2014-00162318-CU-FR

Nabil Samaan vs. Folsom Buick GMC

Nature of Proceeding: Demurrer to Fourth Amended Complaint (JS Folsom Automotive)

Filed By: Britton, John A.

*** If oral argument is requested, the parties must at the time oral argument is requested notify the clerk and opposing counsel of the specific causes of action that will be addressed at the hearing. Counsel are also reminded that pursuant to local rules, only limited oral argument is permitted on law and motion matters.

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Defendant JS Folsom Automotive dba Folsom Buick GMC’s (“JSFA”) demurrer to the Fourth Amended Complaint (“4AC”) is SUSTAINED IN PART and OVERRULED IN PART, without leave to amend, as follows.

The opposition to this demurrer was not timely filed (since 2/12/2018 was a court holiday) but it was nevertheless considered.

The court did not consider the declaration which plaintiff filed in opposition to this demurrer since such extrinsic evidence is beyond the permissible scope of what may be considered in connection with a demurrer, which is limited to the facts alleged in the challenged pleading and those for which judicial notice is both requested and granted.

Factual Background

This case arises from plaintiff’s purchase of a GMC truck from a Roseville dealership in 2008. Plaintiff alleges he purchased a General Motors Protection Plan, Major Guard Insurance Policy (“GMPP”) at the same time. According to plaintiff, defendants other than JSFA are parties to this GMPP and are liable for a failure to perform after he sought vehicle repairs in 2012. Plaintiff maintains that JSFA is an agent of these other defendants and that JSFA is an authorized service provider under the GMPP, thereby

being authorized to submit claims and invoices for payment under the GMPP.

Plaintiff took the vehicle to JSFA for repairs in 2012, when JSFA allegedly indicated it was authorized to submit claims and make repairs under the GMPP. JSFA thereafter made repairs and issued invoices for payment by plaintiff even though JSFA had submitted claims for work it previously done on the truck pursuant to the GMPP. According to plaintiff, JSFA employee Shawn Vishney promised he would handle diagnostics, repairs and invoices in 2012 and these promises are part of oral and written agreements with JSFA, with the written portions being JSFA’s invoices. Plaintiff adds that JSFA did not properly diagnose problems with the vehicle, failed to submit invoices for his claims under the GMPP, forged plaintiff’s signature, wrongfully disposed of vehicle parts and engaged in other fraudulent conduct.

The 4AC spans nearly 250 pages including exhibits (e.g., deposition transcripts, discovery responses) and it purports to state several causes of action against JSFA including breach of contract, “fraud” (consisting of mixed allegations of false promise, concealment and misrepresentation), negligence, violation of Business & Professions Code §17200 et seq., interference with contract and conspiracy plus similar causes of action against other defendants.

Moving Papers. Defendant JSFA now demurs to the entire 4AC and each cause of action on various grounds, including that the 4AC admits plaintiff has already been reimbursed by defendant Ally Financial for the $1,800 allegedly spent on vehicle repairs.

Opposition. Plaintiff opposes, arguing inter alia that the 4AC adequately plead recoverable damages with respect to each cause of action and that JSFA is barred from either asserting for the first time or re-asserting certain objections to several of the causes of action.

Analysis

At the outset, it is important to note that in ruling on JSFA’s demurrer to the Third Amended Complaint (“3AC”) the court concluded plaintiff had failed to adequately allege the damages needed for each cause of action and thus, the court declined to address a number of additional arguments advanced by Defendants. To the extent the court did not address these arguments, JSFA is not precluded from re-asserting those contentions in connection with this demurrer to the 4AC. However, Code of Civil Procedure §430.41(b) does preclude JSFA from demurring on any ground which could have been but was not raised in JSFA’s demurrers to the prior complaints.

Breach of Contract. Defendant JSFA now demurs to this cause of action on the grounds that plaintiff has been reimbursed by defendant Ally Financial for the $1,800 allegedly spent on vehicle repairs and that plaintiff’s remaining claims for the loss of use on the $1,800 and for denial of a rental car pursuant to the GMPP (along with the resulting wear-and-tear on plaintiff’s other vehicle) are not actionable against JSFA since these injuries were not reasonably contemplated or foreseen by the parties at the time of the alleged contract was entered. JSFA further asserts that plaintiff is entitled to recover neither diminution in value of the vehicle because of JSFA’s alleged failure to fix it nor the costs to “preserve the evidence” and also that the 4AC fails to plead facts establishing JSFA was “unjustly enriched” by the $1,800 which he initially paid for the repairs. Finally, JSFA contends that plaintiff has not adequately alleged he

is an intended beneficiary of any other contract on which this cause of action may be based.

