Filed 2/8/22 Espiritu v. Garrison CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION TWO

APPEAL from the Superior Court of Riverside County. Raquel A. Marquez, Judge. Affirmed.

Law Offices of William J. Tucker and William J. Tucker for Plaintiffs and Appellants.

Casselman Law Group and David B. Casselman; Esner, Change & Boyer and Stuart B. Esner for Defendant and Respondent.

I. INTRODUCTION

In 2015, defendant and respondent Mark Garrison (defendant) and plaintiffs and appellants Mary Jane Espiritu and Roberto Gerometta (collectively, plaintiffs) formed a business for the purpose of marketing and selling vegan foods. They named the business “ ‘Pivotal Foods, LLC’ ” (Pivotal) and agreed that plaintiffs would be responsible for the culinary aspects of Pivotal, while defendant would be responsible for the financial and business operations. As the business grew, plaintiffs made three capital contributions to Pivotal totaling $250,000. Defendant also made three capital contributions totaling that same amount, but he made his contributions at different times.

The parties disagreed about numerous issues regarding management of the business and began negotiations to end their business relationship in 2019. During the course of these negotiations, plaintiffs purportedly learned for the first time that defendant did not make his capital contributions to Pivotal at the same time that plaintiffs made their contributions. Plaintiffs alleged this failure constituted grounds for rescission of their contractual agreements with defendant; damages for fraud, negligent misrepresentation, or fraudulent concealment; equitable relief under the doctrine of money had and received; and an accounting.

On August 6, 2020, the trial court granted summary adjudication in favor of defendant on every cause of action stated in the complaint, and judgment in favor of defendant was entered on August 18. Plaintiffs appeal, arguing the trial court erred in granting summary adjudication on each cause of action, except the cause of action for accounting. We find no error warranting reversal and affirm the judgment.

II. FACTS AND PROCEDURAL HISTORY

A. Complaint

On August 26, 2019, plaintiffs filed a civil complaint against defendant. According to the complaint, plaintiffs and defendant agreed to form a business to market and sell vegan foods in 2015. They initially made an oral agreement to form the business; later, they formalized their business relationship in a written operating agreement (Operating Agreement) in January 2016 and a second written agreement, the Founders Agreement, in January 2019.

As relevant on appeal,[1] plaintiffs’ first six causes of action were styled as causes of action for “rescission for intentional misrepresentation,” “rescission for negligent misrepresentation,” “rescission for unilateral mistake of fact,” “damages for intentional misrepresentation,” “damages for negligent misrepresentation,” and “damages for suppression and concealment of fact.” However, each of these purported causes of action was based upon the same set of operative facts. Specifically, plaintiffs alleged that defendant represented he would “ ‘match’ ” any capital contribution that plaintiffs made to Pivotal; plaintiffs relied on this representation to make three capital contributions totaling $250,000;[2] and defendant’s representation was false or untrue.

Plaintiffs alleged that defendant’s representations were false because, with respect to two of their capital contributions, defendant delayed for months before making his corresponding capital contribution. Plaintiffs also alleged that, with respect to their third capital contribution, defendant never made a corresponding contribution. As a result, plaintiffs sought to rescind their oral and written agreements with defendant or, alternatively, obtain tort damages.

Finally, plaintiffs asserted a cause of action for “money had and received,” seeking equitable relief in the form of return of their capital contributions to Pivotal and a cause of action for an accounting of the money plaintiffs contributed to the business.[3]

B. Defendant’s Motion for Summary Adjudication

Defendant filed a motion for summary adjudication of all claims asserted by plaintiffs in the complaint. In a declaration in support of the motion, defendant attested that prior to the formation of Pivotal, there was never an agreement regarding the amount of any specific capital contributions. After the formation of Pivotal, the parties reached an agreement providing that plaintiffs (collectively) and defendant each would contribute $125,000 to Pivotal, but they never discussed the timing for these contributions. Defendant stated the parties’ discussions were memorialized in e-mail correspondence in February 2017, and he attached those messages. Defendant further confirmed that the parties later agreed that plaintiffs would contribute a total of $250,000, and defendant would contribute a total of $250,000 to Pivotal. However, the parties again did not discuss when these contributions would be made.

Defendant declared that he never represented that any capital contribution to Pivotal would be made at the same time as plaintiffs, never entered into any agreement providing for the timing of any capital contribution, and never even discussed the issue of simultaneous investment with plaintiffs. Defendant further attached the Operating Agreement entered into by the parties and the current bylaws for Pivotal, neither of which provided for simultaneous capital contributions by the parties.

