STEARNS, CONRAD AND SCHMIDT VS ROCKVIEW DAIRIES

Tentative Rulings

Case Number: ****6932    Hearing Date: January 28, 2020    Dept: SEC

STEARNS, CONRAD AND SCHMIDT CONSULTING ENGINEERS, INC. DBA SCS ENGINEERS V. ROCKVIEW DAIRIES, INC., et al.

CASE NO.: ****6932

HEARING: 1/28/20

#7

TENTATIVE ORDER

Plaintiff/Cross-Defendant Stearns, Conrad and Schmidt Consulting Engineers, Inc.’s demurrer to fourth amended cross-complaint is SUSTAINED without leave to amend as to the 1^st and 4^th causes of action and SUSTAINED with 10 days leave to amend as to the 2^nd and 3^rd causes of action.

Moving Party to give NOTICE.

Background

Plaintiff STEARNS, CONRAD AND SCHMIDT dba SCS ENGINEERS (“SCS”) and Defendant Rockview Dairies, Inc. (“Rockview”) entered into a written consulting agreement for professional services, including environmental consulting and compliance assistance, concerning properly located at 205 E. Carson Street in Carson, California. SCS provided a variety of ongoing site investigation services and compliance assistance activities concerning the property between 1997 and 2015 in exchange for payment from Rockview. Rockview made payments for the services between 1997 and 2010. Beginning in 2011, Rockview began making partial payments instead of paying the entire amount invoiced by SCS. SCS alleges there is an unpaid balance of $73,070.34.

On February 16, 2018, SCS filed a complaint for (1) breach of contract, (2) open book account, (3) account stated, and (4) quantum meruit.

On April 2, 2018, Rockview filed a Cross-Complaint against SCS, which was demurred to and sustained with leave. The operative Fourth Amended Cross-Complaint (“4AXC”) for (1) breach of 2000 oral contract, (2) breach of 2011 oral contract, (3) common count, and (4) negligence.

Request for Judicial Notice

SCS’s request for judicial notice is GRANTED as to the existence of the documents, but not as to any hearsay statements contained therein.

Rockview’s request for judicial notice is GRANTED as to the existence of the documents, but not as to any hearsay statements contained therein.

1^st CAUSE OF ACTION

BREACH OF 2000 ORAL CONTRACT:

As discussed in the court’s prior ruling:

“If there is no writing, an oral contract may be modified if the modification is supported by consideration. ‘In a unilateral contract, there is only one promisor, who is under an enforceable legal duty. The promise is given in consideration of the promisee’s act or forbearance. As to the promisee, in general, any act or forbearance, including continuing to work in response to the unilateral promise, may constitute consideration for the promise.’ (Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 10.) However, in bilateral agreements, the law is clear—“[a] promise to perform a preexisting legal duty is not supported by consideration.’ (US Ecology, Inc. v. State of California (2001) 92 Cal.App.4th 113, 129.)”

While Rockview has alleged consideration on SCS’s part, i.e. SCS would only perform work authorized for reimbursement by the State of California and/or the State Water Board, and SCS would limit the conditions of payment (4AXC, ¶ 22), Rockview has failed to allege any consideration on its part.

Rockview asserts in its opposition that allowing SCS to continue working on the property was sufficient consideration for the oral modification because Rockview was under no legal obligation to retain SCS for the remediation project. (Opposition, p. 11:19-27.) However, the 4AXC does not allege that one of the modified terms gave Rockview the right to terminate SCS from providing services under the 2000 Oral Agreement.

Rockview cites Asmus v. Pacific Bell (2000) 23 Cal.4th 1, 15 to support its assertion that allowing SCS to continue working was sufficient consideration. However, Asmus is distinguishable because there, the California Supreme Court found that the availability of continuing employment serves as adequate consideration from the employer with respect to modifications. (Asmus, supra, 23 Cal.4th at 14-15.) Asmus was decided in the context of a unilateral contract where there is no mutuality of obligation. (Id. at 14.) Here, the oral agreement is a bilateral contract. Therefore, continued employment does not constitute adequate consideration as it did in Asmus. (Id. - “The mutuality of obligation principle requiring new consideration for contract termination applies to bilateral contracts only.”)

Based on the allegations in the 4AXC and Rockview’s opposition and multiple opportunities to amend, the Court finds Rockview cannot successfully amend this cause of action.

Therefore, the demurrer to the first cause of action is SUSTAINED without leave to amend.

2^nd CAUSE OF ACTION

BREACH OF 2011 ORAL CONTRACT:

SCS asserts that this cause of action fails under the sham pleading doctrine. The Court disagrees.

