This case was last updated from Los Angeles County Superior Courts on 05/04/2020 at 02:45:02 (UTC).

LLEJ LLC VS F & O MELROSER PLACE INC

Case Summary

On 03/23/2018 LLEJ LLC filed a Contract - Other Contract lawsuit against F O MELROSER PLACE INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are STEPHANIE M. BOWICK and HOLLY J. FUJIE. The case status is Disposed - Dismissed.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9493

  • Filing Date:

    03/23/2018

  • Case Status:

    Disposed - Dismissed

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

STEPHANIE M. BOWICK

HOLLY J. FUJIE

 

Party Details

Plaintiffs and Petitioners

LA TROPEZIENNE BAKERY

LLEJ LLC

BAKERY LA TROPEZIENNE

LLEJ LLC DBA LA TROPEZIENNE BAKERY

Defendants and Respondents

FIG & OLIVE RESTARANTS

F & O MELROSE PLACE INC.

DOES 1-100

F & O MELROSE PLACE INC. DBA FIG & OLIVE RESTAURANTS

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

FRIEDMAN STEVEN R. ESQ

JILL GREENSPAHN

GREENSPAHN JILL

Defendant Attorneys

READY MARTY B.

AVENI DAVID JOSEPH

 

Court Documents

Judgment - JUDGMENT JUDGMENT OF DISMISSAL WITH PREJUDICE

4/8/2020: Judgment - JUDGMENT JUDGMENT OF DISMISSAL WITH PREJUDICE

Notice Re: Continuance of Hearing and Order

3/17/2020: Notice Re: Continuance of Hearing and Order

NOTICE OF CASE MANAGEMENT CONFERENCE

4/10/2018: NOTICE OF CASE MANAGEMENT CONFERENCE

SUBSTITUTION OF ATTORNEY -

4/30/2018: SUBSTITUTION OF ATTORNEY -

PROOF OF SERVICE OF SUMMONS

6/7/2018: PROOF OF SERVICE OF SUMMONS

REQUEST FOR ENTRY OF DEFAULT

7/6/2018: REQUEST FOR ENTRY OF DEFAULT

Motion to Compel Further Discovery Responses - MOTION TO COMPEL FURTHER DISCOVERY RESPONSES TO FORM INTERROGATORIES SET ONE

1/9/2020: Motion to Compel Further Discovery Responses - MOTION TO COMPEL FURTHER DISCOVERY RESPONSES TO FORM INTERROGATORIES SET ONE

Proof of Service by Mail

12/18/2019: Proof of Service by Mail

Notice of Ruling

10/25/2019: Notice of Ruling

Notice - NOTICE AMENDED NOTICE OF MOTION TO STRIKE FIRST AMENDED COMPLAINT

9/9/2019: Notice - NOTICE AMENDED NOTICE OF MOTION TO STRIKE FIRST AMENDED COMPLAINT

Proof of Service (not Summons and Complaint)

8/23/2019: Proof of Service (not Summons and Complaint)

Declaration - DECLARATION OF MARTY B. READY IN SUPPORT OF DEFENDANT'S REPLY IN SUPPORT OF DEMURRER

4/25/2019: Declaration - DECLARATION OF MARTY B. READY IN SUPPORT OF DEFENDANT'S REPLY IN SUPPORT OF DEMURRER

Opposition - OPPOSITION PLAINTIFF'S OPPOSITION TO DEFENDANT'S DEMURRER

4/19/2019: Opposition - OPPOSITION PLAINTIFF'S OPPOSITION TO DEFENDANT'S DEMURRER

Proof of Service by Mail

3/27/2019: Proof of Service by Mail

Notice of Ruling - NOTICE OF RULING ON CASE MANAGEMENT CONFERENCE AND CAUSE RE DEFAULT JUGMENT

3/15/2019: Notice of Ruling - NOTICE OF RULING ON CASE MANAGEMENT CONFERENCE AND CAUSE RE DEFAULT JUGMENT

Minute Order - Minute Order (Order to Show Cause Re: re: Default Judgment)

1/3/2019: Minute Order - Minute Order (Order to Show Cause Re: re: Default Judgment)

96 More Documents Available

 

Docket Entries

  • 04/23/2020
  • DocketMemorandum of Costs (Summary); Filed by F & O Melrose Place, Inc. (Defendant)

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  • 04/20/2020
  • DocketProof of Service (not Summons and Complaint); Filed by F & O Melrose Place, Inc. (Defendant)

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  • 04/17/2020
  • DocketNotice (of Entry of Judgment); Filed by F & O Melrose Place, Inc. (Defendant)

