Judge Christopher K. Lui, Case Number: 24STCV24230, Date: 2025-03-06 Tentative Ruling

Judge: Christopher K. Lui, Case: 24STCV24230, Date: 2025-03-06 Tentative Ruling

Case Number: 24STCV24230 Hearing Date: March 6, 2025 Dept: 76

Plaintiffs allege that Defendants have consistently told Plaintiff Dealership’s customers that Dealership fabricated their rodent damage claims, that it was attempting to defraud Mercury Insurance, that it was engaged in consistent illegal behavior, and that Dealership was ripping off its customers. Mercury, its agents and employees, and especially Shideh, contacted employees at Dealership and accused them of fabricating evidence, intentionally damaging customer vehicles to make insurance claims, and disparaging Dealership’s reputation.

Defendants Shahorkh Shideh and Shideh Engineering, Inc. demur to the First Amended Complaint.

TENTATIVE RULING

Defendants Shahorkh Shideh and Shideh Engineering, Inc.’s demurrer to the First Amended Complaint is OVERRULED as to the sixth and eighth causes of action, and SUSTAINED without leave to amend as to the second, ninth and tenth causes of action.

However, the demurrer to the entire First Amended Complaint on the ground of failure to file a certificate of merit is SUSTAINED with 30 days’ leave to amend.

ANALYSIS

Demurrer

Request For Judicial Notice

Defendants request that the Court take judicial notice of the following: Defendant SHIDEH ENGINEERING, INC.’s Mechanical Engineer Shahrokh Shideh’s Mechanical Engineering licensing details from California Board for Professional Engineers, Land Surveyor, and Geologists (License #26429). The request is GRANTED.

Pursuant to Evid. Code § 452(c), the Court may take judicial notice of official records of an administrative agency. (Ordlock v. Franchise Tax Bd. (2006) 38 Cal.4th 897, 912.)

Meet and Confer

The Declaration of Bayan Salehi does not reflect that Defendants’ counsel satisfied the meet and confer requirement after the First Amended Complaint was filed, as set required by Civ. Proc. Code, § 430.41(a). Nonetheless, the Court will proceed to address the demurrer on the merits.

Discussion

Defendants Shahorkh Shideh and Shideh Engineering, Inc. demur to the First Amended Complaint as follows:

1. Entire First Amended Complaint.

Defendants argue that Plaintiffs have failed to execute a certificate of merit under Civ. Proc. Code, § 411.35, which is necessary because Shideh is a licensed mechanical engineer and this action arises out of professional negligence. Such certificate must be filed before the complaint is served. (Civ. Proc. Code, § 411.35(a).)

Plaintiff argues that, on January 2, 2025, Plaintiffs filed the Certificate of Merit required under Code of Civ. Proc. § 411.35. (Chapman Decl., ¶ 10, Ex. A.) This was long after the First Amended Complaint was filed on September 19, 2024.

Civ. Proc. Code, § 411.35 provides in pertinent part:

(a) In every action, including a cross-complaint for damages or indemnity, arising out of the professional negligence of a person holding a valid architect’s certificate issued pursuant to Chapter 3 (commencing with Section 5500) of Division 3 of the Business and Professions Code, or of a person holding a valid registration as a professional engineer issued pursuant to Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code, or a person holding a valid land surveyor’s license issued pursuant to Chapter 15 (commencing with Section 8700) of Division 3 of the Business and Professions Code on or before the date of service of the complaint or cross-complaint on any defendant or cross-defendant, the attorney for the plaintiff or cross-complainant shall file and serve the certificate specified by subdivision (b).

. . .

(g) The failure to file a certificate in accordance with this section shall be grounds for a demurrer pursuant to Section 430.10 or a motion to strike pursuant to Section 435.

(Civ. Proc. Code, § 411.35 (a) & (g)[bold emphasis and underlining added].)

