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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA BARBARA
Dated and Entered: January 27, 2016 Time: 9:30 AM
Judicial Officer: James E Herman
Deputy Clerk: Kristi Temple Dept: SB Dept 1
Deputy Sheriff: Sandy Frausto
Court Reporter: Michelle Sabado Case No: 1417847
Patsy Moler vs Chris Hulme
Parties Present:
Michael Ring Plaintiff'sAttorney
Jeffrey Bennion Defendants Attorney
NATURE 0F PROCEEDINGS: Demurrer
The Court has re-reviewed the cases cited by counsel at the last hearing and hereby adopts its tentative
ruling, which follows. The tentative ruling is modified in that Defendant has 20 days leave to amend and
Plaintiff has 3O days to answer.
The following hearing was scheduled:
March 23, 2016 at 8:30 AM
Case Management Conference/T rial Setting
Herman, James E
SB Dept 1
The Trial Confirmation of March 2, 2016 was vacated.
TENTATIVE RULING (adopted with modification as stated above): Plaintiffs demurrer to the
common count cause of action in Clearview’s second amended cross-complaint is sustained with leave
to amend. Plaintiff's demurrer to the fraud cause of action is overruled. Clearview shall have to and
including January 27, 2016 to filean amended pleading.
BACKGROUND:
Plaintiff Patsy Moler is the owner of real property located at 502 Las Alturas, Santa Barbara, California.
In 2011, plaintiffhired defendants Chris Hulme and Jennifer Hulme, individually and dba Clearview
Industries, Inc.,to construct a single family home on plaintiff's property. Plaintiff alleges that defendants
completed the work in a substandard manner and billed for goods and services in excess of what was
actually provided on the property. Plaintiff'sfirst amended complaint, filed on September 29, 2015,
alleges causes of action against defendants for (1) breach of contract, (2) fraud, (3) unjust enrichment,
(4) money had and received, (5) violation of Business and Professions Code Section 7159, and (6)
disgorgement of allcompensation for violation of Business and Professions Code Section 7031.
On December 8, 2015, Clearview Industries, Inc. filed a second amended cross-complaint (“SACC”)
against plaintiff for common counts (open book account; work, labor, services, and materials rendered
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and for which plaintiff promised to pay; and goods sold and delivered for which plaintiff agreed to pay a
reasonable value) and fraud. Plaintiff now demurs to the common count and fraud claims on the grounds
that they do not state facts sufficient to constitute a cause of action and are uncertain.
ANALYSIS:
California law requires a complaint ina civilaction to contain a statement of the facts constituting the
cause of action in ordinary and concise language and a demand for relief to which the plaintiff claims to
be entitled. Code Civ. Proc. §425.10, subd. (a). “What is necessary to state a cause of action are the
facts warranting legal relief. .. Alfaro v. Community Housing Improvement System & Planning
Association, Inc. (2009) 171 Cal.App.4th 1356, 1371. Where the complaint does not state facts sufficient
to constitute a cause of action, a demurrer to the pleading will be sustained. Code Civ. Proc. §430.10,
subd. (e).A demurrer will also be sustained where the complaint is “uncertain.” Code Civ. Proc. §430.10,
subd. (f).
Plaintiff challenges Clearview's first cause of action for open book account and for the reasonable value
of labor and materials provided on the ground that Clearview islegally prevented from pursuing the
common count allegations. Under Business and Professions Code Section 7031, subdivision (a), a
contractor is prohibited from bringing or maintaining an action to recover compensation for the
performance of work requiring a license unless he or she was a duly licensed contractor during the
performance of the work. The statute reads:
“[N]o person engaged in the business or acting in the capacity of a contractor, may bring or maintain any
action, or recover in law or equity in any action, in any court of this state for the collection of
compensation for the performance of any act or contract where a license is required by this chapter
without alleging that he or she was a duly licensed contractor at all times during the performance of that
act or contract, regardless of the merits of the cause of action brought by the person .. .
Bus. & Prof. Code §7031, subd. (a), italics added.
Here, Clearview has not alleged anywhere in the SACC that itwas a licensed contractor during the
performance of its work for plaintiff.Clearview acknowledges in itsopposition (Opp., p. 318-9) that it has
not pleaded its licensure, but argues that this omission has been corrected in form paragraph 3.a.(1) of
its proposed third amended cross-complaint wherein it is alleged that Clearview is “a corporation
qualified to do business in California." (Opp., Ex. 1, Proposed Third Amended Cross-Complaint,
1]3.a.(1).) However, the mere fact that a corporation is qualified to do business in California does not
mean that it is also licensed to do particular types of work, such construction, painting, or landscaping.
