Judge: Andre De La Cruz, Case: 2023-01308637, Date: 2023-08-21 Tentative Ruling

Demurrer to Complaint filed by Pacific Sands LLC and Allen M. Brock on 4/18/23

Defendants Pacific Sands LLC (“Pacific Sands”) and Allen M. Brock (“Brock”) demur to all sixteen causes of action in the Complaint.

Notably, Defendant filed its Reply two days late AND its Demurrer was two pages over the proscribed limit. Defendant is admonished to follow all rules and statutes concerning Court filings. Relatedly, the Reply was NOT considered in the Court’s ruling, below.

First Cause of Action for Quiet Title

Pursuant to Code of Civil Procedure § 761.020, an action to quiet title shall include: (a) a description of the property that is the subject of the action; (b) the title of the plaintiff as to which a determination is sought and the basis of the title; (c) the adverse claims to the title of the plaintiff against which a determination is sought; (d) the date as of which the determination is sought; and (e) a prayer for the determination of the title of the plaintiff against the adverse claims.

Here, the Complaint does not allege that Defendant Brock makes an adverse claim to title of the Property, other than simply lumping him in with “Defendants.”

Plaintiffs have also failed to allege facts sufficient to constitute a cause of action because Plaintiffs do not clearly allege what title they claim. In the general allegations section of the Complaint, Plaintiffs allege that they are the owners of the Property and that they purchased it in 2001. Compl., ¶¶14-15. However, in the charging allegations of the quiet title cause of action, Plaintiffs contradictorily allege that they seek an order and judgment that Defendants shall comply with the Land Purchase Option Agreement and shall sell the fee simple interest in the Property to Plaintiffs. Compl. ¶36. Thus, Defendants have not sufficiently alleged “the title of the plaintiff as to which a determination is sought and the basis of the title.”

Accordingly, the demurrer to the first cause of action for quiet title is SUSTAINED with leave to amend as to both Defendants.

Second Cause of Action for Breach of Written Contract and Third Cause of Action for Breach Of Implied Covenant of Good Faith & Fair Dealing

“A cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff's performance or excuse for nonperformance; (3) defendant's breach; and (4) damages to plaintiff as a result of the breach.” Miles v. Deutsche Bank National Trust Company, 236 Cal. App. 4th 394, 402 (2015).

“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” Durell v. Sharp Healthcare, 183 Cal. App. 4th 1350, 1369 (2010). “The ‘covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct that frustrates the other party’s rights to the benefits of the agreement.” Id.

Here, the Complaint does not state a cause of action for breach of contract or for breach of the implied covenant of good faith and fair dealing against Brock because the Agreement, which is attached as Exhibit 1 to the Complaint, shows that only Pacific Sands—and not Brock—is a party to the contract at issue.

Defendants contend that the second and third causes of action fail to state facts sufficient to constitute a cause of action because the Agreement was terminated in 2008 and the statute of limitations has run. In support of this contention, Defendants request that the Court take judicial notice of a Notice of Termination of Land Purchase Option Agreement that was recorded with the Orange County Recorder’s Office in 2008. RJN, Exh. D.

For a demurrer to be sustained on statute of limitations grounds, the running of the statute must appear “clearly and affirmatively” from the face of the complaint. It is not enough that the complaint might be time-barred. Committee for Green Foothills v. Santa Clara County Bd. of Supervisors, 48 Cal. 4th 32, 42 (2010); Stueve Bros. Farms, LLC v. Berger Kahn, 222 Cal. App. 4th 303, 321 (2013).

Plaintiffs allege that the breach occurred in April 2022 when Defendants refused to consummate Plaintiffs’ purchase of the fee simple interest in the Property under the Agreement. Compl. ¶41. The 2008 recording of the Notice of Termination can arguably be construed as an anticipatory breach of the Agreement. When an anticipatory breach occurs, the injured party may wait until the time of performance and exercise his or her remedies for actual breach. In that case, the statute of limitations does not begin to run until the time when performance is due, i.e., there is an actual breach. Brewer v. Simpson, 53 Cal. 2d 567, 593 (1960); Romano v. Rockwell Int., 14 Cal. 4th 479, 489 (1996).

Pursuant to the Agreement attached as Exhibit 1 to the Complaint, the option could only be exercised at the expiration of the 58-year Sublease in August 2020. Compl. Exh. 1. Thus, under an anticipatory breach theory, the statute of limitations would not have begun to run in 2008.

