Judge Theresa M. Traber, Case 22STCV04378 2023-05-08 Tentative Ruling

Judge: Theresa M. Traber, Case: 22STCV04378, Date: 2023-05-08 Tentative Ruling

Case Number: 22STCV04378 Hearing Date: May 8, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: May 8, 2023 TRIAL DATE: NOT SET

CASE: G&P Group, Inc, v. City National Bank

CASE NO.: 22STCV04378

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY: Defendant City National Bank

RESPONDING PARTY(S): Plaintiff G&P Group, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an action for breach of contract stemming from a commercial banking agreement. The action was commenced on February 3, 2022, with a First Amended Complaint filed on January 5, 2023.

Defendant City National Bank demurs to the First Amended Complaint in its entirety.

TENTATIVE RULING:

Defendant’s demurrer to the First Amended Complaint is OVERRULED.

DISCUSSION:

Defendant City National Bank demurs to the First Amended Complaint in its entirety.

Defendant is ordered to file and serve its Answer to the First Amended Complaint within 20 days of this ruling.

Legal Standard

A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “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.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at p. 747.) The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n demurrer, pleadings are read liberally and allegations contained therein are assumed to be true”].) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

Meet and Confer

Before filing a demurrer, the demurring party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the demurrer and file a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 430.41(a).) However, an insufficient meet and confer process is not grounds to overrule or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)

Defendant filed a declaration on Judicial Council form CIV-140 stating that “at least five days” before the deadline to file a responsive pleading, the parties met and conferred by telephone and were not successful in resolving this matter. (Declaration of Demurring Party Regarding Meet and Confer.) The Court would prefer greater detail regarding the parties’ efforts to meet and confer to resolve this dispute. However, as Defendant used a form adopted for optional use pursuant to this code section, the Court concludes that Defendant has satisfied its statutory meet and confer obligation.

Request for Judicial Notice

Defendant requests that the Court take judicial notice of (1) a July 2020 Forbearance Agreement, (2) an October 2020 Forbearance Agreement; (3) an October 2021 Forbearance Agreement, (4), the 2015 Revolving Note; (5) a 2019 renewal of that note; and (6) a February 4, 2020 Overdraft Agreement.

As Plaintiff does not dispute the legitimacy of these documents nor that they are the documents referred to in the First Amended Complaint, Defendant’s requests are GRANTED pursuant to Evidence Code section 452(h) (facts not reasonably in dispute and subject to verification). (See also Scott v. JP Morgan Chase Bank N.A. (2013) 214 Cal.App.4th 743, 751.) In doing so, the Court only takes judicial notice of the contracts provided, and not the email correspondence accompanying the contracts, nor does it take notice of Defendant’s interpretation of those contracts.

First Cause of Action (Breach of Contract)

Defendant contends that the first cause of action for breach of contract fails to state facts sufficient to constitute a cause of action.

To state a cause of action for breach of contract, a plaintiff must plead the contract, the plaintiff’s performance of the contract or excuse for nonperformance, Defendant’s breach, and finally the resulting damage. (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458.) Further, the complaint must indicate whether the contract is written, oral, or implied by conduct. (Code Civ.Proc. § 430.10(g).) General allegations stating that defendants violated a contract are insufficient, and plaintiffs must state facts showing a breach. (Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150 Cal.App.4th 1, 5-6.) For breach of a written contract, the essential 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. (Otworth v. Southern Pac. Transportation Co., supra, 166 Cal.App.3d at 459.)

On demurrer, the Court is obliged to take as true any pleaded meaning of a contract “to which the instrument is reasonably susceptible.” (Aragon-Hass v. Fam Sec. Ins. Servs., Inc. (1991) 231 Cal.App.3d 232, 239. “So long as the pleading does not place a clearly erroneous construction upon the provisions of the contract,” the Court must accept Plaintiff’s allegations as correct. (Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122, 128.)

Defendant contends that the first cause of action fails to state facts sufficient to constitute a cause of action as to any of the three contracts alleged within it. The First Amended Complaint alleges three contracts: (1) an agreement to honor existing credit agreements with Plaintiff, including renewing Plaintiff’s Line of Credit on the same terms as in past years; (2) an agreement to allow overdrafts up to $300,000, and (3) a written forbearance agreement. (FAC ¶ 81.) If Defendant fails to demonstrate that this cause of action is without merit as to any of these agreements, Defendant’s demurrer will fail.

