Judge: Peter A. Hernandez, Case: 23PSCV03856, Date: 2024-05-16 Tentative Ruling
Case Number: 23PSCV03856 Hearing Date: May 16, 2024 Dept: K
1. Plaintiff/Cross-Defendant Haha Smart,
Inc.’s Demurrer to Walter Ocheaga’s Cross-Complaint is OVERRULED in part (i.e.,
as to the first cause of action) and otherwise SUSTAINED. The court will hear from
counsel for Ocheaga as to whether leave to amend is requested, and as to which
cause(s) of action, and will require an offer of proof if so.
2. Plaintiff/Cross-Defendant Haha Smart, Inc.’s Motion to Strike Portions of Walter Ocheaga’s Cross-Complaint is DENIED as MOOT in part (i.e., as to punitive damages) and GRANTED in part (i.e., as to attorney’s fees).
Background
HSI is a general contractor. On April
8, 2022, HSI entered into a written Solar Home/Building Improvement Agreement
(“Agreement”) with Walter Ocheaga (“Ocheaga”), wherein HSI agreed to furnish
all labor, materials, and equipment to complete certain work (“Project”) at
Ocheaga’s property located at 16761 E. Benbow St. in Covina in exchange for
Ocheaga’s payment. HSI procured the services of S3 Electrical Solutions, LLC (“S3
Electrical”) to perform the Project. Although the Project is complete, Ocheaga
has failed to pay HSI.
On December 12, 2023, HSI filed a complaint, asserting causes of action against Ocheaga, S3 Electrical, First Franklin Financial Corporation (“First Franklin”) and Does 1-50 for:
1.
Breach of Contract
2.
Foreclosure on Mechanic’s Lien
3.
Recovery on Mechanic’s Lien Release Bond
4.
Quantum Meruit
5.
Prompt Payment Penalties
6.
Unjust Enrichment
On February 5, 2024, S3’s default was entered.
On February 7, 2024, Ocheaga filed a cross-complaint, asserting causes of action against HSI, Amir Jafary and Roes 1-20 for:
1.
Breach of Contract
2.
False Promise
3.
Tortious breach of Covenant of Good Faith and Fair
Dealing
4.
Fraud
5.
Negligent Misrepresentation
6.
Intentional Misrepresentation
7.
Declaratory Relief
8.
Release of Mechanics Lien
On April 11, 2024, First Franklin filed a “Disclaimer of Interest.”
A Case Management Conference is set for May 16, 2024.
1. Demurrer to Cross-Complaint
Legal Standard
A demurrer may be made on the grounds that the pleading, inter alia, does not state facts sufficient to constitute a cause of action and/or is uncertain. (Code Civ. Proc., § 430.10, subds. (e) and (f).)
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.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905 [citations omitted].) 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] demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction placed on an instrument pleaded therein, or facts impossible in law, or allegations contrary to facts of which a court may take judicial knowledge.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [citations omitted].)
Discussion
HSI demurs, per Code of Civil Procedure § 430.10, subdivisions (e) and (f), to the first through eighth causes of action in Ocheaga’s cross-complaint, on the basis that they each fail to state facts sufficient to constitute causes of action and are uncertain.
First Cause of Action (i.e., 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.)
HSI demurs to the first cause of action on the basis that Ocheaga has failed to allege breach, performance and damages. Not so. With respect to breach, Ocheaga has alleged that the solar panels installed by HSI pursuant to their contract do not work. (Cross-Complaint, ¶ 13). HSI’s argument that any delays are excused by Section 6 of the parties’ contract is more not appropriate for resolution via demurrer.
Ocheaga has pled performance in ¶¶ 14 and 17. HSI’s statements that Ocheaga “has not allowed HAHA to install the converter” and that Ocheaga “admits . . . that the reason the converter has not been installed has nothing to do with HAHA” are contradictory to Ocheaga’s allegation in ¶ 12 that “[w]hile Cross-Complainant called Amir Jafary many times from September through early January, Cross-Defendants never came to put in a new converter and Amir Jafary told Cross-Complainant that the person who would do the labor was sick and he was having a hard time getting a hold of that person.” With respect to damages, Ocheaga has alleged that he has been making financing payments to Mosaic for the solar panels, that he has solar panels on his roof that do not work and that he has been sued by HSI. (Cross-Complaint, ¶¶ 10, 13 and 14).
