Judge: Walter P. Schwarm, Case: 30-2018-01024718, Date: 2022-12-06 Tentative Ruling
Motion No. 1:
Cross-Defendants’ (Forespar Products Corporation and Scott Foresman) Demurrer to Cross-Complainant’s First Amended Complaint (Demurrer), filed on 6-27-22 under ROA No. 388, is OVERRULED in part and SUSTAINED in part as set forth below.
The court DENIES Cross-Defendants’ Request for Judicial Notice, filed on 6-27-22 under ROA No. 386, as immaterial to the court’s decision as set forth below. The court DENIES Cross-Complainant’s (Guy Foresman) Request for Judicial Notice, filed on 11-21-22 under ROA No. 442, as immaterial to the court’s decision as set forth below. (Silverado Modjeska Recreation & Parks District v. County of Orange (2011) 197 Cal.App.4th 282, 307, fn. 18.)
“A demurrer tests the pleading alone, and not the evidence or the facts alleged. . . . To the extent there are factual issues in dispute, however, this court must assume the truth not only of all facts properly pled, but also of those facts that may be implied or inferred from those expressly alleged in the complaint. [Citations.]” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) Code of Civil Procedure section 452, states, “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” Perez v. Golden Empire Transportation Transit District (2012) 209 Cal.App.4th 1228, 1238, provides, “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. [Citations.]” C.A. v. William S. Hart Union High School District (2012) 53 Cal.4th 861, 872 (C.A.), provides, “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged. [Citation.]”
Cross-Defendants challenge the first through sixth causes of action contained in Cross-Complainant’s First Amended Cross-Complaint (FACC), filed 5-20-22 under ROA No. 375, pursuant to Code of Civil Procedure section 430.10, subdivisions (b) and (e).
Code of Civil Procedure section 430.10, subdivision (b):
Code of Civil Procedure section 430.10, subdivision (b), states, “The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds: . . . [¶](b) The person who filed the pleading does not have the legal capacity to sue. . . .” The Demurrer states, “As a trust beneficiary, Guy is not the real party in interest to bring his claims against Forespar and Scott. Guy’s cross-claims should be dismissed because he lacks standing.” (Demurrer; 11:16-17.) Cross-Complainant’s Opposition to Forespar and Scott Foresman’s Demurrer (Opposition), filed on 11-21-22, responds, “As set forth in the following, Probate Code section 16420 and the exceptions to the general rule confer standing on Guy Foresman as a beneficiary to bring the First Amended Cross-Complaint against Scott Foresman and Forespar.” (Opposition; 5:13-15.)
Probate Code section 16420 states, “(a) If a trustee commits a breach of trust, or threatens to commit a breach of trust, a beneficiary or cotrustee of the trust may commence a proceeding for any of the following purposes that is appropriate: [¶] (1) To compel the trustee to perform the trustee's duties. [¶] (2) To enjoin the trustee from committing a breach of trust. [¶] (3) To compel the trustee to redress a breach of trust by payment of money or otherwise. [¶] (4) To appoint a receiver or temporary trustee to take possession of the trust property and administer the trust. [¶] (5) To remove the trustee. [¶] (6) Subject to Section 18100, to set aside acts of the trustee. [¶] (7) To reduce or deny compensation of the trustee. [¶] (8) Subject to Section 18100, to impose an equitable lien or a constructive trust on trust property. [¶] (9) Subject to Section 18100, to trace trust property that has been wrongfully disposed of and recover the property or its proceeds. [¶] (b) The provision of remedies for breach of trust in subdivision (a) does not prevent resort to any other appropriate remedy provided by statute or the common law.
