Case Name: Douglas Ross v. Scott Miley
Case No.: 16CV291554

I. Background

This lawsuit arises from a dispute over a loan made by plaintiff Douglass Ross (“Ross”) to defendant Scott Miley (“Miley”), his former employee. Ross runs a construction company and offered to help Miley buy a home in Pleasanton, California so he could live closer to the company’s office. In 2007, Ross loaned Miley $600,000 at an annual interest rate of 7 percent, which Miley planned to pay back after selling his home in Discovery Bay, California. When the subprime mortgage crisis unfolded the following year, Miley could not sell his home to pay back the loan. Miley resigned from Ross’s construction company in 2009 and has not made any loan payments since. Ross seeks to recover the principal amount of $600,000 as well as $336,023.98 in interest. In the second amended complaint (“SAC”), Ross asserts causes of action against Miley for: (1) breach of oral contract; (2) breach of written contract; (3) money lent; and (4) intentional misrepresentation.

Currently before the Court is Miley’s demurrer to the first and third causes of action in the SAC, which is accompanied by a request for judicial notice.

II. Request for Judicial Notice

Miley requests judicial notice of the SAC. The Court may take judicial notice of the SAC because it is a court record. (Evid. Code, § 452, subd. (d).) With that said, it is unnecessary to take judicial notice of the SAC because it is the pleading under review and, as such, must necessarily be considered by the Court. (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1091, fn. 1.) Miley’s request for judicial notice is therefore DENIED.

III. Demurrer

Miley demurs on the following purported grounds. “The first cause of action is uncertain and fails to state sufficient facts to constitute a cause of action pursuant to Code of Civil Procedure § 430.10(e).” (Dem. at p. 2:4-5.) “The first cause of action is also uncertain as to whether the agreement was oral, written or otherwise pursuant to Code of Civil Procedure § 430.10(g).” (Dem. at p. 2:6-7.) Finally, Miley demurs on the ground “[t]he third cause of action is barred by [the] statute of limitations pursuant to Code of Civil Procedure § 339.” (Dem. at p. 2:8-9.)

Not all of these purported grounds are statutory grounds for demurrer. Additionally, Miley’s choice of language, particularly the word “uncertain,” creates a lack of clarity. Thus, it is necessary to clarify the actual, statutory grounds for Miley’s demurrer before addressing the merits thereof.

Miley states the first cause of action is uncertain. Uncertainty is a distinct statutory ground for demurrer set forth in Code of Civil Procedure section 430.10, subdivision (f), and is sustainable when “[t]he pleading is uncertain. . . ambiguous [or] unintelligible.” “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Financial Industry Reg. Authority (2012) 208 Cal.App.4th 1125, 1135.)

But while Miley states the first cause of action is uncertain, he does not cite Code of Civil Procedure section 430.10 subdivision (f) or argue the SAC is so incomprehensible he cannot reasonably respond. Instead, Miley cites Code of Civil Procedure section 430.10, subdivisions (e) and (g). Subdivision (e) authorizes a demurrer on the ground “[t]he pleading does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) Subdivision (g) authorizes a demurrer on the ground “it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct.” (Code Civ. Proc., § 430.10, subd. (g).) Miley does present arguments pertaining to the sufficiency of the factual allegations and the form of the contract in his memorandum of points and authorities. Accordingly, the Court treats the demurrer to the first cause of action as being made exclusively on the statutory grounds set forth in Code of Civil Procedure section 430.10, subdivisions (e) and (g) and not on the ground of uncertainty set forth in subdivision (f).

Turning to the third cause of action, Miley identifies the expiration of the statute of limitations as the ground for his demurrer. As the Court previously explained in ruling on the demurrer to Miley’s cross-complaint, the statutory “grounds for a demurrer differ from the reasons for sustaining a demurrer on a particular ground.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111.) The expiration of the statute of limitations is not a statutory ground for demurrer set forth in Code of Civil Procedure section 430.10. Rather, a demurrer on the ground of failure to state facts sufficient to constitute a cause of action may be sustained if “‘the complaint shows on its face that the statute [of limitations] bars the action.’ [Citation.]” (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315.) Consequently, the Court treats the demurrer to the third cause of action as being made on the ground of failure to state sufficient facts (Code Civ. Proc., § 430.10, subd. (e)).

