Judge: David A. Rosen, Case: 22GDCV00586, Date: 2023-02-24 Tentative Ruling
Case Number: 22GDCV00586 Hearing Date: February 24, 2023 Dept: E
Case No: 22GDCV00586
Hearing Date: 2/24/2023 – 10:00am
Trial Date: Unset
Case Name: CJ PRIME INVESTMENT, LLC., a Limited
Liability Company; MARVIN C. HUR, an indiv; CONNIE KIM HUR, an indiv; JONATHAN
HUR, an indiv; JENNIFER HUR, an indiv; v. LOMA VISTA INVESTMENT, LLC., a
Limited Liability Company; ALBERT AHDOOT, indiv; SPECIAL DEFAULT SERVICES,
INC., a California Corporation; and DOES 2-100
TENTATIVE RULING ON
DEMURRER AND MOTION TO STRIKE
Moving Party: Defendants, Loma Vista Investment LLC, a
Limited Liability Company, and Albert Ahdoot, an indiv.
Responding Party: Plaintiff,
CJ Prime Investment, LLC
(Oppo and Reply
Submitted)
Moving Papers: Notice of
demurrer/memo; Request for Judicial Notice
Opposing Papers:
Opposition
Reply Papers: Reply
Proof of Service
Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok
RELIEF REQUESTED
Defendants Loma Vista Investment LLC and Albert Ahdoot demur as follows:
1.
The Amended Complaint fails to allege facts sufficient to state a
cause of action. (Cal. Civ. Proc. Code § 430.10(e))
2.
The Amended Complaint is uncertain, ambiguous, and unintelligible.
(Cal. Civ. Proc. Code § 430.10(f))
3.
The First alleged Cause of Action for Negligent Misrepresentation
is uncertain, and fails to allege facts sufficient to state a cause of action
against these demurring Defendants (Cal. Code Civ. Proc. § 430.10(e))
4.
The Second alleged Cause of Action for Fraudulent Concealment is
uncertain, and fails to allege facts sufficient to state a cause of action
against these demurring Defendants (Cal. Code Civ. Proc. § 430.10(e))
5.
The Third alleged Cause of Action for Unfair Business Practices is
uncertain, and fails to allege facts sufficient to state a cause of action
against this demurring Defendant (Cal. Code Civ. Proc. § 430.10(e))
6.
The Fourth alleged Cause of Action for Cancellation of Written
Instruments is uncertain, and fails to allege facts sufficient to state a cause
of action against these demurring Defendants (Cal. Code Civ. Proc. § 430.10(e))
7.
The Fifth alleged Cause of Action for Breach of Implied Covenant
is uncertain, fails to allege facts sufficient to state a cause of action against
these demurring Defendants (Cal. Code Civ. Proc. § 430.10(e))
8.
The Sixth alleged Cause of Action for Wrongful Foreclosure is
uncertain, fails to allege facts sufficient to state a cause of action against
these demurring Defendants (Cal. Code Civ. Proc. § 430.10(e))
BACKGROUND
Plaintiffs in this
action are CJ Prime Investment LLC (CJ Prime), Marvin Hur, Connie Hur, Jonathan
Hur, and Jennifer Hur.
A
complaint was filed on 09/07/2022. The operative Amended Complaint (AC) was
filed on 11/29/2022.
The
Amended Complaint alleges six causes of action against Defendants Loma Vista
Investment, LLC (Loma Vista), Albert Ahdoot (Ahdoot), and Special Default
Services.
In
summary, the Amended Complaint alleges as follows:
Plaintiff Connie is the president of the corporation
and also wife of Plaintiff Marvin and mother of Plaintiffs Jonathan and
Jennifer. (AC ¶3.) Defendant Albert Ahdoot is agent for service of process for
Plaintiff Loma Vista Investment, LLC. (AC ¶8.) [The Court notes that Plaintiff likely meant to state that
Ahdoot was agent for service of process for Defendant, Loma Vista,
because Loma Vista is not a plaintiff, and in Paragraph 7 of the AC, Loma Vista
is referred to as a Defendant, and Paragraph 7 also states that Ahdoot is agent
for service of process.] Plaintiff CJ Prime is the owner or has owned
the real property commonly known as 2650 Foothill Boulevard, La Crescenta, CA
91214-3510 (Subject Property) since October 28, 2008. (AC ¶10.)
Defendants failed to serve Plaintiff with a
Notice of Default, therefore, making this Notice of Trustee sale invalid. (AC
¶11.)
On or around October 28, 2008, CJ Prime Investment,
LLC. took ownership of the subject premises though a loan through Pacific State
Bank and through a Deed of Trust (hereinafter “DOD”). Attached as Exhibit A.
(AC ¶17.) On or around October 28, 2008, Plaintiffs obtained a commercial loan
from Pacific City Bank, a California banking corporation in the sum of
$1,414,000.00. The Loan was secured by the borrower CJ Prime Investment, LLC.,
leading to possession of the subject property. (AC ¶18.) .The Loan was
evidenced by a U.S. Small Business Administration Note, dated October 28, 2008
and Pacific City Bank was the initial loan holder, see-attached Note as Exhibit
“B.” (AC ¶19.) On or around January 29, 2018, there was a transfer of the
lender’s note, DOD, and all loan documents by Pacific City Bank. (AC ¶20.) Pacific
City Bank sold Plaintiff's loan in the secondary mortgage market to Loma Vista
Investments, LLC. (AC ¶21.)
Plaintiffs signed a Forbearance Agreement
without having any legal assistance or representation at that time and
especially without receiving professional assurances, nor clarification for the
actual content and the terms of the said document. Attached Forbearance
Agreement as Exhibit “C.” (AC ¶22.) The above-mentioned Forbearance Agreement
was not translated or provided in the native language of Korean, which is the
language Plaintiff Marvin and Plaintiff Connie speak. (AC ¶23.) Defendants were
aware that this is the native language of Plaintiff Marvin and Plaintiff
Connie. (AC ¶24.) Numerous family members and entities were made guarantors,
who have no- interest and business dealings in this transaction. (AC ¶25.)
When Plaintiffs requested a copy of the
above-mentioned forbearance agreement, several pages were missing after page
13. (AC ¶26.) During the COVID-19 pandemic, Plaintiffs business was
substantially reduced due to state and local requirements, which impacted their
income and ability to process mortgage payments. (AC ¶27.) Defendant stated to
Plaintiffs on several occasions that they had been in default on the loan, and
explicitly said they were in default on multiple occasions. Defendant informed
Plaintiffs, that he would not foreclose. (AC ¶28.) Plaintiff was unaware of any
of this since no notice was ever properly served or provided. In fact, Defendant
encouraged Plaintiffs during the COVID period to make tenant improvements using
monetary funds, which they essentially did not possess, to update and renovate
the restaurant. (AC ¶29.) Defendant’s encouragement to use money to renovate
and update was-to the Defendant's benefit, because if and when the property
foreclosed, he-would have then inherited all the high end and expensive tenant
improvements that were made by Plaintiff. (AC ¶30.)
