17-CIV-05917 AC PETROLEUM, LLC, ET AL. VS. HOWARD CHEUNG, ET AL.

AC PETROLEUM, LLC HOWARD CHEUNG
JAGDEEP HANSRA LAWRENCE A. JACOBSON

DEMURRER OF DEFENDANT HOWARD CHEUNG (“DEFENDANT”) TO THE FIRST AMENDED COMPLAINT OF PLAINTIFFS AC PETROLEUM AND ELITE CAJUN FOODS LLC (“PLAINTIFFS”) TENTATIVE RULING:

Defendant HOWARD CHEUNG, Trustee of the CHEUNG LIVING TRUST’s Demurrer to First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND as to Plaintiff ELITE CAJUN FOODS, LLC’s Second cause of action for breach of contract (third party beneficiary) and Third cause of action for breach of the implied covenant of good faith and fair dealing.

The Court takes judicial notice of certain party admissions made by Plaintiffs and their counsel in their prior Motion for Leave to File First Amended Complaint, specifically that Plaintiff ELITE was only recently found to be a third party beneficiary in this action following “formal and informal discovery”. The Court may take judicial notice of party admissions that are inconsistent with the allegations contained in the FAC. See Dell E. Webb Corp v. Structural Materials Co. (1981) 123 Cal.App. 3d 593, 604. (See Defendant’s RJN, Exhibits A and B.)

Plaintiff ELITE concedes that under applicable Idaho law, in order to be considered a valid third party beneficiary of the Purchase and Sale Agreement ( “Agreement”) between Plaintiff ACP and Defendant CHEUNG, it must show that (1) the Agreement was made expressly for its benefit, and (2) the Agreement, on its face, reflects an intent to benefit Elite. In fact, both the moving and opposing papers cite to Adkison Corp. v. American Bldg. Co. (1984) 107 Idaho 406 for this test. However, if ELITE was only recently found to be a third party beneficiary in this action following “formal and informal discovery”, despite being admittedly an affiliate of Plaintiff ACP and under common control and ownership, as well as an existing tenant at the subject Property when the Agreement was entered into, it can hardly now argue that the Agreement was made expressly for its benefit. The first prong of the Adkison test thus cannot be met.

Moreover, while ELITE does not dispute that the Agreement, on its face, must reflect an intent to benefit ELITE, Plaintiffs yet fail to attach a copy of the Agreement as an exhibit to the FAC. If the action is based on a written contract (as here), the terms must be set out verbatim in the body of the Complaint, or a copy of the contract must be attached as an exhibit to the Complaint and incorporated by reference. FPI Develoment, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 383. Thus, the second prong of Adkison is not met.

Although a demurrer should not be sustained without leave to amend if there is a reasonable possibility that a defect in the complaint can be cured by amendment, the burden is on the plaintiff to show in what manner she can amend the complaint and how that amendment will affect the pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. Here, Plaintiffs have not met this burden, and accordingly leave to amend is denied.

If the tentative ruling is uncontested, it shall become the order of the Court, pursuant to CRC Rule 3.1308(a)(1), adopted by Local Rule 3.10. If the tentative ruling is uncontested, DEMURRING PARTY is directed to prepare, circulate, and submit a written order reflecting this Court’s ruling verbatim for the Court’s signature, consistent with the requirements of CRC Rule 3.1312. The proposed order is to be submitted directly to Judge Susan L. Greenberg, Department 3.