Judge: Joel L. Lofton, Case: 23AHCV01994, Date: 2024-01-29 Tentative Ruling
Case Number: 23AHCV01994 Hearing Date: January 29, 2024 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: January 29, 2024 TRIAL
DATE: No date set.
CASE: BHO INVESTMENTS,
LLC., v. SCOTT WILLIAM RAFFAELE, in his capacity as SUCCESSOR TRUSTEE OF THE
STEPHANIE SADOSKI REVOCABLE LIVING TRUST DATED AUGUST 20, 2002; NINE HOLDINGS,
LLC.; RAMIRO QUEZADA
CASE NO.: 23AHCV01994
DEMURRER
WITH MOTION TO STRIKE
MOTION
TO EXPUNGE LIS PENDENS
MOVING PARTY: Defendants Nine Holdings,
LLC and Ramiro Quezada (“Defendants”)
RESPONDING PARTY: Plaintiff BHO Investments, LLC
SERVICE: Demurrer
filed October 16, 2023
Motion
to expunge lis pendens filed December 13, 2023
OPPOSITION: Opposition to demurrer filed December 6,
2023
Opposition to motion to expunge
lis pendens filed January 16, 2024
REPLY: Reply to demurrer filed January 22, 2024
Reply to motion to expunge lis pendens filed
January 22, 2024
RELIEF
REQUESTED
Defendants demurrer to Plaintiff’s
third and fourth causes of action.
BACKGROUND
This case arises out of Plaintiff BHO
Investments, LLC’s (“Plaintiffs) claim that Defendants breached a contract for
the sale of real property located at 1525 La Loma Road, Pasadena, California
91105 (“Subject Property”). Plaintiff filed this complaint on August 30, 2023,
alleging four causes of action for (1) breach of contract/specific performance,
(2) breach of the implied covenant of good faith and fair dealing, (3) fraud,
and (4) tortious interference with contractual relations.
TENTATIVE RULING
Defendants’ demurrer to Plaintiff’s complaint is
OVERRULED.
Defendants’ motion to strike is DENIED.
Nine Holding’s motion to expunge lis pendens is GRANTED.
All requests for sanctions are DENIED.
REQUESTS FOR JUDICIAL NOTICE
Plaintiff’s request for judicial notice for Exhibit 1 is GRANTED pursuant
to Evidence Code section 452, subdivision (c).
Nine Holding’s request for judicial notice for Exhibit 1, 2, 3, and 4, is
GRANTED pursuant to Evidence Code section 452, subdivision (c).
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
Defendants demurrer to Plaintiff’s third cause of action for fraud.
“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.” (Beckwith v. Dahl (2012) 205
Cal.App.4th 1039, 1060, citations omitted.
“[F]raud may consist of a
suppression of a material fact in circumstances under which the defendant has a
legal duty of disclosure.” (Hoffman v. 162 North Wolfe LLC (2014)
228 Cal.App.4th 1178, 1186, internal citations omitted.) “[W]here material
facts are known to one party and not to the other, failure to disclose them is
not actionable fraud unless there is some relationship between
the parties which gives rise to a duty to disclose such known facts. A
relationship between the parties is present if there is ‘some sort of transaction between the parties.’ ” (Id.
at p. 1187.) “Thus, a duty to disclose may arise from the relationship between
seller and buyer, employer and prospective employee, doctor and patient, or
parties entering into any kind of contractual agreement.” (Ibid.)
“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.)
In
its complaint, Plaintiff alleges that Scott William Raffaele (“Raffaele”) represented
he would sell the Subject Property to Plaintiff while concealing the fact that
he entered into another purchase agreement with another party. (Complaint ¶¶ 68-70.) Plaintiff alleges that Raffaele fraudulently concealed
that he had a death certificate in his possession to delay the sale of the
Subject Property. (Id. ¶ 71.) Plaintiff alleges that Ramiro Quezada
represented to Plaintiff that he was not interested in purchasing the subject
property while opening escrow to transfer the Subject Property to his alter
ego. (Id. ¶ 77-78.) Plaintiff also alleges reliance and damages. (Id.
¶ 72 and 84.)
