Judge Lynne M. Hobbs, Case Number: 24STCV16362, Date: 2024-11-18 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 24STCV16362, Date: 2024-11-18 Tentative Ruling

Case Number: 24STCV16362 Hearing Date: November 18, 2024 Dept: 61

MARIA ROSA C. BLANCO, et al. vs RUBEN RUIZ, et al.

TENTATIVE

Defendant Ruben Ruiz’s Demurrer and Motion to Strike Portions of the Complaint is SUSTAINED with leave to amend as to the second and third causes of action for breach of implied agreement and breach of fiduciary duty, with leave to amend to add Maria Ruiz as a Defendant. The demurrer is otherwise OVERRULED. The motion to strike is GRANTED as to the prayer for punitive and compensatory damages made in paragraphs 27 and 30, with leave to amend, and is otherwise DENIED.

Plaintiffs to give notice.

DISCUSSION

I. DEMURRER

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”) “In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.) “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.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

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. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendant Ruben Ruiz (Defendant) demurrers to the Complaint of Plaintiffs Maria Rosa Blanco and Victor Blanco (Plaintiffs) on several grounds. Defendant argues that Plaintiffs have alleged that another person, Maria Ruiz, is party to the partnership and contract that Plaintiffs contend was breached, but they have not included her as a defendant. (Demurrer at p. 15.) Defendant argues that each cause of action is ambiguous because Plaintiff’s frequent misuse of referents in the Complaint makes it unclear what obligations and liabilities are being alleged by which party and against which party. (Demurrer at p. 16.) Defendant argues that the claims fail because the condition precedent to refinancing the property never occurred. (Demurrer at pp. 16–17.) Defendant argues that the claims are barred by the statute of frauds. (Demurrer at pp. 17–18.) Defendant argues that Plaintiffs have failed to allege the elements of a contract with sufficient specificity. (Demurrer at pp. 18–19.) Defendant argues that Plaintiffs have failed to allege the existence of a partnership for the purposes of establishing a fiduciary duty. (Demurrer at pp. 19–20.) Defendants argue that the claim for cancellation of instrument fails because Plaintiffs allege no basis for the cancellation of the deed in question, lack standing to seek its cancellation, and allege no inadequacy of legal remedies. (Demurrer at pp. 20–21.) Defendants argue that Plaintiffs cannot seek partition because they are not owners of the property. (Demurrer at p. 21.) And Defendant finally argues that the accounting claim fails because no partnership relationship is alleged. (Demurrer at pp. 22–23.)

Some of Defendant’s arguments have merit. First, the contract claim is missing a necessary party, Maria Ruiz, who is alleged to be a party to the contract. (Complaint ¶ 10.) “Ordinarily where the rights involved in litigation arise upon a contract, courts refuse to adjudicate the rights of some of the parties to the contract if the others are not before it.” (Deltakeeper v. Oakdale Irrigation District (2001) 94 Cal.App.4th 1092, 1106.) Maria Ruiz is a necessary party to the action, and Plaintiffs do not argue otherwise. The demurrer is therefore properly SUSTAINED as to the second cause of action for breach of contract, with leave to amend to add Maria Ruiz as a defendant.

The Complaint is also uncertain in some respects. It makes reference to two “Marias,” the Plaintiff Maria Rosa Blanco and nonparty Maria Ruiz. Yet the parties’ respective obligations and the course of their dealing is ill-defined. It is alleged that Plaintiffs agreed to offer their credit to purchase a property, but they do not state whether they obtained any interest in the property as a result. Moreover, they allege that one of the terms of their agreement was that, after Defendant refinanced the property, “Maria would be added to the title.” (Complaint ¶¶ 10–11.) However, because it does not appear that Plaintiffs seek to enforce this obligation, the Complaint cannot be deemed uncertain in its entirety.

