Judge: Theresa M. Traber, Case: 22STCV09799, Date: 2023-01-11 Tentative Ruling

Case Number: 22STCV09799    Hearing Date: January 11, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     January 11, 2023                   TRIAL DATE: NOT SET

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

CASE NO.:                 22STCV09799           

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY:               Defendant Joshua Road, LLC

RESPONDING PARTY(S): Plaintiff LGP Equipment Rentals, Inc.

CASE HISTORY:

·         03/21/22: Complaint filed.

·         10/25/22: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This action was filed on March 21, 2022, alleging breach of contract, foreclosure of a mechanic’s lien, and for common counts. In the First Amended Complaint filed on October 25, 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 the First Amended Complaint in its entirety.

TENTATIVE RULING:

Defendant Joshua Road, LLC’s Demurrer to the First Amended Complaint is SUSTAINED with leave to amend as to the first and third causes of action and otherwise OVERRULED.

Plaintiff shall have 20 days leave to amend pursuant to this order.

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DISCUSSION:

            Defendant Joshua Road, LLC demurs to each of the four 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 November 22, 2022. (Declaration of Ryan J. Snyder ISO Demurrer ¶ 3.) No copy of this correspondence is attached. However, Attorney Snyder also states that he received a response from Plaintiff’s counsel stating their belief that the claims were appropriately pled and that Defendant should proceed with the demurrer. (Id. ¶¶ 4.) Attorney Snyder states that the meet and confer letter was not sent sooner because Attorney Snyder had an emergency dental procedure on November 14, 2022, and therefore was unable to complete the meet-and-confer letter before November 22, 2022. (Id. ¶ 3.) Considering the explanation of Plaintiff’s counsel for the late hour of the meet-and-confer correspondence, the Court finds that this evidence is sufficient to establish that Defendant has satisfied the statutory meet and confer requirements.

First Cause of Action: Breach of Implied Contract

            Defendant demurs to the first cause of action for breach of implied 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 the Court previously rejected Plaintiff’s claims for breach of contract against Defendant in its September 26, 2022 minute order on the basis that Plaintiff had not adequately alleged contractual privity between the subcontractors and Defendant. It is true that the Court found Plaintiff had not alleged the existence of a contract or of contractual privity necessary to support a cause of action against Defendant Joshua Road, LLC.  Defendant appears to assert that Plaintiff’s amended pleading simply reiterates the same flawed claim, but the Court does not read the First Amended Complaint in this manner.  In the First Amended Complaint, Plaintiff alleges that Defendant entered into an implied-in-fact contract with Plaintiff to properly store, secure, and protect the Skidsteer skid loader at issue in this case while the loader was being used for work on Defendant’s property. (FAC ¶ 22.) Thus, Plaintiff is now alleging a separate, implied-in-fact contract into which Defendant allegedly entered, rather than alleging that Defendant was bound by the written contract between Plaintiff and the subcontractors.

            An implied-in-fact contract has the same legal effect as an express contract but differs from an express contract in that an implied-in-fact contract can only be shown “by the acts and conduct of the parties, interpreted in the light of the subject matter and of the surrounding circumstances.” (Marvin v. Marvin (1976) 18 Cal.3d 660, 678, fn. 16.) The existence of an implied contract is usually a question of fact for the trial court. (Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622, 636.) Thus, to the extent that the First Amended Complaint alleges any conduct by Defendant that could be construed as evidencing an implied-in-fact contract, a claim for breach of that contract would be adequately alleged.

            Reviewing the allegations in the First Amended Complaint, Plaintiff does not allege any conduct by Defendant itself, as opposed to the subcontractors, that would support an implied-in-fact contract between Plaintiff and Defendant. Plaintiff’s contention that Defendant “took possession of the Skidsteer onto the Subject Property” in the First Amended Complaint is a legal conclusion, not a factual allegation. The Court is therefore not required to presume its correctness for the purposes of a demurrer. Further, as to the allegations of acts by the subcontractors as agents for Defendant, the Court rejected the argument that there is a presumption that an unlicensed contractor becomes the agent of the principal for the purposes of contractual privity in its September 26, 2022 minute order. Plaintiff is therefore required to allege facts establishing the agency relationship between the subcontractors and Defendant. No such allegations are present in the First Amended Complaint.

