Judge: Michael P. Linfield, Case: 22STCV24958, Date: 2023-01-11 Tentative Ruling
Case Number: 22STCV24958 Hearing Date: January 11, 2023 Dept: 34
SUBJECT: Demurrer
Moving Party: Defendants
Urbane Builders, Inc., Gagik Patrick Nazaryan, Amirhosin Ebrahimi, Neda
Abousaidi, GCN Properties, LLC, Tyrone Development, LLC, Black Star Development
LLC, Ehsan Sombolestani, Cynthia Sarkissian, Urbane Design, Inc., and Redwood
Inc.
Resp. Party: Plaintiff Robert Sanati
The
Demurrer is SUSTAINED in part. The Demurrer is sustained with 10 days leave as
to the cause of action for violation of Business and Professions Code section
7031, subdivision (b). The Demurrer is sustained without leave as to the cause
of action for restitution. The Demurrer is overruled as to the other grounds
claimed.
BACKGROUND:
On
August 2, 2022, Plaintiff Robert Sanati filed his Complaint against Defendants Urbane
Builders, Inc., Gagik Patrick Nazaryan, Amirhosin Ebrahimi, Neda Abousaidi, GCN
Properties, LLC, Tyrone Development, LLC, Black Star Development LLC, Ehsan
Sombolestani, Cynthia Sarkissian, Urbane Design, Inc., and Redwood Inc. The
causes of action are for:
(1) Breach of contract;
(2) Negligence;
(3) Violation of Civil
Code sections 1788.20 and 1788.30;
(4) Conversion;
(5) Fraud and deceit;
(6) Theft;
(7) Common counts;
(8) Violation of Civil
Code sections 1761 and 1770;
(9) Violation of Business
& Professions Code sections 7031, et seq.;
(10) Unfair, unethical
business practices;
(11) Accounting;
(12) Rescission, pursuant
to Civil Code section 1691;
(13) Restitution, pursuant
to Business & Professions Code sections 7031 and 7118; and
(14) Money had and
received.
On
November 16, 2022, Defendants filed their Demurrer. Defendants concurrently
filed: (1) Request for Judicial Notice; and (2) Proposed Order.
On
December 27, 2022, Plaintiff filed his Opposition. Plaintiff concurrently filed
his Affidavit of Venue.
On January 4, 2023, Defendants filed
their Reply.
ANALYSIS:
I.
Judicial
Notice
Defendants request judicial notice of Certified License History for
License #1046293, which is a public document filed with the State of
California’s Contractors State License Board.
The Court GRANTS judicial notice of this item.
II.
Legal
Standard for a Demurrer
A demurrer is a pleading used to test the legal sufficiency of other
pleadings. It raises issues of law, not fact, regarding the form or content of
the opposing party’s pleading. It is not the function of the demurrer to
challenge the truthfulness of the complaint; and for purpose of the ruling on
the demurrer, all facts pleaded in the complaint are assumed to be true,
however improbable they may be. (Code Civ. Proc., §§ 422.10, 589.)
A demurrer can be used only to challenge defects that appear on the
face of the pleading under attack; or from matters outside the pleading that
are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No
other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A
demurrer is brought under Code of Civil Procedure section 430.10 (grounds), section
430.30 (as to any matter on its face or from which judicial notice may be
taken), and section 430.50(a) (can be taken to the entire complaint or any
cause of action within).
A demurrer may be brought under Code of Civil Procedure section 430.10,
subdivision (e) if insufficient facts are stated to support the cause of action
asserted. A demurrer for uncertainty (Code of Civil Procedure section 430.10,
subdivision (f)), is disfavored and will only be sustained where the pleading
is so bad that defendant cannot reasonably respond—i.e., cannot reasonably
determine what issues must be admitted or denied, or what counts or claims are
directed against him/her. (Khoury v. Maly's of Calif., Inc. (1993) 14
Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague,
“ambiguities can be clarified under modern discovery procedures.” (Id.)
Where a demurrer is sustained, leave
to amend must be allowed where there is a reasonable possibility of successful
amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is
on the plaintiff to show the court that a pleading can be amended successfully.
(Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However,
“[i]f there is any reasonable possibility that the plaintiff can
state a good cause of action, it is error to sustain a demurrer without leave
to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240,
245).
III.
Discussion
Defendants demur against the Complaint on the following grounds:
(1)
That all
causes of action fail because Plaintiff did not set out verbatim in the
Complaint the terms of the contract;
(2)
That the
first cause of action for breach of contract fails because it does not identify
the existence of a contract or state the terms of the contract;
(3)
That the
third cause of action for violation of the Rosenthal Act fails because
Plaintiff fails to allege prohibited conduct by Defendants;
(4)
That the
fourth cause of action for conversion fails because the funds paid were for
services performed;
(5)
That the
fifth cause of action for fraud and deceit fails because the fraud allegations
are not specifically pleaded;
(6)
That the
sixth cause of action for theft fails because criminal intent is not
established pursuant to Penal Code section 496;
(7)
That the
eighth cause of action for violation of the Consumer Legal Remedies Act (CLRA)
fails because CLRA does not apply to construction contract pursuant to Civil
Code section 1754;
(8)
That the
ninth cause of action for violation of the Business & Professions Code
section 7031, et seq. fails because Defendant is and was properly licensed;
(9)
That the
tenth cause of action for unfair, unethical business practices fails because
the allegations do not show unlawful conduct and are impermissibly uncertain;
and
(10)
That the
thirteenth cause of action for restitution fails against all Defendants because
Defendant Urbane was properly licensed at all times.
(Demurrer, pp.
4–12.)
A.
Breach
of Contract
1.
Legal
Standard
If a breach of contract claim “is based on alleged breach of a written
contract, the terms must be set out verbatim in the body of the complaint or a
copy of the written agreement must be attached and incorporated by reference.”
(Harris v. Rudin, Richman & Appel (1999)
74 Cal.App.4th 299, 307.) “In an action based on a written contract, a
plaintiff may plead the legal effect of the contract rather than its precise
language.” (Construction Protective
Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199.)
2.
Analysis
Here, Plaintiff discussed
the legal effect of the contract at length in the Complaint. (Complaint, ¶¶
25–32.) However, “plaintiff’s failure to either to attach or to set out
verbatim the terms of the contract [is] not fatal to his breach of contract
cause of action.” (Miles v. Deutsche
Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.)
The Court OVERRULES Defendants’ Demurrer on the grounds that either all
causes of action or the breach of contract cause of action fail for lack of
including the contract verbatim.
B.
Rosenthal
Act
1.
Legal
Standard
The Rosenthal Fair Debt Collection Practices Act (RFDCPA) prohibits
debt collectors from engaging in unfair debt collection practices. (Civ. Code,
§§ 1788.10, et seq.) In addition to listed conduct and other practices that are
deemed unfair, the RFDCPA also prohibits conduct that is prohibited by the
federal Fair Debt Collection Practices Act (FDCPA). (Civ. Code, § 1788.17.)
Among the federally banned practices is the false representation of the character,
amount, or legal status of any debt. (15 U.S.C. 1692e, subdivision (2)(A).)
2.
Analysis
Here, Plaintiff has alleged that, among other things, Defendants
“regularly sent bills to Plaintiff” and that Defendants “repeatedly told
Plaintiff that he was in default when he was not.” (Complaint, ¶¶ 85, 87.) That
is sufficient to allege a cause of action under the RFDCPA. The Court OVERRULES
Defendants’ Demurrer on the grounds that Plaintiff has failed to allege
prohibited conduct under the RFDCPA.
C.
Conversion
1.
Legal
Standard
“Conversion is the wrongful exercise of
dominion over the property of another. The elements of a conversion claim are:
(1) the plaintiff’s ownership or right to possession of the property; (2) the
defendant’s conversion by a wrongful act or disposition of property rights; and
(3) damages.” (Lee v. Hanley (2015)
61 Cal.4th 1225, 1240.)
2.
