Judge Ashfaq G. Chowdhury, Case Number: 24NNCV02367, Date: 2025-01-17 Tentative Ruling

Judge: Ashfaq G. Chowdhury, Case: 24NNCV02367, Date: 2025-01-17 Tentative Ruling

Case Number: 24NNCV02367 Hearing Date: January 17, 2025 Dept: E

Case No: 24NNCV02367
Hearing Date: 1/9/2025-830am

Trial Date: UNSET

Case Name: WILSHIRE ROYALE HOTEL, a California corporation, v. BEST CHOICE ROOFING FRANCHISING LLC, a Tennessee limited liability company; GAF MATERIALS, LLC, a Delaware limited liability company; PHOENIX KELLER LLC, an Arizona limited liability company

[TENTATIVE RULING – 1 Demurrer 1 Motion to Strike]

RELIEF REQUESTED
“Defendant GAF Materials LLC (“GAF”) will and hereby does demur to Plaintiff Wilshire Royale Hotel’s (“Plaintiff”) fifth, sixth, and seventh causes of action in its Complaint pursuant to Code of Civil Procedure section 430.10, 430.30(a), 430.41, 430.50(a), and 430.60.” (Def. Mot. p. 1.)

“This Demurrer is made on the grounds that Plaintiff’s fifth, and sixth causes of action fail to state particularized facts sufficient to support causes of action for fraudulent misrepresentation, and fraudulent inducement, against GAF. This Demurrer is made on the further grounds that Plaintiff’s seventh cause of action fails to state facts sufficient to support a cause of action for an unfair business practices claim.

This Demurrer is based upon this Notice, the accompanying Memorandum of Points and Authorities, the Court’s records and files in this case, the Declaration of Dominique Marangoni-Simonsen, and any further evidence or argument which may be presented to the Court at or before the time of the hearing. The parties met and conferred prior to the filing of this Demurrer and accompanying motion to strike, but the parties could not reach an agreement with respect to the objections raised herein.” (Def. Mot. p. 2.)

PROCEDURAL ANALYSIS
Moving Party: Defendant, GAF Materials LLC (Defendant or GAF)

Responding Party: Plaintiff, Wilshire Royale Hotel

Moving Papers: Notice/Demurrer; Notice/Motion to Strike

Opposition Papers: Opposition to Demurrer; Opposition to Motion Strike

Reply Papers: Reply to Demurrer; Reply to Motion to Strike

Proof of Service Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP § 1005(b)): Ok
Proper Address (CCP § 1013, § 1013a, § 1013b): Ok

Meet and Confer
A party filing a demurrer “shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).) “The parties shall meet and confer at least five days before the date the responsive pleading is due. If the parties are not able to meet and confer at least five days prior to the date the responsive pleading is due, the demurring party shall be granted an automatic 30-day extension of time within which to file a responsive pleading, by filing and serving, on or before the date on which a demurrer would be due, a declaration stating under penalty of perjury that a good faith attempt to meet and confer was made and explaining the reasons why the parties could not meet and confer.” (Code Civ. Proc., § 430.41, subd. (a)(2).)

Failure to sufficiently meet and confer is not grounds to overrule or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)

Here, Defendant’s counsel met and conferred.

LEGAL STANDARDS FOR DEMURRERS
Demurrer – Sufficiency
A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda, (2007) 147 Cal.App.4th 740, 747.) 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.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law ….” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) 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 pleadings alone and not the evidence or other extrinsic matters; therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading … is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.)

On demurrer, a trial court has an independent duty to “determine whether or not the … complaint alleges facts sufficient to state a cause of action under any legal theory.” (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 734.) Demurrers do not lie as to only parts of causes of action, where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Demurrer – Uncertainty
A special demurrer for uncertainty, CCP section 430.10(f), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

BACKGROUND
Plaintiff filed a Complaint on 6/20/2024.

On 9/30/2024, Plaintiff filed an FAC against Defendants – (1) Best Choice Roofing Franchising LLC, a Tennessee limited liability company (BCR); (2) GAF Materials, LLC, a Delaware limited liability company (GAF); and Phoenix Keller LLC, an Arizona limited liability company (PK).

Movant here, GAF, demurs to the fifth (fraudulent misrepresentation), sixth (fraudulent inducement), and seventh (violation of CA Business & Professions Code § 17200 et seq.) causes of action on grounds of failure to state facts sufficient to allege a cause of action.

