Judge: H. Jay Ford, III, Case: 24SMCV02017, Date: 2024-10-24 Tentative Ruling

Case Number: 24SMCV02017    Hearing Date: October 24, 2024    Dept: O

 Case Name:  Delshad v. Taheri, et al.

SUBJECT:                 DEMURRER WITHOUT MOTION TO STRIKE

MOVING PARTY:   Defendant Babak Taheri

RESP. PARTY:         Plaintiff Jim Delshad

TENTATIVE RULING

            Defendant Babak Taheri’s Demurrer to the 1^st, 2^nd, 3^rd, and 5^th causes of action in Plaintiff Babak Taheri’s FAC is OVERRULED. Plaintiff has properly plead compliance with the statute of limitations for each cause of action. Plaintiff has properly plead all the necessary elements of the causes of action.

REASONING

As a general matter, 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 pleading alone, and not the evidence or facts alleged.” (E428.50Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Plaintiff is only required to allege ultimate facts, not evidentiary facts. (See Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 212 [“the complaint should set forth the ultimate facts constituting the cause of action, not the evidence by which plaintiff proposes to prove those facts”); 1 Cal. Affirmative Def. § 10:2 (2d ed.) [allegations of agency, course and scope of employment, etc. qualify as ultimate facts].) Plaintiff’s allegations must be accepted as true on demurrer. (See Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924 [“For purposes of reviewing a demurrer, we accept the truth of material facts properly pleaded in the operative complaint”].)

1.     Demurrer to the 1^st, 2^nd, 3^rd, and 5^th causes of action based on Statute of Limitations—OVERRULED

“The statute of limitations usually commences when a cause of action ‘accrues,’ and it is generally said that ‘an action accrues on the date of injury.’ [Citation.] Alternatively, it is often stated that the statute commences ‘upon the occurrence of the last element essential to the cause of action.” (Bernson v. Browning–Ferris Industries (1994) 7 Cal.4th 926, 931.) “These general principles have been significantly modified by the common law ‘discovery rule,’ which provides that the accrual date may be ‘delayed until the plaintiff is aware of her injury and its negligent cause.” (Ibid.) Now, under the discovery rule, “the statute of limitations begins to run when the plaintiff suspects or should suspect that her injury was caused by wrongdoing, that someone has done something wrong to her.” (Id. at p. 932.)

To rely on the discovery rule, plaintiff must specifically allege facts showing “(1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.  In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence’; ‘conclusory allegations will not withstand demurrer.’”  (Fox v. Ethicon Endo–Surgery, Inc. (2005) 35 C4th 797, 808.)

“Part payment is deemed to be a sufficient acknowledgment of a “continuing contract” to take the case out of the statute of limitations . . . . The acknowledgment of a debt before the statute has run, however, does not create a new obligation as of the time of the acknowledgment; it merely continues the original obligation through a new statutory period.” (Eilke v. Rice (1955) 45 Cal.2d 66, 73; see Code Civ. Proc., § 360.)

Defendant Babak Taheri (“Taheri”) argues that the statute of limitations began to run on the breach of promissory note claims on 12-1-16 because Plaintiff Jim Delshad’s (“Delshad”) Complaint states that Taheri “would make monthly payments of interest from December 1, 2011 to December 1, 2016. (FAC, ¶ 14.) Taheri argues the effective date when Delshad was allegedly injured was on 12-1-16, and thus the statute of limitations began to run at that time. However, this argument ignores the allegation that Taheri “continued to pay Delshad $2866.66 every month until April 2023, when Taheri simply ceased making payments on the Note.” (FAC, ¶ 16.) Thus, Delshad pleads that the date of injury was in April of 2023 when Taheri stopped making payments on the loan, not what was allegedly originally contracted for in the original promissory note. Delshad further pleads that “Taheri’s cessation of monthly interest payments and his failure and refusal to pay off the Note has caused Delshad to be harmed in the amount of $430,000, plus interest.” (FAC, ¶ 17.)

Delshad’s allegations of partial payment up until April of 2023, which must be accepted as true at this stage, create the assumption that the statute of limitations began to run in April of 2023 for all claims, as the April 2023 date is the alleged initial date of injury. Delshad filed the complaint on 4-26-24, around a year after the statute of limitations began to accrue, thus the Complaint was filed well within the four year statute of limitations for breach of promissory note (Code Civ. Proc., § 337, subd. (a)), three year statute of limitations for fraud (Code Civ. Proc., § 338, subd. (d)), and four-year statute of limitations for financial elder abuse (Welf. & Inst. Code, § 15657.7.)

Thus, Taheri’s Demurrer as to the 1^st, 2^nd, 3^rd, and 5^th causes of action based on the Statute of Limitations is OVERRULED.

2.     Demurrer to the 1^st cause of action for breach of promissory note—OVERRULED

Taheri argues that the 1^st cause of action for breach of promissory note is vague and uncertain because the FAC does not identify “terms of this purported second agreement” regarding the continuation of the promissory note payments. (Demurrer, p. 9:9–22.)

"Demurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond . . . . We strictly construe such demurrers because ambiguities can reasonably be clarified under modern rules of discovery." (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135. ["demurrers for uncertainty are disfavored"].)

"A cause of action for nonpayment on a promissory note is one for breach of contract." (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1112, as modified (July 24, 2007).) The essential elements of breach of contract are “(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." (D'Arrigo Bros. of California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.)

