Judge: Daniel S. Murphy, Case: 22STCV36899, Date: 2023-04-21 Tentative Ruling

Case Number: 22STCV36899    Hearing Date: April 21, 2023    Dept: 32

BACKGROUND

            This quiet title action was initiated in November 22, 2022. On December 28, 2022, Plaintiffs Phuong Le Thai and Edward Lee filed the operative First Amended Complaint against Defendants Diana Lee, William Truong, and all persons claiming interest in the subject property located in El Monte (the Property). The FAC asserts causes of action for declaratory relief, quiet title, fraud, conversion, elder abuse, and accounting.

            According to the FAC, Plaintiff Phuong Le Thai (Phuong) wished to purchase the Property but failed to qualify for a loan. (FAC ¶ 11.) Around July or August 2017, Phuong proposed that her daughter, Defendant Diana Lee (Diana) purchase the Property in her name and hold legal title without assuming any obligations such as down payment, maintenance expenses, property taxes, and loan payments. (Id., ¶ 12.) Diana allegedly agreed to this arrangement and promised to convey title to Phuong once Phuong had paid all expenses related to the maintenance and preservation of the Property for a period of time sufficient to demonstrate her credit worthiness. (Id., ¶ 13.) Diana obtained title to the Property on September 14, 2017. (Id., ¶ 15.) The down payment was made using loans and gifts belonging to Phuong. (Ibid.) In June 2021, after Phuong had possessed the Property and paid the associated expenses for several years, Phuong demanded that Diana convey title to the Property to her in accordance with their agreement, but Diana refused. (Id., ¶¶ 16-17.)

Phuong was married to John Shing Lee (John Lee or Decedent), who died in September 2022. Decedent’s son, Plaintiff Edward Lee, pursues this action as Decedent’s successor-in-interest. The FAC alleges that Diana stole the following property: (1) Decedent’s portion of proceeds from the sale of Plaintiffs’ other residences in Nevada and California; (2) Decedent’s cash; (3) proceeds from Decedent’s life insurance policy; (4) and a 2006 Honda Pilot. (FAC ¶¶ 18-31.) Defendant William Truong, Diana’s husband, allegedly participated in the fraud and conversion.

            On March 1, 2023, Defendants filed the instant demurrer and motion to strike.     

LEGAL STANDARD

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.)

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part of that pleading. (Code Civ. Proc., § 435, subd. (b).) The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike (1) any irrelevant, false, or improper matter inserted in any pleading and (2) 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.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court notes that Defendants have complied with the meet and confer requirement. (See Fok Decl. ¶¶ 3-9.)

DISCUSSION

I. Demurrer

            a. Edward Lee’s Standing

            “Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.” (Code Civ. Proc., § 367.) “A cause of action that survives the death of the person entitled to commence an action or proceeding passes to the decedent’s successor in interest, subject to Chapter 1 (commencing with Section 7000) of Part 1 of Division 7 of the Probate Code, and an action may be commenced by the decedent’s personal representative or, if none, by the decedent’s successor in interest.” (Id., § 377.30.) “The person who seeks to commence an action or proceeding or to continue a pending action or proceeding as the decedent’s successor in interest under this article, shall execute and file an affidavit or a declaration” containing certain information. (Id., § 377.32(a).)

            Defendants argue that Edward Lee has no standing because he has not properly demonstrated his status as Decedent’s successor-in-interest. However, Edward Lee filed a declaration with the FAC, filed December 28, 2022, that contains the requisite information. (See Code Civ. Proc., § 377.32(a).) Defendants rely on inapplicable Probate Code provisions that presume the existence of a probate proceeding or estate administration. Because there is no indication that a probate has been opened, the only requirements for Edward Lee to sue as a successor-in-interest are those enumerated in Code of Civil Procedure section 377.32. The successor-in-interest asserts causes of action that the decedent would have had if he were alive. In other words, Edward Lee is asserting claims on behalf of Decedent; he is not seeking recovery for himself personally. The lawsuit does not implicate issues of intestacy, heirs, or distribution of Decedent’s property, and it does not become a probate matter simply because the successor-in-interest happens to be Decedent’s son. Edward Lee is not suing as a potential heir, but as a successor-in-interest under Code of Civil Procedure section 377.30.  

