Case Number: EC062289    Hearing Date: September 05, 2014    Dept: B

15. EC062289
JAMES M. SEXTON vs ASSOC. FOR LOS ANGELES CTY SHERIFFS
Demurrer and Motion to Strike Punitive Damages

The Complaint alleges that the Plaintiff and Defendant entered into a written agreement under which the Defendant agreed to provide legal representation to the Plaintiff for legal disputes arising from the Plaintiff’s employment with the Los Angeles Sheriff’s Department. The Defendant breached this agreement by refusing to pay legal fees to the Plaintiff for counsel he obtained to represent him.
In addition, the Defendant has caused emotional distress to the Plaintiff by failing to provide counsel to him before a federal grand jury, by engaging in dilatory and deceptive tactics regarding insurance coverage and membership fees, and by failing to indemnify him for the legal fees he incurred.
The Causes of action in the Complaint are for:
1) Breach of Contract
2) Breach of Implied Covenant of Good Faith and Fair Dealing
3) Intentional Infliction of Emotional Distress
4) Negligent Infliction of Emotional Distress

This hearing concerns the Defendant’s demurrer and motion to strike directed at the original Complaint.

An initial issue is that the Defendant requests that the Court take judicial notice of the bylaws of the Association for the Los Angeles Sheriffs’ Deputies, Inc. The Defendant cites to Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal. App. 4th 659, 666 n2 to support the request for judicial notice. In Performance Plastering, the plaintiff pleaded that it was a party to two settlement agreements. The trial court took judicial notice of the two settlement agreements to find that the plaintiff was not a party to the settlement agreements. The Court of Appeal upheld the trial court’s use of the settlement agreements on the ground that, even though the settlement agreements were “outside the four corners of the complaint”, there was no factual dispute concerning the contents of the agreements.
In the pending case, plaintiff claims that defendant is a labor union, of which he is a member. He contends that his union provides him with benefits, including legal representation. He sues for breach of this contract, which he identifies in his pleading requires that counsel be provided by the terms of the contact. Clearly, Plaintiff is claiming that he is a party to a contract with his union. This is similar to the pleading in Performance Plastering where the Court judicially noted the contract, alleged to be breached in the complaint. Plaintiff Further, in his opposition, the Plaintiff denies that the bylaws are enforceable or should be subject to Judicial Notice. But whether or not there is a dispute as to the enforceability of the contract, the by-laws of the union, subject to a breach of contract with the union, the Court may take judicial notice of the By Laws “and consider their contents even though they are outside the four corners of the complaint, as there is and can be no factual dispute concerning the contents of the agreement….” Performance Plastering v. Richmond American Homes of California, Id., at page 666, fn.2.

1. Demurrer Based on Failure to Exhaust Legal Remedies and on Failure to Submit Claim to Binding Arbitration

The Defendant’s argument regarding the failure to follow administrative remedies is based on the by-laws of the union. There is no allegation in the Complaint indicating whether Plaintiff exhausted the union grievance procedure or was excused from doing so. Plaintiff contends that a fair reading of the grievance procedure contained in the union by-laws demonstrates that filing a grievance with the union is permissive and not mandatory. The Court agrees.
Further, the Defendant’s argument regarding the arbitration clause is supported by no legal authority holding that the Court lacks jurisdiction to hear a claim arising from a contract that includes an agreement to arbitrate. Instead, the California Legislature has enacted a statutory scheme in CCP sections 1280 to 1294.2 that the Defendant may use to file a petition to compel arbitration, if it seeks to enforce this provision in the bylaws. It is unclear why the Defendant did not simply file a petition to compel arbitration rather than expend resources unnecessarily drafting and appearing on the pending demurrer and motion to strike. Whether the arbitration clause is to be enforced depends on a party moving for its enforcement. Defendant must follow the statutory scheme if it wishes to enforce the arbitration provision.
Accordingly, this is not grounds for a demurrer.

2. Demurrers to First Cause of Action for Breach of Contract and to Second Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealing
The Defendant argues that these causes of action lack sufficient facts because the Complaint does not include a copy of the contract. However, a copy of the contract is not required. Instead, under California law, in an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal. 4th 189, 198-199. In order to plead a contract by its legal effect, plaintiff must allege the substance of its relevant terms. McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1489. To do so, the Plaintiff must identify the contract. It is unclear from the complaint what contract between the parties is at issue. Is it the by-laws or some other agreement.
The Plaintiff alleges in paragraph 51 that the parties entered into a written agreement under which the Defendant agreed to provide the Plaintiff with legal representation. In paragraph 54, the Plaintiff alleges that the Defendant breached this agreement by refusing to pay his legal fees. Although this is sufficient to plead the legal effect because it identifies the terms of the agreement, i.e., the agreement to provide legal representation, it does not identify the contract itself. In a case such as this where multiple agreements may exist, a more definite identification of the contract is needed.
Accordingly, the Court sustains the demurrers to the first and second causes of action with 10 days leave to amend.

