Judge: Donald F. Gaffney, Case: Truong v. Tran, Date: 2023-05-24 Tentative Ruling
TENTATIVE RULING:
Demurrer to FACC
Plaintiffs/Cross-Defendants Hai Hoang Truong, Thuy Phuong Nga To demur to the First Amended Cross-Complaint of Defendant/Cross-Complainant Chuong Ngac Tran. For the following reasons, the demurrer is OVERRULED in part and SUSTAINED in part with leave to amend.
General Principles re Demurrer
A demurrer challenges the defects appearing on the face of the pleading or from other matters properly subject to judicial notice. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The issue is the sufficiency of the pleading, not the truth of the facts alleged. Thus, no matter how unlikely or improbable, the allegations made must be accepted as true for the purpose of ruling on the demurrer. (See Del E. Webb Corporation v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) Absent court orders or other items subject to judicial notice, or items attached as exhibits to the complaint, the court may not consider the contents of pleadings or other exhibits when ruling on a demurrer. (See Day v. Sharp (1975) 50 Cal.3d 904, 914, and Sosinsky v. Grant (1992) 6 Cal.App.4th 1746, 1749.) The court may, however, take judicial notice of admissions or inconsistent statements by plaintiff in earlier pleadings in the same lawsuit, in prior similar lawsuits that plaintiff had voluntarily dismissed, or in discovery documents, and may disregard conflicting factual allegations in the complaint. (Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial (Rutter Group 2017) ¶ 7:47, citing Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604 [“Thus, a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless” (emphasis added)]; Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 344 [judicially noticing allegations in plaintiff's prior, voluntarily dismissed lawsuit against same defendants].)
In Daar v. Yellow Cab Co. (1967) 67 Cal.2d 666, the Daar court noted that: “In our examination of the complaint we are guided by the well settled principles governing the testing of its sufficiency by demurrer: A demurrer admits all material and issuable facts properly pleaded. (Citations omitted.) However, it does not admit contentions, deductions or conclusions of fact or law alleged therein. (Citations omitted.)” (See Daar, supra, 67 Cal.2d at 672.)
A demurrer may be based on, among other grounds, failure to state sufficient facts to constitute a cause of action and uncertainty. (Code Civ. Proc., § 430.10, subds. (e), (f).)
Under Section 430.10(e), the test is whether the complaint states any valid claim entitling plaintiff to relief, even if plaintiff’s cause of action is improperly titled, or an improper remedy is stated. (See Quelimane Co., Inc. v. Stewart Title Guar. Co. (1998) 19 Cal.4th 26, 38, and Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547.) Hence, under a general demurrer, plaintiff’s complaint must fail to state a valid cause of action for the demurrer to be sustained.
A demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading, but is directed at the uncertainty existing in the allegations actually made. (People v. Lim (1941) 18 Cal. 2d 872, 883.) “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.) Errors and confusion created by “the inept pleader” are to be forgiven if the pleading contains sufficient facts entitling plaintiff to relief. (Saunders v. Cariss (1990) 224 Cal. App. 3d 905, 908.) A party attacking a pleading on “uncertainty” grounds must specify how and why the pleading is uncertain, and where that uncertainty can be found in the challenged pleading. (Fenton v. Groveland Community Services Dept. (1982) 135 Cal.App.3d 797, 809 (disapproved on other grounds in Katzberg v. Regents of the University of California (2002) 29 Cal.4th 300).)
A demurrer for uncertainty will only be sustained where the complaint is so poorly pled that a defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)
First Cause of Action (Breach of Contract)
The demurrer to the first cause of action is SUSTAINED with leave to amend.
The first cause of action alleges that Cross-Defendants breached the parties’ 10/06/2020 Purchase Agreement by taking title to the Subject Property and by failing to assume, refinance in their own names, or pay off the debt on the property. (FACC ¶¶ 25-29.) The agreement provides in relevant part:
Buyers agree to assume the current mortgage (GMAC Mortgage LLC) of Seller and keep on paying until paying off the loan. Every month, on 15th day or before that date, Buyers, will submit a check of $2,580.96 (that covers the compound of Mortgage, Property Tax and Insurance) to Seller. After that, Seller will generate an equal amount check to pay to the Mortgage company. In case GMAC Mortgage or other mortgage service does not accept this assumption of Buyers, Buyers can apply for a new mortgage loan to replace the current loan.
(FACC Ex. 2 at ¶ 21(c).)
The elements of a cause of action for breach of contract are: (i) existence of the contract; (ii) Plaintiff’s performance or excuse for nonperformance; (iii) Defendant’s breach; and (iv) damage to plaintiff resulting therefrom. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811.)
