Judge Holly J. Fujie, Case Number: 22STCV22542, Date: 2023-06-29 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 PARTIES: Defendants Patricia V. Lewis (“Lewis”); and Amos Delone and Almita Delone (the “Delone Defendants”) (collectively, “Moving Defendants”)

This action was initiated on July 13, 2022, and arises out of a dispute over the distribution of trust assets. The currently operative third amended complaint (the “TAC”) alleges: (1) fraud; and (2) emotional distress.

In relevant part, the TAC alleges: On or about October 10, 2000, Dorothy M. Vaughn (“Settlor”) conveyed real property located at 8806 John Avenue (the “Property”) to the Dorothy M. Vaughn Revocable Trust (the “Trust”). (TAC at p. 3.) The Trust named Plaintiff Wayne Vaughn (“Wayne”) and Lewis as the Trust’s successor trustees. (TAC ¶ 10.)[1] Section 3.03 of the Trust agreement provided that upon Settlor’s death, 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 identified beneficiaries, which included Plaintiff’s 15 percent interest. (See TAC, Exhibit 1.)[2]

On or about October 28, 2008, the date that she assumed her duties as co-trustee of the Trust, Lewis transferred the Property to herself and encumbered the Property with a mortgage. (TAC at p. 3-4.) In 2012, Lewis conveyed the Property to the Delone Defendants to prevent a foreclosure sale. (TAC ¶ 17.) Lewis concealed these transfers from Plaintiff by failing to provide an annual accounting as required under the Trust. (TAC ¶ 21.) On or about March 29, 2012, when Plaintiff inquired when Trust distributions would be made, Lewis informed her that Plaintiff’s interests in the Property were secured and that Lewis would return to work in order to pay Plaintiff her interest. (Id.) At some point, Lewis filed for bankruptcy. (TAC at p. 9.) In 2019, after the settlement of Lewis’s bankruptcy proceedings, the Delone Defendants transferred the Property back to Lewis. (Id.) As a result of the three conveyances of the Property, Plaintiff was defrauded of her rights to the title and benefits of the Property. (Id.) Plaintiff became aware of these facts when she received a letter from Lewis dated September 26, 2020. (TAC at p. 10.)

On May 19, 2023, Lewis filed and served a demurrer (the “Lewis Demurrer”) and the Delone Defendants filed and served a demurrer (the “Delone Demurrer”) to the first cause of action in the TAC.[3]

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 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.)

When a complaint shows on its face or on the basis of judicially noticed facts that the cause of action alleged therein is barred by the statute of limitations, the plaintiff must plead facts which show an excuse, tolling, or some other basis for avoiding the statutory bar. (Ponderosa Homes, Inc. v. City of San Ramon (1994) 23 Cal.App.4th 1761, 1768.) To invoke the delayed discovery doctrine in order to stop the accrual of the statute of limitations, a plaintiff must plead: (1) facts showing reasonable diligence; and (2) the time and manner of discovery. (WA Southwest 2, LLC v. First American Title Ins. Co. (2015) 240 Cal.App.4th 140, 156-57.) The delayed discovery doctrine only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action. (Id.) 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 Cal.4th 797, 808.) In the case of fraud, where a fiduciary duty exists, nondisclosure is treated as fraud and a delayed discovery rule is more liberally applied, but such rule is nonetheless subjected to a reasonable diligence standard. (Britton v. Girardi (2015) 235 Cal.App.4th 721, 730.)

The TAC does not include allegations that clearly address the deficiencies identified in the Court’s ruling on Moving Defendants’ demurrer to the Second Amended Complaint. Nor does the TAC include allegations that clearly articulate a basis for tolling the three-year statute of limitations for fraud claims. To the contrary, the TAC alleges that Plaintiff inquired about distributions of the Trust’s assets in 2012. Plaintiff did not initiate this matter until 2022, and Court therefore finds that the TAC does not allege sufficient facts to show that Plaintiff exercised reasonable diligence to allow her to invoke the delayed discovery rule to avoid the three-year statute of limitations. Further, Plaintiff does not present facts to show that the deficiencies in the TAC may be cured by further amendment. Accordingly, the Court SUSTAINS the Demurrers without leave to amend.

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 uses first names to distinguish persons with the same last name and intends no disrespect in so doing.

[2] The Trust agreement is attached to the original complaint (the “Complaint”) as “Exhibit B.”

[3] The Court refers to the Lewis Demurrer and Delone Demurrer collectively as the “Demurrers.”