TENTATIVE RULING

Defendant Flue Steam, Inc.’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED with thirty (30) days leave to amend.

Plaintiff Creditors Adjustment Bureau, Inc. may amend its complaint only as authorized by the Court’s order and may not amend the complaint to add a new party or cause of action without having obtained permission to do so. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)

Defendant Flue Steam, Inc. to give notice. 

REASONING

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967), but the Court does not “assume the truth of contentions, deductions, or conclusions of fact or law” (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125).

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

First Cause of Action: Breach of Contract

To state a cause of action for breach of contract, a 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.)

In the First Amended Complaint (“FAC”), Plaintiff Creditors Adjustment Bureau, Inc. (“Plaintiff”) refers to two insurance policies forming the basis of its breach of contract claim. (FAC ¶ 11.) Plaintiff generally describes the terms of the policies, but it has not provided a copy of those policies, and it has not described the terms in sufficient detail for the trier of fact to determine the obligations owed by all parties to the agreements. If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) While in some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199), Plaintiff must still describe all important terms of the agreements, and it has not done so here because it has not described the specific terms of the obligation owed by Defendant Flue Steam, Inc. (“Defendant”), i.e., the time within which Defendant was to pay, or the terms for Plaintiff to collect as the assignor. Thus, Defendant’s demurrer to the first cause of action is SUSTAINED with thirty (30) days leave to amend.

Second Cause of Action: Open Book Account

“The elements of an open book account cause of action are: “1. That plaintiff and defendant had financial transactions; 2. That plaintiff kept an account of the debits and credits involved in the transactions; 3. That defendant owes plaintiff money on the account; and 4. The amount of money that defendant owes plaintiff.” (State Compensation Insurance Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 449, brackets, ellipses, quotation marks, and paragraph marks omitted.)

In the second cause of action, Plaintiff again alleges that Defendant owes a debt to Plaintiff arising out the identified policies. (FAC ¶ 21.) While a contract may not be necessary, Plaintiff has not sufficiently stated all terms of the agreements underlying the debt, as stated above. Accordingly, Defendant’s demurrer to the second cause of action is SUSTAINED with thirty (30) days leave to amend.

Third Cause of Action: Account Stated

“The essential elements of an account stated are: (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; [and] (3) a promise by the debtor, express or implied, to pay the amount due.” (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.)

In the third cause of action, Plaintiff again alleges that Defendant owes a debt to Plaintiff arising out the identified policies. (FAC ¶ 24.) Here, the agreements between Defendant and the assignor are alleged to have been written, and Plaintiff has not sufficiently stated all terms of the agreements underlying the debt, as stated above. Thus, Defendant’s demurrer to the third cause of action is SUSTAINED with thirty (30) days leave to amend.

Fourth Cause of Action: Reasonable Value

In the fourth cause of action, Plaintiff again alleges that Defendant owes a debt to Plaintiff arising out the identified policies. (FAC ¶ 27.) While a contract may not be necessary, Plaintiff has not sufficiently stated all terms of the agreements underlying the debt, as stated above. The exact nature of a “reasonable value” claim is also unclear to the Court, i.e., is this a claim for quantum meruit, common count, or some other claim, or is it merely duplicative of the other claims alleged in the FAC? For these reasons, Defendant’s demurrer to the fourth cause of action is SUSTAINED with thirty (30) days leave to amend.

Defendant Flue Steam, Inc.’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED with thirty (30) days leave to amend. Plaintiff Creditors Adjustment Bureau, Inc. may amend its complaint only as authorized by the Court’s order and may not amend the complaint to add a new party or cause of action without having obtained permission to do so. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) Insofar as both parties request sanctions against the other, those requests are DENIED.