Judge: Gail Killefer, Case: 23STCV09383, Date: 2023-12-04 Tentative Ruling
Case Number: 23STCV09383 Hearing Date: December 4, 2023 Dept: 37
HEARING DATE: Monday, December 4, 2023
CASE NUMBER: 23STCV09383
CASE NAME: Transportation Commodities, Inc. v. Unis Transportation, LLC
MOVING PARTY: Defendant Unis Transportation, LLC
OPPOSING PARTY: Plaintiff Transportation Commodities, Inc.
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Demurrer to First Amended
Complaint
OPPOSITION: 16 November 2023
REPLY: 27
November 2023
TENTATIVE: Defendant’s demurrer to the third cause of
action for open book account is waived due to improper notice and sustained
with leave to amend as to the second cause of action for account stated.
Plaintiff is granted 20 days leave to amend the second cause of action. The
court sets an OSC re Second Amended Complaint for January 8, 2024, at 8:30 a.m.
Background
this action, filed April 26, 2023, arises
in connection with the agreement by Transportation
Commodities, Inc. (“Plaintiff”) to provide three commercial vehicles to Unis
Transportation, LLC (“Defendant”).
Defendant contracted with Plaintiff for the leasing and servicing of the
three commercial vehicles on March 22, 2022, for a duration of 84 months
(“Lease and Servicing Agreement”). The Complaint alleges Defendant cancelled
the agreement on February 24, 2023. Plaintiff sues for the full lease value of
the vehicles less the reasonable recovery for leasing the vehicles.
Plaintiff’s Complaint alleged four causes of
action: (1) breach of contract; (2) account stated, (3) open book account; and
(4) breach of contract. On July 12, 2023, the court overruled Defendant’s
demurrer as to the first and fourth causes of action and sustained the demurrer
with leave to amend the second and third causes of action.
On August 10, 2023, Plaintiff filed the operative
First Amended Complaint (“FAC”). The FAC alleges the same four causes of action
as the original Complaint. Defendant now demurrers to the FAC and Plaintiff
opposes.
The matter is now before the court.
I. Legal Standard
Where pleadings are defective, a party may raise the defect
by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A
demurrer tests the sufficiency of a pleading, and the grounds for a demurrer
must appear on the face of the pleading or from judicially noticeable matters.¿
(CCP, § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In
evaluating a demurrer, the court accepts the complainant’s properly pled facts
as true and ignores contentions, deductions, and conclusory statements. (Daar
v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971)
5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff
will be able to prove the allegations or the possible difficulty in making such
proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d
590, 604.)
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 complainant to
show the Court that a pleading can be amended successfully. (Id.)
II. Demurrer[1]
A. Defendant Waived the Demurrer to the
Third Cause of Action Due to Improper Notice
“A principle of motion practice is that
the moving party must specify for the court and the posing party the grounds
upon which that party seeks relief. Code of Civil Procedure section 1010
requires that a notice of motion must state ‘the grounds upon which it will be
made.’ California Rules of Court, rule 311 requires a notice of motion to state
in its opening paragraph ‘the nature of the order being sought and the grounds
for issuance of the order.’ As a general rule, the trial court may consider
only the grounds stated in the notice of motion.” (Luri v. Greenwald (2003)
107 Cal.App.4th 1119, 112.) “The purpose of these requirements is to cause the
moving party to ‘sufficiently define the issues for the information and
attention of the adverse party and the court.’ (Ibid. citing
Hernandez v. National Dairy Products (1954) 126 Cal.App.2d 490, 493.)
Defendant’s notice of motion states “defendant, unis Transportation, LLC,
will and hereby does demur to the second and fourth causes of action contained
in the complaint.”
(Demurrer at p. 2:3-4.)
Defendant’s notice further states:
3. Defendants generally demur to the fourth
cause of action for breach of contract on the ground that the cause of action
fails to state facts sufficient to constitute a cause of action.
4. Defendants specially demur to fourth cause of
action for breach of contract on the ground that the cause of action is
uncertain.
(Demurrer at p. 3: 8-14.)
In opposition, Plaintiff responded that
the demurrer to the fourth cause of action was “inappropriate” because the
court had previously overruled the demurrer. “As such, the demurrer to the
fourth cause of action should be summarily overruled based upon the Court’s
July 12, 2023 ruling.” (Opposition at p. 2: 12-14.)
On reply, Defendant explain that its
demurrer states in error that Defendant demurs to third cause of action rather
than the fourth.
An
error was obviously made in that the demurrer itself demurs to two causes of
action, but misstates the demurrer as to one of them being to the contract
claim. Parts and III [sic] of the demurring papers makes clear that the
demurrer was directed to the non-contract claims.
