Opinion
A150522
01-16-2018
STAN SCHULDNER, Cross-Complainant and Appellant, v. ITC FINANCIAL LICENSES, INC., et al., Cross-Defendants; OFFICE DEPOT, INC., Cross-Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. 15-514368)
Appellant Stan Schuldner appeals from an judgment following an order sustaining the demurrer of respondent Office Depot, Inc. without leave to amend. We conclude the trial court properly sustained the demurrer as to all causes of action asserted against Office Depot. We further conclude the trial court did not abuse its discretion in denying Schuldner leave to amend. As the trial court succinctly—and correctly—put it, Schuldner does not "have a claim against Office Depot here." We thus affirm.
BACKGROUND
The Origins of This Dispute
This case arises out of Schuldner's scheme to generate credit card rewards points by purchasing gift cards on credit and returning the cards for cash. Pursuant to this scheme, Schuldner purchased "Do It Yourself Home Improvement" gift cards, each worth $500, in quantities of 10 to 20 at a time from an Office Depot store in San Francisco. He did not, however, intend to actually use the gift cards to purchase home improvement goods or services. Instead, he would immediately mail them to the issuer, ITC Financial Licenses, Inc. (ITC), for a cash refund of the purchase price. From October 2013 to January 2014, he purchased at least 130 gift cards totaling $65,000.
ITC's auditors eventually discovered Schuldner's scheme and determined he was violating the terms of the cardholder agreement governing use of the cards. Relying on the terms of the agreement, ITC declined to issue Schuldner any further refunds, leaving $32,499 in outstanding gift cards. After notifying Schuldner of its decision not to issue cash refunds for the outstanding cards, ITC attempted to return the cards to Schuldner, but he refused the delivery.
The Arbitration
Schuldner initiated an arbitration against ITC, seeking a cash refund for the outstanding gift cards, plus interest and punitive damages. In a decision dated June 12, 2015, the arbitrator ruled in ITC's favor, finding that Schuldner had purchased the cards in bad faith and his scheme violated the terms and conditions of the cardholder agreement. According to the arbitrator, Schuldner's "sole intention was to generate credit card reward points without spending any of his own money" and he "candidly acknowledged that he never had any intention of using the Home Improvement gift cards for their intended purpose."
The arbitrator ordered ITC to return the full value of the outstanding gift cards ($32,499), expressly stating that Schuldner was responsible for accepting delivery. When ITC attempted to return the cards, however, Schuldner refused to accept them.
ITC's Petition to Confirm the Arbitration Award and Schuldner's Cross-Complaint
ITC filed a petition to confirm the arbitrator's award. On September 14, 2015, the court granted the petition and confirmed the award. That same day, Schuldner filed a document entitled "Respondent's Petition to Vacate; and Respondent's Counter Claim—Civil Action."
Schuldner entitled his pleadings "Counter Claim" and "Crossclaim." We refer to them as cross-complaints.
He also identified himself as "Attorney for Respondent." He did not, however, provide a California State Bar number, and he admitted at a hearing below that he is not admitted to the California State Bar.
In the cross-complaint, Schuldner alleged that since approximately 2012, ITC had published on its website a cardholder agreement that provided the buyer could return the cards for a refund, as well as "notices and advertisements that the gift cards it was selling could be used at various merchants including at BenjaminMoore.com." He further alleged that in or about June 2015 and on various other dates, he "went to BenjaminMoore.com and noticed that it says it does not accept the gift cards." According to Schuldner, he served ITC with a notice of violation of the Consumer Legal Remedies Act (CLRA) arising out of its false advertising concerning where the gift cards could be used, but ITC never responded. The cross-complaint asserted four causes of action against ITC: (1) violation of the CLRA; (2) breach of contract; (3) account stated; and (4) unjust enrichment.
ITC moved to compel arbitration of the cross-complaint, but the court denied the motion, finding that Schuldner "never used the cards and, therefore, there was no acceptance. Collateral estoppel does not apply because there was no prior action or final judgment on the merits. . . . Respondent's agreement to arbitrate the prior dispute does not mean that the instant dispute is subject to arbitration."
Schuldner's First Amended Cross-Complaint
Schuldner obtained leave to file a first amended cross-complaint (FACC), which added The Bancorp Bank (Bancorp) and Office Depot as cross-defendants.
