Judge: Joseph Lipner, Case: 22STCV31986, Date: 2023-09-19 Tentative Ruling

Case Number: 22STCV31986    Hearing Date: October 10, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendants William Garrido and Rocio Reyes (Defendants) filed a Demurrer to the  First Amended Complaint.

Defendants’ Demurrer is OVERRULED as to the first and third causes of action and SUSTAINED as to the second causes of action with LEAVE TO AMEND.  Plaintiffs shall have 20 days to amend the complaint.

Background

          On September 29, 2022, Plaintiff Aura Garrido Chavez, Joel Chavez, and German A. Garrido (Plaintiffs) filed a Complaint against Defendants and DOES 1 through 50, inclusive, alleging causes of action for (1) real property partition and sale; (2) breach of contract; and (3) declaratory relief.

December 28, 2022, Plaintiffs filed a First Amended Complaint (FAC) alleging the same causes of action.

          On January 23, 2023, Defendants filed a Demurrer without Strike to Plaintiff’s FAC. On May 25, 2023, Plaintiffs filed an Opposition. On June 1, 2023, Defendants filed a Reply.

Legal Standard

          As a general matter, 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 pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

Meet and Confer

The demurrer is accompanied by the declaration of Robert A. Kashfian, which satisfies the meet and confer requirements. (Code Civ. Proc., § 430.41(a).)

Discussion

First Cause of Action for Real Property Partition and Sale

          In a partition action, the complaint shall set forth the following:

“(a) A description of the property that is the subject of the action…in the case of real property, the description shall include both its legal description and its street address or common designation, if any;

(b) All interests the plaintiff has or claims in the property;

(c) All interests of record or actually known to the plaintiff that persons other than the plaintiff have or claim in the property and that the plaintiff reasonably believes will be materially affected by the action, whether the names of such persons are known or unknown to the plaintiff;

(d) The estate as to which partition is sought and a prayer for partition of the interests therein; and

(e) Where the plaintiff seeks sale of the property, an allegation of the facts justifying such relief in ordinary and concise language.”

(Code Civ. Proc., § 872.230)

          Here, Plaintiffs plead that this action concerns a dispute in the disposition of a residential real property located at street address: 3273-3275 Cerritos Avenue in Signal Hill, CA and with the legal description “LOT 8 BLOCK 7 OF TRACT NO. 4143, IN THE CITY OF SIGNAL HILL, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA AS PER MAP RECORDED IN BOOK 117 PAGES 69 AND 70 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF LOS ANGELES COUNTY. APN: 7148-007-008.” Furthermore, Plaintiffs plead that Plaintiffs Aura Garrido Chavez and Joel Chavez have an undivided two-fifths interest in the property and Plaintiff German A. Garrido has an undivided one-fifth interest in the property in joint tenancy. Moreover, Plaintiffs plead that Defendants’ have an undivided one-fifth interest in the property, which will be materially affected by this present action. Specifically, Plaintiffs plead that they reside and occupy the back unit at 3275 of the property and Defendants reside and occupy the front unit at 3273 of the property. Plaintiffs allege that a partition by sale “is more equitable in these circumstances than partition by physical division because the Property consists of a single duplex building, which is not susceptible to physical division.  Further, the duplex is on a single lot.”  (FAC,  paragraph 39.)

Defendants assert that the real property partition and sale cause of action fails because the FAC does not allege facts to justify selling the property.  The Court does not agree. 

          Defendants cite no case that says that such a pleading is insufficient for a partition action requesting a sale.  The parties’ back-and-forth argument about an 1881 case that found a particular set of allegations sufficient to support a judgment (Lorenz v. Jacobs (1881) 59 Cal. 262, 263-264) is of little help to determine whether this complaint properly pleads “an allegation of the facts justifying such relief [i.e., a sale] in ordinary and concise language.”  (Code Civ. Proc., § 872.230.)  The complaint does so with sufficient clarity.  Whether a sale is appropriate on the merits will be determined during the lawsuit and not at the pleading stage. 

          Accordingly, the demurrer to the first cause of action is OVERRULED.

Second Cause of Action for Breach of Contract

“Elements of cause of action for breach of contract are the existence of the contract, performance by the plaintiff or excuse for nonperformance, breach by the defendant and damages.” (First Commercial Mortgage Co. v. Reece (App. 2 Dist. 2001) 89 Cal. App.4th 731, 745.)

