Judge: Ronald F. Frank, Case: 21TRCV00144, Date: 2023-09-27 Tentative Ruling
Case Number: 21TRCV00144 Hearing Date: September 27, 2023 Dept: 8
Tentative Ruling¿
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HEARING DATE: September
27, 2023
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CASE NUMBER: 21TRCV00144
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CASE NAME:
Muldrow, et al. v. Jones, et al.
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MOVING PARTY: Defendants
Greer Jones, Pacific Equity Brokers and Kevin Brian White
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RESPONDING PARTY: Plaintiffs
Donnie Ray Muldrow and Precision Business Consulting, LLC
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TRIAL DATE: November 12, 2024
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MOTION:¿ (1) Demurrer
(2) Motion to Strike
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Tentative Rulings: (1) Demurrer is OVERRULED. Defendant’s Answer is due withing 20 days to
the three remaining causes of action, absent stipulation of the parties
otherwise
(2) Motion to Strike is GRANTED as to the third, fourth,
sixth through ninth causes action and as to the addition of a new named party
not named as a Doe defendant without having obtained prior leave of court of
stipulation of opposing counsel.
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I. BACKGROUND¿¿
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A. Factual¿¿
On March 1, 2021, Plaintiffs Donnie Ray Muldrow and Precision
Business Consulting, LLC (“Plaintiffs”) filed their Complaint against
Defendants Greer Jones, Pacific Equity Brokers, Kevin Brian White, and DOES 1
through 50.
After
a prior demurrer and amended pleading, on July 18, 2023, Plaintiffs filed a second
amended complaint (“SAC”) alleging causes of action for: (1) Breach of
Contract; (2) Breach of Contract – Third Party Beneficiary Liability; (3) Intentional
Interference with Contract; (4) Breach of Implied Covenant of Good Faith and
Fair Dealing; (5) Interference with Prospective Economic Advantage; (6) Interference
with Contractual Relations; (7) Unfair Business Practices Under CA Bus. &
Prof. Code § 17200; (8) Fraud; and (9) Negligence. The SAC added a new party
defendant, Greer Jones, Trustee of the Greer Jones Family Trust. This matter
arises from the alleged breach by defendants of contracts relating to the
purchase of a property.
B.
¿ Procedural
On August 17, 2023, Defendants
filed this Demurrer. On September 14, 2023, Plaintiffs filed an opposition. Defendants
filed a late reply on September 20, 2023
¿II. MEET AND CONFER
Defendants set
forth a meet and confer declaration in sufficient compliance with CCP § 435.5.
(Declaration of Craig Weinstein (“Weinstein Decl.”), ¶¶ 3-4.) Defendants’ counsel
sent Plaintiffs’ counsel an email outlining the basis for their demurrer and
motion to strike and an offer to schedule a telephone conference. (Ibid.)
Although Plaintiffs’ counsel did not respond, the email communicated to
Plaintiffs’ counsel the grounds of the Motion. The Court finds the meet and
confer requirement was met.
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¿III. ANALYSIS¿
A.
Demurrer
A demurrer can be used only to challenge defects that
appear on the face of the pleading under attack or from matters outside the
pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39
Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts
sufficient to state a cause of action; each evidentiary fact that might
eventually form part of the plaintiff’s proof need not be
alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53
Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of
action, the demurrer admits the truth of all material facts properly pleaded. (Aubry
v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does
not admit contentions, deductions or conclusions of fact or law.” (Daar v.
Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿¿
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A pleading is uncertain if it is ambiguous or
unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) A demurrer for uncertainty may lie if the failure
to label the parties and claims renders the complaint so confusing defendant
cannot tell what he or she is supposed to respond to.¿ (Williams v. Beechnut
Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) However, “[a]
demurrer for uncertainty is strictly construed, even where a complaint is in
some respects uncertain, because ambiguities can be clarified under modern
discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14
Cal.App.4th 612, 616.)¿¿
First
Cause of Action: Breach of Contract
Defendants
contend that Plaintiffs failed to allege any facts as to the second element of
Plaintiffs’ breach of contract claim, specifically as to Plaintiffs’
performance of the contract or excuse for nonperformance.