For background, Plaintiff, Wilshire, owns and operates a hotel in Burbank called Coast Annabel Hotel (CAH). Plaintiff alleges that Wilshire entered into two contracts with BCR/PK wherein BCR/PK were to perform roof repair, painting, and replacement work at CAH, including the renting of scaffolding for the work.

Generally speaking, as to demurring Defendant GAF, Plaintiff alleges that GAF was not merely just the manufacturer who provided the materials for the project, but GAF referred the contractor BCR to Wilshire and misrepresented BCR’s credentials and qualifications to Wilshire.

Fifth Cause of Action – Fraudulent Misrepresentation
With respect to moving Defendant GAF, Plaintiff alleges the following:

27. Furthermore, GAF, a manufacturer and/or retailer who sells building and construction materials, represented on its website that BCR was an approved and master contractor and recommended to Wilshire to use BCR as a contractor for the subject project. In fact, a representative of GAF named Charles visited the subject property several times with BCR. GAF and BCR visited during the bidding process as well as the testing phase. After BCR disappeared, GAF visited CAH but refused to honor the warranty on their products that were used for the subject project. GAF claimed that BCR did not follow the proper procedures in installing the roofing. GAF knew or should have known of BCR’s poor and unprofessional workmanship and reputation, yet strongly recommended to Wilshire that Wilshire use BCR as the contractor for the project at CAH and to install GAF’s own products. GAF’s negligence and intentional inducement in recommending BCR as a contractor caused Wilshire to suffer the damages described in this Complaint.

…

63. Further, GAF knowingly and intentionally misrepresented to Plaintiff that BCR was an approved and master contractor and that BCR was qualified to do the work Plaintiff hired them for, when in fact, GAF knew or should have known that BCR was unprofessional, unorganized, untrustworthy and performed subpar work.

64. GAF and its employees knew their representations to be false. They knew that BCR was not a master contractor and they knew BCR’s bad reputation of performing subpar work. GAF knew there was a substantial risk that BCR would not complete the work and/or they would perform the work in a poor and insufficient manner, yet still recommended BCR to Plaintiff by representing that BCR was a master contractor and would perform the work in a professional manner.

65. As a result of GAF’s misrepresentations, Plaintiff suffered damages as described herein.

66. Plaintiff justifiably and reasonably relied on GAF’s fraudulent misrepresentations. GAF is a company employing professionals in the manufacturing and construction industry and has been in business for over a century according to their website. Plaintiff had no reason to doubt GAF’s judgment and recommendation on who to use as a contractor to install GAF’s products. But for GAF’s misrepresentations regarding BCR’s credentials and reputation, Plaintiff would have hired another contractor to do the subject work.

67. As a direct and proximate result of the fraudulent misrepresentations and despicable conduct by Defendants, Plaintiff has been substantially harmed and suffered general and compensatory damages, which have accrued and are continuing to accrue, at least in the amount of $150,000. Plaintiff should also be awarded punitive damages, in an amount to be proven at trial, for Defendants' conduct, at least in the amount of $1,000,000.

(FAC ¶¶ 27 & 63-67.)

“ ‘The elements of fraud, which gives rise to the 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.’ “ (Small v. Fritz Companies, Inc. (2003) 30Cal.4th 167, 173 citing Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

Fraud must be pleaded with specificity rather than with “‘general and conclusory allegations.’” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court (1996)12 Cal.4th 631, 645.)

With respect to the allegations contained within the fifth cause of action in the body of the FAC [paragraphs 63-67], Plaintiff did not state facts sufficient to constitute a cause of action for fraudulent misrepresentation.

Plaintiff alleges in ¶ 63 that GAF knowingly and intentionally misrepresented to Plaintiff that BCR was an approved and master contractor and that BCR was qualified to do the work Plaintiff hired them for. However, nowhere in ¶¶ 63-67 does Plaintiff allege how the representations were made, when they were made, where they were made, to whom they were made, and what means the representations were made. Further, in the case of a corporate defendant, like the Defendant here, Plaintiff did not allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.

In Paragraph 27 of the FAC, Plaintiff alleges that GAF represented on its website that BCR was an approved and master contractor and recommended to Wilshire to use BCR as a contractor for the subject project. While Paragraph 27 mentions that the website made this representation, Plaintiff still does not allege many of the specificity requirements of fraud – for example when, to whom, by what means the representation was made, etc. Additionally, it is not clear if this misrepresentation is the same misrepresentation that ¶ 63 is referring to.

