Judge: Mark E. Windham, Case: 24STLC02435, Date: 2024-10-15 Tentative Ruling
Case Number: 24STLC02435 Hearing Date: October 15, 2024 Dept: 26
Erdenekhuu v. Hu Trans, LLC, et al.
DEMURRER;
MOTION TO STRIKE
(CCP §§ 430.31,
et seq., 435, et seq.)
TENTATIVE RULING:
Cross-Defendant
Hash-Ulzii Erdenekhuu’s Demurrer to the First Amended Cross-Complaint is
SUSTAINED WITHOUT LEAVE TO AMEND.
Cross-Defendant
Hash-Ulzii Erdenekhuu’s Motion to Strike Portions of the First Amended
Cross-Complaint is DEEMED MOOT.
ANALYSIS:
Plaintiff Hash-Ulzii
Erdenekhuu (“Cross-Defendant Erdenekhuu”) filed the instant action for breach
of contract against Defendant Hu Trans, LLC (“Cross-Complainant”) on April 3,
2024. On May 16, 2024, Cross-Complainant filed a cross-complaint against
Cross-Defendant Erdenekhuu and EZH, Inc. (Cross-Defendant EZH”) (collectively,
“Cross-Defendants”).
On July 25,
2024, the Court sustained Cross-Defendant Erdenekhuu’s demurrer to the
Cross-Complaint and deemed its motion to strike portions of the Cross-Complaint
moot. (Minute Order, 07/25/24.) Cross-Complainant filed the First Amended
Cross-Complaint on August 14, 2024. Cross-Defendant Erdenekhuu filed the
instant Demurrer to the First Amended Cross-Complaint and Motion to Strike
Portions of the First Amended Cross-Complaint on September 13, 2024. Cross-Complainant
filed oppositions on September 30, 2024 and Cross-Defendant Erdenekhuu replied
on October 4, 2024.
Discussion
Allegations in the Complaint and First Amended Cross-Complaint
The Complaint alleges that Cross-Defendant Erdenekhuu and
Cross-Complainant entered into a written loan agreement on June 28, 2021.
(Compl., ¶BC-1 and Attachment A.) Pursuant to the loan agreement,
Cross-Complainant borrowed $24,000.00 from Cross-Defendant Erdenekhuu, to be repaid by July 26, 2021. (Ibid.)
Cross-Complainant allegedly breached the loan agreement by failing to repay the
money by July 26, 2021, thereby damaging Cross-Defendant Erdenekhuu in an amount according to proof. (Id.
at ¶¶BC-2 – BC-5.)
In the First Amended Cross-Complaint,
Cross-Complainant alleges that on June 28, 2021, it entered into an oral
agreement, confirmed in writing, with Cross-Defendants for Cross-Defendant
EZH’s use of two trucks owned by Cross-Complainant. (FACC, ¶5.)
Cross-Defendants were required to pay for “mileage both ways, fuel, bonus and
food for the driver.” (Ibid.) Cross-Complainant allegedly provided two
trucks for Cross-Defendants’ use, for which they failed to pay a required total
of $30,534. (Id. at ¶6a-b.) From July 13, 2021 to August 18, 2021, Cross-Defendant
Erdenekhuu represented orally and confirmed in writing that if
Cross-Complainant provided two trucks that Cross-Defendant EZH, the company
Cross-Defendant Erdenekhuu owned and operated, would pay for their use. (Id.
at ¶12(1).) The payment included mileage both ways, fuel, bonus, and food for
the driver. (Ibid.) The representations were false because Cross-Defendant
Erdenekhuu did not intend for Cross-EZH to honor the promise. (Id. at
¶12.) Cross-Defendant Erdenekhuu concealed that payment would only be made for
mileage one way and would not reimburse Cross-complainant for fuel, pay bonus
and food for the driver. (Id. at ¶12.) Cross-Defendant Erdenekhuu made the
misrepresentations with the intent to deceive and defraud Cross-Complainant. (Id.
at ¶13.) Cross-Defendant Erdenekhuu knew the representations were false and
concealed the facts to induce Cross-Complainant’s reliance. (Id. at
¶14.) As a result, Cross-Complainant was damaged in the amount of $30,534, plus
$90,000.00 for lost business. (Id. at ¶¶16-17.)
Demurrer to First Amended Cross-Complaint
The Demurrer is accompanied by a meet and confer declaration that
complies with Code of Civil Procedure section 430.41. (Demurrer, Hardacre
Decl., ¶¶2-3 and Exh. 1.) Cross-Defendant Erdenekhuu demurs to the second
cause of action for fraud for failure to allege sufficient facts.
The elements of promissory fraud are (1) a
promise made regarding a material fact without any intention of performing it;
(2) the existence of the intent not to perform at the time the promise was
made; (3) intent to deceive or induce the promisee to enter into a transaction;
(4) reasonable reliance by the promisee; (5) nonperformance by the party making
the promise; and (6) resulting damage to the promise. (Muraoka v. Budget
Rent-A-Car, Inc. (1984) 160 Cal. App. 3d 107,109).
