Judge Cynthia A Freeland, Case Number: 37-2023-00010188-CU-FR-NC, Date: 2024-06-07 Tentative Ruling

Judge: Cynthia A Freeland, Case: 37-2023-00010188-CU-FR-NC, Date: 2024-06-07 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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SOUTH BUILDING TENTATIVE RULINGS - June 06, 2024

06/07/2024 01:30:00 PM N-27 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Cynthia A. Freeland

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Civil - Unlimited Fraud Demurrer / Motion to Strike 37-2023-00010188-CU-FR-NC HOWARD VS. GOTTUSO [IMAGED] CAUSAL DOCUMENT/DATE FILED: Notice of Motion and Supporting Declarations, 02/15/2024

Plaintiff/Cross-Defendant Randall Howard ('Cross-Defendant')'s demurrer to Defendant/Cross-Complainant Nicholas Gottuso ('Cross-Complainant')'s Cross-Complaint is sustained.

A demurrer tests the legal sufficiency of a pleading. See McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1469. When reviewing a demurrer, the court 'give[s] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.' Blank v. Kirwan (1985) 39 Cal. 3d 311, 318. The court 'treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law.' Durell v. Sharp Healthcare (2010) 183 Cal. App. 4th 1350, 1358. The court's analysis is limited to the complaint, exhibits attached to the complaint and incorporated by reference, and matters properly subject to judicial notice. See Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal. App. 4th 659, 665; Thorburn v. Department of Corrections (1998) 66 Cal. App. 4th 1284, 1287-1288; Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.

Initially, to the extent Cross-Defendant demurs to the first and second causes of action on the grounds of uncertainty, the demurrer is overruled as Cross-Defendant has failed to demonstrate that those causes of action are so incomprehensible that he cannot reasonably respond. See Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal. App. 4th 1125, 1135. To the extent Cross-Defendant believes that the Cross-Complaint is in any way ambiguous, such ambiguities can be clarified during discovery. See Khoury v. Maly's of California, Inc. (1993) 14 Cal. App. 4th 612, 616. The court will now address each subject cause of action in turn.

The demurrer to the first cause of action for breach of contract is sustained. 'The elements of a breach of oral contract are the same as those for a breach of written contract: a contract; its performance or excuse for nonperformance; breach; and damages.' Stockton Mortgage, Inc. v. Tope (2014) 233 Cal. App. 4th 437, 453 (citing Careau & Co. v. Security Pacific Business Credit. Inc. (1990) 222 Cal. App. 3d 1371, 1388).

The court finds that the Cross-Complaint, as presently pled, fails to state facts sufficient to constitute a cause of action for breach of oral contract. The Cross-Complaint alleges that at some point between April and September 2021, Cross-Complainant and Cross-Defendant entered into an oral agreement under which Cross-Defendant 'was to make certain contributions of funds and work towards potential real estate acquisition and development opportunities.' See Cross-Complaint, p. 3. Cross-Defendant allegedly breached the parties' oral contract by failing to make payments and contributions as promised, damaging Cross-Complainant in the amount of $100,000.00. The foregoing is insufficient to state a Calendar No.: Event ID: TENTATIVE RULINGS

3107574 CASE NUMBER: CASE TITLE: HOWARD VS. GOTTUSO [IMAGED] 37-2023-00010188-CU-FR-NC cause of action for breach of oral contract. More specifically, the Cross-Complaint, as presently pled, fails to sufficiently allege the existence of an oral contract between the parties. Cross-Defendant is correct, as a general proposition, that '[i]f the action is based on 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 instrument must be attached and incorporated by reference.' Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal. App. 3d 452, 459. Alternatively, 'in an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.' Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal. 4th 189, 198-199. However, as Cross-Complainant correctly notes, the Cross-Complaint alleges the existence of an oral contract, not a written contract. Toward that end, California law does not require that Cross-Complainant plead the terms of the oral contract or its legal effect with the same level of detail as would be required had he alleged breach of written contract. See Khoury, 14 Cal. App. 4th at 616.

