Case Name: Zegay Siyoum and Senait Hagos v. ADT, LLC

Case No.: 1-14-CV-268333

Demurrer by Defendant ADT, LLC to the First Amended Complaint of Plaintiffs Zegay Siyoum and Senait Hagos

Factual and Procedural Background

This action involves an agreement to install a home security system. In May 2013, Plaintiffs and Defendant entered into an oral agreement for the installation of a home security system in Plaintiffs’ home. (See First Amended Complaint [“FAC”] at ¶¶ 5, 6, 7, 12, and 13.) In exchange for the home security system, Plaintiffs agreed to pay monthly payments as requested by Defendant. (Id. at ¶ 7.) Shortly after the home security system was installed, Plaintiffs discovered that the system was not operable. (Id. at ¶ 8.) Despite multiple requests by Plaintiffs, Defendant failed to fix the home security system. (Id. at ¶¶ 8-9.)

On May 15, 2013, a robbery occurred and Plaintiffs lost as much as $100,000 worth of jewelry and other items from their home. (See FAC at ¶ 9.) Plaintiffs duly filed a claim with Defendant who then indicated that some other party was responsible for the installation of the home security system and that this other party had assumed all obligations of Defendant. (Id. at ¶ 10.) Claiming that this “other party” should pay for the loss by Plaintiffs, Defendant has allegedly stonewalled all efforts of Plaintiffs to receive any compensation for their loss. (Ibid.)

On November 17, 2014, Plaintiffs filed a FAC, now the operative pleading, against Defendant alleging the following causes of action: (1) negligent breach of contract; (2) negligence; and (3) punitive damages.

On December 22, 2014, Defendant filed a demurrer to the second and third causes in the FAC for failure to state a claim. (See Code Civ. Proc. § 430.10, subd. (e).)

Demurrer to the FAC

1. Legal Standard

“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.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

2. Second Cause of Action: Negligence

“In order to state a cause of action for negligence, the complaint must allege a legal duty on the part of defendant to use due care, and the breach of that duty as the proximate or legal cause of resulting injury. Whether such a duty exists is primarily a question of law.” (Sullivan v. City of Sacramento (1987) 190 Cal.App.3d 1070, 1075 [internal citation omitted].)

“Conduct amounting to a breach of contract becomes tortious only when it violates an independent duty arising from principles of tort law.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 515.) “Tort damages have been permitted in contract cases where a breach of duty directly causes physical injury; for breach of the covenant of good faith and fair dealing in insurance contracts; for wrongful discharge in violation of fundamental public policy; or where the contract was fraudulently induced. In each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm.” (Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552 [internal citations omitted].)

As Defendant points out, Plaintiffs’ negligence claim is based on the parties’ alleged oral agreement to install a home security system. (See FAC at ¶¶ 17-19.) Thus, Plaintiffs fail to allege facts showing that Defendant owes them a duty separate and apart from the contract to support a claim for negligence. Nor does the FAC establish recovery for tort damages based on a breach of duty causing physical injury, breach of the covenant of good faith and fair dealing in insurance contracts, for wrongful discharge in violation of public policy or where the contract was fraudulently induced.

Therefore, Defendant’s demurrer to the second cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND for failure to state a claim.

3. Third Cause of Action: Punitive Damages

Plaintiffs’ third cause of action is labeled as one for punitive damages. As a threshold matter, Defendant cannot demur to a claim for damages. Rather, the proper procedural vehicle to attack a claim for punitive damages is by motion to strike. (See Caliber Bodyworks, Inc. v. Sup. Ct. (2005) 134 Cal.App.4th 365, 385 [the appropriate procedural device for challenging a portion of a cause of action seeking an improper remedy is a motion to strike]; Grieves v. Sup. Ct. (1984) 157 Cal.App.3d 159, 163 [petitioners’ punitive damage allegations not subject to real parties’ demurrers].) However, in opposition, Plaintiffs characterize the third cause as one based on fraud. (See OPP at p. 6; see also Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908 [erroneous or confusing labels attached by the inept pleader are to be ignored if the complaint pleads facts which would entitle the plaintiff to relief].)

“The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792 [citation omitted].)

Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.” (West v. JPMorgan Chase Bank, N.A., supra, 214 Cal.App.4th at p. 793 [citation and quotation marks omitted].)

Here, Plaintiffs’ third cause of action incorporates prior allegations from their breach of contract claim. (See FAC at ¶ 20.) The third cause of action also alleges that Defendant presented Plaintiffs with a document containing a forged signature of the Plaintiffs. (Id. at ¶ 23.) As a preliminary matter, Plaintiffs’ fraud claim has not been pled with the required specificity to state a cause of action. To the extent that there are any misrepresentations, Plaintiffs fail to allege facts showing that they relied on any such false statements to their detriment to support a claim for fraud. (See Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1499 [to establish fraud, a plaintiff must allege specific facts not only showing he or she actually and justifiably relied on the defendant’s misrepresentations, but also how the actions he or she took in reliance on the misrepresentations caused the alleged damages].)

Accordingly, Defendant’s demurrer to the third cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND for failure to state a claim.