Judge: Margaret L. Oldendorf, Case: 22AHCV01015, Date: 2023-10-10 Tentative Ruling

Case Number: 22AHCV01015    Hearing Date: October 10, 2023    Dept: P

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

I.        INTRODUCTION

This is an action for breach of construction contract, enforcement of mechanic’s lien, and common counts. Plaintiff Bruce Wayne Miller, doing business as Glowtex Builders, alleged it performed work for Defendants Georgi Stefanov Kazachki and Stefan Kazachki on certain real property. The real property is located at 325 Camino Verde in South Pasadena. Defendant Green Earth Building, LLC, was later added as Doe 1. On August 1, 2023, the Court granted Defendant Green Earth’s motion for relief from default.

Before the Court is a demurrer and motion to strike filed by Georgi Kazachki, Stefan Kazachki and Green Earth (Defendants). Defendants argue that (1) plaintiff failed to allege he registered his fictious business name, (2) the breach of contract claim fails for failure to state a cause of action, (3) the enforcement of a mechanic’s lien claim fails for failure to state a cause of action and (4) the common counts cause of action fails for failure to state a cause of action.  Plaintiffs have not filed an opposition to either motion.

The demurrer is SUSTAINED with leave to amend. The motion to strike is MOOT and is therefore taken off calendar.

II. MEET AND CONFER

Before filing a demurrer or motion to strike, the moving party must meet and confer in person or by telephone with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading. (CCP §§ 430.41, 435.5.) 

Counsel for defendants declares she started the meet and confer process June 12, 2023. (Miller Decl. ¶ 2, 3.) She called again the next day and agreed to give plaintiff’s counsel more time. Plaintiff’s counsel did not respond to the legal issues defendants’ counsel raised, and did not respond when given a second chance to do so. (Id.) Counsel’s declaration satisfies CCP §¿430.41(a). (Miller Decl. ¶ 3.)

III.     DEMURRER

A. Legal Standard

Code Civ. Proc. §430.10(e) provides for a demurrer on the basis that a complaint fails to state a cause of action. A demurrer admits, provisionally for purposes of testing the pleading, all material facts properly pleaded. (Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1247.) A demurrer tests the legal sufficiency of a complaint. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  Pleadings are to be broadly construed (Code Civ. Proc. § 452), and demurrers are to be overruled where the facts are sufficient to state any cause of action. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.)

B. Plaintiff failed to allege compliance with Business and Professions Code section 17918.

Under Business and Professions Code section 17918, a person may not maintain an action under a fictious business name if that action is based on a contract made under the business name unless the fictious business name is registered to him. (B&PC, § 17918.) Under the same code, a “fictious business name” for an individual, is one that does not contain the individual’s surname or one that implies the existence of other owners. (B&PC, § 17900(b)(1).) The code is intended to protect those who deal with individuals doing business under fictious names. (Id.) (B&PC, § 17900(a)(1).)

Plaintiff’s Complaint at paragraph 2 alleges that “At all times relevant, Plaintiff GLOWTEX BUILDERS is and was duly licensed by the State of California as a contractor and authorized to enter into the agreement to perform the construction work . . .”  Plaintiff’s Complaint at paragraph 1 alleges that Glowtex Builders is a dba. (Comp. ¶ 1.) Glowtex Builders does not contain plaintiff Bruce Wayne Miller’s last name. Nowhere in the complaint does plaintiff allege that a “fictitious business name statement has been executed, filed, and published as required.” (B&PC, § 17918.) Accordingly, Defendants correctly argue that that plaintiff cannot sue under the fictitious name of Glowtex Builders, because he does not allege that the dba is registered to him. As plaintiff failed to allege compliance with B&PC section 17918, the action cannot be maintained.

Accordingly, the Court SUSTAINS the demurrer, with leave to amend.

C. First Cause of Action for Breach of Contract

While the Court is sustaining the demurrer for plaintiff’s failure to comply with Business and Professions Code section 17918, the Court will address the rest of defendants’ arguments for the sake of completeness.

          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.) A plaintiff suing for breach of contract must prove that it has performed all of its obligations under the contract or was otherwise excused. (Consolidated World Investments, Inc. v. Lido Preferred, Ltd. (1992) 9 Cal.App.4th 373, 380 [Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.]) Additionally, if the defendant’s performance is conditioned on a specific event happening, that event must be proved to have happened. (Consolidated World Investments, supra at 380 [Cochran v. Ellsworth (1954) 126 Cal.App.2d 429, 440–441.]) Failure to comply with the statutory requirements for change orders does not preclude recovery to prevent unjust enrichment. (BPC § 7159(e)(3)(C).)

i. Breach of contract claim fails as to non-parties to the contract.

Defendants allege that Glowtex’s first cause of action fails because defendants Georgi and Green Earth Buildings, LLC are not parties to the contract. Defendants cite Civ. Code section 1558 and CACI 330 for the proposition that to recover for breach of contract, parties must have entered into a contract. The Complaint alleges that Glowtex Builders and Stefan Kazachki entered into a contract on September 7, 2021, pursuant to which Glowtex agreed to furnish labor and supplies at the real property. (Comp. ¶ 13.) In the complaint, Glowtex alleges that Georgi is the owner of the subject property. (Comp. ¶ 3.) However, Exhibit A to the Complaint, the alleged contract between the parties, names Stefan as the homeowner. (Comp., Exh. A, 1.) In multiple places in Exhibit A, Stefan’s signature appears as the homeowner. The complaint does not allege a relation between Green Earth Buildings LLC and the contract. As plaintiff failed to allege that a contract existed between Glowtex and Georgi or Glowtex and Green Earth Buildings, LLC, these defendants cannot be held to a contract they are not party to.

