Judge James L. Crandall, Case 21-1236442 2022-12-08 Tentative Ruling

Judge: James L. Crandall, Case: 21-1236442, Date: 2022-12-08 Tentative Ruling

1. Demurrer to Amended Complaint

2. Motion to Strike Portions of Complaint

MOTION NO. 1:

The demurrer of defendant Jill Goldberg Nadley to the Verified Second Amended Complaint (“SAC”) of Plaintiff Jason Goldberg is OVERRULED in part, and SUSTAINED in part, with 20-days leave in amend.

First cause of action for Breach of Express Oral Contract:

“A cause of action for breach of contract requires proof of the following elements: (1) existence of the contract; (2) plaintiff’s performance or excuse for non-performance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.” (CDF Firefighters v. Maldonado (2008) 158 Cal. App. 4th 1226, 1239.)

The SAC alleges that in February 2018, Jill agreed with Jeff and Jason that, notwithstanding the terms of the Trust, the three siblings would share equally all the property of the Trust. (SAC, ¶ 30.) As consideration, Jason agreed that he would not speak with Herbert about changing the terms of the Trust, and would not challenge the Trust after Herbert’s death. (SAC, ¶ 30.) Therefore, the SAC alleges that the three siblings entered into an oral agreement for the division of the Trust’s assets after

Herbert’s death. As to performance, the SAC alleges that Plaintiff fully performed all obligations the distribution agreement required of him, except for those obligations he was excused from performing. (SAC, ¶ 32.) Specifically, Jason did not speak with Herbert about the terms of the Trust during the more than 18 months between the formation of the Distribution Agreement and Herbert’s death. (SAC, ¶ 32.) As to breach, the SAC alleges that on December 19, 2019, Jill breached the Distribution Agreement by disavowing it and instead, claiming that she is the sole trustee and sole beneficiary of the Trust. (SAC, ¶ 33.) Lastly, the SAC alleges that Jason has been damaged in an amount according to proof at trial but believed to be more than $5 million. (SAC, ¶ 34.) Therefore, the SAC sufficiently alleges the elements of a cause of action for breach of an oral contract.

Defendant argues that the first cause of action fails because the distribution agreement is illusory. “A contract is unenforceable as illusory when one of the parties has the unfettered or arbitrary right to modify or terminate the agreement or assumes no obligations thereunder.” (Harris v. Tap Worldwide, LLC (2016) 248 Cal.App.4th 373, 385.) Defendant argues that because Herbert Goldberg could amend the trust himself, and did so, the distribution agreement was not binding. Paragraph 19 of the SAC alleges that in February 2018, Jeff, Jason, and Jill entered into an express oral agreement that, notwithstanding the provisions of the Trust, the entire residue of the Trust after Herbert’s death would be distributed equally to Jeff, Jason, and Jill. (SAC, ¶ 19.) Based on the distribution agreement, even if Herbert changed the distribution of the assets in the trust, each sibling would still be entitled to 1/3 of the property distributed to the siblings. Therefore, the distribution agreement is not illusory.

Defendant also contends that the first cause of action is barred by the statute of frauds. (Civ. Code, § 1624, subd. (a)(1)(3)(7).)

Civil Code Section 1624, subdivision (a) states in pertinent part: “(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party's agent: [¶] (1) An agreement that by its terms is not to be performed within a year from the making thereof . . . [¶] (3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged . . .[[¶] (7) A contract, promise, undertaking, or commitment to loan money or to grant or extend credit, in an amount greater than one hundred thousand dollars ($100,000), not primarily for personal, family, or household purposes, made by a person engaged in the business of lending or arranging for the lending of money or extending credit. For purposes of this section, a contract, promise, undertaking, or commitment to loan money secured solely by residential property consisting of one to four dwelling units shall be deemed to be for personal, family, or household purposes.”

Here, as to Defendant’s argument that the agreement violates the Statute of Frauds because it is for an amount more than $100,000, Civil Code Section 1624(a)(7) only applies to loan agreements and credit agreements. Therefore, Section 1624(a)(7) does not apply. Further, Section 1624(a)(1) does not apply because Herbert could have passed within a year of the agreement. Thus, by its own terms, the agreement could have been fulfilled within one year. Lastly, Section 1624(a)(3) does not apply because the alleged agreement did not concern title or interest in real property. Accordingly, the first cause of action is not barred by the statute of frauds.

Based on the foregoing, the demurrer to the first cause of action for breach of an oral agreement is OVERRULED.

Second cause of action for Breach of Implied Covenant of Good Faith and Fair Dealing fail:

“The implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation. [Citation.] ‘The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract’s purpose.’ [Citation.] . . . ‘In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party’s rights to the benefits of the contract.’” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031–1032.)

