Case Name: Timothy J. Turi v. Wayne W. Bier

Case No.: 1-14-CV-260566

This action arises out of a dispute regarding the sale of real property located at 1694 Lyle Drive, San Jose, California 95129 (the “Property”).

On October 22, 2014, plaintiff Timothy J. Turi (“Plaintiff”) filed the operative first amended complaint (“FAC”) against defendant Wayne W. Bier (“Defendant”), alleging causes of action for: (1) “breach of contract – lease with purchase option agreement”; (2) breach of the covenant of good faith and fair dealing; (3) tortious breach of contract; (4) “breach of contract – buy-out agreement”; (5) fraudulent inducement; and (6) promissory estoppel.

Currently before the Court is Defendant’s demurrer to and motion to strike the FAC.

I. Demurrer

Defendant demurs to each and every cause of action of the FAC on the grounds of failure to allege facts sufficient to constitute a cause of action, uncertainty, and failure to allege whether the contract is written, oral, or implied by conduct. (See Code Civ. Proc., § 430.10, subds. (e), (f), (g).)

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

As an initial matter, the Court has not considered Plaintiff’s declaration in opposition to the demurrer or any of the exhibits attached thereto as a demurrer tests only the sufficiency of the pleading. (See id.)

The demurrer to each and every cause of action of the FAC on the ground of uncertainty is OVERRULED. Uncertainty is a disfavored ground for demurrer and is typically sustained only where the pleading is so bad the responding party cannot reasonably respond. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal App 4th 612, 616 [“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.”].) It is clear from his other arguments that Defendant understands what the causes of action at least attempt to allege and there is no true uncertainty.

The demurrer to the first cause of action for breach of contract on the ground of failure to allege facts sufficient to constitute a cause of action is OVERRULED. Defendant unsuccessfully argues that the cause of action fails to allege facts sufficient to state a claim because Plaintiff did not attach or allege the verbatim terms of the alleged purchase contract entered into on or about June 6, 2011. The allegations that Plaintiff and Defendant entered into an agreement whereby Plaintiff agreed to pay an additional $800 per month in rent towards a down payment and Defendant agreed to give Plaintiff the option to purchase the Property within three years for $720,000 adequately set forth the legal effect of the contract. (See Construction Protective Services v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199 [“[A] plaintiff may plead the legal effect of the contract rather than its precise language.”].) Additionally, Defendant’s argument that the emails attached to the FAC contradict the allegations of the FAC and demonstrate that there was no contract as of June 6, 2011, is not well-taken. The FAC filed with the Court on October 22, 2014, does not have any attachments even though the FAC itself makes reference to the same. Thus, Defendant’s arguments based on the emails are not properly made on demurrer. (See Blank v. Kirwan, supra, 39 Cal.3d at p. 318; see also Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 213–214.) Furthermore, Defendant’s argument that his obligations under the purchase contract were terminated by the Buy-Out Agreement is not persuasive because the FAC alleges that Defendant did not pay Plaintiff the sums due under the Buy-Out Agreement and it is not clear that the parties intended to extinguish rather than merely modify the original agreement. (See In re Marriage of Thompson (1996) 41 Cal.App.4th 1049, 1058 [“An accord and satisfaction is the substitution of a new agreement for and in satisfaction of a preexisting agreement between the same parties.”]; see also Civ. Code §§ 1521 and 1523; see also Howard v. County of Amador (1990) 220 Cal.App.3d 962, 977 [to establish that a new contract was substituted in place of an old one it must “clearly appear that the parties intended to extinguish rather than merely modify the original agreement.”] [internal quotation marks omitted] see also Alexander v. Angel (1951) 37 Cal.2d 856, 860 [“The ‘question whether a novation has taken place is always one of intention’ [citation], with the controlling factor being the intent of the obligee to effect a release of the original obligor on his obligations under the original agreement. [Citation.] While the evidence in support of a novation must be ‘clear and convincing’ [citation], the ‘whole question is one of fact and depends upon all the facts and circumstances of the particular case’ [citation] ….”].)

The demurrer to the first cause of action for breach of contract on the ground that it cannot be ascertained from the pleading whether the contract alleged is oral, written, or implied by conduct is SUSTAINED, with 10 days’ leave to amend. (See FAC, ¶¶ 6, 10 [indicating only that the agreement entered into by Plaintiff and Defendant on or about June 6, 2011, was “confirmed” in a series of emails].) While Plaintiff suggests in his opposition papers that the purchase contract is either an oral contract for the sale of real property or a contract implied by conduct, the FAC does not contain any allegations regarding the same.

The demurrer to the second cause of action for breach of the covenant of good faith and fair dealing on the ground of failure to allege facts sufficient to state a cause of action is SUSTAINED, with 10 days’ leave to amend. As it is presently pled, the second cause of action is superfluous as it does nothing more than repeat the allegation that Defendant breached the purchase contract by refusing to sell the Property to Plaintiff. (See Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 327 [“[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous.”]; see FAC, ¶ 14.)

