Judge: Michael E. Whitaker, Case: 23SMCV00552, Date: 2023-09-26 Tentative Ruling

Case Number: 23SMCV00552    Hearing Date: September 26, 2023    Dept: 207

TENTATIVE RULING

MOTIONS

Plaintiff and Cross-Defendant Buddy Chan (“Chan”) demurs to all three causes of action alleged in Defendant and Cross-Complainant Millbrook Kitchens Inc.’s (“Millbrook”) Cross-Complaint.  Chan also moves to strike the request for punitive damages in Milbrook’s Cross-Complaint.

This case stems from a dispute over the installation of artificial turf at Chan’s home.  Chan filed suit for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional misrepresentation, negligent misrepresentation, professional negligence, and violations of business and professions code section 17200 et seq., alleging that the quality of the installation was sub-par and Millbrook hired unlicensed subcontractors to do the work. 

Millbrook has filed a cross-complaint alleging breach of contract, fraud, and common counts-services rendered, alleging Chan promised to, but failed to pay for the work Millbrook performed. 

Millbrook filed an untimely opposition to the demurrer and motion to strike.  Chan filed notices that the oppositions were untimely, and then timely replied to both the demurrer and motion to strike.  Millbrook responded to the notices of untimely oppositions.

MEET AND CONFER REQUIREMENT

            Code of Civil Procedure section 430.41, subdivision (a) requires that “Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” 

The statute further requires “As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies.”  (Code Civ. Proc., § 430.41, subd. (a)(1).)  “The party who filed the complaint, cross-complaint, or answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency.”  (Ibid.)

“The parties shall meet and confer at least five days before the date the responsive pleading is due.  (Code Civ. Proc. § 430.41, subd. (a)(2).)  “The demurring party shall file and serve with the demurrer a declaration stating either” the means by which the parties met and conferred, or that the party who filed the pleading subject to demurrer failed to respond to the meet and confer request.  (Id., subd. (a)(3).) 

Here, Chan provided an attorney declaration indicating that on August 2, Chan’s counsel sent counsel for Millbrook a detailed email, outlining the bases for its demurrer to each of the three causes of action, and on August 3, Millbrook’s counsel called Chan’s counsel and indicated by telephone that Millbrook’s counsel was unpersuaded by the arguments and did not intend to amend the cross-complaint.  (Meigs Decl. ¶¶ 1-4 and Ex. A thereto.)

Thus, the parties have satisfied the meet and confer requirement.

REQUEST FOR JUDICIAL NOTICE

            Chan requests the Court to take judicial notice of the Cross-Complaint filed in this action.

Judicial notice may be taken of records of any court in this state.  (Evid. Code, § 452, subd. (d)(1).)  Because the Cross-Complaint is part of the Court’s record for this case, the Court may take judicial notice of it.  (Ibid.)   However, “while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files.  Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof.”  (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [cleaned up].)  Accordingly, the Court takes judicial notice of the existence of the Cross-Complaint filed in this matter as a court record, but not the truth of the allegations contained therein.

CHAN’S REQUEST TO STRIKE MILLBROOK’S OPPOSITIONS AS UNTIMELY

            Code of Civil Procedure section 1005, subdivision (b) provides, “All papers opposing a motion […] shall be filed with the court and a copy served on each party at least nine court days, and all reply papers at least five court days before the hearing.”  The court has discretion whether to consider late-filed papers.  (California Rules of Court, rule 3.1300(d).)   

The hearing in this matter is set for September 26, 2023, and there is a court holiday on Friday, September 22, making Opposition papers due on September 12, and Reply papers due September 18, 2023.

            Millbrook did not file opposition papers to the demurrer or the motion to strike until September 14.  Millbrook’s counsel attached attorney declarations to the oppositions to both the demurrer and the motion to strike, indicating that an emergency in another case required counsel to draft and three emergency motions, which were filed on September 13, and attend an ex parte on September 14, precluding timely submission of the oppositions in this case.  (Moghadam Decl. ¶ 3.)  The declarations also indicated, “In fairness to the Plaintiff, I would not object if the Plaintiff submitted his reply late.”  (Moghadam Decl. ¶ 4.)

