Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. BC392020 Jane L. Johnson, Judge. Reversed and remanded with directions.
Law Offices of Chan Yong Jeong and C. Yong Jeong for Plaintiff and Appellant.
Law Offices of James Alexander Kim and James A. Kim for Defendants and Respondents.
ZELON, J.
This appeal arises out of a dispute over a construction project. Appellant Pro Tech Air, Inc. (“Pro Tech”) is a subcontractor that provided heating, ventilation, and air conditioning services in the construction of a building owned by respondents NBGI Homes, LLC and Jae Woong Chong (collectively, “NBGI”). When Pro Tech was not paid in full for its services, it filed suit against NBGI, alleging claims for quantum meruit, unjust enrichment, breach of a third party beneficiary contract, and account stated. The trial court sustained NBGI’s demurrers to each cause of action without leave to amend and entered judgment in favor of NBGI. We conclude that the trial court properly sustained the demurrer to the cause of action for breach of contract, but erred in sustaining the demurrer to the cause of action for account stated. We further conclude that Pro Tech should be granted leave to amend its complaint to state causes of action for quantum meruit and unjust enrichment. We accordingly reverse the judgment and remand for further proceedings consistent with this opinion.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
I. The Construction Project
NBGI is the owner of a condominium building located at 702 Serrano Avenue in Los Angeles, California. JRC Development & Management Inc. (“JRC”) is a general contractor, and Pro Tech is a subcontractor. In September 2005, NBGI and JRC entered into a written general contractor agreement under which JRC was to provide general contractor services to NBGI in the construction of NBGI’s building. Pursuant to the general contractor agreement, JRC was to work with subcontractors to complete construction of the project. Prior to awarding subcontracts, JRC was to submit a list of proposed subcontractors to NBGI, and NBGI was to timely advise JRC whether it had any objection to the persons on the list. JRC agreed not to contract with any subcontractor to whom NBGI had a timely and reasonable objection. The subcontractors retained for the construction project were to receive payment for their services directly from a fund control company. The general contractor agreement provided, however, that the contract “shall not be construed to create a contractual relationship of any kind... between the Owner and a Subcontractor or Sub subcontractor.”
In January 2006, JRC and Pro Tech entered into a written subcontractor agreement under which Pro Tech was to furnish and install heating, ventilation, and air conditioning systems in NBGI’s building in exchange for payment for its work. Pursuant to the subcontractor agreement, JRC and Pro Tech agreed to the scope of work to be performed by Pro Tech on the project and the consideration to be paid to Pro Tech for its work. Until the end of 2007, Pro Tech performed work on the project by installing heating, ventilation, and air conditioning systems in the building. Pro Tech provided JRC with invoices requesting payment for each part of the work that it performed, and received a total of 12 payments for the amounts requested. However, Pro Tech was not paid the balance of $58,191.24 due at the end of 2007. Pro Tech requested that JRC and NBGI pay the remaining balance, but never received any payment.
II. The First Amended Complaint
On June 5, 2008, Pro Tech filed a civil action against JRC and NBGI in Los Angeles County Superior Court. In a first amended complaint, Pro Tech asserted three causes of action against NBGI for quantum meruit, unjust enrichment, and breach of a third party beneficiary contract.
Pro Tech alleged six causes of action against JRC for breach of contract, account stated, quantum meruit, unjust enrichment, breach of a third party beneficiary contract, and open book account. JRC is not a party to this appeal and Pro Tech’s claims against JRC are not at issue.
With respect to the quantum meruit and unjust enrichment claims, Pro Tech alleged that it was retained pursuant to the general contractor agreement between NBGI and JRC, and that it performed work on NBGI’s construction project at JRC’s request and approval. Pro Tech further alleged that NBGI “indirectly” requested that Pro Tech perform the work by providing in the general contractor agreement that JRC would retain subcontractors, that NBGI knew or should have known that Pro Tech was retained as a subcontractor on the project, and that NBGI never objected to any of Pro Tech’s work. Pro Tech also alleged that NBGI benefited from the work in the form of increased value to its building, but refused to pay JRC the money owed to JRC for the project or to authorize payment of the money owed to Pro Tech for its work.
