Judge: Frank M. Tavelman, Case: 20BBCV00870, Date: 2022-07-29 Tentative Ruling

Case Number: 20BBCV00870    Hearing Date: July 29, 2022    Dept: A

MP:

Catalina Gracia, individually and as trustee of the 2013 Marlen Ayala Protector and as successor trustee of The Ayala Family Trust Dated February 27, 2003; Diego Garcia, individually and as trustee of the 2013 Marlen Ayala Protector Trust and as successor trustee of The Ayala Family Trust Dated February 27, 2003 Trust

 

RP:

Plaintiff Mar Dore Milpa

 

 

ALLEGATIONS:

 

Mar Dore Milpa ("Plaintiff") filed suit against Defendants RIF IV–Burbank, LLC, a California Limited Liability Company ("D/RIF"); Rexford Industrial Realty, LP, a Maryland Limited Partnership ("D/Rexford"); Diego Garcia, individually ("D/Diego") and as co-successor trustee of The 2013 Marlen Ayala Protector Trust (“Ayala Protector Trust") and as successor trustee of The Ayala Family Trust Dated February 27, 2003 Trust ("Ayala Family Trust"); Catalina Gracia, individually ("D/Catalina") and as co-successor trustee of Ayala Protector Trust and as successor trustee of the Ayala Family Trust; Marlen Ayala, individually ("D/Marlen") and as trustee of the Ayala Family Trust; and Commercial Real Estate Inspectors, LLC, a California Limited Liability Company ("CREI", and collectively, "Defendants"). Plaintiff alleges that Diego, Catalina, and Marlen ("Seller Defendants") sold Plaintiff a property located at 831 South Main Street, Burbank, California 91506 ("Subject Property") in 2013, and that RIF and Rexford ("Rexford Defendants") own the property adjacent to the Subject Property, located at 901 West Alameda Avenue, Burbank, California 91506 ("Adjacent Property"). Plaintiff further alleges that Rexford Defendants negligently maintained the Adjacent Property as to allow the Subject Property to incur water damage, that such damage was intentionally not disclosed by Seller Defendants, and that their property inspectors, CREI, failed to discover such damage on inspection.

 

Plaintiff filed a Complaint on November 25, 2020, and a First Amended Complaint ("FAC") on February 4, 2022, alleging eight causes of action: (1) Nuisance (against Rexford Defendants); (2) Negligence (against Rexford Defendants); (3) Injunctive Relief (against Rexford Defendants); (4) Breach of Contract for Sale of Real Property (against D/Diego, D/Catalina, and D/Marlen); (5) Breach of Contract for Property Inspection (against CREI); (6) Negligence (against CREI); (7) Fraud (Intentional Misrepresentation) (against D/Diego, D/Catalina, and D/Marlen); and (8) Fraud (Negligent Misrepresentation) (against D/Diego, D/Catalina, and D/Marlen).

 

CREI filed a Cross-Complaint on November 28, 2021, and a First Amended Cross-Complaint ("CFXC") on March 3, 2022, alleging six causes of action against RIF, Rexford, D/Diego, D/Catalina, D/Marlen, and Plaintiff: (1) Implied Indemnity; (2) Comparative Indemnity; (3) Declaratory Relief; (4) Equitable Indemnity; (5) Contribution; and (6) Breach of Written Contract.

 

PRESENTATION:

 

D/Diego and D/Catalina, both in their individual capacity and as trustees for the Ayala Protector Trust and Ayala Family Trustee ("Trustee Defendants") filed a demurrer on May 31, 2022; Plaintiff’s opposition was filed on June 13, 2022; and a reply filed on June 17, 2022.

 

On June 24, 2022, the Court continued the instant matter to July 29, 2022, and directed both parties to file limited supplemental briefing. Trustee Defendants were directed to file their brief by July 8, 2022; and Plaintiff by July 22, 2022.

 

The Court received Trustee Defendants’ supplemental brief filed on July 8, 2022 and a Plaintiff’s supplemental brief filed on July 22, 2022.

 

RELIEF REQUESTED:

 

Trustee Defendants demur to the Fourth, Seventh and Eighth causes of action in the FAC.

 

ANALYSIS:

 

I.          LEGAL STANDARD

 

Pursuant to CCP §§430.10(e) and (f), the party against whom a complaint is filed may demur on the grounds that the pleading does not state facts sufficient to constitute a cause of action, or that the pleading is uncertain, ambiguous and/or unintelligible. It is an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable probability that the defect can be cured by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1082, as modified (Dec. 23, 2003).)

