Judge: Stephen P. Pfahler, Case: 23STCV20372, Date: 2024-02-14 Tentative Ruling

Case Number: 23STCV20372    Hearing Date: February 14, 2024    Dept: 68

Dept. 68

Date: 2-14-24 c/f 1-22-24 c/f 1-16-24

Case #23STCV20372

DEMURRER TO THE FIRST AMENDED COMPLAINT

MOVING PARTY: Defendant, City of Los Angeles

RESPONDING PARTY: Plaintiff, Abet Security Services, Inc.

RELIEF REQUESTED

Demurrer to the First Amended Complaint

·         1^st Cause of Action: Breach of Contract

Motion to Strike

SUMMARY OF ACTION

Plaintiff Abet Security Services, Inc. alleges the existence of a contract with defendant City of Los Angeles, including the Los Angeles Police Department, for the provision of security services beginning on February 21, 2017. Plaintiff claims non-payment for services rendered totaling $803,537.92 based on 24,284 hours of labor from 2017 through August 31, 2022.

On August 24, 2023, Plaintiff filed a complaint for Breach of Contract, Breach of Implied Covenant of Good Faith and Fair Dealing, and Negligent Interference with Prospective Economic Advantage. On November 13, 2023, Plaintiff filed its first amended complaint for Breach of Contract. On December 29, 2023, the court denied Plaintiff’s motion for relief.

RULING

Demurrer: Sustained with Leave to Amend.

Defendant City of Los Angeles brings the subject demurrer to the first amended complaint on grounds that plaintiff Abet Security Services, Inc. (Abet) improperly includes terms not agreed upon, specifically the provision of “Field Supervisors.” City of Los Angeles also challenges the claim on grounds of failure to timely submit the invoices. Abet in opposition maintains the breach of contract claim is properly pled, and alternatively moves for leave to amend. City of Los Angeles in reply reiterates the lack of any agreement for the provision of field/patrol supervisors, and the invoices were not timely submitted.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

1^st Cause of Action: Breach of Contract

“To state a cause of action for breach of contract, [a plaintiff] must plead the contract, his performance of the contract or excuse for nonperformance, [defendant’s] breach and the resulting damage. (Citation.) Further, the complaint must indicate on its face whether the contract is written, oral, or implied by conduct. (Citation.)” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458–59.) In examining a breach of contract claim, the court is required to examine the terms, or at least the legal effect of the contract. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318 [“we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context”]; Otworth v. Southern Pac. Transportation Co., supra, 166 Cal.App.3d at p. 459 [“If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference”]; Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199 [“In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language”].)

The existence of the written contract remains undisputed. [First Amend. Comp., Ex. 1.] The court finds the elements for breach of contract properly pled. [First Amend. Comp., ¶¶ 22-25.]

On the legal effect of the agreement, given the incorporation of the undisputed exact terms via a copy of the written contract, the court may review the terms of the contract. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) City of Los Angeles cites to specific provisions of the contract in support of its challenge, while Abet maintains the court should rely on the presumption that all terms must be considered as truthful for purposes of ruling on the demurrer.

The court reviews the applicable sections. The contract provides in relevant part:

“2.2 Statement of Work to be Performed

A. During the term of this Agreement, Contractor shall provide the Services, and implement the tasks identified herein and in Attachment B, Statement of Work (“SOW”), and Attachment

C, Fee Schedule.

B. All work and tasks are subject to City approval in accordance with the SOW. Failure to receive approval may result in the withholding of compensation for such work pursuant to Section 3, Compensation and Method of Payment, of this Agreement.

C. Notwithstanding any other provision of this Agreement, the Contractor shall perform such other work within the SOW as necessary to ensure that the work provided under this Agreement meets the requirements set forth in this Agreement and all Attachments.

D. In the event that City requires services in addition to those specified in this Agreement, Contractor agrees to provide such services in accordance with Section 6, Amendments, of this Agreement. Prior to performance of additional work, this Agreement will be amended to include the additional work and payment therefor.” [First Amend. Comp., Ex. 1: Attachment A.]

The contract identifies a number of potential employees, which includes the disputed field supervisor position. “3.1 Security Officer Types and Qualifications

Unarmed Security Officer ... Armed Security Officer ... Armed Security Shift Supervisor ... Professional Security Officer ... Post Commander ... Field Supervisor.” [First Amend. Comp., Ex. 1: Attachment B.]

Notwithstanding the identified personnel in section 3.1, the agreement also specifically identifies the authorized employees actually part of the course and scope of any and all provided services pursuant to a referenced schedule. “11.3 Fees [¶] The Contractor shall submit invoices as described herein for the services performed for which payment is requested. Said services shall be billed in the amounts set forth in fee schedule identified as Attachment C and attached hereto and incorporated herein by this referral. The total dollar amount that the City will pay the Contractor for satisfactory services rendered under the terms of this contract may be up to, but not exceed, ten million dollars ($10,000,000) annually.” [First Amend. Comp., Ex. 1: Attachment B.] The fee schedule specifically identifies the following authorized personnel: “Unarmed Security Officer ... Armed Security Officer ... Armed Security Shift Supervisor ... Armed Security Officer ... Post Commander ... Professional Security Officer.” [First Amend. Comp., Ex. 1: Attachment C.]

The operative complaint specifically seeks compensation for “Patrol Supervisors” as the basis of the alleged outstanding balance. [First Amend. Comp, ¶ 25.] Again, the terms of the contract remain undisputed. “Patrol Supervisor” remains specifically omitted from the described category of compensable personnel. The court finds no basis for the recovery under the terms of the contract for the subject employee category under the terms of the operative pleading when read in conjunction with the incorporated contract. The demurrer is therefore sustained as to the breach of contract claim on this basis.

On the second argument regarding timely submission of invoices, the court also cites to the contractual terms. Section 11.1 states: “The invoices for services per Contract Request Form must be submitted on or before the 15th day of each month following the month in which services were rendered. If the 15th falls on a weekend, invoices will be due on the next business day.” [First Amend. Comp., Ex. 1: Attachment C.] The operative complaint seeks payment from 2017, without any allegation regarding the timely submission of any and all invoices pursuant to contractual terms. [First Amend. Comp, ¶¶ 24-25.] The court therefore sustains the demurrer on this basis as well.

The arguments regarding the four year statute of limitations are not otherwise considered given the failure to allege valid contract terms.

The motion to strike is MOOT.

Given the subject demurrer constitutes the first review of the operative pleading by this court, the court sustains the demurrer with 30 days leave to amend. The court grants leave to amend in order to allow Plaintiff the opportunity to allege terms within the legally operative scope of the incorporated contract. Plaintiff may not add any new causes of action. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) Any new causes of action added without leave of court may be subject to a motion to strike. Material changes to the operative complaint seeking to alter or omit the material terms of the purported agreement may also be subject to a demurrer under the sham pleading standard.

“In response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. The three-amendment limit shall not include an amendment made without leave of the court pursuant to Section 472, provided the amendment is made before a demurrer to the original complaint or cross-complaint is filed.” (Code Civ. Proc., § 430.41, subd. (e)(1).) While the court declines to make a finding of an inability to plead a valid claim upon this first review, the court cites to the standard upon the potential for a future challenge to the second amended complaint.

Defendant to give notice.