With respect to the breach of contract claim, Pro Tech alleged that the general contractor agreement between NBGI and JRC was expressly made for the benefit of the subcontractors because it specified the manner of retaining and paying subcontractors, and obligated NBGI to pay for the costs of the construction project, including the costs of the subcontractors’ work. Pro Tech further alleged that NBGI breached the general contractor agreement by failing to pay JRC for the project or to provide the money necessary to pay Pro Tech for its work.
The trial court sustained NBGI’s demurrer to the causes of action for quantum meruit and unjust enrichment without leave to amend, and sustained the demurrer to the cause of action for breach of a third party beneficiary contract with leave to amend. In dismissing the quantum meruit and unjust enrichment claims, the court found that Pro Tech had failed to allege that it performed the work on the construction project at the request of NBGI, as opposed to the request of JRC, or that NBGI’s benefit from Pro Tech’s work was the result of fraud, duress, conversion, or similar conduct. The court also concluded that an owner has no personal liability to a subcontractor absent privity of contract, and there was no contractual privity between Pro Tech and NBGI. In dismissing the breach of contract claim, the court stated that Pro Tech’s conclusory allegation that the general contractor agreement was expressly made for the benefit of the subcontractors was insufficient to support the existence of a third party beneficiary contract. However, the court granted Pro Tech leave to amend the breach of contract claim provided that it attach a copy of the alleged contract to its amended complaint.
III. The Third Amended Complaint
Following the filing of a second amended complaint, the parties stipulated that Pro Tech could file a third amended complaint in the action. In its third amended complaint, Pro Tech asserted two causes of action against NBGI: breach of a third party beneficiary contract and account stated.
Pro Tech added the following factual allegations to its complaint: NBGI reviewed the subcontractor agreement between JRC and Pro Tech and did not object to the retention of Pro Tech as a subcontractor. Pro Tech’s invoices requesting payment for its work were provided to and reviewed by both JRC and NBGI. Until November 2007, NBGI made 12 payments to Pro Tech through NBGI’s designated financial institution, National Builders Control, Inc. (“NBCI”), and directly authorized such payments by providing NBCI with signed written requests for payment to Pro Tech. NBGI reviewed an invoice from Pro Tech requesting payment of $39,375.44 as of November 2007, and confirmed in an internal report that the amount requested was correct. As of the end of 2007, NBGI also approved change orders to Pro Tech for additional amounts. The balance stated to NBGI and JRC in an invoice dated August 2008 was $58,191.94. NBGI acknowledged that Pro Tech was owed the balance of $58,191.94 by making partial payments directly to Pro Tech through NBCI, confirming the amount due in its internal payment reports, and failing to object to the invoices. NBGI also acknowledged that Pro Tech properly performed its work by confirming the completion of the work in an internal inspection report and making no complaint about the work until the present lawsuit.
In addition to the new allegations, Pro Tech attached numerous exhibits to its third amended complaint. These exhibits included the general contractor agreement between NBGI and JRC, the subcontractor agreement between JRC and Pro Tech, job invoices submitted by Pro Tech to JRC, change orders and field time sheets submitted by Pro Tech to JRC, payment vouchers for Pro Tech signed by NBGI and JRC and submitted to NBCI, checks issued to Pro Tech by NBCI, an unsigned spreadsheet of retention amounts requested by subcontractors as of August and September 2007, an unsigned status report of project items inspected as of November 2007, and an unsigned summary of the amount owed to Pro Tech as of August 2008.
The trial court sustained NBGI’s demurrer to the third amended complaint without leave to amend and dismissed the remaining causes of action for breach of a third party beneficiary contract and account stated, and entered judgment in favor of NBGI. Pro Tech thereafter filed a timely notice of appeal.
