Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Tuolumne County. No. CV54711 James A. Boscoe, Judge.
Michael D. Macomber for Plaintiff and Appellant.
Law Offices of Kate Powell Segerstrom, Kate Powell Segerstrom and John N. Gulick, Jr., for Defendants and Respondents.
OPINION
HILL, P.J.
Plaintiff appeals from a judgment entered against him after defendants’ demurrer to the second amended complaint was sustained without leave to amend. The trial court found the second amended complaint failed to state facts sufficient to constitute a cause of action for breach of contract or an account stated in writing. We agree and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff filed his original complaint on May 19, 2009. Before defendants responded, he filed a first amended complaint, to which defendants demurred. The court sustained the demurrer with leave to amend. Plaintiff filed a second amended complaint and defendants demurred again. They asserted plaintiff failed to state facts sufficient to constitute a cause of action for breach of a written contract, the statute of limitations had run on any cause of action for breach of a contract not in writing, and the common count for an account stated in writing was based on the same facts as the breach of contract cause of action, and therefore failed along with it. The court sustained the demurrer to the second amended complaint without leave to amend, and entered judgment in favor of defendants.
The first cause of action of the second amended complaint alleged plaintiff, an engineer, met with defendants, Land Tec, Inc. and Matthew Hagerty, to discuss defendants hiring plaintiff to develop “a remote video weapon sight, which is a water-pressure-tight camera system.” After the meeting, on October 20, 2004, plaintiff sent defendants a letter containing terms of an agreement. Defendants returned the letter, marked with revisions, to plaintiff the same day. On October 21, 2004, plaintiff received a second marked revision of the agreement from defendants’ advisor, Robert Himber, “for final review and consideration.” On October 26, 2004, plaintiff accepted the proposal without further changes. The written contract was attached to the second amended complaint as exhibit No. 2. The agreement was confirmed in subsequent emails and correspondence. Neither party signed the written contract. Plaintiff performed as required; he sent time slips to defendants, which Hagerty approved and defendants paid. On February 8, 2005, the design was completed. On April 1, 2005, the parties met and plaintiff told defendants his outstanding bill of $92,622 must be brought current before any further work could proceed. On May 31, 2005, defendants breached the contract by failing to pay the past due invoices.
The second cause of action of the second amended complaint incorporated by reference the allegations of the first cause of action and alleged defendants became indebted to plaintiff on an account stated in writing and for work done in designing the camera system at defendants’ request.
Defendants’ demurrer argued that the second amended complaint contained no allegation of facts showing that defendants agreed to the essential terms of the written contract. They argued the writing proffered by plaintiff as the contract was nothing more than a working draft which contemplated further negotiations before the agreement became final. They contended plaintiff had not stated a cause of action for breach of a written contract, and the statute of limitations had run on any cause of action for breach of a contract not in writing. Plaintiff responded that the parties were not required to sign the writing in order to adopt it as their contract, and the emails attached to the second amended complaint showed the parties’ agreement to the writing. Plaintiff did not dispute that the statute of limitations had run on any cause of action for breach of a contract not in writing.
DISCUSSION
I. Standard of Review
“On review from an order sustaining a demurrer, ‘we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory, such facts being assumed true for this purpose. [Citations.]’ [Citation.]” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) “We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law.” (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) We may consider exhibits attached to the complaint. “If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence.” (Holland v. Morse Diesel Internat., Inc. (2001) 86 Cal.App.4th 1443, 1447.)
II. Breach of Unwritten Contract
The second amended complaint on its face demonstrates the statute of limitations has run on any claim of breach of a contract not founded on an instrument in writing. The limitations period on such a cause of action is two years. (Code Civ. Proc., § 339, subd. (1).) The second amended complaint alleges defendants breached the contract on May 31, 2005. The original complaint was filed on May 19, 2009, almost four years later. Plaintiff does not attempt to argue that a breach of oral contract cause of action was timely filed. Thus, the second amended complaint did not state facts sufficient to constitute a cause of action for breach of a contract not in writing.
III. Breach of Written Contract
The elements essential to establish the existence of a contract are: “1. Parties capable of contracting; [¶] 2. Their consent; [¶] 3. A lawful object; and, [¶] 4. A sufficient cause or consideration.” (Civ. Code, § 1550.) “The consent of the parties to a contract must be: [¶] 1. Free; [¶] 2. Mutual; and, [¶] 3. Communicated by each to the other.” (Civ. Code, § 1565.) “Consent can be communicated with effect, only by some act or omission of the party contracting, by which he intends to communicate it, or which necessarily tends to such communication.” (Civ. Code, § 1581.)
