Business Properties #6 vs. Umana Academy of Fine Arts, Inc.

Demurrer to Amended CrossComplaint

Cal. Super. - 4th Dist.August 18, 2017

I © © a ON Wn 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 THE DURINGER LAW GROUP, PLC Stephen C. Duringer (SBN 134592) Edward L. Laird (SBN 102534) 181 S. Old Springs Road, Second Floor Anaheim Hills, CA 92808 (714) 279-1100 - Office (714) 279-1109 - Fax Attorneys for Plaintiff and Cross-defendant Business Properties #6 ELECTRONICALLY FILED Superior Court of California, County of Orange 0213/2018 at 10:05:00 A Clerk of the Superior Court By hanique Ramirez, Deputy Clerk SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE, CENTRAL JUSTICE CENTER BUSINESS PROPERTIES #6 Plaintiff, v. UMANA ACADEMY OF FINE ARTS, INC; JUSTIN BOATMAN; MAUREEN BOATMAN; BRADEN RUSSELL; STEPHANIE RUSSEL; and Does 1 to 50, inclusive, Defendants. UMANA ACADEMY OF FINE ARTS, Inc.; JUSTIN BOATMAN; MAUREEN BOATMAN; BRADEN RUSSELL; STEPHANIE RUSSELL; Cross-complainants, V. BUSINESS PROPERTIES #6, and Roes 1 through 50, inclusive, Cross-defendants Case No.: 30-2017-00938523-CU-BC-CIC Assigned To: Hon. Linda Marks Reservation No. 72753552 NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED CROSS-COMPLAINT Date: April 30, 2018 Time: 10:00 am. Dept.: C10 TO ALL INTERESTED PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on April 30, 2018, at 10:00 a.m., in Department C10 of the above-entitled Court located at 700 Civic Center Drive West, Santa Ana, CA, or as soon Notice Of Demurrer And Demurrer to First Amended Cross-complaint 1 ; J d N o No N o N O N o N o N o N o NN - - Jo ey f t - - - - -_ - 0 ~~ O N hh bh W N = DO Y N R W = O Oo 0 NN A nn ks W N thereafter as the matter may be heard, Cross-defendant Business Properties #6 will demur to the Cross-complaint of Cross-complainants Umana Academy Of Fine Arts, Inc., Justin Boatman, Maureen Boatman, Braden Russell and Stephanie Russell, as to each cause of action therein alleged. This Demurrer is based on the grounds that each cause of action of the Cross-complaint fails to state facts sufficient to constitute a cause of action and the individual parties do not have standing. This Demurrer is based on this notice, the memorandum of points and authorities submitted herewith, on the papers and pleadings on file herein and on such other oral or documentary evidence or argument as may be submitted at the hearing of this demurrer. Dated: February 12, 2018 DURINGER LAW GROUP, PLC By: =A 0 Edward L.Laird Attorneys for Plaintiff and Cross; defendant Business Properties #6 Notice Of Demurrer And Demurrer to First Amended Cross-complaint 2 Oo «0 NN NN n b W N N O N N N N N N N N = e e e d e m E e e d 0 ~~ O N Un RA W N = DO OVO R N Y N R W N = O DEMURRER Cross-defendant Business Properties #6 hereby demurs to the First Amended Cross- complaint of Cross-complainants Umana Academy Of Fine Arts, Inc., Justin Boatman, Maureen Boatman, Braden Russell and Stephanie Russell, as follows: 1. Cross-defendant Business Properties #6 demurs to the First Cause of Action for Breach of Oral Contract, on the ground that it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc. § 430.10(e).) 2. Cross-defendant Business Properties #6 demurs to the Second Cause of Action for Fraud - Promise Made Without Intent to Perform, on the ground that it fails to state facts sufficient to constitute a cause. (Code Civ. Proc. § 430.10(e).) 3. Cross-defendant Business Properties #6 demurs to the Third Cause of Action for Promissory Estoppel, on the ground that it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc. § 430.10(¢).) 4. Cross-defendant Business Properties #6 demurs to the fourth Cause of Action for Breach of the Implied Covenant of Good Faith and Fair Dealing, on the ground that it fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc. § 430.10(e).) Dated: February 12, 2018 ~~ DURINGER LAW GROUP, PLC Edward L." Laird Attorneys for Plaintiff and Cross; defendant Business Properties #6 Notice Of Demurrer And Demurrer to First Amended Cross-complaint 3 Oo 0 NN O N Vn bh W N = N O N N N N N D N N N EE e s e R e e e e ee e d e d e d Ww ~~ O N Wh RA W N = O DO N Y R W = O IL II. Iv. VIL TABLE OF CONTENTS INTRODIICTIOMN. .......onwonows esis ois sss sim esses sms miss sass cesses (1s sy seas ssa esses 6 THE FACC FAILS TO STATE A CAUSE OF ACTION FOR BREACH OF CONTRACT. coerce terete nests stsst sts b sass bss seb s sbeebs sbeebs snes eras bse nese nbessannas 7 A. The Oral Agreements Are Unenforceable Modifications Of A Written Lease. ...... 