Judge: Anne Richardson, Case: 22STCV18024, Date: 2023-04-17 Tentative Ruling

Case Number: 22STCV18024    Hearing Date: April 17, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

79+ year old Plaintiff Larry C. Marshall—individually and as trustee of the Marshap Family Trust, Dated March 15, 2016—sues Defendants David Oiaknin, Liran Zorella, LA Green Development, Inc., Do & Lo Investments LLC, Zorella Investments, LLC, and Does 1 through 20 pursuant to a November 20, 2022 First Amended Complaint (FAC) alleging claims of (1) Promissory Fraud, (2) Fraud (Rescission), (3) Elder Financial Abuse, (4) Cancellation of Instrument, and (5) Violation of Civil Code § 2338 (Tort of Agent). The claims arise from allegations that Defendant Oiaknin, acting on behalf of all Defendants, through undue influence and fraud, induced Plaintiff Marshall into signing a flurry of documents related to: (A) a Residential Purchase Agreement of Plaintiff Marshall’s 648 N. Laurel Avenue, Los Angeles, California 90048 and 650 N. Laurel Avenue, Los Angeles, California 90048 properties (house with ADU; hereafter, Subject Property) for $140,000 when its worth was valued at $1.8 million at the time; (B) a Grant Deed conveying the Subject Property to Zorella Investments; and (3) approximately $500,000 in loans in Plaintiff’s own name to perform substantial renovations and improvements to the Subject Property, including new doors, new windows, exterior paint, new air-conditioning, new furnace, interior renovation and the conversion of an artist’s studio into an alternative dwelling unit with a kitchen, two bedrooms and two bathrooms, with the proceeds from the loans being paid back to Defendants to perform the work on Plaintiff’s residence. The undue influence and fraud alleged relate to Defendant Oiaknin promising that if the Subject Property was conveyed by Plaintiff, Oiaknin would, among other things, take care of Plaintiff by renting out the Subject Property to raise rental income for Plaintiff and pay off the loans on the Subject Property either himself or through LA Green.

Of relevance to the discussion below:

The original Complaint for this action was filed on June 1, 2022 and alleged the same causes of action based on the same general allegations as the FAC, with the difference that the Complaint attached a copy of the Grant Deed at issue;

On August 11, 2022, Defendant Oiaknin demurred to the Complaint as alleged against him, with a hearing set for November 29, 2022;

On August 12, 2022, Defendants Liran Zorella, LA Green Development, Inc., Do & Lo Investment LLC, and Zorella Investments LLC filed an Answer to the Complaint and filed their own Cross-Complaint against Plaintiff Marshall on August 12, 2022 pursuant to claims of (1) Breach of Contract, (2) Breach of the Implied Covenant of Good Faith & Fair Dealing, (3) Declaratory Relief, (4) Fraud, (5) Quiet Title, and (6) Injunction based on allegations that the Subject Property should vest in Zorella Investments LLC according to the agreements signed by Plaintiff Marshall;

On November 10, 2022, Plaintiff filed his FAC; and

On November 29, 2022, the Court took Defendant Oaiknin’s demurrer off calendar.

On January 19, 2023, Defendant David Oiaknin (Oiaknin) demurred to the claims alleged against him in the FAC—i.e., the FAC’s first through third and fifth causes of action—based on sufficiency and uncertainty grounds. The demurrer was set for hearing on March 2, 2023.

On February 16, 2023, Plaintiff Marshall opposed the demurrer.

On February 24, 2023, Defendant Oiaknin filed a notice with the Court arguing that he was never served with Plaintiff’s opposition.

On March 1, 2023, Plaintiff and Oiaknin stipulated a continuance of the March 2nd hearing to permit Defendant Oiaknin to reply to the February 16th opposition.

On April 10, 2023, Oiaknin replied to Plaintiff’s opposition.

The January 19th demurrer is now before the Court.

Request for Judicial Notice

The Court TAKES JUDICIAL Notice of the Grant Deed attached to the June 1, 2022 Complaint, this file, and Notice of Lis Pendens filed on June 13, 2022, though Defendant Oiaknin is reminded to make his request in a document separate from the body of the demurrer. (Demurrer, ¶ 14; Evid. Code, § 452, subd. (h), 453.)

Demurrer

Demurrer Sufficiency Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code Civ. Proc., § 430.10, subd. (e).) This device can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a [general] demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) In testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-67.) A demurrer, however, “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228, disapproved on other grounds, Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1162.) The face of the complaint includes exhibits attached to the complaint. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence. (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447, superseded by statute on other grounds as stated in White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 521.)

