Judge: Mark A. Young, Case: 20SMCV01593, Date: 2023-11-08 Tentative Ruling

Case Number: 20SMCV01593    Hearing Date: November 8, 2023    Dept: M

CASE NAME:           Bullock v. Untouchable J Productions, et al.

CASE NO.:                20SMCV01593

MOTION:                  Demurrer to the Second Amended Complaint

HEARING DATE:   11/8/23

Legal Standard

            A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (CCP §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations omitted.)

            A special demurrer for uncertainty is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

            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. (CCP § 435(b)(1); Cal. Rules of Court, Rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)

            “Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading. (Id.)

Analysis

            Defendants Untouchable J Productions, Ryder Resorts and JoJo Ryder demur to each cause of action of the Second Amended Complaint (SAC).

First Cause of Action for Money Had and Received

“In California, it has long been settled the allegation of claims using common counts is good against special or general demurrers.” (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.) “The action for money had and received is based upon an implied promise which the law creates to restore money which the defendant in equity and good conscience should not retain. The law implies the promise from the receipt of the money to prevent unjust enrichment. The measure of the liability is the amount received.’ ” (Rotea v. Izuel (1939) 14 Cal.2d 605, 611, internal citations omitted.) “The only essential allegations of a common count are ‘(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.’” (Zerin, supra, 53 Cal.App.4th at 460.)

The statute of limitations for a money had and received claim depends on the gravamen of the cause of action. For example, if plaintiff is recovering money obtained through fraud, the claim is subject to the three-year statute of limitations. (First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1670.) Otherwise, the two-year statute of limitations would apply. (CCP §339(1).)

“Generally, a cause of action accrues and the statute of limitation begins to run when a suit may be maintained. Ordinarily this is when the wrongful act is done and the obligation or the liability arises . . .. In other words, a cause of action accrues upon the occurrence of the last element essential to the cause of action. [Citation.]” (Cobb v. City of Stockton (2011) 192 Cal.App.4th 65, 72-73, alterations and internal quotation marks omitted.)  Unless a complaint affirmatively discloses on its face that the statute of limitations has run, demurrer must be overruled. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881 [“It must appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred”].)

Defendant argues that the allegations are ambiguous and uncertain as to the alleged dates. Defendant further asserts that these ambiguities demonstrate that the claim is barred by the statute of limitations. However, the allegations and dates alleged do not create any ambiguity or demonstrate the application of the 2-year statute of limitations.

The SAC alleges that starting in “October 2015, and continuing and concluding prior to 2019,” Defendant JoJo Ryder, individually and as an agent and representative of the other Defendants, received money in the total sum of $518,000 from Plaintiff. (SAC ¶ 10.) Defendants were to use this capital to produce and distribute at least 10 episodes in one season of a real estate oriented “Fix & Flip” show. (Id.) There were also multiple guarantees that each episode would generate a minimum of $100,000.00 in profit because Defendants had a guaranteed output deal. (¶ 11.) The parties agreed that this would be accomplished before October 1, 2019. (Id.) Despite this agreement, Defendants did not deliver an acceptable TV show and did not substantially work on the TV show. (¶¶ 11-12.) Defendants also denied all guarantees. (¶ 12.) Plaintiff alleged damages in a sum exceeding $518,000, plus interest. (¶ 13.)

These allegations are sufficient for a common count of money had and received. The above allegations show that Defendants were indebted to Plaintiff in a sum certain. To wit, Plaintiff invested $518,000.00 to be used for the creation of the TV show. Defendants failed to perform and failed to return payment by the agreed upon date of October 1, 2019.  This action commenced within two years of that date -- on October 22, 2020. Thus, the SAC does not demonstrate on its face that the cause of action is barred by the two-year statute of limitations.

Accordingly, the demurrer is OVERRULED as to the first cause of action.

Second Cause of Action for Fraud

Defendants argue that the fraud cause of action fails to state who/how/by what means any representation(s) was/were made prior to the investment.

The elements of fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) In California, fraud must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) 

The SAC fails to allege the fraud with the requisite specificity. The SAC now provides specifics as to when, where and to whom the representations were made. The SAC includes a list of specific dates and meetings between certain persons. (SAC ¶ 18.) The SAC alleges that from “early 2015 thru about October 1, 2019, Defendants, by and through JR, met with Plaintiff on a regular basis. During those meetings, the same summary set of misrepresentations asserted in Paragraphs 15 & 16 above were repeated.” (Id.) The list also includes the means of some of the meetings, such as a conference call or a personal meeting. (Id.) However, the SAC does not present specific misrepresentations in paragraphs 15 or 16.