7 B. The Oral Agreement To Accept The Proceeds Of Sale As Full Performance Under The Lease Is Too Uncertain To Be Enforced. ..........cooooviiiiiiin 10 THE FACC FAILS TO STATE A CAUSE OF ACTION FOR FRAUD...........ccccu.... 11, 13 THE FACC FAILS TO STATE A CLAIM FOR PROMISSORY ESTOPPEL. ................ 12 THE FACC FAILS TO STATE A CLAIM FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AN FAIR DEALING. ....ccccecerrienirininnieresnsseseressesesesnnes 14 CONCLUSION. .....v. cere msnemmm armesueses sens nonnme 4 466546565545855 5555565 5538 TR EAE SHARES ESSA SAREE 15 Notice Of Demurrer And Demurrer to First Amended Cross-complaint 4 Oo «0 NN Oo n n b w NN N O R N N N N N RN N m e m e e s e e e e e a 00 ~~ O O wn h r W O N = OO OV N N RE W N -= OO TABLE OF AUTHORITIES Cases Beggerly v. Gbur (1980) 112 Cal. App.3d 180... eens 9 Bustamante v. Intuit, Inc. (2006) 141 Cal. App.4th 199... 10 Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197.............. 11 D. L. Godbey & Sons Constr. Co. v. DOANE ....oeveveveeeecreecteereeien te ter e ese stee esses sees san sess een ssa s ates 9 Diamond Woodworks, Inc. v. Argon Ins. Co. (2003) 109 Cal.App.4th 1020.......cccccveerereueenenen. 14 Hartong v. Partake, Inc. (1968) 266 Cal.App.2d 942 ........ocvviiiiiicniiiiciiiciciiiecteeetennrennes 12 Healy, Bravster (1963) 39 Cal. 2dA8S onummsssmmmmmmeasnnrmmsssmnmms ws m m srgsasssmess 13 Hunt v. Smyth (1972) 25 Cal.APP.3d 807 scusssmssinssovios sonssmmssasssmsmassnssanssunessmasssmmesssmmmsssmessmmissmamsss 8 Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935... 10 JULIAN V. GOLA, 214 Cal. TA a..eveeeeeeeeeeeeetrecieeseressste esse essessssssassasssessssosssssessassatsssssesasessesors ss asarsssssss § Ladas v California State Automobile Association (1993) 19 Cal. App 4th TE). csummnssmsnsnuemmenvmsanes 10 Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665 ........coccvivvmnvimnneninnnincinisssinncns 13, 14 Stoltenberg 9. Harveston (1934) 1 Cal. 2d 264. ous assomssemsrmmmmeonsomssmssssysss 8,9 Tenzer v. Superscope (1985) 39 Cal.3d 18 ......oevieoiiiiiectete steers nes 12 Statutes CIVIL COGS QLBIB ove eeraronceronmormaneaomameamonsassnsassoss o asiuh 550 HES 5100 EHS ERSTSS SOSEART RAIS SHS BE STRESS 8,9,13, 14 Notice Of Demurrer And Demurrer to First Amended Cross-complaint 5 OO 0 NN O N Un BR W N N O N N R N N N N N e m em e R e e e d e e e e 0 ~~ O N wn hh W N = O V W N N N BR E W N = O MEMORANDUM OF POINTS AND AUTHORITIES LL INTRODUCTION. Cross-complainants Umana Academy Of Fine Arts, Inc. (“Umana”), a defunct children’s school, tells an improbable tale of a lessor orally agreeing to excuse hundreds of thousands of dollars of lease liability in exchange for the indefinite proceeds of sale of a failing business. Indeed, it is admitted that not even the school’s primary asset, its students, had any value to the purported suitors. (Cross-complaint [“FACC”] 118) Joining Umana as Cross-complainants are the guarantors of the lease, Justin Boatman, Maureen Boatman, Braden Russell and Stephanie Russell (collectively referred to as the “Guarantors”. The lease between Cross-defendant Business Properties #6 (“BP”) and Umana was a commercial lease (the “Lease”) entered into in March of 2012, and the individual cross- complainants guaranteed the lease. (FACC 975-6) The FACC acknowledges that by January of 2016 Umana was failing as a business. (FACC 97) Cross-Complainants Maureen Boatman and Stephanie Russell, in their capacity as officers of Umana, approached the property manager for BP, to discuss Umana’s financial difficulty. (Id.) There was an oral promise by BP to reduce rent and the new terms were to be “drafted”, i.e., put into writing, by