WAEL KHALIL VS MICHAEL WYSS, ET AL.

Tentative Rulings

Case Number: *******5185 Hearing Date: January 7, 2022 Dept: 32

BACKGROUND

On May 1, 2019, Plaintiff Wael Khalil (“Plaintiff”) filed this action against Defendants Jorge Gomez (“Gomez”), So Cal Cater Truck, Inc. (“SCCT”), Michael Wyss (“Wyss”), and Wyss Catering Trucks, Inc. The complaint alleges the following causes of action: (1) breach of contract; (2) fraud; (3) negligent misrepresentation; (4) breach of the covenant of good faith and fair dealing; (5) common counts; and (6) unjust enrichment.

Plaintiff entered into a contract with Gomez and Gomez’s business, SCCT, whereby Gomez and SCCT agreed to convert two of Plaintiff’s trucks into food trucks. (Compl. 11.) The total price of the modifications was $143,200. (Id., 12.) This amount was to be satisfied by two means: (1) Plaintiff paid $70,000 in cash, consisting of $20,000 to Gomez and SCCT and $50,000 to Wyss toward Gomez’s purchase of Wyss Catering Trucks, Inc.; and (2) Plaintiff agreed to satisfy the remaining balance of $73,200 by contributing that amount towards the lease of an Audi R8 automobile for use by Gomez and his family. (Id., 13.) However, Plaintiff was to only assume the lease payments on the Audi R8 after Gomez paid the lease down to a balance of $70,000. The complaint alleges that Defendants breached the contract by failing to deliver the modified food trucks by the agreed-upon deadline. (Id., 15.) Per the agreement, Defendants have accrued late fees of over $6,000. (Ibid.)

Through this action, Plaintiff seeks to recover the following: (1) the two food trucks; (2) the $70,000 cash payment; (3) $3,200 down payment for the Audi R8 lease; (4) $2,268.76 for a February 2019 lease payment on the Audi that Gomez failed to pay, forcing Plaintiff to cover; and (5) the accrued late fees of over $6,000. (Compl. 16.)

On November 19, 2021, Wyss filed the instant demurrer to all six causes of action as asserted against him. Plaintiff has not filed an opposition.

LEGAL STANDARD

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. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc. 430.30(a).) 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.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, 147 Cal.App.4th at 747.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer 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. (Code Civ. Proc., 430.41, 435.5.) The Court notes that the Moving Party has complied with the meet and confer requirement. (Lonas Decl. 3-6.)

DISCUSSION

a. First Cause of Action for Breach of Contract

To establish breach of contract, a plaintiff must show: (1) the contract existed, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal. App. 4th 1182, 1186.) Besides setting forth the terms of a contract verbatim in the body of a complaint or attaching a copy of the written instrument, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.)

A defendant is entitled to judgment on the pleadings if the allegations fail to establish that the defendant is a party to the contract. (See Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1071.) Here, Wyss is not alleged to be a party to the contract. The complaint alleges that “plaintiff and defendant Gomez and SCCT entered into a Contract whereby defendants agreed to customize and convert two of Plaintiffs trucks into food trucks (the ‘Contract’).” (Compl. 11.) There is no contract attached to the complaint that demonstrates Wyss was a party to the contract. As such, the motion for judgment on the pleadings is GRANTED without leave to amend as to the first cause of action.

b. Second and Third Causes of Action for Fraud and Negligent Misrepresentation

The elements of a fraud claim are: “(1) a 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.) “Negligent misrepresentation requires an assertion of fact, falsity of that assertion, and the tortfeasor’s lack of reasonable grounds for believing the assertion to be true. It also requires the tortfeasor’s intent to induce reliance, justifiable reliance by the person to whom the false assertion of fact was made, and damages to that person.” (SI 59 LLC v. Variel Warner Ventures, LLC (2018) 29 Cal.App.5th 146, 154.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Here, the fraud claims are based on the allegation that “defendants Gomez represented to plaintiff they would deliver two converted food trucks . . . .” (Compl. 18.) The complaint also alleges that “Defendants further perpetrated their fraud upon plaintiff by continuing to assure plaintiff that defendants would fully perform the Contract, which defendants had no intention of doing.” (Id., 21.) These allegations are insufficiently specific to satisfy the heightened pleading requirement as set forth in Lazar, and no statements are attributed to Wyss. Therefore, the motion for judgment on the pleadings is GRANTED without leave to amend as to the second and third causes of action.

c. Fourth and Fifth Causes of Action for Breach of the Covenant of Good Faith and Fair Dealing and Common Counts

“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349-350.) “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.)

