Case Number: BC527464    Hearing Date: September 12, 2014    Dept: 73

Dept. 73
Rafael Ongkeko, Judge presiding

YP Advertising, etc. vs. L.O. of David Lozano, etc. (BC527464)

Counsel for plaintiff/cross-defendant/moving party: Randy Lopez (Borton, etc.)
Counsel for defendant/cross-complainant/opposing party: David Lozano; Peter Bronstein

Matter #1:
Cross-defendant’s demurrer to Lozano cross-complaint (filed 6/19/14): SUSTAINED, with leave to amend. The motion is unopposed. The demurrer is as to each cause of action and is sustained on all grounds in the moving papers.

Cross-complainant is granted leave on or before 9/29/14, either to file and serve a writing indicating no intent to amend the cross-complaint or to file and serve a first amended cross-complaint by that date. If cross-complainant elects the latter, a red-line copy of the amended cross-complaint showing the changes from the previous cross-complaint is to be concurrently provided to cross-defendant. If cross-defendant intends to file a demurrer to the first amended cross-complaint, cross-defendant must lodge directly in Dept. 73 the red-line copy of the amended cross-complaint with its demurrer.
Matter #2;
Cross-defendant’s motion to strike portions of cross-complaint (filed 6/19/14): Moot based on above ruling sustaining the demurrer to the second cause of action for fraud.

DISCUSSION (DEMURRER):
1st cause of action- Rescission
The cross-complaint alleges that from 1996 to 2013, Cross-Complainant was a loyal yellow pages customer with a successful bankruptcy petition business. (¶5.) He did not have an internet presence and was unfamiliar with internet marketing. (¶6.) It is alleged that from November 2011 through June 2012, Cross-Defendant Yellow Pages made misrepresentations to Cross-Complainant concerning Yellow Pages’ experience in internet marketing, the volume of calls Cross-Complainant could expect, the manner in which Cross-Complainant would be charged for internet advertising, and that the agreement would be terminated based upon double billing and other activities. (¶13.) Cross-Complainant alleges these statements were false and were made for the purpose of obtaining Cross-Complainant’s reliance. (¶¶14-15.) It is alleged that in reliance on Cross-Defendant’s statements, Cross-Complainant signed and returned a contract to Cross-Defendants on April 27, 2012. (¶8.)

To plead a cause of action for rescission, one must allege (1) consent of the party rescinding or of any jointly contracting party given or obtained by or through fraud; (2) exercised by or with the connivance of the party as to whom the party rescinds, or of any other party to the contract jointly interested with such party. (Civil Code §1689; Medina v. Safe-Guard Products, Internat., Inc. (2008) 164 Cal. App. 4th 105, 112 (“Generally, in order to state a claim for rescission, the allegations must include “an offer to restore benefits already received under the contract.”); Star Pacific Investments, Inc. v. Oro Hills Ranch, Inc. (1981) 121 Cal. App. 3d 447, 457 (“[I]n order to obtain rescission of an agreement, including rescission on the basis of inducement into the agreement by the defendant’s fraudulent misrepresentation, a plaintiff must generally restore to the defendant everything of value which the plaintiff has received from defendant under the agreement.”).)

Cross-Defendant challenges this cause of action on grounds the complaint has not alleged what contract Cross-Complainant seeks to rescind. Here, the cross-complaint alleges the parties entered into a contract on April 27, 2012. (¶8.) While the complaint indicates the agreement was related to internet marketing, the terms of the agreement are not sufficiently pled. The Exhibit attached to the cross-complaint is merely the signature page and explicitly references terms not alleged or attached to the cross-complaint.

2nd cause of action – Fraud
Cross-Complainant alleges that from November 2011 through June 2012, Yellow Pages made the above identified misrepresentations. (¶21.) These allegations were false and made with the purpose of obtaining cross-complainant’s reliance and consent to enter into the internet marketing agreement. (¶¶22-23.) The allegations also reference fraudulent concealment, but fail to note what was allegedly concealed. (¶¶25-26.)