As particularly pertinent here, the FACC alleged:
"1. In about November 2013, crossclaim plaintiff purchased various Home Improvement Discover cards out of an Office Depot store in San Francisco. The cards were advertised at www.homeimprovementgiftcard.com as being able to be used at benjaminmoore.com and at physical Benjamin Moore stores. . . . [¶] . . . [¶]
"17. Since approximately 2012, all crossclaim defendants have jointly published on their website notices and advertisements that the gift cards they were selling could be used at various merchants including at BenjaminMoore.com and including all physical Benjamin Moore stores.
"18. In or about June 2015, and on various other dates, Crossclaim plaintiff went to BenjaminMoore.com and noticed that it says it does not accept the cards. In addition, Crossclaim plaintiff contacted various physical stores of Benjamin Moore and was told the cards are accepted in only some. Benjamin Moore is a franchiser that does not require its franchisee stores to take the card. In addition, the cards can in fact not be used at many other stores that the website says it can be used in."
The FACC contained the following additional allegations:
Schuldner purchased the original gift cards from Office Depot, which in turn forwarded "most" of the money to ITC or Bancorp. The cardholder agreement accompanying those cards allowed him to return those cards for a full refund, which he attempted to do, but ITC never refunded his money.
Following the arbitration award, ITC sent Schuldner replacement gift cards in the amount of $32,500, which exceeded the amount of the award by $1.00. Pursuant to the perfect tender rule, Schuldner rejected the replacement gift cards because they were in the wrong dollar amount. Schuldner also "issued notice" that he was exercising his right as stated in the cardholder agreement to demand a refund if he did not consent to the terms of the agreement, but ITC never gave him a refund for the replacement cards.
The FACC purported to assert 12 causes of action against all three cross-defendants: (1) violation of the CLRA; (2) breach of contract (for failure to honor the cancellation clause in the cardmember agreement and because the cards could not be used on the Benjamin Moore website and in all stores); (3) account stated; (4) unjust enrichment; (5) false advertising in violation of Business and Professions Code section 17200 (section 17200); (6) fraud; (7) conversion; (8) violation of Penal Code section 496 ; (9) breach of fiduciary duty; (10) negligent misrepresentation; (11) constructive trust; and (12) civil conspiracy.
Penal Code section 496 punishes the receipt of stolen property.
The FACC also asserted class action allegations.
ITC's and Bancorp's Demurrer to the FACC
ITC and Bancorp demurred to the FACC, and on April 25, 2016, the demurrer came on for hearing. At the outset, the trial court rejected ITC's and Bancorp's argument that Schuldner was collaterally estopped from raising any additional claims relating to the gift cards due to the arbitration award. It agreed, however, that the FACC failed to state a claim. As to the four claims premised on cross-defendants' alleged misrepresentation regarding where the cards could be used (namely, the claims for violation of the CLRA, false advertising in violation of section 17200, fraud, and negligent misrepresentation), the court found that Schuldner failed to sufficiently allege that he had relied on any purported misrepresentation and that he had suffered damages as a result. Accordingly, it sustained the demurrer as to those causes of action but granted Schuldner leave to amend to allege reliance and damages. To the extent those claims arose from the notice in the cardholder agreement that the gift cards could be returned for a cash refund, the court held that Schuldner was collaterally estopped from asserting such claims due to the arbitration. As to the remaining eight claims, the court held that they failed as a matter of law and there was no reasonable possibility Schuldner could amend to state viable claims. Accordingly, the court sustained the demurrer without leave to amend as to those causes of action. Lastly, it dismissed the class allegations as improper since Schuldner was representing himself in propria persona, and it denied his petition to vacate the arbitration award.
Office Depot's responsive pleading was due the same day as the hearing on ITC's and Bancorp's demurrer.
These were the claims for breach of contract, account stated, unjust enrichment, conversion, violation of Penal Code section 496, breach of fiduciary duty, constructive trust, and civil conspiracy.
Schuldner's Second Amended Cross-Complaint
On June 28, 2016, Schuldner filed a second amended cross-complaint (SACC). The facts alleged in the SACC, which was the subject of the order from which Schuldner appeals, were these:
Erroneously labeled the first amended cross-complaint.
