Judge: Michael P. Linfield, Case: 23GDCV02113, Date: 2023-12-21 Tentative Ruling
Case Number: 23GDCV02113 Hearing Date: December 21, 2023 Dept: 34
SUBJECT: Demurrer to Complaint
Moving Party: Defendant
Vrej Sarkissian
Resp. Party: Plaintiff Asatur Arthur Supikyan
The Demurrer to the Complaint is SUSTAINED, with thirty (30) days leave
to amend the Complaint.
BACKGROUND:
On October 5, 2023, Plaintiff Asatur Arthur Supikyan
filed his Complaint against Defendant Vrej Sarkissian on causes of action for
breach of oral contract and account stated.
On October 30, 2023, the Court found related cases
22STCV33142, 23GDCV00515, and 23GDCV02113. The Court designated 22STCV33142 as
the lead case.
On November 27, 2023, Defendant filed his Demurrer to the
Complaint. In support of his Demurrer, Defendant concurrently filed: (1)
Declaration of Gregg D. Zucker; and (2) Request for Judicial Notice.
On December 8, 2023, Plaintiff filed his Opposition to
the Demurrer.
On December 12, 2023, Defendant filed his Reply regarding
the Demurrer.
ANALYSIS:
I.
Request for Judicial Notice
Defendant requests that the Court take judicial notice of a writing
referenced in the Complaint.
The Court DENIES judicial notice to this
item. This item is not judicially noticeable.
II.
Legal Standard
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 Cal., 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.)¿¿¿
III.
Discussion
Defendant demurs to both causes of action in the Complaint.
A. First
Cause of Action — Breach of Contract
1. Legal
Standard
To state a cause of action for breach of
contract, a plaintiff must be able to establish “(1) the existence of the
contract, (2) plaintiff’s performance or excuse for nonperformance, (3)
defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis
W. Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
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.” (Constr. Protection Servs., Inc. v. TIG Specialty Ins. Co.
(2002) 29 Cal.4th 189, 198–199.)
2. The
Parties’ Arguments
Defendant demurs to the first cause of action for breach of contract,
arguing that it is barred by the two-year statute of limitations. (Demurrer, p.
4:24–25.)
Plaintiff disagrees, arguing that the claim is not barred by the
statute of limitations. (Opposition, p. 2:16.)
Defendant reiterates his argument in his Reply. (Reply, p. 1:23–24.)
3. Statutes
and Case Law on Acknowledgements
“The periods
prescribed for the commencement of actions other than for the recovery of real
property, are as follows: . . . Within two years: 1. An action upon a contract,
obligation or liability not founded upon an instrument of writing, except as
provided in Section 2725 of the Commercial Code or subdivision 2 of Section 337
of this code; or an action founded upon a contract, obligation or liability,
evidenced by a certificate, or abstract or guaranty of title of real property,
or by a policy of title insurance; provided, that the cause of action upon a contract,
obligation or liability evidenced by a certificate, or abstract or guaranty of
title of real property or policy of title insurance shall not be deemed to have
accrued until the discovery of the loss or damage suffered by the aggrieved
party thereunder.” (Code Civ. Proc., §§ 335, 339, subd. 1.)
“No
acknowledgment or promise is sufficient evidence of a new or continuing
contract, by which to take the case out of the operation of this title, unless
the same is contained in some writing, signed by the party to be charged
thereby, provided that any payment on account of principal or interest due on a
promissory note made by the party to be charged shall be deemed a sufficient
acknowledgment or promise of a continuing contract to stop, from time to time as
any such payment is made, the running of the time within which an action may be
commenced upon the principal sum or upon any installment of principal or
interest due on such note, and to start the running of a new period of time,
but no such payment of itself shall revive a cause of action once barred.”
(Code Civ. Proc., § 360.)
“The distinction
between the acknowledgment of a debt before and one after the statute has run
consists merely in its effect upon the debt and the remedy. An acknowledgment
or promise made before the statute has run vitalizes the old debt for another
statutory period dating from the time of the acknowledgment or promise, while
an acknowledgment made after the statute has run gives a new cause of action,
for which the old debt is a consideration.” (S. Pac. Co. v. Prosser (1898)
122 Cal. 413, 416, quoting Wood on Limitations, § 81, internal quotation marks
omitted.)