Further, although Plaintiff argues in opposition that Defendant could be liable under a theory of ostensible agency, Plaintiff must allege facts showing that the principal, either intentionally or by want of ordinary care, caused or allowed Plaintiff to believe that the subcontractors had authority to act as Defendant’s agent. (Preis v. American Indemnity Co. (1990) 20 Cal.App.3d 752, 761.) Ostensible authority may be established by conduct of the principal that causes the agent to reasonably believe that the principal consents to the agent’s act on the principal’s behalf. (Tomerlin v. Canadian Indemnity Co. (1964) 61 Cal.2d 638, 643.) For example, ostensible authority may be established by proof that the principal approved prior similar acts of the agent. (United States Credit Bureau, Inc. v. Cheney (1965) 235 Cal.App.2d 357, 360.) Alternatively, "where the principal knows that the agent holds himself out as clothed with certain authority, and remains silent, such conduct on the part of the principal may give rise to liability.” (Gulf Ins. Co. v. TIG Ins. Co. (2001) 86 Cal.App.4th 422, 439 [internal citations omitted].) Here, however, Plaintiff has offered no specific allegations of any prior acts of the subcontractors that were approved by Defendant, nor has Plaintiff alleged any facts supporting the contention that the subcontractors held themselves out as clothed with agency authority on behalf of Defendant. A bare allegation that the subcontractors contracted with Plaintiff to lease a skid loader for the benefit of Defendant is not sufficient to state facts sufficient to constitute a cause of action.

Accordingly, Defendant’s Demurrer to the first cause of action is SUSTAINED.

Second Cause of Action: Conversion

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

“The elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages. …” (Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, 1387.)

Defendant contends that Plaintiff’s allegations are inadequate and conclusory, and therefore fail to state facts sufficient to constitute a cause of action. The Court disagrees with Defendant’s characterization. Plaintiff alleges that the Skidsteer was stolen from Defendant’s property, due to Defendant’s failure to properly secure the Skidsteer. (FAC ¶ 16.) Plaintiff then alleges that Defendant intentionally or knowingly allowed the Skidsteer to be lost or destroyed. (FAC ¶ 28.) Construing all factual allegations in the light most favorable to Plaintiff, without regard to whether Plaintiff has evidence to prove them, these allegations are sufficient to state a cause of action for conversion. Defendant’s contention that it did not steal the skid loader is not relevant at the demurrer phase.

Accordingly, Defendant’s Demurrer to the second cause of action for Conversion is OVERRULED.

Third Cause of Action: Breach of Bailment

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

            Defendant contends, and Plaintiff agrees, that this cause of action rests on the same basis as Plaintiff’s implied breach of contract claim. As the Court has sustained the demurrer to the implied breach of contract claim, this cause of action likewise fails.

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

Fourth Cause of Action: Negligence

            Defendant demurs to the fourth cause of action for negligence for failure to state facts sufficient to constitute a cause of action.

A plaintiff may recover pure economic loss through a negligence theory when there is a special relationship between the parties. (See J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799.) The determination of whether a special relationship exists such that the defendant has a duty of care to the plaintiff is based on six factors: (1) the extent to which the transaction was intended to affect the plaintiff; (2) the foreseeability of harm to the plaintiff; (3) the degree of certainty the plaintiff suffered injury; (4) the proximity of connection between the conduct and the injury; (5) the moral blame attached to the defendant’s conduct; and (6) the policy of preventing future similar harm. (Id. at 804; see also Connor v. Great Western Sav. & Loan Assn. (1968) 69 Cal.2d 850, 865.) A duty may be premised upon the general character of the activity in which the defendant engaged or the relationship between the parties. (See Valdez v. J. D. Diffenbaugh Co. (1975) 51 Cal.App.3d 494, 505.)

Defendant argues that this cause of action fails because Plaintiff has not alleged any particular duty owed to them by Defendant. Defendant cites no law standing for this proposition. As the moving party, Defendant bears the burden of initially demonstrating why Plaintiff has failed to state facts sufficient to support a cause of action for negligence. A conclusory assertion that Joshua Road had no duty to protect the Skidsteer because there was no contractual relationship between the parties is not sufficient to establish that Defendant is not liable for the tort of negligence for the loss of the equipment.

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

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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 has not shown how the defects in the First Amended Complaint could be cured. However, as the demurrers to the first and third causes of action were sustained on the basis that Plaintiff did not allege the basis for Defendant’s liability in sufficient detail, the manner in which the pleadings could be amended is readily apparent to the Court. The Court will therefore exercise its discretion, given the broad presumption in favor of amendment, to grant leave to amend.

CONCLUSION:

Accordingly, Defendant Joshua Road, LLC’s Demurrer to the First Amended Complaint is SUSTAINED with leave to amend as to the first and third causes of action and otherwise OVERRULED.

Plaintiff shall have 20 days leave to amend pursuant to this order.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: January 11, 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.