Defendant is also correct that Plaintiffs fail to allege a partnership for the foundation of their fiduciary duty claim. “’Partnership’ means an association of two or more persons to carry on as co-owners a business for profit.” (Corp. Code, § 16101, subd. (a)(9).) Here, although Plaintiffs repeatedly invoke the existence of a “partnership” agreement, the contours of that agreement do not include the running of a business for profit, but only the purchase of a property for Defendant to live in. The Complaint thus does not state a claim for breach of fiduciary duty. The demurrer is therefore SUSTAINED with leave to amend as to the third cause of action for breach of fiduciary duty.

Plaintiffs’ claims based on contract do not necessarily fail, however. The statute of frauds applies to all contracts “for the sale of real property, or of an interst therein.” (Civ. Code § 1624, subd. (a)(3).) There exists an exception from the statute of frauds for agreements between joint venturers or partners to develop and convey properties for sale to others. (See Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 586.) But as the Kaljian court explained, the exemption applies to agreements whereby a single party conveys real property to the joint venture itself, or where the venturers agree to sell the property of a party to a party outside the joint venture: “[N]one of the cited cases dealt with an agreement which contemplated a transfer of real property from one joint venturer to another.” (Id. at p. 584.) Thus Plaintiffs’ claims based on contract, sounding in the exchange of title to the property for removal from the mortgage obligations thereon, may be assessed under the statute of frauds.

However, there exists an exception to the statute of frauds in cases of part-performance. “The doctrine of part performance by the purchaser is a well-recognized exception to the statute of frauds as applied to contracts for the sale or lease of real property.” (Sutton v. Warner (1993) 12 Cal.App.4th 415, 422.) Here, Plaintiffs do not merely allege that Defendant has failed to refinance the mortgage as agreed, but that he failed to do so after Plaintiffs, in reliance on his assurances, quitclaimed their title in the property to him. (Complaint ¶¶ 12–13.) Plaintiffs thus allege that they performed their part of the bargain, both by offering their credit for the loan and later by quitclaiming their interest in the property. Thus the statute of frauds does not necessarily foreclose their contractual claims.

Defendant’s arguments as to substantive defects in the contract claim likewise fail. He argues that there was no deadline for him to refinance the property, and further that he has paid all expenses associated with the property as agreed. (Demurrer at pp. 18–19.) This argument, however, is unavailing. Although the Complaint alleges that “There was never any deadline set for the refinancing to take place,” this allegation merely states that there was no set deadline, not that Defendant had an unlimited amount of time in which to perform his contractual obligation. (Complaint ¶ 13.) Elsewhere the Complaint alleges that Defendant was to refinance the property “once [he] and Maria had improved their credit.” (Complaint ¶ 10.) Generally, “[i]f no time is specified for the performance of an act required to be performed, a reasonable time is allowed.” (Civ. Code, § 1657.) Defendant also argues that he is alleged to have paid all expenses on the property. (Demurrer at p. 19.) This is true, but beside the point. He is not alleged to have breached this obligation, but the obligation to refinance.

Defendant’s argument as to the fourth cause of action for cancellation of instrument are likewise unpersuasive. He argues that Plaintiffs have stated only that their quitclaim of interest in the property was made without consideration, but that donative transfers are routinely recorded and enforced. (Demurrer at pp. 20–21.) Defendant’s mistake is in interpreting the quitclaim as a donative transfer when it is alleged to have been made upon Defendant’s promise to refinance. (Complaint ¶ 13.)* Defendant argues that Plaintiffs lack standing, but neglects that they are the ones listed as giving up their property rights on the instrument they seek to cancel. (Demurrer at p. 21.) And although Defendant argues that Plaintiffs allege no lack of legal remedy, they seek a restoration of the title to be conveyed by the instrument they seek to have cancelled, i.e. an instrument in land. Land is generally considered “unique,” and loss thereof is not necessarily susceptible to adequate compensation by monetary damages. (See Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 473.) Leave to amend is therefore properly granted for Plaintiffs’ contract claims.