Finally, defendant declared that when the parties were first forming Pivotal, he personally paid for various expenses necessary to establish the business; plaintiffs were notified of these expenses at the time they were paid; and, to the extent any of these expenses were not reimbursed, defendant treated them as part of his agreed contributions. Defendant attached e-mail correspondence to plaintiffs in which he notified plaintiffs of these expenses to Pivotal. He also attached written correspondence from vendors and contractors, invoices, receipts, and service agreements, indicating that a sum of $10,288 had been incurred by Pivotal, as well as his personal credit card and bank statements, indicating he had personally paid for these expenses.

Following the payment of these initial expenses, defendant deposited an additional $40,000 in June 2017. According to defendant, his unreimbursed expenses and this initial deposit were intended to correspond with plaintiffs’ initial capital contribution of $50,000. Defendant also deposited $75,000 into Pivotal’s bank account in May 2018, which he intended to correspond with a September 2017 deposit of $75,000 made by plaintiffs. Defendant attached e-mail correspondence indicating he had provided plaintiffs with a bank statement showing the timing of his contribution on the same day it was made. Finally, defendant made a deposit of $125,000 into Pivotal’s bank account on August 19, 2019, which corresponded with a $125,000 deposit made in May 2018 by plaintiffs. According to defendant, the deposits were never simultaneous because they were intended to correspond with Pivotal’s need for operating capital.

Defendant also submitted excerpts from the transcript of plaintiffs’ deposition testimony in which both plaintiffs admitted there were never express representations about making simultaneous capital contributions; there was no written agreement providing for simultaneous capital contributions; and the parties never had a discussion about making simultaneous contributions. Gerometta even admitted that, as long as defendant made his contributions available when Pivotal needed the money, such would comply with his understanding of the parties’ agreement. Gerometta also admitted he was not aware of any time in which Pivotal was left without sufficient funds to pay any expenses as a result of the timing of defendant’s contributions.

C. Plaintiffs’ Evidence in Opposition

In opposition, plaintiffs each submitted declarations that merely reaffirmed the allegations of the complaint, but they asserted those facts under oath. However, at no point in their declarations did they contradict defendant’s representation or their prior deposition testimony that the parties had never discussed or agreed upon the timing of any capital contributions.

D. Trial Court’s Ruling, Order, and Judgment

On July 30, 2020, the trial court held a hearing on the motion in which both parties presented oral argument. During the hearing, plaintiffs’ counsel was specifically asked by the trial court to identify the evidence showing harm to Pivotal flowing from defendant’s purported failure to make simultaneous capital contributions. However, plaintiffs did not identify any such evidence and instead argued that the lack of harm to Pivotal was irrelevant. At the conclusion of the hearing, the trial court took the matter under submission.

On August 6, 2020, the trial court entered an order granting summary adjudication as to all causes of action, and judgment in favor of defendant was entered on August 18. Plaintiffs appeal from the judgment.

III. DISCUSSION

On appeal, plaintiffs argue the trial court erred in granting summary adjudication on each cause of action, except the cause of action for an accounting. As we explain post, we find no error warranting reversal, and we affirm the judgment.

A. General Legal Principles and Standard of Review

“ ‘A summary adjudication motion is subject to the same rules and procedures as a summary judgment motion.’ ” (Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1157; see Code Civ. Proc., § 437c, subd. (f)(2) [A motion for summary adjudication “shall proceed in all procedural respects as a motion for summary judgment.”].)

“The standard of review for an order granting a motion for summary judgment is de novo. [Citation.] [¶] In performing our independent review, we apply the same three-step process as the trial court. ‘Because summary judgment is defined by the material allegations in the pleadings, we first look to the pleadings to identify the elements of the causes of action for which relief is sought.’ [Citation.] ‘We then examine the moving party’s motion, including the evidence offered in support of the motion.’ [Citation.] A defendant moving for summary judgment has the initial burden of showing that a cause of action lacks merit because one or more elements of the cause of action cannot be established or there is a complete defense to that cause of action. [Citation.] [¶] . . . f the moving papers make a prima facie showing that justifies a judgment in the defendant’s favor, the burden shifts to the plaintiff to make a prima facie showing of the existence of a triable issue of material fact.” ([i]Ryan v. Real Estate of Pacific, Inc. (2019) 32 Cal.App.5th 637, 642.)

