Judge: Daniel M. Crowley, Case: 22STCV26316, Date: 2022-12-22 Tentative Ruling

Case Number: 22STCV26316    Hearing Date: December 22, 2022    Dept: 28

Defendant’s Demurrer to Plaintiff’s Complaint

Having considered the moving, opposition, and reply papers, the Court rules as follows.

BACKGROUND

            Plaintiffs Martin and Bessie Ellen Warren sue their sons, Scott Kenneth Warren and Bruce Michael Warren, for financial elder abuse, intentional infliction of emotional distress, breach of contract, fraud/concealment, negligence, rescission, and cancellation of a written instrument under Civil Code section 3412. Plaintiffs’ suit arises from the management and disposition of their considerable financial assets.

            Defendant Bruce M. Warren, for himself only, demurs to plaintiffs’ first and second causes of action.

            For purposes of demurrer, the court treats all facts alleged in the complaint as true. (Picton v. Anderson Union High School District (1996) 50 Cal.App.4th 726, 732.)

            Plaintiffs, ages 89 and 92, “amassed properties [now] worth well over $20,000,000”, largely in Los Angeles, beginning in the 1970s. (Compl. ¶¶ 1-2 and 12-13.) “As [they] aged, they began turning over the management duties and responsibilities to their three adult children”, defendants Scott and Bruce and their sister Laurie, the latter not named in this suit. (Id. ¶¶ 3 and 14.) (Laurie’s involvement with the facts alleged in the complaint is parenthetical for the purposes of demurrer.)

Scott and Bruce, both attorneys, provided plaintiffs with advice on various matters related to financial management, tax planning, estate planning, and landlord-tenant issues. (Id. ¶¶ 15-16.) Plaintiffs allege that they “became dependent” on their sons, “came to trust” them, and “developed … confidential and fiduciary relationship[s]” with them. (Ibid.) Neither Scott nor Bruce advised plaintiffs “that they should seek independent counsel with respect to any transaction that would personally benefit” either of their sons. (Ibid.)

            Around 2012, Scott facilitated the formation of three LLCs and the transfer of ownership of three of plaintiffs’ real estate assets to those LLCs. (Id. ¶ 19.) He transferred majority ownership stakes in the LLCs to himself and Bruce, while plaintiffs retained minority stakes. (Id. ¶ 20.) In January 2020, plaintiffs transferred their remaining interests in the LLCs to Scott and Bruce, ostensibly for tax reasons, upon the brothers’ advice. Plaintiffs relied on Scott and Bruce’s oral promises that plaintiffs would retain de facto ownership of these assets and their sons “would provide all money [p]laintiffs request at any time and for any reason.” (Id. ¶¶ 23-24.)

            In 2022, Scott and Bruce objected when plaintiffs transferred a $1,000,000 real estate asset they still personally owned directly to Laurie, who in turn transferred it to her son. (Id. ¶¶ 31-32.) From that point on, Scott and Bruce’s management of the LLCs and their provision of income to plaintiffs became contentious. (Id. ¶¶ 32-37.) Plaintiffs allege they did not not receive income from their sons when they requested or required it, despite their sons’ oral promises in 2020. (Id. ¶¶ 34-37.) Scott and Bruce refused a request to make monthly deposits into plaintiffs’ checking account and instead “asked [p]laintiffs to provide an accounting of their money.” (Id. ¶ 34.) Scott then agreed to give plaintiffs approximately two-thirds of what they requested, while withholding the rest for tax payments. (Id. ¶ 36.) As of July 2022, Scott had paid plaintiffs one-half of that reduced amount (“his share”), while Bruce had paid them nothing. (Id. ¶ 37.) As an alternative to payment, plaintiffs have demanded defendants return their interests in the real estate now held by the LLCs created in 2012. (Id. ¶ 34.)

