Case Number: GC050660    Hearing Date: August 01, 2014    Dept: A

Hernandez v Dynasty Coachwork International

DEMURRERS(3) & MOTION TO STRIKE

Calendar: 15
Case No: GC050660
Date: 8/1/14

MP: Cross-Defendant, Pride Adjusters, Inc.
Cross-Defendants, Andrew Chang and Linda Chang
Cross-Defendant, Dynasty Coachwork International, Inc.
RP: Cross-Complainants, Rigo Gutierrez and Audrey Gutierrez

ALLEGATIONS IN THIRD AMENDED CROSS-COMPLAINT:
The Cross-Complainants’ personal property was damaged in a windstorm while on the premises of Dynasty Coachwork International, Inc. The Cross-Defendants, entered into a contractual relationship regarding an insurance policy.

CAUSES OF ACTION IN THIRD AMENDED CROSS-COMPLAINT:
1) Breach of Written Contract
2) Fraud
3) Breach of Covenant of Good Faith and Fair Dealing
4) Equitable Indemnification

RELIEF REQUESTED:
1. Cross-Defendant, Pride Adjusters, Inc.
Demurrer to 2nd, 3rd, and 4th causes of action.

2. Cross-Defendants, Andrew Chang and Linda Chang
Demurrer to 2nd, 3rd, and 4th causes of action.

3. Cross-Defendant, Dynasty Coachwork International, Inc.
Demurrer to 1st, 2nd, 3rd, and 4th causes of action
Strike request for punitive damages and request for actual damages

DISCUSSION:
This hearing concerns the following motions regarding the Second Amended Cross-Complaint:

1) the demurrer and motion to strike of Cross-Defendants, Pride Public Adjusters and Pride Adjusters, Inc.;
2) the demurrer of Cross-Defendants, Andrew Chang and Linda Chang; and
3) the demurrer of Cross-Defendant, Dynasty Coachwork International, Inc.

1. Cross-Defendant, Pride Adjusters, Inc.
The Cross-Defendant filed a demurrer to the second, third, and fourth causes of action in the Third Amended Cross-Complaint on the ground that these causes of action fail to state sufficient facts.

a. Demurrer to Second Cause of Action for Fraud
The Cross-Defendant argues that the cause of action lacks the particular facts needed to plead fraud against a corporation. The elements of a fraud cause of action are the following:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of fraud must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.
In addition, fraud pleadings against a corporation must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the second cause of action reveals that it lacks the required particularity. There are no allegations identifying any false representations made by any person on behalf of Pride Adjusters, Inc. There are no allegations identifying the names of the persons who made any misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. This is insufficient.
The rest of the cause of action also lacks the required particularity and merely repeats the elements of the cause of action. For example, the Cross-Complainants allege in paragraph 39 that they justifiably relied on the statements. There are no particular facts demonstrating that the Cross-Complainants were justified when they relied upon the alleged representations. This is insufficient to plead a fraud claim.

Therefore, the Court will sustain the demurrer to the second cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants did not identify any manner by which they can correct the numerous defects in their second cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

c. Demurrer to Third Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing
The Cross-Defendant argues that this cause of action lacks sufficient facts.

Under California law, every contract contains an implied covenant of good faith and fair dealing providing that no party to the contract will do anything that would deprive another party of the benefits of the contract. Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720. The implied covenant protects the reasonable expectations of the contracting parties based on their mutual promises. Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 373–374. The scope of conduct prohibited by the implied covenant depends on the purposes and express terms of the contract. Id. at 373.

A review of this cause of action reveals that it is merely a list of elements. In paragraph 43, the Cross-Complainants allege that the parties entered into a written agreement. There are no allegations identifying the written agreement, its terms, their obligations, or its legal effect. This is insufficient to plead the existence of a contract that implied the covenant.
Further, in paragraph 46, the Cross-Complainants allege that the Cross-Defendants “unfairly interference” with the Cross-Complainants’ right to receive the benefits of the written agreement. There are no allegations identifying the benefits at issue or identifying the manner in which the Cross-Defendants interfered with the Cross-Complainants’ right to the benefits. This is insufficient to plead the cause of action.

Therefore, the Court will sustain the demurrer to the third cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants did not identify the manner in which they can correct the numerous defects in their third cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

d. Demurrer to Fourth Cause of Action for Equitable Indemnification
The Cross-Defendant argues that this cause of action does not plead any facts regarding Pride Adjusters, Inc.
Indemnity means “the obligation resting on one party to make good a loss or damage another party has incurred.” Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal. 3d 622, 628. An indemnitor is the party who is obligated to pay another. An indemnitee is the party who is entitled to receive the payment from the indemnitor.
An indemnity obligation arises from two general sources. First, it may arise from express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances. E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal. 3d 497, 506. Second, it may be implied from equitable considerations. Id. at 507. Unlike contractual indemnity which looks to the parties’ intent, equitable and implied indemnity focuses on principles of fairness and justice and is designed to apportion loss among tortfeasors in proportion to their relative culpability.