The demurrer to the second cause of action for breach of the covenant of good faith and fair dealing on the ground that it cannot be ascertained from the pleading whether the contract alleged is oral, written, or implied by conduct is SUSTAINED, with 10 days’ leave to amend. (See FAC, ¶¶ 6, 10.)

The demurrer to the third cause of action for tortious breach of contract on the ground of failure to allege facts sufficient to constitute a cause of action is OVERRULED. Defendant’s argument that the third cause of action fails because Plaintiff did not plead sufficient facts to establish the existence of a contract is without merit as Plaintiff adequately pleads the legal effect of the contract. Defendant also argues that Plaintiff cannot recover tort damages as his claims merely arise out of a breach of contract. However, the third cause of action alleges that the Defendant’s breach was accompanied by fraud and a tortious breach of contract claim can be established when the breach is accompanied by a traditional common law tort, such as fraud. (See Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 102; see also Erlich v. Menezes (1999) 21 Cal.4th 543-553-554 [“[O]utside the insurance context, ‘a tortious breach of contract . . . may be found when (1) the breach is accompanied by a traditional common law tort, such as fraud or conversion; (2) the means used to breach the contract are tortious, involving deceit or undue coercion or; (3) one party intentionally breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.’ [Citation.]”].)

The demurrer to the third cause of action for tortious breach of contract on the ground that it cannot be ascertained from the pleading whether the contract alleged is oral, written, or implied by conduct is SUSTAINED, with 10 days’ leave to amend. (See FAC, ¶¶ 6, 10.)

The demurrer to the fourth cause of action for breach of contract is OVERRULED. Defendant does not dispute the existence of the Buy-Out Agreement, which forms the basis of the fourth cause of action, and argues only that the attachments to the FAC contain various inconsistencies that render the Buy-Out Agreement uncertain. However, as previously articulated, the FAC filed with the Court on October 22, 2014, does not have any attachments and this argument is not properly made on demurrer. (See Blank v. Kirwan, supra, 39 Cal.3d at p. 318; see also Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 213–214.)

The demurrer to the fifth cause of action for fraudulent inducement on the ground of failure to allege facts sufficient to constitute a cause of action is SUSTAINED, with 10 days’ leave to amend. Defendant’s argument that the fifth cause of action fails to allege facts sufficient to state a claim because the FAC does not establish the existence of the purchase contract lacks merit. As indicated above, Plaintiff adequately pleads the purchase contract by its legal effect. Defendant also unpersuasively argues that the fifth cause of action is inconsistent with the first cause of action because it alleges that the purchase contract is void and unenforceable. Even assuming the contract and tort claims are incompatible (and there does not appear to be anything contradictory in alleging both fraudulent inducement of a contract and then breach of the resulting contract), that is not a failure to state facts. “When a pleader is in doubt about what actually occurred or what can be satisfied by the evidence, he or she may plead in the alternative and make inconsistent allegations. Either factually or legally inconsistent allegations are permissible.” (Weil & Brown, Cal. Practice Guide: Civ. Proc. Before Trial (Rutter Group 2007) ¶ 6:242, p. 6-66, citing Adams v. Paul (1995) 11 Cal.4th 583, 593; Crowley v. Katleman (1994) 8 Cal.4th 666, 690-691; Mendoza v. Rast Produce Co. (2006) 140 Cal.App.4th 1395, 1402.) Next, Defendant’s argument that certain emails contradict the allegations of the FAC is not well-taken because the subject emails are not attached to the FAC and may not be considered on demurrer. (See Blank v. Kirwan, supra, 39 Cal.3d at p. 318; see also Committee on Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 213–214.) Nonetheless, Defendant persuasively argues that the fifth cause of action is not pled with the requisite specificity as it does not state when or the manner in which the fraudulent representations were made. (See Committee On Children’s Television, Inc. v. General Foods Corp., supra, 35 Cal.3d at pp. 216-217; see also Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645 [fraud claims must be pleaded with particularity; this necessitates pleading facts showing how, when, where, to whom and by what means the alleged misrepresentations were tendered].)

The demurrer to the fifth cause of action for fraudulent inducement on the ground that it cannot be ascertained from the pleading whether the contract alleged is oral, written, or implied by conduct is SUSTAINED, with 10 days’ leave to amend, because the claim for fraudulent inducement is founded upon the purchase contract and the FAC does not state whether the purchase contract is oral, written, or implied by conduct. (See Code Civ. Proc., § 430.10, subd. (g) [providing a ground for a demurrer “[i]n an action founded upon a contract”].)

