Opinion
NOT TO BE PUBLISHED
APPEAL from the judgment of the Superior Court of Los Angeles County. No. SC100459, John H. Reid, Judge.
Kull + Hall and Robert F. Kull for Plaintiff and Appellant.
Barnes, Crosby, FitzGerald & Zeman, Michael J. FitzGerald and Eric P. Francisconi for Defendants and Respondents Subhi M. Zhili, Sandra D. Ruhl and Jerash, LLC.
PERLUSS, P. J.
Shadi Hamad appeals from the judgment entered after the trial court sustained without leave to amend the joint demurrer of Subhi M. Zhili, Sandra D. Ruhl and Jerash, LLC to Hamad’s first amended complaint for breach of oral contracts and several related claims arising from Zhili and Ruhl’s alleged failure to repay loans made to them by Hamad. We reverse the judgment and reverse in part the order sustaining the demurrer.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Parties
Hamad and Zhili, who both immigrated to the United States from the Middle East, have been friends since 1995. Ruhl married Zhili in 1997. Jerash, which is owned by Zhili, does business as The Score Gentleman’s Club (Score). Hamad did business as Guaranteed Auto Sales (Guaranteed).
Our description of the factual background for Hamad’s claims is based on the allegations in Hamad’s first amended complaint, which we accept as true to determine whether the demurrer should have been sustained or overruled. (Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 373; Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 182-183 [“[t]he reviewing court accepts as true all facts properly pleaded in the complaint in order to determine whether the demurrer should be overruled”]; see Mack v. Soung (2000) 80 Cal.App.4th 966, 971 [all properly pleaded allegations deemed true, regardless of plaintiff’s ability to later prove them].)
2. The Loans
During the course of their friendship with Hamad, both Zhili and Ruhl asked Hamad to loan money to them, to Jerash or to Score. For the period from March 25, 1998 through April 6, 2006, Hamad or Guaranteed made a series of loans, totaling at least $500,050. The loans were made pursuant to oral requests; Zhili and Ruhl agreed to repay Hamad when they had the financial ability to do so but in any event when they sold their interest (or a portion of their interest) in Score. The loans were made, among other reasons, for use in the construction of Score, for the acquisition by Zhili of automobiles and for payment of legal fees.
Throughout the period during which the loans were being made, Zhili and Ruhl urged Hamad to be patient and repeatedly promised to repay him when they could afford to do so. In view of his friendship with Zhili and Ruhl and in reliance on their promises of repayment, Hamad deferred any collection efforts. In early April 2006 Zhili did, in fact, pay Hamad $40,000 of the outstanding loan balance.
3. The Demand for Repayment and the Compromise Agreement
In March 2007 Hamad came to believe that some or all of the interest held by Zhili, Ruhl or Jerash in Score had been sold. Zhili denied that a sale had taken place, but Hamad demanded payment on the loans for the first time. Zhili in the presence of Ruhl again told Hamad they could not afford to repay any of the loans.
In May 2007 Hamad and Zhili, on behalf of himself, Ruhl and Jerash entered into a written agreement in which Zhili acknowledged the preexisting loan obligations and promised to pay Hamad a total of $440,000 (a slightly smaller sum than actually due after credit for the $40,000 payment in 2006) “in monthly installment[s] with 12% interest due on the first of the month starting on 9-1-07.” The agreement did not specify the number or amount of monthly payments or a due date for the loan principal balance. (Hamad did not attach a copy of the written agreement to either the initial complaint or the first amended complaint in this action.)
4. The Original Complaint and the First Successful Demurrer
On November 4, 2008 Hamad filed a complaint for breach of oral contracts; breach of written contract (damages) and breach of written contract (rescission), both with respect to the May 2007 written agreement; and fraud. The fraud claim was based on the allegation that Zhili, Ruhl and Jerash had entered into the various oral loan agreements and the written compromise agreement without any intention of performing their promises.
In December 2007, 11 months before he filed the case at bar, Hamad had sued Zhili and Ruhl to recover the unpaid loans. That action was dismissed without prejudice in July 2008. Hamad has alleged he dismissed the lawsuit because Zhili promised if he did so Hamad “would be repaid at least $400,000, $100,000 forthwith and the balance in unspecified installments.” Hamad has also alleged “Zhili stated and implied that if plaintiff did not dismiss the Prior Action, plaintiff’s family would be harmed.”
