Kielle Campbell Horton Living Trust vs Horton Autosport Inc et al
Kielle Campbell Horton Living Trust vs Horton Autosport Inc et al
Case Number
23CV03236
Case Type
Hearing Date / Time
Fri, 05/17/2024 - 10:00
Nature of Proceedings
(3) Demurrers
Tentative Ruling
For the reasons set forth below:
- Defendant Bert Linau’s demurrer to the first amended complaint is sustained with leave to amend.
- Defendant Christian Mooney’s demurrer to the first amended complaint is sustained with leave to amend.
- Defendants Horton Autosport, Inc., dba The Garage, and Johnathan Horton’s demurrer to the first amended complaint, and each cause of action therein, is overruled.
- Plaintiff shall file and serve her second amended complaint no later than May 31, 2024.
Background:
This action commenced on July 26, 2023, by the filing of an unlawful detainer complaint by plaintiff Kielle Campbell Horton Living Trust (“Plaintiff”) against defendants Horton Autosport Inc., DBA The Garage (“The Garage”), Jonathan Horton (“Horton”), Bert Linau (“Linau”), and Cristian Mooney (“Mooney”).
On March 22, 2024, plaintiff filed the operative first amended complaint (“FAC”) setting forth causes of action for: (1) Breach of contract; (2) Breach of the covenant of good faith and fair dealing; (3) Conversion; (4) Common counts; and (5) Unjust enrichment. All causes of action are alleged as to all defendants.
As alleged in the complaint:
Plaintiff is the lessee/sublessor of commercial property located at 417 Santa Barbara Street, Suite B4-B6, Santa Barbara. (“premises”). (FAC, ¶ 7.) On June 1, 2015, the defendants subleased the premises from plaintiff pursuant to a lease agreement. (FAC, ¶ 8 & Exh. 1.)
On April 1, 2022, the parties entered into an oral agreement to raise the monthly rent from $4,680.00 to $7,785.89. (FAC, ¶ 9.) The premises are not subject to the Tenant Protection Act of 2019. (FAC, ¶ 10.)
Since the initial lease agreement was executed in 2015, defendants have used the premises as an auto repair shop. (FAC, ¶ 11.) The equipment used by defendants in the auto repair shop was purchased with plaintiff’s funds as an investment to improve the functionality and lease value of the premises. (FAC, ¶ 12.) That equipment includes three above-ground car lifts, an in-ground car lift, cabinetry, and light fixtures. (Ibid.) Pursuant to agreement, plaintiff’s personal property was to be surrendered to her, along with the premises, upon lease expiration or termination. (FAC, ¶ 13.)
On June 23, 2023, defendants were served with a 15-Day notice to pay rent or quit for failure to pay several months’ rent for the premises. (FAC, ¶ 15.) On the same day, defendants were served with a 15-Day notice to cure or quit for failure to pay common area maintenance charges and accrued interest for unpaid rent. (FAC, ¶ 16.)
Defendants failed to pay all past due amounts and plaintiff initiated the unlawful detainer action. (FAC, ¶¶ 17-19.) Between October 19, 2023, and October 23, 2023, following settlement negotiations, defendants dismantled plaintiff’s personal property and removed it from the premises. (FAC, ¶ 20.) Possession of the premises is no longer an issue, but possession of plaintiff’s personal property is at issue. (FAC, ¶¶ 21-22.)
Linau and Mooney both demur to the FAC, and each cause of action, on the grounds that the FAC fails to state facts sufficient to constitute any cause of action, and is uncertain, due to the fact that the FAC does not identify either of them as associated with any of the causes of action.
Plaintiff has not filed opposition or any other response to the demurrers of Linau or Mooney.
The Garage and Horton demur to the entirety of the FAC and each cause of action contained therein.
Plaintiff opposes the demurrer of The Garage and Horton.
Analysis:
Request for Judicial Notice
The Garage and Horton request that the court take judicial notice of the Judgment of the Santa Barbara Superior Court, filed February 16, 2024, in case No. 22FL01003. The Garage and Horton have submitted the 62-page document with the request.
Plaintiff does not object. The court will take judicial notice of the document.
Standard on Demurrer
A demurrer alleging that the complaint does not state facts sufficient to constitute a cause of action and/or that the pleading is uncertain is permitted under Code of Civil Procedure sections 430.10 subds. (e) and (f).