The applicable statute of limitations for professional negligence is two years (Civ. Proc. Code, § 339(1), and a plaintiff has an additional 60 days thereafter to file a certificate of merit. (Curtis Engineering Corp. v. Superior Court (2017)16 Cal. App. 5th 542, 549.) However, if the statute of limitations has not yet expired, the proper procedure where a plaintiff has not filed a certificate of merit prior to filing the operative complaint is to sustain a demurrer with leave to amend, to permit a plaintiff to do so.

Respondents argue that the only cure for Price’s failure to file a certificate before serving her original complaint was dismissal of the action without prejudice, followed by service of a new complaint after a properly filed [*360] certificate of merit. Nothing in the terms of section 411.35 suggests such a procedure. The statute does not provide that failure to file a certificate requires dismissal. It declares that failure to file a certificate is a ground for demurrer or motion to strike, both procedures in which leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question. (Citations omitted.)

In Strauch v. Superior Court (1980) 107 Cal. App. 3d 45, 49 [165 Cal. Rptr. 552], the court held that failure to comply with a parallel requirement for a certificate of merit formerly imposed in medical malpractice actions was “demurrable only and curable . . . by the filing of the certificate.” We do not agree that merely filing a belated certificate cures the defect, because the statute requires the certificate to be filed before the complaint is served. (§ 411.35, subd. (a); see also former § 411.30, subd. (a); Strauch v. Superior Court, supra, 107 Cal. App. 3d at p. 48, fn. 2.) However, by granting leave to file an amended complaint the court can give the plaintiff an opportunity to fully comply with the statutory requirements for filing a certificate of merit.

(Price v. Dames & Moore (2001) 92 Cal.App.4th 355, 359-60 [bold emphasis and underlining added].)

Here, the underlying inspections occurred in 2024. (1AC, ¶¶ 18 – 66.) As such, the 2 ½ year statute of limitations has not yet expired. The Certificate of Merit was filed and served on January 2, 2025. As such, while this ground for demurrer is successful, the appropriate course of action is to permit Plaintiff to file and serve a subsequent complaint to comply with Civ., Proc. Code, § 411.30(a).

As such, the demurrer to the entire First Amended Complaint is SUSTAINED with leave to amend.

The Court will proceed to address the other grounds for demurrer.

2. Second Cause of Action (Trade Libel).

Defendants argue that Shideh did not make any statements directly disparaging Plaintiff’s services to third parties. Instead, Shideh provided inspection reports to Mercury Insurance, which Mercury then provided to its insureds. Defendants argue that this indirect communication through an intermediary cannot support a claim for trade libel. Moreover, Defendants argue, the 1AC fails to allege any direct financial harm caused by reliance on those purported statements.

Trade libel is an intentional disparagement of the quality of services or product of a business that results in pecuniary damage to the plaintiff. (Citations omitted.) Like defamation, trade libel requires a false statement of fact, not an expression of an opinion. (Citations omitted.) To constitute trade libel the statement must be made with actual malice, that is, with knowledge it was false or with reckless disregard for whether it was true or false. (Citation omitted.) The plaintiff must also plead and prove it actually suffered some pecuniary loss. (Citation omitted.)

(J-M Manufacturing Co., Inc. v. Phillips & Cohen LLP (2016) 247 Cal. App. 4th 87, 97.)

Generally, however, publication to a person other than the person defamed suffices:

Defendant argues that plaintiff did not allege publication of these statements because plaintiff alleged only that the statements were made by one of defendant’s employees to other employees of defendant. This argument is without merit as publication occurs when a statement is communicated to any person other than the party defamed. (Citation omitted.)

(Kelly v. General Telephone Co. (1982) 136 Cal.App.3d 278, 284.)

Here, the 1AC alleges that the disparaging statements that Plaintiff damaged the insured’s vehicles were made to the insureds. (1AC, ¶¶ 103, 104.) Plaintiff alleges that these disparaging statements were not true and there was actually rodent damage to the subject vehicles. (Id., ¶ 105.) ¶ 106 alleges that Sandbekken and Shideh knew the statements were untrue but conveyed them to the insureds anyway.