“Under the sham pleading doctrine, allegations in an original pleading that rendered it vulnerable to demurrer or other attack cannot simply be omitted without explanation.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 751.) “The purpose of the doctrine is to enable the courts to prevent an abuse of process.” (Id.) “The doctrine is not intended to prevent honest complainants from correcting erroneous allegations or to prevent the correction of ambiguous facts.” (Id.)

Here, as pointed out by Rockview, the facts are substantially the same. Rather, this claim is based on an alternative legal theory. A party may plead alternative legal theories and make inconsistent allegations in the pleading. (Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402; Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29.) The Court thus finds this cause of action is not barred by the sham pleading doctrine. The demurrer to this cause of action thus cannot be sustained on this ground.

SCS also argues this cause of action is barred by the statute of limitations because Rockview’s allegations demonstrate that it suspected wrongdoing in 2015.

Breach of oral contract claims are subject to a two-year statute of limitations. (Code Civ. Proc., ; 339(1).) The cause of action accrues when the breach occurs. (Spear v. California State Automobile Association (1992) 2 Cal.4th 1035, 1042.) “‘In order to rely on the discovery rule for delayed accrual of a cause of action, a Plaintiff whose Complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery, and (2) the inability to have made earlier discovery despite reasonable diligence.’” (NBC Universal Media, LLC v. Superior Court (2014) 225 Cal.App.4th 1222, 1232 (quoting Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808).)

Here, SCS provided services from 2011 to early 2016. Given that the original cross-complaint was filed in April 2018, it would appear that any breaches that occurred prior to 2016 would generally be time-barred. Rockview alleges that it discovered SCS’s wrongdoing after it terminated the relationship with SCS and hired FREY Environmental, Inc. to review the work performed by SCS in May 2016. (4ACC, ¶ 19.) While this suggests that the statute of limitations did not begin to run until May 2016 under the delayed discovery doctrine, Rockview has also alleged that it started openly questioning SCS’s work and billing practices towards the end of 2015. (4ACC, ¶ 18.) This allegation suggests that Rockview may have been able to discover SCS’s alleged wrongdoing prior to May 2016 and thus was not reasonably diligent in doing so. Rockview has thus failed to plead sufficient facts to invoke the delayed discovery doctrine. This cause of action is thus time-barred.

In opposition, Rockview asserts that it could not have discovered SCS’s wrongdoing because SCS continued to represent to Rockview that the work it was doing and the billing was necessary and effective and that it was reasonable for Rockview to rely on SCS’s representations given the parties’ business relationship. This is not alleged in the 4ACC. As this appears to be sufficient to plead reasonable diligence, the Court will permit Rockview to amend the pleading to assert these allegations.

Accordingly, the demurrer to the 2^nd cause of action is SUSTAINED with 10 days leave to amend.

3rd CAUSE OF ACTION

COMMON COUNT: The elements for a cause of action for Money Paid are: 1) Defendant is indebted to plaintiff in a certain sum; and 2) for money lent, paid or expended to, or for, the defendant. (Moya v. Northrup (1970) 10 Cal. App. 3d 276, 280; 4 Witkin Cal. Pro. (4^th ed. 1997) ;525.)

¶ 35 alleges that SCS has become obligated to Rockview for money paid to remediate the property, but SCS failed to keep its end of the bargain.

Defendant contends that because the oral causes of action fail, the common count must fail as well. (See McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.)

However, because this court has allowed leave to amend the 2^nd cause of action, the demurrer is SUSTAINED with 10 days leave to amend.

4^th CAUSE OF ACTION

NEGLIGENCE:

CCP section 335.1 provides that an action for injury to an individual caused by the neglect of another must be brought within two years. (Code Civ. Proc., ; 335.1.)

Here, SCS purportedly provided services between 2011 and early 2016 and the relationship between SCS and Rockview ended by May 2016. Any breaches would occur before May 2016. Any negligence claim would thus need to have been brought before May 2018. Rockview did not bring a negligence claim until July 16, 2018. The 4^th cause of action is thus time-barred.

In opposition, Rockview argues that this claim is not time-barred because it relates back to the original pleading. Generally, this would be the case as the claim arises out of the same general facts. However, where the certificate of merit was not filed within the statute of limitations period or within 60 days after the filing of the original complaint, the Court of Appeal has found that the relation-back doctrine does not apply and such negligence claims are subject to dismissal. (See Curtis Engineering Corp. v. Superior Court (2017) 16 Cal.App.5th 542, 545-51.) Rockview did not file or serve a certificate of merit until the FAXC was filed on July 16, 2018. This is more than three months after the original Cross-Complaint was filed and after the statute of limitations had already expired. As the certificate of merit was not filed before the statute of limitations expired or within 60 days after the filing of the original Cross-Complaint, the relation-back doctrine does not apply and Rockview’s negligence claim is barred.

Given that this is an incurable defect, the demurrer to the 4^th cause of action is SUSTAINED without leave to amend.