Zhili, Ruhl and Jerash jointly demurred to the complaint on January 5, 2009. After briefing and a hearing on March 19, 2009, the court sustained the demurrer as to all four causes of action with leave to amend. In sustaining the demurrer, the court agreed with Ruhl and Jerash’s argument there were no factual allegations in the complaint that would support claims against them. The court also ruled the applicable two-year statute of limitations (Code Civ. Proc., § 339) barred the claims for breach of oral contracts. The court explained, “Since the oral loans at issue are alleged to have been payable on demand, the statutes of limitations began to run on the dates of their execution. [Citation.] The general rule is that the statue of limitations begins to run on a promissory note payable on demand from the date of the note, and no actual demand is necessary to put it in motion. [Citations.]” (Zhili, Ruhl and Jerash argued the last of the loans identified in the complaint had allegedly been made in November 2005, more than three years before the complaint was filed.)
The court’s tentative ruling had been to sustain the demurrer to the causes of action for breach of oral contracts and rescission without leave to amend. However, at the hearing the court expanded leave to include all four causes of action, explaining, “The Court of Appeal has pretty much indicated that the plaintiff should be given at least one opportunity to amend and, therefore, I will give you one opportunity to amend. I am not sure you are going to be able to do it successfully.”
Although the court acknowledged the 2007 written compromise agreement was not time-barred, it nonetheless found it was unenforceable because, as alleged, the agreement failed to specify any terms for repayment and did not expressly state it was entered into to settle the prior debts. Leave to amend was given for Hamad to plead these additional terms or to attach a copy of the agreement itself. (The court rejected the argument the written agreement lacked sufficient consideration.) The court concluded the fraud cause of action failed to satisfy the strict pleading requirements for a fraud claim and alleged insufficient facts to show that any of the defendants had committed fraud in the inducement or made a promise without the intent to perform. As to the rescission claim the court explained, because the oral contracts claim was barred by the statute of limitations, rescission would leave Hamad without any remedy.
After the court stated Hamad had 20 days leave to amend all four causes of action, his counsel asked for a clarification: “As I indicated in my opposition papers, there are some other causes of action that we believe we would like to allege, including the account stated, book account. The court is not precluding us from adding any causes of action, is it? Because we believe the four-year statute of limitation applies here. [¶]... [¶] This is one of the ways, Your Honor, I believe that we can show that we should be able to remain in court. The facts are going to be the same but we believe that we have different theories, and I can allege more facts to support the additional theories of recovery.” The court responded, “I’m not going to rule on that request. If you want to add them-we will decide that-you can go ahead and make that choice, and if counsel has an objection to it, then we will hear that at the time of the demurrer.”
5. The First Amended Complaint and the Second Joint Demurrer
On April 8, 2009 Hamad filed his first amended complaint containing eight causes of action. In addition to the four causes of action in the original complaint, Hamad included claims for book account, account stated, promissory estoppel and infliction of emotional distress (alleged in the alternative as intentional or negligent). The first amended complaint also included a new Exhibit A, a four-page summary of account listing each of the loans at issue in the cause of action for breach of oral contracts, showing loans made between March 25, 1998 and April 6, 2006 and partial repayments totaling $48,000: April 10, 2006 ($40,000), July 20, 2008 ($4,000) and July 29, 2008 ($4,000).
With respect to the oral loan agreements, Hamad modified the language concerning Zhili, Ruhl and Jerash’s repayment obligation. The original complaint had alleged, “The items had no stated due dates, but were to be payable either on demand, subject to the ability of defendants to repay the same, or, to the extent such permitted repayment, when Zhili and/or Ruhl sold his/her interest, or any part thereof, in defendant Score.” The first amended complaint modified that language to read, “[D]efendants agreed to repay plaintiff when defendants had the financial wherewithal to do so, but in any event when they sold their interest, or any portion thereof in defendant Score.”
Zhili, Ruhl and Jerash jointly demurred to each of the eight causes of action on May 5, 2009. Without commenting upon the change of language regarding the repayment obligation, Zhili, Ruhl and Jerash argued the two-year statute of limitations barred the cause of action for breach of oral contracts, noting that the loans in Exhibit A were all made more than two years prior to the filing of the lawsuit and restating the argument that the limitations period begins to run on a loan payable on demand when the loan is made. As to the four new causes of action, Zhili, Ruhl and Jerash noted Hamad had sought leave of court to add these claims and asked that they be stricken.