 

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.  (CCP §430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747). The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Ibid.)  A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.  (Blank, supra, 39 Cal. 3d at p. 318.)

 

II.        REQUEST FOR JUDICIAL NOTICE

 

  1. Trustee Defendants' Request for Judicial Notice

     

    Trustee Defendants request that the Court take judicial notice of Exhibits 1-4 attached to their Request for Judicial Notice. The Court takes judicial notice of Exhibits 1-4 pursuant to Evid. Code § 452(d) and (h) ("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" and "[f]acts 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.")

     

  2. Plaintiff’s Request for Judicial Notice

     

    Plaintiff requests that the Court take judicial notice of Exhibits A through E, attached to their Request for Judicial Notice. The Court takes judicial notice of Exhibits A through E pursuant to Evid. Code §452(h).

     

    III.       MEET AND CONFER

     

    CCP § 430.41(a) requires that the demurring party meet and confer with the party who filed the pleading that is subject to the demurrer at least five days before the date the responsive pleading is due, by telephone or in person, for the purpose of determining if the parties can resolve the objections to be raised in the demurrer. The demurring party must file and serve a declaration detailing their meet and confer efforts. Failure to meet and confer is not grounds to overrule or sustain a demurrer, or grant or deny a motion to strike. (CCP §§ 430.41(a)(4); CCP 435.5(a)(4).)

     

    On review of the Declaration of Nicholas Kanter, the Court finds that, despite a disagreement between the parties regarding each respective side's good faith during meet and confer efforts, these requirements have been satisfied to code to a sufficient level for the Court to rule on the merits of the instant demurrer. (Decl. Kanter, ¶¶ 2-3; Decl. Marootian, ¶¶ 8-10.)

     

    IV.       MERITS

     

  1. Lack of Continuous Ownership (Standing and Causation)

     

    On June 24, 2022, the Court granted the parties leave to file supplemental briefing on the issue of causation.

     

    Plaintiff argues: (1) that Seller Defendants are barred from raising the standing and causation argument because they failed to do so in their demurrer to the original Complaint (CCP §430.41(b); (2) Plaintiff argues that the FAC is not based on a title claim, but breach of contract and fraud claims; and (3) the quitclaim deed did not transfer her claims or break the chain of causation.

     

    In reply, Seller Defendants argue that a standing argument may be raised at any time, and the delay was because they only obtained the quitclaim deed underlying the standing argument after filing the first demurrer. (Decl. Kanter, ¶ 6.)

     

    First, as to the CCP §430.41(b) argument preclusion issue, the statute provides: “A party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint, cross-complaint, or answer on grounds that could have been raised by demurrer to the earlier version of the complaint, cross-complaint, or answer.” (CCP §430.41(b).) The Court finds that this statute does not bar the Trustee Defendants’ standing because prior to knowing of the quitclaim deed and title transfer between Plaintiff and her mother, they could not have raised the issue. (Decl. Kanter, ¶ 6.) The Court will thus move on to the merits of the standing based on the continuous ownership issue.

     

    Trustee Defendants argue that Plaintiff lacks standing to bring the fourth, seventh, or eighth causes of action against Trustee Defendants, D/Marlen, and the Ayala Family Trust (and together, "Seller Defendants"). Trustee Defendants discuss that after purchasing the property, Plaintiff transferred the Subject Property to her mother on January 1, 2014 and inherited the Subject Property on September 15, 2015.  Seller Defendants refer to a Quitclaim Deed and a court order, both attached to their Request for Judicial Notice.  Seller Defendants argue that Plaintiff lacks causation and standing and cannot show that she relied on any representation or promise by Seller Defendants in inheriting the Subject Property from her mother. 

     

    The FAC alleges that Plaintiff entered into a written agreement to purchase the Subject Property from Trustee Defendants on April 22, 2013, but that Trustee Defendants breached the agreement by failing to disclose material information (FAC, ¶ 43), and intentionally or negligently misrepresented such facts (FAC, ¶¶ 68-84.) The FAC pleads the delayed discovery rule, alleging that Plaintiff only discovered the facts underlying the allegations on November 27, 2018, when she experienced a water intrusion coming through the wall adjacent to the Adjacent Property. (FAC, ¶ 16.) Exhibits 1 and 2 attached to Trustee Defendants’ Request for Judicial Notice also show that the Subject Property was transferred to Plaintiff’s mother, Mary Mizenko (“Mizenko”), on January 1, 2014; and distributed back to Plaintiff on September 8, 2015 by court order following the passing of Mizenko. (Trustee Defendants’ RJN, Exs. 1, 2.)

