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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA BARBARA
Dated and Entered: 10/15/2021 Time: 10:00 AM
Judicial Officer: Donna D Geck
Deputy Clerk: Kristi Temple Dept: SB Dept 4
Deputy Sheriff: Marco Diaz
Court Reporter: Michelle Sabado Case No: 20CV02113
Mark Schaub et al vs Andrew Wyles Waters et al
Parties Present:
NATURE OF PROCEEDINGS: Motion: Strike Second Amended Complaint; Demurrer to Second
Amended Complaint
No appearances.
The Court adopted the tentative ruling as follows:
RULING: Defendants’ demurrer to plaintiffs’ second amended complaint is overruled. Defendants’
motion to strike portions of plaintiffs’ second amended complaint is denied. Defendants shall file and
serve their answer to plaintiffs’ second amended complaint on or before October 25, 2021.
BACKGROUND:
This is an action for alleged conversion of bank funds and related claims. Plaintiffs are Mark Schaub
(“Schaub”) and his limited liability company, TLG Ltd. (“TLG”). Defendants are Andrew Waters (“Waters”)
and his limited liability companies, FCP Private, LLC (“FCP Private”) and FCP Corporate (HK) Ltd. (“FCP
Corporate”). Schaub and Waters are former business associates, having first met in 2008 when both
were living and doing business in Shanghai, China. Schaub and Waters conducted several business
transactions together. In one of the transactions, Schaub loaned $400,000 to a company controlled by
Waters called China Network Logistics. Schaub later agreed to exchange the $400,000 loan to China
Network Logistics for shares in a different company controlled by Waters called Food Box Network.
Schaub alleges that Food Box Network is a fake company that was used by Waters to scam investors.
Schaub has never been repaid the $400,000 that he loaned to Waters.
At the time of the events in this case, TLG had approximately $1.9 million in a long-term investment
account with HSBC, a bank incorporated in Hong Kong. In June 2019, HSBC notified Schaub that it was
planning to close his TLG account. Schaub discussed the pending account closure with Waters, who
indicated that HSBC was closing the account because it contained a journal entry in the amount of
$50,000 that HSBC believed was a “tainted” transaction. Waters told Schaub that he should transfer the
$50,000 to FCP Corporate’s account with Citibank, where the funds would be safe because it was a
client trust account. Schaub agreed to transfer the funds. However, HSBC mistakenly wire-transferred all
of the TLG funds (approximately $1.9 million) to the FCP Corporate account, not just the $50,000.
SC-2411 (Revised July 1, 2013) MINUTE ORDER
Schaub asked Waters to return the funds to him, but Waters claimed that the FCP Corporate account
had been frozen “because there was something wrong with the money.” Waters told Schaub that he
would contact Citibank and find out what needed to be done in order for the funds to be released.
Schaub alleges that the FCP Corporate account was never frozen and that Waters subsequently
transferred all of the funds in the account to an account controlled by FCP Private for Waters’s personal
use and to repay other investors he had defrauded.
On June 14, 2021, Schaub and TLG filed their verified second amended complaint (“SAC”) for (1)
conversion, (2) intentional misrepresentation – fraud, (3) concealment, (4) breach of contract -
$1,940,000, (5) breach of contract - $400,000, and (6) unjust enrichment. Waters, FCP Private, and FCP
Corporate now demur to the SAC for failure to state facts sufficient to constitute a cause of action.
Defendants have also filed a motion to strike the fourth and fifth causes of action for breaches of contract
and the sixth cause of action for unjust enrichment. Plaintiffs oppose the demurrer and motion to strike.
ANALYSIS:
1. Demurrer to SAC
A general demurrer will be sustained if “[t]he pleading does not state facts sufficient to constitute a cause
of action.” Code Civ. Proc. §430.10, subd. (e). The objective of a general demurrer is to test the legal
sufficiency of the pleading to determine whether the plaintiff has alleged facts sufficient to establish every
element of the cause of action at issue. Cantu v. Resolution Trust Corporation (1992) 4 Cal.App.4th 857,
879. It is not the function of a general demurrer to test the truth of the plaintiff’s allegations or the
accuracy with which it describes the defendant’s conduct. Committee on Children’s Television, Inc. v.
