Judge: Helen Zukin, Case: SC126473, Date: 2022-10-27 Tentative Ruling
Case Number: SC126473 Hearing Date: October 27, 2022 Dept: 207
Defendant
Grace Carelli’s Demurrer Background
On March 10, 2021,
Plaintiff Awal Investment, LLC (“Plaintiff”) filed a complaint against various
Defendants, including Michael
Bernstein and Marion Bernstein (collectively “the Bernsteins”) and Grace
Carelli (“Carelli” or, collectively with the Bernsteins, “Defendants”).
Plaintiff’s Complaint was filed in an action styled Awal Investment, LLC v.
Grace Carelli, Case No. 21SMCV00474. On April 28, 2021, the Court issued an
order finding this litigation related to an earlier action, Grace Carelli v.
Mercedes-Bohbot, Case No. SC126473, with the earlier action to serve as a
lead case. These related actions stem from Plaintiff’s ownership of real
property located at 9635 Cedarbrook Drive, Beverly Hills, California 90210 (the
“Subject Property”), and lawsuits brought by neighboring property owners
regarding alleged encroachments.
Plaintiff’s
operative complaint is the Second Amended Complaint (“SAC”) alleging causes of
action for fraud, declaratory relief, trespass, and three different causes of
action for quiet title/establishment of title by adverse possession. Defendants
brings this demurrer to Plaintiff’s first cause of action for fraud, second
cause of action for declaratory relief, and fourth and fifth causes of action
for quiet title alleging they fail to state sufficient facts to constitute a
cause of action under Code Civ. Proc. § 430.10(e) and are uncertain under Code
Civ. Proc. § 430.10(f). Defendant Carelli also moves to strike Plaintiff’s
claim for punitive damages.
Demurrer Standard
When considering demurrers, courts read the allegations
liberally and in context. (Wilson v. Transit Authority of City of Sacramento
(1962) 199 Cal.App.2d 716, 720-21.) 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 on the evidence or facts alleged.” (E-Fab, 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.) However, it does not accept as true
deductions, contentions, or conclusions of law or fact. (Stonehouse Homes
LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)
A special demurrer for uncertainty under Section 430.10(f) is disfavored
and will only be sustained where the pleading is so unintelligible a defendant
cannot reasonably respond—i.e., cannot reasonably determine what issues must be
admitted or denied, or what counts or claims are directed against him/her. (Khoury
v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even
if the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Id.)
Motion to Strike Standard
The court may, upon a motion,
or at any time in its discretion, and upon terms it deems proper, strike any
irrelevant, false, or improper matter inserted in any pleading. (Code Civ.
Proc., § 436(a).) The court may also strike all or any part of any pleading not
drawn or filed in conformity with the laws of this state, a court rule, or an
order of the court. (Id., § 436(b).)
The grounds for a motion to strike are: the pleading has irrelevant, false, or
improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to
strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.)
Analysis
1. Meet and
Confer Requirement
At least five days before
filing a demurrer or a motion to strike, the demurring or moving party is
required to “meet and confer in person or by telephone” with the party who
filed the pleading demurred to or the pleading subject to the motion to strike
for the purposes of determining whether an agreement can be reached through a
filing of an amended pleading to resolve the objections to be raised in the
demurrer. (C.C.P. §§ 430.41 and 435.5.) Under Code Civ. Proc. § 430.41(a)(3)
the demurring party is required to file and serve a declaration with the
demurrer attesting to the “means by which the demurring party met and conferred
with the party who filed the pleading subject to demurrer, and that the parties
did not reach an agreement resolving the objections raised in the demurrer” or
a statement “[t]hat the party who filed the pleading subject to demurrer failed
to respond to the meet and confer request of the demurring party.” Code Civ.
Proc. § 435.5(a)(3) imposes the same requirement on a party bringing a motion
to strike.