DISCUSSION
I. Standard Of Review
In reviewing the sufficiency of a complaint against a demurrer, we “treat[] the demurrer as admitting all material facts properly pleaded, ” but we do not “assume the truth of contentions, deductions or conclusions of law.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) We liberally construe the pleading to achieve substantial justice between the parties, giving the complaint a reasonable interpretation and reading the allegations in context. (Code Civ. Proc., § 452; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) When a demurrer is sustained, we must determine de novo whether the complaint alleges facts sufficient to state a cause of action under any legal theory. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) When a demurrer is sustained without leave to amend, we must also decide whether there is a reasonable possibility that the defect in the complaint can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
“‘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 pleading. (Id. at p. 971; Code Civ. Proc., § 472c, subd. (a); see also City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 746 [“The issue of leave to amend is always open on appeal, even if not raised by the plaintiff.”].) 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.) Where the complaint can reasonably be amended to allege a valid cause of action, the judgment must be reversed. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.)
Pro Tech did not include a reporter’s transcript of the hearings on the demurrers with the record on appeal. NBGI claims that the failure to provide a transcript of the oral proceedings precludes Pro Tech from challenging the sufficiency of the evidence supporting the judgment in NBGI’s favor. However, a demurrer does not test sufficiency of the evidence, but sufficiency of the pleadings. Moreover, because a demurrer solely raises issues of law, we are not bound by the grounds on which the trial court relied in its ruling. Rather, we must independently determine if the complaint states a claim for relief under any legal theory. We therefore may address the merits of Pro Tech’s appeal based on the record before us.
II. Quantum Meruit and Unjust Enrichment
In its first amended complaint against NBGI, Pro Tech alleged claims for quantum meruit and unjust enrichment. Although pleaded as separate causes of action, both the quantum meruit and unjust enrichment claims were based on the same factual allegations. The gravamen of each cause of action was that NBGI was unjustly enriched at Pro Tech’s expense when it obtained the benefit of Pro Tech’s work on its property without providing full compensation for such work.
“A quantum meruit or quasi-contractual recovery rests upon the equitable theory that a contract to pay for services rendered is implied by law for reasons of justice. [Citations.]” (Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4th 1410, 1419.) “Quantum meruit refers to the well-established principle that ‘the law implies a promise to pay for services performed under circumstances disclosing that they were not gratuitously rendered.’ [Citation.]” (Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 458.) “‘Quasi-contract’ is simply another way of describing the basis for the equitable remedy of restitution when an unjust enrichment has occurred. Often called quantum meruit, it applies ‘[w]here one obtains a benefit which he may not justly retain’.... [Citations.]” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 388, fn. 6.) “‘‘Quasi-contracts, unlike true contracts, are not based on the apparent intention of the parties to undertake the performance in question, nor are they promises. They are obligations created by law for reasons of justice.” [Citation.]’ [Citation.]” (Ibid.)
“To recover in quantum meruit, a party need not prove the existence of a contract [citations], but it must show the circumstances were such that ‘the services were rendered under some understanding or expectation of both parties that compensation therefor was to be made’ [citations].” (Huskinson & Brown v. Wolf, supra, 32 Cal.4th at p. 458; see also Maglica v. Maglica (1998) 66 Cal.App.4th 442, 449 [“recovery in quantum meruit does not require a contract”].) “[A] plaintiff must establish both that he or she was acting pursuant to either an express or implied request for such services from the defendant and that the services rendered were intended to and did benefit the defendant.” (Day v. Alta Bates Medical Center (2002) 98 Cal.App.4th 243, 248.) Recovery under a quasi-contractual theory may also be available “where the defendant obtained a benefit from the plaintiff by fraud, duress, conversion or similar conduct.” (McBride v. Boughton, supra, 123 Cal.App.4th at p. 388; see also Nibbi Brothers, Inc. v. Home Federal Sav. & Loan Assn. (1988) 205 Cal.App.3d 1415, 1422 [“‘It must ordinarily appear that the benefits were conferred by mistake, fraud, coercion or request; otherwise, though there is enrichment, it is not unjust.’”].) The measure of recovery in quantum meruit “is the reasonable value of the services rendered, provided they were of direct benefit to the defendant.” (Palmer v. Gregg (1967) 65 Cal.2d 657, 660.)
