Judge: H. Jay Ford, III, Case: 20SMCV00767, Date: 2023-03-21 Tentative Ruling

Case Number: 20SMCV00767    Hearing Date: March 21, 2023    Dept: O

Case Name:               Rush v. Ireland, et al.

SUBJECT:                MOTION FOR SUMMARY ADJUDICATION

MOVING PARTY:   Defendants Kathryn Ireland, The Perfect Room, Kathryn M. Ireland, Inc. and Kathryn M. Ireland Textiles & Design

RESP. PARTY:         Plaintiff Jennifer Rush

TENTATIVE RULING

            Defendants Kathryn Ireland, The Perfect Room, Kathryn M. Ireland, Inc. and Kathryn M. Ireland Textiles & Design’s Motion for Summary Adjudication is DENIED. 

Plaintiff’s Objections to Dec. of Harwell—OVERRULED.  Plaintiff’s Objections to Dec. of K. Ireland—OVERRULED as to Objection Nos. 2-11 and SUSTAINED as to Objection Nos. 1.

Defendants’ objections to Dec. of J. Rush – OVERRULED as to objection Nos 1-25, and SUSTAINED, in part as to objection no. 25 referencing the content of “expert reports.”  Defendants’ objections to the Declaration of Patrick McGarrigle – OVERRULED as to “paragraph 5” and SUSTAINED as to “paragraph 17” and Exhibit 14.

            Defendants move for summary adjudication of ten issues identified in its notice of motion for summary adjudication.  The issues are identified as follows: 

ISSUE 1: Defendants bear no liability for defective construction by a licensed third party

contractor whom they did not contract with, did not agree to supervise, and were not paid to manage.

ISSUE 2: Plaintiff cannot prevail on a breach of contract case where the purportedly

breached agreement(s) never existed between Plaintiff and Defendants.

ISSUE 3: Plaintiff cannot prevail on a fraud cause of action where she merely “assumed”

the alleged fraudulent statements.

ISSUE 4: Plaintiff cannot prevail on a negligent representation cause of action where the

alleged representations were not made.

ISSUE 5: Plaintiff cannot prevail on her conversion cause of action where Defendants did

not wrongfully take or withhold Plaintiff’s belongings.

ISSUE 6: Plaintiff cannot prevail on her money had and received cause of action because

she does not allege, and cannot establish, that Defendants took a sum certain that was intended for her benefit.

ISSUE 7: Kathryn has no independent liability where the alleged wrongful acts took place

while she was acting in her capacity as the principal of KMI and/or The Perfect Room.

ISSUE 8: Plaintiff’s prayer for punitive damages is unsupported.

ISSUE 9: Plaintiff is not entitled to seek attorneys’ fees against Defendants.

ISSUE 10: Plaintiff may not recover from The Perfect Room damages above the value of

the purchase price of the goods she bought from it, subject to her returning those goods.

I.  Issue Nos. 1, 7, 9 and 10 are not subject to adjudication on procedural grounds

            Pursuant to Code of Civil Procedure §437c(f)(1), a party may properly seek summary adjudication of one or more causes of action, one or more affirmative defenses, the issue of punitive damages or the issue of duty. See Code of Civil Procedure §437c(f)(1). “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim of damages or an issue of duty.” Id.

            A.  Issue No. 1 (liability for Caliwood’s negligence)—DENY as procedurally improper and on grounds that triable issues of fact remain as to existence of Defendants’ contractual duty to supervise, manage or oversee Caliwood’s work on the remodel project

            Defendants’ Issue No. 1 is not subject to adjudication.  Defendants’ Issue No. 1 does not seek adjudication of a cause of action, an identifiable affirmative defense, an issue of punitive damages or the existence or nonexistence of an issue of duty.  The Court cannot speculate and construe Issue No. 1 as one of the four categories of adjudicable issues. 

            To the extent Defendants’ Issue No. 1 is a request to adjudicate the nonexistence of a contractual duty to supervise Caliwood Development, Inc., triable issues of fact remain.  Plaintiff alleged that Defendants entered into a partially written, partially oral agreement whereby Defendants orally agreed to “supervise the work of [Caliwood]” and “competently provide oversight and supervision of the referred contractor [Caliwood] to protect Plaintiff’s interests and ensure the contractor provided good workmanship, the work would conform with the Perfect Room Parties’ interior design requirements for Plaintiff’s home…”  See Complaint, ¶11. 

