Judge Thomas D. Long, Case 21STCV17999 2023-04-04 Tentative Ruling

On October 26, 2022, Plaintiff Weber Enterprise Trucking Corporation filed a first amended complaint (“FAC”) against Defendants Forest Lawn Memorial-Park Association, Michael Manzanares, Clint Granath, and Robert Wong.

On January 20, 2023, Michael Manzanares, Clint Granath, and Robert Wong (collectively, “Defendants”) filed a combined demurrer and motion to strike. “Motions to strike and demurrers should be filed as separate documents.” (Weil & Brown, Cal. Prac. Guide: Civil Procedure Before Trial (The Rutter Group June 2022 Update) ¶ 7:162.1.)

Defendants’ request for judicial notice of the Declaration of Clint Granath in Support of Motion for Summary Judgment (Exhibit 1) is denied. Defendants rely on this declaration as evidence of facts (Motion at pp. 23-24 & fn. 9), but the Court cannot take judicial notice of the truth of its contents, nor can the Court consider additional evidence on demurrer.

Defendants demur to the second through fifth causes of action. The first cause of action is not brought against Defendants.

A demurrer for sufficiency 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, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.” (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)

A. Plaintiff Agrees to Dismiss Defendants From the Fourth and Fifth Causes of Action.

Defendants argue that they cannot be liable for anticipatory breach of contract and breach of the implied covenant of good faith and fair dealing because Plaintiff does not allege a contract with them. (Motion at pp. 14-16.)

Plaintiff concedes that Defendants were inadvertently named as individual defendants on these causes of action, and it agrees to dismiss them. (Opposition at pp. 6-7.)

The demurrer to the fourth and fifth causes of action is sustained without leave to amend.

The second cause of action alleges intentional misrepresentation, and the third cause of action alleges negligent misrepresentation. “The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. [Citations.] The essential elements of a count for negligent misrepresentation are the same except that it does not require knowledge of falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true. [Citations.]” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231.) “Causes of action for intentional and negligent misrepresentation sound in fraud and, therefore, each element must be pleaded with specificity.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)

Defendants argue that misrepresentation claims are not pleaded with specificity. (Motion at pp. 16-17.) Plaintiff alleges that “[b]eginning in February 2020,” Forest Lawn, through Defendants, made three specific misrepresentations. (FAC ¶¶ 15, 22.) These representations were also confirmed in the written Agreement, which was executed by Wong, Manzanares, and others. (FAC ¶¶ 15, 22.) This does not allege with specificity who made which representation, when they made the representations, and whether the representations were written or oral.

C. The Misrepresentation Causes of Action Improperly Seek to Turn a Breach of Contract Into a Tort.

Defendants argue that the misrepresentation causes of action seeks tort recovery for contractual breaches. (Motion at pp. 17-19.)

“Quite simply, the economic loss rule ‘prevent[s] the law of contract and the law of tort from dissolving one into the other.’” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988 (Robinson Helicopter).) However, tort damages may be permitted when the breach of contract is accompanied by a tort, such as fraud. (Id. at pp. 989-990.) “Tort damages have been permitted in contract cases . . . where the contract was fraudulently induced. [Citation.]” (Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552.) To plead around the economic loss rule, a party must plead the existence of a duty that arises independent of any contractual duty and independent injury, other than economic loss, that arises from the breach of that duty. (Robinson Helicopter, supra, 34 Cal.4th at pp. 988-991.)

Plaintiff alleges that Defendants, on Forest Lawn’s behalf, made representations about three things that Forest Lawn would do, and those representations were “confirmed in writing in the Agreement.” (FAC ¶¶ 15, 22.) Specifically, Forest Lawn would make one million cubic yards of soil available, pay Plaintiff to process and set aside interfering portions of stockpile improvements, and allow Plaintiff to add soil to the stockpiles. (FAC ¶¶ 15, 22.) As a result of these misrepresentations, Plaintiff was harmed “in a sum exceeding $19,665,000.” (FAC ¶¶ 19, 26.) But these representations are the same as what was promised, and the harm is the same harm that Plaintiff suffered, in connection with Forest Lawn’s breach of contract: “Forest Lawn breached the Agreement by failing to make 1,000,000 cubic yards of soil available to Weber as agreed, by failing to pay Weber for removing and separating steel reinforcing encountered in processing concrete structures, and by failing to allow Weber to add soil and other materials to the Stockpiles.” (FAC ¶ 11; see FAC ¶ 8 [contract terms]; see FAC ¶ 12 [$19,665,000 in damages from the breach of contract].)

