Preview
Aimee Wong (State Bar No. 179369)
aimee@udellwang.com Electronically Filed
UDELL WANG LLP 9/9/2020 1:51 PM
445 South Figueroa Street, Suite 2250 Superior Court of California
Los Angeles, CA 90071 County of Stanislaus
Telephone: (213) 988-7059 Clerk of the Court
By: Kimberly Mean, Deputy
Attorneys for Defendant
ALBERTSON’S LLC $90 PD
SUPERIOR COURT OF CALIFORNIA
COUNTY OF STANISLAUS
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SAVE MART SUPERMARKETS, a CASE NO. CV-20-000721
11 California corporation,
[Assigned for all purposes to the Honorable
12 Plaintiff, Sonny S. Sandhu, Dept. 24]
13 VS.
DEFENDANT ALBERTSON’S LLC’S
14 ALBERTSON’S LLC, a Delaware limited NOTICE OF DEMURRER AND
liability company; and DOES | through 10, DEMURRER TO PLAINTIFF’S FIRST
15 inclusive, AMENDED COMPLAINT;
MEMORANDUM OF POINTS AND
16 Defendants. AUTHORITIES IN SUPPORT THEREOF;
DECLARATION OF AIMEE Y. WONG IN
17 SUPPORT OF MEET AND CONFER
EFFORTS PURSUANT TO CODE OF
18 CIVIL PROCEDURE SECTION 430.41
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Date: October 6, 2020
20 Time: 8:30 a.m.
Judge: Sonny S. Sandhu
21 Dept.: 24
22 [Action Filed: January 30, 2020]
23 [Trial Date: None Set]
24 [Filed Concurrently with Request for Judicial
Notice and [Proposed] Order]
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
TABLE OF CONTENTS
NOTICE OF DEMURRER
DEMURRER
MEMORANDUM OF POINTS AND AUTHORITIES
I INTRODUCTION AND SUMMARY OF FACTS
IL THE DEMURRER SHOULD BE SUSTAINED BECAUSE THE COMPLAINT
FAILS TO ALLEGE ANY VALID CAUSE OF ACTION AGAINST
ALBERTSONS
A. The First Cause of Action for Breach of Contract Fails to Allege a Critical
Fact to Establish the Breach of Section 8.2(a)(iii) of the SPA
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B Save Mart’s Second Cause of Action for Reformation Fails Because There
11 Was No Mutual Mistake at the Time Albertsons and Save Mart Entered
into the SPA 11
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Save Mart’s Third Cause of Action for Specific Performance Fails as a
13 Matter of Law. 14
14 Save Mart’s Fourth Cause of Action for Breach of Reformed Contract Is
Based on the Reformed SPA and Therefore Fails as a Matter of Law 15
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Because Consideration Was Received for the SPA, Save Mart is
16 Precluded from Alleging a Claim for Promissory Estoppel 15
17 Til. LEAVE TO AMEND SHOULD BE DENIED BECAUSE SAVE MART
CANNOT ALLEGE VALID CAUSES OF ACTION AGAINST ALBERTSONS 16
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IV. ALBERTSONS COMPLIED WITH THE MEET AND CONFER
19 REQUIREMENTS UNDER CODE OF CIVIL PROCEDURE SECTION 430.41 17
20 Vv. CONCLUSION 18
21 DECLARATION OF AIMEE Y. WONG 19
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
TABLE OF AUTHORITIES
Cases
Page(s)
Andonagui v. May Dept. Stores Co.
(2005) 128 Cal.App.4th 435
Bailard v. Marden
(1951) 36 Cal.2d 703 12
Barroso v. Ocwen Loan Servicing, LLC
(2012) 208 Cal.App.4" 1001 15
10 Blackburn yv. Charnley
(2004) 117 Cal.App.4" 758 15
11
Blank v. Kirwan
12 (1985) 39 Cal.3d 311
13
Cottle v. Gibbon
14 (1962) 200 Cal.App.2d 1 12, 14
15 Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968
16
17 Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc.
(2012) 211 Cal.App.4th 230 8, 15
18
Fontenot v. Wells Fargo Bank, N.A.
19 (2011) 198 Cal.App.4th 256 16
20
George v. Automobile Club of Southern California
21 (2012) 201 Cal.App.4th 1112, 12
22 Goodman v. Kennedy
(1976) 18 Cal.3d 335 16
23
24 Hess v. Ford Motor Co.
(2002) 27 Cal.4th 520 11
25
McDonald v. Superior Court
26 (1986) 180 Cal.App.3d 297 16
27
28
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
TABLE OF AUTHORITIES (Cont.)
Cases
Page(s)
Mercury Cas. Co. v. Superior Court
(1986) 179 Cal.App.3d 1027 16
Serrano v. Priest
(1971) 5 Cal.3d 584
Thayer Plymouth Center, Inc. v. Chrysler Motor Corp.
(1967) 255 Cal.App.2d 300
10 Thrifty Payless, Inc. v. Americana at Brand, LLC
(2013) 218 Cal.App.4th 1230 7,12
11
Youngman vy. Nevada Irrigation Dist.
12
(1969) 70 Cal.2d 240 15
13
Yvanova v. New Century Mortgage Corp.
14 (2016) 62 Cal.4th 919 16
15
Statutes
16
17 California Code of Civil Procedure
18 § 430.10
§ 430.10(e) 1,4,6,9
19 § 430.41 17
§ 430.41(a) ... 17
20 § 430.41 (a)(1)) . 17
21 § 430.41(a)(2) ... 17
§ 430.41(a)(3)(A) 17
22
Civil Code §3399 ooo. ecceeceeessseseessessessseesssessesssessssesseassessssesssacscsseseseeasssseeessseesseseeeeeeee 7, 11, 12
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that on October 6, 2020, at 8:30 a.m., or as soon thereafter as
the matter may be heard in Department 24 of the above-entitled Court, located at 801 10" Street,
Modesto, California 95354, Defendant Albertson’s LLC (“Albertsons” or “Defendant”) will, and
hereby does, demur to the First Amended Complaint (the “Complaint”) filed by Plaintiff Save
Mart Supermarkets (“Save Mart” or “Plaintiff”)
The Demurrer follows the conference of counsel under Code of Civil Procedure Section
430.41, as explained in the attached Declaration of Aimee Y. Wong.
This Demurrer is brought pursuant to Code of Civil Procedure section 430.10(e) on the
10 ground that each and every one of the causes of action alleged in the Complaint fail to state facts
11 sufficient to constitute a legally cognizable cause of action against Albertsons. (Cal. Code Civ.
12 Proc. §430.10(e)).
13 Save Mart’s first cause of action alleges that Albertsons breached Section 8.2(a)(ili) of
14 the Securities Purchase Agreement dated November 20, 2006 (the “SPA”) because Albertsons
15 failed to indemnify Save Mart for damages arising from Albertsons’ alleged failure to transfer
16 the lease of a Lucky’s store located in St. Petersburg, Florida (the “St. Petersburg Lease”) to
17 Albertsons prior to closing on the SPA in 2006. (Request for Judicial Notice (“RJN”), Ex. 1,
18 Complaint, §{[19-26). Section 8.2(a)(iii) applies only to contracts or obligations transferred or
19 “required to be so transferred, assumed or terminated, pursuant to Section 5.2(a)” of the SPA.
20 (dd., 414). Therefore, to establish a claim for indemnity under Section 8.2(a)(iii), Save Mart must
21 show that Albertsons breached Section 5.2(a) of the SPA, which required Albertsons to transfer
22 “(iv)...all leases relating to the stores listed on Schedule 3.19...” back to Albertsons or an
23 Albertson’ subsidiary prior to the Closing Date. (/d., 411).
24 The Complaint fails to allege a critical fact - that the St. Petersburg Lease was listed on
25 Schedule 3.19 of the SPA. The allegation cannot be made because the St. Petersburg Lease was
26 not listed on Schedule 3.19 and there was no obligation to transfer the Lease pursuant to Section
27 5.2(a) of the SPA. Because Albertsons did not breach Section 5.2(a) of the SPA, its alleged
28 indemnity obligation falls outside the scope of Section 8.2(a)(ili). Therefore, Save Mart’s first
DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
cause of action for breach of contract, which is based on the alleged breach of Section 8.2(a)(iii)
of the SPA, fails as a matter of law.
With its second cause of action, Save Mart seeks to reform the SPA on the ground of
mutual mistake. To reform a contract based on mutual mistake, Save Mart must show that the
SPA fails to express the mutual understanding of Save Mart and Albertsons at the time they
entered into the SPA. (Civ. Code §1636 and 3399; Thrifty Payless, Inc v. Americana at Brand,
LLC (2013) 218 Cal.App.4th 1230, 1243-1244).
Here, Save Mart seeks to re-write the indemnity provision in the SPA in order to remove
the $1.5 million floor for liabilities incurred by Save Mart resulting from Albertsons’ alleged
10 failure to transfer the St. Petersburg Lease. But, there is no claim that the indemnity provision in
11 Section 8.4 and the sole remedy provision in Section 8.8 fails to express the mutual
12 understanding of the parties at the time they entered into the SPA. The Complaint, as amended,
13 alleged that Save Mart and Albertsons mistakenly believed that Albertsons had discovered the
14 existence of and identified all stores that had to be transferred and that Albertsons had actually
15 transferred all such stores prior to closing on the SPA. (RJN, Ex. 1, Complaint, §38).