Analysis
Plaintiff alleges that Defendant
wrongfully interfered with Plaintiff’s property by wrongfully taking
Plaintiff’s money, refusing to return the money, and thus causing damages to
Plaintiff. (Complaint, ¶¶ 105, 110.) That is sufficient to allege a cause of
action for conversion. The Court OVERRULES Defendants’ Demurrer on the grounds
that Plaintiff has failed to sufficiently allege the elements of conversion.
D.
Fraud
and Deceit
1.
Legal Standard
“The elements of fraud are (a) a misrepresentation
(false representation, concealment, or nondisclosure); (b) scienter or
knowledge of its falsity; (c) intent to induce reliance; (d) justifiable
reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.)
The facts constituting the alleged fraud must
be alleged factually and specifically as to every element of fraud, as the
policy of “liberal construction” of the pleadings will not ordinarily be
invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)
To properly allege fraud against a
corporation, the plaintiffs must plead the names of the persons allegedly making
the false representations, their authority to speak, to whom they spoke, what
they said or wrote, and when it was said or written. (Tarmann v. State Farm
Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)
2.
Analysis
Here, Plaintiff alleges: (1) that
Defendants concealed certain information from Plaintiff; (2) that Defendants
made multiple, specific false representations to Plaintiff; (3) that Defendants
intended to deceive Plaintiffs by concealing the facts; (4) that Plaintiff
reasonably relief on Defendants’ deception; and (5) that Plaintiff was harmed.
Plaintiff has made sufficiently specific
allegations to meet the higher pleading standard for fraud. The Court OVERRULES
Defendants’ Demurrer on the grounds that Plaintiff has failed to sufficiently
allege the elements of fraud and deceit.
E.
Theft
1.
Legal
Standard
“Every person who
buys or receives any property that has been stolen or that has been obtained in
any manner constituting theft or extortion, knowing the property to be so
stolen and obtained, or who conceals, sells, withholds, or aids in concealing,
selling, or withholding any property from the owner, knowing the property to be
so stolen or obtained, shall be punished by imprisonment in a county jail for
not more than one year, or imprisonment pursuant to subdivision (h) of Section
1170.” (Pen. Code, § 496, subd. (a).)
“Any person who
has been injured by a violation of subdivision (a) or (b) may bring an action
for three times the amount of actual damages, if any, sustained by the
plaintiff, costs of suit, and reasonable attorney’s fees.” (Pen. Code, § 496,
subd. (c).)
2.
Analysis
Here, Plaintiff
alleges, among other things, that Defendants “were systematically stealing
money by providing false invoices for more than agreed to amounts coming to
work on Plaintiff’s property for minimal time while working on other projects”.
(Complaint, ¶ 144.) These are sufficient allegations to constitute the cause of
action for theft, which includes theft by false pretense. (Bell v. Feibush (2013)
212 Cal.App.4th 1041, 1043, holding that the phrase “any manner constituting
theft” under section 496(a) includes theft by false pretense.)
The Court notes
that, contrary to Defendants’ arguments, criminal intent is not a prerequisite
for civil liability pursuant to Penal Code section 496, subdivision (c). (Bell,
supra, at 1043, holding that a criminal conviction under section 496(a)
is not a prerequisite to recovery of treble damages under section 496(c).)
Defendants have not cited to any case law that would indicate otherwise.
The Court OVERRULES Defendants’ Demurrer
on the grounds that Plaintiff has failed to sufficiently allege the elements of
theft.
F.
Violation
of CLRA
1.
Legal
Standard
Among other things, the CLRA prohibits “[r]epresenting that goods or
services are of a particular standard, quality, or grade, or that goods are of
a particular style or model, if they are of another.” (Civ. Code, § 1770, subd.
(a)(7).)
“The provisions
of this title shall not apply to any transaction which provides for the
construction, sale, or construction and sale of an entire residence or all or
part of a structure designed for commercial or industrial occupancy, with or
without a parcel of real property or an interest therein, or for the sale of a
lot or parcel of real property, including any site preparation incidental to
such sale.” (Civ. Code, § 1754.)
2.
