Case Name: Ali v. FusionStorm, Inc.
Case No.: 17-CV-312165

Defendant FusionStorm, Inc. (“Defendant”) demurs to the first amended complaint (“FAC”) filed by plaintiff Syed Nazim Ali (“Plaintiff”).

This is an action for breach of contract and misrepresentation. Defendant allegedly acted as an intermediary to assist Plaintiff, a cyber security consultant, in securing employment with a third party to service one of Defendant’s clients, Gilead Sciences (“Gilead”). According to the allegations of the FAC, in November 2015, Plaintiff and Defendant entered into a partially written and partially oral contract pursuant to which Plaintiff was to begin working with Gilead. (FAC, ¶ 8.) The contract provided that the term of employment was to be no less than 6 months, while Defendant represented that the term would be between 6 and 36 months. (Id.) Plaintiff was initially advised that he would start work on November 22, 2015, however, the date was moved several times and he ultimately did not begin working for Gilead until January 4, 2016. (Id., ¶ 12.) Plaintiff’s last day of work at Gilead was May 5, 2016; his employment lasted only four months. (Id., ¶ 13.)

Plaintiff alleges that Defendant knew that the job would lastly only 4 months when it told him it could last longer, and did so in order to convince him to accept the offer. (FAC, ¶ 14.) In reliance on the promise of 6 to 36 months of employment, Plaintiff passed up other employment opportunities and relocated from Southern California, incurring significant costs and losses as a result. (Id., ¶ 15.)

On September 12, 2017, Plaintiff filed the FAC asserting the following causes of action: (1) intentional misrepresentation; (2) negligent misrepresentation; (3) breach of contract; (4) promissory estoppel; and (5) violation of Labor Code § 970. On October 17, 2017, Defendant filed the instant demurrer to the FAC and each of the five causes of action asserted therein on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Plaintiff opposes the motion.

In demurring to the first and second causes of action for intentional misrepresentation and negligent misrepresentation, respectively, Defendant insists that its alleged assertions to Plaintiff about when he would start work and how long that work would last cannot, as a matter of law, give raise to these claims because “predictions as to future events, or statements as to future action by some third party, are deemed opinions and not actionable fraud.” (Def’s Memo. at 5:11-13, quoting Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158.) While Defendant is generally correct that for a representation to give rise to a cause of action for fraud and deceit it must be a statement of fact rather than opinion, and statements as to future actions generally qualify as opinions (see Tarmann, supra), where a party makes a promise to do something without any intention of performing it, a claim for fraud may be maintained. (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 [stating that “[a] promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud”].) Courts have recognized actionable claims for fraud in circumstances where promises have been made by an employer to a prospective employee about the length of employment. (See, e.g., Lazar v. Superior Court (1996) 12 Cal.4th 631, 638-639; also see Finch v. Brenda Raceway Corp. (1994) 22 Cal.App.4th 547.) Here, although Defendant is not alleged to have articulated the exact length of time that Plaintiff’s employment with Gilead would last, it did purportedly promise him that his employment would last at least 6 months. (FAC, ¶¶ 19, 27.) It did not, and Plaintiff alleges that Defendant knew the job would only last 4 months what it made the foregoing representation. (FAC, ¶¶ 21, 29.) The Court finds that this is a sufficient basis upon which to assert a claim for fraud. Consequently, Defendant’s demurrer to the first and second causes of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

Next, Defendant contends that Plaintiff’s third cause of action for breach of contract fails as a matter of law because the alleged “partially written and partially verbal contract” is not a valid or enforceable agreement. More specifically, Defendant asserts that contract terms as alleged by Plaintiff are not certain or definite enough to be enforceable.

“Under California law, a contract will be enforced if it is sufficiently definite (and this is a question of law) for the court to ascertain the parties’ obligations and determine whether those obligations have been performed or breached. [Citation.] To be enforceable, a promise must be definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.” (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 209 [internal quotations omitted].) “Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable. [Citation.] 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. [Citations.] But [i]f … a supposed contract does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, there is no contract. [Citation.]” (Id.; see also Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 770.)