Defendant argues that the fifth cause of action for partition fails because there is no allegation of an agreement to jointly own the property. (Demurrer at p. 22.) But the Complaint alleges that Plaintiffs possessed title to the property, which they quitclaimed over to Defendant based on representations that he would refinance the property to remove them from the loan. Plaintiffs here seek to revoke that transfer of title — thereby claiming an interest in the property — potentially entitling them to partition. The demurrer is therefore OVERRULED as to the fourth cause of action.

Defendant finally argues that no accounting claim can be had because there is no fiduciary relationship and Plaintiffs are not co-owners of the property. (Demurrer at pp. 22–23.) But as noted above, the defects in Plaintiff’s contract claim may be rectified by adding a necessary Defendant, and Defendant’s substantive arguments against claims not based on the existence of a fiduciary duty fail, and the demurrer is OVERRULED as to the sixth cause of action.

In summary the demurrer is SUSTAINED with leave to amend as to the second and third causes of action for breach of implied agreement and breach of fiduciary duty, and Plaintiffs are directed to add Maria Ruiz as a defendant. The demurrer is otherwise OVERRULED.

II. MOTION TO STRIKE

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)

Defendant moves to strike the prayer for punitive damages appended to the third cause of action for breach of fiduciary duty. (Demurrer at pp. 3–4.) Punitive damages are allowed in non-contract cases when a defendant is guilty of “oppression, fraud, or malice . . . .” (Civ. Code § 3294, subd. (a).) The terms are defined as:

1. “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

2. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.

3. “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

(Civ. Code § 3294, subd. (c).)

Something more than the mere commission of a tort is always required for punitive damages. (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Proof of negligence, gross negligence, or recklessness is insufficient to warrant an award of punitive damages. (Dawes v. Sup.Ct. (Mardian) (1980) 111 Cal.App.3d 82, 88–89.) Punitive damages may be recovered in an action for negligence or other nonintentional torts if the plaintiff pleads and proves that the defendant acted with the state of mind described as “conscious disregard” of the potential dangers to others. (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) When malice is based on a defendant’s conscious disregard of Plaintiff’s rights, the conduct must be both despicable and willful. (College Hospital v. Superior Court (1994) 8 Cal.4th 794, 713 (“College Hospital”).)

Defendant is correct that the allegation of malice made here is made without supporting facts, or the allegation of facts supporting the existence of a fiduciary duty. (Complaint ¶ 27.) The motion is therefore GRANTED as to the prayer for punitive damages made in the third cause of action, with leave to amend.

Defendant also moves to strike the prayer for damages made in connection with the fourth cause of action for cancellation of instrument, on the grounds that such a request is not permitted in connection with equitable cancellation proceedings. (Motion at p. 4.) Defendant is correct that cancellation claims are “purely equitable,” not actions at law for damages. (Corrigan v. Stiltz (1965) 233 Cal.App.2d 381, 387.)

Defendant next argues that the prayer for attorney fees made in connection with Plaintiff’s partition claim should be stricken, because no contract or statute provides for these fees, and they are therefore not permitted under Code of Civil Procedure § 1021. (Motion at p. 4.) But Plaintiff notes that the costs awardable in a partition action include “[r]easonable attorney’s fees incurred or paid by a party for the common benefit.” (Code Civ. Proc. § 874.010, subd. (a).)

Defendant finally argues that the Complaint fails to comply with California Rules of Court, Rule 2.112, which requires each cause of action in a complaint to state its number, nature, and the party asserting it and the parties to whom it’s directed. (CRC Rule 2.112.) But given that Defendant is the only named defendant in this action, the absence of specific notations of who is asserting which claim against whom does not render the Complaint unintelligible.

The motion is therefore GRANTED as to the prayer for punitive damages contained in paragraph 27, with leave to amend, and as to the prayer for damages contained in paragraph 30. The motion is otherwise DENIED.

* The quitclaim deed attached to the Complaint itself states both that it is “a Bonafide gift and the grantor received nothing in return,” and that it was made “FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged.” (Complaint Exh. A.)