16 These alleged mistakes have nothing whatsoever to do with the indemnity language in
17 Section 8.4 of the SPA or the sole remedy provision in Section 8.8 of the SPA. The alleged
18 “mistakes” relate to Albertsons’ alleged failure to identify and transfer the St. Petersburg Lease
19 and not a mistake in drafting either Section 8.4 or 8.8 of the SPA. While the failure to identify
20 and transfer the St. Petersburg Lease may arguably serve as the basis for a breach of contract
21 claim, it does not serve as a basis to reform the indemnity provision in the SPA. Therefore, Save
22 Mart’s second cause of action for reformation fails as a matter of law. Because there is no basis
23 to reform the SPA, the fourth cause of action for breach of the reformed SPA also fails.
24 The third cause of action alleges a claim for specific performance of Section 8.2(a)(iii) or
25 alternatively, the reformed SPA. The entire cause of action fails because Save Mart has an
26 adequate remedy at law, i.e., money damages, for the alleged breach of the SPA or the reformed
27 SPA. (Morrison v. Land (1915) 169 Cal. 580, 586, 587).
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Save Mart’s fifth cause of action for promissory estoppel also fails because promissory
estoppel is only available in the absence of a valid and enforceable contract and presumes a lack
of consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th
230, 242-245). Because there is a valid and enforceable contract between Save Mart and
Albertsons, i.e. the SPA, and there was consideration for the SPA, a cause of action for
promissory estoppel is precluded as Save Mart can sue for breach of the SPA.
This Demurrer is based on this Notice, the Demurrer, the Memorandum of Points and
Authorities, the Declaration of Aimee Y. Wong, the concurrently filed Request for Judicial
Notice, the [Proposed] Order, the files and records in this action, and upon such other and further
10 pleadings, papers or argument as may be presented to the Court prior to, or at the hearing on this
11 Demurrer.
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Dated: September8, 2020 UDELL WANG LLP
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Aimee Y. Wong
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Attorneys for Defendant
16 ALBERTSON’S LLC
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
DEMURRER
Defendant Albertson’s LLC (“Albertsons”) hereby demurs to the First Amended
Complaint (the “Complaint”) filed by Plaintiff Save Mart Supermarket (“Save Mart”) on the
following grounds:
Demurrer to the First Purported Cause of Action
(Breach of Contract)
1 The first purported cause of action for breach of contract does not state facts
sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)).
Demurrer to the Second Purported Cause of Action
10 (Reformation Based on Mutual Mistake, Cal. Civ. Code §3399)
11 2. The second purported cause of action for reformation based on mutual mistake
12 does not state facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)).
13 Demurrer to the Third Purported Cause of Action
14 (Specific Performance to Compel Indemnification and Payment of Damages)
15 3 The third purported cause of action for specific performance to compel
16 indemnification and payment of damages does not state facts sufficient to constitute a cause of
17 action. (Cal. Code Civ. Proc. § 430.10(e)).
18 Demurrer to the Fourth Purported Cause of Action
19 (Breach of Reformed Contract)
20 4 The fourth purported cause of action for breach of reformed contract does not
21 state facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)).
22 Demurrer to the Fifth Purported Cause of Action
23 (Promissory Estoppel)
24 5 The fifth purported cause of action for promissory estoppel does not state facts
25 sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)).
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Dated: September 8, 2020 UDELL WANG LLP
an
By:
Aimee Y. Wong
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Attorneys for Defendant
ALBERTSON’S LLC
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
MEMORANDUM OF POINTS AND AUTHORITIES
I INTRODUCTION AND SUMMARY OF FACTS.
In lieu of opposing Defendant Albertson’s LLC’s Demurrer to the original Complaint,
Plaintiff Save Mart Supermarket (“Save Mart”) filed a First Amended Complaint in an attempt
to cure the defects in the original Complaint. However, like the original Complaint, the First
Amended Complaint (the “Complaint”) fails to allege facts sufficient to support Save Mart’s
causes of action for breach of contract, reformation, specific performance, breach of reformed
contract and promissory estoppel against Albertsons. (Cal. Code Civ. Proc. § 430.10(e)).
Accordingly, this Demurrer should be sustained without leave to amend.
10 On or about November 20, 2006, Albertsons, as seller, and Save Mart, as buyer, entered
11 into a Securities Purchase Agreement (the “SPA”) whereby Albertsons agreed to sell to Save
12 Mart all open stores under the “Lucky 9gs banner in Northern California and Nevada only.
13 (Request for Judicial Notice (“RJN”), Ex. 1, Complaint, 48). Pursuant to the SPA, Save Mart’s
14 purchase of the Lucky’s stores would close after Albertsons transferred all Lucky’s stores
15 located outside Northern California and Nevada to Albertsons or one of its subsidiaries. (/d.,
16 4410, 12).
17 Albertsons, however, failed to transfer a former Lucky’s stores in St. Petersburg, Florida
18 (the “St. Petersburg Lease’) to Albertsons prior to closing. (/d., §19). On March 27, 2018, the
19 current tenant occupying the premises under the St. Petersburg Lease filed for bankruptcy. (/d.,
20 20). The landlord, Brixmor Skyway Plaza, LLC (“Brixmor”), sued Lucky’s to recover amounts
21 due under the St. Petersburg Lease (the “Brixmor Matter”). (/d.)
22 Pursuant to the indemnification provision in the SPA, Save Mart tendered its claim for
23 damages relating to the Brixmor Matter to Albertsons. (/d., 421). Albertsons denied the claim on
24 the ground that the indemnification provision in Section 8.4(a) of the SPA requires Albertsons to
25 indemnify Save Mart only for damages exceeding $1.5 million. (/d., §{915, 22). Section 8.4(a) of
26 the SPA states:
27 “Neither Seller [Albertsons] nor Purchaser [Plaintiff] will
be required to indemnify any Purchaser Indemnified Party
28 or Seller Indemnified Party, respectively, pursuant to
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Section 8.2(a)(i) or (ii) (other than for breaches of Sections
3.1, 3.2, 3.3, 3.13 or 3.19(d)) or Section 8.3(a)(i) or (ii)
(other than for breaches of Sections 4.1 or 4.2),
respectively, (i) unless and until the aggregate of all
Damages (as defined in the applicable agreement) suffered
by the Purchaser Indemnified Parties or the Seller
Indemnified Parties, respectively, under this Agreement
and the Real Estate Agreement exceeds $1,500,000 and
then only for such excess amount...” (/d., §15).
Ultimately, the Brixmor Matter settled for $290,000.00 and the St. Petersburg Lease was
terminated. (/d., §25). Because the Brixmor Settlement did not exceed $1.5 million,! Albertsons
has no obligation to defend or indemnify Save Mart for the Brixmor Matter. The amount of the
Brixmor Matter settlement will however reduce the $1.5 million floor accordingly (for purposes
10 of future indemnity claims.
11 Save Mart amended its original Complaint to allege a new cause of action for breach of
12 contract on the ground that Albertsons breached Section 8.2(a)(iii) of the SPA by failing to
13 indemnify Save Mart for the Brixmor Settlement. (/d., §{]27-33). Section 8.2(a)(ili) is triggered
14 only if Albertsons breached its obligation under Section 5.2(a) of the SPA which required
15 Albertsons to transfer “‘all leases relating to the stores listed on Schedule 3.19.” (/d., 4911, 14).
16 There is no allegation in the Complaint that the St. Petersburg Lease was listed on Schedule 3.19
17 (and such an allegation cannot be made because the Lease was not listed on Schedule 3.19).
18 Because there is no such allegation, Save Mart cannot allege that Albertsons breached Section
19 5.2(a) and therefore, Albertsons had no obligation to indemnify pursuant to Section 8.2(a)(iii).
20 Accordingly, the first cause of action for breach of contract fails as a matter of law.
21 Further, despite the clear language in the SPA obligating Albertsons to indemnify Save
22 Mart only for damages that exceed $1,500,000, Save Mart now seeks to reform the SPA on the
23 ground of mutual mistake. However, Save Mart can be awarded relief only if it can show that the
24 SPA fails to express the mutual understanding of the parties at the time of contracting. (Civil
25 Code §3399; Thrifiy Payless, Inc. v. Americana at Brand, LLC (2013) 218 Cal.App.4" 1230,
26 1243-1244).
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' Save Mart has not alleged that the $1.5 million floor has been used up, in part or in total, by
28 previous indemnity claims.
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Save Mart’s claim for reformation based on mutual mistake fails as a matter of law
because there is no claim that Sections 8.4 and 8.8 of the SPA fails to express the mutual
understanding of the parties at the time they entered into the SPA. Save Mart’s Complaint now
alleges there were two “mistakes”, whereby both Save Mart and Albertsons mistakenly believed
that: (1) Albertsons had identified the St. Petersburg Lease at the time the parties entered into the
SPA; and (2) Albertsons had taken the necessary steps to assume the St. Petersburg Lease prior
to closing on the SPA. (RJN, Ex. 1, Complaint, 439). These alleged “mistakes” had nothing
whatsoever to do with any actual mistake in the drafting of Sections 8.4 and 8.8 of the SPA.
