Judge: Michelle Williams Court, Case: 22STCV13923, Date: 2022-09-01 Tentative Ruling
Case Number: 22STCV13923 Hearing Date: September 1, 2022 Dept: 74
22STCV13923 TRACY
DAVIS-LOWE vs STEVE BARNETT
Defendant Steve Barnett’s Demurrer to Plaintiff’s
Complaint
TENTATIVE RULING:
The demurrer is OVERRULED.
Defendant shall file an answer within 15 days.
Background
On April 27, 2022, Plaintiff Tracy Davis-Lowe,
Trustee of the Verna L. Davis Trust, filed this action against Defendant Steve
Barnett. The complaint asserts a single cause of action for breach of contract
seeking $56,500.00 in damages.
Demurrer
On
July 6, 2022, Defendant Steve Barnett filed a demurrer to the complaint arguing
the Plaintiff fails to adequately allege breach of the agreement.
Opposition
In opposition, Plaintiff contends the note is
payable on demand and the Court may reform the contract if necessary.
Reply
In reply, Defendant reiterates his contention that
he is not in breach of the agreement because he made the payments required by
the loan and there are insufficient allegations in the complaint to demonstrate
reformation is warranted.
Meet and Confer
The demurrer is accompanied by the declaration of
Rodney S. Diggs which satisfies the requirements of Code of Civil Procedure
section 430.41.
Discussion
Standard
A demurrer for sufficiency tests whether the
complaint states a cause of action. (Hahn
v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers,
courts read the allegations liberally and in context. In a demurrer proceeding,
the defects must be apparent on the face of the pleading or via proper judicial
notice. (Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not
the evidence or other extrinsic matters. Therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (Code
Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only
allege ultimate facts sufficient to apprise the defendant of the factual basis
for the claim against him. (Semole v.
Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A complaint need not allege
evidentiary facts noting plaintiff’s proof. (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th
861, 872.) A “demurrer does not, however, admit contentions, deductions or
conclusions of fact or law alleged in the pleading, or the construction of
instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)
A
special demurrer to a complaint is appropriate when the grounds of the pleading
are uncertain, ambiguous, or unintelligible. (Code Civ. Proc. § 430.10(f);
Beresford Neighborhood Assn. v. City of
San Mateo (1989) 207 Cal.App.3d 1180, 1191.) Courts typically disfavor
demurrers based on uncertainty, which the court strictly construes even when
the pleading is uncertain in some respects. (Khoury v. Maly’s of California, Inc. (1993) 14
Cal.App.4th 612, 616.)
The
demurrer rules apply equally to Judicial Council form complaints. (See People
ex rel. Dept. of Transportation v. Superior Court (1992) 5 Cal.App.4th
1480, 1484.)
Breach of Contract
To
state a claim for breach of contract, a Plaintiff must allege sufficient facts
to establish: (1) a contract between the parties; (2) plaintiff’s performance
or excuse for nonperformance; (3) defendant’s breach; and (4) damages to
plaintiff from the breach. (See e.g. Wall
Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171,
1178.) A contract must be pled verbatim in the body of the complaint, be
attached to the complaint and incorporated by reference, or be pled according
to its legal effect. (Bowden v. Robinson (1977) 67 Cal.App.3d
705, 718.)
The
complaint attaches a “Note Secured by Deed of Trust” signed by Defendant on
April 23, 2019 wherein Defendant agreed to pay to Verna L. Davis Trust “the
principal sum of fifty six thousand five hundred . . . dollars with interest
from May 1, 2019 on unpaid principal at the rate of 11% per cent per annum;
principal and interest payable in installments of five hundred seventeen dollars
& ninety two cent ($517.92 interest only) each and every month, beginning
on the 1st day of May 1, 2019 and continuing until May 1, 2021.” (Compl. Ex.
A.)
In
the complaint, Plaintiff alleges “Defendant who was making monthly payments of
$517.92 cent. (Interest only) The amount of loan was $56,500.00. Defendant
agreed to pay the loan off in two years plus interest. Defendant refusal to the
$56,500.00 loan back.” (Compl. ¶ BC-2.)
Defendant
contends the note required payments from May 1, 2019 through May 1, 2021,
Plaintiff alleges he made these payments, and therefore “Defendant cannot be in
breach because he provided adequate performance as required by the Note Secured
by Deed of Trust.” (Dem. at 6:3-18.)
In
opposition, Plaintiff contends “[a]fter only a cursory reading of the
Promissory Note it becomes obvious that mistakes were made.” (Opp. at 2:14-16.)
Plaintiff argues “[w]hen no ‘due date’ is set forth in the contract or
promissory note, either on purpose of through mutual mistake, the note becomes
a ‘Demand Note’ and the court will imply a reasonable time period for
repayment.” (Opp. at 2:11-13.) Plaintiff does not cite any authority for this
position in the opposition.
However,
California law supports Plaintiff’s argument. Pursuant to California Uniform
Commercial Code section 3180(a), “[a] promise or order is ‘payable on demand’
if it . . . (2) does not state any time of payment.” (See also Leonard v.
Gallagher (1965) 235 Cal.App.2d 362, 375 (“There is no evidence that these
loans and notes had any time fixed for payment. The law is therefore clear that
they were payable on demand.”); Sapin v. Security First Nat. Bank (1966)
243 Cal.App.2d 201, 205 (“the note was an instrument payable on demand because
no time for payment had been expressed.”); Holmes
v. West (1861) 17 Cal. 623, 625 (“The note is payable generally, not
specifying any time of payment, with a provision that interest shall accrue
after a certain event, at a given rate. The rule is well settled that a note
thus payable is due immediately; and the mere provision in respect to interest
does not alter the principle. The demurrer, therefore, is not well taken.”).)
Defendant admits “[t]here is no language within the four corners of the
contract which indicate when if at anytime the note would be repaid.” (Reply at
2:6-7.)
The
Court finds the allegations sufficient to state a cause of action for breach of
contract based upon Defendant’s failure to repay the principal of the note on
demand.
Plaintiff
also cites Civil Code section 3399 noting that the Court may revise the
promissory note. (Opp. at 2:24-28.) Civil Code section 3399 provides: “[w]hen,
through fraud or a mutual mistake of the parties, or a mistake of one party,
which the other at the time knew or suspected, a written contract does not
truly express the intention of the parties, it may be revised on the
application of a party aggrieved, so as to express that intention, so far as it
can be done without prejudice to rights acquired by third persons, in good
faith and for value.”
“The
allegations necessary to state a cause of action for reformation are outlined
in Johnson v. Sun Realty Co., 138 Cal.App. 296, 300, 32 P.2d 393,
395, as follows: ‘A complaint for the reformation of a contract should allege
what the real agreement was, what the agreement as reduced to writing was, and
where the writing fails to embody the real agreement. It is also necessary
to aver facts showing how the mistake was made, whose mistake it was, and what
brought it about, so that mutuality may appear.’” (Lane v. Davis (1959)
172 Cal.App.2d 302, 309.) Plaintiff’s complaint does not seek reformation or
allege sufficient facts to support a claim for reformation. However, as noted
above, the law supplies the time for repayment and therefore reformation does not
appear warranted.