Judge Lisa K. Sepe-Wiesenfeld, Case Number: 23SMCV03681, Date: 2024-11-05 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 23SMCV03681, Date: 2024-11-05 Tentative Ruling

Defendants Mandrake Construction Co. Inc. and Juan Antonio Devoto’s Demurrer to Plaintiffs’ Complaint is SUSTAINED without leave to amend as to the fourth, sixth, eighth, tenth, eleventh, twelfth, and thirteenth causes of action and SUSTAINED with thirty (30) days leave to amend as to the first, second, third, fifth, ninth, and fourteenth causes of action.

Plaintiffs Homan Siman and Sanam Siman may amend their 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.)

Defendants Mandrake Construction Co. Inc. and Juan Antonio Devoto (“Defendants”) demur to the first through sixth and eighth through fourteenth causes of action and move to strike portions of Plaintiffs Homan Siman and Sanam Siman (“Plaintiffs”) complaint.

“[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).

Further, the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (b).) The grounds for a motion to strike are that the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws. (Code Civ. Proc., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)

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.)

Defendants argue that Devoto cannot be held personally liable for all causes of action in the complaint simply because he is the Chief Executive Officer of the corporate entity, and he was not a party to the subject agreement. Notably, there are no alter ego allegations, and insofar as Plaintiffs intend to hold Devoto liable simply because he acted for the corporate entity, more is required, i.e., Plaintiffs cannot simply allege that he acted on behalf of the corporate entity. Plaintiffs must describe specific conduct by Devoto that would warrant holding him liable in his individual capacity. Defendants’ demurrer is SUSTAINED with thirty (30) days leave to amend as to the claims against Defendant Juan Antonio Devoto.

Defendants argue that Plaintiffs have not included the date of any alleged breach by Defendants, which makes it unclear whether the claims are barred by the applicable statutes of limitations. Plaintiffs refer to the discovery rule, but none of this is laid out in the complaint. Thus, Defendants’ demurrer is SUSTAINED with thirty (30) days leave to amend in this regard.

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

Plaintiffs allege that they entered into the subject contract on February 20, 2017, and Defendants breached the contract by refusing to fully perform the agreement, by violating statutes and code provisions, and failing to obtain proper permits. Put simply, the first three causes of action are confusing because Plaintiffs fail to allege any purported abandonment, the code violations are not specifically alleged, and the claim as to failure to obtain a proper permit is conclusory, i.e., the third cause of action is not based in the facts alleged in the prior paragraphs. It is also unclear why Plaintiffs need three causes of action for breach of contract when all claims seek the same damages, and the Court advises Plaintiffs that they may be better served by limiting their causes of action in the complaint. Accordingly, Defendants’ demurrer is SUSTAINED with thirty (30) days leave to amend as to the first, second, and third causes of action.

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.)

Plaintiffs’ fourth cause of action alleges no more than a breach of contract by Defendants, as Plaintiffs simply allege that Defendants failed to properly perform the work and requested payment in excess of the value of the work performed, i.e., Defendants performed substandard work for the money paid. “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated . . . [T]he only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Id. at pp. 1394-1395.) To recover in tort for breach of the implied covenant, the defendant must “have acted unreasonably or without proper cause.” (Id. at p. 1395, citations and italics omitted.) Plaintiffs have not alleged any unreasonable conduct by Defendants warranting a tort claim against them for their breach. Thus, Defendants’ demurrer is SUSTAINED without leave to amend as to the fourth cause of action.

“[T]o prevail on a breach of express warranty claim, the plaintiff must prove (1) the seller’s statements constitute an affirmation of fact or promise or a description of the goods; (2) the statement was part of the basis of the bargain; and (3) the warranty was breached.” (Patricia A. Murray Dental Corp. v. Dentsply International, Inc. (2018) 19 Cal.App.5th 258, 275, quotation marks omitted.) Plaintiffs allege that Defendants warranted that the materials and equipment furnished under the agreement would be of good quality and new, and that the work would be free from defects (Compl. ¶ 64), but the agreement attached to the complaint contains no express warranty, and Plaintiffs allege no other express warranty by Defendants. Accordingly, Defendants’ demurrer is SUSTAINED without leave to amend as to the sixth cause of action.

In order to state a claim for negligence, Plaintiff must allege the elements of (1) “the existence of a legal duty of care,” (2) “breach of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.) “The negligence per se doctrine, as codified in Evidence Code section 669, creates a presumption of negligence if four elements are established: (1) the defendant violated a statute, ordinance, or regulation of a public entity; (2) the violation proximately caused death or injury to person or property; (3) the death or injury resulted from an occurrence of the nature of which the statute, ordinance, or regulation was designed to prevent; and (4) the person suffering the death or the injury to his person or property was one of the class of persons for whose protection the statute, ordinance, or regulation was adopted.” (Spates v. Dameron Hospital Association (2003) 114 Cal.App.4th 208, 218, quotation marks omitted.) “The doctrine of negligence per se is not a separate cause of action, but creates an evidentiary presumption that affects the standard of care in a cause of action for negligence.” (Johnson v. Honeywell International Inc. (2009) 179 Cal.App.4th 549, 555, quotation marks and brackets omitted.)