General Foods Corporation (1983) 35 Cal.3d 197, 213. In general, a complaint is sufficient to withstand a
demurrer if it alleges enough facts to apprise the defendant of the specific conduct at issue in the
case. Wise v. Southern Pacific Company (1963) 223 Cal.App.2d 50, 60.
Defendants challenge plaintiffs’ first cause of action for conversion, as well as their other claims, on the
ground that Schaub is not the real party in interest and lacks standing to assert the claims. The court
disagrees that Schaub lacks standing and will overrule defendants’ demurrer on that ground. “Every
action must be prosecuted in the name of the real party in interest, except as otherwise provided by
statute.” Code Civ. Proc. §367. In general, in order to have standing “the plaintiff must be able to allege
injury – that is, some invasion of the plaintiff's legally protected interests.” Angelucci v. Century Super
Club (2007) 41 Cal.4th 160, 175. As stated in Blumhorst v. Jewish Family Services of Los
Angeles (2005) 126 Cal.App.4th 993:
“The issue of whether a party has standing focuses on the plaintiff, not the issues he or she seeks to
have determined. A person who invokes the judicial process lacks standing if he, or those whom he
properly represents, does not have a real interest in the ultimate adjudication because [he] has neither
suffered nor is about to suffer any injury of sufficient magnitude reasonably to assure that all of the
relevant facts and issues will be adequately presented.”
Id., at 1001 (internal quotes and citations omitted).
See also, Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 439-440 (“[t]he purpose of
[the] standing requirement is to ensure that the courts will decide only actual controversies between
parties with a sufficient interest in the subject matter of the dispute to press their case with
vigor”); Residents of Beverly Glen, Inc. v. City of Los Angeles (1973) 34 Cal.App.3d 117, 129
(association had standing to maintain action on behalf of members who were injured by defendant).
SC-2411 (Revised July 1, 2013) MINUTE ORDER
Here, Schaub has alleged that he suffered an “invasion of [his] legally protected interests” sufficient to
afford him an interest in pursuing his claims. As alleged in the SAC, Schaub is the sole owner and
member of TLG, a Hong Kong limited liability company. (SAC, ¶ 10.) Thus, whatever injury TLG suffered
was likewise suffered by Schaub as the funds in question “rightfully belong to him.” (SAC, ¶ 4.) Because
Schaub has a legally protected interest in the monies held by defendants, he has standing to bring the
first cause of action for conversion. Schaub also has standing to bring the second and third causes of
action for intentional misrepresentation and concealment because he was the person allegedly lied to
and the person who relied upon Waters’s alleged misrepresentations and concealments to his detriment.
(SAC, ¶¶ 27-34, 66-73, 76-78.) Finally, Schaub has standing to bring the fourth, fifth, and sixth causes of
action for breaches of contract and unjust enrichment because both he and TLG were parties to the
contracts at issue in the case. (SAC, ¶¶ 81, 87.)
Plaintiffs’ second cause of action is for intentional misrepresentation. To state a cause of action for
intentional misrepresentation, or fraud, the plaintiff must allege (1) a false representation, concealment,
or nondisclosure of a material fact, (2) knowledge of its falsity, (3) intent to defraud, (4) justifiable
reliance, and (5) resulting damage. Robinson Helicopter Company, Inc. v. Dana Corporation (2004) 34
Cal.4th 979, 990. Defendants argue that plaintiffs’ fraud cause of action is deficient because the alleged
misrepresentations by Waters only caused TLG to intend to send $50,000 to the FCP Corporate account.
In their SAC, plaintiffs acknowledge that defendants acquired the remaining funds (approximately $1.9
million) by bank error, not fraud, as “HSBC mistakenly transferred all the funds to the FCP Corporate
(HK) account, not just the $50,000.” (SAC, ¶ 27.)
The court finds that plaintiffs’ fraud cause of action is sufficiently pleaded and will overrule defendants’
demurrer. Whether plaintiffs were fraudulently induced to transfer $50,000 or $1.9 million is not
determinative of whether they have stated a cause of action for fraud. Schaub alleges that Waters
misrepresented on multiple occasions that the transferred funds would be held in trust and that the funds
would be transferred back to plaintiffs upon request. (SAC, ¶¶ 29, 66, 81.) Schaub relied upon these
representations and allowed funds in his TLG account to be transferred to the FCP Corporate account.