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  • 04/08/2020
  • DocketJudgment (Judgment of Dismissal with Prejudice); Filed by F & O Melrose Place, Inc. (Defendant)

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  • 04/01/2020
  • Docketat 09:00 AM in Department 56; Informal Discovery Conference (IDC) - Not Held - Advanced and Continued - by Court

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  • 03/17/2020
  • DocketNotice Re: Continuance of Hearing and Order; Filed by Clerk

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  • 02/21/2020
  • DocketNotice of Ruling (ON DEFENDANTS DEMURRER WITH MOTION TO STRIKE PORTIONS OF PLAINTIFF'S SECOND AMENDED COMPLAINT); Filed by F & O Melrose Place, Inc. (Defendant)

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  • 02/20/2020
  • Docketat 08:30 AM in Department 56; Hearing on Demurrer - with Motion to Strike (CCP 430.10) - Held

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  • 02/20/2020
  • DocketOrder Appointing Court Approved Reporter as Official Reporter Pro Tempore; Filed by Clerk

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  • 02/20/2020
  • DocketMinute Order ( (Hearing on Demurrer - with Motion to Strike (CCP 430.10))); Filed by Clerk

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111 More Docket Entries
  • 04/09/2018
  • DocketSUBSTITUTION OF ATTORNEY

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  • 04/09/2018
  • DocketSubstitution of Attorney; Filed by LLEJ, LLC (Plaintiff)

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  • 04/09/2018
  • DocketSubstitution of Attorney; Filed by LLEJ, LLC (Plaintiff); La Tropezienne Bakery (Legacy Party)

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  • 04/05/2018
  • DocketChallenge To Judicial Officer - Peremptory (170.6); Filed by LLEJ, LLC (Plaintiff)

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  • 04/05/2018
  • DocketPEREMPTORY CHALLENGE TO JUDICIAL OFFICER

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  • 04/04/2018
  • DocketSUBSTITUTION OF ATTORNEY

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  • 04/04/2018
  • DocketSubstitution of Attorney; Filed by LLEJ, LLC (Plaintiff); La Tropezienne Bakery (Legacy Party)

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  • 03/23/2018
  • DocketComplaint; Filed by LLEJ, LLC (Plaintiff)

    Read MoreRead Less
  • 03/23/2018
  • DocketSUMMONS

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  • 03/23/2018
  • DocketCOMPLAINT FOR: 1) BREACH OF CONTRACT ;ETC

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Tentative Rulings

Case Number: BC699493    Hearing Date: February 20, 2020    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

LLEJ LLC. dba LA TROPEZINE BAKERY,

Plaintiff,

vs.

F&O MELROSE PLACE, INC. dba FIG & OLIVE RESTAURANTS, et al.

Defendants.

CASE NO.: BC699493

[TENTATIVE] ORDER RE: DEMURRER TO PLAINTIFF’S SECOND AMENDED COMPLAINT; MOTION TO STRIKE

Date: February 20, 2020

Time: 8:30 a.m.

Dept. 56

MOVING PARTY: Defendant F&O Melrose Place, Inc. dba Fig & Olive Restaurants

RESPONDING PARTY: Plaintiff LLEJ, LLC

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

Plaintiff filed the operative Second Amended Complaint (“SAC”) against Defendant alleging causes of action for: (1) breach of contract; (2) breach of fiduciary duty; (3) breach of the implied covenant of good faith and fair dealing; (4) fraud; and (5) accounting. Plaintiff’s FAC arises from an alleged business transaction between Plaintiff and Defendant that would have allowed Plaintiff to operate a bakery within Defendant’s restaurant.

Defendant filed a demurrer to all the causes of action in the SAC. Defendant also filed a motion to strike portions of the SAC.

MEET AND CONFER

The meet and confer requirement has been met.

DEMURRER

“A demurrer tests the sufficiency of a complaint as a matter of law.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) “[T]he court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Id.) “The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.” (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer “[t]he complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) “On demurrer, all material facts properly pleaded and all reasonable inferences which can be drawn therefrom are deemed admitted.” (Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 198.) In ruling on a demurrer, a court “may also take notice of exhibits attached to the complaints. If facts appearing in the exhibits contradict those alleged, the facts in exhibits take precedence.” (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447.) Where allegations in a complaint conflict with express terms of an agreement, the Court “will, in hearing on the demurrer, examine the exhibits and treat the pleader’s conclusions as surplusage.” (Alphonzo E. Bell Corp. v. Bell View Oil Syndicate (1941) 46 Cal.App.2d 684, 691.) A demurrer will be sustained without leave to amend if there exists no “reasonable possibility that the defect and be cured by amendment.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “The burden of proving such reasonable possibility is squarely on the plaintiff.” (Id.)

