HADI HILLO VS GCMS INC., ET AL.

Tentative Rulings

Case Number: *******1675 Hearing Date: January 21, 2022 Dept: 36

Superior Court of California

County of Los Angeles

Department 36

Demurrer is overruled as to the first, third, fourth, and sixth causes of action.

Demurrer is sustained with leave to amend as to the second and fifth causes of action.

Motion to Strike is ruled upon according to the demurrer with respect to the fifth and sixth causes of action; denied as moot as to the prayer for punitive damages; denied as to the prayer for the sixth cause of action; and granted with leave to amend as to the fifth paragraph of the prayer for attorney’s fees.

Meet & Confer

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer in person or by telephone with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (CCP 430.41, 435.5.)

Defense counsel attests to having sent a letter regarding the original Complaint in this action; that the parties met and conferred by telephone; and that before the prior demurrer and motion to strike was heard, Plaintiff filed the FAC. (See Tenner Decl. 4-5.) The foregoing does not show a sufficient meet and confer attempt for this demurrer and motion to strike to the First Amended Complaint.

In light, however, that the failure to sufficiently meet and confer does not provide grounds to overrule or sustain demurrer or grant or deny a motion to strike, the court on this occasion proceeds to the merits. Defendants are admonished to comply with required meet and confer conferences on future motions.

I. Demurrer

Legal Standard

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, 318.) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Id.)

A general demurrer may be taken to a complaint where “[t]he pleading does not state facts sufficient to constitute a cause of action.” (Code of Civ. Proc. 430.10(e).) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. The defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc. 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [internal citations omitted].)

A cause of action may be demurred to on grounds that the pleading is “uncertain,” which includes that it is “ambiguous and unintelligible.” (CCP 430.10(f).) A special demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.) To defeat a demurrer on grounds of uncertainty, the allegations in the complaint must be “sufficiently clear to apprise the defendant of the issues he is to meet” (Smith v. Williams (1961) 55 Cal.2d 617, 619) or “the nature, source, and extent” of the cause of action (Longshore v. County of Ventura (1979) 25 Cal.3d 14, 30).

Discussion

Defendants Studio Lending Group, LLC (“Studio Lending”), GCMS Inc. (“GCMS”), and Vladimir Leontev demur to each cause of action alleged in the First Amended Complaint on grounds of failure to state sufficient facts to constitute a cause of action, and uncertainty. (CCP 430.10(e), (f).) Plaintiff has opposed. Defendants have replied.

A. Summary of Complaint

Plaintiff makes the following common allegations in the Complaint.

Defendant Studio Lending is owner or leaseholder of the property located at 1041 N. Formosa Ave., West Hollywood, CA 90046. (FAC, 2.) Defendant GCMS was general contractor who hired Plaintiff to work at the property. (Id. 3.) Defendant Leontev is or was the owner of GCMS. (Id. 4.)

GCM contracted with Studio Lending for construction on the subject property, and GCMS contracted for Plaintiff’s assistance on that contract, through an oral agreement in October 2020 between Plaintiff as contractor and GCMS (via Defendant Leontev). (See FAC 10.) Under the contract, Plaintiff would perform construction, remodeling, and/or improvements to the Property; and GCMS and Plaintiff would split all profits for the work 50/50. (Id.) However, GCMS has refused to pay Plaintiff’s 50% profit, which amounts to $300,000. (Id.) Plaintiff has completed his work, which included digging, trenching, use of Plaintiff's heavy machinery, and heavy commercial plumbing work. (Id. at 11.)

B. First Cause of Action: Breach of Oral Contract

Defendant demurs to the first cause of action on grounds that the cause of action fails to show that a valid contract was formed. Defendant asserts that there is a failure to show mutual consent as based on the terms alleged of the oral contract to compensate Plaintiff for 50% of profits, because the profits were not known at the time of contract formation. However, that profits were not known at the time of contract formation is not specifically alleged in the FAC and is therefore beyond the scope of the court’s review. Further, Defendants have not offered any legal authority to show that acceptance of a percentage of future profits renders a contract ambiguous or uncertain, such that acceptance of the proposal would not result in the formation of a contract; Defendants’ sole citation apart from statutory authorities is to the inapposite authority Weddington Productions, Inc. v. Flick concerning a purported license agreement, in which the Court of Appeal found, based on the specific facts of the case and uncontradicted evidence that the parties never objectively manifested agreement to material terms such as scope of the license, permitted uses, grounds and procedures for termination, etc. (See (1998) 60 Cal.App.4th 793, 811.) Without apposite authority on such points the court is unable to find that Plaintiff fails to state a claim. Demurrer to the first cause of action is overruled.