            Plaintiffs sued Scott and Bruce on August 15, 2022. They allege their sons “had no intention of performing [their oral] promises” to provide for plaintiffs. (Id. ¶ 42.) They allege their sons “have wrongfully retained the income generated by the LLC interests … in violation of their [oral] promise.” (Id. ¶ 43.) They also allege their sons misrepresented and concealed facts and wrongfully failed to advise them to seek independent counsel when arranging for the 2012 formation of the LLCs and the subsequent transfer of their LLC interests. (Id. ¶¶ 44-45.)

            Bruce demurred to plaintiffs’ first and second causes of action on November 10, 2022. Trial is set for February 24, 2024.

REQUESTS FOR JUDICIAL NOTICE

Defendant suggests the court should take judicial notice of two admissions purportedly made by plaintiffs during discovery. Defendant cites case law interpreting the court’s statutory power under Evidence Code section 452, subdivision (h), to take judicial notice at its discretion of “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Ev. Code § 452(h).)

Regardless of the standard articulated in Evidence Code section 452, a party seeking judicial notice must follow the procedures stated in section 453. According to that section, the court shall take judicial notice if “a party requests it and … [g]ives each adverse party sufficient notice … and … [f]urnishes the court with sufficient information to enable it to take judicial notice of the matter.” (Ev. Code § 453.) Defendant has done neither.

Defendant filed his request for judicial notice along with his reply memorandum, only seven court days prior to the hearing on this demurrer. Defendant refers to alleged admissions made by plaintiffs during discovery, but does not present authenticated copies of these admissions to the court or any factual declaration attesting that these admissions were made.

The court does not rule on the propriety of judicial notice at this time. The court finds defendant has not provided plaintiffs with sufficient notice, nor the court with sufficient information, for judicial notice to be taken.

The court DENIES defendant’s requests for judicial notice.

The court also notes that defendant’s reply contains numerous factual contentions from outside the four corners of the pleading. As noted below, a demurrer tests the legal sufficiency of the pleading based only on deficiencies apparent from the face of the complaint. (See Harboring Villas Homeowners Assn. v. Superior Court (63 Cal.App.4th 426, 429.) Put differently, what a complaint “does not mention” (Dem. 1:27-2:1, 2:3, 2:12, 2:19-20) generally has no bearing on a court’s analysis of its sufficiency. The court does not consider extrinsic facts in its analysis.

LEGAL STANDARD

            Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220.)

The grounds for the demurrer must appear on the face of the pleading or from judicially noticeable matters. (Cal. Code. Civ. Proc. § 430.30, subd. (a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A party may not introduce new facts in its demurrer to argue they disclose a defect in the complaint. (See Harboring Villas Homeowners Assn. v. Superior Court (63 Cal.App.4th 426, 429.) In fact, “in passing upon the question of the sufficiency or insufficiency of a complaint to state a cause of action, it is wholly beyond the scope of the inquiry to ascertain whether the facts stated are true or untrue.” (Colm v. Francis (1916) 30 Cal.App. 742, 753.)

The court “may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.” (Young v. Gannon, supra, 97 Cal.App.4th  at p. 220, citing Moore v. Conliffe (1994) 7 Cal.4th 634, 638; Montclair Parkowners’ Association v. City of Monclair (1999) 76 Cal.App.4th 784, 790.)  

To survive a demurrer, a plaintiff must set forth the essential facts of his case with reasonable precision and with particularity sufficient to acquaint a defendant with the nature, source, and extent of his cause of action. (See Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 719.) The Court treats all facts alleged in the complaint as true. (Picton v. Anderson Union High School District (1996) 50 Cal.App.4th 726, 732.) The court does not consider whether a plaintiff will be able to prove the allegations, or the possible difficulty in making such proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.)

As a general matter, when considering demurrers, courts “are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School District, supra, 50 Cal.App.4th at p. 733, citing Rogoff v. Grabowski (1988) 200 Cal.App.3d 624, 628.) As long as a party shows there is “a reasonable possibility any defect identified by the defendant can be cured by amendment,” the trial court should grant leave to amend the pleadings when sustaining a demurrer. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.) However, the burden is on the plaintiff to demonstrate the manner in which the complaint can be amended. (Ross v. Creel Printing & Publishing Company (2002) 100 Cal.App.4th 736, 748.)

