Judge Bruce G. Iwasaki, Case 22STCV04775 2023-05-05 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 OVERRULED as to the first and second cause of action and SUSTAINED with leave to amend as to the fifth and sixth causes of action. The Motion to Strike is GRANTED as to item (b) in the prayer for relief and otherwise DENIED as moot.

This case arises out of an incident involving a water truck falling into a sinkhole. Plaintiff Steve Martinez dba Agua Dulce Water Trucks & Transportation (“Plaintiff”) alleges that on May 14, 2021, his water truck fell into a sinkhole on a vacant lot near Valencia, CA while transporting water to a filming location. Plaintiff alleges that Defendants were aware of this problem occurring on the subject property but did not warn him about it.

On February 8, 2022, Plaintiff filed this action against Defendant Southern California Gas Company (“SoCal Gas”), Goldie Productions LLC (“Goldie”), and The Newhall Land and Farming Company, Inc. (“Newhall”), alleging a cause of action for negligence. Plaintiff subsequently amended the Complaint on February 9, 2023 (the “FAC”), naming as additional Defendants Five Point Holdings, LLC (“Five Point”) and Barnard Construction Company Inc. (“Barnard”), and alleging causes of action for negligence, premises liability, breach of fiduciary duty, promissory estoppel, fraud, constructive fraud, and violation of Cal. Pub. Util. Code § 2106.

On March 10, 2023, Defendant Newhall filed a demurrer to the fifth and sixth causes of action of the FAC for fraud and constructive fraud, respectively, and a motion to strike the punitive damages claims. On April 14, 2023, the Court sustained Newhall’s demurrer with leave to amend as to the fifth and sixth causes of action, and granted the motion to strike as to the punitive damages request in the prayer for relief.

On March 10, 2023, Defendant SoCal Gas filed a demurrer to the third, fourth, fifth, and sixth causes of action of the FAC for breach of fiduciary duty, promissory estoppel, fraud, and constructive fraud, respectively, and a motion to strike the punitive damages claims. On April 20, 2023, the Court sustained SoCal Gas’ demurrer with leave to amend as to the third, fourth, fifth, and sixth causes of action, and granted the motion to strike as to the punitive damages request in the prayer for relief.

On March 27, 2023, Defendant Five Point filed a demurrer as the first, second, fifth, and sixth causes of action of the FAC for negligence, premises liability, fraud, and constructive fraud, on the grounds that they each fail to state a cause of action. Five Point also moves to strike paragraphs 95, 98, 99, 100, 108, 109, 111, 112, and the prayer for punitive damages. Plaintiff has opposed Five Point’s demurrer and motion to strike. Five Point has replied. The declaration of Five Point’s counsel, Greg H. Smith, satisfies the meet and confer requirement.

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.)

The Court denies Five Point’s requests for judicial notice. Exhibits 1 and 2 are from a private title company and are not records of which the Court must or may take judicial notice. Exhibit 3, apart from being a map without context, is without any indicia that it is a government record. (See Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 743-744 [judicial notice refused without “information about the source, purpose, or official ratification” of purported official publication].)

The Court also denies Plaintiff’s request for judicial notice, as the link provided does not appear to work and the Court cannot view the proffered document.

The elements of a claim for negligence are: (1) legal duty owed to plaintiffs to use due care; (2) breach of duty; (3) causation; and (4) damage to plaintiff. (County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318.)

Five Point demurs to the first cause of action for negligence on the basis that Five Point does not own the subject property where the sinkhole incident occurred and therefore owed no duty to Plaintiff. But the Court has declined to take judicial notice of the documents Five Point has proffered in support of its claimed lack of ownership.

Moreover, while the Court agrees that Plaintiff’s allegations of a parent/subsidiary relationship between Five Point and Newhall are insufficient to impute agent liability to Five Point, (see Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 861-62), and that Plaintiff has not adequately alleged the existence of an employer/employee relationship for purposes of respondeat superior, these points still do not address Plaintiff’s underlying allegations that both Newhall and Five Point own the subject property, (FAC ¶¶ 5, 10). Additionally, the line referenced to the Barnard Report in the FAC regarding the property being located “within Newhall Land and Farm property” is insufficient to establish that Defendant does not also own it with Newhall.