Because there is no allegation that there was a mistake in drafting Sections 8.4 and 8.8 of the
10 SPA or that it failed to express the mutual understanding of the parties at the time of contracting,
11 there is no basis to reform Sections 8.4 and 8.8, and Save Mart’s claim fails as a matter of law.
12 Because Save Mart cannot allege a claim for mutual mistake, its fourth cause of action
13 for breach of reformed contract also fails. If the Demurrer as to the second cause of action for
14 reformation is sustained, then the Demurrer to the fourth cause of action must also be sustained.
15 In addition, Save Mart’s third cause of action for specific performance of Section
16 8.2(a)(iii) or alternatively, the reformed SPA, also fails because specific performance is
17 precluded if an adequate remedy exists at law and if money damages afford adequate relief.
18 (Thayer Plymouth Center, Inc. v. Chrysler Motor Corp. (1967) 255 Cal.App.2d 300, 306). Save
19 Mart has an adequate remedy at law, i.e., money damages, thereby precluding its cause of action
20 for specific performance.
21 Save Mart’s fifth cause of action for promissory estoppel is also defective. Promissory
22 estoppel is available in the absence ofa valid and enforceable contract and presumes a lack of
23 consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4" 230,
24 242-245). Because Albertsons and Save Mart entered into the SPA, there is a valid and
25 enforceable contract between the parties. Therefore, Save Mart’s claim for promissory estoppel
26 is barred.
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Because of these defects, each and every one of the causes of action in the Complaint fail
to allege facts sufficient to state a cause of action. Accordingly, Albertsons respectfully requests
that its Demurrer be sustained, without leave to amend.
IL. THE DEMURRER SHOULD BE SUSTAINED BECAUSE THE COMPLAINT
FAILS TO ALLEGE ANY VALID CAUSE OF ACTION AGAINST
ALBERTSONS.
A demurrer tests the legal sufficiency ofa complaint. (Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 995). A demurrer challenges defects that appear on the face of a
pleading, or from matters outside the pleadings that are judicially noticeable. (Blank v. Kirwan
10 (1985) 39 Cal.3d 311, 318).
11 Under Code of Civil Procedure section 430.10, a party may object by demurrer to a
12 pleading on the ground that the pleading “does not state facts sufficient to constitute a cause of
13 action.” A demurrer admits the truth of all material facts properly pleaded, but not any of the
14 contentions, deductions or conclusions of fact or law alleged in the complaint. (Andonagui v.
15 May Dept. Stores Co. (2005) 128 Cal.App.4th 435, 439 (citing Serrano v. Priest (1971) 5 Cal.3d
16 584, 591)). A court must grant a demurrer where a plaintiff fails to plead facts sufficient to
17 constitute a cause of action against a defendant. (Code Civ. Proc. §430.10(e)).
18 A. The First Cause of Action for Breach of Contract Fails to Allege a Critical Fact
19 to Establish the Breach of Section 8.2(a)(iii) of the SPA.
20 Save Mart’s first cause of action for breach of contract alleges that Albertsons failed to
21 indemnify Save Mart pursuant to Section 8.2(a)(iii) of the SPA for all damages arising from
22 Albertsons’ alleged failure to transfer the St. Petersburg Lease as required by Section 5.2(a) of
23 the SPA. Save Mart’s first cause of action fails to state a claim against Albertsons because its
24 alleged indemnification obligation falls outside the scope of Section 8.2(a)(iii).
25 Section 8.2(a)(iil) states that Albertsons must indemnify Save Mart from any damages
26 arising from “[t]he assets, liabilities, obligations and contracts transferred from LSI or assumed
27 by Seller or one or more of its Subsidiaries (other than LSI or LSID) or terminated on behalf of
28 LSI, or required to be so transferred, assumed or terminated, pursuant to Section 5.2(a).” (RJN,
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Ex. 1, Complaint, 414). Section 8.2(a)(iii) is triggered only if there has been a breach of Section
5.2(a) of the SPA. Section 5.2(a) states:
Prior to the Closing Date, Seller [Albertsons] will (1) cause (i) all
cash (other than Store Cash) and marketable securities and similar
investments, and all intercompany accounts held by LSI and owing
by or to Seller or a Subsidiary other than LSI, (ii) all capital stock
of the Transferred Subsidiaries, (iii) accounts receivable relating to
all stores other than the Purchased Stores, and (iv) all owned real
property other than the Real Property and all leases relating to the
stores listed on Schedule 3.19 and all subleases relating to such
real property, to be transferred to or assumed by Seller or one of its
Subsidiaries (other than LSI, LSII or any Retained Subsidiary) and
(2) cause LSII to merge with and into LSI. Prior to the Closing
Date, Seller will assume, or will cause one of more of its
Subsidiaries (other than LSI, LSII or any Retained Subsidiary) to
assume all assets, liabilities and obligations transferred pursuant to
10 clause (iv) of the preceding sentence, including without limitation
any environmental liabilities arising out of events or conditions
11 occurring prior to the Closing Date attributable to real property
owned or leased by LSI or any Retained Subsidiary prior to the
12 Closing Date and set forth on Schedule 3.19(a). Ud, 411).
(Emphasis added).
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Save Mart’s allegation in paragraph 11 of the Complaint that “Section 5.2(a) provided
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that all stores not located in Northern California and Nevada and all related leases, property,
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assets, liabilities, and obligations would be transferred to and assumed by Albertson’s or an
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Albertson’s subsidiary before closing...” is inaccurate and misstates Section 5.2(a). (U/d., §11).
17
(Emphasis in original). Contrary to Save Mart’s allegation, Section 5.2(a) does not require
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Albertsons to transfer all stores not located in Northern California and Nevada to Albertsons or
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an Albertsons subsidiary. Section 5.2(a)(iv) states that Albertsons is obligated to transfer only
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those leases listed on Schedule 3.19.
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Therefore, to establish that Albertsons breached Section 5.2(a) of the SPA, Save Mart
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must allege that: (1) the St. Petersburg Lease was listed in Schedule 3.19 of the SPA; and (2)
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Albertsons breached Section 5.2(a)(iv) because it failed to transfer the Lease. Save Mart makes
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no allegation that the St. Petersburg Lease was listed in Schedule 3.19. That critical allegation is
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missing because it cannot be truthfully pled - the St. Petersburg Lease was, in fact, not listed in
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Schedule 3.19. The lack of such a critical allegation fatally dooms Save Mart’s cause of action.
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Because the St. Petersburg Lease was not listed in Schedule 3.19, Albertsons’ alleged failure to
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DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
transfer the Lease was not a breach of Section 5.2(a). Because there was no breach of Section
5.2(a), Albertsons had no obligation to indemnify pursuant to Section 8.2(a)(iii) of the SPA.
Instead, Albertsons’ alleged indemnity obligation, if any, would fall within the scope of Sections
8.2(a)(i) (for breach ofa Seller representation or warranty) or 8.2(a)(ii) (for breach ofa covenant
under the SPA that survives closing), which are both subject to the $1.5 million indemnity floor
in Section 8.4 of the SPA.
Accordingly, Albertsons’ Demurrer to the first cause of action for breach of contract
should be sustained because Save Mart failed to allege all facts necessary to state a claim for
breach of Sections 5.2(a) and 8.2(a)(iii) of the SPA.
10 B. Save Mart’s Second Cause of Action for Reformation Fails Because There Was
11 No Mutual Mistake at the Time Albertsons and Save Mart Entered into the
12 SPA.
13 Save Mart’s second cause of action for reformation alleges that the SPA must be
14 reformed based on mutual mistake under Code of Civil Procedure section 3399. Specifically,
15 Save Mart alleges that both Save Mart and Albertsons mistakenly believed: (1) “Albertson’s had
16 discovered the existence of and identified all Lucky’s stores outside Northern California and
17 Nevada at the time of the SPA”; and (2) Albertsons “had transferred all such stores to
18 Albertson’s or an Albertson’s subsidiary prior to the closing of the transaction.” (RJN, Ex. 1,
19 Complaint, §38). Save Mart further alleges that the $1.5 million floor in the indemnification
20 provision and the sole remedy provision were not intended to cover Albertsons’ alleged mistaken
21 failure to transfer the St. Petersburg Lease prior to closing. (/d., 39, 40). As a result of the
22 alleged mutual mistake, Save Mart seeks to reform the SPA to eliminate the $1.5 million floor
23 with respect to the liabilities incurred by Save Mart relating to the St. Petersburg Lease. (/d.)
24 “Under longstanding contract law, a ‘contract must be so interpreted as to give effect to
25 the mutual intention of the parties as it existed at the time of contracting, so far as the same is
26 ascertainable and lawful.’” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 520, 524). If a contract,
27 by mutual mistake, fails to express the intention of the parties, a written contract may be revised
28 pursuant to Civil Code section 3399 which states:
11
DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
When, through fraud or a mutual mistake of the parties, or a
mistake of one party, which the other at the time knew or
suspected, a written contract does not truly express the intention of
the parties, it may be revised on the application of a party
aggrieved, so as to express that intention, so far as it can be done
without prejudice to rights acquired by third persons, in good faith
and for value.