“[A] court must treat a demurrer as admitting all material facts properly pleaded, it does not, however, assume the truth of contentions, deductions or conclusions of law.” (Travelers Indem. Co. of Connecticut v. Navigators Specialty Ins. Co. (2021) 70 Cal.App.5th 341, 358, citing Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.)
“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 demurrer is simply not the appropriate procedure for determining the truth of disputed facts.” (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879.)
“What is important is that the complaint as a whole contains sufficient facts to apprise the defendant of the basis upon which the plaintiff is seeking relief.” (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6.)
The question of plaintiff’s’ ability to prove their case is of no concern in ruling on a demurrer. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214 [superseded by statute on other grounds].)
Linau and Mooney Demurrers
As noted above, Linau and Mooney demur to the entirety of the FAC on the grounds that the FAC fails to state facts to constitute any cause of action against either of them.
Other than in the caption of the FAC, Linau and Mooney are not mentioned other than in the context of “all defendants.” They are not even identified in the section of the FAC that identifies the parties to the action. Likewise, they are not mentioned in the commercial lease that is attached as Exhibit 1 to the complaint.
Reading the complaint as a whole, including the attached lease, and treating all material facts as admitted, the FAC fails to set forth any cause of action against either Linau or Mooney. There are no allegations that they in any way entered into any agreements with plaintiff, owed plaintiff any sort of duty, or engaged in any actions or inactions that caused harm to plaintiff. In fact, the only reasonable inference that can be drawn from the FAC, regarding Linau and Mooney, is that neither of them were parties to the lease agreement that forms the basis for plaintiff’s first, second, and fourth causes of action.
Plaintiff implicitly concedes that Linau and Mooney’s arguments are valid. As noted above, plaintiff did not oppose their demurrer. Further, by way of their opposition to The Garage and Horton’s demurrer, plaintiff states: “In any event, the Court should note that Plaintiff’s undersigned counsel is in the process of negotiating Defendants Bert Linau and Christian Mooney’s dismissal from this action, which should be finalized prior to the hearing on the Demurrer.” (Opp., p. 7, ll. 18-20.)
The court has not yet received dismissals for Linau or Mooney. As such, their demurrers will be sustained. As there is a reasonable probability that the FAC is capable of amendment to state facts sufficient to constitute causes of action against Linau and Mooney, leave to amend will be granted.
The Garage and Horton’s Demurrer
The Garage and Horton demur to the FAC, in its entirety, on the grounds that the FAC fails to state sufficient facts to constitute any cause of action “by reason of the fact that the FAC does not identify the co-defendants as associated with any cause of action averred in the First Amended Complaint, and there are no charging allegations to support a cause of action against said demurring co-defendants.” (Notice of Demurrer, p. 6, ll. 12-21.)
As explained below, The Garage and Horton’s demurrer to the entirety of the FAC is without merit and will be overruled.
First Cause of Action for Breach of Contract:
The Garage and Horton demur to the first cause of action on grounds including that it fails to state facts sufficient to constitute a cause of action because “the demurring co-defendants are not mentioned, identified, or accused even by inference as having been a contracting party, or in privity to any contracting party to any valid agreement; the allegations are vague and uncertain, and the purported contract attached to the FAC as Exhibit 1, and incorporated by reference thereto, expired by its terms on May 31, 2020, and cannot serve as the anchor of Plaintiff’s allegation in ¶ 9 of the FAC, of an ‘oral agreement’ ‘. . . pursuant to the Agreement . . .,’ and entered ‘on or about April 1, 2022.’ ” (Notice of Demurrer, p. 6, l. 23 - p. 7, l. 2.)
The California Supreme Court has held: “In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)
“An oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)
In Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394 (Miles), the “plaintiff alleged the basic elements of a breach of contract claim. ‘A cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.’ (citation.) Plaintiff alleged an express contract to refinance his loan, including the loan balance, the interest rate, and the monthly payment. He alleged he performed by making payments under the agreement. He alleged defendants breached that contract by repudiating it and refusing to accept payments under it. And he alleged he was damaged by various fees he was charged and by being evicted from his home.” (Id., at p. 402.) The court found those allegations sufficient and held that “plaintiff’s failure either to attach or to set out verbatim the terms of the contract was not fatal to his breach of contract cause of action.” (Ibid.)
