Hills Transp. Co. v. Southwest Forest Industries, Inc.

• Decision Date: 22 October 1968
• Citation: 266 Cal.App.2d 702,72 Cal.Rptr. 441
• Court: California Court of Appeals Court of Appeals
• Parties: HILLS TRANSPORTATION COMPANY, a corporation, Plaintiff and Appellant, v. SOUTHWEST FOREST INDUSTRIES, Inc., a corporation, et al., Defendants and Respondents. Civ. 31711.

Page 441

72 Cal.Rptr. 441

266 Cal.App.2d 702

HILLS TRANSPORTATION COMPANY, a corporation, Plaintiff and Appellant, v. SOUTHWEST FOREST INDUSTRIES, Inc., a corporation, et al., Defendants and Respondents.

Civ. 31711.

Court of Appeal, Second District, Division 2, California.

Oct. 22, 1968.

Rehearing Denied Nov. 19, 1968.

Hearing Denied Dec. 18, 1968.

Ball, Hunt, Hart & Brown, by Albert H. Ebright, Beverly Hills, for plaintiff and appellant.

Gibson, Dunn & Crutcher, by Frederic H. Sturdy, Los Angeles, for defendants and respondents.

FLEMING, Justice.

General and special demurrers to Hills Transportation Co.'s second amended complaint were sustained without leave to amend. Hills appeals the judgment of dismissal.

Hills was engaged in the business of transporting goods by truck as a common carrier. Defendant Southwest Forest Industries (Southwest) was one of three paper companies which sold newsprint to the Hearst publications in Los Angeles. Formerly, the three paper companies shipped newsprint by rail or vessel to Los Angeles, and each employed Hills to carry its newsprint by truck from rail depot or ship's dock to Hearst's facilities in Los Angeles. But in May 1964, Southwest eliminated its rail haul of newsprint by commencing to ship newsprint by truck direct from Arizona to Hearst in Los Angeles. As a consequence Hills lost the local haulage business of Southwest it had previously enjoyed.

In July 1965, Hills filed an unverified complaint for breach of contract against Southwest, and its officer, Raymond Baker; and against Hillbro Newspaper Printing Co. (Hearst), and its officer, R. Willis Meinburg. General and special demurrers to this complaint were sustained, and the same fate befell Hills' unverified first amended complaint, to which a count for fraud had been added and from which the five exhibits attached to the original complaint had been deleted.

In the second amended complaint, which was verified, only Southwest and Baker were named as defendants, and Hearst and Meinburg were dropped from the case. This complaint pleaded four counts of breach of contract and a fifth count of fraud.

The first count declared that Southwest and Hearst made a written contract on 1 September 1962 for Southwest to sell newsprint to Hearst at a price to include the cost of delivery; under this contract all newsprint would be shipped by rail to the Los Angeles depot and delivered from there to Hearst by one trucking company. On 19 October 1962, according to the pleading, Southwest offered Hills an exclusive contract to haul Southwest's newsprint by truck from the Los Angeles rail depot to Hearst's premises. Under this offer deliveries would start 2 February 1963 and continue for a reasonable time, the provisions of the Southwest-Hearst contract governing delivery of newsprint would be incorporated in the contract, and rates would be adjusted every 30 days in accordance with the requirements of the California Public Utilities Commission. On 8 November 1962, Hills accepted in writing Southwest's offer of a contract. Thereafter Hills invested $200,000 in equipment to carry out its duties under the contract, but on 13 May 1964 Southwest breached its contract by commencing to deliver newsprint by truck direct from Arizona to Hearst in Los Angeles.

The second, third, and fourth counts were tied to the first, in that each pleaded the contract between Hills and Southwest and then set forth various modes and consequences of its breach. The trial court sustained general and special demurrers to the four contract counts of the second amended complaint.

The ruling on the special demurrers to those counts was proper, for it is readily apparent that two gaping holes exist on the face of the pleading. First, the pleading does not specify whether the contract was written or oral, an allegation whose absence has been made a specific ground of demurrer. (Code Civ.Proc. § 430(8) (formerly 430(10).) The pleading describes the contract between Southwest and Hearst as written, and it describes Hills' acceptance of Southwest's offer as written, but it does not state whether Southwest's offer to Hills was written or oral. Second, the complaint is uncertain about the duration of the contract. (Code Civ.Proc. § 430(7) (formerly 430(9).) According to the pleading the contract was tendered by Southwest on 19 October 1962, accepted by Hills on 8 November 1962, went into effect on 2 February 1963, and was breached by Southwest on 13 May 1964. The only thing said about the term of the contract is that it was to continue for a reasonable time. How long is a reasonable time--one month, two months, five months, one year, two years, five years? Having run 15 months, had it run a reasonable time? Does Hills contend that Southwest was required to continue indefinitely shipment of newsprint by rail? Could never change? Could only change on giving some particular notice? On this point it seems obvious the pleading is uncertainty rampant.

