Judge: Mel Red Recana, Case: 21STCV44344, Date: 2024-06-25 Tentative Ruling
All rulings shown here are TENTATIVE ONLY, and thus oral argument WILL be heard. All Counsel are still required to attend.
Case Number: 21STCV44344 Hearing Date: June 25, 2024 Dept: 45
Hearing Date: June
25, 2024
Moving Party: Defendant
Stephanie Borg
Responding
Party: Plaintiff Ronald P. Slates, a
Professional Corporation
Motion for Judgment on the Pleadings
The court has
considered the moving, opposition, and reply papers.
The court GRANTS Defendant’s motion for judgment
on the pleadings with leave to amend.
Background
On
December 6, 2021, plaintiff Ronald P. Slates, a Professional Corporation (“Plaintiff”),
filed this action against defendants Kurtis George Borg aka Kurtis Borg aka
Kurt Borg (“Kurtis Borg”), Stephanie F. Borg, and Does 1 through 25, inclusive,
asserting causes of action for breach of written contract, (2) open book
account, (3) account stated, (4) fraud and deceit – intentional
misrepresentation – fraud in the inducement, (5) fraud and deceit – negligent
misrepresentation - fraud in the inducement, and (6) fraud and deceit – promise
made without intent to perform.
The
Complaint alleges the following. Commencing on June 17, 2009, and continuing
through at least December 9, 2016, Plaintiff and the defendants entered into a
written retainer agreement whereby the defendants requested and Plaintiff
agreed to represent the defendants in legal matters. (Compl., ¶ 31.) The
defendants agreed to pay Plaintiff in exchange for those legal services.
(Compl., ¶ 31.) Plaintiff performed all services agreed to under the parties’
contract, except for those contractual obligations excused by the defendants’
failure to perform. (Compl., ¶ 37.) However, the defendants breached the
agreement by failing to pay $92,152.45 worth of legal services. (Compl., ¶ 40.)
On
January 20, 2022, default was entered against Defendant Stephanie F. Borg (“Defendant”).
On January 26,
2022, Kurtis Borg and Defendant filed a joint Answer to the Complaint even
though Defendant had been defaulted.
On July 19,
2022, Defendant filed a motion to set aside the default.
On March 23,
2023, the court granted the motion and set aside the default.
On March 14,
2024, Defendant filed the instant motion for judgment on the pleadings.
Plaintiff filed its opposition on June 10, 2024. Defendant filed her reply on
June 17, 2024.
Legal
Standard
A defendant’s motion for judgment on the
pleadings may be made after the time to demur has expired, and an answer has
been filed. (CCP § 438(f).) A motion by a defendant may be made on the grounds
that (1) the court “lacks jurisdiction of the subject of one or more of the
causes of action alleged” or (2) the complaint or cross-complaint “does not
state facts sufficient to constitute a cause of action against that defendant.”
(CCP § 438(c).)
A motion for judgment on the pleadings has
the same function as a general demurrer but is made after the time for demurrer
has expired. Except as provided by statute, the rules governing demurrers
apply. (See Cloud v. Northrop Grumman
Corp. (1998) 67 Cal.App.4th 995, 999.) “A motion for judgment on the
pleadings is akin to a general demurrer; it tests the sufficiency of the
complaint to state a cause of action. [Citations.] The court must assume the
truth of all factual allegations in the complaint, along with matters subject
to judicial notice.” (See Wise v. Pacific
Gas and Elec. Co. (2005) 132 Cal.App.4th 725, 738.)
Like a general demurrer, “ordinarily, a
[motion for judgment on the pleadings] does not lie as to a portion of a cause
of action, and if any part of a cause of action is properly pleaded, the
[motion] will be overruled.” (Fire Ins.
Exchange v. Superior Court (2004) 116 Cal.App.4th 446, 452.) In considering
a motion for judgment on the pleadings, courts consider whether properly pled
factual allegations—assumed to be true and liberally construed—are sufficient
to constitute a cause of action. (Stone
Street Capital, LLC v. California State Lottery Com. (2008) 165 Cal.App.4th
109, 116.)