Plaintiff throughout this entire period spoke to
Defendant on numerous occasions, requesting statements, documentation, and
provided Defendants with all the requested documents each and every time. (AC
¶31.) At no point and time did Defendant provide loan statements or
documentation that properly accounted for monthly mortgage payments, principal
payments, or other obligations-owed by Plaintiff. (AC ¶32.)
Within the past year, Defendant approached
Plaintiff with a new “legal document” and stated that they had to sign this
document. (AC ¶33.) As described by Defendant, this legal document increased
the principal interest on the original loan. (AC ¶34.) When Plaintiffs insisted
that they wanted to show this document to an attorney, Defendant immediately
tore the document without providing any further info. (AC ¶35.)
Plaintiffs received Notice of Trustee's Sale on
March 23, 2021 by mail. (AC ¶36.) Defendants have taken advantage of Plaintiff
Marvin and Plaintiff Connie due to their inability to speak and read fluent
English. They have gone as far as to add Plaintiff's very own children to the
forbearance agreement and failed to even provide all the documents. (AC ¶37.)
Plaintiffs are hardworking and have been in
possession of this subject property since 2008. They have consistently made
mortgage payments. (AC ¶38.) Defendant has kept Plaintiffs in the dark and did
not follow required state and federal statutes for notice and the fairness and
equality within the Lending Act. (AC ¶39.) On or around October 19, 2022,
Plaintiff received another improper Notice of Trustee Sale from Defendants,
despite never being served with a Notice of Default. (AC ¶40.) California Code
§2924C requires that prior to Notice of Trustee sale being given to a party, a
Notice of Default must be served allowing ninety (90) days for the party served
to respond. Then, a party may proceed with a Notice of Trustee sale if no
response is received. (AC ¶41.) On or around October 19, 2022, Plaintiff to
file a Lis Pendens with the country recorders. Please see attached Lis Pendens
as Exhibit “D.” (AC ¶42.) On or around November 17, 2022, Plaintiff again
received another improper Notice of Trustee sale, set for December 1, 2022.
Again, Defendants failed to serve Plaintiff with a Notice of Default and failed
to comply with the California Code. Please see attached Notice of Trustee Sale
as Exhibit “E.”(AC ¶43.)
(AC ¶3-43.)
PROCEDURAL
Meet
and Confer
A party filing a
demurrer “shall meet and confer in person or by telephone with the party who
filed the pleading that is subject to demurrer for the purpose of determining
whether an agreement can be reached that would resolve the objections to be
raised in the demurrer.” (Code Civ.
Proc., §430.41, subd. (a).) “The parties
shall meet and confer at least five days before the date the responsive
pleading is due. If the parties are not able to meet and confer at least five
days prior to the date the responsive pleading is due, the demurring party
shall be granted an automatic 30-day extension of time within which to file a
responsive pleading, by filing and serving, on or before the date on which a
demurrer would be due, a declaration stating under penalty of perjury that a
good faith attempt to meet and confer was made and explaining the reasons why
the parties could not meet and confer.”
(Code Civ. Proc., §430.41, subd. (a)(2).) Failure to sufficiently meet
and confer is not grounds to overrule or sustain a demurrer. (Id., §430.41(a)(4).)
Defendants’
counsel met and conferred with Plaintiffs’ counsel but was not able to reach an
agreement. (Decl. Kritzer ¶10.)
LEGAL STANDARDS FOR DEMURRERS
Demurrer
– Sufficiency
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.) The court “treat[s] the demurrer as admitting
all material facts properly pleaded, but not contentions, deductions or
conclusions of fact or law ….” (Berkley
v. Dowds (2007) 152 Cal.App.4th 518, 525.)
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 pleadings
alone and not the evidence or other extrinsic matters; therefore, it lies only
where the defects appear on the face of the pleading or are judicially
noticed. (Code Civ. Proc., §§ 430.30,
430.70.) 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.)
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 … 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.)
On
demurrer, a trial court has an independent duty to “determine whether or not
the … complaint alleges facts sufficient to state a cause of action under any
legal theory.” (Das v. Bank of
America, N.A. (2010) 186 Cal.App.4th 727, 734.) Demurrers do not lie as to only parts of
causes of action, where some valid claim is alleged but “must dispose of an
entire cause of action to be sustained.”
(Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97,
119.) “Generally
it is an abuse of discretion to sustain a demurrer without leave to amend if
there is any reasonable possibility that the defect can be cured by
amendment.” (Goodman v. Kennedy
(1976) 18 Cal.3d 335, 349.)
Demurrer – Uncertainty
A special demurrer for uncertainty, CCP section 430.10(f), is disfavored
and will only be sustained where the pleading is so bad that 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.” (Ibid.)
ANALYSIS
First Cause of Action – Negligent Misrepresentation
Plaintiffs
allege as follows in their AC:
Plaintiff
realleges and incorporates herein by reference each and every allegation of
Paragraphs 1 through 43 as set forth above. (AC ¶44.) Defendants misrepresented
Plaintiff providing by failing to provide any material disclosures. documents,
statements, and notices regarding the amount due and/or paid towards the loan.
(AC ¶45.) The above representations, material facts for the loan, and the exact
amount due ‘were never disclosed to Plaintiffs, The true facts were that
Defendants never wanted to present the exact amounts due to Plaintiff, nor to
allow them to make payments in good faith and maintain the Subject Property.
(AC ¶46.) Plaintiff reasonably and justifiably relied-on Defendants as they had
a duty to be impartial and act for the best interest of all parties in the
transaction and as a direct and proximate result of Defendants’ negligence and
carelessness, Plaintiff has incurred significant pecuniary loss, during the
time their business was notable to function to its full capacity. (AC ¶47.)
“The elements of negligent
misrepresentation are well established. A plaintiff must prove the following in
order to recover. ‘Misrepresentation 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.)
