Case Name: The Don Chapin Co., Inc. v. Riverview Capital Investment, LLC, et al.
Case No.: 16-CV-298347

Currently before the Court is the demurrer and motion to stay or dismiss by defendants Lumin Chang (“Chang”), Paul Wong (“Wong”), WTI, Inc. (“WTI”), Riverview Capital Investment, LLC (“Riverview”), and the City of San Jose (“City”) (collectively, “Defendants”).

Factual and Procedural Background

This action arises out of a contract dispute between plaintiff The Don Chapin Co. Inc. (“Chapin”) and Riverview. Plaintiff is a licensed general engineering contractor. (Complaint, ¶ 1.) Riverview is in the business of owning and developing real property in the City of San Jose. (Id. at ¶ 2.) As is relevant here, Riverview is the owner of real property located at 3471 North First Street, San Jose, California 95134 (“3741 North First Street Property”). (Id. at ¶ 15.) In addition, until sometime on or about October 17 to November 12, 2015, Riverview was the owner of other real property in San Jose (hereinafter, “Park Lot”). (Ibid.)

Chapin and Riverview entered into a series of written agreements on or about August 2, 2013, January 4, 2014, January 23, 2014, and May 2, 2014. (Complaint, ¶ 17.) Chapin and Riverview also implemented six change orders for work associated with the agreements dated August 2, 2013, January 4, 2014, and January 23, 2014 (“Agreements”). (Ibid.) The Agreements, change orders, and May 2, 2014 agreement (“Directive”) generally provided that labor, materials, and equipment would be furnished in exchange for payment of the contract price. (Id. at ¶ 18.) Riverview allegedly breached the Agreements, Directive, and change orders during the period of October 9, 2013 through March 4, 2016, “by failing to pay the balance due for [the work] in the amount of $671,636.34” plus interest and penalties. (Id. at ¶¶ 19-22.)

On August 30, 2013, Chapin served Riverview and the City with a 20-day preliminary notice of lien. (Complaint, ¶ 30.) Thereafter, on September 14, 2015, Chapin advised the City that Riverview had not paid it amounts due and owing for work performed on the Park Lot. (Id. at ¶ 32.) The City allegedly informed Chapin that it would require lien free property and would make sure that Chapin and its subcontractors were paid in full. (Ibid.)

Approximately one month later, Riverview transferred the Park Lot to the City without receiving a reasonably equivalent value in exchange. (Complaint, ¶¶ 39-41.) At the time of the transfer, Riverview was insolvent, unable to pay its debts as they became due in the ordinary course of business, or lacked sufficient assets to pay its debts. (Ibid.)

On May 9, 2016, Chapin recorded a mechanic’s lien against the 3741 North First Street Property and Park Lot. (Complaint, ¶ 35.) Chapin seeks judicial foreclosure of its lien and a declaration that all other interests and liens are junior to its lien. (Id. at ¶¶ 36-37 and Prayer, ¶ 3.)

Based on the foregoing, Chapin filed a complaint against Defendants and defendant Liberty Mutual Insurance, alleging causes of action for: (1) breach of contract; (2) common counts; (3) foreclose on a mechanic’s lien; (4) set aside fraudulent transfer; and (5) recover on a payment bond.

On November 27, 2017, Defendants filed the instant demurrer and motion to stay or dismiss. Chapin filed papers in opposition to the matters on January 24, 2018. On January 30, 2018, Defendants filed reply papers in support of their demurrer and motion to stay or dismiss.

Discussion

I. Requests for Judicial Notice

A. Defendants’ Request

With their moving papers, Defendants ask the Court to take judicial notice of the following items in connection with their demurrer and motion to stay or dismiss: the fact that the City acquired the Park Lot as of October 17, 2015; the recorded Parkland Agreement for Tentative Map No. PT07-101 Between City of San Jose and WTI, Inc. and Covenants and Restrictions Relating to Private Recreational Amenities (“Parkland Agreement”); and the AIA A107 Construction Contract between Riverview and Chapin dated August 2, 2013. With their reply papers, Defendants also ask the Court to take judicial notice of the online court docket in this case in connection with their motion to stay or dismiss.

