Judge Jill Feeney, Case Number: 22STCV24782, Date: 2024-04-18 Tentative Ruling

Plaintiff Daniel Chu (“Plaintiff”) purchased a home (the “Subject Property”) from Defendant GRCA2 (“GRCA2”) in 2014 pursuant to a Residential Purchase Agreement (“RPA”). (Compl. ¶ 9.) GRCA2 and Defendant Gerry Wiener (“Wiener” and together with GRCA2, “Movants”) assured Plaintiff that the work done on the home by Defendant CAA Contractor (“CAA”) prior to Plaintiff’s purchase was fully to code, and all permits and approvals had been obtained. (Compl. ¶ 12.)

Shortly thereafter, Plaintiff and GRCA2 entered into an addendum (“Addendum 1”) to the RPA stating that there were “outstanding permits that ha[d] not been finalized. Seller to provide buyer FINAL Building and Safety approval/permits for the recent construction at the site.” (Compl. ¶ 13.) GRCA2’s duty to provide all necessary permits to Plaintiff was affirmed in another addendum (“Addendum 3”) prior to purchase. (Compl. ¶ 16.)

In 2016, Plaintiff discovered material defects in the renovations to the Subject Property. (Compl. ¶ 18.) In May 2016, Plaintiff sent a demand letter to GRCA2 explaining these defects. (Ibid.) In December 2016, the parties settled the dispute pursuant to a Settlement Agreement and Mutual Release (the “Settlement Agreement”). (Compl. ¶ 19.) In the Settlement Agreement, GRCA2 represented to Chu that GRCA2 had repaired or addressed all the matters and defects set forth in the Addenda. (Compl. ¶ 20.)

In August 2021, Chu attempted to sell the Subject Property to a third party. (Compl. ¶ 21.) As a result of this attempted sale, Chu discovered that GRCA2 had failed to obtain necessary permits and that no certificate of occupancy was ever obtained. (Compl. ¶ 22.) Additionally, Chu discovered evidence that GRCA2 and CAA Contractor had intentionally concealed the defective renovations. (Compl. ¶ 23.)

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code, section 452, subds. (c), (d), and (h).)

Evidence Code Section 452 provides that judicial notice may be taken for facts and propositions that are “not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code, section 452(h).) Further, “a court may take judicial notice of [recorded documents and] the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 745-755.)

Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning. (Fremont Indem. Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-14 (citations and internal quotations omitted).) In addition, judges “consider matters shown in exhibits attached to the complaint and incorporated by reference.” (Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 665.) However, “[w]hen judicial notice is taken of a document . . . the truthfulness and proper interpretation of the document are disputable.” (Aquila, Inc. v. Sup. Ct. (2007) 148 Cal.App.4th 556, 569 (quoting StorMedia Inc. v. Sup. Ct. (1999) 20 Cal.4th 449, 457 n. 9).)

Courts may take judicial notice of a party’s admissions that cannot be reasonably controverted, such as answers to interrogatories, answers to requests for admissions, or affidavits filed on the party’s behalf. (Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 485.)

Here, Movants request that the Court take judicial notice of Plaintiff’s responses to requests for admissions and form interrogatories, including exhibits provided by Plaintiff in response to the requests. Plaintiff provided these exhibits in his answers to requests for admissions and the documents do not controvert the allegations in Plaintiff’s Complaint. Therefore, the exhibits are judicially noticed. These requests for judicial notice are granted.

Movants’ request that the Court take judicial notice of a bank account statement for Defendant GRCA2 is denied. This is not a matter which may be subject to judicial notice under Evid. Code, section 452.

Movants move for judgment on the pleadings on the grounds that (1) all claims pertaining to the property were settled and released, (2) the settlement bars all unknown claims, (3) each cause of action is barred by the applicable statute of limitations, (4) the third cause of action does not state a cause of action for fraud, and (5) Plaintiff cannot rescind the settlement agreement because he has already derived the benefits of the agreement.

A defendant may move for judgment on the pleadings when the “complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Code Civ. Proc., section 438(b)(1) and (c)(1)(B)(ii).)

“A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. Presentation of extrinsic evidence is therefore not proper on a motion for judgment on the pleadings.” (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999 (Citations Omitted).) The standard for ruling on a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law. (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322 (citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216).)

If a party moving for judgment on the pleadings already demurred to pleadings on the same grounds as the motion for judgment on the pleadings, the motion may proceed provided there has been a material change in applicable case law or statute since the ruling on the demurrer. (Code Civ. Proc., section 438(g)(1).)

Here, the demurrer overruled in May 2023 already addressed the statute of limitations issues. Movants made the same arguments in the earlier demurrer as in this motion. Therefore, this motion is not made on new facts, or a material change in law. The motion is denied as to the statute of limitations grounds.

Movants’ arguments with respect to the cause of action for fraud differ slightly from the original demurrer. Movants now allege based on Plaintiff’s discovery requests that (1) Plaintiff was on notice of the permit-related representations and (2) the representations of Addendum 3 to the parties’ contract was replaced with Addendum 4, which Plaintiff does not allege was false.

First, the argument that Plaintiff was on notice of the permit-related representations is the same as the previous demurrer. Therefore, this is not a new ground for judgment on the pleadings, nor is it a change in law. The motion is denied with respect to this issue.

A claim for fraud must plead all of the following elements: (1) misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128; Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1332.)

Here, Movants allege that they did not accept Addendum number 3 to the parties’ contract and instead opted to replace it with Addendum 4. (RJN Exh. A, Exh. 5, ¶3.) However, this is a question of fact that cannot be resolved here. Moreover, the Complaint states that GRCA2 agreed in all Addenda generally that it would provide all required permits for renovations. Thus, the Complaint adequately states Movants misrepresented in the parties’ contract that they would obtain the required permits.

Movants move for judgment on the pleadings on the grounds that the claims pertaining to the property, including unknown claims, have been settled and released. However, as discussed above and in the previous demurrer, the Complaint adequately states that Plaintiff was induced to agree to the settlement through fraud.

“Fraud in the inducement . . . occurs when ‘the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud is voidable.” (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 415, quoting Ford v. Shearson Lehman American Express, Inc. (1986) 180 Cal.App.3d 1011, 1028.)

Here, because the Complaint adequately states a cause of action for fraud, the settlement induced through fraud is voidable. Therefore, Plaintiff’s claims are not barred by the settlement. The motion is denied on this ground.

Movants also argue that Plaintiff cannot rescind the settlement agreement because he has already derived the benefits of the agreement by receiving settlement payment. Movants cite Gill v. Rich (2005) 128 Cal.App.4th 1254, 1264 (Gill) and Neet v. Holmes (1944) 25 Cal.2d 447, 457 (Neet) in support of this argument. Both cases state that a party waives the right to rescind a contract by accepting its benefits. Although a party may rescind if the consent of the party was obtained through fraud, when the rights of others have intervened and no circumstances have so far changed that rescission may not be decreed without injury to those parties and their rights, rescission will be denied. (Gill at p.1265.)

Here, Plaintiff is not simply rescinding a contract after receiving the full benefit of its terms. Rather, Plaintiff alleges that the settlement was induced through fraud and seeks a declaration that the settlement is void. There are no allegations in the