Case Name:   Integrated Communications Systems v. Bogard Construction, Inc., et al.

Case No.:       1-14-CV-260167

 

Currently before the Court is the demurrer of defendants Bogard Construction, Inc. (“Bogard”) and Liberty Mutual Insurance Company (“Liberty”) (collectively, “Defendants”) to the first amended complaint (“FAC”) of plaintiff Integrated Communications Systems (“ICS”).  Defendants demur to the first, second, third, and sixth causes of action for breach of written contract; breach of partially oral, partially written contract; breach of contract implied by conduct; and recovery on payment bond, respectively, asserted in the FAC on the ground that ICS fails to allege facts sufficient to constitute a cause of action.  (Code Civ. Proc., § 430.10, subd. (e).) Defendants also demur to the third cause of action for breach of contract implied by conduct on the ground that it is uncertain. (See Code Civ. Proc., § 430.10, subd. (f).)

 

Procedural Matter

 

In its opposition, ICS requests leave to amend the FAC in order to allege a cause of action for promissory estoppel. The request is DENIED WITHOUT PREJUDICE.  If ICS wishes to file an amended pleading, absent a stipulation and order it must file a formal motion for leave to amend in compliance with California Rules of Court, rule 3.1324.

 

First Cause of Action for Breach of Written Contract and Second Cause of Action for Breach of Partially Oral, Partially Written Contract

 

Defendants contend that ICS cannot allege a cause of action for breach of written contract because there is no written contract entered into between ICS and Bogard.  In opposition, ICS argues that there is a written contract between Bogard and itself because “Bogard, by its promises and conduct, assumed the obligations of Applegate under the written Subcontract between ICS and Applegate….” (Opp’n., p. 3:19-21.)

 

Here, ICS does not allege a written agreement entered into between Bogard and ICS. (FAC, p. 4:8-12.)  Instead, ICS alleges that the parties agreed to a new oral contract, incorporating the terms of the written subcontract between ICS and Applegate. (See FAC, p.4:8-12.)  Therefore, as ICS does not incorporate by reference or allege the material effect of a written agreement entered into between Bogard and ICS, ICS fails to allege sufficient facts to constitute a cause of action for breach of written contract. Accordingly, the demurrer to the first cause of action for breach of written contract is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

 

In contrast, ICS does allege sufficient facts to state a cause of action for breach of a partially written and partially oral contract. A partly written and partly oral contract is in legal effect a contract, the terms of which may be proven by both written and oral evidence. (See Lande v. Southern California Freight Lines (1948) 85 Cal.App.2d 416, 421.)  ICS has alleged each of the essential terms of a contract between itself and Bogard by reference to both written evidence (i.e. the incorporated terms of the subcontract between Applegate and ICS) and oral evidence (i.e. Bogard’s assumption of the terms of the subcontract).  Accordingly, the demurrer to the second cause of action for breach of a partially written and partially oral contract is OVERRULED.

 

Third Cause of Action for Breach of Implied-In-Fact Contract

 

Defendants contend that ICS fails to state sufficient facts to constitute a cause of action for breach of an implied-in-fact contract because it does not allege specific facts concerning the conduct that gave rise to the contract.

 

A cause of action for a breach of an implied-in-fact contract may be generally pleaded. (See Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 247 [“[O]nly the facts from which the promise is implied must be alleged. [Citation.]”].)

 

Here, ICS alleges the conduct giving rise to the performance (FAC, p. 3:13-14 [Bogard’s instruction to continue performance of the subcontract]), when the contract was formed (FAC, p. 3:13-14 [after Applegate declared bankruptcy]), the scope of the work to be performed (FAC, p. 3:14-11, Ex. A [the construction and installation of audiovisual and paging systems as itemized in the subcontract attached to the FAC]), the payment terms (FAC, Ex. A [as itemized in the subcontract attached to the FAC]), and the basis for the breach (FAC, p. 3:24-25 [Bogard’s refusal to pay $100,026 due and owing under the subcontract]). Thus, ICS states facts sufficient to constitute a cause of action for the breach of an implied-in-fact contract.  Accordingly, the demurrer on this ground is OVERRULED.

 

Next, Defendants demur to the third cause of action on the ground that it is uncertain. “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)  A demurrer for uncertainty will be sustained only where the complaint is so incomprehensible that a defendant cannot reasonably respond. (See Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.)  The allegations of the FAC are sufficient to allow Defendants to reasonably determine the issues to be admitted or denied and the claims directed against them. Any perceived ambiguities can be clarified in discovery. Accordingly, the demurrer on this ground is OVERRULED.

 

The Sixth Cause of Action for Recovery on Payment Bond

 

             Defendants contend that ICS has failed to serve a preliminary notice to either Bogard or Liberty of its intention to enforce a claim against a payment bond in violation of Civil Code section 9560. In opposition, ICS asserts that it is not required to serve such a notice because it has a direct contractual relationship with Bogard, the general contractor.

 

Under Civil Code section 9560, subdivision (a), “[i]n order to enforce a claim against a payment bond, a claimant shall give the preliminary notice provided in Chapter 3 (commencing with Section 9300).”  In turn, Section 9300 provides that: “(a) … before … asserting a claim against a payment bond, a claimant shall give preliminary notice to the following persons: [¶] (1) The public entity. [¶] (2) The direct contractor to which the claimant provides work. [¶] (b)  Notwithstanding subdivision (a): [¶] … (2) A claimant that has a direct contractual relationship with a direct contractor is not required to give preliminary notice.”  A “direct contractor” means a contractor that has a direct contractual relationship with an owner. (Civ. Code, § 8018.)

 

Here, ICS alleges that, once Bogard assumed its subcontract with Applegate, it had a direct contractual relationship with Bogard (the “direct contractor”) and is therefore not required to file a preliminary notice to either Liberty or Bogard. A plain reading of the statute indicates that, as ICS has alleged a direct contractual relationship with Bogard, it is exempt from the preliminary notice requirement.

 

As ICS has sufficiently alleged facts indicating that the preliminary notice requirement does not apply to it, and Defendants do not contend that the cause of action for recovery on the payment bond is otherwise insufficient, the demurrer to the sixth cause of action is OVERRULED.