B. Issues Framed by the Pleadings

We begin by considering the issues framed by the complaint. “The pleadings play a key role in a summary judgment motion and ‘ “ ‘set the boundaries of the issues to be resolved at summary judgment.’ ” ’ [Citation.] ‘[T]he scope of the issues to be properly addressed in [a] summary judgment motion’ is generally ‘limited to the claims framed by the pleadings.’ ” (Jacobs v. Coldwell Banker Residential Brokerage Co. (2017) 14 Cal.App.5th 438, 444.)

However, it is the factual allegations set forth in the complaint that determine what causes of action have been placed at issue. Thus, in defining the issues framed by the pleading, a reviewing court will disregard the title of a cause of action where the factual allegations actually state a different legal theory of liability. (See Borman v. Brown (2021) 59 Cal.App.5th 1048, 1060-1061 [interpreting the plaintiff’s cause of action as one for negligent misrepresentation despite use of the title “fraud and deceit” in complaint]; Vera v. REL-BC, LLC (2021) 66 Cal.App.5th 57, 65-66 [concluding that gravamen of the plaintiff’s complaint is one for fraud despite styling causes of action as “negligence,” “breach of warranty,” and “breach of contract”]; Hutton v. Fidelity National Title Co. (2013) 213 Cal.App.4th 486, 496 [concluding “entire complaint was founded on one, and only one, theory of liability” despite the fact it was styled as multiple causes of action].)

Here, while plaintiffs’ ninth cause of action for money had and received and 10th cause of action for an accounting are pled in a fairly straightforward manner, considerable confusion in this case appears to stem from the manner in which plaintiffs have styled their request for rescission and damages arising out of defendant’s alleged misrepresentations. As we explain, a plain reading of the factual allegations actually set forth in the complaint gives rise to only one potentially viable cause of action for deceit based upon a theory of promissory fraud and only one cause of action for rescission based upon unilateral mistake.

1. The Complaint Sets Forth Only One Cause of Action for Deceit

Here, plaintiffs’ fourth, fifth, and sixth causes of action are respectively entitled “damages for intentional misrepresentation,” “damages for negligent misrepresentation,” and “damages for suppression and concealment of fact.” However, all three purported causes of action are premised upon the same factual allegations: defendant is liable because he represented he would “ ‘match’ ” any capital contributions made by plaintiffs to Pivotal, and defendant ultimately failed to do so within the time plaintiffs expected. By its very nature, these alleged misrepresentations all involve an unfulfilled promise of future action by defendant.

“Ordinarily, promises to be performed in the future, even though false, are not actionable.” (Cutler v. Bowen (1935) 10 Cal.App.2d 31, 34.) “ ‘It is hornbook law that an actionable misrepresentation must be made about past or existing facts’ ” (Neu-Visions Sports v. Soren/McAdam/Bartells (2000) 86 Cal.App.4th 303, 309-310; see Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 607), and a representation involving a promise to perform at some future time does “not involve a past or existing material fact” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 (Tarmann)). However, California law recognizes a limited exception to this rule when a promise is made “without any intention of performing it.” (Civ. Code, § 1710; see Magpali v. Farmers Group (1996) 48 Cal.App.4th 471, 481 [“A promise of future conduct is actionable as fraud only if made without a present intent to perform.”]; Hooked Media Group, Inc. v. Apple Inc. (2020) 55 Cal.App.5th 323, 331 [“Broken promises regarding future conduct may be actionable as promissory fraud, but only if the promisor did not actually intend to perform at the time the promise was made.”].)

As these authorities make clear, the factual allegations of the complaint cannot support traditional theories of fraud, negligent misrepresentation, or fraudulent concealment because they involve a promise of future action. Instead, a promise of future action can only support a claim for deceit premised upon a theory of promissory fraud. We acknowledge that the complaint did not expressly assert a theory of promissory fraud.[4] However, the factual allegations are what determine the cause of action and frame the issues for purposes of summary judgment. Thus, the only potentially viable theory based upon such allegations is one of promissory fraud.