“If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated. Thus, absent those limited cases where a breach of a consensual contract term is not claimed or alleged, the only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395 (“Careau & Co.”).)

Here, the SAC alleges that “Defendant violated the duty to act fairly and in good faith, implied in the Distribution Agreement between them.” (SAC, ¶ 37.) The SAC further alleges that “Plaintiff fully performed all that the Distribution Agreement required of him and that all conditions precedent to Defendant’s performance have occurred” however “Defendant unfairly interfered with Plaintiff’s right to receive the benefits of the Distribution Agreement between them, namely receipt of his 1/3 share in their father’s trust estate.” (SAC, ¶¶ 38, 39.) As to damages, Plaintiff claims that he was “harmed in an amount subject to proof at trial but believed to be in excess of $5 million.” (SAC, ¶ 40.)

Here, the allegations in the SAC do not go beyond the statement of a contract breach, rely on the same alleged facts and seek the same damages as the contract cause of action. The implied covenant of good faith and fair dealing is therefore superfluous as no additional claim is stated.

Accordingly, the demurrer to the second cause of action should be SUSTAINED with 20-days leave to amend.

Third cause of action for Fraud/Misrepresentation:

Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar), states, “ ‘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.’ [Citations.] [¶] ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.]” “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.]” (Id., at p. 645.) Italics in Lazar.)

The elements of fraud that will give rise to a 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. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974; CACI No. 1900.) Lazar v. Superior Court (Lazar) (1996) 12 Cal.4th 631, 645, explains, “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’ ”

Defendant argues that the fraud cause of action fails to meet the heightened pleading requirements because the allegations in paragraphs 45 through 47 of the SAC are contradicted by earlier allegations in paragraph 10 through 13 of the SAC. Paragraph 45 of the SAC alleges that in February 2018, Jill orally promised to Jeff and Jason that she agreed to divide their father’s estate equally, in 1/3 shares, notwithstanding the terms of the Trust and its amendments. (SAC, ¶ 45.) In turn, Jason agreed to not speak with Herbert about changing the terms of the Trust. Jason also agreed he would not challenge or contest the probate of Herbert’s estate. (SAC, ¶ 46.) Jill made her promise to split Herbert’s estate equally with intention of inducing Jason to forgo discussing changing the terms of the Trust with Herbert to reflect the state of their repaired relationship during Herbert’s lifetime. (SAC, ¶ 47.)

Defendant argues that these allegations are contradicted by allegations that demonstrate that the relationship between Plaintiff and Herbert had not been repaired. Specifically, the SAC alleges that “[i]n or about July 26, 2018, Herbert executed a First Amendment to the Trust,” which set forth that “after Herbert’s death the entire Trust estate was distributed solely to Jill.” (SAC, ¶¶ 10-11.) Approximately a year after the siblings’ alleged discussion regarding their father’s legacy, the SAC alleges that [i]n or about January 29, 2019, Herbert executed a Second Amendment to the Trust,” which distributed “[t]he sum of One Hundred Dollars ($100.00)… to Jason and the entire remaining residue of the Trust to… Jill and Jeff.” (SAC, ¶¶ 12-13.)

Here, the allegations in paragraphs 10 through 13 of the SAC show that Herbert made two separate amendments to the Trust after the siblings entered into an oral agreement, First Amendment which left Plaintiff nothing and a Second Amendment which distributed $100. These allegations do indeed contradict Plaintiffs’ allegations in paragraphs 45 through 47 that the relationship between Plaintiff and Herbert was repaired which was the basis for the promise. Therefore, the SAC does not sufficiently allege a fraud cause of action with particularity.

Accordingly, the demurrer to the THIRD cause of action for breach of implied covenant of good faith and fair dealing is SUSTAINED with 20-days leave to amend.

Fourth cause of action for Punitive Damages:

Defendant contends that the fourth cause of action for punitive damages is not a separate cause of action. Unlike the first three causes of action which are labeled as First, Second and Third Causes of Action in the SAC, Plaintiff seeks punitive damages under a section in the SAC titled “Request for Punitive Damages.” Since the request for punitive damages is not alleged as a separate cause of action, the demurrer to the request for punitive damages is improper.

Moving Defendant to give notice.

MOTION NO. 2:

The motion to strike of defendant Jill Goldberg Nadley to portions of the Verified Second Amended Complaint (“SAC”) filed by Plaintiff Jason Goldberg is GRANTED with 20-days leave to amend.

Based on the Court’s ruling SUSTAINING the demurrer to the third cause of action for fraud, the request to strike punitive damages is GRANTED with 20-days leave to amend.

Moving Defendant to give notice.

3. Case Management Conference