Wolf v. Mitchell, Silderberg & Knupp (1999) 76 Cal.App.4th 1030, 1036 (Wolf), states, “When a cause of action is prosecuted on behalf of an express trust, the trustee is the real party in interest. [Citations.] Generally, the beneficiary of a trust, having no legal title or ownership interest in the trust assets, is not the real party in interest and may not sue in the name of the trust. [Citations.] A trust beneficiary's ‘right to sue is ordinarily limited to the enforcement of the trust, according to its terms.’ [Citations.]” Harnedy v. Whitty (2003) 110 Cal.App.4th 1333, 1341-1342 (Harnedy), explains, “The several holdings just discussed can, we believe, be rationalized relatively easily: when the claim being asserted rests in whole or in part on alleged breaches of trust by the trustee, a beneficiary has standing to pursue such a claim against either (1) the trustee directly, (2) the trustee and third parties participating in or benefiting from his, her or its breach of trust, or (3) such third parties alone. Only in circumstances such as those present in Saks and Pillsbury, where no misfeasance or breach of trust by the trustee is asserted and the beneficiary is effectively seeking to step into the shoes of the trustee and enforce the trust agreement directly, does the beneficiary lack standing.” (Italics in Harnedy; Footnote 2 omitted.)
The FACC pleads, (1) “Cross-Complainant, GUY FORESMAN (‘Guy’ or ‘Cross-Complainant’), as beneficiary of THE FORESMAN GENERAL TRUST DATED AUGUST 20, 1995 as Amended, as beneficiary of THE SURVIVOR'S TRUST UNDER TRUST AGREEMENT DATED AUGUST 20, 1995, and as beneficiary of THE EXEMPTION TRUST UNDER TRUST AGREEMENT DATED AUGUST 20, 12 1995 alleges as follows: . . .” (FACC; 2:2-11 (Uppercase in FACC.).); (2) Cross-Defendant—Scott Foresman “. . . is also a co-trustee of the General Trust, the Survivor’s Trust, and the Exemption Trust. . . .” (FACC, ¶ 3.); (3) Paragraph 7 of the FACC allege an alter ego theory between Cross-Defendant—Scott Foreman and Forespar Products, Corp. (Forespar); (4) Paragraphs 29-35 of the FACC allege that Cross-Defendant—Scott Foresman and Forespar breached the Forespar Agreement; and (5) Paragraphs 46-47 of the FACC plead that Cross-Defendant—Scott Foresman and Forespar breached the Lease and 2014 Addendum.
Under Probate Code section 16420, Wolf, and Harnedy, the FACC adequately plead that Cross-Complainant has standing to pursue claims as a beneficiary. Under the FACC, Cross-Complainant seeks to pursue claims against Cross-Defendant—Scott Foresman and Forespar based on Cross-Defendant—Scott Foresman’s alleged breaches of trust. Therefore, the court OVERRULES the Demurrer to the extent it relies on Code of Civil Procedure section 430.10, subdivision (b).
First Cause of Action (Breach of Contract—Forespar Agreement):
Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98, “To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff's performance or excuse for nonperformance, (3) the defendant's breach, and (4) resulting damages to the plaintiff. [Citations.]”
The Demurrer states, “Guy fails to plead the first element of the existence of a contract between the parties because Guy – a as a trust beneficiary – was not a contracting party to the Forespar Agreement.” (Demurrer; 6:24-25.)
The FACC alleges the first cause of action against Scott Foresman individually and Scott Foresman as trustee. As discussed above, the court has found that Cross-Complainant has standing to bring the FACC against Cross-Defendants pursuant to Probate Code section 16420, Wolf, and Harnedy. which allow a beneficiary to bring a claim against third parties who are participating with the trustee in a breach of trust. Since the FACC pleads that Cross-Defendant—Scott Foresman breached fiduciary duties by failing “. . . to seek redress for breach of the terms of the Forespar Agreement . . .” (FACC, ¶ 34(a)), Cross-Complainant has standing to enforce the Forespar Agreement based on Cross-Defendant—Scott Foresman’s alleged breach of trust. Therefore, the court OVERRULES the Demurrer as to the first cause of action.
Second Cause of Action (Breach of Contract—Lease Agreement):
The court OVERRULES the Demurrer to the second cause of action for the same reasons as stated for the first cause of action.
