Judge Michael Small, Case Number: 23STCV02597, Date: 2023-08-28 Tentative Ruling

Judge: Michael Small, Case: 23STCV02597, Date: 2023-08-28 Tentative Ruling

Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.

Case Number: 23STCV02597 Hearing Date: April 17, 2024 Dept: 57

Plaintiff LA Metropolitan Development Corp. (“LAMDC”) sued Defendant the Code Solution (“TCS”) and multiple persons whom LAMDC alleged to be agents, shareholders, employees, and/or officers of TCS (“collectively, “the Defendants”). LAMDC’s complaint arises from a contract that LAMDC is alleged to have entered into with TCS for the provision by TCS of architectural services to LAMDC in connection with two properties in Los Angeles that LAMDC was developing -- one located at 305 N. Boylston Street, and the other at 964 S. Catalina Street (collectively, “the Properties”). At the heart of each claim are allegations that none of the Defendants was licensed by the State of California to provide architectural services. TCS has filed a Cross-Complaint against LAMDC and an individual named Andrew Yao (“Yao”) whom TCS alleges controls LAMDC. TCS’s Cross-Complaint alleges that LAMDC and Yao breached contracts for the payment of TCS for its provision of real estate development services to LAMDC and Yao at the Properties. In addition to a claim for breach of contracts, TCS’s Cross-Complaint has claims for common count based on TCS’s alleged provision of those services to LAMDC and Yao.

Pending before the Court is the demurrer of LAMDC and Yao to TCS’s Cross-Complaint. The premise of the demurrer is that the “contract” -- singular contract, not plural contracts - on which the Cross-Complaint rests is illegal because TCS does not have any licensed architects or engineers working for it. LAMDC and Yao also posit in their demurrer that this Court agreed with them that the contract was illegal when the Court overruled the Defendants’ demurrer to TCS’s operative First Amended Complaint.

LAMDC and Yao misapprehend the limitations of a demurrer and the limitations of this Court’s decision overruling Defendants’ demurrer to LAMDC’s First Amended Complaint. Accordingly, the Court is overruling the demurrer of LAMDC and Yao to the Cross-Complaint.

It is elemental that a demurrer tests the sufficiently of allegations in a complaint, which must be accepted as true for purposes of the demurrer, and that a demurrer necessarily must be limited to what is alleged in the complaint and what is set forth in any attachments to the complaint. A demurrer cannot stray beyond those confines. (Autonomous Region of Narcotics Anonymous v. Narcotics Anonymous Word Services, Inc. (2022) 77 Cal.App.5th 950, 962; Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1626-1627.) The demurrer of LAMDC and Yao contravenes these basic principles. TCS’s Cross-Complaint alleges that LAMDC and Yao breached contracts -- plural, not singular -- for the payment to TCS for real estate development services it provided to LAMDC and Yao related to the Properties. The notion that there was just one contract, not two as TCS alleges, comes from the allegations in LAMDC’s operative First Amended Complaint, not the allegations in TCS Cross-Complaint. More fundamentally, the notion that the contract, singular, was illegal because TCS had no licensed architects or engineers likewise comes from the allegations in LAMDC’s First-Amended Complaint. LAMDC and Yao cannot through their demurrer inject into the Cross-Complaint allegations they made in First Amended Complaint. They are two separate pleadings. LAMDC and Yao’s demurrer exceeds the boundaries of the Cross-Complaint.

This Court’s decision overruling the Defendants’ demurrer to the First Amended Complaint did not hold that any contract (or contracts) on which LAMDC’s claims against the Defendants rest was illegal for the lack of licensed architects or engineers in TCS’s camp. The Court simply held that, at the pleading stage, LAMDC’s allegations regarding illegality were sufficient to withstand the Defendants’ demurrer.

LAMDC and Yao’s demurrer to the common count claims in the Cross-Complaint fails as well to the extent the demurrer to those claims argues that the contract under which TCS provided services was illegal. The demurrer also fails to the extent that it argues that the TCS does not adequately plead common count claims. The allegations in the Cross-Complaint supporting those claims, which, as stated above, must be taken as true at this stage, are sufficient to withstand the demurrer.