Judge Theresa M. Traber, Case 22STCV09799 2022-09-26 Tentative Ruling

Judge: Theresa M. Traber, Case: 22STCV09799, Date: 2022-09-26 Tentative Ruling

Case Number: 22STCV09799 Hearing Date: September 26, 2022 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: September 26, 2022 TRIAL DATE: NOT SET

CASE: LGP Equipment Rentals, Inc. v. Joshua Road, LLC, et al.

CASE NO.: 22STCV09799

DEMURRER TO COMPLAINT

MOVING PARTY: Defendant Joshua Road, LLC

RESPONDING PARTY(S): Untimely First Amended Complaint filed 9/14/22

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an action for breach of contract, foreclosure of a mechanic’s lien, and for common counts filed on March 21, 2022. Plaintiff alleges that Defendants breached a contract for rental of construction equipment by allowing the equipment rented to be stolen and refusing to reimburse Plaintiff for the lost equipment.

Defendant Joshua Road, LLC demurs to and moves to strike the Complaint in its entirety.

TENTATIVE RULING:

Defendant Joshua Road, LLC’s Demurrer to the Complaint is SUSTAINED without leave to amend as to the first cause of action and otherwise SUSTAINED with leave to amend.

Plaintiff’s First Amended Complaint entered on September 14, 2022 is stricken as untimely. Plaintiff shall have 30 days leave to amend pursuant to this order.

DISCUSSION:

Defendant Joshua Road, LLC demurs to each of the five causes of action asserted against it for failure to state facts sufficient to constitute a cause of action.

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).)

The Declaration of Ryan J. Snyder states that he sent Plaintiff’s counsel a meet and confer letter regarding the issues in this demurrer on May 24, 2022. (Declaration of Ryan J. Snyder ISO Demurrer ¶ 3.) No copy of this correspondence is attached. However, Attorney Snyder also states that he had a conversation with Plaintiff’s counsel regarding this matter on June 14, 2022, and the parties were not able to resolve this dispute. (Id. ¶¶ 4-5.) The Court finds that this evidence is sufficient to establish that Defendant has satisfied the statutory meet and confer requirements.

Plaintiff’s Untimely Amended Pleading

Plaintiff, in lieu of an opposition, filed a First Amended Complaint with the Court on September 14, 2022.

Code of Civil Procedure section 472 states, in relevant part:

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, or after a 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. A party may amend the pleading after the date for filing an opposition to the demurrer or motion to strike, upon stipulation by the parties. The time for responding to an amended pleading shall be computed from the date of service of the amended pleading.

(Code Civ. Proc. § 472(a).) Here, pursuant to Code of Civil Procedure section 1005, the opposition or first amended complaint was due nine court days before the date of this hearing. (Code Civ. Proc. § 1005(b).) Accounting for the September 23, 2022 holiday, the last day to file and serve this amended pleading was September 12, 2022. The First Amended Complaint was served on September 13, 2022 and filed on September 14, 2022. Plaintiff’s proposed first amended complaint is therefore untimely. Accordingly, the Court, on its own motion, orders the First Amended Complaint stricken.

First Cause of Action: Foreclosure of Mechanic’s Lien

Defendant demurs to this cause of action for failure to state facts sufficient to constitute a cause of action, on the basis that Plaintiff has failed to allege the existence of a valid mechanic’s lien and has failed to allege proper notice of the mechanic’s lien.

1. Validity of the Lien

Defendant contends that Plaintiff has failed to state facts sufficient to constitute a cause of action because the mechanic’s lien itself was invalid.

The purpose of a mechanic’s lien is to prevent unjust enrichment of a property owner at the expense of laborers or material suppliers. (Abbett Electric Corp. v. California Fed. Savings & Loan Assn. (1991) 230 Cal.App.3d 355, 360.) Civil Code section 8430(a) establishes the amount that a claimant may assert in a mechanic’s lien, stating that a mechanic’s lien “is a direct lien for the lesser of the following amounts: (1) [t]he reasonable value of the work provided by the claimant; (2) [t]he price agreed to by the claimant and the person that contracted for the work.” (Civ. Code § 8430(a).) “Reasonable value” for the purposes of a mechanic’s lien “is to be limited to a proportion of the contract price reflecting the amount of progress made toward the completion of the work.” (University Casework Systems, Inc. v. Superior Court (1974) 41 Cal.App.3d 263, 267 [Ruling on Civil Code section 3123, now replaced with section 8430.)

