Judge: Theresa M. Traber, Case: 23STCV28108, Date: 2024-02-20 Tentative Ruling

Case Number: 23STCV28108    Hearing Date: March 4, 2024    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     March 4, 2024                        TRIAL DATE: NOT SET

CASE:                         Robert Golightly v. Pacific Coast Sustainable Assets, LLC, et al.

CASE NO.:                 23STCV28108           

DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY:               Defendants Pacific Coast Sustainable Assets, LLC, and Yajac Agriculture, LLC

RESPONDING PARTY(S): Plaintiff Robert Golightly

CASE HISTORY:

·         10/24/22: Complaint filed.

·         08/04/23: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for breach of contract. Plaintiff contracted with Defendants to manage and operate a farm owned by Defendants. Plaintiff alleges that he was terminated in violation of the terms of his contract.

Defendants demur to the First Amended Complaint in its entirety.

TENTATIVE RULING:

            Defendants’ Demurrer to the First Amended Complaint is OVERRULED.

DISCUSSION:

Defendants demur to the First Amended Complaint in its entirety.

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 Attorney Faryan Afifi attached to the Demurrer states that the parties met and conferred electronically between September 6, 2023, and September 13, 2023, but were unable to resolve the disputes raised in this demurrer. (Declaration of Faryan A. Afifi ISO Demurrer ¶¶ 4-5, Exhs. 1-2.) Defendants have therefore satisfied their statutory meet and confer obligations.

Request for Judicial Notice

Plaintiff requests that the Court take judicial notice of a demurrer, opposition, and ruling on the demurrer filed in the unrelated action Zugsmith et al. v. Scullin, et al., LASC Case No. BC581496. As this matter has no bearing on the instant case, these materials are irrelevant. Plaintiff’s request for judicial notice is therefore DENIED. (Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 (“[J]udicial notice . . . is always confined to those matters which are relevant to the issue at hand.”].) 

First Cause of Action: Breach of Contract

            Defendants demur to the first cause of action for breach of contract as failing to state facts sufficient to constitute a claim.

            The elements of a claim for breach of contract are (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) the defendant’s breach; and (4) resulting damage to the Plaintiff. (See, e.g., D’Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)

            Defendants first contend that Plaintiff has failed to state a claim for breach of contract because the allegations in the pleadings supporting Plaintiff’s claim are allegedly contradicted by the express terms of the original written contract. Specifically, Defendants argue that Plaintiff’s claim fails because the 2012 Pacific Coasts Sustainable Assets Operating Agreement attached as Exhibit A to the First Amended Complaint does not name Plaintiff as a manger of the property, contradicting his allegations in the body of the Complaint. (See FAC Exh. A.) The Court disagrees. Plaintiff plainly alleges that the written contract was modified by a subsequent oral agreement in 2013. (FAC ¶ BC-1.) There is no contradiction, and the first cause of action is not defective on this basis.

            Second, Defendants argue that Plaintiff’s allegation of a subsequent oral modification of the 2012 agreement is barred by the parol evidence rule. The parol evidence rule was codified in 1978 as Code of Civil Procedure section 1856, and states, in relevant part, that “[t]erms set forth in a writing intended by the parties as a final expression of their agreement with respect to the terms included therein may not be contradicted by evidence of a prior agreement or of a contemporaneous oral agreement.” (Code Civ. Proc. § 1856(a).) Here, however Plaintiff alleges the existence of neither. Instead, Plaintiff is alleging that the parties entered into a subsequent oral modification of the contract naming him as a manager in exchange for compensation in the form of wages and or distributions from the sale of the product. (FAC ¶ BC-1.) Evidence of subsequent oral modifications is not barred by the parol evidence rule. (See, e.g., Beggerly v. Gbur (1980) 112 Cal.App.3d 180, 188.) Thus, the integration of the 2012 agreement is immaterial to Plaintiff’s claims as pleaded.

            Finally, Defendants assert that the alleged subsequent oral modification is invalid because it is barred by the statute of frauds, as set forth in Civil Code section 1624. This section provides that certain categories of contracts are invalid unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or their agent. (Civ. Code § 1624(a).) These categories include, inter alia, “[a]n agreement that by its terms is not to be performed within a year from the making thereof.” (Civ. Code § 1624(a)(1).) Defendants contend that the partnership operating agreement is governed by this statute because it could not be performed within one year. However, Defendants provide no explanation for this position, nor do they point to any provision in the contract which necessarily could not be performed within one year on its face. Defendants have thus failed to demonstrate that Plaintiff’s contract claim is deficient on this basis.

As Defendants have failed to demonstrate that the first cause of action is deficient on any of the grounds identified, Defendants’ demurrer to the first cause of action is OVERRULED.

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Second Cause of Action: Partition

            Defendants demur to the second cause of action for partition for failure to state facts sufficient to constitute a cause of action.

            A partition action is a special proceeding for the determination and apportionment of the rights and interests of parties to real property. (See Code Civ. Proc. §§ 872.010 et seq.) A partition action may be maintained by a co-owner of personal property or by an owner of an estate of inheritance, estate for life, or estate for years in real property where the property is owned by several persons concurrently or in successive estates. (Code Civ. Proc. § 872.210(a).)

