Judge: Latrice A. G. Byrdsong, Case: 22NWLC19105, Date: 2024-04-25 Tentative Ruling
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Case Number: 22NWLC19105 Hearing Date: April 25, 2024 Dept: 25
Hearing Date: Thursday, April 25, 2024
Case Name: NAUTILUS INSURANCE COMPANY v. LEY DREW, INC., a California Corporation; and DOES 1 to 10, inclusive
Case No.: 22NWLC19105
Motion: Motion for Judgment on the Pleadings
Moving Party: Defendant Ley Drew, Inc.
Responding Party: Plaintiff Nautilus Insurance Company
Notice: OK
Tentative Ruling: Defendant Ley Drew, Inc’s Motion for Judgment on the Pleadings is GRANTED with 30 days leave to amend as to the first, second, and third causes of action in the First Amended Complaint. The Court will not allow leave to amend the fourth cause of action for quantum meruit.
BACKGROUND
On August 11, 2022, Plaintiff Nautilus Insurance Company (“Plaintiff”) filed a Complaint against Defendant Ley Drew, Inc. (“Defendant”) and DOES 1 to 10, inclusive, alleging causes of action for: (1) breach of contract; (2) open book account; (3) account stated; and (4) quantum meruit.
On September 14, 2023, the Court sustained Defendant’s demurrer to each cause of action in the Complaint with leave to amend. (09/14/23 Minute Order.) The Court sustained the demurrer due to the Court finding that the allegations were not sufficient to show that the action was filed within the applicable statute of limitations period. (09/14/23 Minute Order.)
On October 31, 2023, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendant alleging causes of action for: (1) breach of contract; (2) open book account; (3) account stated; and (4) quantum meruit.
On March 18, 2024, Defendant filed and served the instant motion for judgment on the pleadings to which Plaintiff filed and served an opposition on April 16, 2024. As of April 23, 2024, no reply brief was filed. Any reply brief was required to have been filed and served at least five court days prior to the hearing. (CCP § 1005(b).)
Non-jury trial is scheduled to commence on August 5, 2024.
MOVING PARTY POSITION
Defendant contends that the first, second, and third causes of action are barred by the four-year statute of limitations. Defendant argues that the fourth cause of action is barred by the two-year statute of limitations.
OPPOSITION
In opposition, Plaintiff asserts that the FAC sufficiently pleads that the statute date runs from September 26, 2019, and that all other assertions are not relevant in this motion.
REPLY
None as of April 23, 2024.
ANALYSIS
I. Motion for Judgment on the Pleadings
A. Meet and Confer Requirement
Before filing a motion for judgment on the pleadings, a moving party's counsel must meet and confer, in person, by telephone, or by videoconference with counsel for the party who filed the pleading subject to the judgment on the pleadings motion “for the purpose of determining if an agreement can be reached that resolves the claims to be raised in the motion for judgment on the pleadings.” (CCP § 439(a).) “A determination by the court that the meet and confer process was insufficient shall not be grounds to grant or deny the motion for judgment on the pleadings.” (CCP § 439(a)(4).)
Defendant’s counsel, Marshall C. Sanders (“Sanders”), provides a declaration in support of the instant motion; however, counsel’s declaration does not set forth any meet and confer efforts between the parties.
The Court finds that the meet and confer requirement has not been met. The Court, however, will assess the merits of the motion for judgment on the pleadings. The Court reminds the parties of the need to comply with the requirements of the Code of Civil Procedure.
B. Legal Standard
A defendant’s motion for judgment on the pleadings may be made after the time to demur has expired and an answer has been filed. (CCP § 438(f)(2).) A motion by a defendant may be made on the grounds that (1) the court lacks jurisdiction of the subject of one or more of the causes of action alleged or (2) the complaint “does not state facts sufficient to constitute a cause of action against that defendant.” (CCP § 438(c).) A motion for judgment on the pleadings may be made after a moving defendant has already demurred to the complaint. (CCP § 438(g)(1).)
“A motion for judgment on the pleadings has the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed.” Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999. “A motion for judgment on the pleadings is akin to a general demurrer; it tests the sufficiency of the complaint to state a cause of action.” Wise v. Pacific Gas and Elec. Co. (2005) 132 Cal.App.4th 725, 738.
