Judge Holly J. Fujie, Case 22STCV22542 2022-12-15 Tentative Ruling

RESPONDING PARTY: Plaintiff Lisa A. Vaughn (“Plaintiff” or “Ms. Vaughn”)

The Court has considered the moving and opposition papers. No reply papers were filed. Any reply papers were required to have been filed and served at least five court days before the hearing under California Code of Civil Procedure (“CCP”) section 1005, subdivision (b).

This action arises out of a dispute over distribution of real property (the “Property”) held at various times in a trust, the Revocable Trust of Dorothy M. Vaughn (the “Trust”). The currently operative first amended complaint (the “FAC”) alleges: (1) fraud; (2) emotional distress; and (3) punitive damages.

The FAC is far from clear, but it appears to allege: The Property was conveyed by “Dorothy M. Vaughn, Settlor (Deceased)[1]” (“Settlor”) to the Trust in October 2000. (FAC ¶ 9.) Plaintiff Wayne Vaughn (“Mr. Vaughn”) and Moving Defendant are alleged to have been successor trustees of the Trust, although it is unclear during what period of time they served as such, because` there is no indication as to when the Memorandum of Trust was executed, and it is not appended to the FAC. (FAC ¶ 11.) “Plaintiff”[2] is alleged to possess a “15% Beneficial Interest” in the Property pursuant to the terms of the Revocable Trust of Dorothy M. Vaughn. (FAC, ¶ 10, and Exh. B, ¶ 3.03, which is referenced but not attached to the filed FAC.[3]) The FAC alleges that on or around October 28, 2008, Moving Defendant, in her capacity as co-trustee of the Trust, transferred the Property to herself in her individual capacity, thus allegedly depriving Plaintiffs of their interest in the Property. (See FAC ¶ 12.) It is alleged that Moving Defendant then encumbered the Property with a mortgage and in 2012, conveyed the Property to Defendants Amos Delone and Almita Delone (collectively, the “Delone Defendants”) to prevent a foreclosure sale. (See FAC ¶¶ 13-17.) The FAC alleges that the Delone Defendants reconveyed the Property to Moving Defendant. Despite transferring the Property to the Delone Defendants, Moving Defendant continued to live at the Property and did not pay rent. (FAC ¶ 22.)^{^[4]}

The FAC also alleges that on or around March 18, 2019, the Delone Defendants improperly conveyed the Property to Moving Defendant, which had the effect of depriving Plaintiff of her interest in the Property. (FAC ¶ 8.) Plaintiffs further allege that Defendants began a campaign to evict Plaintiff from the Property by disconnecting the waterline to the refrigerator and disconnecting the floor heater. (FAC ¶¶ 34-35.)

The Court notes that although the Memorandum of Trust is not attached to the FAC, it is referenced therein and the Court exercises its discretion to consider it. The Memorandum of Trust attached to the original Complaint states that “On the death of the Trustor [defined as Dorothy M. Vaughn in Section 1.02(a)], the Trust shall terminate and the Trustee shall, as soon as reasonably possible, distribute the net income and principal remaining in the Trust to the…beneficiaries.” (Original Complaint, ¶ 3.03.) Although the FAC does not allege when Dorothy M. Vaughn died, according to the Memorandum of Trust, upon her death the Trust terminated and the net income and principal was to be distributed. Thus, the 15% interest claimed by Plaintiff would appear not to be a 15% interest in the Property but instead would merely be a 15% interest in the net income and principal “remaining in the Trust.”

Moving Defendant filed a demurrer (the “Demurrer”) on the grounds that the FAC fails to state sufficient facts to constitute a cause of action and there is a misjoinder of parties.

A demurrer tests the sufficiency of a complaint as a matter of law. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.) The court accepts as true all material factual allegations and affords them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts. (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.) With respect to a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded. (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.) A demurrer will be sustained without leave to amend if there exists no reasonable possibility that the defect can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

The Court preliminarily notes that the Demurrer and opposition (the “Opposition”) both rely on facts extrinsic to the FAC to support their arguments, which are improper for consideration on demurrer. The Court has accordingly not considered the outside evidence cited in the Demurrer and Opposition.

A defendant may demur to a complain on the ground that there is a defect or misjoinder of parties. (CCP § 430.10, subd. (d).) A demurrer is particularly unsuited to resolving questions of fact regarding the misjoinder of parties because a demurrer lies only for defects appearing on the face of the pleadings and a defendant may not make allegations of defect or misjoinder of parties in the demurrer if the pleadings do not disclose the existence of the matter relied on; such objection must be taken by plea or answer. (Verizon California Inc. v. Board of Equalization (2014) 230 Cal.App.4th 666, 680.)

