Judge Kerry Bensinger, Case Number: 23STCV08715, Date: 2024-01-10 Tentative Ruling

This is a breach of contract action. On April 19, 2023, Plaintiff, iHeartMedia + Entertainment, Inc., filed a Complaint against Defendant, Orange County Flight Center, Inc., for (1) Breach of Part Written/Part Oral Contract, (2) Quantum Meruit, and (3) Open Book Account. Plaintiff alleges Defendant asked Plaintiff to run radio advertisements. They agreed upon advertising schedules (orally and/or in writing) and a Media plan. Plaintiff issued an Order Confirmation.[1] Pursuant to the terms of the Agreement, Plaintiff was to run the advertisements and send Defendant invoices, and Defendant would pay Plaintiff for the same. Plaintiff performed all conditions under the Agreement. However, Defendant refused to make payment. This action followed.

“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 demurrer may be brought if insufficient facts are stated to support the cause of action asserted. (Code Civ. Proc., § 430.10, subd. (e).) “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.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Where the complaint contains substantial factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty will be overruled or plaintiff will be given leave to amend. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) 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. (Ibid.)

Defense counsel has satisfied the meet and confer requirement.¿ (Declaration of Karo G. Karapetyan, CIV-140.)¿¿¿¿

Defendant argues each cause of action fails to state facts sufficient to state a claim. The Court addresses each argument in turn.

The essential elements of a breach of contract cause of action are: (1) the existence of a valid contract between a plaintiff and a defendant, (2) the plaintiff’s performance, (3) the defendant’s unjustified failure to perform, and (4) damages to the plaintiff caused by the defendant’s breach.¿ (See CACI No. 303.)

Defendant demurs to the breach of contract claim on the following grounds: (1) the Complaint does not allege Plaintiff’s offer and Defendant’s acceptance of the agreement, and (2) there is no contract because the parol evidence rule bars inclusion of prior oral agreements between the parties.

Defendant argues the second page of the Order Confirmation is an “offer sheet” rather than a contract. In support, Defendant points to the sections 1.1.1 and 1.1.2 which, in Defendant’s estimation, invite acceptance by either “pay[ment] in advance for the distribution of advertising” or (2) execution of a collateral written agreement for iHeart to “extend credit” to OCFC.” (Mot., p. 4.)

Defendant’s argument fails for two reasons. First and foremost, offer and acceptance are not essential elements for stating a claim for breach of contract. Rather, at the pleading stage, the elements of this claim are the existence of a valid contract, performance, breach, and damages resulting from the breach. (CACI No. 303.) The existence of a valid agreement implies offer and acceptance. Second, Defendant’s alternative interpretation of the contract is at odds with the express terms of sections 1.1.1 and 1.1.2, which state:

1.1. Advertiser agrees to pay in advance for the distribution of advertising covered by this contract (collectively “transmissions”) unless otherwise expressly agreed in writing.

1.2. If Station has extended credit, Station shall render invoices monthly. Payment by Advertiser is due within 30 days unless invoice is sent to agency or buying service, then net payment is due within 45 days. Past due accounts shall be charged interest at the rate of 1% per month (12% annual percentage rate) or, if less, the highest rate allowed by applicable law, from the date of the invoice. If Advertiser notices any error on an invoice, Advertiser must contact Station in writing within 7 days of the invoice date, stating the invoice number, amount and description of alleged error, and including any supporting documentation as may be required by Station. All invoice charges will be considered valid if no written dispute from the Client is received by Station within the 7 day period.

(Complaint, Ex. A, §§ 1.1.1-1.1.2.) The foregoing language does not support Defendant’s argument re: invitation. Rather, sections 1.1.1 and 1.1.2 state the terms of the agreement between the parties. The Complaint alleges Defendant’s acceptance of the agreement. “Subsequently, advertising schedules were agreed upon (orally and/or in writing) and a Media Plan and an Order Confirmation were issued by Plaintiff.” (Complaint, ¶ 6, emphasis added.) Defendant’s interpretation does not carry the day at this stage in the proceedings. Acceptance of the agreement is sufficiently pled.