Defendants here
admit they did not attempt to comply with these statutory requirements in
filing their demurrer and motion to strike. Defendants state they “attempted to
meet and confer” with Plaintiff “by email exchange” and made their own
determination that they did not need to meet and confer in person or by
telephone as required by statute because they assumed the meet and confer would
be unsuccessful. (Philips Decl. at ¶ 2.) However, Plaintiff’s opposition shows
Defendants made no effort to meet and confer at least five days prior to filing
the demurrer and motion to strike. Rather, Defendants sent an email on
September 28, 2022, stating they would be filing a demurrer that same day. (Ex.
A to DuPlantier Decl.) Plaintiff’s counsel responded that he was traveling out
of the office and did not have immediate access to the SAC but would review the
SAC together with the Court’s order on the prior demurrer. (Id.)
Defendants then filed the demurrer and motion to strike the same day.
Defendants’
September 28 email was untimely and deficient under Code Civ. Proc. §§ 430.41
and 435.5. Defendants have not shown they made any attempt to meet and confer
in person or by telephone at least five days before filing their demurrer and
motion to strike as required. Nor does the September 28 email discuss all the
grounds on which their demurrer and motion to strike are based. The email makes
no mention of a motion to strike, and only addresses Carelli’s demurrer to the
cause of action for fraud. The Court also notes it specifically advised
Defendants’ counsel of the meet and confer obligations imposed by Code Civ.
Proc. §§ 430.41 and 435.5 in its July 27, 2022, ruling on Defendant Carelli’s
prior demurrer and motion to strike. Nonetheless, the Court will consider the merits
of Defendants’ demurrer and motion to strike, however the Court cautions the
parties that any further failure to comply with such meet and confer
requirements will result in the moving party’s motion or application being
taken off calendar. (C.C.P. §§ 430.41(a)(4), 435.5(a)(4).)
2. Fraud
“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 Ctr.
(2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must
be alleged factually and specifically as to every element of fraud, as the
policy of “liberal construction” of the pleadings will not ordinarily be
invoked. (Lazar v. Superior Court (1996)
12 Cal.4th 631, 645.)
Plaintiffs must plead the names of the persons allegedly making the false
representations, 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.)
The SAC
alleges a scheme conducted by Defendant Carelli and her attorney. Carelli filed
a lawsuit against the former owner of the Subject Property, Judith Alessi
(“Alessi”), alleging structures erected on the Subject Property encroached onto
her own. (SAC at ¶¶ 9-10.) Plaintiff claims Carelli and her counsel wanted to
obtain a substantial monetary settlement of those claims which Alessi could not
afford to pay. (Id. at ¶ 15.) The SAC alleges Carelli and her attorney
instructed Alessi to secure loans against the Subject Property without
mentioning the pending lawsuits filed by Defendants and said they would not
file a lis pendens on the disputed property, despite being obligated to do so.
(Id. at ¶¶ 12, 14-15.) Alessi did so, and in April 2018 applied for a
$100,000 loan from Plaintiff’s predecessor in interest, Lion Solar, LLC (“Lion
Solar”) to be secured against the Subject Property, claiming she was not a
party to any lawsuit. (Id. at ¶ 17.) Lion Solar issued the loan to
Alessi in reliance on her representation without notice of the pending
litigation filed by Carelli. (Id. at ¶¶ 18-22.)
Carelli argues the SAC fails to
set forth a cause of action against her for fraud either directly or on a
theory of conspiracy. The Court notes Carelli previously filed a demurrer to
Plaintiff’s cause of action for fraud in Plaintiff’s prior First Amended
Complaint (“FAC”). In sustaining Carelli’s prior demurrer, the Court found the
FAC had not sufficiently set out “the specific nature” of the fraud alleged by
Carelli. (July 27 Order at 4.) Specifically, the Court instructed Plaintiff to
“clarify and specifically plead its theory or theories of fraud as to each
defendant they are alleged against. To the extent Plaintiff seeks to hold
Defendant liable on a theory of conspiracy, Plaintiff must plead factual
allegations establishing the elements of a civil conspiracy.” (Id.) A
civil conspiracy requires “(1) the formation of a group of two or more persons
who agreed to a common plan or design to commit a tortious act; (2) a wrongful
act committed pursuant to the agreement; and (3) resulting damages.” (City
of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211-212.)