Even if the Court were to construe the misrepresentation claims as claims for fraudulent inducement, Plaintiff does not allege any other harm that was caused specifically by the misrepresentations. Instead, Plaintiff’s damages arise from Forest Lawn’s subsequent breach of the Agreement that also contained the misrepresentations.

Plaintiff contends that it “can add facts and details to the allegations that will further distinguish and describe the alleged conduct as fraud as opposed to a breach of contract.” (Opposition at p. 9.) However, any such amendment would contradict the allegations that the misrepresentations were “confirmed in writing in the Agreement” and that Plaintiff’s damages from the misrepresentations are the same damages that Plaintiff suffered from Forest Lawn’s breach of contract.

The demurrer to the second and third causes of action is sustained without leave to amend.

The demurrer is SUSTAINED. Because Plaintiff did not show how it can remedy the deficiencies, no leave to amend is granted.

The Court orders that Michael Manzanares, Clint Granath, and Robert Wong be DISMISSED from the FAC without prejudice.

The court may, upon a motion or at any time in its discretion: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc., § 436, subds. (a)-(b).)

Defendants move to strike paragraphs 20, 36, and 39, related to punitive damages. (Motion at pp. 21-23.) A plaintiff can recover punitive damages in tort cases where “the defendant has been guilty of oppression, fraud, or malice.” (Civ. Code § 3294, subd. (a).) “The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. [Citation.] Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim. [Citation.]” (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166, fn. omitted.)

Paragraph 36 is within the fifth cause of action, from which Plaintiff agreed to dismiss Defendants. The motion is now moot as to this paragraph.

Paragraph 20 is related to the second cause of action, and paragraph 39 is the prayer for punitive damages on the second and fifth causes of action. The second cause of action alleges intentional misrepresentation, which is a type of fraud that could support an award of punitive damages. However, the Court concurrently sustains the demurrer to the second cause of action. Accordingly, there is no longer any basis for punitive damages from Defendants, and Defendants’ motion to strike paragraphs 20 and 39 is moot.

B. Defendants Have Not Shown That Paragraph 9 Violates the Statute of Frauds.

Defendants also move to strike ““or, in the alternative, by an executed oral agreement that modified the Agreement” from paragraph 9. In full, paragraph 9 alleges: “In the Agreement, or in the Agreement as modified in writing or, in the alternative, by an executed oral agreement that modified the Agreement, Forest Lawn agreed that Weber could add soil and other materials to Stockpiles #1 and #2, to blend with materials in the Stockpiles, to create soil and related products for sale.” Defendants argue that this allegation violates the statute of frauds because the oral agreement could not be performed within a year: the Agreement is effective June 2, 2020, but the collection, processing, and hauling would be completed no later than December 31, 2024 for Stockpile #2 and December 31, 2028 for Stockpile #2. (Motion at p. 23; see Civ. Code, § 1624.) This language from the Agreement is not in the FAC, and the FAC does not attach a copy of the Agreement. Defendants do provide the Agreement in the form of Exhibit E to Exhibit 1, and Defendants asked the Court to take judicial notice of Exhibit 1. (See Motion at p. 23, fn. 8.) However, the Court cannot take judicial notice of the truth of the contents of Exhibit 1, and it is those contents that purport to authenticate the Agreement as Exhibit E.

Because the FAC refers to the Agreement, the Agreement would be an appropriate matter for judicial notice. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 956 fn. 6.) But even if the Court were to consider it, the Court would still deny the motion on this ground. Plaintiff alleges additional misrepresentations, beyond just the orally modified terms. (FAC ¶¶ 15, 22.) Moreover, this allegation is no longer applicable to Defendants after Plaintiffs agreed to dismiss them from the fourth and fifth causes of action and after the Court sustained the demurrer to the second and third causes of action.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court