Case Number: 22STCV19312    Hearing Date: May 15, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiffs/Cross-Defendants Sarah Dalisay and Hun B. Park sue Defendant/Cross-Complainant Myeongja Choi pursuant to a June 13, 2022 Complaint alleging claims of (1) Financial Elder Abuse, (2) Breach of Fiduciary Duty, (3) Fraudulent Misrepresentation, (4) Unjust Enrichment, (5) Cancellation of Written Instrument, (6) Quiet Title, (7) Imposition of Constructive Trust, and (8) Conversion. The claims arise from allegations that: many years ago, friends Mr. Park and Ms. Choi entered into an arrangement through which (1) Choi lent Park money to purchase a rental property located at 207 S Serrano Avenue, Los Angeles, CA 90004 (the Serrano Property), (2) Choi assumed managerial responsibilities over a property owned by Park and located at 7310 Van Nuys Boulevard, Van Nuys, CA 91405 (the Van Nuys Property), and (3) in return for the loan, Choi would live at the Serrano Property rent-free and collect rent from other tenants; subsequently, Park’s cognition began to slip, which Choi exploited by directing funds from Park’s bank account into her own; in 2019—after Park had conveyed the Serrano Property to his company, Cross-Defendant Jashikdl, Inc. in 2016—Choi “connived” her way into putting herself on title for the Serrano Property; despite Park executing a power of attorney over his affairs to his daughter Sarah Dalisay in 2020—with Park eventually moved into a nursing home by Dalisay—Choi induced Park to assign certain property rights with respect to Park’s residence and transferred hundreds of thousands of dollars from his Hamni Bank account to Choi’s bank account; Choi stole $10,000 that Park had hidden in a storage shed, prompting Park to file a police report; and through this conduct, Park was harmed in an amount no less than $575,000.

On September 6, 2022, Choi filed an Answer to Complaint and a Cross-Complaint against Park, Dalisay, Park’s company Jashikdl, Matt Ehrlich, Nai Capital Commercial, Inc., and Roes 1-20. The operative March 16, 2023 First Amended Cross-Complaint (FAXC) is directed at the same Cross-Defendants and alleges claims of (1) Fraud by Concealment, (2) Cancellation of Instrument, (3) Common Counts, (4) Quiet Title, and (5) Declaratory Relief. The claims arise from, among other things, allegations that: as of July 1, 2019, Choi became the owner of the Serrano Property in conjunction with Jashikdl; on or about January 21, 2022, Cross-Defendants—alleged to be agents of one another—forged Choi’s signature to sell the Serrano Property for $1.4 million to buyer Ronen Henn, with Park signing and initialing the agreement on behalf of Jashikdl and Matt Ehrlich executing the agreement as Choi’s agent and on behalf of Choi’s broker, NAI Capital Commercial Inc. (NAI); Choi never signed the purchase agreement, did not initial the pages of that document, and did not know about or consent to the sale; Choi never engaged Ehrlich or NAI as her real estate agent and broker respectively; Choi is not aware of who forged her signature and initials on the purchase agreement, but believes the person to be one of the Cross-Defendants; Cross-Defendants knew the signatures by Choi were forged; these actions amounted to a conspiracy to divest Choi of her ownership rights in the Serrano Property; and Choi was damaged by these actions and seeks relief thereon, as well as repayment of various loans made to Park and Jashikdl.

On April 19, 2023, Cross-Defendants Dalisay, Park, and Jashikdl demurred to the FAXC’s concealment claim on the ground of insufficiency in pleading.

On May 2, 2023, Cross-Complainant Choi opposed the demurrer.

On May 8, 2023, Dalisay, Park, and Jashikdl replied to the opposition.

The demurrer is now before the Court.

Demurrer: SUSTAINED.

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.)

FAXC, First Cause of Action, Concealment: SUSTAINED.

“[T]he elements of an action for fraud and deceit based on a concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.)

Allegations of fraud “must be pled with more detail than other causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 240.) “Every element of the cause of action for fraud must be alleged … factually and specifically[,] and the policy of liberal construction of the pleadings … will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citations.]” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216, superseded by statute as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) “[G]eneral and conclusory allegations do not suffice.” (Small v. Fritz Cos., Inc. (2003) 30 Cal.4th 167, 184 [citations omitted].) Fittingly, a plaintiff pleading fraud must plead facts showing “how, when, where, to whom, and by what means” the allegedly fraudulent representations were tendered. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

The concealment cause of action is pleaded against all Cross-Defendants and alleges that: Cross-Defendants concealed the execution of the documents transferring ownership of the Serrano Property; Cross-Defendants generally had a duty to inform Choi of the sale; Ehrlich and NAI, as Choi’s purported agents, had a fiduciary duty to inform Choi of the sale; Cross-Defendants intentionally concealed or suppressed the wrongful sale of Choi’s ownership interest in the Serrano Property with the intent to defraud her; at the time of sale, Choi was unaware of the sale and would not have consented to such forgery of documents and sale of her ownership interests in the Serrano Property had she known; and, as a result of forgery and sale, Choi has suffered substantial damages in an amount to be proven at trial, as well as entitlement to punitive damages. (FAXC, ¶¶ 27-44.)