Umana. (FACC 98) Umana also proposed a solution of selling the business to which BP was “amenable”. (Id.) On or about February 1, 2016, Umana presented a new payment plan and retained a broker to help sell its business to someone that would “take over the lease”. (FACC 99) Payments were allegedly reduced to $5,000 a month, however, the Cross-complaint does not attach the new -- plan as an exhibit or describe its terms in any further detail. (FACC 910) The payments of $5,000 a month were made through June of 2017. | In April or May of 2016, Umana proposed that upon a sale of its business the “entire proceeds would be paid over to BP as a means of cancelling the balance of the lease term.” (FACQ 912) Umana merely estimated what the anticipated sale price would be. (Id.) Notwithstanding the uncertainty surrounding this sale, in July or August of 2016 Umana purportedly agreed to accept the sale proceeds for cancelling the balance of the lease term. (FACC 14) As alleged in paragraph 9 of the FACC, the “sale” was to include an assignment to “take over” the existing lease. This is Notice Of Demurrer And Demurrer to First Amended Cross-complaint 6 No OO 0 NN NN nn B W 10 11 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 28 corroborated by paragraph 21 where it is alleged that Umana requested financials from a potential suitor and that Umana was preparing a lease for signatures. Notably, potential buyers did not require the retention of any of Umana’s students; thus, casting overwhelming doubt on the value of the business, which depended on students for its revenue. (FACC 918) An offer of unspecified terms to purchase the business was received in August 2016 and Cross-defendants assert that BP “did not take reasonable steps to assist with the sale”, without alleging what assistance was expected. (FACC 16) Critical to the sale was transfer of the existing Conditional Use Permit (“CUP”). (FACC 19) BP allegedly insisted on using its own contractor who caused unspecified “obstacles” which prevented transfer of the CUP. (FACC 920) In October of 2016 another buyer expressed interest and BP wanted to see the buyer’s financials. (FACC 921) BP allegedly told Umana’s realtor that it was preparing a lease for signature. (Id.) Negotiations between BP and the new buyer were not successful and it became “very clear” that BP was not going to honor the agreement to accept the proceeds of a sale of Umana as fulfillment of Umana’s lease obligations and an escrow was cancelled. (FACC 1923-26) The above allegations, which are incorporated into and operate as the basis for each cause of action, are insufficient to support the causes asserted. II. THE FACC FAILS TO STATE A CAUSE OF ACTION FOR BREACH OF CONTRACT. Emerging from the background facts are two alleged oral agreements for Cross- complainants First Cause of Action for breach of contract. “Agreement One” is the alleged oral agreement to accept a lowered lease payment of $5,000 a month. (FACC 929) “Agreement Two” is the alleged oral agreement that the proceeds of the sale of Umana’s business would be paid over to BP as a wash for the balance of the lease term. (FACC 930) Both of those alleged agreements are unenforceable modifications to the underlying lease. (CC 929-30) Additionally, the agreement to accept sale proceeds in lieu lease payments is too indefinite to be enforced. A. The Oral Agreements Are Unenforceable Modifications Of A Written Lease. The Cross-complaint alleges the existence of a written Lease. The alleged oral agreements purport to change the Lease terms. Agreement One purports to decrease rent for the balance of the Notice Of Demurrer And Demurrer to First Amended Cross-complaint 7 OO 0 3 O N Bl W N N o N o N o N o N o N o N Y N o N = f t - p - t - - - - f d pi d 0 ~~ O N Ln BR W N = O V N O Y BE ERE W N = O lease. Agreement Two purports to pay off the Lease through a proposed sale of the business. These allegations trigger Civil Code §1698 which states: (a) A contract in writing may be modified by a contract in writing. (b) A contract in writing may be modified by an oral agreement to the extent that the oral