In addition to the contractual allegations set forth above, plaintiff alleges:
“Plaintiff and Defendants entered in the Agreement as set forth above in Paragraph 8.” (FAC, ¶ 24.) “By the terms of the Agreement, Defendants subleased the Premises from Plaintiff in exchange for, inter alia, a monthly rent obligation of $4,680.00 (subsequently increased to $7,785.89, effective April 1, 2022) for purposes of operating an auto repair shop.” (FAC, ¶ 26.) The Agreement also required Defendants to pay [common area maintenance charges] to Plaintiff.” (FAC, ¶ 27.) “The Agreement also provided that ‘any and all leasehold improvements made to the Premises which become affixed or attached to the leasehold Premises shall remain the property of the Lessor at the expiration or termination of this Lease Agreement.’ ” (FAC, ¶ 28.) “The consideration set forth in the Agreement was fair and reasonable.” (FAC, ¶ 29.) “Plaintiff fully performed her obligations under the Agreement.” (FAC, ¶ 30.) “Defendants materially breached their contractual obligations to Plaintiff under the Agreement by failing to pay rent and CAMs due and owing, and by dismantling and removing Plaintiff’s Personal Property from the Premises and failing to properly surrender the Premises along with the Personal Property as fixtures attached thereto.” (FAC, ¶ 31.) Plaintiff suffered damages. (FAC, ¶¶ 32-33.)
Plaintiff has alleged all of the required elements for a breach of contract claim. Unlike defendants Linau and Mooney, a reasonable inference can be made that the breach of contract claims are properly brought against The Garage and Horton. As shown by Exhibit 1 to the FAC, Horton personally signed the written agreement on behalf of The Garage. The oral agreement is alleged to simply be a modification of the original written agreement.
The allegations in the complaint regarding breach of contract, as to The Garage and Horton, are sufficient to overcome demurrer. The demurrer to the first cause of action, as to The Garage and Horton will be overruled.
Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing:
In addition to the allegations set forth above, plaintiff alleges:
“Every contract, including the Agreement between the parties in this case, has an implied covenant of good faith and fair dealing, whereby the parties agree that none of them will do anything that will injure the rights of the other to receive the benefits of the Agreement.” (FAC, ¶ 35.) “Plaintiff has at all times performed all terms, covenants, and conditions of the Agreement, except for those which were excused as a result of Defendants’ misconduct.” (FAC, ¶ 36.) “Defendants, at all times pertinent, had an obligation to act fairly and in good faith in dealing with Plaintiff pursuant to the Agreement.” (FAC, ¶ 37.) “Defendants breached the covenant of good faith and fair dealing implied in the Agreement by failing to pay rent and CAMs due and owing, and by dismantling and removing Plaintiff’s Personal Property from the Premises and failing to properly surrender the Premises along with the Personal Property as fixtures attached thereto.” (FAC, ¶ 38.) Plaintiff has sustained damages. (FAC, ¶ 39.)
The Garage and Horton demur to the second cause of action as follows:
“Demurring Defendant demurs to the purported Second Cause of Action for ‘breach of the covenant of good faith and fair dealing’ on the grounds that it fails to state facts sufficient to state a cause of action, in that it is by law tethered to the contract alleged to exist under the purported First Cause of Action and as to that cause of action the FAC fails to state facts sufficient to state a cause of action, including but not limited to, by reason of the fact that neither of the demurring co-defendants are mentioned, identified, or accused even by inference as having been a contracting party, or in privity to any contracting party to any valid agreement.” (Notice of Demurrer, p. 7, ll. 4-11.) Other than that, The Garage and Horton fail to make any argument or provide any authority to support the demurrer to the second cause of action.
The Garage and Horton’s demurrer, in this respect, fails. As with the breach of contract cause of action, the reasonable inference is that plaintiff’s allegations of breach of the covenant of good faith and fair dealing pertain, at least, to The Garage and Horton. The demurrer to the second cause of action for breach of the covenant of good faith and fair dealing will be overruled as to The Garage and Horton.
Third Cause of Action for Conversion:
The Garage and Horton demur to the third cause of action on the grounds that “it fails to state facts sufficient to state a cause of action, by reason of the fact that it fails to allege the elements of conversion as to this demurring defendant. Moreover, that cause is barred by the doctrine of res judicata (‘claim preclusion’) and collateral estoppel (‘issue preclusion’) implicated by virtue of the Judgment entered by the Santa Barbara Superior Court in case number 22FL01003 on February 16, 2024.” (Notice of Demurrer, p. 7, ll. 13-19.)
