Judge Armen Tamzarian, Case Number: 23STCV27229, Date: 2024-04-04 Tentative Ruling

Judge: Armen Tamzarian, Case: 23STCV27229, Date: 2024-04-04 Tentative Ruling

Case Number: 23STCV27229 Hearing Date: April 4, 2024 Dept: 52

Tentative Ruling:

Defendants Brett I. Ersoff and Lisa C. Ersoff’s Demurrer and Motion to Strike Portions of Plaintiff’s Complaint

Demurrer

Defendants Brett I. Ersoff, individually and as trustee of the Ersoff Trust, and Lisa C. Ersoff, individually and as trustee of the Lisa C. Ersoff Trust, demur to plaintiff Philip Berardi’s eighth, 10th, and 12th causes of action.

8th Cause of Action: Fraud/Concealment

Plaintiff alleges sufficient facts for this cause of action. Fraud by concealment requires: (1) the defendant concealed or suppressed a material fact; (2) defendant had a duty to disclose the fact to plaintiff; (3) defendant intentionally concealed or suppressed the fact with intent to defraud plaintiff; (4) plaintiff must have been unaware of the fact and would have acted otherwise if she had known of the concealed fact; and (5) plaintiff suffered damage as a result of the concealment. (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.)

Plaintiff alleges Brett and Lisa Ersoff “patched ‘cracks’ on the exterior of the Property to hide the defects from BERARDI” (¶ 167), and “never properly disclosed” numerous “structural issues” to plaintiff though the Ersoffs knew of them “at all relevant times” (¶ 168). He further alleges the Ersoffs “placed … rags under the [water] tank to collect water in an attempt to conceal the leak in the tank that was previously noted in the inspection report and made part of a request for repairs.” (¶ 172.) Plaintiff also alleges, “The ERSOFFS knew BERARDI would rely on their statements and representations regarding the condition of the Property in order to finalize the sale of the Property.” (¶ 177.) Plaintiff alleges he relied on the concealment “to conclude the sale, reside in the Property, and continue residing in the Property during the severe rainstorms that result[ed] in significant damage to the Property.” (¶ 178.)

Defendants rely on arguments that do not apply on demurrer. For example, they argue, “Without any support for the conclusion, Plaintiff asserts the Ersoffs ‘and/or’ the Oppenheim Defendants must have placed the rag there.” (Demurrer, p. 4.) In reviewing a complaint challenged by demurrer, the court must “accept as true all the material facts properly pleaded” and does not “go beyond the four corners of the complaint, except as to matters which may be judicially noticed.” (Thornburn v. Department of Corrections (1998) 66 Cal.App.4th 1284, 1287-1288.) Any ambiguity in the complaint is viewed in favor of the plaintiff. This is because the court must liberally construe the complaint and make all reasonable inferences in favor of the party asserting the claims. (Robertson v. Saadat (2020) 48 Cal.App.5th 630, 639.) That the Ersoffs (or other defendants) placed the rag there is a factual allegation. On demurrer, the court must accept it as true.

10th Cause of Action: False Promise

Plaintiff does not specifically allege the necessary facts for this cause of action. “The elements of promissory fraud (i.e., of fraud or deceit based on a promise made without any intention of performing it) 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 promisee 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 promisee.” (Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1453.) “[F]raud must be pled specifically” by “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, internal quotes omitted.)

Plaintiff’s 10th cause of action, alleged against all defendants, contains only the following paragraph: “Defendants made false promises to BERARDI, regarding the sale of the Property, the structural integrity of the Property, and the integrity of the lot surrounding and upon which the Property is built. The Defendants made this promise, repeatedly, to BERARDI, during the course of the Property inspection and the sale of the Property. The Defendants did not intend to perform this promise when it was made to the PLAINTIFFS. Rather, the Defendants intended for the PLAINTIFFS to rely on these false promises and the Defendants did not perform their promises. The PLAINTIFFS were directly harmed by these false promises regarding the Property, and the PLAINTIFFS’ reliance on these false promises was a substantial factor in causing the PLAINTIFFS’ harm.” (¶ 201.)

Assuming the remainder of the complaint contains the necessary facts for this cause of action, this paragraph muddies the waters such that the complaint fails to apprise defendants of the basis for this claim. The allegation of “false promises … regarding the sale of the Property, the structural integrity of the property, and the integrity of the lot” fails to specifically identify the nature of the promise. Furthermore, plaintiff alleges this cause of action against all nine defendants, though they served different roles in the events that gave rise to this action. By combining this cause of action as against all the defendants, it is impossible to understand which defendant is being sued for which purportedly false promises.

