Judge: Daniel M. Crowley, Case: 21SMCV02011, Date: 2023-04-21 Tentative Ruling
Case Number: 21SMCV02011 Hearing Date: April 21, 2023 Dept: 207
Background
Plaintiffs Paul Hendifar and Jason Hendifar (collectively
“Plaintiffs”) bring this action alleging construction defects in real property
they own in Venice, California. Plaintiffs’ purchase of this property has
spawned multiple lawsuits. In the initial action, Case No. 19SMCV01950,
Plaintiffs brought suit for construction defect against the entities
responsible for the construction of the property. In the instant action,
Plaintiffs have sued Defendants Lindsay Galbraith (“Galbraith”), Gregory Bega
(“Bega”), Sotheby’s International Realty, Inc. (Sotheby’s, or, collectively
with Galbraith and Bega, “Defendants”), and others who were involved in the
sale of the property to Plaintiffs and are alleged to have concealed or failed
to disclose the existence of those construction defects.
Plaintiffs’ operative pleading in this action is the First
Amended Complaint (“FAC”) filed on February 21, 2023, and asserting eleven
causes of action. Defendants now bring a demurrer to Plaintiffs’ first cause of
action for intentional misrepresentation, second cause of action for negligent
misrepresentation, and fifth cause of action for fraudulent concealment,
arguing each of these causes of action fails to state sufficient facts to
constitute a cause of action against them pursuant to Code Civ. Proc. §
430.10(e). Defendants separately move to strike Plaintiffs’ claim for punitive
damages and related allegations from the FAC. Plaintiffs’ oppose Defendants’
motions.
Demurrer Standard
When considering demurrers, courts read the allegations
liberally and in context. (Wilson v. Transit Authority of City of Sacramento
(1962) 199 Cal.App.2d 716, 720-21.) In a demurrer proceeding, the defects must
be apparent on the face of the pleading or via proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the
pleading alone, and not on the evidence or facts alleged.” (E-Fab, Inc. v.
Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such,
the court assumes the truth of the complaint’s properly pleaded or implied
factual allegations. (Id.) However, it does not accept as true
deductions, contentions, or conclusions of law or fact. (Stonehouse Homes
LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)
The general rule is that the plaintiff need only allege
ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles
(2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter
of pleading, even as against a special demurrer, is that his complaint set
forth the essential facts of the case with reasonable precision and with
sufficient particularity to acquaint the defendant with the nature, source and
extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp.
(1945) 26 Cal.2d 149, 156-157.)
A special demurrer
for uncertainty under Section 430.10(f) is disfavored and will only be
sustained where the pleading is so unintelligible that a defendant cannot
reasonably respond—i.e., cannot reasonably determine what issues must be admitted
or denied, or what counts or claims are directed against him/her. (Khoury v.
Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if
the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Id.)
Motion to Strike Standard
The court may, upon a motion, or at any time in its
discretion, and upon terms it deems proper, strike any irrelevant, false, or
improper matter inserted in any pleading. (Code Civ. Proc., § 436(a).) The
court may also strike all or any part of any pleading not drawn or filed in
conformity with the laws of this state, a court rule, or an order of the court.
(Id., § 436(b).) The grounds for a
motion to strike are: the pleading has irrelevant, false, or improper matter,
or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the
face of the pleading or by way of judicial notice. (Id. § 437.)
Analysis
1. Meet
and Confer Requirement
The Court
finds Defendants have complied with the meet and confer requirements set forth
under Code of Civil Procedure §§ 430.41 and 435.5. (Dowsing Decl. at ¶4.)
2. First
Cause of Action for Intentional Misrepresentation
“The elements of fraud,” including
a cause of action for intentional misrepresentation, “are (a) a
misrepresentation (false representation, concealment, or nondisclosure); (b)
scienter or knowledge of its falsity; (c) intent to induce reliance; (d)
justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.)
The facts constituting the alleged fraud must be alleged factually and with
particularity as to every element of fraud, as the policy of “liberal construction”
of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity
requirement necessitates pleading facts which ‘show how, when, where, to
whom, and by what means the representations were tendered.’” (Stansfield v. Starkey
(1990) 220 Cal.App.3d 59, 73 [quoting Hills Trans. Co. v. Southwest
(1968) 266 Cal.App.2d 702, 707].) To properly allege fraud against a
corporation, the plaintiffs must plead the names of the persons allegedly
making the false representations, their authority to speak, 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.)
Defendants argue Plaintiffs’ cause
of action for intentional misrepresentation is not pled with sufficient
specificity against them. The Court agrees. The allegations of Plaintiffs’
first cause of action for intentional misrepresentation are set forth in
paragraphs 50-59 of the FAC. This cause of action is asserted against
Galbraith, Bega, and Sotheby’s as well as Defendants Joseph Ryan Cilic, Marc
Fishman, and Elizabeth Gay. Paragraphs 50-59 of the FAC make allegations as to
all of these defendants collectively without drawing any distinction between
them or offering specific factual allegations as to any defendant individually.