The parties dispute whether, as a matter of law, a subcontractor, who has no direct contractual relationship with a property owner, is precluded from recovering under a quantum meruit or unjust enrichment theory for benefits conferred on the property. Relying principally on the California Supreme Court’s decision in R.D. Reeder Lathing Co. v. Allen (1967) 66 Cal.2d 373 (Reeder), NBGI contends that a property owner cannot be personally liable to a subcontractor absent privity of contract, and without privity, a subcontractor’s sole remedy against an owner is a statutory mechanic’s lien. In Reeder, a subcontractor filed suit against a property owner to foreclose on a mechanic’s lien. (Id. at p. 375.) In granting summary judgment in favor of the subcontractor, the trial court determined that the owner was personally liable for the value of the labor and materials that the subcontractor supplied. (Ibid.) The Supreme Court concluded that “[t]he part of the judgment that defendant is personally liable to plaintiff is clearly erroneous” because “[i]n the absence of a contract between a lien claimant and the property owner, the right to enforce a mechanic’s lien against real property does not give rise to personal liability of the owner.” (Id. at p. 376.) The sole issue before the Court in Reeder was the subcontractor’s right to a statutory mechanic’s lien and whether the pursuit of such right could result in personal liability against the owner. Reeder thus did not consider the separate issue raised here -- whether a subcontractor may seek recovery against an owner not based on statutory lien rights, but on other legal or equitable remedies.
Although Pro Tech filed a mechanic’s lien on NBGI’s property, it did not seek to foreclose on its lien within the 90-day period prescribed by statute (Civ. Code, § 3144). Pro Tech does not dispute that its mechanic’s lien claim against the property is time-barred, but rather argues that its failure to enforce its statutory lien rights does not preclude it from pursuing alternative, non-statutory claims against NBGI.
Two decisions -- Rogers v. Whitson (1964) 228 Cal.App.2d 662 (Rogers) and Truestone, Inc. v. Simi West Industrial Park II (1984) 163 Cal.App.3d 715 (Truestone) -- have addressed the availability of quasi-contractual recovery in an action by a subcontractor against a property owner. In Rogers, a subcontractor sought to recover from a property owner the costs of equipment that he had furnished to a general contractor for use in a construction project on the owner’s property. (Rogers, supra, 228 Cal.App.2d at p. 670.) The Court of Appeal held that the lack of privity between the subcontractor and the owner precluded the imposition of any personal liability against the owner. (Id. at pp. 673-674.) In response to the subcontractor’s claim that the owner would be unjustly enriched if recovery was not allowed, the Rogers court noted that the subcontractor had alternative legal remedies, including exercising his mechanic’s lien rights against the property or pursuing a lawsuit against the general contractor “with whom he stood in contractual privity.” (Id. at p. 676.) The Rogers court also explained that it “apprehend[ed] no unjust enrichment here” given that the owner had paid the general contractor for the subcontractor’s work. (Ibid.)
In Truestone, a subcontractor brought an action against a property owner for unjust enrichment and other claims based on the general contractor’s failure to pay for the materials that the subcontractor delivered for a construction project on the owner’s property. (Truestone, supra, 163 Cal.App.3d at pp. 718-719.) The Court of Appeal affirmed summary judgment in favor of the owner on the unjust enrichment claim. (Id. at pp. 723-724.) Citing Rogers, the court stated that a “[a] subcontractor, who has no direct contractual relationship with the property owner, may generally not recover on an unjust enrichment theory for benefits conferred on the property.” (Id. at p. 724.) The court noted that in Rogers, the subcontractor was not entitled to quasi-contractual relief because the owner had compensated the general contractor, and hence, had not been unjustly enriched at the subcontractor’s expense. (Ibid.) The Truestone court concluded that the subcontractor in the case before it likewise could not state a claim for unjust enrichment because “[t]here was no allegation that [the owner] promised to pay [the subcontractor], or that [the owner] did not pay [the general contractor]” for the subcontractor’s work. (Id. at p. 723.)
