Case Name: Giuliani Construction and Restoration Inc. v. Simoncini & Associates, et al.
Case No.: 17-CV-316089

This is a breach of contract action initiated by plaintiff Giuliani Construction and Restoration Inc. (“Plaintiff”) against defendants Simoncini & Associates (“S&A”), Kenneth Simoncini (“Simoncini”), S&A’s sole proprietor, and Nannette Leduc, an employee of S&A (collectively “Defendants”).

According to the allegations of the complaint (“Complaint”), S&A’s property located at 1694 The Alameda, San Jose, California (“Subject Property”) suffered “a water loss,” causing significant damage. (Complaint, ¶¶ 2, 8.) S&A and Simoncini hired Plaintiff, a licensed contractor, to mitigate the water damage and the parties entered into a contract to that effect. (Id. at ¶¶ 9, 13.) Plaintiff performed that work and Simoncini paid it accordingly. (Id. at ¶ 9.)

The parties then expanded the agreed-upon scope of work to include repair to the damaged property. (Complaint, ¶¶ 10, 14.) Plaintiff sent Simoncini a written estimate for work to be performed pursuant to the modified contract detailing all necessary repairs and materials. (Id. at Exh. B.) Although Plaintiff performed all of the additional work, it has not been paid. (Id. at ¶ 11.)
Plaintiff alleges five causes of action for breach of written contract, breach of oral contract, promissory estoppel, common count for account stated, and common count for goods and services rendered.

Defendants presently demur to each cause of action on the ground of failure to state sufficient facts to constitute a cause of action. Plaintiff opposes the demurrer and requests an award of sanctions.

I. Request for Judicial Notice

In support of their demurrer, Defendants request judicial notice of the Complaint. While court records are proper subjects for judicial notice pursuant to Evidence Code section 452, subdivision (d), it is unnecessary to take judicial notice of the pleading under review on demurrer. (See Paul v. Patton (2015) 235 Cal.App.4th 1088, 1091, fn. 1.) Accordingly, the request for judicial notice is DENIED.

II. Merits of the Demurrer

A. First Cause of Action

The first cause of action for breach of written contract is predicated on Defendants’ failure to pay Plaintiff for the work performed pursuant to the modified contract, i.e. repairing the water damage and providing certain construction materials.

Defendants first argue Plaintiff fails to state a claim because it does not set forth the essential terms of the modified contract with sufficient detail. Particularly, Defendants insist Plaintiff does not specify “what work was actually contracted for and performed” because it only alleges it was to “supply work and materials.” (Mem. Ps. & As., p. 3:18-20.)
To plead the existence of a contract, its essential elements must be alleged in reasonably certain terms. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1174.) “The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.” (Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 777 [allegation that defendant promised large bonus to plaintiff in exchange for working at company until it was sold was sufficiently certain].)
Here, Plaintiff adequately alleges the terms of the modified contract. The pleading reflects Plaintiff was to perform certain repairs which also required providing necessary materials. (Complaint, ¶¶ 10, 14.) The particular work and materials were identified in the estimate attached to the Complaint, which Plaintiff alleges set forth the work that is the subject of the modified contract. (Id. at ¶ 14, Exh. B.) Further, the estimate provides that the work would cost $83,297.25, which is the amount of damages claimed by Plaintiff. (Id. at ¶ 19, Exh. B.) As such, the existence of a breach and appropriate remedy can be ascertained from the face of the pleading.

Defendants additionally contend this cause of action is barred by the statute of frauds, particularly Uniform Commercial Code section 2201 (“Section 2201”), which provides that a contract for the sale of goods for the price of $500 or more is not enforceable unless memorialized by a “writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought[.]” In other words, Section 2201 “creates a statute of frauds for the sale of all goods with the value of $500 or more.” (Allied Grape Growers v. Bronco Wine Co. (1988) 203 Cal.App.3d 432, 439.) A general demurrer will lie where the complaint is barred by the statute of frauds. (Parker v. Solomon (1959) 171 Cal.App.2d 125, 136.)
Defendants’ argument is problematic because it does not appear that Section 2201 governs. Defendants presume this section applies, but do not discuss how they came to this conclusion. Presumably, they consider the modified contract to be one for the sale of goods. UCC section 2105 defines goods as “all things . . . which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid, investment securities . . . and things in action.”

“In determining whether the agreement was for the sale of goods or the provision of services, [the court] must look to the essence of the agreement. When service predominates, the incidental sale of items of [ ] property [ ] does not alter the basic transaction.” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1186, internal citations and quotation marks omitted.) Here, it is clear from the face of the pleading and the estimate attached thereto that the purpose of the modified contract was to provide services. Plaintiff expressly alleges Simoncini hired it to perform repair work. (Complaint, ¶¶ 10, 14.) Moreover, the estimate predominantly describes services to be performed, such as installing drywall, painting the surface area, treating windows, and masking and covering light fixtures. (Id. at Exh. B.) Although the estimate also includes some materials, there is no basis for concluding it actually encompassed the sale of goods as opposed to simply obtaining materials required to perform the necessary repair work. (See ibid.) Even if providing necessary materials could be characterized as the sale of goods, it was incidental to the purpose of the modified contract—repair work. Because the modified contract was principally for the provision of services, it is not subject to Section 2201. Consequently, Defendants’ argument that the modified contract is barred by Section 2201 is without merit.

