Judge Holly J. Fujie, Case Number: 23STCV22061, Date: 2024-03-21 Tentative Ruling

MOVING PARTY: Defendants 634 Huntley, LLC, Dustin Pourbaba and 4D Development and Investment (“Demurring Defendants”)

On January 2, 2024, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants 634 Huntley, LLC, Dustin Pourbaba; 4D Development and Investment; Century West Associates Incorporated; Jamshid Kermani; and DOES 1 through 20, inclusive, (“Defendants”) for (1) Breach of Contract; (2) Breach of the Implied Covenant of Good Faith and Fair Dealing; and (3) Negligence.

On February 5, 2024, Demurring Defendants filed this instant Demurrer without Strike to the FAC. On March 8, 2024, Plaintiff filed his opposition. On March 14, 2024, Demurring Defendants filed their reply.

The Court finds that Demurring Defendants have satisfied the meet and confer requirement.

“The primary function of a pleading is to give the other party notice so that it may prepare its case [citation], and a defect in a pleading that otherwise properly notifies a party cannot be said to affect substantial rights.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.)¿¿

“A¿demurrer¿tests the legal sufficiency of the factual allegations in a complaint.” (Ivanoff v. Bank of America, N.A.¿(2017) 9 Cal.App.5th 719, 725.) The Court looks to whether “the complaint alleges facts sufficient to state a cause of action or discloses a complete defense.” (Id.) The Court does not “read passages from a complaint in isolation; in reviewing a ruling on a demurrer, we read the complaint ‘as a whole and its parts in their context.’ [Citation.]” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 804.) The Court “assume[s] the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken.” (Harris, supra, 56 Cal.4th p. 240.) “The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.]” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)¿¿

A general demurrer may be brought under Code of Civil Procedure Section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted or under section 430.10, subdivision (a), where the court has no jurisdiction of the subject of the cause of action alleged in the pleading. All other grounds listed in Section 430.10, including uncertainty under subdivision (f), are special demurrers. Special demurrers are not allowed in limited jurisdiction courts. (Code Civ. Proc., § 92, subd. (c).)¿¿

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.)¿¿

Demurring Defendants demur to Plaintiff’s FAC on the grounds that the second and third causes of action (1) fail to state facts sufficient to constitute a cause of action and (2) are uncertain, ambiguous and unintelligible.

Second Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealing

“The [implied] covenant of good faith and fair dealing [is] implied by law in every contract. The covenant is read into contracts and functions ‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract.’” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) As such, “A breach of the implied covenant of good faith is a breach of the contract.” (Id.)

“Establishing that claim requires a showing of “(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.” (D’Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)

Demurring Defendants argue that Plaintiff’s second cause of action relied upon the same allegations of breach as those alleged with respect to the first cause of action. Demurring Defendants contend this cause of action may be either a tort or a contract claim, but if it is pled as a tort, Plaintiff must identify a legally recognized “special relationship” between the parties and if it is pled in contract, it is a claim that the defendant did something that was not (in and of itself) a violation of the subject contract. Demurring Defendants assert that Plaintiff has not identified a legally recognized “special relationship” between himself and 634 Huntley, LLC that would allow a tort claim to be alleged. Demurring Defendants assert Plaintiff has not identified any conduct which has deprived him of the benefit of the contract without actually breaching the contract.

In opposition, Plaintiff argues he sufficiently alleged facts that support his claim that 634 Huntley, LLC breached the covenant of god faith and fair dealing in the Purchase Agreement. Specifically, Plaintiff contends he alleged that 634 Huntley, LLC deliberately refused to discharge contractual responsibilities, which deprived Plaintiff of the benefits of the Purchase Agreement by failing to deliver a property to Plaintiff that is free from defects. (FAC ¶ 35.) Furthermore, Plaintiff argues delivering the property to Plaintiff free from defects is not an express requirement mandated by the terms of the Purchase Agreement itself. Moreover, Plaintiff asserts that he notified 634 Huntley, LLC multiple times of these defects and gave 634 Huntley, LLC multiple opportunities to correct such defects, but 634 Huntley, LLC refused to do so. Thus, Plaintiff contends 634 Huntley, LLC consciously and deliberately deprived Plaintiff of the benefits of the Purchase Agreement.

In reply, Demurring Defendants argue there are no allegations in the FAC, including, without limitation, different alleged damages, to distinguish the second cause of action from the first cause of action. Demurring Defendants further argue there are no allegations of any specific facts in the FAC of alleged “deliberate” refusal by 634 Huntley, LLC to discharge its contractual responsibilities depriving Plaintiff of the benefit of their bargain. Demurring Defendants assert the Court may not take judicial notice of the truth of alleged facts in Plaintiff Opposition of in the FAC.