In his opposition to the demurrer Hamad argued repayment of the loans was conditioned on Zhili and Ruhl’s ability to do so, as now clearly alleged in the first amended complaint. Accordingly, the causes of action did not accrue when the loans were made, but rather (at least for pleading purposes) not until sometime in 2007 (that is, less than two years before the filing of the lawsuit). Hamad attached to his opposition papers a computer-generated, red-lined copy of the first amended complaint showing all changes he had made.
Zhili, Ruhl and Jerash filed a reply memorandum in support of their joint demurrer. However, the court stated at the hearing that the reply had not been timely filed and was not considered for purposes of the ruling on the demurrer.
6. The Order Sustaining the Demurrer Without Leave To Amend
Following oral argument on May 28, 2009 the court sustained the demurrer to the four new causes of action (for book account, promissory estoppel, account stated and infliction of emotional distress) in the first amended complaint on the ground Hamad did not request and had not been granted leave to add these causes of action at the hearing on the original demurrers on March 19, 2009. “The four new causes of action are beyond the scope of the amendment permitted by the Court.”
The court overruled the demurrer by Ruhl and Jerash based on lack of specific allegations against them, but sustained without leave to amend the joint demurrer to the remaining four causes of action for breach of oral contracts, breach of written contract (damages), fraud and breach of written contract (rescission). The court recognized, as now alleged in the first amended complaint, the cause of action for breach of oral contracts did not appear to be barred by the statute of limitations. However, the court took judicial notice of the allegations in the original complaint and stated Hamad had simply “omitted the harmful allegations that the loans were payable on demand. This was clearly done in response to the Court’s prior tentative ruling, and brings the sham pleading doctrine into play.” Noting that Hamad “has not explained why this omission was necessary, ” the court disregarded the allegations in the first amended complaint that were inconsistent with the original pleading and reaffirmed its prior ruling that the claim was barred by the two-year limitations period in Code of Civil Procedure section 339.
With respect to the cause of action for breach of written contract (damages), the court ruled it was not necessary for Hamad to attach a copy of the agreement to his complaint. However, although the additional allegations in the first amended complaint now adequately identified the preexisting debts purportedly covered by the agreement (the loans specified in Exhibit A), the court ruled Hamad had still failed to plead all material provisions of the agreement necessary for it to be enforceable-specifically, the term of the agreement and the amount of the monthly installments. “The failure to plead these essential terms renders the Compromise Agreement uncertain as pled.” As to the two remaining claims, the court found Hamad still had not alleged sufficient facts to show fraud; and rescission of the written agreement was not appropriate because the agreement itself was too uncertain to be enforced and, in any event, rescission would leave Hamad without a remedy because the oral agreements were also unenforceable (time barred).
Judgment was entered on the first amended complaint on July 29, 2009. Hamad filed a timely notice of appeal.
DISCUSSION
1. The Standard of Review on Appeal from Demurrer
On appeal from an order dismissing an action after the sustaining of a demurrer, we independently review the pleading to determine whether the facts alleged state a cause of action under any possible legal theory. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) We give the complaint a reasonable interpretation, “treat[ing] the demurrer as admitting all material facts properly pleaded, ” but do not “assume the truth of contentions, deductions or conclusions of law.” (Aubry, at p. 967; accord, Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.) We liberally construe the pleading with a view to substantial justice between the parties (Code Civ. Proc., § 452; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; see Kotlar v. Hartford Fire Ins. Co. (2000) 83 Cal.App.4th 1116, 1120.)
“‘Where the complaint is defective, “[i]n the furtherance of justice great liberality should be exercised in permitting a plaintiff to amend his [or her] complaint.”’” (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at p. 970.) Leave to amend may be granted on appeal even in the absence of a request by the plaintiff to amend the complaint. (Id. at p. 971; see Code Civ. Proc., § 472c, subd. (a).) We determine whether the plaintiff has shown “in what manner he [or she] can amend [the] complaint and how that amendment will change the legal effect of [the] pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “[L]eave to amend should not be granted where... amendment would be futile.” (Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685; see generally Caliber Bodyworks, Inc. v. Superior Court (2005) 134 Cal.App.4th 365, 373 374.)