     

    In their supplemental briefing, Trustee Defendants cite to Krusi v. S.J. Amoroso Constr. Co. (2000) 81 Cal.App.4th 995, 1005 and Siegel v. Anderson Homes, Inc. (2004) 118 Cal.App.4th 994, 1009 for the contention that a cause of action for damage to real property accrues when the defendant’s act causes harm to the property; and that this cause of action belongs to the property owner at the time the damage is discovered or ought to be discovered. Trustee Defendants thus argue that Plaintiff did not own a cause of action before transferring the Subject Property; and by the time she made her discovery after getting the Subject Property back from her mother, there was no more causal connection between the alleged 2013 representations and the harm.

     

    In her supplemental opposition, Plaintiff cites to Emeric v. Alvarado (1891) 90 Cal. 444; Spaulding v. Bradley (1889) 79 Cal. 449; City and County of San Francisco v. Lawton (1861) 18 Cal. 465; and Taylor v. Coachella Val. County Water Dist. (1952) 108 Cal. App. 2d 743 for the contention that a quitclaim deed only transfers the interest possessed by the transferor, and that since Plaintiff did not have a cause of action at the time, she did not transfer any potential claims to her mother. Plaintiff also argues that, even if the Court were to consider that the chain of causation was broken, Krusi provides that subsequent buyers may maintain negligence claims against parties to which they are not in privity of contract. However, as discussed below, Krusi discussed that certain tort claims may continue, but nothing in Krusi discussed general breach of contract claims.

     

    Plaintiff transferred the Subject Property to her mother via a quitclaim deed.   A quitclaim passes all the rights, title and interest in a property to another.  (City of Manhatan Beach v Superior Court (1996) 13 Cal. 4th 232, 239.)  Any rights under a contract are not part of an interest in a property, and thus are not conveyed via a quitclaim deed.  Contractual rights are conveyed via assignment of those rights if permitted by a contract. 

     

    The Court may not consider extrinsic evidence, and further must assume the truth of all factual and material allegations pled on demurrer. (CCP § 430.30(a); Blank, supra, 39 Cal. 3d 318.) The only evidence concerning the quitclaim transfer of the Subject Property from Plaintiff to her mother, and the subsequent transfer back to Plaintiff, is garnered from judicially noticeable matters. These documents do not include any additional facts on this transfer, and the FAC does not include any mention of this transfer at all.

     

    The Krusi court discusses that a tort duty may run from an architect, designer, or contractor to both the original owner for whom real property improvement services are provided, and to subsequent owners of the same property; however, as to the fourth cause of action against Trustee Defendants, the claim is for breach of contract, and not a tort, which is alleged in other causes of action.  As discussed by our Supreme Court in Biakanja v. Irving, an action for negligence may be maintained against one not in privity with a plaintiff under certain circumstances.  Biakanja v. Irving (1958) 49, Cal. 2d 647, 650.  The Biakanja court does not discuss breach of contract, however unless a subsequent owner is a third-party beneficiary of a contract, the same does not hold true for a breach of contract cause of action. 

     

    Once the Plaintiff quitclaimed the property to her mother, Plaintiff would not be able to bring suit for breach of contract since any discovered damages from failing to disclose would be incurred by a third person, her mother.   Likewise, if another person acquired the property from the Probate Court after Plaintiff’s mother’s death, that new owner would not be able to sue for the original breach of contract; effectively, there would be no privity and the subsequent deeds to transfer the property would only convey an interest in the property, and not any contractual rights.   The Court sees no equitable, public policy or legal basis to find that Plaintiff, simply because she reacquired property which she had previously transferred, should be treated differently from another subsequent owner of the property.  Plaintiff has failed to state a basis in the FAC to support a legal basis for such a cause of action.  Ultimately, the issue is one of continuous ownership, and while that may not affect some causes of action, it affects the breach of contract claim.

     

    The Court has considered the following potential argument not offered by either party:  The Plaintiff is in a different position than a random third-party owner because the Plaintiff had direct privity of contract, even after she transferred the Subject Property.  The Court does not find this persuasive for the action brought in this case.  The Plaintiff is only able to have incurred damages because Plaintiff reacquired property that had otherwise been transferred.   The Court could foresee a different argument if the new owner had sued Plaintiff for failing to disclose, and Plaintiff then filed a cross-complaint against CREI or Seller Defendants.

