Judge Elaine Lu, Case 20STCV09801 2022-09-19 Tentative Ruling

On March 11, 2020, plaintiff Francisca Velasquez (“Plaintiff”) filed the instant action against defendants Koko Polosajian (“Polosajian”), Cesar Galvan (“Galvan”), Standard Home Lending, Inc. (“Standard Home Lending”) (collectively “Defendants”), Mark S, Nadel, and Nadel & Associates Profit Sharing Plan & CA TD Investments. On May 20, 2021, the Court sustained Defendants’ demurrer to the complaint with leave to amend. (Order 5/20/21.)

On June 4, 2021, Plaintiff filed a First Amended Complaint against Defendants, Mark S, Nadel, and Nadel & Associates Profit Sharing Plan & CA TD Investments. On February 3, 2022, the Court sustained Defendants’ demurrer to the First Amended Complaint with leave to amend. (Order 2/3/22.)

On February 22, 2022, Plaintiff filed the operative Second Amended Complaint (“SAC”) against Defendants, Mark S, Nadel, and Nadel & Associates Profit Sharing Plan & CA TD Investments.[1] The SAC asserts four causes of action for (1) Financial Elder Abuse, (2) Intentional Infliction of Emotional Distress, (3) Fraud, and (4) Breach of Fiduciary Duty.

On March 28, 2022, Defendants filed the instant demurrer and motion to strike the SAC. On September 1, 2022, Plaintiff filed an opposition to the demurrer and motion to strike but failed to serve the oppositions on Defendants. Accordingly, the Court continued the demurrer and motion to strike to September 19, 2022 to allow Defendants an opportunity to file replies. (Minute Order 9/8/22.) On September 15, 2022, Defendants filed its replies.

“[Plaintiff] is a 77-year-old widow and an elder as defined by California Welfare and Institutions Code Section 12610.27.” (SAC ¶ 8.) In October 2018, Plaintiff “was the owner of the property located at 2315 Prince Street 5 Los Angeles, CA 90031, Lot 48 of Tract No. Herbert and Butterworth's Prince” (the “Subject Property”). (SAC ¶ 9.)

Throughout 2018, Defendant Galvan, while working for Standard Home Lending, targeted Plaintiff for a high interest loan as she lacked education and had over $500,000 in equity in the Subject Property. (SAC ¶¶ 10, 20.) Defendant Polosajian is the Broker at Standard Home Lending and is responsible for the policies, procedures, and management of loan agents at Standard Home Lending such as Galvan. (SAC ¶¶ 3-4.)

Defendants were aware that Plaintiff was not working and could not afford to repay the home loan and could not pay the loan origination fees. (SAC ¶ 14.) “[Defendant Galvan] spoke Spanish and knew PLAINTIFF could not read or write English.” (SAC ¶ 20.) “[Plaintiff] does not read or write and has an elementary school education. The first language of Plaintiff is Spanish and she cannot read English. The loan documents were in English.” (SAC ¶ 23.) Accordingly, Plaintiff had to rely on the representations of Defendant Galvan – as an agent of Standard Home Lending. (SAC ¶ 23.)

Defendants misled Plaintiff on October 4, 2018 by “concealing important material facts of the loan and the fees and induced [Plaintiff] to take a one-year balloon payment home loan out on her home and sign a deed of trust in favor of Defendants, Mark S. Nadel, Nadel & Associates Profit Sharing Plan & CA TD Investments, the lenders.” (SAC ¶ 16.) “[Plaintiff] was never made aware of the terms of the one year, interest only balloon loan for $160,000.” (SAC ¶ 17.)

Further, Defendants “falsif[ied] the loan application to make it appear that [Plaintiff] had enough income to qualify for a loan.” (SAC ¶ 22.)

