Judge: Wesley L. Hsu, Case: 22PSCV01602, Date: 2023-04-27 Tentative Ruling
Case Number: 22PSCV01602 Hearing Date: April 27, 2023 Dept: L
Defendants STAAR Lubricants, LLC’s, STAAR Distributing,
LLC’s, Ryan Gordon’s and Todd Gordon’s Demurrer to the First Amended Complaint
of Daley Technology Systems, LLC is SUSTAINED as to the second and third causes
of action. Defendants STAAR Distributing’s, R. Gordon’s and T. Gordon’s
demurrer to the fourth and fifth causes of action is overruled. The court will hear from counsel for
Plaintiff as to whether leave to amend is requested, and as to which cause(s)
of action, and will require an offer of proof if so.
Background
Plaintiff Daley Technology Systems, Inc. (“Plaintiff”) alleges as
follows: On May 21, 2019, Plaintiff and Defendant STAAR Lubricants, LLC (“STAAR
Lubricants”) entered into a 12-month service contract (“Contract”) whereby
Plaintiff would provide marketing and branding services and create and operate
websites commencing June 2019 in exchange for payment of $6,000.00 per month
for 12 months. The Contract was slated to continue thereafter until terminated
in writing with 60 days’ notice, which was never provided. Plaintiff is owed
money for unpaid amounts incurred during the 12-month initial contract term and
thereafter. Also, Plaintiff provided additional services for other operations
owned by defendants and worked on a project referred to as the U.S. ADVANCED
Bio-Fuel project and other projects.
On February 16, 2023, Plaintiff filed a First Amended Complaint,
asserting causes of action against STAAR Lubricants, STAAR Distributing, LLC
(“STAAR Distributing”), Ryan Gordon (“R. Gordon”), Todd Gordon (“T. Gordon”) and
Does 1-20 for:
1. Breach of Written Contract
2. Fraud
3. Negligent Misrepresentation
4. Common Count for Services Rendered
5. Common Count for Open Book
A Case Management Conference is set for April 27, 2023.
Legal Standard
A
demurrer may be made on the grounds that the pleading, inter alia, does not
state facts sufficient to constitute a cause of action. (Code Civ. Proc., §
430.10, subd. (e).)
When considering demurrers, courts read the allegations liberally and in
context. 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 [citations omitted].) At the pleading stage, a
plaintiff need only allege ultimate facts sufficient to apprise the defendant
of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) “[A] demurrer
does not, however, admit contentions, deductions or conclusions of fact or law
alleged in the pleading, or the construction placed on an instrument pleaded
therein, or facts impossible in law, or allegations contrary to facts of which
a court may take judicial knowledge.” (S.
Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [citations
omitted].)
Discussion
STAAR Lubricants, STAAR Distributing, R. Gordon and T.
Gordon (together, “Defendants”) demur to the second and third causes of action
in Plaintiff’s FAC, on the basis that they each fail to state facts sufficient
to constitute causes of action. STAAR Distributing, R. Gordon and T. Gordon
demur to the fourth and fifth causes of action on this basis.
Second and Third Causes of Action (i.e.,
Fraud and Negligent Misrepresentation, Respectively)
“[P]romissory fraud requires proof of (1) a promise made regarding
a material fact without any intention of performing it; (2) the existence of
the intent not to perform at the time the promise was made; (3) intent to
deceive or induce the promisee to enter into a transaction; (4) reasonable
reliance by the promisee; (5) nonperformance by the party making the promise;
and (6) resulting damage to the promise[e].” (Gruber v. Gruber (2020) 48
Cal.App.5th 529, 540).
“The elements of negligent misrepresentation are (1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to
induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Apollo Capital
Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th
226, 243.)
“Fraud must be pleaded with specificity…[t]o withstand a
demurrer, the facts constituting
every element of the fraud must be alleged with particularity, and the claim
cannot be salvaged by references to the general policy favoring the liberal
construction of pleadings.” (Goldrich v.
Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772,
782 [emphasis in original].) “This particularity requirement necessitates
pleading facts which show how, when,
where, to whom, and by what means the representations were tendered.” (Stansfield v. Starkey (1990) 220
Cal.App.3d 59, 73 (emphasis in original; quotation marks and citation
omitted].) Likewise, “[e]ach element in a cause of action for.