Plaintiff has pled the elements sufficient to
state a claim for fraud. Further, although Plaintiff has not pled the specific
details for each instance of concealment, the case at bar presents
circumstances where Plaintiff’s allegations are sufficient. Because Plaintiff’s
claim for fraud is based on concealment of facts, Defendants have greater
information regarding the specific factual claims. “Less specificity
in pleading fraud is required ‘when “it appears from the nature of the
allegations that the defendant must necessarily possess full information
concerning the facts of the controversy....” ’ ” (Cansino v. Bank of America
(2014) 224 Cal.App.4th 1462, 1469.) Thus, this issue is better left for discovery rather than the
pleading phase, where “[m]aterial facts alleged in
the complaint are treated as true for the purpose ruling on the demurrer” (Kisesky
v. Carpenters’ Trust for So. California. (1983) 144 Cal.App.3d, 228).
Defendants’ demurrer to Plaintiff’s third cause of action is
overruled.
Defendants
also demurrer to Plaintiff’s fourth cause of action for tortious interference
with contractual relations.
“The elements of
an action for tortious interference are ‘ “(1) a valid contract between
plaintiff and a third party; (2) defendant's knowledge of this contract; (3)
defendant's intentional acts designed to induce a breach or disruption of the
contractual relationship; (4) actual breach or disruption of the contractual
relationship; and (5) resulting damage.” ’ ” (Hahn v. Diaz-Barba (2011)
194 Cal.App.4th 1177, 1196.)
“[A] plaintiff may plead the legal effect of
the contract rather than its precise language.” (Miles v. Deutsche Bank
National Trust Co. (2015) 236 Cal.App.4th 394, 402.)
Plaintiff
alleges that it entered into a contract with Raffaele for the purchase of the
Subject Property for $700,000. (Complaint ¶¶ 19-20.) Plaintiff alleges that it
informed Quezada of the contract. (Id. ¶ 28.) Plaintiff alleges
intentional acts designed to induce breach. (Id. ¶ 90) Plaintiff also
alleges actual breach. (Id. ¶ 35 and 37.) Plaintiff alleges resulting
damages. (Id. ¶ 84.) Plaintiff has alleged facts sufficient to state a
claim for tortious interference with contractual relations. Defendants’
demurrer to Plaintiff’s third cause of action is overruled.
Motion
to Strike
Defendants
move to strike Plaintiff’s 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.)
Defendant
argues that Plaintiff’s claim for punitive damages should be stricken because
its claim for fraud fails. However, because Plaintiff’s claim for fraud
survives, so too does Plaintiff’s claim for punitive damages. Defendants’
motion to strike is DENIED.
Motion
to Expunge Lis Pendens
Nine Holdings, LLC (“Nine Holdings”) moves to expunge the lis pendens
recorded on October 25, 2023.
“A party who
asserts a claim to real property can record a notice of lis pendens, which
serves as notice to prospective purchasers, encumbrancers and transferees that
there is litigation pending that affects the property.” (J & A Mash
& Barrel, LLC v. Superior Court of Fresno County (2022) 74 Cal.App.5th
1, 15 (“J & A Mash”.) “ ‘A party to an action who asserts a real
property claim may record a notice of pendency of action in which that real
property claim is alleged,’ commonly known as a lis pendens. (§ 405.20.) Such a party is a “ ‘[c]laimant’ ” for purposes
of the lis pendens statute. (§ 405.1.) Once recorded,
any party with an interest in the property can move to expunge the lis pendens
pursuant to the procedure set forth in section 405.30.” (Id.
at p. 16.)
A
preliminary issue raised by the parties is whether Nine Holdings has standing
to bring the present motion. Code of Civil Procedure section 405.30, provides
in part: “At any time after notice of pendency of action has been recorded, any
party, or any nonparty with an interest in the real property affected thereby,
may apply to the court in which the action is pending to expunge the notice.”
Nine Holdings provides that on December 11, 2023, a grant deed was recorded
transferring the Subject Property to Nine Holdings. (Supplemental RJN Exhibit
4.) Thus, Nine Holdings has standing to bring this motion to expunge lis
pendens and the court turns to the substantive issues raised.
