writing”. (Compl. ¶ 87.) Attached to the Complaint as
Exhibit 1 is a document labeled “Construction Contract”. A review of the
exhibit reveals a combination of itemized lists bearing the letterhead of “Gary
English Construction”
Defendants
argue that Plaintiff has failed to allege sufficient facts to state her cause
of action for breach because her allegations as to the nature of the contract
are conflicting. Defendants argue that Plaintiff alleges the contract was an “oral
contract memorialized in writing” while also alleging that the contract was
purely written by way of attaching a purported “Construction Contract” to the
Complaint. Defendants argue that these allegations are inconsistent such that
the nature of the contract cannot be ascertained from the Complaint.
The Court
agrees with Defendants that Plaintiff is required to plead the nature of the
contract, whether oral or written, and allege its substantive terms. The Court
disagrees that Plaintiff has not done so in her Complaint. The Court does not
see how allegations of an oral contract memorialized later in writing are
inconsistent with the attachment of said writing. To the extent that Defendants
believe these allegations create ambiguity as to the contractual terms, such
ambiguities would be capable of resolution through discovery such that a
demurrer is not appropriate.
At the
same time the “Construction Contract” attached as Exhibit 1 appears unlikely to
be a contract within the meaning of the law. Exhibit 1 consists of several work
orders, many of which are handwritten. There are no signature lines and no
substantive terms contained in these writings. It seems unlikely to the Court
that this document alone could serve as a contract between the parties as it
contains no indication of mutual assent. (See Costa v. Road Runner Sports,
Inc. (2022) 84 Cal.App.5th 224 [“If there is no evidence establishing
a manifestation of assent to the “same thing” by both parties, then there is no
mutual consent to contract and no contract formation”].)
Regardless,
the Court finds that the allegations of the Complaint as a whole are sufficient
to establish both the existence of a contract and its terms. Plaintiff
specifically alleges that sometime between June 11th and June 15th,
English presented her with a contract including an itemized list of the work he
would do and the cost of $150,000. (Compl. ¶ 36.) Plaintiff also alleges the
scope of the work that was to be performed, effectively outlining the terms of
the contract. Specifically, Plaintiff alleges that Defendants contracted to
install a bathroom, kitchen, tankless hot water heater, countertops,
backsplash, closet organizer, waterproofing, mold remediation, foundation
repair “at a cost of thousands of dollars”. (Compl. ¶ 75-81.)
The Court
finds Plaintiff has adequately alleged the existence of a contract between the
parties that was subsequently breached when Defendants did not complete the
contracted work for the agreed upon price. Accordingly, the demurrer to this
cause of action is OVERRULED.
Second
COA - Fraud - Overruled
Defendants
demur to this cause of action, reasoning that it is barred by the “economic
loss” rule. The economic loss rule provides that, “[i]n general, there is no
recovery in tort for negligently inflicted ‘purely economic losses,’ meaning
financial harm unaccompanied by physical or property damage.” (Sheen v.
Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) Defendants argue that
Plaintiff’s cause of action for fraud is barred because it only alleges damages
in the form of economic losses. However, the economic loss rule does not bar
causes of action for intentional misrepresentation where the allegations of
fraud are separate from allegations of a breach of contract. (Robinson
Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 991.) In Robinson
Helicopter, the California Supreme Court found that the economic loss rule
did not bar a cause of action for fraud where the plaintiff alleged that they
would not have entered into the contract without the fraudulent
misrepresentations. (Id.) In short, where the conduct of fraudulently
inducing a person to enter a contract is separate from the conduct breaching
the contract, the economic loss rule does not apply. (Id.)
The Court
finds that a good portion Plaintiff’s allegations of fraudulent inducement are
separate from her claims of breach. While some of the allegations of fraud
speak to Defendants’ alleged breach, others speak specifically to actions by
Defendants which were intended to induce Plaintiff’s reliance. For example,
Plaintiff alleges that English promised her that he could obtain the proper
permits for a comfortable ADU and that all of the work would be completed in a
matter of months. (Compl. ¶ 18.) Plaintiff also alleges that English
showed her pictures of properties he had completed and told her that he was
best friends with a Burbank City Inspector such that permitting would not be a
problem. (Compl. ¶ 19.) Defendant also told Plaintiff that the existing
structure was totally viable and would not need to be demolished as part of the
new construction. (Compl. ¶ 23.) Lastly, Plaintiff alleges that she
initially informed English that the price was too high when yard work was
included. (Compl. ¶ 33.) English responded that he would “take care of”
working on the yard if Plaintiff paid to have the ADU constructed. (Compl.
¶ 34.)
All of
the above allegations speak to alleged conduct by English prior to the contract
and which was intended to induce Plaintiff to agree to the project. These
allegations indicate a fraudulent misrepresentation which stands outside the
breaching conduct itself. As such, the economic loss rule does not serve to bar
this cause of action.
Accordingly,
the demurrer to this cause of action is OVERRULED.
Third COA
– Unfair Business Practices – Overruled
Unfair
competition is defined as “any unlawful, unfair or fraudulent business act or
practice…” (Bus. & Prof. Code § 17200.) The law is “sweeping, embracing
anything that can properly be called a business practice and at the same time
is forbidden by law.” (Cel-Tech Communications, Inc. v. Los Angeles Cellular
Telephone Company (1999) 20 Cal. 4th 163, 180.) Since Bus. & Prof. Code
§ 17200 is written in the disjunctive, Plaintiff may state a cause of action if
any of the three prongs are satisfied. (See Podolsky v. First Healthcare
Corp. (1996) 50 Cal. App. 4th 632, 647; Berryman v. Merit Property
Management, Inc. (2007) 152 Cal. App. 4th 1544, 1554.) In relevant part,
under the fraudulent prong, “[a] business practice is fraudulent under the UCL
if a plaintiff can show that ‘members of the public are likely to be deceived.’”
(Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal. App. 4th
830, 847 quoting Bardin v. Daimlerchrysler Corporation (2006) 136 Cal.
App. 4th 1255, 1261.)
The Court
finds the facts alleged in the Complaint are sufficient. As already detailed in
the previous section, Plaintiff alleges a variety of fraudulent
misrepresentations made by Defendants to induce her into contract. The
allegations are presented with specificity such that they can serve as
allegations of fraudulent business practices under Bus. & Prof. Code §
17200. Defendants’ argument that Plaintiff has not alleged violation of a
specific law is unpersuasive. First, it appears Plaintiff is claiming violation
of Bus. & Prof. Code § 17200 by virtue of unfairness and not unlawfulness.
Second, even if Plaintiff was claiming unlawfulness, such a claim can be based
on conduct barred by a separate regulation, statute, or common-law rule. (Kasky
v. Nike, Inc. (2002) 27 Cal.4th 939, 950.)
In short,
the Court finds that Plaintiff has sufficiently alleged fraudulent business
practices in violation of Bus. & Prof. Code § 17200. Accordingly, the
demurrer to this cause of action is OVERRULED.
Fourth
COA – Accounting – Overruled
“A cause
of action for an accounting requires a showing that a relationship exists
between the plaintiff and defendant that requires an accounting, and that some
balance is due the plaintiff that can only be ascertained by an accounting. An
action for accounting is not available where the plaintiff alleges the right to
recover a sum certain or a sum that can be made certain by calculation.” (Teselle v. McLoughlin (2009) 173
Cal.App.4th 156, 179.)
Defendants
argue that this cause of action is unavailable to Plaintiff because she alleges
a sum certain for the contract, i.e. $150,000. Defendants’ argument misstates
Plaintiff’s claim. Plaintiff’s action seeks an accounting of the money that she
provided in excess of the sum certain initially agreed to. (Compl. ¶ 109.)
Plaintiff specifically alleges that the project remained unfinished after the
payment of the $150,000. (Compl. ¶ 62.) Plaintiff further alleges that she
paid “thousands of dollars” beyond the agreed upon price for the installation
of a bathroom, kitchen, tankless hot water heater, countertops, backsplash,
closet organizer, waterproofing, mold remediation, foundation repair. (Compl.
¶ 75-81.) Plaintiff seeks an accounting for the amounts paid as these
installations are alleged to have never occurred. These allegations render
Plaintiff’s claim for an accounting to be outside of the sum certain
established by the contract.
Accordingly,
the demurrer to this cause of action is OVERRULED.
Fifth COA
– Rescission – Overruled
To
rescind a contract, a party must promptly, upon discovering the facts entitling
him to recission: (a) notify the other party; and (b) restore or offer to
restore to that party everything of value taken under the contract. (Cal. Civ.
Code § 1691.) Service of a complaint seeking recission can serve as the
requisite notice and offer if a notice or offer have not otherwise been made. (Id.)
Whether as
a cause of action or a remedy, a party seeking rescission must allege “a valid
substantive ground for rescission.” (Wong v. Stoler (2015) 237
Cal.App.4th 1375, 1387.) Grounds for unilateral rescission include when
plaintiff’s consent “was given by mistake, or obtained through duress, menace,
fraud, or undue influence, exercised by or with the connivance of” the
defendant. (Cal. Civ. Code, § 1689(b)(1).) “[W]hen a party has been induced by
fraud or mistake to enter into a contract, the party may have the contract set
aside and seek restitution of those benefits lost to him by the transaction.” (Merced
County Mut. Fire Ins. Co. v. State of California (1991) 233 Cal.App.3d 765,
771.)
Defendants
demur to this cause of action arguing (1) that Plaintiff has not given notice
of intent to rescind and (2) Plaintiff has not returned any consideration
provided by Defendants.
The Court
finds both of these arguments unpersuasive. First, Cal. Civ. Code § 1691
explicitly states that a complaint including a cause of action for rescission
can serve as notice. Second, the Defendants misinterpret the quote upon which
they rely in asserting that consideration must be returned to them. Defendants
cite Village Northridge Homeowners Assn. v. State Farm Fire & Casualty
Co. which held the statute generally requires “…the rescinding party
return any consideration received as a condition of rescission before judgment
in the rescission action.” (Village Northridge Homeowners Assn. v. State
Farm Fire & Casualty Co. (2010) 50 Cal.4th 913, 922.) This quote
specifically contemplates that the return of consideration as a condition which
must occur before the entry of judgment. This quote has no relevance to
whether Plaintiff has adequately stated her claim. In the event Plaintiff were
not to return any consideration it appears her action for rescission would
fail, but this is irrelevant for the purposes of a demurrer.
Accordingly,
the demurrer to this cause of action is OVERRULED.
---
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
Gary English and Gary
English Construction’s Demurrer came on regularly for
hearing on May 17, 2024, 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
SPECIAL DEMURRER FOR UNCERTAINTY AS TO THE WHOLE COMPLAINT IS OVERRULED.
THE GENERAL
DEMURRER AS TO EACH CAUSE OF ACTION IS OVERRULED.
THE CASE
MANAGEMENT CONFERENCE SET FOR JUNE 26, 2024 REMAINS.
UNLESS
ALL PARTIES WAIVE NOTICE, PLAINTIFF TO GIVE NOTICE.
IT IS SO
ORDERED.
DATE:
May 17, 2024 _______________________________
F.M.
TAVELMAN, Judge
Superior Court of California
County of
Los Angeles