Judge Holly J. Fujie, Case Number: 21STCV13311, Date: 2024-11-12 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

MOVING PARTY: Defendants Everilda Romero and Fremont Oaks, LLC (“Fremont”) (collectively, “Defendants”)

This action stems from the sale of real property located at 5055 Alhambra Avenue, Los Angeles, California 90032 (the “Property”). The operative Third Amended Complaint (“TAC”) alleges causes of action for (1) Breach of Contract; (2) Breach of Implied Covenant of Good Faith and Fair Dealing; (3) Failure to Disclose Material Facts; (4) Fraudulent Deceit; (5) Intentional Misrepresentation; (6) Constructive Fraud; (7) Negligent Misrepresentation; and (8) Breach of Express Warranty.

On September 30, 2024, Defendants filed the instant demurrer to the TAC (the “Demurrer”). Plaintiff filed an opposition on October 29, 2024, and Plaintiff filed a reply on November 4, 2024.

Defendants request judicial notice of the following: (1) the City of Los Angeles building records; (2) the Certificate of Occupancy for 5055 Alhambra Avenue, Los Angeles, California 90032; (3) the California Department of Real Estate (“DRE”) real estate licensing information; (4) DRE information that Srinivas Yalamanchili is a license real estate broker in California; and (5) the Court’s July 23, 2024 Order in this action.

The Court declines to take judicial notice of the information and documents in Item Nos. 1 through 4, as these are not relevant to the matters at issue in the Demurrer. The Court takes judicial notice of Item No. 5, which is already part of the Court’s records in this case.

“The primary function of a pleading is to give the other party notice so that it may prepare its case [citation], and a defect in a pleading that otherwise properly notifies a party cannot be said to affect substantial rights.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.) “A demurrer tests the legal sufficiency of the factual allegations in a complaint.” (Ivanoff v. Bank of America, N.A. (2017) 9 Cal.App.5th 719, 725.) The Court looks to whether “the complaint alleges facts sufficient to state a cause of action or discloses a complete defense.” (Id.) The Court does not “read passages from a complaint in isolation; in reviewing a ruling on a

demurrer, we read the complaint ‘as a whole and its parts in their context.’ [Citation.]” (West v.

JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 804.) The Court “assume[s] the truth

of the properly pleaded factual allegations, facts that reasonably can be inferred from those

expressly pleaded and matters of which judicial notice has been taken.” (Harris, supra, 56 Cal.4^th p. 240.) “The court does not, however, assume the truth of contentions, deductions or

conclusions of law. [Citation.]” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350,

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.) “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.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”).) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Here, Defendants demur to the TAC on the grounds that the first through the eighth causes of action in the TAC fail to state facts sufficient to constitute a cause of action against Defendants, and that Plaintiff failed to cure defects identified by this Court in its July 23, 2024 Order.

“To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff.” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98 [internal citation omitted].)

Plaintiff’s contract-based claims are based mainly on the allegation that Fremont breached the Purchase Agreement by failing to deliver a 15-unit residential building as set forth in the Purchase Contract & Joint Escrow Instructions (“Purchase Agreement”), attached to the TAC as Exhibit 3. Specifically, Plaintiff alleges that “[t]he Purchase Agreement stated, in pertinent part, that Yalamanchili and/or assignee was purchasing ‘A 15 Unit Residential Building and the Fee Simple Land in Which It Is Situated.’” (TAC, ¶ 21; Exh. 3.) The TAC then alleges that “during the due diligence period, Yalamanchili, on behalf of PI Properties, inspected the Property and, in line with the previous representations made by Russell, visibly saw fifteen rooms which appeared to be bachelor units.” (TAC, ¶ 23.) Based on these allegations, which are assumed to be true to the extent they are not inconsistent with the exhibit attached to the pleading, it is apparent that Fremont’s obligation was to deliver a 15-unit residential building, and that Fremont did perform its obligation. Plaintiff’s own allegations reflect that the Property, does, in fact, consist of 15 bachelor units. Plaintiff does not allege that Fremont represented and was, therefore, obliged to deliver a Property with 15 approved or permitted apartment units.

Based on this premise, Plaintiff, therefore, has not articulated the element of “breach” essential to the contract-based claims. Accordingly, the demurrer to the first, second, and eighth cause of action is SUSTAINED.

Fraud-Based Claims (Third, Fourth, Fifth, Sixth and Seventh Causes of Action)

“The elements of fraud, which give rise to the tort action for deceit, 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.” (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 638.) “[F]raud must be pled specifically; general and conclusory allegations do not suffice... This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal. 4th at 645.)

In a similar vein as the above discussion, Plaintiff has also failed to allege any misrepresentation by Defendants. Specifically, Plaintiff does not allege that Defendants represented that the 15 units were approved or permitted, but merely that there were 15 bachelor units at the Property. (TAC, ¶ 23.) Neither does the Offering Memorandum attached to the TAC (Exh. 2) contain such misrepresentation.

In fact, Plaintiff cannot allege such a misrepresentation since under the Purchase Agreement, Plaintiff expressly agreed that it would “purchase the Property ‘as is’ and solely on reliance of [his] own investigation of the Property,” and that with regards to “the legality of the present or any possible future use of the Property under any federal, state, or local law,” that “Buyer agrees that investigation and analysis of the foregoing matters is Buyer’s sole responsibility.” (TAC, Exh. 3, ¶ 23.) The PSA is clear that Plaintiff was obligated to and expressly agreed to conduct his own investigation.

Accordingly, Plaintiff cannot reasonably allege justifiable or reasonable reliance in its fraud claims, in the same way that it cannot establish that Defendants breached the Purchase Agreement, an express warranty, or the implied covenant of good faith and fair dealing, when it was Plaintiff’s obligation under the Purchase Agreement to conduct due diligence and investigate the Property.

As this Court noted in its July 23, 2024 Order sustaining the previous demurrer to Plaintiff’s second amended complaint (“SAC”), “[t]he entire verified SAC is based on the premise that Defendants misrepresented the Property as a “15 unit residential building” when in fact it was not permitted as such, yet the above section of the Purchase Contract appears to waive any such representations regarding “the physical condition, or value of the Property or its suitability for Buyer’s intended use.” (7/23/2024 Order, p. 8.) In holding that the SAC was subject to demurrer, this Court stated that the exhibits to a complaint control over the allegations in that complaint, and the allegations in the SAC do not state a basis for avoiding the waiver provision contained in Section 23 of the Purchase Agreement. Similarly, in Plaintiff’s present TAC, Plaintiff has not stated a basis for avoiding Section 23 of the Purchase Agreement.

Accordingly, the demurrer to the third through seventh causes of action based on fraud is SUSTAINED.

In its Opposition, Plaintiff does not request leave to amend its TAC if Defendants’ Demurrer is sustained, nor does it give any indication as to how it might amend to rectify the above defects. The Court thus finds that there is no reasonable possibility that the defects in the TAC can be cured by an amendment, and considering that this is Plaintiff’s fourth attempt to state legally cognizable claims, the Demurrer to the entire TAC is SUSTAINED without leave to amend.

The Court orders Defendants to file and serve a proposed judgment of dismissal within 10 days of the date of this order.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court