Judge Lynette Gridiron Winston, Case Number: 23PSCV00960, Date: 2023-10-04 Tentative Ruling

Judge: Lynette Gridiron Winston, Case: 23PSCV00960, Date: 2023-10-04 Tentative Ruling

Case Number: 23PSCV00960 Hearing Date: October 4, 2023 Dept: 6

CASE NAME: Hixih Rubber Industry Group Co., Ltd. v. King’s Tire Hawaii Wholesale, Inc., et al.

Demurrer and Motion to Strike of Defendants King’s Tire Hawaii Wholesale, Inc., King’s Tire and Wheel, Inc., and Sarkis Batanian to the Complaint of Plaintiff Hixih Rubber Industry Group Co., Ltd.

TENTATIVE RULING
Defendants’ demurrer is SUSTAINED with leave to amend as to the fifth and sixth causes of action for fraud and negligent misrepresentation. The demurrer is otherwise OVERRULED.

Defendants’ motion to strike is GRANTED as to the requests for attorney’s fees and punitive damages in the prayer for relief, paragraphs 3 and 4 on page 10 of the Complaint. The motion to strike is otherwise DENIED.

Plaintiff is ordered to file an amended complaint within 10 days of the date of this order if it chooses to amend the fifth and sixth causes of action.

BACKGROUND
On April 3, 2023, Plaintiff Hixih Rubber Industry Group Co., Ltd. (Plaintiff) filed this action against Defendants King’s Tire Hawaii Wholesale, Inc., King’s Tire and Wheel, Inc., Sarkis Batanian (collectively, Defendants) and Does 1 through 20, alleging causes of action for breach of contract, goods wares and merchandise sold and delivered – common count, unjust enrichment, breach of account stated, fraud, and negligent misrepresentation.

On June 26, 2023, Defendants filed a demurrer and motion to strike portions of Plaintiff’s complaint. On July 27, 2023, Plaintiff opposed the demurrer and motion to strike, and filed an amendment to the complaint, substituting King’s Tire Wholesale as Doe 1. On August 7, 2023, Defendants replied.

MEET AND CONFER
Plaintiff contends that Defendants did not sufficiently meet and confer before filing this demurrer and motion to strike. (Code Civ. Proc., §§ 430.41, 435.5.) Nevertheless, inadequate meeting and conferring cannot be a basis for overruling a demurrer or denying a motion to strike. (Id., §§ 430.41, subd. (a)(4); 435.5, subd. (a)(4).) The Court has also reviewed the supporting declarations and finds that the parties have adequately met and conferred. (Brent Decl., ¶¶ 3, 4.)

LEGAL STANDARD - Demurrer
A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer or cross-complaint). (Code Civ. Proc., §§ 422.10, 589; see Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true. (Id.)

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. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian, supra, 116 Cal.App.4th at p. 994.) No other extrinsic evidence can be considered. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881 [error for court to consider facts asserted in memorandum supporting demurrer]; see also Afuso v. United States Fid. & Guar. Co. (1985) 169 Cal.App.3d 859, 862 [disapproved on other grounds in Moradi-Shalal v. Fireman’s Fund Ins. Cos. (1988) 46 Cal.3d 287] [error to consider contents of release not part of court record].)

A demurrer can be utilized where the “face of the complaint” itself is incomplete or discloses some defense that would bar recovery. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-72.) The “face of the complaint” includes material contained in attached exhibits that are incorporated by reference into the complaint; or in a superseded complaint in the same action. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94; see also Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 [“[W]e rely on and accept as true the contents of the exhibits and treat as surplusage the pleader’s allegations as to the legal effect of the exhibits.”])

A demurrer can only be sustained when it disposes of an entire cause of action. (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119; Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046.)

ANALYSIS – Demurrer
Defendants demur to the entire complaint and each cause of action therein on the grounds that they fail to state a cause of action, are uncertain, and it cannot be determined whether the alleged contract is oral, written, or implied by conduct.