2. The Trial Court Erred in Sustaining the Demurrer to the Cause of Action for Breach of Oral Contracts
Hamad’s first amended complaint adequately alleges each of the elements necessary to plead a cause of action for breach of oral contract: He loaned Zhili, Ruhl and/or Jerash money at their request in specified amounts on dates identified in Exhibit A attached to the first amended complaint; the borrower(s) promised to repay the loans; the borrower(s) failed to repay the loans when required to do so by the terms of their agreements; and Hamad was injured as a result of that failure. (See, e.g., Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1352-1353; Walsh v. West Valley Mission Community College Dist. (1998) 66 Cal.App.4th 1532, 1545; CACI No. 303.)
Nonetheless, the trial court sustained the demurrer to this cause of action, finding it barred by the two year statute of limitations for oral contracts. (Code Civ. Proc., § 339.) As discussed, in his original complaint Hamad had alleged the loans were “payable either on demand, subject to the ability of defendants to repay the same, ” or when they sold part or all of their interest in Score. The court construed this language to allege a promise to repay on demand the money Hamad had loaned and applied the general rule that the statute of limitations begins to run on a promissory note that is payable on demand from the date of the note (that is, without an actual demand being necessary). (See, e.g., Bogart v. George K. Porter Co. (1924) 193 Cal. 197, 208 [“with reference to a promissory note payable on demand, ... the statute runs not from the time of the demand, but from the execution of the note”]; Clunin v. First Federal Trust Co. (1922) 189 Cal. 248, 249 [“[w]here a promise to pay money is payable on demand the statute of limitations begins to run thereon at the date of its execution”].) Because each of the loans alleged had been made more than two years before Hamad filed his lawsuit to recover the unpaid sums, the court ruled the first cause of action was time-barred.
In the first amended complaint Hamad alleged, “[D]efendants agreed to repay plaintiff when defendants had the financial wherewithal to do so, but in any event when they sold their interest, or any portion thereof in defendant Score.” The court acknowledged that a different rule applies to a qualified promise to pay when able: “[S]uch a promise is conditional, and... no cause of action accrues until the condition is performed, that is to say, until the debtor is able to pay.” (Van Buskirk v. Kuhns (1913) 164 Cal. 472, 474; accord, Fuller v. White (1948) 33 Cal.2d 236, 239; Horacek v. Smith (1948) 33 Cal.2d 186, 191.) The first amended complaint (like the original complaint) alleged Zhili and Ruhl were not able to repay the loan obligations until May 2007 at the earliest, well within the two-year limitations period.
In its ruling on the demurrer the court commented, “As pled now, this cause of action does not appear to be barred by the statute of limitations.” However, on its own motion the court identified the modified language in the first amended complaint regarding the conditional nature of the promise to repay as a sham and disregarded it to the extent it was inconsistent with the original complaint. Accordingly, the court sustained the demurrer on the same basis as it had previously.
The issue of sham pleading was not raised in Zhili, Ruhl and Jerash’s joint demurrer to the first amended complaint. After Hamad emphasized the conditional nature of the promise to repay in his opposition papers, in their late-filed reply papers Zhili, Ruhl and Jerash argued Hamad’s attempt to contradict the payable-on-demand allegations in the original complaint should be disregarded as a sham. The trial court stated it was not considering the reply for purposes of ruling on the demurrer.
The trial court’s ruling is doubly flawed. First, liberally construing the pleadings, as we must (see Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081; Porten v. University of San Francisco (1976) 64 Cal.App.3d 825, 833 [“the policy of the law is to construe pleadings liberally to the end that cases will be tried on their merits rather than disposed of on technicalities of pleadings”]), Hamad’s original complaint alleges a conditional promise to repay not on demand (or, more precisely, not on demand alone), but when the debtors were financially able to do so, either because a fund was created by the sale of Score or because other means of repayment had become available to them. Accordingly, the original ruling sustaining the demurrer to this case of action was in error; and, even if we were to disregard the new allegations in the first amended complaint, the demurrer should have been overruled.