Analysis
Here, Plaintiff alleges multiple
violations of the CLRA, including that Defendants represented that services
Defendants provided were of a particular standard quality or grade when they
were not. (Complaint, ¶ 167.) This is a sufficient allegation to constitute a
violation of CLRA. In addition, the Court notes that Civil Code section 1754
does not apply here as the services at question regarded construction of a pool
and remodel of a home, not the construction, sale, or both of an entire
residence.
The Court OVERRULES Defendants’ Demurrer on
the grounds that the CLRA does not apply here due to Civil Code section 1754.
G.
Violation
of Business & Professions Code
1.
Legal
Standard
“Except
as provided in subdivision (e), a person who utilizes the services of an
unlicensed contractor may bring an action in any court of competent
jurisdiction in this state to recover all compensation paid to the unlicensed
contractor for performance of any act or contract.” (Bus. & Prof. Code, §
7031, subd. (b).)
2.
Analysis
Here, Plaintiff
alleges that Defendants were unlicensed. However, by request of Defendants, the
Court has taken judicial notice of Defendant Urbane Builders Inc.’s license,
which has been in effect since January 1, 2019. Plaintiff has not made
sufficient allegations as to which Defendant played which role in the incident
at issue, making it unclear to the Court whether this document is for the
general contractor. Defendants argue that the contract at issue – which has
not been provided to the Court – is only between Plaintiff and Defendant Urbane
Builders Inc. (Opposition, p. 5:4–5.)
Given that the
Complaint is uncertain on this matter, the Court SUSTAINS the Demurrer as to
the cause of action for violation of Business and Professions Code section
7031, subdivision (b), with 10 days leave for Plaintiff to amend the Complaint.
H.
Violation
of Unfair Competition Law
1.
Legal
Standard
To set forth a claim for a violation of Business and Professions Code
section 17200 (“UCL”), Plaintiff must establish Defendant was engaged in an
“unlawful, unfair or fraudulent business act or practice and unfair, deceptive,
untrue or misleading advertising” and certain specific acts. (Bus. & Prof.
Code, § 17200.) A cause of action for unfair competition “is not an all-purpose
substitute for a tort or contract action.” (Cortez
v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)
2.
Analysis
Here, Plaintiff has extensively alleged
unfair, deceptive, and misleading acts that are sufficient to constitute a
cause of action for a violation of the UCL. The Court OVERRULES the Demurrer as
to the cause of action for violation of the UCL.
I.
Restitution
“Unjust enrichment…is synonymous with
restitution.” (Dinosaur Dev., Inc. v. White (1989) 216 Cal.App.3d 1310,
1314.) “The elements for a claim of unjust enrichment are ‘receipt of a benefit
and unjust retention of the benefit at the expense of another.’” (Prakashpalan
v. Engstrom, Lipscomb, & Lack (2014) 223 Cal.App.4th 1105, 1132,
quoting Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.)
“The theory of unjust enrichment requires one
who acquires a benefit which may not justly be retained, to return either the
thing or its equivalent to the aggrieved party so as not to be unjustly
enriched.” (Otworth v. Southern Pac. Transp. Co. (1985) 166 Cal.App.3d
452, 460.) “The phrase ‘Unjust Enrichment’ does not describe a theory of
recovery, but an effect: the result of a failure to make restitution under
circumstances where it is equitable to do so.
“In addition, as [trial courts have]
observed, there is no cause of action in California for unjust enrichment.” (Melchior
v. New Line Prod., Inc. (2003) 106 Cal.App.4th 779, 793.)
2.
Analysis
Plaintiff pleads a cause of action that does not exist in California.
While restitution as a remedy may be available later, it is not available as a cause
of action based on the allegations made. The Court SUSTAINS without leave the
Demurrer as to the cause of action for restitution.
IV.
Conclusion
The
Demurrer is SUSTAINED in part. The Demurrer is sustained with 10 days leave as
to the cause of action for violation of Business and Professions Code section
7031, subdivision (b). The Demurrer is sustained without leave as to the cause
of action for restitution. The Demurrer is overruled as to the other grounds
claimed.