Judge: H. Jay Ford, III, Case: 23SMCV04625, Date: 2024-09-19 Tentative Ruling

Case Number: 23SMCV04625    Hearing Date: September 19, 2024    Dept: O

  Case Name:  Renovating Specialist, Inc. v. 557 Westlake, LLC, et al.

SUBJECT:                 DEMURRER W/ MOTION TO STRIKE

MOVING PARTY:   Defendants 577 Westlake, LLC and Nissim David-Chai

RESP. PARTY:         Plaintiff Renovating Specialist, Inc. dba Sivan Windows And Doors

TENTATIVE RULING

            Defendants 577 Westlake, LLC And Nissim David-Chai Demurrer to the 2^nd and 3^rd causes of action in Plaintiff Renovating Specialist, Inc. dba Sivan Windows And Doors FAC are OVERRULED. Plaintiff alleges all the elements of both causes of action with the requisite specific fact requirement for the fraud cause of action.

Defendants Motion to Strike is DENIED. Plaintiff pleads a fraud and Penal Code § 496 claim, which allow for punitive and treble damages respectively.

REASONING

I.      Demurrer to 2^nd cause of action for fraud in the inducement—OVERRULED

            "A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. Every element must be specifically pleaded. [citations omitted]" (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.)

            “[T]he facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) Fraud actions against corporations require 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, the specificity requirement is “relaxed when the allegations indicate that the defendant must necessarily possess full information concerning the facts of the controversy or when the facts lie more in the knowledge of the opposite party.” (Ibid., citations omitted.)

            Plaintiff Renovating Specialist, Inc. dba Sivan Windows And Doors (“Plaintiff”) alleges

Defendants 577 Westlake, LLC (“Westlake”) and Nissim David-Chai (“Chai”) (collectively “Defendants”) made knowingly false statements to Plaintiff, and Plaintiff includes specifics of the alleged knowingly false statements. (FAC, ¶¶ 23, 25, 26.) Plaintiff alleges that Chai made the alleged statements while acting as an agent of Westlake, and that the statements were “false and untrue,” alleging “Defendants never intended to pay Plaintiff for the full price of the products it had ordered.” (Id., ¶¶ 24, 25.) Plaintiff alleges Defendants made the false allegations to induce Plaintiff to “deliver the windows and doors to Plaintiff. (Id., ¶ 26.) Plaintiff alleges Plaintiff was “ignorant of the falsity of Defendants’ statements,” and if Plaintiff had known the truth Plaintiff would not have agreed to the contract terms. (Id., ¶ 27.) Plaintiff alleges justifiable reliance. (Id., ¶¶ 10–11, 27.) Plaintiff pleads the contract was signed Plaintiff pleads resulting damages. (Id., ¶ 28.)

            Defendants argue the timing of the alleged false representations were not plead correctly in the FAC, since Plaintiff fails to allege that Defendants “never intended to pay full contract price before the contract was executed,” and thus Chai “cannot have made these alleged representations to induce Plaintiff to execute a contract.” (Demurrer, p. 6.) The Court does not agree with this argument. Plaintiff alleges the contract was signed on 9-29-22. (FAC, Ex. 1 (the “Contract”). Plaintiff alleges that Chai made the false statements “during the fourth quarter of 2022.” (FAC, ¶ 23.) During the fourth quarter of 2022 could very well indicate a time prior to 9-29-22, and Plaintiff is only required to plead ultimate facts, not evidentiary facts.

            Plaintiff has successfully plead specific ultimate facts to allege a case of action for fraud in the inducement. Defendants’ demurrer to the 2^nd cause of action is OVERRULED.

II.   Demurrer to 3^rd cause of action for Treble Damages – Penal Code § 496—OVERRULED

(a) Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170.

(Pen. Code, § 496, subd. (a).)

Theft is defined in Penal Code §484(a). “Every person who shall feloniously steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property…is guilty of theft.” (Pen. Code §484(a).)

“A plaintiff may recover treble damages and attorney's fees under section 496(c) when property has been obtained in any manner constituting theft.” (Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 349, 361 [enording the analysis of  Bell v. Feibush (2013) 212 Cal.App.4th 1041 which found the legislative intent of Penal Code § 496(a) was to permit treble damage recovery by ‘any person’ injured by the knowing purchase, receipt, concealment, or withholding of property stolen or obtained by theft.”].)

            Plaintiff pleads “Defendant received the windows and doors from Plaintiff without paying for them in full by means of theft by false pretenses.” (FAC, ¶ 32.) Plaintiff has successful plead fraud in the inducement, as analyzed above, the requisite intent to take property by false pretenses has been plead. (See FAC, ¶¶ 22–27.) Plaintiff may seek treble damages under Penal Code § 496(c). (FAC, ¶ 33.) Thus, Plaintiff pleads all the elements of a Penal Code § 496 civil action for treble damages.

            Defendants Demurrer to the 3^rd cause of action is OVERRULED.

III.           Motion to Strike—DENIED

Defendants Motion to Strike Punitive and treble damages, plus attorneys’ fees is DENIED due to Plaintiff’s successful pleading of the 2^nd and 3^rd causes of action.

“(a) In an action for breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant had 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.” (Civ. Code, § 3294, subd. (a).).

Treble damages are permitted under a Penal Code § 496 claim. (See Pen. Code § 496, subd. (c) [“Any person who has been injured by a violation of subdivision (a) or (b) may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney's fees.”].)

Plaintiff has successfully plead a Fraud and Penal Code § 496 cause of action in the FAC. Thus, Plaintiff may plead a prayer for punitive and treble damages, plus and award of attorneys’ fees.