Judge: Lee W. Tsao, Case: 22NWCV00398, Date: 2023-06-20 Tentative Ruling
Case Number: 22NWCV00398 Hearing Date: June 20, 2023 Dept: C
SANCHEZ v. SANCHEZ
CASE NO.: 22NWCV00398
HEARING: 06/20/23
#2
TENTATIVE ORDER
OVERRULED
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, Plaintiff
filed a First Amended Complaint (“FAC”). On February 23, 2023, the Court
sustained Defendant Richard F. Sanchez’s (“Defendant”) demurrer to the FAC.
On March 21, 2023, Plaintiff filed the operative Second Amended
Complaint (“SAC”). The SAC 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 theloan’s inception in 1995 until Plaintiff paid
it off in 2019).” (SAC ¶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.” (SAC
¶7.)
“Defendant Sanchez made the loan payments on the 1995 loan
until about 2006. 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, the parties agreed to split the rent payments equally from
the Property's tenant, with Defendant and Plaintiff each paying one-half of month's
loan/property tax combined payment to the lender….” (SAC ¶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.” (SAC ¶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.” (SAC
¶¶10-11.)
Additionally, Plaintiff and Defendant agreed to purchase a
property at 305 N. Fourth Property, with Plaintiff and his wife holding a 90%
undivided interest, and Defendant holding a 10% undivided interest. (SAC ¶ 12.)
They obtained a loan. (SAC ¶ 13.) The parties agreed that Defendant Sanchez
“would hold his 10% undivided interest in trust for Plaintiff and would
transfer that 10% interest to Plaintiff at Plaintiffs request, after the
secured loan was paid off.” (SAC ¶ 13.) Plaintiff paid off the secured loan in
2014. (SAC ¶ 14.) Defendant never made any payments on the loan, nor paid any
of the Property expenses. (SAC ¶ 14.) “In late 2020, Plaintiff demanded that
Defendant transfer his 10% interest in this property to Plaintiff. Defendant
refused at that time, and continues to refuse, to transfer that interest in the
property to Plaintiff.” (SAC ¶ 15.)
The SAC asserts the following causes of action: (1) Breach
of Oral Contract – 5021 Property, (2) Fraud – 5021 Property, and (3) Fraud
(False Promise) – 305 N. Property, and (4) Declaratory Relief.
Defendant demurs to each cause of action on the grounds that
the SAC fails to state facts sufficient to state a cause of action under CCP §
430.10(e).
First Cause of Action: Breach of Oral Contract
Defendant argues that the cause of action for breach of oral
contract fails because Plaintiff does not plead a breach, the cause of action is
barred by the statute of limitations, and the cause of action is barred by the
statute of frauds.
First, Defendant argues that the SAC does not plead a breach
by Defendant. The elements for breach of contract are (1) the contract, (2)
plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach,
and (4) resulting damages. (San Mateo Union High School District v. County
of San Mateo (2013) 213 Cal.App.4th 418, 439.)
The SAC states that “Defendant and Plaintiff agreed in 2011
that Plaintiff would be solely responsible for making all loan/property tax
payments and for paying all other property expenses for said Property, and they
agreed that Defendant would relinquish and transfer his interest in said
Property to Plaintiff when requested by Plaintiff.” (SAC ¶ 18.) The SAC alleges
that Plaintiff has fully performed. (SAC ¶ 19.) Further, it alleges that “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.” (SAC ¶ 11.) The SAC sufficiently alleges breach.
Next, Defendants argue that the breach of oral contract
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.” (SAC ¶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. “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.) “The principle
that full performance takes a contract out of the statute of frauds has been
limited to the situation where performance consisted of conveying property,
rendering personal services, or doing something other than payment of money.” (Ibid.)
“Under the doctrine of part performance, the oral agreement
for the transfer of an interest in real property is enforced when the buyer has
taken possession of the property and either makes a full or
partial payment of the purchase price, or makes valuable and substantial
improvements on the property, in reliance on the oral
agreement. [Citation] Payment of the purchase price alone, without the
buyer obtaining possession or making substantial improvements to the property,
is not sufficient part performance to preclude application of the statute of
frauds.” (Sutton v. Warner (1993) 12 Cal.App.4th 415, 422.)