“Whether a motion for judgment on the
pleadings should be granted with or without leave to amend depends on ‘whether
there is a reasonable possibility that the defect can be cured by amendment....’
[Citation.] When a cure is a reasonable possibility, the trial court abuses its
discretion by not granting leave to amend and a reviewing court must reverse.”
(Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1402.)
Discussion
Meet and Confer
CCP § 439(a) states, in relevant part: “Before
filing a motion for judgment on the pleadings . . . the moving party shall meet
and confer in person or by telephone with the party who filed the pleading that
is subject to the motion for judgment on the pleadings for the purpose of
determining if an agreement can be reached that resolves the claims to be
raised in the motion for judgment on the pleadings.”
CCP § 439(a)(3)
provides: “The moving party shall file and serve with the motion for judgment
on the pleadings a declaration stating either of the following: [¶] (A) The
means by which the moving party met and conferred with the party who filed the
pleading subject to the motion for judgment on the pleadings, and that the
parties did not reach an agreement resolving the claims raised by the motion
for judgment on the pleadings. [¶] (B) That the party who filed the pleading
subject to the motion for judgment on the pleadings failed to respond to the
meet and confer request of the moving party or otherwise failed to meet and
confer in good faith.”
Defendant’s
counsel attests that he met and conferred with Plaintiff’s counsel via email on
March 5, 2024, but the parties could not reach an agreement. (Declaration of
Cedric Severino, filed March 14, 2024, ¶¶ 4.) Plaintiff does not deny that the
parties met and conferred.
Accordingly, the
court will consider the motion on its merits.
Motion for Judgment on the Pleadings
Defendant moves
for judgment on the pleadings with respect to the first, second, and third
causes of action, arguing that they fail to state facts sufficient to
constitute a cause of action. (CCP § 438(c)(1)(B)(ii).)
///
///
First
Cause of Action – Breach of Written Contract
Defendant
argues that the first cause of action for breach of contract fails to state
facts sufficient causes of action for two reasons: (1) the Complaint fails to
plead the existence of a written contract between Plaintiff and Defendant, and
(2) the claim is barred by the applicable statute of limitations.
a.
Existence of a Written Contract
The
court addresses those arguments below.
“Where a written
contract is pleaded by attachment to and incorporation in a complaint, and
where the complaint fails to allege that the terms of the contract have any
special meaning, a court will construe the language of the contract on its face
to determine whether, as a matter of law, the contract is reasonably subject to
a construction sufficient to sustain a cause of action for breach.” (Hillsman
v. Sutter Community Hospitals (1984) 153 Cal.App.3d 743, 749–750.)
Here, the
Complaint has attached the alleged retainer that underlies the first cause of
action for breach of written contract. (Complaint, Exhibit 12, the
Attorney-Client Retainer Agreement & Hourly Rate Schedule (the “Retainer
Agreement”).)
The Retainer
Agreement refers to “Kurtis Borg” as the
“client.” (Retainer Agreement, p. 1.) The agreement then states that the client
has retained Plaintiff to represent him in connection with the appeal of the
decision entered in (1) “District Court of Appeal” case number “SC046452” and
(2) “any subsequent matters referred to Attorney [i.e., Plaintiff].” (Id.
p. 2, at the top of the page) The agreement also states the following in
relevant part. “This Retainer Agreement does NOT include the representation of CLIENT
with respect to any other matter except as specifically specified herein.” (Ibid.
the second paragraph.) “CLIENT further understands and agrees that any and all
prior understandings, statements, and/or agreements, whether verbal or in
writing, expressed and/or implied, which are not otherwise set forth herein
concerning Attorneys’ representation of CLIENT in the litigation is of no legal
force or effect and shall not be binding upon any of the parties.” (Id.
