Judge Bruce G. Iwasaki, Case 22STCV04775 2023-04-20 Tentative Ruling

Case Name: Steve Martinez dba Agua Dulce Water Trucks & Transportation v. Southern California Gas Company et al.

Opposing Party: Plaintiff, Steve Martinez dba Agua Dulce Water Trucks & Transportation

Tentative Ruling: The demurrer is sustained with leave to amend as to the third, fourth, fifth, and sixth causes of action.

The motion to strike is moot.

On February 8, 2022, plaintiff Steve Martinez dba Agua Dulce Water Trucks & Transportation (“plaintiff”) filed this action against Southern California Gas Company (“SoCal Gas”), Goldie Productions LLC (“Goldie”), and The Newhall Land and Farming Company, Inc. (“Newhall”) for damages from an incident where plaintiff’s truck dropped into a sink hole on Newhall’s property, while transporting water for defendant Goldie.

On February 7, 2023, the Court granted plaintiff’s request for leave to amend to add two new defendants, Five Point Holdings, LLC (“Five Point”) and Barnard Construction Company Inc. (“Barnard”), and several new causes of action.

In his operative first amended complaint (FAC), plaintiff now sues SoCal Gas, Goldie, Newhall, Five Point, and Barnard for (1) negligence, (2) premises liability, (3) breach of fiduciary duty, (4) promissory estoppel, (5) fraud, (6) constructive fraud, and (7) violation of Public Utilities Code section 2106.

Plaintiff alleges defendants knowingly or negligently concealed sinkholes on its property, one of which caused the accident that damaged his truck. He also alleges SoCal Gas promised to repair his truck for him after the accident but never did so.

On April 14, 2023, the Court sustained defendant Newhall’s demurrer to plaintiff’s FAC with partial leave to amend. The Court indicated it would set a timeline for plaintiff to file a newly amended complaint after the instant hearing and the hearing on Five Point’s demurrer and motion to strike, now set for May 5.

Defendant SoCal Gas demurs to the third, fourth, fifth, and sixth causes of action in plaintiff’s FAC, arguing plaintiff has failed to state a claim against it under any of his legal theories. Defendant also moves to strike plaintiff’s punitive damages allegations.

Plaintiff has requested judicial notice of four citations allegedly issued by the California Public Utilities Commission, a draft resolution of the Public Utilities Commission, and a copy of SoCal Gas’s Answer to the Complaint.

None of the citations plaintiff has submitted are certified. Without a certification the court cannot determine their authenticity and cannot grant judicial notice. (See Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 743.)

Plaintiff cites to Evidence Code section 452, subdivision (c), permitting judicial notice of “[o]fficial acts of . . . legislative, executive, and judicial departments . . . .” A draft resolution is not an official act.

The Court takes judicial notice of SoCal Gas’s Answer. (Evid. Code, § 452, subd. (d).)

The Court denies Plaintiff’s request for judicial notice as to the draft resolution and citations, and grants it as to Defendant’s Answer.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) 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.)

To state a claim for breach of fiduciary duty a plaintiff must plead “the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Thomson v. Canyon (2011) 198 Cal.App.4th 594, 604.)

“A fiduciary relationship is ‘ “any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.’ ” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29.) It is “ ‘ordinarily synonymous with a “confidential relation.” It is ... founded upon the trust or confidence reposed by one person in the integrity and fidelity of another, and likewise precludes the idea of profit or advantage resulting from the dealings of the parties and the person in whom the confidence is reposed.’ ” (Rickel v. Schwinn Bicycle Co. (1983) 144 Cal.App.3d 648, 654, italics added.) “‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’” (Hasso v. Hapke (2014) 227 Cal.App.4th 107, 140 (quoting Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 221).)

Plaintiff alleges SoCal Gas had a “superior position” to him during the incident in question. (FAC ¶ 80.) He also alleges SoCal Gas made certain promises that it would repair his truck. (Ibid.) He alleges SoCal Gas “has substantial resources, and it was reasonable [for plaintiff] to believe it would keep [its] promises . . . .” (Id., ¶ 81.) None of these, separately or together, establishes SoCal owed plaintiff a fiduciary duty.

Plaintiff confuses the doctrine of promissory estoppel – an equitable doctrine closely associated with breach of contract – with breach of fiduciary duty, a tort. Plaintiff himself implies in his complaint that his relationship to SoCal resembles that of a contracting partner: that plaintiff relinquished his option to call the fire department after his accident in consideration for SoCal Gas’s promise to repair his truck. This sort of mutually profitable exchange is at odds with a fiduciary duty, in which the fiduciary strictly may not profit off concessions made by its beneficiary. (See Rickel v. Scwinn Bicycle Co., supra, at p. 654 [fiduciary relationship “precludes the idea of profit or advantage”].) A fiduciary relationship requires more than the basic duty to perform on a contract. (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 387-388 [even when trust, broad discretion, asymmetrical information, and vulnerability and dependence all exist, it does not per se establish a fiduciary relationship].)

