Judge Lisa K. Sepe-Wiesenfeld, Case Number: 23SMCV1869, Date: 2023-11-14 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 23SMCV1869, Date: 2023-11-14 Tentative Ruling

Defendants Brian Weiner and Excel Global Family Office, Inc.’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED with twenty (20) days leave to amend as to the first, second, third, and fifth causes of action, and SUSTAINED without leave to amend as to the fourth and sixth causes of action.

Plaintiff Arden Silverman dba Capital Asset Protection may amend his 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 Brian Weiner and Excel Global Family Office, Inc. (“Defendants”) demur to each of the six causes of action set forth in Plaintiff Arden Silverman dba Capital Asset Protection (“Plaintiff”)’s First Amended Complaint (“FAC”). Plaintiff has not filed an opposition to Defendants’ demurrer, and a party’s failure to file an opposition can be considered a concession that the motion is meritorious. (See Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410.)

“[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.)

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

Plaintiff alleges that his assignor, Brandview, Inc. (“Brandview”), entered into a written service contract on May 19, 2022, with Defendant Brian Weiner, as Co-Founding Partner of Defendant Innovise Family Wealth Advisors LLC, to provide property investment recommendations. (FAC ¶ 13.) Plaintiff purports to attach the agreement as Exhibit B, but he has failed to provide any such attachment. 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.) Defendants provide a copy of what they contend is the service agreement, but the Court lacks a basis to take judicial notice of this agreement, and the cases cited by Defendants do not stand for the proposition advanced by Defendants, specifically that the Court may take judicial notice of a contract where it is represented to be attached but is not. (See Dem., p. 3, ll. 7-11.) Thus, the Court will not consider that document, as it is extrinsic evidence not properly considered in the context of a demurrer.

Plaintiff alleges that “Defendants” entered into a contract, while alleging elsewhere that only Defendant Weiner was a party to that agreement, certain modifications were made, and Defendants breached the agreement by failing to pay Plaintiff’s assignor. (FAC ¶¶ 13, 23-27.) It is also unclear, without the terms of the contract, whether Plaintiff as the assignor is entitled to enforce the agreement. The basis for liability under the contract cannot be determined without reference to the agreement. Accordingly, Defendants’ demurrer to the first cause of action is SUSTAINED with twenty (20) days leave to amend.

In the second cause of action, Plaintiff alleges that “Defendants” had a fiduciary duty to Brandview “to act fairly and in the utmost good faith for the benefit of [Brandview] in providing payment for the services provided by Assignor as set forth in the Agreement,” and Defendants breached that duty to failing to pay Brandview. (FAC ¶¶ 31, 32.) First, the nature of any duty is unclear given the lack of the underlying agreement and use of the term “Defendants” generally. Second, it is not clear how a fiduciary relationship would be breached solely due to nonpayment under a contract. Thus, Defendants’ demurrer to the second cause of action is SUSTAINED with twenty (20) days leave to amend.

“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.) “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.)

Notably, “[t]he prerequisite for any action for breach of the implied covenant of good faith and fair dealing is the existence of a contractual relationship between the parties, since the covenant is an implied term in the contract” and “[w]ithout a contractual underpinning, there is no independent claim for breach of the implied covenant.” (Fireman’s Fund Insurance Co. v. Maryland Casualty Co. (1994) 21 Cal.App.4th 1586, 1599.) As stated above, the Court lacks a basis to conclude that there is a contractual relationship between Plaintiff or Plaintiff’s assignor and Defendants. Accordingly, Defendants’ demurrer to the third cause of action is SUSTAINED with twenty (20) days leave to amend

“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”].) Plaintiff’s unjust enrichment claim alleges nothing different than Plaintiff’s other claims in the FAC. Thus, Defendants’ demurrer to the fourth cause of action is SUSTAINED without leave to amend.

To set forth a claim for a violation of Business and Professions Code section 17200, Plaintiff must establish Defendants were engaged in an “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising” and certain specific acts. (Bus. & Prof. Code, § 17200.)

Plaintiff alleges that Defendants violated Business and Professions Code section 17200 by failing to repay Plaintiff’s assignor for services rendered. (FAC ¶ 54.) It appears Plaintiff’s claim here is no more than breach of a promise to pay, i.e., a breach of contract claim, and a cause of action for unfair competition “is not an all-purpose substitute for a tort or contract action.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.) Plaintiff must allege specific facts beyond mere failure to pay under a contract. Accordingly, Defendants’ demurrer to the fifth cause of action is SUSTAINED with twenty (20) days leave to amend.

“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.)

In the sixth cause of action, Plaintiff seeks an accounting of all charges, fees, commissions, costs, and transactions between Defendants and Brandview, and Plaintiff alleges that it “cannot ascertain the amount Defendants have received with the benefit of the property investment recommendations provided by [Brandview] for purposes of pursuing a claim for disgorgement of all profits and benefits stemming from [Brandview’s] work.” (FAC ¶¶ 65-66.) There is no basis for the Court to determine that an accounting is necessary where Plaintiff alleges there is $50,000 due and owing for nonpayment under the contract. (FAC ¶ 19.) Thus, Defendants’ demurrer to the sixth cause of action is SUSTAINED without leave to amend.

“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) “A corporate identity may be disregarded—the ‘corporate veil’ pierced—where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation.” (Ibid.) “The alter ego doctrine exists to prevent “individuals or other corporations from misusing the corporate laws by the device of a sham corporate entity formed for the purpose of committing fraud or other misdeeds.” (Ibid.)

In the FAC, Plaintiff provides only conclusory statements that Defendant Weiner was the alter ego of Innovise Family Wealth Advisors LLC without any specific facts which would support a finding that Weiner used Innovise Family Wealth Advisors LLC as a sham to commit certain misdeeds. (FAC ¶ 9.) Should Plaintiff seek to hold Defendant Weiner liable under an alter ego theory, Plaintiff must provide specific facts supporting a finding that Defendant Weiner has abused the corporate privilege.