As Plaintiff had no source of income, Plaintiff was unable to make the $1333.33 mortgage payments, causing the Subject Property to go into foreclosure, and forcing Plaintiff to sell her home at a loss to avoid foreclosure. (SAC ¶ 25.)

e. Declaration of Abandonment of Declared Homestead for the Subject Property dated July 6, 2010

l. Notice of Release of Special Tax Lien for Subject Property dated May 28, 2019

m. Notice of Release of Special Tax Lien for the Subject Property dated May 28, 2019

r. Notice of Recession of Default and Demand for Sale of the Subject Property dated February 9, 2021

As the court may take judicial notice of court and state records, (See Evid. Code, § 452(c),(d)), the unopposed request for judicial notice is granted. However, the Court will not take judicial notice of the truth of assertions within. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

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 Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.) 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.” (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.) “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.)

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.). (See CCP §§ 435-437.) A party may file a motion to strike in whole or in part within the time allowed to respond to a pleading, however, if a party serves and files a motion to strike without demurring to the complaint, the time to answer is extended. (CCP §§ 435(b)(1), 435(c).)

A motion to strike lies only where the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws. (CCP § 436.) The grounds for moving to strike must appear on the face of the pleadings or by way of judicial notice. (CCP § 437.)

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party 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.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension. (CCP § 430.41(a)(2).) The demurring party must also file and serve a declaration detailing the meet and confer efforts. (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading. (Id.¿at (a).) There is a similar meet and confer requirement for motions to strike. (CCP § 435.5.)

Defendants have fulfilled the meet and confer requirement. (Liseta Decl.[2] ¶¶ 3-8.)

Defendants contend that the first cause of action fails because Plaintiff failed to amend the allegations after the Court sustained the demurrer to the first cause of action of the First Amended Complaint for financial elder abuse.

The applicable code section, Welfare and Institution Code section 15610.30, provides, in relevant part, that:

(a) “Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following:

(1) 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.

(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.

(b) A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.

(c) For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult.

“The text of section 15610.30 is broad. It speaks not only of ‘taking’ real or personal property, but also ‘secreting, appropriating, obtaining, or retaining’ such property (§ 15610.30, subd. (a)(2); accord, id., subd. (a)(1)), and then, to capture the sense of all of these terms, goes on to use the more expansive term ‘deprive.’ (§ 15610.30, subd. (c) [‘a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right’].) Some of the terms used in section 15610.30 are narrower than others; to ‘secret,’ for example, suggests hiding or concealment, and to ‘retain’ or to ‘obtain’ suggests affirmatively acquiring possession of something. … (See § 15610.30, subd. (c); Oxford English Dict. Online (2017) [‘Deprivation’ means ‘[t]he action of depriving or fact of being deprived; the taking away of anything enjoyed; dispossession, loss’] at <www.oed.com> [as of Aug. 23, 2017].)” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 861.)

A claim for financial elder abuse must be pleaded with particularity. (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) Moreover, the “plaintiff must demonstrate by clear and convincing evidence that defendant is guilty of something more than mere negligence; he or she must show reckless, oppressive, fraudulent, or malicious conduct.” (Delaney v. Baker (1999) 20 Cal.4th 23, 31.)

Here, the SAC alleges that Defendants induced Plaintiff to enter into an unfavorable loan agreement without informing Plaintiff of the terms of the agreement. (SAC ¶¶ 10-25.) The SAC further alleges that Defendants had the intent to deprive Plaintiff of her financial assets. (SAC ¶ 31.) However, the SAC does not specify what the financial assets are. However, in liberally construing the SAC, the Court gleans that the SAC appears to indicate two separate financial assets or “properties” of Plaintiff that were taken away from Plaintiff by Defendants’ conduct or of which Plaintiff has been deprived by Defendants’ conduct. The first loss Plaintiff has suffered is the Subject Property that went into foreclosure and that Plaintiff was forced to sell at a loss to avoid foreclosure. (SAC ¶ 36.) The second loss is the loan origination fee. (SAC ¶ 30.)

