Judge Stephen P. Pfahler, Case Number: 23STCV31236, Date: 2024-08-02 Tentative Ruling

Judge: Stephen P. Pfahler, Case: 23STCV31236, Date: 2024-08-02 Tentative Ruling

Case Number: 23STCV31236 Hearing Date: August 2, 2024 Dept: 68

Dept. 68

Date: 8-2-24 c/f 7-31-24 a/f 10-9-24

Case # 23STCV31236

Trial Date: Not Set

DEMURRER

MOVING PARTY: Defendant, R S Innovations, Inc.

RESPONDING PARTY: Plaintiff, Principal Property Management

RELIEF REQUESTED:

Demurrer to the Complaint

· 1st Cause of Action: Breach of Contract

· 2nd Cause of Acton: Accounts Stated

· 3rd Cause of Acton: Open Book Account

· Aiding, Abetting and Conspiracy Allegations

SUMMARY OF ACTION:

On February 8, 2022, Plaintiff Principal Property Management loaned Defendants R S Innovations, Inc., MJY Imports, Inc., and David Talasazanan a total of $90,000 over a “series of loans” at an interest rate of “at least 10” percent. On February 17, 2022, Plaintiff loaned Defendants $50,000 at a rate of “at least 10” percent interest. On April 2, 2022, Plaintiff loaned Defendants $80,000 at an interest rate of “at least 10” percent. The loans were purportedly guaranteed via oral agreement by Talasazanan. Plaintiff alleges total the principal balance of $220,000 remains outstanding, and also seeks $37,400 in interest for a total sum of $257,400.

On December 21, 2023, Plaintiff filed a complaint for Breach of Contract, Account Stated, and Open Book Account. On February 16, 2024, MJY Imports, Inc., and David Talasazanan filed a cross-complaint for Breach of Contract, Conversion, and Declaratory Judgment. On April 17, 2024, R S Innovations, Inc. filed a cross-complaint for Breach of the Covenant of Good Faith and Fair Dealing, Intentional Interference with Contractual Relations, Total Equitable Indemnity, Comparative Indemnity, and Contribution. On May 22, 2024, MJY Imports, Inc., and David Talasazanan dismissed the February 16, 2024, filed cross-complaint.

RULING: Sustained with Leave to Amend in Part/Overruled in Part

Request for Judicial Notice: Denied

Defendant R S Innovations, Inc. submits a demurrer to all causes of action in the complaint for Breach of Contract, Accounts Stated, and Open Book Account, as well as the allegations Aiding, Abetting and Conspiracy, on grounds of failure to state sufficient facts and/or defects in the pleading itself. Plaintiff in opposition filed maintains all three causes of action are properly pled. Defendant in reply reiterates the lack of sufficient facts in support of the complaint, and asserts any leave to amend would be “futile.”

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.)

“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; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

The demurrer challenging the allegations of aiding and abetting and conspiracy is overruled. The subject allegations are not a separately pled cause of action, and should be addressed in a motion to strike. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682-1683 [While a demurrer is not the exclusive means to challenge a cause of action, a motion to strike generally applies to parts of a cause of action, claim for damages, or where the cause of action or primary right is barred as a matter of law.]; see Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281 [“Where a whole cause of action is the proper subject of a pleading challenge, the court should sustain a demurrer to the cause of action rather than grant a motion to strike”].)

To the extent the demurrer depends on judicial notice finding regarding the terms of the contract, the court declines to take judicial notice and cannot consider any and all terms within the requested notice for consideration of the demurrer. (Gould v. Maryland Sound Industries, Inc. (1995) 31 Cal.App.4th 1137, 1145-1146.) The request for judicial notice therefore constitutes improper extrinsic reference.

1st Cause of Action, Breach of Contract: Sustained with Leave to Amend.

Defendant challenges the subject cause of action on grounds the complaint lacks sufficient facts regarding the terms of the purported oral agreement(s), including the duration and terms of the agreement(s), and interest rate. Defendant also raises a potential statute of frauds defense not readily determined as a result of the sparse allegations.

“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”].)

Notwithstanding the “series” of loans allegations in the “statement of facts” section of the operative complaint, the subject cause of action only identifies a single “oral agreement” for a $220,000 at an interest rate of “at least 10%” which defendant(s) failed to pay on an uncertain

date, thereby leading to outstanding interest of $37,400. The court finds the complaint alleges the existence of a money loan, but the prior allegations regarding the series of agreements, lack of specificity on the actual interest rate, or potential variable terms, lack of dates regarding the duration and therefore basis for the determined balance due, renders the cause of action uncertain. The court otherwise declines to consider the potential for a statute of frauds defense as such consideration constitutes inference beyond the scope of the pleading, especially given the paucity of alleged facts. The demurrer is sustained.

2nd Cause of Acton, Accounts Stated: Overruled.

3rd Cause of Acton, Open Book Account: Overruled.

Defendant challenges the subject common count claims on grounds the reliance on the flawed contract allegations renders the subject claims uncertain as well.

A common count cause of action withstands general and special demurrer if the elements are stated: a statement of indebtedness, consideration, and nonpayment. (Avidor v. Sutter's Place, Inc. (2013) 212 Cal.App.4th 1439, 1454; Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.) The operative complaint sufficiently articulates the elements for a common count claim regardless of the separately required elements and discussion in the breach of contract claim. The demurrer is overruled.

In summary, the demurrer is sustained with 30 days leave to amend as to the Breach of Contract cause of action, and overruled as to the remainder of the challenged causes of action and allegations. If Plaintiff elects to forego filing an amended pleading within the 30-day window, Defendant is ordered to answer the remaining operative complaint within 10 days of the lapse of the amendment deadline.

Case Management Conference set for September 6, 2024.

Moving Defendant to give notice.