Case Number: SC128558 Hearing Date: December 11, 2018 Dept: M

CASE NAME: Zipporah Fischel v. Renovate America, Inc.

CASE NO.: SC128558

Complaint filed: 12/19/2017

HEARING DATE: 12/12/2018

Trial date: N/A

MEET & CONFER? Yes

Discovery cutoff per CCP §2024.020(a) C/O: N/A

NOTICE per CCP §1005(b): Ok

Motion cutoff per CCP §2024.020(a): N/A

SUBJECT: DEMURRER TO COMPLAINT

MOVING PARTY: Defendant County of Los Angeles

RESP. PARTY: Plaintiff Zipporah Fischel

BACKGROUND

Plaintiff, an elderly woman, entered into multiple home construction and remodeling contracts with Defendants Avraham Amar, Flat Rate Remodeling, Inc. and Renovate America, Inc. Plaintiff alleges that Defendant took advantage of her age, loneliness, and lack of understanding to pressure her into signing these agreements. These projects were allegedly financed by the HERO program, a public-private partnership in Los Angeles County that provides loans for environmentally-friendly home renovations. Defendant Amar allegedly represented to Plaintiff that she would never have to pay her HERO loan back, and convinced her to sign an electronic application for a loan from HERO to finance the remodeling projects.

Plaintiff alleges that Defendants were part of a common scheme to exploit the HERO Program’s electronic signature process to defraud seniors into agreeing to large loans without understanding what the contracts entailed. Under the terms of the HERO financing agreement that Plaintiff signed electronically, the loan would be repayable through an assessment levied against Plaintiff’s home, and her yearly property tax bill would increase by the amount of regular installment payments on the loan. Plaintiff’s property tax bill would thus increase by $10,287.01 a year for twenty years. Plaintiff allegedly was never given the opportunity to review the assessment contract, and was unable to access the HERO program website.

Further, the County of Los Angeles allegedly had a contract with Defendant Renovate America, Inc. under which Renovate would act as a contractor for the HERO program, and the County was responsible for monitoring Renovate’s performance and ensuring that they were qualified to administer the program.

Plaintiff’s Complaint contains causes of action for: 1. Intentional Misrepresentation, 2. Concealment, 3. Negligent Misrepresentation, 4. Intentional Infliction of Emotional Distress, 5. Violation of Business and Professions Code §7163, 6. Violation of Business & Professions Code §17200, 7. Violation of Business and Professions Code §17500, 8. Civil Code §1575(2), 9. Civil Code §1750, 10. Financial Elder Abuse, 12. Cancellation of Instruments, 13. Declaratory Relief, 14. Injunctive Relief, 15. Unjust Enrichment, 16. Breach of Contract, 17. Breach of the Implied Covenant of Good Faith and Fair Dealing, 18. Breach of the Implied Warranty of Fitness for a Particular Purpose, 19. Revocation of Contractor’s License.

Defendant County of Los Angeles demurs to the Seventh, Eighth, Ninth, Fourteenth, Fifteenth, Sixteenth, and Seventeenth Causes of Action.

TENTATIVE RULING

Defendant’s Demurrer to the Seventh and Ninth Causes of Action is SUSTAINED without leave to amend.

Defendant’s Demurrer to the Eighth, Fourteenth, Fifteenth, Sixteenth, and Seventeenth Causes of Action is SUSTAINED with ten days leave to amend.

ANALYSIS

Demurrer Standard

A demurrer accepts as true all well pleaded and judicially noticeable facts, but not deductions, contentions, or conclusions of law or fact. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) When there are unexplained contradictions between exhibits and the allegations, the allegations are disregarded as surplusage. (Edgerly v. City of Oakland (2012) 211 Cal.App.4th 1191, 1198.) When the exhibits are ambiguous, the construction urged by plaintiff will be accepted as true unless patently absurd or incorrect. (Chisolm v. Board of Retirement (2013) 218 Cal.App.4th 400, 410-411.) A demurrer is all-or-nothing, i.e., no demurrer to a portion of a cause of action. (People v. Union Pacific R. Co. (2006) 141 Cal.App.4th 1228, 1243.)

A general demurrer challenges the sufficiency of the pleading as a matter of law and must not be sustained if the facts show an entitlement to some relief. (Collier v. Superior Court (1991) 228 Cal.App.3d 1117, 1120.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) A public

Seventh and Ninth Causes of Action for Violation of Business and Professions Code §17500 & Civil Code § 1750

Cal. Bus. and Profs. Code §17500 bars “any person, corporation, association, or any employee thereof”” from engaging in “false or misleading” advertising. The consumer legal remedies act (Cal. Civ. Code §1750 et seq.) bars “unfair or deceptive acts or practices . . . undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer[.]” (Cal. Civ. Code §1770). A public entity is not a legal “person,” and thus is immune to liability under both statutes. (People for Ethical Treatment of Animals, Inc. v. California Milk Producers Advisory Board. (2005) 125 Cal.App.4th 871, 877-83; Patton v. Allergan PLC (U.S.D.C. C.D.Ca 2017) WL 3137575, *3.) Finally, under the government tort claims act, “a public entity is not liable for an injury, whether the injury arises out of the act or omission of the public entity or a public employee or any other person” unless there is a clear statutory basis for liability. (Cal. Gov. Code §815.)

