Case Name: John O’Reilly v. Christopher Roselli, et al.
Case No.: 1-13-CV-257044

Plaintiff/cross-defendant John O’Reilly (“Plaintiff” or “Cross-Defendant”) demurs to the answer of defendants/cross-complainants Christopher Roselli (“Roselli”), Jean Michel Morot-Gaudry (“Morot-Gaudry”), and HHL Corp. (“HHL”) (collectively, “Defendants” or “Cross-Complainants”) on the grounds of uncertainty, failure to allege whether a contract is written oral, or implied, and failure to allege sufficient facts to constitute a defense. (See Code Civ. Proc. [“CCP”], § 430.20, subds. (a)-(c).)

Cross-Defendant also demurs to the cross-complaint (“XC”) by Cross-Complainants on the grounds of lack of capacity to sue, failure to allege sufficient facts to constitute a cause of action, and failure to allege whether a contract is written, oral, or implied. (See CCP, § 430.10, subds. (b), (e), and (g).)

Cross-Complainants’ request for judicial notice in support of their opposition to the demurrer to the XC is DENIED. (Cal. Rules of Court, rule 3.1113(l) [request for judicial notice must be made in a separate document].)

Plaintiff’s demurrer to the second through fifth affirmative defenses in the answer on the ground of uncertainty is OVERRULED. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616 [demurrer for uncertainty will only be sustained where any ambiguity in the pleading cannot be clarified under modern discovery procedures].)

Plaintiff’s demurrer to the second affirmative defense in the answer on the ground of failure to allege whether a contract is written, oral, or implied by conduct is OVERRULED. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [“South Shore”] [“determination of the sufficiency of the answer requires an examination of the complaint because its adequacy is with reference to the complaint it purports to answer”].) This defense is raised in connection with the first cause of action in the first amended complaint (“FAC”), which is based on an alleged written contract. (FAC, ¶ 9.)

Plaintiff’s demurrer to the first and third affirmative defenses in the answer on the ground of failure to allege sufficient facts to constitute a defense is OVERRULED. The answer alleges sufficient facts to support the claim that the parties entered into a settlement agreement that bars Plaintiff’s claims. (Answer, ¶¶ 3-11.) The third “affirmative defense” is a general denial to the allegation that Plaintiff performed as agreed and does not assert any new matter. (See South Shore, supra.)

Plaintiff’s demurrer to the second and fourth affirmative defenses in the answer on the ground of failure to allege sufficient facts is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Defendants assert the affirmative defense of lack of mutual consent, i.e. that their consent to a contract was obtained by fraud, but do not specifically allege what Plaintiff’s false representations were, or “how, when, where, to whom, and by what means the [fraudulent] representations were tendered.” (See Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 [“Stansfield”].) Defendants also assert the affirmative defense of failure to mitigate damages, but do not plead that Plaintiff’s conduct was unreasonable or what acts Plaintiff should have engaged in to reduce his damages. (See Erler v. Five Points Motors, Inc. (1967) 249 Cal.App.2d 560, 568 [the affirmative defense of mitigation of damages must allege “what he could have done with the exercise of reasonable diligence and effort”].) In addition, Defendants assert the affirmative defense of unclean hands, but do not plead how Plaintiff’s alleged conduct is connected to any matter in dispute. (See California School Employees Assn., Tustin Chapter No. 450 v. Tustin Unified School Dist. (2007) 148 Cal.App.4th 510, 523, citation omitted.)

Cross-Defendant’s demurrer to each cause of action and to the XC as a whole on the ground of lack of capacity is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND as to HHL, and OVERRULED as to Roselli and Morot-Gaudry. (See CCP, § 430.10, subd. (b).) The caption to the XC states that HHL is a suspended corporation (see Los Angeles Ry. Co. v. Davies (1905), 146 Cal. 179, 181, citations omitted [lack of capacity must appear from the face of the pleading]), but no allegations suggest that Roselli and/or Morot-Gaudry lack legal capacity.

Cross-Defendant’s demurrer to the first cause of action in the XC on the ground of failure to allege sufficient facts is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Cross-Complainants’ fraud claim is based on two alleged misrepresentations: (1) Cross-Defendant “represented to HHL that he could do some monthly baseline tasks, which would be billed on an hourly basis,” and “also said he could do project-specific tasks as needed by HHL” (XC, ¶ 92); and (2) Cross-Defendant “represented to HHL that he would prepare a white paper for HHL to show potential investors” (id., ¶ 98). These allegations lack the requisite specificity. (See, e.g., Stansfield, supra, at p. 73.)

Cross-Defendant’s demurrer to the second cause of action in the XC on the ground of failure to allege sufficient facts is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The existence of a fiduciary duty, as with duties of care generally, is a question of law, but the pleading must allege facts that cause a duty to arise or from which it can be inferred. (Kirschner Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d 784, 790; Guilliams v. Hollywood Hosp. (1941) 18 Cal.2d 97, 99; Vescovo v. New Way Enterprises, Ltd. (1976) 60 Cal.App.3d 582, 589.) Cross-Complainants do not allege sufficient facts for the Court to infer that a fiduciary duty exists, since a commercial relationship does not necessarily create a fiduciary duty. (See XC, ¶¶ 18 & 123-125; see also McCann v. Lucky Money, Inc. (2005) 129 Cal. App. 4th 1382, 1398.)

Cross-Defendant’s demurrer to the third cause of action in the XC on the ground of failure to allege sufficient facts is OVERRULED. (See North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 774, [where a pleading alleges that a defendant negligently performed under a contract for services, the plaintiff may seek to recover under either a contract theory or a tort theory of liability, and “[i]n such a hybrid circumstance, the plaintiff is entitled to pursue both legal theories until an occasion for an election of remedies arises”] citation omitted.) Cross-Complainants allege sufficient facts for the Court to infer that Cross-Defendant owed them a duty of care when performing certain services, irrespective of whether Cross-Complainants’ alleged “retain[ing]” of Cross-Defendant to perform such services was a contract. (Id., ¶ 135-137.)

Cross-Defendant’s demurrer to all three causes of action in the XC for failure to allege whether a contract is written, oral, or implied is OVERRULED. (See CCP, § 430.10, subd. (g) [providing a ground for a demurrer “[i]n an action founded upon a contract”].) These three claims are “founded” upon the existence of alleged legal duties that are separate from any alleged contractual duties.