The online court docket is a proper subject of judicial notice under Evidence Code section 452, subdivision (d). (See Evid. Code, § 452, subd. (d) [permitting judicial notice of court records]; see also First American Title Co. v. Mirzaian (2003) 108 Cal.App.4th 956, 960 [taking judicial notice of superior court docket].)

Next, the existence of the August 2, 2013 contract between Riverview and Chapin is a proper subject of judicial notice as the contract is referenced by Chapin in the complaint. (See StorMedia Inc. v. Super. Ct. (1999) 20 Cal.4th 449, 457, fn. 9 [indicating that a document referenced in a pleading under review is judicially noticeable, but the truthfulness and proper interpretation of the document are disputable]; see also Salvaty v. Falcon Cable TV (1985) 165 Cal.App.3d 798, 800, fn. 1; Ingram v. Flippo (1999) 74 Cal.App.4th 1280, 1285, fn. 3.)

In addition, the existence of the Parkland Agreement, the fact of the document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in the document, and the document’s legally operative language are proper subjects of judicial notice because the Parkland Agreement is a recorded document and Chapin does not dispute the document’s authenticity. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (Fontenot), disapproved of on other grounds in Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919 [a court may take judicial notice of certain facts in a recorded document, including “the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity”].)

Finally, the fact that the City acquired the Park Lot as of October 17, 2015, is a proper subject of judicial notice. The grant deed attached to the complaint as Exhibit 4 is a recorded document. The document indicates that it was executed on October 17, 2015, and the legally operative language provides that Riverview grants the Park Lot to the City. (Complaint, Ex. 4.) The Court may take judicial notice of “the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language, assuming there is no genuine dispute regarding the document’s authenticity.” (Fontenot, supra, 198 Cal.App.4th at pp. 264-265.) Here, Chapin does not dispute the authenticity of the document. Taken together, the judicially noticeable facts from the grant deed demonstrate that the City acquired the Park Lot as of October 17, 2015.

Accordingly, Defendants’ request for judicial notice is GRANTED.

B. Chapin’s Request

Chapin asks the Court to take judicial notice of the complaint and the grant deed attached to the complaint as Exhibit 4.

The complaint is a proper subject of judicial notice as it is a court record relevant to the pending matters. (See Evid. Code, § 452, subd. (d) [the court may take judicial notice of “[r]ecords of any court of this state”]; see also People v. Woodell (1998) 17 Cal.4th 448, 455 [court may “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact”].)

The existence of the grant deed, the fact of the document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in the document, and the document’s legally operative language are proper subjects of judicial notice because the grant deed is a recorded document and Defendants do not dispute the document’s authenticity. (See Fontenot, supra, 198 Cal.App.4th at pp. 264-265.)

Accordingly, Chapin’s request for judicial notice is GRANTED.

II. Evidentiary Objections

Chapin and Defendants submit evidentiary objections to various declarations filed in connection with the pending matters. There is no authority for the proposition that the Court must rule on evidentiary objections made in connection with a motion other than a motion for summary judgment or an anti-SLAPP motion. Consequently, the Court declines to rule on these objections.

III. Motion to Stay or Dismiss

Defendants move to stay this action for 60 days or dismiss the lawsuit pending completion of mediation. (Ds’ Ntc. Dem. And Mtn. to Stay or Dism., p. 1:8-11; Mem. Ps. & As., p. 1:24-25.) Defendants assert that “the Court should require the parties to participate in mediation and stay or dismiss this action pending completion of the mediation” because Chapin refuses to participate in mediation and the August 2, 2013 contract between Riverview and Chapin (“Construction Contract”) requires mediation as a condition precedent to litigation. (Mem. Ps. & As., pp. 4:20-25 and 6:7-8.)