“A comment to section 405.30 identifies
four bases upon which expungement may be sought: (1) the lis pendens is void
and invalid (§ 405.23), (2) the action as pleaded does not contain a
real property claim (§ 405.31), (3) the claimant fails to
establish the probable validity of the claim (§ 405.32), and (4)
monetary relief provides an adequate remedy (§ 405.33).” (J &
A Mash, supra, 74 Cal.Ap.5th at p. 16.)
In support of its motion to
expunge lis pendens, Nine Holdings primarily argue that Plaintiff is fails to
establish probable validity of its claims.
“[T]he court
is required to expunge a lis pendens ‘if the court finds that the claimant has
not established by a preponderance of the evidence the probable validity of the
real property claim.’ ” (Kirkeby, supra, 33 Cal.4th at p. 651.)
Nine
Holdings first argues that Plaintiff lacks standing to bring this claim because
it assigned away its rights an interest. (Travillion Decl. ¶ 4, Exhibit B.) However, Plaintiff provides
that although the assignment agreement was executed, the assignment never
occurred based on conditions not being met. (Grigoriev Decl. ¶ 13.) Nine
Holding’s argument that Plaintiff lacks standing is unavailing.
Nine Holding also argues that Plaintiff’s allegations are
insufficient to state a claim for fraud or tortious interference with contract.
However, Nine Holdings’ demurrer were overruled, and its arguments here are
similarly unavailing. Nine Holdings has failed to demonstrate grounds for
expunging the lis pendens. However, pursuant to Code of Civil Procedure section
405.30, “the claimant”, or in this case Plaintiff, “shall have the burden of
proof under Sections 405.31 and 405.32.”
“In proceedings under this chapter, the court shall
order that the notice be expunged if the court finds that the claimant has not
established by a preponderance of the evidence the probable validity of the
real property claim. The court shall not order an undertaking to be given as a
condition of expunging the notice if the court finds the claimant has not
established the probable validity of the real property claim.” (Code Civ. Proc.
§ 405.32.)
Here,
Plaintiff bears the burden of establishing probable validity of the real
property claim. However, Plaintiff has failed to meet that burden. First, in
its opposition, Plaintiff fails to identify what claim it asserts provides the
basis for the lis pendens. Second, Plaintiff does not even argue that it has
established probable validity for any of its claims. Plaintiff merely asserts
its allegations are sufficient to state a claim, which is relevant to the
demurrer but not the motion to expunge lis pendens. Lastly, and most
importantly, Plaintiff’s evidence fail to establish probable validity of any of
its claims, be it for breach of contract, fraud, or tortious interference. The
only probative evidence supporting Plaintiff’s claim is where Plaintiff asserts
that Raffaele was unable to deliver clear title to Plaintiff on or before the
agreed closing date, and thus breached the agreement. (Grigoriev Decl. ¶¶ 10-11.) However, that is insufficient to establish probable
validity by a preponderance of the evidence.
Nine Holding’s motion to expunge lis pendens is granted.
Both parties request sanction for the present motion.
Code of
Civil Procedure section 405.38 provides: “The court shall direct that the party
prevailing on any motion under this chapter be awarded the reasonable
attorney’s fees and costs of making or opposing the motion unless the court
finds that the other party acted with substantial justification or that other
circumstances make the imposition of attorney’s fees and costs unjust.” “Trial
courts should liberally impose these sanctions upon any who file fraudulent
transfer actions and record notices of lis pendens before uncovering credible
evidence of fraud.” (Huntington World, Inc. v. Superior Court (1994) 22
Cal.App.4th 67, 74.)
Here, Nine
Holdings is the prevailing party to the motion. However, this motion was
granted solely because Plaintiff failed to meet its affirmative burden and Nine
Holdings failed to provide persuasive or relevant arguments. All requests for
sanctions are denied.
CONCLUSION
Defendants’ demurrer to Plaintiff’s complaint is
OVERRULED.
Defendants’ motion to strike is DENIED.
Nine Holding’s motion to expunge lis pendens is GRANTED.
All requests for sanctions are DENIED.
Dated: January 29,
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