However, Plaintiff does not plead special damages from the alleged trade libel, but rather that, as a result of Defendants’ false statements to Defendants’ insureds and the dealership’s customers, the dealership Plaintiff paid for necessary repairs to the subject vehicle. (Id. at ¶ 111.) This is not special damages incurred by Plaintiff, but rather a goodwill gesture towards its customers, which was voluntarily incurred.

While a cause of action for trade libel “‘resembles that for defamation … [it] differs from it materially in the greater burden of proof resting on the plaintiff, and the necessity for special damage in all cases. … [T]he plaintiff must prove in all cases that the publication has played a material and substantial part in inducing others not to deal with him, and that as a result he has suffered special damages.’” (Erlich v. Etner (1964) 224 Cal.App.2d 69, 73 [36 Cal. Rptr. 256] (Erlich).) At a minimum, a trade libel cause of action requires: “(1) a publication; (2) which induces others not to deal with plaintiff; and (3) special damages.” (Nichols v. Great American Ins. Companies (1985) 169 Cal.App.3d 766, 773 [215 Cal. Rptr. 416].)

Thus, unlike a claim for defamation, trade libel requires as an essential element that the plaintiff suffered direct financial harm because someone else acted in reliance on the defendant’s statement. (CACI No. 1731.) To establish this element, “‘is not enough to show a general decline in [plaintiff’s] business resulting from the falsehood, even where no other cause for it is apparent, … it is only the loss of specific sales that can be recovered. This means, in the usual case, that the plaintiff must identify the particular purchasers who have refrained from dealing with him, and specify the transactions of which he claims to have been deprived.’” (Erlich, supra, 224 Cal.App.2d at p. 73; see Mann v. Quality Old Time Service, Inc. (2006) 139 Cal.App.4th 328, 335–336 [42 Cal. Rptr. 3d 607] [plaintiff failed to establish probability of prevailing on trade libel claim in opposition to special motion to strike where plaintiff “did not present any evidence showing it had suffered a specific pecuniary loss as a result of the defendant’s communications”].)

Thus, the existence of a specific customer or business entity that refrained from dealing with plaintiff as a result of reliance on the Dupré Reports is an essential factual element of plaintiff’s cause of action for trade libel.

(Muddy Waters, LLC v. Superior Court (2021) 62 Cal. App.5th 905, 925 [bold emphasis added].)

Because Plaintiff voluntarily chose to appease its customers to avoid possible, but speculative, loss of future business, there are no damages caused by the alleged trade libel. The element of causation of damage is not sufficiently pled.

The demurrer to the second cause of action is SUSTAINED without leave to amend, unless Plaintiff can demonstrate a reasonable possibility of successful amendment.

3. Sixth Cause of Action (General Negligence).

Defendants argue that they did not owe Plaintiffs a duty of care because Shideh was retained by Mercury to provide professional services inspecting vehicles and giving expert opinions about the claims, and Plaintiffs were not intended third-party beneficiaries of this engagement by Mercury.

Here, because Plaintiffs allege economic harm resulting from Defendants’ alleged negligence, the Court must examine whether a special relationship exists so as to impose a duty of care owed toward Plaintiffs:

The four elements of a negligence claim are well established: (1) duty; (2) breach; (3) proximate causation; and (4) injury. (Brown v. USA Taekwondo (2021) 11 Cal.5th 204, 213 [276 Cal. Rptr. 3d 434, 483 P.3d 159] (Brown) [“To establish a cause of action for negligence, the plaintiff must show that the ‘defendant had a duty to use due care, that he breached that duty, and that the breach was the proximate or legal cause of the resulting injury.’”]; Kesner v. Superior Court (2016) 1 Cal.5th 1132, 1158 [210 Cal. Rptr. 3d 283, 384 P.3d 283]; Nally v. Grace Community Church (1988) 47 Cal.3d 278, 292 [253 Cal. Rptr. 97, 763 P.2d 948].) In moving for summary judgment, Chase argued the Law Firm could not establish three of the elements: duty, breach, and causation. We agree with the Law Firm that Chase owed the Law Firm a duty of care, and the Law Firm has created a triable issue of fact as to breach and causation.