. . negligent misrepresentation must be factually and specifically alleged.” (Cadlo
v. Owens-Illinois, Inc. (2004)
Plaintiff has alleged that
“[d]efendants and their officers and/or agents made several false
representations to Plaintiff to solicit Plaintiff to enter into that agreement
all the while knowing that Defendants had no intent of fully paying Plaintiff”
(FAC, ¶ 21); this allegation, however, does not provide the “how, when, where,
to whom, and by what means” concerning the false representations. Further,
Plaintiff does not plead facts reflecting an “intent to deceive or induce the
promisee to enter into a transaction.”
Plaintiff has alleged
that certain statements were made after the Contract was signed, including
(1) a statement on November 25, 2019, in which T. Gordon allegedly told
Plaintiff’s owner that payments would be made to Plaintiff but would be delayed
by 60 to 90 days after the completion of services each month (Id., ¶¶ 22
and 31) and (2) subsequent requests for work, such as “creating flyers,
templates, a PowerPoint, and price and sales sheets” made on February 6, 8, and
9, 2020 by “Defendants, including Todd Gordon” (Id., ¶¶ 23 and 32.)
Plaintiff alleges T. Gordon made these representations “so that Plaintiff would
continue to work for the Defendants and provide time, energy and resources for
Defendants’ benefit.” (Id.) Plaintiff also alleges that certain
representations that it would be paid were made “by high-level officers of
STARR Lubricants, Inc. and STAAR Distributing, LLC,” “all to get Plaintiff to
continue to work for the Defendants.” (Id., ¶¶ 24 and 33.)
However, Plaintiff was
bound to provide services under the Contract after signing same. “If the parties’
obligations are independent, the breach by one party does not excuse the other
party's performance. Instead, the nonbreaching party still must perform and its
remedy is to seek damages from the other party based on its breach of the
contract.” (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172,
1183.) The alleged representations were made in November 2019 and February
2020, during the 12-month initial term of the Contract. As Defendants state,
“Plaintiff’s decision to waive a purported breach and not exercise its contract
remedies does not turn a breach of contract case into a fraud case.” (Reply,
4:18-20).
Additionally, Plaintiff has failed
to plead these causes of action with the requisite specificity. Plaintiff has
not provided specific fraud allegations for each defendant.
Defendants’ demurrer to the second
and third causes of action is sustained.
Fourth and Fifth Causes of Action (i.e.,
Common Count for Services Rendered and Common Count for Open Book, Respectively)
“To recover on a claim for the reasonable value of services
under a quantum meruit theory, a plaintiff must establish both that he or she
was acting pursuant to either an express or implied request for services from
the defendant and that the services rendered were intended to and did benefit
the defendant.” (Ochs v.
PacifiCare of California (2004) 115 Cal.App.4th 782, 794.). Further,
a “book account” is “defined as a detailed statement, kept in a book in the
nature of debit and credit, arising out of contract or some fiduciary relation.”
(Interstate Group Administrators, Inc. v. Cravens, Dargan & Co.
(1985) 174 Cal.App.3d 700, 708 [quotation marks an citation omitted].)
With respect to the fourth cause of action, Plaintiff has
alleged that “[i]n addition to the work that Plaintiff provided under
the contract, all of the Defendants requested that Plaintiff provide additional
services for other operations owned by Defendants, including STARR
Distributing, LLC and the websites Trytrickshot.com, TrickShotRacing.com, the
U.S. Advanced Bio-Fuel project, and several other projects.” (FAC, ¶ 38).
Plaintiff has further alleged that it “provided the services to Defendants but
Defendants have not paid Plaintiff for the services,” that “[t]he reasonable
value of the services that were provided were established by the parties at
$6,000 per month” and that “Defendants owe Plaintiff currently $232,000 plus
interest for those services” (Id., ¶ 39). The court determines that the
fourth cause of action has been adequately pled.
With respect to the fifth cause of action, Plaintiff has
alleged that “Plaintiff and the Defendants engaged in financial transactions
with each other wherein Plaintiff would provide services to Defendants and
Defendants would pay for those services on a monthly basis,” that “Plaintiff in
the regular course of business kept a written account of the debits and credits
involved in the business transactions and the amount owed by Defendants,” that
“Defendants currently owe Plaintiff money on the account and have failed to pay
it” and that “[t]he amount of money that the Defendants currently owe is
$232,000 plus interest.” (Id., ¶ 42.) The court determines that the
fourth cause of action has been adequately pled.
STAAR Distributing’s, R. Gordon’s and T. Gordon’s demurrer
to the fourth and fifth causes of action is overruled.