With respect to the Renewal Agreement, Defendant construes this allegation as an allegation of breach of the Line of Credit, and contends that it is not properly alleged. Defendant is incorrect. As Plaintiff states in opposition, this allegation refers to a separate agreement to renew the Line of Credit, and it was this renewal agreement that was allegedly breached. (FAC ¶¶ 40-41.) Thus, Defendant’s arguments concerning the LOC itself are inapposite.

Defendant also contends that the release of claims in the October 2021 Forbearance Agreement precludes liability for any conduct relating to the LOC before November 1, 2021. The release states that Plaintiff released all claims against Defendant “occasioned directly, or indirectly, by any act or omission of the CNB Parties arising out of or in connection with the Loan Documents from the beginning of time until the execution of this Agreement.” (RJN Exh. C p. 2.) In opposition, Plaintiff contends that the phrase “arising out of or in connection with the Loan Documents” refers only to claims directly pertaining to the LOC, and not to a separate agreement concerning renewal of the LOC. Although the Court is dubious of the evidentiary support for that interpretation, the Court cannot say, construing all inferences in favor of Plaintiff, that this interpretation is clearly erroneous.

Defendant also contends that this cause of action fails to state facts sufficient to constitute a cause of action because it is vague as to how each of the alleged contracts were breached, and as to the form of these contracts. Defendant’s conclusory assertions are not well taken. The First Amended Complaint states that the Forbearance and Overdraft Agreements were in writing, and states that the terms were “confirmed in written notes and memoranda,” which, construing all inferences in Plaintiff’s favor, the Court takes to meant that the renewal agreement was an oral contract subsequently confirmed in writing. (FAC ¶ 82.) Plaintiffs also allege that Defendant breached the renewal agreement by failing to renew Plaintiff’s line of credit. (FAC ¶ 84.) These allegations are not vague.

Defendant’s final argument with respect to this cause of action is that Plaintiff did not adequately plead performance of its own contractual obligations, on the basis that “legal conclusions are insufficient.” This argument is contrary to law. A party may plead its own performance on a contract in general terms. (Code Civ. Proc. § 457, Careau & Co. v. Sec. Pac. Bus. Credit, Inc. (1990) 222 Cal.App.3d 1371, 1389.) Plaintiff’s allegation that it performed on its obligations is sufficient as a matter of law. (FAC ¶ 89.)

Defendant has not shown that all alleged bases for liability under the first cause of action fail to state facts sufficient to constitute a cause of action. Accordingly, Defendant’s demurrer to the first cause of action for breach of contract is OVERRULED.

Second Cause of Action (Breach of Overdraft Agreement)

Defendant contends that the second cause of action for breach of the Overdraft Agreement also fails to state facts sufficient to constitute a cause of action. Defendant offers numerous arguments in support of this contention. None are persuasive.

First, Defendant contends that this cause of action represents an impermissible split of a single primary right with the first cause of action with respect to the allegation that Defendant refused to permit overdrafts beyond $300,000. (See Grisham v. Philip Morris U.S.A. Inc. (2007) 40 Cal.4th 623, 641.) Plaintiff responds in opposition that Defendant is misconstruing the allegations in these two causes of action, in that the first cause of action pertains to a separate, informal agreement to provide overdrafts, which were not subject to the Overdraft Agreement. Indeed, Defendant makes this same argument in contending that overdrafts above $10,000 are not subject to the Overdraft Agreement with respect to the first cause of action—an argument this Court otherwise declines to address for the reasons stated above. As Plaintiff has put forth a cognizable legal theory concerning two separate agreements, the Court finds that this claim does not impermissibly split the same cause of action.

Defendant next contends that Plaintiff has not adequately alleged the terms of the Overdraft Agreement, in violation of Code of Civil Procedure section 430.10(g). Specifically, Defendant contends that although Plaintiff attempted to plead the legal effect of the Overdraft Agreement (see FAC ¶ 42), Plaintiff omitted the term specifying a credit limit of $10,000. (RJN Exh. F.) Defendant contends, without citation to authority or explanation for its reasoning, that this term is material. Defendant’s mere assertion that a term is material is not sufficient to make it so.