With regard to the first loss, the Subject Property, a proper foreclosure is not as a matter of law a deprivation of property for purposes of Welfare and Institutions Code section 15610.30. In Stebley v. Litton Loan Servicing, LLP (2011) 202 Cal.App.4th 522, the Court of Appeal affirmed an order sustaining a demurrer without leave to amend as to the plaintiffs' claims for wrongful foreclosure and dependent adult abuse (Welf. & Inst. Code, § 15610.30). (Stebley, supra, 202 Cal.App.4th at pp.524-525.) The Court of Appeal determined a lender does not engage in dependent adult abuse by properly exercising its rights under a contract, even though that conduct is financially disadvantageous to the dependent adult. (Id. at pp.527-528.) “ ‘It is simply not tortious for a commercial lender to lend money, take collateral, or to foreclose on collateral when a debt is not paid.... [A] commercial lender is privileged to pursue its own economic interests and may properly assert its contractual rights.’ [Citation.]” (Id. at p.528.) Thus, the foreclosure on the subject property cannot constitute elder abuse.

As noted, the SAC also alleges that Defendants received portions of the origination fee for the loan. (SAC ¶ 30.) Specifically, the SAC alleges that “[t]he home origination fee was $7,500 payable to Standard Home Lending. The administration fee was $1495 payable to Standard Home Lending. The consulting fee was $2,600, payable to Standard Home lending.” (SAC ¶ 30.) The FAC further alleges that Plaintiff paid these fees. (SAC ¶ 30.) Though not a model of clarity, when very liberally construed, the SAC indicates that the financial assets taken from Plaintiff and/or of which Plaintiff has been deprived by Defendants also include the origination fees paid for the loan. “Stating things in blunt terms, the [SAC] alleges that, by [inducement of the loan agreement], the [Defendants] managed to separate [Plaintiff] from [her] money. That, in our view, constitutes a ‘depriv[ation]’ of ‘property.’” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 864.) Accordingly, when liberally construed, the SAC does identify a property of which Defendants deprived Plaintiff.

Nonetheless, as the Court noted in the prior order sustaining the demurrer to the First Amended Complaint, the First Amended Complaint failed to allege -- apart from the general allegations of fraud -- any wrongful conduct on the part of Defendants or any undue influence on Plaintiff. (Order 2/3/22.) Though Plaintiff did not amend the allegations specifically as to the first cause of action, Plaintiff did add sufficient allegations with regard to the fraud claim of the SAC. For the reasons discussed below, the SAC alleges fraud with sufficient particularity.

Defendants assert that the second cause of action also fails because the complaint does not allege extreme or outrageous conduct by Defendants.

“A cause of action for intentional infliction of emotional distress exists when there is ‘(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.’ A defendant’s conduct is ‘outrageous’ when it is so ‘extreme as to exceed all bounds of that usually tolerated in a civilized community.’ And the defendant’s conduct must be ‘intended to inflict injury or engaged in with the realization that injury will result.’” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050–1051.) With regard to the first element, IIED “calls for intentional, or at least reckless conduct—conduct intended to inflict injury or engaged in with the realization that injury will result.” (Davidson v. City of Westminster (1982) 32 Cal.3d 197, 210.)

For “[c]onduct to be outrageous[, it] must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (Davidson v. City of Westminster (1982) 32 Cal.3d 197, 209.) “[W]hether conduct is outrageous is ‘usually a question of fact’ … [however] many cases have dismissed intentional infliction of emotional distress cases on demurrer, concluding that the facts alleged do not amount to outrageous conduct as a matter of law.” (Bock v. Hansen (2014) 225 Cal.App.4th 215, 235, [internal citations omitted].) “‘Behavior may be considered outrageous if a defendant (1) abuses a relation or position that gives him power to damage the plaintiff’s interests; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably with the recognition that the acts are likely to result in illness through mental distress. . . .’” (Molko v. Holy Spirit Ass’n (1988) 46 Cal.3d 1092, 1122, superseded by statute as noted in Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 853, fn. 19 [internal citation omitted].) “[T]he requisite emotional distress may consist of any highly unpleasant mental reaction such as fright, grief, shame, humiliation, embarrassment, anger, chagrin, disappointment or worry.” (Fletcher v. Western National Life Ins. Co. (1970) 10 Cal.App.3d 376, 397.)