(1) Misrepresentation of a past or existing
material fact
Preliminary Matter
As a preliminary matter, it is unclear to
the Court as to what Plaintiffs are alleging are the misrepresentations. The AC
states, “Defendants misrepresented Plaintiff providing by failing to provide
any material disclosures, documents, statements, and notices regarding the
amount due and/or paid towards the loan.” (AC ¶45.) Further, the AC states, “ The
above representations, material facts for the loan, and the exact amount due
were never disclosed to Plaintiffs. The true facts were that Defendants never
wanted to present the exact amounts due to Plaintiff, nor to allow them to make
payments in good faith and maintain the Subject Property.” (AC ¶46.) Not only is it unclear as to what the
misrepresentation(s) is/are, but the AC seems to be referencing “failing to
provide any material disclosures..” which confusingly sounds like Plaintiffs
are referring to concealments, not misrepresentations.
Further, in Opposition, Plaintiffs state,
“Defendant Albert Ahdoot stated that he would not foreclose on Plaintiffs, This
was an intentional or at the very least negligent misrepresentation because
either Defendant new [sic] he was giving false information or had no reason to
believe it to be certain or accurate.” (Oppo. p. 7.) However, the Court does
not see where this allegation is made in the AC.
Further in Opposition, Plaintiffs argue, “This
misrepresentation along with the material concealments induced reliance and
financially harmed Plaintiffs.” (Oppo. p.7.) Again, the Court is confused as to
why Plaintiffs are referring to concealments with respect to their
misrepresentation cause of action and what Plaintiffs are alleging is the
difference between the two causes of action.
Additionally, in Opposition here, Plaintiffs
argue, “Defendants encouraged Plaintiffs to make improvement and renovations to
the subject property knowing that he would have foreclosed notwithstanding the
assurances provided to Plaintiffs and knowing that he would take title to a
completely renovated property.” (Oppo. p. 7.) Again, the Court is entirely
unclear as to what Plaintiffs are trying to allege is the misrepresentation. Further,
if it is alleged in the AC, it is not alleged in the section titled “First
Cause of Action,” in the AC. If it is alleged earlier in the AC, due to the
fact that Plaintiffs incorporated the allegations via Paragraph 44, it is still
unclear as to what specific misrepresentations Plaintiffs allege.
Specificity
Defendants argue that Plaintiffs failed to
meet the specificity requirements under California law to plead negligent
misrepresentation. Plaintiffs cite Tarmann v. Stale Farm Mut. Auto Ins. Co.
(1991) 2 Cal.App.4th 153, 157 to argue that the requirement of specificity in a
fraud action against a corporation requires the plaintiff to allege the names
of the persons who made the allegedly …representations, their authority to
speak, to whom they spoke, what they said or wrote, and when it was said or
written. Plaintiffs also state that the
specificity requirement applies equally to negligent misrepresentation claims
and cites Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185 fn. 14.
As to Defendant’s argument here, the Court
is not persuaded that the level of specificity required for pleading fraud is also
required for a negligent misrepresentation claim.
Defendants cite Charnay v. Cobert
(2006) 145 Cal.App.4th 170, 185 fn. 14 to argue that the specificity
requirements apply to a negligent misrepresentation cause of action; however, Charney
cites Lazar v. Superior Court, 12 Cal.4th 631, 645, and Lazar did
not deal with negligent misrepresentation. Lazar dealt with fraudulent
inducement of an employment contract.
At the very least, there appears to be
conflicting authority as to whether or not the specificity in pleading fraud requirements
apply in a negligent misrepresentation cause of action. In Hamilton v.
Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, the Second
District affirmed the trial court’s judgment dismissing borrowers’ complaint in
connection with a lender’s foreclosure of a residential mortgage loan after
sustaining lender’s demurrer. In Hamilton,
the Second District treated the claims for fraud and negligent
misrepresentation together, and set forth the particularity requirements
referring to fraud and deceit claims, but did find the demurer had been
properly sustained to both causes of action on the ground the conclusory
allegations were not specific enough to state a claim for fraud. (Hamilton,
at 1615. ) “ Plaintiffs' fraud and negligent misrepresentation claims are
likewise defective… The particularity requirement “
‘necessitates pleading facts which “show how, when, where, to
whom, and by what means the representations were tendered.” ’ [Citation.] A
plaintiff's burden in asserting a fraud claim against a corporate employer is
even greater. In such a case, the plaintiff must ‘allege the names of the
persons who made the allegedly fraudulent representations, their authority to
speak, to whom they spoke, what they said or wrote, and when it was said or
written.’ ” (Ibid.)” . (Hamilton, at 1614.)
However, Small v. Fritz Companies, Inc.
(2003) 30 Cal.4th 167, 184 indicates that the specificity requirements may
not apply here for negligent misrepresentation. “California courts have never
decided whether the tort of negligent misrepresentation, alleged in the
complaint here, must also be pled with specificity…because of the potential for
false claims, we hold that a complaint for negligent misrepresentation in a
holder’s action should be pled with the same specificity required in a holder’s
action for fraud. (We express no view on whether this pleading requirement
would apply in other actions for negligent misrepresentation.)” (Small v.
Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)
Here, this action does not appear to be a
holder’s action for fraud; therefore, it is unclear if the specificity
requirements are needed in this negligent misrepresentation action.
Therefore, the Court is not commenting on
what level of specificity is needed for a negligent misrepresentation cause of
action. However, the Court can determine at the very least that the first
element of the negligent misrepresentation cause of action was not sufficiently
alleged because it is entirely unclear as to what Plaintiffs are even alleging
to be the negligent misrepresentation or negligent misrepresentations.
(2) Without Reasonable ground for
believing it to be true
Here,
the Court does not see where Plaintiffs alleged this element.
(3) Intent to induce another’s reliance on
the fact misrepresented
Here,
the Court does not see where Plaintiffs alleged this element.
(4) Ignorance of the truth and justifiable
reliance on the misrepresentation by the party to whom it was directed
Here,
the Plaintiffs arguably alleged this element by stating, “Plaintiff reasonably
and justifiably relied-on Defendants as they had a duty to be impartial and act
for the best interest of all parties in the transaction…” (AC ¶47.)
(5) Resulting Damage
Here, Plaintiffs alleged as follows, “…and
as a direct and proximate result of Defendants’ negligence and carelessness,
Plaintiff has incurred significant pecuniary loss, during the time their
business was not able to function to its full capacity.” This is a bare minimum in causation and
damages allegations.
TENTATIVE RULING FIRST CAUSE OF ACTION –
NEGLIGENT MISREPRESENTATION
Defendants’
demurrer as to the first cause of action is SUSTAINED WITH 20 DAYS’ LEAVE TO
AMEND for failure to allege sufficient facts to constitute a cause of action
and on grounds of uncertainty.
