Judge: Gail Killefer, Case: 24STCV25961, Date: 2025-04-22 Tentative Ruling

Case Number: 24STCV25961    Hearing Date: April 22, 2025    Dept: 37

HEARING DATE:                 Tuesday, April 22, 2025

CASE NUMBER:                   24STCV25961

CASE NAME:                        Maggetti v. Vallecllios

MOVING PARTY:                 Defendant Glenn Vallecillos

OPPOSING PARTY:             Plaintiffs David & Ruthie Maggetti

TRIAL DATE:                        None

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer to First Amended Complaint

OPPOSITION:                        March 5, 2025

REPLY:                                  March 27, 2025

TENTATIVE:                         Defendant Glenns’ demurrer to the Complaint is overruled as to the third cause of action for unjust enrichment but is otherwise sustained with 10 days leave to amend as to the remaining causes of action. The court sets the OSC RE: Amended Complaint for May 14, 2025, at 8:30 a.m., and continues the Case Management Conference to that same date and time. 

Background

This case arises out of an alleged oral loan agreement between David and Ruthie Maggetti (“Plaintiffs”), in their individual capacity and as co-trustees of the Maggetti Revocable Trust, and Glenn and Drue Vallecillos (“Defendants”). According to the Complaint, Plaintiffs allege that they loaned $500,000 to Defendants with the understanding that Defendants would later provide a written promissory note and a security interest in real property. Plaintiffs assert that Defendants partially repaid the loan but ultimately failed to repay the remainder of the balance.

Based on these allegations, Plaintiffs filed a Complaint on October 7, 2024, alleging five causes of action: (1) Breach of Contract, (2) Financial Elder Abuse, (3) Unjust Enrichment, (4) Constructive Trust, and (5) Temporary, Preliminary, and Permanent Injunction.

Defendant Glenn Vallecillos (“Glenn”) demurs to the entire complaint. Plaintiffs oppose the demurrer. The matter is now before the court.

LEGAL STANDARDS

A.        Demurrer 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿(Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿ 

B.        Leave to Amend 

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿¿ 

Demurrer[1]

I.         Request for Judicial Notice

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords 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.” (Evid. Code § 452(c), (d), and (h).) “Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)

Defendant Glenn seeks judicial notice of the following:

Exhibit A: Deed of Trust recorded 4-20-23.

Defendant Glenn’s request for judicial notice is granted.

II.        Discussion

            A.        Factual Summary of Allegations in Complaint

Plaintiffs are husband and wife and the co-trustees of the Maggetti Revocable Trust. (Compl., ¶¶ 1, 2.) Defendant Glenn and Defendant Dure Maggetti-Vallecillos (“Drue”) are also married. (Id. ¶ 4.) Drue is the daughter of Plaintiffs and Defendant Glen is the son-in-law of Plaintiffs. (Ibid.)

In October 2022, the Parties began discussing the possibility of Plaintiffs loaning Defendants  $300,000 for a downpayment on a home. (Compl., ¶ 8.) The loan would require that Plaintiffs borrow against their retirement savings at Morgan Stanley, with Defendants making the loan “secured” by the house. (Id. ¶¶ 9, 10.) Plaintiffs took an initial loan from Morgan Stanley in the sum of $440,000 but then Defendants requested that Plaintiffs increase the loan to $500,000 or Defendants would loose the bid on the house and their deposit. (Id. ¶¶ 18, 19.) Defendants provided assurances that they would cover all monthly payments to Morgan Stanely and repay the loan in full any time upon request. (Id. ¶¶ 18, 19.) Defendants also promised that the additional $60,000 would be repaid within 30 days after the close of escrow. (Id. ¶ 19.)

On April 7, 2023, Defendants informed Plaintiff that their mortgage broker needed to call the $500,000 loan a “gift” for purposes of qualifying the purchase of the Property, but also assured Plaintiffs that the $500,000 was still a loan that would be repaid. (Compl., ¶ 21.) “To alleviate David and Ruthie’s concerns, Glenn sent an email confirming in writing that, ‘I, Glenn Vallecillos, will repay the delta of the extended loan (totaling $500,000 USD), within 30 days business of the escrow closing. I will assume all timely payments for the remainder of the loa as per your direction / Morgan Stanley’s payment schedule.’ ” (Id. ¶ 21.)

On April 19, 2023, escrow closed, and Plaintiffs confirmed via text message the loan information and $4,000 per month payment to Morgan Stanely. (Compl, ¶ 23.) Defendants failed to pay the additional $60,000 within 30 business days of the escrow closing. (Id. ¶¶ 25, 26.) In February 2024, Defendant Glenn filed and served Defendant Drue with a petition for the dissolution of marriage. (Id. ¶ 27.) Plaintiffs assert that Defendant Drue was forced to move out with her children while Defendant Glenn stayed in the purchased home (the “Property”). (Id. ¶ 28.) Defendants began making the scheduled monthly payments on Plaintiffs’ Morgan Stanely loan, but Defendants stopped making payments in February 2024 and have failed to make payments since then. (Id. ¶¶ 24, 29.) On March 4, 2024 and March 14, 2024, Plaintiffs tried to formalize the loan with a written promissory note and a deed of trust and asking that the loan be repaid in full, but Defendants have failed to respond. (Id. ¶¶ 30, 31.)