3. Demurrers to Third Cause of Action for Intentional Infliction of Emotional Distress and to Fourth Cause of Action for Negligent Infliction of Emotional Distress
The Defendant argues that these tort claims cannot be based on the breach of the contract at issue. Both causes of action are based on allegations that the Plaintiff suffered emotional distress because the Defendant failed to provide counsel, engaged in deceptive tactics regarding insurance coverage continuation and membership fees, and failed to indemnify him for his attorney’s fees. The third claims that this conduct was intentional and the fourth claims that this conduct was negligent.
Contract and tort are different branches of law. Contract law exists to enforce legally binding agreements between parties; tort law is designed to vindicate social policy. Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 683. The Supreme Court has cited to Professor Prosser to describe the essential difference between contract and tort law as follows:

[Whereas] [c]ontract actions are created to protect the interest in having promises
performed,’ ‘[t]ort actions are created to protect the interest in freedom from
various kinds of harm. The duties of conduct which give rise to them are imposed
by law, and are based primarily on social policy, and not necessarily based upon
the will or intention of the parties ‘
Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 176.

Conduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law. Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal. 4th 503, 514-516. The law imposes the obligation that every person is bound without contract to abstain from injuring the person or property of another, or infringing upon any of his rights. Id. This duty is independent of the contract and the omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty. Id.
The differences between contract and tort give rise to distinctions in assessing damages and in evaluating underlying motives for particular courses of conduct. Id. Contract damages seek to approximate the agreed-upon performance. Id. In the law of contracts the theory is that the party injured by breach should receive as nearly as possible the equivalent of the benefits of performance. Id. Under Civil Code section 3300, for the breach of an obligation arising from contract, the measure of damages is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.
Contract damages are generally limited to those within the contemplation of the parties when the contract was entered into or at least reasonably foreseeable by them at that time; consequential damages beyond the expectations of the parties are not recoverable. Applied Equipment, 7 Cal.4th at 515. This limitation on available damages serves to encourage contractual relations and commercial activity by enabling parties to estimate in advance the financial risks of their enterprise. Id.
In contrast, tort damages are awarded to compensate the victim for injury suffered. Id. at 516. Civil Code section 3333 provides that for the breach of an obligation not arising from contract, the measure of damages is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not.
Conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law. Erlich v. Menezes (1999) 21 Cal. 4th 543, 551. An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty. Id. Examples of cases permitting tort damages in contract cases are the following:

1) breaches of contractual duties that cause physical injuries;
2) breaches of the covenant of good faith and fair dealing in insurance contracts;
3) wrongful discharge in violation of public policy;
4) the fraudulent inducement of a contract.
Id. at 551-552.

In the pending case, the Plaintiff alleges in paragraph 67 of his third cause of action and in paragraph 75 of his fourth cause of action that the Defendant’s failure to provide counsel, it used dilatory and deceptive tactics regarding insurance coverage and membership fees, and its failure to indemnify caused him emotional distress. A comparison of these claims to the claims in the breach of contract causes of action reveal that the duties at issue arise from the Defendant’s obligations under the alleged contract to provide legal representation.
For example, the Plaintiff alleges that the Defendant failed to provide him with counsel when the Plaintiff appeared before a federal grand jury. The Defendant’s duty to provide legal representation arose from the private agreement of the parties because there is no duty independent of the contract arising from tort law that requires a party to provide a lawyer to another. Since the duty arose from the contract, the Defendant’s breach is not a tort.
Also, the Plaintiff’s claim regarding membership fees and the duty to indemnify also arise from the contract between the parties. These claims do not arise from duties independent of the contract arising from the principles of tort law.
In his opposition, the Plaintiff argues that the Defendant intentionally failed to provide him with a lawyer and that this makes the claim into a tort. However, whether the Defendant intentionally or negligently failed to provide the lawyer is irrelevant because the duty arose from the contract and the breach of a contract duty cannot be a tort.

Therefore, the Court sustains the demurrers to the third and fourth causes of action because they do not plead that the Defendant breached duties independent of the contract that arise from tort law. It is not reasonably possible to correct this defect by amendment because the breach of a contract duty cannot be a tort.
California law imposes the burden on the Plaintiff to demonstrate the manner in which he can amend his pleadings. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff does meet this burden because he does not offer any basis to find that he can correct the defect that his tort claims are based on the breach of obligations arising from the contract between the parties. Accordingly, the Court does not grant leave to amend.

4. Motion to Strike
The Defendant requests that the Court strike the claims for punitive damages from the second cause of action, the third cause of action, and the prayer for relief. CCP section 436 permits the Court to strike any portions of a pleading that are improper.

The second cause of action is for the breach of the implied covenant of good faith and fair dealing. Under California law, tort recovery, i.e., punitive damages, is permitted in a breach of the implied covenant of good faith and fair dealing only when the implied covenant arises from an insurance contract. Freeman & Mills v. Belcher Oil Co. (1995) 11 Cal.4th 85, 102-103. A review of the pleadings reveals no allegation that the parties had entered into a contract for insurance.
Accordingly, the Court strikes the claim for punitive damages in paragraph 64 of the second cause of action.

The third cause of action for intentional infliction of emotional distress should be removed by the demurrer. This will also remove the claim for punitive damages in paragraph 71.

Finally, the request for punitive damages in the prayer for relief is based on the allegations in the second and third causes of action. Since the claims for punitive damages in the second and third causes of action should be removed, the Complaint does not contain any basis to award punitive damages. Accordingly, the Court strikes the claim for punitive damages from the prayer for relief.

Therefore, the Court grants the Defendant’s motion to strike. It is not reasonably possible for the Plaintiff to correct these defects by amendment because his claims arise from the contract between the parties. Since it is not an insurance contract, the Plaintiff is limited to contract remedies.
Accordingly, the Court does not grant leave to amend.