Defendant further contends that Plaintiff has not properly alleged any breach of the Overdraft Agreement. Plaintiff alleged that Defendant breached the Overdraft agreement because it “(a) failed to provide the required written notice of the November 2021 change in the amount of overdrafts G&P could take; (b) failed to give notice of a termination of the Overdraft Agreement or the account as required to terminate overdrafts; (c) demanded immediate payment of the full balance of overdrafts without a contractual basis; (d) refused to honor additional overdrafts as required by the Overdraft Agreement; and (e) suspended further overdraft privileges without any default or notice of default.” (FAC ¶ 90.) Defendant argues—again without citation to any legal authority—that these allegations are not sufficiently detailed to allege a breach of the Overdraft Agreement. The Court is not persuaded. Plaintiff pled what it contends are the essential terms of the contract, and alleges the specific ways in which Defendant violated that agreement. (FAC ¶¶ 42, 90.) This is sufficient to satisfy the standard for pleading breach of contract on demurrer.

Accordingly, Defendant’s demurrer to the second cause of action is OVERRULED.

Third Cause of Action (Implied Covenant of Good Faith & Fair Dealing)

Defendant demurs to the third cause of action for breach of the implied covenant of good faith and fair dealing for failure to state facts sufficient to constitute a cause of action.

A claim for breach of the covenant of good faith and fair dealing “is nothing more than a cause of action for breach of contract.” (Habitat Trust for Wildlife Inc. v. City of Rancho Cucamonga (2009) 175 Cal.App.4th 1306, 1344.) Here, Defendant argues that the third cause of action is rooted in breaches of the contracts alleged in the first and second causes of action. (FAC ¶ 95.) In opposition, Plaintiff contends that its first cause of action asserts Defendant had no discretion at all to halt overdrafts and offer no other form of funding, while the third cause of action asserts that even if Defendant had this discretion, Defendant exercised its discretion in a way that was unreasonable and, thus, breached the implied covenant of good faith and fair dealing. (Locke v. Warner Bros., Inc. (1997) 57 Cal.App.4th 354, 365-66.) The first cause of action asserts a pure breach by acting without discretion to do so, while the third cause of action challenges Defendant’s discretionary conduct as being implemented without good faith. At this stage of the proceedings, the Court cannot say that these are not separate claims.

Accordingly, Defendant’s demurrer to the third cause of action is OVERRULED.

Fourth Cause of Action (Promissory Estoppel)

Defendant demurs to the fourth cause of action for promissory estoppel on the basis that it fails to state facts sufficient to constitute a cause of action.

Specifically, Defendant contends that this cause of action is also duplicative of the first two causes of action, and that these theories are mutually exclusive. However, it is well-settled that a party is entitled to plead promissory estoppel in the alternative. (Fleet v. Bank of America (2014) 229 Cal.App.4th 1403, 1413.) Further, the Court is not inclined to conclude that this cause of action is improper when Defendant itself spends much of the demurrer arguing that Plaintiff did not adequately allege the existence of any contract. As this is the only basis for the demurrer to this cause of action, Defendant has failed to demonstrate that this cause of action is without merit.

Accordingly, Defendant’s demurrer to the fourth cause of action is OVERRULED.

Fifth Cause of Action (Intentional Misrepresentation)

Defendant demurs to the fifth cause of action for fraud arguing that it fails to state facts sufficient to constitute a cause of action.

“The elements of fraud that will lead to a tort action are: (a) misrepresentation; (b) knowledge of falsity; (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant[s] to understand fully the nature of the charge made. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Ibid.) “[G]eneral and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

The elements of fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) intent to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) the plaintiff sustained damage as a result of the concealment or suppression of fact. (Hambridge v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)

Defendant contends that the fraud cause of action is deficient because Plaintiff fails to allege any misrepresentations with the requisite specificity and does not adequately allege that any representations alleged were false at the time they were made. The Court disagrees but, even so, it could not sustain the demurrer as drafted because it fails to address Plaintiff’s alternative theory of fraudulent concealment based on the same facts. (FAC ¶ 150.) Because this theory has not been challenged at all, Defendant has failed to show that this cause of action is deficient.

Accordingly, Defendant’s demurrer to the fifth cause of action is OVERRULED.

Sixth Cause of Action (Negligent Misrepresentation)

Defendant demurs to the sixth cause of action for negligent misrepresentation for failure to state facts sufficient to constitute a cause of action.