Both Rogers and Truestone provide some support for NBGI’s contention that a subcontractor may not recover from a property owner on a quantum meruit or unjust enrichment theory where there is no privity of contract between the parties. Notably, however, neither case rejected the subcontractor’s claim for equitable relief based solely on the lack of contractual privity. Rather, in reaching their holdings, the courts in each case also considered whether there was any allegation or evidence of unjust enrichment to the property owner, either because the owner promised to pay the subcontractor directly or failed to pay the general contractor for the subcontractor’s work. (Rogers, supra, 228 Cal.App.2d at p. 676; Truestone, supra, 163 Cal.App.3d at p. 723; see also In re De Laurentiis Entertainment Group, Inc. (9th Cir. 1992) 963 F.2d 1269, 1273, fn. 6 [noting that Rogers and Truestone rejected quasi-contract claims based on a lack of unjust enrichment rather than a lack of privity].) We accordingly read Rogers and Truestone as supporting a broader legal principle that, while a subcontractor who has no direct contractual relationship with a property owner ordinarily may not recover on a quantum meruit or unjust enrichment theory, there may be circumstances where the extent of the parties’ dealings can give rise to a cause of action for equitable relief.
Here, we conclude that Pro Tech should be granted leave to amend its complaint to state causes of action for quantum meruit and unjust enrichment based on the allegations in its third amended complaint. As previously noted, Pro Tech’s quantum meruit and unjust enrichment claims were set forth in its first amended complaint and were dismissed by the trial court when it sustained NBGI’s demurrers to both causes of action without leave to amend. In pleading these claims in its first amended complaint, Pro Tech merely alleged that NBGI made an implied request that Pro Tech perform the work on its project by not objecting to JRC’s retention of Pro Tech as a subcontractor, that NBGI directly benefited from the work in the form of increased value to its property, and that NBGI failed to pay JRC or Pro Tech the total amount owed for the work. However, in its third amended complaint, Pro Tech added new allegations that NBGI was also involved in reviewing and approving the details of Pro Tech’s work and invoices, and in authorizing payment directly to Pro Tech through its designated financial institution.
Specifically, the third amended complaint alleged that NBGI reviewed JRC’s subcontractor agreement with Pro Tech and the scope of work to be performed, and did not raise any objection to the retention of Pro Tech as a subcontractor or to its subsequent work on the project. NBGI also received and reviewed the job invoices submitted by Pro Tech for each of its services and directly authorized payment to Pro Tech by providing signed payment requests to its designated financial institution, NBCI. The payment vouchers that Pro Tech attached to its complaint appear to support that allegation by showing that both NBGI and JRC signed the vouchers directing payment to Pro Tech by NBCI. As further alleged in the third amended complaint, NBGI was provided with an invoice requesting the remaining balance of $58,191.94, but failed to authorize payment of such balance to Pro Tech. In addition, NBGI inspected the work performed by Pro Tech at the completion of the project, and did not claim any defect in the work until the filing of the present action. If proven, these factual allegations could support a finding that NBGI retained a considerable amount of direct control over Pro Tech’s work on the project by deciding when and under what circumstances Pro Tech would be paid for its work.
Therefore, based on the allegations in the third amended complaint, it is reasonably probable that Pro Tech can allege sufficient facts to show that it was acting pursuant to an implied request for services from NBGI and that the services it rendered were intended to benefit and did directly benefit NBGI in the form of increased value to the property. It is also reasonably probable that Pro Tech can allege sufficient facts to show that there was an understanding between the parties that NBGI would compensate Pro Tech directly for its services rather than compensating JRC, and that NBGI failed to pay the remaining balance owed to Pro Tech despite receiving a specific demand for payment. Because there is a reasonable probability that Pro Tech can amend its pleading to state a claim for quantum meruit or unjust enrichment, we must order that Pro Tech be granted leave to amend. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at p. 971; City of Stockton v. Superior Court, supra, 42 Cal.4th at p. 746.) Consequently, we reverse the judgment and remand the matter to the trial court for the issuance of a new order granting Pro Tech leave to amend its complaint to allege causes of action for quantum meruit and unjust enrichment.