Here, the Court takes judicial notice of the fact that the County of Los Angeles is a public entity, and not a “person” within the meaning of the two statutes. Thus, there can be no liability. In Opposition, Plaintiff urges the court to apply the rule from Los Angeles v. San Fernando (1975) 14 Cal.3d 199, 276-277, stating that government agencies are only excludable from the statutory definition of “person” if the civil action seeks to interfere with a valid exercise of the entity’s sovereign powers. The Court in PETA, however, disapproved the use of the “sovereign powers,” test, explicitly stating that “the issue of whether a public entity can be sued under the UCL as a ‘person’ is readily answered by reference to the plain language of section 17201,” and that that language’s exclusion of public entities is “sufficient to end the inquiry[.]” PETA, supra, at 881. This Court will therefore decline to apply the San Fernando test here and will instead rely upon the more recent precedent from PETA, which held that a public entity is not a “person” as a matter of law, and is therefore not subject to either of the statutes forming the basis of these two causes of action.

Defendant’s Demurrer to Plaintiff’s Seventh and Ninth Causes of Action is therefore SUSTAINED without leave to amend.

Eighth Cause of Action for Violation of Civil Code §1575(2) (Undue Influence)

Cal. Civ. Code §1575 defines undue influence in forming a contract, and states that it consist of, inter alia, “taking an unfair advantage of another’s weakness of mind.” A contract entered into via undue influence can be rescinded. (Cal. Civ. Code §1566.) In order to rescind a contract, the party seeking rescission must (a) give notice of rescission to the party as to whom he rescinds; and (b) restore to the other party everything of value which he has received from him under the contract. (Cal. Code of Civ. Proc. §1691.)

Here, Plaintiff purports to set forth a cause of action for undue influence. As indicated by the statutory sections set forth above, however, undue influence is not a distinct cause of action, but rather a basis for rescission of a contract. Plaintiff has not clearly alleged a claim for rescission or that she has followed the procedure necessary to rescind a contract—specifically, she has not alleged an attempt to restore everything of value that she received under the contract with Defendant.

Defendant’s Demurrer to Plaintiff’s Eighth Cause of action for undue influence is SUSTAINED with ten days leave to amend to clearly allege rescission.

Fourteenth Cause of Action for Injunctive Relief

Plaintiff indicates that she has offered to re-plead this cause of action in amendment. The Demurrer is therefore SUSTAINED with ten days leave to amend.

Fifteenth Cause of Action for Unjust Enrichment

There is a split amongst California courts regarding whether unjust enrichment is an independent cause of action. Some courts have explicitly stated that “there is no cause of action in California for unjust enrichment.” (Melchior v. New Line Prods., Inc. (2003 – 2nd Dist.) 106 Cal.App.4th 779, 793; McKell v. Wash. Mut., Inc. (2006 – 2nd Dist.) 142 Cal.App.4th 1457, 1490; Jogani v. Superior Court (2008 – 2nd Dist.) 165 Cal.App.4th 901, 911.) These courts conclude that unjust enrichment is “not a cause of action . . . or even a remedy, but rather a principle, underlying various legal doctrines and remedies. It is synonymous with restitution.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 387 (internal quotation marks and citations omitted). However, other California courts have recognized an independent cause of action for unjust enrichment. (See First Nationwide Sav. v. Perry (1992 – 6th District) 11 Cal.App.4th 1657, 1662–63; Lectrodryer v. SeoulBank (2000 – 2nd Dist.) 77 Cal.App.4th 723, 726.)

While acknowledging the split in authority, the Court here will abide by the dominant second district rule which holds that there is not independent cause of action for unjust enrichment. Plaintiff may attempt to re-plead this claim using the elements of a recognized cause of action, such as quantum meruit.

Defendant’s Demurrer to Plaintiff’s Fifteenth Cause of Action is therefore SUSTAINED with ten days leave to amend.

Sixteenth and Seventeenth Causes of Action for Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing

To prevail on a cause of action for breach of contract, Plaintiff must establish: (1) the existence of contract between Plaintiff and Defendants; (2) Plaintiff’s performance or excuse for nonperformance; (3) the Defendants’ breach; and (4) any resulting damages. (E.g., Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388.)

All contracts impose upon each party an implied duty of good faith and fair dealing as part of its performance and its enforcement. (Foley v. Interactive Data Corporation (1988) 47 Cal.3d 654, 683.) Under the implied covenant, each contracting party must “refrain from doing anything to injure the right of the other to receive the agreement’s benefits.” (Jordan v. Allstate Ins. Co. (2007) 148 Cal.App.4th 1062, 1072.) In sum, the implied covenant “fills in” gaps in contracts in order to effectuate the intentions of parties or protect their reasonable expectations. (Id.) Consequently, a breach of the covenant of good faith and fair dealing is treated as a breach of the underlying contract. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal. App. 3d 1371, 1393.) A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. (Cal. Civ. §1559)

Here, both of these causes of action are based on contracts to which Plaintiff is not a party, but instead an alleged intended third-party beneficiary. Plaintiff has not, however, set forth sufficient facts to indicate that any of the relevant contracts were made expressly for her benefit. Additionally, the alleged breaches were each committed by Defendants Flat Rate Remodeling and Renovate America, Inc. (Complaint at ¶¶214, 216, 219, 220.) Plaintiff has alleged no breaches specifically committed by the County of Los Angeles.

Defendant’s Demurrer to Plaintiff’s Sixteenth and Seventeenth Causes of Action is therefore SUSTAINED with ten days leave to amend to allege facts showing third-party beneficiary status, and to show clear breaches by the County of Los Angeles.