Second, even if the original complaint were properly interpreted to allege a promise to pay on demand, the court erred in applying the sham pleading doctrine and disregarding the allegations in the first amended complaint of a conditional promise of repayment only when the debtors were financially able to do so. To be sure, if a plaintiff attempts to avoid the effect of a demurrer by omitting material facts or alleging new, contradictory facts, the court may examine the prior complaint to ascertain whether the amendment is a sham. “The rationale for this rule is obvious. ‘A pleader may not attempt to breathe life into a complaint by omitting relevant facts which made his previous complaint defective.’ [Citation.] Moreover, any inconsistencies with prior pleadings must be explained; if the pleader fails to do so, the court may disregard the inconsistent allegations.” (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946; see Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 836 [“‘Where a verified complaint contains allegations destructive of a cause of action, the defect cannot be cured in subsequently filed pleadings by simply omitting such allegations without explanation.’ [Citations.] ‘In such a case the original defect infects the subsequent pleading so as to render it vulnerable to a demurrer.’ [Citation.] However, we have also made it clear that ‘a party should be allowed to correct a pleading by omitting an allegation which, it appears, was made as the result of mistake or inadvertence.’”].) Before applying the sham pleading doctrine, however, the court must give the pleader an opportunity to explain the changes made. (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 426 [“the party who made the pleadings must be allowed to explain the changes”].)
Hamad and his counsel reasonably believed the modified language in the first amended complaint clarified, but was consistent with, the allegation regarding repayment contained in the original complaint. Because no issue of sham pleading was raised in the joint demurrer and supporting papers, there was no reason for Hamad’s counsel to explain any differences in the language used, and specifically the deletion of the phrase “on demand.” However, at the hearing on the demurrer, after the court indicated in its tentative ruling its intention to apply the sham pleading doctrine, Hamad’s counsel advanced a plausible explanation for the apparent inconsistency between the first amendment complaint and the prior pleading (both of which were unverified): Repayment by Zhili and Ruhl was always subject to their ability to do so; the term “on demand, ” accordingly, was an unnecessary aspect of the allegation “payable... on demand, subject to the ability of defendants to repay, ” but was apparently the source of some misunderstanding by the court. Thus, after checking with his client to be sure he was pleading truthfully (that is, that the phrase “on demand” was not used by the parties when making the loan arrangements), Hamad’s counsel deleted that term and clarified the conditional obligation to repay at issue.
The trial court should have accepted this explanation. (See Deveny v. Entropin, Inc., supra, 139 Cal.App.4th at p. 426 [“the sham pleading doctrine does not apply because [plaintiffs’ attorney] offered a plausible explanation for the amendment”]; Hahn v. Mirda (2007) 147 Cal.App.4th 740, 751 [sham pleading doctrine “is not intended to prevent honest complainants from correcting erroneous allegations or to prevent the correction of ambiguous facts”].) The trial court erred in disregarding the allegations of the first amended complaint and sustaining the demurrer to the first cause of action on the basis of the sham pleading doctrine.
3. The Trial Court Properly Sustained the Demurrer to the Causes of Action for Breach of Written Contract
“‘Under California law, a contract will be enforced if it is sufficiently definite (and that is a question of law) for the court to ascertain the parties’ obligations and to determine whether those obligations have been performed or breached.’ [Citation] ‘To be enforceable, a promise must be definite enough that a court can determine the scope of the duty[, ] and the limits of performance must be sufficiently defined to provide a rational basis for assessment of damages.’ [Citations.] ‘Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable.’” (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 209; accord, Weddington Productions v. Flick (1998) 60 Cal.App.4th 793, 811 [“[if]... a supposed ‘contract’ does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, there is no contract”]; see generally Rest.2d Contracts, § 33, subd. (2) [“[t]he terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy”].)
Hamad has alleged he and Zhili (purportedly on behalf of Ruhl and Jerash, as well as himself) entered into a written compromise agreement in May 2007 to satisfy all the debtors’ preexisting obligations by payment of the principal sum of $440,000, to be paid “in monthly installment[s] with 12% interest due on the first of the month starting on 9 1 07.” Hamad acknowledged in the first amended complaint there was no monthly payment specified and no due date for repayment of the principal balance.
It may well be, as Hamad suggests, that whatever the parties’ intentions, the failure of Zhili and Ruhl to make any payments whatsoever was inconsistent with their agreement. But the absence of either a minimum monthly payment requirement or a time period or final date for payment in full leaves the purported written agreement unenforceable by a court. There is simply no basis for determining the extent of any breach by Zhili or giving an appropriate remedy. (See Holmes v. Lerner (1999) 74 Cal.App.4th 442, 457.)
