Judge Lee W. Tsao, Case 22NWCV00398 2023-02-23 Tentative Ruling

Judge: Lee W. Tsao, Case: 22NWCV00398, Date: 2023-02-23 Tentative Ruling

Case Number: 22NWCV00398 Hearing Date: February 23, 2023 Dept: C

SANCHEZ v. SANCHEZ

CASE NO.: 22NWCV00398

HEARING: 02/23/23

TENTATIVE ORDER

Defendant RICHARD F. SANCHEZ’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED with 20 days leave to amend in part and SUSTAINED without leave to amend in part.

Moving Party to give notice.

This breach of contract action was filed by Plaintiff MICHAEL F. SANCHEZ (“Plaintiff”) on May 23, 2022. On August 8, 2022, the operative First Amended Complaint (“FAC”) was filed. The FAC alleges, in pertinent part that, “[u]p through the middle of 1995, Edward and Delfina Garcia and Michael Sanchez were the owners of the residential real property commonly known as 5021 Harbor Street, Commerce, California (the ‘5021 Property’). In the middle of 1995, Defendant Richard Sanchez went to the Garcias and Plaintiff to borrow a loan against the 5021 Property to take cash out to assist Richard Sanchez in purchasing his own residence….. The Garcias agreed to, and did, borrow a loan for $75,000 from American Savings Bank in about August 1995, which loan by a deed of trust against the 5021 Property. The new loan paid off the Garcias’ existing loan and generated approximately $40,000 in ‘cash out’ proceeds, which the Garcias then forwarded to Richard Sanchez. Per the terms of the verbal agreement between the Garcias, Plaintiff, and Defendant, Defendant was to pay all loan payments and property taxes for the 5021 Property (the monthly loan payments to the lender included property taxes from the loan’s inception in 1995 until Plaintiff paid it off in 2019).” (FAC ¶6.) “Because of Richard Sanchez’s agreement to be solely responsible for the new loan and property taxes, in about September 1995 the Garcias and Plaintiff then transferred title to the 5021 Property to Plaintiff and Defendant, each with a 50% undivided interest [sic] therein. However, all the parties to the 1995 agreement—the Garcias, Plaintiff… and Defendant… confirmed to one another that the agreement for Defendant to make all loan payments on the new loan remained in place and binding upon Defendant.” (FAC ¶7.) “Defendant Sanchez made the loan payments on the 1995 loan until about 2004. Defendant said he could not afford to make the entire loan payments any longer, despite his agreement with the Garcias and Plaintiff to do so. Consequently, in order to save the 5021 Property from a foreclosure because of a loan default, Plaintiff began in about 2004 to pay half of each month’s loan/property tax combined payment to the lender, with Defendant paying the other half.” (FAC ¶8.) “In 2011, Defendant announced to Plaintiff that he… could not afford to pay any more toward the loan and property taxes for the 5021 Property. Defendant then let Plaintiff take over receiving rents from the Property and told Plaintiff that he… would need to be solely responsible for all property expenses if Plaintiff did not want to lose the 5021 Property. Defendant also asked to be taken off the title to the 5021 Property because he was turning over all financial responsibilities… to Plaintiff, and agreed to transfer his interest in the Property to Plaintiff at such time when Plaintiff requested it.” (FAC ¶9.) “Based on Defendant’s refusal to honor the original agreement and in reliance on Defendant’s promise to transfer his interest in the 5021 Property to Plaintiff, Plaintiff paid all the remaining balance of the 1995 loan, which had a principal balance of approximately $48,000 in 2011. Plaintiff paid off the loan in 2019. Plaintiff also paid for all property taxes, insurance and other expenses for the 5021 Property after Defendant’s repudiation of the original agreement and Defendant’s request to be removed from the title to the Property. [¶] In the last two years, and as recently as February 2022, Plaintiff requested that Defendant execute a quitclaim deed to release his interest in the 5021 Property to Plaintiff, based on their agreement in 2011. Defendant has refused to sign such a quitclaim deed.” (FAC ¶¶10-11.)

Plaintiff asserts the following causes of action: (1) Breach of Written Contract (5021 Property); (2) Fraud; and (3) Breach of Written Contract (305 N. Fourth Property); and (4) Conversion.

Defendant specially and generally demurs to each cause of action.

Third and Fourth Causes of Action – Breach of Written Contract (305 N. Fourth Property) and Conversion

In Opposition, Plaintiff states that he will “delete” these causes of action. (See Opp. 5:1-2 and Opp. 8:1-4.)

Consequently, the demurrer to the third and fourth causes of action is SUSTAINED without leave to amend.

