Judge: Holly J. Fujie, Case: 22STCV37904, Date: 2023-08-25 Tentative Ruling

Case Number: 22STCV37904    Hearing Date: August 25, 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

            The currently operative first amended complaint (the “FAC”) 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 FAC alleges: In October 2020, Kazarian facilitated an agreement (the “Agreement”) for Spectrum to lend Plaintiff $500,000 that would be secured by a deed of trust (the “DOT”) against Plaintiff’s real property.  (FAC ¶ 7.)  Plaintiff and Spectrum entered into the Agreement on October 23, 2020.  (Id.)  On October 23, 2020, Plaintiff also signed the DOT, which was later recorded in Los Angeles County.  (See id., Exhibit 1.)  On October 23, 2020, when Plaintiff requested that Moving Defendants perform their obligations under the Agreement, Moving Defendants failed to tender the $500,000 loan.  (FAC ¶ 9.) 

The DOT includes a page entitled “Request for Full Reconveyance” (the “Reconveyance Request Form”) that is signed by Plaintiff and dated October 25, 2020.  (See Exhibit 1 at 5.)  The FAC alleges that the Reconveyance Request Form, which Kazarian instructed Plaintiff to sign, misstates the terms of the Agreement.  (See FAC ¶ 7.)  The Reconveyance Request Form is addressed to the Trustee (identified as Plaintiff) of the DOT and provides, 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 entire FAC on the grounds that it fails to state fats sufficient to constitute a cause of action and is uncertain.

DISCUSSION

Meet and Confer

The meet and confer requirement has been met.

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 FAC fails to allege a breach of contract claim because Plaintiff’s signature on the Reconveyance Request Form contradicts the allegation that Moving Defendants never tendered the $500,000 loan. 

            The FAC alleges that the Reconveyance Request Form was “inexplicably” included in the DOT and does not reflect the intentions of the parties.  The Court finds that the FAC does not adequately address certain issues raised by the signed Reconveyance Request Form.  The FAC alleges that Plaintiff signed the document on or about October 23, 2020 (the same date Plaintiff made a demand for the $500,000 loan) at Kazarian’s direction, although the signed copy attached to the FAC is dated October 25, 2020.  In addition to the discrepancy between when Plaintiff demanded Moving Defendants’ performance under the Agreement and the supposed acknowledgement in the Reconveyance Request Form that all sums secured by the DOT were satisfied, it is not clear if the FAC alleges that the document was presented to Plaintiff in furtherance of a fraudulent scheme.  Nor does the FAC explain Plaintiff’s understanding of the document when it was signed.  The limited information regarding the discrepancies between Plaintiff’s allegations and the terms of the document render the breach of contract claim unclear.  The Court therefore SUSTAINS the Demurrer to the first cause of action with 20 days leave to amend. 

Remaining Causes of Action

            The ambiguity regarding the terms of the Reconveyance Request Form and the FAC’s allegation affects the legal sufficiency of the remainder of Plaintiff’s claims, 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.

Moving party is ordered to give notice of this ruling.

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 25th day of August 2023