Judge: Holly J. Fujie, Case: 22STCV37904, Date: 2023-04-21 Tentative Ruling

Case Number: 22STCV37904    Hearing Date: April 21, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendants Narek Kazarian (“Kazarian”) and Spectrum Lending, LLC (“Spectrum”) (collectively, “Moving Defendants”)

RESPONDING PARTY: Plaintiff

The Court has considered the moving, opposition and reply papers.

BACKGROUND

            This action arises out of a dispute over real property (the “Property”).  Plaintiff’s complaint (the “Complaint”) alleges: (1) breach of contract; (2) fraud and deceit – intentional misrepresentation; (3) fraud and deceit – negligent misrepresentation; (4) fraud and deceit – promise made without intention to perform; (5) cancellation of instrument; and (6) declaratory relief. 

In relevant part, the Complaint alleges: In October 2020, Kazarian facilitated an agreement that was entered into by Plaintiff and Spectrum for Spectrum to lend Plaintiff $500,000, which was secured by a deed of trust (the “DOT”) against Plaintiff’s Property.  (Complaint ¶ 7.)  Plaintiff signed the DOT on October 23, 2020.  (See id., Exhibit 1.)  On October 23, 2020, Moving Defendants failed to tender the $500,000 loan.  (Complaint ¶ 9.) 

The DOT identifies Plaintiff as the Trustor and Spectrum as both the Beneficiary and Trustee.  (Complaint, Exhibit 1 at 1.)  Included in the DOT paperwork attached to the Complaint is a form entitled “Request for Full Reconveyance” (the “Reconveyance Request Form”) that is signed by Plaintiff and dated October 25, 2020.  (See Complaint, Exhibit 1 at 5.)  The Reconveyance Request Form is addressed to the Trustee of the DOT and states, in part:

“The undersigned is the legal owner and holder of all indebtedness secured by the within Deed of Trust. All sums secured by said Deed of Trust have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of any sums owing to you under the terms of said Deed of Trust, to cancel all evidences of indebtedness, secured by said Deed of Trust, delivered to you herewith together with said Deed of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed of Trust, the estate now held by you under the same.”  (Id.)

Moving Defendants filed a demurrer (the “Demurrer”) to the Complaint on the grounds that the Complaint fails to state facts sufficient to constitute a cause of action and is uncertain.  Moving Defendants also filed a motion to strike (the “Motion”) portions of the Complaint that concern punitive damages.

DEMURRER

Meet and Confer

The meet and confer requirement has been met for the Demurrer and Motion.

Legal Standard

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.)  While the allegations of a complaint must be accepted as true for purposes of demurrer, the facts appearing in exhibits attached to the complaint will also be accepted as true, and, if contrary to the allegations in the pleading, will be given precedence.  (Moran v. Prime Healthcare Management, Inc. (2016) 3 Cal.App.5th 1131, 1145-46.)  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.) 

Demurrers for uncertainty are disfavored.  (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.)  A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.  (Id.)  

Breach of Contract

The elements of a breach of contract claim 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.  (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)  Where a complaint is based on a written contract which it sets out in full, a general demurrer to the complaint admits not only the contents of the instrument but also any pleaded meaning to which the instrument is reasonably susceptible.  (Aragon-Haas v. Family Security Ins. Services Inc. (1991) 231 Cal.App.3d 232, 240.)  While a plaintiff’s interpretation of the contract ultimately may prove invalid, it is improper to resolve the issue against them on their own pleading.  (Id.)  Where an ambiguous contract is the basis of an action, it is proper, if not essential, for a plaintiff to allege its own construction of the agreement.  (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 229.)  On a demurrer, the court must consider the sufficiency of the allegations, including any parol evidence allegations, to determine whether the contract is reasonably susceptible to plaintiff’s alleged interpretation.  (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1128.)

            Moving Defendants argue that the Complaint fails to allege a breach of contract claim because Plaintiff’s signature on the Reconveyance Request Form constitutes an admission that Plaintiff received the full $500,000 loan.  The Complaint does not include allegations that explain the inclusion of this form or Plaintiff’s reasons for signing it.  The Court notes, however, that logically, Plaintiff, as the Trustor under the DOT, was liable for the debt that the DOT secured, and therefore was not the owner of the debt.  In addition, under California law, when the obligation secured by a deed of trust has been satisfied, the beneficiary is responsible for executing a request for reconveyance.  (See Civ. Code § 2941, subd. (b)(1).)  Nonetheless, the Complaint’s lack of allegations that explain the Reconveyance Request Form renders Plaintiff’s claims uncertain.[1]  The Court therefore SUSTAINS the Demurrer to the first cause of action with 20 days leave to amend.

Remaining Causes of Action

            Plaintiff’s claims are all based on Moving Defendants’ alleged failure to issue Plaintiff the loan money that they promised.  The lack of clarity concerning the Reconveyance Request Form similarly renders the remainder of Plaintiff’s claims ambiguous, particularly since claims sounding in fraud must be pleaded with specificity.  (See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1472.)  The Court therefore SUSTAINS the Demurrer to the second through sixth causes of action with 20 days leave to amend.

MOTION TO STRIKE

A motion to strike either: (1) strikes any irrelevant, false or improper matter inserted in any pleading; or (2) strikes any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of court.  (CCP § 436, subds. (a)-(b).) 

            In light of the Court’s ruling on the Demurrer, the Motion is MOOT.

Moving party is ordered to give notice of this ruling.

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. 

 Dated this 21st day of April 2023