BRITE SEMICONDUCTOR USA CORP. v. CLOUDVUE TECH. CORP.
Case No.: 1-14-CV-261671
DATE: May 22, 2014
TIME: 9:00 a.m.
DEPT.: 3

As an initial matter the Court in ruling on a demurrer or motion to strike considers only the pleading under attack, any attached exhibits (part of the “face of the pleading”) and any facts or documents for which judicial notice is properly requested and may be granted. Any purported requests for judicial notice that do not comply with Rule of Court 3.1113(l) are denied. The Court cannot consider extrinsic evidence in ruling on a demurrer or motion to strike. Accordingly, the Court has not considered the documents attached to Plaintiff’s Opposition to demurrer or arguments relying on those documents.

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” Blank v. Kirwan (1985) 39 Cal.3d 311, 318. Allegations are not accepted as true on demurrer if they contradict or are inconsistent with facts judicially noticed. Similarly, facts appearing in exhibits attached to the complaint (part of the “face of the pleading”) are given precedence over inconsistent allegations in the complaint. See Holland v. Morse Diesel Int’l, Inc. (2001) 86 Cal App 4th 1443, 1447. “While inconsistent theories of recovery are permitted, a pleader cannot blow hot and cold as to the facts positively stated.” Manti v. Gunari (1970) 5 Cal.App.3d 442, 449, internal citation omitted. See also Witkin, California Evidence (4th Ed., 2000) 1 Judicial Notice §3(3) (“It has long been established in California that allegations in a pleading contrary to judicially noticed facts will be ineffectual; i.e., judicial notice operates against the pleader.”)

Defendant’s request for judicial notice of a copy of Plaintiff’s Complaint, while redundant and unnecessary as the Court already considers the face of the pleading under attack on demurrer, is GRANTED pursuant to Evid. Code §452(d).

Defendant’s demurrer to the Complaint’s 1st cause of action, Breach of Contract, on the ground that it fails to state sufficient facts, is SUSTAINED with 10 days’ leave to amend. A bare recitation of the generic elements of the cause of action is not enough. Having chosen to attach the alleged contract as exhibit A to the Complaint, Plaintiff is subject to the rule that the contents of the exhibit control over allegations inconsistent with or contradictory to it terms. See Holland, supra at 1447. The contract makes clear the parties’ various duties to perform certain actions depend upon the fulfilling of conditions by the other party and Defendant is correct that where contractual liability depends upon the occurrence of some event, “a specific allegation of the happening of the condition is a necessary part of pleading the defendant’s breach.” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal. App. 3d 1371, 1389. Put another way, while a Plaintiff’s interpretation of ambiguous contract (with the existence of an ambiguity being a question of law for the Court) will be accepted as true on demurrer, such an interpretation must be alleged in the pleading, not simply argued in the opposition to demurrer as it is here.

Defendant’s demurrer to the Complaint’s 2nd cause of action, Breach of the Implied Covenant of Good Faith and Fair Dealing, on the ground that it fails to state sufficient facts is SUSTAINED with 10 days’ leave to amend. “It is universally recognized the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract. . . . [T]he implied covenant of good faith is read into contracts ‘in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract’s purpose.’ This in fact is consistent with the general distinction between breach of the covenant of good faith as recognized in the context of a contract action and that recognized as a tort.” Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal 4th 342, 373, emphasis added, internal citations omitted. See also Guz v. Bechtel National, Inc. (2000) 24 Cal 4th 317, 349, 350 (“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made. . . . It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.”) Emphasis in original. As presently stated this claim fails to allege how Defendant denied Plaintiff any specific benefit owed to it under some express term or purpose of the contract. A bare recital of the generic elements of the claim is insufficient, and if the 2nd cause of action is based on nothing more than what is alleged in the 1st cause of action it will not survive further demurrer. “[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous.” Guz, supra at 327.

Defendant’s demurrer to the Complaint’s 3rd cause of action, Fraud, is SUSTAINED with 10 days’ leave to amend. The law is well established that in order to state a cause of action for fraud, each of the elements must be pled with specificity. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217. In pleading fraud against a corporate defendant, the requirement that fraud be pled with specificity “requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157; see also Lazar v. Superior Court (1996) 12 Cal.4th 631, 645. As presently alleged the claim does not satisfy the requirement that fraud claims be stated with particularity, especially when alleged against a corporate entity defendant. While it is possible to base a fraud claim on an alleged false promise to perform a contract, such a claim still must be specifically pled.

Defendant’s demurrer to the Complaint’s 4th cause of action, Common Count—Money Owed, on the ground that it fails to state sufficient facts, is SUSTAINED with 10 days’ leave to amend. As presently pled the claim is duplicative of the 1st cause of action. See McBride v. Boughton (2004) 123 Cal.App.4th 379, 394 (A common count is not a specific cause of action; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory. When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable, if the cause of action is demurrable.)

Defendant’s Motion to Strike various requests for “lost profits” and punitive damages from the Complaint is DENIED as MOOT in light of the ruling above sustaining the demurrer to all causes of action alleged against Defendant.