Judge: Jon R. Takasugi, Case: 21STCV47140, Date: 2022-10-28 Tentative Ruling

Case Number: 21STCV47140    Hearing Date: October 28, 2022    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

            Defendants’ demurrer is OVERRULED IN PART, SUSTAINED IN PART:

-         Defendants’ demurrer is overruled as to the first, second, and fourth causes of action

-         Defendants’ demurrer is sustained, with 15 days leave to amend, as to the third cause of action

-         Defendants’ demurrer is sustained, without leave to amend, as to the fifth cause of action

Defendants’ motion to strike is DENIED as to Plaintiff Zohar and MOOT as to Plaintiff Leeron.

On 12/28/2021, Plaintiffs Zohar and Leeron Regev (collectively, Plaintiffs) filed suit against Matthew Wilkie, Cal Developers, Inc., Angel Wayhang Kou, and Umro Realty Corp. On 7/26/2022, Plaintiffs filed a first amended complaint (FAC) alleging: (1) intentional misrepresentation; (2) negligent misrepresentation; (3) breach of fiduciary duty; (4) breach of contract; (5) declaratory relief.  

            On 10/10/2022, Plaintiffs dismissed Angel Wayhang Kou and Umro Realty Group from the action.

            Now, Defendants Matthew Wilkie and Cal Developers (collectively, Defendants) demurrer to Plaintiffs’ FAC in its entirety. Defendants also move to strike portions of Plaintiffs’ FAC

Legal Standards

A demurrer for sufficiency tests whether the complaint states a cause of action.¿ (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) ¿When considering demurrers, courts read the allegations liberally and in context.¿ (Taylor v. City of Los Angeles Dept. of Water and Power¿(2006) 144 Cal.App.4th 1216, 1228.)¿ In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿ (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿ “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.¿ Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”¿ (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, supra, 147 Cal.App.4th at p. 747.) 

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer, such as words, phrases, and prayers for damages. (See Code Civ Proc., §§ 435-437.)  A motion to strike can be made to strike irrelevant, false or improper matter inserted in any pleading or to strike any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of the court.  (§ 436.) 

Factual Background

            This action concerns a promissory note of $67,500. Plaintiffs allege that this sum was transferred as part of partnership deal with Defendants, and that Defendants defrauded them and never intended for them to be partners.

Demurrer

            Defendants argue Plaintiffs have not resolved the deficiencies previously identified in their demurrer to the original Complaint. More specifically, Defendants contend that that there is still uncertainty as to whether both Plaintiffs exchanged the underlying promissory note, and that Plaintiffs have failed to allege representations and transactions with the requisite specificity.

I.                   Intentional Misrepresentation

Fraud must be plead with specificity rather than with “general and conclusory allegations.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

            Previously, the Court found this cause of action insufficiently pled writing:

Here, Plaintiffs allege “In or about 2021, Defendants falsely and fraudulently represented to Plaintiffs, through oral statements and in writing, Plaintiffs and Wilkie/Cal Developers were partners in the purchase of the Subject Property.” (Complaint ¶ 25.) However, at other times, Plaintiffs allege that “[a]t all times relevant proceeding forward, the Defendants represented to the world that Leeron was a partner in the purchase of the Subject Property.” (Complaint ¶ 16.) As such, there is uncertainty as to whether Plaintiffs allege that Defendants represented that both Plaintiffs were in the partnership, or just Leeron. Moreover, Plaintiffs create uncertainty by generally referring to Defendants throughout the Complaint. Given that there are four Defendants in this action, Plaintiffs must allege the specific “how, when, where, to whom, and by what means” that were made by each Defendant, so that the Defendants can be on notice of what they are alleged to have said. 

Moreover, the alleged harm to support this cause of action is the misappropriation of the $67,500. However, by their own allegations, only Zohar lent this money, not Leeron. As such, Plaintiffs have not alleged any facts which could show that Leeron was damaged by alleged reliance on Defendants’ contention that they were partners.

            (7/11/2022 Ruling).

            Now, Plaintiffs’ FAC alleges that “In or about 2021, Wilkie falsely and fraudulently represented to Zohar, through oral statements and in writing, that Leeron and Wilkie were partners in the purchase of the Subject Property.” (FAC ¶ 22.) Plaintiffs also alleges that in reliance on this allegedly false representation, Zohar transferred $67,500 to Wilkie.

            These allegations are sufficient at the pleading stage for Zohar to state a claim for fraud. Contrary to Defendants contention, allegations that oral and written representations were made in 2021 that Leeron and Wilkie were partners is sufficiently specific in that it specifies how, when, where, to whom, and by what means Defendant Wilkies allegedly made the relevant representations. Moreover, the alleged $67,500 transfer is sufficient at this stage to show justifiable reliance. Finally, unlike in the previous Complaint, the FAC asserts this cause of action on behalf of Zohar alone.

