Judge Gail Killefer, Case Number: 24STCV06452, Date: 2024-12-12 Tentative Ruling

TENTATIVE: defendant’s demurrer is sustained with leave to amend. The motion to strike is granted with leave to amend. Plaintiff is granted 30 days leave to amend. The court sets the OSC RE: Amended Complaint for, and continues the Case Management Conference to, January 21, 2025, at 8:30 a.m. Defendant to give notice.

This action stems from a contract dispute. On March 14, 2024, Adwizar, Inc. (“Plaintiff”) filed a Complaint against Amina Sadiq (“Defendant”), alleging three causes of action: 1) breach of Contract; 2) Intentional Misrepresentation; and 3) Negligent Misrepresentation.

After the court vacated the default entered against Defendant, Defendant filed a demurrer with a motion to strike. Plaintiff opposes both Motions. The matter is now before the court.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿(Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿

¿Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP § 435(b)(1); CRC, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP, § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿¿

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿¿

Demurrer[1]

The Complaint alleges that on or about December 18, 2022, Plaintiff and Defendant entered into an Enrollment Agreement for digital goods, services, and mentorship for the “Spectacular Academy: SS7” package. (Compl., ¶ 5, Ex. A.) The Complaint alleges that Defendant agreed to pay an initial deposit of $30,000, and pay the remaining $70,000 by making payments of $10,000 a month. (Id., ¶ 10.) Defendant paid with a credit card but later disputed all credit charges. (Id., ¶ 18, Ex. B.) As a result, Plaintiff’s credit card processor, Quickbooks, temporarily suspended Plaintiff’s ability to accept credit cards, thereby harming Plaintiff’s business and the credit card dispute was resolved in Defendant’s favor. (Ibid.)

The elements of a claim for breach of contract are: “(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 addition, the complaint must demonstrate damages proximately caused by the breach. (St. Paul Ins. v. American Dynasty (2002) 101 Cal.App.4th 1038, 1060.) Furthermore, “the complaint must [also] indicate on its face whether the contract is written, oral, or implied by conduct.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-59 citing CCP, § 430.10(g).)

“If the action is based on alleged breach of 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, 308.) Alternatively, “a plaintiff may 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.)¿¿“[A]ll essential elements of a breach of contract cause of action [] must be pleaded with specificity.”¿(Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150 Cal.App.4th 1, 5.)

Defendant asserts that Plaintiff’s breach of contract fails because the Enrollment Agreement is between Spectacular Academy and Defendant and not Plaintiff Adwizar Inc. (Compl., Ex. A.) Plaintiff Adwizar states that the name “Adwizar” is referenced in the Enrollment Agreement on page 3:

The Liability by Adwizar Technologies, its employees, agents, associates, successors, assigns, and legal representatives under this Agreement is limited in direct proportion to the compensation paid to Company under this Agreement, and shall not, under any condition, exceed the amount already paid to Company at the time of any such claim, demand or cause of action whatsoever . . .

While the Enrollment Agreement does reference Plaintiff Adwizar, the referenced provision only limits Adwizar’s liability and does not explain what its relationship is to Spectacular Academy or how Adwizar has standing to enforce the contract on behalf of Spectacular Academy.

Therefore, the demurrer to the first cause of action is sustained with leave to amend.

“The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 231.) “Each element of a fraud count must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any basis for the cause of action, although less specificity is required if the defendant would likely have greater knowledge of the facts than the plaintiff.” ( Id. at p. 231.)

Defendant asserts that the second cause of action is not pled with particularity. The Complaint alleges that Defendant initially “agreed to pay an initial deposit of $30,000, and pay the remaining $70,000 by making payments of $10,000 a month.” (Compl., ¶ 10.)

Defendant represented that she was facing financial hardship in February and October 2023, so Plaintiff paused payments and allowed Defendant to continue participating in the program. (Id., ¶¶ 11, 12.) However, Defendant “insisted that she could not afford to continue paying for the program” and on October 30th, 2023, Defendant “disputed all of the transactions with her credit card company, which total an amount of $78,000[.]” (Id., ¶¶ 16, 18.)

The court agrees that the Complaint is unclear if Plaintiff’s agreement to pay the remaining balance in $10,000 increments was part of the Enrollment Agreement or a subsequent representation made after the Enrollment Agreement was signed. If the former, Plaintiff’s tort claim is barred by the economic loss rule. Tort “claims are barred when they arise from — or are not independent of — the parties’ underlying contracts.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 923.) “A plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independently of the parties' contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the agreement.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 38.)

The Complaint further asserts that Plaintiff falsely misrepresented that she had not received the goods/services promised under the Enrollment Agreement and disputed the credit card charges. (Compl., ¶¶ 20- 30.) The allegations in the Complaint lead to the inference that Plaintiff’s reliance that Defendant would make the payments and not dispute the credit card charges stems from the Enrollment Agreement, and not from any additional misrepresentations made by Defendant. Accordingly, Plaintiff fails “establish all elements of the tort independent of the rights and duties assumed by the parties under the contract.” (Rattagan, supra, 17 Cal.5th at p. 38.) That Plaintiff promised to perform all her duties under the Enrollment Agreement does not mean that her failure to perform gives rise to a tort action for misrepresentation when the misrepresentation is Plaintiff’s promise to pay per the Enrollment Agreement.

Therefore, the demurrer to the second cause of action is sustained with leave to amend.

“The elements of negligent misrepresentation, a form of deceit, are misrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another's reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Home Budget Loans, Inc. v. Jacoby & Meyers Law Offices (1989) 207 Cal.App.3d 1277, 1285.) Negligent misrepresentation must also be pled with particularity. (Chapman, supra, 220 Cal.App.4th at p. 231.) Negligent misrepresentation requires that the party owe a duty to disclose. (See Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 841; Levine v. Blue Shield of California (2010) 189 Cal.App.4th 1117, 1136.)

Defendant again asserts that the negligent misrepresentation cause of action is insufficiently pled. The court finds that the negligent misrepresentation cause of action suffers from the same deficiencies as the intentional misrepresentation cause of action. Furthermore, Plaintiff fails to plead facts to show that Defendant owed a duty to disclose.

Defendant moves to strike Plaintiff’s request for punitive damages. As the demurrer is sustained, the motion to strike is also granted with leave to amend.

defendant’s demurrer is sustained with leave to amend. The motion to strike is granted with

leave to amend. Plaintiff is granted 30 days leave to amend. The court sets the OSC RE:

Amended Complaint for, and continues the Case Management Conference to, January 21, 2025,

[1] Pursuant to CCP §§ 430.41 and 435.5(a), the meet and confer requirement has been met. (Koshki Decl., ¶¶ 3, 4.)