Judge: Joel L. Lofton, Case: 23AHCV01732, Date: 2024-04-09 Tentative Ruling
Case Number: 23AHCV01732 Hearing Date: April 9, 2024 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: April 9, 2024 TRIAL DATE: No date set.
CASE: ANNIE CAROLIN, an
individual; CHARLANDO, LLC, a California limited liability company, v. OCAJ
LLC, a California limited liability company, BEREL SCHUSTERMAN, an individual,
JACKIE LUBRANO, an individual; JAKE ZACUTO, an individual; ZACUTO GROUP, INC.,
a California corporation, and DOES 1 through 20, inclusive.
CASE NO.: 23AHCV01732
DEMURRER
WITH MOTION TO STRIKE
MOVING PARTY: Defendants Zacuto Group, Inc., Jake
Zacuto, and Jackie Lubrano (“Zacuto Defendants”) and Defendants Berel
Schusterman and OCAJ, LLC (“OCAJ Defendants”).
RESPONDING PARTY: Plaintiffs
Annie Carolin and Charlando, LLC
SERVICE: Zacuto Defendants’ demurrer filed October
9, 2023
OCAJ’s demurrer filed on December 1, 2023
OPPOSITION: Filed March 22, 2023
REPLY: Filed April 2, 2024
BACKGROUND
This case arises out of Plaintiffs Annie
Carolin and Charlando, LLC’s (“Plaintiffs”) claim that Defendants breached a
contract for the sale of real property located at 2075-2085 N. Fair Oaks
Avenue, Pasadena, California, 91103. Plaintiffs filed a complaint on July 28,
2023, alleging six causes of action (1) breach of contract, (2) breach of
implied covenant of good faith and fair dealings, (3) fraud and/or concealment,
(4) breach of fiduciary duty, (5) violation of Civil Code section 2079, et seq.
and (6) negligence.
TENTATIVE RULING
The Zacuto Defendants’ demurrer is OVERRULED.
The OCAJ Defendants’ demurrer to Plaintiffs’ first and second
causes of action is OVERRULED.
The OCAJ Defendants’ demurrer to Plaintiffs’ third cause of action
is SUSTAINED with 20 days leave to amend.
The
OCAJ Defendants’ motion to strike is DENIED.
The
Zacuto Defendants’ motion to strike is GRANTED with 20 days leave to amend.
LEGAL STANDARD
Demurrer
A general
demurrer may be taken to a complaint where “[t]he pleading does not state facts sufficient to
constitute a cause of action.” (Code of Civ. Proc. § 430.10(e).) A demurrer for sufficiency tests whether the
complaint states a cause of action. (Hahn
v. Mirda (2007) 147 Cal. App. 4th 740, 747.) In a demurrer proceeding, the
defects must be apparent on the face of the pleading or by proper judicial
notice. (Code Civ. Proc. section
430.30(a).) A demurrer tests the pleadings alone and not the evidence or
other extrinsic matters. (SKF Farms v. Superior Court (1984) 153
Cal. App. 3d 902, 905.) The only issue involved in a demurrer hearing is
whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action. (Hahn v.
Mirda, supra, 147 Cal.App.4th 740, 747.)
Additionally, a
special demurrer to a complaint may be brought on the ground the pleading is
uncertain, ambiguous, or unintelligible. Code Civ. Proc section 430.10(f); Beresford Neighborhood Assn. v. City of
San Mateo (1989) 207 Cal.App.3d 1180, 1191.) A demurrer based
on uncertainty is disfavored and will be strictly construed even when the
pleading is uncertain in some respects. (Khoury v. Maly's of California, Inc. (1993) 14
Cal.App.4th 612, 616.) A demurrers based on uncertainty are “granted only if
the pleading is so incomprehensible that a defendant cannot reasonably
respond.” (Lickiss v. Financial Industry Regulatory Authority (2012) 208
Cal.App.4th 1125, 1135.)
Motion to Strike
Any party, within the time allowed to respond to a pleading
may serve and file a notice of motion to strike a pleading or any part
thereof. (Code Civ. Proc., § 435, subd. (b)(1).) The
court may, upon a motion, or at any time in its discretion, and upon terms
it deems proper, strike any irrelevant, false, or improper matter inserted in
any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may
also strike all or any part of any pleading not drawn or filed in conformity with
California law, a court rule, or an order of the court. (Code Civ. Proc.,
§ 436, subd. (b).) An immaterial or irrelevant allegation is one that is
not essential to the statement of a claim or defense; is neither pertinent to
nor supported by an otherwise sufficient claim or defense; or a demand for
judgment requesting relief not supported by the allegations of the
complaint. (Code Civ. Proc., 431.10, subd. (b).) The grounds for
moving to strike must appear on the face of the pleading or by way of judicial
notice. (Code Civ. Proc., § 437.)