Additionally, we observe that the first cause of action is styled as one for “rescission for intentional misrepresentation” and is premised upon the same alleged misrepresentations as the tort claims for deceit. Where a plaintiff seeks to rescind a contract based on fraud, the defendant’s liability is premised upon proof of the same essential elements as a tort claim for fraud. (See Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294-295 [“causes of action for fraud and rescission based on fraud” require proof of same essential elements as tort claim]; see also Reed v. King (1983) 145 Cal.App.3d 261, 264 [cause of action for rescission of contract based upon theory of fraud requires plaintiff to establish tort elements of fraud].) This is because “[r]escission and damages are alternative remedies” where a party to a contract “has been injured by a breach of contract or fraud and lacks the ability or desire to keep the contract alive,” and “ ‘[t]he election of one [remedy] bars recovery under the other.’ ” (Wong v. Stoler (2015) 237 Cal.App.4th 1375, 1384-1385.) Thus, in the context of this case, the first cause of action is not a separate claim but merely a request for the alternative remedy of rescission to the extent plaintiffs can prevail on a claim for promissory fraud.

2. The Complaint Sets Forth One Cause of Action for Rescission Based Upon Mistake

Plaintiffs’ second and third causes of action are respectively entitled “rescission for negligent misrepresentation” and “rescission for unilateral mistake of fact.” However, “nnocent misrepresentation, though not specifically enumerated as a ground for rescission under Civil Code section 1689, has been held to be a type of mistake . . . and hence a ground for rescission.” ([i]Guthrie v. Times-Mirror Co. (1975) 51 Cal.App.3d 879, 890.) Thus, a claim for rescission based upon unilateral mistake incorporates mistakes caused by the actions or representations of the other party. (Balistreri v. Nev. Livestock Prod. Credit Ass’n. (1989) 214 Cal.App.3d 635, 644 [rescission available for unilateral mistake “when induced by mistaken action of the other party”]; Waters v. Div. of Labor Stds. Enforcement (1987) 192 Cal.App.3d 635, 641 [rescission available “where a plaintiff in good faith relies on the defendant’s negligent misrepresentation”]; Wood v. Kalbaugh (1974) 39 Cal.App.3d 926, 929-930 [“n this state a contract may be rescinded by a contracting party unilaterally if his consent to be bound by the agreement was induced . . . by a material misrepresentation, though innocently made . . . .”].) We therefore interpret plaintiffs’ purported second and third causes of action as only a single cause of action seeking rescission based upon unilateral mistake.

C.[i] Summary Adjudication Was Properly Granted on the Claim for Promissory Fraud

The elements of a cause of action for promissory fraud are: “ ‘(1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise[e].’ [Citation.] As with any other form of fraud, each element of a promissory fraud claim must be alleged with particularity.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1498 (Rossberg); see Gruber v. Gruber (2020) 48 Cal.App.5th 529, 540.)[6]

On appeal, the parties agree that plaintiffs’ claim for deceit is premised solely on an alleged false promise regarding the timing of defendant’s monetary contributions to Pivotal. As we explain, defendant submitted evidence sufficient to negate at least two essential elements of this cause of action, and plaintiffs failed to produce any evidence in opposition to show a triable issue of material fact. Thus, we conclude summary adjudication of this cause of action was proper.

1. No Evidence of a Promise Related to a Material Fact

First, summary adjudication was appropriate because there was no evidence regarding the existence of the alleged promise forming the basis of plaintiffs’ claim. Specifically, plaintiffs’ entire claim is premised upon the argument that defendant’s alleged promises to “ ‘match’ ” capital contributions implied he would do so at or near the times plaintiffs made their capital contributions to Pivotal. The question of whether an implied promise can even support the basis of a claim for promissory fraud appears unsettled. (Compare Lonely Maiden Productions, LLC v. GoldenTree Asset Management, LP (2011) 201 Cal.App.4th 368, 375 [affirming summary judgment on fraud claim “based on an implied false promise” because “no such tort has been recognized by California law”] with Huy Fong Foods, Inc. v. Underwood Ranches, LP (2021) 66 Cal.App.5th 1112, 1124 [fraud may be based upon implied false promise].) We need not resolve this question here because, even assuming an implied false promise is actionable, the undisputed facts here showed that no such promise was made.

Here, defendant’s declaration stated the parties never made any representations to each other, never agreed, and never even discussed the timing of any of his matching capital contributions to Pivotal. Defendant further attached excerpts from plaintiffs’ deposition testimony in which both plaintiffs admitted the parties never discussed the timing of defendant’s anticipated contributions. In his deposition testimony, Gerometta even admitted that he did not necessarily expect defendant to make matching contributions “at the exact time” and that, so long as defendant made his contributions to the business “within one day, if it was ever needed,” such action would comply with Gerometta’s understanding of the parties’ agreement.

