Judge: Craig Griffin, Case: "Sarm Five Points Plaza, LLC v. Zia et al", Date: 2023-06-12 Tentative Ruling

Before the Court are a Demurrer and a Motion to Strike, filed on 2/16/23 by Cross-Defendants Lanick Realty Services, Inc. (“Lanick”) and Julie Fletcher (“Fletcher”) (collectively here, as moving parties, “MPs”), as to the Cross-Complaint (“XC”) filed by Defendant/Cross-Complainant Wahidullah Zia (“Zia”) on 1/14/22. 

I.           The Demurrer

The Demurrer is directed to the First, Second, and Fifth through Tenth Causes of Action (each a “COA”) in the XC, as asserted against Lanick, and as to COAs 6-9, as to both MPs.

The Demurrer is SUSTAINED as to COAs 7-9, with 15 days leave to amend from the date of service of notice of this ruling, but otherwise OVERRULED.

For COAs 8 and 9, the claims are not pled with adequate specificity. For fraud claims, every element must be alleged in full, factually and specifically. The policy of liberal construction of pleading will not be invoked to sustain a pleading defective in any material respect. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)  The particularity requirement necessitates pleading facts that show how, when, where, to whom, and by what means the representations were tendered. In addition, when fraud is alleged against a corporation, the complaint must also allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App. 4th 153, 157; Lazar v. Sup. Court (1996) 12 Cal.4th 631, 645.)

Here, COAs 8 and 9 lack the requisite specificity. Each makes a general assertion that MPs made representations “that the new lease agreement would be in Cross-Defendant ANAND and DAKSHABEN’s name” (XC ¶ 72) or “that the new lease agreement would be in Cross-Defendant ANAND’s name” (XC ¶80), and in each, that “Cross-Complainant’s name would no longer be associated with the lease.” The general allegations also include a similar statement at ¶ 15.  But the XC fails to identify who spoke, what specifically was said, where and when it was said, and whether the alleged representations were made in a writing, or orally. The Demurrer as to COAs 8 and 9 is therefore SUSTAINED.

For COA 7, the XC fails to adequately state either the terms of the alleged agreement or to attach it, or to state whether it was oral or written or implied by conduct. And while it is possible to instead plead the legal effect or substance of the contract’s material terms, the XC has failed to adequately do so here. It fails to adequately identify who the parties to the agreement were, and what was specifically agreed. The Demurrer as to COA 7 is therefore SUSTAINED.

For COA 6, MPs assert that the Economic Loss Rule (“ELR”) necessarily bars the claim.  But not all tort claims for monetary losses between contractual parties are barred by the ELR: such claims are barred when they arise from or are not independent of the parties’ underlying contracts.  (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922-924; see also Erlich v. Menezes (1999) 21 Cal.4th 543, 551-552.)  Here, COA 6 appears to be based on a fiduciary duty rather than any contract terms. (XC ¶¶ 62-63.)  It is thus not clear from what has been alleged here that the ELR necessarily bars the claim. The Demurrer as to COA 6 is therefore OVERRULED.

For the claims against Lanick, it appears that the entity did not exist when the events at issue occurred. But MPs have not shown that alter-ego liability can never attach to an entity formed after the alleged wrongdoing occurred. The Demurrer as to the claims against Lanick is therefore OVERRULED.

The Requests for Judicial Notice are GRANTED under Ev. Code §452(c), as to the existence of the records, but not as to the truth of any disputed facts asserted therein. (Fontenot v. Wells Fargo Bank, NA (2011) 198 Cal.App.4th 256, 264; Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)

II.         The Motion to Strike

The Motion to Strike is DENIED.  For pleading purposes on an alter-ego claim, it is sufficient to allege only “ultimate rather than evidentiary facts.” (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236.)  With regard to the punitive damages allegations, as the Court here has sustained on COAs 8 and 9 with leave to amend, this Motion is premature.

Counsel for MPs is to give notice of these rulings.