Accordingly, the demurrer to the second and third causes of action is SUSTAINED with leave to amend as to Brock and OVERRULED as to Pacific Sands.

Fourth Cause of Action for Fraud, Fifth Cause of Action for Fraud in Inducement, Sixth Cause of Action for Intentional Misrepresentation and Seventh Cause of Action for Negligent Misrepresentation

Defendants contend that the fourth, fifth and seventh causes of action for fraud, fraud in inducement and negligent misrepresentation fail to state facts sufficient to constitute a cause of action because Defendants could not have justifiably relied on the statement that Pacific Sands would pursue a remedy to terminate the option because the Land Purchase Agreement had already been terminated in 2008. Defendants also contend that the causes of action are uncertain because the statement in the 10/26/18 letter was not a positive assertion that Pacific Sands would reinstate the purchase option.

Construing the facts pled in the Complaint as true, as the Court must in the context of a demurrer, Plaintiffs have stated a claim. They may have understood the 10/26/18 letter as acknowledging that the purchase option was available to them, and therefore made payments in reliance on that statement.

As to the sixth cause of action, Defendants argue that the intentional misrepresentation cause of action is duplicative of fraud claim. Plaintiffs offer no argument in opposition to this contention. Courts have recognized this as a basis for a demurrer. Palm Springs Villas II Homeowners Assn., Inc. v. Parth, 248 Cal. App. 4th 268, 290 (2016); Rodrigues v. Campbell Industries, 87 Cal. App. 3d 494, 501 (1978) (finding demurrer was properly sustained without leave to amend as to cause of action that contained allegations of other causes and “thus add[ed] nothing to the complaint by way of fact or theory of recovery”); Award Metals, Inc. v. Superior Court, 228 Cal. App. 3d 1128, 1135 (1991).

Accordingly, the demurrer to the fourth, fifth and seventh causes of action is OVERRULED as to both Defendants. The demurrer to the sixth cause of action is SUSTAINED as to both Defendants with leave to amend.

Eighth Cause of Action for Reformation

Reformation is an equitable remedy. Jones v. First Am. Title Ins. Co., 107 Cal. App. 4th 381, 389 (2003), as modified on denial of reh'g (Apr. 23, 2003).) “When, through . . . mutual mistake of the parties, or a mistake of one party, which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved, so as to express that intention . . . .” Cal. Civ. Code §3399.

Here, the Complaint alleges that the Land Purchase Option Agreement and October 26, 2018 Notice of Default do not accurately reflect the parties’ true intentions. Compl. ¶84. The claim is uncertain. It does not sufficiently describe who made the mistake or what the intended agreement should have stated. The allegations are somewhat bewildering since neither of the Plaintiffs was a party to the Land Purchase Option Agreement. It is therefore difficult to imagine how the Agreement failed to accurately reflect Plaintiffs’ true intentions.

The demurrer to the ninth cause of action for reformation is SUSTAINED with leave to amend as to both Defendants.

Ninth Cause of Action for Constructive Fraud

The elements of a constructive fraud cause of action are “(1) a fiduciary or confidential relationship; (2) nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4) reliance and resulting injury (causation)". Younan v. Equifax Inc., 111 Cal. App. 3d 498, 516 (1980), n. 14.

Plaintiffs failed to allege a fiduciary or confidential relationship. In opposition to the demurrer, they contend that such a relationship is not an element of the cause of action. Plaintiffs are incorrect.

The demurrer to the ninth cause of action for constructive fraud is SUSTAINED with leave to amend as to both Defendants.

Tenth Cause of Action for Constructive Trust

“A constructive trust is an involuntary equitable trust created by operation of law as a remedy to compel the transfer of property from the person wrongfully holding it to the rightful owner. The essence of the theory of constructive trust is to prevent unjust enrichment and to prevent a person from taking advantage of his or her own wrongdoing.” Campbell v. Superior Court, 132 Cal. App. 4th 904, 920 (2005). A “constructive trust may only be imposed where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it.” Id.

Defendants contend that the claim is uncertain because it refers to unspecified personal property. However, the “claim” (which is, admittedly, actually a remedy) also refers to real property which has been specified in the Complaint.

The demurrer to the tenth cause of action for constructive trust is OVERRULED as to both Defendants.