Issue No. 1: The Sham Pleading Doctrine

“[A]dmissions in an original complaint that has been superseded by an amended pleading remain within the court’s cognizance and the alteration of such statements by amendment designed to conceal fundamental vulnerabilities in a plaintiff’s case will not be accepted.” (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1043, fn. 25.) “When a plaintiff files an amended complaint, it may not omit harmful allegations . . . from previous complaints.” (Smyth v. Berman (2019) 31 Cal.App.5th 183, 195.) “Unless the plaintiff provides a plausible explanation for dropping the harmful allegations . . . the trial court will take judicial notice of the harmful allegations and disregard the new and contrary allegations.” (Id.) “This is known as the sham pleading doctrine and prevents the abuse of process that would arise if parties circumvent prior adverse rulings by pleading the underlying facts in the alternative.” (Id.)

The Court finds that Plaintiff makes new allegations that were never alleged in the original complaint or the first amended complaint. The SAC now asserts that: (1) subsequent agreements took place that modified or clarified the written agreement entered into between Plaintiff and Defendants on October 25, 2016 (SAC at ¶ 13); (2) during the course of the construction and remodeling of the property, the parties met in the summer and fall of 2017 and Defendants agreed that Plaintiff could and should continue the construction until it was completed, even if that took well into the year 2018 to complete the construction (Id. at ¶ 23); (3) in the second half of 2017, Defendants and Plaintiff agreed that once construction was completed, they would open their business together and any previous delays in construction were immaterial and such agreements were memorialized in writing between the parties (Id.); (4) Defendants confirmed the work had been completed (Id. at ¶ 25); (5) after Plaintiff performed all of its obligations, Defendants notified Plaintiff that they would not perform any of their obligations under the agreement and instead were breaching the agreement (Id. at ¶ 26); and (6) Defendants never sought to terminate the agreement, stated they were terminating the agreement, never invoked any right to terminate the agreement, never terminated the agreement between the parties, and the agreement was never terminated. (Id. at ¶¶ 35-41.) The SAC also asserts that Defendants agreed that Plaintiff could have to and through at least mid-2018 to complete construction should that be necessary, and these agreements restricted Defendants’ rights to terminate and superseded any right to terminate articulated in Exhibit 1, including but not limited to Article 14.2. (Id. at ¶ 63.) The first amended complaint alleged that “[b]y September 2017 Plaintiff had performed all, or substantially all, of the significant things it was required to do under the contract by paying for and carrying out all improvements, construction, build out and permitting listed in the contract and by demanding performance of the contract by the Defendants” (FAC at ¶ 27) while the SAC alleges that construction was incomplete and was ongoing in the summer and fall of 2017. (SAC at ¶ 63.)

This is Plaintiff’s first time alleging the above allegations with respect to: (1) entering into subsequent agreements with Defendants about the timing of completing construction; (2) Defendants not seeking to terminate the agreement or invoke any right thereto; (3) the parties agreeing that any construction delays were immaterial; (4) the parties agreeing that subsequent agreements superseded the language of Article 14.2 in the agreement; and (5) the parties agreeing that Defendants’ rights to terminate the agreement were restricted.

In ruling on the demurrer to the first amended complaint, the Court indicated that Article 14.2 gave Defendants the right to terminate the agreement because the bakery never opened. Moreover, based on the allegations in the first amended complaint, when Plaintiff alleged that “[b]y December 6, 2017 it was clear to Plaintiff that Defendants had no intention of honoring their agreement and the joint venture created” (FAC at ¶ 41) leads to the inference that the agreement was terminated. The SAC omits such allegation and alleges that the agreement was never terminated, and Defendants took no steps to terminate such agreement. The complaint and first amended complaint repeatedly asserted that the contract signed by the parties on October 25, 2016—which is attached as Exhibit 1 to each version of Plaintiff’s complaint—was the sole and operative agreement in connection with this litigation. Although leave to amend is designed to allow a party to assert facts not previously pled, Plaintiff fails to offer any reasonable or plausible explanation in its opposition on why such facts were not alleged in the first amended complaint or a plausible explanation why such facts are only being set forth now given that the complaint in this action was filed on March 23, 2018, which is almost two years ago.

To the extent that Plaintiff has added new and contradictory allegations, such as those above, the Court will exercise its discretion and will disregard such allegations under the sham pleading doctrine.