(SAC, ¶ 30.) Plaintiffs were thereafter damaged when Waters allegedly misappropriated the funds for his
own purposes. (SAC, ¶ 41.)
Defendants’ demurrer to plaintiffs’ third cause of action for concealment will likewise be overruled. The
elements of a cause of action for concealment are (1) the defendant concealed or suppressed a material
fact from the plaintiff, (2) the defendant was under a duty to disclose the fact to the plaintiff, (3) the
defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the
plaintiff was unaware of the fact and would have acted differently had the plaintiff known of the
concealed or suppressed fact, and (5) resulting damage to the plaintiff. Kaldenbach v. Mutual of Omaha
Life Insurance Company (2009) 178 Cal.App.4th 830, 850. Here, plaintiffs’ SAC pleads each of these
elements. After Waters allegedly induced plaintiffs to send funds to an account under his control and
then falsely represented that the account had been frozen by the bank, Waters actively concealed from
plaintiffs that the funds were not frozen and could be withdrawn. (SAC, ¶¶ 35, 40, 76.) As a result,
plaintiffs took no steps to prevent Waters from draining the account. (SAC, ¶ 77.)
Defendants next challenge plaintiffs’ fourth cause of action for breach of contract for $1,940,000 and fifth
cause of action for breach of contract for $400,000 on the ground that when the court sustained
defendants’ demurrer to plaintiffs’ first amended complaint, which did not include contract claims,
plaintiffs were not granted leave to add new causes of action. Pleadings may be amended, however, to
address the court’s reasons for sustaining a demurrer. Patrick v. Alacer Corporation (2008) 167
Cal.App.4th 995, 1015 (granting leave to amend following the sustaining of a demurrer is generally
construed as allowing the plaintiff to add a new cause of action if it directly responds to the court’s reason
for sustaining the demurrer). Plaintiffs have done that in this case as the two contract causes of action
SC-2411 (Revised July 1, 2013) MINUTE ORDER
address the deficiencies found by the court with regard to their unjust enrichment cause of action. The
court will therefore overrule defendants’ demurrer to the two contract claims.
The court finds that the contract claims also allege sufficient facts to state a proper cause of action. In
their fourth cause of action, plaintiffs allege that the parties entered into an oral contract whereby
defendants agreed to hold plaintiffs’ funds in trust and to return the funds upon request. (SAC, ¶ 81.)
Plaintiffs allege that they performed their part of the agreement by transferring funds to the FCP
Corporate account, but that defendants breached the agreement by refusing to return the funds. (SAC,
¶¶ 83, 84.) Defendants argue that plaintiffs’ fourth cause of action fails for lack of consideration because
defendants’ willingness to hold plaintiffs’ funds in trust conferred no benefit to defendants. However,
while “[t]he benefit may be trifling . . . , if the promisor is not otherwise lawfully entitled to it, it is sufficient
to sustain the contract as a matter of law. The law does not weigh the quantum of the
consideration.” Chrisman v. Southern California Edison Company (1927) 83 Cal.App. 249, 254. Here, it
can reasonably be inferred there was a goodwill element to the agreement, which Waters wanted to
protect, as the parties were long-time business associates.
Plaintiffs’ fifth cause of action for breach of contract is also properly pleaded. Schaub alleges that he
orally agreed to loan $400,000 to Waters to provide liquidity for Waters’s company, China Network
Logistics, and that he later agreed that Waters could convert the $400,000 loan to shares in a different
company called the Food Box Network. (SAC, ¶ 87.) Waters repeatedly reaffirmed his agreement to
repay the $400,000 to plaintiffs, but then failed to do so. (SAC, ¶¶ 88, 89, 90.) Defendants claim that the
oral agreement violates the statute of frauds under Civil Code Section 1624, which provides:
“(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing
and subscribed by the party to be charged or by the party’s agent:
“(7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an
amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or
household purposes, made by a person engaged in the business of lending or arranging for the lending
of money or extending credit. . . .”
The statute of frauds is inapplicable, however, as nowhere in the SAC is it alleged that plaintiffs were
“engaged in the business of lending or arranging for the lending of money or extending credit” and
defendants’ demurrer to plaintiffs’ fifth cause of action will be overruled.
