The Construction Company of San Luis Obispo, Inc., et al. v. Tubular George, Inc., et al.

B. Discussion

1. The Complaint Alleges Sufficient Facts to Plead the Existence of a Contract as to the First Cause of Action.

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff. [Citation.]” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal App.4th 1230, 1244.)

Defendants demur to the first cause of action on the ground that the complaint fails to set forth facts sufficient to allege the existence of a contract. Defendants argue that the breach of contract cause of action fails because the complaint does not include a signed and dated contract and does not plead facts showing mutual assent to the terms of the unsigned contract.

Defendants rely on Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299 (Harris) and Beck v. American Health Group Int’l, Inc. (1989) 211 Cal.App.3d 1555 (Beck). 1 Plaintiff argues that these authorities do not apply because these decisions “only fit cases where the parties’ understanding required assent ‘in the manner agreed upon’ (i.e., signatures) before any binding obligation could arise. Here, Defendants’ demurrer identifies no pleaded fact – and points to no allegation – that the parties agreed signatures were a condition precedent to being bound.” (Opp., p. 4, ll. 24-27.) The Court finds that neither authority supports Defendants’ position.

First, Defendants cite Harris for the proposition that “where the writing shows it was not intended to be binding until a formal written contract is executed, there is no contract.” (Harris v. Rudin, Richman & Appel, supra, 74 Cal.App.4th 299, 307.) In Harris, the court determined that plaintiff’s complaint contained sufficient facts to evidence at least an oral agreement. (Harris, at p. 308.) The Harris court stated that “[w]hether the parties intended their communications to be a binding settlement agreement or an agreement to further negotiate after a formal draft was prepared is a factual question not properly the subject of a demurrer.” (Ibid.)

Second, the Court finds Beck distinguishable. Defendants cite Beck to show that “where 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 Int’l, Inc., supra, 211 Cal.App.3d 1555, 1562.) The Beck court concluded that a letter between the parties did not constitute a binding agreement but was merely an “agreement to agree.” (Beck, at p. 1563.)

Unlike the letter in Beck, the Court finds that the complaint’s first cause of action does not plead merely an “agreement to agree.” The complaint alleges that on or about January 2021, Defendants entered into a written contract with Plaintiffs. (Cmp., ¶ BC-1; Att. No. BC-1.) The complaint attaches a copy of the agreement and incorporates it by reference. (Ibid., Ex. A.) In the absence of controlling authority requiring Plaintiff to attach a fully executed agreement to the complaint, under these circumstances, the Court finds that the first cause of action adequately alleges the existence of a contract.

Defendants next argue that Plaintiff does not allege Plaintiff’s performance or excuse thereof. However, the complaint alleges that “Plaintiff has performed all obligations to defendant except those obligations plaintiff was prevented or excused from performing.” (Cmp., ¶ BC-3.) (Weil &

1 Superseded on other grounds as noted in Epic Medical Management, LLC v. Pacquette (2015) 244 Cal.App.4th 504, 515-516, fn.

6.

Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2026) ¶ 6:246 [“In a breach of contract suit, plaintiff normally may allege plaintiff’s performance in general terms (‘Plaintiff duly performed all conditions on his part’).”].) The Court finds these allegations sufficient.

Accordingly, the demurrer to the first cause of action is overruled on grounds that the complaint sufficiently sets forth the existence of a contract and properly alleges Plaintiff’s performance or excuse for nonperformance.

2. The Complaint Fails to State Facts to Allege a Cause of Action for Intentional Interference with Contractual Relations.

“ ‘[A] stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract.’ (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126, 270 Cal.Rptr. 1, 791 P.2d 587, and cases cited.) To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage. (Ibid.)” (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148; see Cal. Law of Contracts (Cont.Ed.Bar 2026) § 8.78.)

Defendants contend that the complaint does not allege an existing contract between the Plaintiff and Solatube International.

The complaint alleges that Defendants “entered into a written agreement with Plaintiffs for the sale of goods from a line of products produced by Manufacturer Solatube International. Plaintiffs had an existing business relationship with Solatube International as well being that they were directly contracted to buy their products from middlemen Defendants.” (Cmp., p. 9.) The Court finds these allegations insufficient as to the existence of a valid contract between Plaintiff and Solatube International. Accordingly, the third cause of action is sustained with leave to amend.

3. The Fourth Cause of Action for Intentional Interference with Prospective Economic Advantage.

“In order to plead a claim for interference with prospective economic advantage, a plaintiff must allege an economic relationship between it and a third party that carries a probability of future economic benefit to the plaintiff, defendant’s knowledge of the relationship, intentional acts by the defendant designed to disrupt the relationship, actual disruption of the relationship, and economic harm to the plaintiff proximately caused by the defendant’s acts. [Citation.] In addition, the plaintiff must allege that the defendant’s conduct was ‘wrongful “by some measure beyond the fact of the interference itself.” ’ ” (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1220; See 5 Witkin, Cal. Procedure (6th ed. 2026) Pleading, § 770.)

Defendants’ sole contention challenging the fourth cause of action is that the allegation fails because no binding contract was ever formed between Plaintiff and Defendants. The Court has already determined, however, that the complaint sufficiently alleges the existence of the contract. The demurrer on this ground is overruled.

II. MOTION TO STRIKE

Defendants move to strike a portion of the prayer for contractual attorney’s fees, arguing that because the complaint fails to allege an executed contract between the parties, the request must be stricken. (Civ. Code § 1717.) In light of this Court’s ruling on the demurrer, the motion to strike is denied.

ORDER (PROPOSED)

The demurrer is sustained with leave to amend as to the third cause of action and overruled as to the first and fourth causes of action. The motion to strike is denied.

Plaintiffs may file a first amended complaint within twenty (20) days from service of the notice of ruling. (Code Civ. Proc., § 472b; Cal. Rules of Court, rule 3.1320(g).) Defendants will serve the notice of ruling. (Code Civ. Proc., § 1019.5, subd. (a).)

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