Case Number: 16K13943 Hearing Date: July 23, 2018 Dept: 94

Cross-Defendant Law Offices of Paul Kingston’s Demurrer to Andrew Silver’s Cross-Complaint is sustained with 20 days’ leave to amend as to the first, second and third causes of action, and overruled as to the fourth and sixth causes of action.

Cross-Defendant’s Motion to Strike the requests for punitive damages and attorneys’ fees is granted with 20 days’ leave to amend.

Legal Standard

Demurrer

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purpose of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true, however improbable they may be.

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A demurrer is brought under CCP § 430.10 [grounds], § 430.30 [as to any matter on its face or from which judicial notice may be taken], and § 430.50(a) [can be taken to the entire complaint or any cause of action within]. Specifically, a demurrer may be brought per CCP § 430.10(e) if insufficient facts are stated to support the cause of action asserted. Per CCP §430.10(a) a demurrer may be brought where the court has no jurisdiction of the subject of the cause of action alleged in the pleading. Furthermore, demurrer for uncertainty will be sustained only where the complaint is so bad that the defendant cannot reasonably respond. CCP § 430.10(f).

However, in construing the allegations, the court is to give effect to specific factual allegations that may modify or limit inconsistent general or conclusory allegations. (Financial Corporation of America v. Wilburn (1987) 189 Cal.App.3rd 764, 769.) And, if the facts pled in the complaint are inconsistent with facts which are incorporated by reference from exhibits attached to the complaint, the facts in the incorporated exhibits control. Further, irrespective of the name or label given to a cause of action by the plaintiff, a general demurrer must be overruled if the facts as pled in the body of the complaint state some valid claim for relief. Special demurrers are not allowed in limited jurisdiction courts. (CCP § 92(c).)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)

Finally, CCP section 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (CCP § 430.41(a).) The parties are to meet and confer at least five days before the date the responsive pleading is due. (CCP § 430.41(a)(2).) Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts. (CCP § 430.41(a)(3).)

Motion to Strike

California law authorizes a party’s motion to strike matter from an opposing party’s pleading if it is irrelevant, false, or improper. (CCP §§ 435; 436(a).) Motions may also target pleadings or parts of pleadings which are not filed or drawn in conformity with applicable laws, rules or orders. (CCP § 436(b).) Motions to strike in limited jurisdiction courts may only challenge pleadings on the basis that “the damages or relief sought are not supported by the allegations of the complaint.” (CCP § 92(d).) A motion to strike is used to address defects that appear on the face of a pleading or from judicially noticed matter but that are not grounds for a demurrer. (Pierson v. Sharp Memorial Hospital (1989) 216 Cal.App.3d 340, 342; see also City & County of San Francisco v. Strahlendorf (1992) 7 Cal.App.4th 1911, 1913 (motion may not be based on a party’s declaration or factual representations made by counsel in the motion papers).) In particular, a motion to strike can be used to attack the entire pleading or any part thereof – in other words, a motion may target single words or phrases, unlike demurrers. (Warren v. Atchison, Topeka & Santa Fe Railway Co. (1971) 19 Cal.App.3d 24, 40.) California’s policy of liberal construction applies to motions to strike. (CCP § 452; see also Duffy v. Campbell (1967) 250 Cal.App.2d 662, 666 (noting that courts must resolve all reasonable doubts in favor of the pleading when considering a motion to strike).) The Code of Civil Procedure also authorizes the Court to act on its own initiative to strike matters, empowering the Court to enter orders striking matter “at any time in its discretion, and upon terms it deems proper.” (CCP § 436.)

Discussion

Background

On November 10, 2016, Plaintiff Law Offices of Paul Kingston (“Plaintiff”) filed the instant action in interpleader against Defendants Andrew Silver (“Cross-Complainant”), The Law Office of Tuan A. Khuu & Associates, Terry Rich, DC, and Motion Picture and Television Fund. Default was entered against Silver on June 27, 2017, but set aside on March 27, 2018. Silver filed an Answer and Cross-Complaint against Plaintiff (“Cross-Defendant”) on April 17, 2018.

Cross-Defendant filed its demurrer to the Cross-Complaint on June 8, 2018. To date, no opposition has been filed

Meet and Confer

Pursuant to Code of Civil Procedure, section 430.40, subdivision (a), “Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” A party shall thereafter file a declaration stating the meet and confer efforts did not lead to agreement or, if necessary, that the parties were for some reason unable to meet and confer in good faith. (Code Civ. Proc., § 430.41, subd. (a)(3).)

The demurrer is accompanied by a meet and confer declaration as required by Code of Civil Procedure, section 430.40, subdivision (a). (See Demurrer, Shomloo Decl., ¶2.)

Demurrer

The Cross-Complaint alleges causes of action for: (1) breach of contract; (2) negligent misrepresentation; (3) intentional misrepresentation; (4) constructive trust; (5) breach of fiduciary duty; and (6) unjust enrichment. The claims are alleged to arise out of Cross-Defendants’ representation of Cross-Complainant in an underlying personal injury action that resulted in a settlement on his behalf.

Uncertainty

As an initial matter, the demurrer for uncertainty is overruled. Special demurrer are not permitted in courts of limited jurisdiction. (Code Civ. Proc., § 92, subd. (c).)