Hence, reformation is an equitable remedy used to rewrite a written instrument so that it
accurately states the parties’ true agreement when, through fraud, mutual mistake or unilateral
mistake, the writing fails to embody the true agreement of the parties. (Civ. Code §3399; and
Bailard v. Marden (1951) 36 Cal.2d 703, 708). To assert a claim for reformation based on the
parties’ mutual mistake, the moving party must show that the contract fails to express the mutual
10
understanding of the parties at the time of contracting. (Civ. Code §3399; Thrifty Payless, Inc,
11
supra, 218 Cal.App.4th at 1243-1244). A contract can be reformed on the ground of mutual
12
mistake if: (1) the mistake occurred when the contract was executed, (2) the mistake related to an
13
essential or material term of the contract, and (3) correction of the mistake is material to the
14
parties' rights. (Cottle v. Gibbon (1962) 200 Cal.App.2d 1, 8). To properly plead a claim for
15
reformation based on mutual mistake, there must be a clear recitation of facts showing how,
16
when and why the mistake occurred. (George v. Automobile Club of Southern California (2012)
17
201 Cal.App.4th 1112, 1132). Absent such a recitation, the pleading is inadequate against a
18
general and special demurrer. (/d.)
19
Here, Save Mart’s claim for mutual mistake fails as a matter of law. Save Mart seeks to
20
claim a “mistake” occurred in order to try to rewrite the indemnity provision in Section 8.4 of
21
the SPA in order to eliminate the $1.5 million floor and the sole remedy provision in Section 8.8
22
of the SPA. However, the Complaint makes no claim that the actual indemnity and sole remedy
23
provisions in the SPA fail to express the mutual understanding of the parties at the time of
24
contracting. Indeed, to establish a mutual mistake, Save Mart must provide a clear recitation of
25
facts showing how, when and why the alleged mistake occurred relating to the drafting of the
26
SPA. (George, supra, 201 Cal.App.4th at 1132). For example, there is no claim that the
27
indemnity provision and the $1.5 million floor in Section 8.4 of the SPA is inaccurate or that
28
12
DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
there was a mistake in drafting that provision. There is no allegation that a scrivener’s error was
made in the drafting of an essential term of the SPA. In fact, there are no facts alleged regarding
how, when and why the alleged mistake occurred at the time the parties drafted the SPA. What
Save Mart is really trying to do is to re-write the SPA in order to provide itself with a remedy by
removing the $1.5 million indemnity floor in order to compel Albertsons’ to indemnify Save
Mart for the settlement paid in the Brixmor Matter. However, this is not the purpose of
reformation, as the SPA already reflects the true intention of the parties when they drafted the
SPA.
Further, the “mistakes” alleged in the Complaint have nothing to do with a mistake in an
10 essential or material term of the SPA. Save Mart identifies two mistakes: (1) Albertsons’ alleged
11 failure to discover the existence of the St. Petersburg Lease at the time it entered into the SPA;
12 and (2) Albertsons’ alleged failure to transfer the Lease prior to closing. (RJN, Ex. 1, Complaint,
13 4938, 39 (“Albertson’s however, mistakenly failed to discover the existence of or identify the
14 Florida Lucky’s Store as of the time of the SPA and failed to comply with its express obligation
15 under the SPA to transfer the Florida Lucky’s Lease to Albertson’s or an Albertson’s
16 subsidiary.”)). These allegations ofa “mistake” have nothing to do with a mistake in the drafting
17 of Sections 8.4 and 8.8 of the SPA or a mistake in any essential term of the SPA. If, arguendo,
18 these alleged mistakes occurred and Albertsons failed to transfer the St. Petersburg Lease, then
19 Save Mart has a claim for breach of contract and damages. But, the alleged mistake does not
20 give rise to a claim for reformation of the indemnity provision based on mutual mistake, and
21 Save Mart cannot seek to now re-write the SPA in order to avoid the $1.5 million floor in
22 Section 8.4(a) or the sole remedy provision in Section 8.8.
23 In addition, although the cause of action is plead as a claim for reformation based on a
24 “mutual mistake”, as pled, there was no mutual mistake. Although both Save Mart and
25 Albertsons may have both mistakenly believed the St. Petersburg Lease had been transferred,
26 the actual language of the Complaint alleges that the mistakes were made by Albertsons, i.e.,
27 Albertsons’ alleged “mistake” in failing to identify and transfer the St. Petersburg Lease. (/d.,
28 439). But, even if, arguendo, the cause of action can be interpreted as one for reformation based
13
DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
on unilateral mistake, the cause of action still fails. A contract can be reformed based on a
unilateral mistake when one party knows the true facts, but the other party is suffering under a
mistake as to the actual facts. (Cottle v. Gibbon (1962) 200 Cal.App.2d 1, 8). Here, there is no
allegation that Albertsons knew at the time it entered into the SPA about the St. Petersburg Lease
or that it should have been transferred to Albertsons prior to closing on the SPA. Accordingly,
there is no basis for a claim for reformation based on a unilateral mistake.
Finally, to the extent the alleged “mistake” is based on Albertsons’ alleged failure to
transfer the St. Petersburg Lease prior to closing, that alleged “mistake” did not occur when the
contract was executed on November 20, 2006. That alleged “mistake” related to Albertsons’
10 obligations after it had entered into the SPA and had nothing to do with an actual mistake in the
11 drafting of the indemnity provision of the SPA. Because, the alleged “mistake” relating to the
12 transfer of the St. Petersburg Lease did not exist at the time the SPA was executed, it cannot
13 form the basis for a claim to reform the SPA.
14 Accordingly, because there is no allegation that there was a “mutual mistake” in the
15 drafting of Sections 8.4 and 8.8 of the SPA or that it fails to express the mutual understanding of
16 the parties at the time of contracting, Save Mart’s cause of action for reformation fails as a
17 matter of law and must be dismissed.
18 C. Save Mart’s Third Cause of Action for Specific Performance Fails as a Matter of
19 Law.
20 Save Mart’s third cause of action for specific performance seeks to compel
21 indemnification and payment of Save Mart’s alleged damages. There are two separate claims for
22 specific performance: (1) specific performance of Section 8.2(a)(iii) of the SPA; or alternatively
23 (2) specific performance of the reformed SPA. (RJN, Ex. 1, Complaint, 45 (“Under the terms of
24 the contract, or alternatively the terms of the reformed contract, Save Mart is entitled to an order
25 directing Albertson’s to indemnify Save Mart...”)).
26 If the Demurrer to the second cause of action for reformation is sustained, then the
27 second cause of action for specific performance of the reformed SPA must also be sustained.
28
14
DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
Further, Save Mart’s entire claim for specific performance of the SPA or alternatively,
the reformed SPA, is precluded because there is an adequate remedy at law — a claim for breach
of contract and the recovery of damages. (Blackburn v. Charnley (2004) 117 Cal.App.4" 758,
766). Indeed, Save Mart’s Complaint already alleges a cause of action for breach of contract and
breach of reformed contract. Because Save Mart has an adequate remedy at law and money
damages are adequate to compensate Save Mart for its alleged loss, Save Mart cannot allege a
cause of action for specific performance. The fact that Save Mart’s damages award would be
impacted by the agreed upon $1.5 million indemnity floor does not allow Save Mart to avail
itself to an argument that it does not have a legal remedy. Therefore, specific performance is
10 precluded as a matter of law.
11 D. Save Mart’s Fourth Cause of Action for Breach of Reformed Contract Is Based
12 on the Reformed SPA and Therefore Fails as a Matter of Law.
13 Save Mart’s fourth cause of action alleges that Albertsons breached the reformed SPA
14 and seeks to recover damages. (RJN, Ex. 1, Complaint, 50, 51). Again, if the SPA is not
15 reformed, there is no basis for any breach of contract claim. As discussed in Section II(B), Save
16 Mart’s cause of action for reformation is defective and fails as a matter of law. Therefore, the
17 fourth cause of action, which is based on the reformed SPA, also fails as a matter of law.
18 E. Because Consideration Was Received for the SPA, Save Mart is Precluded from
19 Alleging a Claim for Promissory Estoppel.
20 To establish promissory estoppel, there must be evidence that: (1) a clear, unambiguous,
21 and certain promise was made; (2) it was foreseeable that the promisee would rely on the
22 promise; (3) the promisee reasonably relied on the promise; and (4) as a result, the promisee was
23 injured by his or her reliance. (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4""
24 1001, 1016). Promissory estoppel is available in the absence of a valid and enforceable contract
25 and presumes a lack of consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc.
26 (2012) 211 Cal.App.4th 230, 242-245). “The purpose of this doctrine is to make a promise
27 binding, under certain circumstances, without consideration in the usual sense of something
28 bargained for and given in exchange.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d
15
DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT
240, 249). “[A] plaintiff cannot state a claim for promissory estoppel when the promise was
given in return for proper consideration. The claim instead must be pleaded as one for breach of
the bargained-for contract.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4" 256,
275 (disapproved on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62
Cal.4" 919).
Here, a cause of action for promissory estoppel is precluded because it is undisputed that
a valid and enforceable contract exists between Save Mart and Albertsons, i.e., the SPA. It is
also undisputed that proper consideration was given for the SPA. Because Save Mart can sue to
enforce the SPA, Save Mart is precluded from alleging a cause of action for promissory estoppel.