12th Cause of Action: Intentional Infliction of Emotional Distress

Plaintiff alleges sufficient facts for this cause of action. Its elements are “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050.) “Whether the defendant’s conduct was outrageous and whether the plaintiff’s emotional distress was severe are generally questions of fact.” (Murphy v. Allstate Ins. Co. (1978) 83 Cal.App.3d 38, 51.)

As discussed above, plaintiff alleges the Ersoffs concealed defects in the property they sold him. He alleges they intentionally tricked him into agreeing to purchase the property when he would not have done so if he knew the truth. The court cannot conclude that, as a matter of law, these allegations are not sufficiently egregious for intentional infliction of emotional distress.

Again, the Ersoffs’ demurrer makes arguments inappropriate on demurrer. They argue, “There is nothing, aside from conclusory allegations, to suggest Ersoffs engaged in any ‘extreme and outrageous conduct’ with the intention of causing emotional distress.” (Demurrer, p. 9.) A defendant’s intent is generally an ultimate fact sufficient to withstand challenge by demurrer. (See, e.g., Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6 [allegations that defendants acted “wrongfully and intentionally” and “in retaliation” sufficient to support prayer for punitive damages]; Rosin v. Superior Court (1960) 181 Cal.App.2d 486, 490 [“the allegation of petitioner’s intent in removing the children from the jurisdiction … is an allegation of fact, not a mere conclusion”].) Plaintiff alleges the ultimate fact that defendants intended to cause emotional distress: “Defendants committed these acts and engaged in misconduct knowingly, intentionally, and willfully so as to cause BERARDI, severe emotional and mental distress.” (¶ 206.) Plaintiff’s allegations may not be specific, but specificity is not required for this cause of action. The 12th cause of action meets California’s liberal standard of pleading.

Motion to Strike

Defendants Brett I. Ersoff, individually and as trustee of the Ersoff Trust, and Lisa C. Ersoff, individually and as trustee of the Lisa C. Ersoff Trust, move to strike portions of plaintiff’s complaint regarding punitive damages. Courts may strike allegations related to punitive damages where the facts alleged “do not rise to the level of malice, oppression or fraud necessary” to recover punitive damages under Civil Code section 3294. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 64.) Conclusory allegations are not enough. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.) The complaint must make “factual assertions supporting a conclusion [defendants] acted with oppression, fraud or malice.” (Ibid.) As discussed above, plaintiff alleges sufficient facts to constitute a cause of action for fraud by concealment. The same allegations suffice to constitute fraud under Civil Code section 3294.

Disposition

Defendants Brett I. Ersoff and Lisa C. Ersoff’s demurrer to plaintiff’s 10th cause of action is sustained with 20 days’ leave to amend. Defendants’ demurrer to plaintiff’s 8th and 12th causes of action are overruled.

Defendants Brett I. Ersoff and Lisa C. Ersoff’s motion to strike portions of plaintiff’s complaint is denied.

Tentative Ruling:

Defendants Jason Oppenheim and The Oppenheim Group, Inc.’s Demurrer and Motion to Strike Portions of Plaintiff’s Complaint

Demurrer

Defendants Jason Oppenheim and The Oppenheim Group, Inc. demur to plaintiff Philip Berardi’s second, sixth, seventh, ninth, and 12th causes of action.

2nd Cause of Action: Breach of Contract

Plaintiff does not allege sufficient facts for this cause of action. Breach of contract requires a contract between the parties. Plaintiff’s complaint alleges Oppenheim and The Oppenheim Group “served as the listing agent for the sale of the Property.” (¶ 73.) He further alleges, “BERARDI, and the OPPENHEIM DEFENDANTS, entered into contractual agreements for services pertaining to the Property in the defendants’ capacity as real estate brokers.” (¶ 85.) The complaint does not allege what “contractual agreements” or what “services” those were.

The only potential contract between plaintiff and the Oppenheim defendants referenced in the complaint is the Residential Purchase Agreement and Joint Escrow Instructions attached as Exhibit 1. When the plaintiff alleges facts contradicted by exhibits attached to the complaint, the facts stated in the exhibits will be given precedence. (Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1145–1146; Barnett v. Fireman’s Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505.) The first paragraph of the agreement provides, “Buyer and Seller are referred to herein as the ‘Parties.’ Brokers and Agents are not Parties to this Agreement.” (Comp., Ex. 1, ¶ 1.D.)

Plaintiff’s opposition does not address defendants’ only argument on this cause of action. Instead, plaintiff argues real estate brokers have noncontractual or tort duties. That is not relevant to breach of contract.