            Chan timely filed both Reply briefs, but requested that the Court strike the oppositions.

            While the Court agrees with Chan, that better management of the upcoming briefing in this case would have prevented the last-minute emergency, the Court finds no prejudice here, as Chan did not request additional time to draft the reply brief.  Therefore the Court exercises its discretion and considers the late-filed opposition briefs.

ANALYSIS

1.      DEMURRER

Chan demurs to all three causes of action in Millbrook’s Cross-Complaint on the basis that they failed to state facts sufficient to constitute causes of action against Chan under Code of Civil Procedure section 430.10(e).

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.”  (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  In ruling on a demurrer, the court must “liberally construe[]” the allegations of the complaint.  (Code Civ. Proc., § 452.)  “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.”  (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.) 

A.    UNCERTAINTY

As A demurrer for uncertainty will be sustained only where the pleading is so bad that the responding party cannot reasonably respond - i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what claims are directed against him or her.  (Khoury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)  Where a demurrer is made upon the ground of uncertainty, the demurrer must distinctly specify exactly how or why the pleading is uncertain, and where such uncertainty appears by reference to page and line numbers.  (See Fenton v. Groveland Comm. Services Dist. (1982) 135 Cal.App.3d 797, 809.) 

Although Chan argues in the memorandum of points and authorities that the first cause of action for breach of contract is uncertain, pursuant to Code of Civil Procedure section 430.10, subdivision (f), Chan’s Notice of Demurrer and Demurrer does not cite Code of Civil Procedure section 430.10, subdivision (f) as a basis for any of the demurrers.  As such, any argument that the breach of contract cause of action is uncertain is improper.

But even if the Court were to consider this argument, Chan does not demonstrate that any portions of the Cross-Complaint are so bad that Chan cannot reasonably determine what issues must be admitted or denied, or what claims are directed against Chan.  The Court thus declines to sustain Chan’s demurrer to the first cause of action on the basis of uncertainty. 

B.     FAILURE TO STATE A CAUSE OF ACTION

                                                                    i.            First Cause of Action – Breach of Contract

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.”  (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) 

Chan argues that Millbrook’s first cause of action for breach of contract “contains only a conclusory allegation that [Chan] breached the contract and is impermissibly vague as to the conduct underlying the alleged breach.”

Here, in the cross-complaint, Millbrook pleads in pertinent part as follows:   “On or about 3/23/22, Cross-Complainant entered into a written agreement with CHAN to perform certain outdoor improvements, generally described as installation of artificial grass and ancillary work, to his property, located at 32015 Cape Point Dr., Rancho Palos Verdes, CA 90275 (“Agreement”). Cross-Complaint was to be paid at least $88,840.75 for this work. MILLBROOK substantially performed under the Agreement.  CHAN breached the Agreement.  Cross-Complainant suffered damages as a result of CHAN’s breach.”  (Cross-complaint, ¶¶ 7-9.) 

As the cause of action stands, Millbrook has pled the ultimate facts necessary to state a cause of action for breach of contract against Chan.  Ultimate facts are those “constituting the cause of action” or those upon which liability depends, e.g., duty of care, breach of the duty and causation (damages).  (See Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.)  “[T]he term ultimate fact generally refers to a core fact, such as an essential element of a claim. Ultimate facts are distinguished from evidentiary facts and from legal conclusions.”  (Central Valley General Hosp. v. Smith (2008) 162 Cal.App.4th 501, 513 [cleaned up]; see also Rodriguez v. Parivar, Inc. (2022) 83 Cal.App.5th 739, 750–751 [“The elements of a cause of action constitute the essential or ultimate facts in a civil case”].)  

Accordingly, the Court finds for pleading purposes Millbrook has sufficiently stated a cross-claim for breach of contract against Chan.

                                                                  ii.            Second Cause of Action - Fraud

“In a promissory fraud action, to sufficiently alleges [sic] 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.”  (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060.)   

First, Chan demurs to the second cause of action for fraud on the basis that the contractual economic loss rule precludes a claim of fraud unless the alleged conduct is “independent of the breach of contract itself” and thus violates “some independent duty arising from tort law.”  (Opp. at p. 7:8-11.)