The Court agrees with Defendant that the allegations in the Complaint are not sufficient to show that an $80,000 mechanic’s lien is valid. The preliminary notice attached to the Complaint states that the stolen Skidsteer was first furnished on June 4, 2021. (Complaint Exh. A.) The Skidsteer was stolen four days later, on June 8, 2021. (Complaint ¶ 16.) Furthermore, the Complaint alleges that the Skidsteer was rented to Southern Cali Construction at a daily rate of $300 per day. (Complaint ¶ 12a.) Although these allegations, absent other issues with the alleged mechanic’s lien addressed below, might be sufficient to support a lien for $1,500, accounting for the five days the Skidsteer was on the property, they are not sufficient to support a lien for $80,000. The Court is aware of no statute or precedent authorizing such a lien, and the Court does not see how such a lien would advance the purposes of the statute to prevent unjust enrichment of a property owner, especially where, as here, it is not alleged that any party to this action stole the Skidsteer. The Court therefore finds that Plaintiff has not alleged sufficient facts to show the validity of the mechanic’s lien.

2. Adequacy of Notice

Defendant also contends that Plaintiff has failed to state facts sufficient to constitute a cause of action because the required preliminary notice was invalid. As the Court stated in its ruling on Defendant’s Lambert motion:

To record a valid lien, the claimant must serve a preliminary notice that complies with all statutory requirements. (Civ. Code § 8200(b).) Civil Code section 8102 requires that the notice include certain information to the extent known to the person giving the notice, including the contact information of the reputed owner, the direct contractor, and any construction lender, as well as, if the person giving the notice is a claimant, a general statement of the work provided, the name of the person to or for whom the work is provided, and a statement or estimate of the claimant’s demand, less all just credits and offsets. (Civ. Code § 8102(a).) Variance from the requirements of subdivision (a) of section 8102 does not invalidate a notice so long as it substantially informs the owner of the information required in the notice. (Civ. Code § 8102(b).)

Defendant contends that the notice is invalid because the preliminary notice stated that the direct contractor was a “Cherry Development,” which allegedly contracted for the equipment. (See Complaint Exh. A.) Defendant contends that this error rendered the notice insufficient to substantially inform it of the information required in the notice, as no contractor by that name was ever involved in this matter and is not identified in the Complaint.

. . .

It cannot be said as a matter of law that a notice of mechanic’s lien that names a completely unrelated entity as a general contractor and only states that the lien is for “equipment rental” is sufficient to substantially inform an owner of the basis for a lien on its property. . . . Even considering the broad leeway afforded a claimant under the statutory scheme, the Court cannot conclude that a notice which names an entirely incorrect party as the direct contractor and as the person who contracted for the equipment rental is sufficient to put an owner on notice of the basis for a mechanic’s lien. The Court therefore finds that the lien is not compliant with section 8102 of the Code of Civil Procedure and is therefore invalid.

(August 11, 2022 Minute Order.) As the Court has already held that the preliminary notice is not compliant with section 8102 of the Code of Civil Procedure, Plaintiff has failed to state facts sufficient to show that there was a valid mechanic’s lien.

Accordingly, the Court finds that Plaintiff has failed to state facts sufficient to support a valid cause of action for foreclosure of a mechanic’s lien. Defendant’s demurrer is SUSTAINED as to the first cause of action.

Second Cause of Action

Defendant demurs to the second cause of action for breach of contract for failure to state facts sufficient to constitute a cause of action.

A cause of action for breach of contract may only be pursued against a property owner for the actions of a subcontractor if there is contractual privity between the owner and the claimant. (See, e.g., Distefano v. Hall (1963) 218 Cal.App.2d 657, 675 [court required to instruct jury that an owner had no personal liability towards laborers, materialmen, or subcontractors absent contractual privity]; Frank Curran Lumber Co., Inc. v. The Eleven Co. (1969) 271 Cal.App.2d 175, 184 [plaintiff could not seek personal judgment against property owner absent contractual privity].)

Defendant contends that Plaintiff has failed to state facts sufficient to constitute a cause of action because Plaintiff has not alleged the existence of any written contract between Plaintiff and Defendant Joshua Road. As Defendant observes, Plaintiff alleges that “[b]ecause Romero and OPC were not licensed contractors at the time they entered into the rental agreements to use the Skidsteer at the Subject Property, Romero and OPC were the agents and employees of Defendant Joshua Road.” (Complaint ¶ 27.) As the statement that Romero and OPC were agents and employees of Defendant is a legal conclusion, rather than a factual allegation, the Court is not required to presume its correctness for the purposes of a demurrer. The Court agrees with Defendant that this allegation is not sufficient to establish contractual privity between the parties. The Court is not aware of any statute or precedent creating a presumption that an unlicensed contractor becomes the agent of the principal for purposes of contractual privity. (Cf. Labor Code § 2750.5 [creating rebuttable presumption that an unlicensed worker performing work for which a license is required is considered an employee, not a subcontractor, for the purposes of tort actions].)