DISCUSSION

Plaintiffs’ first cause of action does not suffer from fatal uncertainty.

“Demurrers for uncertainty under Code of Civil Procedure section 430.10, subdivision (e) are disfavored. (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135 … .) ‘A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.’ (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616 … .) A demurrer for uncertainty should be overruled when the facts as to which the complaint is uncertain are presumptively within the defendant's knowledge. (5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 976, p. 389.)” (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.)

Defendant argues the complaint is uncertain because it does not separate allegations made against him from allegations made against his brother in every instance. He characterizes all allegations that do not mention him by name as contentions, deductions, or conclusions, rather than properly pled facts. Defendant cites no direct authority for this proposition. His citations to law in support of his point relate to court’s definitions of conclusory pleadings, not uncertain ones.

Defendant’s proposition does not comport with common sense. Plaintiffs often sue more than one defendant, and courts do not reject complaints because they refer to all the defendants collectively rather than listing them by name in every instance. Defendant’s argument in this respect fails.

Defendant also argues “one cannot tell just what it is that plaintiffs contend constitutes ‘financial elder abuse’ ” from the complaint. (Dem. 7:16-17) He believes the court should sustain his demurrer because he has difficulty connecting the facts pled to plaintiffs’ legal theories of relief. This argument fails because it misconstrues basic pleading rules.

Regardless of whether plaintiffs’ complaint justifies defendant’s confusion – which the court finds it does not – California law has long recognized that “a party cannot be thrown out of court merely because he may have misconceived the form of relief to which he is entitled.” (Zellner v. Wassman (1920) 184 Cal. 80, 88.) A demurrer for uncertainty questions whether the complaint states facts clearly enough to put a defendant on notice of the plaintiff’s allegations; a complaint may survive demurrer “if [its f]actual allegations … are adequate to state a cause of action under any legal theory.” (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 103.) Plaintiffs’ facts state causes of action under several. That plaintiffs’ facts may support more than one theory of relief does not justify dismissal of their complaint; quite the contrary.

Defendant also claims plaintIffs’ complaint does not comply with California Rule of Court number 2.112. (Dem. 3:19-27.) After quoting the text of the rule, he states only: “The complaint does not comply.” (Dem. 4:1.) Without further elaboration, his contention is puzzling.

Plaintiffs state a claim for financial elder abuse against defendant.

A plaintiff claiming elder abuse must allege (1) she is an elder adult and (2) a defendant took, secreted, appropriated, or retained her real or personal property, or assisted another to do so, (3) to a wrongful use, with an intent to defraud, or by undue influence. (Wel. & Inst. Code § 15610.30, subd. (a); Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 174.)

Plaintiffs allege they are 89 and 92, respectively, and reside in California. For the purposes of plaintiffs’ cause of action, “ ‘[e]lder’ means any person residing in this state, 65 years of age or older.” (Wel. & Inst. Code § 15610.27.) Plaintiffs plead facts that satisfy the first element of their claim.

As to the second element, “a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an [elder] is deprived of any property right, including by means of an agreement, or testamentary bequest … .” (Id. ¶ 15610.30, subd. (c).)

            Plaintiffs allege they made an agreement with defendants to transfer ownership of their real estate to an LLC owned mostly by defendants. Thus, according to plaintiffs, defendants obtained plaintiffs’ property by agreement and retained it. Plaintiffs also allege they transferred their minority interests in the LLCs to defendants based on the parties’ oral agreement, repeating the same pattern of facts that satisfies the second element of plaintiffs’ claim. Plaintiffs then allege they demanded either the distribution of their property in the form of income, or the return of their real estate holdings, and defendants refused. Thus, plaintiffs allege defendants retained plaintiffs’ real or personal property. It requires no complex legal analysis to determine plaintiffs have pled facts satisfying the second element of elder abuse.