Here, the SAC alleges that Defendants “used deceptive tactics to cause Plaintiff to take out a loan she could not repay and to seek financial profit by charging Plaintiff exorbitant loan origination fees.” (SAC ¶ 41.) Defendants knew that Plaintiff was an elderly widow and had no source of income to repay a mortgage loan. (SAC ¶ 50.) Moreover, Defendants induced Plaintiff into a loan and concealed the terms of the loan from Plaintiff while knowing that she could not read the loan agreement. (SAC ¶¶ 23, 39-51.) Defendants fail to cite any authority indicating that fraudulently inducing a party into an interest only loan that Defendants knew Plaintiff could not pay and would result in the loss of Plaintiff’s home cannot, as a matter of law, constitute outrageous conduct. Further, Plaintiff identifies that she suffered “great pain, suffering, grief and mental anguish” – i.e., noneconomic damages. (SAC ¶ 51.)

Defendants assert that the third cause of action is not pled with the requisite specificity.

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) “[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 Ctr., Inc. (2011) 198 Cal. App. 4th 230, 248, [internal citations omitted].)

“Fraud allegations ‘involve a serious attack on character’ and therefore are pleaded with specificity. [Citation.] General and conclusory allegations are insufficient. [Citation.] The particularity requirement demands that a plaintiff plead facts which ‘‘‘show how, when, where, to whom, and by what means the representations were tendered.’’’ [Citation.]” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) “[E]ach element must be pleaded with specificity. [Citations.]” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.) This particularity requirement necessitates pleading facts which “show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Further, “[t]he requirement of specificity in a fraud action against a corporation requires the plaintiff to 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.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) However, “[a]s one court has aptly observed, “it is harder to apply [the requirement of specificity] to a case of simple nondisclosure. ‘How does one show “how” and “by what means” something didn’t happen, or “when” it never happened, or “where” it never happened?’ ” (Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1199 [citing Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384 and Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217, [“ ‘[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party ...’ ”].)

Here, the SAC alleges that Defendants are mortgage brokers with a fiduciary duty to Plaintiff. (SAC ¶ 56.) Between June 2018 and October 2018, Defendant Galvan on behalf of Defendants made various misrepresentations. (SAC ¶ 62.) Defendants also “failed to inform [Plaintiff] about the foreclosure aspect in case plaintiff fails to repay the loan. [Defendants] concealed information about the one-year balloon payment, the interest only payments and penalties to be paid in case of delayed payment.” (SAC ¶ 63.) Defendants “acted as loan brokers and induced [Plaintiff] to take out a loan on her home and charge [Plaintiff] exorbitant fees by using deceptive tactics to deprive [Plaintiff] of her financial assets and to put her in a position ensuring that she will default on her loan and be forced to seek an additional loan to rescue her from the first loan.” (SAC ¶ 60.)

In sum, the SAC alleges that Plaintiff was induced by Defendants into an unfavorable loan that Plaintiff would have been unable to repay because Defendants concealed important loan terms from Plaintiff. While these allegations lack any specificity as to any affirmative misrepresentation, the SAC does sufficiently allege concealment. The SAC identifies who was concealed the loan information from Plaintiff – i.e., Defendant Galvan on behalf of defendants. (SAC ¶ 62.) The SAC identifies when the concealment took place – i.e., from June 2018 through October 2018. (SAC ¶ 62.) The SAC identifies that Defendants had a duty to disclose – i.e., because they were acting as brokers. (SAC ¶ 56.) Moreover, the SAC identifies that Defendants were aware that Plaintiff did not speak English, the loan documents were in English and that Plaintiff had to rely on Defendant Galvan for the loan information. (SAC ¶ 23.) While these allegations are somewhat general, a claim for concealment need not have the same specificity as a claim for affirmative fraud. (Jones, supra, 198 Cal.App.4th at p.1199.) While some of these allegations may prove to be false as Plaintiff took out multiple loans in the preceding few years, the judicially noticed record does not definitively show that Plaintiff speaks English or that Plaintiff could pay back the loan as alleged. (See e.g., RJN Exh. F.)