Chapin opposes the motion, arguing that there is no California case law authorizing a motion to stay or dismiss this action or to otherwise compel the parties to participate in mediation. Chapin also asserts that forcing parties to mediate at this juncture would do nothing but delay resolution of this case and waste resources. Finally, Chapin contends that Riverview waived its right to mediation in April 2016, when its counsel stated that Riverview was not interested in mediation and wanted to pursue arbitration.

As an initial matter, Defendants cite no statutory basis for their motion and the Court is aware of none. Moreover, Defendants have not identified a single published California case authorizing such a motion. The legal authorities cited by Defendants in their papers are distinguishable and do not authorize the instant motion. The two federal district court cases cited by Defendants—Previti v. National Union Fire Ins. Co. of Pittsburgh PA (C.D. Cal., Aug. 7, 2012, No. EDCV 12-00704 DDP) 2012 WL 3257877 and Columbia Casualty Company v. Cottage Health System (C.D. Cal., July 17, 2015, No. CV1503432DDPAGRX) 2015 WL 4497730—involve motions to dismiss under Federal Rule of Civil Procedure 12(b)(6). Defendants’ motion is not brought pursuant to any similar statutory authority. Next, Leamon v. Krajkiewcz (2003) 107 Cal.App.4th 424 (Leamon) and Lange v. Schilling (2008) 163 Cal.App.4th 1412 (Lange) pertain to appeals from motions for attorney fees following trial. Similarly, Cullen v. Corwin (2012) 206 Cal.App.4th 1074 (Cullen) involves a motion for attorney fees following summary judgment. In those three cases, the appellate courts determined that the moving parties were not entitled to awards of attorney fees under the terms of their respective contracts because they failed to comply with the preconditions regarding mediation. (Leamon, supra, 107 Cal.App.4th at pp. 430-32; Lange, supra, 163 Cal.App.4th at pp. 1416-18; Cullen, supra, 206 Cal.App.4th at pp. 1078-79.) As the instant motion is clearly not one for attorney fees, those cases are easily distinguishable. Finally, in McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330, 1337 (McCaffrey), a construction defect case, the moving party asserted it was statutorily entitled to seek a court order staying the action and compelling mediation under the “Right to Repair Act,” title 7 to division 2, part 2 of the Civil Code (Civ. Code, § 895 et seq.; Sen. Bill No. 800 (2001-2002 Reg. Sess.)). (See Civ. Code, § 930, subd. (b) [“If the claimant does not conform with the requirements of this chapter, the builder may bring a motion to stay any subsequent court action or other proceeding until the requirements of this chapter have been satisfied.”].) No such statute authorizing a motion to stay or dismiss is cited here. To the extent the moving party in McCaffery asserted that it was contractually entitled to such an order, the opposing party did not raise the issue of whether the motion was legally cognizable. (See McCaffrey, supra, 224 Cal.App.4th at p. 1347 [“Since McCaffrey’s contractual provisions are not rendered unenforceable merely because they deviate from the statutory procedure, we consider the only other argument on enforceability that real parties in interest make, namely whether the contractual provisions are unenforceable because they are unconscionable.”]; see also Riverside County Sheriff’s Dept. v. Stiglitz (2014) 60 Cal. 4th 624, 641 [a case is not authority for a proposition not considered].)

Furthermore, even though there is a strong public policy in favor of promoting mediation as an alternative to judicial proceedings in a less expensive and more expeditious forum (Cullen, supra, 206 Cal.App.4th at p. 1079), an order compelling mediation is antithetical to the entire concept of mediation. (Jeld–Wen, Inc. v. Super. Ct. (2007) 146 Cal.App.4th 536, 540-43.) Mediation is a voluntary process whereby a neutral person facilitates communication between the parties involved in a dispute to assist them in reaching a mutually acceptable agreement. (Ibid.) This neutral third party has no decision making power but, rather, intervenes in the dispute to help the litigants voluntarily reach their own agreement. (Ibid.) “Essential to the mediation process is the concept that the parties are in control of resolving their own dispute.” (Ibid.) In light of the foregoing, California courts have refused to force parties to mediate. (Ibid.) Here, it makes little sense for the Court to force an objecting party, such as Chapin, to expend the time and attorney fees to attend mediation, which requires the parties to voluntarily reach their own agreement. Such an exercise would be futile and a waste of time and resources.