Third Cause of Action (Breach of the Covenant of Good Faith and Fair Dealing):
The Demurrer states, “Guy’s Third Cause of Action similarly fails to state a claim for Breach of the Covenant of Good Faith and Fair Dealing because it is based on contracts – the Forespar Agreement, Lease, and 2014
Addendum - to which Guy as a trust beneficiary is not a contracting party.” (Demurrer; 8:26-28.)
Racine & Laramie, Ltd. v. Depatment of Parks and Recreation (1992) 11 Cal.App.4th 1026, 1032 (Racine) states, “There is no obligation to deal fairly or in good faith absent an existing contract. [citation] If there exists a contractual relationship between the parties, as was the case here, the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract.”
The court OVERRULES the Demurrer to the third cause of action for the same reasons as stated for the first and second causes of action.
Fourth Cause of Action (Unjust Enrichment):
Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370 (Durell), provides, “ ‘[T]here is no cause of action in California for unjust enrichment.’ [Citations.] Unjust enrichment is synonymous with restitution. [Citation.]” Since the Cross-Complaint pleads unjust enrichment as a cause of action, the court SUSTAINS the Demurrer with leave to amend to allow Cross-Complainant to plead unjust enrichment as a remedy.
Fifth and Sixth Causes of Action (Open Book Account and Account Stated):
State Compensation Insurance Fund v. Readylink Health Care, Inc. (2020) 50 Cal.App.5th 422, 449 (SCIF), provides, “ ‘The elements of an open book account cause of action are: ‘1. That [plaintiff] and [defendant] had financial transactions . . .; [¶] 2. That [plaintiff] . . . kept [an] account of the debits and credits involved in the transactions; [¶] 3. That [defendant] owes [plaintiff] money on the account; and [¶] 4. The amount of money that [defendant] owes [plaintiff].’ (CACI No. 372.)” Leighton v. Foster (2017) 8 Cal.App.5th 467, 491 (Leighton), states, “ ‘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. [Citations.]’ [Citation.]”
The Demurrer states, “Guy fails to plead the four elements of a cause of action for Open Book Account because he does not allege that he, as a trust beneficiary, had financial transactions with Forespar and Scott or that Forespar and Scott owed him money as a trust beneficiary. . . . Because this is a claim arising out of the financial transactions between Forespar and the Foresman Trust, which does not involve Guy as a trust beneficiary, Guy cannot satisfy the elements of this claim. [¶] Similarly, Guy’s Sixth Cause of Action fails to state a claim for “Account Stated” because it is another direct claim between the contracting parties, Forespar and the Foresman Trust.” (Demurer; 10:10-18.) The Demurrer also states, “This claim is based on the financial transactions and agreements between Forespar, as lessee and the Foresman Trust, as lessor. Guy – as a trust beneficiary – cannot satisfy the elements of this claim.” (Demurrer; 11:13-15.)
The court OVERRULES the Demurrer to the fifth and sixth causes of action for the same reasons as stated for the first and second causes of action.
Based on the above, the court OVERRULES Cross-Defendants’ (Forespar Products Corporation and Scott Foresman) Demurrer to Cross-Complainant’s First Amended Complaint, filed on 6-27-22 under ROA No. 388, as to the first, second, third, fifth, and sixth causes of action. The court SUSTAINS the Demurrer as to the fourth cause of action with 14-days leave to amend from the date of service of the notice of the court’s ruling.
Cross-Defendants are to give notice.
Motion No. 2:
Cross-Defendants’ (Forespar Products Corporation and Scott Foresman) Motion to Strike Portions of Cross-Complainant’s First Amended Cross-Complaint (Motion), filed on 6-27-22 under ROA No. 389, is DENIED.
Code of Civil Procedure section 436, states, “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: [¶] (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [¶] (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” Code of Civil Procedure section 435, subdivision (b)(1), states, “Any party, within the time allowed to respond to a pleading may serve and file, a notice of motion to strike the whole or any part thereof, but this time limitation shall not apply to motions specified in subdivision (e).” Pierson v. Sharp Memorial Hospital, Inc. (1989) 216 Cal.App.3d 340, 342, explains, “Preliminarily, we note a motion to strike is generally used to reach defects in a pleading which are not subject to demurrer. A motion to strike does not lie to attack a complaint for insufficiency of allegations to justify relief; that is a ground for general demurrer. [Citation.]”