C. Second Cause of Action: Breach of Implied Covenant of Good Faith and Fair Dealing

Defendant demurs to the second cause of action on grounds that it alleges nothing more than a mere contract breach. “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, as modified on denial of reh'g (Oct. 31, 2001).)

The second cause of action alleges only that the above-alleged agreement contains the implied covenant of good faith and fair dealing; and that Defendants’ conduct in failure to disclose the amount of money GCMS was paid by Studio Lending and to pay Plaintiff for the work performed under the alleged agreement caused a breach of the implied covenant, causing damages of at least $300,000.00. (See FAC 18-20.) Each allegation is made under the Breach of Contract cause of action. (See id. 13-16.) The cause of action relies on the same alleged acts, sound in a mere contract breach, and seeks the same damages, and is therefore demurrable. (Careau & Co., supra, at 1395.) Accordingly, demurrer is sustained with leave to amend.

D. Third Cause of Action: Unjust Enrichment; Fourth Cause of Action:

Reasonable Value

Defendant demurs to the third and fourth causes of action on grounds that each is demurrable since the first cause of action for breach of contract is demurrable. As the court has overruled demurrer to the first cause of action, it does not sustain demurrer on these grounds.

Defendant demurs to the third cause of action on grounds that Plaintiff fails to allege the value of the benefit CGMS retained, and the sum of $300,000 is arbitrary. “The elements of a cause of action for unjust enrichment are simply stated as ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’ ” (Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238.) Here, Plaintiff alleges having worked at the subject property for approximately six months at Defendant Leontev’s request; that GCMS and Leontev were conferred a substantial benefit and were enriched by retaining Plaintiff’s services; and Defendants GCMS and Leontev failed to fulfill their obligations under their agreements with Plaintiff to compensate him for his work pursuant to the above-alleged agreement. (See FAC, 23-24.) Plaintiff alleges that $300,000 represents the value of the benefits which Plaintiff conferred upon these defendants. (See id. 26.) The foregoing suffices to show the receipt of a benefit by Defendnats GCMS and Leontev; a benefit may be in the form of services. (See Professional Tax Appeal, supra, at 238.) Nor do Defendants provide legal authority in support that Plaintiff’s claim for damages of $300,000 is arbitrary and fails to state a claim.

Defendant demurs to the fourth cause of action on grounds Plaintiff fails to allege any specific amount due based on any accounting for alleged work and material provided, only the ambiguous 50% of unknown profits. The cause of action alleges Plaintiff provided labor and/or materials to Defendants at their request, who promised to pay Plaintiff the reasonable value therefor; that the total and reasonable value is $300,000; and that there is now due and owing this sum. (See FAC, 28-30.) The foregoing is sufficient to state a claim. (See Haggerty v. Warner (1953) 115 Cal.App.2d 468, 475.) As above, no authority nor matters pled in the FAC or subject to judicial support that Plaintiff’s claim for damages is insufficient as a matter of law.

Accordingly, demurrer to the third and fourth causes of action is overruled.

E. Fifth Cause of Action: False Promise

Pursuant to Civil Code section 1709, “one is liable for fraudulent deceit if he deceives another with intent to induce him to alter his position to his injury or risk . . . .” The elements of fraud are: (1) misrepresentation, consisting of false representation, concealment, or nondisclosure; (2) knowledge of falsity or scienter; (3) intent to defraud, that is, to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal. App. 4th 821, 837.) Fraud must be pleaded specifically; each element “must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

The fifth cause of action alleges that Defendant Leontev on his own behalf and on behalf of GCMS promised that he would pay Plaintiff 50% of profits from the construction job at the Property in exchange for Plaintiff’s services and use of Plaintiff’s heavy machinery; that these Defendants intended not to perform this promise when made and intended for Plaintiff to rely on it; that Plaintiff reasonably relied on this promise; that these Defendants have not performed on this promise; and that as a result Plaintiff has been harmed in an amount no less than $300,000.00. (See FAC 33-38.)

Actionable deceit exists where a promise is made “without any intention of performing it.” (Civ. Code 1710(4).) “To maintain an action for deceit based on a false promise, one must specifically allege and prove, among other things, that the promisor did not intend to perform at the time he or she made the promise and that it was intended to deceive or induce the promisee to do or not do a particular thing.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159.) Plaintiff makes these allegations with sufficient specificity. Plaintiff alleges the date and means by which the parties entered into an oral contract, i.e. an oral agreement made in October 2020 between Plaintiff and GCMS through Defendant Leontev, which induced Plaintiff’s work on the property.

