Judge: Christian R. Gullon, Case: 22PSCV00627, Date: 2023-06-29 Tentative Ruling

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Case Number: 22PSCV00627    Hearing Date: September 25, 2023    Dept: O

Tentative Ruling

(1)   Defendants CAPITALIST MASTERS GROUP’s and MANUEL MARQUEZ’s DEMURRER to the SAC is SUSTAINED without leave to amend.

(2)   DEFENDANTS’ MOTION TO STRIKE PLAINTIFF’S COMPLAINT is DENIED/MOOT as the case is dismissed. [See fn. 2]

Background

This case involves real property. Plaintiff Martha Ismelda Morales (“Plaintiff”) alleges the following against Defendants: In May 2019, Plaintiff sought the help of Defendant Marquez, the principal of CMG,[1] to transfer the subject property from her uncle to Plaintiff. After making payments, Plaintiff was shocked to learn that the entire loan balance was due.

On June 23, 2022, Plaintiff filed suit against Defendants for:

1. Violation Of Business And Professions Code ¶ 17500;

2. Breach Of Implied Covenant Of Good Faith And Fair Dealing;

3. Promissory Estoppel;

4. Fraud;

5. Breach Of Contract;

6. Temporary Restraining Order, Preliminary Injunction; And

7. Declaratory And Injunctive Relief.

On October 31, 2022, Defendants filed a demurrer to the original complaint, which the court sustained with leave to amend (the demurrer was unopposed).

On January 17, 2023, Plaintiff filed a FAC, adding a COA for intentional infliction of emotional distress (“IIED”).

On June 2, 2023, Defendants filed a demurrer to the FAC, which the court again sustained with leave to amend (which was again unopposed).

On July 21, 2023, Plaintiff filed a SAC.[2]

On August 21, 2023, Defendants filed the instant demurrer to the SAC.[3]

On September 14, 2023, Plaintiff filed her opposition.

On September 14, 2023, Defendants filed their Reply.

Legal Standard

A demurrer may be made on the grounds that, inter alia, the pleading does not state facts sufficient to constitute a cause of action and/or that the pleading is uncertain. (Code Civ. Proc., § 430.10, subds. (e)-(g).) When considering demurrers, courts read the allegations liberally and in context. At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.)

Discussion

On the two previous demurrers, Defendants demurred on the grounds that the complaint is uncertain, vague, and unintelligible, and it cannot be ascertained if the contract(s) on which the complaint rests are written, or, or implied in conduct. The court agreed that a contract was insufficiently pled because Plaintiff alleged “that there may be a purchase agreement, promissory note, or “other loan documents” but “Defendants were left none the wiser which of the said ‘agreements’ were violated, by whom, when, and whether the ‘agreement’ that was allegedly breached by Defendants was oral, written, or implied in conduct in violation of Code Civ. Proc. § 430.10.” (See December 6, 2022 Tentative Ruling.) As for the demurrer to the FAC, it was again sustained because Plaintiff again conclusively alleged that Defendants breached an agreement (that was notably blank pages)[4] without adequately pleading the terms of the agreement/contract.

Now, despite three opportunities to cure the defects (i.e., allege terms of an agreement), the SAC is again insufficiently pled.

The SAC alleges, inter alia, the following:

-        In May 2019, Plaintiff sought the professional assistance of Defendants to transfer the subject property from Plaintiff’s uncle to Plaintiff to qualify for refinancing of the property (SAC ¶10)

-        Instead of refinancing, Defendants offered to lend Plaintiff and her uncle $23,621.24 to bring their loan current. “The loan would be paid in June 2020, with $6,348.76 in interest, for a total of $29,970, and was secured by the Subject Property.” (SAC ¶11)

-        In May 2020, Plaintiffs “returned to Defendants for help” because they were unable to obtain refinancing loan. (SAC ¶13). Defendants agreed to transfer the property and refinance the loan. (SAC ¶15). Arbitrarily, Defendants included Barajas, a family friend of Plaintiff, as a coborrower and increased the loan amount without consent from $223,000 (the principal plus the $29,970) to $265,374. Defendants “pressured” Plaintiff, her uncle, and Barajas to signing the agreements without explaining the terms. (SAC ¶16)