“The
standard elements of a claim for breach of contract are: ‘(1) the contract, (2)
plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach,
and (4) damage to plaintiff therefrom.’” (Wall Street Network, Ltd. v. New
York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)
Here,
Plaintiffs allege facts sufficient to satisfy the second element of their
breach of contract claim. In
its ruling on Defendants’ demurrer to Plaintiffs’ original complaint, the Court
sustained the demurrer to Plaintiffs’ breach of contract claim partly because Plaintiffs
failed to include any allegation of Plaintiffs’ performance under the terms of
the relevant contracts or excuse for nonperformance. (See Minute Order dated
October 14, 2022, pp. 2-3.) A review of the SAC reveals that Plaintiffs
added additional facts alleging Plaintiffs had performed the contract. (SAC ¶¶
12, 16-18.) Plaintiffs’ SAC claims that Plaintiff Muldrow submitted his
client’s offer to purchase the property and it was accepted by Defendants. (SAC
¶¶ 12-13.) Plaintiffs’ further claim Defendants’ actions prevented or hindered
the performance of the purchase of the property, such as through “late seller
disclosures, delays in preparing the property for inspection and appraisal, and
failure to respond to the buyer’s Repair Request.” (SAC ¶ 16.) In addition, Plaintiffs contend
that their buyer made multiple attempts to comply with the purchase contract
such as by “providing the seller with extensions, removing all contingencies
except for loan contingency,” etc. (SAC ¶ 17.) Plaintiffs argue in their
opposition that performance of the contract occurred when Plaintiff Muldrow
submitted an offer on behalf of his client to purchase the property. (See
Steve Schmidt & Co. v. Berry (1986) 183 Cal.App.3d 1299, 1305-06: the
“broker or agent is ordinarily entitled to the commission when he produces a
purchaser, ready, able and willing to buy the property for the price and on the
terms specified by the principal, regardless of whether the sale is ever
consummated.”) As such, on the face of the pleading, Plaintiffs have stated
sufficient facts to establish Plaintiffs’ performance of the contract.
Additionally,
Defendants specially demur to the first cause of action on the ground that
there is misjoinder of parties.
Plaintiff must
join as parties to the action any person whose interest is such that (1) in the
person’s absence, complete relief cannot be accorded among those already
parties or (2) the person claims an interest relating to the subject of the
action and is so situated that the disposition of the action in his absence may
(i) as a practical matter impair or impede his ability to
protect that interest or (ii) leave any of the persons already parties subject
to a substantial risk of incurring double, multiple, or otherwise inconsistent
obligations by reason of his claimed interest.¿ (C.C.P. §389(a); see Olszewski
v. Scripps Health (2003) 30 Cal.4th 798, 808-809 [“[A] person is
indispensable only when the judgment to be rendered necessarily must affect
that person’s rights.”]; Morrical v. Rogers (2013) 220 Cal.App.4th 438,
460-464.)¿
Defendants allege there is a misjoinder of parties because
Karen Tolliver, Plaintiffs’ potential buyer and a party to the contract, is not
a named party to the SAC. However, as Plaintiffs’ assert, complete relief can
be accorded to Plaintiffs in the absence of Tolliver being a party in this
action. Since this is an action alleging a broker’s commission owed, Plaintiffs
are seeking monetary relief based on the agreements between the brokers and the
assignment of Plaintiff Muldrow’s interest to Plaintiff Precision Business
Consulting, LLC. Tolliver, on the other hand, was simply a potential buyer of
the property and has no claim in this action. Thus, the Court does not find
Tolliver is a necessary party that must be joined under C.C.P. §389.
Accordingly, the Demur as to the first cause of action
is OVERRULED.
Second
Cause of Action: Breach of Contract – Third Party Beneficiary Liability
Next, Defendants demur to
Plaintiffs’ second cause of action on the claimed ground that as a matter of
law, Plaintiffs are not third party beneficiaries.
“A contract, made expressly for
the benefit of a third person, may be enforced by him at any time before the
parties thereto rescind it.” (Civ. Code, § 1559.) “In Goonewardene v. ADP,
LLC (2019) 6 Cal.5th 817…our high court set forth three prerequisites to
apply this doctrine: (1) the third party would in fact benefit from the
contract; (2) a motivating purpose of the contracting party was to provide a
benefit to the third party; and (3) permitting a third party to bring its own
breach of contract action against a contracting party is consistent with the
objectives and the reasonable expectations of the contracting parties.
[Citation.]” (Levy v. Only Cremations for Pets, Inc. (2020) 57
Cal.App.5th 203, 211-12.) Even if a third party will generally obtain a benefit
from a contract, that is not sufficient to authorize the third party to sue a
party to the contract under the third-party beneficiary doctrine. (Goonewardene
v. ADP, LLP, supra, 6 Cal.5th at p. 835.) Further, “[t]he motivating purpose of the contracting
parties must be to provide such a benefit to [the third party].” (Id.)