Second Cause of Action – Fraudulent
Concealment
Plaintiffs allege as follows with respect to their
cause of action for Fraudulent Concealment:
Plaintiff
realleges and incorporates each and every allegation of paragraphs I through 47
of this Complaint as though fully set forth herein. (AC ¶48.) Defendants
engaged in centrally directed fraud by which they concealed numerous material
facts. (AC ¶49.) Defendants’ suppressed
material facts relevant to Plaintiff's decision on whether or not Plaintiff
could have sought out other financial options. Plaintiff relied on Defendants’
statements. (AC ¶50.) Defendants misled
Plaintiffs and failed to disclose material information regarding Plaintiff’s
property, and actual and accurate estimated loan amount due. (AC ¶51.) As a
proximate result of the foregoing concealments and other misrepresentations
made by Defendants, Plaintiffs have suffered monetary loss. (AC ¶52.) These
frauds-and concealments were unknown to Plaintiffs, Any reasonable person would
have been unable to reasonably discover said frauds any earlier (AC ¶53.) In doing the things herein alleged, Defendants
acted in concert intentionally. (AC ¶54.)
(AC ¶¶48-54.)
“’[T]he elements of an action for fraud and deceit
based on concealment are: (1) the defendant must have concealed or suppressed a
material fact, (2) the defendant must have been under a duty to disclose the
fact to the plaintiff, (3) the defendant must have intentionally concealed or
suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff
must have been unaware of the fact and would not have acted as he did if he had
known of the concealed or suppressed fact, and (5) as a result of the
concealment or suppression of the fact, the plaintiff must have sustained
damage.’” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230,
248 citing Hahn v. Mirda (2007) 147 Cal.App.4th 740,748.) “Fraud must be
pleaded with specificity rather than with “’general and conclusory’”
allegations.” (Boschma, supra, at 248 citing Small v. Fritz
Companies, Inc. (2003) 30 Cal.4th 167, 184.)
(1) The Defendant must have concealed or suppressed
a material fact
First, Plaintiffs allege in their AC, “Defendants engaged in centrally
directed fraud by which they concealed numerous material facts. Defendants’
suppressed material facts relevant to Plaintiff's decision on whether or not
Plaintiff could have sought out other financial options. Plaintiff relied on
Defendants’ statements.” (AC ¶49-50.)
Here, as to these statements in the AC, the Court is
entirely unclear as to what Plaintiffs are referring to with respect to “suppressing
facts relevant to Plaintiff’s decision on whether or not Plaintiff could have
sought out other financial options.”
Plaintiffs also allege, “Defendants misled Plaintiffs
and failed to disclose material information regarding Plaintiff’s property, and
actual and accurate estimated loan amount due.” (AC ¶51.) Again, the Court is
confused as to what the concealment is and what this allegation is referring
to. The AC mentions at least two different loans in Paragraphs 17-19 of the AC,
and thus the Court is unclear what information Plaintiffs concealed and with
respect to what.
Further, in Opposition, Plaintiffs argue, “Here,
Defendants did not provide any statements or documents related to the money
owed by Plaintiffs as principal and interest or the loan. The Forbearance
Agreement had several missing pages, and a Notice of default was never served.
There was a concealment of material facts in violation of the Landing Act and
of California Code §2924C that requires that prior to Notice of Trustee sale
being given to a party, a Notice of, Default must be served allowing ninety
(90) days for the party served to respond. Defendant never sent mortgage
statements or served a notice of default because had the clear intention to
defraud the Plaintiffs of the subject property. Defendants concealed material
facts with the intent to induce reliance and indeed Plaintiffs relied on it. If
Plaintiffs would have been served with Notice of default, they could have
sought financial options to make the required payments and keep the property.”
(Oppo. p.6)
As to Plaintiffs’ argument on this point, not all of
these allegations are contained within the “Second Cause of Action” section in
the AC. Although Paragraph 48 incorporates paragraphs 1-47 of the Complaint, Plaintiffs
still need to make clear what the fraudulent concealments are considering the
overall uncertainty of the AC and the allegation in the “Second Cause of
Action,” section.
Specificity
Defendants
make the same argument with respect to specificity that Defendants made in the
negligent misrepresentation cause of action.
As to Defendants argument here, the Court
would need further briefing as to whether or not this level of specificity is
required for a fraudulent concealment claim.
“Fraud must be pleaded with specificity rather than
with “’general and conclusory’” allegations.” (Boschma, supra, at 248
citing Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)
Although the Court realizes that Boschma states
that the specificity requirements also apply for fraudulent concealment, Boschma
relied on Small, which to the Court, it does not appear pertained
to a cause of action for fraudulent
concealment. Therefore, the Court is not commenting on what level of
specificity is needed for a fraudulent concealment cause of action. However,
the Court can determine at the very least that the first element of the fraudulent
concealment cause of action was not sufficiently alleged because it is entirely
uncertain as to what Plaintiffs are even alleging to be the fraudulent
concealment.
(2) The Defendant must have been under a
duty to disclose the fact to the Plaintiff
Here, Plaintiffs do not allege this element.
(3) The Defendant must have intentionally concealed
or suppressed the fact with the intent to defraud the plaintiff
Here, the Plaintiffs do not allege that Defendants
acted with the intent to defraud the Plaintiffs.
(4) The Plaintiff must have been unaware
of the fact and would not have acted as he did if he had known of the concealed
or suppressed fact
Plaintiffs allege, “These frauds and concealments were
unknown to Plaintiffs. Any reasonable person would have been unable to
reasonably discover said frauds any earlier.” (AC ¶53.)
Here, Plaintiffs do not sufficiently allege this
element. Plaintiffs allege the frauds and concealments were unknown to
Plaintiffs, but Plaintiffs do not allege that Plaintiffs would not have acted
as he did if he had known of the concealed or suppressed fact.
(5) As a result of the concealment or
suppression of the fact, the plaintiff must have sustained damage
Plaintiffs
allege, “As a proximate result of the foregoing concealments and other
misrepresentations made by Defendants, Plaintiffs have suffered monetary loss.”
Here, the Plaintiffs arguably alleged this element.
TENTATIVE RULING – SECOND CAUSE OF ACTION
– FRAUDULENT CONCEALMENT
Defendants’ demurrer as to the second cause of action
for fraudulent concealment is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND for
failure to allege sufficient facts to constitute a cause of action and on
grounds of uncertainty.
Third Cause of Action – Unfair Business
Practices Violation of Business and Professions Code Section 17200 ET
As a preliminary matter, Defendants’ argument as to
sustaining the demurrer for this cause of action is borderline
incomprehensible.
The allegations in the AC state as follows:
Plaintiff
incorporates and realleges the allegations of paragraphs 1 through 54 above, as
though set forth fully herein. (AC ¶55.) The Unfair Competition Law, California
Business and Professions Code Section 17200 et seq., defines unfair competition
to include any “unlawful”, “unfair” or “fraudulent” business act or practice.
