2017-00212288-CU-BC

Baljinder Singh vs. Phanikumar Vadarevu

Nature of Proceeding: Hearing on Demurrer to Unverified First Amended Complaint

Filed By: Wong, Cyndi K.

Defendants Phanikumar Vadarevu and Sita Vadarevu’s (collectively, “Individual Defendants”) Demurrer to Unverified First Amended Complaint is SUSTAINED with leave to amend.

This action arises out of the purchase and sale of a care facility in Natomas. Plaintiffs

Bajinder Singh and Ajit Singh (collectively, “Individual Plaintiffs”) filed their original complaint on May 10, 2017, alleging four causes of action against Individual Defendants for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and conversion (and in the caption a possible fifth cause of action for “demand for arbitration”). Individual Defendants demurred to the complaint and the Court sustained the demurrer with leave to amend as to the causes of action for breach of contract and breach of the implied covenant. The Court further noted a “demand for arbitration” is not a cause of action.

The Court’s November 15, 2017, Order stated that where the demurrer has been sustained with leave to amend “Plaintiffs may file and serve an amended complaint no later than 12/1/2017.” The Minute Order further ordered that “[t]o the extent plaintiffs may wish to add new parties and/or causes of action, they should promptly file and serve a noticed motion to amend in conformity with CRC Rule 3.1324.”

On December 5, 2017, after the Court’s deadline, Individual Plaintiffs filed a First Amended Complaint (“FAC”). The FAC alters the description of Plaintiffs and Defendants to read as follows:

“Plaintiffs, 421 San Juan LLC and SEVA Assisted Living at Natomas, Inc. are entities formerly owned and operated by Bajinder and Ajit Singh resides [sic] in Sacramento County, California.”

“Defendants, PSVN Properties, LLC and Twin Rivers at Natomas, Inc. are companies either owned and operated by individual Phanikumar Vadarevu who along with his spouse Sita Vadarevu. Both entities reside in Sacramento County, California.”

Previously, Plaintiffs were defined as the Individual Plaintiffs and Defendants as the Individual Defendants. The caption remains unchanged.

Defendants contend the corporate entities have not been properly substituted in for “Doe” defendants, properly added pursuant to a motion for leave to amend (as indicated was required in the Court’s prior Order), or served. As such, Defendants contend the corporate entities (PSVN Properties, LLC and Twin Rivers at Natomas, Inc.) have not appeared in the instant action and are not yet required to respond. The demurrer is brought only on behalf of the Individual Defendants.

The Individual Defendants demur again to the entire complaint and its four causes of action on the ground they fail to plead facts sufficient to constitute a cause of action against them. (Code Civ. Proc. § 430.10(e).)

The change in the definition of “Plaintiffs” and “Defendants” in the body of the FAC has created a lack of clarity in the pleadings. In a couple of places, the FAC refers to “Defendant, Sida Vadarevu.” For the most part, however, the FAC generally refers to “Plaintiffs” and “Defendants,” and occasionally seems to incorrectly use the terms in the singular form without further specificity as to which purported Plaintiff or Defendant the FAC is referring.

Breach of Contract

The demurrer is SUSTAINED with leave to amend.

Individual Defendants demur to the first cause of action on the grounds the FAC fails to plead the existence of a valid contract to which the Individual Defendants are parties and fails to allege the violation of a material contract term.

In its November 15, 2017, Order, the Court sustained Defendants’ demurrer on the grounds that neither of the Individual Plaintiffs were a party to the contract or amendments thereto. Rather, Individual Plaintiffs had executed the contract documents as “CEO” and “CFO” of the seller, which was expressly identified as “421 San Juan LLC & Seva Assisted Living at Natomas, Inc.” The Court stated that because of this, Individual Plaintiffs cannot state a valid claim for breach of contract regardless of whether the two defendants (as individuals) signed the purchase agreement.

Although the FAC cures the foregoing as it now alleges 421 San Juan LLC & Seva Assisted Living at Natomas, Inc. as the purported Plaintiffs, the FAC also appears to remove the Individual Defendants from the body of the FAC as it now defines the “Defendants” as the corporate entities PSVN Properties, LLC and Twin Rivers at Natomas, Inc. There are no allegations in the FAC that Individual Defendants entered into a contract with the corporate entity Plaintiffs. Accordingly, Individual Defendants’ demurrer to the first cause of action is SUSTAINED with leave to amend. Leave to amend is granted as the Court is not persuaded Individual Plaintiffs are unable to cure the defects in the FAC.

Breach of Implied Covenant

Individual Defendants demur to the second cause of action for breach of the implied covenant of good faith and fair dealing on the ground that Individual Defendants are no longer parties to the Purchase Agreement pursuant to the amendments. For the same reasons discussed above, the demurrer to this cause of action must also be SUSTAINED with leave to amend. The FAC fails to allege any agreement between corporate entity Plaintiffs and Individual Defendants. Leave to amend is granted as the Court is not persuaded Individual Plaintiffs are unable to cure the defects in the FAC.

Unjust Enrichment

The demurer is SUSTAINED with leave to amend.

Defendants demur to the third cause of action on the ground that “unjust enrichment” is not a cause of action. This argument is well taken. Unjust enrichment is not a cause of action, but rather is a claim for restitution under a theory of quasi-contract or constructive trust. (See Hill v. Roll Internat. Corp. (2011) 195 Cal.App.4th 1295, 1307 [citing cases]; McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1490.)

The Court grants Plaintiffs leave to amend to plead a cause of action, other than a cause of action based on terms in the Purchase Agreement and amendments thereto, seeking restitution. The Court expresses no opinion as to whether Plaintiffs will be able to state such a cause of action.

Conversion

The demurrer is SUSTAINED with leave to amend.

Individual Defendants demur to the fourth cause of action on the ground the FAC fails to allege they, as individuals, borrowed and failed to return the Assisted Living Waiver (“ALW”) funds. In opposition, Individual Plaintiffs contend the FAC alleges Individual Defendants improperly took possession of the census payments.

Due to the confusion in how “Plaintiffs” and “Defendants” are now defined, the Court agrees that the FAC, as written, fails to allege Individual Defendants improperly took possession of any payments owed to the corporate entity Plaintiffs. Accordingly, the demurrer as to the cause of action for conversion is SUSTAINED with leave to amend as the Court is not persuaded Plaintiffs are unable to amend to cure the defects.

Conclusion

Individual Defendants’ demurrer is SUSTAINED with leave to amend. Plaintiffs may file and serve a Second Amended Complaint on or before March 26, 2018. Response to be filed and served within 30 days of service of the Second Amended Complaint, 35 days if served by mail.