Judge: Bruce G. Iwasaki, Case: 23STCV04586, Date: 2024-09-20 Tentative Ruling

Case Number: 23STCV04586    Hearing Date: September 20, 2024    Dept: 58

Moving Party:             Defendants Greater Page Temple Church and David E. Harris

Responding Party:      Plaintiffs Warren Walker, James Perry, and Regina Johnson

Tentative Ruling:      The demurrer is sustained with leave to amend. 

            This matter involves a dispute among members of a church regarding alleged conduct of the church’s pastor.  Plaintiffs’ First Amended Complaint (FAC) alleges causes of action for (1) Declaratory relief; (2) Removal of director; (3) Conversion;  (4) Fraud; and (5) Breach of fiduciary duty. Defendants demur to the third, fourth, and fifth causes of action.  The Court sustains the demurrer with leave to amend.

Procedural background

            In March 2023, Plaintiff Warren Walker, James Perry, and Regina Johnson (Plaintiffs) filed a Complaint.  On April 22, 2024, Plaintiffs filed the FAC against Defendant Greater Page Temple Church of God in Christ (Church) and its pastor, Defendant David R. Harris (Harris) (collectively Defendants). Plaintiffs allege they are all members of the Church; Plaintiffs Walker and Perry allege they remain board members of the Church (FAC ¶¶ 20, 21.) The Church is described as a nominal Defendant. (Id. ¶ 4.)

The FAC alleges that around 2017, Harris was installed as the Church’s pastor.  Plaintiffs allege, on information and belief, that after he became pastor, Harris misappropriated Church money for his personal use, and failed to account for proceeds.  (FAC ¶ 29.) Plaintiffs allege that in May 2020 Harris visited church board members to get them to approve refinancing of the mortgage on the Church property, resulting in a loan of $527,000, which Plaintiffs believe Harris has misappropriated. (Id. ¶ 30.)  In engaging in self-dealing and misappropriation, Harris, according to Plaintiffs’ information and belief, intentionally deceived the congregation that he was acting in the Church’s best interests. (Id. ¶ 34.)  The FAC alleges that Harris, as pastor and chief executive officer of the Church, owed the Church a fiduciary duty, but breached that duty. (Id. ¶¶ 38-39.)

            On August 15, 2024, Defendants demurred to the FAC, alleging that because the conversion, fraud, and fiduciary duty claims lack specificity, they fail to state causes of action. On September 4, 2024, Plaintiffs filed an Opposition; Defendants replied.

Legal principles

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.) 

Discussion

The fourth cause of action for fraud lacks the requisite specificity

The elements of intentional misrepresentation “are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230–231.)  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, where, to whom, and by what means” the alleged fraud occurred. (Id.)  The purpose of the particularity requirement is to “separate meritorious and nonmeritorious cases, if possible in advance of trial.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

The fraud cause of action describes in general terms “a course of self-dealing including…misappropriation and diversion of monies received by the Church from its congregation in tithes and offerings.” The FAC alleges that Harris “deceive[d] the Church congregation into believing and otherwise relying on his acting in the best interests of the Church…” (FAC ¶¶ 34-35.)

These allegations fail to identify any specific misrepresentation, or how, where, and to whom it was made. In opposition, Plaintiffs seem to argue that the fraud cause of action is based upon the concealment of fact. But the FAC fails to allege the particular material fact allegedly concealed.  It is insufficient to plead that a defendant failed to reveal his dishonesty. 

The demurrer to the fourth cause of action is sustained with leave to amend.

The third cause of action for conversion fails to state sufficient facts

“Conversion is generally described as the wrongful exercise of dominion over the personal property of another. [Citation.] The basic elements of the tort are (1) the plaintiff's ownership or right to possession of personal property; (2) the defendant's disposition of the property in a manner that is inconsistent with the plaintiff's property rights; and (3) resulting damages.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “The tort of conversion is derived from the common law action of trover. The gravamen of the tort is the defendant's hostile act of dominion or control over a specific chattel to which the plaintiff has the right of immediate possession.” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)

Thus, to establish a viable cause of action for conversion, Plaintiffs must establish an actual interference with their ownership or right of possession of property. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 610.) To do that they must have “either ownership and the right of possession or actual possession [of the property] at the time of the alleged conversion thereof.” (General Motors Acceptance Corp. v. Dallas (1926) 198 Cal. 365, 370.)

The FAC alleges that Harris induced Church board members, including Plaintiff Perry, to authorize a refinancing of Church property, and alleges that Harris has not accounted for it.  The Complaint says Plaintiffs “believe that Defendant Harris has diverted and/or otherwise misappropriated such monies….” (FAC ¶ 30.)

None of the elements of a conversion claim are alleged.  There is no item of personal property identified that any Plaintiff owns or has the right to possess. Thus, there is no allegation that Defendant Harris converted such property.  Finally, there are no facts to allege that any of the Plaintiffs have been damaged.

Plaintiffs concede that money cannot be the subject of a conversion action unless a specific sum is identified. They further concede that the complaint fails to allege a precise sum of money.  (Oppos. p. 8.)

The demurrer to the third cause of action for conversion is sustained with leave to amend.

The fifth cause of action for breach of fiduciary duty also fails

To establish a cause of action for breach of fiduciary duty, plaintiff must plead “(1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez v. Girardi (2011) 194 Cal. App. 4th 925, 932.) A fiduciary relationship requires that a relationship exist between parties to a transaction wherein one of the parties is 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.) A relationship ordinarily exists when “a con¿dence is reposed by one person in the integrity of another, and . . . the party in whom the con¿dence is reposed, if he voluntarily accepts or assumes to accept the con¿dence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent.’” (Ibid.) 

            The fifth cause of action is terse and conclusory.  Plaintiffs are informed and believe that Harris:  “owed, without limitation, duties of care, loyalty, and disclosure to the Church as an entity and the Congregation of the Church,” and “breached his fiduciary duties for reasons, and based on the acts, alleged herein above.”  (FAC ¶¶ 38-39.)

            The Court assumes that the FAC adequately pleads that Harris, as a board member and the pastor, owed a fiduciary duty to other board members and the Church. And the Court assumes that misappropriation of Church assets is a breach of duty owed to the Church. But the Church is not a plaintiff here; nor is this a derivative action.  Plaintiffs have failed to allege any damage to them caused by any breach of fiduciary duty. 

            The demurrer to the fifth cause of action is sustained with leave to amend.

Conclusion

            Defendants’ demurrer to the First Amended Complaint is sustained with leave to amend as to the third, fourth, and fifth causes of action.  Plaintiff’s second amended complaint shall be served and filed on or before October 11, 2024.