“It is to be noted that the acknowledgment and promise are stated
in the alternative, thus indicating that either one or the other will be
sufficient to toll the statute. A promise is plainly what the word imports, namely an engagement
to pay the debt. Naturally it may be either express or implied in fact. The ordinary meaning of acknowledgment is an
admission or recognition of the existence of the debt. Hence it would appear
that an acknowledgment standing alone would be sufficient even though it is
insufficient from which to imply in fact a promise to pay.
It is generally assumed, however, that the acknowledgment must be unqualified
and unconditional, that is, while the law will imply a promise to pay from a
bare acknowledgment, it will not be sufficient if there are circumstances
showing an unwillingness to pay or refuting an intent to contract to pay, thus
injecting the implied in fact promise feature into the case where such
circumstances are present.” (W. Coal & Mining Co. v. Jones (1946) 27
Cal.2d 819, 822–823.)
"The law, then, as now fully established
both in England and in this country, clearly is: 1. That a debt barred by the Statute of
Limitations may be revived by a new promise. 2. That such new promise may
either be an express promise or an implied one. 3. That the latter is created
by a clear and unqualified acknowledgment of the debt. 4. That if the acknowledgment
be accompanied by such qualifying expressions or circumstances as repel the
idea of an intention or contract to pay, no implied promise is created . . . ." (Biddel v. Brizzolara (56 Cal.
374, 380, quoting Angell on Limitations, 232 [internal quotation marks and
italics omitted].)
“We think that § 360 of the Code of Civil
Procedure does not establish a different rule in this State. The purpose
of that section is to establish a rule, not with respect to the character of
the promise or acknowledgment from which a promise may be inferred, but with
respect to the kind of evidence by which
the promise or acknowledgment shall be proved. Like Lord Tenderden's Act (9
Geo. iv, c. 13, cited in Bacon's Abr. title, Limitations of Actions), it
provides that no such promise or acknowledgment shall be deemed sufficient
evidence of a new or continuing contract, whereby to take a case out of the
operation of the statute, unless the same be in writing signed by the party to
be charged thereby. The English rule had been so far modified as
to require that the acknowledgment should be such as to constitute evidence of
a new promise before the Tenderden Act, and such has been the law in England since. It was not suspected by the English courts that the act
established the proposition that a mere acknowledgment that the debt once
existed should be sufficient. It was said by Tindal, C. J., in Hayden
v. Williams, 7 Bing. 163, that the Tenderden Act did not intend to make any
alteration in the legal construction to be put upon acknowledgments or promises
made by defendants, but only to require a different mode of proof. Our statute does not purport to adopt
either of the adverse principles referred to by Mr. Angell; that is, that the
acknowledgment removes a presumption of payment, or that it is evidence of a new promise for which the consideration is moral
simply, though springing out of the original consideration. It is a simple
enactment, that whatever the intent of the statute--whether it provides for a
new or a continuation of the old promise--the promise, or proof of the promise,
must be in writing, signed, etc.” (Biddel, supra, at pp. 380–381
[italics omitted].)
4. Discussion
Here, Plaintiff alleges: (1) that an oral contract was made in May 2018
for a loan; (2) that the terms of the oral contract were (a) that Plaintiff
would provide Defendant with an $80,000.00 loan and (b) that Defendant would
repay that amount to Plaintiff within two to three months of the loan; (3) that
on May 29, 2018, Plaintiff performed his part of the contract by providing
Defendant with a cashier’s check in the amount of $80,000.00; (4) that
Defendant did not perform his part of the contract by repaying any amount; (5)
that on October 7, 2021, Defendant acknowledged his obligation to pay the debt
in a writing made in connection with broader negotiations; and (6) that the
writing expressly contemplated Defendant paying Plaintiff the sum owed, in
addition to the sum relevant to the other parts of the contemplated
transaction. (Complaint, ¶¶ 10–14, 17.)
There appear to be two issues here: (1) was there an oral contract? and
(2) if there was an oral contract, has it expired, and there is insufficient
evidence of a subsequent acknowledgement or promise for a new contract?
“A contract is an
agreement to do or not to do a certain thing.” (Civ. Code, § 1549.)
“It is essential to the existence of a contract that
there should be: 1. Parties capable of contracting; 2. Their consent; 3. A
lawful object; and, 4. A sufficient cause or consideration.” (Civ. Code, §
1550.)
“Past consideration cannot support a
contract.” (Passante v. McWilliam (1997) 53 Cal.App.4th 1240, 1247,
citation omitted.) However, “the extinguishment of a preexisting obligation, or
the rendering of past services with the expectation of future payment,
constitute sufficient consideration for a contract.” (Ibid., italics
omitted.)