See, Latipac, Inc. v. Superior Court (1966) 64 Cal.2d 278, 285 (a corporation qualifies for a license by
demonstrating that its managing officer has qualified for the same license classification). Accordingly,
even if the proposed third amended cross-complaint were the operative pleading, which it is not, it would
be insufficient.
Plaintiff argues that Clearview cannot plead that it was licensed during the time it worked on plaintiff's
property because its owner, defendant Chris Hulme, has already admitted ina sworn declaration filed in
support of defendants‘ summary judgment motion that Clearview was not licensed. Plaintiff asks the
court to take judicial notice of Hulme's declaration filed on June 10, 2015. Hulme's declaration, however,
does not support plaintiff's position. Hulme states that “[d]uring the course of the project .. . [a]llof the
landscaping work was done under [the direction of Paul Speed, a licensed landscaper] or under the
direction of other licensed landscape consultants until Clearview obtained its landscaping license." (Ptf.
RJN, Ex. A, 117.) Hulme also states that “true and correct copies of the contractor's licenses held by
Clearview [and] issued by the California Contractor's State Licensing Board“ are attached to defendants‘
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notice of Iodgment of documents. (Ptf. RJN, Ex. A, 1124.)
Plaintiff'sdemurrer to Clearview’s common count cause of action will therefore be sustained with leave to
amend.
Clearview’s second cause of action is for fraud based on a false promise. Plaintiff claims that this isnot a
valid cause of action, but the court disagrees. Fraud based on a false promise is specifically codified in
Civil Code Sections 1709 and 1710. Section 1709 provides:
“FRAUDULENT DECEIT. One who willfully deceives another with intent to induce him to alter his
position to his injury or risk, is liablefor any damage which he thereby suffers."
Section 1710 provides:
“DECEIT, WHAT. A deceit, within the meaning of the last section, is either:
“1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;
“2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing
itto be true;
“3. The suppression of a fact, by one who is bound to disclose it,or who gives information of other facts
which are likely to mislead for want of communication of that fact;
“4. A promise, made without any intention of performing it."
(Italicsadded.)
The case law also supports the existence of such a cause of action. ‘“Promissory fraud’ is a subspecies
of fraud and deceit. A promise to do something necessarily implies the intention to perform; hence,
where a promise is made without such intention, there is an implied misrepresentation of fact that may be
actionable fraud. [Citations] [1]]An action for promissory fraud may lie where a defendant fraudulently
induces the plaintiff to enter into a contract." Engalla v. Permanente Medical Group, Inc. (1997) 15
Cal.4th 951, 973-974, quoting Lazar v Superior Coun‘ (1996) 12 Cal.4th 631, 628; see also, Beckwith v.
Dah/ (2012) 205 Cal.App.4th 1039, 1060 (in a promissory fraud action, the complaint must allege (1) the
defendant made a representation of intent to perform some future action, the
i.e., defendant made a
promise, and (2) the defendant did not really have that intent at the time that the promise was made).
Clearview’s second cause of action alleges that plaintiff induced Clearview to enter into an agreement to
perform construction work on her property, but never had any intention of paying for all of the work.
Clearview alleges:
“Clearview Industries, Inc. performed a lengthy and expensive series of projects at [plaintiffs] property.
Clearview was required to front expenses for materials and labor based on an agreement that [plaintiff]
would promptly reimburse said expenses. Beginning around February 2013, [plaintiff]stopped paying her
bills,did not intend to pay any future bills,but continued to ask Clearview to provide labor and front
expenses for materials, and misrepresented to Clearview that they would be reimbursed for their work."
(SACC, 1]FR-4.a.)
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Clearview further alleges:
“[Plaintiff's]promise without any intention of performance was made with the intent to defraud and induce
[Clearview] to rely upon it and to act as described in item FR-5. At the time [Clearview] acted, [Clearview]
was unaware of [plaintiff's]intention not to perform the promise. [Clearview] acted in justifiable reliance
upon the promise.“
(SACC, 1IFR-4.b.)
Clearview further alleges:
"In justifiable reliance upon [plaintiff's]conduct, [Clearview] was induced to . ..front[] expenses for
materials and labor and continued to provide services at [plaintiff's]property.”
(SACC, 1IFR-5.)
Finally, Clearview alleges:
“Because of [Clearview's] reliance upon [plaintiff's]conduct, [Clearview] has been damaged .. .for the
value of services and materials, according to proof."
(sAcc, 1IFR-6.)
These are sufficient allegations of fraud based on a false promise and plaintiff's demurrer to the second
cause of action in the SACC will be overruled.
DARREL E. PARKER, EXECUTIVE OFFICER Minutes Prepared by:
KristiTemple , Deputy
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