Next, Defendants demur that Plaintiff fails to allege “something more than nonperformance” to show Defendant Leontev’s intent not to perform. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 481, as modified on denial of reh'g (Aug. 20, 1996).) Here Plaintiff fails to make any factual allegations in support of Defendants’ intent not to perform the promise than proof of nonperformance. Accordingly, demurrer is sustained on these grounds, with leave to amend.

F. Sixth Cause of Action: Foreclosure of Mechanic’s Lien

Defendants demur that the sixth cause of action is insufficiently pled because Plaintiff has not complied with statutory requirements to allege the cause of action; specifically, Plaintiff has not alleged making the required written preliminary notice within 20 days after Plaintiff commenced furnishing labor, service, equipment, or materials to the job site. However, Defendants’ motion provides citation only to provisions of the Civil Code that were repealed effective July 1, 2012, by citation to Civil Code, section 3097. Accordingly, Defendants provided no valid grounds for demurrer in the moving papers.

Plaintiff on opposition notes the foregoing repealed authority and redirects the court to Civil Code, section 8204, which provides that, while a preliminary notice shall be given not later than 20 days after the claimant has first furnished work on the work of improvement, “[i]f work has been provided by a claimant who did not give a preliminary notice, that claimant shall not be precluded from giving a preliminary notice at any time thereafter. The claimant shall, however, be entitled to record a lien, give a stop payment notice, and assert a claim against a payment bond only for work performed within 20 days prior to the service of the preliminary notice, and at any time thereafter.” (Civ. Code 8204(a).) Here, Plaintiff alleges having sent Defendants a preliminary notice of Plaintiff’s claim pursuant to Civil Code, section 8200, on March 3, 2021. (FAC 45, Exh. A.) Accordingly, while Plaintiff’s claim may be limited, Defendants have provided no grounds that the cause of action fails.

On reply, Defendants assert for the first time that the cause of action fails because Defendant seeks $300,000 for his work, appearing to seek compensation for the entire working timeframe of October 2020 through April 2021. Generally, neither new evidence, nor new argument raised for the first time, is permitted with reply papers. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537–38; Alliant Ins. Services, Inc. v. Gaddy (2008) 159 Cal.App.4th 1292, 1308.) Good cause has not been shown for the failure or inability to make the pertinent arguments in the moving papers. Moreover, Defendants have provided no authority that allegedly overstating recoverable damages causes the cause of action to fail.

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

II. Motion to Strike

Legal Standard

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (CCP 435(b)(1)). The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (CCP 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (CCP 436.)

Discussion

Defendants move to strike the fifth and sixth causes of action, as well as prayers for punitive damages, the prayer regarding the sixth cause of action, and the prayer for attorney’s fees.

Defendants’ arguments seeking to strike the fifth and sixth causes of action are the same as alleged on demurrer. The court has addressed the arguments on demurrer and does not again address the arguments under the motion to strike.

Defendants move to strike the prayer for punitive damages, which is asserted under the fifth cause of action. As demurrer has been sustained with leave to amend, the motion to strike damages under this cause of action is moot.

Defendants move to strike the prayer under the sixth cause of action. Defendants assert solely that the prayer must be stricken because the cause of action does not comply with statutory requirements as alleged in the demurrer. As the court has not sustained demurrer, the motion to strike is denied.

Defendants move to strike the fifth paragraph of the prayer for attorney’s fees, which is asserted generally. Entitlement to attorney’s fees are alleged under the second cause of action for Breach of the Covenant of Good Faith and Fair Dealing, and under the sixth cause of action for Foreclosure of Mechanic’s Lien. (FAC 21; id. at p. 9:24-27.) Demurrer to the second cause of action has been sustained, and attorney’s fees sought pursuant to this cause of action is moot. As to the sixth cause of action, fees are alleged under Civil Code, section 3148, which has been repealed effective July 1, 2012. (See Civ. Code 3148.) Next, Defendants assert that attorney’s fees may not be recovered under Civil Code, section 1717, because there was no written contract between the parties providing for attorney’s fees. Plaintiff has not opposed this argument. Based on the foregoing, the motion to strike regarding the fifth paragraph of the prayer for attorney’s fees is granted, with leave to amend.

Dated:

Gregory Alarcon

Superior Court Judge