            According to Defendants’ PMK, (1) Plaintiff did not pay Defendants to provide any services in connection with Caliwood’s work or to manage the construction aspect of her remodeling project; and (2) Defendants never agreed to manage Caliwood’s work.  See Defendants’ SSUMF Nos. 13, 14; Dec. of K. Ireland, ¶¶17-18.  According to Defendants, Plaintiff also admitted during her deposition that (1) the purchase agreement with The Perfect Room is the only formal agreement entered into with defendants in this case (SSUMF No. 17); and (2) the alleged oral agreement was based on assumptions made by Plaintiff, not affirmative representations by Defendants (SSUMF No. 20). 

            Plaintiff submits a declaration disputing Defendants’ PMK declaration.  Plaintiff testifies that Defendant Kathryn Ireland promised on behalf of the Defendants that Defendants would supervise/oversee and manage the Project and Caliwood’s performance.  See Dec. of J. Rush, ¶6.  Plaintiff testifies that Kathryn promised that her employee, Caroline Mann, was going to be the Project Manager on the Project.  Id. at ¶6.  Plaintiff testifies that the verbal promises were consistent with the written notation in the Original Contract that “All work to be in coordination with Kathryn Ireland.”  See Plaintiff’s Evidence, V. 1, Ex. 6, p. 134, “Notes.” 

            In addition, upon review of the portions of Plaintiff’s deposition cited in support of Defendants’ SSUMF Nos. 17 and 20, Defendants’ SSUMF Nos. 17 and 20 mischaracterize the Plaintiff’s deposition testimony.  Plaintiff did not testify that the “purchase agreement was the only formal agreement entered into with the defendants in this case.”  See Defendants’ Motion, Dec. of Harwell, Ex. B, 27:2-30:9.  Plaintiff also did not testify that the oral representations and promises identified in Form Rog 50.1 and the complaint were based on her assumptions, not Defendants’ representations.  Nowhere does she clearly so state.  See Defendants’ Motion, Dec. of Harwell, Ex. B, 166:3-174:16.  There was a great deal of confusion regarding what Defense counsel was asking Plaintiff.  Plaintiff stated that she assumed Defendant Ireland was qualified, diligent and detail-oriented.  A few lines later, Plaintiff also said that “They [defendants] verbally represented” what was identified as part of the oral contract.  Id. at 166-167.  Nowhere did Plaintiff deny that Defendants made the verbal representations identified in Form Rog 50.1.  The deposition responses relied upon by Defendants do not negate Plaintiff’s allegation that Defendants made the oral promises and representations identified in Form Rog 50.1 and ¶11 of the Complaint. 

            Triable issues of fact remain as to whether Defendants contractually agreed to supervise, oversee and manage the Project and Caliwood’s performance.  Plaintiff is seeking to hold Defendants liable for their own direct negligence in supervising, managing and overseeing Caliwood’s work.  Plaintiff is not relying on doctrines of derivative liability, such as agency or respondeat superior.  To the extent Issue No. 1 moves to adjudicate the nonexistence of Defendants’ contractual duty to supervise, oversee or manage Caliwood’s work, the motion for adjudication must be denied on substantive grounds.  Triable issues of fact remain as to whether Defendants made the oral promises/representations alleged in ¶11 of the Complaint and Form Rog 50.1 

            B.  Issue No. 7 (Kathryn Ireland’s individual liability)—DENY as procedurally improper and on substantive grounds that triable issues of fact remain as to Kathryn’s personal liability for the causes of action alleged against her

            Defendants moves for summary adjudication of Kathryn Ireland’s liability as an individual for acts she performed as the agent and representative of Defendant The Perfect Room.  Defendants fail to identify whether Issue No. 7 is a request to adjudicate a specific cause of action, a specific affirmative defense, an issue of duty or plaintiff’s claim of punitive damages.  Defendant’s request for adjudication of the 7^th cause of action is therefore denied as procedurally defective.

