Judge: Robert B. Broadbelt, Case: 22STCV09393, Date: 2022-12-16 Tentative Ruling

Case Number: 22STCV09393    Hearing Date: December 16, 2022    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:             Defendants IC Funding, Inc., Nadav Ibi, Einat Rozenbaum, and Carmiel Cohen

RESPONDING PARTY:       Plaintiff Pacifica Reliable Funding, LLC

(1)   Demurrer to First Amended Complaint;

(2)   Motion to Strike Portions of First Amended Complaint

The court considered the moving, opposition, and reply papers filed in connection with the demurrer and motion to strike.

BACKGROUND

Plaintiff Pacifica Reliable Funding, LLC (“Plaintiff”) filed this action on March 17, 2022.

Plaintiff filed its operative First Amended Complaint on June 16, 2022, against defendants IC Funding, Inc. (“IC Funding”), Nadav Ibi (“Ibi”), Einat Rozenbaum (“Rozenbaum”), and Carmiel Cohen (“Cohen”) (collectively, “Defendants”).  Plaintiff’s First Amended Complaint alleges six causes of action for (1) breach of contract; (2) money had and received; (3) conversion; (4) breach of guaranty; (5) breach of guaranty; and (6) breach of guaranty.

Defendants now move the court for an order (1) sustaining their demurrer to each of the causes of action alleged in Plaintiff’s First Amended Complaint without leave to amend, and (2) striking from the First Amended Complaint the prayer for punitive damages and related allegations.

DEMURRER

The court overrules IC Funding’s demurrer to the first cause of action for breach of contract because it states facts sufficient to constitute a cause of action because Plaintiff sufficiently alleges the existence, and attaches a copy of, the written contract on which this cause of action is based.  (Code Civ. Proc., § 430.10, subd. (e); FAC Ex. 1.)  

The court notes that Defendants contend that the Memorandum of Understanding is not a binding contract because it includes a clause providing that the parties agree to negotiate and execute another contract that includes the terms set forth in the Memorandum of Understanding and “additional miscellaneous terms . . . .”  (FAC Ex. 1, p. 1 [“The Parties agree to the following terms to be more fully documented in a formal contract to follow”], p. 5, ¶ 12 [“The Parties agree to negotiate and execute a full contract reflecting the above terms and additional miscellaneous terms necessary to reflect the Parties’ intent in entering this MOU”].)  If a written document “shows it was not intended to be binding until a formal written contract is executed, there is no contract.”  (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.)  However, “[w]here the writing at issue shows ‘no more than an intent to further reduce the informal writing to a more formal one’ the failure to follow it with a more formal writing does not negate the existence of the prior contract.”  (Ibid.)  While the Memorandum of Understanding does state the parties’ intent to execute “a full contract reflecting the above terms and additional miscellaneous terms necessary to reflect the Parties’ intent in entering this MOU,” the language does not indicate that the Memorandum of Understanding was not intended to be binding until another contract with additional terms was executed.  (FAC Ex. 1, p. 5, ¶ 12.)  The court therefore finds that, on the face of the First Amended Complaint and the exhibits attached thereto, Plaintiff has sufficiently pleaded the existence of a valid contract.  

The court overrules IC Funding’s demurrer to the second cause of action for money had and received because it states facts sufficient to constitute a cause of action since it does not “appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred[,]” since Plaintiff alleges that its damages “continue[] to increase” based on IC Funding’s failure to send payments to Plaintiff pursuant to the terms of their agreement.  (Code Civ. Proc., § 430.10, subd. (e); Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881; FAC ¶ 54.)

The court overrules IC Funding’s demurrer to the third cause of action for conversion on the ground of the bar of the statute of limitations since it does not “appear clearly and affirmatively that, upon the face of the complaint,” Plaintiff’s entire conversion claim is barred by the three-year statute of limitations, because Plaintiff alleges that it was damaged between March 2, 2019, and April 12, 2019 (FAC ¶ 61), and therefore at least part of Plaintiff’s conversion claim did not accrue until it incurred damage on April 12, 2019, rendering Plaintiff’s March 17, 2022 complaint timely.  (Code Civ. Proc., § 430.10, subd. (e); Lockley, supra, 91 Cal.App.4th p. 881; City of Vista v. Robert Thomas Sec. (2000) 84 Cal.App.4th 882, 886 [“When damages are an element of a cause of action, the cause of action does not accrue until the damages have been sustained”].)

The court sustains IC Funding’s demurrer to the third cause of action for conversion because it does not state facts sufficient to constitute a cause of action since (1) money can only be the subject of a conversion claim if there is a specific, identifiable sum involved, and (2) Plaintiff has not pleaded that IC Funding converted a “specific, identifiable sum” of money, and instead generally pleads that Plaintiff has suffered damages “in excess of $25,000” (FAC ¶ 61).  (Code Civ. Proc., § 430.10, subd. (e); PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 396 [“actions for the conversion of money have not been permitted when the amount of money involved is not a definite sum”].)