Lastly, defendants demur to plaintiffs’ sixth cause of action for unjust enrichment on the ground that
“unjust enrichment” is not a cause of action. While unjust enrichment is generally not recognized as a
standalone cause of action, where the plaintiff has pleaded allegations giving rise to a right to restitution
based on unjust enrichment, it is error to sustain a demurrer to the claim. Rutherford Holdings, LLC v.
Plaza Del Rey (2014) 223 Cal.App.4th 221, 232. As the Rutherford court stated:
“[R]estitution may be awarded in lieu of breach of contract damages when the parties had an express
contract, but it was procured by fraud or is unenforceable or ineffective for some reason. [Citation.] Thus,
a party to an express contract can assert a claim for restitution based on unjust enrichment by ‘alleg[ing
in that cause of action] that the express contract is void or was rescinded.’ [Citation.] A claim for
restitution is permitted even if the party inconsistently pleads a breach of contract claim that alleges the
existence of an enforceable agreement.”
Id., at 231.
SC-2411 (Revised July 1, 2013) MINUTE ORDER
In their unjust enrichment claim, plaintiffs allege that defendants derived monetary benefits from plaintiffs
and were unjustly enriched by more than $2.3 million (first, the $400,000 loan and then the $1.9 million
bank transfer) after fraudulently deceiving plaintiffs. (SAC, ¶¶ 91, 92, 93.) Because plaintiffs have
asserted two breach of contract causes of action to support their unjust enrichment claim, defendants’
demurrer to plaintiffs’ sixth cause of action will be overruled.
2. Motion to Strike Portions of SAC
“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion . . . [s]trike
out any irrelevant, false, or improper matter inserted in any pleading.” Code Civ. Proc. §436. “The
grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of
which the court is required to take judicial notice.” Code Civ. Proc. §437, subd. (a).
Defendants ask the court strike plaintiffs’ fourth and fifth causes of action for breaches of contract on the
ground that the court did not grant plaintiffs leave to add new causes of action after sustaining
defendants’ demurrer to plaintiffs’ first amended complaint. Defendants also ask the court strike plaintiffs’
sixth cause of action for unjust enrichment on the ground that unjust enrichment is not a recognized
cause of action. For the reasons already discussed, the court finds that plaintiffs’ breach of contract
causes of action were appropriately added in response to the court’s earlier ruling on defendants’
demurrer and that plaintiffs’ claim for unjust enrichment is properly asserted. Accordingly, defendants’
motion to strike these claims will be denied.
Defendants shall have to and including October 25, 2021, to file and serve their answer to plaintiffs’ SAC.
DARREL E. PARKER, EXECUTIVE OFFICER Minutes Prepared by:
Kristi Temple , Deputy
SC-2411 (Revised July 1, 2013) MINUTE ORDER
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SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA BARBARA Dated and Entered: 10/15/2021 Time: 10:00 AM Judicial Officer: Donna D Geck Deputy Clerk: Kristi Temple Dept: SB Dept 4 Deputy Sheriff: Marco Diaz Court Reporter: Michelle Sabado Case No: 20CV02113 Mark Schaub et al vs Andrew Wyles Waters et al Parties Present: NATURE OF PROCEEDINGS: Motion: Strike Second Amended Complaint; Demurrer to Second Amended Complaint No appearances. The Court adopted the tentative ruling as follows: RULING: Defendants’ demurrer to plaintiffs’ second amended complaint is overruled. Defendants’ motion to strike portions of plaintiffs’ second amended complaint is denied. Defendants shall file and serve their answer to plaintiffs’ second amended complaint on or before October 25, 2021. BACKGROUND: This is an action for alleged conversion of bank funds and related claims. Plaintiffs are Mark Schaub (“Schaub”) and his limited liability company, TLG Ltd. (“TLG”). Defendants are Andrew Waters (“Waters”) and his limited liability companies, FCP Private, LLC (“FCP Private”) and FCP Corporate (HK) Ltd. (“FCP Corporate”). Schaub and Waters are former business associates, having first met in 2008 when both were living and doing business in Shanghai, China. Schaub and Waters conducted several business transactions together. In one of the transactions, Schaub loaned $400,000 to a company controlled by Waters called China Network Logistics. Schaub later agreed to exchange the $400,000 loan to China Network Logistics for shares in a different company controlled by Waters called Food Box Network. Schaub alleges that Food Box Network is a fake company that was used by Waters to scam investors. Schaub has never been repaid the $400,000 that he loaned to Waters. At the time of the events in this case, TLG had