That being said, California is a fact pleading jurisdiction. See Ostling v. Loring (1994) 27 Cal. App. 4th 1731, 1750. Merely putting an opposing party on notice is not sufficient to state a cause of action. See Bach v. County of Butte (1983) 147 Cal. App. 3d 554, 561; Diodes, Inc. v. Franzen (1968) 260 Cal. App. 2d 244, 250. Instead, a pleading must assert general allegations of ultimate fact. See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47; Lim v. The.TV Corp. Internat. (2002) 99 Cal. App. 4th 684, 690. In this case, the Cross-Complaint fails to sufficiently allege the existence of an oral contract to the extent that it fails to identify a sufficient cause or consideration given by Cross-Complainant to Cross-Defendant. See Cal. Civ. Code §§ 1550, 1605. Moreover, the Cross-Complaint is devoid of any details regarding: (1) Cross-Complainant's obligations under the oral contract, and (2) whether Cross-Complainant fully performed his obligations or was excused for failing to perform.

Accordingly, the court sustains the demurrer to the first cause of action with leave to amend as Cross-Complainant has demonstrated a reasonable possibility that the foregoing deficiencies can be cured by amendment. See Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 967.

The demurrer to the second cause of action for general negligence is sustained. 'To succeed in a negligence action, the plaintiff must show that (1) the defendant owed the plaintiff a legal duty, (2) the defendant breached the duty, and (3) the breach proximately or legally caused (4) the plaintiff's damages or injuries.' Thomas v. Stenberg (2012) 206 Cal. App. 4th 654, 662.

Cross-Defendant's argument that the second cause of action is time-barred is not well taken. The statute of limitations for general negligence claims is two years. See Aldana v. Stillwagon (2016) 2 Cal. App. 5th 1, 5; Cal. Code Civ. P. § 335.1. In this case, the Cross-Complaint alleges negligent conduct on Cross-Defendant's part that occurred at some point between April and September 2021.

Cross-Complainant did not assert his negligence claim until he filed his Cross-Complaint on December 15, 2023 – more than two years later. However, '[a]s a general rule, the filing of a complaint tolls the statute of limitations applicable to a cross-complaint so long as the cross-complaint is related to the original complaint and its causes of action were not barred when the original complaint was filed.' California-American Water Co. v. Marina Coast Water Dist. (2016) 2 Cal. App. 5th 748, 763. 'Such a cross-complaint need only be subject-matter related to the plaintiff's complaint-i.e., arise out of the same occurrence ... to relate back to the date of filing the complaint for statute of limitations purposes.' Sidney v. Sup. Ct. (1988) 198 Cal. App. 3d 710, 714. In this case, a review of the operative pleadings shows a clear relationship between the gravamen of Cross-Defendant's Complaint and the Cross-Complaint, namely the parties' respective promises and/or representations to invest certain money in various real estate ventures. Consequently, Cross-Complainant's negligence cause of action was tolled upon Cross-Defendant's filing of his Complaint on March 9, 2023 – within the two-year limitations period.

Cross-Complainant raised this argument in his opposition brief yet Cross-Defendant did not address it in his reply, which the court construes as Cross-Defendant's concession of the merits on that issue.

The court finds that the Cross-Complaint, as presently pled, fails to state facts sufficient to constitute a cause of action for general negligence. The Cross-Complaint alleges that at some point between April Calendar No.: Event ID: TENTATIVE RULINGS

3107574 CASE NUMBER: CASE TITLE: HOWARD VS. GOTTUSO [IMAGED] 37-2023-00010188-CU-FR-NC and September 2021, Cross-Defendant 'was to make certain contributions of funds and provision of work towards potential real estate acquisition and development opportunities. He negligently either failed to perform, or performed in a deficient and incomplete manner, proximately causing damage to Gottuso, in an amount to be determined at trial but estimated at approximately $100,000.' See Cross-Complaint, p. 4. The foregoing is insufficient to state a negligence claim. More specifically, the Cross-Complaint, as presently pled, fails to allege the existence of a legal duty of care owed by Cross-Defendant to Cross-Complainant and fails to allege how Cross-Defendant's failure to make certain monetary contributions and provide work toward potential real estate deals constituted a breach of such legal duty.

