Judge: John C. Gastelum, Case: 21-01237737, Date: 2023-08-29 Tentative Ruling
Demurrer to Amended Cross-Complaint
Tentative Ruling: Cross-Defendants MTR Construction and Michael T. Rose’s demurrer to the 5th and 6th causes of action in the First Amended Cross-Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.
Demurrer to the 5th cause of action for intentional misrepresentation against Cross-Defendant Rose
“The elements of fraud are: (1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage. [Citation.]” (Id. at p. 990.) “‘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.]’ [Citation.]” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060.) However, “‘[i]t is insufficient to show an unkept but honest promise, or mere subsequent failure of performance.’ [Citation.]” (Reeder v. Specialized Loan Servicing LLC (2020) 52 Cal.App.5th 795, 804.)
Here, the 5th cause of action fails to allege actionable fraud, i.e., promise without an intent to perform. On the first representation that Rose would be the manager and supervisor of the project for the duration of the contract, the FACC alleges that the Contract was entered into on October 17, 2019 and “when MTR started working on the Project, things went smoothly. Rose was attentively to the Moores and appeared onsite twice a week or more to oversee the Project and the numerous subcontractors performing work. However, in or around January of 2021, Rose stopped appearing onsite and the Moores noticed that he would take longer to respond to email and make himself more difficult to contact.” [FACC, ¶ 10, 45.] Those allegations only show a subsequent failure to perform and are unchanged from the original cross-complaint. [See Cross-Complaint, ¶¶ 10, 45.]
The other representations, the promise to complete the project in 6 months and that only $90K in GC fees would be charged, similarly show a subsequent failure to perform. The scope of the project changed when the Moores requested the height of the walls to be raised in February 2020. [FACC, ¶ 28.] Further, the FACC alleges Cross-Defendants never billed extra and the GC fee became an issue only after a dispute arose between the parties. [Id., ¶ 44.]
In its ruling on the previous demurrer to this cause of action by Cross-Defendant Rose, the court noted the failure to allege actionable fraud. [ROA 90.] Other than re-directing this cause of action against Rose only and removing the allegation of the promise that the project would be a remodel and not a new build, the 5th cause of action largely remains unchanged from the original cross-complaint. Because it appears that Cross-Complainants cannot allege actionable fraud, the demurrer to the 5th cause of action for intentional misrepresentation against Cross-Defendant Rose is SUSTAINED WITHOUT LEAVE TO AMEND.
Demurrer to the 6th cause of action for fraud – concealment against Cross-Defendants
The elements of an action for fraud and deceit based on a 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.)
The court previously sustained the demurrer to the 6th cause of action for fraud - concealment cause of action on the ground that it failed to allege intent to defraud and resulting damages. [ROA 90, 95.] Cross-Complainants attempt to cure that deficiency by alleging that Cross-Defendants intended to induce them to continue to use Cross-Defendants on the project despite the obvious breach of contract and not hire someone else, and alleging they were damaged by the loss of the use of their property during the time of the delay due to Cross-Defendants’ concealment and additional fees paid due to the submittal of incorrect plans Cross-Defendants knew would not be approved since the project was now being considered a new build. [FACC, ¶ 111-119.]
Despite the amendments, the 6th cause of action still fails to sufficiently allege intent to defraud or resulting damages. The allegation that Cross-Defendants intended to induce Cross-Complainants to continue to use them and not hire someone else, alleges nothing more than conduct amounting to a breach of contract by Cross-Defendants. As for the allegations that Cross-Complainants lost use of their property due to delay and had to pay additional fees, again, that would have occurred the moment Cross-Defendants demolished the walls. The demurrer to the 6th cause of action for fraud - concealment is SUSTAINED WITHOUT LEAVE TO AMEND.
Cross-Defendants to give notice of ruling.