Judge: Margaret L. Oldendorf, Case: 23AHCV02146, Date: 2024-04-16 Tentative Ruling

Case Number: 23AHCV02146    Hearing Date: April 16, 2024    Dept: P

[TENTATIVE] ORDER OVERRULING DEMURRER TO THE SIXTH CAUSE OF ACTION AND DENYING MOTION TO STRIKE

I.        INTRODUCTION

          In this breach of contract action, Plaintiff San Van High Technology Co. (San Van) alleges that it entered a contract with Defendants Tians LLC, Cahm LLC, Cayg LLC, Jack Gu, Jing Chen, Diamond Ridge Corp. and JL Capital Resources Inc. for the purchase of real property at 14814 Castle Butte Rd., North Edwards, California 93523. San Van alleges that the purchase included the business defendants ran at the property, defendants’ Industrial Hemp Cultivation License and three separate APNs: 23348030005, 23348029003, 23348005003. It is alleged that Defendants retained Plaintiff’s initial deposit of $700,000 after the purchase fell apart.

          The complaint contains ten causes of action: (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) unjust enrichment, (4) conversion, (5) negligence/professional malpractice, (6) breach of fiduciary duty, (7) common count- open book account, (8) common count- money had and received, (9) common count-money paid, laid out and expended, (10) common count-mistaken receipt.

          Defendants Diamond Ridge Corp. dba Re/Max Champions (Re/Max Champions) and Jing Chen (collectively Defendants) filed the instant demurrer and motion to strike on November 3, 2023. Plaintiff filed opposition to the demurrer and motion to strike on April 3, 2024. Defendants filed a reply on April 9, 2024.

Before the Court are Defendants’ challenge to the sixth cause of action for breach of fiduciary duty. Defendants allege that the sixth cause of action fails as the facts alleged amount to negligence. The demurrer is overruled. The motion to strike is denied.

II.      DEMURRER

A. Legal Standard

Code Civ. Proc. Section 430.10(e) provides for a demurrer on the basis that a complaint fails to state a cause of action. (CCP § 430.10(e).) A demurrer tests the legal sufficiency of a complaint. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  A demurrer is treated as “admitting all material facts properly pleaded,” but not the truth of “contentions, deductions or conclusions of law.” (Aubry v. Tri-Defendants Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) The general rule on demurrer is that the pleadings are “deemed to be true, however improbable they may be.” (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.4th 593, 604.) 

Questions of plaintiff’s ability to prove unlikely allegations are of no concern. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.)

Allegations need not be accepted as true if they are contradicted by judicially noticeable facts. (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1474.) 

“We treat the demurrer as admitting all the properly pleaded material facts and consider matters which may be judicially noticed, but we do not treat as admitted contentions, deductions, or conclusions of fact or law. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958 [102 Cal.Rptr.3d 343].) Further, ‘ “ ‘we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.’ ”’ (Ibid.) Because a demurrer tests only the legal sufficiency of the pleading, we accept as true even the most improbable alleged facts, and we do not concern ourselves with the plaintiff's ability to prove its factual allegations. (Ibid.) ‘“Facts appearing in exhibits attached to the first amended complaint also are accepted as true and are given precedence, to the extent they contradict the allegations.”’ (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1091.) Although a demurrer does not ordinarily reach affirmative defenses, it ‘“will lie where the complaint ‘has included allegations that clearly disclose some defense or bar to recovery.’ ”’ (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183, Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406. )

          B. Meet and Confer Requirement Met

          The Declaration of Penelope M. Deihl is offered in support of counsel’s compliance with Code Civ. Proc. Section 430.41. Deihl declares that she met and conferred with Plaintiff’s counsel. (Deihl Decl. ¶¶ 2, 3, referencing Exh. A.)

Deihl’s meet and confer letter sent on October 9, 2023 discusses the substantive issues presented on demurrer. Consequently, the meet and confer requirement has been met.

          C. Demurrer to the Sixth Cause of Action for Breach of Fiduciary Duty

“ ‘The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.’ (Citation.)” (O’Neal v. Stanislaus County Employees’ Retirement System (2017) 8 Cal.App.5th 1184, 1215.) A claim for breach of fiduciary duty is distinct from a claim for professional negligence. (Buehler v. Sbardellati (1995) 34 Cal.App.4th 1527, 1544 fn. 9, internal citations omitted [“there is authority for the view the breach of fiduciary duty theory is separate from the professional negligence theory”].)