Defendant argues that the alleged contract is fatally uncertain because Plaintiff has not alleged payment terms or an agreement by Defendant (rather than the third-party employer, Gilead) to pay him that salary starting and ending on particular dates. Moreover, it contends, exhibits attached to the initial complaint in this action that allegedly made up the written portion of the agreement (which are no longer attached to the FAC), confirm that the terms of Plaintiff’s potential assignment were left for further negotiation and agreement. Though in referring to these materials Defendant does not make explicit mention of the sham pleading doctrine in its moving papers, in asking the Court to consider them and their contents as compared to what is pleaded in the FAC, this is the doctrine on which it appears to be relying. It confirms as much in its reply brief.

“Under the sham pleading doctrine, admissions in an original complaint [including the exhibits attached thereto] that has been superseded by an amended pleading remain within the court’s cognizance and the alteration of such statements by amendment designed to conceal fundamental vulnerabilities in a plaintiff’s case will not be accepted.” (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1043, fn. 25.) Stated alternatively, “plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to void attacks raised on demurrers ….” (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425.) If a plaintiff attempts to file such an amended pleading, the court may take judicial notice of prior pleadings and “may disregard any inconsistent allegations.” (Colapinto v. County of Riverside (1991) 230 Cal.App.3d 147, 151.)

The Court agrees with Defendant that, as currently pleaded, Plaintiff has not alleged terms that are certain or definite enough to plead an enforceable contract and the exhibits attached to the complaint, which he has notably omitted from the FAC but which the Court judicially notices here, evidence that such terms had yet to be definitively reached between Plaintiff and Defendant. These include, for instance, his salary (a term necessary to provide the Court with a rational basis for the assessment of damages, should they be deemed warranted) and the official start date of his employment with Gilead. Consequently, the demurrer to the third cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.

With regard to the fourth cause of action for promissory estoppel, Defendant asserts that its demurrer to this claim should be sustained because Plaintiff fails to allege that it made any clear and unambiguous promise to Plaintiff.

The elements of a claim for promissory estoppel are: “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” (Granadino v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 411, 416 [internal citations and quotations omitted].) Defendant insists Plaintiff’s allegation that it promised him work lasting anywhere from 6 to 36 months is self-defeating and shows that the length of employment was inherently unclear and uncertain. The Court does not find this argument persuasive. While it is true that the ultimate length of Plaintiff’s employment was unclear, he was allegedly promised at least 6 months of employment, which he did not receive. The promise of a minimum length of employment is sufficiently clear to support Plaintiff’s promissory estoppel claim. Consequently, Defendant’s demurrer to the fourth cause of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

Finally, Defendant maintains that Plaintiff’s fifth cause of action for violation of Labor Code section 970 (“Section 970”) fails because the claim is time-barred. Section 970 prohibits employers from inducing employees to move from within or without California for the purpose of working, “by means of knowingly false representations” concerning “[t]he length of time such work will last, or the compensation therefor.” (Lab. Code, § 970, subd. (b).) Claims under this statute have been held to be subject to a one-year statute of limitations under Code of Civil Procedure section 340, subdivision (a), which begins to run when the employee loses his or her job. (See Aguilera v. Pirelli Armstrong Tire Corp. (9th Cir. 2000) 223 F.3d 1010, 1018 [applying California law]; see also Munoz v. Kaiser Steel Corp. (1984) 156 Cal.App.3d 965, 980.) Here, per the allegations of the FAC, Plaintiff’s employment at Gilead ended on May 5, 2016. Accordingly, the statute of limitations on his Section 970 claim concluded on May 5, 2017. However, Plaintiff’s initial complaint in this action was not filed until June 23, 2017, over a year later. Consequently, Plaintiff’s fifth cause of action is time-barred.

In opposition, Plaintiff insists that Defendant cannot raise a statute of limitations defense in his demurrer and could only have raised it in its answer, which is entirely inaccurate. First, a defendant may properly demur to a cause of action on the ground of the statute of limitations where the dates alleged in the complaint show “clearly and affirmatively,” as they do here, that the action is barred by the applicable limitations period. (Geneva Towers Ltd. Partnership v. City & County of San Francisco (2003) 29 Cal.4th 769, 781.) Second, while a defendant can waive a statute of limitations defense where he or she fails to plead it as an affirmative defense in an answer (see, e.g., Davenport v. Stratton (1944) 24 Cal.2d 232, 246-247), Defendant has yet to file an answer to the FAC, and need not do so until after the Court disposes of its demurrer. Thus, in accordance with the foregoing analysis, Defendant’s demurrer to the fifth cause of action on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.