Moving Defendant argues that the FAC improperly added Mr. Vaughn as a Plaintiff. The FAC does not plead facts that demonstrate a defect or misjoinder of parties. The Court therefore OVERRULES the Demurrer on this basis.

The elements of fraudulent concealment are: (1) the defendant must have concealed or suppressed a material fact; (2) the defendant must have been under a duty to disclose the fact to the plaintiff; (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact; and (5) as a result of the concealment or suppression of the fact, the plaintiff suffered damage. (Boschma v. Home Loan Center, Inc (2001) 198 Cal.App.4th 230, 248.) There are four circumstances that impose a duty on the defendant such that nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant has exclusive knowledge of material facts not known to plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 310-11.) Fraud claims have a three-year statute of limitations. (CCP § 338, subd. (d).) The cause of action does not accrue until the plaintiff discovers the facts constituting the fraud. (Id.)

Moving Defendant argues that the FAC fails to allege the elements of fraud by omission and that the claim is barred by the statute of limitations.

As an initial matter, although not discussed in the Demurrer, the Court observes that it is unclear whether Plaintiffs are alleging a fraudulent concealment claim or a fraudulent transfer claim. The Opposition, however, responds to the Demurrer’s arguments and does not contend that the FAC alleges a fraudulent transfer claim. The last allegedly fraudulent transfer occurred on March 18, 2019. Plaintiffs initiated this action over three years later, on July 13, 2022. The FAC does not include allegations concerning the discovery of the alleged fraud. As a result, the Court SUSTAINS the Demurrer to the first cause of action with 20 days leave to amend. The Court recommends that Plaintiffs include allegations that clarify both the underlying facts, including the death of Settlor, and the nature of their fraud-based cause of action should they file an amended pleading.

To state a claim for intentional infliction of emotional distress, a plaintiff must allege: (1) the defendant’s extreme and outrageous behavior with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff suffered severe emotional distress; and (3) the defendant’s extreme and outrageous conduct was the actual and proximate cause of the severe emotional distress. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050.) Conduct is considered extreme and outrageous when it is so extreme as to exceed all bounds of that usually tolerated in a civilized community. (Id.) Behavior may be considered outrageous if a defendant: (1) abuses a position that gives him power over a plaintiff’s interest; (2) knows the plaintiff is susceptible to injuries through emotional distress; or (3) acts intentionally or unreasonably when the conduct is likely to result in mental distress and illness. (Agarwal v. Johnson (1979) 25 Cal.3d 932, 946.) Whether conduct is extreme or outrageous is generally a question of fact. (See Barker v. Fox & Associates (2015) 240 Cal.App.4th 333, 356.)

The FAC does not allege facts regarding Moving Defendant’s intent to cause emotional distress or that Plaintiffs suffered severe emotional distress, or indeed any actions that would form the basis for a claim for intentional infliction of emotional distress. The Court therefore SUSTAINS the Demurrer to the second cause of action with 20 days leave to amend.

In California there is no separate cause of action for punitive damages. (McLaughlin v. National Union Fire Ins. Co. (1994) 23 Cal.App.4th 1132, 1164.) The Court therefore SUSTAINS the Demurrer to the third cause of action without leave to amend. Plaintiffs may, however, file an amended pleading that contains allegations to support an award of punitive damages as a remedy as it relates to a valid claim for damages.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative. If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person. The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date. This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

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.

[1] The Court assumes that the reference in paragraph 9 was to a transfer made by Dorothy M. Vaughn, Settlor, before she died, although it is not clear from this pleading. The Court notes that there is no allegation in the FAC as to the death of Settlor

[2] Presumably the original Plaintiff, Lisa A. Vaughn, as Plaintiff Wayne L. Vaughn is listed as having a 35% interest in the net income and principal of the Trust.

[3] The FAC references all Exhibits as being those attached to the original Complaint, stating “IF YOU WEISH [SIC] TO VIEW SAID ESHIBNITS [SIC] PLEASE SEE THE INITIAL COMPLAINT, FILED HEREIN.” (FAC, p. 15.) The Court notes that this reference is insufficient to incorporate the exhibits from the original Complaint into the FAC or any subsequent complaint. All pleadings must be complete in themselves, such that if Plaintiffs choose to file a Second Amended Complaint that references exhibits, those exhibits must be filed together with the Second Amended Complaint. The Court does note, that the exhibit attached to the original Complaint references that Julius Vaughn also has a 15% beneficial interest in the Property, and that Plaintiff Wayne L. Vaughn and Moving Defendant each hold 35% of the beneficial interest in the Property.

[4] The FAC alleges that after transferring the Property to the Delone Defendants, Moving Defendant continued to reside at the Property with “Plaintiff,” but does not specify if this allegation includes both Mr. Vaughn and Ms. Vaughn. (See FAC ¶ 22.)