III. Breach of Third Party Beneficiary Contract
In its third amended complaint, Pro Tech asserted a claim against NBGI for breach of a third party beneficiary contract. In pleading the cause of action, Pro Tech alleged that, as a subcontractor on the construction project, it was an intended beneficiary of the general contractor agreement between NBGI and JRC, and that NBGI breached the terms of that agreement by failing to provide full compensation for Pro Tech’s work.
It is well-established that “California law permits third party beneficiaries to enforce the terms of a contract made for their benefit.” (Principal Mutual Life Ins. Co. v. Vars, Pave, McCord & Freedman (1998) 65 Cal.App.4th 1469, 1485.) This rule is codified in Civil Code section 1559, which provides that “[a] contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” (Civ. Code, § 1559.) “Because third party beneficiary status is a matter of contract interpretation, a person seeking to enforce a contract as a third party beneficiary ‘“must plead a contract which was made expressly for his [or her] benefit and one in which it clearly appears that he [or she] was a beneficiary.”’ [Citation.]” (Schauer v. Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 957.)
“‘The test for determining whether a contract was made for the benefit of a third person is whether an intent to benefit a third person appears from the terms of the contract. [Citation.] If the terms of the contract necessarily require the promisor to confer a benefit on a third person, then the contract, and hence the parties thereto, contemplate a benefit to the third person.’” (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1022.) The third party need not be identified individually to be an intended beneficiary, and may be part of “‘a class of persons for whose benefit’” the contract was made. (Id. at p. 1023.) “In contrast, ‘[a] third party who is only incidentally benefited by performance of a contract is not entitled to enforce it. [Citation.] “‘The fact that he is incidentally named in the contract, or that the contract, if carried out according to its terms, would inure to his benefit, is not sufficient to entitle him to demand its fulfillment. It must appear to have been the intention of the parties to secure to him personally the benefit of its provisions.’”’ [Citation.]” (Prouty v. Gores Technology Group (2004) 121 Cal.App.4th 1225, 1233.) “‘“Whether a third party is an intended beneficiary or merely an incidental beneficiary to the contract involves construction of the parties’ intent, gleaned from reading the contract as a whole in light of the circumstances under which it was entered.”’ [Citation.]” (Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401, 1411.)
In the construction industry context, a subcontractor is generally not a third party beneficiary of a contract between a property owner and a general contractor. For instance, in Southern Cal. Acoustics Co. v. C. V. Holder, Inc. (1969) 71 Cal.2d 719 (Southern Cal. Acoustics), a subcontractor sought to recover against a property owner for breach of contract on the grounds that it was a third party beneficiary of the owner’s agreement with the general contractor. The California Supreme Court affirmed the trial court’s order sustaining the owner’s demurrer to the complaint. (Id. at p. 728.) The Court concluded that the subcontractor could not, as a matter of law, establish that “the contracting parties’ purpose was expressly to benefit it.” (Id. at pp. 727-728.) Instead, the subcontractor “was at most an incidental beneficiary, ” and thus, not entitled to enforce the terms of the general contractor agreement. (Id. at p. 728.)
Likewise, in Lundeen Coatings Corp. v. Department of Water & Power (1991) 232 Cal.App.3d 816 (Lundeen), a subcontractor alleged breach of contract claims against the agent of a property owner under a third party beneficiary theory. The Court of Appeal affirmed the order sustaining the agent’s demurrer because the third party beneficiary doctrine did not apply to the subcontractor’s claims. (Id. at p. 834.) As the Lundeen court explained, “[s]ubcontractors cannot recover directly from public entity owners of a construction project on a theory of third-party beneficiary of the prime contract, unless they are specifically intended to benefit from the issuance of the prime contract.” (Ibid.) Because the subcontractor “was at most an incidental beneficiary of that contract, ” it lacked standing to sue the owner for its alleged breach. (Ibid.)