As set forth in the Court’s ruling on the
demurrer to the original Cross-Complaint, the Court of Appeals has explained in
detail the necessary specificity that must be alleged to support a cause of
action for promissory fraud:
“A promise to do something necessarily
implies the intention to perform; hence, where a promise is made without such
intention, there is an implied misrepresentation of fact that may be actionable
fraud. [Citations.]” (Lazar, supra, 12 Cal.4th at p. 638, 49 Cal.Rptr.2d 377,
909 P.2d 981.) Thus, in a promissory fraud action, to sufficiently alleges
defendant made a misrepresentation, the complaint must allege (1) the defendant
made a representation of intent to perform some future action, i.e., the defendant
made a promise, and (2) the defendant did not really have that intent at the
time that the promise was made, i.e., the promise was false. (Id. at 639, 49
Cal.Rptr.2d 377, 909 P.2d 981.)
To sufficiently plead the first requirement,
that the defendant made a promise, the complaint must state “ ‘facts which
“show how, when, where, to whom, and by what means the representations were
tendered.” ’ [Citation.]” (Lazar, supra, 12 Cal.4th 631, 645, 49 Cal.Rptr.2d
377, 909 P.2d 981.) As for the second requirement, the falsity of that promise
is sufficiently pled with a general allegation the promise was made without an
intention of performance. (See Tyco Industries, Inc. v. Superior Court (1985)
164 Cal.App.3d 148, 156, 211 Cal.Rptr. 540.) “The representation (implied) is
that of the intention to perform [citation]; the truth is the lack of that
intention. Purely evidentiary matters—usually circumstantial evidence or
admissions showing lack of that intention—should not be pleaded. Hence, the
only necessary averment is the general statement that the promise was made
without the intention to perform it, or that the defendant did not intend to
perform it.” (5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 725, p. 142.)
(Beckwith v. Dahl (2012) 205
Cal.App.4th 1039, 1060.) Details regarding how, when, where, to whom, and by
what means the representations are set forth in the First Amended Cross-Complaint.
Cross-Complainant alleges that Cross-Defendant Erdenekhuu made oral
promises from July 31, 2021 to August 18, 2021, which were confirmed in
writing, regarding payment for the use of the trucks. (Cross-Compl., ¶12(1).) Again,
however, Cross-Complainant does not allege to whom these promises were made. (Ibid.)
The first element, therefore, is still not sufficiently alleged.
In
sustaining the demurrer to the original Cross-Complaint, the Court also ruled
that there were allegations of partial performance by Cross-Defendants that
contradicted the allegation that Cross-Defendant Erdenekhuu did not intend to
perform at the time the promise was made. The First Amended Cross-Complaint now
alleges that it was Cross-Defendant Erdenekhuu’s intent only to pay for the
first half of the mileage, and not to pay for the second half of the mileage,
fuel, bonus and food for the driver. (Id. at ¶¶12(2)-13.) This
eliminates the contradictory allegations that were grounds to sustain the first
demurrer. Also, the Court previously ruled that the damages element was not
adequately alleged. The First Amended Cross-Complaint now alleges that the
amount owed for the miles driven was $16,961 for 4,846 miles and $13,573 for
3,878 miles. (Id. at ¶¶6(a)-(b), 16.) While it is not alleged with
particularity how Cross-Complaint incurred the other damages, alleged in the
amount of $90,000, the First Amended Cross-Complainant does provide sufficient
facts regarding how some of the damages were incurred based on the miles driven
on the trucks used by Cross-Defendants.
Therefore,
the only insufficient allegation pertains to the first element of the cause of
action for promissory fraud. On this basis, the Demurrer is sustained as to the
second cause of action.
Motion to Strike Portions of First Amended Complaint
Cross-Defendant Erdenekhuu moves to strike the portion of the First
Amended Cross-Complaint in which Cross-Complainant alleges they are entitled to
punitive damages. This is allegedly solely with respect to the second cause of
action. (See FACC, ¶18.) The Motion is brought pursuant to Code of Civil
Procedure section 436, on the grounds that the Court may “strike out any
irrelevant, false, or improper matter inserted in any pleading.” (Code Civ.
Proc., § 436, subd. (a).) As with the Demurrer, Defendants have filed the
required meet and confer declaration required by Code of Civil Procedure
section 435.5. (Motion, Hardacre Decl., ¶¶2-3.) In light of the ruling on the
demurrer, however, the Motion to Strike is moot.
Leave to Amend
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment, however, the
burden is on the complainant to show the Court that a pleading can be amended
successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)
Cross-Complainant does not request leave to amend should the demurrer be
sustained, and has already had an opportunity to amend. Therefore, leave to
amend is denied.
Conclusion
Cross-Defendant
Hash-Ulzii Erdenekhuu’s Demurrer to the First Amended Cross-Complaint is
SUSTAINED WITHOUT LEAVE TO AMEND.
Cross-Defendant
Hash-Ulzii Erdenekhuu’s Motion to Strike Portions of the First Amended
Cross-Complaint is DEEMED MOOT.
Moving party to give notice.