Here, Plaintiffs plead that in 1996, the parties purchased the property in reliance on an oral agreement to equally contribute expenses for ongoing inhabitation and maintenance of the property. Furthermore, Plaintiffs plead that contributed their respective shares towards the monthly payments, which constitutes acceptance of the 1996 oral agreement through conduct. Moreover, Plaintiffs plead that on or about September 23, 2005, Defendants initiated a home equity line of credit (HELOC). Plaintiffs plead that they have verbally and by way of their conduct agreed to amend or modify their agreement with Defendants or alternatively entered into a new agreement that Defendants may obtain the HELOC in reliance that Defendants would use the proceeds, be responsible for that liability and it would not affect Plaintiff’s equity in the property. Plaintiffs plead further that Defendants continued to make their monthly contributions towards the original mortgage as well as the entirety of the HELOC, which constitutes acceptance of the 2005 oral agreement. Additionally, Plaintiffs plead that on or around June 9, 2009, the parties refinanced the original mortgage and HELOC into a single mortgage with Bank of America where Defendants’ verbally and by their conduct agreed to Plaintiff Aura Garrido Chavez and Joel Chavez continuing to pay their original mortgage obligation until February 2022 and Defendants subsequently pay the entirety of the refinance mortgage obligation in full excluding Plaintiff German A. Garrido’s portion. Plaintiffs plead that they performed substantially all of their obligations by continuing to make their monthly payments to the Bank of America mortgage until February 2022.

Plaintiffs plead that Defendants breached their agreement with the Plaintiffs by failing to assume the entirety of the Bank of America mortgage in or around February 2022. Plaintiffs also plead that they detrimentally relied on Defendants’ representations that they would be wholly responsible for the HELOC in 2005 and the remaining balance of the refinance from 2009. Plaintiffs plead that Plaintiff Aura Garrido Chavez and Joel Chavez have unwillingly continued to pay on the Bank of America mortgage to mitigate their own damages. Lastly, Plaintiffs plead that Defendants’ breach of failing to assume the entirety of the Bank of America mortgage caused them harm and damages.

Defendants argue that the breach of contract cause of action fails because the FAC alleges three separate oral agreements but is unclear as to which of these agreements has been purportedly breached. The Court agrees. 

Plaintiffs’ mere citation to three alleged oral agreements—in 1996, 2005, and 2009–is insufficient.  It does not tell Defendants which contract they are alleged to have breached.  As noted by Defendants, “novation must be pleaded either expressly or ‘by unequivocal implication,’ and the burden of proof is ‘upon the party asserting its existence.’” (Alexander v. Angel (1951) 37 Cal.2d 856, 860.) Plaintiffs do not plead that the 2005 and 2009 agreements were expressly or by unequivocal implication novations of the 1996 agreements but possibly novations if not considered modifications of said agreement. As a result, it is unclear from the allegations which of the three agreements were breached by Defendants.  An amended complaint must make clear to the parties and the Court which is the operative contract that Defendants allegedly breached.

Furthermore, Defendants argue that, whatever the relevant contract may be, any such contract is barred by the statute of frauds. “A contract coming within the statute of frauds is invalid unless it is memorialized by a writing subscribed by the party to be charged or the party’s agent.” (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552.) Defendants do not disagree that the statute of frauds would generally apply but assert that estoppel prevents Defendants from invoking the statute of frauds. “The party so pleading must allege that refusal to enforce the oral contract will result in (1) ‘unconscionable injury’ because the party pleading estoppel ‘seriously…changed its position in reliance on the oral contract,’ or (2) the unjust enrichment’ of the party pleading the statute of frauds as a defense because that party ‘received the benefits of the other’s performance.’” (Smyth v. Berman (2019) 31 Cal.App.5th 183, 198.)

Defendants do appear to have a basis to assert estoppel.  However, this issue would be better considered after Defendants make clear which contract they are asserting as a basis of their breach. 

Accordingly, the demurrer to the second cause of action is SUSTAINED with leave to amend.

