Case Number: EC062149    Hearing Date: September 05, 2014    Dept: B

14. EC062149
FRANK J. LOZOYA vs INTERNAT’L BROADCASTING CONS.
Demurrer and Motion to Strike Cross-Complaint
Case Management Conference

The Cross-Complaint alleges that the Cross-Defendant provided legal services to the Cross-Complainants on several legal cases. The Cross-Complainants dispute the amount owed to the Cross-Defendants and seeks damages for fraudulently charged fees.
The causes of action in the Cross-Complaint are:
1) Attorney Fee Dispute
2) Breach of Contract
3) Breach of Fiduciary Duty
4) Unjust Enrichment
5) Quantum Meruit
6) Promise without Intent to Perform
This hearing concerns the Cross-Defendant’s demurrer to each cause of action and motion to strike the claim for punitive damages.

1. Demurrer to First Cause of Action for Attorney Fee Dispute
The Cross-Defendant argues that this is not a cause of action. A review of the cause of action reveals that it does not plead any claim for damages. Instead, the paragraphs in the first cause of action identify the cases on which the Cross-Defendants provided legal services, the amounts billed, and amount of fees that the Cross-Complainants allege they owe, which is $61,200.
There is no legal theory pleaded. There are no elements pleaded. This is not a cause of action.

The opposition papers argue that this is a cause of action “on the contract”. However, the opposition papers do not identify the nature of the cause of action. Since there is a second cause of action for breach of contract, it appears that the first cause of action is duplicative.

Accordingly, the Court sustains the demurrer to the first cause of action. Since no legal theory is pleaded in the first cause of action, it is not possible to correct this by amendment. Therefore, the Court does not grant leave to amend.

2. Demurrer to Second Cause of Action for Breach of Contract
The Cross-Defendant argues that the Cross-Complainant, Irfan Merchant, does not have standing to bring this claim because he was not a party to the contract. A breach of contract claim must include the following:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

A review of the second cause of action reveals that it does not plead the first element. In paragraph 30, the Cross-Complainants allege that the Cross-Defendant “breach said contract” (sic). There are no allegations that identify “said contract”. This is insufficient to plead that a contract existed between the parties.
Further, a review of allegations one to twenty-nine reveals that the Cross-Defendants provided legal services on a number of cases. In paragraph 8, the Cross-Complainants allege that International Broadcast Consultants, through its CEO, Irfan Merchant, signed a contingency fee agreement with the Cross-Defendant. This indicates that there was an agreement between International Business Consultants and the Cross-Defendant. There are no allegations indicating that Irfan Merchant was a party or that he entered into a separate agreement with the Cross-Defendants. This is insufficient to plead that a contract existed between Irfan Merchant and the Cross-Defendant.

Accordingly, the Court sustains the demurrer to the second cause of action with respect to Cross-Complainant, Irfan Merchant. It does not appear reasonably possible to correct this defect by amendment because Irfan Merchant was not a party to the agreement between International Broadcast Consultants and the Cross-Defendant. Therefore, the Court does not grant leave to amend.

3. Demurrer to Fourth Cause of Action for Fraud
The Cross-Defendant argues that this cause of action lacks the particular facts needed to plead a claim for fraud. The elements of a fraud cause of action are the following:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of fraud must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.

The Cross-Complainants allege in paragraphs 41 to 46 that the Cross-Defendant made promises or agreements to secure the written fee agreement. These statements were that there would be no additional legal fees other than the 42% contingency fee, that Irfan merchant would not be liable for the debt, and that the Cross-Defendants would contribute $90,000 of their legal fees to help pay legal fees due to the Cross-Complainants’ prior counsel. There are no allegations that identify how, when, where, to whom, or by what means these representations were made. This is insufficient to plead the fraud claim.

Accordingly, the Court sustains the demurrer to the fourth cause of action. Since it is reasonably possible to correct these defects by amendment, the Court grants 10 days leave to amend.

4. Demurrer to Fifth Cause of Action for Conversion
The Cross-Defendant argues that there is no cause of action for conversion of money. This is not accurate.
Under California law, money can be the subject of an action for conversion if a specific sum capable of identification is involved. Munger v. Moore (1970) 11 Cal. App. 3d 1, 7. A claim for conversion must allege the following elements:

1) Plaintiff had the right of ownership and possession to the property converted;
2) Defendant unlawfully took the property, and
3) the value of the property converted.
Taylor v. S & M Lamp Co. (1961) 190 Cal. App. 2d 700, 705.

