Judge: Melvin D. Sandvig, Case: 22CHCV00184, Date: 2025-01-24 Tentative Ruling

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Case Number: 22CHCV00184    Hearing Date: January 24, 2025    Dept: F47

Dept. F47

Date: 1/24/25

Case #22CHCV00184

 

DEMURRER & MOTION TO STRIKE TO THE SECOND AMENDED COMPLAINT

 

Demurrer filed on 10/30/24.

 

MOVING PARTY: Defendants Beitler & Associates, Inc. and Second Riverton Development, LLC

RESPONDING PARTY: Plaintiff CLC Builders, Inc.

NOTICE: ok

 

Demurrer is to the entire Second Amended Complaint:

            1.  Breach of Contract

            2.  Foreclosure of Mechanic’s Lien

            3.  Fraud and Deceit

            4.  Work, Labor and Services (Quantum Meruit)

            5.  Money Due on an Open Book Account (Quantum Meruit)

            6.  Reasonable Value of Services Rendered (Quantum Meruit)

 

RELIEF REQUESTED IN MOTION TO STRIKE: An order striking the following portions of the Second Amended Complaint: (1) ¶13, p.4:27-28: “the 5263 Cartwright Project which is the subject of this Action;” (2) ¶58, p.23:18-28 (punitive damages) and (3) ¶3, p.27:28-p.28:1 (prayer for punitive damages re: 3rd cause of action).

 

RULING: The demurrer is sustained and the motion to strike is granted, both with 30 days leave to amend

 

SUMMARY OF ACTION & PROCEDURAL HISTORY

 

This action arises out of Plaintiff CLC Builders, Inc.’s (Plaintiff) claims that it was engaged by Defendant Beitler & Associates, Inc. (Beitler) and multiple Beitler affiliated entities to perform general commercial contractor services in building apartment complexes and other commercial structures.

 

In this action, Plaintiff alleges that it performed substantial work at a project known as Defendant Second Riverton Development, LLC (Riverton) which was allegedly operated and managed by Barry Beitler, now deceased, and its Chief Operating Officer and de facto in-house counsel, Donald Rezak.  Plaintiff alleges that although Beitler made payments toward Plaintiff’s invoices on the Riverton project, Beitler failed to pay the entire balance due leaving $73,793.61 unpaid.

 

On 3/18/22, Plaintiff filed this action against Beitler and Riverton for: (1) Breach of Contract and (2) Foreclosure of Mechanic’s Lien.  On 3/2/23, Plaintiff filed its First Amended Complaint alleging causes of action for: (1) Breach of Contract, (2) Foreclosure of Mechanic’s Lien, (3) Fraud and Deceit, (4) Work, Labor and Services (Quantum Meruit), (5) Money Due on Open Book Account (Quantum Meruit), (6) Reasonable Value of Services Rendered (Quantum Meruit) and (7) Unfair Business Practices (Business & Professions Code 17200). 

 

On 6/10/24, pursuant to a Stipulation and Order, Plaintiff filed the subject Second Amended Complaint for: (1) Breach of Contract, (2) Foreclosure of Mechanic’s Lien, (3) Fraud and Deceit, (4) Work, Labor and Services (Quantum Meruit), (5) Money Due on an Open Book Account (Quantum Meruit) and (6) Reasonable Value of Services Rendered (Quantum Meruit).  After meet and confer efforts failed to resolve the issues Beitler and Riverton (collectively, Defendants) had with the Second Amended Complaint, on 10/30/24, Defendants filed and served the instant demurrer to the entire Second Amended Complaint and motion to strike which seeks to strike the following portions of the Second Amended Complaint: (1) ¶13, p.4:27-28: “the 5263 Cartwright Project which is the subject of this Action;” (2) ¶58, p.23:18-28 (punitive damages allegations in the 3rd cause of action) and (3) ¶3, p.27:28-p.28:1 (prayer for punitive damages re: 3rd cause of action).  (See Hurwitz Decl.).  Plaintiff has opposed the demurrer and motion to strike and Defendants have filed a joint reply to the oppositions.

 

ANALYSIS

 

Among others, a demurrer may be based on the grounds that a complaint does not state facts sufficient to constitute a cause of action and/or in an action based on a contract, it cannot be ascertained from the complaint whether the contract is written, oral, or implied by conduct.  See CCP 430.10(e), (f).

 

1st cause of action – Breach of Contract

 

The elements of a breach of contract cause of action are: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach and (4) resulting damages to plaintiff.  Reichert (1968) 68 C2d 822, 830.  Plaintiff has failed to allege sufficient facts to satisfy the first element of the cause of action as it cannot be ascertained what contract forms the basis of the claim.

 

The title of the cause of action does not indicate whether the claim is for breach of a written, oral or implied contract.  (See Second Amended Complaint (SAC) p.1:13, p.11:4-6).  Plaintiff seems to base the claim on a written agreement, the “Second Riverton Agreement.”  (Second Amended Complaint ¶¶23-27, 29).  However, Plaintiff admits that such agreement is “incomplete and/or not fully-executed.”  (See SAC ¶23 and Ex.1 thereto).  Additionally, Beitler, who is named as a defendant in the breach of contract cause of action, is not identified as a party in the incomplete/not fully-executed contract.  (SAC, Ex.1).  The facts appearing in the exhibit attached to the Second Amended Complaint (i.e., parties to the contract and the unexecuted status of the contract) take precedence over inconsistent allegations in the pleading.  See Dodd (1990) 222 CA3d 1624, 1627.  To the extent Plaintiff intended to state a cause of action for breach of written contract, the Second Amended Complaint fails to allege sufficient facts to state such a cause of action.  CCP 430.10(e).

