Judge: Joel R Wohlfeil, Case: 37-2023-00026461-CU-BC-CTL, Date: 2024-01-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - January 18, 2024

01/19/2024  09:00:00 AM  C-73 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Joel R. Wohlfeil

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Civil - Unlimited  Breach of Contract/Warranty Demurrer / Motion to Strike 37-2023-00026461-CU-BC-CTL FOLEY VS BRE-FMCA LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Demurrer, 11/17/2023

1. The special and general Demurrer (ROA # 35) of Defendants, BRE-FMCA, LLC ('BRE') and ESSEX PROPERTY TRUST, INC. (collectively 'Defendants') to causes of action 2 and 4 in the First Amended Complaint ('FAC') by Plaintiff THOMAS FOLEY ('Plaintiff'), is OVERRULED.

Defendants are ordered to file and serve Answers within twenty (20) days of this hearing.

The special Demurrer for uncertainty is overruled because causes of action 2 and 4 are not ambiguous or unintelligible. Code Civ. Proc. 430.10.

The remainder of this ruling addresses the general Demurrer.

2nd COA: FRAUD The elements of fraud are: (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity; (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. Lazar v. Superior Court (1996) 12 Cal. 4th 631, 638.

'Promissory fraud' is a subspecies of the action for fraud and deceit. Id. 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. Id. An action for promissory fraud may lie where a defendant fraudulently induces the plaintiff to enter into a contract. Id. Fraud must be pled specifically; general and conclusory allegations do not suffice. Id. at 645.

This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. Id. Plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. Id. In such a case, Plaintiff must allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. Id. Calendar No.: Event ID:  TENTATIVE RULINGS

3052953 CASE NUMBER: CASE TITLE:  FOLEY VS BRE-FMCA LLC [IMAGED]  37-2023-00026461-CU-BC-CTL This cause of action alleges the lease agreement was fraudulently induced: 'The lease specifically states that upon termination of the lease BRE shall not charge Foley for any normal use of the premises .... ¶ ... BRE never had any intention of complying with this provision, not at the time the leased was entered into or ever.' FAC at ¶¶ 20 and 21.

The preliminary facts allege the lease was entered into in April 2022 and Plaintiff vacated the premises on March 31, 2023.

The FAC also alleges detailed facts setting forth the nature of the falsehood: i.e., demanding the cost of carpet replacement and re-painting even though 'there was no damage other than normal use.' Other allegations state the date and substance of Defendants' subsequent communications which evidence and support the original fraudulent inducement.

The alleged false statement is the language within the written lease agreement referenced in the FAC.

This written agreement will set forth the name of the individual making the false statement and acting on behalf of the corporate entities.

These facts are sufficiently detailed.

Knowledge of the falsity and intent to induce reliance are alleged in sufficient detail.

As alleged, Defendants intentionally seek to maximize profit through a course of dealing in which they disregard the terms of lease agreements and instead charge tenants for carpet and paint 'damage' that, in fact, constitutes normal wear.

It is reasonable to rely on the terms of a signed, written agreement.

4th COA: DURESS 'Under modern law duress is not limited to threats against the person. It may also consist of threats to business or property interests.' Leeper v. Beltrami (1959) 53 Cal. 2d 195, 203.

If actions taken or threatened involve the assertion of claims known to be false, the conduct constitutes duress. Louisville Title Ins. Co. v. Surety Title & Guar. Co. (1976) 60 Cal. App. 3rd 781, 801.

The doctrine of 'economic duress' can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract. CrossTalk Productions, Inc. v. Jacobson (1998) 65 Cal. App. 4th 631, 644.

The party subjected to the coercive act, and having no reasonable alternative, can then plead 'economic duress' to avoid the contract. Id. Defendants argue: 'Defendants' alleged threats to report the debt to consumer reporting agencies are not improper because they were permitted to report the debt that they believed Plaintiff owed for re-carpeting and repainting the walls after Plaintiff vacated the premises and an inspection of the property was conducted.' However, whether Defendants had a good faith belief that the debt was owed is a question of fact that cannot be resolved via a Demurrer.

The FAC sufficiently alleges wrongful, coercive acts causing plaintiff to tender funds that were not owed.

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3052953 CASE NUMBER: CASE TITLE:  FOLEY VS BRE-FMCA LLC [IMAGED]  37-2023-00026461-CU-BC-CTL 2. The Motion (ROA # 37) of Defendants BRE-FMCA, LLC and ESSEX PROPERTY TRUST, INC.

('Defendants') to strike portions of Plaintiff's FAC, is DENIED.

A properly pled fraud claim will itself support recovery of punitive damages. No allegations of 'malice' or intent to injure Plaintiff are required because fraud is an alternative and independent basis for recovery.

See Civ. Code 3294(a); Stevens v. Superior Court (1986) 180 Cal. App. 3d 605, 610; and Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal. App. 3d 1220, 1239.

As discussed within the concurrent ruling on the Demurrer, the claim for fraud is sufficiently alleged. The claim for economic duress is essentially premised on the continuing fraudulent conduct. As a result, the claim for punitive damages also survives.

When seeking punitive damages against a corporate employer, Plaintiff must allege that the entity 'authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.' Civ. Code 3294(b).

The opposition brief does not directly address whether corporate ratification / authorization is sufficiently alleged. However, the allegations within the FAC do sufficiently support this aspect of the alleged claim.

Specifically, this is not a situation involving a possible rogue employee committing a single wrongful act (e.g., assault or discrimination in the workplace). Instead.

The FAC alleges what appears to be a falsehood contained in a pre-printed lease and a corporate wide policy to extract money from former tenants by claiming 'damage' to apartment units.

Paragraph 4 alleges Szabo was an 'authorized representative.' Paragraph 12 alleges an email that used 'corporate form language' to coerce plaintiff into paying money that was not owed.

Paragraph 22 alleges: '... BRE, as directed and controlled by its parent corporation EPT, has a calculated corporate policy and scripted approach under which it routinely overcharges tenants upon move out of leased premises ....' These allegations are sufficient.

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