The opposition maintains that JSFA knew or should have known its failure to submit the claims for payment under the GMPP would result in plaintiff having to pay for the repairs out of his own pocket and this failure directly led to the delay in reimbursement. The opposition also argues that plaintiff is entitled to recover for his “lost time,” damage to his other vehicle and diminution in value of the vehicle JSFA failed to repair (although ultimately fixed by a third party) as well as for JSFA’s unjust enrichment.

The court will overrule the demurrer to the breach of contract cause of action since the allegations are sufficient to establish that JSFA knew or should have known its own failure to submit the claims for payment under the GMPP would result in plaintiff having to pay for the repairs out of his own pocket and that the alleged failure to submit the claims foreseeably led to the delay in reimbursement and caused plaintiff to suffer at a minimum the alleged loss of use of the $1,800. (See, e.g., CACI 350.) As plaintiff has established at least one item of recoverable damage, the court need not consider in connection with this demurrer any of the other items of damage cited in the moving papers since, even if not recoverable, their elimination would not dispose of this cause of action.

However, to the extent that plaintiff has purported to include a new cause of action for unjust enrichment here, the court notes that he did not have leave to add such a claim but regardless it is deficient as a matter of law. First, it does not appear that “unjust enrichment” is a cause of action recognized in California. (See, e.g., Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, [“[T]here is no cause of action in California for unjust enrichment. … Unjust enrichment is ‘a general principle, underlying various legal doctrines and remedies,’ rather than a remedy itself. (Dinosaur Development, Inc. v. White (1989) 216 Cal.App.3d 1310, 1315.) It is synonymous with restitution. (Id. at p. 1314.)”].) Second, the 4AC fails to plead facts which establish that JSFA was “unjustly enriched” at the expense of plaintiff and thus, he has not shown any entitlement to “restitution” of this amount from JSFA.

“Fraud.” JFSA broadly asserts that “Deception without loss is not actionable” and then argues this cause of action fails because (1) it is premised on allegations of “forged and fraudulent invoices” even though plaintiff admits to being be reimbursed for these “forged and fraudulent invoices;” (2) plaintiff cannot establish he reasonable relied on the invoices containing his “forged” signature; (3) the fraud allegations are contradictory and not plausible plus plaintiff could not justifiably rely on contradictory statements; (4) plaintiff cannot show JSFA misrepresented it would submit the invoices or reliance on such a representation since he called Ally Financial to ensure the latter and he were not both charged for the same repairs, rather than to determine whether the invoices were submitted by JSFA; and (5) even if he can establish the other prima facie elements of fraud, plaintiff did not suffer any out-of-pocket losses as a proximate result of the alleged fraud and damages which are speculative, remote or contingent are insufficient to support a fraud claim.

The opposition maintains this court has already determined that with the exception of the damages element, plaintiff has adequately pled facts sufficient to state a fraud claim based on a false promise theory and JSFA’s attempt to challenge other elements of this cause of action is an impermissible “second bite at the apple.” Plaintiff further asserts that he has suffered out-of-pocket damages as a direct consequence of the

alleged fraud including the loss of use of the $1,800 until finally reimbursed, his “lost time,” damage to his other vehicle and diminution in value of the vehicle JSFA failed to repair, as discussed above in connection with the contract cause of action.

The demurrer to the fraud cause of action is also overruled. First, the opposition is correct that this court did previously find plaintiff had established the prima facie elements of promissory fraud with the exception of damages and thus, the court need not re-visit here JSFA’s current challenge to the elements other than damages. Second, JSFA’s arguments about why plaintiff’s misrepresentation allegations are deficient would not, even if true, render the entirety of this cause of action subject to demurrer inasmuch as it otherwise states a valid claim for false promise. Third, while a victim of fraud may ordinarily be limited to recover only those out-of-pocket losses proximate resulting from the fraud, there is another remedy which is available when actionable fraud is proven: “Benefit of the Bargain.” (See, e.g., CACI 1923-1924; Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.App.4th1226, 1240.) Regardless, under the out-of-pocket rule as stated in CACI 1923, “The amount of damages must include an award for all harm that [name of defendant] was a substantial factor in causing, even if the particular harm could not have been anticipated.” (Underline added for emphasis.) Accordingly, the out-of-pocket rule cited by JSFA does not, without more, appear to preclude plaintiff from alleging his loss of use of the $1,800, “lost time,” damage to his other vehicle, etc. in order to establish the essential element of damages for the fraud cause of action.