(AC ¶56.) Defendants violated Section 17200 et seq, by committing unlawful and
fraudulent business acts and practices by failing to provide Plaintiffs with-material
information regarding the actual loan agreement’s amounts due of the Subject
Property in order to eventually foreclose, sell it and gain unlawful profit.
(AC ¶57.) As alleged above, Defendants committed fraudulent acts and practices
by employing deceptive practices and failing to disclose the actual and
true.amount due for the loan of the Property. (AC ¶58.) As a direct result of
Defendants’ unlawful and fraudulent acts and practices, Plaintiff has been
financially harmed and their business has been impacted. (AC ¶59.) Plaintiff is
entitled to restitution of all profits, benefits, and monies that Defendants
obtain and/or will obtain as a result of its wrongful conduct. (AC ¶60.)
(AC ¶55-60.)
Discussion
The purpose of the UCL
“is to protect both consumers and competitors by promoting fair competition in
commercial markets for goods and services.” (Drum v. San Fernando Valley Bar
Assn. (2010) 182 Cal.App.4th 247, 252 citing Kasky v. Nike, Inc. (2002)
27 Cal.4th 939, 949.) Business and Professions Code section 17200 provides:
“[a]s used in this chapter, unfair competition shall mean and include any
unlawful, unfair or fraudulent business act or practice and unfair, deceptive,
untrue or misleading advertising and any act prohibited by Chapter 1
(commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions
Code.” (Progressive West Ins. Co. v. Superior Court (2005) 135
Cal.App.4th 263, 284.) Because the UCL
is written in the disjunctive, it establishes three varieties of unfair
competition – acts or practices which are unlawful, or unfair, or fraudulent. (Adhav
v. Midway Rent a Car, Inc. (2019) 37 Cal.App.5th 954, 970 citing Cel-Tech
Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20
Cal.4th 163, 180.)
Unlawful
“
‘The “unlawful” practices prohibited by … section 17200 are any practices
forbidden by law, be it civil or criminal, federal, state, or municipal,
statutory, regulatory, or court-made. [Citation.] It is not necessary that the
predicate law provide for private civil enforcement. [Citation.] As our Supreme
Court put it, section 17200 “borrows” violations of other laws and treats them
as unlawful practices independently actionable under section 17200 et seq.’” (South
Bay Chevrolet v. General Motors Acceptance Corp. (1999) 72 Cal.App.4th 861,
880 citing Hewlett v. Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499,
531-532.) “A plaintiff alleging unfair business practices under these statutes
must state with reasonable particularity the facts supporting the statutory elements
of the violation.” (Khoury v. Maly’s of California, Inc. (1993) 14
Cal.App.4th 612, 619; “Demurrer was properly sustained as to this cause of
action because the second amended complaint identifies no particular section of
the statutory scheme which was violated and fails to describe with any
reasonable particularity the facts supporting violation.”
A fair reading of the AC, reveals that it is unclear
as to what conduct/actions Plaintiffs are basing their UCL cause of action on.
Plaintiffs allege, “Defendants violated Section 17200 et seq, by committing
unlawful and fraudulent business acts and practices by failing to provide
Plaintiffs with-material information regarding the actual loan agreement’s
amounts due of the Subject Property in order to eventually foreclose, sell it
and gain unlawful profit.” (AC ¶57.)
Assuming Plaintiffs are basing their UCL cause of
action under the “unlawful” prong, it is still uncertain as to what Plaintiffs
are basing their cause of action on. It is unclear if it is based on statute,
or if it is based on some other cause of action in the AC.
In Opposition, Plaintiffs argue, “Here, Defendants
violated Section 17200 et seq. by committing unlawful and fraudulent business
acts and practices by failing to provide Plaintiffs with-material information
regarding the actual loan agreement’s amounts due of the Subject Property in
order to eventually foreclose, sell it and gain unlawful profit. Plaintiffs
made several payments but were never aware of how much, they owe, because they
never received a statement. Also, they never received a notice of default and
therefore never had the opportunity to respond or seek financial option to pay
the defaulted amount since they were unaware of how much the defaulted amount
was. As a direct result of Defendants’ unlawful and fraudulent-acts and
practices; Plaintiff has been financially harmed, and their business has-been
impacted. Therefore, Defendants’ Demurrer should be overruled.” (Oppo. p.8.)
As our Supreme Court put it, section 17200 “borrows”
violations of other laws and treats them as unlawful practices independently
actionable under section 17200 et seq.’” (South Bay Chevrolet v. General
Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 880 citing Hewlett v.
Squaw Valley Ski Corp. (1997) 54 Cal.App.4th 499, 531-532.) “A plaintiff
alleging unfair business practices under these statutes must state with
reasonable particularity the facts supporting the statutory elements of the
violation.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th
612, 619.)
Here, based on the Opposition, it appears as if
Plaintiffs are basing their UCL cause of action under the unlawful prong on
violation of the UCL itself. The Court fails to see how this is proper, as
Plaintiffs are not “borrowing” from other violations of laws, and further, Plaintiffs
don’t with reasonable particularity state the facts supporting the statutory
elements of the violation.
Unfair
There
is authority that the test to determine whether a business practice is unfair
differs depending on whether the plaintiff in a UCL case is a competitor of the
defendant or a consumer. (Drum v. San Fernando Valley Bar Assn. (2010)
182 Cal.App.4th 247, 253.) In competitor cases, a business practice is “unfair”
only if it “threatens an incipient violation of an antitrust law, or violates
the policy or spirit of one of those laws because its effects are comparable to
or the same as a violation of the law, or otherwise significantly threatens of
harms competition.” (Id. citing Cel-Tech, supra, 20 Cal.4th at
187.)
In consumer cases, the Supreme Court has not
established a definitive test to determine whether a business practice is
unfair. (Drum v. San Fernando Valley Bar Assn., supra, 182
Cal.App.4th at 246 citing Cel-Tech,
supra, 20 Cal.4th at 187, fn. 12.)
Several definitions of “unfair” under the UCL have
been formulated, and they are:
1. “An
act or practice is unfair if the consumer injury is substantial, is not
outweighed by any countervailing benefits to consumers or to competition, and is
not an injury the consumers themselves could reasonably have avoided.” (Daugherty
v. American Honda Motor Co., Inc. (2006) 144 Cal.App.4th 824, 839.)
2. “’[A]n
“unfair business practice occurs when that practice “offends an established
public policy or when the practice is immoral, unethical, oppressive,
unscrupulous or substantially injurious to consumers.” [Citation.]’
[Citation.]” (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93
Cal.App.4th 700, 719.)