(Emphasis added.)
“‘Because third party beneficiary
status is a matter of contract interpretation, a person seeking to enforce a
contract as a third party beneficiary “ ‘must plead a contract which was
made expressly for his [or her] benefit and one in which it clearly appears
that he [or she] was a beneficiary.’ ” [Citation.] [¶.] “ ‘ “[E]xpressly[,]” [as used in [Civil Code
section 1559] and case law,] means “in an express manner; in direct or
unmistakable terms; explicitly; definitely; and directly.” ’ [Citations.] ‘An intent to make
the obligation inure to the benefit of the third party must have been clearly
manifested by the contracting parties.’ ” [Citation.] Although this means
persons only incidentally or remotely benefitted by the contract are not
entitled to enforce it, it does not mean both of the contracting parties must intend to benefit
the third party. Rather, it means the promisor… ‘must have understood that the promisee...had such intent. [Citations.]
No specific manifestation by the promisor of an intent to benefit the third
person is required.’ ” ’ ” (Levy v. Only Cremations for
Pets, Inc., supra, 57 Cal.App.5th at p. 212.)
Defendants argue that the contract does not
include express provisions regarding the payment of the real estate commission
and Plaintiffs were not parties to the agreement to purchase the property.
In Opposition, Plaintiffs cite to Watson
v. Aced (1957) 156 Cal.App.2d 87 in
which the court found real estate brokers may recover under a third party
beneficiary claim even if they were not expressly named in the contract as a
beneficiary nor a party to the contract. (Watson v. Aced (1957)
156 Cal.App.2d 87, 91-92.) In Watson, a real estate broker sought
commission based on a contract regarding the exchange of property. (Ibid.)
The broker was mentioned in the contract, but it did not set forth the amount
of his commission nor was the broker a party to the contract. (Watson,
supra, 156 Cal.App.2d at 91.) According to the Watson court, just
mentioning the broker in the contract was sufficient to inform defendants that
if the contract was breached, the broker would be damaged by loss of some
commission. (Ibid.) Further, even though the broker was not a party to
the agreement, it was made for his benefit and he should be able to recover. (Ibid.)
Similarly, here, Plaintiffs assert that although
Plaintiff Muldrow was not a party to the contracts, he was named in the
contracts. (SAC ¶¶ 30-35, SAC Ex. A, p. 1, 10; Ex. B, p. 1.) The
contracts refer to Plaintiff Muldrow as the buyer’s agent, therefore,
Defendants were arguably on notice that Plaintiff Muldrow would lose some
commission if the contract was breached. (Ibid.) Thus, the Court finds
that at this stage, Plaintiffs have pleaded sufficient facts to support their
second cause of action.
Again,
Defendants specially demur to the second cause of action on the ground that
there is misjoinder of parties. However, for the reasons stated above, the
Court does not find there is misjoinder of the parties because Tolliver is not
a necessary party in this action.
Accordingly, the Demur as to the second cause of
action is OVERRULED.
Fifth
Cause of Action: Interference with Prospective Economic Advantage
Finally,
Defendants contend that Plaintiffs have not alleged
sufficient facts to assert their Interference with Prospective Economic
Advantage claim, which is numbered as the fifth alleged cause of action with
the insertion of multiple additional causes of action without having obtained
prior leave of court of stipulation by opposing counsel.
The elements of
a claim for intentional interference with prospective economic advantage include
“(1) an economic relationship between the plaintiff and some third party, with
the probability of future economic benefit to the plaintiff; (2) the
defendant’s knowledge of the relationship; (3) intentional or negligent acts on
the part of the defendant designed to disrupt the relationship; (4) actual
disruption of the relationship; and (5) economic harm to the plaintiff
proximately caused by the acts of the defendant.” (Crown Imports, LLC v.
Superior Court (2014) 223 Cal.App.4th 1395, 1404 [citations, brackets, and
quotation marks omitted].) Further, “the alleged interference must have been
wrongful by some measure beyond the fact of the interference itself. For an act
to be sufficiently independently wrongful, it must be unlawful, that is, it is
proscribed by some constitutional, statutory, regulatory, common law, or other
determinable legal standard.” (Ibid. [citation, ellipsis, and quotation
marks omitted].)