DISCUSSION
First Cause of Action for Breach of Contract
Defendants separately demurrer to Plaintiffs’ complaint. Plaintiffs’
first three causes of action are alleged against OCAJ and Schusterman. The OCAJ
Defendants argue that Plaintiffs’ first cause of action fails to establish that
Charlando, LLC and Schusterman are parties to the contract.
The
essential elements of a breach of contract are: (1) the contract, (2)
plaintiff’s performance or excuse for nonperformance, (3) the defendant’s
breach, and (4) the resulting damages to the plaintiff. (Green Valley
Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th. 425, 433.)
Plaintiffs
allege that they purchased the Subject Property from OCAJ, LLC and Schusterman.
(Complaint ¶ 9.) However, the contract, attached as Exhibit A, does not expressly
state that either Charlando, LLC or Schusterman are parties to the contract.
However, the contract lists the buyer as “Annie Carolin and/or Assignee” and
the seller OCAJ, LLC signed by Berel Schusterman. (Complaint, Exhibit A at pp.
9-10.)
The complaint, as alleged and the attached exhibit,
is not so deficient as to establish that Charlando, LLC lacks standing nor does
it demonstrate that Schusterman cannot be named a Defendant for his actions on
behalf of OCAJ. The OCAJ Defendants argue that because the contract contains an
integration clause, neither Charlando, LLC nor Schusterman are, as a matter of
fact, not parties to the contract. However, that argument is a fact based one
that is not as pertinent at the pleading stage. Plaintiffs allege that they
were the buyers and OCAJ, LLC and Schusterman were the sellers. (Complaint ¶¶
1-2.) At the pleading stage that is sufficient.
The
OCAJ Defendants’ demurrer to Plaintiffs’ first cause of action is overruled.
Second
Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealings
The
OCAJ Defendants demurrer to Plaintiffs’ second cause of action for breach of
implied covenant of good faith and fair dealings.
“Under
California law, every contract includes an implied covenant of good faith and
fair dealing.” (Prager University v. Google LLC (2022) 85 Cal.App.5th
1022, 1039.) The covenant “exists merely to prevent one contracting party from
unfairly frustrating the other party’s right to receive the benefits of the
agreement actually made.” (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th
317, 349.)
The
OCAJ Defendants argue that Plaintiffs’ cause of action fail because it attempts
to override an express contractual term. However, the OCAJ Defendants’ citation
to case law does not support their statement of the law, and Defendants also
fail to point to where or how Plaintiffs’ allegations seek to supersede an
express contractual term. Defendants’ demurrer to Plaintiffs’ second cause of
action is overruled.
Third Cause of Action for
Fraud and Concealment
The OCAJ Defendants demurrer to
Plaintiffs’ third cause of action on the grounds that Plaintiff has failed to
allege facts with the required specificity.
“[T]he elements of an action for
fraud and deceit based on 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
must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011)
198 Cal.App.4th 230, 248.)
“Fraud is required to be pleaded
with specificity.” (People ex rel. Harris v. Rizzo (2013) 214
Cal.App.4th 921, 947.) “Fraud allegations must be pled with more detail than
other causes of action. The facts constituting the fraud, including every
element of the cause of action, must be alleged factually and specifically. The
objectives are to give the defendant notice of definite charges which can be
intelligently met, and to permit the court to determine whether, on the facts
pleaded, there is any foundation, prima facie at least, for the charge of
fraud.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007)
158 Cal.App.4th 226, 240, internal quotation marks omitted.)
Plaintiffs only generally allege
that Defendants failed to disclose the existence of defects in the property but
fail to allege the elements with specificity. Defendants’ demurrer to
Plaintiffs’ third cause of action is sustained.
Zacuto Defendants’ Statute of
Limitations Argument
The Zacuto Defendants first argue
that Plaintiffs claims are time-barred based on the contractual limitations
period, which provides: “The Parties agree that no lawsuit or other legal
proceedings involving any breach of duty, error or omission relating to this
transaction may be brought against Broker more than one year after the Date of
Agreement . . ..” (Complaint, Exhibit A at p. 9 ¶ 24.2(d).
“It is true California courts have
afforded contracting parties considerable freedom to modify the length of a
statute of limitations. Courts generally enforce parties' agreements for a
shorter limitations period than otherwise provided by statute, provided it is
reasonable.” (Moreno v. Sanchez (2003) 106 Cal.App.4th 1415, 1430.) “ ‘
“A contractual period of limitations is reasonable if the plaintiff has a
sufficient opportunity to investigate and file an action, the time is not so
short as to work a practical abrogation of the right of action, and the action
is not barred before the loss or damage can be ascertained.” ’ ” (Ramirez v.
Charter Communications, Inc. (2022) 75 Cal.App.5th 365, 374.)
“However, a contractually shortened
limitations period has never been recognized outside the context of
straightforward transactions in which the triggering event for either a breach
of a contract or for the accrual of a right is immediate and obvious. Moreover,
no decision upholding the validity of a contractually shortened limitation
period has done so in the context of an action against a professional or
skilled expert where breach of a duty is more difficult to detect.” (Moreno,
supra, 106 Cal.App.4th at p. 1430.)