            Finally, taking property “[to] a wrongful use is defined as taking, secreting, appropriating, or retaining property in bad faith. Bad faith occurs where the person or entity knew or should have known that the elder had the right to have the property transferred or made readily available to the elder or to his or her representative. [Citation.]” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 174.)

Inducing an elder to transfer property by concealing material facts amounts to wrongful use. (Id. at pp. 174-175.) So does convincing an elder to make bad investments in one’s own self-interest. (See Wood v. Jamison (2008) 167 Cal.App.4th 156.) So does exacting unfair financial concessions from an elder, such as unearned commissions or excessive interest rates. (Zimmer v. Nawabi (E.D.Cal. 2008) 566 F.Supp.2d 1025, 1034.) Plaintiffs have alleged exactly this sort of impropriety on defendants’ part.

In addition, plaintiffs clearly allege defendants’ knowledge that their parents had a right to certain property in question. According to plaintiffs’ allegations, which the court accepts as true for the purposes of demurrer, defendants made an agreement to provide all the income plaintiffs could ever require, then refused to do so. Plaintiffs allege Bruce specifically participated in this agreement; thus, on the face of the complaint, Bruce knew plaintiffs had a right to have their property made readily available to them.

Plaintiffs have alleged, at the very least, that Bruce retained their property in bad faith. Thus, plaintiffs have satisfied the third element of their financial elder abuse claim.

Plaintiffs’ second cause of action fails to state facts sufficient to constitute a cause of action.

“The elements of the tort for intentional infliction of mental distress are: (1) outrageous conduct by the defendant; (2) intention to cause or reckless disregard of the probability of causing emotional distress, (3) severe emotional suffering and (4) actual and proximate causation of emotional distress.” (Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, 921.)

Conduct satisfying the first element of intentional infliction of emotional distress “must be ‘so extreme and outrageous “as to exceed all bound of that usually tolerated in a civilized society.” ’ [Citation.]” (Bosetti v. United States Life Ins. Co. in City of New York (2009) 175 Cal.App.4th 1208, 1242.) An elder abuse claim, while perhaps alarming, does not per se satisfy the standard of outrageous conduct required for intentional infliction of emotional distress. (See Mack v. Soung (2000) 80 Cal.App.4th 966, 975-976 [reversing trial court’s order sustaining demurrer to elder abuse claim but affirming as to intentional infliction of emotional distress].) Financial misconduct similar to what plaintiffs allege here, even when perpetrated by individuals vested by their victims with special power or trust, does not necessarily amount to “extreme and outrageous” conduct for the purposes of this tort. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-1051 [IIED defendant prevailed on summary judgment where he attempted to extract sexual favors in exchange for releasing money from plaintiff’s son’s trust fund].)

Plaintiffs have alleged bad conduct, but nothing so extreme and outrageous as to exceed all civilized bounds. Thus, they have not stated a claim for intentional infliction of emotional distress.

Plaintiffs have also not alleged facts satisfying the second element of intent. They allege defendants took certain actions that might be emotionally hurtful – in Bruce’s case, slamming a door; failing to visit their father or send a card when he was ill. (Compl. ¶¶ 32-33.) But no specific facts point to either defendant’s intent to cause emotional harm. Plaintiffs allege only that “[d]efendants acted with intent to cause Plaintiffs emotional distress” (Compl. ¶ 54), which is a legal conclusion devoid of specifics.

Plaintiffs argue persuasively in their opposition, however, that further specifics or clarification could state a claim for intentional infliction of emotional distress. The court declines to take the drastic step of refusing leave to amend the complaint, particularly where, as here, plaintiffs have yet to amend their complaint at all in this suit.

CONCLUSION

The court OVERRULES defendant’s demurrer to plaintiffs’ first cause of action.

The court SUSTAINS defendant’s demurrer to plaintiffs’ second cause of action, WITH leave to file an amended complaint.

            Plaintiffs are ordered to give notice of this ruling.

Plaintiffs are ordered to file the proof of service of this ruling with the Court within five days.

The parties are directed to the header of this tentative ruling for further instructions.