Judge Robert S. Draper, Case 21STCV46620 2022-09-02 Tentative Ruling

Defendants Supra National Express, Inc. and Daniel Linares’s Demurrer to the First Amended Complaint is SUSTAINED without leave to amend as to the Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing

The Court notes that it granted a Motion to Be Relieved as Counsel for Defendants Daniel Linares and Supra National Express on July 19, 2022. No Notice of Association of Counsel has been filed for either Defendant since that date.

As Supra National Express is a corporate entity, it cannot appear without representation. A Status Conference re Representation of Defendants has been set for this date, and should Supra attempt to appear without Counsel, the Court will consider whether to dismiss the matter or continue it until a later date.

This is an action for breach of contract related to a previous settlement agreement. The operative First Amended Complaint (“FAC”) alleges as follows.

Plaintiff Nelson Ochoa (“Ochoa”) filed suit against Defendant Supra National Express, Inc. (“Supra”) alleging various violations of the California Labor Code. (FAC ¶ 12.) On January 27, 2020, the parties entered into a written settlement agreement. (FAC ¶ 14.) Defendants agreed to pay Ochoa $400,000 in exchange for his dismissing the action. (FAC ¶ 16.) Defendants are more than $275,000 behind on the settlement payments. (FAC ¶ 19.)

On May 9, 2022, this Court denied Defendants’ Motion for Judgment on the Pleadings as to the First Cause of Action for Breach of Contract but granted it as to the Second Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing. Ochoa was granted thirty days leave to amend.

On June 7, 2022, Ochoa filed the operative First Amended Complaint asserting the same two causes of action.

Also on June 7, 2022, Defendants’ attorney filed a Motion to be Relieved as Counsel.

Defendants Demur to the Second Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing.

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) As is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“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. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.

A. Second Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

Defendants argue that the First Amended Complaint fails to allege facts sufficient to state a claim for Breach of the Implied Covenant of Good Faith and Fair Dealing.

The elements for breach of the implied covenant of good faith and fair dealing are: (1) existence of a contract between plaintiff and defendant; (2) plaintiff performed his contractual obligations or was excused from performing them; (3) the conditions requiring defendant’s performance had occurred; (4) the defendant unfairly interfered with the plaintiff’s right to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant’s conduct. (Merced Irr. Dist. V. County of Mariposa (E.D. Cal. 2013) 941 F.Supp.2d 1237, 1280 (discussing California law).) Allegations must demonstrate defendant’s conduct for failure or refusal to discharge contractual responsibilities was a conscious and deliberate act, not an honest mistake, bad judgment or negligence. (Id.) “‘[T]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract and cannot be extended to create obligations not contemplated by the contract.’” (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 206 (quoting Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094).)

Here, Defendants argue that there are no facts supporting an independent tort cause of action for breach of the implied covenant of good faith and fair dealing, only an allegation of breach of the settlement agreement.

“A ‘breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself’ and it has been held that ‘[b]ad faith implies unfair dealing rather than mistaken judgment . . . .’” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394 (quoting Congleton v. National Union Fire Insurance Co. (1987) 189 Cal.App.3d 51, 59).)

In ruling on this matter following Defendants’ Motion for Judgment on the Pleadings, the Court found that the Complaint did not allege any acts beyond Defendants’ failure to pay their obligation under the settlement agreement.

To attempt to resolve this defect, Ochoa added the following allegations in the First Amended Complaint:

“Plaintiff was forced to file a second lawsuit to enforce his contractual rights.” (FAC ¶ 30.)

“Defendants’ failure to pay Plaintiff the amount owed under the contract has prevented Plaintiff from being able to receive the benefits under the contract.” (FAC ¶ 31.)

“That by doing so, Defendants did not act fairly, or in good faith.” (FAC ¶ 32.)

The above allegations are conclusory and fail to resolve the issue at hand. Simply put, the only breach of the implied covenant alleged here is the breach of contract; absent more factual allegations, the cause of action for implied covenant is fatally duplicative of the cause of action for breach of contract.

Accordingly, Defendants’ Demurrer to the Second Cause of Action in the First Amended Complaint is SUSTAINED. And, as this is the same defect as the Court addressed in its previous ruling, and as Ochoa did not add any facts showing the issue can be resolved, or discuss such facts in his Opposition, the cause of action is dismissed without leave to amend.

[1] Defendant Supra National Express, Inc. has not subsequently filed a Notice of Association of Counsel. “A corporation cannot appear in court by an officer who is not an attorney and it cannot appear in propria persona.” (Paradise v. Nowlin (1948) 86 Cal.App.2d 897, 898; see also Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1284 n.5.) Supra therefore cannot appear regarding the instant matter. This will be addressed at hearing, as there is an OSC re: Representation scheduled for the same day as the hearing on the Demurrer.

[2] The Opposition is a duplicate of that filed in opposition to the earlier Motion for Judgment on the Pleadings, is captioned as such, and is not responsive to the arguments presented in the instant Demurrer.

nelson ochoa, Plaintiff, vs. supra national express, Inc., et al., Defendants.	Case No: 21STCV46620
	Hearing Date: September 2, 2022

	[TENTATIVE] RULING RE: Defendants supra national express, inc. and daniel linares’s demurrer to the first amended complaint.