In or around November 2013, Schuldner purchased multiple Home Improvement Discover gift cards from an Office Depot store in San Francisco. Office Depot in turn forwarded most of the purchase money to ITC and Bancorp.
Since 2012, cross-defendants had "jointly" advertised on "their website"—www.homeimprovementgiftcard.com—that the gift cards could be used at Benjamin Moore's online store and all store locations. In 2015, however, Schuldner viewed Benjamin Moore's website, which stated that it did not accept the cards. He also contacted various Benjamin Moore stores, and learned that only some of the stores accepted the cards.
Although it was not disclosed at the time Schuldner purchased the cards at Office Depot, the gift card package provided a notice inside stating that the cardholder agreement was published on the Home Improvement Discover cards website and if the consumer did not consent to the agreement, the consumer can call a phone number to arrange a return of the cards for a refund. The cardholder agreement on the website stated that it constituted an agreement between The Bancorp Bank (the issuer), ITC Financial Licenses, Inc. and IH Financial Licenses, Inc. (the servicers), and the consumer. Office Depot did not disclose when Schuldner purchased the cards that any other entity was a party to the contract. In fact, Office Depot was a contracting party or an agent for the undisclosed principles, ITC and Bancorp.
Schuldner never used any of the gift cards he purchased. Instead, he called ITC and requested a refund. The phone agent of ITC and Bancorp with whom he spoke told him to mail the cards back and a refund would be sent. In November 2013, Schuldner mailed the cards to ITC, but ITC never sent a refund, keeping the cards and the money it received from Office Depot.
Schuldner filed an arbitration action in or around January 2014, and the arbitrator ordered ITC to issue new gift cards to Schuldner in the exact amount of the original gift cards within 30 days of April 2015. ITC mailed gift cards to Schuldner in May 2015, but Schuldner did not accept the shipment, instead informing ITC and Bancorp that he was rejecting the cards in accordance with the cardholder agreement that provided he could seek a refund if he did not consent to the cardholder agreement.
The SACC added this allegation regarding Schuldner's reliance on the purported false advertisements:
"Respondent relied upon the representations that the cards were refundable and that they could be used at benjaminmoore.com and all Benjamin Moore physical stores, not merely some. It may be true that Respondent's primary plan was to convert the cards back to cash, but he also had a back up plan, as most people do in this uncertain world. Respondent figured there was some chance for instance that Bancorp would go bankrupt, and under a bankruptcy plan the cards could not be refunded but had to be spent out in stores. Respondent also figured there was some chance that Bancorp, ITC, an arbitrator, or a judge would disagree with Respondent's opinion that the cards are refundable, as actually happened with the arbitrator. Respondent was relying upon the advertisements on where the cards can be used in case these things happened. Respondent also relied upon the language that the cards were refundable. (Someone buying Goldman Sach's stock might primarily rely upon expected profits for the firm, but also have back up reliance that the government will bail out stockholders of a bank too big to fail. People normally rely upon more than one thing and plan for contingencies.) Furthermore, Respondent was not sure he was going to convert the Home Improvement cards to cash through a direct refund from ITC. He contemplated possibly using the Home Improvement cars [sic] to buy other products (including gas gift cards), and then converting the other product to cash. The inability to do so through purchases at the Benjamin Moore sales points denied Respondent this option."
Schuldner alleged that he was injured by not being able to use the cards at Benjamin Moore's online store and all of its store locations because there are items that are sold online or at certain Benjamin Moore stores that are not sold at the stores near him.
The SACC realleged the four misrepresentation-based causes of action against all defendants: violation of the CLRA (count 1); false advertising in violation of section 17200 (count 2); fraud (count 3); and negligent misrepresentation (count 14). And it alleged three new causes of action against all defendants: rescission (count 4), declaratory relief (count 5), and negligence (count 12).
Additionally, the SACC reasserted against all cross-defendants the six causes of action the court had dismissed with prejudice as to ITC and Bancorp, that is breach of contract for misrepresenting where the cards could be used (count 6), breach of contract for failure to give a refund after the arbitration (count 8), account stated (count 9), unjust enrichment (count 10), conversion (count 11), and violation of Penal Code section 496 (count 13). As to Office Depot and Bancorp only, the SACC also alleged breach of contract for failure to give a refund before the arbitration (count 7).