In their demurrer, Dalisay, Park, and Jashikdl argue that the concealment claim in the FAXC is not sufficiently stated because it fails to plead, with particularity, the elements for this cause of action, alleging nothing more than conspiracy theories that someone forged her signature on the purchase agreement for the Serrano Property, and failing to show how she detrimentally relied on any concealment or how she would have acted had she known about the concealments alleged. (Demurrer, p. 8.) They also argue that it fails to allege specific facts regarding the resulting damages she allegedly sustained. (Id.)

In opposition, Choi argues the sufficiency of her concealment claim. (Opp’n, pp. 4-5.)

In reply, Dalisay, Park, and Jashikdl argue that the concealment fails to properly allege reliance and damages. (Reply, pp. 3-4.)

The Court finds that that the concealment claim is not sufficiently pleaded. Reliance in a fraudulent omission case can be proved by establishing that “had the omitted information been disclosed, [the plaintiff] would have been aware of it and behaved differently.” (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1093.) Here, Choi alleges that she was unaware of the forgery and sale, and “would not have consented to such forgery of documents and sale of her ownership interests in the Serrano property had she known.” (FAXC at ¶ 42.) However, this fails to allege that she would have “behaved differently.” She does not allege that she ever consented to the sale; to the contrary, Choi alleges that Cross-Defendants “knew that CHOI did not consent to the Purchase Agreement and sale of her property.” (FAXC at ¶ 41.) In essence, Choi alleges that she did not consent to the sale of her Serrano Property, with or without a forgery. Such allegations do not constitute a fraudulent concealment claim. Particularly given the heightened pleading requirements for a fraud claim, these allegations do not pass muster.

In addition, the first cause of action fails to allege what Choi’s damages are with any specificity. (FAXC at ¶ 43 [“As a proximate result of the forgery and sale, CHOI has suffered substantial losses in an amount to be proven at the time of trial”].) It cannot be ascertained from the FAXC what those damages are; indeed, the FAXC seems to indicate that the Purchase Agreement has been held up as given that Choi seeks a cancellation of the Purchase Agreement in the second and fifth causes of action. Again, given the requirement that all elements of a fraud claim–including damages–must be pleaded with particularity, the Court concludes that the allegations are insufficient. (See also Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, 1091-1092 [Plaintiff failed to allege damages or misrepresentation with requisite specificity where he alleged that “defendants’ act [an alleged forgery] ‘caused Plaintiff to rely on the recorded documents and ultimately lose the property which served as his primary residence, and caused Plaintiff further damage, proof of which will be made at trial’”].)

Finally, the Court considers whether to grant leave to amend. The burden is on the plaintiff to demonstrate there are facts which could be alleged to meet all the elements of the cause of action with the requisite specificity. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [burden of articulating how a defective pleading could be cured is squarely on the plaintiff].) In the five-page Opposition brief, Cross-Complainant does not identify any such facts. A prior demurrer was already ruled on in which the Court found that Choi did not allege sufficient facts for contractual fraud, and specifically, that “Choi does not allege … that she justifiably relied and/or acted based on this misrepresentation. Ostensibly, it was the buyer, nonparty Ronen Henn, who justifiably relied on the alleged misrepresentation [i.e., the forged signature].” (2/14/23 Minute Order at p. 3.) Thus, Choi has not met her burden to show there are facts that could be alleged to remediate the issues raised by the demurrer.

Cross-Defendants Dalisay, Park, and Jashikdl’s demurrer is thus SUSTAINED without leave to amend.

Conclusion

Cross-Defendants Sarah Dalisay, Hun B. Park, and Jashikdl, Inc.’s Demurrer to First Amended Cross-Complaint is SUSTAINED without leave to amend because the sole claim challenged therein—first cause of action for concealment—is insufficiently pleaded by Cross-Complainant Myeongja Choi in her First Amended Cross-Complaint and Choi has not alleged any facts that could be added to cure the deficiency.