Here, the FACC does not allege any breach of the parties’ agreement. The FACC contends that Cross-Defendants “breached the Agreement by taking title to Subject Property and failing to assume, refinance in their own names, or pay off the debt on the Subject Property . . . .” (FACC ¶ 27.) While the agreement provides that the buyers may apply for a new mortgage loan, the agreement also provides the option of having Buyers remit payment of $2,580.96 to the Seller, who in turn remits payment to GMAC Mortgage. The FACC does not allege that Buyers have failed to remit any monthly payment to Seller. (See generally FACC.)
Second Cause of Action (Breach of Contract)
The demurrer to the second cause of action is OVERRULED.
The second cause of action alleges that Cross-Defendants breached an agreement to assume ownership responsibility of the Sunnova solar panel system installed at the property. (FACC ¶¶ 30-34.)
Code of Civil Procedure Section 430.10(g) provides a party may demur where “it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct.” Cross-Defendants do not demur on these grounds, so the court disregards this specific ground for demurrer. (See Code Civ. Proc., § 430.60.)
The elements of a cause of action for breach of contract are: (i) existence of the contract; (ii) Plaintiff’s performance or excuse for nonperformance; (iii) Defendant’s breach; and (iv) damage to plaintiff resulting therefrom. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811.)
Here, the FACC alleges sufficient facts to support each element of the contract claim, including that Cross-Defendants agreed to assume responsibility for the Sunnova solar panel system (FACC ¶¶ 20, 31), that Cross-Complainant performed his obligations under that agreement (FACC ¶ 32), Cross-Defendants breached the agreement by failing to pay all sums due or timely assume the debt (FACC ¶ 33), and that Cross-Complainant was damaged as a result (FACC ¶ 34).
Cross-Defendants do not show the statute of frauds to apply, as the alleged agreement to assume can be performed within a year.
The special demurrer to the second cause of action is OVERRULED. The FACC is not so poorly pled that a defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)
Third Cause of Action (Cancellation of Instruments)
The demurrer to the third cause of action is SUSTAINED with leave to amend.
The third cause of action alleges that the Grant Deed transferring the Subject Property to Cross-Defendants is null and void due to fraudulent inducement. (See FACC ¶¶ 36-40.)
Civil Code Section 3412 provides that for cancellation of written instruments that are void or voidable against the Plaintiff. (See Civ. Code, § 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 [apply to cancel such instrument]”].) To state a claim for cancellation of an instrument, a plaintiff must allege: (i) there is a reasonable apprehension that, if left outstanding, the instrument will cause serious injury to the plaintiff; (ii) the instrument is valid on its face; (iii) the instrument is void or voidable; (iv) the instrument was in existence or under the defendant’s possession and control when the action was filed; and (v) if the instrument is voidable, rather than void, that the plaintiff acted promptly to rescind it. (Civ. Code, §§ 3412, 3413; Hironymous v. Hiatt (1921) 52 Cal.App. 727, 731 [abrogated on other grounds by Robertson v. Superior Ct. (2001) 90 Cal.App.4th 1319].)
An instrument that the plaintiff executes as a result of fraud in the inducement is voidable. (Fleming v. Kagan (1961) 189 Cal.App.2d 791, 797 [citing C. I. T. Corp. v. Panac (1944) 25 Cal.2d 547, 548].)
The elements of a cause of action for fraud are: (i) misrepresentation; (ii) defendant’s knowledge of the statement’s falsity; (iii) defendant’s intent to defraud; (iv) plaintiff’s justifiable reliance; and (v) resulting damage. (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231; Witkin Summary of Cal Law, Torts § 676.) Fraud must be pleaded with specificity. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216, superseded by statute on another ground as stated in California for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227.) The representation must be an affirmation of fact. (Civ. Code, § 1710(1) [defining deceit, in part, to include the assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true].) Fraud actions must be pled with specificity. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216, superseded by statute on another ground as stated in California for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227.)
Here, the FACC does not allege sufficient facts to show the instrument is voidable. Although the FACC alleges Cross-Defendant Truong misrepresented the amount of funding available to fund the purchase, that alleged misrepresentation is not pled with particularity; the FACC does not allege where, when, or how the alleged misrepresentations were made. In addition, the FACC does not allege facts supporting plaintiff’s justifiable reliance on any misrepresentation(s). Lastly, the FACC does not allege that Cross-Defendant acted promptly to rescind the voidable instrument.
Fourth Cause of Action (Declaratory Relief)
The special demurrer to the fourth cause of action is SUSTAINED with leave to amend.
As an initial matter, Cross-Defendants mistakenly demur to an action for specific performance, based on the caption page’s misidentification of the fourth cause of action. The fourth cause of action seeks declaratory judgment, not specific performance.
In addition, the court finds the action for declaratory relief to be uncertain and ambiguous.