Issue No. 2: First Cause of Action

“The elements of a cause of action for breach of contract are: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391.) “[L]anguage in a contract must be interpreted as a whole.” (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1269.) “Interpretation of a contract must be fair and reasonable, not leading to absurd conclusions.” (Id.) “The court must avoid an interpretation which will make a contract extraordinary, harsh, unjust, or inequitable.” (Id.)

Pursuant to the first cause of action in the SAC, Plaintiff alleges that Defendants breached the agreement by: (1) refusing to grant Plaintiff the right to inspect books and records (SAC at ¶ 84); (2) failed to pay Plaintiff for the investment in the business which they kept (Id. at ¶ 85); (3) Defendants refused to reimburse Plaintiff for construction costs in connection with remodeling Defendants’ property (Id. at ¶ 73); (4) not granting Plaintiff access to the Facility in order to provide services to customers (Id. at ¶ 71); and (5) not permitting Plaintiff to operate in the space designated in the agreement to be used by the parties and provide services to customers (Id. at ¶ 72)

The agreement with Plaintiff did not obligate Defendant to repay Plaintiff’s investment costs for the build-out of the Concession Location (SAC at Exhibit 1, Article 7.1) or pay Plaintiff for its investment until the Concession Location began to make profits and was to be paid within 90 days of the opening of the bakery (Id. at Exhibit 1, Article 7.2.) It is clear and the Court can infer from the allegations in the SAC that the bakery never opened. As such, the triggering event—the opening of Plaintiff’s bakery—which would have required Defendant to repay Plaintiff’s investment and construction costs in the form of a Pre-Opening Credit never occurred. As such, the failure to repay Plaintiff for its investment or return Plaintiff’s investment cannot serve as a basis for Defendants’ breach of contract.

Next, the SAC asserts that Defendant breached the agreement because Defendant refused to allow the new bakery to operate in the space as was agreed upon and did not allow Plaintiff access to the Facility to serve customers. (SAC at ¶¶ 72-73.) As the Court’s ruling on the demurrer with respect to Plaintiff’s complaint and first amended complaint indicated, the agreement did not grant Plaintiff an independent right to operate its bakery. (Id., Exhibit 1 at Articles 14.2(A) and 14.2(D).) Additionally, Article 14.2(D) gave Defendant the power to terminate the agreement at any time after six months from the effective date of the agreement if the profits generated from the Concession Location fell below $50,000.00 for three consecutive months. (Id. at Article 14.2(D).) According to the SAC the agreement was signed on October 25, 2016 (SAC at ¶ 11) and based on the allegations in the first amended complaint which were omitted from the SAC, the agreement was allegedly terminated on December 6, 2017 (FAC at ¶ 41.) There is no dispute pursuant to the SAC that the bakery never opened and never generated any profits. In fact, the SAC indicates that construction was ongoing as of the Fall of 2017. The inference, therefore, can be made that no profits were ever made by Plaintiff and under the agreement, Defendant could terminate the agreement for that reason and would not have been in breach had such action been taken under Article 14.2(D). Thus, the Court can infer that based on the explicit terms in the agreement, Defendant could have terminated the agreement because the bakery never opened and as such was entitled to not allow: (1) Plaintiff to operate on the space as agreed upon; and (2) Plaintiff to access the facility to serve customers.

The SAC asserts Defendants have refused to grant Plaintiff rights to inspect the books and records as another basis for the breach of contract cause of action. (SAC at ¶ 84.) Article 7.3(E) of the agreement states that “F&O shall maintain reasonably accurate books and records in connection with the Concession Location and shall maintain such records for a period of at least (3) years, which books and records shall be available for Concessionaire’s inspection during regular business hours.” (Id., Exhibit 1 at Article 7.3(E).) The section of the agreement in which Article 7.3(E) is contained seems to imply that accounting and control procedures shall exist with respect to an operational Concession Location. (Id. at Article 7.3.) The Court does not see how Article 7.3(E) was ever triggered where the Concession Location never opened or became operational at all under ASP Properties Group.