In opposition, plaintiffs only presented their own declarations as evidence. However, none of plaintiffs’ attestations actually identified words or actions by defendant that expressly or implicitly referenced the timing of his proposed capital contributions.[7] Accordingly, defendant met his burden to produce evidence to negate the existence of the alleged promises, and plaintiffs failed to meet their corresponding burden to produce evidence that would suggest a genuine factual dispute on this issue.

2. No Evidence of Resulting Damages

Second, even assuming plaintiffs had produced evidence of a promise made without the intent to perform and reasonable reliance on that promise, defendant met his burden to negate the essential element of “resulting damage.”

Defendant declared that he ran the day-to-day operations of Pivotal, and that the timing of his contributions did not negatively impact the business in any way. Defendant further submitted Gerometta’s deposition testimony admitting that Gerometta was not aware of any occasion in which Pivotal was left with insufficient funds to meet its expenses as the result of the timing of defendant’s contributions. This constituted prima facie evidence that plaintiffs suffered no resulting damage as the result of any allegedly false promise regarding the timing of defendant’s contributions. Again, plaintiffs offered no evidence to the contrary and failed to dispute this fact in their separate statement in support of their opposition.[8]

Plaintiffs argue that, had they known defendant would delay several months before making his matching contributions, they would not have made their contributions and, therefore, would still have possession of the $250,000 they contributed. However, “ ‘ “ ‘ “[m]isrepresentation, even maliciously committed, does not support a cause of action unless the plaintiff suffered consequential damages.” ’ ” [Citation.]’ Indeed, ‘ “ ‘assuming . . . a claimant’s reliance on the actionable misrepresentation, no liability attaches if the damages sustained were otherwise inevitable or due to unrelated causes.’ [Citation.]” If the defrauded plaintiff would have suffered the alleged damage even in the absence of the fraudulent inducement, causation cannot be alleged and a fraud cause of action cannot be sustained.’ ” (Rossberg, supra, at 219 Cal.App.4th at p. 1499; see Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1064.)

It takes no leap of logic to see the fallacy in plaintiffs’ argument here. Had defendant made his capital contributions exactly as plaintiffs claim he promised to do, plaintiffs would have invested the $250,000 into Pivotal based on defendant’s fulfilled promises. Thus, the allegedly false promises defendant made did not result in plaintiffs’ loss of $250,000. Clearly, the loss of their $250,000 cannot be attributed to defendant’s alleged false promises, since the same alleged loss would have been sustained regardless of whether defendant’s promise was true or false.[9]

At oral argument, plaintiffs also suggested that they suffered hypothetical harm because their contributions at times exposed them to greater risk than that of defendant. However, under Nevada law,[10] defendant remains liable to Pivotal “for any unpaid contribution to capital which the member agreed” (Nev. Rev. Stat. Ann., § 86.391, subd. (1)); Pivotal’s creditors would be able to enforce any unpaid liability directly against defendant (Nev. Rev. Stat. Ann., § 86.391, subd. (2)); and to the extent Pivotal has assets to distribute among members upon dissolution, such assets would be distributed first to pay off the members’ capital contribution shares (Nev. Rev. Stat. Ann., § 86.521). Thus, a party’s “risk” is measured by the amount he or she agreed to contribute in capital, regardless of whether that amount is actually deposited in Pivotal’s bank accounts. Even if defendant never made his promised capital contributions, this would not have placed plaintiffs in any greater “risk,” as Nevada law treats defendant’s promise as an asset held by Pivotal enforceable against defendant.

Thus, defendant met his burden on summary adjudication by negating at least two essential elements of plaintiffs’ cause of action for promissory fraud, and plaintiffs failed to produce any evidence in opposition to show a triable issue of fact as to these elements. Accordingly, the trial court did not err in granting summary adjudication on this claim which, as we have already explained, encompasses plaintiffs’ purported first, fourth, fifth, and sixth causes of action.