Eleventh Cause of Action for Conversion

The elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant’s conversion a wrongful act or disposition of property rights; and (3) damages. Lee v. Hanley, 61 Cal. 4th 1225, 1240 (2015). Money cannot be the subject of conversion unless a specific, identifiable sum is involved. McKell v. Washington Mutual, Inc., 142 Cal. App. 4th 1457, 1491 (2006).

The Complaint alleges that Defendants “accepted and took possession of the personal property of Plaintiffs as described above.” Compl. ¶98. Plaintiffs contend that the personal property converted is money.

Here, the Complaint does not allege an identifiable sum of money or any other personal property.

The demurrer to the eleventh cause of action for conversion is SUSTAINED with leave to amend as to both Defendants.

Twelfth Cause of Action for Slander of Title

“The elements of a cause of action for slander of title are ‘(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.’” RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc., 56 Cal. App. 5th 413, 433 (2020), n. 14.

The Complaint contains the conclusory allegation that Defendants “had documents recorded which cast doubts about Plaintiffs’ ownership of the real property.” Compl. ¶103. However, the Complaint is uncertain as it does not specify which documents were allegedly false.

The demurrer to the twelfth cause of action for slander of title is SUSTAINED with leave to amend as to both Defendants.

Thirteenth Cause of Action for Common Count – Money Had and Received

“A cause of action is stated for money had and received if the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff.” Schultz v. Harney, 27 Cal. App. 4th 1611,1623 (1994).

The Complaint fails to state facts sufficient to constitute a cause of action for money had and received as only conclusory allegations are pled with no facts indicating a sum certain that was received by Defendants, nor is there any indication as to who paid the sum to Defendants or for what purpose.

The demurrer to the thirteenth cause of action for money had and received is SUSTAINED with leave to amend as to both Defendants.

Fourteenth Cause of Action for Tort of Another

Under the “tort of another” doctrine, a person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney's fees, and other expenditures thereby suffered or incurred. Prentice v. North Am. Title Guaranty Corp., Alameda Division, 59 Cal. 2d 618, 620 (1963); Electrical Electronic Control, Inc. v. Los Angeles Unified School Dist., 126 Cal. App. 4th 601, 617 (2005).

The doctrine does not apply to the ordinary two-party suit. It is for use in cases where the defendant has wrongfully made it necessary for a plaintiff to sue a third person. See Prentice at 620-21.

Here, there is no allegation that the Defendants have caused Plaintiffs to have to sue another due to their wrongful acts. The charging allegations consists of only conclusory allegations with no facts alleged.

The demurrer to the fourteenth cause of action for tort of another is SUSTAINED with leave to amend as to both Defendants.

Fifteenth Cause of Action for Unfair Business Practices

The UCL’s scope is broad and does not proscribe specific practices but defines “unfair competition” to include “any unlawful, unfair, or fraudulent business act or practice.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999). Because the statute is written in the disjunctive, there are three varieties of unfair competition: (1) unlawful acts or practice; (2) unfair acts or practice; and (3) fraudulent acts or practices. Id.

Defendants contend that the fifteenth cause of action does not adequately allege which acts alleged in the Complaint qualify as an unlawful or unfair business practice. However, Plaintiffs allege UCL violations based on Civil Code Sections 1708, 1709, 1710 and common law. Compl. ¶123. Civil Code Section 1709 is deceit. As discussed above, the Complaint elsewhere adequately pleads causes of action for fraud and fraud in the inducement. The UCL cause of action is therefore sufficiently pled.

The demurrer to the fifteenth cause of action for unfair business practices is OVERRULED as to both Defendants.

Sixteenth Cause of Action for Declaratory Relief

“Any person interested under a written instrument . . . or under a contract . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” Code Civ. Proc. § 1060.

“To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party’s] rights or obligations.’” Jolley v. Chase Home Finance, LLC, 213 Cal. App. 4th 872, 909 (2013).

Defendants contend that the declaratory relief cause of action simply seeks a declaration of the same rights that are already encompassed by the other causes of action pled in the Complaint. The Court disagrees.

The demurrer to the sixteenth cause of action for declaratory relief is OVERRULED as to both Defendants.

The Court grants Defendants’ requests for judicial notice of Exhibits A and D pursuant to Evidence Code § 452(h).

Plaintiffs shall have 20 calendar days to amend the Complaint.

Defendants to give notice.