            Defendants point out that a “successor in interest” is defined as “the beneficiary of the decedent’s estate or other successor in interest who succeeds to a cause of action or to a particular item of the property that is the subject of a cause of action.” (See Code Civ. Proc., § 377.11.) Defendants further note that the complaint reveals Decedent is succeeded by his spouse (Phuong) and three other children besides Edward Lee. Defendants argue that, as a result, there are other beneficiaries, including Diana, who must join in the action. However, Section 377.11 defines “successor in interest” as a beneficiary or other successor in interest who succeeds to a cause of action. The provision is written in the disjunctive, and nothing suggests that only a beneficiary can be the successor in interest. Again, Edward Lee has provided the requisite affidavit demonstrating his status as successor in interest, and Defendants have no contradictory evidence. While Edward Lee’s declaration does not attach Decedent’s death certificate, this can be easily cured, and there is no dispute over Decedent’s death.

Defendants also cite the Welfare and Institutions Code for the proposition that where more than one person claims standing, the court must determine which of them is appropriate to pursue the action. (See Welf. & Inst. Code, § 15657.3(e).) However, that provision only applies to claims of elder abuse, and Phuong is the only one who asserts an elder abuse claim in this case. Therefore, the cited code provision is immaterial to Edward Lee’s standing.

The Court finds that Plaintiff Edward Lee has sufficiently established his standing to pursue this action as Decedent’s successor-in-interest.

            b. Statute of Frauds

            Certain contracts, including “[a]n agreement that by its terms is not to be performed within a year from the making thereof,” or “[a]n agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein,” are “invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent.” (Civ. Code, § 1624(a).)

            Defendants argue that the alleged oral contract between Phuong and Diana is barred by the statute of frauds because it is an agreement concerning an interest in real property and could not be performed within one year. However, the contract could possibly have been performed within one year, even though it ultimately took Phuong several years to pay the requisite expenses. Therefore, the contract does not fall under the statute of frauds for this reason. (See White Lighting Co. v. Wolfson (1968) 68 Cal.2d 336, 342 [statute of frauds does not apply unless the terms of a contract foreclose its performance within one year].) Nonetheless, a contract for the transfer of an interest in real property falls under the statute of frauds. (Code Civ. Proc., § 1624(a)(3).)

            However, it is well-established that partial performance or detrimental reliance takes a contract out of the statue of frauds. (See Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 555; Garcia v. World Savings, FSB (2010) 183 Cal.App.4th 1031, 1040, fn. 10.) Here, the FAC alleges that Phuong relied on Diana’s promise and paid the Property expenses for years, believing that Diana would eventually convey the Property to her. (FAC ¶ 53.) Because Phuong performed her obligations under the contract and detrimentally relied on Diana’s promise, the statute of frauds does not apply.

            c. Statute of Limitations

            The statute of limitations for “[a]n action for relief on the ground of fraud or mistake” is three years. (Code Civ. Proc., § 338(d).) The statute of limitations for “[a]n action upon a contract, obligation or liability not founded upon an instrument of writing” is two years. (Id., § 339.) The statute does not begin running until a plaintiff discovers or reasonably should have discovered their injury. (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.)

            Defendants argue that Plaintiffs’ claims are time-barred because the FAC admits that Diana took title to the Property in September 2017. Because Plaintiffs have known since then that Diana had title to the Property, Defendants contend, the statute of limitations ran by September 2020 at the latest. However, Plaintiffs had no reason to suspect wrongdoing until June 2021, when Diana refused to transfer title to Phuong. (See FAC ¶ 17.) The fact that Diana obtained title to the Property is not an indication of fraud because that was the parties’ arrangement. Phuong expected Diana to take title; she would not have been put on notice of potential fraud from that alone. Phuong would only have realized that Diana lied when Diana refused to convey title to her in June 2021.