            Defendants contend that the First Amended Complaint does not set forth Plaintiff’s proportionate undivided interest in the property. Not so. A review of the allegations in the First Amended Complaint shows that Plaintiff alleges that he owns a 50% interest in Defendant Pacific Coast Sustainable Assets, that this Defendant is the listed owner of the subject property, and that Plaintiff is a joint owner pursuant to an estate of inheritance. (FAC ¶¶ 1, 3-4.) Defendants offer no explanation for why these allegations are insufficient or contradictory and have therefore failed to demonstrate that this cause of action is defective.

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

Third Cause of Action: Declaratory Relief

            Defendants demur to the third cause of action for declaratory relief for failure to state facts sufficient to constitute a cause of action.

            To state a claim for declaratory relief, a party must allege (1) a proper subject for declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations. (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

            Defendants contend that there is no actual controversy because they have already conceded in a separate action that the true operating agreement is the document proffered in the pleadings as Exhibit A, not the one attached as Exhibit B which is disputed by Plaintiff as improper. (See FAC ¶¶ 7, 11.) According to Defendants, Yael Reiss testified that Exhibit B was invalid in a separate action titled Yajac Agriculture, LLC v. Epstein, et al., LASC Case No. BC582745. Defendants have not requested judicial notice of the separate case, nor do they cite to relevant portions of the voluminous record to establish their contentions. As moving parties, Defendants bear the burden of demonstrating the veracity of their arguments. By this omission, Defendants have failed to carry that burden.

            Accordingly, Defendants’ demurrer to the third cause of action for declaratory relief is OVERRULED.

Fourth Cause of Action: Dissolution

            Defendants demur to the fourth cause of action for dissolution for failure to state facts sufficient to constitute a cause of action.

            A limited liability company may be dissolved under one of the following circumstances: (1) upon the occurrence of an event set forth in the operating agreement; (2) by a vote of 50% or more of the voting interests of the members; (3) when the LLC has no members remaining; or (4) by entry of judicial dissolution. (Corps. Code § 17707.01.)

            Defendants contend that Plaintiff has failed to state a claim for dissolution because he is not a 50% owner of Defendant PCSA and has not set forth any other facts which would support dissolution on another basis. Although Plaintiff does not directly allege his ownership interest with respect to this cause of action, Plaintiff states with respect to the second cause of action that he is a 50% owner of PCSA. (Complaint ¶ 1.) Thus, construed in the light most favorable to Plaintiff, as required on a demurrer, he has alleged that he has a 50% voting interest and is electing to dissolve the corporation. Applying this standard, the fourth cause of action is not defective.

            Accordingly, Defendants’ Demurrer to the fourth cause of action is OVERRULED.

Fifth Cause of Action: Breach of Fiduciary Duty

            Defendants demur to the fifth cause of action for breach of fiduciary duty for failure to state facts sufficient to constitute a cause of action.

            The elements for a claim for breach of fiduciary duty are: (1) the existence of a fiduciary relationship; (2) its breach; and (3) damages proximately caused by that breach. (See, e.g., O’Neal v. Stanislaus County Employees’ Retirement Assn. (2017) 8 Cal.App.5th 1184, 1215.) A fiduciary relationship is “any relations between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.” (Herbert v. Lankershim (1937) 9 Cal.2d 409, 483.) The fiduciary duties owed by a member to a member-managed limited liability company and the other members of that company are the duties of loyalty and care. (Corp. Code § 17704.09(a).) The duty of loyalty is (1) the duty to account to the company and hold as trustee for it any property, profit, or benefit derived by the member in the conduct of its activities; (2) to refrain from dealing with the company as or on behalf of an adverse party; and (3) to refrain from competing with the company. (Corp. Code § 17704.09(b).) The duty of care is limited to refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. (Corp. Code § 17704.09(c).)

            Defendants contend that the fifth cause of action is deficient because the allegation of Plaintiff’s ouster and reckless mismanagement contradicts the attached exhibit which does not name Plaintiff as a manger. (See FAC ¶ 21(a), Exh. A.) However, as stated above, Plaintiff also alleges a subsequent oral modification naming him as a manager. (See FAC ¶ BC-1.) For that reason alone, the fifth cause of action is not deficient with respect to a claim for breach of fiduciary duty.

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

Uncertainty

            Defendants also demur to each cause of action on the basis that they are uncertain.

            Demurrers¿for uncertainty are disfavored, because discovery can be used for clarification, and they apply only where defendants cannot reasonably determine what issues or claims are stated.¿(Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822; Khoury v. Maly's of Cal., Inc.¿(1993) 14 Cal.App.4th 612, 616.) If the complaint is sufficiently comprehensible that Defendant can reasonably respond, the complaint is not uncertain. (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848 n.3.)  

            Here, as should be apparent from the Court’s discussion of each cause of action, the allegations are not so vague that Defendants cannot reasonably respond. Defendant’s demurrer to the First Amended Complaint for uncertainty is likewise OVERRULED.

CONCLUSION:

            Accordingly, Defendants’ Demurrer to the First Amended Complaint is OVERRULED.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated:  March 4, 2024                                    ___________________________________

                                                                                    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.