The Cross-Complainants’ fourth cause of action does not plead any facts regarding Pride Adjusters, Inc. to demonstrate that it is a tortfeasor or that it would be equitable to impose a duty to indemnify on Pride Adjusters, Inc.

Therefore, the Court will sustain the demurrer to the fourth cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants did not identify the manner in which they can correct the numerous defects in their fourth cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

2. Cross-Defendants, Andrew Chang and Linda Chang
The Cross-Defendants, Andrew Chang and Linda Chang, filed a demurrer to the second, third, and fourth causes of action in the Third Amended Cross-Complaint on the ground that they fail to state sufficient facts.

Cross-Complainants filed a notice of dismissal regarding Linda Chang on July 22, 2014. This makes her demurrer moot. Accordingly, the following analyzes the demurrers made by Andrew Chang in which he refers to the Third Amended Cross-Complaint throughout his papers with the acronym “3AXC”.

a. Demurrer to Second Cause of Action for Fraud
The Cross-Defendant argues that the cause of action lacks the particular facts needed to plead fraud. The elements of a fraud cause of action are the following:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of fraud must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.

A review of the second cause of action reveals that it lacks the required particularity. The Cross-Complainants allege in paragraph 34 that Andrew Chang falsely stated to the Cross-Complainants that their claim would be adjusted faster if it were included in another claim. There are no allegations identifying how, when, where, or by what means Mr. Chang tendered the representation. This is insufficient.
The rest of the cause of action also lacks the required particularity and merely repeats the elements of the cause of action. For example, the Cross-Complainants allege in paragraph 39 that they justifiably relied on the statements. There are no particular facts demonstrating that the Cross-Complainants were justified when they relied upon the alleged representations. This is insufficient to plead a fraud claim.

Therefore, the Court will sustain the demurrer to the second cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants did not identify any manner by which they can correct the numerous defects in their second cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

c. Demurrer to Third Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing
The Cross-Defendant argues that this cause of action lacks sufficient facts. On page 7 of their opposition papers, at lines 11 to 12, the Cross-Complainants state that they do not oppose this demurrer and that they withdraw this cause of action as to Andrew Chang.

Therefore, the Court will sustain the demurrer to the third cause of action without leave to amend.

d. Demurrer to Fourth Cause of Action for Equitable Indemnification
The Cross-Defendant argues that this cause of action does not plead any facts showing that he is liable for any torts.
Indemnity means “the obligation resting on one party to make good a loss or damage another party has incurred.” Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal. 3d 622, 628. An indemnitor is the party who is obligated to pay another. An indemnitee is the party who is entitled to receive the payment from the indemnitor.
An indemnity obligation arises from two general sources. First, it may arise from express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances. E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal. 3d 497, 506. Second, it may be implied from equitable considerations. Id. at 507. Unlike contractual indemnity which looks to the parties’ intent, equitable and implied indemnity focuses on principles of fairness and justice and is designed to apportion loss among tortfeasors in proportion to their relative culpability.

The Cross-Complainants’ fourth cause of action does not identify any tort for which it would be equitable to impose a duty to indemnify on the Cross-Defendant. Instead, the Cross-Complainants allege facts in paragraphs 52 to 55 that the Cross-Defendants engaged in conduct that breached the lease agreement by permitting Chinese females to use the kitchen to prepare their meals. This is insufficient to plead a claim for equitable indemnity.

Therefore, the Court will sustain the demurrer to the fourth cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants made a generic request for leave to amend, but did not identify the manner in which they can correct the numerous defects in their fourth cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

3. Cross-Defendant, Dynasty Coachwork International, Inc.
The Cross-Defendant filed a demurrer to the first, second, third, and fourth causes of action in the Third Amended Cross-Complaint on the ground that they fail to state sufficient facts. In addition, the Cross-Defendant requests that the Court the claims for punitive damages and for actual damages.

a. Demurrer to First Cause of Action for Breach of Contract
This cause of action arises from the claim that the Cross-Defendants breached a lease agreement. The Cross-Defendant argues that this cause of action fails to allege any facts demonstrating that the Cross-Complainant breached the lease agreement. The cause of action for breach of contract has the following elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

The Cross-Complainants allege in paragraph 29 that the parties entered into a written lease agreement. There are no facts demonstrating that the Cross-Defendant breached the agreement. There are no allegations identifying a contractual obligation that the Cross-Defendant did not perform. This is insufficient to plead the cause of action.
In their opposition, the Cross-Complainants argue that they pleaded that the Cross-Defendant evicted the Cross-Complainants prior to the end of the lease. However, the Cross-Complainants did not plead in the first cause of action that the Cross-Defendant breached the lease agreement by evicting them.

