Judge: Maren Nelson, Case: 23STCV08297, Date: 2023-09-18 Tentative Ruling

Case Number: 23STCV08297    Hearing Date: September 18, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Waring’s demurrer to Manatt’s cross-complaint is OVERRULED as to the first and second causes of action, and SUSTAINED, WITHOUT LEAVE TO AMEND, as to the fourth cause of action.

            On 4/14/2023, Plaintiff Waring Plaza Properties, L.P. filed suit against Manatt, Phelps & Phillips, LLP and Benjamin G. Shatz (collectively, Defendants), alleging: (1) professional negligence; (2) breach of implied contract; and (3) common counts.

            On 7/5/2023, Cross-Complainant Manatt, Phelps & Phillips, LLP filed a cross-complaint (XC) against Waring Plaza Properties, L.P., alleging: (1) breach of written contract; (2) open book account; and (3) quantum meruit; and (4) breach of implied-in-fact contract.

            Now, Waring Plaza Properties (Waring) demurs to Manatt, Phelps & Phillips, LLP (Manatt)’s first, second, and fourth causes of action in the cross-complaint.

Discussion

            Waring argues that: (1) Manatt cannot state a claim for breach of written contract because the claim is based on a void agreement; (2) Manatt cannot state a claim for open book account because it is based on a void fee agreement and Manatt has failed to allege facts showing the parties intended to be subject to an account; and (3) Manatt cannot allege an implied-in-fact contract here because the law requires fee agreements to be in writing.

            After review, the Court disagrees and agrees in part.

            As to the first claim, whether or not the fee agreement is void is a factual determination not properly made at the pleading stage. As such, the Court will not conclude, as a matter of law, that the agreement is void and thus Manatt cannot maintain a claim for breach of the agreement. Moreover, as noted by Manatt in opposition, there is an open question of fact as to whether or not the agreements was ratified through performance.  (See French v. Freeman (1923) 191 Cal. 579, 590) (“Whether or not a person has ratified a voidable contract, or elected to affirm it rather than to rescind it, depends primarily upon his intention, and this is shown by his declarations, his acts, or his conduct, which are matters of fact. The question is therefore a question of fact for the determination of the jury.”)

            As for the second claim, Waring is of course correct that “the mere recording in a book of transactions or the incidental keeping of accounts under an express contract does not of itself create a book account.” (H. Russell Taylor’s Fire Prevention Serv., Inc. v. Coca Cola Bottling Corp. (1979) 99 Cal.App.3d 711, 728.) However, whether monies owing under a contract may be recovered on a book account turns on the specific facts of each case. There a number of California cases holding that a law firm’s monthly billing statements and records meet the elements of a book account where no set amount is determined to be due each month, where record keeping is necessary to track the varying amounts that come due during the applicable periods, and where the billing statements constituted detailed permanent records. (See e.g. Parker v. Shell Oil Co. (1946) 29 Cal.2d 503; In re Roberts Farms Inc. (9th Cir. 1992) 980 F.2d 1248.) Accordingly, Manatt is not precluded, as a matter of law, from asserting an open book account claim based on attorney billing records. Moreover, at the very least, there are issues of fact here as to whether or not Manatt can be said to have maintained an account.

            Finally, there is nothing impermissibly inconsistent about maintaining a claim for both breach of contract and open book account. When a pleader is in doubt about what actually occurred or what can be established by the evidence, the modern practice allows that party to plead in the alternative and make inconsistent allegations.” (Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2017) 6 Cal. App. 5th 1207, 1222 (citation and quotation marks omitted).) Under the liberal rules of pleading, a party “remains free to allege any and all ‘inconsistent counts’ that a reasonable attorney would find legally tenable on the basis of the facts known to the plaintiff at the time.” (Id. at p.1223.) This means “a plaintiff may plead inconsistent causes of action for breach of contract and common count,” even if it cannot ultimately recover on both. (Ibid); see also Rader Co. v. Stone (1986) 178 Cal. App. 3d 10, 29 (a party “is not precluded by law from alleging in one cause of action the breach of a contract and an inconsistent theory of recovery in another cause of action…. [S]uch inconsistency is not fatal to [any] claims at the pleading stage, as a plaintiff is permitted to plead inconsistent or alternative counts”; punctuation omitted.)

            As for the fourth claim, Business and Professions Code section 6148(a) states that “the contract for services in the case shall be in writing.” In opposition, Manatt does not respond to this contention, but rather argues that Waring is estopped from denying an implied-in-fact contract because Waring’s own complaint asserts a claim for implied-in-fact contract. However, the fact that another party alleges the existence of contract cannot save that contract if it is barred as a matter of law. Manatt is equally entitled to challenge the sufficiency of Waring’s allegations with respect to the implied-in-fact contract allegation. Manatt must allege facts which could show that they could enter into a valid agreement for legal services that was implied-in-fact, rather than in writing.

            Based on the foregoing, Waring’s demurrer is overruled as to the first and second causes of action, and sustained, without leave to amend, as to the fourth cause of action.

It is so ordered.

Dated:  September    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

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