Filed 12/21/17 Bliven v. Locasio CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

BRIAN BLIVEN,

Plaintiff and Appellant,

v.

JOHN LOCASCIO, et al.,

Defendants and Respondents.
H043030
(Santa Clara County
Super. Ct. No. 1-13-CV-256818)

Appellant Brian Bliven seeks review of the superior court’s grant of a motion in limine for judgment on the pleadings in favor of respondents John and Marcello LoCascio and their auto body repair business, Union Jack. Appellant contends that the court should not have granted judgment on the pleadings based on a settlement agreement without assuming the truth of the facts pleaded in his first amended complaint. We agree with appellant that the facts alleged in appellant’s complaint were sufficient to preclude judgment on the pleadings in this procedural context. Accordingly, we must reverse.
Background
Appellant initiated this action in November 2013 with a complaint against respondents for breach of contract, negligence, fraud, and violations of Business and Professions Code sections 9884.8 and 9884.9 (governing invoices and written estimates, respectively, by auto repair dealers). Appellant alleged that respondents breached a contract to repair and restore his 1959 Austin Healey vehicle: they began work before issuing an estimate, performed phase 2 repairs before completing phase 1 and before obtaining appellant’s approval, performed work exceeding the original estimate without authorization, failed to use reasonable care in performing the work, and allowed the vehicle to sustain damage from a collision while in their care. In his sixth cause of action for “Unlawful Contract in Violation of Civil Code § 1668” appellant also claimed that respondents had, among other things, forced him to sign a release and waiver of liability or else “endure increasing storage fees and threatened legal action.”
The document to which the sixth cause of action referred, titled “Waiver of Liability and Release,” had been signed by the parties on August 30, 2012. Appellant had sought the assistance of the Bureau of Automotive Repair (BAR) in retrieving his car; the BAR representatives recommended settlement, which resulted in the waiver agreement drafted by respondents.
In the waiver agreement appellant expressly agreed that in consideration for respondents’ release of his car from storage at their facility, appellant would pay them $1,000 and “waive any and all rights” to sue respondents “for any reason related to or arising out of said repair contract.”
Appellant paid the $1,000 to respondents. The following December, however, appellant sued in the Small Claims Division of the superior court to recover that money. Respondents answered with their own claim for $5,000 and an injunction “to stop defamation” of Union Jack. In February 2013 the small claims action was dismissed without prejudice “[a]s to both sides,” based on the August 30, 2012 waiver of liability.
Respondents demurred to the November 2013 complaint, asserting res judicata based on the earlier small-claims action. On April 16, 2014, the superior court overruled the demurrer as to the first five causes of action because the small-claims action had been dismissed without prejudice and thus could not serve as the basis for res judicata. The sixth cause of action for unlawful contract, however, was subject to demurrer because the section on which appellant relied, Civil Code section 1668, applied only to future torts, not to past conduct.
In ruling on the demurrer, the court acknowledged respondents’ additional claim that the August 30, 2012 waiver was “comprehensive and conclusive,” thus precluding this litigation. The court rejected that position, stating, “Determining the effect and scope of the waiver Bliven signed is not appropriate for purposes of this demurrer. [Citation.] [¶] Defendants contend that Bliven alleges no facts to support his duress allegation (i.e. fraud in the execution/inducement). This contention is belied by the complaint. (See Complaint, ¶ 30 [alleging that Bliven signed the waiver under duress of incurring storage fees and having a lien placed on his vehicle].”
On April 25, 2014 appellant filed the operative pleading, the first amended complaint. In this version, the sixth cause of action for “Unilateral Rescission of Waiver Based on Fraud, Duress, and Undue Influence” asserted that respondents had breached the parties’ original repair contract, falsified invoice records, stopped communicating with appellant, and threatened a DMV lien and accruing storage fees if appellant did not pay the full amount due of $2,957.50. Then, in order to “exempt themselves from the responsibility of their fraud, violations of the Bus. & Profess. Codes [sic], cover [sic] their negligence,” respondents took “a grossly oppressive and unfair advantage of Plaintiff’s necessities or distress” by drafting a release of liability. Because of respondents’ undue influence and the duress he was under, appellant’s “only choice to procure his [vehicle] was to sign the release and waiver of liability or endure increasing storage fees, the unlawful detention of his property, and threatened legal action.” Appellant therefore demanded “the voiding of the release and waiver of liability.”
Respondents answered the first amended complaint with a general denial and 16 affirmative defenses, including the following: “16. Mutual General Release for All Known and Unknown Claims. Plaintiff signed and delivered a valid and enforceable mutual general release for all known and unknown claims covering every cause of action and claim found in the complaint. Defendant [sic] performed all conditions required of defendant. Plaintiff breached that agreement to release claims. The breach has caused harm to defendant, including causing defendant to incur unwarranted costs and expenses, including attorney fees. If the court for some reason invalidates this release, then defendant’s claims pre-release will be again valid and should be judicially determined in this proceeding.”
