Judge: Lisa K. Sepe-Wiesenfeld, Case: 21SMCV01950, Date: 2025-05-01 Tentative Ruling

Case Number: 21SMCV01950    Hearing Date: May 1, 2025    Dept: N

TENTATIVE RULING

Defendant West Coast Escrow Company’s Demurrer to Second Amended Complaint is SUSTAINED without leave to amend.

Defendant First American Title Insurance Company’s Demurrer to Plaintiff’s Second Amended Complaint is SUSTAINED without leave to amend.

Plaintiff Leon Thompson Jr.’s second cause of action for breach of the implied covenant of good faith and fair dealing is STRICKEN from the Second Amended Complaint.

Plaintiff Leon Thompson Jr.’s Motion for Relief from Order and to Amend Complaint is DENIED.

Moving parties to give notice.

REASONING

Legal Standard

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967), but the Court does not “assume the truth of contentions, deductions, or conclusions of fact or law” (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125).

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Defendant West Coast Escrow Company’s Demurrer to Second Amended Complaint; Defendant First American Title Insurance Company’s Demurrer to Plaintiff’s Second Amended Complaint

In his Second Amended Complaint, Plaintiff Leon Thompson Jr. (“Plaintiff”) asserts claims for breach of contract, breach of implied covenant of good faith and fair dealing, fraud and deceit, and negligence.

First Cause of Action: Breach of Contract

To state a cause of action for breach of contract, Plaintiff must be able to state “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) In the first cause of action, Plaintiff alleges that Defendant William S. Jensen breached the Vacant Land Purchase Agreement and Joint Escrow Instructions (“the agreement”) by failing to deliver the property with a valid, enforceable easement as required under the agreement, and Defendant First American Title Company (“First American”) breached the agreement by denying Plaintiff’s claim under his title insurance. (Second Am. Compl. ¶¶ 35, 45, 51.)

As the Court previously stated, Plaintiff must be able to point to a contractual provision which required First American to research the easement sought by Plaintiff, as he alleges the denial of his claim was First American’s own fault for its lack of diligence (Second Am. Compl. ¶¶ 25, 51), but Plaintiff again does not identify any such provision. Again, the agreement instead states that Plaintiff accepted title to the property “in its present condition subject to all encumbrances, easements, covenants, conditions, restrictions, rights and other matters whether of record or not.” (Second Am. Compl. ¶ 16, Ex. A, at ¶ 18(B).) It follows that the trier of fact has no basis to conclude that First American breached an agreement for title insurance when Plaintiff took the property in this manner. Moreover, the Court identified these deficiencies in its prior order sustaining First American’s demurrer to the First Amended Complaint, and while Plaintiff added certain factual allegations, none of those added facts serve to state a claim for breach of contract by identifying the specific contractual provision allegedly breached by First American. Thus, the Court lacks a basis to conclude that amendment will cure any issues with this claim. Accordingly, First American’s demurrer to the first cause of action is SUSTAINED without leave to amend.

Second Cause of Action: Breach of Implied Covenant of Good Faith and Fair Dealing

As to Plaintiff’s claim for breach of the implied covenant of good faith and fair dealing, this claim was not included in the First Amended Complaint, and the Court’s ruling on the prior demurrers stated that no causes of action were to be added without obtaining leave to do so. Plaintiff did not move for leave to add this claim. Thus, the second cause of action for breach of implied covenant of good faith and fair dealing is STRICKEN from the Second Amended Complaint.

Third Cause of Action: Fraud and Deceit

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

While the heading of this claim does not identify First American, Plaintiff includes allegations as to First American in the body of the claim itself, stating that it was familiar with the property and failed to disclose to Plaintiff that the easement was not valid. (Second Am. Compl. ¶¶ 108, 117-118.) Plaintiff alleges that First American’s agent, Sheila Isham, a Senior Title Officer for First American, failed to exercise due care when she communicated that the easements on the property were valid and enforceable. (Second Am. Compl. ¶ 131.)

Plaintiff has not sufficiently set forth the nature of the purported misrepresentations made to him by Isham or any other representative of First American, and it is axiomatic that the facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Plaintiff fails to identify the means by which any statements were made and when they were made, and he fails to allege that anyone made false statements with the intent to induce reliance by Plaintiff. Further, Plaintiff cannot hold First American liable under the title insurance policy, as discussed below. Again, the Court lacks a basis to conclude that amendment will cure any issues with this claim. Accordingly, First American’s demurrer to the third cause of action is SUSTAINED without leave to amend.