Defendant next argues the parol evidence rule and the express terms of the Order Confirmation show that a contract cannot exist. “The parol evidence rule is codified in Civil Code section 1625 and Code of Civil Procedure section 1856. [Citation.] It generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument.” (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343 [cleaned up].) At the pleading stage, the demurring party is required to demonstrate that contractual language supporting its position is so clear that parol evidence would be inadmissible to refute it. (See, e.g., Palacin v. Allstate Ins. Co. (2004) 119 Cal.App.4th 855, 863 [applying general principles of contract interpretation to an insurance policy and stating, “an insurer moving for a demurrer based on insurance policy language must establish conclusively that this language unambiguously negates beyond reasonable controversy the construction alleged in the body of the complaint. [Citation.] To meet this burden, an insurer is required to demonstrate that the policy language supporting its position is so clear that parol evidence would be inadmissible to refute it. [Citation.] Absent this showing, the court must overrule the demurrer and permit the parties to litigate the issue in a context that permits the development and presentation of a factual record, e.g., summary judgment or trial.”].)

Here, the Complaint alleges that the Agreement between the parties is written and oral. (See Complaint, ¶ 6.) Further, Section 7.6 of the Order Confirmation unambiguously states: “This contract and any applicable written credit agreement, agency commission arrangement and/or merchandising arrangement contains the entire agreement between the parties relating to the subject matter in it, and no modification of its terms shall be effective unless in writing signed by both parties.” (Complaint, Ex. A, § 7.6, emphasis added.) Thus, Defendant is correct that the oral portion of the agreement is barred by the parol evidence rule, unless an exception applies, and cannot be considered as part of the contract between the parties.

Moreover, the Complaint fails to identify and allege the terms of the oral agreement. The effect of the foregoing renders the breach of contract claim uncertain. Plaintiff cannot allege that the contract between the parties is composed of written and oral agreements when the express terms of the Order Confirmation directly provide that the Order Confirmation contains the entire agreement.

“The requisite elements of quantum meruit are (1) the plaintiff acted pursuant to ‘an explicit or implicit request for services’ by the defendant and (2) the services conferred a benefit on the defendant. [Citation.]” (Port Medical Wellness, Inc. v. Connecticut General Life Insurance Company (2018) 24 Cal.App.5th 153, 180.)

The Complaint states a claim for quantum meruit. As alleged, Defendant indicated a desire for Plaintiff to run various radio advertisements for Defendant; Plaintiff performed. (Complaint, ¶ 6.) Liberally construed, Plaintiff conferred a benefit to Defendant by running advertisements for Plaintiff. The Second Cause of Action is sufficiently pled.

A book account is a written record of the credits and debts between parties to a contract. The contract may be oral, in writing, or implied by the parties’ words and conduct. A book

account is “open” if entries can be added to it from time to time. (CACI No. 372, emphasis added.)

To establish a cause of action for open book account, the following elements must be satisfied: (1) plaintiff and defendant had financial transactions, (2) plaintiff kept an account of the debits and credits involved in the transactions, (3) defendant owes plaintiff money on the account, and (4) the amount of money that the defendant owes the plaintiff. (State Comp. Ins. Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal. App. 5th 422, 449; CACI No. 372.) A book account is “open” if a balance remains due on this account. (Interstate Group Administrators, Inc. v. Cravens, Dargan & Co. (1985) 174 Cal.App.3d 700, 708.)

Defendant argues the open book account fails because there was no contract. Given that the Complaint does not state a cause of action for breach of contract because the existence of a contract is not sufficiently pled, Plaintiff’s common count claim for an open book account similarly fails.

Accordingly, Demurrer to the Second Cause of Action is OVERRULED. The Demurrer to the First and Third Causes of Action is SUSTAINED. Leave to amend is GRANTED.

Plaintiff is ordered to serve and file its First Amended Complaint within 30 days of this order.

Defendant is ordered to serve and file its responsive pleading within 30 days of service of Plaintiff’s amended pleading.

Kerry Bensinger

Judge of the Superior Court

[1] The Media Plan and Order Confirmation are attached to, and incorporated in, the Complaint.