Even assuming Section 2201 applies, Defendants’ argument is otherwise misguided because this cause of action is founded upon a written contract. Though not explicitly stated, Defendants presumably believe the statute of frauds is implicated because Plaintiff purportedly failed to adequately allege the existence of a written contract. The statute of frauds, however, is not implicated in the first instance because the cause of action is predicated on a written contract and Plaintiff’s purported failure to allege reasonably certain terms would not alter the type of contract alleged.
In light of the above, the demurrer to the first cause of action is OVERRULED.

B. Second Cause of Action

The second cause of action for breach of oral contract is for the nonpayment for services rendered and materials provided. (Complaint, ¶ 21.) This cause of action is pleaded in the alternative to the first cause of action for breach of written contract. (Ibid.)

Defendants argue no cause of action has been stated based on the same statute of frauds argument asserted in connection with the first cause of action. Although this cause of action is predicated on an oral contract in contrast to the first cause of action, Defendants’ argument is still unavailing because the pleading does not reflect the modified contract falls within Section 2201 for the reasons discussed above.

Accordingly, the demurrer to the second cause of action is OVERRULED.

C. Third Cause of Action

The third cause of action for promissory estoppel alleges Defendants represented to Plaintiff that it would be paid for all work and materials provided in connection with the water damage repair. (Complaint, ¶ 26.) In reliance on such representations, Plaintiff performed the repairs and provided the necessary materials. (Id. at ¶¶ 27-28.)
Defendants assert Plaintiff fails to state a claim because it alleges its reliance was bargained for in connection with the breach of contract causes of action.
“A cause of action for promissory estoppel is a claim in equity that substitutes reliance on a promise for consideration ‘in the usual sense of something bargained for and given in exchange.’” (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1412–1413 (“Fleet”), quoting Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 249.) It is distinct from a claim sounding in contract because the element of detrimental reliance is regarded as a substitute for consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 242.) Thus, “where the promisee’s reliance was bargained for, the law of consideration applies; and it is only where the reliance was unbargained for that there is room for application of the doctrine of promissory estoppel.” (Id. at pp. 243–44, citations omitted.)

While it is true that Plaintiff pleads its reliance was bargained for in connection with the breach of contract causes of action, Defendants’ argument is without merit because Plaintiff may plead alternative counts. “[T]he modern practice allows that party to plead in the alternative and make inconsistent allegations.” (Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1402; see also Crowley v. Katleman (1994) 8 Cal.4th 666, 691 [pleading alternative factual or legal theories is appropriate “when the pleading is in doubt as to which theory most accurately reflects the events and can be established by the evidence”].) Courts have specifically allowed a plaintiff to plead causes of action for promissory estoppel and breach of contract based on the same facts, even though the causes of action have conflicting elements. (Fleet, supra, 229 Cal.App.4th at p. 1413.) Therefore, a plaintiff may allege “facts that could support a cause of action for promissory estoppel . . . in the event that [he or she] cannot establish a cause of action for breach of contract.” (Ibid.) Consequently, the fact Plaintiff alleges a bargained for promise relative to the breach of contract causes of action does not render this cause of action defective.

Therefore, the demurrer to the third cause of action is OVERRULED.

D. Fourth and Fifth Causes of Action
The fourth and fifth causes of action are for common counts and are predicated on the same facts as the preceding causes of action.
Defendants contend these claims are subject to demurrer since they are based on the same facts as the first and second causes of action and those claims are defective. In support, Defendants cite the general rule that “[w]hen 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” ordinarily “must stand or fall with [the] cause of action.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394-95.) However, the demurrer to the first and second causes of action is without merit for the reasons discussed above. Therefore, the demurrer to these causes of action also fails.
Consequently, the demurrer to the fourth and fifth causes of action is OVERRULED.
III. Request for Sanctions
In its opposition, Plaintiff seeks an award of sanctions against Defendants and their counsel pursuant to Code of Civil Procedure section 128.5 (“Section 128.5”), which provides that “[a] trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.” Section 128.5, as amended effective 1/1/2018, allows a court to issue sanctions “subject to the conditions stated” in the statute, including that the “motion for sanctions . . . shall be made separately from other motions or requests[.]” (Code Civ. Proc., § 128.5, subd. (f)(1)(A).) The statute also contains a safe harbor provision providing that “[i]f the alleged action or tactic is the making of a motion or the filing and service of a . . . responsive pleading that can be withdrawn or appropriately corrected, a notice of motion shall be served as provided in Section 1010, but shall not be filed with or presented to the court, unless 21 days after service of the motion or any other period as the court may prescribe, the challenged action or tactic is not withdrawn or appropriately corrected.” (Code Civ. Proc., § 128.5, subd. (f)(1)(B).)

Plaintiff did not file a separate motion, which in itself may not be fatal as notice of a request for sanctions may still be presented in responding papers under §128.5(c). Even assuming Plaintiff has properly made this request in opposition, it did not otherwise comply with the 21-day safe harbor provision and other requirements of the statute as amended. Compliance was required because the subject action or tactic was the filing and service of a responsive pleading, i.e. the demurrer, which could be withdrawn prior to the hearing. Further, Plaintiff has not sufficiently demonstrated the alleged subjective bad faith that appears to be required under the amended statute.

Plaintiff’s request for sanctions is DENIED.