Therefore, the Court will sustain the demurrer to the first cause of action. The Court will grant leave to amend because it is reasonably possible for the Cross-Complainants to correct the defect by amendment, i.e., they can add allegations identifying the breach of the lease agreement.

b. Demurrer to Second Cause of Action for Fraud
The Cross-Defendant argues that the cause of action lacks the particular facts needed to plead fraud against a corporation. The elements of a fraud cause of action are the following:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of fraud must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.
In addition, fraud pleadings against a corporation must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the second cause of action reveals that it lacks the required particularity. In paragraph 34, the Cross-Complainants allege that “Dynasty” falsely stated to Cross-Complainants that their claim would be adjusted faster if it were included in another claim. There are no allegations identifying the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. This is insufficient.
The rest of the cause of action also lacks the required particularity and merely repeats the elements of the cause of action. For example, the Cross-Complainants allege in paragraph 39 that they justifiably relied on the statements. There are no particular facts demonstrating that the Cross-Complainants were justified when they relied upon the alleged representations. This is insufficient to plead a fraud claim.

Therefore, the Court will sustain the demurrer to the second cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants made a generic request for leave to amend; however, they did not identify the manner in which they can correct the numerous defects in their second cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

c. Demurrer to Third Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing
The Cross-Defendant argues that this cause of action lacks sufficient facts.

Under California law, every contract contains an implied covenant of good faith and fair dealing providing that no party to the contract will do anything that would deprive another party of the benefits of the contract. Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720. The implied covenant protects the reasonable expectations of the contracting parties based on their mutual promises. Carma Developers (Cal.), Inc. v. Marathon Development California, Inc. (1992) 2 Cal.4th 342, 373–374. The scope of conduct prohibited by the implied covenant depends on the purposes and express terms of the contract. Id. at 373.

A review of this cause of action reveals that it is merely a list of elements. In paragraph 43, the Cross-Complainants allege that the parties entered into a written agreement. There are no allegations identifying the written agreement, its terms, their obligations, or its legal effect. This is insufficient to plead the existence of a contract that implied the covenant.
Further, in paragraph 46, the Cross-Complainants allege that the Cross-Defendants “unfairly interference” with the Cross-Complainants’ right to receive the benefits of the written agreement. There are no allegations identifying the benefits at issue or identifying the manner in which the Cross-Defendants interfered with the Cross-Complainants’ right to the benefits. This is insufficient to plead the cause of action.

Therefore, the Court will sustain the demurrer to the third cause of action. This is the Cross-Complainants’ fourth attempt to plead their claims. The Cross-Complainants have the burden of identifying the manner in which they can amend their complaint and how that amendment will change the legal effect of their pleading. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants made a generic request for leave to amend; however, they did not identify the manner in which they can correct the numerous defects in their third cause of action. Accordingly, the Court will not grant leave to amend in a fifth pleading.

d. Demurrer to Fourth Cause of Action for Equitable Indemnification
The Cross-Defendant argues that this cause of action does not plead that it is liable for any tort damages.
Indemnity means “the obligation resting on one party to make good a loss or damage another party has incurred.” Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal. 3d 622, 628. An indemnitor is the party who is obligated to pay another. An indemnitee is the party who is entitled to receive the payment from the indemnitor.
An indemnity obligation arises from two general sources. First, it may arise from express contractual language establishing a duty in one party to save another harmless upon the occurrence of specified circumstances. E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal. 3d 497, 506. Second, it may be implied from equitable considerations. Id. at 507. Unlike contractual indemnity which looks to the parties’ intent, equitable and implied indemnity focuses on principles of fairness and justice and is designed to apportion loss among tortfeasors in proportion to their relative culpability.

The Cross-Complainants’ fourth cause of action does not identify any tort for which it would be equitable to impose a duty to indemnify on the Cross-Defendant. Instead, the Cross-Complainants allege facts in paragraphs 52 to 55 that the Cross-Defendants breached the lease agreement by permitting Chinese females to use the kitchen to prepare their meals. This is insufficient to plead a claim for equitable indemnity.
In their opposition, the Cross-Complainants argue that they can add allegations to plead this cause of action as a claim for implied or express contractual indemnification.

Therefore, the Court will sustain the demurrer to the fourth cause of action. The Court will grant leave to amend because the Cross-Complainants assert that they can correct this cause of action by adding allegations to demonstrate that the contract between the parties included a duty to indemnity.

e. Motion to Strike
In light of the sustaining of the demurrers to each cause of action, the Court will take the motion to strike off calendar as moot.

RULING:
1. Cross-Defendants, Pride Public Adjusters and Pride Adjusters, Inc.
SUSTAIN demurrers to 2nd, 3rd, and 4th causes of action without leave to amend

2. Cross-Defendants, Andrew Chang and Linda Chang
TAKE OFF CALENDAR demurrer of Linda Chang as moot.
SUSTAIN demurrers to 2nd, 3rd, and 4th causes of action without leave to amend

3. Cross-Defendant, Dynasty Coachwork International, Inc.
SUSTAIN demurrers to 1st and 4th causes of action with leave to amend
SUSTAIN demurrers to 2nd and 3rd causes of action without leave to amend.

TAKE OFF CALENDAR motion to strike as moot