Hamad is correct that, absent a comprehensive integration clause in the written agreement, extrinsic evidence of consistent additional terms may be introduced to make a contract enforceable. (See Code Civ. Proc., § 1856, subd. (b).) But he identifies no admissible evidence that could properly be relied upon to provide the missing, necessary terms for the written agreement, suggesting only that he should be allowed to plead what his understanding was at the time. More is required. (See Winet v. Price (1992) 4 Cal.App.4th 1159, 1166, fn. 3 [“undisclosed subjective intent of the parties is irrelevant to determine the meaning of contractual language”]; Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 980 [“‘“[i]t is the objective intent, as evidenced by the words of the contract, rather than the subjective intent of one of the parties, that controls interpretation”’”].)
The trial court did not err in sustaining without leave to amend the joint demurrer to the causes of action for breach of written contract-whether the remedy sought was damages or rescission.
The trial court sustained the demurrer to the breach of written contract action (rescission) in part because rescission would leave Hamad without any remedy in light of its ruling that the cause of action for breach of oral contracts was time-barred. Because we have revived the oral contracts claim and held the written contract unenforceable, there is simply no need for rescission of the latter agreement.
4. The Trial Court Erred in Sustaining the Demurrer to the Cause of Action for Promissory Fraud
“‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) In his first amended complaint Hamad alleged, at the time he made each of the loans identified in Exhibit A, Zhili, Ruhl and Jerash promised to repay the loans when they were financially able to do so and that those promises were made without any intent to perform them. He further alleges Zhili, Ruhl and Jerash intended to, and did, deceive him with their false promises; and, as a direct consequence, he has been damaged by their failure to repay the sums owed. Finally, Hamad alleges he was unaware of the lack of intent to perform until May 2007 when Zhili, Ruhl and Jerash refused to repay the loans despite their apparent ability at that point to do so. These specific factual allegations adequately plead each element necessary for Hamad’s fraud claim based on promises made without intent to perform. (See O’Mary v. Mitsubishi Electronics America, Inc. (1997) 59 Cal.App.4th 563, 579 [“‘“[i]n order to support a claim of fraud based upon the alleged failure to perform a promise, it must be shown that the promisor did not intend to perform at the time the promise was made’””].)
To the extent the trial court sustained the joint demurrer to this cause of action because, in its view, Hamad had not alleged sufficient facts to show that Zhili, Ruhl and Jerash never intended to perform their promises to repay the loans, its insistence on the pleading of evidentiary facts, rather than ultimate facts, is misplaced. (See Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550-551 [complaint is ordinarily sufficient if it alleges ultimate rather than evidentiary facts].) The allegations of the first amended complaint concerning the loans made by Hamad, together with the information set forth on Exhibit A, clearly identified the circumstances and dates on which at least some of the false promises to repay were made. Moreover, Hamad pleaded a number of events that arguably support an inference that those promises were made without an intent to perform. (See Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30 [“fraudulent intent must often be established by circumstantial evidence”; “for example, ... fraudulent intent has been inferred from such circumstances as defendant’s insolvency, his hasty repudiation of the promise, his failure even to attempt performance, or his continued assurances after it was clear he would not perform”].)
The trial court also ruled Hamad could not evade the limitations bar on his breach of oral contracts claim by alleging the promises to repay the loans were fraudulent. Because we have reversed the ruling with respect to the timeliness of the contract claim, the premise for this conclusion ceases to exist.
5. The Trial Court Erred in Striking the New Causes of Action for Book Account, Account Stated and Promissory Estoppel
Once the time permitted by Code of Civil Procedure section 472 for amending a pleading by right has elapsed, a party seeking to file an amended pleading must obtain leave of court. (Code Civ. Proc., §§ 473, subd. (a)(1) [after notice to adverse party, court may allow, “in furtherance of justice, and on any terms as may be proper, ” an amendment to any pleading], 576 [“[a]ny judge, at any time... in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading...”].) The court’s discretion will usually be exercised liberally to permit amendment of the pleadings. (See Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939.) “Indeed, ‘it is a rare case in which “a court will be justified in refusing a party leave to amend his pleading so that he may properly present his case.”’” (Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.)