D. Summary Adjudication Was Properly Granted on the Claim for Rescission Based Upon Mistake

With respect to plaintiffs’ cause of action for rescission based upon mistake, we also conclude that summary adjudication of this claim was proper in light of the evidence before the trial court.[11] An essential element to any cause of action for recission due to unilateral mistake is that “the mistake has a material effect upon the agreed exchange of performances that is adverse to the [party claiming mistake].” (Stewart v. Preston Pipeline Inc. (2005) 134 Cal.App.4th 1565, 1588; Donovan v. Rrl Corp. (2001) 26 Cal.4th 261, 282 [unilateral mistake must have “a material effect adverse to the mistaken party” to warrant recission]; Guthrie v. Times-Mirror Co. (1975) 51 Cal.App.3d 879, 886.) [“A contract is voidable for mistake only if enforcement would be materially harmful or more onerous to the party seeking avoidance than it would have been had the law or the facts been as believed.”].)

Here, defendant declared that he ran the day-to-day operations of the business, and the timing of his contributions did not negatively impact the business in any way. Defendant submitted copies of the parties’ written Operating Agreement, which provided for equal allocation of income, gain, loss, deductions, or credit based upon each party’s stated percentage interest and not the amount of each party’s capital contributions. Defendant further submitted Gerometta’s deposition testimony in which Gerometta testified he did not necessarily expect defendant to make matching contributions “at the exact time”; that, so long as defendant made his contributions to Pivotal “within one day, if it was ever needed,” such action would comply with Gerometta’s understanding of the parties’ agreement; and that he had no knowledge of any point in time when Pivotal was unable to meet any financial obligations as the result of the timing of defendant’s contributions. This was sufficient prima facie evidence that the timing of defendant’s contributions to Pivotal did not have a materially adverse effect on plaintiffs, even if plaintiffs were mistaken as to the timing of those contributions.

In opposition, plaintiffs submitted declarations attesting to their subjective understanding that defendant had agreed to make matching contributions at or near the time of plaintiffs’ contributions. However, this evidence does not suggest how plaintiffs’ purported mistake resulted in a materially adverse effect on their interests. Since it was undisputed that the business itself suffered no adverse impact from the timing of defendant’s contributions, plaintiffs would stand in the exact same position they do today, even if the facts had been as they believed and defendant had made his contributions simultaneously with plaintiffs.

Where the undisputed facts establish enforcement of the parties’ contractual obligations is not more onerous than if the facts had been exactly as plaintiffs’ believed them to be, plaintiffs cannot establish a materially adverse effect as a result of their unilateral mistake that would warrant recission, and summary adjudication of this cause of action was proper.

E. Summary Adjudication Was Properly Granted on the Claim for Money Had and Received

Finally, we conclude that summary adjudication was properly granted on the cause of action for money had and received because it was undisputed that the money plaintiffs’ claim to have lost was in Pivotal’s possession.

“Technically, an action for money had and received lies in cases where one person has in his possession money which in equity and good conscience he ought to pay over to another. [Citation.] Under this rule, no recovery for money had and received can be had against a defendant who never received any part of the money or equivalent thing sued for.” (Rains v. Arnett (1961) 189 Cal.App.2d 337, 344.) Thus, by its very nature, an essential element of a claim for money had and received is that the named defendant received and actually had possession of money belonging to plaintiffs.

Here, it was undisputed that plaintiffs placed their monetary contributions into a financial account owned by the business. Defendant’s declaration attested that all such money was used solely toward paying expenses related to Pivotal’s operations. This was sufficient prima facie evidence to show that defendant did not personally receive any money belonging to plaintiffs, negating an essential element of any claim for money had and received.[12]

In opposition, plaintiffs presented no evidence to the contrary to suggest defendant diverted any of these funds into a personal account. To the extent plaintiffs believe defendant mismanaged Pivotal’s funds in his capacity as a director, officer, or owner of Pivotal, such a claim is not placed at issue in a cause of action seeking equitable relief for money had and received. Accordingly, defendant met his burden to negate an essential element of this cause of action, plaintiffs failed to produce any evidence to create a triable issue of material fact as to this element, and summary adjudication was properly granted.

IV. DISPOSITION

The judgment is affirmed. Defendant to recover his costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

FIELDS

J.

We concur:

SLOUGH

Acting P. J.

MENETREZ

J.

[1] While the general allegations of the complaint include numerous areas of criticism related to the manner in which defendant managed Pivotal, the purported causes of action refer to only one set of acts or omissions that constitute the basis of liability for all of plaintiffs’ claims.

[2] Specifically, plaintiffs claim to have made an initial $1,000 contribution in November 2016; a $50,000 contribution in January 2017; a $75,000 contribution in September 2017; and a $125,000 contribution in May 2018.

[3] Plaintiffs also initially asserted claims for conversion and conspiracy but voluntarily dismissed those claims.