Lastly, the SACC continued to allege class claims despite the court's dismissal of the class allegations.
Office Depot's Demurrer to the SACC
Office Depot demurred to the SACC, and the demurrer came on for hearing on August 30, 2016. At the outset of the hearing, the trial court observed that Schuldner had "ignored" its previous rulings "in large order." Specifically, the court had granted leave to amend only the claims relying on the misrepresentation theory, but Schuldner had reasserted the causes of action the court had dismissed with prejudice. Concluding those claims still failed as a matter of law, the court sustained Office Depot's demurrer to those claims without leave to amend.
As to the remaining claims, the court concluded that Schuldner had not alleged, and could not allege, a misrepresentation by Office Depot or his reliance on a misrepresentation by Office Depot, informing Schuldner, "You don't have a claim against Office Depot here." The court thus sustained Office Depot's demurrer without leave to amend.
ITC and Bancorp also demurred to the SACC, with the court hearing their demurrer the same day as Office Depot's. The court sustained their demurrer to the misrepresentation-based causes of action. Schuldner amended his complaint, ITC and Bancorp again demurred, and this time the court overruled the demurrer. Thus, the causes of action for violation of the CLRA, false advertising in violation of section 17200, fraud, and negligent misrepresentation remain as to ITC and Bancorp.
On October 5, 2016, the court entered judgment for Office Depot.
This timely appeal followed.
DISCUSSION
Standard of Review
On appeal from an order sustaining a demurrer, "[o]ur standard of review is de novo, as we exercise our independent judgment to determine whether the complaint states a cause of action as a matter of law. [Citation.] We give the complaint a reasonable interpretation, reading it as a whole and viewing its parts in context. [Citation.]" (Bock v. Hansen (2014) 225 Cal.App.4th 215, 226.) "Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law." (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.)
Preliminary Observation
Before turning to the merits of Schuldner's appeal, we make one preliminary observation. That is, it is difficult to ascertain from Schuldner's briefs what it is he is appealing. The SACC asserted 14 causes of action against Office Depot, all of which were dismissed. Schuldner, however, fails to specify which causes of action he seeks to have reinstated, wholly neglecting to identify the elements of specific causes of action and the factual allegations satisfying each element. He presents numerous arguments in his briefs, but it is near impossible to determine to which cause(s) of action each argument applies. As best as we can glean from his briefs, he challenges the dismissal of his four misrepresentation-based claims—violation of the CLRA, false advertising in violation of section 17200, negligent misrepresentation, and fraud. He also appears to challenge the trial court's ruling on his rescission and three breach of contract claims. He does not address the remaining causes of action, and thus neither shall we, other than to say that the trial court's unchallenged ruling on those claims is affirmed. With that, we turn to the above-mentioned causes of action, addressing first the four misrepresentation-based claims.
The Trial Court Properly Sustained the Demurrer to the Causes of Action Based on Schuldner's Misrepresentation Theories
Schuldner's misrepresentation-based claims were based on two purported misrepresentations. The first concerned the alleged statement that the gift cards could be used at all Benjamin Moore store locations and on its website, when in fact they could not be used to purchased goods from the website and were only accepted at some stores. Schuldner's allegations in support of this theory consisted of the following: it was advertised on www.homeimprovementgiftcard.com that the gift cards were usable at Benjamin Moore stores and on its website, and all cross-defendants "jointly published on their website notices and advertisements that the gift cards they were selling could be used at various merchants including at BenjaminMoore.com and including all physical Benjamin Moore stores." These allegations are inadequate to attribute the alleged misrepresentation to Office Depot. As noted, the SACC identified only one source for the alleged misrepresentation: www.homeimprovementgiftcard.com. But it did not allege facts in any way connecting Office Depot to that website. It did not allege facts indicating that Office Depot controlled, sponsored, maintained, or influenced the website, or was in any way responsible for its content. In the absence of factual allegations connecting Office Depot to the website, the conclusory allegation that all three cross-defendants "jointly" published the notice on the website is insufficient.