Although a formal noticed motion seeking leave to amend is required under many circumstances, when a demurrer is sustained by the trial court, “the court may grant leave to amend the pleading upon any terms as may be just....” (Code Civ. Proc., § 472a, subd. (c).) Thus, a plaintiff who unsuccessfully opposes a demurrer may be granted leave at that time not only to attempt to correct deficiencies in the causes of action as to which the demurrer has been sustained but also to raise claims unrelated to those pleaded in the earlier complaint. Absent an express statement of leave by the trial court to add entirely new causes of action, however, when a demurrer is sustained with leave to amend, that leave is properly construed as permission to amend the causes of action as to which the demurrer was sustained (People ex rel. Dept. Pub. Wks. v. Clausen (1967) 248 Cal.App.2d 770, 785), to add new causes of action that respond directly to the trial court’s reasons for sustaining the earlier demurrer (Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995, 1015), or to plead new legal theories based on the same operative facts alleged in the prior complaint. (See McCall v. PacifiCare of Cal., Inc., supra, 25 Cal.4th at p. 415 [issue on demurrer is whether facts alleged state a cause of action under any possible legal theory]; cf. Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 415-416 [“amended complaint relates back to a timely filed original complaint, and thus avoids the bar of the statute of limitations, only if it rests on the same general set of facts and refers to the same ‘offending instrumentalities, ’ accident and injuries as the original complaint”; amended complaint “alleging the same accident and injuries but a different cause of action and legal theory from the original complaint related back to the filing of the original complaint”].)
If the facts alleged support relief on a legal theory not pleaded, the demurrer should be overruled. (See Sheehan v. San Francisco 49ers, Ltd. (2009) 45 Cal.4th 992, 998; Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810.) However, as a practical matter we recognize that a plaintiff may need to expand on the facts previously alleged before all available theories of liability are apparent.
Here, Hamad through his counsel asked for leave to add new causes of action when he filed his first amended complaint. Without elaborating its reasons, the court neither granted nor denied permission to do so, saying simply, “I’m not going to rule on that request.” Nonetheless, in addition to the original four causes of action contained in the complaint, Hamad’s first amended complaint pleaded causes of action for book account, account stated, promissory estoppel and infliction of emotional distress.
Without evaluating the sufficiency of the allegations in support of Hamad’s four new causes of action, the court sustained the demurrer as to them because they were “beyond the scope of the amendment permitted by the Court.” We agree the causes of action for intentional and negligent infliction of emotional distress, although based on facts alleged in the original complaint (false promises to repay and threats to Hamad’s family in the Middle East), are not sufficiently related to the claims originally pleaded nor the operative facts alleged to be included in an amended pleading without additional leave to amend. On remand, if he still wishes to assert these claims, Hamad must file a noticed motion for leave to amend the operative complaint. (See Code Civ. Proc., § 473, subd. (a)(1).)
To challenge the four new causes of action as beyond the scope of the court’s order granting Hamad leave to amend, Zhili, Ruhl and Jerash should have filed a separate motion to strike under Code of Civil Procedure section 436, subdivision (b), authorizing the court to “[s]trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” Instead, they demurred to these four causes of action, as well as the repleaded original four causes of action, but then argued in their memorandum of points and authorities the court should strike them as unauthorized. Similarly, although in its explanation of the reasons for its ruling the court stated it was striking the causes of action as improper, the court’s order sustained the demurrer to these causes of action. Even without a formal motion before it, the court had the authority to strike improperly filed causes of action and should have phrased its order in those terms. (See Caliber Bodyworks, Inc. v. Superior Court, supra, 134 Cal.App.4th at p. 385 [although petitioner did not bring a motion to strike as an alternative to its demurrer, the court may on its own motion strike improper matter appearing on the face of the complaint].)
The other new causes of action pleaded, however-for book account, account stated and promissory estoppel-are sufficiently related to Hamad’s original claims for breach of oral and written contracts to be properly included in the first amended complaint without additional leave to amend. “In determining whether a wholly different cause of action is introduced by the amendment technical considerations or ancient formulae are not controlling; nothing more is meant than that the defendant not be required to answer a wholly different legal liability or obligation from that originally stated.” (Klopstock v. Superior Court (1941) 17 Cal.2d 13, 20.)
a. Book account
“The term ‘book account’ means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonably permanent form and manner and is (1) in a bound book, or (2) on a sheet or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner.” (Code Civ. Proc., § 337a.)