            A plaintiff’s obligation to allege specific facts justifying delayed discovery only arises when it appears on the face of the complaint that the claim is time-barred. (See Fox, supra, 35 Cal.4th at p. 808.) This is not the case here because the FAC clearly shows that Phuong was not on notice of Diana’s fraud until June 2021. The filing of the complaint in November 2022 was therefore timely.

d. Defective Oral Contract

            Defendants argue that the alleged oral contract is defective because it is vague, ambiguous, and uncertain. Defendants point out that the contract required Diana to convey title to Phuong at some unspecified time: “a period of time sufficient to demonstrate her credit worthiness.” (See FAC ¶ 13.) According to the FAC, this period was satisfied by June 2021. (Id., ¶ 17.) Defendants argue that “the purported verbal agreement is completely unclear as to what the parties obligations were, who performed what obligations, if any, and therefore ultimately unclear as to whether Defendants breached any obligation to Plaintiff (or whether Defendant was even a party to any agreement with Plaintiff).” (Dem. 9:1-5.)

            The Court disagrees. The FAC is sufficiently clear about the parties’ respective obligations. The lack of a precise timeframe or specific date does not render the contract ambiguous. Whether Phuong properly demonstrated her credit worthiness to warrant transfer of the title is a factual issue. At the pleading stage, the allegation that she did must be taken as true. Assuming true that Phuong demonstrated her credit worthiness, Diana would have been obligated under the contract to transfer title to Phuong. Diana’s failure to do so constitutes a breach. Therefore, the FAC adequately pleads an oral contract as the basis for quiet title.

            e. Adverse Possession

            “To establish adverse possession, the claimant must prove: (1) possession under claim of right or color of title; (2) actual, open, and notorious occupation of the premises constituting reasonable notice to the true owner; (3) possession which is adverse and hostile to the true owner; (4) continuous possession for at least five years; and (5) payment of all taxes assessed against the property during the five-year period.” (Main Street Plaza v. Cartwright & Main, LLC (2011) 194 Cal.App.4th 1044, 1054.)

            Here, the FAC alleges that “Plaintiff has adversely possessed the Property by being in possession thereof to the exclusion of the Defendants and paying all taxes assessed thereon, maintaining, repairing, improving and insuring it, for more than five years.” (FAC ¶ 48.) Defendants argue that this is conclusory and that Phuong’s possession could not have been adverse because the parties agreed that Phuong would occupy the Property.

However, the FAC adequately alleges ultimate facts supporting adverse possession. Plaintiffs are also entitled to plead adverse possession in the alternative in the event their allegation of an oral contract is disproven. “A plaintiff may plead cumulative or inconsistent causes of action.” (Gherman v. Colburn (1977) 72 Cal.App.3d 544, 565.) Therefore, the FAC adequately pleads adverse possession.

f. Fraud

“The elements of fraud that will give rise to a tort action for deceit are: ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974, quoting Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. (Lazar, supra, 12 Cal.4th at p. 645.)

The FAC specifically alleges that around July or August 2017, Diana orally promised to hold title to the Property in trust for Phuong. (FAC ¶ 51.) Diana did not intend to perform this promise because she refused to transfer title to Phuong when the time came. (Id., ¶ 17.) The FAC further alleges that the misrepresentation was intended to induce Phuong to pay the down payment, mortgage, and expenses for the Property and that Phuong in fact did so. (Id., ¶¶ 55-56.) Phuong allegedly suffered damages consisting of the payments that she made. (Id., ¶ 56.) Thus, the elements of fraud have been alleged with the requisite specificity.

g. Conversion

The elements of conversion are: (1) the plaintiff’s ownership or right to possession of the personal property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. (Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208.)

The conversion claim alleges that “Defendants wrongfully converted to their own personal use without Plaintiffs consent, the Property and moneys and personal property described herein.” (FAC ¶ 87.) The FAC describes the following property that Diana allegedly took or transferred to herself without consent: (1) sale proceeds from the First Las Vegas House (FAC ¶¶ 18-20); (2) sale proceeds from the Second Las Vegas House (id., ¶¶ 21-22); (3) insurance proceeds from the Lambert El Monte Residence (id., ¶¶ 23-26); Decedent’s cash (id., ¶ 27); Decedent’s life insurance benefits (id., ¶¶ 28-31); and a Honda Pilot vehicle (id., ¶¶ 32-33).