The second amended complaint alleges plaintiff prepared a written contract, defendants made two sets of revisions to it, and plaintiff “accepted the proposal without any further changes”; it does not allege any facts explaining how this acceptance was made or how it was communicated to defendants. Because plaintiff’s conclusion that he accepted defendants’ proposal is a conclusion of law, we do not assume its truth.
“If a proposal prescribes any conditions concerning the communication of its acceptance, the proposer is not bound unless they are conformed to.” (Civ. Code, § 1582.) “[W]here it is part of the understanding between the parties that the terms of their contract are to be reduced to writing and signed by the parties, the assent to its terms must be evidenced in the manner agreed upon or it does not become a binding or completed contract.” (Beck v. American Health Group Internat., Inc. (1989) 211 Cal.App.3d 1555, 1562.) According to the second amended complaint, plaintiff originally prepared the exhibit No. 2 letter agreement. It contained a provision that “acceptance of this proposal is to be made by approved signature of all parties.” Defendants made no change to that provision in their revisions. Thus, both parties’ versions of the proposed contract prescribed the means by which acceptance was to be made and communicated: by signing the written agreement. Plaintiff did not allege he accepted the proposal in accordance with that term.
“‘Mutual consent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.’ [Citations.]” (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 208.) “The parties’ outward manifestations must show that the parties all agreed ‘upon the same thing in the same sense.’ [Citation.]” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 811.) “Preliminary negotiations or an agreement for future negotiations are not the functional equivalent of a valid, subsisting agreement. ‘A manifestation of willingness to enter into a bargain is not an offer if the person to whom it is addressed knows or has reason to know that the person making it does not intend to conclude a bargain until he has made a further manifestation of assent.’ [Citation.]” (Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 59.)
The second amended complaint alleges defendants sent plaintiff two sets of revisions of the letter agreement before plaintiff accepted their proposal. Only one written document is attached to the second amended complaint as the contract of the parties; there is no allegation that it contains all of the revisions requested or suggested by defendants. The letter agreement in exhibit No. 2 contains underlinings, strikeouts, and added parenthetical comments. For example, in paragraph 2.0 under “Basic Scope Of Work, ” which pertains to the “[d]esign of the support frame/enclosure structure for camera, electronics and battery, ” there is an underlined parenthetical stating: “This needs more definition.” In paragraph 2.0 under “Deliverables, ” an underlined parenthetical states: “Not sure we need this.” Under “Costs” is a parenthetical notation: “Joe you’ll need to revise these numbers please.” Also under costs, two estimates are given: one “[t]hrough milestone Goal 2” and the other “[t]hrough milestone Goal 5.” In the prior section, however, milestone goals 4, 5, and 6 appear in strikeout type, indicating those goals are being eliminated.
An email from Hagerty to plaintiff, dated October 20, 2004, and included as part of exhibit No. 2, states:
“Please review the changes/corrections made by MCH001 [Hagerty]. [¶] Certainly we are getting started on a working agreement between our two business entities. [¶] When you review or make changes, please use Track Changes under the tools function. [¶] Please note NOT to use the read only function as this prevents corrective changes on my end. [¶] Until we work out all these details, we’ll be batting this back and forth to get to a reasonable agreement. [¶] Looking forward to getting this done with you, both on the agreement and the project.”
Another email from Hagerty to plaintiff, dated October 21, 2004, and included in exhibit No. 2, states: “Further revisions by our editor, Mr. Robert Himber. Please review same.” No second version of the agreement with other revisions is included in the exhibits to the second amended complaint.
Applying an objective standard to the outward expressions of the parties, exhibit No. 2 cannot reasonably be interpreted to show that the parties all agreed upon the same thing in the same sense. Rather, they indicate defendants contemplated further negotiation and revision before the parties arrived at a final written agreement. Defendants’ notes left certain items incomplete or ambiguous, and the cover memo indicated an intent to “work out all these details” by “batting this back and forth to get to a reasonable agreement.” While plaintiff alleges he accepted “the proposal, ” his own allegations admit there were two written proposals containing revisions by defendants. He attached only one writing to the second amended complaint, and did not allege it contained all the revisions proposed by defendants. Further, he alleged he accepted the proposal on October 26, 2004; he did not allege facts indicating how he accepted it, nor did he allege that he communicated his acceptance to defendants in any way.
Plaintiff contends the parties’ subsequent conduct reflected their agreement to the written contract, even in the absence of a signed writing. The cases they cite do not address a similar factual situation.
