Judge Lee W. Tsao, Case Number: 22NWCV00311, Date: 2023-09-07 Tentative Ruling

Judge: Lee W. Tsao, Case: 22NWCV00311, Date: 2023-09-07 Tentative Ruling

Case Number: 22NWCV00311 Hearing Date: November 15, 2023 Dept: C

AGUILA v. IPSWICH SHELLFISH CO, INC.

CASE NO.: 22NWCV00311

HEARING: 11/15/23 @ 10:30 AM

Defendant IPSWICH SHELLFISH CO., INC.’s Demurrer to Plaintiff’s Third Amended Complaint is SUSTAINED without leave to amend.

Moving Party to give notice.

This breach of contract action was filed by Plaintiff Henry Aguila (“pro per”) on April 25, 2022. On September 13, 2023, the operative Third Amended Complaint (TAC) was filed.

Background

The TAC alleges, in pertinent part: “Plaintiff and Defendant Ipswich desired to procure a line of credit for shipments of lobsters to Thee Aguila Inc…. and insure said shipments with Euler Hermes…. Defendant Ipswich and Euler Hermes required a personal guarantee from Plaintiff to issue the line of credit. Plaintiff agreed to personally guarantee the line of credit if Defendant Ipswich agreed to ship lobsters to TAI and Euler Hermes issued the line of credit insuring said shipments and Plaintiff. On May 15, 2011, Plaintiff personally guaranteed the credit application as instructed by Defendant Ipswich and Euler Hermes, attached as Exhibit “A” …. After Plaintiff signed the personal guarantee, and in consideration thereof and for Plaintiff’s sole benefit, Euler Hermes issued a $250,000.00 line of credit to TAI for lobster shipments from Defendant Ipswich.” (TAC ¶7.) “On September 20, 2019, Plaintiff demanded in writing to counsel for Defendant Ipswich to submit an insurance claim to Euler Hermes for the disputed lobster shipments or alternatively Plaintiff would submit the claim. Plaintiff had informed Ipswich’s counsel that TAI and Plaintiff had a claim against Euler Hermes for cancelling TAI’s line of credit and putting TAI out of business before a judicial determination had been made on the disputed lobster shipment and invoices. Ipswich’s counsel informed Plaintiff that he would forward Plaintiff’s demand to Ipswich. Plaintiff never heard back from Ipswich of its legal representative.” (TAC ¶9.) “On April 11, 2022, Plaintiff was informed that instead of submitting an insurance claim as previously demanded by Plaintiff, Defendant Ipswich assigned its right to Defendants Indiana and Montana to pursue Plaintiff for payment of the disputed lobster shipments. At the time of the assignment, Defendants Indiana and Montana were in litigation with TAI and Plaintiff. At the time of the assignment, Defendants Indiana and Montana had previously been found liable in a jury trial for interfering with TAI’s and Plaintiff’s economic opportunities and for conversion of TAI’s monies.” (TAC ¶10.)

The TAC asserts the following causes of action: (1) Breach of Contract/Third Party; and (2) Breach of Implied Covenant of Good Faith and Fair Dealing.

Legal Standard

The party against whom a complaint has been filed may object to the pleading, by demurrer, on several grounds, including the ground that the pleading does not state facts sufficient to constitute a cause of action. (CCP § 430.10(e).) A party may demur to an entire complaint, or to any causes of action stated therein. (CCP § 430.50(a).)

Discussion

Defendant IPSWICH SHELLFISH CO. INC. separately specially and generally demurs to each cause of action.

Whether it is written, oral, or implied, the elements of a cause of action for breach of contract are as follows: (1) the existence of a contract; (2) Plaintiff’s performance or excused non-performance; (3) Defendants’ breach; and (4) resulting damage to Plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

Plaintiff has included the credit agreement as the written contract he alleges that Defendant breached.

Defendants argue that Plaintiff does not qualify as a third-party beneficiary of the contract.

To state a cause of action for third-party beneficiary breach of contract, Plaintiff must allege the existence of a contract that was made expressly for their benefit. (Cal. Civ. Code §1559; see also Martin v. Bridgeport Comm. Assn., Inc. (2009) 173 Cal.App.4th 1024, 1034.) “The fact that… the contract, if carried out according to its terms, would inure to [the plaintiff’s] benefit, is not sufficient to entitle [the plaintiff] to enforce it. [Citation.]” (Id.) “A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. The intent to benefit a third party must appear on the terms of the contract. As explained by well-reasoned case law: A third party should not be permitted to enforce covenants made not for his benefit, but rather, for others. He is not a contracting party; his right to performance is predicated on the contracting parties’ intent to benefit him. The fact that the contract, if carried out to its terms, would inure to the third party’s benefit is insufficient to entitle him or her to demand enforcement. Whether a third party is an intended beneficiary or merely an incidental beneficiary to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered.” (Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401, 1410-1411.)

Plaintiff alleges that “Plaintiff was the intended third-party beneficiary of the contractual agreements between TAI, Defendant Ipswich and Euler Hermes.” (TAC ¶12.)

The Credit Agreement that Plaintiff attached does not reveal an intent to benefit Plaintiff from the terms of the contract. The Credit Agreement, while difficult to read, states that it is issued to induce Defendant to sell and deliver merchandise to Thee Aguila, Inc. and not to Plaintiff individually. Plaintiff must be an intended third-party beneficiary in order to enforce the agreement—the benefit to Plaintiff must have been a motivating factor in the parties’ decision to enter into the contract. (Eastern Aviation Group, Inc. v. Airborne Express, Inc. (1992) 6 Cal.App.4th 1448, 1453.) The Court cannot accept a legal conclusion on a demurrer. (Hawkins v. TACA Internat. Airlines, S.A. (2014) 223 Cal.App.4th 466, 478.)

Plaintiff is named in the Credit Agreement as the owner and the signatory as owner for Thee Aguila, Inc. However, the terms of the contract do not make clear that he was intended to benefit from the credit agreement. Thus, Plaintiff has failed to meet his burden of showing that he was the intended third-party beneficiary of the Credit Agreement.

Additionally, Plaintiff claims that Defendant breached the contract by refusing to submit an insurance claim. However, it is not apparent from the terms of the Credit Agreement that Defendant had a duty under the contract to do so. Thus, Plaintiff has failed to show that Defendant breached a duty under the contract.

The burden is on the complainant to show the court that a pleading can be amended successfully, in order to obtain an order allowing leave to amend. (McKenney v. Purepac Pharmaceutical Co. (2008) 167 Cal.App.4th 72, 78.) Here, Plaintiff fails to provide any facts which would support a showing that his pleading can be amended successfully. This Court has now sustained two demurrers and Plaintiff has amended his Complaint on three occasions. Thus, Plaintiff is not granted leave to amend.

Accordingly, Defendant’s Demurrer is SUSTAINED without leave to amend.