Judge: Teresa A. Beaudet, Case: 24STCV24199, Date: 2025-04-04 Tentative Ruling

Case Number: 24STCV24199    Hearing Date: April 4, 2025    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Security Guards of America, Inc. (“Plaintiff”) filed this action on September 18, 2024 against Defendants CA Student Living USC, LLC, Benjamin A. Troutman, John Diedrich, and Does 1-25.  The complaint alleges causes of action for (1) breach of written contract – Security Services Agreement; (2) Breach of Written Contract – Assumption and Guaranty; and (3) Fraud.

Defendants CA Student Living USC, LLC (“Student Living”) Benjamin A. Troutman (“Troutman”), and John Diedrich (“Diedrich”) (collectively, “Defendants”) demur to Plaintiff’s complaint. Plaintiff opposes.

Discussion

A.    Legal Standard  

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.)

B.    Allegations of the Complaint 

Plaintiff and Student Living entered into a Security Services Agreement, pursuant to the terms of which, Plaintiff would provide security services for Defendants at 510 W 31st Street, Los Angeles, CA 90007. The security services were to commence on June 26, 2023. (Complaint, ¶ 9.)  The agreement includes a Credit Card Authorization and Consent Form, by which Troutman assumed the responsibility for and/or guaranteed the payment for services provided by Plaintiff pursuant to the Security Services Agreement.  (Complaint, ¶ 10.)  Plaintiff has fully performed its obligations and issued invoices for payment of its services; however, Defendants have failed to pay the invoices. The outstanding balance of the unpaid invoices is $41,740.85.  (Complaint, ¶11.)  Plaintiff is entitled to legal interest on the unpaid balance at the rate of 10% per year, plus reasonable attorney’s fees and costs for bringing this action to recover the unpaid balance.  (Complaint, ¶ 12.)

C.    Second Cause of Action for Breach of Written Contract

To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” ((Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

If a breach of contract claim “is based on 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 agreement must be attached and incorporated by reference.” ((Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” ((Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

Defendants argue that the breach of contract cause of action fails to state sufficient facts because it fails to provide any basis to hold Troutman personally liable for breach of contract to Plaintiff. Defendants argues that Troutman’s position as an employee of Student Living is insufficient to hold him liable for the companies’ alleged wrongful acts citing Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523, 538 (2000) (“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations.” [citations omitted]).

However, a demurrer assumes the facts as alleged in the complaint to be true.  Here, the complaint specifically alleges that Troutman personally assumed the responsibility for and/or guaranteed the payment for services provided by Plaintiff.  (Complaint, ¶ 17; Exhibit A – Credit Card Authorization and Consent Form signed by Troutman and not on behalf of Student Living.) Adequate consideration is alleged in that security services were provided in exchange for Troutman’s responsibility for and/or guarantee. 

The demurrer as to this cause of action is OVERRULED.

D.    Third Cause of Action for Fraud

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. ((Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. ((Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Plaintiff must allege fraud with particularity.  “This means: (1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action for fraud must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.”  ((Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.)  To state a claim for promissory fraud, Plaintiff must allege specific factual circumstances beyond contract breach which reflect Defendants’ contemporaneous intent not to perform.  (Hills Transportation Co. v. Southwest Forest Ind., Inc. (1968) 266 Cal.App.2d 702, 707.)  Here, Plaintiff alleges that Diedrich electronically executed the Security Services Agreement on behalf of Student Living, as its authorized signatory, but did not in fact intend to abide by the terms of the Security Services Agreement, and intended to breach it. (Complaint, ¶21.)  Plaintiff does not allege specific facts to show that Defendants did not intend to pay Plaintiff at the time Defendants executed the agreement with Plaintiff.  Plaintiff also does not allege the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, etc.

The demurrer to this cause of action is SUSTAINED with leave to amend.

Conclusion

Based on the foregoing, the Court OVERRULES the demurrer as to the second cause of action, but SUSTAINS the demurrer as to the third cause of action with leave to amend.

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this Order. If no amended complaint is filed within 20 days, the Court orders (a) Student Living to file and serve its answer to the complaint within 30 days of this Order, and (b) Diedrich to file and serve a proposed judgment of dismissal.

Defendants are ordered to give notice of this Order.¿¿

DATED: April 4, 2025                                   ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court