approximately $1.9 million in a long-term investment account with HSBC, a bank incorporated in Hong Kong. In June 2019, HSBC notified Schaub that it was planning to close his TLG account. Schaub discussed the pending account closure with Waters, who indicated that HSBC was closing the account because it contained a journal entry in the amount of $50,000 that HSBC believed was a “tainted” transaction. Waters told Schaub that he should transfer the $50,000 to FCP Corporate’s account with Citibank, where the funds would be safe because it was a client trust account. Schaub agreed to transfer the funds. However, HSBC mistakenly wire-transferred all of the TLG funds (approximately $1.9 million) to the FCP Corporate account, not just the $50,000. SC-2411 (Revised July 1, 2013) MINUTE ORDER Schaub asked Waters to return the funds to him, but Waters claimed that the FCP Corporate account had been frozen “because there was something wrong with the money.” Waters told Schaub that he would contact Citibank and find out what needed to be done in order for the funds to be released. Schaub alleges that the FCP Corporate account was never frozen and that Waters subsequently transferred all of the funds in the account to an account controlled by FCP Private for Waters’s personal use and to repay other investors he had defrauded. On June 14, 2021, Schaub and TLG filed their verified second amended complaint (“SAC”) for (1) conversion, (2) intentional misrepresentation – fraud, (3) concealment, (4) breach of contract - $1,940,000, (5) breach of contract - $400,000, and (6) unjust enrichment. Waters, FCP Private, and FCP Corporate now demur to the SAC for failure to state facts sufficient to constitute a cause of action. Defendants have also filed a motion to strike the fourth and fifth causes of action for breaches of contract and the sixth cause of action for unjust enrichment. Plaintiffs oppose the demurrer and motion to strike. ANALYSIS: 1. Demurrer to SAC A general demurrer will be sustained if “[t]he pleading does not state facts sufficient to constitute a cause of action.” Code Civ. Proc. §430.10, subd. (e). The objective of a general demurrer is to test the legal sufficiency of the pleading to determine whether the plaintiff has alleged facts sufficient to establish every element of the cause of action at issue. Cantu v. Resolution Trust Corporation (1992) 4 Cal.App.4th 857, 879. It is not the function of a general demurrer to test the truth of the plaintiff’s allegations or the accuracy with which it describes the defendant’s conduct. Committee on Children’s Television, Inc. v. General Foods Corporation (1983) 35 Cal.3d 197, 213. In general, a complaint is sufficient to withstand a demurrer if it alleges enough facts to apprise the defendant of the specific conduct at issue in the case. Wise v. Southern Pacific Company (1963) 223 Cal.App.2d 50, 60. Defendants challenge plaintiffs’ first cause of action for conversion, as well as their other claims, on the ground that Schaub is not the real party in interest and lacks standing to assert the claims. The court disagrees that Schaub lacks standing and will overrule defendants’ demurrer on that ground. “Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.” Code Civ. Proc. §367. In general, in order to have standing “the plaintiff must be able to allege injury – that is, some invasion of the plaintiff's legally protected interests.” Angelucci v. Century Super Club (2007) 41 Cal.4th 160, 175. As stated in Blumhorst v. Jewish Family Services of Los Angeles (2005) 126 Cal.App.4th 993: “The issue of whether a party has standing focuses on the plaintiff, not the issues he or she seeks to have determined. A person who invokes the judicial process lacks standing if he, or those whom he properly represents, does not have a real interest in the ultimate adjudication because [he] has neither suffered nor is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented.” Id., at 1001 (internal quotes and citations omitted). See also, Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 439-440 (“[t]he purpose of [the] standing requirement is to ensure that the courts will decide only actual controversies between parties with a sufficient interest in the subject matter of the dispute to press their case with vigor”); Residents of Beverly Glen, Inc. v. City of Los Angeles (1973) 34 Cal.App.3d 117, 129 (association had standing to maintain action on behalf of members who were injured by defendant). SC-2411 (Revised July 1, 2013) MINUTE ORDER Here, Schaub has alleged that he suffered an “invasion of [his] legally protected interests” sufficient to afford him an interest in pursuing his claims. As alleged in the SAC, Schaub is the sole owner and member of TLG, a Hong Kong limited liability company. (SAC, ¶ 10.) Thus, whatever