As to the fourth cause of action, the complaint alleges that Defendants breached the implied covenant of good faith and fair dealing “by their conduct herein alleged.” (Compl. 32.) As to the fifth cause of action, the complaint alleges that “[w]ithin the last past four years, defendants became indebted to plaintiff in the sum of not less than $151,469.76.” (Id., 35.) As discussed above, there is no allegation that Wyss is a party to the contract. Thus, Wyss could not have breached an implied contract term. The complaint alleges no other basis beyond the contract for Wyss to be indebted to Plaintiff. (See id., 34-36 [incorporating previous allegations into the fifth cause of action].) Accordingly, the motion for judgment on the pleadings is GRANTED without leave to amend as to the fourth and fifth causes of action.

d. Sixth Cause of Action for Unjust Enrichment

The elements for a claim of unjust enrichment are: (1) receipt of a benefit; and (2) unjust retention of the benefit at the expense of another. (Elder v. Pacific Bell Telephone Co. (2012) 205 Cal.App.4th 841, 857.) Courts have construed unjust enrichment claims as quasi-contract claims seeking restitution. (Rutherford Holdings LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.) “[A] party to an express contract can assert a claim for restitution based on unjust enrichment by ‘alleg[ing in that cause of action] that the express contract is void or was rescinded.” (Ibid.) However, “an action based on an implied-in-fact or quasi-contract cannot lie where there exists between the parties a valid express contract covering the same subject matter.” (Ibid; see also Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370 [unjust enrichment theory inapplicable where plaintiff alleged that the parties entered into express contracts].)

Here, the complaint alleges that Plaintiff paid “$50,000.00 to defendant Michael Wyss toward defendant Gomez’s recent purchase of defendant Wyss Catering Trucks, Inc.” (Compl. 13.) Wyss argues that “[t]he benefit of the payment was not to WYSS, but to Defendant Gomez alone as Plaintiff’s payment reduced Defendant Gomez’s obligation.” (Dem. 8:25-26.) Additionally, Plaintiff paid the $50,000 to Wyss pursuant to his contract with Gomez and SCCT. (Compl. 13.) Plaintiff does not explain why he has a valid claim for unjust enrichment against Wyss given Plaintiff can recover his damages from Gomez and SCCT for their breach of contract. Therefore, the motion for judgment on the pleadings is GRANTED without leave to amend as to the sixth cause of action.

CONCLUSION

Defendant Michael Wyss’s motion for judgment on the pleadings is GRANTED without leave to amend.

BACKGROUND

On May 1, 2019, Plaintiff Wael Khalil (“Plaintiff”) filed this action against Defendants Jorge Gomez (“Gomez”), So Cal Cater Truck, Inc. (“SCCT”), Michael Wyss (“Wyss”), and Wyss Catering Trucks, Inc. The complaint alleges the following causes of action: (1) breach of contract; (2) fraud; (3) negligent misrepresentation; (4) breach of the covenant of good faith and fair dealing; (5) common counts; and (6) unjust enrichment.

Plaintiff entered into a contract with Gomez and Gomez’s business, SCCT, whereby Gomez and SCCT agreed to convert two of Plaintiff’s trucks into food trucks. (Compl. 11.) The total price of the modifications was $143,200. (Id., 12.) This amount was to be satisfied by two means: (1) Plaintiff paid $70,000 in cash, consisting of $20,000 to Gomez and SCCT and $50,000 to Wyss toward Gomez’s purchase of Wyss Catering Trucks, Inc.; and (2) Plaintiff agreed to satisfy the remaining balance of $73,200 by contributing that amount towards the lease of an Audi R8 automobile for use by Gomez and his family. (Id., 13.) However, Plaintiff was to only assume the lease payments on the Audi R8 after Gomez paid the lease down to a balance of $70,000. The complaint alleges that Defendants breached the contract by failing to deliver the modified food trucks by the agreed-upon deadline. (Id., 15.) Per the agreement, Defendants have accrued late fees of over $6,000. (Ibid.)