Plaintiffs filed this action on October 7, 2024, and Defendant Glenn now demurs to the Complaint.

B.        Defendant Glenn Fails to Show Plaintiff’s Lack Standing to Bring This Action

Defendant Glenn asserts that the Complaint is uncertain as to standing because the Complaint contains no allegation explaining why the Trust is a Plaintiff in this action and how the Defendants harmed the trust. The court agrees that the Complaint is silent as to who owned the funds in the Morgan Stanley retirement account and if Plaintiffs or the Trust was the entity who took out a loan from Morgan Stanley. However, Defendant Glenn fails to explain how the omission of such a fact deprives Plaintiffs of standing to bring this action.

“Unlike a corporation, a trust is not a legal entity. Legal title to the property owned by a trust is held by the trustee, and common law viewed the trustee as the owner of the trust's property.” (Galdjie v. Darwish (2003) 113 Cal. App. 4th 1331, 1343.) “A trust itself cannot sue or be sued.” (Portico Management Group, LLC v. Harrison (2011) 202 Cal.App.4th 464, 473.) “ ‘As a general rule, the trustee is the real party in interest with standing to sue and defend on the trust's behalf. [Citations.]’ ” (Id. at p. 473.)

Here, as Plaintiffs bring this action in both their individual capacity and as trustees of the Trust,  the court fails to see how Plaintiffs lack standing. The Complaint states that Defendants were provided “the loan payment info” and “with a copy of handwritten notes which provided the information for David and Ruthie’s Morgan Stanley loan” such that they have notice as to whom the loan belongs. The Complaint also does not state that the additional $60,000 loaned to Defendants came from the Morgan Stanley. Therefore, the court is not persuaded that Plaintiffs are not the real party in interest in this action.

Therefore, the demurrer due to lack of standing is overruled.

C.        First Cause of Action: Breach of Contract

To state a claim for breach of contract, Plaintiff must plead: “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 821.) In addition, the complaint must demonstrate damages proximately caused by the breach. (St. Paul Ins. v. American Dynasty (2002) 101 Cal.App.4th 1038, 1060.) Furthermore, “the complaint must [also] indicate on its face whether the contract is written, oral, or implied by conduct.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-59 citing CCP, § 430.10(g).)

First, Defendant Glenn asserts the breach of contract action fails because the loan was characterized as a “gift” such that there was no consideration showing the existence of a contract. The Complaint does assert that the Defendants mortgage banker called the $500,000 loan a “gift” but the Complaint repudiates this assertion and stated the $500,000 was a loan and not a gift. (Compl., ¶ 21.)

For purposes of a demurrer, the allegations in the Complaint must be taken as true. (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.) Moreover, whether the $500,000 were a gift or a loan presents a triable issue of fact not subject to adjudication on demurrer.  “On a demurrer a court's function is limited to testing the legal sufficiency of the complaint. [Citation.] ‘A demurrer is simply not the appropriate procedure for determining the truth of disputed facts.’ [Citation.]” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-114

Second, Defendant Glenn asserts the contract claim is barred by the statute of frauds because the Complaint alleges the loan was to be secured by real property but instead remains an oral agreement. (Civ. Code § 1624.) Under Civil Code § 1624 certain agreements must be in writing to be enforceable, including those not to be performed within one year or involving an interest in real property.

Plaintiffs assert that the statute of frauds does not apply because the loan is not an” indebtedness secured by a mortgage or deed of trust” and there is no requirement that the loan be in writing. The court disagrees with Plaintiffs’ contention. In Reeder v. Specialized Loan Servicing LLC (2020) 52 Cal.App.5th 795, the California Supreme Court found that an oral agreement to modify the deed of trust, was subject to the statute of frauds even if “the oral agreement preceded the loan and trust deed, and therefore did not and could not modify those documents.” (Id. at p. 802.) “While most contract modifications no doubt do occur later in time, plaintiff cites no authority that so limits the application of the statute of frauds.” (Ibid.) Here, Plaintiffs are requesting that that deed of trust be modified so that Plaintiffs have a security interest in the Property. (Compl., ¶ 33.) As the deed of trust is subject to statute of frauds, so is the agreement to modify the contract. (Reeder, at p. 801.)

The Complaint fails to show that the loan agreement is not subject to the statute of frauds and/or fails to assert defenses showing that the agreement is nevertheless enforceable even if it violates the statues the statute of frauds. Therefore, the demurrer to the first cause of action is sustained with leave to amend.