Further, in ¶ 27, the FAC mentions a representative of GAF named Charles that visited the subject property. The FAC does not allege if Charles made a representation. The FAC simply alleges that he visited the subject property, and it goes without saying, the FAC didn’t mention how, when, where, to whom, etc. for Charles.

In Opposition, Plaintiff cites to Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal. App. 4th 821 for the proposition that there are certain exceptions which mitigate the rigor of the rule requiring specific pleading of fraud such as when the facts lie more in the knowledge of the opposite party.

However, problematic with Plaintiff’s reliance on Tenet Healthsystem Desert, Inc. v. Blue Cross of California is that in that case the Fourth District Court of Appeal noted:

Hospital has sufficiently met the pleading requirements for intentional fraud. First, Hospital identifies multiple written and oral communications, made by the Anthem entities and expressed to Hospital, in which Anthem authorized the services that Hospital provided to Patient X. As to a large number of communications, Hospital alleges the dates, times, and the names of the individuals who initiated these communications, which occurred over a period of approximately 50 days. Moreover, Hospital identifies at least one conversation between Anthem discharge planner Steele–Alvarez and a Hospital representative in which Steele–Alvarez, alleged to be an employee and agent of one or more of the Anthem defendants, not only authorized but specifically requested that Hospital admit Patient X to its acute rehabilitation facility upon his discharge from Hospital's ICU. Hospital has thus clearly pled facts that show how the statements were made (directly to agents of Hospital through telephone calls and written letters faxed to Hospital), when the statements were made (on the identified dates and the specified times), where the statements were made (at Hospital, where its representatives received the communications), to whom the statements were made (to identified Hospital employees), and the means by which they were made (by way of telephone calls placed and letters faxed from numbers that are alleged to belong to defendants). (See Lazar, supra, 12 Cal.4th at p. 645, 49 Cal.Rptr.2d 377, 909 P.2d 981 [pleading with particularity necessitates pleading that “ ‘ “show[s] how, when, where, to whom, and by what means the representations were tendered” ’ ”].) Further, Hospital alleged the identities of certain individuals acting as the agents of Anthem, and further provided the basis for the allegation that such individuals had the authority to act on Anthem's behalf, including the fact that these individuals were originally reached through Hospital's call to the number provided on Patient X's member identification card, and that these individuals possessed private health and identifying information about Patient X that they would not have been in possession of absent their employment/agency relationship with Anthem.

(Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal. App. 4th 821, 838-39.)

Here, Plaintiff did not allege anything remotely close to the level of specificity as the hospital alleged in Tenet Healthsystem Desert, Inc. v. Blue Cross of California.

Additionally, Plaintiff did not allege element (c) – intent to defraud, i.e. to induce reliance for the fifth cause of action.

TENTATIVE RULING FIFTH CAUSE OF ACTION – FRAUDULENT MISREPRESENTATION
Defendant’s demurrer on grounds of failure to state facts sufficient to constitute a cause of action directed at the fifth cause of action is SUSTAINED with LEAVE TO AMEND GRANTED.

SIXTH CAUSE OF ACTION – FRAUDULENT INDUCEMENT
As stated in in Dhital v. Nissan North America, Inc. :

Fraudulent inducement is a viable tort claim under California law. “The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage. [Citations.] *839 Fraud in the inducement is a subset of the tort of fraud. It ‘occurs when “ ‘the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.’ ” ’ ” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294–295 [37 Cal.Rptr.3d 364]; accord, Geraghty v. Shalizi (2017) 8 Cal.App.5th 593, 597 [215 Cal.Rptr.3d 61].

(Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 838-839.)

Plaintiffs FAC alleges:

73. Further, GAF knowingly and intentionally induced Plaintiff to enter into Contract 1 and Contract 2 with BCR by representing to Plaintiff that BCR was an approved and master contractor and that BCR was qualified to do the work Plaintiff was planning to do, when in fact, GAF knew BCR was unprofessional, unorganized, untrustworthy and performed subpar work.

74. GAF and its employees knew their representations to be false. They knew that BCR was not a master contractor and they knew BCR’s bad reputation of performing subpar work. GAF knew there was a substantial risk that BCR would not complete the work and/or they would perform the work in a poor and insufficient manner, yet still induced Plaintiff to enter into Contract 1 and Contract 2.