 

The opposition to the demurrer implies that Plaintiff may be attempting to state a claim for breach of oral contract by arguing “[w]hether it was the parties’ mutual intention that an oral agreement to the terms contained in a proposed written agreement should be binding…” or, perhaps, a claim for breach of implied contract based on the argument that “the contracted-for work by Plaintiff was fully performed by Plaintiff, repeatedly accepted by Defendants incrementally as the work was performed, and partially paid for by BEITLER throughout.”  (See Opposition, p.5:5-18).  Based on the foregoing, the 1st cause of action is subject to demurrer because it cannot be ascertained from the Second Amended Complaint whether the contract on which cause of action is based is written, oral, or implied by conduct.  See CCP 430.10(f).

 

4th cause of action – Work, Labor and Services (Quantum Meruit); 5th cause of action – Money Due On An Open Book Account (Quantum Meruit) & 6th cause of action – Reasonable Value of Services Rendered (Quantum Meruit)

 

The 4th, 5th and 6th causes of action all incorporate and rely on the “Second Riverton Agreement” which seemingly forms the basis for the deficient 1st cause of action.  (See ¶¶23, 61, 64, 66, 67, 69, 71, 72, 73, 77).  Since that agreement is admittedly “incomplete and/or not fully-executed,” these claims also fail to allege sufficient facts to state a cause of action.  (SAC ¶23); CCP 430.10(e); Ephraim (1946) 28 C2d 824, 833; Stafford (1953) 117 CA2d 326, 327.

 

2nd cause of action – Foreclosure of Mechanic’s Lien

 

A contractor may not enforce a mechanic’s lien unless the contractor records the lien within 90 days after completion of its work.  Civil Code 8412(a).  Plaintiff identifies the subject lien as the document attached to the Second Amended Complaint as Exhibit 2 which shows that it was recorded on 12/20/21.  (SAC ¶32).  As such, the Court may disregard the contradictory allegation in the Second Amended Complaint that Plaintiff recorded the lien on or about 12/15/21.  See Dodd, supra. 

 

In its First Amended Complaint, Plaintiff alleged that it ceased performance of its work on, and it sought to recover interest from and after, 9/15/21, which is more than 90 days before the mechanic’s lien was recorded.  (First Amended Complaint (FAC) ¶¶12, 59, 64, 70).  Under the sham pleading doctrine, Plaintiff cannot avoid the foregoing admission by merely eliminating it from the Second Amended Complaint, without explanation.  See Deveny (2006) 139 CA4th 408, 425-426; Reichert, supra at 836; Amid (1989) 212 CA3d 1383, 1387-1391. 

 

The opposition admits that the date on the lien indicates a recordation date more than 90 days after the alleged date of completion.  (See Opposition, p.5:25-26).  Plaintiff then claims that it “will show that the lien was submitted for recording well within the period provided by law” and makes the unsupported argument that “Plaintiff should therefore be permitted to bring the appropriate motion for relief from this technical error, which was not the fault of Plaintiff in the first place.”  (See Opposition, p.5:25-28).  There is no indication that Plaintiff has made any effort to file any motion in an attempt to obtain relief from the purported technical error. 

 

Additionally, the lien shows that Beitler was not an owner of the property and that Plaintiff did not provide Beitler with notice of the lien.  (See SAC, Ex.2).  As such, any allegation that anyone other than Riverton is an owner of the property may be disregarded.  See Dodd, supra; (SAC ¶¶9, 34). 

3rd cause of action – Fraud and Deceit

 

The elements of a fraud cause of action are: (1) misrepresentation (false representation, concealment or nondisclosure), (2) knowledge of falsity or scienter, (3) intent to defraud (induce reliance), (4) justifiable reliance and (5) resulting damage.  Lazar (1996) 12 C4th 631, 638.  A fraud cause of action must be pled with particularity including facts showing how, when, where, to whom and by what means the representations were made.  Id. at 645.

 

Here, Plaintiff alleges that the representations which form the basis of the fraud claim were made by “Barry Beitler, REZAK and DOES 2 TO 200.”  (See SAC ¶40).  Plaintiff failed to meet the particularity requirement as it is not clear who the 198 other individuals are who purportedly made misrepresentations are, those individuals’ authority to speak on behalf of Defendants, what they said or wrote, when, etc.   

 

Fraud in the inducement/promissory fraud is a subset of the tort of fraud and may lie where a defendant fraudulently induces the plaintiff to enter into a contract by making promises the defendant did not intend to perform.  See Lazar, supra at 638.  To the extent Plaintiff attempts to state a claim for fraudulent inducement to enter a contract, the claim fails to allege sufficient facts to state a cause of action because, as noted above, Plaintiff has failed to adequately allege the underlying contract.  Additionally, Plaintiff has failed to allege sufficient facts to establish that Defendants did not intend to perform under the purported contract as Plaintiff admits that only some of the invoices, amounting to $73,793.61, were not paid on the $2 million+ project.  (See SAC ¶¶23, 28).

 

The Court finds that Defendants’ argument that the fraud claim fails under the economic loss rule is without merit as Plaintiff has alleged damages in addition to the contract damages.  (See SAC ¶57).

 

Since Plaintiff has failed to sufficiently allege the fraud and deceit cause of action, there is no basis for its allegations regarding and the prayer for punitive damages.

 

Plaintiff admits that its reference to the “5263 Cartwright Project” at ¶13, p.4:28, in the Second Amended Complaint is a typographical error that needs correction.  (See Opposition to Motion to Strike, p.2:1-5).

 

CONCLUSION

 

The demurrer is sustained and the motion to strike is granted.  Due to the liberal policy of allowing leave to amend and since this is the first time the pleading is before the Court, Plaintiff is granted 30 days leave to amend.