Furthermore, Five Point’s contention that the FAC fails to allege sufficient facts for a negligence claim is unpersuasive. Plaintiff has alleged that Five Point was an owner of the subject property and that Five Point owed Plaintiff a duty of due care as an invitee onto the subject property. (FAC, ¶¶ 5, 10, 53.) Plaintiff has also alleged that Five Point breached its duty of care to Plaintiff by failing to warn Plaintiff of sinkholes on the subject property which led to Plaintiff’s alleged damages. (FAC, ¶¶ 45, 55, 68.)

The elements of a claim for premises liability are essentially the same as a claim for negligence, namely: (1) defendant was owner, occupant or lessor of premises; (2) defendant was negligent in the use, maintenance or management of premises; and (3) negligence was a cause of injury, damage, loss or harm to plaintiff. (Brooks v. Eugene Burger Management Corp. (1989) 215 Cal.App.3d 1611, 1619.)

Since this cause of action is the same as the first cause of action for negligence, the Court’s analysis from above applies here too. Accordingly, the Court OVERRULES the Demurrer as to this cause of action.

“‘[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.)

For fraudulent concealment to be actionable, a defendant must have been under a duty to

disclose the facts to plaintiff. (Hahn, supra, 147 Cal. App.4th at p. 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.)

“‘“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 p. 1187, citing LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337, original italics.)

The Court finds that the same issues found with the FAC against Newhall also apply to Five Point. The FAC alleges that before the incident, there were numerous sink holes that collapsed, and Defendant Five Point, along with the other defendants, were familiar with the area and knew that it had many sinkholes. (FAC ¶ 14.) The FAC alleges that before the accident, Defendants had several meetings about the sinkholes on the property, but concealed this information from invitees. (FAC ¶ 16.) The sinkholes were covered by loose dirt, and there were no warning signs.(FAC ¶ 16.) When transporting water for Defendant Goldie, Plaintiff’s truck sank into a concealed sinkhole. (FAC ¶19-20.)

The fraud cause of action against Defendant Five Point is predicated on Five Point’s alleged “intentional creation of sinkholes and the intentionally failing to warn the public of the sinkholes at the accident site.” (FAC ¶ 95.) Allegedly, Defendant Five Point “knew running water from their property was flowing down to the roadway…They knew this condition would create sinkholes around the SUBJECT PROPERTY. They knew there was a substantial risk the sinkholes would collapse. They consciously did not set up sinkhole warnings or warn the public for fear that potential investors of real estate would be spoken to by the sinkholes… They had a duty to disclose the dangerous condition of the subject property to the public and invitees including Plaintiff. They invited the public and Plaintiff to use the roadway of the accident to gain access to their property while concealing sinkholes and the dangerous condition of the property.” (FAC ¶ 95.) Further, Five Point “had actual knowledge of the sinkholes, how they were created, a failure to put up sinkhole warnings, 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.)

The FAC does not allege that Five Point made any affirmative misrepresentations. Thus, the fraud cause of action against Defendant Five Point is premised on the theory of fraudulent concealment. Defendant Five Point argues that Plaintiff has not alleged specific facts showing that Five Point knew about the subject sinkhole, alleged a duty to disclose or facts showing that Five Point actively concealed the sinkhole, or alleged facts showing that the sinkhole was concealed with the intent to defraud.

Defendant argues that Plaintiff fails to allege that Defendant Five Point knew about the specific sinkhole. The FAC alleges that “there were numerous sink holes that collapsed” on the property,” and defendant employees had several meetings about the sinkholes, and “knew there would be more sinkholes in the Subject Property.” (FAC ¶ 14, 16.) Plaintiff alleges that he wouldn’t have driven his truck on the property if he was disclosed the dangerous condition of the subject property. (FAC ¶ 95.) These allegations are sufficient for purposes of demurrer to show Defendant Five Point knew that there would be sinkholes in the property, and that Plaintiff justifiably relied on this alleged concealment. It is not necessary that Defendant Five Point knew of the specific sinkhole that Plaintiff’s truck got stuck in.

For fraudulent concealment to be actionable, a defendant must have been under a duty to disclose the facts to plaintiff. (Hahn, supra, 147 Cal.App.4th at p. 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; and (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.)

Here, the duty allegedly arises from Five Point’s duty as a landowner. Plaintiff has alleged that the sinkhole was on Defendant Five Point’s premises. (FAC ¶ 19.) Plaintiff entered the premises because Defendant Goldie hired Plaintiff’s services to transport water to their filming location on Five Point’s property. (FAC ¶ 18.) Plaintiff alleges that Defendant had a duty to warn of the dangerous condition to the public and invitees. (FAC ¶ 95, 108.) Plaintiff does not allege any fiduciary relationship between the parties.