injury TLG suffered was likewise suffered by Schaub as the funds in question “rightfully belong to him.” (SAC, ¶ 4.) Because Schaub has a legally protected interest in the monies held by defendants, he has standing to bring the first cause of action for conversion. Schaub also has standing to bring the second and third causes of action for intentional misrepresentation and concealment because he was the person allegedly lied to and the person who relied upon Waters’s alleged misrepresentations and concealments to his detriment. (SAC, ¶¶ 27-34, 66-73, 76-78.) Finally, Schaub has standing to bring the fourth, fifth, and sixth causes of action for breaches of contract and unjust enrichment because both he and TLG were parties to the contracts at issue in the case. (SAC, ¶¶ 81, 87.) Plaintiffs’ second cause of action is for intentional misrepresentation. To state a cause of action for intentional misrepresentation, or fraud, the plaintiff must allege (1) a false representation, concealment, or nondisclosure of a material fact, (2) knowledge of its falsity, (3) intent to defraud, (4) justifiable reliance, and (5) resulting damage. Robinson Helicopter Company, Inc. v. Dana Corporation (2004) 34 Cal.4th 979, 990. Defendants argue that plaintiffs’ fraud cause of action is deficient because the alleged misrepresentations by Waters only caused TLG to intend to send $50,000 to the FCP Corporate account. In their SAC, plaintiffs acknowledge that defendants acquired the remaining funds (approximately $1.9 million) by bank error, not fraud, as “HSBC mistakenly transferred all the funds to the FCP Corporate (HK) account, not just the $50,000.” (SAC, ¶ 27.) The court finds that plaintiffs’ fraud cause of action is sufficiently pleaded and will overrule defendants’ demurrer. Whether plaintiffs were fraudulently induced to transfer $50,000 or $1.9 million is not determinative of whether they have stated a cause of action for fraud. Schaub alleges that Waters misrepresented on multiple occasions that the transferred funds would be held in trust and that the funds would be transferred back to plaintiffs upon request. (SAC, ¶¶ 29, 66, 81.) Schaub relied upon these representations and allowed funds in his TLG account to be transferred to the FCP Corporate account. (SAC, ¶ 30.) Plaintiffs were thereafter damaged when Waters allegedly misappropriated the funds for his own purposes. (SAC, ¶ 41.) Defendants’ demurrer to plaintiffs’ third cause of action for concealment will likewise be overruled. The elements of a cause of action for concealment are (1) the defendant concealed or suppressed a material fact from the plaintiff, (2) the defendant was under a duty to disclose the fact to the plaintiff, (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff was unaware of the fact and would have acted differently had the plaintiff known of the concealed or suppressed fact, and (5) resulting damage to the plaintiff. Kaldenbach v. Mutual of Omaha Life Insurance Company (2009) 178 Cal.App.4th 830, 850. Here, plaintiffs’ SAC pleads each of these elements. After Waters allegedly induced plaintiffs to send funds to an account under his control and then falsely represented that the account had been frozen by the bank, Waters actively concealed from plaintiffs that the funds were not frozen and could be withdrawn. (SAC, ¶¶ 35, 40, 76.) As a result, plaintiffs took no steps to prevent Waters from draining the account. (SAC, ¶ 77.) Defendants next challenge plaintiffs’ fourth cause of action for breach of contract for $1,940,000 and fifth cause of action for breach of contract for $400,000 on the ground that when the court sustained defendants’ demurrer to plaintiffs’ first amended complaint, which did not include contract claims, plaintiffs were not granted leave to add new causes of action. Pleadings may be amended, however, to address the court’s reasons for sustaining a demurrer. Patrick v. Alacer Corporation (2008) 167 Cal.App.4th 995, 1015 (granting leave to amend following the sustaining of a demurrer is generally construed as allowing the plaintiff to add a new cause of action if it directly responds to the court’s reason for sustaining the demurrer). Plaintiffs have done that in this case as the two contract causes of action SC-2411 (Revised July 1, 2013) MINUTE ORDER address the deficiencies found by the court with regard to their unjust enrichment cause of action. The court will therefore overrule defendants’ demurrer to the two contract claims. The court finds that the contract claims also allege sufficient facts to state a proper cause of action. In their fourth cause of action, plaintiffs allege that the parties entered into an oral contract whereby defendants agreed to hold plaintiffs’ funds in trust and to return the funds upon request. (SAC, ¶ 81.) Plaintiffs