            D.        Second Cause of Action: Elder Financial Abuse

An elder is “any person residing in this state, 65 years of age or older.” (Welf. & Inst. Code, § 15610.27.) Elder financial abuse occurs when a person or entity “[t]akes, 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 “[a]ssits in taking.” (See Welf. & Inst. Code, § 15610.30(a)(1), (2); see also Cameron v. Las Orchidias Properties, LLC¿(2022) 82 Cal.App.5th 481, 507 (Cameron).) “A plaintiff is not required to prove bad faith or fraud to prevail on a claim of financial elder abuse.” (Cameron, supra, 82 Cal.App.5th at p. 507.)

“Subdivision (b) of 15610.30 provides a person or entity is “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 possession of property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder ... adult.” (Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 656 (Paslay) citing Welf. & Inst. Code, § 15610.30(b).) “[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.” (Welf. & Inst. Code, § 15610.30(c).) “Thus, a party may engage in elder abuse by misappropriating funds to which an elder is entitled under a contract.” (Paslay, at p. 656.)

Defendant Glenn demurs to the second cause of action on the basis that Plaintiffs fail to plead facts to show undue influence, but undue influence is just one of the ways an elder’s property can be taken. (Welf. & Inst. Code, § 15610.30.) Defendant Glenn fails to explain how the second cause of action fails to plead facts showing wrongful use, intent to defraud, or in a manner that is likely to be harmful to the elder. (See Welf. & Inst. Code, § 15610.30.)

However, the court agrees that the second cause of action is uncertain because the Complaint fails to state if the money at issue belongs to Plaintiffs personally or is held by the Trust for their benefit. The court also agrees that the Complaint fails to state sufficient facts to show that Plaintiffs were elders at the time the loan was made. Therefore, there is uncertainty as to who is the owner of the funds at issue.

Accordingly, the demurrer to the second cause of action is sustained with leave to amend.

            E.        Third Cause of Action: Unjust Enrichment

While California courts have long stated that there is no standalone cause of action for unjust enrichment, more recent authority has confirmed that a plaintiff may seek restitution on an unjust enrichment theory grounded in equitable principles. (Melchior v. New Line Cinema (2003) 106 Cal.App.4th 779, 793; Sepanossian v. National Ready Mix Co. (2023) 97 Cal.App.5th 192.) Unjust enrichment may support relief where the defendant obtained a benefit under circumstances making it inequitable to retain it. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.)

Here, Plaintiffs allege they transferred $500,000 to Defendants, who have retained the funds and failed to complete repayment. (Compl., ¶¶ 19-21, 50.) Plaintiffs also allege that they relied on promises of repayment and that the loan would be “secured” by the house. (Id. ¶¶ 10, 16, 17, 19.)

The court finds that that these facts are sufficient to allege unjust retention of a benefit conferred by Plaintiffs on Defendants under circumstances that, if proven, may entitle Plaintiffs to restitution. Moreover, unjust enrichment may be pursued as an alternative to a breach of contract theory where the contract is found unenforceable or void.

Therefore, the demurrer to the third cause of action is overruled.

F.        Fourth Cause of Action: Constructive Trust

A cause of action for constructive trust is based on an underlying wrongful act and requires: (1) a wrongful act, (2) specific, identifiable property or an excuse for inability to describe it, (3) plaintiff’s right to the property, and (4) defendant’s title to the property. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 76; Michaelian v. State Comp. Ins. Fund (1996) 50 Cal.App.4th 1093, 1114.)

Defendant Glenn’s demurrer to the fourth cause of action asserts that the action is uncertain and fails to state a claim against Defendants. While the Complaint alleges that a  $500,000 loan was made, the Complaint admits that payments were made on that loan until February 2024. (Compl., ¶¶ 24, 29.) Therefore, there is uncertainty as to how much Defendants owe on the loan after crediting the prior payments made, making the amount due unidentifiable.

The demurrer to fourth cause of action is sustained with leave to amend.

G.        Fifth Cause of Action: Injunctive Relief

Injunctive relief is a remedy, not a standalone cause of action. (CCP § 525.) A party seeking an injunction must show that the alleged misconduct is ongoing or likely to recur. (Madrid v. Perot Systems (2005) 130 Cal.App.4th 440, 464; Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403 fn. 6.)

Defendant Glenn’s demurrer to the fifth cause of action asserts that the claim is uncertain and fails to state a cause of action. Here, Plaintiffs request injunctive relief to prevent Defendants from transferring or dissipating assets derived from the disputed $500,000 loan. However, the Complaint does not allege that Defendants are currently engaging in, or threatening to engage in, ongoing misconduct such as the transferring of assets. Instead, the Complaint focuses on past acts of non-repayment. Because the Complaint lacks allegations showing that the challenged conduct is ongoing or likely to recur, the request for injunctive relief is insufficiently plead to survive as a freestanding claim. It may, however, be considered as a potential remedy if Plaintiffs later establish entitlement to equitable relief.

The demurrer to the sixth cause of action is sustained with leave to amend.

Conclusion

Defendant Glenns’ demurrer to the Complaint is overruled as to the third cause of action for

unjust enrichment but is otherwise sustained with 10 days leave to amend as to the remaining

causes of action. The court sets the OSC RE: Amended Complaint for May 14, 2025, at 8:30

a.m., and continues the Case Management Conference to that same date and time.