Accordingly, the court sustains the demurrer to the second cause of action with leave to amend as Cross-Complainant has demonstrated a reasonable possibility that the foregoing deficiencies can be cured by amendment. See Aubry, 2 Cal. 4th at 967.

The demurrer to the third cause of action for fraud is sustained. As an initial matter, it is unclear whether Cross-Complainant has attempted to plead a cause of action for intentional misrepresentation, negligent misrepresentation, or false promise. The caption of the third cause of action merely says 'fraud'.

Moreover, Cross-Complainant checked Box FR-2 alleging a cause of action for 'intentional or negligent misrepresentation.' Under Sections FR-2(a) and (b), Cross-Complainant alleges that Cross-Defendant made certain fraudulent representations with no intent or ability to perform, suggesting that Cross-Complainant is pursuing an intentional misrepresentation claim. At the same time, however, Cross-Complainant checked: (1) Box FR-2(c) stating that when Cross-Defendant made the alleged representations, he had no reasonable ground for believing the representations were true, which suggests that Cross-Complainant is alleging a negligent misrepresentation claim, and (2) Box FR-4 stating that Cross-Defendant made a promise with no intent to perform, which suggests that Cross-Complainant is alleging a claim for false promise. Toward that end, Cross-Complainant states in his opposition that he is alleging negligent misrepresentation and false promise, not intentional misrepresentation. Cross-Complainant must clarify this in an amended pleading.

Moreover, the Cross-Complaint, as presently pled, fails to state facts sufficient to constitute claims for negligent misrepresentation and/or false promise. '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.'' National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal. App. 4th 35, 50 (quoting Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal. App. 4th 226, 243). The elements for false promise, or promissory fraud, are '(1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false.' Beckwith v. Dahl (2012) 205 Cal. App. 4th 1039, 1060. Under California law, fraud-based claims are subject to heightened pleading requirements.

See Lazar, 12 Cal. 4th at 645; Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal. App. 4th 513, 519. This means that '(1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.' Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal. App. 3d 1324, 1331. Indeed, '[t]he specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.' West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal. App. 4th 780, 793. See also Small v. Fritz Co., Inc.

(2003) 30 Cal. 4th 167, 184.

The court finds that the Cross-Complaint, as presently pled, fails to satisfy California's heightened pleading standard for fraud-based causes of action. The Cross-Complaint alleges in general terms that Cross-Defendant promised to make certain contributions of funds and provide work for potential real estate deals. However, under the above standard, Cross-Complainant must allege when, where, and Calendar No.: Event ID: TENTATIVE RULINGS

3107574 CASE NUMBER: CASE TITLE: HOWARD VS. GOTTUSO [IMAGED] 37-2023-00010188-CU-FR-NC under what circumstances Cross-Defendant made the alleged promises. It is insufficient for Cross-Complainant to allege that Cross-Defendant made oral promises at some point between April and September 2021.

Accordingly, the court sustains the demurrer to the third cause of action with leave to amend as Cross-Complainant has demonstrated a reasonable possibility that the foregoing deficiencies can be cured by amendment. See Aubry, 2 Cal. 4th at 967.

In light of the foregoing, the court sustains the demurrer with leave to amend. Cross-Complainant shall file and serve a first amended cross-complaint within ten (10) days of this hearing. See Cal. R. Ct.

3.1320(g).

This is the tentative ruling for the hearing at 1:30 p.m. on Friday, June 7, 2024. If no party appears at the hearing, this tentative ruling will become the order of the court as of June 7, 2024. If the parties are satisfied with the court's tentative ruling or do not otherwise wish to argue the motion, they are encouraged to give notice to the court and each other of their intention not to appear, though this notice is not required.

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