Judge: Jon R. Takasugi, Case: 19STCV39580, Date: 2023-07-11 Tentative Ruling

Case Number: 19STCV39580    Hearing Date: December 11, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiffs’ motion for nonsuit is GRANTED as to the third, fifth, sixth, and seventh causes of action. Plaintiffs’ motion for nonsuit is DENIED as to the remaining causes of action.

On 11/4/2019, Plaintiffs Terry Herrera and Teodora Herrera (collectively, Plaintiffs) filed suit against Full Circle Real Estate Solutions, Inc., the Mum Group, Marvin U. Mangabat, and Erik Lederman. Plaintiff filed a first amended complaint (FAC), alleging: (1) intentional misrepresentation; (2) concealment; (3) negligent misrepresentation; (4) conversion; (5) elder abuse; (6) rescission of contract; (7) violation of Business and Professions Code section 7163; (8) breach of fiduciary duty; (9) cancellation of instruments; (11) declaratory relief; (12) unjust enrichment; (13) equitable lien; (14) preliminary and permanent injunction; and (15) violation of Business and Professions Code section 17200.

On 1/16/2020, Defendant Full Circle Real Estate Solutions, Inc. filed a Cross-Complaint (XC) against Terry and Teodora Herrera, alleging: (1) breach of contract; (2) promissory fraud; (3) unjust enrichment; (4) breach of implied covenant of good faith and fair dealing; (5) intentional interference with prospective economic relations; (6) negligent interference with prospective economic advantage; and (7) trespass.

            Now, Plaintiffs/Cross-Defendants move for nonsuit.

Legal Standard

A motion for nonsuit operates as a “demurrer” to a claimant’s evidence: it concedes the truth of the facts proved and contends that those facts are insufficient as a matter of law to sustain the plaintiff’s case. (Alpert v. Villa Romano Homeowners Ass’n. (2000) 81 Cal.App.4th 1320, 1328.) “The granting of a motion for nonsuit is warranted . . . when, and only when, disregarding conflicting evidence, and giving to plaintiff’s evidence all the value to which it is legally entitled, indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff.” (Raber v. Tumi (1951) 36 Cal.2d 654, 656 (citation omitted; internal quotation omitted).) But “the doctrine that a scintilla of evidence creates a sufficient evidentiary basis to reverse a judgment of nonsuit has been rejected.” (Alpert, 81 Cal.App.4th at p. 1327 (citation omitted)

Discussion

            Plaintiffs argue nonsuit should be granted as to Defendant’s Cross-Complaint.

            After review, the Court agrees and disagrees in part. 

            As for the first cause of action, Plaintiff argues that the first cause of action for breach of contract should be dismissed under the Home Solicitation Sales Act (HSSA) and the Home Improvement Act because the evidence indisputably established that: “(1) Elia made the written offer—he wrote up and presented the joint venture agreement at the Herreras’ home on their driveway on September 25, 2019 and spent two hours trying to get them to sign it there; (2) the next day, the Herreras went to FCRS’s offices to sign and have notarized documents and that the venture draft was essentially the same—no material differences—as the document that was signed on September 26; (3) the Herreras repeatedly notified FCRS of their cancellation of any agreement by phone, text, and email during the period September 27 through October 4, 2017 and (4) FCRA refused to accept cancellation.” (Motion, 4: 26- 5:6.)

            However, as noted by Defendant in opposition, it is not clear as a matter of law that the transaction here is covered by the HSSA. Defendant presented evidence that the Agreement was made in Full Circles Office, and thus was not made at “other than appropriate trade premises” and that the Plaintiff was introduced to Metrosun, not Defendant, because of the ad. Moreover, the ad was sent to a property owned by Plaintiffs, not their primary residence.  

            As for the Home Improvement Act (HIA), this act covers an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner, where the aggregate contract price exceeds $500.00. Here, Full Circle is not a contractor, and the work to be performed was to take place after the transfer of ownership. Moreover, the Joint Venture Agreement did not specify any contract price.

            As for the second cause of action, Plaintiffs argue that this claim should not go to the jury because Full Circle has not shown fraudulent intent or detrimental reliance.

As for fraudulent intent, Plaintiffs argues that: 

Elia was introduced to Mr. Herrera on September 24, 2019. Elia spoke with Mrs. Herrera and Mr. Herrera about the terms of a proposed joint venture (the document he presented to them) on September 25, 2019 in the evening at their home. Elia testified that he knew of no fraudulent statement made to him by either of the Herreras before “joint venture” document was signed.

For whatever reason, the Herreras decided within 24(-48) hours of signing the agreement that they wanted to cancel. They did not intend to cheat Elia. They had regrets about what they signed and decided they did not want to do business with Elia. There is no evidence that this was calculated or that the Herreras secretly intended when they signed the agreement to not perform the next morning. Mere non-performance of an agreement does not turn a case of breach of contract claim into one for fraud.

            (Motion, 6:6-15.)

            However, triable issues of material fact are implicit in this argument. While Plaintiffs dismiss as irrelevant their reason for canceling, the reason they decided to cancel is indicative of whether or not they actually intended to perform. Defendant presented evidence that Plaintiffs testified that they wanted to cancel because they were suspicious when they were not provided copies of the paperwork they signed, but this was contrary to evidence which showed they did leave with such copies. As such, there are inconsistencies in Plaintiffs’ explanation for cancelling the Agreement. Plaintiffs’ inconsistent explanations for why they decided to pull out of the Agreement, alongside the murkiness of the timeline following Plaintiffs’ signing, supports at the very least a legitimate inference that they did not intend to perform under the Agreement. Put simply, there are triable issues as to what Plaintiffs’ actual intentions were for cancellation. This, in turn, informs whether or not Plaintiffs merely did not perform under the contract, or whether there was a prior intention not to perform.  

            The Court also disagrees with Plaintiffs that Defendant has not shown detrimental reliance. Plaintiff contends that the only thing Full Circle did in reliance on the signing of the Agreement was simply record the grant deed which could have been undone without harm. However, Defendant has submitted evidence of numerous actions he took in reliance on the Agreement, including starting to procure financing to stave off the looming foreclosure and providing a personal guarantee for the loan.

            Defendant’s evidence at least supports an inference that Plaintiffs never intended to perform under the Agreement, as well as that it relied on Plaintiff’s promise to perform to its detriment. 

            As for the third, fifth, sixth, and seventh causes of action, both sides agree that these claims have been abandoned. Accordingly, nonsuit is appropriate as to these claims.

            Finally, as for the fourth cause of action, Plaintiffs argue that nonsuit is appropriate because this is not a bad faith insurance case, and Full Circle has failed to “establish tortious conduct independent of a breach of the contract itself, that is, violation of some independent duty arising from tort law.” (Food Safety Net Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130.) Plaintiffs contend that “It is clear that the Herreras cancelled or attempted to cancel within 24(-48) hours regretting their stupidity. This was no bad faith breach. It was an honest breach.” (4: 9-10) However, whether or not the breach was in bad faith or an honest one is a triable issue of fact.

            Based on the foregoing, Plaintiffs’ motion for nonsuit is granted as to the third, fifth, sixth, and seventh causes of action. Plaintiffs’ motion for nonsuit is denied as to the remaining causes of action.

It is so ordered.

Dated:  December    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.