In his original complaint Hamad alleged he made a series of loans to Zhili, Ruhl and Jerash; although they agreed to repay the loans, they failed to do so despite his demand for repayment. In his first amended complaint Hamad alleged those loans are summarized on Exhibit A attached to the pleading. Whether those allegations and the written summary of the loans made are sufficient to adequately plead a book account-and specifically whether Exhibit A meets the requirements of the statute-is not before us at this time. Although pleaded as a common count, this claim is based on the same cause of action and seeks the identical remedy as the breach of oral contracts claim. No additional leave of court was needed to include this cause of action in the first amended complaint.
b. Account stated
An account stated is “an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing. [Citation.] To be an account stated, ‘it must appear that at the time of the statement an indebtedness from one party to the other existed, that a balance was then struck and agreed to be the correct sum owing from the debtor to the creditor, and that the debtor expressly or impliedly promised to pay to the creditor the amount thus determined to be owing.’ [Citation.] The agreement necessary to establish an account stated need not be express and is frequently implied from the circumstances. When a statement is rendered to a debtor and no reply is made in a reasonable time, the law implies an agreement that the account is correct as rendered.” (Maggio, Inc. v. Neal (1987) 196 Cal.App.3d 745, 752-753.) It is necessary, however, that the debtor has acknowledged the debt and has agreed with the creditor on the final balance due. (Id. at p. 753.)
In his original complaint Hamad alleged that Zhili, on behalf of himself, Ruhl and Jerash, acknowledged the prior loans and agreed to repay a somewhat reduced principal sum of $440,000. Leave to amend the causes of action for breach of written contract fairly embraced the right to add this alternative, common count claim, which seeks the identical relief based on the same operative facts.
c. Promissory estoppel
Under the equitable doctrine of promissory estoppel, “‘[a] promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.’” (C & K Engineering Contractors v. Amber Steel Co. (1978) 23 Cal.3d 1, 6, quoting Rest. Contracts, § 90.) The doctrine employs equitable principles to satisfy the requirement that consideration must be given in exchange for the promise sought to be enforced. (Kajima/Ray Wilson v. Los Angeles Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310.)
The elements of a promissory estoppel claim are (1) a clear promise, (2) reliance, (3) substantial detriment and (4) damages measured by the extent of the obligation assumed and not performed. (Toscano v. Greene Music (2004) 124 Cal.App.4th 685, 692.) Although equitable in nature, promissory estoppel is akin to a cause of action based on contract except that the consideration needed to form an enforceable contract is provided by detrimental reliance. (Id. at pp. 692-693; see Signal Hill Aviation Co., Inc. v. Stroppe (1979) 96 Cal.App.3d 627, 640.) Courts therefore “have characterized promissory estoppel claims as being basically the same as contract actions, but only missing the consideration element....” (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 903.) Although it is not clear what benefit there is to including an additional claim of promissory estoppel in this case, there can be no question it is not a “wholly different cause of action” from the breach of oral contracts claim alleged in the original complaint. No additional leave to amend was required to plead this cause of action.
Presumably Hamad added this cause of action in an effort to avoid the trial court’s conclusion his action for breach of oral contracts was time-barred. However, when the primary purpose of an equitable cause of action is to recover money under a contract, the statute of limitations applicable to contract actions governs the equitable claim. (See Jefferson v. J.E. French Co. (1960) 54 Cal.2d 717, 718-719 [accounting action was subject to the two-year statute of limitations of Code Civ. Proc., § 339 because “the primary purpose of the action [was] to recover money under the oral contract” and the “accounting [was] merely ancillary to the perfection of plaintiff’s right under the oral contract”]; see also Century Indem. Co. v. Superior Court (1996) 50 Cal.App.4th 1115, 1117 [equitable contribution action was “governed by the two-year statute of limitations of Code of Civil Procedure section 339 as an action not founded on an instrument in writing, ” fn. omitted].) Because Hamad’s promissory estoppel claim sounds in contract and seeks to recover damages based on the oral loan agreements, the two-year statute of limitations applicable to oral contracts likewise applies to this claim.
DISPOSITION
The judgment is reversed, and the matter remanded for proceedings not inconsistent with this opinion. The parties are to bear their own costs on appeal.
We concur: ZELON, J., JACKSON, J.