Judge: Colin Leis, Case: 22STCV35653, Date: 2024-11-15 Tentative Ruling

Case Number: 22STCV35653    Hearing Date: November 15, 2024    Dept: 74

Wizmann v. Izek Shomof et al.

Defendants Izek Shomof, Aline Shomof and Aline Shomof as Trustee’s Demurrer.

BACKGROUND 

            On November 10, 2022, plaintiff Patrick Wizmann (Plaintiff) filed a complaint alleging contractual fraud relating to two properties, the Wheatland Property and the Nichols Property.

            On July 26, 2024, Plaintiff filed the operative Third Amended Complaint (TAC) against defendants Izek Shomof (Izek), Aline Shomof (Aline), Aline Shomof as Trustee (Trustee), Eric Shomof (Eric), Jonathan Shomof (Jonathan), Jimmy Shomof (Jimmy), Shadow Hills Homes, LLC (SHH), Grand Pacific 7-28, LLC (GP), Roberto Saldaña (Saldaña), Diony Rebuta (Rebuta) and Does 1-100 (collectively Defendants).  

            Plaintiff alleges eight causes of action, three related to the “Wheatland Property” (1) Fraud, (2) Negligent Misrepresentation and (3) Breach of Contract, four related to the “Nichols Property” (4) Fraud, (5) Negligent Misrepresentation, (6) Breach of Contract and (7) Common Court for Goods and Services Rendered and one general cause for (8) Defamation. Defendants demur to the First, Second, Third, Fourth, Fifth and Sixth Causes of Action in the Third Amended Complaint.

JUDICIAL NOTICE
Granted.

DISCUSSION

            Defendants demur to the TAC on the grounds that it fails to state facts sufficient to constitute a cause of action against Aline, Trustee, Jonathan, Jimmy (the Shomof Defendants), SHH and GP.  Additionally, Defendants demur to the third cause of action that it fails to allege whether the contract is written, oral, or implied by conduct.

Wheatland Property

Plaintiff alleges that Izek and Plaintiff entered into a business agreement, including several Conditions.  (TAC, ¶ 26.)  Roberto Saldaña and Izek represented that Saldaña would be representing both Izek and Plaintiff in the deal.  (TAC, ¶¶ 29, 30.)  Plaintiff was presented the Purchase and Sale Agreement (Wheatland PSA) and given very little time to read and review the document.  (TAC, ¶ 32.)  Based on representations and assurances made by Saldaña and Izek, Plaintiff executed the Wheatland PSA, believing that it included the requirement that Izek pay for and perform the Conditions.  (TAC, ¶ 33.)  In fact, however, the Wheatland PSA did not contain the Conditions.

            Fraud – First Cause of Action

The elements of fraud are (1) misrepresentation (false representation, concealment or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage.  (Conroy v. Regents of Univ. of Cal. (2009) 45 Cal.4th 1244, 1255.)  Additionally, fraud must be pleaded with particularity, specifically, showing “how, when, where, to whom, and by what means that representations were tendered.”  (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)  A plaintiff need not, however, specifically plead how, when, to whom, and by what means when alleging fraudulent concealment.  (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)  Nevertheless, allegations that the defendants concealed information and the plaintiff relied on the allegations are insufficient without a duty to disclose the information.  (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 132.)

Defendants argue that Plaintiff fails to satisfy the specificity required for defendants other than Izek and Saldaña.

Plaintiff alleges that (1) Izak and Saldaña represented that the Wheatland PSA contained the Conditions that Plaintiff and Izak had verbally agreed to and gave him very little time to review the PSA.  (TAC, ¶ 33.)  Additionally, SHH and GP knew about the Conditions because Izek controls both entities and the Shomof defendants knew about the conditions because they are close family members and business partners.  (TAC, ¶¶ 27, 28.) Finally, Diony Rebuta knew about the conditions as a long-term employee and account manager for Izek’s real estate company.  (TAC ¶ 28.)  Plaintiff also alleges that Izek, Saldaña, GP, SHH, and the Shomof Defendants were all aware that the Wheatland PSA did not contain the Conditions.  (TAC, ¶ 36.)  Plaintiff also alleges that the parties met at various times to discuss the Wheatland Property.  (TAC, ¶ 28.)

 This sufficiently alleges that all defendants had knowledge of the falsity.

Plaintiff then alleges that each defendant specifically intended to conceal the fact that the PSA did not contain the Conditions.  (TAC, ¶ 37.)  Plaintiff does not allege that any defendants, except Izek and Saldaña owed him a duty to disclose. Thus, Plaintiff fail to state a cause of action for concealment against Aline, Trustee, Jonathan, Jimmy, SHH, and GP.

Additionally, Plaintiff alleges that Izek and the Shomof Defendants assured Plaintiff that they would comply with the Conditions notwithstanding their omission, but they never intended to.  (TAC, ¶ 39.)  This allegation successfully pleads that the Shomof Defendants engaged in misrepresentation.  Plaintiff still fails to plead that he justifiably relied on these misrepresentations after the Wheatland PSA was signed, or that there was additional damage from the failure to comply with the conditions.  Rather, Plaintiff alleges that these assurances occurred after Izek had already failed to comply with many of the Conditions and that failure to perform was commonplace for Izek.  (TAC, ¶¶ 39, 40.)

Therefore, Defendants demurrer to the first cause of action to all defendants except Izek and Saldaña is sustained.