Like a general demurrer, “ordinarily, a [motion for judgment on the pleadings] does not lie as to a portion of a cause of action, and if any part of a cause of action is properly pleaded, the [motion] will be overruled.” Fire Ins. Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452. In considering a motion for judgment on the pleadings, courts consider whether properly pled factual allegations—assumed to be true and liberally construed—are sufficient to constitute a cause of action. Stone Street Capital, LLC v. Cal. State Lottery Com’n (2008) 165 Cal.App.4th 109, 116. A complaint cannot allege mere legal conclusions and must plead facts. Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 1006. “[L]eave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action.” Lowry v. Port San Luis Harbor District (2020) 56 Cal.App.5th 211, 221.
1. First Cause of Action for Breach of Contract
Defendant contends that the first cause of action in the FAC is barred by the four-year statute of limitations.
To state a cause of action for breach of contract, Plaintiff must be able to establish “(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. Pursuant to Code of Civil Procedure § 337(a), the statute of limitations for any “action upon any contract, obligation or liability founded upon an instrument in writing” is four years. (CCP § 337(a).)
“Generally speaking, a cause of action accrues at the time when the cause of action is complete with all of its elements.” Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806. “An important exception to the general rule of accrual is the discovery rule, which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” Id. at p. 807. “A plaintiff has reason to discover a cause of action when he or she has reason at least to suspect a factual basis for its elements.” Ibid. “[S]uspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period.” Ibid. “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action.” Ibid. “In order to rely on the discovery rule for delayed accrual of a cause of action, [a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” Id. at p. 808. “In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to show diligence; conclusory allegations will not [suffice].” Ibid.
The FAC alleges the following: on or about July 1, 2013, a written agreement (the “Agreement”) was made between Plaintiff and Defendants and each of them. (FAC, ¶ 5; Exh. A.) Plaintiff provided services and/or goods and/or insurance coverage to Defendants, and Defendants promised to pay Plaintiff for all services and/or goods and/or insurance coverage provided. (FAC, ¶ 5; Exh. A.) Plaintiff demanded payment for a $5,000.00 deductible on or about August 27, 2019, and the payment due date was September 26, 2019. (FAC, ¶ 6; Exh. B.) On September 26, 2019, Defendants breached the Agreement by failing to pay for services and/or deductible to insurance policy which had been provided on credit at their special instance and request. (FAC, ¶ 6.) Defendants have failed and refused to continue to fail and refuse to pay all or any part of the remaining balance due. (FAC, ¶ 6.) Plaintiff alleges that it has performed all obligations to Defendants except for those obligations Plaintiff was prevented or excused from performing. (FAC, ¶ 7.) Plaintiff alleges that it suffered damages. (FAC, ¶ 8.)
The Court notes that the Agreement has a policy period from July 1, 2013 to July 1, 2014. (FAC, ¶ 5; Exh. A.) The date of payment is not indicated in the Agreement. (FAC, ¶ 5; Exh. A.) There is no payment date for any deductible. (FAC, ¶ 5; Exh. A.) The instant action was filed on August 11, 2022, which is over nine years after the Agreement was formed and over eight years after the Agreement ended. The Court notes that the August 27, 2019 demand letter shows that the monies owed concern a loss occurring on July 1, 2013. (FAC, ¶ 6; Exh. B.) The August 27, 2019 demand letter clearly states that “[f]ollowing this page is our deductible invoice of $5,000.00” and that “[Plaintiff] is to be reimbursed by [Defendant] for the deductible or part of the deductible paid.” (FAC, ¶ 6; Exh. B.)
Thus, considering the allegations of the FAC and the accompanying exhibits thereto, the Court finds that the first cause of action is barred by the statute of limitations. The Court fails to see why Plaintiff waited until 2019 to seek reimbursement for a payment that occurred in 2013. Irrespective of such fact, the Court finds that the policy period expired on July 1, 2014, and that Plaintiff waited over 5 years after such date to seek payment from Defendant. Plaintiff should have known of Defendant’s failure to pay the deductible at least by the end of the policy period given that the loss at issue occurred on July 1, 2013.
As such, the Court finds that the first cause of action is barred by the four-year statute of limitations. Plaintiff has not stated sufficient facts to invoke the discovery rule.
2. Second Cause of Action for Open Book Account and Third Cause of Action for Account Stated
“A book account is open where a balance remains due on the account.” Eloquence Corporation v. Home Consignment Center (2020) 49 Cal.App.5th 655, 664-65. To state a cause of action for open book account, CACI 372 requires a showing of the following elements: (1) Plaintiff and Defendant had financial transactions with each other; (2) Plaintiff, in the regular course of business, kept a written or electronic account of the debits and credits involved in the transactions; (3) Defendant owes Plaintiff money on the account; and (4) the amount to money that Defendant owes Plaintiff. There is a four-year limitations period for causes of action for open book account. R.N.C. Inc. v. Tsegeletos (1991) 231 Cal.App.3d 967, 972. The statute of limitations period for a cause of action for open book account “begins as of the last entry in the book account.” Ibid.