“ ‘Conversion is generally described as the wrongful exercise of dominion over the personal property of another. [Citation.] The basic elements of the tort are (1) the plaintiff’s ownership or right to possession of personal property; (2) the defendant’s disposition of the property in a manner that is inconsistent with the plaintiff’s property rights; and (3) resulting damages. [Citation.]’ ” [Citation.] “ ‘Conversion is a strict liability tort. The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious. Therefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial.’ ” [Citation.]” (Regent Alliance Ltd. v. Rabizadeh (2014) 231 Cal.App.4th 1177, 1181.)
In addition to the allegations set forth above, plaintiff alleges:
“Defendants’ intentional removal from the Premises and retention of possession and/or control over the Personal Property was a wrongful exercise of dominion over Plaintiff’s personal property.” (FAC, ¶ 41.) “At the time Defendants intentionally removed the Personal Property from the Premises, Defendants were aware of the fact that Plaintiff was the sole owner of the Personal Property with right to possession thereof.” (FAC, ¶ 42.) “Defendants’ intentional removal from the Premises and retention of possession and/or control over the Personal Property was a wrongful act of disposition of property rights to which Defendants were not entitled.” (FAC, ¶ 43.) “Defendants intentionally removed the Personal Property from the Premises without Plaintiff’s knowledge and without Plaintiff’s consent.” (FAC, ¶ 44.) Plaintiff suffered damages. (FAC, ¶ 48.)
The Garage and Horton’s first ground clearly fails. All of the elements of conversion are alleged.
Likewise, The Garage and Horton’s second ground, that the cause of action is barred by the doctrines of res judicata and collateral estoppel, also fails.
For unknown reasons, The Garage and Horton’s argument regarding res judicata and collateral estoppel are contained in the second through sixth pages of the Notice of Demurrer rather in the Points and Authorities. The Garage and Horton’ argument, summarized, is essentially that Horton was awarded the property as a part of the judgment of dissolution between himself and plaintiff and, as a result, plaintiff is precluded from making a claim to the property in the current action. Specifically, the judgment of dissolution (of which the court has taken judicial notice) provides: “Tom Stevenson, the valuation expert, was expected to testify as to the value. The stipulation is that the number he reached of $46,100 for The Garage is a stipulated value, that his report which is Exhibit 421 would come into evidence, and that the business is John’s separate property.” (Judgment of Dissolution, p. 9, ll. 18-22.)
Plaintiff argues, and it appears to be the case, that the awarding of The Garage to Horton, pertains to the business entity. Nothing before the court tends to show that the judgment of dissolution determined the disposition of equipment being used by the entity. At most, the language in the judgment of dissolution creates competing inferences that are not properly resolved by way of demurrer. It simply does not prove a complete defense to the third cause of action. As such, the demurrer to the third cause of action will be overruled as to The Garage and Horton.
Fourth Cause of Action for Common Counts:
The Garage and Horton demur to the fourth cause of action on the grounds that: “it fails to state facts sufficient to state a cause of action, by reason of the fact that demurring co-defendants are not mentioned, identified, or accused even by inference as having been a contracting party, or in privity to any contracting party to any valid agreement, which would serve as the basis for the later agreement as to amounts due under the theories of ‘account stated,’ or ‘open book account’ as alleged in the subject cause of action.” (Notice of Demurrer, p. 7, ll. 21-27.) No additional argument or authority is provided by The Garage and Horton relative to the fourth cause of action.
“Common counts” is a long-established common law form of pleading that is an exception to many of the modern rules of pleading.
Typically:
“(a) A complaint or cross-complaint shall contain both of the following:
“(1) A statement of the facts constituting the cause of action, in ordinary and concise language.
“(2) A demand for judgment for the relief to which the pleader claims to be entitled. If the recovery of money or damages is demanded, the amount demanded shall be stated.” (Code Civ. Proc., § 425.10, subd. (a).)