3. An
unfair business practice means the “ ‘the public policy which is a predicate to
the action must be “tethered” to specific constitutional, statutory or
regulatory provisions.’” (Scripps Clinic v. Superior Court (2003) 108
Cal.App.4th 917, 940.)
(West v. JPMorgan Chase Bank, N.A. (2013) 214
Cal.App.4th 780, 806.)
“The balancing test required by the unfair business
practice prong of section 17200 is fact intensive and is not conducive to
resolution at the demurrer stage. ‘[U]nfairness’ is an equitable concept that
cannot be mechanistically determined under the relatively rigid legal rules
applicable to the sustaining or overruling of a demurrer.” (Progressive West
Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 287 citing Schnall
v. Hertz Corp. (2000) 78 Cal.App.4th 1144, 1167.)
While there is no definitive test for “unfairness” at
the demurrer stage, even if this Court were to assume that all three
definitions apply, Plaintiffs have not made any allegations falling under any
three of the unfairness tests. Further, Opposition does not even address this
aspect of a UCL cause of action, and Opposition appears to only mention
unlawful and fraudulent acts.
Fraudulent
“A
fraudulent business practice under section 17200 ‘is not based upon proof of
the common law tort of deceit or deception, but is instead premised on whether
the public is likely to be deceived.’” (Progressive West Ins. Co. v.
Superior Court (2005) 135 Cal.App.4th 263, 284 citing Pastoria v.
Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1498.) Stated another way, “In
order to state a cause of action under the fraud prong of [section 17200] a
plaintiff need not show that he or others were actually deceived or confused by
the conduct or business practice in question. ‘The “fraud” prong of [section
17200] is unlike common law fraud or deception. A violation can be shown even
if no one was actually deceived, relied upon the fraudulent practice, or
sustained any damage. Instead, it is only necessary to show that members of the
public are likely to be deceived.’ [Citations.]” (Progressive West Ins. Co.,
supra, 135 Cal.App.4th at 284 citing Schnall v. Hertz Corp. (2000)
78 Cal.App.4th 1144, 1167.)
Plaintiffs alleged, “As alleged above, Defendants
committed fraudulent acts and practices by employing deceptive practices and
failing to disclose the actual and true amount due for the loan of the
Property.” (AC ¶58.)
Here, Plaintiffs make no allegations about whether the
public is likely to be deceived. Further, while it’s unclear if Plaintiffs are
basing their UCL cause of action under the fraudulent prong, as it stands now
in the AC, it appears as if Plaintiff are basing their UCL cause of action on
their common law fraud claims. “A fraudulent business practice under section
17200 ‘is not based upon proof of the common law tort of deceit or deception,
but is instead premised on whether the public is likely to be deceived.’” (Progressive
West Ins. Co. v. Superior Court (2005) 135 Cal.App.4th 263, 284 citing Pastoria
v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1498.)
TENTATIVE RULING – THIRD CAUSE OF ACTION –
UNFAIR BUSINESS PRACTICES VIOLATION OF BUSINESS AND PROFESSIONS CODE SECTION
17200 ET
Defendants’
demurrer as to the third cause of action is SUSTAINED WITH 20 DAYS’ LEAVE TO
AMEND for failure to allege sufficient facts to constitute a cause of action
and on grounds of uncertainty.
FOURTH CAUSE OF ACTION – CANCELLATION OF
WRITTEN INSTRUMENTS
As
stated in U.S. Bank National Assn. v. Naifeh:
Under Civil
Code section 3412, “[a] written instrument, in respect to which there is a
reasonable apprehension that if left outstanding it may cause serious injury to
a person against whom it is void or voidable, may, upon his application, be so
adjudged, and ordered to be delivered up or canceled.” To prevail on a claim to
cancel an instrument, a plaintiff must prove (1) the instrument is void or
voidable due to, for example, fraud; and (2) there is a reasonable apprehension
of serious injury including pecuniary loss or the prejudicial alteration of
one's position. (See Turner v. Turner (1959) 167 Cal.App.2d
636, 641, 334 P.2d 1011.)
(U.S. Bank
National Assn. v. Naifeh (2016) 1 Cal.App.5th 767, 778.)
Defendants first point out that Plaintiffs
don’t specifically identify which instrument is sought to be cancelled, and
Defendants note that presumably Plaintiffs seek to cancel the Forbearance
Agreement dated October 14, 2019.
In Opposition, Plaintiffs state that the
fourth cause of action seeks to cancel the forbearance agreement dated October
14, 2019.
In relevant part, Plaintiffs alleged, “As a
result of these false instruments, Plaintiff's title was taken by what is
arguably a void Forbearance Agreement and the Subject Property was defaulted
and Plaintiff suffered significant pecuniary loss. Therefore, Plaintiff has a
basis for seeking an adjudication that the instruments, each and every one, is
void.” (AC ¶64.)
TENTATIVE RULING FOURTH CAUSE OF ACTION –
CANCELLATION OF WRITTEN INSTRUMENTS
Here,
Defendants’ argument is well-taken. Although Plaintiffs state in their
Opposition that this cause of action is based on the forbearance agreement, the
allegations in the AC are ambiguous, vague, and uncertain. For example,
Paragraph 64 first states, “As a result of theses false instruments.” Even
though Plaintiffs referred to “instruments,” plural, Plaintiffs then refer to
“a void forbearance agreement,” which is singular, and then Plaintiffs state
they are seeking adjudication that “the instruments, each and every one, is
void.” Plaintiffs’ allegations as to which instrument, or instruments, they
want cancelled are uncertain and ambiguous because Plaintiffs go back and forth
referring to a singular instrument and multiple instruments.
Defendants’ demurrer as to the fourth
cause of action is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND for failure to allege
sufficient facts to constitute a cause of action and on grounds of uncertainty.
FIFTH CAUSE OF ACTION – BREACH OF THE
IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING
As
a preliminary matter, Defendants do not cite what the elements are for a cause
of action for breach of the implied covenant of good faith and fair dealing.
“Every contract imposes upon each party a
duty of good faith and fair dealing in its performance and its enforcement.” (Hicks
v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 508.) “It is
universally recognized the scope of conduct prohibited by the covenant of good
faith is circumscribed by the purposes and express terms of the contract.” (Id.
at 509.)
“The covenant of good faith and fair
dealing, implied by law in every contract, exists merely to prevent one
contracting party from unfairly frustrating the other party’s right to receive
the benefits of the agreement actually made.” (Guz v. Bechtel (2000) 24
Cal.4th 317, 349.)