agreement is executed by the parties. (c) Unless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consideration. The statute of frauds (Section 1624) is required to be satisfied if the contract as modified is within its provisions. (d) Nothing in this section precludes in an appropriate case the application of rules of law concerning estoppel, oral novation and substitution of a new agreement, rescission of a written contract by an oral agreement, waiver of a provision of a written contract, or oral independent collateral contracts. Here, Cross-complainants rely on subdivision (b) permitting modification by an “executed” oral agreement. The FACC alleges the oral agreement for lowered rent “. . . was executed when Cross-defendant accepted the lower rental rate”. (FACC 929) Further, that the oral agreement to accept the proceeds of sale was “. . . executed when Cross-defendants agreed that the proceeds of the sale of Cross-complainant’s business would be paid over to Cross-complainants as a wash for the balance of the lease term”. (FACC 30) | A long line of case has established that an oral agreement to accept reduced lease payments can at most apply only to payments already accepted as satisfaction in full. Stoltenberg v. Harveston (1934) 1 Cal.2d 264, 266-267 states: In so far as the payments of rent made under the oral agreement of the parties are concerned, there can be no question that as to those payments actually made and accepted as rent in full for the period covered by them, the oral agreement reducing the rent was executed and no claim for the recovery of rent during the period covered by said payments can be maintained. (Julian v. Gold, 214 Cal. 74 [3 Pac. (2d) 1009].) As to the monthly payments of rent due under said lease and not actually paid by the lessees, a different rule governs. As to such payments the oral agreement to accept amounts less than those called for in the written lease had not been executed. As stated in Hunt v. Smyth (1972) 25 Cal.App.3d 807, 820, again citing Julian v. Gold, among other authority: “From the foregoing authorities it is clear that the plaintiffs cannot predicate a modification of the agreement for future payments on the payment and acceptance of Notice Of Demurrer And Demurrer to First Amended Cross-complaint 8 OO ® NN a Un Bs W N N O O N R N N N N N N N e e e e e e e d e d e d 0 ~N Ww K N w NY - o \ O o o ~ J AN Wh > Ww No pt oo lesser sums in the past. Moreover, in the absence of agreement, or any expression of intent to accept the $ 250 payment in satisfaction of a $350 payment, rather than merely crediting it on the account, there was no forgiveness of the delinquency.” Based on Stoltenberg v. Harveston and Hunt v. Smyth, the acceptance of a reduced rent payment in the past does not constitute an executed agreement as to continued rent. Accordingly, the alleged oral agreement for a permanent rent reduction applicable to rent not yet due violates Civil Code §1698 and is unenforceable. The oral agreement to accept the proceeds of a sale of Umana to pay off the Lease is also not “executed”. Formerly, an oral modification could be deemed executed where the “. . . plaintiff has alleged an adequate consideration for the oral modification and full performance on its part under the terms thereof . . ..” D. L. Godbey & Sons Constr. Co. v. Deane (1952) 39 Cal.2d 429, 433-434, Section 1698 was amended in 1976 and the Legislative Committee Comments state that «, . . the requirement in Godbey that the party seeking enforcement of the oral modification must have executed his part of the agreement is not continued.” (Emphasis added.) Now, for an oral modification to be enforceable under subsection (b), it must be executed by both parties. See also, Beggerly v. Gbur (1980) 112 Cal. App.3d 180, 189, similarly observing the requirement of mutual execution. Here, the FACC admits that the oral agreement to accept the proceeds of a sale of Umana as performance in full under the Lease was never executed by BP. The FACC in fact alleges that BP “did not take reasonable steps to assist with the sale of the business” (FACC 16); and