Judge Bruce G. Iwasaki

Department 58

Hearing Date: February 26, 2024

Case Name: K2005, LLC v. Saidi

Case No.: 23STCV03449

Matter: (1.) Demurrer

(2.) Demurrer

Moving Party: (1.) Defendants David Saidi and Neta 38th LLC

(2.) Defendants Michael Davoodpour and Trimax Realty & Loan

Responding Party: (1.) Plaintiff K2005, LLC

(2.) Plaintiff K2005, LLC

Tentative Ruling: The Demurrer to the Second Amended Complaint is overruled as to the first cause of action against Defendant Neta 38^thonly and sustained in its entirety as to all the remaining claims as to all Defendants.

This is an action for breach of contract arising from a real estate sale. On January 6, 2021, Defendant Neta 38th LLC (Neta 38^th), owned and operated by Defendant David Saidi (Saidi), (jointly, Buyer Defendants) entered into a Commercial Property Purchase Agreement and Joint Escrow Instructions (Purchase Agreement) with Plaintiff K2005, LLC, a company owned and operated by Tamara Marizadeh (Marizadeh), for the purchase of real property located at 2306 East 38th Street, Vernon, California 90058 (Property) for $600,000. (SAC ¶¶ 8, 11-13.) In addition to the Purchase Agreement, Buyer Defendants and Plaintiff executed a “Contingent Furniture Purchase Sale Agreement” (Furniture Agreement) in which Buyer Defendants agreed to pay $187,000. (SAC ¶¶ 14.)

In 2021, Plaintiff began communicating with Michael Davoodpour, Saidi’s agent and owner of Trimax Realty & Loan, (Trimax Defendants). (SAC ¶ 18.) Plaintiff alleges that Trimax Defendants falsely represented that they were funding Buyer Defendants’ loan for both the Purchase Agreement and Furniture Agreement. (SAC ¶ 18.)

Under the Furniture Agreement, Buyer Defendants were to place $137,000.00 in escrow, and the funds were to be released to Plaintiff immediately upon the closing of the Subject Property. (SAC ¶ 15.) The remaining balance of $50,000 was to be wired to Plaintiff after the close of escrow and after Buyer Defendants confirmed the furniture was still at the Property. (SAC ¶ 15.) To date, alleges Plaintiff, Buyer Defendants never made the required $50,000 payment. (SAC ¶ 16.)

The Second Amended Complaint contains causes of action for (1.) breach of contract, (2.) breach of implied covenant of good faith and fair dealing, (3.) fraud, and (4.) negligence.

On December 27, 2023, Defendants Saidi and Neta 38th demurred to the first, second, third, and fourth causes of action. Plaintiff opposed the demurrer.

On December 28, 2023, Defendants Davoodpour and Trimax Realty demurred to the third and fourth causes of action. Plaintiff opposed the demurrer.

The demurrers are in large measure sustained. They are overruled only as to the breach of contract claim against Defendant Neta 38^th.

Legal Standard for Demurrers

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.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

Analysis

First Cause of Action for Breach of Contract:

Defendants Saidi and Neta 38^th demur to the first cause of action on the grounds that the SAC fails to state a claim.

To state a claim for breach of contract, a plaintiff must allege sufficient facts to establish: (1) a contract between the parties; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff from the breach. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4^th 1171, 1178.)

First, Buyer Defendants note that, although the cause of action is predicated on written agreements, Plaintiff fails to allege the terms of the agreement verbatim, attach the contract agreement, or incorporate the agreement by reference. Thus, Buyer Defendants argue that this cause of action is subject to demurrer.

This argument is not well taken. A plaintiff has the option to either plead the terms of a contract verbatim, attach the contract, or “plead the legal effect of the contract rather than its precise language.” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.)

Here, Plaintiff has pled the material terms of the contract sufficiently such that the parties can determine the precise basis for the breach. Specifically, the SAC alleges that, under the Furniture Agreement, Buyer Defendants were to wire $50,000 to Plaintiff after the close of escrow and after Buyer Defendants confirmed the furniture was still at the Property. (SAC ¶ 15.) Buyer Defendants breached this contractual obligation. (SAC ¶ 16.)

Defendant Saidi also demurs to the first cause of action on the grounds that he is not a named party to any of the contracts or agreements alleged in the SAC.

The SAC alleges “[p]er the “Contingent Furniture Purchase Agreement”, K200 was referred to as the “Seller” and David Saidi and/or Neta 38th were both collectively referred to as the “Buyer”, and consequently they are both parties to Contingent Furniture Purchase Agreement.” (SAC ¶ 14.)

Admittedly, a plaintiff may plead inconsistent facts and legal theories in alternative counts. (Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29 [“Where the exact nature of the facts is in doubt, or where the exact legal nature of plaintiff's right and defendant's liability depend on facts not well known to the plaintiff, the pleading may properly set forth alternative theories in varied and inconsistent counts.”].) Here, however, Plaintiff, as a party to the contract, cannot allege that these facts are not known to it and, thus, cannot plead alternative facts.