Even if the instant motion was authorized and properly before the Court, it fails on substantive grounds. First, the Construction Contract that contains the mediation clause is only between Riverview and Chapin. Chang, Wong, WTI, and the City are not parties to the contract. Additionally, Defendants do not assert that Chang, Wong, WTI, and the City are third-party beneficiaries of the contract. Therefore, Chang, Wong, WTI, and the City lack standing to enforce the terms of the contract, and the mediation clause, against Chapin. (See Windham at Carmel Mountain Ranch Assn. v. Super. Ct. (2003) 109 Cal.App.4th 1162, 1173 [“[s]omeone who is not a party to [a] contract has no standing to enforce the contract”], internal citations and quotation marks omitted; see also Gantman v. United Pacific Ins. Co. (1991) 232 Cal.App.3d 1560, 1566 [same]; Civ. Code, § 1559 [a third-person can enforce a contract made expressly for his or her benefit]; Loduca v. Polyzos (2007) 153 Cal.App.4th 334, 341 [same].)

Second, although section 21.1 of the Construction Contract states that claims, disputes, and other matters arising out of or relating to the contract “shall be subject to mediation as a condition precedent to binding dispute resolution,” such as litigation, section 21.2 expressly states that “[i]f a claim, dispute or other matter in question relates to or is the subject of a mechanic’s lien, the parting asserting such matter may proceed in accordance with applicable law to comply with the lien notice or filing deadline.” (Chang Dec., Ex. B.) Here, the action is undoubtedly related to the mechanic’s lien filed by Chapin on May 9, 2016. Thus, mediation was not a precondition to Chapin’s initiation of this lawsuit; instead, under section 21.2, Chapin was permitted to file its action without first participating in mediation.

Third, Chapin presents uncontradicted evidence that Riverview waived its right to mediate the dispute. “A waiver is an intentional relinquishment of a known right.” (Salton Community Services Dist. v. Southard (1967) 256 Cal.App.2d 526, 532; Thriftimart, Inc. v. Me & Tex (1981) 123 Cal.App.3d 751, 754 [“Waiver is a matter of intent.”].) Chapin’s evidence shows that Riverview’s counsel told Chapin’s counsel on April 28, 2016, that Riverview was “not interested in mediation” and, instead, wanted to pursue arbitration. (Herendeen Dec., ¶ 27.) Later, the same day, Riverview’s counsel sent a follow-up email to Chapin’s counsel confirming that the parties had decided to pursue arbitration. (Id. at ¶ 28, Ex. F.) Thereafter, the parties spent 11 months drafting an arbitration agreement. (Herendeen Dec., ¶ 29; James Dec., ¶¶ 3-11; Double Dec., ¶ 3.) In March 2017, Riverview and Chapin believed they had reached an agreement regarding the final form of the arbitration agreement. (James Dec., ¶ 12; Double Dec., ¶ 4.) However, amendments and modifications to the agreement were subsequently proposed such that a finalized arbitration agreement was never executed by all parties. (James Dec., ¶¶ 13-23; Double Dec., ¶¶ 5-6.) It was not until November 20, 2017—almost 19 months after Riverview advised Chapin that it was not interested in mediation—that Riverview first provided Chapin with a request for mediation of this action. (Double Dec., ¶ 6.) Riverview’s express statement that it was “not interested in mediation” and, instead, wanted to pursue arbitration, and its later course of conduct in pursuit of arbitration demonstrate that Riverview intended to relinquish its right to mediate the dispute.