Entire Complaint
A demurrer to the entire complaint may be overruled if any cause of action is properly stated. (Warren v. Atchison, T. & S. F. Ry. Co. (1971) 19 Cal.App.3d 24, 36.)“A cause of action for breach of contract requires pleading of a contract, plaintiff's performance or excuse for failure to perform, defendant's breach and damage to plaintiff resulting therefrom. (4 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 476, p. 570.) A written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. (Id., §§ 479, 480, pp. 572–573.)” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.) “To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

The Court finds Defendants’ arguments in support of the demurrer to the entire complaint unpersuasive. The complaint attaches a copy of the alleged contract to it (the Contract). (Compl., pp. 11-16.; Davies v. Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086, 1091 [“Where a written contract is pleaded by attachment to and incorporation in a complaint, and where the complaint fails to allege that the terms of the contract have any special meaning, a court will construe the language of the contract on its face to determine whether, as a matter of law, the contract is reasonably subject to a construction sufficient to sustain a cause of action for breach.”]) It identifies Plaintiff as one of the parties and Defendant King’s Tire Wholesale dba King’s Tire Wholesale as the billing recipient. (Compl., p. 11.) It identifies amounts due for goods allegedly sold and contains signatures. (Compl., pp. 12, 14.) Plaintiff alleges Defendants have not paid Plaintiff the amount owed under the Contract. (Compl., ¶¶ 11, 13.) Also, the Contract is attached to the complaint, which shows that it is written. (See Compl., pp. 11-16.)

The Court also finds Defendants’ arguments regarding the identification of the parties to the Contract to be unavailing. Plaintiff filed an amendment to the complaint on July 27, 2023, which substituted King’s Tire Wholesale as Doe 1. (Code Civ. Proc., § 474.) Plaintiff indicated in its opposition that it would make such amendment in conjunction with the opposition, (Opp., 2:19-20), and Defendants did not address this in their reply, (see Holden v. City of San Diego (2019) 43 Cal.App.5th 504, 418). Additionally, the complaint alleges that Defendant King’s Tire Wholesale Hawaii, Inc. is a terminated corporation, and that Defendants are otherwise alter egos of each other. (Compl., ¶¶ 4, 5, 8.) The Court finds this sufficient to state causes of action against Defendants.

The Court finds the factual allegations of the complaint to be sufficiently clear to apprise Defendants of what the issues are, (see Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616), and that Plaintiff has alleged sufficient facts to state a cause of action for breach of contract. Based on the foregoing, the Court OVERRULES the demurrer to the entire complaint.

Breach of Contract
For the reasons set forth above, the Court finds the complaint alleges sufficient facts to support a cause of action for breach of contract. The Court OVERRULES the demurrer as to the first cause of action for breach of contract.

Goods, Wares and Merchandise Sold and Delivered – Common Counts
“This form of pleading, a common count, by long continued practice is not subject to attack by general demurrer or by a special demurrer for uncertainty.” (Weitzenkorn v. Lesser (1953) 40 Cal.2d 778, 792-793) [internal quotes omitted].

Defendants contend the second cause of action for common counts is subject to demurrer based on the allegations in connection with Plaintiff’s claim for breach of contract. However, since the Court has overruled the demurrer as to Plaintiff’s breach of contract claim, the Court finds that is not a sufficient basis for sustaining a demurrer here.

Moreover, to the extent Defendants rely on the argument that they are not parties to the Contract, the Court is not persuaded. As stated above, Plaintiff filed an amendment to the complaint naming Defendant King’s Tire Wholesale as a doe defendant, and the complaint contains allegations that support alter ego liability between the Defendants. (Compl., ¶¶ 4, 5, 8.) Further, the complaint alleges that Plaintiff shipped goods to Defendants, billed Defendants for such goods, and that Defendants failed to pay for such goods. (Compl., ¶¶ 10-13, 20.)

Based on the foregoing, the Court OVERRULES the demurrer as to the second cause of action for goods, wares and merchandise sold and delivered – common counts.

Unjust Enrichment
To state a claim for unjust enrichment, the plaintiff must allege, “ ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’ [Citation.]” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769.)

Defendants’ demurrer to the third cause of action for unjust enrichment repeats the contention that none of the Defendants are named in the Contract. (Demurrer, 9:23-10:24.) However, as noted above, Plaintiff has substituted King’s Tire Wholesale as Doe 1 and Defendants have not commented on this issue in their reply. Plaintiff has also alleged alter ego liability between all of the Defendants. (Compl., ¶¶ 4, 8.) Further, the complaint alleges that Plaintiff shipped goods to Defendants, billed Defendants for such goods, and that Defendants failed to pay for such goods. (Compl., ¶¶ 10-13, 24, 25.)

Therefore, the Court OVERRULES the demurrer as to the third cause of action.

Breach of Account Stated
To state a cause of action for account stated, the plaintiff must allege: “(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; (3) a promise by the debtor, express or implied, to pay the amount due. [Citations.]” (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.)

Defendants just repeat their arguments with respect to the first, second, and third causes of action. For the same reasons set forth above, this is unpersuasive.

The Court therefore OVERRULES the demurrer as to this cause of action.

