Judge Mark E. Windham, Case Number: 24STLC03647, Date: 2024-09-26 Tentative Ruling

Judge: Mark E. Windham, Case: 24STLC03647, Date: 2024-09-26 Tentative Ruling

Case Number: 24STLC03647 Hearing Date: September 26, 2024 Dept: 26

Water Source Solutions, Inc. v. Ultra Tokyo Connections, LLC, et al.

DEMURRER

(CCP § 430.10, et seq.)

TENTATIVE RULING:

Defendant Ultra Tokyo Connections, LLC’s Demurrer to the Complaint is OVERRULED. DEFENDANT IS TO FILE AND SERVE ITS ANSWER TO THE COMPLAINT WITHIN 20 DAYS OF THIS ORDER.

ANALYSIS:

On May 20, 2024, Plaintiff Water Source Solutions, Inc. (“Plaintiff”) filed the Complaint in this action against Defendant Ultra Tokyo Connection, LLC, (“Defendant”). On June 27, 2024, Defendant filed the instant Demurrer to the Complaint. Plaintiff filed an opposition on August 5, 2024 and Defendant replied on September 19, 2024.

Discussion

Allegations in the Complaint

The parties entered into a binding written agreement for two water fountains and an associated service contract on October 4, 2023. (Compl., ¶5.) The contract provides for a rental term of 60 months at $300.00 per month. (Id. at ¶7.) Following execution of the contract, Defendant accepted delivery and installation of the equipment. (Id. at ¶11.) Per the agreement, Defendant made payments for the months of November 2023, December 2023, January 2024 and February 2024. (Id. at 14.) Plaintiff sent Defendant an invoice for March 2024 on February 15, 2024. (Id. at ¶15.) No payment has been made for March 2024. (Ibid.) Section 7 of the Agreement provides that if a payment is not made before the due date, “a late charge equal to 15% of the late payment or $20, whichever is greater, will be charged for each late payment.” (Id. at ¶18.) Section 12 of the Agreement provides for acceleration of remedies as follows: “If Customer does not pay any amount when due, or breaches any other term of this Rental Agreement…WSS…may deem the Customer in default and…may thereafter exercise any and all legal remedies available by law including but not limited to… termination of maintenance agreements, reimbursement of reasonable attorney fees associated with any action…and acceleration of the balance due under this Rental Agreement….” (Id. at ¶20.) “Defendant currently owes a total of $16,290.00, plus the applicable invoiced amounts for March 2024 and April 2024 and late-fees for those two invoices totaling $661.52 and $132.30, respectively. The total due is currently, $17,083.82.” (Id. at ¶19.) On March 22, 2024, Plaintiff sent Defendant an invoice pursuant to section 12, notifying Defendant of Plaintiff’s acceleration of the payment schedule in full. (Id. at ¶23.) Around May 1, 2024, Plaintiff retrieved the equipment that was installed on Defendant’s property. (Id. at ¶26.)

Demurrer to the Complaint

The Complaint alleges causes of action for (1) Breach of Contract; (2) Open Book Account and Account Stated; (3) Goods and Services Rendered; (4) Quantum Meruit; (5) Unjust Enrichment and; (6) Negligent Misrepresentation. The Demurrer is accompanied by a meet and confer declaration as required by Code of Civil Procedure section 430.41. (Demurrer, Young Decl., ¶2.) Defendant demurs on the grounds that the Complaint fails to allege facts sufficient to state a cause of action.

The demurrer is first brought as to the entire Complaint on the grounds that Plaintiff’s damages are premised on an unenforceable liquidated damages provision. This is not correct, however. As set forth above, the damages sought by Plaintiff are based on (1) the unpaid rent from March and April 2024; (2) late fees; and (3) the accelerated remedy. (Compl., ¶¶18-20.) None of the causes of action in the Complaint are premised solely on the accelerated damages provision. The breach of contract cause of action alleges, “As a result of UTC’s failure to make payments due under the contract, WSS was harmed in an amount to be determined at trial.” (Compl., ¶31.) The fifth cause of action for unjust enrichment also alleges damages according to proof. (Id. at ¶53.) The remaining causes of action rely on the damages set forth in paragraph 19, which includes the late fees and unpaid rent from March and April 2024. (Id. at ¶¶37, 44, 49, 59.) To the extent the demurrer is based on only one portion of the damages sought, it does not overcome an entire cause of action and cannot be sustained on that basis. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119 [“[a] demurrer must dispose of an entire cause of action to be sustained”].)

Nor has Defendant otherwise shown that any of the causes of action are insufficiently alleged based on improper damages. None of the cases to which the demurrer cites involve the damages allegation at the pleading stage except Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782. Ochs, however, does not analyze what must be alleged for damages when seeking quantum meruit recovery. (Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782, 794.) Therefore, the Complaint states facts sufficient to allege each of the causes of action.

Conclusion

Defendant Ultra Tokyo Connections, LLC’s Demurrer to the Complaint is OVERRULED. DEFENDANT IS TO FILE AND SERVE ITS ANSWER TO THE COMPLAINT WITHIN 20 DAYS OF THIS ORDER.

Court clerk to give notice.