As a threshold matter, Millbrook has alleged that Chan fraudulently induced Millbrook to perform services by falsely representing that Chan would pay, when Chan had no intention to pay.  Thus, Millbrook’s allegations do allege conduct independent of the breach of contract itself that violates an independent duty arising from tort law.  In the case law Chan cites, the Court held the economic loss rule did not bar fraud and intentional misrepresentation claims.  (See Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979.)

Moreover, as Millbrook has explained in Opposition, it has brought the second and third causes of action, for fraud and “common counts – services rendered” in the alternative, in case no contract is ultimately found to exist between the parties.  At this stage, the Cross-Complaint may “plead in the alternative and make inconsistent allegations.”  (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1388.)

Second, Chan argues that the cross-complaint fails to plead a cause of action for fraud with the requisite particularity because it merely alleges Chan “falsely promised to pay [Millbrook] for its services under the Agreement.”  The Court notes that the Cross-Complaint also alleges Chan never intended to pay Millbrook; Chan knew the promise was false when made; and in reliance upon Chan’s promise to pay, Millbrook “substantially performed under the Agreement.” (Cross-complaint, ¶¶ 13-15.) 

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.”  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)  “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.”  (Ibid.) 

“One of the purposes of the specificity requirement is notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.”  (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)  As such, less specificity is required “when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy[.]”  (Ibid.)  “Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.”  (Ibid.)

Here, the Court finds that Millbrook has not pled with sufficient particularity the facts necessary to support the fraud cause of action.  In particular, the Court notes that Millbrook fails to assert facts with specificity regarding how and when Chan falsely promised to pay Millbrook for its services; how and when Chan always intended to cease paying monies owed to Millbrook; and how and when Chan knew his promise to pay Millbrook was false never intending to fully pay Millbrook. 

As such, the Court Millbrook has failed to state a sufficient cause of action for fraud.

                                                                iii.            Third Cause of Action – Common Counts – Services Rendered

Chan’s challenge to the third cause of action – that the quasi-contract claim for services rendered is inconsistent with the breach of contract claim – is unavailing.  Because Millbrook may plead alternative theories of liability at this stage of litigation, the fact that the third cause of action is inconsistent with the first cause of action is not a basis to sustain the demurrer.

2.      MOTION TO STRIKE

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof.  (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).)  On a motion to strike, the court may: (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.  (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)  Here, Chan moves to strike from the complaint, references to and claims for punitive damages.    

In ruling on a motion to strike punitive damages, “judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.”  (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294.  (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.)  Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice.  (Civ. Code, § 3294, subd. (a).)   As set forth in the Civil Code,

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.  (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.  (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

(Civ. Code, § 3294, subd. (c)(1)-(3), emphasis added.) 

Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice.  To wit, there is a heightened pleading requirement regarding a claim for punitive damages.  (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.)  “When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice.  When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].)  In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs’ assertions related to their claim for punitive damages were “insufficient to meet the specific pleading requirement.”  (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged “the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff's rights. Plaintiff's injuries were exacerbated by the malicious conduct of Defendants. Defendants' conduct justifies an award of exemplary and punitive damages”]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages.  Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim”].) 

Here, as discussed above, Millbrook has not alleged facts with requisite specificity to state a cause of action for fraud against Chan.  As such, the Court finds that the allegations do not adequately support a claim for punitive damages against Chan.    

3.      LEAVE TO AMEND

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Millbrook has failed to meet its burden as it does not address whether leave should be granted if either the demurrer is sustained or the motion to strike is granted. 

CONCLUSION AND ORDER

For the reasons stated, the Court overrules Chan’s Demurrer to the First and Third Causes of Action, and sustains without leave to amend Chan’s Demurrer to the Second Cause of Action. 

Further, the Court grants Chan’s Motion to Strike in its entirety, and orders the prayer for punitive damages associated with the Second Cause of Action stricken from the Cross-complaint. 

Further, the Court orders Chan to file an Answer to the Cross-complaint on or before October 10, 2023. 

Chan shall provide notice of the Court’s ruling and file a proof of service regarding the same. 

DATED:  September 26, 2023                                               ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court