Thus, the demurrer by Defendant Saidi to the first cause of action is sustained. The demurrer by Defendant Neta 38^th is overruled.

Second Cause of Action for Breach of Covenant of Good Faith and Fair Dealing:

“The implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation.” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031.) “The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made. [Citation.]” (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 349.)

First, in the absence of adequate allegations of the existence of a contract between Plaintiff and Defendant Saidi, this claim cannot withstand the demurrer as to Defendant Saidi. Thus, the demurrer is sustained on this ground.

Second, if a plaintiff's allegations of breach of the covenant of good faith “do[es] not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek[s] the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.) Here, this cause of action does nothing than restate the breach of contract cause of action. (SAC ¶¶ 35-41.)

Thus, the demurrer to the second cause of action is sustained on this additional ground as to both Buyer Defendants.

Third Cause of Action for Fraud:

Defendants Saidi, Neta 38th, Davoodpour, and Trimax Realty all demur to the third cause of action for fraud on the grounds that Plaintiff has failed to allege facts sufficient to state a claim.

Here, Defendants argue that the allegations of fraud are conclusory and fail to demonstrate the requisite specificity.

Fraud requires an express or implied false representation, concealment of a material fact which the defendant had a duty to disclose, or a promise made without the intention to perform. (Pearson v. Norton (1964) 230 Cal.App.2d 1, 7.)

The elements of a cause of action for intentional misrepresentation are: (1) a misrepresentation; (2) knowledge of falsity; (3) intent to defraud or induce reliance; (4) actual reliance by the plaintiff; and (5) resulting damage. (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1255; Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173; Civ. Code, § 1709.) Further, fraud, unlike most claims in tort, requires that each element must be pled with specificity. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) That is, generally, “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.). “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.]” (Ibid.)

With respect to promissory fraud, a promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.]” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Thus, in a promissory fraud action, to sufficiently alleges defendant made a misrepresentation, the complaint must allege (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false. (Id. at 639.)

Importantly, fraud requires that each element must be pled with specificity. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) That is, generally, “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.]” (Ibid.)

The SAC alleges “Saidi made false representations to Marizadeh that Saidi and/or Neta 38th would pay Plaintiff in accordance with the Commercial Property Purchase Agreement and Joint Escrow Instructions and the addendum, “Contingent Furniture Purchase Sale Agreement.”:’ (SAC ¶ 47.) Further, the SAC alleges that Saidi falsely told Marizadeh that Defendant Trimax Realty was providing a loan to him to pay the Contingent Furniture Purchase Sale Agreement. (SAC ¶ 47.)

The SAC also alleges “Davidpour of Trimax falsely represented to Marizadeh that Trimax was loaning Saidi sufficient funds to fully pay K2005 pursuant to the Commercial Property Purchase Agreement and Joint Escrow Instructions and an addendum, “Contingent Furniture Purchase Sale Agreement.” (SAC ¶ 48.) Additionally, “Michael Davidpour made knowingly false representations to Marizadeh about the contents of the Contingent Furniture Purchase Sale Agreement. Michael Davidpour called Plaintiff to his office and induced her to sign a Contingent Furniture Purchase Sale Agreement, that he falsely told her was the same one the parties agreed to previously, which included an attorneys fees provision. However, this was not true.” (SAC ¶ 52.)

These allegations of false representations fail to contain the level of specificity required for pleading fraud. The demurrer to the third cause of action is sustained.

Fourth Cause of Action for Negligence:

Defendants also demur to the fourth cause of action on the grounds that Plaintiff has failed to state a claim.

To state a claim for negligence, the plaintiff must show that (1) the defendant owed the plaintiff a legal duty, (2) the defendant breached the duty, and (3) the breach proximately or legally caused (4) the plaintiff's damages or injuries. (Thomas v. Stenberg (2012) 206 Cal.App.4th 654, 662.)

Here, the SAC states “Michael Davoodpour and Trimax had a legal duty to use due care with Plaintiff and to not mislead and/or conceal facts to K2005 relating to Neta 38th and David Saidi’s ability to pay K2005 in relation to the Contingent Furniture Purchase Sale Agreement.” (SAC ¶ 60.) Similarly, the SAC alleges “Neta 38th and David Saidi were negligent with Plaintiff in making assurances to Plaintiff that it would pay $50,000 to Plaintiff K2005 in accordance with the Contingent Furniture Purchase Sale Agreement.” (SAC ¶ 62.)

The fourth cause of action simply restates the elements of negligence, relying on the same allegations for the breach of contract claim and the deficient fraud claim. These allegations are insufficient.

The demurrer to the negligence cause of action is sustained.

Conclusion

The demurrer is overruled as to the first cause of action against Defendant Neta 38^thonly. The demurrers are sustained in their entirety as to all the remaining claims as to all Defendants. Plaintiff shall have leave to amend. The amended complaint shall be served and filed on or before March 25, 2024.