that “thq transaction (sale of the business) had not yet been submitted to the new managing partners”. (FACC 923) There is no allegation of any sale proceeds accepted by BP. In point of fact, there is not even any allegation of any sale proceeds at all. Mere agreement “. . . that the proceeds of the sale of Cross-complainant’s business would be paid over to Cross-complainants as a wash for the balance of the lease term”, as alleged in paragraph 29 of the FACC, does not constitute execution. Similarly, ““a gratuitous oral promise to postpone a sale of property pursuant to the terms of a trust deed ordinarily would be unenforceable under section 1698.” This is because the oral promise had not been executed by the parties, as required by section 1698.” Jones v. Wachovia Bank (2014) Notice Of Demurrer And Demurrer to First Amended Cross-complaint 9 Oo 0 NN NN n t B R A W N N O N N N N N N N , E e e e e e e e e e e 0 ~~ O N Wn BR W N OO O e N N YN N R W N O 230 Cal.App.4th 935, 943-944. The only way for the oral agreement of sale to be executed would be through an actual sale with actual proceeds that were actually accepted by BP. That is not alleged and as such the claim for breach of contract fails. B. The Oral Agreement To Accept The Proceeds Of Sale As Full Performance Under The Lease Is Too Uncertain To Be Enforced. “Under California law, a contract will be enforced if it is sufficiently definite (and this is a question of law) for the court to ascertain the parties’ obligations and to determine whether those obligations have been performed or breached.” (Citation omitted.) “To be enforceable, a promise must be definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.” (Citations omitted.) “Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable.” (Citations omitted.) “The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.” (Citations omitted.) But “[i]f ... a supposed ‘contract’ does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, there is no contract.” (Citation omitted.) Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 209. “To be enforceable, a promise must be definite enough that a court can determine the scope of the duty and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.” Ladas v California State Automobile Association (1993) 19 Cal.App.4th 761, 770. | The alleged oral agreement to pay off the Lease through a sale of the business lacks essential terms. The sale price is unfixed. At paragraph 12 the FACC alleges that Umana “informed Ms. Dome of what they anticipated the sale price would be”. (Emphasis added.) Thus, while it is plain enough that at least a certain amount was to be expected, the FACC does not include any such allegations. There is no specified limit on the amount of time that Cross- complainants would have to complete a sale. An agreement to sell at just any price at just any point in time is to uncertain to be enforced. It is also plain enough that a new lease was Notice Of Demurrer And Demurrer to First Amended Cross-complaint 10 OO 0 3 A N nh bh W N N O N N D R N N N N N N E e e e e e e e e e e d 0 ~~ O&O Wn hr W N R O YW N Y BRE W N = O contemplated. (FACC 921 and 23) However, the FACC contains no allegations as to the amount of the intended rent or other terms of a new lease. There is also no rationale basis for assessing damages, as required by Ladas v California State Automobile Association. If the agreement involved no minimum sale price and no minimum rent for the new tenant then exposure to a claim of breach would be virtually limitless. There is no clue as to how Umana’s damages might be measured. In point of fact, the FACC claims only “compensatory damages” without any description of what they might be. (FACC 933) Altogether, the alleged oral agreement for lowered rent and a sale of Umana with the proceeds paying off the Lease are just too uncertain to be enforced. III. THE FACC FAILS TO STATE A CAUSE OF ACTION FOR FRAUD. “[TThe rule is everywhere followed that fraud must be specifically pleaded. The effect of this rule is twofold: (a) General pleading of the legal conclusion of ‘fraud’ is insufficient; the facts constituting the fraud must be alleged. (b) Every element of the cause of action for fraud must be alleged in the proper manner (i.e., factually and specifically), and the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.” Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. The FACC at paragraph 14 alleges that it was August of 2016 when BP’s Laurie Dome represented that BP would accept sale proceeds “in exchange for cancelling the balance of the lease term” and that Cross-complainants should” actively pursue sale of the business”. Paragraph 15 states that Cross-complainants acted in “justifiable reliance” on the representation of August 2016. However, at paragraph 35 of the fraud cause of action, the FACC alleges that the “green light was given for cancellation of the balance of the lease term” in February of 2016. Given the allegations of paragraphs 14 and 15, the supposed representation could not have been made in February 2016. Adding to the ambiguity are contradictory references to the point in time when in supposed reliance Umana let it students go. Paragraph 18 indicates that event followed the supposed representation of August-2016 whereas paragraph 36 indicates it followed the supposed representations of February 2016. The FACC also does not allege to whom these representations Notice Of Demurrer And Demurrer to First Amended Cross-complaint 11 © «© NN O N n n hse W O N 00 ~~ OA Wn hs W N = O O N Y N R W N N = O were supposedly made or exactly how and when students were let go. A purpose of the specificity requirement is “to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.” (Id.) Here the vague and contradictory allegations of a promise made and reliance thereon are insufficient to state a cause of action for fraud. Furthermore, the reliance alleged is not justifiable. “A plaintiff will be denied recovery only if his conduct is manifestly unreasonable in the light of his own intelligence or information. It must appear that he put faith in representations that were "preposterous" or "shown by facts within his observation to be so patently and obviously false that he must have closed his eyes to avoid discovery of the truth." (Citation omitted.) Even in case of a mere negligent misrepresentation, a plaintiff is not barred unless his conduct, in the light of his own information and intelligence, is preposterous and irrational. Hartong v. Partake, Inc. (1968) 266 Cal.App.2d 942, 965. Here, the allegation is that Cross-defendants were told that Umana could pay reduced rent for an indefinite period of time while it undertook efforts to sell Umana and that the proceeds of sale, no matter what the amount or when the sale might occur, would be accepted as full satisfaction of Umana’s lease shHpatians. That fits the definition of preposterous as “contrary to nature, reason, or common sense”. It is preposterous to consider that Umana closed its business based on an alleged promise that no matter how long a sale might take and no matter what the proceeds might be, that Umana’s lease obligations would be excused. Our Supreme Court has recognized the potential for abuse in claims based on a promise made without intent to perform stating: “[A] disappointed promisee should not be allowed to present his claim for compensation to a jury simply by recasting his complaint to include an allegation of misrepresentation.” Tenzer v. Superscope (1985) 39 Cal.3d 18, 30. This is an appropriate case to apply that admonition. Minimally, further detail of the parameters of the alleged promise are necessary. IV. THE FACC FAILS TO STATE A CLAIM FOR PROMISSORY ESTOPPEL. “The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both Notice Of Demurrer And Demurrer to First Amended Cross-complaint 12 Oo © 9 a nh BR W O N N N R RN N N N N N e e e e e e e d e d e pe d 0 ~~ O N Wh Hh W N =, © VW ®® N N N B R A W N = O reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” (Emphasis added.) Jones v. Wachovia Bank, supra, 230 Cal. App.4th at 944-945. As discussed above, there was no clear and unambiguous promise upon which Cross-complainants could reasonably rely. There