In Amen v. Merced County Title Co. (1962) 58 Cal.2d 528 (Amen), the complaint alleged that the plaintiff entered into a contract to purchase a tavern from the sellers. The contract was in the form of escrow instructions, typed on forms provided by the defendant escrow holder, and signed by the buyers and the sellers. The instructions to the defendant required it to pay any debts over $10,000 out of the proceeds of the sale and provided that the escrow was accepted by the defendant subject to all terms and conditions set forth in the escrow instructions. (Id. at pp. 530-531.) Although the defendant had notice prior to close of escrow that the seller owed state sales taxes, it closed escrow without paying the taxes or notifying the plaintiff they were unpaid. The plaintiff sued the escrow holder more than two years after the alleged breach of contract. The court concluded the four-year statute of limitations applicable to a cause of action for breach of a written contract (Code Civ. Proc., § 337) applied. (Amen, at p. 533.) “If the escrow instructions are in writing and the escrow holder accepts them or if the escrow holder prepares the instructions, offers to perform them, and the buyer and seller accept the offer, an action for failure to comply with the instructions is on a written contract. The contract may be ‘in writing’ for purposes of the statute of limitations even though it was accepted orally or by an act other than signing.” (Id at p. 532.) The court added: “When a party has agreed to the writing, there is no reason to invoke the two-year statute of limitations applicable to oral agreements. The four-year statute of limitations, unlike the statute of frauds, does not require that the writing be signed by the party to be charged. Had the Legislature meant to make a signature mandatory for a writing to qualify for the longer period of limitations it would have so provided as it did in section 360 of the Code of Civil Procedure, which requires that a new promise to perform under an old contract be signed to start the statute running anew.” (Id. at p. 533.)
We are not dealing with escrow instructions, accepted or prepared by the escrow holder and signed by the buyer and the sellers. There was no final contract, signed by some parties, prepared by the party to be charged with its breach, and containing a provision expressing that party’s agreement to be bound by the terms of the writing. While Amen indicates a party may agree to a written contract without signing it, it does not eliminate the requirement that there must be a written agreement to which both parties manifest assent in order for the parties to be bound by it. Defendants’ revisions to the writing proffered by plaintiff indicate defendants anticipated further revisions and had not yet arrived at their intended final agreement.
In James De Nicholas Associates, Inc. v. Heritage Constr. Corp. (1970) 5 Cal.App.3d 421 (De Nicholas), the parties orally agreed that, in exchange for the plaintiff’s waiver of certain rights and provision of certain materials, the defendant would pay the plaintiff $10,000 plus certain expenses. The plaintiff confirmed the agreement in a letter, in which it offered to accept $13,000 for the consideration set forth in the letter. The defendant paid the plaintiff $5,000, then refused to pay the balance. The plaintiff sued for breach of contract, and the defendant’s demurrer was sustained without leave to amend on the ground the two-year statute of limitations on an oral contract had run. (Id. at p. 423.)
On appeal, the plaintiff argued the contract was written, even though the writing was not signed. (De Nicholas, supra, 5 Cal.App.3d at p. 424.) The court distinguished Amen; in Amen, the escrow instructions were prepared by the defendant on a form provided by the defendant, which tended to show the defendant’s acceptance of the terms. Additionally, the instructions provided the escrow was accepted by the defendant, subject to all the terms and conditions set forth in them. In De Nicholas, however, the writing was prepared by the plaintiff and there was no written indication of acceptance by the defendant. (De Nicholas, at p. 425.) The partial payment did not demonstrate an assent to the written contract, as opposed to the oral contract. (Id. at p. 426.)
Here, the proposed contract was prepared by plaintiff, revisions were made by defendants, and the revised contract and the accompanying cover memo indicated that further revisions were anticipated. Performance by the parties did not indicate their acceptance of the particular writing in exhibit No. 2, as opposed to their acceptance of some oral or implied contract that they anticipated would be memorialized later in a final written contract.
In E.O.C. Ord, Inc. v. Kovakovich (1988) 200 Cal.App.3d 1194 (E.O.C. Ord), the parties entered into an agreement for the plaintiff, an attorney, to represent the defendant in a tax matter. The parties spoke by telephone, then the plaintiff confirmed their agreement in a letter; it stated that the defendant had agreed to pay the plaintiff a percentage of any decrease in the tax, interest, and penalties owed, and the exact percentage was to be determined by the defendant and his general attorney, and set out in a separate letter. (Id. at pp. 1196-1197.) The defendant did not respond to the letter. The plaintiff wrote again, stating he was to receive 50 percent of any reduction in tax, interest, and penalties, and admonishing the defendant to respond immediately if he disagreed with this fee arrangement. (Id. at p. 1197.) Receiving no response, the plaintiff telephoned the defendant, discussed the letter with him, and received his oral agreement to its terms. The plaintiff subsequently asked the defendant to sign a copy of the letter, but the defendant did not do so. After the plaintiff secured a settlement of the tax matter, he demanded his fee; the defendant refused to pay, and the plaintiff filed suit more than three years later. Although the trial court found the parties entered into an agreement during their telephone conversation, it concluded the agreement was an oral contract and plaintiff’s claim was barred by the two-year statute of limitations.