Plaintiff has alleged that he has “fully performed all his
obligations under the parties’ agreements. In particular, Plaintiff alleges he not
only paid all property expenses, but also undertook in reliance upon the
parties’ aforementioned agreement, to deal with all tenant requests and demands
for repairs in order to comply with the landlord obligations under California
law, dealt with utility providers, and expended time and effort in repairing
and maintaining the 5021 Property.” (SAC ¶ 19.)
Here, Plaintiff alleges that he has “fully performed all his
obligations under the parties’ agreements,” including paying the property
expenses, dealing with tenant requests, dealing with utility providers, and
repairing and maintaining the property. Here, Plaintiff does not plead
performance only by payment of money, but also pleads actions taken in reliance
on the contract, by taking over responsibility of dealing with the tenants, and
repairing and maintaining the Property. This is sufficient to state an exception
to the statute of frauds and thus survive demurrer.
The demurrer to the first cause of action is OVERRULED.
Second and Third Causes of Action: Fraud
Defendant argues that Plaintiff’s fraud claims fail because
they are not alleged with sufficient particularity and they are barred by the
statute of limitations.
Defendant argues that the fraud claims fail to allege facts
to support a knowledge of falsity and an intent to defraud. Additionally, the
SAC fails to allege where and how Defendant made the false representations.
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.)
As to the second cause of action for fraud relating to the
5021 Property, Plaintiff alleges that “In or about September 2011, Defendant
Richard Sanchez met in person with Plaintiff and told Plaintiff that he… could
no longer afford to make any payments of any of the property expenses for the
5021 Property…. Defendant asked Plaintiff to take over complete legal
responsibility for dealing with tenants (including the leasing to tenants and the
eviction of tenants, if necessary), for collecting rent, and for paying all
property expenses for this Property. At that time, Defendant further
represented to Plaintiff that if Plaintiff would take over complete
responsibility for the property expenses for that Property, Defendant would
transfer his interest in the Property to Plaintiff.” (SAC ¶ 24.)
As to the third cause of action for fraud relating to the 305
N. Fourth Property, the SAC alleges, “In or about May 1984… Plaintiff and
Defendant verbally agreed that Defendant would be on title as owner of a 10%
interest in the Property, but they also verbally agreed that because this
Property would be Plaintiff’s home, Defendant would hold the 10% interest in
trust for Plaintiff and later transfer said interest to Plaintiff at
Plaintiff’s request, if Plaintiff made all payments of the mortgage loan and of
all other property expenses for the 305 N. Fourth Property.” (SAC ¶ 34.)
These allegations are sufficiently specific as they allege
that Defendant made these representations verbally in person with Plaintiff.
Further, these causes of action allege that “these
representations were false. Defendant made them to Plaintiff with the intention
of inducing Plaintiff to relieve Defendant of Defendant’s financial
responsibilities and legal responsibilities… and to induce Plaintiff to expend
much time and effort in repairing and maintaining the Property.” (SAC ¶ 26.) Although
the facts as to Defendants’ intentions and knowledge of falsity are vague, when
the facts alleged in the complaint are presumptively within the knowledge of
the demurring party, the requirement for specificity is alleviated. (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157 [holding
specificity requirements are relaxed when the defendant must necessarily
possess full information concerning the facts of the controversy or when the
facts lie more in the knowledge of the defendant].)
These allegations are sufficient to survive demurrer.
Next, Defendant argues that the fraud claims are barred by
the statue 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 late 2020 when Plaintiff demanded Defendant transfer his
interest in the 305 N. Fourth Property, and in 2022, when Defendant refused to
convey his interest in the 5021 Property. (SAC ¶ 15, 29.) The Court does not
find that Plaintiff’s claim of fraud is necessarily barred by the statute of
limitations.
Defendant’s demurrer to the second and third causes of
action is OVERRULED.
Declaratory Relief
Defendant argues that declaratory relief cause of action
fails because there is a legal remedy encompassed in the breach of contract and
fraud claims.
To state a claim for declaratory relief, Plaintiff must
allege a proper subject of declaratory relief and an actual controversy
involving justiciable questions relating to the party’s rights or obligations.
(Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)
The SAC alleges that an actual controversy exists between
the parties and their respective legal interests in the 5021 Property and the
305 N. Fourth Property. (SAC ¶ 42.)
This is sufficient to state a cause of action for
declaratory relief. Although Plaintiff brings other legal claims, these legal
claims do not necessarily provide an adequate legal remedy for determination of
Plaintiff and Defendant’s respective property interests.
Thus, Defendants’ demurrer to the fourth cause of action is
OVERRULED.