1. Duty of care owed to third parties

“Whether a duty exists is a question of law to be resolved by the court.” (Brown, supra, 11 Cal.5th at p. 213; accord, Southern California Gas Leak Cases (2019) 7 Cal.5th 391, 398 [247 Cal. Rptr. 3d 632, 441 P.3d 881] [*193] (Gas Leak Cases).) The general rule governing duty of care is set forth in Civil Code section 1714. (Brown, at p. 213.) Civil Code section 1714, subdivision (a), provides, “Everyone is responsible, not only for the result of his or her willful acts, but also for an injury occasioned to another by his or her want of ordinary care or skill in the management of his or her property or person … .” Under this provision, “[i]n general, each person has a duty to act with reasonable care under the circumstances.” (Regents, supra, 4 Cal.5th at p. 619; accord, Gas Leak Cases, at p. 398 [“In California, the ‘general rule’ is that people owe a duty of care to avoid causing harm to others and that they are thus usually liable for injuries their negligence inflicts.”].)

However, “[d]uty is not universal; not every defendant owes every plaintiff a duty of care. A duty exists only if ‘“the plaintiff’s interests are entitled to legal protection against the defendant’s conduct.”‘” (Brown, supra, 11 Cal.5th at p. 213; accord, Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 920 [290 Cal. Rptr. 3d 834, 505 P.3d 625] (Sheen).) For example, “[t]he law does not impose the same duty on a defendant who did not contribute to the risk that the plaintiff would suffer the harm alleged.” (Brown, at p. 214.)

A significant exception to the general duty of care under Civil Code section 1714 applies where the defendant causes only economic loss, commonly called the “economic loss rule.” (Sheen, supra, 12 Cal.5th at p. 922 [“The [economic loss rule] is deceptively easy to state: In general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.”]; see Gas Leak Cases, supra, 7 Cal.5th at p. 406 [liability in negligence for “purely economic losses” is “the exception, not the rule”].)

This case presents such a situation—the Law Firm alleges it suffered solely an economic loss as a result of Chase’s negligence in releasing all the funds in the blocked account to Brumfield. Although the economic loss rule is therefore implicated, there is an exception to the rule’s limitation on liability where the plaintiff and defendant have a special relationship and policy considerations support finding a duty. (Gas Leak Cases, supra, 7 Cal.5th at p. 400; J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804 [157 Cal. Rptr. 407, 598 P.2d 60] (J’Aire).) As the Supreme Court explained in Gas Leak Cases, “The primary exception to the general rule of no recovery for negligently inflicted purely economic losses is where the plaintiff and the defendant have a ‘special relationship.’ [Citation.] What we mean by special relationship is that the plaintiff was an intended beneficiary of a particular transaction but was harmed by the defendant’s negligence in carrying it out.” (Gas Leak Cases, at p. 400.)

. . . [*194] . . .

The Supreme Court in Biakanja, supra, 49 Cal.2d at page 650 explained “[t]he determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors … .” The court considered six factors typically described as the Biakanja factors: (1) the extent to which the transaction was intended to affect the plaintiff; (2) the foreseeability of harm to the plaintiff; (3) the degree of certainty that the plaintiff suffered injury; (4) the closeness of the connection between the defendant’s conduct and the injury suffered; (5) the moral blame attached to the defendant’s conduct; and (6) the policy of preventing future harm. (Ibid.; see Gas Leak Cases, supra, 7 Cal.5th at p. 401 [“Discerning whether there is a special relationship justifying liability [for purely economic loss by a third party] can nonetheless be a [*195] subtle enterprise” involving balancing of the Biakanja factors]; J’Aire, supra, 24 Cal.3d at p. 804 [applying Biakanja factors to find duty of care owed to third party lessee]; Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th 568, 578 [173 Cal. Rptr. 3d 752, 327 P.3d 850] [“Biakanja set forth a list of factors that inform whether a duty of care exists between a plaintiff and defendant in the absence of privity.”].)