The Motion seeks to strike the following items from Cross-Complainant’s (Guy Foresman) First Amended Cross-Complaint (FACC) filed on 5-20-22 under ROA No. 375: (1) “Paragraph 32 in its entirety: ‘As a result of Scott and Forespar’s breaches of contract, Cross-Complainant has been compelled to employ an attorney to defend and prosecute this action. The terms of the Forespar Agreement and Lease both provide for prevailing party attorney’s fees and costs, and Cross-Complainant seeks recovery of his reasonable attorney fees in an amount according to proof at the time of trial.’ ” (Notice, 1:8-12); (2) “. . . [T]he following portion in Paragraph 40 stating: ‘and attorney fees’ (FACC, ¶ 40.)” (Notice, 1:14-15); (3) “. . . Paragraph 41 in its entirety: ‘Pursuant to Section 15 of the Forespar Agreement, Cross-Complainant is entitled to attorney fees and costs.’ (FACC, ¶ 41.)” (Notice, 1:17-19); (4) “. . . [T]he following portion in Paragraph 47 stating: ‘and attorney fees’ (FACC, ¶ 47.)” (Notice, 1:21-22); (5) “. . . Paragraph 48 in its entirety: ‘As a result of Scott and Forespar’s breaches of contract, Cross-Complainant has been compelled to employ an attorney to defend and prosecute this action and pursuant to the terms of the Lease which provides for prevailing party attorney’s fees, Cross-Complainant will seek reasonable attorney fees and costs in an amount according to proof at the time of trial.’ (FACC, ¶ 48.)” (Notice, 1:24-28); (6) “. . . [T]he following portion in Paragraph 54 stating: ‘and attorney fees’ (FACC, ¶ 54.)” (Notice, 2:2-3); (7) “. . . [T]he following portion in Paragraph 64 stating: ‘plus attorneys' fees and costs under the terms of the Lease.’ (FACC, ¶ 64.)” (Notice, 2:5-6); (8) “. . . [T]he following portion in Paragraph 67 stating: ‘plus attorneys' fees under the terms of the Lease.’ (FACC, ¶ 67.)” (Notice, 2:8-9); and (9) “For the Prayer for Relief ‘As to All Causes of Action,’ the following portion in Paragraph 16 stating: ‘together with reasonable attorneys' fees, permitted by statute or contract[.]’ (Prayer for Relief, p. 23, ¶16.)” (Notice, 2:10-12).
“There is no requirement that a party plead that it is seeking attorney fees, and there is no requirement that the ground for a fee award be specified in the pleadings. [Citations.]” (Yassin v. Solis (2010) 184 Cal.App.4th 524, 533.) Snatchko v. Westfield LLC (2010) 187 Cal.App.4th 469, 497 (Snatchko), explains, “ ‘There is no requirement that the intent to seek attorney fees under section 1021.5 must be pleaded in the underlying action. [Citation.] Such fees are not part of the underlying cause of action, but are incidents to the cause and are properly awarded after entry of a . . . judgment[.]’ [Citation.] As there was no requirement they be pled at all, the trial court erred in striking Snatchko's prayer for attorney fees based on a failure to adequately plead their basis and Snatchko's failure to reallege his request for fees in his first amended complaint does not waive or forfeit his ability to seek them at the conclusion of this case.” (Italics in Snatchko.)
The Motion seeks to strike items that relate to attorneys’ fees. Under Snatchko, it is not improper to plead requests for attorneys’ fees. Therefore, the court DENIES Cross-Defendants’ (Forespar Products Corporation and Scott Foresman) Motion to Strike Portions of Cross-Complainant’s First Amended Cross-Complaint filed on 6-27-22 under ROA No. 389.
Cross-Complainant is to give notice.