Judge: Lee W. Tsao, Case: 22NWCV00525, Date: 2023-01-31 Tentative Ruling

Case Number: 22NWCV00525    Hearing Date: January 31, 2023    Dept: C

ROYAL PAPER CORP. v. INTERNATIONAL SOURCING GROUP, LTD., et al.

CASE NO.:  22NWCV00525

HEARING:  1/31/23 @ 1:30 PM

 

#10

TENTATIVE RULING

 

I.             Defendant Morgan’s unopposed demurrer to the Complaint is OVERRULED.

 

II.            Defendant Morgan’s motion to strike attorney’s fees is GRANTED without leave to amend. 

 

Defendant is ORDERED to file and serve his Answer within 10 days.

 

Moving Party to give NOTICE.

 

 

Defendant Tim Morgan demurs to the 1st – 6th causes of action on the ground that they do not state facts sufficient to constitute a cause of action.

 

Plaintiff Royal Paper Corp.’s Complaint alleges that Defendant Tim Morgan is the owner and founder of Defendant International Sourcing Group.  Defendants were the agents and alter egos of the other Defendants.  (Complaint, ¶ 6.)  On June 1, 2020, Plaintiff prepared a written agreement, titled Purchase Order 9150562 for gloves.  (Id., ¶ 13.)  Plaintiff discovered in August, 2021 that its payments were “stuck in China.”  (Id., ¶ 21.)  Plaintiff requested a refund, but Defendant has yet to return Plaintiff’s money.  (Id., ¶¶ 24-25.)  Based thereon, the Complaint asserts causes of action for:

 

1.        Breach of Written Contract

2.        Breach of Implied Covenant of Good Faith and Fair Dealing

3.        Negligent Interference of Prospective Economic Advantage

4.        Negligent Misrepresentation

5.        Unjust Enrichment

6.        Violation of Unfair Competition Law

 

 

1st CAUSE OF ACTION

 

BREACH OF WRITTEN CONTRACT:  The elements for a breach of contract cause of action are: (1) the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damages.  (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)  In alleging a breach of contract cause of action, it is necessary to specify whether the contract is written, oral or implied by conduct.  (CCP § 430.10(g).)  To plead a written contract, a plaintiff must do one of the following: (1) set forth the contract in haec verba; or (2) plead the contract’s legal effect by alleging the substance of its relevant terms.  (4 Witkin, California Procedure 4th Ed., 479-481.)  In order to plead an oral contract, a plaintiff must plead its legal effect, i.e., allege the substance of the contractual terms.  (Id. at 483.)

 

¶ 31 alleges that Plaintiff and Defendants entered into a written agreement, and alleges the terms of contract.  ¶ 33 alleges Plaintiff’s performance, ¶ 34 alleges Defendant’s breach, and ¶ 36 alleges Plaintiff’s resulting damage.  Further, the court finds that ¶ 6 adequately alleges agency and alter ego allegations.

 

Demurrer is OVERRULED.

 

2nd CAUSE OF ACTION

 

BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING:  The elements are:  1) existence of contractual relationship; 2) implied duty; 3) breach; and 4) causation of damages.  (E.g., Smith v. San Francisco (1990) 225 Cal.App.3d 38, 49; 1 Witkin Sum. Cal. Law (10th ed. 2005) Contracts § 800.)

¶ 37 incorporates the prior contractual allegations.  ¶¶ 40-41 alleges Defendant’s bad faith performance of contract.  Further, the court finds that ¶ 6 adequately alleges agency and alter ego allegations.

 

Accordingly, the demurrer is OVERRULED.

 

3rd CAUSE OF ACTION

 

NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS:  The elements are:  an economic relationship between the plaintiff and a third party; that contained a reasonably probable future economic benefit or advantage to plaintiff; defendant knew of the existence of the relationship and was aware, or should have been, that if it did not act with due care, its actions would interfere with the relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage; the defendant was negligent; the negligence caused damage to plaintiff because of actual interference or disruption; and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship.  (North Amer. Chem. Co. v. Sup. Ct.  (1997) 59 Cal. App. 4th 764, 786.)  Both intentional and negligent varieties of interference with prospective economic relations require the plaintiff to plead facts showing that the defendant engaged “wrongful conduct” that falls outside the bounds of fair competition. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.)

 

Defendant Morgan contends that the 3rd cause of action is defective because it does not allege Morgan’s individual liability.  However, the court finds that ¶ 6 adequately alleges agency and alter ego allegations.

 

Demurrer is OVERRULED.

 

4th CAUSE OF ACTION

 

NEGLIGENT MISREPRESENTATION:  The elements are: (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant made the representation without reasonable ground for believing it to be true; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.  (Majd v. Bank of Am, N.A. (2015) 243 Cal.App. 4th 1293, 1307 citing West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal. App.4th 780, 792.)

 

The court finds that Defendant Morgan’s negligent misrepresentation is adequately alleged at ¶¶ 52-56.  Further, the court finds the allegations are sufficiently particular.  Demurrer is OVERRULED.

 

5th CAUSE OF ACTION

 

UNJUST ENRICHMENT:  Under the law of restitution, an individual may be required to make restitution if he is unjustly enriched at the expense of another. A person is enriched if he receives a benefit at another's expense. (Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51.)

 

There is a split of authority across the appellate courts regarding whether unjust enrichment is a cause of action or a principle of law.  (Jogani v. Superior Court (2008) 165 Cal.App.4th 901, 911 and Melchior v. New Line Prods., Inc. (2003) 106 Cal.App.4th 779, 794 hold that unjust enrichment is a principle underlying various doctrines and remedies, including quasi-contract. On the other hand, Hirsch v. Bank of America (2003) 107 Cal.App.4th 708, First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, and Lectrodryer v. Seoul Bank (2000) 77 Cal.App.4th 723 view it as a separate cause of action.)

 

This court follows the Jogani line of cases and finds that Unjust Enrichment is not a cause of action.  However, Plaintiffs may still allege it as a theory supporting the remedy of rescission.  A complaint may state multiple legal theories upon which recovery might be predicated for one claim for relief.  (Newhall Land & Farming Co. v. Superior Court (1993) 19 Cal.App. 4th 334, 351.)

 

Accordingly, the Clerk is ORDERED to strike the title, “Fifth cause of action  Unjust Enrichment and ¶ 57” (Complaint, 10:1-4) by interlineation, but the allegations at ¶¶ 192-199 may remain. 

 

As amended, demurrer is OVERRULED.

 

6th CAUSE OF ACTION

 

VIOLATION OF B&P CODE § 17200, ET SEQ.: The Unfair Business Practices Act shall include “any unlawful, unfair or fraudulent business act or practice.” (B&P Code § 17200.)  A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.  (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.)  Even a single incident - a one-time act that is unfair, unlawful or fraudulent - is sufficient to state a claim under 17200.  (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969 fn. 3.) 

 

The court finds the Fraud and unfair business practices prongs are adequately pled.  Demurrer is OVERRULED.

 

Defendant’s accompanying motion to strike attorney’s fees is GRANTED without leave to amend.  Plaintiff failed to allege whether attorney’s fees is recoverable by contract or law.