Judge: Douglas W. Stern, Case: 21STCV26498, Date: 2022-09-02 Tentative Ruling

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Case Number: 21STCV26498    Hearing Date: September 2, 2022    Dept: 52

Tentative Ruling:

Defendants Kingdom Business Real Estate, Inc.’s and John Young Rhee’s Demurrer and Motion to Strike Portions of First Amended Complaint

I. Demurrer

Defendants Kingdom Business Real Estate, Inc. and John Young Rhee demur to both causes of action alleged against them in plaintiff Young Sook Kim’s first amended complaint.

Fourth Cause of Action: Breach of Fiduciary Duty

Plaintiff Young Sook Kim fails to allege sufficient facts to constitute this cause of action.  “The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.”  (Knox v. Dean (2012) 205 Cal.App.4th 417, 432, internal quotes and citations omitted.) 

The first amended complaint alleges only the first element.  It alleges defendants Kingdom Business Real Estate, Inc. and Rhee were plaintiff’s real estate agents.  (FAC, ¶ 35.) 

Plaintiff fails to allege facts constituting breach of a fiduciary duty.  A real estate agent has a “fiduciary duty to his own client to refrain from making representations of facts material to the client’s decision to buy the property without advising the client that he is merely passing on information received from the seller without verifying its accuracy.”  (Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 562, fn. 3.)

The first amended complaint alleges, “Defendants breached their fiduciary duties by EXPRESSLY GUARANTEEING to Plaintiff that the Property would be sold to Plaintiff and the escrow would be closed if Plaintiff put additional $100,000 deposit to the escrow.”  (FAC, ¶ 37.)  That is not a representation of fact that can be subject to verification, such as the property’s size.  It is a statement or prediction regarding future events and therefore is not actionable.  (See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)  Any express guarantee lies outside a real estate agent’s fiduciary duty to his client.

The first amended complaint alleges no facts establishing that defendants Kingdom Business Real Estate, Inc. and Rhee did anything to cause damages to plaintiff.  It alleges the sellers backed out of the real estate transaction and kept his $200,000 deposit.  (FAC, ¶ 42.)  It does not allege Kingdom or Rhee caused that.

Plaintiff also makes contradictory allegations about Kingdom and Rhee’s failure to communicate with him.  The first amended complaint alleges:

[Kingdom and Rhee] failed to communicate with Plaintiff about their communication with Seller Defendants regarding the release of the $200,000 escrow deposit to Seller.  Seller Defendants also demanded Plaintiff to release the escrow deposit, the total amount of $200,000 with express guarantee that the property will be transferred to Plaintiff.  However, Defendant Rhee and Kingdome [sic] Business Real Estate Inc failed to communicate about this condition and promises [sic] to Plaintiff.  Instead, Defendants continuously promised and guaranteed to Plaintiff that the transaction will be completed if Plaintiff signed the release.  However, after Plaintiff signed the release, Seller defendants took the escrow deposit $200,000 and sold to third parties.  If Defendants informed this material information to Plaintiff, Plaintiff would not sign and proceed the escrow deal with Seller Defendant.

(FAC, ¶¶ 38-43.)

These allegations do not add up.  Plaintiff alleges Kingdom and Rhee should have told him one thing—but instead told him that same thing.  Plaintiff alleges Kingdom and Rhee should have told him that, if he released the escrow deposit, the sellers would transfer the property to him.  (FAC, ¶¶ 38-40.)  But instead of telling him that, they promised that the transaction would be completed if plaintiff signed the release.  (FAC, ¶ 41.)  Releasing the escrow deposit and signing the release are the same thing.  Transferring the property to plaintiff and completing the transaction are also the same. 

Moreover, plaintiff did sign the release to complete the transaction.  Defendants’ failure to tell him he could do that therefore did not make any difference or cause any damages. 

Fifth Cause of Action: Negligence

            Plaintiff fails to allege sufficient facts for negligence.  The elements of negligence are “(a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.”  (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.)

The first amended complaint does not allege Kingdom and Rhee breached a tort duty as required for negligence.  It alleges that “as Plaintiffs’ real estate broker in relation to the purchase of the Property,” they “were under a duty to exercise ordinary care as licensed real estate brokers/sale agents in assisting Plaintiff for the purchase of the Property.”  (FAC, ¶ 47.)  It further alleges they “breached their respective duties owed to Plaintiff, by Expressly guaranteeing that the Property would be sold to Plaintiff and the escrow would be closed.”  (FAC, ¶ 49.)

Any express guarantee is not a tort duty as required for the tort of negligence.  Breaching that guarantee cannot be negligence.  A buyer’s real estate broker is not negligent simply because the seller breaches the sales contract.  The buyer has a recourse against the seller—not against his own broker. 

Disposition

Defendants Kingdom Business Real Estate, Inc. and John Young Rhee’s demurrer to the fourth and fifth causes of action is sustained with 15 days’ leave to amend.

II. Motion to Strike

Defendants Kingdom and Rhee move to strike allegations regarding punitive damages and attorney fees. 

A plaintiff may only recover punitive damages when the defendant is “guilty of oppression, fraud, or malice.”  (Civ. Code, § 3294(a).)  Plaintiff alleges no facts that constitute oppression, fraud, or malice by defendants.  

A plaintiff can only recover attorney fees when authorized by contract, statute, or law.  (CCP § 1033.5(a)(10).)  The complaint alleges no basis for recovering attorney fees from defendants.

As with the initial motion to strike, plaintiff again opposes the motion solely on the grounds that motions to strike do not apply to prayers for relief.  Again, plaintiff relies on cases applying the Federal Rules of Civil Procedure.  (Delano Farms Co. v. California Table Grape Com'n (E.D. Cal. 2009) 623 F.Supp.2d 1144, 1183.) 

Under the California Code of Civil Procedure, the black-letter law permits defendants to strike prayers for relief.  Courts may strike “irrelevant matter” (CCP § 436(a)), including “[a] demand for judgment requesting relief not supported by the allegations of the complaint” (CCP § 431.10(b)(3)).  “The adequacy of [a complaint’s] punitive damage allegations” can be “tested by motion to strike.”  (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 164.)

Disposition   

Defendants Kingdom Business Real Estate, Inc.’s and John Young Rhee’s motion to strike is granted.  The court hereby strikes the following language from the first amended complaint:

1.      Page 6, lines 11-14, “The aforementioned acts of Defendants were willful, oppressive, wanton, malicious or in reckless disregard of the rights of Plaintiff. Therefore, Plaintiff is entitled to punitive or exemplary damages.”

2.      Page 8, line 4, “For attorney’s fees incurred herein;”

3.      Page 8, line 9, “For punitive and exemplary damages in an amount according to proof;”

4.      Page 8, line 11, “For attorney’s fees incurred herein;”