General Facilities v. Claude E. Atkins Enterprises
A subcontractor on a project had its license suspended due to an unpaid judgment. The subcontractor obtained reinstatement of its license, but still found itself in dire financial straits, and sought assistance from the contractor. The subcontractor executed a promissory note by which it agreed to repay, with interest, any amounts advanced by the contractor. The promissory note expressly provided that the contractor had no obligation to advance funds and that any advance of funds would be solely at the contractor’s discretion. Some months later, the subcontractor’s license was suspended for failure to resolve outstanding liabilities. The relationship between the contractor and the subcontractor deteriorated, and they brought cross-actions against each other for breach of the subcontract. The subcontractor also alleged the contractor had fraudulently induced it to execute the promissory note by falsely promising to advance the funds necessary for it to remain afloat.
The contractor successfully demurred to the subcontractor’s cross-complaint. As to the cause of action for breach of the subcontract, the demurrer was sustained on the basis that the subcontractor’s license had been suspended during its performance of the work. As to the promissory fraud cause of action, the demurrer was sustained on the basis that a contracting party cannot sue on a promise that was superseded by, and is inconsistent with, the written contract the promise allegedly induced. The subcontractor appeals; court affirmed.
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