            Based on the foregoing, Defendants’ demurrer to the first cause of action is overruled. 

II.               Negligent Misrepresentation

Plaintiffs’ second cause of action is based on the same allegations set forth above, and is sufficient for the same reasons.

Based on the foregoing, Defendants’ demurrer is overruled as to the second cause of action. 

III.            Breach of Fiduciary Duty

The Court previously sustained Defendants’ demurrer to this cause of action writing:

Here, Plaintiffs allege that a fiduciary duty existed between them and Defendants by virtue of the partnership, and that this duty was breached by the misappropriation of the $67,500 deposit. (Complaint ¶ 39.) However, as stated, there is uncertainty as to whether or not Plaintiffs allege a partnership between both Plaintiffs or just Leeron. (Compare Complaint ¶ 16 with Complaint ¶ 25.)

Moreover, because only Zohar lent the promissory note, it’s not clear how this loss of funds could constitute breach a duty owed to Leeron.

            Now, in their FAC, Plaintiffs continue to allege that Defendant Wilkie breached a fiduciary duty to Plaintiff Leeron based on the $67,500 transfer. The only additional facts alleged to address the issue of how Leeron could be harmed by a loss of funds that were provided by Zohar alone is the vague allegation that “[t]hese acts were averse to Leeron’s interest.” (FAC ¶ 37.) However, Plaintiffs have not alleged any facts which could show that a fiduciary relationship existed between Defendant Wilkie and Leeron, nor has Plaintiff even explained how Leeron had any legally cognizable interest in funds which, by Plaintiffs’ own allegations, were lent by Zohar alone.  The mere fact that an act is adverse to another’s interest does not, on its own, mean that that act constitutes a breach of a fiduciary duty.

            Plaintiff will be afforded one final opportunity to allege facts which could show a breach of fiduciary duty.

Based on the foregoing, Defendants’ demurrer is sustained as to the third cause of action, with 15 days leave to amend.

IV.            Breach of Contract

Here, Plaintiff Zohar alone alleges that he executed a written agreement with Cal Developers on 3/31/2021 which provided that the Note was repayable within 60 days of the Lender (Zohar) providing the Borrower  (Cal Developers) with written notice of demand. (FAC ¶ 41.) Plaintiff Zohar alleges that despite having demanded repayment, Defendants have failed to do so. (FAC ¶ 43.) These allegations are sufficient at the pleading stage to state a claim for breach of contract against Cal Developers. Because Plaintiff Zohar alleges that Cal Developers and Wilkie are alter-egos, this is sufficient at this stage to also state a claim against Defendant Wilkie.   

In demurrer, Defendants concede that these allegations are sufficient for Defendant Zohar to state a claim but that the cause of action is  “rendered uncertain by the fact that Plaintiff Leeron is claiming to be entitled to recovery of the same sum due to an alleged breach of fiduciary duty.” (Motion, 10: 3-5.) The Court disagrees. The fact that Leeron inadequately alleges an entitlement to the same sum renders her claims deficient, not Defendant Zohars.

Based on the foregoing, Defendants’ demurrer is overruled as to the fourth cause of action.

V.                Declaratory Relief

Defendants argue this cause of action is duplicative. The Court agrees. Through this cause of action, Plaintiff Zohar seeks “judicial determination as to the Defendants' duties and Plaintiff’s rights and entitlements, including that Defendants owe at least $67,500 to Plaintiff, Plaintiff is entitled to damages and the fulfillment of contractual duties by Defendant, and/or that Defendant is obligated to reimburse Plaintiffs for all amounts incurred by Plaintiff.” (FAC ¶) Such a determination will already necessarily be made by the breach of contract cause of action, and as such, this cause of action is duplicative.

Defendants demurrer to the fifth cause of action is sustained, without leave to amend.

Motion to Strike

Defendants argue that Plaintiffs have not alleged sufficient facts to support a prayer for punitive damages. As set forth above, the Court overruled their demurrer to Plaintiff Zohar’s fraud causes of action. As such, Plaintiff Zohar has sufficiently alleged facts which could show Defendants acted with malice, oppression or fraud. However, because the Court sustained Defendants’ demurrer as to Plaintiff Leeron, the motion to strike is moot as to her claims.

It is so ordered.

Dated:  October    , 2022

   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. 

            Due to Covid-19, the court is strongly discouraging in-person appearances.  Parties, counsel, and court reporters present are subject to temperature checks and health inquiries, and will be denied entry if admission could create a public health risk.  The court encourages the parties wishing to argue to appear via L.A. Court Connect.  For more information, please contact the court clerk at (213) 633-0517.  Your understanding during these difficult times is appreciated.