A. First Cause of Action

1. Form of the Contract

A demurrer may be sustained if, “[i]n an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct.” (Code Civ. Proc., § 430.10, subd. (g).) Miley asserts he cannot ascertain the form of the contract alleged in the first cause of action. But the first cause of action is explicitly identified as a claim for breach of an oral contract, and Ross alleges therein that Miley breached an oral agreement to repay the $600,000 loan plus accrued interest. Contrary to what Miley asserts, the allegation that he also breached a written promissory note executed several years later does not create any “uncertainty” or confusion. (Mem. of Pts. & Auth. at p. 5:1-6.) Ross clearly identifies breach of the written promissory note as the basis for the second cause of action for “breach of written agreement.” (SAC at p. 4:9-10.) Thus, it is possible to ascertain from the pleading that the first cause of action is based on an oral agreement, not a written agreement. Accordingly, the demurrer to the first cause of action on the ground the form of the contract cannot be ascertained is OVERRULED.

2. Failure to State Sufficient Facts

In order to state a claim for breach of contract, a plaintiff must allege, among other things, the defendant breached the contract. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) Miley argues Ross does not adequately plead a breach of the loan agreement because he does not allege the house in Discovery Bay was ever sold.

Although not articulated by Miley, it appears he is perhaps asserting that his performance, namely repaying the loan, was contingent on the sale of the house. But Miley does not identify and there does not appear to be any allegation in the SAC to support the proposition that the parties’ agreement contained such a contingency or condition precedent. Furthermore, Miley does not cite any authority or provide any legal analysis to substantiate his position. (See generally Kapinski v. Smitty’s Bar, Inc. (2016) 246 Cal.App.4th 456, 464; see also Realmuto v. Gagnard (2003) 110 Cal.App.4th 193, 199.) Put differently, although it appears the parties anticipated that Miley would repay the loan after selling his house in Discovery Bay, there is no basis for concluding the parties’ agreement was contingent upon or otherwise required the sale of the home as a condition precedent. Accordingly, Miley does not substantiate his argument.

After presenting the argument discussed above, Miley asserts in a conclusory manner that Ross’s claim is not “ripe.” (Mem. of Pts. & Auth. at p. 4:14.) “‘Where a point is merely asserted [ ] without any argument of or authority for its proposition, it is deemed to be without foundation and requires no discussion.’ [Citation.]” (People v. Dougherty (1982) 138 Cal.App.3d 278, 282; Cal. Rules of Court, rule 3.1113(b).) Consequently, the Court does not discuss this assertion here; it is not a basis for sustaining the demurrer.

For these reasons, Miley’s demurrer to the first cause of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

B. Third Cause of Action

Miley argues the third cause of action, which is a common count for money lent, is subject to demurrer because it is time-barred.

To substantiate this argument, Miley must demonstrate (1) which statute of limitations applies and (2) when the claim accrued. (E-Fab, supra, 153 Cal.App.4th at p. 1316.) The demurrer is only sustainable if the challenged cause of action is clearly and affirmatively barred by the statute of limitations based on the allegations on the face of the pleading. (Ibid.)

Miley asserts “[t]he statute of limitations for an oral common count cause of action is two years” pursuant to Code of Civil Procedure section 339, which applies to actions “upon a contract, obligation or liability not founded upon an instrument of writing.” In support, Miley relies on Moya v. Northrup (1970) 10 Cal.App.3d 276. But the court in Moya did not actually hold that the statute of limitations for a common count of money lent is two years under Code of Civil Procedure section 339. Instead, the court held a common count could not be challenged by demurrer on the ground of uncertainty. (Moya, supra, 10 Cal.App.3d at p. 285.) Miley does not cite and the Court is otherwise unaware of any case holding the statute of limitations for this type of common count is two years. Thus, Miley does not substantiate his assertion with respect to the applicable statute of limitations in the first instance. Additionally, he does not demonstrate when the claim accrued. He appears to take the position that the claim accrued in December 2007. It is fundamentally unclear, based on the law or the allegations in the pleading, how he reached this conclusion. For these reasons, Miley does not demonstrate the third cause of action is time-barred.

Perhaps Miley is unable to provide authority to support his position because, ordinarily, common counts are not subject to demurrer. (Jones v. Daly (1981) 122 Cal.App.3d 500, 510.) Typically, demurrers to common counts are only sustained “[w]hen a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action” and the demurrer to that specific cause of action is sustained. (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.) But the Court overruled the demurrer to the first cause of action, which is based on the same facts as this common count. Thus, the demurrer to the common count for money lent is not sustainable.

In conclusion, the demurrer to the third cause of action is OVERRULED.