Judge: Wesley L. Hsu, Case: 22STCV00831, Date: 2023-04-26 Tentative Ruling
Case Number: 22STCV00831 Hearing Date: April 26, 2023 Dept: L
1.
Defendant Stewart Design,
Engineering & Construction, Inc.’s DEMURRER TO PLAINTIFF’S FIRST AMENDED
COMPLAINT is SUSTAINED with leave to amend.
2.
Defendant Stewart Design,
Engineering & Construction, Inc.’s MOTION TO STRIKE PLAINTIFF’S FIRST
AMENDED COMPLAINT is GRANTED with leave to amend.
1. Defendant Carl W. Stewart II and
Carl W. Stewart III’s DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT is
SUSTAINED with leave to amend as to the ninth cause of action as to both
Defendants and the seventh and eighth cause of action as to Stewart III and
OVERRULED as to the seventh and eighth causes of action as to Stewart II.
3. Defendant Carl W. Stewart II and
Carl W. Stewart III’s MOTION TO STRIKE PLAINTIFF’S FIRST AMENDED COMPLAINT is GRANTED
with leave to amend.
Plaintiff
Reliance Development and Construction, Inc. (“Plaintiff”) alleges as follows:
In or about August 2021 and January 2022, Plaintiff entered into two written
architectural design agreements with Defendants Stewart Design, Engineering
& Construction Inc. (“Stewart Design”), Carl W. Stewart II (“Stewart II”),
Carl W. Stewart III (“Stewart III”), and RWA Group, Inc. dba Stewart Design and
Engineer Inc. (“RWA”) (collectively “Defendants”), wherein Defendants agreed to
provide design and structural plans for Plaintiff’s customers. Defendants
failed to provide the designs on time, failed to submit the designs to the
cities of Pasadena and Los Angeles, respectively, for approval in a timely
manner, failed to respond to Plaintiff’s concerns about design flaws, and
refused to conduct a site inspection unless Plaintiff agreed to pay triple the
agreed price. Defendant’s design plans did not consider the condition of the existing
home and resulted in “support issues” and “sagging.”
On
January 30, 2023, Plaintiff filed the operative First Amended Complaint
(“FAC”), asserting causes of action for:
1. Breach of Written Contract Dated on August 5,
2021
2. Breach Of Written Contract Dated
On January 8, 2022
3. Negligence
4. Breach of Fiduciary Duty of Care
5. Breach of Fiduciary Duty of Loyalty
6. Breach of Fiduciary Duty of Good
Faith And Fair Dealing
7. Unfair Competition- Fraudulent
Business Practices under Business & Professions Code § 17200 Et Seq.
8. Unfair Competition- Deceptive or
Misleading Advertising under Business & Professions Code § 17200 Et Seq.
9. Constructive Trust
Plaintiff’s
counsel was relieved on March 9, 2023 and an OSC re Representation of
Corporation is set for July 26, 2023.
ANALYSIS
2.
Defendant Stewart Design,
Engineering & Construction, Inc.’s DEMURRER TO PLAINTIFF’S FIRST AMENDED
COMPLAINT is SUSTAINED with leave to amend.
Defendant
Stewart Design demurs to the first seventh cause of action for unfair
competition, eighth cause of action for unfair competition, and ninth cause of
action for constructive trust based on failure to state a cause of action.
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 via proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not
the evidence or other extrinsic matters. Therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed.” (SKF
Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer
hearing is whether the complaint, as it stands, unconnected with extraneous
matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at 747.)
Unfair
Competition
The Unfair
Competition Law (“UCL”), Business and Professions Code sections 17200, et seq.
prohibits unfair competition, including unlawful, unfair, and fraudulent
business acts. (Feitelberg v. Credit
Suisse First Boston, LLC (2005) 134 Cal.App.4th 997, 1008-09.) The UCL covers a wide range of conduct, and
section 17200 borrows violations from other laws by making them independently
actionable as unfair competitive practices and a practice may be deemed unfair
even if not specifically proscribed by some other law. (Id. at 1009.) “Furthermore, under the abstention doctrine,
courts may decline to decide UCL claims where a regulatory or administrative
mechanism addresses the conduct at issue.
(Ibid.) Although the
notion of abstention in the context of the UCL “originally arose in cases
involving the intersection of federal and state law,” the notion applies more
broadly. (Ibid.) Furthermore, “because the remedies available
under the UCL, namely injunctions and restitution, are equitable in nature,
courts have the discretion to abstain from employing them.” (Ibid.)
California
law previously authorized “any person acting for the interests of … the general
public” to sue for relief for unfair competition notwithstanding lack of injury
or damages”; however, Proposition 64, approved by the voters at the November 2,
2004, General Election, changed the standing requirements for a UCL claim. (Hall v. Time Inc. (2008) 158
Cal.App.4th 847, 852.) A private person
now has standing to assert a UCL claim only if he or she (1) “has suffered
injury in fact,” and (2) “has lost money or property as a result of the unfair
competition.” (Hall, supra, at 852, citing Bus. & Prof. Code,
§ 17204.)