10 Therefore, the Demurrer to the fifth cause of action should be sustained.
11 il. LEAVE TO AMEND SHOULD BE DENIED BECAUSE SAVE MART CANNOT
12 ALLEGE VALID CAUSES OF ACTION AGAINST ALBERTSONS.
13 Leave to amend a complaint can be denied where the complaint “shows on its face that it
14 is incapable of amendment.” (McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303-
15 304). It is not up to the judge to determine how the complaint can be amended to state a cause of
16 action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349). The burden is on the plaintiffto show
17 in what manner the complaint can
Preview
Aimee Wong (State Bar No. 179369) aimee@udellwang.com Electronically Filed UDELL WANG LLP 9/9/2020 1:51 PM 445 South Figueroa Street, Suite 2250 Superior Court of California Los Angeles, CA 90071 County of Stanislaus Telephone: (213) 988-7059 Clerk of the Court By: Kimberly Mean, Deputy Attorneys for Defendant ALBERTSON’S LLC $90 PD SUPERIOR COURT OF CALIFORNIA COUNTY OF STANISLAUS 10 SAVE MART SUPERMARKETS, a CASE NO. CV-20-000721 11 California corporation, [Assigned for all purposes to the Honorable 12 Plaintiff, Sonny S. Sandhu, Dept. 24] 13 VS. DEFENDANT ALBERTSON’S LLC’S 14 ALBERTSON’S LLC, a Delaware limited NOTICE OF DEMURRER AND liability company; and DOES | through 10, DEMURRER TO PLAINTIFF’S FIRST 15 inclusive, AMENDED COMPLAINT; MEMORANDUM OF POINTS AND 16 Defendants. AUTHORITIES IN SUPPORT THEREOF; DECLARATION OF AIMEE Y. WONG IN 17 SUPPORT OF MEET AND CONFER EFFORTS PURSUANT TO CODE OF 18 CIVIL PROCEDURE SECTION 430.41 19 Date: October 6, 2020 20 Time: 8:30 a.m. Judge: Sonny S. Sandhu 21 Dept.: 24 22 [Action Filed: January 30, 2020] 23 [Trial Date: None Set] 24 [Filed Concurrently with Request for Judicial Notice and [Proposed] Order] 25 26 27 28 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT TABLE OF CONTENTS NOTICE OF DEMURRER DEMURRER MEMORANDUM OF POINTS AND AUTHORITIES I INTRODUCTION AND SUMMARY OF FACTS IL THE DEMURRER SHOULD BE SUSTAINED BECAUSE THE COMPLAINT FAILS TO ALLEGE ANY VALID CAUSE OF ACTION AGAINST ALBERTSONS A. The First Cause of Action for Breach of Contract Fails to Allege a Critical Fact to Establish the Breach of Section 8.2(a)(iii) of the SPA 10 B Save Mart’s Second Cause of Action for Reformation Fails Because There 11 Was No Mutual Mistake at the Time Albertsons and Save Mart Entered into the SPA 11 12 Save Mart’s Third Cause of Action for Specific Performance Fails as a 13 Matter of Law. 14 14 Save Mart’s Fourth Cause of Action for Breach of Reformed Contract Is Based on the Reformed SPA and Therefore Fails as a Matter of Law 15 15 Because Consideration Was Received for the SPA, Save Mart is 16 Precluded from Alleging a Claim for Promissory Estoppel 15 17 Til. LEAVE TO AMEND SHOULD BE DENIED BECAUSE SAVE MART CANNOT ALLEGE VALID CAUSES OF ACTION AGAINST ALBERTSONS 16 18 IV. ALBERTSONS COMPLIED WITH THE MEET AND CONFER 19 REQUIREMENTS UNDER CODE OF CIVIL PROCEDURE SECTION 430.41 17 20 Vv. CONCLUSION 18 21 DECLARATION OF AIMEE Y. WONG 19 22 23 24 25 26 27 28 1 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT TABLE OF AUTHORITIES Cases Page(s) Andonagui v. May Dept. Stores Co. (2005) 128 Cal.App.4th 435 Bailard v. Marden (1951) 36 Cal.2d 703 12 Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4" 1001 15 10 Blackburn yv. Charnley (2004) 117 Cal.App.4" 758 15 11 Blank v. Kirwan 12 (1985) 39 Cal.3d 311 13 Cottle v. Gibbon 14 (1962) 200 Cal.App.2d 1 12, 14 15 Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968 16 17 Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230 8, 15 18 Fontenot v. Wells Fargo Bank, N.A. 19 (2011) 198 Cal.App.4th 256 16 20 George v. Automobile Club of Southern California 21 (2012) 201 Cal.App.4th 1112, 12 22 Goodman v. Kennedy (1976) 18 Cal.3d 335 16 23 24 Hess v. Ford Motor Co. (2002) 27 Cal.4th 520 11 25 McDonald v. Superior Court 26 (1986) 180 Cal.App.3d 297 16 27 28 il DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT TABLE OF AUTHORITIES (Cont.) Cases Page(s) Mercury Cas. Co. v. Superior Court (1986) 179 Cal.App.3d 1027 16 Serrano v. Priest (1971) 5 Cal.3d 584 Thayer Plymouth Center, Inc. v. Chrysler Motor Corp. (1967) 255 Cal.App.2d 300 10 Thrifty Payless, Inc. v. Americana at Brand, LLC (2013) 218 Cal.App.4th 1230 7,12 11 Youngman vy. Nevada Irrigation Dist. 12 (1969) 70 Cal.2d 240 15 13 Yvanova v. New Century Mortgage Corp. 14 (2016) 62 Cal.4th 919 16 15 Statutes 16 17 California Code of Civil Procedure 18 § 430.10 § 430.10(e) 1,4,6,9 19 § 430.41 17 § 430.41(a) ... 17 20 § 430.41 (a)(1)) . 17 21 § 430.41(a)(2) ... 17 § 430.41(a)(3)(A) 17 22 Civil Code §3399 ooo. ecceeceeessseseessessessseesssessesssessssesseassessssesssacscsseseseeasssseeessseesseseeeeeeee 7, 11, 12 23 24 25 26 27 28 iii DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on October 6, 2020, at 8:30 a.m., or as soon thereafter as the matter may be heard in Department 24 of the above-entitled Court, located at 801 10" Street, Modesto, California 95354, Defendant Albertson’s LLC (“Albertsons” or “Defendant”) will, and hereby does, demur to the First Amended Complaint (the “Complaint”) filed by Plaintiff Save Mart Supermarkets (“Save Mart” or “Plaintiff”) The Demurrer follows the conference of counsel under Code of Civil Procedure Section 430.41, as explained in the attached Declaration of Aimee Y. Wong. This Demurrer is brought pursuant to Code of Civil Procedure section 430.10(e) on the 10 ground that each and every one of the causes of action alleged in the Complaint fail to state facts 11 sufficient to constitute a legally cognizable cause of action against Albertsons. (Cal. Code Civ. 12 Proc. §430.10(e)). 13 Save Mart’s first cause of action alleges that Albertsons breached Section 8.2(a)(ili) of 14 the Securities Purchase Agreement dated November 20, 2006 (the “SPA”) because Albertsons 15 failed to indemnify Save Mart for damages arising from Albertsons’ alleged failure to transfer 16 the lease of a Lucky’s store located in St. Petersburg, Florida (the “St. Petersburg Lease”) to 17 Albertsons prior to closing on the SPA in 2006. (Request for Judicial Notice (“RJN”), Ex. 1, 18 Complaint, §{[19-26). Section 8.2(a)(iii) applies only to contracts or obligations transferred or 19 “required to be so transferred, assumed or terminated, pursuant to Section 5.2(a)” of the SPA. 20 (dd., 414). Therefore, to establish a claim for indemnity under Section 8.2(a)(iii), Save Mart must 21 show that Albertsons breached Section 5.2(a) of the SPA, which required Albertsons to transfer 22 “(iv)...all leases relating to the stores listed on Schedule 3.19...” back to Albertsons or an 23 Albertson’ subsidiary prior to the Closing Date. (/d., 411). 24 The Complaint fails to allege a critical fact - that the St. Petersburg Lease was listed on 25 Schedule 3.19 of the SPA. The allegation cannot be made because the St. Petersburg Lease was 26 not listed on Schedule 3.19 and there was no obligation to transfer the Lease pursuant to Section 27 5.2(a) of the SPA. Because Albertsons did not breach Section 5.2(a) of the SPA, its alleged 28 indemnity obligation falls outside the scope of Section 8.2(a)(ili). Therefore, Save Mart’s first DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT cause of action for breach of contract, which is based on the alleged breach of Section 8.2(a)(iii) of the SPA, fails as a matter of law. With its second cause of action, Save Mart seeks to reform the SPA on the ground of mutual mistake. To reform a contract based on mutual mistake, Save Mart must show that the SPA fails to express the mutual understanding of Save Mart and Albertsons at the time they entered into the SPA. (Civ. Code §1636 and 3399; Thrifty Payless, Inc v. Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1243-1244). Here, Save Mart seeks to re-write the indemnity provision in the SPA in order to remove the $1.5 million floor for liabilities incurred by Save Mart resulting from Albertsons’ alleged 10 failure to transfer the St. Petersburg Lease. But, there is no claim that the indemnity provision in 11 Section 8.4 and the sole remedy provision in Section 8.8 fails to express the mutual 12 understanding of the parties at the time they entered into the SPA. The Complaint, as amended, 13 alleged that Save Mart and Albertsons mistakenly believed that Albertsons had discovered the 14 existence of and identified all stores that had to be transferred and that Albertsons had actually 15 transferred all such stores prior to closing on the SPA. (RJN, Ex. 1, Complaint, §38). 16 These alleged mistakes have nothing whatsoever to do with the indemnity language in 17 Section 8.4 of the SPA or the sole remedy provision in Section 8.8 of the SPA. The alleged 18 “mistakes” relate to Albertsons’ alleged failure to identify and transfer the St. Petersburg Lease 19 and not a mistake in drafting either Section 8.4 or 8.8 of the SPA. While the failure to identify 20 and transfer the St. Petersburg Lease may arguably serve as the basis for a breach of contract 21 claim, it does not serve as a basis to reform the indemnity provision in the SPA. Therefore, Save 22 Mart’s second cause of action for reformation fails as a matter of law. Because there is no basis 23 to reform the SPA, the fourth cause of action for breach of the reformed SPA also fails. 24 The third cause of action alleges a claim for specific performance of Section 8.2(a)(iii) or 25 alternatively, the reformed SPA. The entire cause of action fails because Save Mart has an 26 adequate remedy at law, i.e., money damages, for the alleged breach of the SPA or the reformed 27 SPA. (Morrison v. Land (1915) 169 Cal. 580, 586, 587). 