Judge: Walter P. Schwarm, Case: 30-2022-01262349, Date: 2022-12-13 Tentative Ruling
Motion No. 1:
Defendants’ (Benjamin D. Abbott, Kevin X. Phong Vu, and Xuan Lan Thi Tran) Demurrer to Plaintiffs’ Complaint (Demurrer), filed 7-27-22 under ROA No. 29, is SUSTAINED in part and OVERRULED in part.
“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.]”
Defendants challenge the second, third and fourth causes of action contained in Plaintiffs’ (Tammi Phan and Jennifer Gonzales) Complaint, filed 5-25-22 under ROA No. 2 pursuant to Code of Civil Procedure section 430.10, subdivision (e).
Second Cause of Action (Breach of Contract):
The Demurrer states, “If a claim for breach of the implied covenant does nothing more than allege a mere contract breach and, relying on the same alleged acts, simply seeks the same damages or other relief already claimed in a contract cause of action, it may be disregarded as superfluous . . . . [¶] Therefore, because Plaintiff’s second cause of action for breach of implied covenant of good faith and fair dealing fails to state sufficient facts against Defendants, the Court should sustain Defendants’ demurrer, without leave to amend.” (Demurrer, 5:6-18.)
Plaintiffs’ (Tammi Phan and Jennifer Gonzalez) Opposition to Defendants’ Demurrer to Plaintiffs’ Complaint (Opposition), filed on 11-30-22 under ROA No. 46, responds, “. . . the facts alleged in the Compl. and discussed above explicitly state how Defendants have also departed from objectively reasonable conduct in performing their obligations under the Purchase Agreement. [¶] These facts clearly give rise to a separate cause of action addressing the quality of Defendants’ dealings under the Purchase Agreement and for this reason, the breach of contract cause of action and the breach of implied covenant of good faith and fair dealing cause of action are not duplicative, contrary to Defendants’ allegations in their demurrer.” (Opposition, 6:25-7:5.)
Paragraph 24 of the Complaint pleads, “Despite continuing efforts and demands for performance, Defendants Abbott and Vu continue to refuse to perform on the Purchase Agreement. Inquiries as to work progress and workmanship are met with hostility and threats from Defendants. Attached as Exhibit 6 is a true and accurate copy of threatening text messages from Defendant Abbott to Plaintiffs’ family members in response to Plaintiffs’ inquiries about work progress and workmanship.” (Complaint, ¶ 24; Emphasis in Complaint.) .) Paragraph 35 of the Complaint incorporates paragraph 24 into the second cause of action.
Careau & Co v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394 (Careau), states, “A ‘ “breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself” and it has been held that ‘[b]ad faith implies unfair dealing rather than mistaken judgment. . . . [Citation.]” [Citation.]’ [Citation.]” (Footnote 17 omitted.) “Thus, allegations which assert such a claim must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement. Just what conduct will meet this criteria must be determined on a case by case basis and will depend on the contractual purposes and reasonably justified expectations of the parties.” (Id. at 1395.)
Liberally construing the Complaint, the court finds that the second cause of action is sufficiently pled. Paragraph 24 alleges that Defendants, in addition to breaching their obligations under the contract, engaged in text message threats to Plaintiffs’ family members in relation to Plaintiffs’ questions about work progress. This is sufficient to constitute allegations that are more than mere breach of contract. Therefore, the court OVERRULES the Demurrer as to the second cause of action.
Third Cause of Action (Fraud (False Promise and/or Promissory Fraud)):
Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar), states, “ ‘The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ [Citations.] [¶] ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.]” Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 973-974 (Engalla), states, “ ‘ “Promissory fraud” is a subspecies of fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.] [¶] An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.’ [Citation.]” (See also, CACI No. 1902.)
The Demurrer states, “Plaintiffs have failed to allege in their complaint with particularity that Defendants intended Plaintiffs to rely on their promises to perform and consequently entered into the purported Purchase Agreement.” (Demurrer; 6:8-10.) Under Lazar and Engalla, a cause of action for promissory fraud is not subject to the heightened pleading requirement. Here, paragraph 43 of the Complaint adequately pleads Defendants intended Plaintiffs to rely on their promise. Paragraph 42 of the Complaint sufficiently alleges that Defendants did not intend to perform their promises when they made them. Therefore, the court OVERRULES the Demurrer as to the third cause of action.