Fraud
To state a cause of action for fraud, the plaintiff must allege: “(1) a misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage.” (City of Indus. v. City of Fillmore (2011) 198 Cal.App.4th 191, 211.)

Defendants’ contentions for this cause of action are the same as those set forth above, namely that Defendants’ names are not on the Contract and that the Contract lacks sufficient details regarding its terms. (Demurrer, 10:25-11:18.) For the reasons already set forth herein, the Court finds these arguments unpersuasive.

However, the Court does agree that the complaint lacks the requisite particularity for a fraud claim. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] Thus, the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. [Citation.] A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. [Citation.]” (Lazar v. Superior Ct. (1996) 12 Cal.4th 631, 645, internal quotation marks omitted.) The complaint does not provide sufficiently particular allegations to identify when the alleged misrepresentations were made, how they were made, to whom they were made, by what means, and the authority of the person allegedly making the misrepresentations on behalf of the entity Defendants. The complaint also fails to allege any specific facts showing that Defendants did not intend to perform at the time the representation was made. (See Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159.

Therefore, the Court SUSTAINS the demurrer as to the fifth cause of action with leave to amend.

Negligent Misrepresentation
To state a cause of action for negligent misrepresentation, the “plaintiff must prove the following in order to recover. ‘[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. v. Hayward, Tilton & Rolapp Ins. Assocs., Inc. (2004) 115 Cal.App.4th 1145, 1154.)

The Court’s analysis is the same with respect to fraud addressed above. The Court finds the allegations here lack the requisite particularity to state a claim for negligent misrepresentation. (See Lazar, supra, 12 Cal.4th at p. 645.).

Based on the foregoing, the Court SUSTAINS the demurrer as to the sixth cause of action.

LEGAL STANDARD – Motion to Strike
“Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof, but this time limitation shall not apply to motions specified in subdivision (e).” (Code Civ. Proc., § 435, subd. (b)(2).) “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out 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.” (Id., § 436.)

ANALYSIS – Motion to Strike
Defendants’ notice of motion to strike asks the Court to strike certain paragraphs and parts of the prayer for relief from the complaint, but in their memorandum of points and authorities, they ask the Court to strike every cause of action in the complaint. However, a motion to strike does not lie as to a cause of action. (Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340, 342-343.) The Court therefore DENIES the motion to strike to the extent it seeks to strike causes of action.

As for Defendants’ arguments that paragraphs 4, 5, and 7 through 9 of the complaint are irrelevant, the Court DENIES the motion to strike. The Court finds these allegations to be directly relevant, as they set forth the background and the key allegations for Plaintiff’s contentions that Defendants failed to pay Plaintiff as agreed. The Court also finds the alter ego allegations to be supported by sufficient facts, such as paragraphs 4 and 5 which allege, respectively, that Defendant King’s Tire Wholesale Hawaii, Inc. is a terminated corporation, and that Defendant Batanian is an owner of King’s Tire Wholesale and its Chief Executive Officer. (Compl., ¶¶4, 5.)

With respect to Defendants’ arguments that paragraphs 10 through 13 of the complaint contradict the Contract, the Court disagrees and DENIES the motion to strike. These arguments are essentially a reiteration of the contention that Defendants are not parties to the Contract, which argument the Court has rejected for the reasons already set forth herein.

As for the requests for punitive damages and attorney’s fees, the Court GRANTS the motion to strike. Nothing in the Contract provides for the recovery of attorney’s fees. (See Compl., pp. 11-16; see also Civ. Code § 1717.5 [“If there is a written agreement between the parties signed by the person to be charged, the fees provided by this section may not be imposed unless that agreement contains a statement that the prevailing party in any action between the parties is entitled to the fees provided by this section.”])

Moreover, given the Court sustaining the demurrer as to Plaintiff’s causes of action for fraud and negligent misrepresentation, Plaintiff has not alleged facts or a cause of action that would otherwise support a request for punitive damages. (See Civ. Code § 3294, subd. (a) [“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”])

Therefore, the Court GRANTS the motion to strike as to the requests for attorney’s fees and punitive damages in the prayer for relief. The motion to strike is otherwise DENIED.

CONCLUSION
Defendants’ demurrer is SUSTAINED with leave to amend as to the fifth and sixth causes of action for fraud and negligent misrepresentation. The demurrer is otherwise OVERRULED.

Defendants’ motion to strike is GRANTED as to the requests for attorney’s fees and punitive damages in the prayer for relief, paragraphs 3 and 4 on page 10 of the Complaint. The motion to strike is otherwise DENIED.

Plaintiff is ordered to file an amended complaint within 10 days of the date of this order if it chooses to amend the fifth and sixth causes of action.