Case Number: VC063236    Hearing Date: July 08, 2014    Dept: SEC

KUMAR v. TAN
CASE NO.: VC063236
HEARING: 07/08/14

#1
TENTATIVE ORDER

Cross-defendant PARMANAND KUMAR’s demurrer to the Second Amended Cross-Complaint (“FAXC”) is SUSTAINED WITHOUT LEAVE TO AMEND as to the breach of contract and promissory estoppel causes of action (1st through 4th) and OVERRULED with respect to the fraud claims (5th through 7th). C.C.P. § 430.10(e),(f).

Cross-defendant has 10 days within which to serve and file a responsive pleading.

This action arises out of a written lease agreement between plaintiff/cross-defendant Kumar and defendants/cross-complainants TRONG THAT TON and MIDNIGHT MANAGEMENT.

On April 22, 2014, this Court sustained with leave to amend cross-defendant’s prior demurrer. Essentially, the Court found that the allegations regarding an alleged oral agreement between the parties was uncertain, and that there may be a viable defense based on the statute of frauds and/or the parol evidence rule.

Cross-complainants filed the SAXC on May 12, 2014, asserting causes of action for breach of contract, fraud, promissory estoppel and constructive eviction. Cross-defendant Kumar again demurs to each of the claims.

The written lease agreement is not attached to the pleading (despite the Court’s previous instruction), but is attached to the moving papers. Cross-complainants do not contest the existence of the agreement, which is referenced throughout the SAXC. The Court must consider the terms of the writing to evaluate the viability of the claims alleged.

As alleged, the lease was signed on January 27, 2012. SAXC, ¶12. The lease contains the following provisions: the premises were leases “AS-IS” (¶2.2), any alterations to utilities must be done with the prior written consent of Lessor and any request for such must be presented to the Lessor in written form (¶¶7.3(a),(b)), and Lessee to provide a $50,000 deposit, refundable after deducting any damages cause by the lease and non-refundable if Lessee breaks the 3-year term of the lease (¶55).

Cross-complainants’ 1st cause of action for breach of oral contract is based on cross-defendant’s alleged agreement to install an additional electrical system. That promise was allegedly made in January 2012, prior to the execution of the lease. See SAXC, ¶¶6, 7.

The 2nd cause of action for reach of oral contract is premised on the $50,000 payment being one for liquidated damages due if cross-defendant failed to install the electrical system or obtain the necessary permits for the property.

The first two causes of action do not plead actionable claims because cross-complainants are attempting to enforce alleged oral agreements which contradict the terms of the writing. Parol evidence may be used where the terms of the agreement itself are ambiguous but that is not the case here; it cannot be used to alter the terms of the writing. Casa Herrera, Inc. v. Beydowm (2004) 32 Cal.4th 336, 343. The lease contains an express statement that “no other prior or contemporaneous agreements or understanding shall be effective.” ¶22. Enforcement of the alleged oral agreements is barred as a matter of law. The demurrer is sustained without leave to amend as to the 1st and 2nd causes of action.

The 4th cause of action for “breach of contract” is also based upon the two oral promises. Cross-complainants allegation that those oral agreements were “modifications” of the written lease (¶62) contradicts the allegations that the alleged oral agreements were made prior to the execution of the lease. Logically, a prior oral agreement cannot modify a later writing. The demurrer to the 4th cause of action is sustained without leave to amend.

In the 3rd cause of action for promissory estoppel, cross-complainants allege that they relied to their detriment on the oral promises. They contend separate consideration was given for each. SAXC, ¶¶36, 43, 59. The doctrine of promissory estoppel is a means of enforcing a contract where there is no consideration, but the party asserting the claim reasonably relied on the promise to his detriment; it does not apply where there was separate consideration for the agreement. Avidity Partners, LLC v. State of Calif. 92013) 221 Cal.App4th 1180. The demurrer to the 3rd cause of action is sustained without leave to amend.

Although cross-complainants cannot enforce the alleged oral agreements in contract, the Court finds that the allegations support the fraud causes of action. The parol evidence rule cannot be sued as a shield to prevent a claim of fraud. Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Ass’n (2013) 55 Cal.4th 1169. The allegations regarding cross-defendant’s misrepresentations are specific, as are the claims of cross-complainants’ reliance. Cross-defendant’s fraudulent intent can be inferred from the circumstances. The demurrer to the 5th through 7th causes of action is overruled.