On August 14, 2015, respondents filed “Motion in Limine #1” which explicitly sought judgment on the pleadings under Code of Civil Procedure section 438, subdivision (c)(1)(B)(ii). (AA 118) Again invoking the waiver and release, respondents disputed appellant’s assertions of duress, citing Civil Code section 1569. Respondents asserted that they were justified in refusing to return appellant’s vehicle without his having paid for the work they had claimed had been done. Respondents further countered the allegation of fraud, noting that (a) lack of communication does not constitute fraud, (b) the asserted falsified invoice records were delivered to appellant before he signed the settlement agreement, and (c) appellant had a week to read and consider the agreement before he signed it and paid respondents $1,000. Appellant, a sophisticated and experienced car collector, knew what needed to be done and agreed to an estimate of $10,000; now, respondents argued, he could not claim to be susceptible to undue influence in agreeing to the compromise. Thus, in respondents’ view, appellant’s statement that he felt he had no choice but to sign the agreement constituted an admission that “he was not induced to sign that release under false pretenses.”
In his opposition appellant pointed out that respondents had not sought reconsideration of the prior demurrer ruling in which the court had rejected the waiver agreement as a ground for judgment as a matter of law. Noting that a motion for judgment on the pleadings is the equivalent of a demurrer, appellant urged the court to reject this motion for the same reason as expressed in the April 16, 2014 order. Alternatively, he argued, the issue of the waiver involved factual questions that should be tried by a jury, as they shed light on “the history of the relationship between the parties, how the work wasn’t done as represented, why the relationship between the parties deteriorated, how invoices were altered after the fact, how false invoices were presented to Plaintiff, and how illegal threats of a lien and withholding of the vehicle were used to extort payment and a waiver from Plaintiff.” Appellant also opposed respondents’ requests to exclude or limit evidence raised in other motions in limine, which are not before us on appeal.
At the hearing on August 17, 2015, appellant further argued that respondents were essentially seeking reconsideration of the prior demurrer ruling, which had been made by a different superior court judge. Appellant maintained that he signed the waiver under economic duress; respondents, after fraudulently manipulating the invoices, had held his car “hostage,” leaving him no choice but to sign the agreement. Respondents, on the other hand, insisted that there were “insufficient facts [pleaded] to set aside the settlement agreement. It’s that simple.”
The court granted respondents’ motion on September 11, 2015, and entered judgment that day. Appellant moved for reconsideration, which was denied on November 6, 2015, the court having found appellant’s “pursuit of this issue after the [BAR] settlement [to be] somewhat reprehensible.” Appellant then filed a timely appeal from the judgment.
Discussion
1. Scope and Standard of Review
As noted earlier, respondents presented their motion for judgment on the pleadings as their Motion in Limine #1. We have previously expressed our disapproval of such procedural strategies: “In limine motions are designed to facilitate the management of a case, generally by deciding difficult evidentiary issues in advance of trial. . . . What in limine motions are not designed to do is to replace the dispositive motions prescribed by the Code of Civil Procedure. . . . These nontraditional in limine motions can result in a court’s dismissing a cause on the pleadings . . . The disadvantages of such shortcuts are obvious. They circumvent procedural protections provided by the statutory motions or by trial on the merits; they risk blindsiding the nonmoving party; and, in some cases, they could infringe a litigant’s right to a jury trial. (Cal. Const., art. I, § 16.) Adherence to the statutory processes would avoid all these risks. Furthermore, these irregular procedures can result in unnecessary reversals. . . . Thus, some cases will be subject to reversal where, had the trial court just taken the time to hold a trial, reversal would not be warranted.” (Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1594 (Amtower); see also R & B Auto Center, Inc. v. Farmers Group, Inc. (2006) 140 Cal.App.4th 327, 371 (conc. opn. of Rylaarsdam, J.) [“To have the sufficiency of the pleading or the existence of triable issues of material fact decided in the guise of a motion in limine is a perversion of the process”].)
The admonition in Amtower finds purchase here, as the superior court’s grant of respondents’ motion in limine did not “facilitate the management of a case”; rather, it ended a case without a trial. (Amtower, supra, 158 Cal.App.4th at p. 1593.) And in so doing, it occasioned one of the “unnecessary reversals” contemplated by Amtower, as we conclude below.
