Case Name: Arborwell, Inc. v. Plus Consulting, LLC, et al.
Case No.: 1-14-CV-263698

This is an action for breach of contract. According to the allegations of the cross-complaint (“XC”), on December 9, 2011, Arborwell and SugarCRM entered into a contract for a five year subscription for SugarCRM’s software package. (See XC, ¶ 10.) On December 14, 2011, Arborwell and SugarCRM channel partner Plus Consulting, LLC (“Plus”) entered into an agreement for Plus’ configuration and customization of the SugarCRM software onto Arborwell’s existing customer relationship management software, ServMan—an agreement that was negotiated by EDP Consulting, Inc. (“EDP”) and Sierra Financial Group, Inc. (“Sierra”). (See XC, ¶¶ 8-9, 11.) During the configuration, customization and integration of the SugarCRM software into ServMan, EDP and Sierra acted as Arborwell’s agents and instructed, directed and managed Plus’ configuration and customization services; Plus’ sole communications on the project were with EDP and Sierra as agents for Arborwell. (See XC, ¶¶ 12-13.) On March 6, 2013, Plus had addressed all issues and configuration and customization services assigned by EDP and Sierra to it; EDP and Sierra did not assign any further items for attention to Plus. (See XC, ¶¶ 14-15.) EDP and Sierra, however, continued to perform services relating to the implementation and integration of ServMan to the SugarCRM software. (See XC, ¶ 15.) On April 11, 2014, Arborwell filed a complaint against SugarCRM and Plus for breach of contract, breach of the covenant of good faith and fair dealing, and breach of the express warranty. (See XC, ¶ 16.) On November 14, 2014, Plus filed the XC against EDP and Sierra, asserting claims for equitable indemnity and declaratory relief. EDP demurs to the first and second causes of action of the XC on the grounds that they are both uncertain and fail to state facts sufficient to constitute a cause of action.

First cause of action

In opposition, Plus acknowledges that in order for equitable indemnity to apply, “there must be some basis for tort liability against the proposed indemnitor.” (See Plus’ opposition to demurrer (“Opposition”), p.5:10-12, citing BFGC Architects Planners, Inc. v. Forcum/Mackey Construction, Inc. (2004) 119 Cal.App.4th 848, 852.) Plus asserts that the cross-complaint, however, alleges facts supporting the breach of a fiduciary duty owed to it by EDP, since EDP is alleged to be the agent of Arborwell. (See Opposition at p.5:16-28.)

However, although the cross-complaint does allege that EDP acted as Arborwell’s agents during the configuring and customization of the software, the cross-complaint does not allege any facts supporting a breach of any fiduciary duty. In fact, the cross-complaint doesn’t even allege that EDP breached a contractual duty owed to Arborwell; rather, the cross-complaint merely alleges that “[t]o the extent Arborwell suffered any injury, EDP and Sierra are responsible for all alleged injuries suffered by Arborwell….” (XC, ¶ 19.) This is plainly insufficient. EDP’s demurrer to the first cause of action of the XC is SUSTAINED with 10 days leave to amend.

Second cause of action

As to the second cause of action for declaratory relief, the claim merely alleges that “a judicial declaration is necessary to determine EDP and Sierra’s responsibility for the alleged injuries and damages suffered by Arborwell, as Arborwell alleges in Arborwell’s Complaint against Plus.” (XC, ¶ 24.) Here, the declaratory relief cause of action is clearly seeking the adjudication of rights that have already crystallized into a cause of action for past wrong such that a money judgment will fully resolve the dispute, as Arborwell is alleged to have already filed a complaint relating to those rights. (See Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 618 (stating that “[d]eclaratory procedure operates prospectively, and not merely for the redress of past wrongs”); see also Code Civ. Proc. § 1061 (stating that “[t]he court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances”); see also General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470 (stating that “[t]he declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action”; also stating that “[t]he availability of another form of relief that is adequate will usually justify refusal to grant declaratory relief”); see also Pacific Electric Ry. Co. v. Dewey (1949) 95 Cal.App.2d 69, 73 (stating that “declaratory relief is unavailable for the determination of issues involved in an already pending action or to prevent such issues from being presented to a jury”); see also Warren v. Kaiser Foundation Health Plan, Inc. (1975) 47 Cal.App.3d 678, 683 (stating that “the court may refuse to entertain the action where ‘the rights of the complaining party have crystallized into a cause of action for past wrongs, [and] all relationship between the parties has ceased to exist’”).) The demurrer to the second cause of action of the XC is SUSTAINED without leave to amend.

The Court will prepare the order.