allege that they performed their part of the agreement by transferring funds to the FCP Corporate account, but that defendants breached the agreement by refusing to return the funds. (SAC, ¶¶ 83, 84.) Defendants argue that plaintiffs’ fourth cause of action fails for lack of consideration because defendants’ willingness to hold plaintiffs’ funds in trust conferred no benefit to defendants. However, while “[t]he benefit may be trifling . . . , if the promisor is not otherwise lawfully entitled to it, it is sufficient to sustain the contract as a matter of law. The law does not weigh the quantum of the consideration.” Chrisman v. Southern California Edison Company (1927) 83 Cal.App. 249, 254. Here, it can reasonably be inferred there was a goodwill element to the agreement, which Waters wanted to protect, as the parties were long-time business associates. Plaintiffs’ fifth cause of action for breach of contract is also properly pleaded. Schaub alleges that he orally agreed to loan $400,000 to Waters to provide liquidity for Waters’s company, China Network Logistics, and that he later agreed that Waters could convert the $400,000 loan to shares in a different company called the Food Box Network. (SAC, ¶ 87.) Waters repeatedly reaffirmed his agreement to repay the $400,000 to plaintiffs, but then failed to do so. (SAC, ¶¶ 88, 89, 90.) Defendants claim that the oral agreement violates the statute of frauds under Civil Code Section 1624, which provides: “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent: “(7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of lending or arranging for the lending of money or extending credit. . . .” The statute of frauds is inapplicable, however, as nowhere in the SAC is it alleged that plaintiffs were “engaged in the business of lending or arranging for the lending of money or extending credit” and defendants’ demurrer to plaintiffs’ fifth cause of action will be overruled. Lastly, defendants demur to plaintiffs’ sixth cause of action for unjust enrichment on the ground that “unjust enrichment” is not a cause of action. While unjust enrichment is generally not recognized as a standalone cause of action, where the plaintiff has pleaded allegations giving rise to a right to restitution based on unjust enrichment, it is error to sustain a demurrer to the claim. Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 232. As the Rutherford court stated: “[R]estitution may be awarded in lieu of breach of contract damages when the parties had an express contract, but it was procured by fraud or is unenforceable or ineffective for some reason. [Citation.] Thus, a party to an express contract can assert a claim for restitution based on unjust enrichment by ‘alleg[ing in that cause of action] that the express contract is void or was rescinded.’ [Citation.] A claim for restitution is permitted even if the party inconsistently pleads a breach of contract claim that alleges the existence of an enforceable agreement.” Id., at 231. SC-2411 (Revised July 1, 2013) MINUTE ORDER In their unjust enrichment claim, plaintiffs allege that defendants derived monetary benefits from plaintiffs and were unjustly enriched by more than $2.3 million (first, the $400,000 loan and then the $1.9 million bank transfer) after fraudulently deceiving plaintiffs. (SAC, ¶¶ 91, 92, 93.) Because plaintiffs have asserted two breach of contract causes of action to support their unjust enrichment claim, defendants’ demurrer to plaintiffs’ sixth cause of action will be overruled. 2. Motion to Strike Portions of SAC “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion . . . [s]trike out any irrelevant, false, or improper matter inserted in any pleading.” Code Civ. Proc. §436. “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” Code Civ. Proc. §437, subd. (a). Defendants ask the court strike plaintiffs’ fourth and fifth causes of action for breaches of contract on the ground that the court did not grant plaintiffs leave to add new causes of action after sustaining defendants’ demurrer to plaintiffs’ first amended complaint. Defendants also ask the court strike plaintiffs’ sixth cause of action for unjust enrichment on the ground that unjust enrichment is not a recognized cause of action. For the reasons already discussed, the court finds that plaintiffs’ breach of contract causes of action were appropriately added in response to the court’s earlier ruling on defendants’ demurrer and that plaintiffs’ claim for unjust enrichment is properly asserted. Accordingly, defendants’ motion to strike these claims will be denied. Defendants shall have to and including October 25, 2021, to file and serve their answer to plaintiffs’ SAC. DARREL E. PARKER, EXECUTIVE OFFICER Minutes Prepared by: Kristi Temple , Deputy SC-2411 (Revised July 1, 2013) MINUTE ORDER