Notably, Riverview does not deny that it told Chapin that it was not interested in pursuing mediation. Instead, Riverview merely takes issue with the fact that the statement is “not reflected in any of the underlying communications between the parties” and the statement “took place nearly two years ago.” (Opp’n., p. 6, fn. 5.) Riverview asserts that “taken in context, Mr. Herendeen’s declaration shows that Riverview was stating its preference for binding arbitration, not waiving its right to mediate before proceeding with litigation.” (Ibid.) Riverview’s interpretation of the statement at issue is not persuasive. Riverview’s counsel did not state that Riverview had a mere preference for arbitration. Rather, Riverview’s counsel said that Riverview was “not interested in mediation.” (Herendeen Dec., ¶ 27.) This statement constitutes an express waiver of Riverview’s right to mediation under the contract.

In light of the foregoing, Defendants’ motion to stay or dismiss the action is DENIED.

IV. Demurrer

Defendants demur to each and every cause of action of the complaint on the ground of failure to allege facts sufficient to constitute a cause of action. (Ds’ Dem. & Mtn. to Stay or Dism., p. 1:6-2:4; see Code Civ. Proc., § 430.10, subd. (e).)

A. Legal Standard

The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code Civ. Proc., § 430.30, subd. (a).) “It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958 (Align), internal citations and quotations omitted.)

B. First and Second Causes of Action

Defendants argue that the first and second causes of action for breach of contract and common counts, respectively, fail to state a claim with respect to Chang, Wong, and WTI because Chapin has not alleged the existence of a contract between it and Chang, Wong, and WTI. (Ds’ Mem. Ps. & As., pp. 1:26-2:11 and 7:1-9:18.) Defendants assert that the only alleged agreements are between Chapin and Riverview. (Ibid.) Moreover, Defendants contend that while Chang, Wong, and WTI are alleged to have directed, controlled, and implemented Riverview’s alleged conduct, there are no allegations establishing alter ego liability. (Ibid.)

Defendants’ argument is well-taken. The only contracts alleged in the complaint are between Riverview and Chapin. There are no factual allegations in the complaint demonstrating that Chang, Wong, and WTI are parties to the alleged contracts. A claim for breach of contract generally cannot be asserted against one who is not a party to the contract. (Tri-Continent Internat. Corp. v. Paris Sav. & Loan Assn. (1993) 12 Cal.App.4th 1354, 1359; see Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1071 [no cause of action for breach of contract where the plaintiff company was not a party to the lease].) Furthermore, the complaint does not contain any alter ego allegations such that Chang, Wong, and WTI could be held liable for Riverview’s alleged conduct on that basis. (See Leek v. Cooper (2011) 194 Cal.App.4th 399, 410 and 414-15 [“To recover on an alter ego theory, a plaintiff need not use the words ‘alter ego,’ but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor. [Citation.] An allegation that a person owns all of the corporate stock and makes all of the management decisions is insufficient to cause the court to disregard the corporate entity. [Citation.]”].) Thus, the claim for breach of contract fails as to Chang, Wong, and WTI.

Additionally, the second cause of action for common counts is based on the same allegations that support the breach of contract claim. “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count” ordinarily “must stand or fall with [the] cause of action.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394-95.) Because the breach of contract claim fails, the common counts claim fails as well.

In opposition, Chapin cites Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773 (Wyatt), for the proposition that Chang, Wong, and WTI may be held liable for Riverview’s alleged conduct simply because they directed and implemented Riverview’s conduct. However, Wyatt does not stand for such a proposition. In Wyatt, the California Supreme Court states that “[d]irectors and officers of a corporation are not rendered personally liable for its torts merely because of their official positions, but may become liable if they directly ordered, authorized or participated in the tortious conduct.” (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 785, italics added; Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 503-04 [same].) The first and second causes of action for breach of contract and common counts are not tort claims. Consequently, the principle articulated in Wyatt is inapplicable here.