Not only are demurrers for uncertainty disfavored, Delshad successfully pleads all the elements of a beach of promissory note cause of action. Delshad alleges that Taheri executed the promissory note attached to the complaint, made payments on the note for 12 years, and then ceased making payments in 2023, thereby breaching the terms of the Note and causing harm to Delshad. (See FAC, ¶¶ 13–17.) Additionally, Delshad alleges after Taheri told Delshad that he would not be able to repay Delshad by the original maturity date of the Note, they "thus agreed to extend the maturity date of the Note and that Taheri could continue to pay interest only until such time that he could afford to pay Delshad the $430,000 principal." (See FAC, ¶ 16.)

Taheri’s Demurrer to the 1^st cause of action for breach of promissory note is OVERRULED.

3.     Demurrer to the 2^nd cause of action for Financial Elder Abuse—OVERRULED

The elements of a cause of action for financial elder abuse are (1) the defendant took, hid, appropriated, obtained or retained plaintiff's property; (2) plaintiff is at least 65 years of age or a dependent adult; (3) the defendant took, hid, appropriated, obtained or retained plaintiff's property for a wrongful use, with the intent to defraud, or by undue influence; (4) the plaintiff was harmed; and (5) the defendant's conduct was a substantial factor in causing plaintiff's harm. (See CACI No. 3100.)

“Under the Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst.Code, § 15600 et seq.), an elder is “any person residing in this state, 65 years or older [citations] . . . . ” Section 15610.30 broadly defines financial abuse of an elder as occurring when a person or entity “[t]akes, secretes, appropriates, obtains, or retains real or personal property of an elder” for “a wrongful use or with intent to defraud, or both,” as well as “by undue influence....” (Paslay v. State Farm General Ins. Co. (2016) 248 Cal.App.4th 639, 656.)

 Welf. & Inst.Code Subdivision (b) of  Section 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.” (Welf. & Inst.Code§ 15610.30, subd. (b).) The provision further specifies that 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....” (§ 15610.30, subd. (c).) . . . . Thus, a party may engage in elder abuse by misappropriating funds to which an elder is entitled under a contract.” (Paslay, supra, 248 Cal.App.4th at p. 656.)

Delshad alleges he over 65, Taheri retained money due Delshad under the terms of the Note, that Taheri did so "with the intent to defraud Delshad or for a wrongful use, including the fact that Taheri knew or should have known that his conduct was likely to harm Delshad," that “Delshad was harmed by Taheri’s retaining the money that was due to Delshad,” and that “Taheri’s conduct was a substantial factor in causing Delshad’s harm.” (See FAC, ¶¶ 6, 11, 13, 19, 21, 22–25.)

Thus, Delshad has plead all the necessary elements of a financial elder abuse cause of action. Taheri’s Demurrer to the 2^nd cause of action is OVERRULED.

4.     Demurrer to the 3^rd cause of action for Fraud—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.)

“Promissory fraud is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract.” (Ibid.) “Recovery, however, may be limited by the rule against double recovery of tort and contract compensatory damages.” (Ibid.)

“[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.)

Delshad alleges all the necessary elements of fraud, or promissory fraud, in the FAC with the requisite specificity as required to plead a fraud cause of action. Delshad alleges the following:

1.     Delshad alleges specific facts regarding the background of the complaint which gave rise to the fraud cause of action, (See FAC, ¶¶ 6–10.)

2.     Delshad alleges “On or about December 1, 2011, Taheri promised Delshad that, if Delshad relinquished his ownership interest in IPC and the other company, he would personally repay Delshad the $430,000,” and attached the alleged Note to the FAC which shows Taheri’s signature (FAC, ¶¶ 11, 13, 29; Ex. A.)

3.     Delshad alleges “[a]t the time Taheri promised Delshad that he would pay Delshad $430,000, Taheri did not actually intend to do so,” “Taheri intended that Delshad would rely on his promise,” and “Delshad reasonably relied on Taheri’s promise by, among other things, relinquishing his ownership interest in IPC.” (FAC, ¶¶ 30–32.)

4.     Delshad alleges “Taheri failed to perform his promise to pay Delshad $430,000,” and “Delshad was harmed as a result of Taheri’s failure to pay Delshad as promised.” (FAC, ¶¶ 33, 34.)

Thus, Taheri’s Demurrer to the 3^rd cause of action for fraud is OVERRULED. 

5.     Demurrer to the 5^th cause of action for Unjust Enrichment—OVERRULED

“The elements for a claim of unjust enrichment are receipt of a benefit and unjust retention of the benefit at the expense of another. [Citation.] The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769.)

“Unjust enrichment is synonymous with restitution.” Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.) Under the law of restitution, [a]n individual is required to make restitution if he or she is unjustly enriched at the expense of another. [Citations.] A person is enriched if the person receives a benefit at another's expense. [Citation.] [Citation.] However, [t]he fact that one person benefits another is not, by itself, sufficient to require restitution. The person receiving the benefit is required to make restitution only if the circumstances are such that, as between the two individuals, it is unjust for the person to retain it.” (Ibid., emphasis in original, quotes omitted.)

Taheri’s argument that a claim for unjust enrichment is not recognized as a cause of action in California is correct, however, a claim for unjust enrichment is synonymous with restitution, which is a cause of action in California.

Delshad pleads that “Delshad paid the Lenders $430,000 on Taheri’s behalf and thus conferred A benefit on Taheri.” (FAC, ¶ 43.) Delshad pleads “Taheri knowingly accepted and retained the benefit that Delshad conferred upon Taheri,” and “Taheri has been unjustly enriched by the benefit conferred by Delshad.” (FAC, ¶¶ 44–45.) Thus, Delshad has properly plead all the elements of unjust enrichment, or restitution.

Taheri’s Demurrer to the 5^th cause of action is OVERRULED.