A defendant generally may obtain judgment on the pleadings upon a showing that the “complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc. § 438, subd. (c)(1)(B)(ii).) “A motion for judgment on the pleadings is in effect a general demurrer and on review is to be tested by the same rules.” (IMO Development Corp. v. Dow Corning Corp. (1982) 135 Cal.App.3d 451, 457.) “ ‘All properly pleaded, material facts are deemed true, but not contentions, deductions, or conclusions of fact or law,’ ” and the court may consider judicially noticeable matters. (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777; Dunn v. County of Santa Barbara (2006) 135 Cal.App.4th 1281, 1298.) In light of these principles, we consider the merits of respondents’ motion in the context of the facts stated in appellant’s first amended complaint.
2. The Allegations Pertaining to the Settlement Agreement
In the sixth cause of action appellant sought rescission of the waiver and release on the ground of fraud, duress, and undue influence. On appeal, he challenges the court’s citation of a nonexistent statute and its consideration of the waiver agreement as extrinsic evidence without properly taking judicial notice of it. We need not scrutinize these asserted procedural aberrations, because the primary issue, whether it was proper to reject appellant’s pleading as a matter of law, is dispositive.
Appellant contends that after experiencing respondents’ “fraudulent, reprehensible and unfair actions,” he was then “effectively bullied” into signing the settlement agreement in order to retrieve his vehicle from “a facility that was negligently damaging it as time went on.” As his counsel explained at the August 2015 hearing on the motion, this was “an issue of economic duress where Mr. Bliven really had no choice but to pay them an additional thousand dollars and sign that document in order to get his vehicle back.” When the court asked counsel whether “the Court [is] just supposed to ignore that [settlement agreement],” counsel responded, “No. I think what you have to do is . . . allow a trial on the issue of the duress.” As appellant’s most developed theory appears to have been economic duress, we will focus on that argument.
3. Economic Duress as a Ground for Rescission
By statute, a party may rescind a contract if his or her consent was “obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance of the party as to whom he rescinds, or of any other party to the contract jointly interested with such party.” (Civ. Code, § 1689, subd. (b)(1).) Statutory duress consists in the unlawful or fraudulently obtained confinement of a person or the unlawful detention of a person’s property. (Civ. Code, § 1569.)
But our courts have also recognized the concept of economic duress, which “does not necessarily involve an unlawful act, but may arise from an act that is so coercive as to ‘cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract.’ ” (Tarpy v. County of San Diego (2003) 110 Cal.App.4th 267, 276, quoting CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 644 (CrossTalk Productions, Inc.).) “The assertion of a claim known to be false or a bad faith threat to breach a contract or to withhold a payment may constitute a wrongful act for purposes of the economic duress doctrine.” (Rich & Whillock, Inc. v. Ashton Development, Inc. (1984) 157 Cal.App.3d 1154, 1159 (Rich & Whillock).) Another way of defining the “wrongful act” component of the doctrine is that there could be “no legitimate dispute” about the defendant’s liability. (San Diego Hospice v. County of San Diego (1995) 31 Cal.App.4th 1048, 1058 (San Diego Hospice).)
“The underlying concern of the economic duress doctrine is the enforcement in the marketplace of certain minimal standards of business ethics. Hard bargaining, ‘efficient’ breaches and reasonable settlements of good faith disputes are all acceptable, even desirable, in our economic system. That system can be viewed as a game in which everybody wins, to one degree or another, so long as everyone plays by the common rules. Those rules are not limited to precepts of rationality and self-interest. They include equitable notions of fairness and propriety which preclude the wrongful exploitation of business exigencies to obtain disproportionate exchanges of value. Such exchanges make a mockery of freedom of contract and undermine the proper functioning of our economic system. The economic duress doctrine serves as a last resort to correct these aberrations when conventional alternatives and remedies are unavailing.” (Rich & Willock, supra, 157 Cal.App.3d at p. 1159.)
Appellant’s first amended complaint stated the following material facts, which we must accept as true under the proper standard of review. When appellant delivered his car to Union Jack on December 17, 2011, he gave respondents a written “Punch List” of specific repairs he wanted done, along with a “ ‘Restoration Guide and Inspection Standards for the Austin Healey Sprite,’ published by The Austin Healey Concourse Registry.” The list of repairs was to be accomplished in three phases, with instructions not to begin the next phase until appellant approved it. Plaintiff was given a repair order, which included “instructions to provide an estimate for body work, preparation and paint, and to refer to ‘customer supplied lists.’ ” Before preparing the estimate, however, respondents began the repair work.
The estimate was not prepared until January 10, 2012, and sent to appellant the next day. The estimate was for $9,605.00 to complete the project in 89 hours, but it did not list specific items from appellant’s repair list. Appellant had not signed the estimate or approved the work to begin. However, on January 17, 2012, he gave respondents a $2,000 deposit.
On February 24, 2012, appellant complained to respondents about applying the wrong primer color and incomplete metal repairs from the list. On March 12, 2012, appellant reviewed the phase 1 items with respondents, who marked with blue paint the specific repairs that needed to be addressed “to [e]nsure there were no misunderstandings of work expectations.” Appellant asked for a plan for completion, while respondents requested another payment of $2,500. Apparently appellant paid this amount, but no receipt was provided. Respondents told appellant that restoration work on his vehicle would stop “until complaints could be addressed and a corrective plan could be presented.”