Fourth Cause of Action (Negligent Misrepresentation):
Tarmann v. State Farm Mutual Automobile Insurance Company (1991) 2 Cal.App.4th 153, 159 (Tarmann), states, “To maintain an action for deceit based on a false promise, one must specifically allege and prove, among other things, that the promisor did not intend to perform at the time he or she made the promise and that it was intended to deceive or induce the promisee to do or not do a particular thing. [Citations.] Given this requirement, an action based on a false promise is simply a type of intentional misrepresentation, i.e., actual fraud. The specific intent requirement also precludes pleading a false promise claim as a negligent misrepresentation, i.e., ‘The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true.’ (Civ.Code, § 1710, subd. (2).) Simply put, making a promise with an honest but unreasonable intent to perform is wholly different from making one with no intent to perform and, therefore, does not constitute a false promise. Moreover, we decline to establish a new type of actionable deceit: the negligent false promise.” (Italics in Tarmann; Footnote 2 omitted.)
Paragraph 49 of the Complaint pleads, “Plaintiffs are informed and believe, and on that basis allege, that none of the representations from Defendants were true, and that Defendants either knew and/or reasonably should have known that they were unable to timely perform or perform in a workmanlike manner at the time they were made.” Paragraph 49 of the Complaint relates to the alleged false promise made by Defendants related to their performance. Under Tarmann, a false promise to perform cannot support a cause of action for negligent misrepresentation. Therefore, the court SUSTAINS the Demurrer as to the fourth cause of action.
Based on the above, the court OVERRULES Defendants’ (Benjamin D. Abbott, Kevin X. Phong Vu, and Xuan Lan Thi Tran) Demurrer to Plaintiffs’ Complaint, filed 7-27-22 under ROA No. 29, as to the second and third 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. (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747.) The court requests the parties to appear at the hearing on 12-13-22 to determine whether Plaintiffs intend to file an amended complaint. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.)
Defendants are to give notice.
Motion No. 2:
Defendants’ (Benjamin D. Abbott, Kevin X. Phong Vu, and Xuan Lan Thi Tran) Motion to Strike Portions of Plaintiff’s Complaint (Motion), filed on 7-27-22 under ROA No. 30, 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 “a) In the prayer for relief, Page 12, Paragraph 1, Lines 16-17.” (Motion; 2:5.) Page 12, lines 16-17 seek “. . . exemplary and punitive damages where and/or allowable by law and according to proof.”
Civil Code section 3294 states in part, “(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”
In order to plead punitive damages, a plaintiff must plead allegations of fraud, malice, or oppression with sufficient particularity. (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.)
Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63 (Turman), states, “ ‘In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.’ [Citation.] [¶] In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294. [Citation.] These statutory elements include allegations that the defendant has been guilty of oppression, fraud or malice. (Civ.Code, § 3294, subd. (a).) ‘ “Malice” ’ is defined in the statute as conduct ‘intended by the defendant to cause injury to plaintiff, or despicable conduct that is carried on by the defendant with a willful and conscious disregard for the rights or safety of others.’ [Citations.] ‘ “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.’ [Citation.] ‘ “Fraud” ’ is ‘an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.’ [Citation.]”
“Punitive damages are recoverable in those fraud actions involving intentional, but not negligent, misrepresentations. [Citations.]” (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1241 (Alliance).) “If the deception was intentional, then punitive damages are available. [Citation.]” (Benson v. Southern California Auto Sales, Inc. (2015) 239 Cal.App.4th 1198, 1208-1209 (Benson).)
Since the court has found that the Complaint pleads a viable cause of action for intentional fraud as to the third cause of action (See Motion No. 1), the Complaint sufficiently alleges the request for punitive damage based on Alliance and Benson. Therefore, the court DENIES Defendants’ (Benjamin D. Abbott, Kevin X. Phong Vu, and Xuan Lan Thi Tran) Motion to Strike Portions of Plaintiff’s Complaint filed on 7-27-22 under ROA No. 30.
Plaintiff is to give notice.