Although Plaintiff attempts to plead that there was active concealment by Defendant Five Point, this allegation is not pleaded with requisite specificity. Plaintiff alleges that “They consciously did not set up sinkhole warnings or warn the public” and “They invited the public and Plaintiff to use the roadway of the accident to gain access to their property while concealing sinkholes and the dangerous condition of the property.” (FAC ¶ 95.) This is insufficient to allege active concealment because the failure to set up sinkhole warnings is not active concealment, but

passive concealment. Further, there are no specific allegations as to who concealed the sinkholes

In opposition, Plaintiff states that the duty arose from Defendant Five Point’s exclusive knowledge of the existence of the sinkhole and Defendant Five Point’s contractual obligations. “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…. 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

No such contract between Defendant Five Point and Plaintiff has been alleged. Plaintiff alleges that Five Point and SoCal Gas had a contract, that Five Point 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.) However, there is no allegation of a direct contractual or transactional relationship between Plaintiff and Five Point besides the fact that Plaintiff was entering Five Point’s property to deliver water to Goldie.

As alleged, this cause of action is equivalent to the premises cause of action that alleges that a landowner owes a duty of care to invitees. Although a landowner has a duty to warn of

dangerous conditions, this does not mean that landowners have a duty to disclose these facts for

The Complaint fails to plead that Defendant Five Point had either a fiduciary or contractual relationship with Plaintiff that creates a duty to disclose.

Plaintiff also has not averred sufficient intent to defraud. 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.) The FAC alleges that Defendants “all had actual knowledge of the sink holes, how they were created, a failure to put up sinkhole warnings, 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.) The FAC also alleges that Defendants “did not set up sinkhole warnings or warn the public for fear that potential investors of real estate would be spoken to by the sinkholes in violation of Civ. C. § 1710(3).” (FAC ¶95.)

These allegations are not sufficiently specific to show how the alleged concealment of the

sinkholes was intended to cause Plaintiff specifically to act in reliance. The FAC does not allege

that Plaintiff is a member of the government or a potential investor of real estate. Further, 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”]

As Plaintiff has not alleged Defendant Five Point’s specific duty to disclose knowledge of sinkholes on the property, and Plaintiff has not pleaded Five Point’s intent to defraud Plaintiff with. requisite specificity, Five Point’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 Defendant Five Point. Thus, the demurrer to the 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.)

The basis for punitive damages must be pled with specificity. Plaintiff must allege specific facts showing that Defendant's conduct was oppressive, fraudulent, or malicious. (Civ. Code, § 3294, subd. (a).) A¿plaintiff’s “conclusory characterization of defendant’s conduct as intentional, willful and fraudulent is a patently insufficient statement of ‘oppression, fraud,¿or malice, express or implied,¿within the meaning of section 3294.”¿(Brousseau v. Jarrett¿(1977) 73 Cal.App.3d 864, 872.)

Five Point’s Motion to Strike is now largely moot since the Court has sustained Five Point’s Demurrer to the fifth and sixth causes of action of the FAC, which are the bases for Plaintiff’s punitive damage claims. The only remaining part of the FAC regarding punitive damages is line (b) from the prayer for relief. The Court notes that none of Plaintiff’s punitive damage claims are made in connection with Plaintiff’s negligence or premises liability causes of action. Even if Plaintiff had requested punitive damages based on negligence, the allegations would not support a punitive damages claim because the extent of Plaintiff’s allegations are that Five Point knew about the sinkholes but failed to repair them, which has been held to be insufficient to establish punitive damages. (McDonnell v. American Trust Co. (1955) 130 Cal.App.2d 296, 298-299 [allegation that landowner was aware of defective conditions and refused to repair does not show malice needed for punitive damages].)

Thus, the Court denies as moot the Motion to Strike as to 95, 98, 99, 100, 108, 109, 111, and 112 of the FAC. However, the Court gramts the Motion to Strike as to line (b) of the prayer for relief.

The Demurrer is OVERRULED as to the first and second cause of action and SUSTAINED with leave to amend as to the fifth and sixth causes of action. The Motion to Strike is GRANTED as to item (b) in the prayer for relief and otherwise DENIED as moot.