A similar conclusion was reached in Sofias v. Bank of America (1985) 172 Cal.App.3d 583 (Sofias). In Sofias, a general contractor brought a breach of contract action against a lender as an alleged third party beneficiary of the construction loan agreement between the property owner and the lender. (Id. at p. 585.) In rejecting the breach of contract claim, the Court of Appeal reasoned: “The construction loan agreement stated ‘no other person or persons shall have any right or action hereon.’ Even [the owner], a party, could not assign his rights without [the lender’s] written consent.” (Id. at p. 587.) Additionally, “[n]o benefit directly flowed to [the subcontractor] by virtue of the contract. His ‘benefit, ’ i.e., the ability to undertake the construction project because [the owner] obtained funds to pay him, was merely incidental to the construction loan agreement.” (Ibid.) The subcontractor therefore was not a third party beneficiary.
In support of its third party beneficiary claim, Pro Tech cites to a case outside the construction industry context, Outdoor Services, Inc. v. Pabagold, Inc. (1986) 185 Cal.App.3d 676 (Outdoor Services). In Outdoor Services, a manufacturer contracted with an advertising agency to plan and place an advertising campaign for its product. (Id. at p. 679.) The agreement authorized the advertising agency to contract with third parties for the purpose of carrying out the campaign and to compensate such parties for their services on the manufacturer’s behalf. (Ibid.) When one of the third parties, a purchaser of outdoor advertising space, was not paid for its work, it filed an arbitration demand against the manufacturer pursuant to a provision in the manufacturer’s agreement with the agency. (Id. at p. 680.) The Court of Appeal held that the purchaser could enforce the arbitration clause as a third party beneficiary of the contract. (Id. at p. 684.) The Court explained that, because the manufacturer had assumed a contractual duty to pay the advertising agency for its expenses on the campaign, including those incurred in contracting with third parties, the purchaser was the intended beneficiary of that promise to pay, and as such, was entitled to enforce the terms of the agreement. (Id. at p. 683.)
In reaching its holding, the court in Outdoor Services relied primarily on Gilbert Financial Corp. v. Steelform Contracting Co. (1978) 82 Cal.App.3d 65 (Gilbert), a construction contract case. In Gilbert, the Court of Appeal held that a property owner in a construction project had standing to sue a subcontractor for breach of contract as a third party beneficiary of the subcontractor’s agreement with the general contractor. (Id. at pp. 69-70.) As the Gilbert court observed, the property owner was “the ultimate beneficiary” of the subcontractor’s performance on the project because the labor and materials furnished by the subcontractor were specifically intended for use in constructing the owner’s building. (Id. at p. 70.) Gilbert thus stands for the general proposition that a property owner may be an intended beneficiary of a contract between a general contractor and a subcontractor for services performed on the owner’s property. Gilbert did not, however, consider whether a subcontractor may be an intended beneficiary of a contract between an owner and a general contractor merely because the contract provides for the use of subcontractors on the project. We believe that Southern Cal. Acoustics, Lundeen, and Sofias are more directly on point on this issue, and support the conclusion that a subcontractor in such circumstances is at most an incidental beneficiary.
In this case, we conclude that Pro Tech has failed to stated a claim for breach of a third party beneficiary contract because it did not plead sufficient facts to establish that the general contractor agreement between NBGI and JRC was made for the express benefit of the subcontractors. On its face, the agreement entered into by NBGI and JRC was made for the express purpose of constructing a condominium building on NBGI’s property. There is nothing in the language of the agreement or in the allegations of the third amended complaint to suggest that part of the contracting parties’ intent in forming the agreement was to benefit the subcontractors who performed work on the project. It is true, as Pro Tech asserts, that the agreement contemplated that JRC would retain subcontractors in the construction of the building and that NBGI would compensate the subcontractors directly through its designated financial institution. However, the benefit that Pro Tech obtained as a result of being retained as a subcontractor was merely that of an incidental beneficiary. Moreover, the general contractor agreement specifically stated that it did not create “a contractual relationship of any kind” between NBGI and any subcontractor. This provision shows that the contracting parties’ express intent was to preclude a subcontractor from enforcing the terms of the agreement against NBGI.