[4] Civil Code section 1710 sets out four categories of representations that may give rise to a cause of action for deceit: “(1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true; [¶] (2) The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true; [¶] (3) The suppression of a fact, by one who is bound to disclose it . . . ; or, [¶] (4) A promise, made without any intention of performing it.” These statutory definitions generally correspond with theories of intentional misrepresentation, negligent misrepresentation, fraudulent concealment, and promissory fraud. Ironically, plaintiffs appear to have advanced every theory except the one actually applicable to the factual allegations of their complaint.

[5] While the complaint also alleged a cause of action for accounting, plaintiffs do not challenge the trial court’s grant of summary adjudication on this cause of action in their appeal.

[6] On appeal, plaintiffs appear to conflate the various theories of liability applicable to deceit claims, attempting to fit the facts of the case into the elements for fraud claims generally, without a recognition that a claim for fraud based upon a false promise involves its own, distinct elements of proof. While plaintiffs clearly cite to cases addressing promissory fraud, their arguments appear to completely ignore that these cases recognize promissory fraud as a distinct theory of liability upon which a cause of action for deceit is premised. As a result, their arguments are largely of limited assistance in the resolution of this case.

[7] Specifically, plaintiffs attributed the following statements to defendant: (1) a proposal that they split ownership in Pivotal “50/50”; (2) a proposal that the parties “share profits and losses equally”; (3) a statement that he “would be matching whatever money plaintiffs invested”; (4) the statement: “I can make my deposit as well since I have a WF account”; and (5) the statement: “Going to the bank to make a deposit to Pivotal Foods business account.” On their face, none of these statements imply a promise to make simultaneous capital contributions.

[8] Setting aside the fact that plaintiffs did not submit a separate statement with respect to the cause of action for deceit, defendant submitted the following fact in support of summary adjudication of every cause of action in the complaint: “The fact [defendant] made investments into [Pivotal] after Plaintiffs, did not negatively affect [Pivotal] in any way.” In opposition to summary adjudication of the rescission cause of action, plaintiffs did not dispute this fact, identified no evidence to dispute this fact, and simply objected on the basis that the fact was irrelevant or constituted an opinion.

[9] We also disagree with plaintiffs’ assertion that any valuation of the business that results in a loss on their investment can constitute resulting damage for purposes of their cause of action for promissory fraud. The assumption upon which this argument is premised—that any investment in a new business should naturally tend to produce a profit—is highly questionable. More importantly, in this case, it was undisputed that the timing of defendant’s contributions to the business “did not negatively affect the business in any way.” Thus, the undisputed evidence in this case simply does not permit the inference that any subsequent drop in the value of the business can be attributed to defendant’s alleged false promise.

[10] The Operating Agreement provides that it is to be governed by Nevada law.

[11] The parties disagree regarding the extent to which the trial court separately analyzed this claim. However, “[e]ven if the grounds entitling the moving party to a summary judgment were not asserted in the trial court, we must affirm if the parties have had an adequate opportunity to address those grounds on appeal.” (Garrett v. Howmedica Osteonics Corp. (2013) 214 Cal.App.4th 173, 181.) Here, both parties directly addressed the issue of whether plaintiffs’ alleged unilateral mistake had a material adverse effect in their briefs on appeal. Indeed, plaintiffs’ position on appeal was that the record already included “ample evidence” to resolve this issue in their favor. Accordingly, we may consider this issue in affirming the judgment regardless of whether the trial court analyzed it in ruling on the motion. (Baines v. Moores (2009) 172 Cal.App.4th 445, 471, fn. 39 [appellate court may affirm summary judgment on separate ground than trial court without supplemental briefing if parties “directly addressed the issue in their briefs” on appeal].)

[12] On appeal, plaintiffs rely on Strutzel v. Williams (1952) 109 Cal.App.2d 512 to argue that the “defendant’s direct receipt of money is not necessary to sustain a claim for money had and received.” However, Strutzel is clearly distinguishable. In that case, two defendants were accused of engaging in a conspiracy to entice investors into participating in a fraudulent investment scheme. (Strutzel, at pp. 513-514.) Thus, while one of the defendants did not literally receive money from plaintiffs, he was sued jointly as a co-conspirator with the defendant who had received such money. (Ibid.) This is clearly not the case here, as Pivotal—the entity who undisputedly received and holds the plaintiffs’ money—is not a party to this action and not alleged to be jointly liable on any cause of action with defendant.