Next, the SAC alleges that Defendants breached the agreement by not reimbursing the “far more than $60,000.00 in costs associated with performing construction upon Defendants’ property but Defendants refused to reimburse Plaintiff for any portion of those costs and refused to do so within 10 days of the event date.” (SAC at ¶ 73.) A review of Article 8 of the agreement to which Plaintiff cites in Paragraph 73 of its SAC does not entitle Plaintiff to a per se reimbursement of additional sums of money. Article 8 says that “[i]f either party has paid sums or incurred any expense for which the other party agreed to pay or reimburse such party, or if either party is required to pay any sums or incurs any expense arising from this [a]greement, such amounts shall be deemed additional payments due hereunder; and such other party shall reimburse the other party . . . or the party may retain the amount(s) thereof, as the case may be.” (SAC, Exhibit 1 at Article 8, emphasis added.) Read in conjunction with Article 7.1, reimbursement or repayment of Plaintiff’s expenses for construction and build-out of the property was not an entitlement for Plaintiff until the Concession Location opened. (SAC, Exhibit 1 at Article 7.1 and 7.2.) Thus, Defendants’ failure to reimburse Plaintiff for the additional sums of money beyond $60,000.00 that were expended in construction upon Defendants’ property cannot serve as a basis for liability of breach of contract.

Therefore, Defendant’s demurrer to Plaintiff’s first cause of action in the SAC is SUSTAINED WITHOUT LEAVE TO AMEND. Plaintiff has failed to meet its burden under Blank to establish that the defects that exist in the first cause of action can be cured by amendment. Plaintiff has had multiple opportunities to state sufficient facts to constitute a breach of contract cause of action as this is Plaintiff’s third iteration of its complaint as Plaintiff has previously filed the original complaint and a first amended complaint.

Issue No. 3: Second Cause of Action

“The key factor in the existence of a fiduciary relationship lies in control by a person over the property of another. It is evident that while these two relationships may exist simultaneously, they do not necessarily do so.” (Vai v. Bank of America National Trust & Savings Ass’n (1961) 56 Cal.2d 329, 338.) “To establish a cause of action for breach of fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary relationship, breach of that duty and damages.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.) “[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.” (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386.) “A fiduciary relationship is created where a person reposes trust and confidence in another and the person in whom such confidence is reposed obtains control over the other person’s affairs.” (Lyunch v. Cruttenden & Co. (1993) 18 Cal.App.4th 802, 809.) There is no fiduciary relationship where an agreement is not primarily for the benefit of only one party. (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386 (mutually beneficial contract between hospital and independent contractor was not primarily for the benefit of independent contractor and therefore no fiduciary relationship existed).)

The agreement between the parties clearly indicates that Plaintiff “shall be an independent contractor of F&O and not a joint venture, partner, agent or employee of F&O.” (SAC at Exhibit 1, Article 5.2, emphasis added.) This is conflicting with the SAC’s allegations that a joint venture or a partnership was established (SAC at ¶¶ 45, 52, 53) and therefore the language of the agreement takes precedence over the SAC under Holland. Also, the agreement indicates that “F&O shall receive fifty percent (50%) of Profits from this Agreement.” (Id., Exhibit 1 at Article 7.2.) Both parties were to mutually benefit from the agreement as evidenced from the profit-sharing structure. (Id.)

Plaintiff citation to Lynch for the proposition that a fiduciary relationship existed between Plaintiff and Defendant is not persuasive. (Lynch v. Cruttenden & Co. (1993) 18 Cal.App.4th 802, 809.) The facts in Lynch are distinguishable from the facts in the SAC. In Lynch¸ plaintiffs gave money to defendant to invest for them and alleged that defendant was acting as an agent. The Court in Lynch held that defendant was acting in a fiduciary capacity. Here, the agreement explicitly disavowed any agency relationship between Plaintiff and Defendant. Plaintiff’s citation to Higashi is also not persuasive because that case involved calculations of profit pursuant to methodology set forth in a partnership agreement. (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566.) Unlike Higashi¸ here the agreement at issue explicitly indicates that there was no partnership.

While Plaintiff’s opposition asserts that City of Hope is inapplicable because it applies only at the trial phase, the Court finds Plaintiff’s argument is not persuasive. While City of Hope was in the context of a jury trial, the rules of law and principles set forth with respect to its holding that a fiduciary relationship does not exist when acting for the mutual benefits of the parties is clear.

Therefore, Defendant’s demurrer to Plaintiff’s second cause of action in the SAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the SAC.

Issue No. 4: Third Cause of Action

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) Where a cause of action is duplicative because it adds “nothing to the complaint by way of fact or theory of recovery” then a demurrer to that certain cause of action can be properly sustained without leave to amend. (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.)

Here, the Court finds that Plaintiff’s third cause of action is duplicative of the first cause of action as the third cause of action is premised on Defendants’ breach of the agreement. The crux of the third cause of action is Defendants’ breach of the agreement and Defendants keeping Plaintiff’s investment monies. (SAC at ¶¶ 116-127.) Also, the third cause of action seeks the exact same recovery as the first cause of action for breach of contract. (Id. at ¶ 89, 127.)