Accordingly, the demurrer to the first and second causes of action is SUSTAINED, with 10 days’ leave to amend, as to Chang, Wong, and WTI.

C. Third Cause of Action

Defendants argue that the third cause of action to foreclose on a mechanic’s lien fails because there is no right to impose a lien on property owned by a public entity, such as the City. (Ds’ Mem. Ps. & As., pp. 2:12-16 and 9:20-10:5.) Defendants point out that the mechanic’s lien was recorded on May 9, 2016, after the Park Lot was conveyed to the City by the grant deed on October 17, 2015. Defendants also point out that no statute provides Chapin with a right to impose a lien on property owned by the City.

Even though Defendants are correct that “[t]here is no right to impose a lien on property owned by a public entity unless such a right has been expressly conferred by statute” (North Bay Const., Inc. v. City of Petaluma (2006) 143 Cal.App.4th 552, 557), their argument fails to dispose of the third cause of action in its entirety. The third cause of action and the mechanic’s lien are based, in part, on work performed at the 3741 North First Street Property. The complaint alleges that the 3741 North First Street Property is owned by Riverview. (Complaint, ¶ 15.) There are no allegations in the complaint indicating that the 3741 North First Street Property is owned by the City. Defendants’ argument does not address the propriety of the mechanic’s lien to the extent it was filed against the 3741 North First Street Property. Thus, the demurrer fails to dispose of the third cause of action to foreclose on the mechanic’s lien to the extent the claim relates to the 3741 North First Street Property. (See PHII, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [a demurrer does not lie to only a portion of a claim].)

Accordingly, the demurrer to the third cause of action is OVERRULED.

D. Fourth Cause of Action

Defendants argue that the fourth cause of action to set aside fraudulent transfer fails because Chapin did not adequately plead that: the transfer was made with intent to hinder, delay, or defraud any creditor; its right of payment arose before Riverview’s obligation to transfer the Park Lot; Riverview did not receive a reasonably equivalent value in exchange for the transfer; and Riverview was insolvent at the time of transfer. (Ds’ Mem. Ps. & As., pp. 2: 17-28 and 10:7.)

“A fraudulent conveyance claim is set forth in the Uniform Fraudulent Transfer Act (UFTA), which is codified in Civil Code section 3439 et seq.” (Kirkeby v. Super. Ct. (2004) 33 Cal.4th 642, 648.) Under Civil Code section 3439.04, “[a] transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay or defraud any creditor, or (2) without receiving reasonably equivalent value in return, and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due.” (Cortez v. Vogt (1997) 52 Cal.App.4th 917, 928 citing Civ. Code § 3439.04.) Under Civil Code section 3439.05, “[a] transfer by a debtor is fraudulent as to creditors whose claims arose before the transfer if the debtor made the transfer (1) without receiving reasonably equivalent value in exchange, and (2) either (a) was insolvent at the time of the transfer, or (b) became insolvent as a result of the transfer. (Ibid. citing Civ. Code § 3439.05.) “A creditor who is damaged by a transfer described in either section 3439.04 or section 3439.05 can set the transfer aside or seek other appropriate relief under section 3439.07.” (Ibid.)

As an initial matter, Chapin has not alleged sufficient facts to state a claim for fraudulent transfer under Civil Code section 3439.04. First, as Defendants persuasively argue, Chapin does not allege that Riverview’s transfer of the Park Lot was made with the intent to hinder, delay, or defraud any creditor. (See Civ. Code § 3439.04, subd. (a)(1).) Second, Chapin does not allege that Riverview was engaged in or about to engage in a business or transaction for which its assets were unreasonably small, or intended to, or reasonably believed, or reasonably should have believed, that it would incur debts beyond its ability to pay as they became due. (See Civ. Code § 3439.04, subd. (a)(2).) Thus, the Court turns to the question of whether the complaint states a claim for fraudulent transfer under Civil Code section 3439.05.