Uncertainty

Defendant argues that Plaintiff’s claims are fatally uncertain. This argument lacks merit because “[a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading but is directed at the uncertainty existing in the allegations actually made.” (Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145-146.) Moreover, demurrers for uncertainty are disfavored and will only be sustained where the pleading is so bad that the defendant cannot reasonably respond, i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of Calif. Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Ibid.) Here, it is clear from Defendant’s other arguments that they understand what Plaintiff at least attempts to allege, and there is no true uncertainty. The Demurrer is not sustained on the basis of uncertainty.

First Cause of Action – Breach of Written Contract

Defendant argues that this claim fails because it is unclear whether the contract at issue is written or verbal where the caption states “Breach of Written Contract” and Plaintiff’s factual allegations reference a verbal agreement. The general rule is that the caption does not control the cause of action. “If the complaint states a cause of action under any theory, regardless of the title under which the factual basis for relief is stated, that aspect of the complaint is good against a demurrer.” (Quelimane Co. v. Steward Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) A liberal reading of the FAC makes it clear that Plaintiff is actually alleging a claim for Breach of Oral Contract.

Defendant also argues that this claim is barred by the statute of limitations. The statute of limitations for a breach of oral contract is two years. (CCP §339.) The demurrer to the first cause of action is not sustained on the basis that it is barred by the statute of limitations. “[A] cause of action for breach of contract accrues for statute of limitations purposes only after there has been a breach of contract.” (Church v. Jamison (2006) 143 Cal.App.4th 1568, 1583.) “A demurrer on the ground of the bar of statute of limitations will not lie where the action may be but is not necessarily barred.” (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881.) Here, Plaintiff sufficiently alleges that “[i]n the last two years, and as recently as February 2022, Plaintiff requested that Defendant execute a quitclaim deed to release his interest in the 5021 Property to Plaintiff, based on their agreement in 2011. Defendant has refused to sign such a quitclaim deed.” (FAC ¶11.) Although Plaintiff alleges that he “paid the loan off in 2019”—Plaintiff further alleges that Defendant’s breach was not discovered/did not occur until at least 2020 when Defendant refused to sign a quitclaim deed. (FAC ¶¶10-11.) This action was filed on May 23, 2022. Plaintiff’s allegations are sufficient to withstand demurrer against a statute of limitations defense.

Lastly, Defendant argues that this claim is barred by the statute of frauds. “An agreement for the sale of real property or an interest in real property comes within the statute of frauds. (Civ. Code §1624, subd. (a)(3).)” (Secrest v. Security National Morg. Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552.) In Opposition, Plaintiff argues that his performance takes the contract out of the statute of frauds. The statute “cannot be used to attack an oral contract that has been fully performed.” (Lee v. Lee (2009) 175 Cal.App.4th 1553, 1557.) “Where the contract is unilateral, or, though originally bilateral, has been fully performed by one party, the remaining promise is taken out of the statute [of frauds], and the party who performed may enforce it against the other.” (Secrest v. Security Nat’l Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 556.) However, “[t]he payment of money is not ‘sufficient part performance to take an oral agreement out of the statute of frauds’ [citation], for the party paying money ‘under an invalid contract… has an adequate remedy at law.’” (Secrest v. Security Nat. Morg. Loan Trust 2002-02 (2008) 167 Cal.App.4th 544, 555.) As articulated by the court in Secrest, the payment of money is not sufficient part performance. Accordingly, Plaintiff has alleged no exception to the statute of frauds. The demurrer to the first cause of action is SUSTAINED with 20 days leave to amend because, as alleged, it is barred by the statute of frauds.

Second Cause of Action – Fraud

Defendant argues that this claim is barred by the statute of limitations. The statute of limitations for fraud is three years. (CCP §338(d).) Here, Plaintiff alleges that he did not discovery Defendant’s alleged fraud until 2020. The Court does not find that Plaintiff’s claim of fraud is necessarily barred by the statute of limitations.

Defendant additionally argues that Plaintiff fails to plead fraud with the requisite amount of specificity to withstand demurrer. Plaintiff must plead allegations that meet the heightened pleading requirements for fraud claims. Fraud actions are subject to strict requirements of particularity in pleading. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) 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, and in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said, or wrote, and when the representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Defendant’s demurrer to Plaintiff’s second cause of action is SUSTAINED with 20 days leave to amend. As argued by Defendant in the instant demurrer, Plaintiff has failed to allege sufficient facts to support this claim. Specifically, Plaintiff does not allege how, where, and by what means Defendant’s purported misrepresentations were made. Specificity is mandatory—mere legal conclusions will not suffice.