75. As a result of GAF’s inducement, Plaintiff suffered damages as described herein.

76. Plaintiff justifiably and reasonably relied on GAF’s fraudulent misrepresentations and inducements. GAF is a company employing professionals in the manufacturing and construction industry and has been in business for over a century according to their website. Plaintiff had no reason to doubt GAF’s judgment and recommendation on who to hire as a contractor to install GAF’s products. But for GAF’s misrepresentations regarding BCR’s credentials and reputation, Plaintiff would have hired another contractor to do the subject work and/or not entered into Contract 1 and Contract 2.

77. As a direct and proximate result of the fraudulent inducement and despicable conduct by Defendants, Plaintiff has been substantially harmed and suffered general and compensatory damages, which have accrued and are continuing to accrue, at least in the amount of $150,000. Plaintiff should also be awarded punitive damages, in an amount to be proven at trial, for Defendants' conduct, at least in the amount of $1,000,000.

(FAC ¶¶ 73-77.)

As the Court previously explained above in the fifth cause of action with respect to fraudulent misrepresentation, Plaintiff here also did not allege the specificity requirements of fraudulent inducement.

TENTATIVE RULING
Defendant’s demurrer to the sixth cause of action for failure to state facts sufficient to constitute a cause of action for fraudulent inducement is SUSTAINED with LEAVE TO AMEND GRANTED.

Seventh Cause of Action – Violation of California Business and Professions Code Section 17200, et seq.
Defendant cites a case for the argument that demurrers to causes of action for unfair business practices under CA Bus. & Prof. Code § 17200 “must be sustained when the assumed facts show lack of a valid claim.”

However, Defendant cites no legal authority as to what is a valid claim or what must be alleged to sufficiently state a claim for this cause of action.

Instead Defendant argues how Plaintiff did not allege certain things, but Defendant cites no legal authority that the things that Defendant brings up must be alleged.

Since Defendant did not bring forth legal authority as to what must be alleged and how Plaintiff did not allege what it was supposed to, the Court does not find Defendant’s arguments availing. The Court will not do Defendant’s work for Defendant to figure out what must be alleged and how Plaintiff did not allege it.

Defendant’s demurrer to the seventh cause of action is OVERRULED.

Procedural Argument
In Opposition, Plaintiff argued that the demurrer was procedurally defective because “Each ground of demurrer must be in a separate paragraph and must state whether it applies to the entire complaint, cross-complaint, or answer, or to specified causes of action or defenses.” (CRC, Rule 3.1320(a).)

The Court does not find Plaintiff’s argument availing.

First off, this rule does not specify that when “each ground of demurrer must be in a separate paragraph,” whether or not this is referring to the notice page or within the body of the demurrer. In the body of the demurrer, Defendant complied with this rule.

Second, even if this rule applied to the notice page, Defendant’s notice was unambiguous as to the grounds of the demurrer and which causes of action the demurrer applied to.

MOTION TO STRIKE
Defendant moves to strike Paragraph E in the prayer for relief in the FAC on page 18 at lines 6-7 which states, “For punitive and exemplary damages of at least $1,000,000.”

Here, the Court will hear argument, but it is likely to deny Defendant’s motion to strike.

The request for punitive damages in the prayer does not specify which Defendants or causes of action the request in the prayer applies to. There are several other Defendants in this case, and no demurrers have been sustained to any causes of action with respect to any non-GAF Defendants. Therefore, this request can easily apply to other Defendants other than moving Defendant GAF.

However, the Court notes the following. The only requests for punitive damages in the body of the FAC, as to moving Defendant GAF, were made for the fifth and sixth causes of action, and those causes of action were sustained with leave to amend as to GAF. Therefore, punitive damages do not appear appropriate against GAF as alleged since the two causes of action against GAF requesting punitive damages were sustained with leave to amend. However, as previously mentioned, Defendant only moves to strike the punitive damages request in the prayer. Defendant does not move to strike the punitive damages requests in the fifth and sixth causes of action located in the body of the FAC. Since the prayer applies to other Defendants, not just GAF, the Court is hesitant to strike this request in the prayer. Further, even if Defendant had requested to strike the punitive damages request in the body of the FAC with respect to the fifth and sixth causes of action, this Court would have granted leave to amend since leave to amend was granted with the demurrer.