However, in the case of a cause of action for common counts: It is not necessary to state when the plaintiff paid, laid out, expended, loaned, or advanced to and for the defendant the moneys sued for, or when defendant became indebted to plaintiff therefor, or when defendant requested plaintiff to make such payments, expenditures, loans, or advancements. Nor was it necessary to set forth the items of the account. The statute expressly provides that the items of an account need not be set forth in a pleading, but a bill of particulars must be furnished on demand.” (Pleasant v. Samuels (1896) 114 Cal.34, 38.) “If the question were new, there might be good ground for saying that the common counts do not comply with the provision of our Code of Civil Procedure (section [425.10]) that the complaint must contain ‘ “a statement of the facts constituting the cause of action in ordinary and concise language.” ’ But the practise of pleading in this form has been too long established in this state to be now open to question.” (Pike v. Zadig (1915) 171 Cal.273, 276.)
This does not mean that a plaintiff is excused from pleading any relevant facts at all. A plaintiff must still plead the elements of the cause of action.
“A common count for reasonable value has the following elements: (1) plaintiff performed certain services for the defendant; (2) the reasonable value of those services; (3) the services were rendered at the request of the defendant; and (4) the services were unpaid.” (State Compensation Insurance Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 449.)
Here, in addition to the allegations set forth above, plaintiff alleges:
“Within the last two years, Defendants became indebted to Plaintiff pursuant to the Agreement in an amount on open account, as of the date of this FAC, of not less than $64,243.37, plus pre-judgment and post-judgment interest, penalties, fees, charges and/or costs, for subleasing the Premises to Defendants, for which Defendants promised to pay Plaintiff rent and CAMSs. These obligations continue to accrue until payment in full is made.” (FAC, ¶ 52.) “Despite Plaintiff’s demands for payment, as of the date of this FAC, there is still due, unpaid and owing from Defendants to Plaintiff the principal sum of $64,243.37, plus pre-judgment and post-judgment interest, penalties, fees, charges and/or costs, which continue to accrue until paid in full.” (FAC, ¶ 53.) Plaintiff has suffered damages. (FAC, ¶¶ 54-55.)
Plaintiff has alleged sufficient facts to overcome demurrer as to her fourth cause of action for common counts as against The Garage and Horton. As such, the demurrer to the fourth cause of action will be overruled as to The Garage and Horton.
Fifth Cause of Action for Unjust Enrichment:
The Garage and Horton demur to the fifth cause of action on the grounds that “it fails to state facts sufficient to state a cause of action, by reason of the fact that demurring co-defendants are not mentioned, identified, or accused even by inference as having been a contracting party, or in privity to any contracting party to any valid agreement, with respect to rents due under an invalid and expired contract, or personal property allegedly converted to demurring defendants, but which, in fact, was awarded to Demurring Defendant JONATHAN HORTON by Judge Anderle in
22FL01003, rather than acquired by a ‘wrongful act.’ ” (Notice of Demurrer, p. 8, ll. 2-9.) No additional argument or authority is provided in further support of The Garage and Horton’s demurrer to the fifth cause of action.
“The elements for a claim of unjust enrichment are “ ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’ ” [Citation.]” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1132.)
In addition to the allegations set forth above, plaintiff alleges:
“Defendants and each of them have received a benefit in the form of occupying the Premises for purposes of operating an auto repair shop.” (FAC, ¶ 57.) “Defendants and each of them have received a benefit in the form of removing from the Premises and retaining possession of Plaintiff’s Personal Property.” (FAC, ¶ 58.) “Defendants have received the above-described benefits without paying the reasonable costs thereof and at Plaintiff’s expense.” (FAC, ¶ 59.) “In subleasing the Premises to Defendants, Plaintiff was not acting as a volunteer and did so on condition that Defendants would pay rent and CAMs. Defendants agreed to pay rent and CAMs for the Premises, but then failed to do so and accepted the benefits of the Premises without paying therefor.” (FAC, ¶ 60.) “Defendants have been unjustly enriched by leasing the Premises without paying all rent and CAMs due Plaintiff, and by removing and retaining possession of the Personal Property without paying its market value to Plaintiff.” (FAC, ¶ 61.) Plaintiff has sustained damages. (FAC, ¶¶ 63-64.)
All of the elements of unjust enrichment have been pled. As described above, a reasonable inference, from the allegations and Exhibit 1, is that The Garage and Horton are the parties to which the cause of action applies. The Garage and Horton’s argument regarding the awarding of The Garage to Horton fails for the same reason that it fails in relation to the third cause of action. As such, the demurrer to the fifth cause of action will be overruled as to The Garage and Horton.