     

    The Court will sustain the demurrer concerning breach of contract in the fourth cause of action, with leave to amend.

     

  2. Untimely Claims

     

    Trustee Defendants argue that the FAC's claims are untimely against Marlen and against The Ayala Family Trust Dated February 27, 2003.  CCP §366.2, bars any claim against a decedent after one year. Plaintiff contends in turn that she has filed outstanding partial dismissals against Marlen and all trustees of The Ayala Family Trust Dated February 27, 2003. On review of the case, the Court finds that such dismissals are outstanding, and so the issue of timeliness is moot.

     

  3. Fourth Cause of Action (Breach of Contract)

     

    To plead breach of contract, the Plaintiff must allege (1) the existence of a contract, (2) Plaintiff’s performance or excuse for non-performance, (3) Defendant’s breach, and (4) resulting damage to Plaintiff. (Lortz v. Connell (1969) 273 Cal. App. 2d 286, 290.)

     

    Trustee Defendants argue that they are not parties to the 2013 contract, which lists only Plaintiff and "Marlen Ayala Trust and/or Assignee." (FAC, Ex. A.)

     

    In opposition, Plaintiff cites to Plaintiff's Request for Judicial Notice and argues that Ayala Protector Trust was granted the Subject Property three days prior to the transfer to Plaintiff. (Plaintiff's RJN, Exs. A, B, C, E.) Plaintiff further argues that this is evidence that Trustee Defendants come with unclean hands and should be estopped from claiming that they are not liable. Plaintiff contends that, because the Ayala Protector Trust was the entity that ultimately transferred the Subject Property to Plaintiff, it, along with its trustees, D/Diego and D/Catalina, are considered the "assignee" of the MarAyala Trust, as referenced in the 2013 contract. (FAC, Ex. A.)

     

    Plaintiff's theories are not alleged in the FAC itself. On a demurrer, the Court may only consider the four corners of the pleading and judicially noticeable matters.  It cannot overrule a demurrer based on arguments that are not supported in the FAC itself.

     

    In addition to the reasons stated above relative to continuous ownership, the Court sustains the demurrer as to the fourth cause of action, with leave to amend.

     

  4. Seventh and Eighth Causes of Action (Intentional Misrepresentation; Negligent Misrepresentation)

     

    Causes of action for ‘fraud,’ ‘concealment’ and ‘intentional misrepresentation’ are all causes of action sounding in “deceit based on intentional misrepresentation.” (Manderville v. PCG&S Group (2007) 146 Cal. App. 4th 1486, 1498, fn. 4.) The elements of fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) In California, fraud, including negligent misrepresentation, must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) Fraud allegations need not be liberally construed, general pleading of the legal conclusion of fraud is insufficient, and every element of the cause of action for fraud must be alleged fully, factually, and specifically. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal. App. 3d 1324, 1331; see also Quelimane Co., Inc. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47) (Specific to fraud is the rule of particularity in pleading; fraud is the only remaining cause of action in which specific pleading is required to enable the court to determine, on the basis of the pleadings alone, whether a foundation exists for the cause.)

     

    On review of the FAC, the Court finds that the seventh and eighth causes of action do not plead the fraud causes of action with sufficient particularity. The allegations of intentional and negligent misrepresentation are made in a general and conclusory manner and do not include any of "how, when, where, to whom, and by what means the representations were tendered." (Cansino, supra, 224 Cal.App.4th at 1469.)

     

    The Court thus sustains the demurrer as to the seventh and eighth causes of action, with leave to amend.

     

    V.        CONCLUSION

     

    Accordingly, the Court sustains the demurrer to the FAC in its entirety, with leave to amend.

     

    ---

     

RULING:

 

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

 

ORDER

 

Defendants Catalina Gracia, individually and as trustee of the 2013 Marlen Ayala Protector and as successor trustee of The Ayala Family Trust Dated February 27, 2003; Diego Garcia, individually and as trustee of the 2013 Marlen Ayala Protector Trust and as successor trustee of The Ayala Family Trust Dated February 27, 2003 Trust's Demurrer came on regularly for hearing on June 24, 2022, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

 

THE DEMURRER IS SUSTAINED WITH 20 DAYS LEAVE TO AMEND.

 

IT IS SO ORDERED.

 

DATE:  July 29, 2022                                               _______________________________

F.M. TAVELMAN, Judge

Superior Court of California