According to Office Depot's interpretation of the SACC, Schuldner alleged that it was not until after the arbitration proceeding that he came up with a backup plan "to 'convert the cards to cash' by using the cards to purchase home improvement goods from retailers like Benjamin Moore and then reselling the goods to third parties." We do not read the SACC as Office Depot does. We understand Schuldner to allege that his backup plan from the outset was to purchase goods from Benjamin Moore and then resell them. This distinction, however, has no bearing on the outcome.
Schuldner argues that in the event we conclude his allegations that Office Depot " 'jointly' " published the false advertisement was insufficient to attribute the advertisement to Office Depot, "there is a reasonable probability [he] can allege the ad was 'sponsored, operated, maintained, or controlled' by ITC, by Bancorp, and by Office Depot. Pleading Office Depot was the retailer does not preclude the possibility it jointly advertised with the manufacturer. Presumably retailers sometimes jointly advertise with manufacturers." But other facts alleged in the SACC are inconsistent with this theory. The terms of the cardholder agreement expressly link ITC and Bancorp, as the servicer and issuers of the cards, respectively, to the gift cards and the website, but the same cannot be said of Office Depot. And all other allegations in the SACC describe Office Depot as a mere retail intermediary that had nothing to do with the substance of the gift cards. Schuldner has not identified any facts he can allege that would indicate Office Depot " ' sponsored, operated, maintained, or controlled' " the website on which the alleged misrepresentations appeared. (Colapinto v. County of Riverside (1991) 230 Cal.App.3d 147, 151 ["If a party files an amended complaint and attempts to avoid the defects of the original complaint by either omitting facts which made the previous complaint defective or by adding facts inconsistent with those of previous pleadings, the court may take judicial notice of prior pleadings and may disregard any inconsistent allegations."].)
The second alleged misrepresentation pertained to the statement in the online cardholder agreement and the gift card packaging that a purchaser could return the gift cards for a refund by mailing the cards to the card servicer. To the extent this allegation pertained to the original cards purchased at Office Depot, Schuldner has not alleged that Office Depot played any role in the terms of the card or the decision to deny Schuldner a cash refund of his outstanding cards. By his own admission, Office Depot was not a party to the cardholder agreement; only the purchaser (Schuldner), the servicer (ITC), and the issuer (Bancorp) were parties to the agreement. At most, his allegations confirm that Office Depot was a mere retail intermediary that did nothing more than sell the ITC gift cards to Schuldner. (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872 [plaintiff must allege facts sufficient to state a cause of action].)
To the extent this allegation related to the replacement cards ITC sent in compliance with the arbitration award, Schuldner has not alleged that Office Depot was in any way connected with this second transaction.
Schuldner Cannot State a Claim for Breach of Contract Arising Out of Where the Gift Cards Could be Used (Count 6)
Count 6, the first of three breach of contract claims against Office Depot, was based on the representation on www.homeimprovementgiftcard.com that the gift cards could be used to purchase goods from Benjamin Moore when they could not be used on the Benjamin Moore website or at certain physical stores. For the reasons already detailed above, Schuldner has not connected Office Depot to any statement on the Home Improvement Gift Cards website—or elsewhere—concerning where the gift cards could be used. In the absence of such connection, he cannot assert a breach of contract claim against Office Depot.
The parties also argue at length whether res judicata (or collateral estoppel) bar Schuldner's claims against Office Depot. We need not address this issue since we conclude for other reasons that Schuldner cannot state a claim against Office Depot. --------
Alternatively, Schuldner theorizes that even if Office Depot did not breach a contract, it is liable for ITC's and Bancorp's breach of contract because Office Depot was an agent of those two entities. This is inconsistent with his express acknowledgment in his reply brief that "Office Depot's liability is not derivative of ITC." Moreover, his perfunctory agency allegations are insufficient, as he has alleged no facts giving rise to any agency relationship, nor has he identified any such facts that he could allege if granted leave to amend. Under California agency law, a retail intermediary like Office Depot is not an agent of its manufacturers, distributors, or suppliers. Rather, "[a] purchaser who resells goods supplied by another is acting as a principal, not an agent." (Rest.3d Agency (2006) § 1.01, com. g; see also Murphy v. DirecTV, Inc. (9th Cir. 2013) 724 F.3d 1218, 1232-1233 [Best Buy was not an agent of DirecTV merely because it sold DirecTV products in its stores].)