As to Defendant West Coast Escrow Company (“WCE”), there are no allegations of fraud and deceit by this defendant. Plaintiff alleges that “[a]ll Defendants intended that Plaintiff rely on the representations made in order that Plaintiff complete the purchase of the Property” (Second Am. Compl. ¶ 132), but such allegations are insufficient to allege a fraud claim against WCE, as there are no mentions of WCE in the heading or the body of the cause of action, and there are no allegations of representations by WCE or anyone affiliated with WCE. Moreover, the Court lacks a basis to conclude that amendment will cure any issues with this claim as to WCE. Thus, WCE’s demurrer to the third cause of action is also SUSTAINED without leave to amend.

Fifth Cause of Action: Negligence

To establish a claim for negligence, Plaintiff must establish the elements of (1) “the existence of a legal duty of care,” (2) “breach of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.) Again, while the heading of this claim does not identify First American or WCE, Plaintiff includes allegations as to First American and WCE in the body of the claim itself. Plaintiff alleges that First American breached its duty to him by stating that the easements were valid and by failing to pay for covered losses sustained by Plaintiff as a result of the missing easement. (Second Am. Compl. ¶¶ 165-166.) Plaintiff alleges that WCE breached its duty to him by failing to ensure that Jensen signed all documents related to the easement or ensuring that Plaintiff and Jensen signed the same contract. (Second Am. Compl. ¶¶ 174-175.)

Plaintiff again fails to set forth how First American breached any duty to him by failing to research the easement or reimburse him when he agreed to take the property as is. Insofar as Plaintiff is seeking to hold First American liable based on the title insurance policy, Siegel v. Fidelity National Title Insurance Co. (1996) 46 Cal.App.4th 1181, 1191 makes clear that “a policy of title insurance is not a representation that the title is in the condition described, and it is not an opinion regarding the condition of title.” It follows that a title insurance policy “does not constitute a representation that the contingency insured against will not occur,” and “when such contingency occurs, no action for negligence or negligent misrepresentation will lie against the insurer based upon the policy of title insurance alone.” (Ibid.) Plaintiff is seeking to hold First American liable under the policy of title insurance, and a negligence claim does not lie in that respect. Again, the Court lacks a basis to conclude that amendment will cure any issues with this claim. Accordingly, First American’s demurrer to the fourth cause of action is SUSTAINED without leave to amend.

Plaintiff also fails to state the nature of a duty owed to him by WCE to ensure all documents were signed by Jensen when WCE was a mere escrow agent, Plaintiff fails to allege the terms of escrow that required WCE to obtain such signatures, and there is no basis to conclude that any failure to obtain signatures was the cause of Plaintiff’s purported harm. Plaintiff’s conclusory statements in this regard do not suffice to support a finding of negligence. Moreover, the Court again lacks a basis to conclude that amendment will cure any issues with this claim as to WCE. Thus, WCE’s demurrer to the fourth cause of action is also SUSTAINED without leave to amend.

Plaintiff Leon Thompson Jr.’s Motion for Relief from Order and to Amend Complaint

Plaintiff has separately moved the Court for an order granting relief from the Court’s March 23, 2023 order sustaining the demurrers to the fraud and negligent misrepresentation claims in the First Amended Complaint, and he seeks leave to file a Third Amended Complaint reasserting those claims, based on purportedly newly discovered evidence that was not available when the original complaint was filed.

Plaintiff cites Code of Civil Procedure section 473, subdivision (b), as the basis for this motion, as he claims the ruling against him was the result of surprise. Code of Civil Procedure section 473, subdivision (b), provides that “[t]he court may, upon any terms as may be just, relieve a party . . . from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect.” The statute further states that “[a]pplication for this relief . . . shall be made within a reasonable time, in no case exceeding six months, after the judgment, dismissal, order, or proceeding was taken.” (Code Civ. Proc., § 473, subd. (b).) The Court’s ruling sustaining the demurrers was issued on March 23, 2023. The present motion was filed on October 10, 2024, well beyond the six-month deadline. Thus, this motion is DENIED as untimely.

Even if the motion were timely, Plaintiff states that he learned the underlying facts and obtained the new evidence in 2022, with further evidence being obtained in 2024. (See Mot., pp. 11-13.) The First Amended Complaint was filed on April 24, 2023, after Plaintiff obtained the new evidence, the Second Amended Complaint was filed on January 4, 2024, again after Plaintiff obtained the new evidence. Thus, Plaintiff had ample opportunity to allege a claim based on this new evidence in an effort to state a cognizable claim for fraud or negligent misrepresentation, but he failed to do so. Accordingly, Plaintiff Leon Thompson Jr.’s Motion for Relief from Order and to Amend Complaint is DENIED.