For example, the FAC asserts “Defendants, and each of them, represented to
Plaintiffs” that the property would not be subject to a rent stabilization
ordinance and that water damage would be remedied. (FAC at ¶53.) But it does not
identify when or how any specific defendant made such misrepresentations. This
cause of action is asserted against Sotheby’s, a corporate entity, but does not
identify who specifically made these alleged representations on behalf of
Sotheby’s. The FAC alleges all of these defendants knew these representations
were false without providing any factual allegations as to how any specific
defendant had such knowledge. By lumping these six parties together for
purposes of pleading this cause of action, it is not clear whether Plaintiffs
are claiming each individual party separately made misrepresentations to
Plaintiffs or if Plaintiffs are seeking to hold certain defendants liable for
misrepresentations made by other parties.
These issues cannot be resolved by
a general reference incorporating all previous paragraphs of the FAC, as those
initial allegations are similarly devoid of specific factual allegations
required to plead a cause of action for fraud. For example, paragraphs 28 and
29 of the FAC allege Galbraith and Bega made numerous representations to
Plaintiffs, without identifying when they were made, or how. Further, because
these allegations are made against Galbraith and Bega collectively, it is not
clear whether they both separately made these statements to Plaintiffs or if
Plaintiffs are alleging one of these parties was present when the other party
made the alleged representation, or if the representation was made by one of
these defendants on behalf of the other.
Plaintiffs request leave to amend.
As these issues can be addressed by providing additional factual allegations
regarding the specific, individual conduct of the Defendants, the Court
SUSTAINS Defendants’ demurrer with leave to amend.
3. Second
Cause of Action for Negligent Misrepresentation and Fifth Cause of Action for
Fraudulent Concealment
A cause of
action for fraudulent concealment as the same as those set forth above for
fraudulent misrepresentation. The elements of a cause of action for negligent
misrepresentation include “[m]isrepresentation of a past or existing material
fact, without reasonable ground for believing it to be true, and with intent to
induce another’s reliance on the fact misrepresented; ignorance of the truth
and justifiable reliance on the misrepresentation by the party to whom it was
directed; and resulting damage.” (Hydro-Mill
Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115
Cal.App.4th 1145, 1154, quotation marks omitted.) As with a claim for fraud, a
claim for negligent misrepresentation must be pled with particularity. (Daniels
v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)
Both causes of action are
insufficiently pled for the same reasons set forth above with respect to the
first cause of action for intentional misrepresentation. Plaintiffs attribute
knowledge and intent to all defendants included in these causes of action on a
collective basis without providing factual allegations specific to any one of
them. (FAC at ¶¶64, 65, 66, 67, 84, 86, 87, 88.) As with the first cause of
action, this appears to be an issue which can be cured by further amendment.
The Court thus SUSTAINS Defendants’ demurrer to the second and fifth causes of
action with leave to amend.
5. Motion to Strike
“In order to survive a motion to
strike an allegation of punitive damages, the ultimate facts showing an
entitlement to such relief must be pled by a plaintiff. In passing on the
correctness of a ruling on a motion to strike, judges read allegations of a pleading
subject to a motion to strike as a whole, all parts in their context, and
assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th
1253, 1255 (internal citations omitted).)
A motion to strike punitive
damages is properly granted where a plaintiff does not state a prima facie
claim for punitive damages, including allegations that defendant is guilty of
oppression, fraud, or malice. (Turman v. Turning Point of Cent. California,
Inc. (2010) 191 Cal.App.4th 53, 63.) “Mere negligence, even gross
negligence, is not sufficient to justify such an award” for punitive damages. (Kendall
Tacht Corp. v. United California Bank (1975) 50 Cal.App.3d 949, 958.) The
allegations supporting a request for punitive damages must be alleged with specificity;
conclusory allegations without sufficient facts are not enough. (Smith v.
Superior Court (1992) 10 Cal.App.4th 1033, 1041-42.) A plaintiff’s
“conclusory characterization of defendant’s conduct as intentional, willful and
fraudulent is a patently insufficient statement of ‘oppression, fraud, or
malice, express or implied, within the meaning of section 3294.” (Brousseau
v. Jarrett (1977) 73 Cal.App.3d 864.)
While the FAC at multiple points
characterizes Defendants’ conduct as “cruel” or “despicable” or undertaken “in
conscious disregard of” Plaintiffs’ rights, it appears from a review of the FAC
that Plaintiffs’ claim for punitive damages is based on the “fraud” prong of
section 3294 in that Plaintiffs are alleging Defendants intentionally misrepresented
or concealed defects in the subject property in order to induce Plaintiffs into
closing escrow on the house. However, as discussed above in the context of
Defendants’ demurrer, the FAC is devoid of factual allegations concerning the
elements of scienter and intent which are necessary to distinguish a claim of
negligence from one of fraud. Conclusory allegations that all Defendants knew
all of their representations were false and made with the intent to induce
Plaintiffs’ reliance are insufficient to support a claim for punitive damages
in the absence of factual allegations supporting such conclusions. For these
reasons, the Court GRANTS Defendants’ motion to strike with leave to amend to
provide the additional factual allegations necessary to state a prima facie
case for punitive damages.
Conclusion
Defendants’ demurrer to the first, second, and fifth causes
of action is SUSTAINED with 30-days’ leave to amend. Defendants’ motion to
strike Plaintiffs’ claim for punitive damages and associated allegations is
GRANTED with 30-days’ leave to amend.