Plaintiff has not pleaded facts sufficient to show SoCal Gas owed him a fiduciary duty. As alleged, plaintiff and SoCal Gas dealt at arm’s length following a possibly tortious incident to attempt to reach an informal resolution. Neither acted as fiduciary for the other.

Defendant’s demurrer to plaintiff’s third cause of action is sustained with leave to amend.

“ ‘The elements of a promissory estoppel claim are “(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” [Citation.]’ [Citation.]” (Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 945.)

Plaintiff alleges a number of promises SoCal Gas made that he relied upon. He claims SoCal Gas promised it would remove plaintiff’s truck from the sinkhole, perform immediate repairs, begin the insurance claims process, buy him a new truck if needed, and generally “take care of everything.” (FAC ¶ 84.) At least some of these promises are clear and unambiguous. Plaintiff might reasonably believe that SoCal Gas would keep its promises if he thought SoCal was trying to avoid scrutiny from authorities. And if SoCal made the promises – which are simple and relatively routine following a car accident – and even towed plaintiff’s truck away for him, as plaintiff alleges, then it should have foreseen he would expect the promises to be carried out.

However, plaintiff’s complaint fails to allege his reliance on SoCal’s promises caused him detriment. He identifies no specific damages caused by false promises, rather than negligence. He does not allege, for instance, that his truck suffered damages it would not have otherwise suffered, or that he lost more earnings than he otherwise would have, had he taken care of the repairs himself. Where he requests compensation for his injury, plaintiff argues “[i]njustice can only be avoided . . . by SOCALGAS being forced to keep the promise they made to Plaintiff for [sic] replacing the TRUCK with a new one . . . .” (FAC, ¶ 86.) Plaintiff’s claim reflects his pursuit of damages caused by the accident, not by SoCal’s broken promises.

“ ‘(W)here estoppel is an element of the action, it must be especially pleaded in the complaint with sufficient accuracy to disclose the facts relied upon and plaintiff must prove all of the essential elements constituting it.’ ” (Frank Pisano & Associates v. Taggart (1972) 29 Cal.App.3d 1, 18.) Plaintiff has not pleaded specific facts supporting the final element of promissory estoppel: detrimental reliance. Therefore, his claim fails.

Defendant’s demurrer to plaintiff’s fourth cause of action is sustained with leave to amend.

Plaintiff also claims SoCal Gas defrauded him in two respects. Plaintiff characterizes the promises underlying his estoppel cause of action as, alternatively, “misrepresentations of material fact” sufficient to state a claim for intentional misrepresentation. (See Opp., 6:16-17.) He also claims SoCal Gas should be liable along with its co-defendants for “fraudulent concealment of sinkholes”. (Id., 7:28.)

The elements of intentional misrepresentation, or fraud in the inducement, 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.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

Plaintiff bases his cause of action on the same promises he refers to in his promissory estoppel claim. In fact, he repeats SoCal Gas’s five alleged promises verbatim in his fourth and fifth causes of action: to remove the truck, perform repairs, start an insurance claim, replace the truck if needed, and “take care of everything.” (FAC ¶¶ 84, 90.) Plaintiff claims these statements “were a substantial factor in causing the damages related to the twisted and damages water tank . . . .” (Id., ¶ 92.)

But plaintiff has not alleged SoCal Gas’s knowledge of falsity or intent to defraud. To be liable for fraud, a defendant must intend to induce the other party to act in reliance on the false information. (City of Atascadero v. Merrill Lynch (1998) 68 Cal.App.4th 445, 481.) Plaintiff alleges “SOCALGAS made . . . false statements to prevent PLAINTIFF from contacting the fire department, so it did not have any intention to keep the promises . . . .” (FAC, ¶ 90, italics added.) Plaintiff’s second statement does not logically follow from the first. The fact that defendant had a reason for making its promise, and the fact that it did not keep its promise, do not establish defendant never intended to keep its promise. That fact must be separately alleged with some specific basis. Similarly, plaintiff alleges SoCal Gas “delay[ed] fulfilling its promises and eventually [broke] its promises to avoid paying for what it stated it would do.” (Id., ¶ 91.) Plaintiff describes a broken promise, not a planned deception.

Also, as set forth above regarding plaintiff’s promissory estoppel claim, he has not identified any detriment caused by defendant’s alleged broken promises. The damage he claims arises from incidents of negligence. He does not establish any of his damages are attributable to the promises made after the accident, rather than the accident itself.

“ ‘ [T]he elements of an action for fraud and deceit based on concealment [or nondisclosure] 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.’ ” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 748.)