Plaintiff further argues, “All allegations herein are that the Moving Parties had actual knowledge of the defects of the subject Property and they ratified their contractual duties as fiduciaries and subsequent breach(es) as the agents to the subject sale. However, the agency relationship does not absolve the Moving Parties from its contractual duties owed to Plaintiff.” (Opp., p. 9.) Plaintiff gets agency backwards. The point of agency is that agents (here, the Oppenheim defendants) have authority to bind their principals (the Ersoffs) to contracts with third parties. “An agent is one who represents another, called the principal, in dealings with third persons.” (Civ. Code, § 2295.) “An agent represents his principal for all purposes within the scope of his” authority, “and all the rights and liabilities which would accrue to the agent from transactions within” that authority, “if they had been entered into on his own account, accrue to the principal.” (Civ. Code, § 2330.)

6th Cause of Action: Intentional Misrepresentation

Plaintiff does not allege sufficient facts for this cause of action. Intentional misrepresentation requires: “(a) misrepresentation; (b) defendant’s knowledge of the statement’s falsity; (c) intent to defraud (i.e., to induce action in reliance on the misrepresentation); (d) justifiable reliance; and (e) resulting damage.” (Hunter v. Up-Right, Inc. (1993) 6 Cal.4th 1174, 1184.) “[F]raud must be pled specifically” by “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, internal quotes omitted.)

The complaint does not specifically allege facts constituting the elements of the cause of action. This cause of action spans paragraphs 126 to 155. The name “Oppenheim” appears only in the sixth cause of action’s label (Comp., p. 24, lines 13-15), in paragraph 136 alleging they “served as the listing agent for the sale of the Property, knowing the condition of the Property at all times”, and in paragraph 146 alleging: The “ERSOFFS, and/or the OPPENHEIM DEFENDANTS, placed the rags under the tank to collect water in an attempt to conceal the leak in the tank that was previously noted in the inspection report and made part of a request for repairs. It was clear that certain repairs promised by the Defendants, ERSOFFS, and by the OPPENHEIM DEFENDANTS, as their agents, which repairs were a condition of the sale, were never performed.”

Not only does the complaint not allege facts showing how, when, where, to whom, and by what means the representations were tendered, but it also fails to apprise the Oppenheim defendants of the purportedly false representations at the heart of this claim. Plaintiff makes a vague and conclusory allegation that “The Defendants, collectively, made false representations that harmed BERARDI. The Defendants, collectively, represented to BERARDI, material facts regarding the Property that the Defendants represented as true.” (¶ 153.) This allegation about “material facts regarding the Property” does not explain the nature of those material facts.

Plaintiff’s opposition makes no cogent argument. It first merely asserts that paragraphs 29, 43, 73, 75, 83, and 146 include the necessary allegations. (Opp., p. 11.) Those paragraphs make allegations about the basic facts of the transaction such as the parties’ roles and the price (¶¶ 29, 73), about real estate agents’ duties in general (¶¶ 43, 83), and the conditions of the property (¶¶ 75, 146). They do not allege any intentional misrepresentation by the Oppenheim defendants.

The opposition further argues, “Plaintiff alleges the Moving Parties misrepresented the fact they ‘placed the rags under the tank to collect water in an attempt to conceal the leak in the tank that was previously noted in the inspection report and made part of a request for repairs.’ ” (Opp., p. 11.) The complaint does not allege that. Doing so would mean the Oppenheim defendants affirmatively told plaintiff they did not put rags under the water tank. Moreover, the complaint does not allege anything plaintiff did in reliance on any such affirmative misrepresentation.

7th Cause of Action: Unjust Enrichment

This cause of action fails because “California does not recognize a cause of action for unjust enrichment.” (Hooked Media Group, Inc. v. Apple Inc. (2020) 55 Cal.App.5th 323, 336; accord Everett v. Mountains Recreation & Conservation Authority (2015) 239 Cal.App.4th 541, 553.)

9th Cause of Action: Fraud/Concealment

The complaint alleges that, “at all relevant times,” the Oppenheim defendants knew of numerous “structural issues with the Property, including, but not limited to, workmanship, materials, components, siding” and “never properly disclosed” them to plaintiff. (¶ 186.) It further alleges the “Ersoffs, and/or the Oppenheim defendants, placed … rags under the [water] tank to collect water in an attempt to conceal the leak in the tank that was previously noted in the inspection report and made part of a request for repairs.” (¶ 190.) Plaintiff also alleges, “The Defendants knew BERARDI would rely on their statements and representations regarding the condition of the Property in order to finalize the sale of the Property.” (¶ 196.) Plaintiff alleges he relied on the concealment “to conclude the sale, reside in the Property, and continue residing in the Property during the severe rainstorms that result[ed] in significant damage to the Property.” (¶ 197.)