When appellant inquired on May 18, 2012 about the corrective plan, he was informed that damage had been sustained to the vehicle during a collision. Appellant was asked to return in one week for a meeting. He was advised at that time that the cost of restoration would increase by at least $1,000.
On May 23, 2012, appellant demanded the immediate return of the car. Respondents had previously produced an $800 invoice, but upon appellant’s demand, respondents for the first time produced additional invoices from earlier dates. Respondents now claimed a past due balance of $2,957.50, which they demanded for the return of the vehicle. Appellant left without it.
Over the next three months the parties corresponded by email. Plaintiff repeatedly requested a detailed accounting for the hours logged and work performed. Respondents threatened storage fees and a lien on the car if payment was not made. The shop logs produced by respondents indicated work done without prior estimate or approval, inconsistent documentation, charges exceeding the estimated amounts, work performed below industry standards, and work that was never completed.
Eventually appellant contacted the BAR for assistance in resolving the dispute. Respondents thereafter sent multiple emails requesting appellant’s signature on the proposed settlement agreement along with payment of $1,000, followed by invoices for the past-due charge of $2,957.50 and storage fees totaling $720 (covering July 23 through August 15, at $30 per day). On August 30, 2012, “[u]nder the threats of accumulating storage fees and a DMV lien being placed on his [vehicle],” appellant signed the settlement agreement. His car was subsequently restored by another business “after being stripped to bare metal exposing sloppy repairs and other ‘repair’ areas covered by filler and primer.” On November 29, 2012, respondents returned a remaining item belonging to appellant, which they had previously represented as lost.
As pertinent to the allegation of duress in the sixth cause of action, appellant alleged that rescission was justified based on respondents’ falsification of invoice records and their threats to secure a DMV lien and accruing storage fees if he did not pay $2,957.50. Appellant’s “only choice” to recover his vehicle was to sign the release “or endure increasing storage fees, the unlawful detention of his property, and threatened legal action.”
These facts were sufficient to constitute a cause of action for rescission of the waiver agreement based on economic duress. Respondents’ assertion that they were “[a]bsolutely” justified in refusing to return appellant’s car without further payment is not helpful. Nor is it useful to insist that “[t]here is no evidence that Bliven could not, if he had wanted to, consulted with an attorney before signing [the agreement], and he may well have actually done so here.” Likewise, it cannot be declared at this point that appellant chose to sign the agreement notwithstanding his “reasonable alternatives,” or that “[t]he facts overwhelmingly demonstrate that Bliven simply experienced a change of heart after agreeing to the settlement or else never intended to abide by it in the first place.” These assertions depend on facts that remain to be introduced at trial or by summary judgment.
Appellant’s pleading was therefore not properly subject to disposition before any evidence could be presented. It is sufficient that the facts alleged in the complaint, if proved at trial, could convince a jury that appellant was subjected to economic duress when he signed the waiver agreement.
We express absolutely no opinion about the likely success or failure of appellant’s position at trial or in a summary adjudication proceeding. Should this matter culminate in a trial, it will be appellant’s burden, of course, to establish that he acted as “a reasonably prudent person” in the circumstances brought to bear upon him, that his signing of the waiver agreement was the product of respondents’ coercive conduct, and that he was faced with “no reasonable alternative” other than to agree to an unfavorable contract. (CrossTalk Productions, Inc., supra, 65 Cal.App.4th at p. 644.) This may be a heavy burden. Courts “are reluctant to set aside settlements and will apply ‘economic duress’ only in limited circumstances and as a ‘last resort.’ [Citation.]” (San Diego Hospice, supra, 31 Cal.App.4th at p. 1058; accord, Perez v. Uline, Inc. (2007) 157 Cal.App.4th 953, 959.) “When a party pleads economic duress, that party must have had no ‘reasonable alternative’ to the action it now seeks to avoid (generally, agreeing to contract). If a reasonable alternative was available, and there hence was no compelling necessity to submit to the coercive demands, economic duress cannot be established.” (CrossTalk Productions, Inc., supra, at p. 644.)
We thus conclude that it was improper to dispose of appellant’s action based solely on the existence of the settlement agreement without giving him an opportunity to establish the factual basis for a finding of economic duress. Whether appellant can establish his claim is a question we leave for trial or other disposition based on the presentation of evidence.
Disposition
The judgment is reversed.





_________________________________
ELIA, Acting P. J.

WE CONCUR:



_______________________________
PREMO, J.



_______________________________
BAMATTRE-MANOUKIAN, J.












Bliven v. Locascio et al.
H043030