            If Defendants maintain Kathryn cannot be held liable for the torts alleged due to her employee/agent status, Defendants’ request for adjudication is denied.  Plaintiff alleges that Kathryn personally made the alleged misrepresentations, negligently supervised Caliwood and personally refused to return Plaintiff’s property after being asked to do so.  See Complaint, ¶¶10-11, 30, 37-38.  Kathryn’s status as an officer/director/employee of The Perfect Room would therefore not insulate her from the tort claims alleged.  “Directors and officers of a corporation are liable for torts committed by them on its behalf. However, directors or officers do not incur personal liability for corporate torts merely because of their official position unless they participate in the wrong or authorize or direct that it be done.”  5 Witkin, Summary of California Law (11^th ed. 2022) Torts, §37. 

            Moreover, as to all claims, Plaintiff alleges that all Defendants are the alter egos of one another.  See Complaint, ¶8.  “Where a corporation is used by an individual or individuals, or by another corporation, to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, a court may disregard the corporate entity and treat the acts as if they were done by the individuals or by the controlling corporation.”  9 Witkin, Summary (11^th ed. 2022), Corp, §11. 

            Defendants’ material facts in support of adjudication of Issue No. 7 are limited to (1) Kathryn’s status as a principal of Defendant Kathryn M. Ireland, Inc. (“KMI”); (2) her undertaking of design projects through KMI; and (3) The Perfect Room’s status as an online platform through which clients can purchase room designs and items for the designs.  See Defendants’ Separate Statement, Material Facts in Support of Issue No. 7, Nos. 1-3.  None of the facts or evidence identified in support of Issue No. 7 negate the allegations of Ireland’s personal participation in the wrongful acts or alter ego.  Defendants fail to establish Issue No. 7.  Defendants’ Motion for Summary Adjudication is denied on the substantive ground that Ireland’s status as an officer or agent of the entity defendants does not alone negate Plaintiff’s allegations of liability against Ireland as an individual. 

            C.  Issue Nos. 9 and 10 (attorney’s fees and contractual clause limiting damages)—DENY as procedurally unauthorized

            Issue No. 9 concerns Plaintiff’s entitlement to attorney’s fees.  CCP §437c(f)(1) does not authorize adjudication of a claim for attorney’s fees. 

            Issue No. 10 concerns the extent of damages that Plaintiff can recover under the parties’ agreement. The existence or enforceability of a contractual limit on recoverable damages is not listed among the categories of issues that can be adjudicated under CCP §437c(f)(1). Resolution of the issue would also not fully adjudicate a cause of action, affirmative defense, issue of duty or punitive damages claim.

III.  Triable issues of fact remain as to Issue Nos. 2 through 4 (breach of contract, fraud and negligent misrepresentation) and whether Defendants made the representations and contractual promises alleged in ¶11 of the Complaint

            Defendants move for summary adjudication of the 1^st cause of action for breach of contract, 2^nd cause of action for fraud and 3^rd cause of action for negligent misrepresentation on grounds that the alleged oral promises and misrepresentations were never made.  Defendants rely on the same evidence and argument as presented in connection with Issue No. 1.

            As discussed in connection with Issue No. 1, Defendant Kathryn Ireland denies that she made the alleged misrepresentations or promises.  See Defendants’ SSUMF Nos. 13, 14; Dec. of K. Ireland, ¶¶17-18.  As discussed in connection with Issue No. 1, Defendants also incorrectly claim that Plaintiff admitted in deposition that (1) these alleged misrepresentations or promises were not made by Defendant Ireland and were based on her assumptions and (2) the parties’ purchase agreement was the only “formal agreement” between the parties.   See Defendants’ Motion, Dec. of Harwell, Ex. B, 27:2-30:9 and 166:3-174:16.  Plaintiff did not testify as to either fact in the deposition.

            In addition, Plaintiff’s declaration contradicts Defendant Ireland’s denial that the misrepresentations were never made.  Plaintiff testifies that Ireland made the misrepresentations and that the misrepresentations were confirmed in the purchase agreement.  See Dec. of J. Rush, ¶6; Plaintiff’s Evidence, V. 1, Ex. 6, p. 134, “Notes.” 