Negligent Misrepresentation – Second Cause of Action

The elements of negligent misrepresentation are (1) assertion of an untrue fact; (2) believed by defendant to be true; (3) lack of reasonable ground for the belief; (4) defendant’s intent to induce plaintiff’s reliance upon the representation; (5) plaintiff’s justifiable reliance upon the representation; and (6) resulting damage.  (Melican v. Regents of Univ. of Cal. (2007) 151 Cal.App.4th 168, 182.)  A negligent misrepresentation claim must be specifically pleaded as to the causal elements, particularly reliance.  (National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50.)  The tort of negligent misrepresentation extends only to affirmative statements or positive assertions.  (Wilson v. Century 21 Great Western Realty (1993) 15 Cal.App.4th 298, 306.)

Defendants demur on the bases that the second cause of action fails to state a cause of action against all defendants except Izek and Roberto.

Plaintiff alleges that Diony, SHH, GP and the Shomof Defendants, concealed the lack of Conditions in the Wheatland PSA, not any specific assertions made by the defendants.  (TAC, ¶ 46.)  Thus, Plaintiff fails to state a cause of action against Aline, Trustee, Jonathan, Jimmy, SHH, and GP.

Therefore, Defendants demurer to the second cause of action to all defendants except Izek and Saldaña is sustained.

Breach of Contract – Third Cause of Action

The elements of breach of contract are (1) existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) resulting damage.  (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Defendants demur on the basis that Plaintiff fails to state a claim because he fails to allege that defendants SHH, GP, and the Shomof Defendants were parties to the contract and that Plaintiff fails to allege the contract was written or oral. 

As a preliminary matter, Plaintiff alleges that the contract at issue is the written contract formed by the Wheatland PSA, which is referred to as “a very large stack of documents” that Plaintiff signed and initialed.  (TAC, ¶ 31.)  In addition, Plaintiff refers to the Conditions, which can be inferred that they were made via oral agreement.  (TAC, ¶¶ 25, 26.)  Therefore, Plaintiff sufficiently identifies the contract as oral or written. 

Plaintiff alleges that he entered a written and oral contract with Izek. As part of this contract, Plaintiff believed the oral contract to perform the Conditions was included.  (FAC, ¶¶ 33, 49.)   Plaintiff does not allege any other defendants were parties to the contract.  Thus, Plaintiff fails to state a cause of action against Aline, Trustee, Jonathan, Jimmy, SHH, and GP.

Therefore, Defendants demurrer to the third cause of action to all defendants except Izek and Roberto is sustained.

Nichols Property

Plaintiff alleges that Izek and Plaintiff entered an oral contract for the title of the Nichols Property.  (TAC, ¶ 72.)  Izek and Plaintiff agreed that Izek would make the equity investment and pay for the improvement costs while Plaintiff would oversee the acquisition and renovation work for a 50/50 split of the profits upon sale.  (TAC, ¶ 57.)  Prior to opening escrow, Izek required that Plaintiff partner with the Shomof Trust, and that Izek would only provide financial backing with an interest rate.  (TAC, ¶ 60.)  Plaintiff still performed his portion of the agreement.  (TAC, ¶ 62.)  The property was sold for $3,350,000 and Plaintiff was paid $153,000.  (TAC, ¶ 62.)

Fraud and Negligent Misrepresentation – Fourth and Fifth Cause of Action

            Plaintiff alleges fraudulent misrepresentation and negligent misrepresentation.  The elements of fraud, including fraudulent misrepresentation are above.  When alleging fraudulent misrepresentation, Plaintiff must allege facts as to “how, when, where, to whom and by what means the representations were tendered.”  (Stansfield, supra, 220 Cal.App.3d at 73.) 

Defendants argue that Plaintiff fails to meet the specificity required in pleading a cause of action against all defendants except Izek and Saldaña.

Plaintiff alleges that Izek and Plaintiff entered into a verbal agreement and that the other defendants were aware of this agreement.  (TAC, ¶ 27.)  Plaintiff alleges that Aline, Jonathan and Jimmy all encouraged Plaintiff to make the deal.  (TAC, ¶ 57.)   Plaintiff does not allege any factual misrepresentations made SHH, GP or the Shomof Defendants.  Thus, Plaintiff fails to allege either a fraudulent or negligent representation cause of action.

Therefore, Defendants’ demurrer to the fourth and fifth cause of action to all defendants except Izek and Saldaña is sustained.

            Breach of Oral Contract – Sixth Cause of Action

As above, Plaintiff alleges that Izek and Plaintiff entered an oral contract.  (TAC, ¶ 73.)  Plaintiff does not allege that any other defendants were a party to the contract. Thus, Plaintiff fails to state a cause of action against Aline, Trustee, Jonathan, Jimmy, SHH, and GP.

Therefore, Defendants’ demurrer to the sixth cause of action to all defendants except Izek and Saldaña is sustained.

Leave to Amend

            Leave to amend should be liberally granted. Defendants allege that leave to amend would be futile but it is not clear by the nature of the defect that Plaintiff could not state a cause of action.  Therefore, the Court grants leave to amend.

CONCLUSION

            The court sustains Defendants’ demurrer to the first, second, third, fourth, fifth and sixth cause of action to defendants Aline Shomof, Aline Shomof as Trustee, Jonathan Shomof, Jimmy Shomof, Sara Shomof, Shadow Hills Homes, LLC, and Grand Pacific 7-28 with leave to amend.           

            Defendants to give notice.