The SAC alleges Carelli, her
attorney, and Alessi conspired (1) to conceal the existence of Carelli’s
lawsuit by refraining from filing a lis pendens, and (2) to misrepresent to
Plaintiff that Alessi was not currently involved in litigation in order to
obtain a loan to resolve Carelli’s lawsuit. (SAC at ¶ 15.) Plaintiff alleges
Carelli and her attorney approached Alessi “shortly before” Alessi obtained her
loan from Plaintiff’s predecessor and “advised and directed her to obtain loans
against the AWAL Property without disclosing the existence of the Carelli QT
Action. CARELLI and her attorney informed Alessi that they would not record lis
pendens so her lenders would be unaware of the Carelli QT Action and would
issue the loans to her. Alessi, CARELLI and CARELLI's attorney all agreed to
participate in and execute the common plan and conspiracy to defraud lenders.”
(Id.) Plaintiff also alleges Alessi has admitted the scheme in verified
interrogatory responses. (Id. at ¶ 16.) The SAC states that in
furtherance of the conspiracy, Alessi applied for the loan without disclosing
Carelli’s lawsuit and misrepresenting that she was not a party to any
litigation and Carelli’s attorney did not promptly record lis pendens. (Id.
at ¶¶ 12, 17.)
The Court finds the SAC
sufficiently alleges a cause of action for fraud against Carelli on a theory of
conspiracy. The factual allegations set forth above show “each member of the
conspiracy acted in concert and came to a mutual understanding to accomplish a
common and unlawful plan, and that one or more of them committed an overt act
to further it.” (Choate v. County of Orange (2000) 86 Cal.App.4th 312,
333.) Carelli argues these allegations are not pled with enough specificity.
The Court disagrees. “While a complaint must contain more than a bare
allegation the defendants conspired, a complaint is sufficient if it apprises
the defendant of the ‘character and type of facts and circumstances upon which
she was relying to establish the conspiracy.’” (AREI II Cases (2013) 216
Cal.App.4th 1004, 1022 [quoting Schessler v. Keck (1954) 125 Cal.App.2d
827].) The SAC apprises Carelli of the alleged facts and circumstances which
form the basis of Plaintiff’s fraud claim, and Carelli’s demurrer to
Plaintiff’s first cause of action for fraud is OVERRULED.
3. Verification
Defendants argue Plaintiff’s cause
of action for declaratory relief and two causes of action for quiet title fail
as they are not verified as required by Code Civ. Proc. § 761.020. The SAC
contains a verification from one of Plaintiff’s members, Robert Evans, however
the verification executed by Mr. Evans references the “First Amended Complaint”
rather than the SAC. Plaintiff argues this is merely a typographical error and
points out the verification was executed in August 2022, several months after
the FAC was served and filed. (Opp. at 8.) Plaintiff argues this typographical
error does not invalidate the verification. The Court agrees. In Martelli v. Pollock (1958) 162 Cal.App.2d 655 cross-complainants argued
the cross-defendants had not properly verified their answer to a
cross-complaint because the attached verification mistakenly used the terms
“plaintiffs” and “the foregoing Complaint” rather than “cross-defendants” and
“answer to cross-complaint.” (Id. at 660.) The Court of Appeal
determined the trial court had correctly determined “the discrepancy was a
typographical error” which did not invalidate the verification. (Id.)
The same result follows here. The Court is satisfied the verification attached
to the SAC was intended to and did verify the content of the SAC and the
reference to the FAC was an unintended typographical error which does not
invalidate the verification. Accordingly, Defendants’ demurrer to these three
causes of action is OVERRULED.
4. Motion to
Strike
Defendant Carelli separately moves
to strike Plaintiff’s claim for punitive damages, arguing it must stand or fall
with Plaintiff’s claim for fraud. As the Court has overruled Carelli’s demurrer
to Plaintiff’s cause of action for fraud, the motion to strike Plaintiff’s
claim for punitive damages is DENIED.
Conclusion
to and Motion to
Strike Awal Investments, LLC’s Second Amended Complaint is OVERRULED. Defendant
Carelli’s motion to strike is DENIED.