“Negligent misrepresentation requires an assertion of fact, falsity of that assertion, and the tortfeasor’s lack of reasonable grounds for believing the assertion to be true. It also requires the tortfeasor’s intent to induce reliance, justifiable reliance by the person to whom the false assertion of fact was made, and damages to that person. An implied assertion of fact is ‘not enough’ to support liability.” (SI 59 LLC v. Variel Warner Ventures, LLC (2018) 29 Cal.App.5th 146, 154.) “As is true of negligence, responsibility for negligent misrepresentation rests upon the existence of a legal duty, imposed by contract, statute or otherwise, owed by a defendant to the injured person. The determination of whether a duty exists is primarily a question of law.” (Eddy v. Sharp (1988) 199 Cal.App.3d 858, 864.) Defendant identifies two bases for its contention that this claim is invalid: first, that Plaintiff has failed to plead a legal duty owed to it by Defendant; second, that Plaintiff only alleges representations as to future performance which are not actionable as a matter of law. The Court addresses each argument in turn.

1. Duty

Defendant contends that the sixth cause of action fails because Plaintiff has not alleged any legal duty violated by Defendant other than the alleged contractual obligations, which are invalid for the reasons stated above. The Court disagrees with Defendant in this respect. "One party to a business transaction is under a duty to exercise reasonable care to disclose to the other before the transaction is consummated, ... facts basic to the transaction, if he knows that the other is about to enter into it under a mistake as to them, and that the other, because of the relationship between them, the customs of the trade or other objective circumstances, would reasonably expect a disclosure of those facts." (Rest.2d Torts, § 551(2)(e); Wells v. John Hancock Mut. Life Ins. Co. (1978) 85 Cal.App.3d 66, 72, fn. 8; Westrick v. State Farm Insurance (1982) 137 Cal.App.3d 685, 691, fn. 3.)

Here, construing the allegations in the light most favorable to the nonmoving party, the First Amended Complaint manifestly alleges a business transaction with Defendant. (See generally FAC.) Plaintiff also alleges that Defendant failed to disclose that the bank would not renew Plaintiff’s Line of Credit, that the overdraft authority could or would be terminated without notice, and that the overdrafts would be terminated without notice or default. (FAC ¶ 115.) Thus, the Court concludes that Plaintiff has alleged that Defendant had a legal duty to exercise reasonable care to disclose basic facts of an unconsummated transaction to which his alleged principal was a party. Defendant has therefore not demonstrated that the sixth cause of action is invalid on this basis.

2. Future Performance

Defendant next argues that Plaintiff’s claimed basis for negligent misrepresentation is invalid as a matter of law because promises as to future performance cannot form the predicate for negligent misrepresentation.

The Court of Appeal addressed a similar question in Tarmann v. State Farm Mutual Auto Ins. Co. (1991) 2 Cal.App.4th 153. In that case, the plaintiff alleged that State Farm had promised that it would pay for repairs to the plaintiff’s vehicle immediately upon their completion, but that State Farm failed to do so. (Tarman v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 158.) The Court of Appeal concluded that these allegations did not involve a past or existing material fact, but a promise to perform at some future time. (Id.) In so concluding, the Court of Appeal stated that broken promises of future conduct could be actionable as a false promise, but such claims also require an allegation that the promisor never intended to perform, which renders that claim a claim of intentional misrepresentation, not negligent misrepresentation. (Id. at 158-59.) Predictions about future events are not precluded as nonactionable opinions if they were intended and accepted as representations of fact and involved matters peculiarly within the speaker’s knowledge. (Eade v. Reich (1932) 120 Cal.App. 32, 34.)

In this case, construing the allegations in the light most favorable to the Plaintiff, the Court concludes the facts alleged in the First Amended Complaint concern representations regarding matters about which the speaker had superior knowledge. Plaintiff alleges that an agent of Defendant made representations about, among other things, Defendant’s willingness to honor overdrafts and to extend the line of credit. (FAC ¶¶ 6, 105, 113.) On their face, these are allegations of matters about which an agent of Defendant, a bank, would have superior knowledge. Plaintiff also alleges that these representations were meant to be taken as true. (FAC ¶ 116.) In the Court’s view, these allegations are sufficient to qualify as allegations of misrepresentations of present fact, rather than future predictions. For this reason, Defendant has not demonstrated that this cause of action fails on this basis.

Accordingly, Defendant’s demurrer to the sixth cause of action is OVERRULED.