The appellate court disagreed. It followed the Amen decision and concluded the parties orally agreed to the terms set out in the writing. “The terms of the agreement were spelled out in the May 1 letter, the letter was received by [the defendant], those terms were discussed by the parties during the May 18 telephone conversation, and [the defendant] unequivocally accepted them.” The court distinguished De Nicholas. In De Nicholas, it could not be determined whether the partial payment was in performance of the original oral agreement or in acceptance of the modified written agreement. (E.O.C. Ord, supra, 200 Cal.App.3d at p. 1200.) The plaintiff there “had not pleaded any facts which, if true, would prove defendant had accepted the subsequent, written offer from plaintiff which had changed the amount of consideration the earlier oral agreement had established.” (Id. at pp. 1200-1201.) The court explained:
“The requirements are only that there be a writing containing all terms and that there be acceptance by the party to be charged. How that acceptance is manifested is a matter of proof. It may be proved by evidence of words spoken, if believed by the trier of fact. It may be proved by evidence of a particular act other than signing. It may be proved by evidence that the party to be charged prepared the written document and offered to perform its terms. It was this last method of proof, preparation of the document and an offer to perform, that led to the conclusion in Amen that the defendant title company had entered into a contract founded upon a written instrument.” (E.O.C. Ord, supra, 200 Cal.App.3d at p. 1201.)
Plaintiff did not allege that defendants orally agreed to the terms set out in the exhibit No. 2 writing. He alleged he prepared a proposed contract and defendants proposed two sets of revisions. The version attached to the second amended complaint contains comments indicating the agreement is incomplete; the cover memorandum indicates defendants anticipated further negotiations and revisions. Plaintiff does not allege the parties manifested their agreement to exhibit No. 2 as the final version of their written contract. While he alleges he performed work on the project and was paid for it, plaintiff does not allege any facts demonstrating this work was performed pursuant to the written contract attached to the second amended complaint, rather than pursuant to an oral or implied contract.
Plaintiff contends that, under the Uniform Electronic Transactions Act (Civ. Code, § 1633.1 et seq.), if a law requires a record to be in writing, an electronic record satisfies that requirement. (Civ. Code, § 1633.7, subd. (c).) He argues that exhibit No. 2 was an electronic contract and, because the parties’ names were printed on it, the contract should be deemed signed. The Act, however, defines “electronic signature” as: “an electronic sound, symbol, or process attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the electronic record.” (Civ. Code, § 1633.1, subd. (h).) There was no allegation in the second amended complaint that defendants “executed or adopted” any “sound, symbol, or process … with the intent to sign” the exhibit No. 2 contract. That document ends with two signature and date lines, one for plaintiff and another for Hagerty. Both lines are blank. The second amended complaint contains no allegation defendants created the signature lines or the names appearing under them, attached the signature lines or names to the purported contract, or added anything as an electronic signature. Rather, it appears the signature lines and names were included in the document originally prepared by plaintiff, and defendants did nothing to change them, except to change the designation of Hagerty from “Principal/Owner” to “CEO, PI.” Consequently, the allegations of the second amended complaint are insufficient, even if exhibit No. 2 is analyzed as an electronic document.
The trial court correctly determined that the second amended complaint failed to allege facts sufficient to constitute a cause of action for breach of a written contract. It also correctly determined the second amended complaint failed to allege facts sufficient to constitute a cause of action for breach of a contract not in writing, because the expiration of the statute of limitations barred any such cause of action. Plaintiff has not asserted that he can amend in any way to allege a viable cause of action for breach of contract. Consequently, the demurrer to the breach of contract cause of action was properly sustained without leave to amend.
IV. Common Count
Plaintiff’s briefs contain no argument that the demurrer to the common count was improperly sustained. “‘Although our review of a [demurrer] is de novo, it is limited to issues which have been adequately raised and supported in plaintiffs’ brief. [Citations.] Issues not raised in an appellant’s brief are deemed waived or abandoned. [Citation.]’” (Davies v. Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086, 1096.) Consequently, plaintiff has waived any claim that it was error to sustain the demurrer to the second cause of action without leave to amend.
In any event, “[a] common count is not a specific cause of action …; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory. [Citations.] When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable. [Citations.]” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394-395.) Thus, plaintiff’s common count for an account stated in writing must stand or fall with his first cause of action for breach of contract. We find no error in the trial court’s sustaining of the demurrer without leave to amend.
DISPOSITION
The judgment is affirmed. Defendants are awarded their costs on appeal.
WE CONCUR: WISEMAN, J., FRANSON, J.