28 2 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Save Mart’s fifth cause of action for promissory estoppel also fails because promissory estoppel is only available in the absence of a valid and enforceable contract and presumes a lack of consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 242-245). Because there is a valid and enforceable contract between Save Mart and Albertsons, i.e. the SPA, and there was consideration for the SPA, a cause of action for promissory estoppel is precluded as Save Mart can sue for breach of the SPA. This Demurrer is based on this Notice, the Demurrer, the Memorandum of Points and Authorities, the Declaration of Aimee Y. Wong, the concurrently filed Request for Judicial Notice, the [Proposed] Order, the files and records in this action, and upon such other and further 10 pleadings, papers or argument as may be presented to the Court prior to, or at the hearing on this 11 Demurrer. 12 Dated: September8, 2020 UDELL WANG LLP 13 14 > Aimee Y. Wong 15 Attorneys for Defendant 16 ALBERTSON’S LLC 17 18 19 20 21 22 23 24 25 26 27 28 3 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT DEMURRER Defendant Albertson’s LLC (“Albertsons”) hereby demurs to the First Amended Complaint (the “Complaint”) filed by Plaintiff Save Mart Supermarket (“Save Mart”) on the following grounds: Demurrer to the First Purported Cause of Action (Breach of Contract) 1 The first purported cause of action for breach of contract does not state facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)). Demurrer to the Second Purported Cause of Action 10 (Reformation Based on Mutual Mistake, Cal. Civ. Code §3399) 11 2. The second purported cause of action for reformation based on mutual mistake 12 does not state facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)). 13 Demurrer to the Third Purported Cause of Action 14 (Specific Performance to Compel Indemnification and Payment of Damages) 15 3 The third purported cause of action for specific performance to compel 16 indemnification and payment of damages does not state facts sufficient to constitute a cause of 17 action. (Cal. Code Civ. Proc. § 430.10(e)). 18 Demurrer to the Fourth Purported Cause of Action 19 (Breach of Reformed Contract) 20 4 The fourth purported cause of action for breach of reformed contract does not 21 state facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)). 22 Demurrer to the Fifth Purported Cause of Action 23 (Promissory Estoppel) 24 5 The fifth purported cause of action for promissory estoppel does not state facts 25 sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10(e)). 26 27 28 4 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Dated: September 8, 2020 UDELL WANG LLP an By: Aimee Y. Wong 8 Attorneys for Defendant ALBERTSON’S LLC 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT MEMORANDUM OF POINTS AND AUTHORITIES I INTRODUCTION AND SUMMARY OF FACTS. In lieu of opposing Defendant Albertson’s LLC’s Demurrer to the original Complaint, Plaintiff Save Mart Supermarket (“Save Mart”) filed a First Amended Complaint in an attempt to cure the defects in the original Complaint. However, like the original Complaint, the First Amended Complaint (the “Complaint”) fails to allege facts sufficient to support Save Mart’s causes of action for breach of contract, reformation, specific performance, breach of reformed contract and promissory estoppel against Albertsons. (Cal. Code Civ. Proc. § 430.10(e)). Accordingly, this Demurrer should be sustained without leave to amend. 10 On or about November 20, 2006, Albertsons, as seller, and Save Mart, as buyer, entered 11 into a Securities Purchase Agreement (the “SPA”) whereby Albertsons agreed to sell to Save 12 Mart all open stores under the “Lucky 9gs banner in Northern California and Nevada only. 13 (Request for Judicial Notice (“RJN”), Ex. 1, Complaint, 48). Pursuant to the SPA, Save Mart’s 14 purchase of the Lucky’s stores would close after Albertsons transferred all Lucky’s stores 15 located outside Northern California and Nevada to Albertsons or one of its subsidiaries. (/d., 16 4410, 12). 17 Albertsons, however, failed to transfer a former Lucky’s stores in St. Petersburg, Florida 18 (the “St. Petersburg Lease’) to Albertsons prior to closing. (/d., §19). On March 27, 2018, the 19 current tenant occupying the premises under the St. Petersburg Lease filed for bankruptcy. (/d., 20 20). The landlord, Brixmor Skyway Plaza, LLC (“Brixmor”), sued Lucky’s to recover amounts 21 due under the St. Petersburg Lease (the “Brixmor Matter”). (/d.) 22 Pursuant to the indemnification provision in the SPA, Save Mart tendered its claim for 23 damages relating to the Brixmor Matter to Albertsons. (/d., 421). Albertsons denied the claim on 24 the ground that the indemnification provision in Section 8.4(a) of the SPA requires Albertsons to 25 indemnify Save Mart only for damages exceeding $1.5 million. (/d., §{915, 22). Section 8.4(a) of 26 the SPA states: 27 “Neither Seller [Albertsons] nor Purchaser [Plaintiff] will be required to indemnify any Purchaser Indemnified Party 28 or Seller Indemnified Party, respectively, pursuant to 6 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Section 8.2(a)(i) or (ii) (other than for breaches of Sections 3.1, 3.2, 3.3, 3.13 or 3.19(d)) or Section 8.3(a)(i) or (ii) (other than for breaches of Sections 4.1 or 4.2), respectively, (i) unless and until the aggregate of all Damages (as defined in the applicable agreement) suffered by the Purchaser Indemnified Parties or the Seller Indemnified Parties, respectively, under this Agreement and the Real Estate Agreement exceeds $1,500,000 and then only for such excess amount...” (/d., §15). Ultimately, the Brixmor Matter settled for $290,000.00 and the St. Petersburg Lease was terminated. (/d., §25). Because the Brixmor Settlement did not exceed $1.5 million,! Albertsons has no obligation to defend or indemnify Save Mart for the Brixmor Matter. The amount of the Brixmor Matter settlement will however reduce the $1.5 million floor accordingly (for purposes 10 of future indemnity claims. 11 Save Mart amended its original Complaint to allege a new cause of action for breach of 12 contract on the ground that Albertsons breached Section 8.2(a)(iii) of the SPA by failing to 13 indemnify Save Mart for the Brixmor Settlement. (/d., §{]27-33). Section 8.2(a)(ili) is triggered 14 only if Albertsons breached its obligation under Section 5.2(a) of the SPA which required 15 Albertsons to transfer “‘all leases relating to the stores listed on Schedule 3.19.” (/d., 4911, 14). 16 There is no allegation in the Complaint that the St. Petersburg Lease was listed on Schedule 3.19 17 (and such an allegation cannot be made because the Lease was not listed on Schedule 3.19). 18 Because there is no such allegation, Save Mart cannot allege that Albertsons breached Section 19 5.2(a) and therefore, Albertsons had no obligation to indemnify pursuant to Section 8.2(a)(iii). 20 Accordingly, the first cause of action for breach of contract fails as a matter of law. 21 Further, despite the clear language in the SPA obligating Albertsons to indemnify Save 22 Mart only for damages that exceed $1,500,000, Save Mart now seeks to reform the SPA on the 23 ground of mutual mistake. However, Save Mart can be awarded relief only if it can show that the 24 SPA fails to express the mutual understanding of the parties at the time of contracting. (Civil 25 Code §3399; Thrifiy Payless, Inc. v. Americana at Brand, LLC (2013) 218 Cal.App.4" 1230, 26 1243-1244). 27 ' Save Mart has not alleged that the $1.5 million floor has been used up, in part or in total, by 28 previous indemnity claims. 7 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Save Mart’s claim for reformation based on mutual mistake fails as a matter of law because there is no claim that Sections 8.4 and 8.8 of the SPA fails to express the mutual understanding of the parties at the time they entered into the SPA. Save Mart’s Complaint now alleges there were two “mistakes”, whereby both Save Mart and Albertsons mistakenly believed that: (1) Albertsons had identified the St. Petersburg Lease at the time the parties entered into the SPA; and (2) Albertsons had taken the necessary steps to assume the St. Petersburg Lease prior to closing on the SPA. (RJN, Ex. 1, Complaint, 439). These alleged “mistakes” had nothing whatsoever to do with any actual mistake in the drafting of Sections 8.4 and 8.8 of the SPA. Because there is no allegation that there was a mistake in drafting Sections 8.4 and 8.8 of the 10 SPA or that it failed to express the mutual understanding of the parties at the time of contracting, 11 there is no basis to reform Sections 8.4 and 8.8, and Save Mart’s claim fails as a matter of law. 12 Because Save Mart cannot allege a claim for mutual mistake, its fourth cause of action 13 for breach of reformed contract also fails. If the Demurrer as to the second cause of action for 14 reformation is sustained, then the Demurrer to the fourth cause of action must also be sustained. 15 In addition, Save Mart’s third cause of action for specific performance of Section 16 8.2(a)(iii) or alternatively, the reformed SPA, also fails because specific performance is 17 precluded if an adequate remedy exists at law and if money damages afford adequate relief. 18 (Thayer Plymouth Center, Inc. v. Chrysler Motor Corp. (1967) 255 Cal.App.2d 300, 306). Save 19 Mart has an adequate remedy at law, i.e., money damages, thereby precluding its cause of action 20 for specific performance. 