“A gift is a
transfer of personal property, made voluntarily, and without consideration.”
(Civ. Code, § 1146.)
“A verbal gift is
not valid, unless the means of obtaining possession and control of the thing
are given, nor, if it is capable of delivery, unless there is an actual or
symbolical delivery of the thing to the donee.” (Civ. Code, § 1147.)
“A gift, other than
a gift in view of impending death, cannot be revoked by the giver.” (Civ. Code,
§ 1148.)
“Case law has
defined the elements of a gift as follows: (1) competency of the donor to
contract; (2) a voluntary intent on the part of the donor to make a gift; (3)
delivery, either actual or symbolical; (4) acceptance, actual or imputed; (5)
complete divestment of all control by the donor; and (6) lack of consideration
for the gift.” (Jaffe v. Carroll (1973) 35 Cal.App.3d 53, 59, citations
omitted.)
Plaintiff
has not alleged that there was any consideration for the purported loan. Thus,
Plaintiff has not sufficiently alleged that there is a contract; at most,
Plaintiff has alleged that he made a gift to Defendant. Because Plaintiff has
not pleaded sufficient allegations to establish that there is a contract,
Plaintiff has not pleaded sufficient allegations that there has been a breach
of contract, and Defendant’s demur to the cause of action for breach of
contract must be sustained.
Further, even if there were a contract,
the relevant statutes and case law clearly require that any acknowledgement or
promise that would take the contract out of its preexisting statute of
limitations must be signed. (Code Civ. Proc., § 360; (Biddel, supra,
at pp. 380–381.) Yet Plaintiff has not alleged that the acknowledgement or
promise were signed. (See Complaint, ¶¶ 14–15, 18.) It is irrelevant whether
the alleged acknowledgement or promise was express or implied — it must still
be signed. Similarly, it is irrelevant whether the alleged acknowledgment or
promise occurred before or after the original statute of limitations ran — it
must still be signed. Without a signature, the acknowledgement or promise is
not “sufficient evidence” as recognized by California law. This is an additional
reason why the Demurrer must be sustained to this cause of action.
Plaintiff requests leave to amend should
the Court be inclined to sustain the Demurrer. (Opposition, p. 7:3–4.)
The Court SUSTAINS the Demurrer to the
first cause of action, with thirty (30) days leave to amend the Complaint.
B. Second
Cause of Action — Account Stated
1. Legal
Standard
“The essential
elements of an account stated are: (1) previous transactions between the
parties establishing the relationship of debtor and creditor; (2) an agreement
between the parties, express or implied, on the amount due from the debtor to
the creditor; (3) a promise by the debtor, express or implied, to pay the
amount due.” (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600,
citations omitted; see also Leighton v. Forster (2017) 8 Cal.App.5th
467, 491.)
2. Discussion
Plaintiff has not alleged that there were previous transactions between
the Parties that would establish a creditor-debtor relationship. The only
relevant allegation in the Complaint is that Plaintiff’s father and Defendant
are co-owners of a group of companies. (Complaint, ¶ 10.). Further, as
previously discussed above, Plaintiff has – at most – alleged that there has
been a gift, not a contract.
It is also notable that alleging an
account stated does not automatically renew the statute of limitations.
“It is not
disputed that the facts originally alleged establish an oral contract, which is
barred by a two-year statute of limitations (Code Civ. Proc., § 339).
We hold that the action cannot be resurrected by the device of pleading common
counts, such as open book account and account stated, in lieu of the oral
contract where, as here, the common counts and the cause of action based on an
oral contract are factually identical in all material respects and no facts are
alleged explaining the omission of the oral contract allegations in the amended
complaints.” (Filmservice Labs. V. Harvey Bernhard Enters. (208
Cal.App.3d 1297, 1308, citations omitted.)
For the independent reasons of
insufficiency of the allegations and applicability of the relevant statute of
limitations, Defendant’s demur to the second cause of action for account stated
must be sustained.
Plaintiff requests leave to amend should
the Court be inclined to sustain the Demurrer. (Opposition, p. 7:3–4.)
The Court SUSTAINS the Demurrer to the
second cause of action, with thirty (30) days leave to amend the Complaint.
IV.
Conclusion
The Demurrer to the Complaint is SUSTAINED, with thirty (30) days leave
to amend the Complaint.