            Triable issues of fact remain as to whether Defendants’ made the oral promises and misrepresentations alleged in ¶11 of the Complaint.  Defendants’ Motion for Summary Adjudication of Issue Nos. 2 through 4 (adjudication of the 1^st cause of action for breach of contract, 2^nd cause of action for fraud and 3^rd cause of action for negligent misrepresentation) is DENIED.

IV.  Issue No. 5 (conversion)—Defendants’ MSA is deemed an MJP and DENIED

            “When a motion for summary judgment challenges the sufficiency of the pleadings rather than the evidence supporting the allegations therein, it is tantamount to a motion for judgment on the pleadings and may be treated as such by the trial court.  The practical effect of this procedure is that in granting judgment on the pleadings, the trial court may give the plaintiff the opportunity to amend the complaint even when no motion to amend has been filed.”  Los Angeles Unified School District v. Torres Construction Corp. (2020) 57 Cal.App.5th 480, 493–494.

            According to Defendants’ separate statement, Defendants are only challenging to the sufficiency of Plaintiff’s allegations of conversion.  Defendants do not submit any evidence or undisputed material facts in support of Issue No. 5.  Defendants argue Plaintiff fails to allege Defendants’ intention to exercise wrongful ownership over the furnishings or Defendants’ interference with Plaintiff’s retrieval of the property.

            The elements of conversion are (1) plaintiff’s ownership or right to possess an item of personal property; (2) defendant’s substantial interference with that property by knowingly or intentionally taking possession of the property, preventing plaintiff’s access to the property, destroying the property or refusing to return the property.  CACI 2100.  Plaintiff alleges that Defendants have intentionally refused to return the property despite her demands therefor.  See Complaint, ¶30. 

            Defendants’ Motion for Summary Adjudication of the 5^th cause of action for conversion is deemed a Motion for Judgment on the Pleadings and is DENIED. 

V.  Issue No. 6 (money had and received)— Defendants’ MSA is deemed an MJP and DENIED

            According to Defendants’ separate statement, they are only challenging the sufficiency of Plaintiff’s allegations of money had and received.  Defendants do not submit any evidence or undisputed material facts in support of Issue No. 6.  Defendants only argue that Plaintiff fails to plead a claim for money had and received. Defendants argue Plaintiff fails to allege a definitive sum or just entitlement to the money.    

            The elements of money had and received are:  (1) plaintiff claims defendant owes plaintiff money; (2) defendant received money that was intended to be used for the plaintiff’s benefit; (3) that money was not used for the benefit of plaintiff; and (3) that defendant has not given the money to plaintiff. 

            Plaintiff alleges that she made $125,000 in overpayments to Defendants for her benefit.  See Complaint, ¶37.  Plaintiff alleges that she paid Defendants for work and furnishings that were never performed or delivered.  Id. at ¶17.  Plaintiff therefore alleges a definite sum and facts establishing Plaintiff’s just entitlement to that sum, i.e. overpayments. 

VI.  Issue No. 8 (Punitive Damages)—DENY on grounds that triable issues of fact remain as to punitive damages

            Defendants argue there are no allegations of malice, oppression or fraud to support a punitive damages claim, nor does the evidence support a finding of malice oppression or fraud.  Defendants deny that Ireland ever made the alleged misrepresentations in the 2^nd cause of action for fraud.  However, as stated in connection with Issue Nos. 2 through 4, there are triable issues of fact as to whether Defendant Ireland made the alleged misrepresentations.  Fraud is grounds for imposition of punitive damages under CC §3294(b).

            In addition, conversion may support a claim for punitive damages.  “Conversion is a tort that often justifies an award of punitive damages.”  6 Witkin, Summary (11^th ed. 2022) Torts §1760.  Defendants unsuccessfully challenged the pleading sufficiency of Plaintiff’s conversion claim.  Defendants did not move for adjudication of the conversion claim based on undisputed facts and evidence.  Plaintiff’s claim for punitive damages cannot be adjudicated, because the conversion claim is still pending.