Demurrer Uncertainty Standard

A demurrer to a pleading lies where the pleading is uncertain, ambiguous, or unintelligible. (Code Civ. Proc. § 430.10, subd. (f).) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.) As a result, a special demurrer for uncertainty is not intended to reach failure to incorporate sufficient facts in the pleading but is directed only at uncertainty existing in the allegations already made. (People v. Taliaferro (1957) 149 Cal.App.2d 822, 825.) Where complaint is sufficient to state a cause of action and to apprise defendant of issues he is to meet, it is not properly subject to a special demurrer for uncertainty. (See ibid.; see also Gressley v. Williams (1961) 193 Cal.App.2d 636, 643 [“A special demurrer [for uncertainty] should be overruled where the allegations of the complaint are sufficiently clear to apprise the defendant of the issues which he is to meet”].)

FAC, Entire Pleadings, Filing of FAC Deficient: OVERRULED.

Defendant Oiaknin first argues that the filing of the FAC—made by Plaintiff as on November 10, 2022 without leave of court—was improperly done because Plaintiff had been deprived of his ability to amend the Complaint as a matter of course when an answer was filed in this action, and that any stipulation between Plaintiff and the remaining defendants to file the FAC was not proper where Oiaknin had no notice thereof. (Demurrer, ¶ 2 [citing to Alden v. Hindin (2003) 110 Cal.App.4th 1502].)

A review of the docket shows that the only Answer filed to the Complaint at that time involved the August 12, 2022 Answer to Complaint by Defendants Liren Zorella, LA Green, and Do & Lo.

In opposition, Plaintiff argues that the Answer at issue was filed by defendants other than Oiaknin, where the answering defendants stipulated to Plaintiff filing a FAC in this action, and where Plaintiff filed the FAC, without the need to obtain Oiaknin’s consent, by filing the FAC as a matter of course pursuant to Code of Civil Procedure section 472, subdivision (a). (Opp’n, p. 4.)

In reply, Defendant Oiaknin failed to raise this issue again.

The Court finds that these grounds for demurrer to the FAC are not properly raised. Oiaknin should have challenged the Court’s November 29, 2022 order if he wished to raise the argument that the order did not properly resolve the substance of his August 11, 2022 demurrer to the original June 1, 2022 Complaint.

The Court also notes that to the extent that Alden v. Hindin commented that in situations where a plaintiff sues multiple defendants and one defendant files an answer to the complaint, the plaintiff is divested of the ability to file an amended complaint to a demurrer by a different defendant as a matter of course (Alden v. Hindin (2003) 110 Cal.App.4th 1502, 1508-1509), this holding has been disapproved by Barton v. Khan, where the court of appeal determined that Alden v. Hindin’s comment was mere dictum and, as a matter of first impression, one defendant’s filing of an answer did not divest the plaintiff of the right to amend the complaint with respect to the causes of action brought against other demurring defendants. (Barton v. Kahn (2007) 157 Cal.App.4th 1219-1221.)

Defendant Oiaknin’s demurrer is thus OVERRULED on this ground.        

FAC, Entire Pleadings, Grant Deed: OVERRULED.

Defendant Oaiknin demurs to the FAC based on the argument that the FAC fails to plead claims against him individually because the FAC’s claims are premised on a Grant Deed that does not name him therein, and instead only sues him as the agent of the remaining defendants. (Demurrer, ¶ 13.)

In opposition, Plaintiff argues that the FAC alleges that Oiaknin committed a number of serious torts, individually and in concert with others, under circumstances where Oiaknin is personally liable. (Opp’n, pp. 5-6.)

In reply, Oiaknin appears to fail to address this point.

The Court does not find merit to Oiaknin’s position. At the very least, the FAC alleges intentional misrepresentations were made to Plaintiff by Oiaknin, conceivably triggering individual liability.

Defendant Oiaknin’s demurrer is thus OVERRULED as premised on this ground.

FAC, First Cause of Action, Promissory Fraud: OVERRULED.

“The elements of promissory fraud … are: (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promise to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1498.) Promissory fraud must be alleged with particularity. (Ibid.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

The FAC’s first cause of action alleges promissory fraud against all Defendants based on allegations that Defendant Oiaknin, acting on behalf of all Defendants, made several promises to Plaintiff, which were untrue at the time they were made, and were made to induce Plaintiff’s reliance on the promises offered by Oiaknin, ultimately causing harm to Plaintiff when Defendants failed to perform accordingly. (FAC, ¶¶ 43-49.) The promises included promises to (1) “look out for” and “take care of Plaintiff” as “family,” (2) take care of Plaintiff by renting out the property for Plaintiff if Plaintiff transferred the Subject Property to Oiaknin, (3) through Oiaknin or LA Green, pay off any the loans made to Plaintiff by Defendants to make improvements to the Subject Property provided Plaintiff transferred the Subject Property to Oiaknin, and (4) ensure that the solar improvements and other renovations on the Subject Property would cost Plaintiff nothing. (FAC, ¶¶ 24, 43.) The FAC also alleges none of these promises were kept, e.g., Plaintiff remains liable on the loans for improvements to the Subject Property. (FAC, ¶ 44.)