The parties argue whether the
shortened limitations period provides a reasonable time period. Plaintiffs
argue that the delayed discovery rule should apply while the Zacuto Defendants
argue that Plaintiffs had ample opportunity to discover the alleged defects.
However, as this is the pleading stage,
and both parties arguments are fact based, it would premature to rule on
whether the limitations period is reasonable. For now, Defendants’ demurrer to
Plaintiffs’ complaint based on the contractual limitations period is overruled.
Fourth Cause of Action for Breach of
Fiduciary Duty
The Zacuto Defendants argue that
Plaintiffs fail to allege a cause of action for breach of fiduciary duty.
“The elements of a cause of action
for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2)
the breach of that duty; (3) damage proximately caused by that breach.” (IIG
Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 646.)
Plaintiffs allege that the Zacuto
Defendants owed them a fiduciary duty but breached the duty by failing to
advise Plaintiffs about defective conditions on the Subject Property. (Id. ¶ 35.) Plaintiffs also alleged they were
damaged as a result of the breach. (Id. ¶
36.) At the pleading stage, Plaintiffs allegations are sufficient to allege a
cause of action for breach of fiduciary duty. The Zacuto Defendants’ demurrer
to Plaintiffs’ fourth cause of action is overruled.
Fifth Cause of Action for Violation of Civil Code section 2079
The Zacuto Defendants demurrer to Plaintiffs’ fifth cause of
action.
Civil Code section 2079 provides in part: “It is the duty
of a real estate broker or salesperson . . . to conduct a reasonably competent
and diligent visual inspection of the property offered for sale and to disclose
to that prospective buyer all facts materially affecting the value or desirability
of the property that an investigation would reveal, if that broker has a
written contract with the seller to find or obtain a buyer or is a broker who
acts in cooperation with that broker to find and obtain a buyer.”
The Zacuto Defendants make various
arguments that Plaintiffs should have alleged more specific factual statements
to establish that Defendants failed to inspect and detect specific defects.
However, these arguments are factual in nature and seek to impose a higher level
of pleading without the support of legal authority. Plaintiffs allege that
Defendants had a duty under Civil Code section 2079 but failed to advise
Plaintiffs of defective conditions on the property. (Complaint ¶¶ 42-43.) The Zacuto Defendants’ demurrer to
Plaintiffs’ fifth cause of action is overruled.
Sixth Cause of Action for Negligence
The Zacuto Defendants demurrer to Plaintiffs’ sixth cause of
action.
“The elements of a cause of action
for negligence are duty, breach, causation, and damages.” (Melton v.
Boustred (2010) 183 Cal.App.4th 521, 529.) Plaintiffs allege that
Defendants owed a duty to them. (Complaint ¶ 35.) Plaintiffs allege that Defendants breached that duty by
selling the property with significant defects. (Id. ¶ 46.) Plaintiffs
allege causation and damages. (Id. ¶ 48.) Plaintiffs have alleged a
cause of action for negligence. Defendants’ demurrer to Plaintiff’s sixth cause
of action is overruled.
Motion to Strike
The Zacuto Defendants move to
strike Plaintiffs’ prayer for punitive damages.
Punitive
damages may be imposed where it is proven by clear and convincing evidence that
the defendant has been guilty of oppression, fraud, or malice. (Civ.
Code, § 3294, subd. (a). A plaintiff seeking punitive damages “must include
specific factual allegations showing that defendant's conduct was oppressive,
fraudulent, or malicious to support a claim for punitive damages. [Citation.]
Punitive damages my not be pleaded generally.” (Today’s IV, Inc. v. Los
Angeles County Metropolitan Transportation Authority (2022) 83 Cal.App.5th
1137, 1193.)
Here, Plaintiffs have failed to
allege any specific facts demonstrating oppression, fraud, or malice. Further,
the demurrer to Plaintiffs fraud claim has been sustained. Thus, Plaintiffs
have failed to allege grounds for punitive damages. The Zacuto Defendants’
motion to strike Plaintiffs’ prayer for punitive damages is GRANTED. The OCAJ
Defendants’ motion to strike is DENIED.
CONCLUSION
The Zacuto Defendants’ demurrer is OVERRULED.
The OCAJ Defendants’ demurrer to Plaintiffs’ first and second
causes of action is OVERRULED.
The OCAJ Defendants’ demurrer to Plaintiffs’ third cause of action
is SUSTAINED with 20 days leave to amend.
The
OCAJ Defendants’ motion to strike is DENIED.
The
Zacuto Defendants’ motion to strike is GRANTED with 20 days leave to amend.
Zacuto
Group to give notice.
Dated: April 9, 2024 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court
Parties who intend to submit on this tentative must send an email to the court
indicating their
intention to submit. alhdeptx@lacourt.org