Case Name: Jimenez v. Golden Ribbon Bakeshop Partnership, et al.

Case No.: 18CV335348

Defendants Gold Ribbon Bakeshop Partnership (GRBP”) and Loritas Balstar (“Balstar”) (collectively, “Defendants”) demur to the Second Amended Complaint (“SAC”) filed by plaintiff Teresita Jimenez (“Plaintiff”).

I. Background
II.

A. Factual
B.

This action arises out of the purported breach of a written general partnership agreement. According to the allegations of the SAC, Plaintiff and defendants Balstar, Lusita Garcia and Mario Lagman entered into a written general partnership agreement (the “Agreement”) dated January 15, 1985, the purpose of which was “to engage for profit in the business of bakery and restaurant.” (SAC, ¶ 7.) Among other things, the Agreement provided that partners who devoted less than 20 hours per week to the business were not to receive any salary or compensation “until determined by the unanimous written agreement by 75% of the partners.” (Id., ¶ 10.) The parties purportedly understood the foregoing clause to mean that any of the partners devoting more than 20 hours to the operation of the bakery would be compensated by the partnership. (Id., ¶ 11.)

From 2009 to July 31, 2017, Plaintiff devoted between 36 and 60 hours per week to the partnership business. (SAC, ¶ 12.) However, her requests for appropriate compensation were rejected by defendants in violation of the Agreement. (Id., ¶ 13.)

On July 31, 2017, the business of the bakery and restaurant ceased and the defendants assumed sole possession and control of the business and its assets, including the real property owned and utilized by the partnership for the operation of the business. (SAC, ¶ 18.) Plaintiff’s continued demands for an accounting have been denied by the defendants and a balance is due to Plaintiff for compensation and potential proceeds of the agreed upon sale of the property on which the business was located. (Id., ¶¶ 20-21.)

C. Procedural
D.

Based on the foregoing allegations, Plaintiff filed the complaint against the defendants on the defendants on September 21, 2018, asserting claims for: (1) breach of partnership agreement; (2) failure to pay minimum wages, overtime wages, and liquidated damages; (3) waiting time penalties under Labor Code section 203; (4) violation of Business and Professions Code section 17200; (5) accounting; (6) declaratory relief; and (7) dissolution and winding up. Defendants demurred to the complaint and each of the seven causes of action asserted therein on a variety of grounds, including failure to state facts sufficient to constitute a cause of action and uncertainty. (Code Civ. Proc., § 430.10, subds. (e) and (f).) In April 2019, the Court sustained the demurrer to all seven of the claims asserted in the complaint with 10 days’ leave to amend.

Plaintiff filed the First Amended Complaint (“FAC”) on May 3, 2019, asserting the following causes of action: (1) breach of partnership agreement; (2) an accounting; (3) declaratory and injunctive relief; and (4) dissolution and winding up. Defendants subsequently moved to strike portions of the FAC, which was denied by the Court.

On January 3, 2020, Plaintiff filed the SAC pursuant to a stipulation and order, asserting the following claims: (1) breach of partnership agreement; (2) accounting; (3) declaratory and injunctive relief; and (4) dissolution and winding up. On November 18, 2019, Defendants filed the instant demurrer to the SAC in its entirety and to the first cause of action on the ground of failure to state facts sufficient to state a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Plaintiff opposes the motion.

III. Defendants’ Request for Judicial Notice
IV.

In support of their demurrer, Defendants request that the Court take judicial notice of the Court’s April 19, 2019 order on their demurrer to the original complaint (Exhibit A). As this item is a court record, it is a proper subject of judicial notice pursuant to Evidence Code section 452, subdivision (d). Accordingly, Defendants’ request for judicial notice is GRANTED.

V. Demurrer
VI.

Defendants first contend that their demurrer to the entire SAC must be sustained because the pleading fails to state sufficient facts to state any claim against them. Defendants generally argue that each cause of action is “vague, ambiguous and directly tied to the first cause of action” that they insist is itself defective. Defendants insist that Plaintiff has failed to set forth an operative set of facts or identify the parties properly.

To the extent that Defendants appear to be arguing that the SAC is in some respects uncertain, the Court notes that uncertainty is not one of the grounds identified in Defendants’ notice of motion or demurrer. As a result, it will be disregarded. (See Code Civ. Proc., § 430.60 [stating that unless the grounds for a demurrer are distinctly specified, it may be disregarded].)

