Judge: Lynette Gridiron Winston, Case: 23PSCV01496, Date: 2023-11-16 Tentative Ruling
Case Number: 23PSCV01496 Hearing Date: November 16, 2023 Dept: 6
CASE NAME: WCS Restoration, LLC v. Jing Xiao
Defendant Jing Xiao’s Demurrer to the First Amended Complaint
TENTATIVE RULING
The Court SUSTAINS the demurrer with 20 days leave to amend as to the First, Second, Third, and Fourth Causes of Action in the First Amended Complaint.
BACKGROUND
This is a breach of contract case. On May 17, 2023, Plaintiff WCS Restoration, LLC filed a complaint against Defendant Jing Xiao (“Defendant”) and Does 1 to 10. On July 10, 2023, Defendant filed a demurrer to the complaint, which was set for a hearing on August 29, 2023.
On August 11, 2023, the Court continued the hearing on Defendant’s demurrer from August 29, 2023 to September 27, 2023.
On September 13, 2023, Plaintiff West Coast Consulting Services LLC dba WCS Restoration LLC (“Plaintiff”) filed the operative First Amended Complaint (“FAC”) alleging causes of action for breach of contract, open book account, account stated, and quantum meruit.
On October 17, 2023, Defendant filed the instant demurrer to the FAC as to each cause of action in the FAC. No opposition has been filed. Any opposition was required to have been filed and served at least nine court days prior to the hearing pursuant to California Code of Civil Procedure, Section 1005(b). Given that the demurrer is unopposed, there is an inference that it is meritorious. (Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410.)
LEGAL STANDARD
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; 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 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, 971-972.) 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.) Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.) If there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend. (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245.)
REQUEST FOR JUDICIAL NOTICE
The Court DENIES Defendant’s request for judicial notice as to Exhibits A and B. (Evid. Code § 452, subds. (g) and (h).) Defendant has not provided any foundation to show that the records are laws, resolutions, certified records or acts under Evidence Code sections 452(a), (b) or (c). Moreover, the court will not take judicial notice of the outcome of an online search to establish that Plaintiff does not hold a contractor license. California law does not allow for judicial notice of such matters. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 888-889.)
MEET AND CONFER
Per Code of Civil Procedure section 430.41, subdivision (a), the parties were required to meet and confer in person or by telephone before bringing this demurrer. (Code Civ. Proc., § 430.41, subd. (a).) It is unclear to the Court if counsel for Defendant complied with this requirement, as the supporting declaration demonstrates that counsel only communicated on the issues raised in the demurrer via email/letter. (Tatone Decl., ¶ 8.) Nevertheless, the Court may not overrule a demurrer for failure to adequately meet and confer. (Code Civ. Proc., § 430.41, subd. (a)(4).) The Court will still consider the demurrer but reminds the parties of the need to comply with the requirements of the Code of Civil Procedure.
DISCUSSION
Failure to File a Fictitious Business Name Statement
Defendant contends that the entire FAC is subject to demurrer because Plaintiff cannot maintain any action upon contract until its fictitious business name statement has been executed, filed, and published.
“Every person who regularly transacts business in this state for profit under a fictitious business name shall do all of the following: (a) File a fictious business name statement in accordance with this chapter not later than 40 days from the time registrant commences to transact such a new business. (b) File a new statement after any change in the facts, in accordance with subdivision (b) of Section 17920. (c) File a new statement when refilling a fictitious business name statement.” (Bus. & Prof. Code, § 17910, subds. (a)-(c).)
“No person transacting business under a fictitious business name contrary to the provisions of this chapter, or his assignee, may maintain any action upon or on account of any contract made, or transaction had, in the fictitious business name in any court of this state until the fictitious business name statement has been executed, filed, and published as required by this chapter. For the purposes of this section, the failure to comply with subdivision (b) of Section 17917 does not constitute transacting business contrary to the provisions of this chapter.” (Bus. & Prof. Code, § 17918.)
A plaintiff that has not complied with the fictitious business name filing requirements lacks the capacity to sue in actions on contracts made in the fictitious name. (See American Alternative Energy Partners II v. Windridge, Inc. (1996) 42 Cal.App.4th 551, 562; Bus. & Prof. Code § 17918.) "Lack of capacity is disclosed. .. where the complaint shows that an organization does business under a fictitious name but fails to go further and allege compliance with the fictitious name statute." (5 Witkin, Cal. Proc. (6th ed. 2022) Pleading §§ 969, 1176; see Pleaters' & Stitchers' Ass'n v. Davis (1934) 140 Cal.App. 403, 406 [finding that trial court properly sustained demurrer where "[t]he complaint shows upon its face that the plaintiff is a voluntary association doing business under a fictitious name, but, as to whether or not it had filed the certificate required. .. the record is silent"].)