Here, ¶¶ 82 and 83 allege that Defendant Chen was Plaintiff’s real estate agent and Defendant Re/Max Champions was Plaintiff’s real estate broker, and in that capacity, they owed Plaintiff fiduciary duties. (Complaint ¶¶ 82, 83.) ¶¶ 85 and 86 of the Complaint alleges that Chen and Re/Max breached their fiduciary duties by using the wrong contract form, not advising Plaintiff to retain an attorney, instructing Plaintiff to pay the $700,000 deposit and failing to cancel the purchase agreement. (Complaint ¶¶ 85, 86.) ¶ 88 provides that Plaintiff did not consent and was damaged as a result. (¶¶ 88,89.) However, these allegations are similar to those in the fifth cause of action for professional negligence. (Complaint ¶¶ 75-80.) Defendants allege that these allegations are also contradicted by the purchase agreement, which is attached to the complaint and judicially noticeable. (See Complain Exh. A.)

In its opposition, Plaintiff urges that it may allege a cause of action for breach of fiduciary duty on the same allegations as the professional negligence cause of action. (See Thomson v. Canyon (2011) 198 Cal.App.4th 594, 605.) Plaintiff also cites that real estate professionals, ReMax Champions and Chen, owe fiduciary duties. (See Civil Code § 2322(c).) However, this code section provides the duties of agents in general, not real estate professionals. Plaintiff cites case law referencing the fiduciary duties of real estate agents and brokers. (See Thomson v. Canyon (2011) 198 Cal.App.4th 594, 607; Ryan v. Real Estate of the Pacific (2019), 32 Cal. App. 5th 637, 646, internal citations omitted.)

There is no authority cited for the proposed higher pleading standard for breach of fiduciary duties. (See Opposition p. 2: 13-16.)

At this time, the Court declines to conclude whether the allegations as pleaded are professional negligence or breach of fiduciary duty, as that is a finding of fact not appropriate at the demurrer stage. (See Reply p. 3: 6-7.)

The demurrer to the sixth cause of action is overruled.

III.     MOTION TO STRIKE

           A. Legal Standard

          Code Civ. Proc. §436 provides: “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.

(b) 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.”                

B. Motion to Strike is Denied

The Defendants seek to strike the following sections of the Complaint: “For attorneys’ fees." (Complaint p. 17: 15.)

CCP Section 1033.5 allows for the recovery of attorney fees if authorized by contract, statute or law. (CCP § 1033.5(a)(10).) Defendants urge that Plaintiff’s counsel “has agreed to stipulate that there is no contractual basis for the request for attorneys’ fees.” (Motion to Strike, p. 4 fn 1.) In its opposition, Plaintiff does not agree that its counsel stipulated that there was no basis for attorney fees. (See Opposition p. 2 fn. 1.)

In its opposition, Plaintiff urges that attorney fees are appropriate as the real estate sale agreement between Plaintiff and Defendants Tians, Cahm and Cayg provides for attorney fees. (See Complaint Exh. A.) As attorney fees are appropriate under the Sale Agreement against the non-demurring defendants, the Court declines to strike the prayer for attorney fees.

Plaintiff also urges that the tort of another doctrine allows for attorney fees against Defendants Re/Max Champions and Chen. The tort of another doctrine “allows a plaintiff attorney fees if he is required to employ counsel to prosecute or defend an action against a third party because of the tort of the defendant.” (Gray v. Don Miller & Assoc., Inc. (1984) 35 Cal.3d 498, 505, emphasis added.) Plaintiff urges that it was forced to sue Seller-Defendants Tians LLC, Cahm LLC and Cayg LLC due to Real Estate-Defendants Re/Max Champions and Jing Chen’s conduct.

In their reply, Defendants urge that the tort of another doctrine does not apply as the suit against the Seller-Defendants arises out of their retention of Plaintiff’s deposit, not out  of Real-Estate Defendant’s alleged negligence. (Complaint ¶¶ 28-29, 49.) The Court agrees and finds that the tort of another doctrine does not provide for attorney fees against Defendants Re/Max Champions and Jing Chen.

The Court denies the motion to strike attorney fees.

IV.     CONCLUSION AND ORDER

 Defendants’ demurrer to the sixth cause of action is overruled. The motion to strike is denied.

          Counsel for Plaintiff to give notice of this order.

Dated: April 15, 2024                                      _______________________________

                                                                                  JARED D. MOSES

                                                                     JUDGE OF THE SUPERIOR COURT