The Cross-Complainants allege in paragraph 55 that the Cross-Defendant received a settlement check in 2013 in case BC427454, and that the Cross-Defendant refuses to deliver funds due in the amount of $68,000. These allegations identify a specific sum capable of identification.
Accordingly, the Court overrules the demurrer to the fifth cause of action because the Cross-Defendant did not identify any grounds for a demurrer.

5. Demurrer to Sixth Cause of Action for Declaratory Relief
The Cross-Defendant argues that this cause of action lacks sufficient facts.
It is general rule that in an action for declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a contract and requests that the rights and duties be adjudged. City Of Tiburon v. Northwestern Pac. R.R. Co. (1970) 4 Cal. App. 3d 160, 170; see CCP section 1060 (identifying the remedy of declaratory relief). If these requirements are met, the Court must declare the rights of the parties whether or not the facts alleged establish that the plaintiff is entitled to a favorable declaration. Declaratory relief is a broad remedy, and the rule that a complaint is to be liberally construed is particularly applicable to one for declaratory relief.

A review of the sixth cause of action reveals that it does not identify an actual controversy between the parties. Instead, the Cross-Complainants pleaded two paragraphs. The first, paragraph 61, seeks a ruling that the contingent fee agreement is void. The second, paragraph 62, pleads that no contract for hourly legal services existed. It appears that the Cross-Complainants are claiming that an actual controversy exists between the parties regarding the Cross-Defendant’s right to fees under the agreement between the parties. However, this was not pleaded in the cause of action.

Accordingly, the Court sustains the demurrer to the sixth cause of action. Since it is reasonably possible to correct these defects by amendment, the Court grants 10 days leave to amend.

6. Motion to Strike
The Cross-Defendant requests that the Court strike the following portions from the Cross-Complaint:

1) the first cause of action;
2) the fifth cause of action;
3) the allegations supporting the request for punitive damages in the third cause of action;
4) the allegations supporting the request for punitive damages in the fourth cause of action;
5) the allegations supporting the request for punitive damages in the fifth cause of action; and
6) the second, third, fourth, and sixth causes of action brought by Irfan Merchant.

First, under California law, it is improper for a Court to strike a whole cause of action of a pleading under CCP section 436. Quiroz v. Seventh Ave. Center (2006) 140 Cal. App. 4th 1256, 1281. Where a whole cause of action is the proper subject of a pleading challenge, the Court sustains a demurrer to the cause of action rather than grant a motion to strike. Id. Accordingly, the Court denies the request to strike the first and fifth causes of action and the request to strike the causes of action brought by Irfan Merchant.

Second, the requests to strike the claims for punitive damages in the fourth cause of action for fraud is moot because the demurrer to this cause of action is sustained.

The remainder of the motion to strike concerns the claims for punitive damages in the third and fifth causes of action. A complaint including a request for punitive damages must include allegations showing that the plaintiff is entitled to an award of punitive damages. Clauson v. Superior Court (1998) 67 Cal. App. 4th 1253, 1255. Under Civil Code section 3294, a plaintiff may recover an award of punitive damages on a showing that the defendant acted with malice, oppression, or fraud. A claim for punitive damages cannot be pleaded generally and allegations that a defendant acted “with oppression, fraud and malice” toward plaintiff are insufficient legal conclusions. Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.

The third cause of action is for breach of fiduciary duty. The Cross-Complainants allege that the Cross-Defendant owed a duty of competence and care and that the Cross-Defendant breached this duty. In paragraph 39, the Cross-Complainants allege that the actions of the Cross-Defendant were done with the intent to defraud and were malicious and oppressive. There are no allegations that support this legal conclusion, which is insufficient to support the claim for punitive damages.
Accordingly, the Court grants the request to strike the claim for punitive damages in paragraph 39 of the third cause of action. Since it is reasonably possible to correct this by amendment, the Court grants 10 dsays leave to amend.

The fifth cause of action is for conversion. The allegations indicate that there is a dispute about the amount of attorney’s fees that the parties agreed to pay the Cross-Defendant for the legal services he rendered to the Cross-Complainants. In paragraph 59, the Cross-Complainants allege that the actions of the Cross-Defendant were done with the intent to defraud and were malicious and oppressive. There are no allegations that support this legal conclusion, which is insufficient to support the claim for punitive damages.
Accordingly, the Court grants the request to strike the claim for punitive damages in paragraph 59 of the fifth cause of action. Since it is reasonably possible to correct this by amendment, the Court grants 10 days leave to amend.
Accordingly paragraphs 39 and 59 are stric