Therefore, Defendant’s demurrer to Plaintiff’s third cause of action in the SAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the SAC.

Issue No. 5: Fourth Cause of Action

“A complaint for fraud must allege the following elements: (1) knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.) To state a fraud-based cause of action a plaintiff must plead “facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “[F]raud must be pled specifically; general and conclusory allegations do not suffice.” (Id.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Id.) “A plaintiff’s burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must allege the names of the persons who made the allegedly false representations, their authority to speak, to whom they spoke, what they said or wrote down, and when it was said or written.” (Id.)

Pursuant to the fourth cause of action in the SAC, Plaintiff has not pled sufficient facts to constitute a cause of action for fraud. Plaintiff has failed to plead the element of justifiable reliance. Plaintiff also pleads the fourth cause of action for fraud in a much too conclusory manner and as such it lacks the required particularity under Lazar. (SAC at ¶¶ 128-141.)

Therefore, Defendant’s demurrer to Plaintiff’s fourth cause of action in the SAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the SAC.

Issue No. 6: Fifth Cause of Action

In order to state a cause of action for an accounting, a complaint “need only state facts showing the existence of the relationship which requires an accounting and the statement that some balance is due the plaintiff.” (Raymond v. Independent Growers (1955) 133 Cal.App.2d 154, 160.) “A cause of action for accounting requires a showing of a relationship between the plaintiff and the defendant, such a fiduciary relationship, that requires an accounting or showing that the accounts are so complicated they cannot be determined through an ordinary action at law.” (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413.) “Generally, an underlying fiduciary relationship, such as a partnership, will support an accounting.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1137.) “Equitable principles govern, and the plaintiff must show the legal remedy is inadequate.” (Id.)

As indicated above in connection with the second cause of action, Plaintiff has not shown a fiduciary relationship between itself and Defendant. Plaintiff has also not pled explicitly that some balance due is owed to Plaintiff. Plaintiff has also failed to plead that the accounts cannot be determined through an ordinary action at law. Plaintiff has not stated a cause of action for an accounting.

Therefore, Defendant’s demurrer to Plaintiff’s fifth cause of action in the SAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the SAC.

MOTION TO STRIKE

Defendant filed a motion to strike with respect to the SAC. Due to the Court sustaining the demurrer without leave to amend filed by Defendant as to all causes of action alleged in the SAC as indicated above, the Court GRANTS WITHOUT LEAVE TO AMEND Defendant’s motion to strike portions of the SAC.

Moving party is ordered to give notice of this ruling.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 20th day of February 2020

Hon. Holly J. Fujie

Judge of the Superior Court

Case Number: BC699493    Hearing Date: October 24, 2019    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

LLEJ LLC. dba LA TROPEZINE BAKERY,

Plaintiff,

vs.

F&O MELROSE PLACE, INC. dba FIG & OLIVE RESTAURANTS, et al.

Defendants.

CASE NO.: BC699493

[TENTATIVE] ORDER RE: DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT; MOTION TO STRIKE

Date: October 24, 2019

Time: 8:30 a.m.

Dept. 56

MOVING PARTY: Defendant F&O Melrose Place, Inc. dba Fig & Olive Restaurants

RESPONDING PARTY: Plaintiff LLEJ, LLC

The Court has considered the moving, opposition, and reply papers.

BACKGROUND

Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendant alleging causes of action for: (1) breach of contract; (2) breach of fiduciary duty; (3) breach of the implied covenant of good faith and fair dealing; (4) fraud; and (5) accounting. Plaintiff’s FAC arises from an alleged business transaction between Plaintiff and Defendant that would have allowed Plaintiff to operate a bakery within Defendant’s restaurant.

Defendant filed a demurrer to all the causes of action in the FAC. Defendant also filed a motion to strike portions of the FAC.

MEET AND CONFER

The meet and confer requirement has been met.

DEMURRER

“A demurrer tests the sufficiency of a complaint as a matter of law.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) “[T]he court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Id.) “The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.” (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) “While the allegations [of a complaint] must be accepted as true for purposes of demurrer, the facts appearing in exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence.” (Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1145-1146, emphasis added.) Where allegations in a complaint conflict with express terms of an agreement, the Court “will, in hearing on the demurrer, examine the exhibits and treat the pleader’s conclusions as surplusage.” (Alphonzo E. Bell Corp. v. Bell View Oil Syndicate (1941) 46 Cal.App.2d 684, 691.) With respect to a demurrer “[t]he complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.” (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)

Issue No. 1: First Cause of Action Defendant asserts that the amended breach of contract claim in the FAC is contrary to the terms of the agreement between the parties. Defendant asserts that Plaintiff alleges three grounds for Defendant’s purported breach of contract: (1) refusal to allow Plaintiff to operate the Concession Location; (2) Plaintiff not receiving reimbursement for build-out costs; and (3) Plaintiff not being able to inspect books and records.