This Court finds that Plaintiffs’ allegations are
sufficient to assert this cause of action. Here, Plaintiffs allege there was an
economic relationship between Plaintiff Muldrow and Toliver because there was
an agreement to pay Plaintiff Muldrow a commission upon the closing of the
property sale and mortgage transaction. (SAC ¶ 61.) Defendants argue that Plaintiffs’ claim that
Defendants had knowledge of this economic relationship is conclusory. However,
Plaintiffs support their assertion that Defendants had knowledge of this
economic relationship by the existence of the contracts. (SAC ¶ 62.) The
SAC and its exhibits allege that the contracts specifically name Plaintiff
Muldrow as Tolliver’s agent. (SAC Ex. A, p. 1, 10; Ex. B, p. 1.) Therefore,
Plaintiffs argue that Defendants signed these contracts and were aware of the
relationship between Plaintiff Muldrow and Tolliver. Thus, despite Defendants’
argument, this is sufficient to plead Defendants’ knowledge of the economic
relationship.
Further,
Defendants’ assertion that the breach of contract is not an independent wrong as
necessary for interference with the prospective economic advantage is
unpersuasive. But as Plaintiffs point out, an act is “independently wrongful if
it is unlawful, that is, if it is proscribed by some constitutional, statutory,
regulatory, common law, or other determinable legal standard.” (Stevenson
Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc.
(2006) 138 Cal.App.4th 1215, 1223.) The alleged breach of contract alleged in
the first and second causes of action is, in the Court’s view, the allegation of
an independent wrong sufficient to support their second cause of action for Interference with Prospective Economic
Advantage.
Thus, Defendants’ demurrer on this cause of action is
OVERRULED.
B.
Motion to Strike
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Any party,
within the time allowed to respond to a pleading may serve and file a notice of
motion to strike the whole or any part thereof. (Code Civ. Proc., § 435, subd.
(b)(1).) The court may, upon a motion, or at any time in its discretion, and
upon terms it deems proper, strike any irrelevant, false, or improper matter
inserted in any pleading. (Code Civ. Proc., § 436, subd. (a); Stafford v.
Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not
essential to the claim is surplusage; probative facts are surplusage and may be
stricken out or disregarded”].) The court may also strike all or any part of
any pleading not drawn or filed in conformity with California law, a court
rule, or an order of the court. (Code Civ. Proc., § 436, subd. (b).) An
immaterial or irrelevant allegation is one that is not essential to the
statement of a claim or defense; is neither pertinent to nor supported by an
otherwise sufficient claim or defense; or a demand for judgment requesting
relief not supported by the allegations of the complaint. (Code Civ. Proc., §
431.10, subd. (b).) The grounds for moving to strike must appear on the face of
the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)¿¿
Defendant moves
to strike the following in Plaintiffs’ complaint:
1. Third Cause of Action: Intentional
Interference with Contract
2. Fourth
Cause of Action: Breach of Implied Covenant of Good Faith and Fair Dealing
3. Sixth
Cause of Action: Interference with Contractual Relations
4. Seventh
Cause of Action: Unfair Business Practices Under CA Bus. & Prof. Code §
17200
5. Eighth
Cause of Action: Fraud
6. Ninth
Cause of Action: Negligence
7. New
party defendant: Greer Jones, Trustee of the Greer Jones Family Trust.
Defendants assert the
allegations are irrelevant, improper, and not drawn in conformity with the laws
of this state because Plaintiffs added the new causes of action and additional
defendant party to the SAC without obtaining leave of the court.
Code
of Civil Procedure section 472 provides in pertinent part that, “A party may
amend its pleading once without leave of the court at any time before the
answer, demurrer, or motion to strike is filed but before the demurrer or
motion to strike is heard if the amended pleading is filed and served no later
than the date for filing an opposition to the demurrer or motion to strike.” (Code
Civ. Proc., § 472.) When a court grants
leave to amend after sustaining a demurrer, the plaintiff does not generally have
the right to add a new party and may only amend the causes of action of the
pleading to which the demurrer was sustained. (People v. Clausen (1967)
248 Cal.App.2d 770, 785-786; Harris v. Wachovia Mortgage (2010) 185
Cal.App,4th 1018, 1023.)
The
Court finds Plaintiffs failed to file a motion, or otherwise obtain leave of
court to add the new causes of action and new party defendant. Plaintiffs do not dispute that they failed to
follow proper procedure necessary to add the new causes of action and defendant
to the SAC.
Accordingly, Defendants’ Motion
to Strike is GRANTED. Plaintiffs may bring a motion for leave to amend if they
wish to add the new causes of action and new party defendant.
IV. CONCLUSION¿¿
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For the foregoing reasons,
Defendants’ Demurrer is OVERRULED.¿
Defendants’ Motion to Strike is
GRANTED.
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Plaintiff is ordered to give
notice of the ruling unless notice is waived.¿¿¿¿