Because Pro Tech cannot show that it was an intended beneficiary of the general contractor agreement between NBGI and JRC, it lacks standing to sue NBGI for an alleged breach of that agreement. Additionally, Pro Tech has not shown how its third amended complaint could be amended to state a viable cause of action for breach of a third party beneficiary contract, and the general contractor agreement itself does not suggest any valid basis for further amendment. (See Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685 [“[L]eave to amend should not be granted where... amendment would be futile.”].) The trial court accordingly did not err in sustaining NBGI’s demurrer to the cause of action for breach of a third party beneficiary contract without leave to amend.
IV. Account Stated
In its third amended complaint, Pro Tech also asserted a claim against NBGI for account stated. In support of the claim, Pro Tech alleged that there was an implied agreement between the parties that Pro Tech was owed the balance of $58,191.24 for its work on the project because NBGI was provided with an invoice seeking payment of that amount and NBGI never disputed or otherwise objected to the stated balance due.
“An account stated is an agreement, based on prior transactions between the parties, that all items of the account are true and that the balance struck is due and owing from one party to the other. [Citations.]” (Trafton v. Youngblood (1968) 69 Cal.2d 17, 25.) “To have 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.]” (Truestone, supra, 163 Cal.App.3d at p. 725.) “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. [Citations.]” (Maggio, Inc. v. Neal (1987) 196 Cal.App.3d 745, 753.) “The key element in every context is agreement on the final balance due. [Citation.]” (Ibid.)
Based on the allegations in the third amended complaint, we conclude that Pro Tech has pleaded sufficient facts to state a cause of action against NBGI for account stated. Specifically, in its third amended complaint, Pro Tech alleged that NBGI was provided with copies of the job invoices that Pro Tech submitted to JRC for each part of the work that it performed on the project. After reviewing the invoices, NBGI directly authorized a total of 12 payments to Pro Tech for its work by providing signed written requests for payment to its designated financial institution. In a November 2007 invoice, Pro Tech requested payment of an outstanding balance of $34,375.44, and in an August 2008 invoice, Pro Tech requested payment of a final balance of $58,191.94. NBGI never disputed any of the amounts stated by Pro Tech in its invoices or the quality of any work performed by Pro Tech on the project. Yet despite not raising any objection to Pro Tech’s requests for payment, NBGI failed to pay the remaining balance owed to Pro Tech for its services.
NBGI argues that none of Pro Tech’s invoices were actually directed to NBGI, but instead were directed to JRC. NBGI is correct that the invoices attached as Exhibits D, E, and I to the third amended complaint were addressed solely to JRC, and the alleged “invoice” attached as Exhibit L was not addressed to anyone. However, Pro Tech asserted in its complaint that copies of these documents were also provided to NBGI, and the documents, on their face, do not directly contradict Pro Tech’s allegations. We therefore must accept these allegations as true for purposes of reviewing the sufficiency of Pro Tech’s complaint against NBGI’s demurrer.
Given the requirement that we liberally construe the complaint, Pro Tech’s allegations were sufficient to show that there was an implied agreement on the part of NBGI that the amounts stated in Pro Tech’s invoices were correct and that the balance of $58,191.94 was due and owing for Pro Tech’s services. Pro Tech’s failure to plead an express written or oral agreement between the parties was not fatal to its claim because an account stated may be implied from a debtor’s knowledge and acquiescence, as Pro Tech has alleged occurred here. (Maggio, Inc. v. Neal, supra, 196 Cal.App.3d at p. 753; Truestone, supra, 163 Cal.App.3d at p. 726.) Under these circumstances, the trial court erred in sustaining NBGI’s demurrer to the cause of action for account stated.
DISPOSITION
The judgment is reversed. The order sustaining the demurrer without leave to amend as to the cause of action for breach of a third party beneficiary contract is affirmed. The order sustaining the demurrer as to the cause of action for account stated is reversed. On remand, the trial court is directed to enter a new order granting Pro Tech leave to amend the third amended complaint to allege causes of action for quantum meruit and unjust enrichment. Each party is to bear its own costs on appeal.
We concur: WOODS, Acting P. J., JACKSON, J.