Interference with Contract and Conspiracy. JSFA demurs to the 9th cause of action on the ground that the 4AC fails to plead facts showing either inducement of breach of contract or interference with prospective economic advantage because plaintiff failed to identify any prospective economic advantage and because plaintiff failed to allege any act by JSFA that interfered with any contract to which plaintiff was a party, particularly when the GMPP attached to the 4AC (which takes precedence over inconsistent allegations) places the burden to submit invoices for reimbursement on plaintiff himself rather than JSFA and when this court has already determined JSFA had no obligations under the GMPP.

According to the opposition, the court’s ruling on the demurrer to the 3AC confirmed plaintiff had adequately pled a claim that JSFA interfered with the GMPP by failing to submit claims for covered repairs based on with JSFA’s alleged custom and practice of doing so on behalf of plaintiff despite the GMPP’s language to the contrary, thereby precluding JSFA from making the same arguments in connection with the 4AC. To the extent the only issue properly raised here is the allegation of damages in support of this cause of action, plaintiff again refers to the allegations in Paragraphs 231-234 of the 4AC which recite the aforementioned loss of use of the $1,800, plaintiff’s “lost time,” damage to his other vehicle, etc.

The court will overrule this cause of action as well. First, the ruling on the 3AC indeed found that this interference with contract claim was properly pled with the exception of damages and the court need not reconsider the sufficiency of the allegations here.

Second, as explained above in connection with the breach of contract cause of action, the 4AC’s allegations are sufficient to establish that JSFA knew or should have known its own failure to submit the claims for payment under the GMPP would result in plaintiff having to pay for the repairs out of his own pocket and that the alleged failure to submit the claims foreseeably led to the delay in reimbursement so as to cause plaintiff to suffer at a minimum the alleged loss of use of the $1,800 until he was

ultimately reimbursed. Since plaintiff has established at least one item of recoverable damage relative to the interference with contract cause of action, it is not subject to demurrer based on the failure to plead facts sufficient to state a cause of action. Finally, to the extent the present demurrer challenges in a footnote on Page 9 the related conspiracy claim on the ground it is not a separate cause of action, the objection falls short since the court has found the 4AC adequately states an interference with contract claim upon which the conspiracy claim may permissibly be based.

Violation of Business & Professions Code §17200 et seq. Defendant JSFA maintains the 7th cause of action for unfair competition is defective inasmuch as the 4AC does not specifically identify the underlying law which was allegedly violated, does not show that plaintiff suffered the loss of money or property as a result of an unfair business practice to establish the requisite legal standing to assert this cause of action and the only remedies available under §17200 are restitution (which plaintiff already received) and injunctive relief.

The opposition insists JSFA is barred by Code of Civil Procedure §430.41(b) from demurring to this cause of action because the court rejected JSFA’s demurrer in connection with the Second Amended Complaint (“2AC”) based on the failure to demur in connection with the First Amended Complaint (“1AC”).

The demurrer to the §17200 cause of action must be overruled. First, the court previously rejected JSFA’s demurrer to this cause of action in the 2AC because JSFA did not demur to it in response to the 1AC and JFSA also did not demur to it in response to the 3AC even though it could have, making the current demurrer to this cause of action improper under Code of Civil Procedure §430.41(b)’s express language. Second, this cause of action may be permissibly based on fraudulent conduct such as that alleged in the fraud cause of action regardless of whether plaintiff identified any specific law or statute which was violated, since §17200 prohibits business practices that are unlawful, unfair or fraudulent. Third, while the 4AC now effectively admits plaintiff has received restitution of the $1,800 he spent on vehicle repairs, this alone does not render this cause of action subject to demurrer to the extent plaintiff may still be entitled to injunctive relief under §17200 as claimed in Paragraph 9 of the closing Prayer.

Negligence. Although JSFA’s demurrer lists this cause of action as among those being challenged here, JSFA’s moving points & authorities nowhere address this cause of action or explain why it is deficient. Coupled with the fact JSFA did not demur to the negligence claim in the 1AC or the 3AC and was barred from doing so in response to the 2AC, the court will overrule the purported demurrer to the negligence cause of action in the 4AC as well particularly since plaintiff has for the reasons explained above alleged at least one item of damage which is potentially recoverable in this action.

Conclusion

Based on the foregoing, JSFA’s demurrer to the 4AC is overruled except as to the purported new cause of action for unjust enrichment, which is sustained.

Leave to amend is denied since plaintiff has already had five opportunities to plead his causes of action in this case.

If not already done, JSFA to file and serve an answer to the remainder of the 4AC within ten days.