In his demurrer, Defendant Oiaknin argues that the FAC “fail[s] to identify any particular conduct rising to a fraud in the inducement and in what … representative capacity or with particularity” and that a comparison of the FAC and Cross-Complaint by the other defendants in this action shows that the dispute here is between Plaintiff and the other defendants. (Demurrer, ¶ 17.)

In opposition, Plaintiff argues his claim is pleaded with particularity, with the promises at issue pleaded in paragraph 43 of the FAC. (Opp’n, pp. 6-7.)

In reply, Defendant Oiaknin argues that the FAC is inconsistent with the exhibits of the Complaint and otherwise mentions fraud but argues only elder abuse. (Reply, pp. 2-3 [inconsistency], 3-4 [elder abuse].)

The Court finds that the promissory fraud claim is sufficiently pleaded and not contradicted by the exhibits attached to the original Complaint, i.e., the Grant Deed divesting Plaintiff of his interest in the Subject Property. (See Complaint, Ex. A.)

“The true rule is, of course, that the agent is liable for his own act, regardless of whether the principal is liable or amenable to judicial action.” (James v. Marinship Corp. (1944) 25 Cal.2d 721, 742-743.)

The promises that underlie the first cause of action are alleged to have been made by Plaintiff Oiaknin and are sufficiently pleaded as lies based on the promises not being kept, thus causing Plaintiff damages when he lost out on his multi-million dollar asset and incurred liability for hundreds of thousands of dollars’ worth of loans. (Complaint, ¶¶ 43-49.)

The Court also finds that the exhibits attached to the June 1, 2022 Complaint do not contradict the FAC as to supersede the claims alleged therein. The FAC merely pleads that, in signing the Grant Deed, Plaintiff initially believed he was transferring the Subject Property to Defendant Oiaknin, but ultimately transferred the property to Defendant Zorella Investments, with Plaintiff making this conveyance in reliance on Oiaknin’s promises and misrepresentations. (Compare Complaint, Ex. A [Grant Deed for Subject Property from Plaintiff to Defendant Zorella Investments, with Defendant Do & Lo’s name crossed out] & Cross-Complaint, Ex. 1 [purchase documents for Subject Property between Plaintiff and Defendant Do & Lo, with Do & Lo’s interest assigned to Defendant Zorella Investments in Addendum #2], with FAC, ¶¶ 35, 43, 49 [transfer of property by Plaintiff to Zorella based on Oiaknin’s promises and misrepresentations].)

Defendant Oiaknin’s demurrer is thus OVERRULED as to the first cause of action.

FAC, Second Cause of Action, Fraud (Rescission): OVERRULED.

“The elements of fraud that will give rise to a tort action for deceit are: “‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974; see also Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128; Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1332.)

The intentional misrepresentation claim in the FAC is directed at all Defendants and alleges Fraud based on the same grounds as Promissory Fraud but seeks rescission as the requested relief. (FAC, ¶¶ 52-55.)

In his demurrer and reply, Defendant Oiaknin directs the same arguments against both fraud claims. (Demurrer, ¶ 17; Reply, pp. 2-4.)

Oiaknin also argues that the second cause of action alleges a prayer for relief rather than a cognizable legal claim upon which relief can be granted. (Demurrer, ¶ 19.)

In opposition, Plaintiff argues that his Fraud claim is sufficiently pleaded based on the same grounds as the Promissory Fraud claim but seeks rescission of the contracts at issue rather than damages as relief. (Opp’n, p. 7.)

The Court adopts its discussion as to the promissory fraud claim to find that the intentional misrepresentations in this fraud claim are properly pleaded through incorporation of paragraphs 43 to 49 of the FAC. (FAC, ¶¶ 52-53 [incorporation of prior pleadings to support intentional misrepresentation claim].)

The Court also notes that the second cause of action is pleaded as an intentional misrepresentation claim with rescission as the requested relief rather than being an improper rescission claim standing alone.

Defendant Oiaknin’s demurrer is thus OVERRULED as to the second cause of action.

FAC, Third Cause of Action, Elder Financial Abuse: OVERRULED.