at p. 4, the fifth full paragraph.) “This Retainer Agreement memorializes and
represents the entire, full and complete understanding and agreement between Attorneys
and CLIENT. Any and all other understandings, representations and/or
agreements, written or oral, express or implied, are deemed to have merged with
the terms of this Retainer Agreement and only those promises, covenants and
conditions set forth herein are understood to be binding and of full legal
force and effect. Neither Attorneys nor CLIENT shall rely upon any other such
representations, agreements and/or understandings, written or oral, express or
implied, which are not otherwise specifically stated and set forth in this
Retainer Agreement.” (Id. at p. 5, the fourth full paragraph.) “This
Retainer Agreement can only be modified and amended by another agreement in
writing signed by both Attorneys and CLIENT. Any other method to effect a
modification and/or amendment unless in writing signed by Attorneys and CLIENT
shall be void and of no legal force or effect.” (Id. at p. 5, the fifth
full paragraph.)
Nowhere does the
Retainer Agreement mention Defendant (i.e., Stephanie Borg) or state that it is
entered into by Kurtis Borg “on behalf of himself and his wife, Stephanie …” as
alleged Paragraph 31 of the Complaint. (Bank of New York Mellon v. Citibank,
N.A. (2017) 8 Cal.App.5th 935, 943 [“Exhibits attached to the complaint
take precedence to the extent they contradict allegations in the complaint”].)
In opposition,
Plaintiff argues that Defendant is liable because a community estate is liable
for debt incurred by either spouse before or during marriage, and, therefore,
it is irrelevant whether Defendant signed the retainer agreement. In support of
that argument, Plaintiff cites Family Code § 910, which states: “Except as
otherwise expressly provided by statute, the community estate is liable for a
debt incurred by either spouse before or during marriage, regardless of which
spouse has the management and control of the property and regardless of whether
one or both spouses are parties to the debt or to a judgment for the debt.” (Fam.
Code, § 910, subd. (a).)
However, as
Defendant argues in the reply, Family Code § 910 states that the “community
estate” is liable for the debt incurred before or during marriage; the statute
does not state that a spouse is personally liable.
Plaintiff has
not cited (and the court has not found) any law holding that a non-contracting spouse
can be sued for “breach of contract” pursuant to Family Code § 910.
Plaintiff argues
that the Complaint alleges some services were rendered to benefit Defendant’s separate
property. Plaintiff points to Paragraph 36(a) of the Complaint, which alleges that
Plaintiff defended Defendant (and Kurtis Borg) in an appeal concerning a home
Defendant purchased in 2000 as her sole and separate property (the “Home
Purchase Matter”) and the amount due and owing for those services is $0.75. Plaintiff
also points to Paragraph 37(d), arguing that the Complaint alleges that
Plaintiff represented both defendants in a Ventura Superior Court case.
However, the
Complaint does not mention Defendant in the paragraph discussing the Ventura
Superior Court case. Instead, that paragraph alleges Ventura Superior Court “matter
involved defending US-Most and Kurtis Borg in a lawsuit arising out of business
dealings of US-Most and Kurtis Borg which US-Most and Kurtis Borg claimed had
been settled by the payment of $66,000.20 from US-Most and Borg to MSO
Technologies.” (Compl., ¶ 36(d).)
In any event,
the issue is not whether Plaintiff represented Defendant in legal matters.
The issue with
regard to the first cause of action for breach of written contract is whether
the Complaint has alleged (1) a written contract existed between Plaintiff and
Defendant for those legal services and (2) Defendant breached that written
contract.
The Complaint
has failed to allege those facts. Indeed, the Retainer Agreement states that
Kurtis Borg retained Plaintiff to represent him (not him and Defendant). (See
Compl., Exhibit 12 – the Retainer Agreement, p. 2, the top of the page [“The
CLIENT [i.e., Kurtis Borg] herewith retains RONALD P. SLATES. P.C. (‘Attorneys’),
as CLIENT’s ATTORNEY AT LAW to represent CLIENT in connection with an appeal of
the decision entered in the following case number …”].) Further, although the
scope of the Retainer Agreement covered “any subsequent matters referred to
[Plaintiff]” (ibid), the Complaint does not allege that the Home
Purchase Matter and Ventura Superior Court case were matters that were “subsequently
referred to” Plaintiff pursuant to the Retainer Agreement.