Regarding the representations, paragraph 15 alleges that Ryder “represented He had a guaranteed output agreement and could guarantee and would guarantee the production and distribution of a minimum of 10 episodes of Plaintiff's Real Estate oriented Fix and Flip television show… Defendants would fully and acceptably produce, also guaranteed distribution in a reasonable period but certainly and no later than Fall 2019, and …[he] guaranteed that on top of the $518,000 or so that Plaintiff would invest, that Plaintiff would receive in return a net minimum of $ 100,000 per episode (minimum of 10 episodes guaranteed in first season) and up to $350,000 per episode in just the first season alone… and that there would be a minimum $1,000,000 net profit in the 1st year to Plaintiff and that it could exceed $3,000,000.” (¶ 15.) He also “expressly guaranteed the return and distribution deal and all related elements on multiple occasions up to approximately October 1, 2019.” (¶ 15.) Paragraph 16 alleges that Ryder not only guaranteed “the distribution and profit along with his guaranteed output deal, but he also represented that he would immediately account for how monies were spent if asked… [he] also indicated he had a close business relationships with Hollywood celebrities like Kevin Hart, Bradley Cooper, Lady Gaga, Akon, Katy Perry, Niki Minaj, Brandy, Lawrence Fishbume and others and that he would cause thein to be part of this project and they would appear.” (¶ 16.)

These allegations remain too general to satisfy the pleading requirements for fraud. The allegations do not specifically assert the facts of the representation, i.e., what was actually said. The representations relate generally to the guarantees, without any specificity as to the communication itself. These allegations merely appear to be summaries of multiple representations which occurred both before and after Plaintiff’s investment. Plaintiff needs to tie a specific misrepresentation to a specific meeting, for example, the January 14, 2015, meeting between Plaintiff, Ryder and Richard Herron.

Accordingly, the demurrer is SUSTAINED with leave to amend.

Third Cause of Action for Accounting

“An accounting is an equitable proceeding which is proper where there is an unliquidated and unascertained amount owing that cannot be determined without an examination of the debits and credits on the books to determine what is due and owing. [Citations.] Equitable principles govern, and the plaintiff must show the legal remedy is inadequate. . . . Generally, an underlying fiduciary relationship, such as a partnership, will support an accounting, but the action does not lie merely because the books and records are complex. [Citations.] Some underlying misconduct on the part of the defendant must be shown to invoke the right to this equitable remedy.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1136-1137.) Courts have observed that a breach of fiduciary duty, fraud, and the fact that the accounts were complicated are recognized as grounds for an accounting. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 593.) 

“‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’” (City of Hope Nat'l Med. Ctr. v. Genentech (2008) 43 Cal.4th 375, 386.) Facts giving rise to a confidential, fiduciary or trustee relationship must be pled, and a “bare allegation that defendants assumed a fiduciary relationship” is a conclusion. (Zumbrun v. Univ. of So. Cal. (1972) 25 Cal.App.3d 1, 13.)  

“A ¿duciary relationship is any relation existing between parties to a transaction wherein one of the parties is duty bound to act with the utmost good faith for the bene¿t of the other party. Such a relation ordinarily arises where a con¿dence is reposed by one person in the integrity of another, and in such a relation the party in whom the con¿dence is reposed, if he voluntarily accepts or assumes to accept the con¿dence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent…” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 [internal citations and quotations omitted].)) “Before a person can be charged with a ¿duciary obligation, he must either knowingly undertake to act on behalf and for the bene¿t of another, or must enter into a relationship which imposes that undertaking as a matter of law.” (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1338.) “[E]xamples of relationships that impose a ¿duciary obligation to act on behalf of and for the bene¿t of another are ‘a joint venture, a partnership, or an agency.’ But, ‘[t]hose categories are merely illustrative of ¿duciary relationships in which ¿duciary duties are imposed by law.’ ” (Id. 1339, internal citation omitted.) 

Defendants argue that there is no relationship requiring an accounting. Defendants note that the written agreement may have provided for an accounting, but Plaintiff is no longer proceeding on that theory. Defendants further contend that the parties merely had a standard business arrangement, where Plaintiff put money into the Project, and were not partners, joint venturers, shareholders, trustees, attorneys, or acting in any other capacity imposing a fiduciary duty.

As an initial matter, the SAC still requests an accounting based on contract. The SAC alleges that Defendants agreed to fully account for the expenditures made regarding the production of the TV show, and/or the monies it provided to Defendants exceeding $500,000. (SAC ¶ 28.) Defendants spent the monies provided by Plaintiff but did not spend the monies on the project. (Id.) Defendants now refuse to provide Plaintiff with any accounting as to how Plaintiff's monies were spent. (Id.) These facts support an accounting as an appropriate measure in the circumstances of this transaction.

Second, Plaintiff alleges a fiduciary relationship between the parties regarding the funds. The SAC alleges that pursuant to the parties’ agreement and the fiduciary relationship between the parties, Defendants were to hold, use and account for the monies Plaintiff provided to Defendants in trust for Plaintiff. (¶ 27.) Defendants do not explain why the allegations do not show a fiduciary relationship, beyond offering their competing characterization of the relationship.

Accordingly, the demurrer is OVERRULED as to this cause of action.

Leave to Amend

The Court will grant leave to amend for the second cause of action. Plaintiff also requests leave to add two additional theories based on the same set of facts. Specifically, Plaintiff seeks leave to add two additional claims of conversion and breach of oral contract. The Court will extend leave to include the statement of these two additional claims. Accordingly, 20 days leave to amend is GRANTED.