The Court finds that the Complaint does not allege the existence of a contract or of contractual privity between Plaintiff and Defendant Joshua Road, LLC. Accordingly, Plaintiff has failed to state facts sufficient to support this cause of action. Defendant’s Demurrer to the second cause of action is SUSTAINED.

Third Cause of Action: Open Book Account

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

“The elements of an open book account cause of action are: (1) plaintiff and defendant had financial transactions; (2) plaintiff kept an account of the debits and credits involved in the transactions; (3) that defendant owed plaintiff money on the account; and (4) the amount of money that defendant owes plaintiff.” (State Compensation Insurance Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 449.) “A book account may furnish the basis for an action on a common count . . . when it contains a statement of the debits and credits of the transactions involved completely enough to supply evidence from which it can be reasonably determined what amount is due to the claimant.” (Interstate Group Administrators, Inc. v. Cravens, Dargan & Co. (1985) 174 Cal.App.3d 700, 708 [internal quotations marks omitted].) “A book account is described as ‘open’ when the debtor has made some payment on the account, leaving a balance due.” (Tillson v. Peters (1940) 41 Cal.App.2d 671, 678 [internal quotations marks omitted].)

Defendant argues, correctly, that the Complaint does not allege any financial transactions between Plaintiff and Defendant. As stated above, the unlicensed status of Defendant’s subcontractors is not sufficient to establish that the subcontractors were agents or employees of Defendant. Therefore, the Complaint does not allege that Defendant, either directly or through any agents or employees, engaged in any transaction with Plaintiff. Plaintiff has failed to state facts sufficient to support this cause of action. Accordingly, Defendant’s Demurrer to the third cause of action is SUSTAINED.

Fourth Cause of Action: Account Stated

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

“The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due. (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.) As stated above, Plaintiff has failed to allege any transactions between Plaintiff and Defendant. Plaintiff has therefore failed to state facts sufficient to support this cause of action. Accordingly, Defendant’s Demurrer to the fourth cause of action is SUSTAINED.

Fifth Cause of Action: Common Count for Goods and Services

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

“[W]here services have been rendered under a contract which is unenforceable because not in writing, an action generally will lie upon a common count for quantum meruit.” (Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 996.) “To recover on a claim for the reasonable value of services under a quantum meruit theory, a plaintiff must establish both that he or she was acting pursuant to either an express or implied request for services from the defendant and that the services rendered were intended to and did benefit the defendant.” (Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782, 794.) However, a lien claimant cannot pursue a common count against a property owner absent a contract. (Halbert’s Lumber, Inc. v. Burdett (1988) 202 Cal.App.3d Supp. 14, 19-20.)

Here, as Plaintiff has not properly alleged the existence of a contract with Defendant Joshua Road, LLC, Plaintiff’s common count cause of action must fail under the Halbert’s Lumber holding. Accordingly, Defendant’s Demurrer to the fifth cause of action is SUSTAINED.

Leave to Amend

When a demurrer is sustained, the Court determines whether there is a reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318). When a plaintiff “has pleaded the general set of facts upon which his cause of action is based,” the court should give the plaintiff an opportunity to amend his complaint, since plaintiff should not “be deprived of his right to maintain his action on the ground that his pleadings were defective for lack of particulars.” (Reed v. Norman (1957) 152 Cal.App.2d 892, 900.) Accordingly, California law imposes the burden on the plaintiffs to demonstrate the manner in which they can amend their pleadings to state their claims against a defendant. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “Denial of leave to amend constitutes an abuse of discretion unless the complaint shows on its face it is incapable of amendment. [Citation.] Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given." (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.)

Plaintiff, having not responded to this motion, has not shown how the defects in the Complaint could be cured. However, except for the first cause of action, the way the pleadings could be amended is readily apparent to the Court. With respect to the other causes of action, the Court will therefore exercise its discretion, in light of the broad presumption in favor of amendment, to grant leave to amend. However, with respect to the first cause of action, the issue of defective preliminary notice is not curable by amendment to the pleadings. Plaintiff affirmatively alleged that the defective notice attached to the Complaint was the notice served on Defendant. (Complaint ¶ 19, Exh. A.) Plaintiff cannot contradict this allegation without implicating the sham pleading doctrine. (See, e.g, Fisher v. Macinness (1961) 191 Cal.App.2d 577, 580.) Therefore, even under the liberal presumption in favor of amendment, the Court cannot conclude that leave to amend should be permitted with respect to the first cause of action.

CONCLUSION:

Accordingly, Defendant Joshua Road, LLC’s Demurrer to the Complaint is SUSTAINED without leave to amend as to the first cause of action and otherwise SUSTAINED with leave to amend.

Plaintiff’s First Amended Complaint entered on September 14, 2022 is stricken as untimely. Plaintiff shall have 30 days leave to amend pursuant to this order.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: September 26, 2022 ___________________________________

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.