“The elements of a cause of action for breach of contract are: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391.) “[L]anguage in a contract must be interpreted as a whole.” (ASP Properties Group, L.P. v. Fard, Inc. (2005) 133 Cal.App.4th 1257, 1269.) “Interpretation of a contract must be fair and reasonable, not leading to absurd conclusions.” (Id.) “The court must avoid an interpretation which will make a contract extraordinary, harsh, unjust, or inequitable.” (Id.)

Defendant contends that the terms of the contract expressly contradict the alleged basis for breach of contract. Defendant is correct that the agreement with Plaintiff did not obligate Defendant to repay Plaintiff’s investment costs for the build-out of the Concession Location (FAC at Exhibit 1, Article 7.1) or pay Plaintiff for its investment until the Concession Location began to make profits and was to be paid within 90 days of the opening of the bakery (Id. at Exhibit 1, Article 7.2.) The parties do not dispute that the bakery never opened. As such, the triggering event—the opening of Plaintiff’s bakery—which would have required Defendant to repay Plaintiff’s Pre-Opening Expenses/build-out costs in the form of a Pre-Opening Credit never occurred. As such, the failure to repay Plaintiff for its investment or return Plaintiff’s investment cannot serve as a basis for Defendant’s breach.

Next, the FAC asserts that Defendant breached the agreement because Defendant refused to allow the new bakery to operate in the space as was agreed upon. (FAC at ¶ 63.) As the Court’s ruling on the demurrer with respect to Plaintiff’s complaint indicated, the agreement did not grant Plaintiff an independent right to operate its bakery. (Id., Exhibit 1 at Articles 14.2(A) and 14.2(D).) Moreover, Article 14.2(D) gave Defendant the power to terminate the agreement at any time after six months from the effective date of the agreement if the profits generated from the Concession Location fell below $50,000.00 for three consecutive months. (Id. at Article 14.2(D).) The agreement was signed on October 25, 2016 (FAC at ¶ 11) and was allegedly terminated on December 6, 2017 (Id. at ¶ 41.) There is no dispute per the FAC that the bakery never opened and never generated any profits. As such, the inference can be drawn that no profits were ever made by Plaintiff and under the agreement, Defendant could terminate the agreement for that reason and would not be in breach when taking such action.

Lastly, the FAC asserts Defendants have refused to grant Plaintiff rights to inspect the books and records as another basis for the breach of contract cause of action. (FAC at ¶ 64.) Article 7.3(E) of the agreement states that “F&O shall maintain reasonably accurate books and records in connection with the Concession Location and shall maintain such records for a period of at least (3) years, which books and records shall be available for Concessionaire’s inspection during regular business hours.” (Id., Exhibit 1 at Article 7.3(E).) The section of the agreement in which Article 7.3(E) is contained seems to imply that accounting and control procedures shall exist with respect to an operational Concession Location. (Id. at Article 7.3.) The Court fails to see how Article 7.3(E) was triggered where the Concession Location never opened or became operational at all under ASP Properties Group.

Therefore, Defendant’s demurrer to Plaintiff’s first cause of action in the FAC is SUSTAINED WITHOUT LEAVE TO AMEND. To be granted leave to amend with respect to a demurrer to a cause of action in a complaint, a Plaintiff must show that “there is a reasonable possibility that the defect [in a complaint] can be cured by amendment.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Plaintiff has failed to meet its burden to establish that the defects that exist in the first cause of action can be cured by amendment. Also, Plaintiff has had multiple opportunities to state sufficient facts to constitute a breach of contract cause of action.

Issue No. 2: Second Cause of Action

“The key factor in the existence of a fiduciary relationship lies in control by a person over the property of another. It is evident that while these two relationships may exist simultaneously, they do not necessarily do so.” (Vai v. Bank of America National Trust & Savings Ass’n (1961) 56 Cal.2d 329, 338.) “To establish a cause of action for breach of fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary relationship, breach of that duty and damages.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.) “[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.” (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386.) “A fiduciary relationship is created where a person reposes trust and confidence in another and the person in whom such confidence is reposed obtains control over the other person’s affairs.” (Lyunch v. Cruttenden & Co. (1993) 18 Cal.App.4th 802, 809.) There is no fiduciary relationship where an agreement is not primarily for the benefit of only one party. (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386 (mutually beneficial contract between hospital and independent contractor was not primarily for the benefit of independent contractor and therefore no fiduciary relationship existed).)

