Judge: Cherol J. Nellon, Case: 22STCV04219, Date: 2023-08-03 Tentative Ruling
Case Number: 22STCV04219 Hearing Date: March 20, 2024 Dept: 14
Shorter v Israel
Case Background
This a dispute over how to manage inherited property and how to care for an elderly dependent.
Complaint
On August 25, 2022 Plaintiff filed her Verified First Amended Complaint (“FAC”) for (1) Partition, (2) Financial Elder Abuse, (3) Breach of Fiduciary Duty, (4) Undue Influence, (5) Accounting, (6) Defamation, (7) Harassment, and (8) Declaratory Relief against Defendants Benayah Israel aka William Shorter (“Israel”), Michael A. Shorter (“Michael”), Estate of John Shorter (“Estate”), Carmencita Ferguson (“Ferguson”), All Persons Known or Unknown, and DOES 1-50.
The second and third causes of action are asserted against Defendant Ferguson, only. The fourth cause of action is asserted against Defendants Israel and Ferguson, only. The sixth and seventh causes of action are asserted against Defendant Israel, only.
On September 26, 2022, Defendant Ferguson filed an unverified Answer.
On September 27, 2022, Defendant Israel filed an unverified Answer.
On September 28, 2022, Defendant Michael filed a verified Answer.
On March 24, 2023, this court entered a written order striking the answer of Defendant Israel and entering his default.
On November 3, 2023, Plaintiff voluntarily dismissed Defendants Estate and Ferguson, with prejudice.
Cross-Complaint
On May 30, 2023, Defendant Michael filed his verified Cross-Complaint for Rent Skimming against Plaintiff.
On October 24, 2023, this court sustained Plaintiff/Cross-Defendant’s demurrer to the cross-complaint, with leave to amend.
On November 17, 2023, Defendant Michael filed his verified First Amended Cross-Complaint for (1) Fraud, (2) Undue Influence, (3) Accounting, and (4) Declaratory Relief against Plaintiff/Cross-Defendant.
On January 3, 2024, this court sustained Plaintiff/Cross-Defendant’s demurrer to the cross-complaint, with leave to amend.
On January 19, 2024, Defendant Michael filed his verified Second Amended Cross-Complaint for (1) Constructive Fraud, (2) Accounting, and (3) Declaratory Relief against Plaintiff/Cross-Defendant.
Trial Date
Instant Pleading
Plaintiff/Cross-Defendant now demurs to the Second Amended Cross-Complaint, on the grounds that the court has no jurisdiction to hear these claims, and that the Cross-Complaint fails to state causes of action and is uncertain.
Decision
Plaintiff/Cross-Defendant’s Request for Judicial Notice (“RJN”) is GRANTED.
Defendant/Cross-Complainant’s RJN is DENIED. The opposing party’s complaint is not a proper subject for judicial notice.
The demurrer is SUSTAINED, without leave to amend.
First Cause of Action: Constructive Fraud
Constructive Fraud is not, perhaps, the most well-defined cause of action. The statute authorizing it, Civil Code § 1573, unmodified since first passage in 1872, provides as follows:
“CONSTRUCTIVE FRAUD. Constructive fraud consists:
1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him; or,
2. In any such act or omission as the law specially declares to be fraudulent, without respect to actual fraud.”
The elements of the claim have been reformulated by case law as: “(1) a fiduciary relationship, (2) nondisclosure, (3) intent to deceive, and (4) reliance and resulting injury.” Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1249-50. “Like an action for fraud, constructive fraud must be pled with specificity.” Id. at 1250.
The original version of the cross-complaint contained a single cause of action for rent skimming. This court sustained that demurrer because the statute which authorized the cause of action also limited the categories of people who could bring such a suit. Cross-Complainant was not in one of those permitted categories.
The First Amended Cross-Complaint contained multiple causes of action, one of which was fraud. This court sustained the demurrer to that cause of action on the grounds that Cross-Complainant Michael had not alleged a fraud perpetrated against him.
In response, Cross-Complainant Michael now brings a cause of action for constructive fraud, on the theory that Plaintiff/Cross-Defendant owed him a fiduciary duty because he is a part owner of the real property at issue in this case. (Second Amended Cross-Complaint ¶ 23). The law does not support that position.
Fiduciary duties are “technical, legal” creations, “recognized” and “imposed” by case law or assumed by express agreement. See Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 631-632 (citing cases). Cross-Complainant Michael cites no case which holds that there is a fiduciary duty between the co-owners of real property. Since there is no fiduciary relationship between the two, Cross-Complainant Michael cannot state a cause of action for constructive fraud.
Second Cause of Action: Accounting
“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. (Brea v. McGlashan (1934)
“The right to an accounting is derivative and depends on the validity of a plaintiff's underlying claims.” Duggal v. G.E. Capital Communications Services, Inc. (2000) 81 Cal.App.4th 81, 95.
This cause of action was asserted in First Amended Cross-Complaint. The court sustained the demurrer because Cross-Complainant Michael failed to plead any basis for an accounting other than his status as beneficiary of his mother’s trust. The court noted that actions for a trust accounting should be brought in the probate courts.
The present pleading suffers from precisely the same defects. There is no other viable cause of action, and Cross-Complainant Michael’s rights to a trust accounting (if any) must be enforced in the probate courts.
Third Cause of Action: Declaratory Relief
This cause of action was also asserted in First Amended Cross-Complaint. The court sustained the demurrer because Cross-Complainant Michael did not identify what he wanted the court to declare, or how he fell within the statutory requirements for such relief. That continues to be true here. There are no allegations at all which follow the heading for this claim; the pleading moves directly on to the prayer for relief.
Conclusion
Cross-Complainant Michael has not and cannot properly alleged a claim for constructive fraud. It has become clear that the wrongs Cross-Complainant Michael seeks to remedy arise out of the alleged maladministration of his mother’s trust by the trustee. While Cross-Complainant Michael’s concern for his mother is laudable, it does not give him a right to file a civil suit on her behalf. These issues should be pursued, if at all, before a probate court. There is no probability that Cross-Complainant Michael will be able to state a claim against Plaintiff/Cross-Defendant which is cognizable in this court. Therefore, the demurrer is SUSTAINED, without leave to amend.