Under Merced Irr. Dist. v. County of
Mariposa :
Under California
law, to allege a claim for breach of the covenant of good faith and fair
dealing, a plaintiff must allege the following elements: (1) the plaintiff and
the defendant entered into a contract; (2) the plaintiff did all or
substantively all of the things that the contract required him to do or that he
was excused from having to do so; (3) all conditions required for the
defendant's performance had occurred; (4) the defendant unfairly interfered
with the plaintiff's right to receive the benefits of the contract; and (5) the
defendant's conduct harmed the plaintiff. See Judicial Counsel
of California Civil Jury Instructions § 325 (2013); see
also Reinhardt v. Gemini Motor Transport, 879 F.Supp.2d 1138,
1145 (E.D.Cal.2012).
(Merced Irr.
Dist. v. County of Mariposa (E.D. Cal. 2013) 941 F.Supp.2d 1237, 1280,
discussing California law.)
‘[T]he implied covenant of good faith and fair dealing
is limited to assuring compliance with the express terms of the
contract, and cannot be extended to create obligations not contemplated by the
contract.’” (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182,
206 (quoting Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th
1089, 1094).)
A breach of the implied covenant of good faith and
fair dealing involves something beyond breach of the contractual duty itself
and it has been held that bad faith implies unfair dealing rather than mistaken
judgment. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990)
222 Cal.App.3d 1371, 1394.)
Plaintiffs alleged as such in their AC:
As mentioned
throughout, Plaintiff and Defendants were contractual parties. As alleged
herein throughout, Defendants did not act in good faith and did not deal fairly
with Plaintiff. This is evidenced by continuous failure to disclose loan
amounts and important notices surrounding the subject property. (AC ¶67.) Defendants’
bad faith and unfair conduct is further evidenced by their actual material
breach when Defendants improperly and wrongfully concealed material facts of
the subject property resulting in Plaintiffs to lose business. (AC ¶68.) These
actions were taken in bad faith and the conduct by Defendants clearly shows
that they had no intention of performing fairly. (AC ¶69.) As a result of the
Defendants’ breach of this covenant, Plaintiff has suffered general, punitive,
and specific damages in an amount to be determined at trial. (AC ¶70.)
(AC ¶67-70.)
TENTATIVE RULING –
FIFTH CAUSE OF ACTION – BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR
DEALING
Here, the Court will not go into any of
the specific elements of this cause of action. Plaintiffs failed to address the
preliminary matter of which contract this cause of action is based on. Defendants’
demurrer is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND on grounds of uncertainty
and failure to allege facts sufficient to constitute a cause of action.
SIXTH CAUSE OF ACTION – WRONGFUL
FORECLOSURE
“To
obtain the equitable set aside of a trustee’s sale or maintain a wrongful
foreclosure claim, a plaintiff must allege that (1) the defendants caused an
illegal, fraudulent, or willfully oppressive sale of the property pursuant to a
power of sale in a mortgage or deed of trust; (2) the plaintiff suffered
prejudice or harm; and (3) the plaintiff tendered the amount of the secured
indebtedness or was excused from tendering.” (Chavez v. Indymac Mortgage
Services (2013) 219 Cal.App.4th 1052, 1062 citing Lona v. Citibank, N.A.
(2011) 202 Cal.App.4th 89, 112.)
Defendants argue that Plaintiffs did not
allege that they tendered the amount owed.
Opposition does not address the sixth
cause of action for wrongful foreclosure.
Plaintiffs’ AC alleges as follows:
Plaintiff
realleges and incorporates each and every allegation of paragraphs 1 through 70
or this Complaint as though fully set forth herein. (AC ¶71.) According to California
Code, 2924C, no sale date may beset until approximately 90 days from the date
of a Notice of Default. Therefore, an individual has ninety (90) days from the
date the Notice of Default is recorded to respond, prior to any Notice of
Trustee Sales being given. (AC ¶72.) As mentioned throughout, Defendant’s bad
faith and misconduct is evident in the fact that they proceeded with numerous
Notices of Trustee sale, without serving Plaintiff with a Notices of Default.
(AC ¶73.) The Notices of Trustee Sale are thus, improper and done in bad faith
and further show that they have no intention of being fair to the Plaintiff in
any capacity. (AC ¶74.) Plaintiff is entitled to restitution of all profits,
benefits, and monies that Defendants obtain an/or will obtain as a result of
its wrongful foreclosure. (AC ¶75.)
(AC ¶71-75.)
TENTATIVE RULING –
SIXTH CAUSE OF ACTION – WRONGFUL FORECLOSURE
Plaintiffs
did not allege tender. Plaintiffs also did not clearly allege the first or second
element of the cause of action.
Defendants’
demurrer is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND on the grounds of
uncertainty and Failure to state a cause of action.
Albert Ahdoot
Defendants argue that there is a lack of
allegations in the AC which might subject Ahdoot to any personal liability. In
Opposition, Plaintiffs argue there are sufficient allegations.
However, this Court will not be commenting
on this issue. The demurrers to every cause of action were sustained;
therefore, there are no causes of actions sufficiently alleged against any
Defendant at present.
REQUEST FOR JUDICIAL NOTICE
Judicial notice may be taken of the following matters
to the extent that they are not embraced within Section 451:
(a) The decisional, constitutional, and statutory
law of any state of the United States and the resolutions and private acts of
the Congress of the United States and of the Legislature of this state.
(b) Regulations and legislative enactments issued
by or under the authority of the United States or any public entity in the
United States.
(c) Official acts of the legislative, executive,
and judicial departments of the United States and of any state of the United
States.
(d) Records of (1) any court of this state or (2)
any court of record of the United States or of any state of the United States.
(e) Rules of court of (1) any court of this state
or (2) any court of record of the United States or of any state of the United
States.
(f) The law of an organization of nations and of
foreign nations and public entities in foreign nations.
(g) Facts and propositions that are of such
common knowledge within the territorial jurisdiction of the court that they
cannot reasonably be the subject of dispute.
(h) Facts 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.
(Evidence Code §452.)
The trial court shall take judicial notice of any
matter specified in Section 452 if a party requests it and:
(a) Gives each adverse party sufficient notice of
the request, through the pleadings or otherwise, to enable such adverse party
to prepare to meet the request; and
(b) Furnishes the court with sufficient
information to enable it to take judicial notice of the matter.
(Evidence Code §453.)
Here, Defendants request judicial notice of a notice
of default and election to sell under deed of trust dated May 30, 2018 and
recorded on June 1, 2018 with the Los Angeles Country Recorder as Instrument
Number 20180547114.
RJN is granted.