The fifth count sought damages for fraud. It charged that Southwest and Baker over the period from 22 October 1962 to 15 May 1964, falsely represented to Hills that they would enter a five-year contract for the Los Angeles carriage of newsprint from rail depot to Hearst. Defendants made these representations without any intent to perform and to induce Hills to invest capital in equipment to carry Southwest's newsprint. Hills relied on these representations and spent money it would not otherwise have spent, to its damage. To this count, as well, general and special demurrers were sustained by the trial court.

The ruling on the special demurrers to this count was likewise proper. The pleading charged a false promise to enter into a five-year contract, made with intent to deceive, made without intent to perform, and justifiably relied on by plaintiff, to its damage. No specific facts were pleaded to show how, when, where, to whom, and by what means the representations were tendered, from what data the falsity of Southwest's intentions could be inferred, or how, when, where, through whom, and in what circumstances Hills became justified in relying upon these representations.

It is well established that the pleading of fraud and deceit must be specific, particularly when the pleader seeks to recover damages for a party's failure to enter a contract required by the statute of frauds to be in writing. The general rule on pleading fraud has been summarized by Mr. Witkin (2 Witkin, California Procedure, § 349, p. 1327):

'Fraud actions have been classed as 'disfavored,' and are subject to strict requirements of particularity in pleading. The idea seems to be that allegations of fraud involve a serious attack on character, and fairness to the defendant demands that he should receive the fullest possible details of the charge in order to prepare his defense. Accordingly the 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. (2) 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 (see supra, § 209) will not ordinarily be invoked to sustain a pleading defective in any material respect. (See Scafidi v. West(ern) Loan & Bldg. Co. (1946) 72 C(al.) A(pp.)2d 550, 165 P.2d 260 (quoting C.J.S.: 'It is essential that the facts and circumstances which constitute the fraud should be set out clearly, concisely, and with sufficient particularity to apprise the opposite party of what he is called on to answer, and to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud'); Woodson v. Winchester (1911) 16 C(al.) A(pp.) 472, 117 P. 565; Mason v. Drug, Inc. (1939) 31 C(al.)A(pp.)2d 697, 703, 88 P.2d 929; Bacon v. Soule (1912) 19 C(al.)A(pp.) 428, 438, 126 P. 384; cf. Fed.Rule 9(b) ('In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity'); 1 B. & H. 541, Clark, p. 541, but cf. § 350, * * *'

A cause of action for a false promise should plead facts to show the existence of two specific intentions of the promisor: an intention to cause the promisee to act by reason of the promise, and an intention at the time of the promise not to keep it. It is not enough to aver that the promisor by his promise intended to induce the promisee to act and that the latter did act in justifiable reliance on the promise. 'If the recipient wishes to obtain legal assurance that the intention honestly entertained will be carried out, he must see that it is expressed in the form of an enforceable contract.' (Restatement, Torts, § 530, p. 69.) Consequently, in pleading the tort it is indispensable to set forth the falsity of the promise at the time it was tendered. (Kett v. Graeser, 241 Cal.App.2d 571, 573, 50 Cal.Rptr. 727.) In so differentiating a false promise from the great bulk of broken promises, the allegations necessary to show contemporaneous intention not to perform should be clear, specific, and unequivocal. (Davis v. Rite-Lite Sales Co., 8 Cal.2d 675, 681, 67 P.2d 1039; Bank of America, etc., v. Vannini, 140 Cal.App.2d 120, 295 P.2d 102.) This rule of specific pleading carries particular weight when plaintiff has attempted to plead a promise to make a contract within the statute of limitations (Scafidi v. Western Loan & Bldg. Co., 72 Cal.App.2d 550, 558, 165 P.2d 260) or within the statute of frauds (Kroger v. Baur, 46 Cal.App.2d 801, 117 P.2d 50; Beach v. Arblaster, 194 Cal.App.2d 145, 163, 14 Cal.Rptr. 854). Here, plaintiff's pleading of its cause of action for fraud was wholly deficient of any statement of fact to back up its claim of a false promise made with intent to deceive and without intent to perform,...