Judge Kerry Bensinger, Case Number: 23STCV21321, Date: 2024-08-06 Tentative Ruling

Plaintiff Rajan Garg (“Garg” or “Plaintiff”) became the medical director and CEO of San Andres Medical Clinic, Inc. (SAMC) in January of 2017. Defendant Daniel Peraza was the previous medical director and CEO of SAMC. In July of 2022, the Trustee of SAMC filed a medical malpractice lawsuit against SAMC, Garg, and several other defendants. In November of 2022, the Trustee and the various defendants agreed to settle the matter for $250,000. Under the terms of the settlement, defendants were to make an initial payment of $60,000 with the remaining settlement balance paid at a rate of $10,000 per month, for nineteen (19) months. As relevant here, Garg and Peraza verbally agreed they alone would be responsible for the settlement payments. Garg and Peraza further agreed they would each pay half of the initial $60,000 payment and half of each of the $10,000 remaining payments. For the next few months, the parties, abided by the oral agreement. In February of 2023, Peraza failed to pay his portion of the monthly installment. Peraza has not made any payments since then, forcing Garg to pay the entire $10,000 monthly installment payment.

On September 5, 2023, Plaintiff filed a Complaint against Peraza for (1) Breach of Contract and (2) Intentional Misrepresentation. Plaintiff seeks attorney fees and punitive damages, among other relief.

On March 6, 2024, Defendant filed this Demurrer and Motion to Strike attorney fees and punitive damages from the Complaint.

“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.)¿¿

Before filing a demurrer, the demurring party must meet and confer in person, by telephone, or by video conference with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised by the demurrer.¿ (Code Civ. Proc., §§ 430.41(a).)¿Defense counsel has satisfied the meet and confer requirement.¿ (See Declaration of Demurring or Moving Party Regarding Meet and Confer.)¿¿¿¿¿

Defendant argues the First Cause of Action fails on the grounds that it is barred by the Statute of Frauds and that the Second Cause of Action fails for lack of specificity. The court addresses each argument in turn.

¿Plaintiff alleges that he and Defendant verbally agreed to be solely responsible for the settlement payments, which consisted of an initial payment of $60,000 and monthly payments of $10,000 for nineteen months. (Complaint, ¶¶ 14-16.) Each party was to pay half of each settlement payment. (Complaint, ¶ 17.) Defendant breached the agreement by failing to contribute to any payments after February 2023. (Complaint, ¶¶ 20-21.)

The elements of a breach of contract cause of action are: (1) the existence of a valid contract between the plaintiff and the 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. (CACI No. 303; Careau & Co. v. Security Pacific Business, Inc. (1990) 222 Cal.App.3d 1371, 1388 (Careau); Otworth v. Southern Pac. Transportation (1985) 166 Cal.App.3d 452, 458.) “[T]he complaint must indicate on its face whether the contract is written, oral, or implied by conduct.” (Otworth, 166 Cal.App.3d at pp. 458-459.)¿ The elements of a breach of oral contract claim are the same as those for a breach of written contract. (Careau, 222 Cal.App.3d at p. 1388.)¿

Defendant argues the breach of contract claim fails because it is barred by the Statute of Frauds. Civil Code section 1624 codifies the Statute of Frauds. It states, in relevant part, that an agreement that by its terms is not to be performed within a year from the making thereof is invalid, unless there is some note or memorandum in writing and subscribed by the party to be charged or by the party’s agent. (Civ. Code, § 1624, subd. (a)(1).)

As alleged, the court agrees the Statute of Frauds bars Plaintiff’s breach of contract claim. The alleged contract is not in writing. (See Complaint, ¶ 16.) Further, the contract is to be performed over nineteen months. (See Complaint, ¶ 15.) The breach of contract claims does not clear the bar raised by the Statute of Frauds hurdle.

In opposition, Plaintiff acknowledges that the parties “did not enter into a formal written agreement” yet nonetheless argues the Complaint adequately outlines the terms of the agreement. Plaintiff further references multiple emails and texts between the parties which demonstrate the existence of the agreement. These arguments are unavailing. Plaintiff does not contend with Defendant’s argument that the parties’ agreement is neither evidenced by a writing nor to be performed within a year. The Statute of Frauds applies. The references to “multiple emails and texts … demonstrat[ing] the existence of the agreement” cannot be considered in ruing on this demurrer because those communications have not been pleaded and are therefore disregarded as extrinsic to the Complaint. \

Plaintiff alleges that “Defendant misrepresented to Plaintiff that Defendant would make half of each of the monthly payments as set forth in their Agreement” and that the representation was not true and made with the intent to induce Plaintiff to enter into the settlement agreement with the Trustee. (Complaint, ¶¶ 32-33.)

“Fraud must be pleaded with specificity rather than with ‘“‘general and conclusory allegations.’”’ (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)¿¿

“Causes of action for intentional and negligent misrepresentation sound in fraud and, therefore, each element must be pleaded with specificity. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)¿¿

To establish a claim for deceit based on intentional misrepresentation, the plaintiff must prove seven¿essential elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff¿reasonably relied on the¿representation;¿(6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff.¿ (Manderville¿v. PCG & S Group, Inc.¿(2007) 146 Cal.App.4th 1486, 1498; CACI No. 1900.)¿¿¿

Defendant argues the Second Cause of Action fails because it lacks the specificity required for fraud claims and further, there are no allegations of intent to defraud at the time the misrepresentations were made. Defendant’s argument has merit. The Complaint does not allege any facts beyond the oral agreement between the parties to share equally in making the settlement payments and Defendant’s breach of that agreement by failing to contribute his share of payments after February of 2023. In other words, Plaintiff attempts to base a fraud claim solely upon nonperformance of an oral promise for future conduct. This is insufficient to state support a claim for fraud. “A promise of future conduct is actionable as fraud only if made without a present intent to perform. A declaration of intention, although in the nature of a promise, made in good faith, without intention to deceive, and in the honest expectation that it will be fulfilled, even though it is not carried out, does not constitute a fraud. Moreover, something more than nonperformance is required to prove the defendant’s intent not to perform his promise. . . . [I]f plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.” (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 481 (internal citations and quotations omitted).) As Defendant correctly points out, there are no specific allegations that Defendant did not intend to perform the agreement at the time he made the promise to Plaintiff. The Second Cause of Action is deficient.

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

Kerry Bensinger

Judge of the Superior Court