The court overrules Ibi’s demurrer to the fourth cause of action for breach of guaranty on the ground of uncertainty because this cause of action is not ambiguous or unintelligible.  (Code Civ. Proc., § 430.10, subd. (f).) 

The court overrules Ibi’s demurrer to the fourth cause of action for breach of guaranty because it can be ascertained from the pleading that the guaranty is based on the written Memorandum of Understanding.  (Code Civ. Proc., § 430.10, subd. (g); FAC Ex. 1, p. 1 [identifying Ibi as guarantor], p. 7.)

The court overrules Ibi’s demurrer to the fourth cause of action for breach of guaranty on the ground that it does not state facts sufficient to constitute a cause of action because it states facts sufficient to constitute a cause of action since (1) the Memorandum of Understanding obligates the guarantors to ensure that IC Funding could meet its obligations, and (2) Plaintiff alleges that Ibi guaranteed full payment of all indebtedness of IC Funding to Plaintiff.  (Code Civ. Proc., § 430.10, subd. (e); FAC Ex. 1, p. 1 [Recitals]; FAC ¶¶ 17, 65.)

The court overrules Rozenbaum’s demurrer to the fifth cause of action for breach of guaranty on the ground of uncertainty because this cause of action is not ambiguous or unintelligible.  (Code Civ. Proc., § 430.10, subd. (f).) 

The court overrules Rozenbaum’s demurrer to the fifth cause of action for breach of guaranty because it can be ascertained from the pleading that the guaranty is based on the written Memorandum of Understanding.  (Code Civ. Proc., § 430.10, subd. (g); FAC Ex. 1, p. 1 [identifying Rozenbaum as guarantor], p. 7.)

The court overrules Rozenbaum’s demurrer to the fifth cause of action for breach of guaranty on the ground that it does not state facts sufficient to constitute a cause of action because it states facts sufficient to constitute a cause of action since, as set forth above in connection with Ibi’s demurrer to the fourth cause of action, (1) the Memorandum of Understanding obligates Rozenbaum to ensure IC Funding’s compliance with its responsibilities, and (2) Plaintiff alleges that Rozenbaum guaranteed the full payment IC Funding’s indebtedness to Plaintiff.  (Code Civ. Proc., § 430.10, subd. (e); FAC Ex. 1, p. 1; FAC ¶¶ 17, 71.)

The court overrules Cohen’s demurrer to the sixth cause of action for breach of guaranty on the ground of uncertainty because this cause of action is not ambiguous or unintelligible.  (Code Civ. Proc., § 430.10, subd. (f).) 

The court overrules Cohen’s demurrer to the sixth cause of action for breach of guaranty because it can be ascertained from the pleading that the guaranty is based on the written Memorandum of Understanding.  (Code Civ. Proc., § 430.10, subd. (g); FAC Ex. 1, p. 1 [identifying Cohen as guarantor].)

The court overrules Cohen’s demurrer to the sixth cause of action for breach of guaranty on the ground that it does not state facts sufficient to constitute a cause of action because it states facts sufficient to constitute a cause of action since (1) the Memorandum of Understanding obligates Cohen, as guarantor, to ensure IC Funding’s compliance with its responsibilities, and (2) Plaintiff alleges that Cohen guaranteed full payment of all of IC Funding’s indebtedness.  (Code Civ. Proc., § 430.10, subd. (e); FAC Ex. 1, p. 1; FAC ¶¶ 17, 77.)

MOTION TO STRIKE

Defendants move the court for an order striking from the First Amended Complaint (1) paragraph 63, and (2) the prayer for punitive damages against IC Funding.

The court denies as moot Defendants’ motion to strike paragraph 63 because the court has sustained the demurrer to Plaintiff’s third cause of action for conversion, and therefore the allegations within that cause of action are removed from the complaint.

The court grants Defendants’ motion to strike the prayer for punitive damages because the court has sustained the demurrer to Plaintiff’s third cause of action for conversion, which is the only cause of action that can support a request for punitive damages.

ORDER

The court overrules defendants IC Funding, Inc., Nadav Ibi, Einat Rozenbaum, and Carmiel Cohen’s demurrer to the first, second, fourth, fifth, and sixth causes of action.

The court sustains defendant IC Funding, Inc.’s demurrer to the third cause of action for conversion.

The court grants defendants IC Funding, Inc., Nadav Ibi, Einat Rozenbaum, and Carmiel Cohen’s motion to strike the prayer for punitive damages.  

The court grants plaintiff Pacifica Reliable Funding, LLC 20 days leave to file a Second Amended Complaint to cure the defects in the third cause of action for conversion set forth above.

The court orders defendant IC Funding, Inc. to give notice of this ruling.

IT IS SO ORDERED.

DATED:  December 16, 2022

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court