-        Plaintiff and Mr. Fuentes never received a copy of the purchase agreement or the promissory note. (SAC ¶18)

-        Plaintiff made all payments until Defendants returned her last check in May 2022. (SAC ¶24)

-        Defendants allege that they gave Plaintiff, and her family a one-year bridge loan with a balloon payment. Plaintiff became aware of this via a May 7, 2021, letter from Defendants’ attorney demanding the balloon payment pursuant to a promissory note that was not attached and which is unknown to Plaintiff. (SAC ¶28).

Again, as with the original complaint and FAC, Plaintiff’s SAC has failed to meet the pleading standard on a demurrer. To assert a cause of action for an alleged breach of a written contract, “the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Demurrer p. 5, citing Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307. Here, neither are the specific terms laid out verbatim nor a copy of the written agreement.  

What is more, despite unclarity as to what contract was breached (purchase agreement or promissory note) and how the purported contract was breached, the SAC suffers from another defect: contradictory allegations. While Plaintiff alleges that Defendants breached the agreement as they “failed to refinance the loan, and instead performed a sale of property,” (SAC ¶50) Exhibit D [escrow agreement] attached to the SAC indicates that the property was transferred to Plaintiff by her uncle and a loan was given.[5] Effectively, Plaintiff received what she asked for: a loan (secured by the property) and transfer of title (from Plaintiff’s uncle to Plaintiff). (See also Demurrer p. 5.) Thus, it appears that Plaintiff breached the agreement, not Defendants, by failing to make the balloon payment.

To the extent that Plaintiff predicates the lawsuit upon Defendants not mentioning a term of the agreement was a balloon payment, one who signs an instrument is deemed to assent to its terms. (Marin Storage & Trucking, Inc. v. Benco Contracting and Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049 [“Every contract requires mutual assent or consent [citation omitted] and ordinarily one who signs an instrument which on its face is a contract is deemed to assent to all its terms. A party cannot avoid the terms of a contract on the ground that he or she failed to read it before signing.”].) Thus, under this general rule, Plaintiff would be deemed to have assented to a loan agreement when she signed the agreement.

To the extent that Plaintiff was to argue that she could not read the terms because she was pressured to quickly sign the agreement (i.e., suggesting unconscionability), the SAC contradicts that argument because Plaintiff has specifically pled some details of the agreement. (See SAC ¶¶15-17 [details such as a request for $15,000 in cash for loan expenses, adjusting the sale price to $223,000 and alleging Defendants added $30,030.72 in seller credit repair to the seller’s closing statement]. Thus, if Defendants never explained anything nor provided any documentation and left Plaintiffs “in the dark” regarding the terms of the loan (SAC ¶¶19, 27, 29), it is unclear how Plaintiff knew any of this information.

In sum, the SAC fails to allege the terms of the contract and how Defendants allegedly breached such a loan agreement. As such, despite a third opportunity to provide such basic facts, the court presumes such necessary facts do not exist. (See Melikian v. Truck Ins. Exchange (1955) 133 Cal.App.2d 113, 115 [“[P]resumptions are always against the pleader, and all doubts are to be resolved against him, for it is to be presumed that he stated his case as favorably as possible to himself (citations); if a fact necessary to the pleader's cause of action is not alleged it must be taken as having no existence.”].) As the entire action is predicated upon a purported loan agreement (and/or Defendants’ alleged statements made in regard thereto), but Plaintiff has not sufficiently alleged the requisite ultimate facts, all the causes of action fail.

As for leave to amend, Plaintiff has received numerous opportunities to cure the defects. And despite filing an opposition, it is completely devoid an analysis, essentially amounting to an unopposed demurrer. Thus, Plaintiff’s failure to cure defects and refute Defendants’ arguments suggest that the opportunity to file a third amended complaint would be futile and expend unnecessary judicial resources, including additional time and cost for Defendants.

Conclusion

Based on the foregoing, the demurrer is sustained WITHOUT leave to amend and the motion to strike is moot/denied.