Seventh Cause of Action (Negligent Interference with Economic Advantage)

Defendant contends that the seventh cause of action for negligent interference with economic advantage fails to state facts sufficient to constitute a cause of action.

The elements of negligent interference with prospective economic advantage are(1) the existence of an economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) the defendant’s knowledge (actual or construed) that the relationship would be disrupted if the defendant failed to act with reasonable care; (4) the defendant’s failure to act with reasonable care; (5) actual disruption of the relationship; (6) and economic harm proximately caused by the defendant’s negligence. (Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 1005.)

Defendant contends that Plaintiff has failed to allege an independent duty of care, and that this claim is barred by the economic loss rule.

1. Duty of Care

A financial institution “owes no duty of care to a borrower when the institution’s involvement in the loan transaction does not exceed the scope of its conventional role as a mere lender of money.” (Nymark v. Heart Fed. Sav. & Loan Ass’n (1991) 231 Cal.App.3d 1089, 1096.) Liability to a borrower for negligence arises when the lender “actively participates in the enterprise, beyond the domain of the usual money lender.” (Wagner v. Benson (1980) 101 Cal.App.3d 27, 35.) Active participation occurs only when the lender obtains “extensive control and shared profits” over the plaintiff. (Id.) Defendant contends that Plaintiff did not allege extensive control, arguing in a conclusory manner that Plaintiff’s allegations constitute only “normal supervision.” A cursory review of the First Amended Complaint disproves this contention. Plaintiffs allege, essentially, that Defendant’s agent exercised complete financial control over Plaintiff. (FAC ¶ 61.) Thus, Defendant’s assertions are not sufficient to demonstrate that this allegation constitutes merely “normal supervision.”

2. Economic Loss Rule

Similarly unpersuasive are Defendant’s contentions regarding the economic loss rule. Under the economic loss rule, “[w]here a purchaser’s expectations in a sale are frustrated because the product he bought is not working properly, his remedy is in contract alone, for he has suffered only ‘economic losses.’” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) The economic loss rule “hinges on a distinction drawn between transactions involving the sale of goods for commercial purposes where economic expectations are protected by commercial and contract law, and those involving the sale of defective products to individual consumers who are injured in a manner which has traditionally been remedied by resort to the law of torts.” (Id.) Simply stated, the economic loss rule “prevents the law of contract and the law of tort from dissolving one into the other.” (Id.)

The restrictions on contract remedies serve purposes not found in tort law—they protect the parties’ freedom to bargain over special risks, and they promote contract formation by limiting liability to the value of the promise. (Harris v. Atlantic Richfield (1993) 14 Cal.App.4th 70, 77.) This encourages efficient breaches, resulting in increased production of goods and services at a lower cost to society. (Id.) Because of these overriding policy considerations, the California Supreme Court has proceeded with caution in carving out exceptions to the traditional contract remedy restrictions. (Id.)

Nevertheless, the most widely recognized exception to the economic loss rule is when a defendant’s conduct constitutes a tort as well as a breach of contract. (Id. at 78.) When one party commits fraud during the contract formation or performance, the injured party may recover in both contract and tort. (Id.)

Here, although Defendant contends that this cause of action arises purely out of the breach of contract claims, Plaintiff offers the alternative theory that they instead arise out of the fraud claims, which go beyond the broken contractual promises. Plaintiff argues that the critical allegations concern the inducement by Defendant for Plaintiff to change its entire business model and cede control of its finances to Defendant’s agent induced by Defendant’s false promises and concealment. (See FAC ¶¶ 42-64.) Thus, Plaintiff has articulated a theory of the case that escapes the economic loss doctrine. Therefore, Defendant has failed to demonstrate that this cause of action is defective.

Accordingly, Defendant’s demurrer to the seventh cause of action is OVERRULED.

Eighth Cause of Action (Intentional Interference with Contract)

Defendant demurs to the eighth cause of action for intentional interference with contractual relations for failure to state facts sufficient to constitute a cause of action.

The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between the plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.)

