DESERT DEVELOPMENT, LLC v. AD-WAY SIGNS, INC.
Case No.: 1-12-CV-226964
DATE: January 21, 2014
TIME: 9:00 a.m.
DEPT.: 3
Plaintiff/Cross-Defendant’s Request for Judicial Notice of two documents 1) The original Cross-Complaint in this matter filed July 15, 2013, and; 2) This Court’s September 25, 2013 Order on the demurrer to the original Cross-Complaint is GRANTED pursuant to Evid. Code §452(d). Only the Court’s prior order is noticed as to the truth of its contents.
As an initial matter Plaintiff/Cross-Defendant is correct that Cross-Complainant has added new claims without prior leave of court. Accordingly the Court on its own motion pursuant to CCP §436(b) strikes the Amended Cross-Complaint’s newly added 2nd cause of action (Slander of Title), 3rd cause of action (Action to Cancel Instrument), and 5th cause of Action (Common Count). The Court also strikes the requests for punitive damages associated with the 2nd and 3rd causes of action listed in the Prayer. Cross-Complainant lost its right to freely amend once under CCP §472 after a ruling was made on the demurrer to the original cross-complaint. When a demurrer is sustained with leave to amend, the leave must be construed as permission to the pleader to amend the causes of action to which the demurrer has been sustained, not add entirely new causes of action. Patrick v. Alacer Corp. (2008) 167 Cal App 4th 995, 1015. To raise claims entirely unrelated to those originally alleged requires either a new lawsuit or a noticed motion for leave to amend. Absent prior leave of court an amended complaint raising new and different causes of action is subject to a motion to strike. Leave to amend to add these claims, or any other new claims, by any means other than a properly noticed motion for leave to amend or a stipulation between the parties is DENIED.
Plaintiff/Cross-Defendant’s demurrer to the 2nd, 3rd and 5th causes of action is deemed MOOT in light of the above ruling.
Plaintiff/Cross-Defendant’s demurrer to the Amended Cross-Complaint’s 4th cause of action for “Unjust Enrichment by Economic Duress, “ formerly the 3rd cause of action in the original Cross-Complaint, on the ground that it fails to state sufficient facts is SUSTAINED. It is now apparent that this claim is solely based on Plaintiff/Cross-Defendant’s alleged threat to file suit to seek to enforce its interpretation of the lease between the parties. See Amended Cross-Complaint at 43. As the Court previously explained in the prior order, “[t]he doctrine of ‘economic duress’ can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract. [Citation.] The party subjected to the coercive act, and having no reasonable alternative, can then plead ‘economic duress’ to avoid the contract. . . . When a party pleads economic duress, that party must have had no ‘reasonable alternative’ to the action it now seeks to avoid (generally, agreeing to a contract). If a reasonable alternative was available, and there hence was no compelling necessity to submit to the coercive demands, economic duress cannot be established. Whether the party asserting economic duress had a reasonable alternative is determined by examining whether a reasonably prudent person would follow the alternative course, or whether a reasonably prudent person might submit. [Citation.] Clearly this inquiry is a factual one, rarely if ever susceptible to determination on demurrer.” CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 644, emphasis added.
“The test in any case is whether the complaining party was or was not in a position to exercise his own will. If the unlawful threats overcome the will of the person threatened, and ‘induce him to do an act which he would not otherwise have done and which he was not bound to do,’ duress, as it is viewed today, is effectuated. (5 Williston on Contracts, sec. 1605.) It is not, however, unlawful to threaten to refuse to proceed under a contract or to pay what is due under it or what is otherwise due. Hence a threat to stand suit is not in the category of unlawful threats.” Sistrom v. Anderson (1942) 51 Cal.App.2d 213, 221, emphasis added. The facts alleged here do not support the claim A dispute over the terms of the lease or as to whether a lease has lapsed and been replaced by a month-to-month tenancy, etc. is not in and of itself unlawful or coercive. Parties have a right to avail themselves of the courts to resolve their disputes, including a dispute as to the terms of a lease. Threatening to exercise that right is not “wrongful conduct” and is not economic duress. Accordingly there is no wrongful conduct for which restitution might be required here that can support a claim of unjust enrichment. See also Durell v. Sharp Healthcare (2010) 183 Cal App 4th 1350, 1370 (as a matter of law, an unjust enrichment claim does not lie where the parties have an enforceable contract). Further leave to amend is DENIED. See Medina v. Safe-Guard Products (2008) 164 Cal App 4th 105, 112 fn. 8 (“As the Rutter practice guide states: ‘It is not up to the judge to figure out how the complaint can be amended to state a cause of action. Rather, the burden is on the plaintiff to show in what manner he or she can amend the complaint, and how that amendment will change the legal effect of the pleading.’”)
Plaintiff/Cross-Defendant’s demurrer to the Amended Cross-Complaint’s 7th cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing (formerly the 5th cause of action in the original cross-complaint) on the ground that it fails to state sufficient facts is SUSTAINED.
“The implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation. ‘The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract’s purpose.’ . . . ‘In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’ . . . There is no obligation to deal fairly or in good faith absent an existing contract. If there exists a contractual relationship between the parties . . . the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract.” Racine & Laramie, Ltd. v. Dept. of Parks & Recreation (1992) 11 Cal App 4th 1026, 1031-1032, internal citations omitted. See also Guz v. Bechtel National, Inc. (2000) 24 Cal 4th 317, 350 (“[The covenant] cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.”) “[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous.” Id. at 327.
With the improperly added claims stricken, this claim remains based almost entirely on the incorporated allegations of breach of contract and interference (which are based on the same alleged facts), does not reference any other specific contractual obligation or identify any other benefit that is being frustrated and thus fails to state a separate cause of action. The Court also notes that Cross-Complainant continues to make references to a violation of Bus. & Prof. Code §17200 without pleading any claim for unlawful business practices. Further leave to amend is DENIED.
Plaintiff/Cross-Defendant’s motion to strike the requests for punitive damages in the Prayer associated with the 2nd, 3rd and 4th causes of action are MOOT in light of the above rulings. The motion to strike to request for punitive damages in the Prayer associated with the 6th cause of action for intentional interference with prospective economic advantage is GRANTED with 10 days’ leave to amend. Plaintiff/Cross-Defendant has not demurred to this claim, so it is assumed to be properly stated. However the only surviving claims in the Amended Cross-Complaint are now the 1st cause of action for breach of contract, the 6th cause of action, and the 8th cause of action for Declaratory Relief. Even read as a whole, the surviving portions of the Amended Cross-Complaint do not support the conclusory allegation at 64 that “[t]he aforementioned acts of cross-defendant were willful and oppressive, fraudulent and malicious.”