Here, the FAC alleges that “Plaintiff WEST COAST CONSULTING SERVICES LLC DBA WCS RESTORATION LLC is, and at all times herein mentioned was, a California limited liability company, qualified to do business in California.” (FAC, ¶ 1.) The FAC is based on a purported breach of contract. (Id., ¶¶ 5-9.) The FAC, however, contains no allegation that a fictitious business name statement has been executed, filed, and published. The FAC is therefore insufficient to show that Plaintiff has standing to maintain this action.
Accordingly, the demurrer is sustained with leave to amend as to all four causes of action in the FAC.
Unlicensed Contractor
Defendant also contends that the entire FAC is subject to demurrer because Plaintiff cannot maintain any action for the collection of compensation for work performed because Plaintiff was not a licensed contractor. (See Bus. & Prof. Code § 7031(a).)
"The plain meaning of the subdivision (a) provision in section 7031, as construed by our Supreme Court, is 'that, except as expressly otherwise provided, a contractor may not sue to collect compensation for performance of 'any act or contract' requiring a license without alleging that he or she was duly licensed 'at all times during the performance of that act or contract.'" (Kim v. TWA Construction, Inc. (2022) 78 Cal.App.5th 808, 826 [citing MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 425].).) The California Supreme Court has construed section 7031(a) as imposing a complete bar to any recovery of compensation for unlicensed work ‘by specifying that a contractor is barred from all recovery for such an 'act or contract' if unlicensed at any time while performing it.'’ (MW Erectors, Inc., supra, 36 Cal.4th at p. 426.)
Here, Plaintiff has not filed any opposition and a review of Exhibit A to the FAC seems to indicate that the work performed would require a contractor’s license. The Court denies the Request for Judicial Notice and does not make any finding as to whether or not Plaintiff was a licensed contractor. However, the FAC does not allege that Plaintiff was a licensed contractor. Thus, the FAC fails to allege sufficient facts to show that Plaintiff has standing to maintain this action.
Although the Court can sustain the demurrer solely based on the lack of standing, the Court will still assess the sufficiency of each cause of action in the FAC to provide guidance to the parties in the event Plaintiff can properly plead standing.
First Cause of Action
“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.) “Ordinarily, a written contract is sufficiently pleaded if it is set out in full or its terms are alleged according to their legal effect.” (Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal.App.4th 1, 18.) “In some cases, a written contract is pleaded by attachment and incorporation in a complaint.” (Id.)
Here, the first cause of action for breach of contract incorporates the purported contract as Exhibit A to the FAC. (FAC, ¶ 5.) Plaintiff alleges that “on or about August 08, 2021, a written agreement was made between Plaintiff and Defendants . . . [and] [b]y the terms of said agreement, Plaintiff provided services and/or goods to Defendants.” (FAC, ¶ 5.) Defendant demurs on the ground that Exhibit A does not reflect that Defendant signed any contract for services and/or goods or to pay for all services and/or goods.” The Court does not agree. The allegations of the FAC are taken as true for purposes of the Demurrer and the FAC alleges that the parties entered into a written agreement. While there are portions of the alleged agreement that are not signed, there are also portions that appear to reflect a signature and possibly initials of Jing Xiao. The Court finds that the FAC would allege sufficient facts to state a cause of action for breach of contract at this stage of the proceedings.
However, due to the lack of standing discussed above, the demurrer to the first cause of action in the FAC is SUSTAINED with 20 days leave to amend.
Second and Third Causes of Action
“A common count is not a specific cause of action, however; rather it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.) “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” (Ibid.)
Here, Defendant contends that the second and third causes of action are based on the same facts as the first cause of action and seek the same recovery as the first cause of action (FAC, ¶¶ 10-15) and are also demurrable due to the absence of a valid written agreement (Dem., pp. 11:20-12:9). Since the Court found that Plaintiff alleged sufficient facts to establish a claim for breach of contract based on a written agreement, the demurrer would not be sustained on these grounds.
However, due to the lack of standing discussed above, the demurrer to the second and third causes of action in the FAC is SUSTAINED with 20 days leave to amend.
Fourth Cause of Action
Defendant demurs to the fourth cause of action for quantum meruit solely on the ground that such cause of action is subject to demurrer if the court finds that a valid written agreement exists. (Dem. p 12:10-17.) However, this determination is not proper at the pleading stage as the court is not determining the validity of any agreement only if sufficient facts have been pled.
Moreover, Defendant fails to cite any binding California authority to support his contention and the federal case cited, DPR Constr. v. Shire Regenerative Med., Inc. (2016) 204 F. Supp. 3d 1118, 1130-1131, decided a motion for summary judgment, not a demurrer. Defendant does not cite any authority preventing Plaintiff from alleging alternative theories of liability. Thus, the demurrer would not be sustained on these grounds.
However, due to the lack of standing discussed above, the demurrer to the fourth cause of action in the FAC is SUSTAINED with 20 days leave to amend.
CONCLUSION
The demurrer of Defendant to the first, second, third, and fourth causes of action in the FAC is SUSTAINED with 20 days leave to amend.
Defendant is ordered to give notice of the Court’s ruling within five calendar days of this order.