The Supreme Court in J’Aire, supra, 24 Cal.3d at page 806 emphasized that a “key component” in this analysis is the foreseeability of the harm. However, as the Supreme Court explained in Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 398 [11 Cal. Rptr. 2d 51, 834 P.2d 745] (Bily), even where the economic loss is foreseeable, the court has considered factors in addition to those in Biakanja in declining to impose a duty of care, for example, where “damage awards threatened to impose liability out of proportion to fault or to promote virtually unlimited responsibility for intangible injury.” Rather, “[d]eciding whether to impose a duty of care turns on a careful consideration of the ‘“‘“the sum total”‘”‘ of the policy considerations at play, not a mere tallying of some finite, one-size-fits-all set of factors.” (Gas Leak Cases, supra, 7 Cal.5th at p. 401; see Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 841 [243 Cal. Rptr. 3d 299, 434 P.3d 124] [declining to impose on third party payroll company a duty of care to employee of hiring business after “[c]onsidering the ‘“sum total”‘ of the relevant considerations of policy”]; Lucas v. Hamm (1961) 56 Cal.2d 583, 589 [15 Cal. Rptr. 821, 364 P.2d 685] [“Since defendant was authorized to practice the profession of an attorney, we must consider an additional factor not present in Biakanja, namely, whether the recognition of liability to beneficiaries of wills negligently drawn by attorneys would impose an undue burden on the profession.”].)

(The Law Firm of Fox & Fox v. Chase Bank, N.A. (2023) 95 Cal. App. 5th 182, 192-195.)

The Court addresses the Biakanja factors:

(1) The extent to which the transaction was intended to affect the plaintiff;

Given that Defendant Shideh of SEI was sent by Mercury to respond to insurance claims (see, e.g., 1AC, ¶ 20), there is an implied contractual relationship between Defendants and Mercury, not the dealership Plaintiffs. As such, the transaction was not intended to affect the Plaintiffs.

This factor weighs against a finding of duty.

(2) The foreseeability of harm to the plaintiff;

As the Supreme Court explained in Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 398 [11 Cal. Rptr. 2d 51, 834 P.2d 745] (Bily), even where the economic loss is foreseeable, the court has considered factors in addition to those in Biakanja in declining to impose a duty of care, for example, where “damage awards threatened to impose liability out of proportion to fault or to promote virtually unlimited responsibility for intangible injury.” Rather, “[d]eciding whether to impose a duty of care turns on a careful consideration of the ‘“‘“the sum total”‘”‘ of the policy considerations at play, not a mere tallying of some finite, one-size-fits-all set of factors.”

Here, it is foreseeable that negligent performance of inspections would affect the Plaintiffs. Because Plaintiff was the only foreseeable plaintiff, there is not risk to imposing liability out of proportion to fault or virtually unlimited responsibility for intangible injury.

However:

The California Supreme Court gave limited weight to the foreseeability factor in determining whether a duty existed in Bily, supra, 3 Cal.4th 370, 398: “ Foreseeability of injury, however, is but one factor to be considered in the imposition of negligence liability. Even when foreseeability was present, we have on several recent occasions declined to allow recovery on a negligence theory when damage awards threatened to impose liability out of proportion to fault or to promote virtually unlimited responsibility for intangible injury.” The Bily court stated, “[e]mphasizing the important role of policy factors in determining negligence, we observed that ‘there are clear judicial days on which a court can foresee forever and thus determine liability but none on which that foresight alone provides a socially and judicially acceptable limit on recovery of damages for [an] injury.’ “ ( Id. at p. 399.)

Here, the Weseloh plaintiffs sought property damages in addition to economic damages. We recognize Bily, supra, 3 Cal.4th 370, 379 involved [*168] only economic damages, and we read Bily in that context. However, we too “will not treat the mere presence of a foreseeable risk of injury to third persons as sufficient, standing alone, to impose liability for negligent conduct. We must consider other pertinent factors.” ( Id. at p. 399.)

(Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc. (2004) 125 Cal.App.4th 152, 167-68 [bold emphasis and underlining added].)

Overall, this factor favors a finding of duty.

(3) The degree of certainty that the plaintiff suffered injury;

Plaintiffs’ reputation could certainly been damaged from being accused of insurance fraud, but economic loss may not be certain unless potential customers testify that they learned of the alleged insurance fraud and decided not to do business with Plaintiffs. As discussed above,

This factor is neutral.

(4) The closeness of the connection between the defendant’s conduct and the injury suffered;

Again, being accused of insurance fraud is closely connected to reputational damage, but economic loss flowing therefrom may be attenuated unless there is direct testimony of potential customers deciding not to do business with Plaintiffs because of the reputation for committing insurance fraud. As discussed above re: the second cause of action, Plaintiff does not plead an actual loss of business due to Defendants’ alleged negligence, because Plaintiff paid for the customer’s repairs to preserve goodwill.

This factor weighs slightly against a finding of duty.

(5) The moral blame attached to the defendant’s conduct;

If Plaintiffs’ allegations of false accusations are proven, there is some moral blame attached to Defendants’ conduct in deliberating misrepresenting the nature of the damage as man-made when there is overwhelming evidence of rodent damage.

This factor favors a finding of duty.

(6) The policy of preventing future harm.

The policy of preventing future harm in the context of investigating insurance claims slightly weighs in favor of finding a duty, because dishonest claim investigations may lead to wrongful denial of valid insurance claims. In the present insurance climate, wrongful denial of claims by insurance companies is of paramount concern.

This factor slightly weighs against a finding of duty.

Conclusion

In light of the foregoing, the Court finds that Defendants owed a duty to Plaintiffs in performing the inspections.

The demurrer to the sixth cause of action is OVERRULED.

4. Eighth Cause of Action (Professional Negligence).

The elements of a cause of action for professional negligence are (1) the existence of the duty of the professional to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) breach of that duty; (3) a causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional negligence. (Ibid.)

(Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Defendants relied upon their absence of duty arguments above re: the sixth cause of action to support the demurrer to the eighth cause of action. For the reasons discussed above, the Court finds the existence of a duty.

The demurrer to the eighth cause of action is OVERRULED.

5. Ninth Cause of Action (Intentional Misrepresentation) and Tenth Cause of Action (Negligent Misrepresentation).

Defendants argue that Plaintiffs do not plead direct misrepresentations to Plaintiff upon which Plaintiffs relied, and any such reliance would be unjustified, as the dealership knew Shideh was retained by and representing Mercury’s interests in a claims process.

“To establish a claim for deceit based on intentional misrepresentation, the plaintiff must prove seven essential elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff’s reliance on the defendant’s representation was a substantial factor in causing that harm to the plaintiff. (Citations omitted.)” (Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498 [italics omitted].)

“The elements of negligent misrepresentation are ‘(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’ (Citation omitted.)” (National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50.)

“ ‘[A]ctual reliance occurs when a misrepresentation is “ ‘an immediate cause of [a plaintiff’s] conduct, which alters his legal relations,’ “ and [*1063] when, absent such representation,’ the plaintiff” “would not, in all reasonable probability, have entered into the contract or other transaction.” ‘ “ (Hall v. Time Inc. (2008) 158 Cal.App.4th 847, 855, fn. 2 [70 Cal. Rptr. 3d 466].) To allege actual reliance with the requisite specificity, “[t]he plaintiff must plead that he believed the representations to be true … and that in reliance thereon (or induced thereby) he entered into the transaction. [Citation.]” (Younan, supra, 111 Cal.App.3d at p. 513.)

(Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062-63 [bold emphasis added].)

Here, the 1AC does not allege that Defendants made representations upon which Plaintiffs relied because they believed Defendants’ representations were true. To the contract, Plaintiffs allege that they believed Defendants’ representations were false. Plaintiffs’ fraud-based causes of action fail as against these Defendants.

The demurrer to the ninth and tenth causes of action is SUSTAINED without leave to amend.