Judge Lee W. Tsao, Case 20NWCV00482 2023-04-20 Tentative Ruling

Judge: Lee W. Tsao, Case: 20NWCV00482, Date: 2023-04-20 Tentative Ruling

Case Number: 20NWCV00482 Hearing Date: April 20, 2023 Dept: C

RENTAL ACQUISITIONS LLC v. KING EQUIPMENT LLC

CASE NO.: 20NWCV00482

HEARING: 04/20/23

TENTATIVE ORDER

Defendants KING EQUIPMENT, LLC and ERNEST W. QUIJADA’s Motion for Summary Judgment is DENIED. The alternative Motion for Summary Adjudication is GRANTED in part and DENIED in part.

Opposing Party to give Notice.

This action was filed by Plaintiff RENTAL ACQUISITIONS LLC (“Plaintiff”) on August 31, 2020. The relevant facts, as alleged, are as follows: “Plaintiff is in the business of providing consulting services including ‘finder’ services in the equipment rental industry.” (Complaint ¶1.) “In or around July 2017, Plaintiff introduced Defendants to SUNBELT. Plaintiff alleges on information and belief that in or around June 2019, SUNBELT, a party introduced to KING by Plaintiff, purchased the KING business including the rental equipment fleet. Due to Defendant’s concealment of the transaction in 2019, however, Plaintiff was completely excluded from any involvement beyond the introduction of the parties. More specifically Plaintiff was completely excluded from any involvement in the 2019 SUNBELT-KING deal including being excluded from any preliminary discussions, preparations of a letter of intent, negotiations, due diligence, contract drafting as well as the closing of the SUNBELT transaction. Plaintiff only discovered the SUNBELT-KING deal after it had closed when SUNBELT announced the sale on an industry website in or around September 2019.” (Complaint ¶8.)

Plaintiff’s Complaint asserts the following causes of action: (1) Breach of Oral Contract; (2) Common Count for Services Rendered; and (3) Fraud.

Defendants KING EQUIPMENT, LLC (“King”) and ERNEST W. QUIJADA (“Quijada”) (collectively “Defendants”) move for summary judgment, or alternatively summary adjudication of each claim as follows: (1) King is entitled to summary adjudication of the first cause of action for breach of oral contract because (a) the parties never entered into an enforceable agreement, (b) any agreement is void for illegality, and (c) any agreement is unenforceable under the statute of frauds; (2) King is entitled to summary adjudication of the second cause of action for the common count of services rendered because Plaintiff did not confer a benefit to King; and (3) Defendants are entitled to summary adjudication of the third cause of action for fraud because (a) Defendants did not make any fraudulent representations, (b) Plaintiff’s reliance on any alleged misrepresentation was not justified, and (c) Plaintiff did not suffer any damages as a result of the alleged reliance.

In Opposition, Plaintiff argues that there are triable issues of fact and that summary judgment/adjudication should be denied.

First Cause of Action – Breach of Oral Contract

To plead a breach of contract, the Plaintiff must allege: (1) the existence of a contract; (2) Plaintiff’s performance or excuse for non-performance; (3) Defendant’s breach; and (4) resulting damage to Plaintiff. (Lortz v. Connell (1969) 273 Cal.App.3d 286, 290.) Every contract requires mutual assent. (Cal. Civ. Code §1550, 1565.)

As a preliminary matter, Plaintiff is alleging breach of an oral contract, not a written one. Clearly, no written contract exists. Also, there is no evidence that the parties orally agreed to the terms of the Second Proposed Consulting Agreement which Hageman presented to Quijada on June 21, 2017.

At most, Hageman’s deposition testimony tends to show that on March 11, 2017, and again on June 21, 2017, Quijada promised Hageman a $1 million “finder fee.” According to Hageman, after he presented the Second Proposed Consulting Agreement to Quijada on March 11, 2017, Quijada said, “I’m comfortable paying a flat fee of 1 million.” (Hageman Transcript 104:20-21; 107:19-20.) “[Quijada] said a million dollars is what I’m comfortable with paying you. I’ll pay you a million dollars. I know you want the 1.25; you’re my guy; let’s have this dinner meeting.” (Hageman Transcript 108:12-16.) According to Hageman, the actual agreement was formed on June 21, 2017. “Our agreement – our oral agreement – I feel happened June 21^st, 2017. I was induced by the promise that he made me and the understanding based on trust, that it would be a million dollars minimum.” (Hageman Transcript 112:9-12.) This is enough to raise triable issues. Summary adjudication of the First Cause of Action is DENIED.

Second Cause of Action – Common Count for Services Rendered (Quantum Meruit)

The elements of a claim for quantum meruit are: (1) Plaintiff’s performance of services, work, or labor; (2) at Defendant’s request; and (3) Defendant’s promise to pay a reasonable value. (McFarland v. Holcomb (1898) 123 Cal. 84, 85.) “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….[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.” (Advanced Choices, Inc. v. Dept. of Health Svcs. (2010) 182 Cal.App.4th 1661, 1673.)

Summary adjudication of the second cause of action is DENIED. Plaintiff has raised a triable issue of material fact as to whether Defendants authorized Plaintiff to act as a “finder” for Defendants’ benefit. There is evidence submitted by both parties showing that Plaintiff communicated with Defendants via text message and in person indicating Plaintiff’s endeavors to market King to potential buyers. (See SSMF Nos. 29-32.)

Third Cause of Action – Fraud

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. Promissory fraud is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Lazar v. Sup. Ct. (1996) 12 Cal.4th 631, 638.)

“In a promissory fraud action, the essence of the fraud is the existence of an intent at the time of the promise not to perform it.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.) “[S]omething more than nonperformance is required to prove the defendant’s intent not to perform his promise.” (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.) While “fraudulent intent must often be established by circumstantial evidence… if plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.” (Id. at 30-31.)

In support of the Third Cause of Action, Plaintiff offers Hageman’s deposition testimony that he believed Quijada lied to him in March 2017, that Quijada was using him as a “stalking horse” to “test the waters.” (Hageman Transcript 255:15-25; 256:1-7.) There is no evidentiary basis for these claims, and they amount to no more than speculation. Plaintiff’s evidence merely supports a showing of nonperformance. Accordingly, summary adjudication of the Third Cause of Action is GRANTED.