Therefore, the
court agrees with the Defendant that the Complaint has failed to allege facts
sufficient to constitute a cause of action for breach of written contract
against the Defendant.
b.
Statute of Limitations for Breach
of Written Contract
Notwithstanding
the above findings, Defendant also moves for judgment on the pleadings, arguing
that the applicable statute of limitations bars the first cause of action for
breach of written contract (as well as the second cause of action for open book
account and third cause of action for account stated).
“Under California law, a four-year statute
of limitations applies to actions for breach of contract, account stated, and
open book account. (Code Civ. Proc., § 337.)” (Professional Collection
Consultants v. Lauron (2017) 8 Cal.App.5th 958, 966 (“Professional
Collection”).) “‘Ordinarily, a cause of action for breach of contract
accrues on the failure of the promisor to do the thing contracted for at the
time and in the manner contracted.’ [Citation.]” (Ibid.)
“A demurrer based on a statute of
limitations will not lie where the action may be, but is not necessarily,
barred. [Citations.]” (Geneva Towers Ltd.
Partnership v. City and County of San Francisco (2003) 29 Cal.4th 769, 781,
quoting Marshall v. Gibson, Dunn &
Crutcher (1995) 37 Cal.App.4th 1397, 1403].) A demurrer may raise a bar of
a statute of limitations only if “the defect[] clearly and affirmatively appear[s]
on the face of the complaint; it is not enough that the complaint shows that
the action may be barred. [Citations.]” (Id.
at 781.)
Here, the court has found that the Complaint
has not alleged facts sufficient to constitute a cause of action for breach of
written contract against Defendant.
Therefore, the court cannot rule at this
time whether the four-year statute of limitations bars that claim. Consequently,
the court need not address at this time Plaintiff’s argument that equitable
estoppel and CCP § 351 tolled the statute of limitations,
and Defendant’s argument that the application of CCP § 351 in this case would
violate the commerce clause of the United States Constitution because
Kurtis Borg’s reason for being in Guam during the relevant period (i.e., employment)
affected interstate commerce. (See Compl., ¶ 13 [“[Kurtis Borg] was, from 2015 through
October of 2021, residing out of the United States and was domiciled in Guam
thus extending the statute of limitations for the bringing of this lawsuit for
a period of six (6) years because from 2015 through as recently as October of
2021, Plaintiff was unable to locate and serve Defendant Borg with a lawsuit
because his exact location was unknown to Plaintiff, and Plaintiff believed
that he was still domiciled in Guam”]; CCP § 351 [“If, when
the cause of action accrues against a person, he is out of the State, the
action may be commenced within the term herein limited, after his return to the
State, and if, after the cause of action accrues, he departs from the State,
the time of his absence is not part of the time limited for the commencement of
the action”]; Filet Menu, Inc. v. Cheng (1999) 71 Cal.App.4th 1276, 1283
[“‘[I]nterstate commerce is affected when persons move between states in the
course of or in search for employment. [Citations.]’ [Citation]”]; Ibid.
[“Because the implications of section 351 for such travel apply equally to
residents engaged in interstate commerce and to residents not so occupied,
tolling statutory periods for the duration of out-of-state travel unrelated to
interstate commerce does not violate the commerce clause”]; cf. Arrow
Highway Steel, Inc. v. Dubin (2020) 56 Cal.App.5th 876, 889 [holding that “section
351 violates the dormant commerce clause as applied to a defendant who moved
out of state to operate a business engaged in interstate commerce”].)
The motion is granted as to the first
cause of action for breach of written contract, with leave to amend.
Second
Cause of Action – Open Book Account
Defendant argues
that the second cause of action for open book account fails to state facts
sufficient to constitute a cause of action because (1) the claim is based on
the Retainer Agreement and (2) the billing and payment history documents
attached to the Complaint show that the only debtor was Kurtis Borg.