The agreement between the parties clearly indicates that Plaintiff “shall be an independent contractor of F&O and not a joint venture, partner, agent or employee of F&O.” (FAC at Exhibit 1, Article 5.2.) This is contrary to the FAC’s allegations that a joint venture was established (FAC at ¶ 25) and therefore the language of the agreement takes precedence over the FAC per the rule set forth in Moran. Also, the agreement indicates that “F&O shall receive fifty percent (50%) of Profits from this Agreement.” (Id., Exhibit 1 at Article 7.2.) Both parties were to mutually benefit from the agreement as evidenced from the profit-sharing structure. (Id.) Plaintiff cites to Lynch for the proposition that a fiduciary relationship existed between Plaintiff and Defendant. The facts in Lynch, however, are distinguishable from the facts in the FAC. In Lynch¸ plaintiffs gave money to defendant to invest for them and alleged that defendant was acting as an agent. The Court in Lynch held that defendant was acting in a fiduciary capacity. Here, the the agreement explicitly disavowed any agency relationship between Plaintiff and Defendant

Therefore, Defendant’s demurrer to Plaintiff’s second cause of action in the FAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the FAC.

Issue No. 3: Third Cause of Action

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) Where a cause of action is duplicative because it adds “nothing to the complaint by way of fact or theory of recovery” then a demurrer to that certain cause of action can be properly sustained without leave to amend. (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.)

Here, the Court finds that Plaintiff’s third cause of action is duplicative of the first cause of action as the third cause of action is premised on Defendant’s breach of the agreement (FAC at ¶¶ 81-83) and adds nothing to the complaint in the way of fact or theory of recovery.

Therefore, Defendant’s demurrer to Plaintiff’s third cause of action in the FAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the FAC.

Issue No. 4: Fourth Cause of Action

“A complaint for fraud must allege the following elements: (1) knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.) Every element of fraud “must be specifically pleaded.” (Id.) To state a fraud-based cause of action a plaintiff must plead “facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “[F]raud must be pled specifically; general and conclusory allegations do not suffice.” (Id.) “Each element in a cause of action for fraud . . . must be factually and specifically alleged.” (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) “Besides actual reliance, [a] plaintiff must also show justifiable reliance, i.e., circumstances were such to make it reasonable for [the] plaintiff to accept [the] defendant’s statements without an independent inquiry or investigation.” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 856.)

Pursuant to the fourth cause of action in the FAC, Plaintiff has not pled sufficient facts to constitute a cause of action for fraud. Plaintiff has failed to plead that Defendant intended to deceive Plaintiff or intended to induce Plaintiff’s reliance. Plaintiff’s fraud cause of action in the FAC is not pled with the required particularity.

Therefore, Defendant’s demurrer to Plaintiff’s fourth cause of action in the FAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the FAC.

Issue No. 5: Fifth Cause of Action

In order to state a cause of action for an accounting a complaint “need only state facts showing the existence of the relationship which requires an accounting and the statement that some balance is due the plaintiff.” (Raymond v. Independent Growers (1955) 133 Cal.App.2d 154, 160.) “A cause of action for accounting requires a showing of a relationship between the plaintiff and the defendant, such a fiduciary relationship, that requires an accounting or showing that the accounts are so complicated they cannot be determined through an ordinary action at law.” (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413.)

As indicated above, Plaintiff has failed to show a fiduciary relationship between itself and Defendant. Moreover, Plaintiff has not pled that the accounts are so complicated that they cannot be determined through an ordinary action at law. Plaintiff has not met the standard set forth in Fleet to state a cause of action for accounting.

Therefore, Defendant’s demurrer to Plaintiff’s fifth cause of action in the FAC is SUSTAINED WITHOUT LEAVE TO AMEND for the reasons set forth above in denying leave to amend with respect to Plaintiff’s first cause of action in the FAC.

MOTION TO STRIKE

Defendant filed a motion to strike with respect to the FAC. Due to the Court sustaining the demurrer without leave to amend filed by Defendant as to all causes of action in the FAC, the Court GRANTS WITHOUT LEAVE TO AMEND, Defendant’s motion to strike portions of the FAC.

Moving party is ordered to give notice of this ruling.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Dated this 24th day of October 2019

Hon. Holly J. Fujie

Judge of the Superior Court