The demurrer argues plaintiff did not allege the details of how, when, where, to whom, and by what means the representations were tendered. The complaint’s ninth cause of action does vaguely allege, “OPPENHEIM DEFENDANTS represented to BERARDI, the conditions of the Property.” (¶ 184.) But the ninth cause of action alleges fraud by concealment. The specificity requirement does not fully apply to concealment claims because it is difficult to show “how” and “by what means” something did not happen. (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

The Oppenheim defendants further argue, “Plaintiffs do not allege why they believe Oppenheim Defendants, whom Plaintiffs themselves characterize as real estate brokers and not as the owner or a contractor, would be able to place a rag under a tank to conceal a leak.” (Demurrer, p. 10.) Even if implausible, that is an allegation of fact that the court must accept as true. In reviewing a complaint challenged by demurrer, the court must “accept as true all the material facts properly pleaded” and does not “go beyond the four corners of the complaint, except as to matters which may be judicially noticed.” (Thornburn v. Department of Corrections (1998) 66 Cal.App.4th 1284, 1287-1288.) Any ambiguity in the complaint is viewed in favor of the plaintiff. This is because the court must liberally construe the complaint and make all reasonable inferences in favor of the party asserting the claims. (Robertson v. Saadat (2020) 48 Cal.App.5th 630, 639.)

The demurrer also argues, “Plaintiffs did not bother stating how they would have reasonably acted differently.” (Demurrer, p. 10.) Paragraph 197 sufficiently alleges what plaintiff did in reliance on the alleged concealment, meaning things he would not have done otherwise: finalizing the purchase.

12th Cause of Action: Intentional Infliction of Emotional Distress

Plaintiff alleges sufficient facts for this cause of action against the Oppenheim defendants. Its elements are “(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050.) “Whether the defendant’s conduct was outrageous and whether the plaintiff’s emotional distress was severe are generally questions of fact.” (Murphy v. Allstate Ins. Co. (1978) 83 Cal.App.3d 38, 51.)

As discussed above, plaintiff alleges the Oppenheim defendants concealed information they knew about defective conditions in the property. He alleges they intentionally tricked him into agreeing to purchase the property when he would not have done so if he knew the truth. The court cannot conclude that, as a matter of law, these allegations are not sufficiently egregious for intentional infliction of emotional distress.

Motion to Strike

Defendants Jason Oppenheim and The Oppenheim Group, Inc. move to strike portions of plaintiff’s complaint regarding attorney fees and portions regarding punitive damages.

A. Attorney Fees

Plaintiff alleges no valid basis for recovering attorney fees. A plaintiff may only recover attorney fees when authorized by contract, statute, or other law. (CCP § 1033.5(a)(10).) Plaintiff relies on the Residential Purchase Agreement and Joint Escrow Instructions attached to the complaint as Exhibit 1. As discussed above, the Oppenheim defendants are not parties to that contract.

Plaintiff’s opposition invents a quote from the contract: “On page 12 of ‘Exhibit 1’ to the Complaint, Para. No. 22 of the Agreement, is an ‘Attorney Fees and Costs’ provision that states ‘In any action in law or equity the prevailing party is entitled to reasonable attorney fees…’.” (Opp., p. 8.) Paragraph 22 of the agreement does not say that. It provides, “In any action, proceeding, or arbitration between Buyer and Seller arising out of this Agreement, the prevailing Buyer or Seller shall be entitled to reasonable attorney fees and costs from the non-prevailing Buyer or Seller, except as provided in paragraph 30A.” (Comp., Ex. 1, p. 12.) The Oppenheim defendants are not parties to the contract and are not the Buyer or Seller.

B. Punitive Damages

Courts may strike allegations related to punitive damages where the facts alleged “do not rise to the level of malice, oppression or fraud necessary” to recover punitive damages under Civil Code section 3294. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 64.) Conclusory allegations are not enough. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.) The complaint must make “factual assertions supporting a conclusion [defendants] acted with oppression, fraud or malice.” (Ibid.) As discussed above, plaintiff alleges sufficient facts to constitute a cause of action for fraud by concealment. The same allegations suffice to constitute fraud under Civil Code section 3294.

Disposition

Defendants Jason Oppenheim and The Oppenheim Group, Inc.’s demurrers to plaintiff’s second, sixth, and seventh causes of action are sustained with 20 days’ leave to amend. Defendants Jason Oppenheim and The Oppenheim Group, Inc.’s demurrers to plaintiff’s ninth and 12th causes of action are overruled.

Defendants Jason Oppenheim and The Oppenheim Group, Inc.’s motion to strike is denied as to portions of the complaint regarding punitive damages. The motion is granted with leave to amend as to portions of the complaint regarding attorney fees. The court hereby strikes the following portion of plaintiff’s complaint as to defendants Jason Oppenheim and The Oppenheim Group, Inc., with 20 days’ leave to amend: “For reasonable attorneys’ fees.” (Comp., prayer, ¶ 2, p. 40, line 16.)