To state a cause of action for account stated, the following elements must be alleged: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due. Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.
The second cause of action incorporates the allegations for breach of contract therein. (FAC, ¶ 10.) Plaintiff states that within the past four years, Defendants have become indebted to Plaintiff on an open book account for goods, wares, and merchandise sold and delivered to Defendants for which Defendants promised to pay Plaintiff. (FAC, ¶ 11.) Although Plaintiff made a demand for payment of the outstanding sum of $5,000.00, Defendants have refused and continue to pay such sum. (FAC, ¶ 12.) Plaintiff alleges that it has suffered damages in the amount of $5,000.00, plus 10% interest per annum from September 26, 2019. (FAC, ¶ 12.)
The third cause of action incorporates the allegations of the preceding causes of action. (FAC, ¶ 13.) Pursuant to the third cause of action, Plaintiff alleges that within four years past, there was an account stated in writing between Plaintiff and Defendants, and each of them, in which it was agreed that Defendants were indebted to Plaintiff for goods, wares, and merchandise sold and delivered to Defendants at Defendants’ special instance and request in the sum of $5,000.00. (FAC, ¶ 14.) Although demand for payment of the sum of $5,000.00 has been made upon Defendants, and each of them, Defendants have failed and refused, and continue to fail and refuse to pay said sum. (FAC, ¶ 15.) The sum of $5,00.00 now remains due, together with interest at the rate of ten (10) percent per annum from September 26, 2019, to Plaintiff. (FAC, ¶ 15.)
The Court references its analysis as to the first cause of action and applies such analysis to the second and third causes of action in the FAC. The date of loss occurred on July 1, 2013 and the Agreement’s policy period extended from such date to July 1, 2014. Plaintiff offers no explanation as to why demand was made almost five years after the expiration of the policy period. Also, the Court finds that Plaintiff should have had some suspicion that it was owed monies for the deductible when the policy period ended. Plaintiff provides no factual explanation in the FAC as to why it waited over eight years from the expiration of the policy period to file the instant action.
The Court also notes that Plaintiff has not provided any legal authority in the opposition brief concerning the sufficiency of the challenged causes of action. Plaintiff merely states that no obligation accrued on the date of loss. (Opp’n at p. 3:5-8.)
The Court finds that the second and third causes of action in the FAC are barred by the applicable statute of limitations. Plaintiff has not alleged facts to invoke the discovery rule.
3. Fourth Cause of Action for Quantum Meruit
The statute of limitations for a quantum meruit cause of action is two years. (CCP § 339.) Quantum meruit refers to the well-established principle that the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered. To recover in quantum meruit, a party need not prove the existence of a contract, but it must show the circumstances were such that the services were rendered under some understanding or expectation of both parties that compensation therefor was to be made.” Chodos v. Borman (2014) 227 Cal.App.4th 76, 96, citations and quotation marks omitted. “[I]n order to recover under a quantum meruit theory, a plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant.” Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248.
The FAC incorporates the allegations from the first, second, and third causes of action into the fourth cause of action for quantum meruit. (FAC, ¶ 16.) The fourth cause of action alleges that: Defendants, and each of them, have been unjustly enriched by the sum of $5,000.00 by failing to pay for goods, wares, and merchandise sold and delivered to Defendants which had been provided on credit since on or about September 26, 2019. (FAC, ¶ 17.) Plaintiff has requested that said sums be reimbursed, however, Defendants, and each of them, have refused and continue to fail and refuse to reimburse Plaintiff. (FAC, ¶ 18.)
The Court does not find that the allegations of the fourth cause of action are sufficient to state a claim for quantum meruit. Given that the fourth cause of action indicates that Defendants have failed to make payment since September 26, 2019, the fourth cause of action is untimely. The instant action was not filed until August 11, 2022, which is outside of the applicable two-year statute of limitations.
Thus, the fourth cause of action is barred by the applicable two-year statute of limitations.
II. Conclusion
Based on the foregoing, the Court GRANTS the Motion for Judgment on the Pleadings with 30 days leave to amend as to only the first, second, and third causes of action in the FAC.
As to the fourth cause of action, the Court will not allow leave to amend given that the Court does not find that there exists a reasonable possibility that Plaintiff can state a sufficient cause of action for quantum meruit.
Moving party is ordered to give notice.