was no specific amount of sale proceeds to be obtained nor any specific rental amount to be paid by a new tenant. There could be no reasonable reliance on a promise that was limitlessly in favor of Umana to escape liability under the Lease by just any sale and just any new rental amount. - As illustrated by Raedeke v. Gibraltar Sav. & Loan Assn. (1974) 10 Cal.3d 665, there is another reason why the doctrine of promissory estoppel does not apply as demonstrated. Therein, lender agreed to postpone a foreclosure sale if prior to foreclosure a purchaser sufficient to pay off] the loan had been found. The Supreme Court found it necessary to avoid the doctrine of promissory estoppel because of an argument made by the lender that the agreement was unenforceable under Civil Code §1698. The Supreme Court stated: “The purpose of this doctrine is to make a promise binding, under certain circumstances, without consideration in the usual sense of something bargained for and given in exchange. (Id. at 672-673) The court noted that promissory estoppel is an equitable substitute for consideration so that “[i]f the promisee's performance was requested at the time the promisor made his promise and that performance was bargained for, the doctrine is inapplicable.” (Id.) The Supreme Court avoided promissory estoppel by finding that the act of the borrower finding a purchaser constituted consideration. (Id. at 673) The Raedeke decision was largely concerned with the trial court’s treating of a jury’s verdict as advisory and with what type of conduct may suffice as consideration, matters not pertinent here. Raedeke does nonetheless demonstrate that under facts similar to those here present, the doctrine of promissory estoppel would not apply because, as pled in the FACC, the promises were “bargained for”. They were bargained for when BP “requested” Umana to find a purchaser, as was the case in Raedeke. Paragraph 14 of the FACC plainly states that Cross- complainants were told to “actively pursue sale of the business” and paragraph 15 states that Cross-complainants acted in reliance thereon to “aggressively pursue sale of the business”. As stated in Healy v. Brewster (1963) 59 Cal.2d 455, 463 (cited by Raedeke), ©. . . where the Notice Of Demurrer And Demurrer to First Amended Cross-complaint 13 f d N o N o N o N o [\ ) N o N o N o N - p e d - - - - f t fo d jo y - 0 ~~ aN Ww N N Ww No - Oo \ O co AN wn E N Ww No - oo OW © uN ON Ln RA W N promisee's reliance was bargained for, the law of consideration applies; and it is only where the reliance was unbargained for that there is room for application of the doctrine of promissory estoppel.” As the FACC alleges a bargained for exchange, the doctrine of promissory estoppel does not apply.! Notably, Raedeke also supports the above contention that the oral agreements herein alleged are too ambiguous ail don’t give rise to reasonable reliance. In Raedeke, the oral agreement to was subject to specific time limitation. The purchaser had to be found before the foreclosure date. Also, the sale amount had to be enough to pay off the loan. Here there are no such allegations. V. THE FACC FAILS TO STATE A CLAIM FOR BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AN FAIR DEALING. “[T]he ‘implied covenant imposes upon each party the obligation to do everything that the contract presupposes they will do to accomplish its purpose.” (Citation omitted.) This rule was developed ‘in the contract arena and is aimed at making effective the agreement's promises.’ (Citation omitted.) The ‘precise nature and extent of the duty imposed . . . will depend on the contractual purposes.” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1393. Application of the covenant of good faith and fair dealing requires the existence of a contract. 1-3 00 CACI 325 (2017). The Fourth Cause of Action incorporates all prior] allegations of the FACC and refers to no other agreement than the alleged oral agreements. Accordingly, inasmuch as Cross-complainants’ causes of action for breach of oral agreement fail, so does the cause of action for breach of the covenant of good faith and fair dealing. 