Regarding SoCal Gas, as opposed to other defendants, plaintiff alleges only that it “had actual knowledge of the sink [h]oles, how they were created, a failure to put up sinkhole warnings, [and] a scheme to keep the sinkholes a secret from the public and government because it would cost an incredible amount of money to properly repair and maintain…” (FAC ¶ 97.) He does not allege SoCal Gas participated in any specific instance, or even any specific practice, of concealment – as opposed to other defendants, whom he at least alleges “consciously did not set up sinkhole warnings or warn the public” about the condition of the roads on the property. (Id., ¶ 95.)

Also, for fraudulent concealment to be actionable, a defendant must have been under a duty to disclose the facts to plaintiff. (Hahn v. Mirda, supra, 147 Cal.App.4th at 745.) The duty may arise when (1) defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of a material fact not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; or (4) when the defendant makes partial representations but also suppresses some material facts. (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186.)

As set forth above regarding plaintiff’s third cause of action, plaintiff has not alleged SoCal Gas owed him any fiduciary duty. Nor has he alleged SoCal Gas had exclusive knowledge of any material fact – in fact, his FAC states on its face that numerous parties were aware of the sinkholes on the property generally. Plaintiff does not allege anyone knew of the specific sinkhole where plaintiff crashed his truck, much less intentionally concealed it.

Plaintiff seems to suggests defendant held a duty as an easement-holder and excavator of the property. (FAC ¶ 96.) He claims SoCal Gas “[was] responsible for maintaining the integrity of the land but failed to do so.” (Id.) But this describes a general duty of care, not a duty owed to plaintiff specifically.

“ ‘ “Where material facts are known to one party and not to the other, failure to disclose them is not actionable fraud unless there is some relationship between the parties which gives rise to a duty to disclose such known facts….” [Citations.] A relationship between the parties is present if there is “some sort of transaction between the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.” ’ ” (Hoffman, supra, 228 Cal.App.4th at 1187, citing LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337, original italics.) But plaintiff alleges no such relationship between him and SoCal Gas prior to the accident. He alleges that Newhall and SoCal Gas had a contract, that Newhall and Goldie had an agreement that Goldie could use its property, and that Plaintiff and Goldie had an agreement that Plaintiff would deliver water. (See FAC ¶ 13, 68.) But he alleges no transactional relationship between him and SoCal Gas before SoCal Gas made promises to repair his truck for him.

And neither the allegations against SoCal Gas nor against the other defendants are sufficiently specific to show how the alleged concealment of the sinkholes was intended to cause Plaintiff specifically to act in reliance. Plaintiff alleges “managing agents for [all defendants] . . . had actual knowledge of the sink roles [sic], how they were created, a failure to put sinkhole warnings, [and] a scheme to keep the sinkholes a secret from the public and the government . . . .” (FAC, ¶ 97.) The FAC does not allege that Plaintiff is a member of the government. And there are no specific allegations as to how the concealment of the sinkholes was intended to induce reliance upon members of the public. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 347 [“mere conclusionary allegations that the omissions were intentional and for the purpose of defrauding and deceiving plaintiffs. . . are insufficient [to show fraud by concealment”].)

Plaintiff has alleged nothing suggesting defendants knew about a specific sinkhole in the road and covered it up, with the intention that plaintiff, specifically, would drive his truck into that hole. And while he has pled ordinary duty and breach so as to support a negligence action, he has not shown that defendants owed him any special duty to disclose to him the location of specific sinkholes.

Defendant’s demurrer to the fraud cause of action is sustained with leave to amend.

Constructive fraud “is a unique species of fraud applicable only to a fiduciary or confidential relationship.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105.) It arises when there is a breach of duty in a confidential or fiduciary relationship which induces justifiable reliance. (Id.) “Constructive fraud allows conduct insufficient to constitute actual fraud to be treated as such where the parties stand in a fiduciary relationship.” (Estate of Gump (1991) 1 Cal.App.4th 582, 601.)

As discussed above, Plaintiff has alleged no confidential or fiduciary relationship between itself and SoCal Gas.

Defendant’s demurrer to plaintiff’s sixth cause of action is sustained with leave to amend.

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436.)

Defendants move to strike the term “punitive damages” from four locations in plaintiff’s FAC; paragraphs 98, 99, 110, 111, 120, and 121, which refer to the elements necessary for an award of punitive damages; and plaintiff’s prayer for punitive damages.

The motion, while meritorious, is largely moot because it is directed entirely to causes of action which have been subject to successful demurrer.The one exception is the provision in line (b) of plaintiff’s prayer for relief (FAC, 37:2-3).

As reflected in the court’s April 14, 2023 ruling on defendant Newhall’s motion to strike, line (b) of plaintiff’s prayer for relief is stricken.

The demurrer is sustained as to the third, fourth, fifth, and sixth causes of action with 20 days leave to amend.

The motion to strike is granted for the punitive damages prayer as to SoCal Gas.