Judge: Alison Mackenzie, Case: 23STCV07896, Date: 2024-11-07 Tentative Ruling
Case Number: 23STCV07896 Hearing Date: November 7, 2024 Dept: 55
NATURE OF PROCEEDINGS: Hearing on Defendants’ Demurrer
– without Motion to Strike
Defendants’ demurrer is sustained without leave
to amend.
BACKGROUND
Plaintiff Linda J. Maultsby, a self-represented litigant,
filed this action against Elkins Family
Revocable Trust of 2002 (the “Elkins Trust”), Lawrence C. Henig D.D.S. Inc. (the “Henig
Corporation”) (“Defendants”) and others, for relief related to the
foreclosure sale of an apartment property at 4757 S. Mansfield, Los Angeles, CA
90026 (the “Property”). The causes of action are: 1) Quiet Title; 2) Fraud; 3)
Breach of Contract; and 4) Negligence.
The motion now before the Court is Defendants’ unopposed Demurrer
to the Second Amended Complaint (“SAC”).
REQUEST FOR JUDICIAL NOTICE
Defendants’ request for judicial notice of documents
recorded in the Official Records of Los Angeles County and previous rulings of
this Court is granted.
LEGAL STANDARD
When considering demurrers, courts read the allegations
liberally and in context. Wilson v. Transit Authority of City of Sacramento
(1962) 199 Cal.App.2d 716, 720-21. In a demurrer proceeding, the defects must
be apparent on the face of the pleading or via proper judicial notice. Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994. “A demurrer tests the
pleading alone, and not on the evidence or facts alleged.” E-Fab, Inc. v.
Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315. As such, courts
assume the truth of the complaint’s properly pleaded or implied factual
allegations. Ibid. However, it does not accept as true deductions,
contentions, or conclusions of law or fact. Stonehouse Homes LLC v. City of
Sierra Madre (2008) 167 Cal.App.4th 531, 538. “When the facts are
undisputed, as they are deemed to be on a ruling on a demurrer, the
interpretation of a contract … is a question of law.” Hervey v. Mercury
Casualty Co. (2010) 185 Cal.App.4th 954, 962-963.
ANALYSIS
As an initial matter, Plaintiff does not oppose the instant
Demurrer, effectively consenting to the Court sustaining it. See Cal. R.
Ct., 8.54(c): (“A failure to oppose a motion may be deemed a consent to the
granting of the motion.”).
I. Improper Parties
Defendants argue that they are improper parties to this
action and the demurrer should be sustained on that basis alone.
A. Elkins Trust
First, Defendants argue that Elkins Trust’s demurrers must
be sustained because a trust is not a proper party to litigation, and the SAC
does not plead any allegations of wrongdoing against the trust.
“In contrast to a corporation, which the law often deems a
person, ‘a trust is not a person but rather a fiduciary relationship with
respect to property.’” Portico Management Group, LLC v. Harrison (2011)
202 Cal.App.4th 464, 473 (quoting Ziegler v. Nickel (1998) 64
Cal.App.4th 545, 548) (citations omitted) (internal quotation marks omitted). “A
trust itself cannot sue or be sued.” Presta v. Tepper (2009) 179
Cal.App.4th 909, 914. “As a general rule, the trustee is the real party in
interest with standing to sue and defend on the trust’s behalf.” Estate of
Bowles (2008) 169 Cal.App.4th 684, 691 (citation omitted).
Here, Plaintiff has named Elkins Trust, rather than its
trustees, as a party to this suit. Accordingly, the demurrer is sustained
without leave to amend as to Elkins Trust.
Next, Defendants argue that Plaintiff has erroneously sued the
Henig Corporation rather than the Lawrence C. Henig, DDS., Inc. Age Based
Profit Sharing Plan (“the Plan”), which was Plaintiff’s lender.
A profit-sharing plan is a separate legal entity from the employer.
See Coastline JX Holdings LLC v. Bennett (2022) 80 Cal.App.5th
985, 1005, fn. 8. The Forbearance/Modification Agreement, attached to the SAC,
lists the Plan, and not the Henig Corporation as the lender. SAC, Ex. F, G, H.
Likewise, the Plan, not the Henig Corporation, is identified in the
Assignment of Dead of Trust. SAC, Ex. J.
Because the Court finds that the complaint is uncertain as
to who the intended defendant is, the Henig Corporation, or the Plan, the demurrer
is sustained. Moreover, even if the Plan was named as a defendant, for the
reasons given below, the Court concludes that the SAC would still fail to allege
any of the causes of action.
II. Quiet Title
Defendants argue that the first cause of action for quiet
titles fails because Plaintiff fails to allege that she has tendered the entire
debt due.
“Generally, ‘as a condition precedent to an action by the
borrower to set aside the trustee’s sale on the ground that the sale is
voidable because of irregularities in the sale notice or procedure, the
borrower must offer to pay the full amount of the debt for which the property
was security.’” Kalnoki v. First American Trustee Servicing Solutions, LLC (2017)
8 Cal.App.5th 23, 47 (quoting Lona v. Citibank, N.A. (2011) 202
Cal.App.4th 89, 112.) “‘The rationale behind the rule is that if [the borrower]
could not have redeemed the property had the sale procedures been proper, any
irregularities in the sale did not result in damages to the [borrower].’” Ibid.
