Case Number: 19STLC06792 Hearing Date: January 21, 2020 Dept: 25

DEMURRER TO COMPLAINT

(CCP § 430.10(e).)

TENTATIVE RULING:

Defendant’s demurrer to the Complaint is SUSTAINED with leave to amend as to causes of action 1 and 2 against Plaintiff LFD, Inc. only. The remainder of the demurrer is OVERRULED. Plaintiffs are to file an amended complaint within 20 days of the date of this order.

SUMMARY OF ACTION: This action is for Defendant’s refusal to pay for goods purchased from and services provided by Plaintiffs. The Complaint asserts causes of action for: (1) breach of oral contract, (2) breach of implied in fact contract, (3) quantum meruit, (4) open book account, and (5) account stated.

MOTION: Defendant demurs to the entire Complaint (C/A 1-5) based on Plaintiffs’ failure to state sufficient facts to any cause of action. As to C/A 1 and 2, Plaintiffs allege the Plaintiff entity entered into a contract with Defendant at a certain time, but the entity did not exist at that time. Also, the terms of the alleged contracts are not definite. As to C/A 1-3, the statute of limitations bars them. As to C/A 5, no agreement to pay invoice is alleged, thus, the cause of action for account stated fails.

OPPOSITION: Entire demurrer should be overruled. As to C/A 1 and 2, the Plaintiff entity existed at the time the contracts were finalized (2017). Also, material terms of the contract are alleged, and the court does not concern itself with the veracity of allegations on demurrer, so the contracts were sufficiently definite. As to statute of limitations, the statute of limitations began when the breach of contract occurred, which is alleged to have happened within 2 years of the complaint’s filing.

ANALYSIS:

Background

On July 23, 2019, Plaintiffs Lorraine Frasco (“Frasco”) and Lorraine Frasco Design, Inc. (“LFD, Inc.”) (together, “Plaintiffs”) filed the Complaint alleging that Defendant Christine Albrecht (“Defendant”) refused to pay for goods purchased from and for services performed by Plaintiffs. The Complaint asserts causes of action for: (1) breach of oral contract, (2) breach of implied in fact contract, (3) quantum meruit, (4) open book account, and (5) account stated.

Legal Standard

A demurrer tests the sufficiency of the pleading at issue as a matter of law. City of Chula Vista v. County of San Diego (1994) 23 Cal.App.4th 1713, 1719. A demurrer may be sustained where the complaint fails to state facts sufficient to constitute a cause of action. CCP § 430.10(e). The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 133 (“On demurrer, pleadings are read liberally and allegations contained therein are assumed to be true.”) However, the Court does not assume the truth of allegations expressing conclusions of law or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates (1995) 36 Cal.App.4th 698, 709.

Additionally, a special demurrer to a complaint may be brought on the ground the pleading is uncertain, ambiguous, or unintelligible. CCP § 430.10(f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191. A demurrer based on uncertainty is disfavored and will be strictly construed even when the pleading is uncertain in some respects. Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616. A demurrer for uncertainty may be sustained when a defendant cannot reasonably determine to what he or she is required to respond. For example, when a plaintiff joins multiple causes of action as one, fails to properly identify each cause of action, or fails to state against which party each cause of action is asserted if there are multiple defendants, a complaint is uncertain. Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.

If the demurrer is sustained, plaintiff “has the burden of proving the possibility of cure by amendment.” Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 173 (citing Grinzi v. San Diego Hospice Corp. (2004) 120 Cal.App.4th 72, 78-79.) Leave to amend must be allowed where there is a reasonable possibility of successfully stating a cause of action. Schulz v. Neovi Data Corp. (2007) 152 Cal.App.4th 86, 92.

Analysis

Request for Judicial Notice

The Court GRANTS Defendant’s request for judicial notice of LFD, Inc’s Articles of Incorporation filed with the California Secretary of State. (Evid. Code, § 452(c).)

Meet and Confer

The Court finds Defendant satisfies the meet and confer requirement. (Dem. [Declaration of Demurring or Moving Party Regarding Meet and Confer].)

Analysis

First Cause of Action – Breach of Oral Contract

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) A breach of contract cause of action does not require that contract terms be attached to the complaint or set out verbatim therein; a plaintiff need only plead a term’s legal effect. (See Miles v. Deutsche Bank Nat’l Trust Co. (2015) 236 Cal.App.4th 394, 402 [citing Constr. Protective Servs., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199].) “An oral contract may be pleaded generally as to its [legal] effect, because it is rarely possible to allege the exact words.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Defendant contends Plaintiffs fail to adequately allege the first element of breach of contract—the existence of a contract. Defendant also contends the statute of limitations bars this cause of action.

Here, the Court agrees that Plaintiff LFD, Inc. does not sufficiently allege the existence of a contract, but the Court finds Plaintiff Frasco sufficiently alleges the cause of action.

As to Plaintiff Frasco, she alleges she entered into a oral contract with Defendant for professional services on May 12, 2013. (Compl. ¶ 29.) This is sufficient to establish the existence of a contract.

As to Plaintiff LFD, Inc., it alleges it also entered into a contract with Defendant on May 12, 2013 (Compl. ¶ 29), but Plaintiff LFD, Inc. did not exist at that time because it became incorporated on April 8, 2014 (RJN, Exh. 1.). Thus, Plaintiff LFD, Inc. could not have entered into a contract at that time.