Defendants first contend that Chapin cannot state a claim under Civil Code section 3439.05 because Riverview became obligated under the Parkland Agreement to transfer the Park Lot to the City in 2009, and Chapin did not entered into any contract with Riverview until 2013. This argument is not well-taken. As Chapin points out, the Parkland Agreement is between the City and WTI, not the City and Riverview. (Chang Dec., Ex. A.) Thus, the Parkland Agreement, in and of itself, does not establish that Riverview had an obligation to transfer the Park Lot to the City as of 2009.

Next, Defendants assert that Riverview received reasonably equivalent value in exchange for the transfer of the Park Lot. Defendants state that Riverview’s receipt of reasonably equivalent value is demonstrated by the Parkland Agreement, which provides that “the transfer of the Park Lot was to allow Riverview to construct a residential subdivision without being required to pay in-lieu fees[ ] pursuant to the San Jose Municipal Ordinance.” (Ds’ Mem. Ps. & As., p. 11:7-9.) This argument is not well-taken. Reasonably equivalent value is the value of the property on the date of the transfer from the perspective of the creditors. (In re Prejean (9th Cir.1993) 994 F.2d 706, 708.) In making this determination, courts consider the fair market value of the property or the fairly equivalent value of the property, taking into consideration all of the specific circumstances affecting the value of the asset. (In re JTS Corp. (9th Cir. 2010) 617 F.3d 1102, 1109.) Here, Defendants have made no showing that the in-lieu of fees that Riverview purportedly was excused from paying were equal to the fair market value of the Park Lot or the fairly equivalent value of the Park Lot, taking into consideration all of the specific circumstances affecting the value of the Park Lot. Thus, Defendants have not shown that Riverview received reasonably equivalent value in exchange for the transfer of the Park Lot.

Defendants also contend that Chapin fails to adequately plead that Riverview was insolvent. “A debtor is insolvent if, at a fair valuation, the sum of the debtor’s debts is greater than the sum of the debtor’s assets.” (Civ. Code, § 3439.02, subd. (a).) “A debtor that is generally not paying the debtor’s debts as they become due other than as a result of a bona fide dispute is presumed to be insolvent.” (Civ. Code, § 3439.02, subd. (b).) “The presumption imposes on the party against which the presumption is directed the burden of proving that the nonexistence of insolvency is more probable than its existence.” (Ibid.) As is relevant here, Chapin alleges that Riverview was insolvent as it was “unable to pay its debts as they became due in the ordinary course of business.” (Complaint, ¶ 41.) This allegation gives rise to the presumption that Riverview was insolvent and it is accepted as true for purposes of demurrer. (Align, supra, 179 Cal.App.4th at p. 958 [“the facts alleged in the pleading are deemed to be true, however improbable they may be”].) Defendants contend that the Court should disregard this factual allegation because Riverview paid a large amount of the monies allegedly owed to Chapin. (Complaint, ¶ 22.) This argument lacks merit. Defendants cite no legal authority providing that the ability to partially pay an alleged debt means that an entity is not insolvent as a matter of law.

Accordingly, the demurrer to the fourth cause of action is OVERRULED.

E. Fifth Cause of Action

In their demurrer, Defendants state that they demur fifth cause of action to recover on a payment bond on the ground of failure to allege sufficient facts to constitute a cause of action. (Ds’ Dem. & Mtn. to Stay or Dism., p. 2:1-4.)

However, Defendants memorandum of points and authorities does not address the fifth cause of action in any way.

Because Defendants do not provide any argument or authority supporting their demurrer to the fifth cause of action, the demurrer is deemed to be without merit. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785; see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”]; Cal. Rules of Ct., rule 3.1113; see also Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 934 [Rule 3.1113 rests on a policy-based allocation of resources, preventing the trial court from being cast as a tacit advocate for the moving party’s theories by freeing it from any obligation to comb the record and the law for factual and legal support that a party has failed to identify or provide].)

Accordingly, the demurrer to the fifth cause of action is OVERRULED.