The cross-complaint fails to adequately plead any of the elements of fraud with the required specificity. Cross-Complainant fails to indicate who made these representations and how they were made. Generally, fraud must be pled with particularity. (E.g., Hills Transportation Co. v. Southwest Forest Ind., Inc. (1968) 266 Cal.App.2d 702, 707.) With regard to fraud claims, pleadings must allege facts as to “‘how, when, where, to whom, and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 73.) “The allegation of the parties’ intent is a conclusion of fact, which need not be accepted for purposes of demurrer.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal. App. 4th 1106, 1115.) A complainant’s conclusory assertion of reliance on misrepresentations is insufficient to satisfy the requirement of specific pleading of fraud, and instead facts must be alleged that would indicate actual reliance on the misrepresentations. (Small v. Fritz Companies, Inc. (2003) 30 Cal. 4th 167, 184.)

3d cause of action – Breach of Contract
Cross-Complainant alleges the agreement executed by the parties provides that in exchange for some sum of money, Cross-Defendant would provide internet marketing services to Cross-Complainant by billing one search term per geographic market, bid solely on bankruptcy petitions. (¶28.) Cross-Complainant alleges it has performed all the management services required to be performed under the agreement and Cross-Defendants have breached the agreement by failing to provide appropriate internet services, failing to bill solely for one search term per geographic area, and failing to bill solely for one area of law. (¶¶29-30.)

Cross-Defendants argue the complaint vaguely refers to an agreement between the parties, yet fails to plead the necessary terms. To plead a cause of action for breach of contract, one must allege (1) the existence of contract; (2) plaintiffs’ performance or excuse for nonperformance; (3) defendants’ breach (or anticipatory breach); and (4) resulting damage. (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.) “In an action based on a written contract, the plaintiff may plead the legal effect of the contract rather than its precise language.” (Ochs v. PacifiCare of Cal. (2004) 115 Cal. App. 4th 782, 795.) Contract terms may be alleged generally according to legal intendment. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.) Pleading contracts by legal effects involves alleging the relevant terms in substance. (McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1489.) The contract is not sufficiently pled, with cross-complainant pleading only limited facts.

4th cause of action – Money Had and Received

Cross-Complainant alleges beginning on October 10, 2012 through February 4, 2013, Cross-Defendant became indebted to Cross-Complainant in some amount to be determined at trial. (¶33.) Cross-Complainant alleges this indebtedness stems from its earlier payment of fees under the contract and those fees are now owed to Cross-Complainant based on the alleged termination of the agreement for double billing. (¶¶33-34.)

To plead recovery on a theory of money had and received, one must allege (1) defendant is indebted to plaintiff in a certain sum and (2) for money had and received by the defendant for the use of plaintiff. (Farmers Ins. Exchange v. Zerin (1997) 53 Cal. App. 4th 445, 460.) A common count is proper notwithstanding that it relates to an original transaction involving an express or implied contract. (Utility Audit Co. v. City of L. A. (2003) 112 Cal.App.4th 950, 958. “As Witkin states in his text, ‘A common count is proper whenever the plaintiff claims a sum of money due, either as an indebtedness in a sum certain, or for the reasonable value of services, goods, etc., furnished. It makes no difference in such a case that the proof shows the original transaction to be an express contract, a contract implied in fact, or a quasi-contract.’ [Citation.]” (Citation omitted). A claim for money had and received can be based upon money paid by mistake, money paid pursuant to a void contract, or a performance by one party of an express contract. (Citation omitted.) “‘Whether an action is based on contract or tort depends upon the nature of the right sued upon, not the form of the pleading or relief demanded. If based on breach of promise it is contractual; if based on breach of a noncontractual duty it is tortious. [Citation.] If unclear the action will be considered based on contract rather than tort. [Citation.]’” Utility Audit, supra, at 958.

Cross-Defendant challenges the fourth cause of action on grounds Cross-Complainant has not pled a basis for finding the contract alleged is void. Based on the above authorities, this is not a proper ground for demurrer. However, because the allegations in the fourth cause of action are to some extent dependent on the allegations in the first through third causes of action, cross-complainant is granted leave to amend this cause of action as well.

Motion to Strike
The motion seeks an order striking the allegations as to punitive damages which are sought in connection with the second cause of action for fraud. Based on the above rulings, the motion is moot.

Unless waived, notice of ruling by moving party.