Through this action, Plaintiff seeks to recover the following: (1) the two food trucks; (2) the $70,000 cash payment; (3) $3,200 down payment for the Audi R8 lease; (4) $2,268.76 for a February 2019 lease payment on the Audi that Gomez failed to pay, forcing Plaintiff to cover; and (5) the accrued late fees of over $6,000. (Compl. 16.)

On December 10, 2020, default judgment was granted against all Defendants in the amount of $233,076.76. On November 19, 2021, Wyss filed the instant motion to set aside default on the grounds that substituted service of the complaint did not result in actual notice. Plaintiff has not filed an opposition.

LEGAL STANDARD

“When service of a summons has not resulted in actual notice to a party in time to defend the action and a default or default judgment has been entered against him or her in the action, he or she may serve and file a notice of motion to set aside the default or default judgment and for leave to defend the action.” (Code Civ. Proc., 473.5, subd. (a).) The motion must be made within a reasonable time, but in no event exceeding the earlier of: (i) two years after entry of default; or (ii) 180 days after written notice of the default judgment. (Ibid.) The motion must “be accompanied by an affidavit showing under oath that the party’s lack of actual notice in time to defend the action was not caused by his or her avoidance of service or inexcusable neglect.” (Id., 473.5, subd. (b).)

DISCUSSION

According to a proof of service filed with the Court on December 9, 2019, Wyss was served by substituted service. On December 6, 2019, a registered process server left the documents with office receptionist Annie Bustamonte at 6868 Suva Street, Bell Gardens, CA 90201. The server subsequently mailed the documents to the same address on December 9, 2019.

Wyss avers that he has never conducted business out of the 6868 Suva Street address. (Wyss Decl. 2.) Instead, Wyss contends that he runs his business from his home in Long Beach. (Ibid.) According to Wyss, he sold his business assets—once belonging to Wyss Catering Truck Manufacturing, Inc.—to Gomez, who then changed his business name to Wyss Catering Trucks, Inc. (Id., 3.) Wyss claims not to know anyone by the name of Annie Bustamonte and avers that he has never received the summons and complaint. (Id., 4.) Wyss discovered that he had been sued for the first time when the Los Angeles Sheriff’s Department notified him that his accounts were being levied upon. (Id., 7, 12.)

California Secretary of State records indicate that Wyss has operated Wyss Catering Truck Manufacturing, Inc. from a location in Long Beach since November 2019. (Wyss Decl., Ex. 1.) Before that, Wyss Catering Truck Manufacturing, Inc. operated out of Santa Fe Springs. (Ibid.) Records from January 2019 indicate that Gomez’s company, Next Level Builds, Inc., operates out of the 6868 Suva Street address. (Id., Ex. 2.) As of February 2019, Next Level Builds, Inc. was renamed to Wyss Catering Trucks, Inc. (Ibid.)

Wyss’s evidence sufficiently demonstrates that the complaint was only served to Gomez’s business address and that Wyss did not receive actual notice of the lawsuit. Gomez has not filed an opposition or presented any contrary evidence. This motion was timely filed as it has not been two years since entry of default. While it has been over 180 days since service of the default, the notice was served only to the 6868 Suva Street address. Thus, Wyss was not served with notice of the default. Wyss avers that he has a reasonable defense to the claims and has simultaneously filed a demurrer. (Wyss Decl. 20.)

CONCLUSION

The Court finds that Defendant Michael Wyss did not receive actual notice of the present action. The Court finds that this was not a result of Defendant’s attempts to evade service or inexcusable neglect. As such, the motion to set aside default is GRANTED.