HSI’s demurrer to the first cause of action is overruled.
Second Cause of Action (i.e., False Promise)
“Promissory fraud or false promise is a subspecies of the action for fraud and deceit.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 181, 1498 [internal quotations and citation omitted].) “The elements of promissory fraud. . . are: (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise as made; (3) intent to deceive or induce the promise to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise[e].” (Id. [internal quotations and citation omitted].) “[E]ach element of a promissory fraud claim must be alleged with particularity.” (Id. [internal quotations and citation omitted].) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 [internal quotations and citation omitted; italics theirs].)
HSI points out that the only specific statement set forth in Ocheaga’s second cause of action (i.e., that “Haha Smart was a fraud, took peoples, [sic] money, took advantage of racial minorities via finances companies, received monies and kick back from finance companies, and performed terrible service where there was either delay or not services performed to provide solar” (Cross-Complaint, ¶ 13) is alleged to be true. Ocheaga otherwise only generically alleges, without more, that “Cross-Defendants made the statements stated herein above in this Cross-Complaint. Said promises were all false promises and Cross-Defendants knew them to be false promises.” (Id.) This allegation fails to allege any false promise. Ocheaga has also failed to plead any of the remaining elements with particularity, as required.
HSI’s demurrer to the second cause of action is sustained.
Third Cause of Action (i.e., Tortious Breach of Covenant of Good Faith and Fair Dealing)
Although not specifically raised by HSI, the court notes that “[g]enerally, no cause of action for the tortious breach of the implied covenant of good faith and fair dealing can arise unless the parties are in a ‘special relationship’ with ‘fiduciary characteristics.’” (Pension Trust Fund for Operating Engineers v. Federal Ins. Co. (9th Cir. 2002) 307 F.3d 944, 955 [italics added].)
HSI’s demurrer to the third cause of action is sustained.
Fourth Through Sixth Causes of Action (i.e., Fraud, Negligent Misrepresentation and Intentional Misrepresentation, Respectively)
“The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage.” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) “The elements of negligent misrepresentation are (1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)
“Fraud must be pleaded with specificity…[t]o withstand a
demurrer, the facts constituting
every element of the fraud must be alleged with particularity, and the claim
cannot be salvaged by references to the general policy favoring the liberal
construction of pleadings.” (Goldrich v.
Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772,
782 [emphasis in original].) Likewise, “[e]ach element in a cause of action for. . . negligent misrepresentation
must be factually and specifically alleged.” (Cadlo v. Owens-Illinois, Inc. (2004)
Ocheaga has not pled these causes of action with the required specificity. HSI’s demurrer to the fourth through sixth causes of action is sustained.
Seventh Cause of Action (i.e., Declaratory Relief)
A claim for declaratory relief requires two elements: (1) “a proper subject of declaratory relief” and (2) “an actual controversy involving justiciable questions relating to the rights or obligations of a party.” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.) Ocheaga has not alleged facts setting forth any “actual controversy.” HSI’s demurrer to the seventh cause of action is sustained.
Eighth Cause of Action (i.e., Release of Mechanics Lien)
Ocheaga generically references a lien and that HSI caused one to be recorded against his residence (i.e., Cross-Complaint, ¶¶ 12, 36, 57 and 62). There does not appear to be a cause of action for “release of mechanics lien;” rather, there is a separate procedure under Civil Code § 8480 available to obtain such relief. HSI’s demurrer to the eighth cause of action is sustained.
2. Motion to Strike Cross-Complaint
Legal Standard
Pursuant to Code of Civil Procedure section 436, “the court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” The grounds for a motion to strike must “appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437.)
Discussion
HSI moves to strike out the following portions of Ocheaga’s cross-complaint:
1.
Punitive damages (i.e., ¶¶ 31, 42, 48, 54, and 62 and
Paragraph 2 of the prayer for relief); and
2.
Attorney’s fees (i.e., Paragraph 5 of the prayer for
relief).
HSI’s motion is denied as moot in part (i.e., as to the punitive damages language and request for relief). The motion is otherwise granted, inasmuch as Ocheaga has not articulated any contractual or statutory basis for attorney’s fees. (Code Civ. Proc., § 1021).