The demurrer to the sixth cause of action for promissory estoppel on the ground of failure to allege facts sufficient to constitute a cause of action is SUSTAINED, with 10 days’ leave to amend. The doctrine of promissory estoppel is used to provide a substitute for the consideration which ordinarily is required to create an enforceable promise. (See Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, 672.) As set forth in Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, “[i]f the promisee’s performance was requested at the time the promisor made his promise and that performance was bargained for, the doctrine is inapplicable.” (Youngman, 70 Cal.2d at 249.) “Under such circumstances, the only reliance which can make the promisor’s failure to perform actionable is the promisee’s doing what was requested. If that reliance was detrimental, it would constitute consideration. If it was not detrimental, it would not constitute consideration; and since detrimental reliance is an essential feature of promissory estoppel, that doctrine could no longer be invoked to make the promisor liable.” (Id. at 249-250, citing Healy v. Brewster (1963) 59 Cal.2d 455, 463.) Stated another way, “where the promisee’s reliance was bargained for, the law of consideration applies; it is only where the reliance was unbargained for that there is room for application of the doctrine of promissory estoppel.” (Id. at 250.) Here, Plaintiff alleges that there was actual consideration for Defendant’s promises because he detrimentally relied on the promises by making additional rent payments of $800 per month. Therefore, the doctrine of promissory estoppel in not implicated. (See id. [“[t]here is no occasion, therefore, to rely upon the doctrine of promissory estoppel, which is necessary only to supply consideration for a promise when no actual consideration was given by the promise”].)

The demurrer to the sixth cause of action for promissory estoppel on the ground that it cannot be ascertained from the pleading whether the contract alleged is oral, written, or implied by conduct is OVERRULED because the action is not founded upon a contract. (See Code Civ. Proc., § 430.10, subd. (g).)

II. Motion to Strike

Defendant moves to strike the following portions of the FAC: “economic damages in an amount to be determined at the time of trial, but is believed to be and exceed the sum of $305,000 to date” (FAC, page 6, lines 2-3); “[f]or all compensatory damages incurred according to proof” (FAC, Prayer for Relief, item 1); “[f]or all consequential damages incurred according to proof” (FAC, Prayer for Relief, item 2); “[f]or punitive damages sufficient to punish the Defendant and act as a deterrent to others” (FAC, Prayer for Relief, item 4); the fifth cause of action for fraudulent inducement; portions of the sixth cause of action for promissory estoppel (see FAC, page 10, lines 14-16 [“Defendant wrongfully and fraudulently induced him to enter into a purchase agreement for the subject property”]); “[f]or all statutory damages as applicable” (FAC, Prayer for Relief, item 5); and “[f]or attorney’s fees ….” (FAC, Prayer for Relief, item 6.)

A court may strike any irrelevant, false, or improper matter inserted into any pleading or strike all or part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (See Code Civ. Proc., § 436.) As with a demurrer, the grounds for a motion to strike must appear on the face of the challenged pleading or from matters of which the court may take judicial notice. (See Code Civ. Proc., § 437, subd. (a); see also City and County of San Francisco v. Strahlendorf (1992) 7 Cal.App.4th 1911, 1913.) In ruling on a motion to strike, the court reads the complaint as a whole, all parts in their context, and assuming the truth of all well-pleaded allegations. (See Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63 citing Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255.)

The motion to strike Plaintiff’s request for economic damages (see FAC, page 6, lines 2-3) is DENIED. Defendant argues in a conclusory manner that the request is uncertain, but uncertainty is not a valid ground for a motion to strike. (See Code Civ. Proc., § 436.)

The motion to strike Plaintiff’s request for compensatory (see FAC, Prayer for Relief, item 1) and consequential damages (see FAC, Prayer for Relief, item 2) is SUSTAINED, with 10 days’ leave to amend, as the demurrer to Plaintiff’s tortious breach of contract and fraudulent inducement claims is sustained and Defendant persuasively argues that, consequently, there is no tort basis for the damages sought.

The motion to strike Plaintiff’s request for punitive damages is GRANTED, with 10 days’ leave to amend. While a properly pleaded fraud claim will itself support recovery of punitive damages (see Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610), the demurrer to Plaintiff’s claims for tortious breach of contract and fraudulent inducement is sustained and Plaintiff does not otherwise allege facts establishing malice or oppression. (See Civ. Code, § 3294.)

The motion to strike the fifth cause of action is MOOT given the ruling on Defendant’s demurrer.

The motion to strike portions of the sixth cause of action for promissory estoppel (see FAC, page 10, lines 14-16 [“Defendant wrongfully and fraudulently induced him to enter into a purchase agreement for the subject property”]) is MOOT given the ruling on Defendant’s demurrer.

The motion to strike Plaintiff’s request for statutory damages (see FAC, Prayer for Relief, item 5) is GRANTED, with 10 days’ leave to amend, as Plaintiff does not cite any statute authorizing statutory damages in this case.

The motion to strike Plaintiff’s request for attorneys’ fees (see FAC, Prayer for Relief, item 6) is GRANTED, with 10 days’ leave to amend. In the absence of some special agreement, statutory provision, or exceptional circumstances, attorneys’ fees are to be paid by the party employing the attorney. (See Code Civ. Proc. §1021 [setting forth the general rule that each party is to bear its own attorneys’ fees]; see also Reid v. Valley Restaurants, Inc., (1957) 48 Cal.2d 606, 610.) Here, Plaintiff has not alleged any contract, statute, or law under which he can recover his attorneys’ fees.