21 Save Mart’s fifth cause of action for promissory estoppel is also defective. Promissory 22 estoppel is available in the absence ofa valid and enforceable contract and presumes a lack of 23 consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4" 230, 24 242-245). Because Albertsons and Save Mart entered into the SPA, there is a valid and 25 enforceable contract between the parties. Therefore, Save Mart’s claim for promissory estoppel 26 is barred. 27 28 8 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Because of these defects, each and every one of the causes of action in the Complaint fail to allege facts sufficient to state a cause of action. Accordingly, Albertsons respectfully requests that its Demurrer be sustained, without leave to amend. IL. THE DEMURRER SHOULD BE SUSTAINED BECAUSE THE COMPLAINT FAILS TO ALLEGE ANY VALID CAUSE OF ACTION AGAINST ALBERTSONS. A demurrer tests the legal sufficiency ofa complaint. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 995). A demurrer challenges defects that appear on the face of a pleading, or from matters outside the pleadings that are judicially noticeable. (Blank v. Kirwan 10 (1985) 39 Cal.3d 311, 318). 11 Under Code of Civil Procedure section 430.10, a party may object by demurrer to a 12 pleading on the ground that the pleading “does not state facts sufficient to constitute a cause of 13 action.” A demurrer admits the truth of all material facts properly pleaded, but not any of the 14 contentions, deductions or conclusions of fact or law alleged in the complaint. (Andonagui v. 15 May Dept. Stores Co. (2005) 128 Cal.App.4th 435, 439 (citing Serrano v. Priest (1971) 5 Cal.3d 16 584, 591)). A court must grant a demurrer where a plaintiff fails to plead facts sufficient to 17 constitute a cause of action against a defendant. (Code Civ. Proc. §430.10(e)). 18 A. The First Cause of Action for Breach of Contract Fails to Allege a Critical Fact 19 to Establish the Breach of Section 8.2(a)(iii) of the SPA. 20 Save Mart’s first cause of action for breach of contract alleges that Albertsons failed to 21 indemnify Save Mart pursuant to Section 8.2(a)(iii) of the SPA for all damages arising from 22 Albertsons’ alleged failure to transfer the St. Petersburg Lease as required by Section 5.2(a) of 23 the SPA. Save Mart’s first cause of action fails to state a claim against Albertsons because its 24 alleged indemnification obligation falls outside the scope of Section 8.2(a)(iii). 25 Section 8.2(a)(iil) states that Albertsons must indemnify Save Mart from any damages 26 arising from “[t]he assets, liabilities, obligations and contracts transferred from LSI or assumed 27 by Seller or one or more of its Subsidiaries (other than LSI or LSID) or terminated on behalf of 28 LSI, or required to be so transferred, assumed or terminated, pursuant to Section 5.2(a).” (RJN, 9 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Ex. 1, Complaint, 414). Section 8.2(a)(iii) is triggered only if there has been a breach of Section 5.2(a) of the SPA. Section 5.2(a) states: Prior to the Closing Date, Seller [Albertsons] will (1) cause (i) all cash (other than Store Cash) and marketable securities and similar investments, and all intercompany accounts held by LSI and owing by or to Seller or a Subsidiary other than LSI, (ii) all capital stock of the Transferred Subsidiaries, (iii) accounts receivable relating to all stores other than the Purchased Stores, and (iv) all owned real property other than the Real Property and all leases relating to the stores listed on Schedule 3.19 and all subleases relating to such real property, to be transferred to or assumed by Seller or one of its Subsidiaries (other than LSI, LSII or any Retained Subsidiary) and (2) cause LSII to merge with and into LSI. Prior to the Closing Date, Seller will assume, or will cause one of more of its Subsidiaries (other than LSI, LSII or any Retained Subsidiary) to assume all assets, liabilities and obligations transferred pursuant to 10 clause (iv) of the preceding sentence, including without limitation any environmental liabilities arising out of events or conditions 11 occurring prior to the Closing Date attributable to real property owned or leased by LSI or any Retained Subsidiary prior to the 12 Closing Date and set forth on Schedule 3.19(a). Ud, 411). (Emphasis added). 13 Save Mart’s allegation in paragraph 11 of the Complaint that “Section 5.2(a) provided 14 that all stores not located in Northern California and Nevada and all related leases, property, 15 assets, liabilities, and obligations would be transferred to and assumed by Albertson’s or an 16 Albertson’s subsidiary before closing...” is inaccurate and misstates Section 5.2(a). (U/d., §11). 17 (Emphasis in original). Contrary to Save Mart’s allegation, Section 5.2(a) does not require 18 Albertsons to transfer all stores not located in Northern California and Nevada to Albertsons or 19 an Albertsons subsidiary. Section 5.2(a)(iv) states that Albertsons is obligated to transfer only 20 those leases listed on Schedule 3.19. 21 Therefore, to establish that Albertsons breached Section 5.2(a) of the SPA, Save Mart 22 must allege that: (1) the St. Petersburg Lease was listed in Schedule 3.19 of the SPA; and (2) 23 Albertsons breached Section 5.2(a)(iv) because it failed to transfer the Lease. Save Mart makes 24 no allegation that the St. Petersburg Lease was listed in Schedule 3.19. That critical allegation is 25 missing because it cannot be truthfully pled - the St. Petersburg Lease was, in fact, not listed in 26 Schedule 3.19. The lack of such a critical allegation fatally dooms Save Mart’s cause of action. 27 Because the St. Petersburg Lease was not listed in Schedule 3.19, Albertsons’ alleged failure to 28 10 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT transfer the Lease was not a breach of Section 5.2(a). Because there was no breach of Section 5.2(a), Albertsons had no obligation to indemnify pursuant to Section 8.2(a)(iii) of the SPA. Instead, Albertsons’ alleged indemnity obligation, if any, would fall within the scope of Sections 8.2(a)(i) (for breach ofa Seller representation or warranty) or 8.2(a)(ii) (for breach ofa covenant under the SPA that survives closing), which are both subject to the $1.5 million indemnity floor in Section 8.4 of the SPA. Accordingly, Albertsons’ Demurrer to the first cause of action for breach of contract should be sustained because Save Mart failed to allege all facts necessary to state a claim for breach of Sections 5.2(a) and 8.2(a)(iii) of the SPA. 10 B. Save Mart’s Second Cause of Action for Reformation Fails Because There Was 11 No Mutual Mistake at the Time Albertsons and Save Mart Entered into the 12 SPA. 13 Save Mart’s second cause of action for reformation alleges that the SPA must be 14 reformed based on mutual mistake under Code of Civil Procedure section 3399. Specifically, 15 Save Mart alleges that both Save Mart and Albertsons mistakenly believed: (1) “Albertson’s had 16 discovered the existence of and identified all Lucky’s stores outside Northern California and 17 Nevada at the time of the SPA”; and (2) Albertsons “had transferred all such stores to 18 Albertson’s or an Albertson’s subsidiary prior to the closing of the transaction.” (RJN, Ex. 1, 19 Complaint, §38). Save Mart further alleges that the $1.5 million floor in the indemnification 20 provision and the sole remedy provision were not intended to cover Albertsons’ alleged mistaken 21 failure to transfer the St. Petersburg Lease prior to closing. (/d., 39, 40). As a result of the 22 alleged mutual mistake, Save Mart seeks to reform the SPA to eliminate the $1.5 million floor 23 with respect to the liabilities incurred by Save Mart relating to the St. Petersburg Lease. (/d.) 24 “Under longstanding contract law, a ‘contract must be so interpreted as to give effect to 25 the mutual intention of the parties as it existed at the time of contracting, so far as the same is 26 ascertainable and lawful.’” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 520, 524). If a contract, 27 by mutual mistake, fails to express the intention of the parties, a written contract may be revised 28 pursuant to Civil Code section 3399 which states: 11 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT When, through fraud or a mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value. Hence, reformation is an equitable remedy used to rewrite a written instrument so that it accurately states the parties’ true agreement when, through fraud, mutual mistake or unilateral mistake, the writing fails to embody the true agreement of the parties. (Civ. Code §3399; and Bailard v. Marden (1951) 36 Cal.2d 703, 708). To assert a claim for reformation based on the parties’ mutual mistake, the moving party must show that the contract fails to express the mutual 10 understanding of the parties at the time of contracting. (Civ. Code §3399; Thrifty Payless, Inc, 11 supra, 218 Cal.App.4th at 1243-1244). A contract can be reformed on the ground of mutual 12 mistake if: (1) the mistake occurred when the contract was executed, (2) the mistake related to an 13 essential or material term of the contract, and (3) correction of the mistake is material to the 14 parties' rights. (Cottle v. Gibbon (1962) 200 Cal.App.2d 1, 8). To properly plead a claim for 15 reformation based on mutual mistake, there must be a clear recitation of facts showing how, 16 when and why the mistake occurred. (George v. Automobile Club of Southern California (2012) 17 201 Cal.App.4th 1112, 1132). Absent such a recitation, the pleading is inadequate against a 18 general and special demurrer. (/d.) 19 Here, Save Mart’s claim for mutual mistake fails as a matter of law. Save Mart seeks to 20 claim a “mistake” occurred in order to try to rewrite the indemnity provision in Section 8.4 of 21 the SPA in order to eliminate the $1.5 million floor and the sole remedy provision in Section 8.8 22 of the SPA. However, the Complaint makes no claim that the actual indemnity and sole remedy 23 provisions in the SPA fail to express the mutual understanding of the parties at the time of 24 contracting. Indeed, to establish a mutual mistake, Save Mart must provide a clear recitation of 25 facts showing how, when and why the alleged mistake occurred relating to the drafting of the 26 SPA. (George, supra, 201 Cal.App.4th at 1132). For example, there is no claim that the 27 indemnity provision and the $1.5 million floor in Section 8.4 of the SPA is inaccurate or that 28 12 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT there was a mistake in drafting that provision. There is no allegation that a scrivener’s error was made in the drafting of an essential term of the SPA. In fact, there are no facts alleged regarding how, when and why the alleged mistake occurred at the time the parties drafted the SPA. What Save Mart is really trying to do is to re-write the SPA in order to provide itself with a remedy by removing the $1.5 million indemnity floor in order to compel Albertsons’ to indemnify Save Mart for the settlement paid in the Brixmor Matter. However, this is not the purpose of reformation, as the SPA already reflects the true intention of the parties when they drafted the SPA. Further, the “mistakes” alleged in the Complaint have nothing to do with a mistake in an 10 essential or material term of the SPA. Save Mart identifies two mistakes: (1) Albertsons’ alleged 11 failure to discover the existence of the St. Petersburg Lease at the time it entered into the SPA; 12 and (2) Albertsons’ alleged failure to transfer the Lease prior to closing. (RJN, Ex. 1, Complaint, 13 4938, 39 (“Albertson’s however, mistakenly failed to discover the existence of or identify the 14 Florida Lucky’s Store as of the time of the SPA and failed to comply with its express obligation 15 under the SPA to transfer the Florida Lucky’s Lease to Albertson’s or an Albertson’s 16 subsidiary.”)). These allegations ofa “mistake” have nothing to do with a mistake in the drafting 17 of Sections 8.4 and 8.8 of the SPA or a mistake in any essential term of the SPA. If, arguendo, 18 these alleged mistakes occurred and Albertsons failed to transfer the St. Petersburg Lease, then 19 Save Mart has a claim for breach of contract and damages. But, the alleged mistake does not 20 give rise to a claim for reformation of the indemnity provision based on mutual mistake, and 21 Save Mart cannot seek to now re-write the SPA in order to avoid the $1.5 million floor in 22 Section 8.4(a) or the sole remedy provision in Section 8.8. 23 In addition, although the cause of action is plead as a claim for reformation based on a 24 “mutual mistake”, as pled, there was no mutual mistake. Although both Save Mart and 25 Albertsons may have both mistakenly believed the St. Petersburg Lease had been transferred, 26 the actual language of the Complaint alleges that the mistakes were made by Albertsons, i.e., 27 Albertsons’ alleged “mistake” in failing to identify and transfer the St. Petersburg Lease. (/d., 28 439). But, even if, arguendo, the cause of action can be interpreted as one for reformation based 13 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT on unilateral mistake, the cause of action still fails. A contract can be reformed based on a unilateral mistake when one party knows the true facts, but the other party is suffering under a mistake as to the actual facts. (Cottle v. Gibbon (1962) 200 Cal.App.2d 1, 8). Here, there is no allegation that Albertsons knew at the time it entered into the SPA about the St. Petersburg Lease or that it should have been transferred to Albertsons prior to closing on the SPA. Accordingly, there is no basis for a claim for reformation based on a unilateral mistake. Finally, to the extent the alleged “mistake” is based on Albertsons’ alleged failure to transfer the St. Petersburg Lease prior to closing, that alleged “mistake” did not occur when the contract was executed on November 20, 2006. That alleged “mistake” related to Albertsons’ 10 obligations after it had entered into the SPA and had nothing to do with an actual mistake in the 11 drafting of the indemnity provision of the SPA. Because, the alleged “mistake” relating to the 12 transfer of the St. Petersburg Lease did not exist at the time the SPA was executed, it cannot 13 form the basis for a claim to reform the SPA. 14 Accordingly, because there is no allegation that there was a “mutual mistake” in the 15 drafting of Sections 8.4 and 8.8 of the SPA or that it fails to express the mutual understanding of 16 the parties at the time of contracting, Save Mart’s cause of action for reformation fails as a 17 matter of law and must be dismissed. 18 C. Save Mart’s Third Cause of Action for Specific Performance Fails as a Matter of 19 Law. 20 Save Mart’s third cause of action for specific performance seeks to compel 21 indemnification and payment of Save Mart’s alleged damages. There are two separate claims for 22 specific performance: (1) specific performance of Section 8.2(a)(iii) of the SPA; or alternatively 23 (2) specific performance of the reformed SPA. (RJN, Ex. 1, Complaint, 45 (“Under the terms of 24 the contract, or alternatively the terms of the reformed contract, Save Mart is entitled to an order 25 directing Albertson’s to indemnify Save Mart...”)). 26 If the Demurrer to the second cause of action for reformation is sustained, then the 27 second cause of action for specific performance of the reformed SPA must also be sustained. 28 14 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT Further, Save Mart’s entire claim for specific performance of the SPA or alternatively, the reformed SPA, is precluded because there is an adequate remedy at law — a claim for breach of contract and the recovery of damages. (Blackburn v. Charnley (2004) 117 Cal.App.4" 758, 766). Indeed, Save Mart’s Complaint already alleges a cause of action for breach of contract and breach of reformed contract. Because Save Mart has an adequate remedy at law and money damages are adequate to compensate Save Mart for its alleged loss, Save Mart cannot allege a cause of action for specific performance. The fact that Save Mart’s damages award would be impacted by the agreed upon $1.5 million indemnity floor does not allow Save Mart to avail itself to an argument that it does not have a legal remedy. Therefore, specific performance is 10 precluded as a matter of law. 11 D. Save Mart’s Fourth Cause of Action for Breach of Reformed Contract Is Based 12 on the Reformed SPA and Therefore Fails as a Matter of Law. 13 Save Mart’s fourth cause of action alleges that Albertsons breached the reformed SPA 14 and seeks to recover damages. (RJN, Ex. 1, Complaint, 50, 51). Again, if the SPA is not 15 reformed, there is no basis for any breach of contract claim. As discussed in Section II(B), Save 16 Mart’s cause of action for reformation is defective and fails as a matter of law. Therefore, the 17 fourth cause of action, which is based on the reformed SPA, also fails as a matter of law. 18 E. Because Consideration Was Received for the SPA, Save Mart is Precluded from 19 Alleging a Claim for Promissory Estoppel. 20 To establish promissory estoppel, there must be evidence that: (1) a clear, unambiguous, 21 and certain promise was made; (2) it was foreseeable that the promisee would rely on the 22 promise; (3) the promisee reasonably relied on the promise; and (4) as a result, the promisee was 23 injured by his or her reliance. (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4"" 24 1001, 1016). Promissory estoppel is available in the absence of a valid and enforceable contract 25 and presumes a lack of consideration. (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. 26 (2012) 211 Cal.App.4th 230, 242-245). “The purpose of this doctrine is to make a promise 27 binding, under certain circumstances, without consideration in the usual sense of something 28 bargained for and given in exchange.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 15 DEFENDANT’S DEMURRER TO FIRST AMENDED COMPLAINT 240, 249). “[A] plaintiff cannot state a claim for promissory estoppel when the promise was given in return for proper consideration. The claim instead must be pleaded as one for breach of the bargained-for contract.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4" 256, 275 (disapproved on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4" 919). Here, a cause of action for promissory estoppel is precluded because it is undisputed that a valid and enforceable contract exists between Save Mart and Albertsons, i.e., the SPA. It is also undisputed that proper consideration was given for the SPA. Because Save Mart can sue to enforce the SPA, Save Mart is precluded from alleging a cause of action for promissory estoppel. 10 Therefore, the Demurrer to the fifth cause of action should be sustained. 11 il. LEAVE TO AMEND SHOULD BE DENIED BECAUSE SAVE MART CANNOT 12 ALLEGE VALID CAUSES OF ACTION AGAINST ALBERTSONS. 13 Leave to amend a complaint can be denied where the complaint “shows on its face that it 14 is incapable of amendment.” (McDonald v. Superior Court (1986) 180 Cal.App.3d 297, 303- 15 304). It is not up to the judge to determine how the complaint can be amended to state a cause of 16 action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349). The burden is on the plaintiffto show 17 in what manner the complaint can