However, tender is not required when the borrower attacks the validity of the
underlying debt. Ibid.
Here, Plaintiff alleges that the Trustee Sale of the
Property never occurred. SAC ¶17. Additionally, Plaintiff alleges that before
making the loan, Defendants made false or misleading statements or omissions
about their ability to conduct business. SAC ¶ 16. The tender rule bars the first
attack, as Plaintiff has not offered to pay the full amount of the debt, and
any irregularities at the auction did not injure her unless she could have
otherwise redeemed the property. Moreover, while a fraud claim challenges the
validity of the debt, for reasons stated below, Plaintiff fails to properly
allege fraud. Therefore, the tender rule bars her claim for quiet title.
Accordingly, the demurrer is sustained without leave to amend.
III. Fraud
“Fraud must be specifically pleaded; a general pleading of
the legal conclusion of fraud is insufficient. Every element of the cause of
action must be alleged in full, factually and specifically.” Tindell v.
Murphy (2018) 22 Cal.App.5th 1239, 1249; see also Wilhelm v. Pray,
Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331 (affirming
demurrer where the complaint failed to plead with specificity a factual basis
for how a defendant attorney knew the representations she communicated on
behalf of her client were false). Moreover, it “‘is not sufficient to allege
fraud or its elements upon information and belief, unless the facts upon which
the belief is founded are stated in the pleading.’” Carney v. Simmonds
(1957) 49 Cal.2d 84, 100 (quoting Dowling v. Spring Valley Water Co.
(1917), 174 Cal. 218, 221.
“To establish a claim for deceit based on intentional
misrepresentation, the plaintiff must prove seven essential elements: (1) the
defendant represented to the plaintiff that an important fact was true; (2)
that representation was false; (3) the defendant knew that the representation
was false when the defendant made it, or the defendant made the representation
recklessly and without regard for its truth; (4) the defendant intended that
the plaintiff rely on the representation; (5) the plaintiff reasonably relied
on the representation; (6) the plaintiff was harmed; and (7) the plaintiff’s
reliance on the defendant’s representation was a substantial factor in causing
that harm to the plaintiff.” Manderville v. PCG&S Group, Inc. (2007)
146 Cal.App.4th 1486, 1498.
“The required elements for fraudulent concealment are (1)
concealment or suppression of a material fact; (2) by a defendant with a duty
to disclose the fact to the plaintiff; (3) the defendant intended to defraud
the plaintiff by intentionally concealing or suppressing the fact; (4) the
plaintiff was unaware of the fact and would not have acted as he or she did if
he or she had known of the concealed or suppressed fact; and (5) plaintiff
sustained damage as a result of the concealment or suppression of the fact.” Graham
v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606.
Plaintiff alleges that Henig Corporation misrepresented that
it had the legal capacity to enter into a real estate contract and concealed its
Terminated status. However, as explained above, the lender was not the Henig
Corporation, but the Plan, a separate legal entity. Moreover, Plaintiff fails
to allege with specificity how, when, where, and by what means the
representations were made. Accordingly, the demurrer to the fraud cause of
action is sustained without leave to amend.
IV. Breach of Contract
Defendants argue that Plaintiff has failed to state a cause
of action for breach of contract.
The elements of breach of contract are “‘(1) the contract,
(2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s
breach, and (4) the resulting damages to plaintiff.’” Kumaraperu v. Feldsted
(2015) 237 Cal.App.4th 60, 70 (quoting Careau & Co. v. Security Pacific
Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388).
Plaintiff does not allege any of these elements but instead
alleges that the contract was void because Defendants lacked the legal
authority to enter a written contract. Again, this allegation is based on the
mistaken belief that the lender was the Henig Corporation, rather than the
Plan. Accordingly, the demurrer for breach of contract is sustained without
leave to amend.
V. Negligence
Defendants contend that the negligence claim against them
fails because (1) they did not owe Plaintiff a duty of care, (2) Plaintiff
fails to allege Defendants breached such a duty, (3) Plaintiff does not plead
how the alleged breach injured her, and (4) the economic loss rule bars her
claim.
“The existence of a duty of care owed by a defendant to a
plaintiff is a prerequisite to establishing a claim for negligence.” Nymark v. Heart Fed. Savings & Loan
Assn. (1991) 231 Cal.App.3d 1089, 1095. “[A] financial institution owes no
duty of care to a borrower when the institution’s involvement in the loan
transaction does not exceed the scope of its conventional role as a mere lender
of money.” Id. at 1096. The economic loss rule generally provides that “there
is no recovery in tort for negligently inflicted ‘purely economic losses,’
meaning financial harm unaccompanied by physical or property damage. Sheen
v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.
The Court agrees that Plaintiff fails to state a claim for
negligence because Defendants did not owe Plaintiff a duty of care, and the
economic loss rule bars such a claim. Plaintiff fails to explain how these
defects could be cured. Accordingly, the Court sustains the demurrer without
leave to amend.
CONCLUSION
Defendants’ demurrer is sustained without leave to amend.