Third Cause of Action for Declaratory Relief

Pursuant to the Code of Civil Procedure section 1060, “any person interested under a written instrument, excluding a will or a trust, or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, or with respect to the location of the natural channel of a watercourse, may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract. He or she may ask for a declaration of rights or duties, either alone or with other relief; and the court may make a binding declaration of these rights or duties, whether or not further relief is or could be claimed at the time. The declaration may be either affirmative or negative in form and effect, and the declaration shall have the force of a final judgment. The declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.” (Code Civ. Proc., § 1060.)

“To qualify for declaratory relief under section 1060, an action must present two essential elements: (1) a proper subject of declaratory relief and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.)

Defendants’ asserts that the declaratory relief cause of action fails because (1) the FAC does not set forth any legal theory upon which such a declaration of relief could be based and (2) appears to be merely a derivative of the breach of contract cause of action.

Here, Plaintiffs plead that in 1996, the parties purchased the property in reliance on an oral agreement to equally contribute expenses for ongoing inhabitation and maintenance of the property. Furthermore, Plaintiffs plead that on or about September 23, 2005, Defendants initiated a HELOC. Moreover, Plaintiffs plead that they signed onto the HELOC in reliance that Defendants would use the proceeds, be responsible for that liability, and it would not affect Plaintiffs’ equity in the property. Additionally, Plaintiffs plead that on or around June 9, 2009, the parties refinanced the original mortgage and HELOC into a single mortgage with Bank of America where Defendants’ verbally and by their conduct agreed to Plaintiff Aura Garrido Chavez and Joel Chavez continuing to pay their original mortgage obligation until February 2022 and Defendants subsequently pay the entirety of the refinance mortgage obligation in full excluding Plaintiff German A. Garrido’s portion. Plaintiffs plead that Defendants subsequently refused to assume Plaintiff Aura Garrido Chavez and Joel Chavez’s portion of the Bank of America mortgage. Plaintiffs plead that they are owed a credit from Defendants. Plaintiffs plead that a dispute exists as to whether Plaintiffs owe any more money based on their share of liability under the Bank of America mortgage but they continue to make monthly payments on the Bank of America mortgage.

 Defendants argue that a claim for declaratory relief fails when it is derivative of other causes of action, citing Ochs v. PacifiCare of California (2004) 115 Cal.App.4th 782, 794.  Ochs is inapposite.  There, the court held that the first and fifth causes of action of Plaintiff’s complaint were completely derivative of claims concerning statutory violations of Knox-Keene Act (compensation for emergency care services) and the alleged facts did not support the claim that the Defendant had violated those statutory provisions. Unlike in Ochs, Plaintiffs allege that Defendants orally agreed to assume the Bank of America mortgage payments post February 2022, breached that agreement by refusing to assume the payments, and Plaintiffs have suffered damages by continuing to pay on the Bank of America mortgage for which they are seeking declaratory relief. Some of the allegations are the same as the breach of contract cause of action but Plaintiffs do not allege any modifications, amendments, or novation. Plaintiffs have pled sufficient facts to support a declaratory relief cause of action because they are the proper subject of a declaratory relief having alleged a contract exists between the parties, what the specific actual controversy is that exists between the parties, and the specific rights and duties owed to them. The question of validity of a contract under a cause of action for declaratory relief may be determined by the court.

Accordingly, the demurrer to the third cause of action is OVERRULED.

Leave to Amend

“When a demurrer is sustained, if the plaintiff has not had an opportunity to amend the complaint in response to the demurrer, leave to amend is liberally allowed as a matter of fairness, unless the complaint shows on its face that it is incapable of amendment.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 971.)

Defendants argue that leave to amend should be denied because there is no possibility that Plaintiffs will be able to sufficiently allege a cause of action. Defendants reiterate that Plaintiffs three claims appear to be solely based on the oral agreements presented in the FAC that are invalid and unenforceable because they are barred by the statute of frauds. However, the demurrer as to the first and third cause of action is OVERRULED. Further, this is the first demurrer in this instant action, so the Plaintiffs should be given an opportunity to amend the FAC. Also, it does not appear on the face of the FAC that the other cause of action is incapable of amendment.

The Court therefore OVERRULES in part Defendants William Garrido and Rocio Reyes’ Demurrer without Strike to First Amended Complaint as to the first and third cause of action and SUSTAINS in part as to the second causes of action with LEAVE TO AMEND.