(Reply at p. 2:3-7.) The court disagrees
that the demurrer makes it clear that Defendant demurs to the third cause of
action for open book account rather than the fourth cause of action for breach
of contract.
Because Defendant’s notice was deficient,
Plaintiff did not have adequate notice that the cause of action being
challenged was the open book account, and this precluded Plaintiff from
addressing the issue on the merits and providing a response. Therefore, the
court finds that Defendant waived the demurrer to the third cause of action for
open book account by failing to adequately provide notice of the demurrer to
this cause of action. As noted by Defendant, Defendant can challenge the third
cause of action by filing a motion for judgment on the pleadings.
The court proceeds to address the
demurrer to the second cause of action for account stated.
B. Second
Cause of Action -Account Stated
“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.) "An account
stated is an agreement, based on prior transactions between the parties, that
all items of the account are true and that the balance struck is due and owing
from one party to the other." (Trafton v. Youngblood (1968) 68
Cal.2d 17, 25.)
The FAC alleges that on March 22, 2022,
Plaintiff and Defendant signed the Lease and Service Agreement that included a
form “Schedule A.” (FAC ¶ 9.) Schedule A also included various fees, including
monthly depreciation, monthly fixed charge, and mileage charge. (FAC¶ 9, Ex.
2.) On February 24, 2023, Defendant breached the terms of the Lease and Service
Agreement and Schedule A by canceling its performance. (FAC ¶ 10.) The FAC
states that on February 22, 2022, an account was stated in writing between
Plaintiff and Defendant, wherein Defendant agreed that Plaintiff would supply
and service specialized vehicles to Defendant, thereby establishing a
debtor/creditor relationship. (FAC ¶ 17.) Pursuant to Schedule A, Plaintiff
charged Defendant a monthly fixed charge, which Defendant agreed to. (FAC ¶
17.) The FAC alleges Defendant owes the principal sum of $427,014.00 plus
interest at the rate of 1.5% per month. (FAC ¶ 19.)
Pursuant to section “IX. CHARGES”
in the Lease and Service Agreement:
A. Customer agrees to pay [Plaintiff] the
Monthly Fixed Charge, as stated on Schedule A, in advance and each payment in
advance thereafter, for each Vehicle upon receipt of [Plaintiff]’s invoice for
same and to pay all charges, specifically including but not limited to all fuel
charges, the Mileage Rate Per Mile, the Hourly Rate Per Hour, provided for
under this Agreement, and any additional charges owed to [Plaintiff], within 10
days of the date of [Plaintiff] invoice without deduction or set off.
(FAC Ex. 2.)
Defendant asserts that an executory lease
cannot support an account stated and that the cause of action fails to state
the items of the account and an agreement as to the total owed. “ ‘An account
stated is a mere unperformed promise by one party to pay a stated sum to
another.’ [Citation.]. ‘It is a complete account stated if it contains a signed
and written acknowledgment of a present, unqualified indebtedness or liability
with a promise to pay a named sum.’ [Citation.]”
(Hammond Lumber
Co. v. Richardson Building & Engineering Co. (1930) 209 Cal. 82, 87.)
The court finds that Schedule A lists the
items due but not the balance owing. Schedule A includes a monthly fixed charge
of $2,395.00 and a milage charge of $0.09 but not the total balance due. (FAC
Ex. 2.) There is no indication of how Plaintiff arrived at the conclusion that
the principal sum due was $427,014.00.
In other words, Plaintiff must not only
allege that the “items of the account are true,” such as the monthly fixed
charge, but also “that the balance struck is due and owing.” (Leighton, supra,
8 Cal.App.5th at p. 491 citing Maggio, Inc. v. Neal (1987) 196
Cal.App.3d 745, 752.) Plaintiff must show that Defendant agreed to pay a
monthly fixed charge and also “that a
balance was then struck and agreed to be the correct sum owing from the debtor
to the creditor, and that the debtor expressly or impliedly promised to pay to
the creditor the amount thus determined to be owing. In addition, the amount
agreed upon must be either specifically stated or readily calculable.” (H.
Russell Taylor's Fire Prevention Service, Inc. v. Coca Cola Bottling Corp.
(1979) 99 Cal.App.3d 711, 726–727.) Here, Plaintiff fails to allege facts as to
how it arrived at the balance of $427,014.00 being due based on the monthly
fixed charge Defendant agreed to play.
Therefore, the demurrer to the second cause of action is sustained
with leave to amend.
Conclusion
Defendant’s demurrer to the third cause of action
for open book account is waived due to improper notice, and sustained with
leave to amend as to the second cause of action for account stated. Plaintiff
is granted 20 days leave to amend the second cause of action. The court sets an
OSC re Second Amended Complaint for January 8, 2024, at 8:30 a.m.
Defendant to give notice.