1 There is no cause to start thinking that the alleged oral agreements may be saved on grounds they were supported by consideration. For one thing, the FACC does not describe any consideration and expressly alleges the oral agreements were “executed”. For another thing, Civil Code §1698(c as it now reads post Raedeke states: “Unless the contract otherwise expressly provides, a contract in writing may be modified by an oral agreement supported by new consideration. The statute of frauds (Section 1624) is required to be satisfied if the contract as modified is within its provisions.” See, e.g., Diamond Woodworks, Inc. v. Argonaut Ins. Co. (2003) 109 Cal. App.4th 1020, 1038, fn. 11 [ provision that contract may be altered or amended only by written amendment signed by both parties does “otherwise provide]. The FACC acknowledges the existing Lease but fails to attach the Lease or to allege that the Lease does not prohibit an oral modification - - which it certainly does at 63, Exhibit “A” to the Complaint herein. Notice Of Demurrer And Demurrer to First Amended Cross-complaint 14 OO 0 3 Wn lx W N nN N O N N No No NY No NY ft p- - -t - pt - - - ft 0 = O N L h R W N D R DO 0 X N N R W N O VI. CONCLUSION. Based upon the foregoing Cross-defendant Business Properties #6 requests the Demurrer be granted in its entirety and without leave to amend. As a condition to any leave to amend Cross- complainants should be required to explain how the Cross-complaint could be amended to state a cause of action without contradicting the existing allegations. Respectfully submitted, Dated: February 12,2018 " DURINGER LAW GROUP PLC Edward E. Laird II Attorneys for Plaintiff and Cross- defendant BP Properties #6 Notice Of Demurrer And Demurrer to First Amended Cross-complaint 15 OO 00 N Y Wn BA W N N O N ND N N N N N e e ee E e e m © aq O n Lh BA W N R= O V O N Y W w e oO PROOF OF SERVICE CCP Section 1013(c) I am employed in the County of Orange, State of California. I am over the age of 18 years and not a party to the within action. My business address is 181 S. Old Springs Rd., 2" Floor, Anaheim Hills, CA 92808. On February 13, 2018, I served the within document described as: NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED CROSS-COMPLAINT XX © MAIL: By placing on said date a true copy of the document listed herein enclosed in a sealed envelope addressed as follows: Scott G. Nathan Attorney for Defendants, UMANA ACADEMY LAW OFFICES OF SCOTT G. NATHAN OF FINE ARTS, INC., MAUREEN 12241 Newport Avenue, Suite 100 BOATMAN, BRADEN RUSSELL, JUSTIN North Tustin, California 92705 BOATMAN & STEPHANIE RUSSELL Tel: (714) 835-2900 Fax: (714) 835-2905 Email: snathan 8law.com BY MAIL - I deposited such envelope in the mail at Duringer Law Group, Anaheim, California. The envelope was mailed with postage thereon fully prepaid. Iam “readily familiar with the firm’s practice of collection and processing correspondence for mailing. Under that practice said correspondence is deposited with the United States Postal Service on that same day with postage thereon fully prepaid in the ordinary course of business and there is delivery service by United States mail at the place where deposited. PERSONAL SERVICE: I caused such envelope by hand to the parties as listed hereinabove. FAX SERVICE: by transmitting the document(s) listed above via facsimile from sending facsimile machine number to the fax number(s) set forth below on this date before 5:00 p.m. and receiving confirmed transmission reports indicating that the document(s) were successfully transmitted ELECTRONIC TRANSMISSION: On the date and from the address stated hereinabove I served electronically the document described herein from the address of elaird@duringerlaw.com to and/or through the address(es) of (see above). XX (State): I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. (Federal): I declare that I am employed in the office of a member of the bar of this court, at ‘whose direction this service was made. Executed on February 13, 2018 at Anaheim Hills, California. i ) ; IL AkhaCantoran Proof of Service - 1