Glowtex additionally does not cite any case law or statute holding these third parties to the obligations of the contract.

          ii. The lack of a final contract does not defeat the breach of contract claim.

Secondly, defendants allege that Glowtex’s first cause of action fails because the agreement provided at Exhibit A to the complaint is not a “full” contract. Defendants note that Exhibit A lacks final price terms, confirmed changes to the scope of the contract and confirmed change order requests. However, pleadings are to be broadly construed on a demurrer. Exhibit A is signed and dated by both Stefan Kazachki and Bruce Miller. The complaint states that Glowtex fully performed under the contract. (Comp. ¶ 14.) Then, the complaint alleges breach due to failure to pay. (Comp. ¶ 15.) Then, damages are alleged, in the form of a monetary loss of $620,751.88. (Comp ¶ 16.) These allegations are enough to plead a breach of contract cause of action. Defendants’ argument implies that Glowtex must have attached all papers relating to the parties’ dealings to the complaint. Glowtex’s burden was to prove existence of a contract. The Court will not read additional requirements into the law in this area.

iii. Glowtex may pursue remedies to prevent unjust enrichment.

Lastly, defendants allege that Glowtex’s first cause of action fails because the complaint contains insufficient facts to show a breach of contract. The contract attached as  Exhibit A to the complaint provides that change orders must be approved before change orders become part of the contract. (Comp., Exh. A, pg. 4.) Glowtex does not allege that change orders were approved, which was a necessary event to obligate defendants to pay for the services rendered under the change orders. Under Quelimane, the Court would have to conclude that there was a failure to state facts on which a cause of action could be found. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) However, per statute and provided by the contract, Glowtex can still pursue remedies at law or equity in order to prevent unjust enrichment.

          D. Second Cause of Action for Mechanic’s Lien 

The claim for enforcement of a mechanic’s lien fails for noncompliance with the mechanic’s lien statutes.

“A mechanic’s lien only exists by virtue of compliance with the statute that creates it.” (Morris v. Wilson (1893) 97 Cal. 644, 646.) Civil Code section 8416 provides the requirements for enforcement of a mechanic’s lien. (CC § 8416.) Before recording a lien claim, a claimant shall give preliminary notice to (a) the owner or reputed owner, (b) the direct contractor or reputed direct contractor and (c) the construction lender or reputed construction lender. (CC § 8200(a).) In addition, the notice shall comply with Civil Code Section 8100 et seq. (CC § 8200(b), CC § 8410.)

Defendants demur on the basis that the plaintiff failed to state facts sufficient to constitute a cause of action. The complaint pleads compliance with Civ. Code Section 3097. However, this is a repealed code section. Plaintiff does not plead compliance with the operative statute for notice, which is Civil Code Section 8200. Plaintiff does not plead compliance with the operative statute for enforcement of mechanic’s liens, Civil Code Section 8416. Additionally, defendants allege that no proof of service is attached to the complaint. However, the complaint alleges that notice of the lien was served on Georgi and Stefan Kazachki. (Comp. ¶20.)  

Most importantly, this cause of action is against all defendants. The complaint does not allege compliance as to defendant Green Earth Buildings LLC. The complaint does not allege that any kind of preliminary notice was served on that defendant. The complaint does not allege compliance with operative mechanic’s lien statutes, so there is a failure to state a cause of action as to all defendants. Additionally, as defendant Green Earth Buildings LLC was not served any kind of notice of lien, the demurrer is sustained as to that defendant for failure to comply with Civil Code Section 8200.

          E. Third Cause of Action for Common Counts

Plaintiff’s cause of action for common counts fails.

“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.”  (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.) 

The complaint alleges that defendants became indebted to plaintiffs in the amount of $620,751.88. This number includes the reasonable value for work, labor, services, and materials rendered, yet unpaid, plus prejudgment interest according to proof at the rate of ten percent per year. (Comp. ¶ 28-29.)

Defendants cite Orloff v. Metropolitan Trust Co. for the proposition that an action for common counts fails if the cause of action upon which common counts is based fails. (Orloff v. Metropolitan Trust Co. (1941) 17 Cal.2d 484, 489.) Orloff stands for the proposition that if a plaintiff is not entitled to recovery under one count, it is “proper to sustain a demurrer to a common count set forth in the complaint.” (Id.) As the earlier causes of action for mechanic’s lien and breach of contract failed to state facts sufficient to state a cause of action, it would be proper to sustain a demurrer as to the third cause of action.

IV. MOTION TO STRIKE

As the demurrer is being sustained, there will be no operative pleading from which to strike any matter. The motion to strike is therefore taken off calendar as moot. 

V. CONCLUSION

The defendants’ demurrer is SUSTAINED.  The motion to strike is moot.  Plaintiffs have twenty (20) days leave to amend.  The Case Management Conference is continued to ______________________.

          Defendants are ordered to give notice.    

Dated:                                                              _______________________________

                                                                              MARGARET L. OLDENDORF

                                                                       JUDGE OF THE SUPERIOR COURT