In 1992,
the Legislature amended section 17200 to expand the definition of unfair
competition to include “any unlawful, unfair, or fraudulent business act or
practice,” overruling former case law that had limited the statute’s
application to practices involving more than a single transaction. (Stop Youth Addiction, Inc. v. Lucky Stores,
Inc. (1998) 17 Cal.4th 553, 570, emphasis in original, superseded by
Proposition 64 on unrelated grounds described above.)
Here, Defendant
Stewart Design argues that Plaintiff has failed to allege any unlawful, unfair,
or fraudulent act and that the allegations show it was Plaintiff’s own mistake
for thinking and assuming it was signing a contract with a different
corporation.
Based on
the allegations, the Court finds that Plaintiff has not alleged the UCL causes
of action against Defendant Stewart Design with the requisite specificity.
Plaintiff alleges that the customer was not aware of the creation of RWA Group,
Inc. before signing and that Defendants created it to shelter its liability
from professional misconduct but this is not specific enough to show how the
conduct was unlawful, unfair, or fraudulent to cause damages.
Plaintiff
has not opposed.
Accordingly,
the demurrer to the seventh and eighth causes of action are SUSTAINED with
leave to amend.
Constructive
Trust
“One who
gains a thing by fraud, accident, mistake, undue influence, the violation of a
trust, or other wrongful act, is, unless he or she has some other and better
right thereto, an involuntary trustee of the thing gained, for the benefit of
the person who would otherwise have had it.” (Civ. Code, § 2224; see Optional
Capital, Inc. v. Das Corporation (2014) 222 Cal.App.4th 1388, 1402.) To
create a constructive trust, there must be: (1) the existence of property or
some interest in the property; (2) the plaintiff’s right to that property; and
(3) the defendant’s acquisition of the property by some wrongful act. (Optional
Capital, Inc., supra, 222 Cal.App.4th at 1402.)
Further,
the imposition of a constructive trust is a remedy, not a cause of action. (See
Kim v. Westmoor Partners, Inc. (2011) 201 Cal.App.4th 267, 277 n.4; Stansfield
v. Starkey (1990) 220 Cal.App.3d 59, 76.)
Defendant
Stewart Design argues that Plaintiff does not allege it has an immediate right
to the money, and can’t because Plaintiff admits services were performed but
negligently. Thus, Plaintiff’s remedy lies in its damages claims, not in a
claim that it has a present and immediate right to the fees it paid. The Court
agrees and further, this is not a cause of action but a remedy.
Plaintiff
has not opposed.
Accordingly,
the demurrer to the ninth cause of action is SUSTAINED without leave to amend.
3.
Defendant Stewart Design,
Engineering & Construction, Inc.’s MOTION TO STRIKE PLAINTIFF’S FIRST
AMENDED COMPLAINT is GRANTED with leave to amend.
The
court may, upon a motion made pursuant to Section 435, or at any time in its
discretion, and upon terms it deems proper, strike out any irrelevant, false,
or improper matter inserted in any pleading or strike out all or any part of
any pleading not drawn or filed in conformity with the laws of this state, a
court rule, or an order of the court.
(CCP § 436.) The grounds for a
motion to strike must appear on the face of the pleading under attack, or from
matter which the court may judicially notice (e.g., the court's own files or
records). (CCP § 437.)
Defendant
Stewart Design moves to strike attorney’s fees from the prayer of the FAC.
California
Code of Civil Procedure section 1021 provides for attorney’s fees specifically
provided by statute or by agreement between the parties. (CCP § 1021.)
Plaintiff
has failed to identify a statute or contract that provides for fees and has not
opposed the motion. Accordingly, the motion to strike is GRANTED with leave to
amend.
4. Defendant Carl W. Stewart II and
Carl W. Stewart III’s DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT is
SUSTAINED with leave to amend as to the ninth cause of action as to both
Defendants and the seventh and eighth cause of action as to Stewart III and
OVERRULED as to the seventh and eighth causes of action as to Stewart II.
Defendants
Stewart II and Stewart III demur to the same causes of action as Stewart Design
and make the same arguments, seemingly verbatim.
As to
the UCL claims, the Court finds that there is a lack of sufficient allegations
against Stewart III to show unlawful, unfair, or fraudulent conduct resulting
in damages as discussed above. However as to Stewart II, Plaintiff has alleged
that Stewart II represented himself as a licensed architect to induce Plaintiff
to sign the agreement but is not licensed. (FAC, ¶¶43-44.) Accordingly, this
allegation appears sufficient at this pleading stage to support a UCL claim
against Stewart II.
Accordingly,
the demurrer to the seventh and eighth causes of action are SUSTAINED with
leave to amend as to Stewart III and OVERRULED as to Stewart II.
As to
the constructive trust claim, the demurrer is SUSTAINED with leave to amend for
the same reasons as set forth above in the Stewart Design demurrer ruling.
5. Defendant Carl W. Stewart II and
Carl W. Stewart III’s MOTION TO STRIKE PLAINTIFF’S FIRST AMENDED COMPLAINT is
GRANTED with leave to amend.
Defendants
Stewart II and Stewart III move to strike attorney’s fees from the prayer int
eh FAC. For the same reasons as set forth above in the Stewart Design motion to
strike ruling, the motion is GRANTED with leave to amend.