Under the economic loss rule in construction defect cases a party may not recover for “purely economic losses, i.e., those not accompanied by either property damage or physical injuries.” (Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1210.) In an action for negligence such as here, “liability is limited to damages for physical injuries; no recovery is allowed for economic loss alone.” (Ibid.)

In the eighth cause of action, Plaintiffs asserts that Defendants had a duty to properly carry out the construction project, and they breached this duty when they failed to do so in compliance with code requirements and without exercising reasonable care, causing the doors and windows to malfunction and leak. (Compl. ¶¶ 79-80.) The complaint supports a conclusion that Plaintiffs’ negligence claim is barred as a matter of law under the economic loss rule because Plaintiffs allege only economic loss. Plaintiffs cannot simply sue for negligent performance of the contract because conduct such as that alleged here “becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law.” (State Ready Mix, Inc. v. Moffatt & Nichol (2015) 232 Cal.App.4th 1227, 1231, italics omitted.) There are no facts in the complaint showing either property damage beyond the window and wall or physical injuries to a party. Thus, Defendants’ demurrer is SUSTAINED without leave to amend as to the eighth cause of action.

“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.) The elements of a cause of action for negligent misrepresentation include “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks omitted.)

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Plaintiffs allege that Defendants made several representations to them about how they would perform the work, but the representations were false. (Compl. ¶¶ 85-86.) Plaintiffs provide no facts about who said what specifically to Plaintiffs, when, and by what means the representations were made. Accordingly, Defendants’ demurrer is SUSTAINED with thirty (30) days leave to amend as to the ninth cause of action.

To establish a cause of action for recovery on a contractor’s license bond, the party seeking to recover must show (1) the existence of a contractor’s license bond issued by the surety, (2) a willful and deliberate violation of Chapter 9 of the California Business and Professions Code by the bond principal, and (3) damages. (Bus. Prof. Code § 7071.5, subd. (c).)

In the tenth cause of action, Plaintiffs allege that Defendants had a bond issued to them for the work performed, and Plaintiffs seek to recover on that bond. (Compl. ¶¶ 92-94.) There are no allegations that Defendants are the bond principal, such that the Court lacks a basis to conclude this claim is proper against Defendants. Thus, Defendants’ demurrer is SUSTAINED without leave to amend as to the tenth cause of action.

“The elements for a claim of unjust enrichment are receipt of a benefit and unjust retention of the benefit at the expense of another. The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769, quotation marks and citations omitted.)

Notably, “[u]njust enrichment is not a cause of action”; it is simply “a restitution claim.” (Hill v. Roll International Corp. (2011) 195 Cal.App.4th 1295, 1307; see also Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793 [“there is no cause of action in California for unjust enrichment”].) Plaintiffs’ unjust enrichment claim alleges no more than a breach of contract by Defendants. Accordingly, Defendants’ demurrer is SUSTAINED without leave to amend as to the eleventh cause of action.

“Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)

Plaintiffs allege a conversion claim based on Defendants’ retention of funds for the work they performed in an alleged substandard manner. Put simply, this is not a conversion claim. Each breach of contract does not support a conversion claim, and simply retaining money paid pursuant to contract based on alleged substandard work does not allege conversion. Further, “[a] generalized claim for money is not actionable as conversion.” (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1042, quotation marks and brackets omitted.) “Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved.” (Ibid.) Here, Plaintiffs’ claim for conversion does not allege a specific, identifiable sum, as they allege that they demanded $320,000, but it is not clear from the facts that Plaintiffs are entitled to recover this money for mere substandard work. As alleged, Plaintiffs’ claim is one for damages arising out of breach of contract or one seeking recovery of money owed. Thus, Defendants’ demurrer is SUSTAINED without leave to amend as to the twelfth cause of action.

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179, citations and paragraph break omitted.) “A cause of action for money had and received is stated if it is alleged that the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. The claim is viable wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.” (Avidor v. Sutter’s Place, Inc. (2013) 212 Cal.App.4th 1439, 1454, brackets, quotation marks, and citations omitted.) Plaintiffs must establish “that the defendant received money intended to be used for the benefit of the plaintiff, that the money was not used for the plaintiff’s benefit, and that the defendant has not given the money to the plaintiff.” (Ibid., brackets and quotation marks omitted.)

In the thirteenth cause of action, Plaintiffs seek a return of the money paid to Defendants for the work performed. Plaintiffs provide a conclusory statement that the amount due to Plaintiffs can only be ascertained by an accounting, but given Plaintiffs are seeking recovery for a breach of contract, for which damages can be ascertained without an accounting, there is no basis to conclude that this claim is proper. Accordingly, Defendants’ demurrer is SUSTAINED without leave to amend as to the thirteenth cause of action.

A party to a contract may rescind it where the contract is unlawful, was the result of mistake, duress, menace, fraud, or undue influence, or will prejudice the public interest if permitted to stand, or if there was a failure of consideration. (Civ. Code, § 1689, subd. (b).)

Plaintiffs seek rescission of the subject contract on the ground that Defendant fraudulently induced Plaintiffs to enter into the agreement, such that the contract is void. (Compl. ¶ 111.) As alleged above, Plaintiffs have not sufficiently alleged fraud by Defendants. Thus, Defendants’ demurrer is SUSTAINED with thirty (30) days leave to amend as to the fourteenth cause of action.