Jong In Park, et al. v. Dream Motor Cars

DEMURRER TO COMPLAINT

 

MOVING PARTY: Defendant Dream Motor Cars

RESPONDING PARTY(S): Plaintiffs Jong In Park and Howard J. Han

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiffs Jong In Park and Howard J. Han purchased a 2015 Mercedes Benz GL Class from Defendant Dream Motor Cars. Plaintiffs allege Defendants failed to pay for a warranty on the vehicle and failed to disclose a prior accident. Plaintiffs bring causes of action for (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, and (3) fraud. 

Defendant Dream Motor Cars now demurrers to each cause of action in the Complaint. Plaintiffs opposed.

TENTATIVE RULING:

Defendant’s Demurrer to the First and Third Causes of Action is SUSTAINED, with leave 30 days to amend. 

Defendant’s Demurrer to the Second Cause of Action is OVERRULED.

Moving party to give notice, unless waived.

DISCUSSION: 

Demurrer

A. Meet and Confer

B. Legal 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.  (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice.  (CCP § 430.30(a).)  A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.  (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.)  Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.  (Id.)  The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.  (Hahn, 147 Cal.App.4th at 747.)

C. Analysis

1. Demurrer to Third Cause of Action for Fraud

Defendant Dream Motor Cars demurrers to each cause of action in the Complaint. 

In support of the fraud claim(s), Plaintiffs allege Defendant “failed to disclose the damaged condition of the automobile, i.e. back door,” and “failed to pay for warranty as agreed.” (Compl., Attachment, pp. 3, 4.) In justifiable reliance on Defendant’s statements, Plaintiffs “entered into the purchase agreement to the purchase the automobile,” and “paid for the automobile with condition that is substantially below the level of condition contracted/paid for.” (Id.) 

Although Plaintiffs assert these allegations in the same cause of action, they really support two separate claims: one for concealment, and another for promissory fraud. (See Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1386 [noting “our policy of emphasizing substance over form in characterizing pleadings”].) 

“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 was made; (3) intent to deceive or induce the promisee 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].” (Rossberg v. Bank of Am., N.A. (2013) 219 Cal. App. 4th 1481, 1498.) “As with any other form of fraud, each element of a promissory fraud claim must be alleged with particularity.” (Id.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.”  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 [italics in original].)  Further, “in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.”  (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

In order to state a claim for concealment, a plaintiff must allege “(1) concealment of a material fact; (2) by a defendant with a duty to disclose; (3) the defendant intended to defraud by failing to disclose; (4) plaintiff was unaware of the fact and would not have acted as it did had it known the fact; and (5) damages.” (Butler America, LLC v. Aviation Assurance Company, LLC (2020) 55 Cal.App.5th 136, 144.) There is some split in the case law whether concealment must be plead with the specificity of other fraud claims.

Here, regarding a claim for promissory fraud, Plaintiff alleges only that Defendant “failed to pay for warranty as agreed.” (Compl., Attachment, p. 4.) Among other things, there is no indication of who allegedly made these statements or if they had authority to speak on behalf of the entity Defendant. Thus, Plaintiff has failed to allege the claim with specificity. 

While the heightened pleading requirement for concealment may be relaxed, Plaintiffs still fail to provide sufficient allegations to support the claim. All that can be determined from the complaint is that Defendant failed to disclose damage to the back door of the vehicle. (Compl., Attachment, p. 4.)  [FN 1]

Accordingly, Defendant’s Demurrer to the Third Cause of Action for Fraud is SUSTAINED, with 30 days leave to amend. When amending, Plaintiff should allege two separate causes of action (concealment and promissory fraud) and include particularized allegations to support each claim.

2. Demurrer to First Cause of Action for Breach of Contract

Defendant also demurrers to the breach of contract and breach of implied covenant claims. Defendant contends the breach of contract claim is uncertain or fails to state facts sufficient because Plaintiffs failed to allege the element of their own performance.

To establish breach of contract, Plaintiff must allege: (1) the existence of contract; (2) Plaintiff’s performance or excuse for nonperformance; (3) Defendant’s breach (or anticipatory breach); and (4) resulting damage.  (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Plaintiffs allege Defendant breached by purchase agreement by “fail[ing] to deliver the automobile that was of quality and condition as agreed.” (Compl., Attach., p. 1.) The court presumes Plaintiffs’ “performance” under the contract was the purchase of the vehicle. To the extent Defendant claims confusion: As Plaintiffs are already given leave to amend the fraud claim, Plaintiffs should also amend the breach of contract to include all necessary elements, including their performance or excuse for nonperformance. 

Accordingly, Defendant’s Demurrer to the First Cause of Action for Breach of Contract is SUSTAINED, with 30 days leave to amend.

3. Demurrer to Breach of Implied Covenant

Defendant also argues the breach of implied covenant claims fails because it alleges nothing more than breach of contract. 

The breach of the covenant relies on “something beyond breach of the contractual duty itself.” (Tilbury Constructors, Inc. v. State Comp. Ins. Fund (2006) 137 Cal. App. 4th 466, 474.) Here, by alleging that Defendant breached the implied covenant of good faith and fair dealing by “failing to pay for warranty and by failing to disclose the past history of an accident,” Plaintiffs have alleged conduct going beyond breach of the contract. (Id., p. 2.) There is no indication these are terms of the contract itself.

Accordingly, Defendant’s Demurrer to the Second Cause of Action for Breach of the Implied Covenant is OVERRULED.

4. Other Issues

Defendant also argues the Complaint is uncertain because Plaintiffs failed to properly identify the parties in sections 3 and 4 of the Complaint. 

First, because it appears both Plaintiffs are individuals and competent adults, there was nothing to include in section 3. Second, while Plaintiffs did not check the box in section 4 indicating the type of entity, Defendant can hardly claim this renders the Complaint uncertain. There is only one Defendant, and Defendant knows better than anyone what kind of entity it is. Be that as it may, Plaintiffs should remedy this error when amending.

IT IS SO ORDERED.

Dated:   September 29, 2023 ___________________________________

FN 1 - While the “Judicial Council pleading forms have simplified the art of pleading,” they still require more than “merely placing an ‘X’ in a box.” (People ex rel. Dep't of Transportation v. Superior Ct. (1992) 5 Cal. App. 4th 1480, 1484.) A form complaint must “contain whatever ultimate facts are essential to state a cause of action under existing statutes or case law.” (Id.)