MOTION
TO STRIKE
Moving Party: Defendants, Loma Vista Investment, LLC and
Albert Ahdoot, an indiv
Responding Party: Plaintiffs,
CJ Prime Investment, LLC; Marvin C. Hur; Connie Kim Hur; Jonathan Hur; and
Jennifer Hur
(Oppo and Reply
Submitted)
Moving Papers: Notice of
Motion/Memo
Opposing Papers: Opposition
Reply Papers: Reply
Proof of Service
Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok
RELIEF REQUESTED
Defendants, Loma Vista Investment LLC and Albert Ahdoot move for an order
striking the following portions from the Amended Complaint:
1.
All portions of the Amended Complaint alleging punitive or
exemplary damages Defendants, including but not limited to the following
paragraphs of the Complaint:
2.
Paragraph
70 – “As a result of the Defendants’ breach of this covenant, Plaintiff has
suffered general, punitive, and specific damages in an amount to be determined
at trial.”
3. Prayer for Relief – “6. For punitive and
exemplary damages.”
Defendants move
pursuant to CCP §435 and 436.
Meet and
Confer
Before filing a motion
to strike pursuant to this chapter, the moving party shall meet and confer in
person or by telephone with the party who filed the pleading that is subject to
the motion to strike for the purpose of determining if an agreement can be
reached that resolves the objections to be raised in the motion to strike. If
an amended pleading is filed, the responding party shall meet and confer again
with the party who filed the amended pleading before filing a motion to strike
the amended pleading. (CCP §435.5(a).)
Preliminary
Matter
Defendants requested in their notice of motion
that “all portions of the Amended Complaint alleging punitive or exemplary
damages Defendants, including but not limited to the following paragraphs of
the Complaint,” be stricken.
“A notice of motion to
strike a portion of a pleading must quote in full the portions sought to be
stricken except where the motion is to strike an entire paragraph, cause of
action, count, or defense. Specifications in a notice must be numbered
consecutively.” (Cal. Rules of Court, Rule 3.1322(a).)
Therefore, the Court
will not search the Amended Complaint for portions that could potentially fall
under the aforementioned request by Defendants. In portion 1, Defendants did
not indicate what paragraphs, causes of action, or portions it wanted stricken.
The only portions the Court will examine in Defendants’ motion to strike is portions
2 and 3 because Defendants indicated to the Court specifically what it wanted
stricken.
LEGAL
STANDARD – MOTION TO STRIKE
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.
(Code Civ. Proc. § 436(b).) A motion to strike cannot be based upon the
grounds that a complaint fails to state facts sufficient to constitute a cause
of action, but instead is properly based on grounds of superfluous or abusive
allegations, or improprieties in form or procedure. (Ferraro
v. Camarlinghi (2008) 161 Cal.App.4th 509,
528-29.)
The grounds for moving
to strike must appear on the face of the pleading or by way of judicial
notice. (Code. Civ. Proc. § 437; Turman v. Turning Point of
Central California, Inc. (2010) 191 Cal.App.4th 53, 63 [“judges read
allegations of a pleading subject to a motion to strike as a whole, all parts
in their context, and assume their truth”].)
Portion 2
Defendants move to
strike Paragraph 70 – “As a result of the Defendants’ breach of this covenant,
Plaintiff has suffered general, punitive, and specific damages in an amount to
be determined at trial.”
As a preliminary
matter, Paragraph 70 is contained in the Fifth Cause of Action for Breach of
the Implied Covenant of Good Faith and Fair Dealing.
In Defendants’ motion,
Defendants don’t specifically address this fifth cause of action. Defendants
simply argue that the AC doesn’t allege facts which constitute fraudulent,
malicious, or oppressive conduct.
In Opposition, Plaintiffs
also do not specifically address the cause of action at issue, and instead
argue generally that their AC alleges fraud.
Punitive
Damages
California Civil Code section 3294 authorizes
the recovery of punitive damages in non-contract cases where “the defendant has
been guilty of oppression, fraud, or malice . . . ” (Civ. Code § 3294(a).)
Punitive damages thus require more than the mere commission of a tort.
(See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.)
“‘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.” (CCP
§ 3294(c)(1).) “‘Oppression’ means despicable conduct that subjects a
person to cruel and unjust hardship in conscious disregard of that person’s
rights.” (Id.,§ 3294(c)(2).) “‘Fraud’ means an 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.,
§ 3294(c)(3).) Specific facts must be pleaded in support of punitive
damages. (See Hillard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374, 391-92.)
Discussion
– Portion 2
Both moving and
opposing papers are entirely unhelpful to the Court.
Moving party doesn’t
specifically address Paragraph 70 which pertains to a cause of action for
breach of the implied covenant of good faith and fair dealing.
Moving party doesn’t
address whether that cause of action is a contract issue or a tort issue, and
neither does Opposing party address this issue.
Upon the Court’s own
research, the Court found as follows, “Since a party “may not recover in tort
for ... breach of the implied covenant of good faith and fair dealing,” an
“award of punitive damages” is not permitted on such a claim.” (Spinks v.
Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1054.)
Further, even if the
Court were to assume its own research is correct, that punitive damages cannot
be recovered for breach of the implied covenant of good faith and fair dealing,
Defendants do not address the entire allegation, “As a result of the
Defendants’ breach of this covenant, Plaintiff has suffered general, punitive,
and specific damages in an amount to be determined at trial.” Defendants do not
address the issue of why and under what authority “general” and “specific”
damages should be stricken.
Tentative
Ruling Motion to strike Portion 2
Motion to strike is granted with 20 days’ leave
to amend. Velez v. Smith (2006)
142 Cal. App. 4th 1154.
Discussion
Portion 3 - Prayer for Relief – “6. For punitive and exemplary damages.”
As the Court previously
discussed, Defendants simply argue in general terms as to why punitive damages
should be stricken. In Opposition, Plaintiffs appear to be alleging that
punitive damages are properly alleged because Plaintiffs believe they alleged a
cause of action for fraud.
Tentative
Ruling – Portion 3
Defendants’ motion to strike as to portion 3 is
granted with 20 days’ leave to amend. Plaintiffs did not sufficiently allege a
fraud cause of action, or any cause of action for that matter.
Tentative
Ruling Portion 1
Defendants’ motion to strike as to portion 1 is
DENIED.
Miscellaneous
– Motion to Strike and Demurrer
The instant demurrer and motion to strike was filed
by Loma Vista and Ahdoot. The AC also lists Special Default Servicing as a
Defendant. Presumably, certain portions shouldn’t be stricken because those
allegations could still pertain to Defendant Special Default Servicing;
however, since Plaintiffs did not successfully allege a cause of action against
any Defendant, the fact that Defendant Special Default Servicing did not file a
demurrer or motion to strike does not affect these rulings.