Schuldner Cannot State a Claim for Breach of Contract for Office Depot's Alleged Failure to Issue a Refund Before the Arbitration (Count 7)
Count 7, the second breach of contract claim asserted against Office Depot, pertained to the original cards purchased by Schuldner, and in particular to the term in the cardholder agreement that the cards could be returned for a refund. Again, Schuldner has not alleged any facts linking Office Depot to the cardholder agreement and thus has not alleged Office Depot breached that agreement. As he specifically alleged, the agreement, which appeared on the Home Improvement Gift Card website, identified ITC as the card servicer and Bancorp as the card issuer, with no suggestion that Office Depot was in anyway connected to the terms of the card. And Schuldner has not demonstrated a reasonable probability he could amend to allege facts connecting Office Depot to the cardholder agreement.
Schuldner also identifies a different breach of contract theory relating to the original gift cards that was not developed in the SACC—that there existed "an implied agreement for Office Depot to give a refund when it sells cards without disclosing the cards cannot be used without agreement to an undisclosed cardholder agreement." We are unclear how this theory alleges a breach of contract by Office Depot, when Schuldner himself cites a string of cases recognizing that a cardholder agreement not disclosed at the time of purchase may nevertheless be enforceable. (See Adobe Sys. Inc. v. Stargate Software Inc. (N.D. Cal. 2002) 216 F.Supp.2d 1051 [shrink-wrapped end user license agreement was not unconscionable or adhesive merely because buyer did not see it before purchasing software and opening the package since buyer had opportunity to return software if it did not agree to license terms]; Meridian Project Sys. Inc. v. Hardin Constr. Co. (E.D. Cal. 2006) 426 F.Supp.2d 1101 [end user agreement not unconscionable because buyers had opportunity to reject the terms and return item]; Davidson & Assocs. v. Internet Gateway (E.D. Mo. 2004) 334 F.Supp.2d 1164 [reaching the same result under California law]; Register.com, Inc. v. Verio, Inc. (2d Cir. 2004) 356 F.3d 393, 428 [consumer manifests assent to terms included in a shrink-wrapped product not at the point of purchase but through later actions]; Hill v. Gateway 2000, Inc. (7th Cir. 1997) 105 F.3d 1147, 1150 [vendor may propose that a contract of sale be formed not in the store or over the phone when the purchase price is paid but after the consumer has had a chance to inspect the item and terms]; ProCD, Inc. v. Zeidenberg (7th Cir. 1996) 86 F.3d 1447, 1452 [vendor can propose a contract where the buyer accepts by use of the good after rendering payment for it, provided there is an opportunity to read the extended terms]; I.Lan Sys., Inc. v. Netscout Serv. Level Corp. (D. Mass. 2002) 183 F.Supp.2d 328, 338 [" 'Money now, terms later' is a practical way to form contracts"]; Brower v. Gateway 2000, Inc. (N.Y. App. Div. 1998) 246 A.D.2d 246, 250; DeFontes v. Dell, Inc. (R.I. 2009) 984 A.2d 1061, 1068.)
Schuldner Cannot State a Claim for Breach of Contract for Office Depot's Alleged Failure to Give a Refund After the Arbitration (Count 8)
Count 8, Schuldner's third breach of contract claim against Office Depot, stemmed from the second transaction, that is, the replacement gift cards ITC sent him in compliance with the arbitrator's award. He does not allege that Office Depot played any role in the second transaction, and in fact states in his reply brief that "[t]he second transaction is not part of this claim." Given this, we fail to understand how he can allege any wrongdoing by Office Depot vis-à-vis the second transaction. At best, he offers this unpersuasive explanation: "The entire second transaction was an (unsuccessful) attempt to mitigate damages from ITC/Bancorp/Office Depot's original failure to give a refund. Assuming Office Depot had a duty to give a refund for the initial purchase, this attempt to mitigate damage does not relieve Office Depot of any liability." Since Schuldner has not identified any facts giving rise to Office Depot's liability for the lack of a refund of the original gift cards, this theory must fail.