First Cause of Action for Breach of Contract

Cross-Defendant demurs to the first cause of action for breach of contract on the grounds that there is no allegation of Cross-Complainant’s performance or excuse of nonperformance, and that it is not alleged whether the contract is written or oral. The elements of a claim for breach of contract are: (1) existence of contract; (2) plaintiffs’ performance or excuse for nonperformance; (3) defendants’ breach (or anticipatory breach); and (4) resulting damage to plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830; Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1387.) The court agrees that the Cross-Complaint does not allege that Cross-Complainant performed his obligations pursuant to the parties’ contract. Instead, he merely alleges the manner in which Cross-Defendant breached the agreement. (X-Comp., ¶¶14-26.) However, the court is satisfied that the Cross-Complaint alleges that the parties’ agreement was written. (See id. at ¶14 and Exh. A.) To the extent Cross-Defendant argues that certain alleged terms of their agreement are not set forth in writing, this is a factual issue that is not appropriately determined on demurrer.

The demurrer to the first cause of action is sustained with leave to amend.

Second Cause of Action for Negligent Misrepresentation; Third Cause of Action for Intentional Misrepresentation

“The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196.) Similarly, the elements of a claim for active fraud are (1) misrepresentation of a material fact; (2) knowledge of falsity or lack of a reasonable ground for belief in the truth of the representation; (3) intent to induce reliance; (4) actual and justifiable reliance by the plaintiff; and (5) resulting damage. (Orient Handel v. United States Fid. & Guar. Co. (1987) 192 Cal.App.3d 684, 693.)

The Cross-Complaint is devoid of proper allegations that Cross-Defendant made misrepresentations to Cross-Complainant. (See X-Comp., ¶¶14-17, 27-39.) The only allegation of a misrepresentation is that “that Cross-Defendant intentionally misrepresented to Cross-Complainant that Kingston would and was complying with the terms of the retainer agreement.” (Id. at ¶34.) This is not sufficient to allege a misrepresentation. To advance a cognizable claim for misrepresentation, “every element of the cause of action . . . must be alleged in full, factually and specifically.” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.) The heightened particularity requirement necessitates pleading facts that “show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Here, there are no allegations as to what specifically Cross-Defendant said to Cross-Complainant regarding compliance with the terms of the retainer agreement, or how, when and where those statements were made.

The demurrer to the second and third causes of action is sustained with leave to amend.

Fourth Cause of Action for Constructive Trust

The elements of a claim for constructive trust are (1) a wrongful act (underlying claim incorporated into the cause of action); (2) the specific, identifiable property or property interest, or excuse for inability to describe it; (3) plaintiff’s right to the property; and (4) defendant has title thereto.

(Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 990; Campbell v. Superior Court (2005) 132 Cal.App.4th 904, 920.)

Cross-Defendant contends that none of these elements are alleged in the Cross-Complaint. However, the Cross-Complaint includes a cause of action for breach of fiduciary duty, which the demurrer does not challenge. A breach of fiduciary claim merely requires the allegation of (1) the existence of a fiduciary duty; (2) breach of that duty; and (3) resulting damages. (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932; citing Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.) Here, Cross-Complainant alleges that Cross-Defendant owed him a fiduciary duty as his counsel, breached that duty by failing to adequately represent him, and cause him damages in the amount of $20,300.00. (X-Comp., ¶¶47-48.) The wrongful act of breach of fiduciary duty, and the specific sum of $20,300.00 in damages are alleged to be in Cross-Defendant’s possession. (Ibid.)

Therefore, the demurrer to the fourth cause of action is overruled.

Sixth Cause of Action for Unjust Enrichment

The elements of a claim for unjust enrichment are (1) receipt of a benefit; (2) unjust or wrongful retention of the benefit; and (3) at the expense of another. (See First Nationwide Sav. v. Perry (1992) 11 Cal.App.4th 1657, 1662–63; Lectrodryer v. SeoulBank (2000.) 77 Cal.App.4th 723, 726.) The demurrer does not specify in what respect the Cross-Complaint fails to allege these elements. Cross-Complainant alleges that Cross-Defendant improperly retained the settlement obtained on Cross-Complainant’s behalf in the underlying personal injury action. (X-Comp., ¶¶49-54.) This alleges a benefit (the settlement funds) wrongfully withheld by Cross-Defendant at Cross-Complainant’s expense.

Therefore, the demurrer to the sixth cause of action is overruled.

Motion to Strike

Punitive Damages

Civil Code section 3294 authorizes punitive damages in non-contract cases “where the defendant has been guilty of oppression, fraud, or malice, express or implied . . . .” (Civil Code, § 3294, subd. (a).) Malice means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (Civil Code, § 3294, subd. (c)(1).) Oppression means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (Civil Code, § 3294, subd. (c)(2).) Finally, fraud means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the party of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. (Civil Code, § 3294, subd. (c)(3).)

As discussed above, the second and third causes of action for misrepresentation are not adequately alleged. Therefore, no fraud basis for punitive damages exists. Nor has Cross-Complainant alleged facts that rise to the level of malice or oppression. The alleged withholding of the settlement in the underlying personal injury action is not alleged to be done with the intent to injure Cross-Complainant, or to subject him to cruel and unjust hardship.

The request for punitive damages, therefore, is struck.

Attorneys’ Fees

Attorneys’ fees are only recoverable when authorized by contract, statute or law. (Code Civ. Proc., § 1033.5, subd. (a)(10).) In the absence of either a provision in the parties agreement for the allocation of attorney’s fees to the prevailing party, or a statute dictating an award of fees, each party bears its

own attorneys’ fees. (Sagado v. County of Los Angeles (1998) 19 Cal.4th 629, 651.) The Cross-Complaint does not allege a contractual or statutory basis for attorneys’ fees. (See X-Comp., Prayer, ¶11.)

The request for attorneys’ fees, therefore, is also struck.

Moving party to give notice.