Judge Lisa K. Sepe-Wiesenfeld, Case Number: 24SMCV00714, Date: 2025-01-22 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 24SMCV00714, Date: 2025-01-22 Tentative Ruling

Defendants demur to the complaint on the ground there is another action pending in Los Angeles Superior Court Case No. 24SMCV00699 (NM Family Trust, Dated July 10, 2018 through its Trustee Amir Mostafavi v. CAP Inc. dba Journey Builder LLC) with the same facts and with the same parties. The complaint in that action shows that Plaintiff NM Family Trust, Dated July 10, 2018, through its Trustee Amir Mostafavi (“Plaintiff”) brought an action against the same parties, based on allegations that Defendants improperly repaired the roof on the same property and fraudulently induced Plaintiff to enter into a contract, which mirrors the allegations of the present action. However, Defendants raised this argument in the other action, which resulted in the Court dismissing that action, so only this action remains. Accordingly, Defendants’ demurrer on that basis is OVERRULED.

“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.) “The elements of a cause of action for fraudulent concealment are: (1) concealment of a material fact; (2) by a defendant with a duty to disclose; (3) the defendant intended to defraud by failing to disclose; (4) plaintiff was unaware of the fact and would not have acted as it did had it known the fact; and (5) damages.” (Butler America, LLC v. Aviation Assurance Company, LLC (2020) 55 Cal.App.5th 136, 144.) “Promissory fraud is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. The elements of promissory fraud (i.e., of fraud or deceit based on a promise made without any intention of performing it) are: (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise.” (Behnke v. State Farm General Insurance Co. (2011) 196 Cal.App.4th 1443, 1453, citation and quotation marks omitted.) The elements of a cause of action for negligent misrepresentation include “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks omitted.)

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.) 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.)

In each of the fraud causes of action, Plaintiff alleges that Defendants made false representations that they would complete the work in a satisfactory manner and that Defendant Karapetyan falsely represented he was a home improvement salesperson, which required him to be registered as such. (Compl. ¶¶ 47-57; 60-66; 69-74; 117-124.) Plaintiff provides no specific facts about the purported representations or concealments, i.e., there are no facts alleging any specific statements, when those statements were made, to whom they were made, or by what means the statements were communicated. Accordingly, Defendants’ demurrer to the first, second, third, and eighth causes of action is SUSTAINED with thirty (30) days leave to amend.

Plaintiff alleges that Defendants negligently advised Plaintiff on a number of issues relating to the roofing work including potential damages caused by not replacing the metal sheet at the time of entering into the contract, and Defendants failed to use the skill and care that a reasonably prudent professional would have used. (Compl. ¶¶ 77-78.) This caused water damages to the area under the metal sheet. (Compl. ¶ 79.) While Defendants allege confusion about who is a party to this action, the Court finds that Defendants have been sufficiently put on notice that they are the parties to this claim, typographical errors notwithstanding. (Compl. ¶ 5.) Thus, Defendants’ demurrer to the fourth cause of action is OVERRULED.

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated . . . [T]he only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Id. at pp. 1394-1395.) To recover in tort for breach of the implied covenant, the defendant must “have acted unreasonably or without proper cause.” (Id. at p. 1395, citations and italics omitted.)

Plaintiff alleges that Defendants did not secure skilled workers to perform the work, did not complete the work sufficiently, and abandoned the work short of completion, among other conduct. (Compl. ¶ 100.) Plaintiff has alleged no more than a breach of contract under these facts, and the claim does not differ from the breach of contract claim in any meaningful way. Accordingly, Defendants’ demurrer to the sixth cause of action is SUSTAINED with thirty (30) days leave to amend.

“The elements of negligent interference with prospective economic advantage are (1) the existence of an economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) the defendant’s knowledge (actual or construed) that the relationship would be disrupted if the defendant failed to act with reasonable care; (4) the defendant’s failure to act with reasonable care; (5) actual disruption of the relationship; and (6) economic harm proximately caused by the defendant’s negligence.” (Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 1005.)

Plaintiff alleges that Defendants interfered with Plaintiff’s prospective lessees of the property, which would have resulted in an economic benefit to Plaintiff. (Compl. ¶ 107.) Plaintiff alleges that Defendants knew that the property is a rental, has been leased recently, and will be put back on the market after the remodeling work is complete. (Compl. ¶ 109.) This claim requires that Defendants knew of existing relationships, but Plaintiff alleges only that future rental relationships would be damaged. This does not allege a claim for negligent interference with prospective economic advantage. Thus, Defendants’ demurrer to the seventh cause of action is SUSTAINED with thirty (30) days leave to amend.

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression. (Civ. Code, § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.) Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud, or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.)

An award of attorney’s fees is proper when authorized by contract, statute, or law. (Code Civ. Proc., §§ 1032, subd. (b), 1033.5, subd. (a)(10).) Plaintiff argues that his request for attorney’s fees is proper under Civil Code section 5975, subdivision (c), which allows an award of attorney’s fees in an action to enforce the governing documents. Because the Court has sustained the demurrer to his cause of action for violation of the CC&Rs, his request for attorney’s fees based on that cause of action must also be amended.

Given the Court has sustained the demurrer as to all but the negligence claim, the Court is unaware of any basis for punitive damages as currently alleged. Further, the basis for attorney fees is not set forth in the complaint. Accordingly, Defendants’ motion to strike is GRANTED with thirty (30) days leave to amend as to the prayers for punitive damages and attorney fees and otherwise DENIED as MOOT based on the Court’s ruling on demurrer.