Defendants argue that Plaintiffs lack standing to pursue conversion for property belonging to Decedent. However, as discussed above, Edward Lee has standing to sue on behalf of Decedent as successor-in-interest. Additionally, Phuong has standing to assert conversion of her own property. Not everything is alleged to belong solely to Decedent. Some of the money allegedly belonged in a joint account owned by Phuong and Decedent. (See, e.g., FAC ¶ 22.) Decedent’s life insurance benefits allegedly belong to Phuong. (Id., ¶ 30.)

Defendants also argue that the statute of limitations has run. However, the FAC does not reveal when Diana stole the property or when Plaintiffs found out. Therefore, no statute of limitations defense appears on the face of the complaint. (See Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 324-325 [“If the dates establishing the running of the statute of limitations do not clearly appear in the complaint, there is no ground for general demurrer”].) The conversion claim is properly pled.

h. Elder Abuse

“Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following: takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (Welf. & Inst. Code, § 15610.30.)

The FAC alleges that Phuong is over 65 years old and that Defendants took and hid Phuong’s property. (FAC ¶¶ 93-94.) The referenced property and alleged wrongful taking are discussed above. Defendants argue that this claim fails because Plaintiffs have failed to maintain their quiet title or conversion claims. Defendants also argue that the claim is barred by the statute of limitations. As discussed above, these arguments are erroneous. Therefore, the elder abuse claim survives.

i. Accounting

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)

Defendants first reiterate the rejected arguments regarding statute of limitations. They then argue that the accounting claim fails because no fiduciary relationship is alleged. However, “a fiduciary relationship between the parties is not required to state a cause of action for accounting. All that is required is that some relationship exists that requires an accounting.” (Teselle, supra, 173 Cal.App.4th at p. 179.) “The right to an accounting can arise from the possession by the defendant of money or property which, because of the defendant's relationship with the plaintiff, the defendant is obliged to surrender.” (Ibid.) The FAC alleges the requisite relationship through the arrangement between Phuong and Diana. It also alleges that “[t]he exact amount of money owing from Defendants cannot be ascertained without an accounting of Defendants' receipts and disbursements.” (FAC ¶ 104.) Therefore, the FAC properly states an accounting claim.

j. Declaratory Relief

“Any person interested under a written instrument . . . or under a contract . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties . . . arising under the instrument or contract.” (Code Civ. Proc., § 1060.)

Defendants argue that this claim fails because every other cause of action fails, reiterating their arguments that the oral contract is unenforceable, that the claims are time-barred, and that Edward Lee lacks standing. These arguments fail for the reasons discussed above.

Defendants also argue that declaratory relief cannot be used to address a past wrong. However, the FAC alleges a present dispute over whether Diana is contractually obligated to transfer title to Phuong. (FAC ¶ 39.) Therefore, the FAC properly pleads declaratory relief.

II. Motion to Strike

            a. Punitive Damages

            “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) “‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Id., subd. (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id., subd. (c)(2).) Fraud is “intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Id., subd. (c)(3).)

            Defendants argue that the FAC relies on purely conclusory allegations of willful and malicious conduct. However, the complaint must be read as a whole. As discussed above, the allegations demonstrate that Defendants intentionally defrauded Plaintiffs and stole their property. This is sufficient at the pleading stage.

            b. Attorneys’ Fees

            “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties . . . .” (Code Civ. Proc., § 1021.)  

            Defendants argue that the prayer for attorneys’ fees is improper because it is a general request tied to every cause of action. (See Prayer for Relief ¶ 4.) The formatting of the prayer for relief is not grounds for demurrer. Even if Plaintiffs do not end up recovering attorneys’ fees for every cause of action, the prayer is properly alleged if Plaintiffs establish a basis on at least one cause of action. Plaintiffs may recover attorneys’ fees for the elder abuse claim if they prevail. (See Welf. & Inst. Code, § 15657.5(a) [“Where it is proven by a preponderance of the evidence that a defendant is liable for financial abuse, as defined in Section 15610.30, in addition to compensatory damages and all other remedies otherwise provided by law, the court shall award to the plaintiff reasonable attorney's fees and costs”].)

            Therefore, the request for attorneys’ fees is not stricken.

CONCLUSION

            Defendants’ demurrer to the FAC is OVERRULED. Their motion to strike is DENIED.