The elements of a cause of action for declaratory relief are: (i) a proper subject for declaratory relief per Code of Civil Procedure Section 1060; (ii) the existence of an actual controversy relating to the legal rights and duties of the respective parties; and (iii) a request that the rights and duties of the parties be adjudged by the court. (Ludgate Ins. Co. v. Lockheed Martin Corp. (2002) 82 Cal.App.4th 592, 605.) Section 1060 provides the following to be proper subjects of declaratory relief: (a) the rights and duties of a written instrument, excluding a will or a trust, or under a contract, or the rights or duties with respect to the parties, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse. (Code Civ. Proc., § 1060.)
Here, the fourth cause of action identifies issues with four different legal documents and the Subject Property itself. The FACC does not specify exactly as to which rights and interests the Cross-Complainant seeks declaratory judgment.
Fifth Cause of Action (Fraud)
The demurrer to the fifth cause of action is SUSTAINED with leave to amend.
The fifth cause of action alleges that Cross-Defendants falsely promised to timely assume, refinance, or pay off the existing debt on the Property (FACC ¶ 54) and falsely promised to assume ownership responsibility of the Sunnova solar panel system (see FACC ¶¶ 31, 55).
“‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 638 [finding allegations established the elements of promissory fraud based on promises related to future employment].) The elements of a cause of action for promissory fraud are: (i) the defendant made a false promise; (ii) with intent not to perform; (iii) intent to induce reliance; (iv) justifiable reliance by the plaintiff; and (v) resulting damages. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 638; Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.)
Here, the FACC does not allege facts showing justifiable reliance by Cross-Complainant.
Cross-Defendants’ request for judicial notice is denied as unnecessary.
Should Cross-Complainant desire to file a second amended cross-complaint that addresses the issues in this ruling, Cross-Complainant shall file and serve the amended pleading within 30 days of service of the notice of ruling
Cross-Defendants to give notice.
Motion to Strike
Plaintiffs/Cross-Defendants Hai Hoang Truong, Thuy Phuong Nga To move to strike the prayer for cancellation of the Grant Deed, declaratory judgment, consequential damages, punitive damages, attorney’s fees and costs, and prejudgment interest, in the First Amended Cross-Complaint of Defendant/Cross-Complainant Chuong Ngac Tran. For the following reasons, the motion is GRANTED with leave to amend.
Pursuant to Code of Civil Procedure Section 436 the court may, upon a motion made or at any time in its discretion, strike out “any irrelevant, false, or improper matter inserted in any pleading.” “Irrelevant” matters include allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim, or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc., § 431.10(b).)
Cancellation of Grant Deed and Declaratory Relief. Given the concurrent ruling sustaining the demurrer as to the third and fourth causes of action, the FACC fails to allege facts supporting the requested relief.
Consequential Damages. Cross-Complainant argues he is entitled to consequential damages relating to the alleged breach of the Agreement. (See Opp. 4:14-6:5.) Given the concurrent ruling sustaining the demurrer to the first cause of action, the FACC fails to allege facts supporting a claim for consequential damages.
Punitive Damages. Punitive damages are available in actions “for breach of an obligation not arising from contract.” (See Civ. Code, § 3294(a).) To plead a claim to recover punitive damages, a plaintiff must plead and show one of the following bases for imposition of exemplary damages, i.e. malice, oppression, or fraud. (Civ. Code, § 3294(a).)
Here, the FACC fails to allege any facts supporting a finding of malice, oppression, or fraud.
Attorney’s Fees and Costs. The general rule regarding attorney’s fees is that each party is responsible for its fees regardless of which party ultimately prevails. (Code Civ. Proc., § 1021.) Attorney’s fees are recoverable only if provided for by contract or statute. (Code Civ. Proc., §§ 1032(a)(4), 1033.5.)
Plaintiff contends the parties’ “Straight Note” (FACC, Ex. 3) provides for the recovery of attorney’s fees. The FACC, however, does not allege any breach of that note.
Prejudgment Interest. Prejudgment interest is authorized only if the damages are certain, or capable of being made certain by calculation. (Jamison v. Jamison (2008) 164 Cal.App.4th 714.) Damages are deemed certain or capable of being made certain, as required for the party to be entitled to recover prejudgment interest under the California Civil Code, where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable, but where their dispute centers on the issue of liability giving rise to damage. (St. Paul Mercury Ins. Co. v. Mountain West Farm Bureau Mut. Ins. Co. (2012) 210 Cal.App.4th 645.)
Here, the FACC does not support a claim for prejudgment interest. The FACC does not allege that Tran was damaged a sum certain, but rather, experienced injury in the form of adverse effects on Cross-Complainant’s credit and/or creditworthiness. (See FACC ¶ 23.)
Should Cross-Complainant desire to file a second amended cross-complaint that addresses the issues in this ruling, Cross-Complainant shall file and serve the amended pleading within 30 days of service of the notice of ruling
Cross-Defendants to give notice.