Defendants’ demurrer is mostly aimed at Plaintiff’s first cause of action; they maintain that it is inadequately pleaded and that because of this, all of the subsequent claims in the SAC fail because they flow from the breach of contract claim. More specifically, Defendants argue that the first cause of action fails because Plaintiff has not attached a copy of the alleged written agreement or pleaded its relevant terms.

As a general matter, in order to state a claim for breach of contract, a plaintiff must plead the following: (1) the existence of a contract, (2) plaintiff’s performance or excuse for non-performance, (3) defendant’s breach, and (4) damages to plaintiff therefrom. (See Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913.) A written contract is usually pleaded by alleging its making and then setting it out verbatim in the body of the complaint or as a copy attached and incorporated by reference. (See, e.g., Kaufman & Broad Bldg. Co. v. City & Suburban Mortg. Co. (1970) 10 Cal.App.3d 206, 210.) However, a written contract can also be pleaded according to its legal effect by alleging its making and the substance of its relevant terms. (See, e.g., Construction Protective Services v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199.) The plaintiff need not allege everyone promise made by the defendant, but only those that the plaintiff claims were breached and others that affect them. (See, e.g., Hancock v. Clark (1922) 56 Cal.App. 277, 278.) Thus, contrary to Defendants’ argument, Plaintiff is not obligated to plead all of the essential terms of the Agreement, attach a copy of it to the SAC or set it out verbatim in order for her breach of contract claim to survive demurrer.

Defendants also contend that the first cause of action suffers from a deficiency recognized by the Court in its order on their preceding demurrer to the breach of contract claim in the original complaint. In the original complaint, Plaintiff alleged that Defendants breached the Agreement by failing to pay her for work in excess of 20 hours per week that she performed from 2009 until July 31, 2017. In its order, the Court noted that Plaintiff had not identified any terms in the Agreement which provided that Defendants were obligated to pay for such work and explained the well-established rule that “‘ “[a]bsent an express agreement, a partner is not entitled to any compensation for his services to the partnership other than his share of the profits” ’ [citation].” [Citation.]” (Bardis v. Oates (2004) 119 Cal.App.4th 1, 14 (Bardis), quoting Cagnolatti v. Guinn (1983) 140 Cal.App.3d 42, 50; Dickson, Carlson & Campillo v. Pole (2000) 83 Cal.App.4th 436, 445 (Dickson); Corp. Code, § 16401, subd. (h) [“A partner is not entitled to remuneration for services performed for the partnership, except for reasonable compensation for services rendered in winding up the business of the partnership.”].) Because she had not alleged facts establishing an express agreement between her and Defendants regarding compensation for her services to the partnership other than her share of the profits, the Court concluded, Plaintiff failed to demonstrate that she was entitled to compensation for her work on behalf of the partnership and had failed to plead an actionable breach.

Here, Defendants suggest that the SAC still suffers from the foregoing deficiency, with Plaintiff again failing to identify any terms in the Agreement that require the partnership to provide her with compensation for hours worked in excess of 20 per week. Finally, Defendants also assert that the first cause of action is inadequately pleaded because Plaintiff has not alleged causation and damages.

Defendants’ assertion that Plaintiff has not identified any terms in the Agreement that require the partnership to provide her with compensation for hours worked in excess of 20 per week is well taken, and the new allegation by Plaintiff that the parties understood the provision in the Agreement prohibiting salary or compensation unless otherwise agreed for those partners devoting less than 20 hours per week to the business to mean that those partners working in excess of 20 hours would be compensated (SAC, ¶ 11) does not save Plaintiff’s claim. While it is true that where a contract is set out in a complaint the plaintiff’s interpretation of that agreement must be accepted as correct in testing the sufficiency of the complaint, the complaint must be ambiguous for this tenant to apply. (See Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239.) There is nothing ambiguous about the provision cited by Plaintiff in the SAC; it simply does not provide for compensation for partners who work more than 20 hours per week. Thus, Plaintiff’s first cause of action is still defective because she has not pleaded an actionable breach, a necessary element of her claim. Accordingly, Defendants’ demurrer to the first cause of action on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.

Turning to the remaining three claims in the SAC, while Defendants argue that these claims necessarily fail because they flow from the fatally defective first cause of action, there is no discussion of the elements of these claims or exactly how Plaintiff’s failure to plead a viable breach of contract claim renders them deficient. Consequently, Defendants’ demurrer to the SAC on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.