The California Welfare and Institutions Code (the Elder Abuse Act) defines an “elder” as a person beyond the age of 65 years. (Welf. & Inst. Code, § 15610.27.) Financial abuse of an elder occurs when a person or entity (1) takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both, (2) assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both, or (3) takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70. (Welf. & Inst. Code, §15610.30, subd. (a).) A person shall be deemed to have taken property for a wrongful use if, among other things, the person takes the property and the person knew or should have known that this conduct is likely to be harmful to the elder. (Welf. & Inst. Code, §15610.30, subd. (b).) A person is deemed to have taken the property when he or she has deprived an elder of any property right. (Welf. & Inst. Code, §15610.30, subd. (c).)

To establish financial elder abuse, the plaintiff must allege that the defendant took or retained the plaintiff’s property; that the plaintiff was 65 years of age or older at the time of the conduct; that the defendant took or retained the property for a wrongful use or with the intent to defraud; that the plaintiff was harmed; and that the defendant’s conduct was a substantial factor in cause the plaintiff’s harm. (See CACI, § 3100.)

As a statutory claim, financial elder abuse must be pleaded with particularity. (See Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.)

The FAC’s financial elder abuse claim is directed at all Defendants and arises from allegations that the actions undertaken by Defendant Oiaknin to induce the 79+ year old Plaintiff to divest his interest in the Subject Property were done fraudulently and with undue influence. (FAC, ¶¶ 11, 56-66.)

In his demurrer, Defendant Oiaknin argues that elder abuse must be pleaded with specificity and that the FAC fails to plead this claim according to that standard. (Demurrer., ¶¶ 20-21.)

In opposition, Plaintiff argues that the third cause of action is sufficiently pleaded, and pleads, at a very minimum, that Oiaknin aided and abetted elder abuse. (Opp’n, p. 8.)

In reply, Defendant argues the FAC fails to plead fraud because Plaintiff continues to live in the Subject Property subject to a life estate and because the FAC does not adequately plead undue influence. (Reply, pp. 3-4.)

The Court adopts its discussion as to the first cause of action to find that, based on the third cause of action’s incorporation of prior pleadings (FAC, ¶ 56), the financial elder abuse claim is sufficiently alleged against Defendant Oiaknin based on promissory fraud allegations. (FAC, ¶¶ 43-49, 60-64).

Defendant Oiaknin’s demurrer is thus OVERRULED as to the third cause of action.

FAC, Fifth Cause of Action, Violation of Civil Code § 2338 (Tort of Agent): SUSTAINED, Without Leave to Amend, as to Defendant Oiaknin Only.

Under Code of Civil Procedure section 2338, “[u]nless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction of such business, and for his willful omission to fulfill the obligations of the principal.” (Code Civ. Proc., § 2338.) Whether an agency relationship has been created or exists is a factual determination reliant upon the relation of the parties and other factors such as right of control, the parties’ intent, and so on. (See Secci v. United Independent Taxi Drivers, Inc. (2017) 8 Cal.App.5th 846, 855.)

The tort of agent claim is directed at all Defendants and alleges that Defendants are liable for the harms committed against Plaintiff based on Defendant Oiaknin’s conduct. (FAC, ¶¶ 74-78.)

In his demurrer, Defendant argues that this claim is vague and ambiguous because if the idea is to hold the principal liable because of a disclosed relationship, then no cause of action exists as to the agent. (Demurrer, ¶¶ 22-23.) Otherwise stated, because the FAC pleads Oiaknin as the agent’s whose conduct imputes liability on principal, this claim, focusing on liability on the principal alone, is improper.

In opposition, Plaintiff argues that this claim is sufficiently pleaded where the FAC alleges Oiaknin is individually liable for the harms to Plaintiff. (Opp’n, p. 8.)

The Reply fails to argue this claim. (See Reply.)

The Court finds this claim is fatally defective. As recognized by the Opposition at page 8, this claim is a claim for respondeat superior liability, which is not applicable to Defendant Oiaknin where he is pleaded in the FAC as the agent from which liability flows. (FAC, ¶¶ 9, 43, 53.)

Defendant Oiaknin’s demurrer is thus SUSTAINED, Without Leave to Amend, as to the fifth cause of action.

Conclusion

Defendant David Oiaknin’s Demurrer to First Amended Complaint is OVERRULED in Part and SUSTAINED in Part as follows:

(1) OVERRULED as to the FAC’s first, second, and third causes of action; and

(2) SUSTAINED, Without Leave to Amend, as to the fifth cause of action, as to Defendant Oiaknin only.

Plaintiff is permitted to file an amended pleading WITHIN 14 CALENDAR DAYS.