“A ‘book account’
is ’a detailed statement which constitutes the principal record of one or more
transactions between a debtor and a creditor arising out of a contract or some
fiduciary relation, and shows the debits and credits in connection therewith,
and against whom and in favor of whom entries are made, is entered in the
regular course of business as conducted by such creditor or fiduciary, and is
kept in a reasonably permanent form and manner and is (1) in a bound book, or
(2) on a sheet or sheets fastened in a book or to backing but detachable
therefrom, or (3) on a card or cards of a permanent character, or is kept in
any other reasonably permanent form and manner.’ [Citation.]” (Professional
Collection, supra, 8 Cal.App.5th at p. 969.)
“A book account is ‘open’ where a balance
remains due on the account. [Citations.]” (Professional Collection, supra,
8 Cal.App.5th at p. 969.)
“Examples of statements held to be book
accounts include a law firm’s billing statements reflecting work performed on
an hourly basis ....” (Professional Collection, supra, 8
Cal.App.5th at p. 969.)
Here, the court agrees with Defendant that
the Complaint fails to allege facts sufficient to constitute a claim for open
book account against Defendant. The billing statements Plaintiff has attached
to the Complaint have Kurtis Borg’s name, not Defendant’s. In addition,
although the Complaint alleges in one paragraph that
“from
March 17, 2017 through August 15, 2018 as hereinabove alleged, [both] Defendants
repeatedly promised Plaintiff that [they] would make arrangements with
Plaintiff to pay the outstanding amount due” (Compl.,
¶ 39),
other paragraphs clearly state that it was only Kurtis Borg that made those
promises. (Compl., ¶¶
12-28 [alleging that Kurtis Borg made numerous promises to Plaintiff regarding
paying the outstanding amount].)
For
those reasons, the motion is granted as to the second cause of action for open
book account, with leave to amend. In light of that ruling, Defendant’s statute
of limitations argument in connection with that claim is moot.
Third
Cause of Action – Account Stated
“‘An account stated is “an agreement,
based on prior transactions between the parties, that the items of an account
are true and that the balance struck is due and owing.”’ [Citation.]” (Professional
Collection, supra, 23 Cal.App.5th at p. 968.)
“‘[A]n element essential to render the
account stated is that it receive the assent of both parties, but the assent of
the party sought to be charged may be implied from his conduct.’ [Citation.]
For example, ‘[w]hen a statement is rendered to a debtor and no reply is made
in a reasonable time, the law implies an agreement that the account is correct
as rendered.’ [Citation.] A number of jurisdictions have applied this principle
in the context of credit card debt, concluding that where a debtor receives and
does not object to a credit card statement, an agreement to the amount due can
be inferred.” (Professional Collection, supra, 23 Cal.App.5th at
p. 968.)
“When an account stated is ‘“assented to,
either expressly or impliedly, it becomes a new contract.”’ [Citation.]” (Professional
Collection, supra, 23 Cal.App.5th at p. 968.) “‘The theory of an
account stated is that it becomes a contract between the parties for payment of
the amount computed to be due without proof of the specific items included
therein.’ [Citation.] Accordingly, an action on an account stated is not based
on the parties’ original transactions, but on the new contract under which the
parties have agreed to the balance due.” (Ibid.)
Here, the court agrees with Defendant that
the third cause of action for account stated also fails
to state facts sufficient to constitute a cause of action because the Complaint
does not contain allegations showing that Defendant agreed with Plaintiff that
the invoices at issue in this case are due and owing. Instead, the Complaint
suggests that only Kurtis Borg assented to the account stated by alleging that
the defendant made numerous promises to Plaintiff regarding paying the
outstanding amount.
For
those reasons, the motion is granted as to the third cause of action for
account stated, with leave to amend. Defendant’s statute of limitations
argument in connection with that claim is moot.
The motion for
judgment on the pleadings is GRANTED as to the first cause of action for breach
of written contract, second cause of action for open book account, and third
cause of action for account stated, with leave to amend.
It is so
ordered.
Dated:
June 25, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court