Plaintiff LFD, Inc. also alleges it entered into “multiple express oral agreements during the time PLAINTIFFS worked on the Ruston Road Projects….” (Compl. ¶ 30.) However, Plaintiffs do not allege the terms or legal effect of those agreements. Plaintiffs allege “the scope and general terms of which for each was expressly and mutually agreed to by the Parties to the oral agreement….” (Ibid.) But, this allegation does not provide the legal effect of the terms. Thus, the existence of a contract is not sufficiently alleged.

Even though it is unnecessary, the Court also considers Defendant’s argument that the alleged agreement did not exist because the parties did not have a meeting of the minds. (Dem. 7:9-11:20.) “‘[T]he failure to reach a meeting of the minds on all material points prevents the formation of a contract even though the parties have orally agreed upon some of the terms, or have taken some action related to the contract.’” (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 215, emphasis original.) Here, with respect to the “multiple express oral agreement” alleged in paragraph 30, the Court agrees there was no meeting of the minds alleged between the parties because the parties agreed that in the future the “formation” of the contract would be complete when Plaintiffs delivered a final invoice to Defendant. In opposition, Plaintiffs argue that the veracity of the allegations, but this does not address whether as a matter of law Plaintiffs have sufficiently alleged meeting of the minds.

Next, the Court considers Defendant’s argument that the statute of limitations bars this cause of action but determines this argument lacks merit. “Civil actions, without exception, can only be commenced within the periods prescribed in this title, after the cause of action shall have accrued….” (Code Civ. Proc., § 312.) Thus, the cause of action for breach of contract must have accrued before the statute of limitations period begins. Here, the breach is alleged to have occurred on June 29, 2018. (Compl. ¶ 32.) Thus, the cause of action could not have accrued before then. It is undisputed that a breach of contract cause of action has a two-year statute of limitations period. This lawsuit was filed on July 23, 2019. Thus, Defendant does not show that as a matter of law the lawsuit is untimely.

Accordingly, Plaintiff LFD, Inc. fails to allege all elements of the cause of action, specifically the element of the existence of a contract.

Therefore, the demurrer is SUSTAINED as to Plaintiff LFD, Inc. but is OVERRULED as to Plaintiff Frasco.

Second Cause of Action – Breach of Implied in Fact Contract

“An implied-in-fact contract is based on the conduct of the parties. Like an express contract, an implied-in-fact contract requires an ascertained agreement of the parties.” (Unilab Corp. v. Angeles-IPA (2016) 244 Cal.App.4th 622, 636.)

Defendant makes similar arguments to this cause of action: failure to allege existence of a contract and statute of limitations.

Here, Plaintiff Frasco alleges she entered into a contract on May 12, 2013 with Defendant based on the parties’ course of conduct. (Compl. ¶ 35.) This is sufficient to allege existence of a contract based on an implied in fact theory.

As to Plaintiff LFD, Inc., the Court incorporates the discussion above concerning the judicially noticed fact that LFD, Inc. did not exist on May 12, 2013, which is when the alleged contract was entered into. Thus, Plaintiff LFD, Inc. has not alleged the existence of a contract.

In opposition, Plaintiffs cite to paragraphs 20-22 to show Plaintiffs LFD, Inc. entered into multiple implied in fact agreements with Defendant, but a review of those allegations show that Plaintiff Frasco engaged in conduct with Defendant.

The Court incorporates the statute of limitations discussion in the first cause of action. The argument lacks merits because Plaintiffs allege breach occurred on June 29, 2018, which is within 2 years of the complaint’s filing.

Defendant also contends the existence of a written contract bars a theory based on implied in fact theory of breach of contract, but Defendant does not assert a written contract is alleged. (Dem. 15:20-16:12.)

Accordingly, the demurrer is SUSTAINED as to Plaintiff LFD, Inc. and is OVERRULED as to Plaintiff Frasco.

Third Cause of Action – Quantum Meruit

The only argument against this cause of action is statute of limitations.

The Court overrules this demurrer based on the following. First, the cause of action alleges no dates, so, the Court cannot determine the cause of action is time barred. Second, even if the Court relies on the dates alleged in the first and second causes of action, the Court incorporates the discussion above and determines Defendant does not show the cause of action is barred by the statute of limitations.

Therefore, the demurrer is OVERRULED as to the third cause of action.

Fourth Cause of Action – Open Book Account

Defendant demurs to this cause of action but fails to provide any argument as to why the cause of action is inadequately pled. Defendant does not carry its burden to show the cause of action fails as a matter of law.

Therefore, the demurrer is OVERRULED as to the fourth cause of action.

Fifth Cause of Action – Account Stated

“The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due.” (Zinn v. Fred R. Bright Co. (1969) 271 Cal.App.2d 597, 600.)

Here, Plaintiffs allege they and Defendant had a relationship of debtor and creditor. (Compl. ¶ 53.) Plaintiffs allege the parties had an agreement by words and by conduct over the amount due in the debtor/creditor relationship. (Id. at ¶ 54.) Plaintiffs allege Defendant promised by conduct to pay the amount due. (Id. at ¶ 55.) Thus, Plaintiff alleges all elements of the cause of action.

Defendant contends this cause of action is inconsistent with other causes of action alleged. However, a party may “plead in the alternative and may make inconsistent allegations”. (Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402; Adams v. Paul (1995) 11 Cal.4th 583, 593.)

Accordingly, the demurrer is OVERRULED as to the fifth cause of action.

Conclusion & Order

Based on the foregoing, Defendant’s demurrer to the Complaint is SUSTAINED with leave to amend as to causes of action 1 and 2 against Plaintiff LFD, Inc. only. The remainder of the demurrer is OVERRULED. Plaintiffs are to file an amended complaint within 20 days of the date of this order.