The FAC incorporates by reference the allegations set forth in Paragraphs 1 through 23. (FAC ¶ 31.) The FAC further alleges that on or around May 11, 2021, Stojkov and Huntley LLC entered into the Purchase Agreement. (Id. at ¶ 32.) The FAC also alleges that there is an implied covenant of good faith and fair dealing in the Purchase Agreement wherein Stojkov and Huntley LLC promises they will not do anything to unfairly interfere with the right of the other party to receive the benefits of the Purchase Agreement. (Id. at ¶ 33.) The FAC also alleges Plaintiff performed each and every obligation on his part to be performed under the Purchase Agreement except those obligations excused by the action or inaction of Huntley LLC and DOES 1-10. (Id. at ¶ 34.) Moreover, the FAC alleges Huntley LLC and DOES 1-10 did not act fairly and in good faith and thus breached the implied covenant of good faith and fair dealing by preventing Plaintiff from receiving the benefits under the Purchase Agreement, specifically receiving a new property that is free from defects. (Id. at ¶ 35.) Lastly, the FAC alleges as a result of Huntley LLC and DOES 1-10’s breach, Plaintiff has suffered damages in an amount to be proven at trial, but at least $25,000.00. (Id. at ¶ 36.)

In Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, the court held that allegations asserting a claim for implied covenant of good faith and fair dealing “must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)

However, “[i]f the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Id.) “[A]bsent those limited cases where a breach of a consensual contract term is not claimed or alleged, the only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Id.)

The Court finds that the FAC does not state sufficient facts to support a cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing. Plaintiff does not allege that 634 Huntley, LLC deliberately refused to discharge contractual responsibilities, which deprived Plaintiff of the benefits of the Purchase Agreement by failing to deliver a property to Plaintiff that is free from defects. Furthermore, Plaintiff does not allege any “special relationship” between him and the Demurring Defendants that is legal recognized. The FAC seemingly relies on the same facts alleged in the first cause of action for Breach of Contract.

Therefore, the demurrer as to the second cause of action is SUSTAINED with twenty (20) days Leave to Amend.

“To state a cause of action for negligence, a plaintiff must allege (1) the defendant owed the plaintiff a duty of care, (2) the defendant breached that duty, and (3) the breach proximately caused the plaintiff's damages or injuries.” (Lueras c. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 62.)

Demurring Defendants argue that Plaintiff’s third cause of action is fatally uncertain as to them because it fails to state any facts of a noncontractual duty owed by 634 Huntley, LLC to Plaintiff which could support the alleged tort claim of negligence. Demurring Defendants also argue that alter ego is insufficiently alleged and there is absolutely no certainty or specificity as to which particular defendant purportedly communicated with Plaintiff or acted negligently toward him.

In opposition, Plaintiff argues he has sufficiently alleged his negligence claim against Demurring Defendants. Specifically, Plaintiff argues the Demurring Defendants had a duty to Plaintiff as the owner and future occupant to perform work on the property in a workman like manner, which included proper water proofing, Plaintiff further contends this is wholly distinct from the Demurring Defendants purchase and sale obligations mandated by the purchase and sale agreement. Likewise, Plaintiff asserts he sufficiently alleged the Demurring Defendants owed him a duty to perform work in a good and workman like manner and to deliver the property that is sufficiently free from defects. (FAC ¶ 38.) Plaintiff also asserts he alleges Demurring Defendants breached their duty by failing to do so. (Id. at ¶ 39.) As such, Plaintiff argues he sufficiently alleged the Demurring Defendants’ negligent conduct did not meet industry standards and resulted in extensive damage to the subject property in support of this cause of action in paragraphs 18-19 of the FAC, which are incorporated into the third cause of action. Additionally, Plaintiff argues the Demurring Defendants are all liable to him as alter egos of each other, which is sufficiently alleged in paragraph 9 of the FAC.

In reply, Demurring Defendants argue there are no allegations in the FAC that any of the Demurring Defendants owed a duty of care to Plaintiff, failed to exercise due care or acted recklessly or carelessly as to Plaintiff. Furthermore, Demurring Defendants reiterates that alter ego is insufficiently alleged as to the third cause of action. Moreover, Demurring Defendants assert that the FAC is uncertain and inconsistent as to the purported alter ego allegations because neither 634 Huntley, LLC nor 4D Development and Investments are corporations or sued or identified as a corporation in the FAC.

The FAC incorporates by reference the allegations set forth in Paragraphs 1 through 23. (FAC ¶ 37.) The FAC further alleges Defendants owed Plaintiff a duty to perform work in a good and workmanlike manner and to deliver a property that is sufficiently free from defects. (Id. at ¶ 38.) The FAC also alleges Defendants breached their duty by failing to perform their work in a good and workmanlike manner, failing to successfully repair the defects at the Property despite receiving several notices, and failing to deliver a property that is sufficiently free from defects. (Id. at ¶ 39.) Finally, the FAC alleges as a result of Defendants’ negligence, Plaintiff has suffered damages in an amount to be proven at trial, but at least $25,000.00.

The Court finds that the FAC does state facts sufficient to support a cause of action for negligence. Plaintiff alleges that the Demurring Defendants owed him a duty to perform work in a good and workman like manner and to deliver the property sufficiently free from defects. Plaintiff further alleges that the Demurring Defendants breached that duty by failing to successfully repair the defects in the property despite receiving several notice and failing to deliver the property sufficiently free from defects. Lastly, Plaintiff alleges that he suffered damages in an amount of at least $25,000.00 because of the Demurring Defendants’ breach.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court