Judge Kerry Bensinger, Case Number: 23STCV21038, Date: 2025-01-23 Tentative Ruling

This is a breach of oral contract and partition action for real property commonly known as 10350 Samoa Avenue, Tujunga, CA 91042 (the Property). On November 9, 2023, Plaintiff Celeste M. Mulrooney (Mulrooney) filed the operative First Amended Complaint (FAC) against Defendant Susan Florence Scalzo (Scalzo) for (1) Partition, (2) Breach of Contract, (3) Fraud, (4) Common Counts, and (5) Declaratory Relief. The FAC is verified.

As alleged in the FAC, Mulrooney and Scalzo are sisters. In July 2011, the parties entered into an oral agreement to jointly purchase the Property. Scalzo qualified for a lower interest rate on the mortgage if Mulrooney was not included on title or mortgage. As such, the parties mutually agreed that only Scalzo’s name would be on the deed of title to the Property and on the mortgage. The parties also mutually agreed that they were co-owners of the Property and agreed to pay jointly for the maintenance of the property. Mulrooney paid half of the mortgage payment and property taxes, made improvements to the Property, among other things, for over eleven years.

In December 2012, the parties’ sister, Ann Maria Spencer, came to live with the parties. On October 27, 2022, Scalzo no longer wanted Ann to live with the parties and asked Ann to leave. Mulrooney protested Scalzo’s treatment of Ann. Soon after, on November 15, 2022, Scalzo informed Mulrooney she was terminating the parties’ ownership agreement. Mulrooney would have to vacate the premises. Mulrooney and Ann vacated the Property on March 25, 2023.

On March 22, 2024, Scalzo filed a Cross-Complaint against Mulrooney. On April 23, 2024, Scalzo filed the First Amended Cross-Complaint (FACC) alleging the sole cause of action for intentional misrepresentation. Scalzo seeks punitive damages.

On May 31, 2024, Mulrooney filed a consolidated demurrer and motion to strike portions of the FACC. Mulrooney argued the FACC did not allege facts sufficient to state a claim for fraud, did not adequately allege damages, was time barred, and was uncertain.

On October 2, 2024, the court sustained the demurrer on the ground that the fraud had not been adequately pleaded, including the element of damages. The court rejected Mulrooney’s other challenges to the FACC. Leave to amend was granted. The motion to strike was rendered moot.

On November 15, 2024, Mulrooney filed this consolidated Demurrer and Motion to Strike portions of the SACC.

Mulrooney’s unopposed request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)

A demurrer for sufficiency tests whether the complaint states a cause of action.¿ (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)¿ When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true.¿ (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.)¿ “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.”¿ (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)¿

As a threshold issue, the parties dispute the scope of the court’s October 2, 2024, order. Scalzo argues the sole deficiency identified by the court was allegations of damages. Mulrooney argues the court’s ruling was not limited to damages.

Mulrooney is correct. The court’s October 2, 2024, order states: “Here, Scalzo does not allege with sufficient specificity the facts and damages she suffered from

Mulrooney’s alleged misrepresentation. Indeed, Scalzo alleges that she was harmed without

providing any additional facts showing how she was harmed by the misrepresentation. (See

FACC, ¶ 12.)” (Minute Order, 10/2/24.) Although the court’s order underscored the issue of damages, the factual basis of the fraud claim was also deficient.

The court reviews again the sufficiency of the fraud claim. And, upon review, the court finds Scalzo’s fraud claim is still deficient. As Scalzo concedes, she has amended only the damages allegations which appears at paragraph 12 of the SACC. The SACC is otherwise unchanged from the FACC. Paragraph 12 now states:

“Cross-Complainant was harmed by Cross-Defendant’s misrepresentation. As a direct result of Cross-Defendant’s misrepresentation, Cross-Complainant has been required to withdraw funds from her retirement savings to fund the defense of the wrongful claims Cross-Defendant asserted against her, thus jeopardizing Cross-Complainant’s retirement and causing her to suffer loss of interest on the withdrawn funds, loss of future income, and to incur taxes on the withdrawn funds. Cross-Complainant has also suffered inconvenience and incurred otherwise unnecessary expenses, loss of time, emotional distress, the embarrassment of being sued by her sister, impairment of her reputation, and a wrongful cloud on title to her residence. Cross-Complainant’s reliance on the representation was a substantial factor in causing these harms.”

Scalzo’s alleged pecuniary harm is essentially attorney fees. Attorney fees cannot be claimed as damages. (See, e.g., Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 507 [holding that a plaintiff is not entitled to recover attorney fees as an element of damages in actions for fraud in which the defendant is a fiduciary].)

Mulrooney overlooks the other allegations which seek damages for emotional distress, among other things. Emotional distress is recoverable in a fraud action. (See, e.g. Branch v Homefed Bank (1992) 6 Cal.App.4th 793, 799 [noting the general damages for mental pain and suffering are recoverable in a tort action for deceit].) Mulrooney does not address this allegation. Scalzo’s SACC does not fail on this ground.

Instead, the deficiencies lie elsewhere. “Fraud must be pleaded 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; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.) ¿“Causes of action for intentional and negligent misrepresentation sound in fraud and, therefore, each element must be pleaded with specificity. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)¿¿¿

To establish a claim for intentional misrepresentation, the plaintiff must allege seven essential elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the¿representation;¿(6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff.¿ (Manderville¿v. PCG & S Group, Inc.¿(2007) 146 Cal.App.4th 1486, 1498; CACI No. 1900.)¿¿¿¿

Here, Scalzo does not allege with sufficient specificity how, when, or where Mulrooney requested to make mortgage payments directly to the mortgage lender as a purported tax deduction for a home office. The fraud claim is not pleaded with sufficient specificity. Scalzo concedes she has not added any new allegations supporting this aspect of her claim. The claim is subject to demurrer. [1]

Based on the foregoing, the demurrer to the SACC is SUSTAINED. Leave to amend is GRANTED.

Defendant/Cross-Complainant Susan Scalzo is ordered to file and serve the Third Amended Cross-Complaint within 10 days of this order.

Kerry Bensinger

Judge of the Superior Court

[1] Mulrooney also argues that she was never a fiduciary of Scalzo. This argument directly responds to footnote 1 in the court’s October 2, 2024. Mulrooney had an opportunity to raise the argument in connection to her previous demurrer and now improperly advances it here. The court declines to consider the argument.