Defendant contends that this cause of action is likewise barred by the economic loss doctrine, and that the allegations, as pled, are factually deficient because they are not sufficiently specific. The Court rejects the economic loss argument for the reasons stated above. Further, with respect to the specificity of the allegations, Defendant’s conclusory attacks on the allegations of Defendant’s intentional interference are unpersuasive, as Plaintiff has pled the ultimate fact of intent, not a legal conclusion. (Korea Supply Co. v. Lockheed Martin (2003) 29 Cal.4th 1134, 1154.) Nor is the Court persuaded by the contention that Plaintiff must allege an independently wrongful act, as our Supreme Court stated that, in fact, such an allegation is not required. (Quelimane Co. v. Stewart Title Guar. Co. (1998) 19 Cal.4th 26, 55.) Defendant has therefore failed to demonstrate that this cause of action is deficient.

Accordingly, defendant’s demurrer to the eighth cause of action is overruled.

Ninth Cause of Action (Breach of Fiduciary Duty)

Defendant demurs to the ninth cause of action for breach of fiduciary duty.

To prevail on a cause of action for breach of a fiduciary duty, a plaintiff must show the existence of a fidicuary relationship, its breach, and damage proximately caused by that breach. (See, e.g., Brown v. California Pension Administrators & Consultants (1996) 34 Cal.App.4th 333, 347-48.)

Defendant contends that this cause of action is barred by the economic loss rule, and that Plaintiff has not alleged a fiduciary relationship beyond that of an ordinary lender. Both of these arguments were addressed and rejected in connection with the seventh cause of action above.

Accordingly, Defendant’s demurrer to the ninth cause of action is OVERRULED.

Tenth Cause of Action (Constructive Fraud)

Defendant demurs to this cause of action for failure to state facts sufficient to constitute a cause of action for the same reasons as the ninth cause of action. As the Court has rejected those arguments, Defendant’s demurrer to the tenth cause of action is likewise OVERRULED.

Eleventh Cause of Action (Negligence)

Defendant demurs to this cause of action for failure to state facts sufficient to constitute a cause of action for the same reasons as the seventh cause of action. As the Court has rejected those arguments, Defendant’s demurrer to the eleventh cause of action is likewise OVERRULED.

Twelfth Cause of Action (Unfair Competition)

Defendant demurs to this cause of action for failure to state facts sufficient to constitute a cause of action.

The Business and Professions Code prohibits “unfair competition,” defined as any “unlawful, unfair, or fraudulent business act or practice.” (Bus. & Prof. Code § 17200.) To bring a claim under this law, a person must have “suffered injury in fact and [have] lost money or property as a result of unfair competition.” (Bus. & Prof. Code § 17204.) To allege a viable cause of action under this law, the plaintiff must allege a predicate act. (See, e.g., Price v. Starbucks Corp. (2011) 192 Cal.App.4th 1136, 1147.) An injury in fact must be “actual or imminent, not just conjectural or hypothetical.” (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1590.)

Defendant first asserts that Plaintiff has failed to allege facts showing that it has standing as a party who has suffered injury in fact due to unfair competition. This contention is absurd on its face, not least because on the same page as this cause of action—and incorporated into it by reference—is a contention that Plaintiff was put out of business by Defendant’s conduct. (FAC ¶¶ 157, 160.) Second, as to the substantive allegations, Defendant’s arguments are not well-taken, as Plaintiffs have adequately alleged fraud as stated above. Finally, Defendant’s contentions that Plaintiff has not established a basis for injunctive relief because it is effectively out of business are made without citation to any supporting authority. Conclusory assertions are not sufficient to demonstrate that a cause of action is defective as a matter of law.

Accordingly, Defendant’s demurrer to the twelfth cause of action is OVERRULED.

Uncertainty:

Defendant also demurs to the breach of contract claims on the ground that they are uncertain.

"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.) "A demurrer for uncertainty will be sustained only where the complaint is so bad that defendant cannot reasonably respond--i.e., he or she cannot reasonable determine what issues must be admitted or denied, or what counts or claims are directed against him or her." (Weil & Brown, Civil Procedure Before Trial (The Rutter Group) § 7:85 (emphasis in original).) "The objection of uncertainty does not go to the failure to allege sufficient facts." (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 459.)

Here, as should be readily apparent from the Court’s analysis of the first two causes of action, the allegations are plainly not so defective that the Defendant could not reasonably respond to them. Defendant has therefore not established that any part of the First Amended Complaint is uncertain.

CONCLUSION:

Accordingly, Defendant’s demurrer to the First Amended Complaint is OVERRULED in its entirety.

Defendant is ordered to file and serve its Answer to the First Amended Complaint within 20 days of this ruling.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: May 8, 2023 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.