Defendants contend that the fourth cause of action also fails because there are no allegations to support a claim for a fiduciary duty.

“‘The elements of a cause of action for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2) the breach of that duty; and (3) damage proximately caused by that breach.’” (IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 646, [internal citation omitted]; Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524.) A fiduciary duty is founded upon a special relationship imposed by law or under circumstances in which “confidence is reposed by persons in the integrity of others” who voluntarily accept the confidence. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1150; see CACI 4100, et seq.)

“‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’” (City of Hope Nat'l Med. Ctr. v. Genentech (2008) 43 Cal.4th 375, 386.) Facts giving rise to a confidential, fiduciary or trustee relationship must be pled, and a “bare allegation that defendants assumed a fiduciary relationship” is a conclusion. (Zumbrun v. Univ. of So. Cal. (1972) 25 Cal.App.3d 1, 13.)

Here, the SAC alleges that Defendants were the loan brokers for Plaintiff. (SAC ¶ 56.) This allegation gives rise to the existence of a fiduciary duty. (See Duffy v. Cavalier (1989) 215 Cal.App.3d 1517, 1535 [“The question is not whether there is a fiduciary duty, which there is in every broker-customer relationship; rather, it is the scope or extent of the fiduciary obligation, which depends on the facts of the case.”].) Pursuant to Civil Code section 2923.1, Defendants

“fiduciary duty includes a requirement that the mortgage broker place the economic interest of the borrower ahead of his or her own economic interest.” (Civ. Code, § 2923.1(a).) Defendants breached this duty by concealing the terms of the loan from Plaintiff while knowing that she could not read the loan agreement. (SAC ¶¶ 23, 65-71.)

Defendants move to strike the prayer for punitive damages, the prayer for prejudgment interest, and the prayer for attorneys’ fees.

California Civil Code section 3294, subdivision (a), provides: “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.” “‘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. at (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id. at (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. at (c)(3).) Punitive damages thus require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.)

Moreover, a demand for punitive damages for the commission of any tort requires more than the mere conclusory allegations of “oppression, fraud, and malice.” (Civ. Code § 3294; see Perkins v. Superior Court (1981) 117 Cal. App.3d 1, 6-7.)

Here, as the Court has overruled Defendants’ demurrer to the fraud claim, the SAC sufficiently states a claim for fraud. Therefore, there is a sufficient basis for punitive damages. Accordingly, Defendants’ motion to strike the prayer for punitive damages is DENIED.

“Prejudgment interest is awarded to compensate a party for the loss of the use of his or her property.” (Bullis v. Security Pac. Nat. Bank (1978) 21 Cal.3d 801, 815.) “More specifically, it ‘provide[s] just compensation to the injured party for loss of use of the award during the prejudgment period—in other words, to make the plaintiff whole as of the date of the injury.’ [Citation.]” (Hewlett-Packard Co. v. Oracle Corp. (2021) 65 Cal.App.5th 506, 574.) “Section 3287 authorizes the recovery of prejudgment interest on damage awards.” (Ibid.)