Schuldner Cannot State a Claim for Rescission Based on a Mutual Mistake of Fact
The primary focus of Schuldner's appeal are the claims based on the two alleged misrepresentations, as addressed above. He does raise on appeal what appears to be a new theory: even if Office Depot were to establish that the advertising was done exclusively by ITC and Bancorp, he would still have a claim against Office Depot based on mutual mistake of fact. This is so, he theorizes, because he believed he was buying, and Office Depot believed it was selling, gift cards that could be used at all Benjamin Moore stores and on its website. As he puts it, "Office Depot was just as fooled as buyer was into believing that the cards can be used at benjaminmoore.com and all Benjamin Moore brick and mortar stores, and that the cards are refundable." Once again, the representation regarding where the gift cards could be used was made on a website to which Schuldner has not connected Office Depot, and he has not identified any other facts indicating that Office Depot had any belief about where the cards could be used. He thus has not alleged facts supporting this new theory regarding Office Depot's purported understanding regarding where the gift cards could be used.
Further, the only claim Schuldner seeks to re-plead based on this purported mutual mistake is his claim for rescission. The parties cannot, however, be returned to the status quo in light of the arbitrator's award (confirmed by the trial court) upholding ITC's decision to refuse a cash refund based on Schuldner's bad faith purchase of the gift cards. Moreover, rescission is only appropriate where a party gives " 'prompt notice' " of the intent to rescind, restores or offers to restore everything received under the contract, and can be returned to the status quo. (White v. Berrenda Mesa Water Dist. (1970) 7 Cal.App.3d 894, 900-901; see also Civ. Code, § 1691.) That was most certainly not the case now, where Schuldner has first proposed his rescission-based-on-mutual-mistake-of-fact theory nearly four years after he purchased the original gift cards.
Schuldner Has Not Alleged Any Other Viable Theory of Liability
Schuldner contends that in addition to his claims for false advertising, he has asserted other, unspecified causes of action that "might be contractual, equitable, under agency or product liability theories, or otherwise." As he puts it, "[O]ther facts are alleged for liability, the gist of which follows: Office Depot sold gift cards with no disclosure that Office Depot itself was not itself the card issuer, or disclosure that a third party was the card issuer. Office Depot gave no notice that a cardholder agreement exists, or that the cards cannot be used unless Buyer later agreed to such undisclosed cardholder agreement. After Buyer bought the cards and got home, he opened the card package and read notice that the cards cannot be used unless Buyer agrees to this undisclosed cardholder agreement. The cardholder agreement has unexpected terms including a limitations of liability clause, arbitration clause, Georgia choice of law clause, and an amendments and cancellation clause saying the card issuer can amend the agreement to anything under the sun and bind Buyer to the amendment." After detailing the provision that states the buyer can obtain a refund if he or she does not agree to the terms of the cardholder agreement, Schuldner then goes on to argue that the "promise of a refund contained in the cardholder agreement in fact does give rise to Office Depot's liability for refusal to give a refund." He continues: "[I]t was Office Depot's choice not to disclose there is a cardholder agreement, and not to disclose that there was a third party issuer. Office Depot cannot both not disclose the cardholder agreement, and later tell a buyer who does not agree to the cardholder agreement that he is stuck and cannot get a refund."
To reiterate allegations made in his SACC and then posit they "might" state some unspecified claim that is "contractual, equitable, under agency or product liability theories, or otherwise" falls short of Schuldner's pleading obligation, and it certain does not demonstrate a reasonable probability that he could state a viable claim if granted leave to amend.
The Trial Court Did Not Abuse Its Discretion in Denying Leave to Amend
We review the trial court's denial of leave to amend for abuse of discretion. (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1035; CAMSI IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1538-1539.) " '[W]e decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.' (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)"
As we have detailed throughout, Schuldner has not identified any facts he could allege suggesting a reasonable possibility that he could amend to state a viable claim against Office Depot. We therefore conclude the trial court did not abuse its discretion in sustaining Office Depot's demurrer without leave to amend.
The Trial Court Properly Dismissed the Class Action Allegations
Because we affirm the trial court's order sustaining the demurrer without leave to amend as to all claims against Office Depot, Schuldner's argument that it was premature for the court to dismiss the class allegations is moot.
DISPOSITION
The order sustaining Office Depot's demurrer to Schuldner's second amended cross-complaint without leave to amend is affirmed. Office Depot shall recover its costs on appeal.
/s/_________
Richman, J.
We concur:
/s/_________
Kline, P.J.
/s/_________
Stewart, J.