“Section 3287, subdivision (a), addresses the award of interest on liquidated claims. One who is ‘entitled to recover damages certain, or capable of being made certain by calculation ... is entitled also to recover interest thereon’ from the time the right to recover arises. [Citation.]” (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828.) “Under subdivision (a) the court has no discretion, but must award prejudgment interest upon request, from the first day there exists both a breach and a liquidated claim.” (Ibid.) “ ‘ “[T]he test for recovery of prejudgment interest under [Civil Code] section 3287, subdivision (a) is whether defendant actually know[s] the amount owed or from reasonably available information could the defendant have computed that amount. [Citation.]” [Citations.] “The statute ... does not authorize prejudgment interest where the amount of damage, as opposed to the determination of liability, ‘depends upon a judicial determination based upon conflicting evidence and it is not ascertainable from truthful data supplied by the claimant to his debtor.’ [Citations.]” [Citation.] Thus, where the amount of damages cannot be resolved except by verdict or judgment, prejudgment interest is not appropriate. [Citation.]' [Citation.]” (Duale v. Mercedes-Benz USA, LLC (2007) 148 Cal.App.4th 718, 729.)

“Section 3287, subdivision (b), addresses the award of interest on unliquidated contract claims: ‘Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.’” (North Oakland Medical Clinic, supra, 65 Cal.App.4th at p.828.) “Under subdivision (b) the court has discretion to decide whether prejudgment interest should be awarded on an unliquidated contractual claim. It is up to the judge to determine the date from which interest runs, but in no event may the court fix a date earlier than the filing of the action.” (Id. at p.829.) However, a request for interest under section 3287(b) must be made by motion to the trial court. (Ibid.)

Civil Code section 3288 “permits discretionary prejudgment interest for unliquidated tort claims.” (Greater Westchester Homeowners Assn. v. City of Los Angeles (1979) 26 Cal.3d 86, 102.) “The award of such interest represents the accretion of wealth which money or particular property could have produced during a period of loss. Using recognized and established techniques a fact finder can usually compute with fair accuracy the interest on a specific sum of money, or on property subject to specific valuation. Furthermore, the date of loss of the property is usually ascertainable, thus permitting an accurate interest computation.” (Id. at pp.102–103.) Thus, prejudgment interest is awardable only for loss of use of funds or property. (Ibid.)

Here, the claim is not liquidated as there is no specific amount of monetary damages that SAC identifies. Nor are there allegations that would support a specific amount of monetary damages until verdict or judgment is entered. Similarly, Plaintiff has not brought a motion for discretionary interest under section 3287.

As to prejudgment interest under section 3288, the only property identified as to any tort claim– as explained with the first cause of action above – is the origination fees of $22,285.00. (SAC ¶ 30.) Thus, the SAC alleges a lost property interest due to a tort claim. Therefore, the jury could in its discretion award prejudgment interest based on that amount.

Accordingly, as there is a discretionary basis for prejudgment interest, the prayer for prejudgment interest is not an improper matter subject to be stricken as a matter of law. (CCP § 436.) Therefore, Defendants’ motion to strike the prayers for prejudgment interest is DENIED.

Attorney’s fees shall only be recoverable as provided for by statute, contract, or other law. (CCP §§1021, 1033.5(a)(10)).

Here, the SAC alleges that attorneys’ fees are available pursuant to Welfare and Institutions Code section 15657.5(a). (SAC at Prayer ¶ 1(c).) This section provides for attorneys’ fees and costs for cases of financial elder abuse as alleged with the first cause of action. (Welf. & Inst. Code, § 15657.5(a).) Accordingly, as the SAC sufficiently alleges financial elder abuse, there is a statutory basis for the prayer for attorneys’ fees. Accordingly, Defendants’ motion to strike the prayer for attorneys’ fees is DENIED.

Based on the forgoing, Defendants Koko Polosajian, Cesar Galvan, and Standard Home Lending, Inc.’s demurrer is OVERRULED.

[1] On April 6, 2022, Plaintiff dismissed Mark S, Nadel and Nadel & Associates Profit Sharing Plan & CA TD Investments from the action without prejudice.

[2] The declaration in support of the demurrer and the declaration in support of the motion to strike are substantially the same.

County of Los Angeles

Department 26