Judge: Mark A. Young, Case: 21SMCV01169, Date: 2022-08-29 Tentative Ruling
Case Number: 21SMCV01169 Hearing Date: August 29, 2022 Dept: M
CASE NAME: Sarkissan v. Peter T. Erdelyi & Assoc., et al.
CASE NO.: 21SMCV01169
MOTION: Demurrer to the First Amended Complaint
HEARING DATE: 8/29/2022
BACKGROUND
On November 29, 2021, Plaintiff filed his First Amended Complaint (FAC). The FAC states causes of action for (1) Breach of Written Contract; (2) Fraud; (3) Negligence; (4) Unfair Business Practices in Violation of Business and Professions Code section 17200 et seq.; (5) Breach of Covenant of Good Faith and Fair Dealing; and (6) Declaratory Relief.
On January 3, 2022, Defendants demurred to the second and fourth causes of action. Plaintiff opposes the demurrer.
Legal Standard
A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) 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. (CCP §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations omitted.)
“Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show in what manner plaintiff can amend the complaint, and how that amendment will change the legal effect of the pleading. (Id.)
MEET AND CONFER
Before filing a demurrer or motion to strike, the moving party must meet and confer in person or by telephone with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading. (CCP § 430.41.) Counsel’s declaration satisfies the meet and confer requirement. (Taylor Decl. ¶¶ 2-4.)
Analysis
Fraud
Defendants demur to the second cause of action for fraud. The elements of fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) In California, fraud must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)
Here, the claim is not pled with specificity. The FAC makes general contentions regarding the misrepresentations. The FAC states that “[p]rior to entering into the contract and before even perform[ing] any work at Plaintiffs residence, Defendants falsely and fraudulently presented to Plaintiff that they experienced, qualified, prepared and able to perform all aspects of structural designing at the said residence[.]” (FAC ¶ 13.) This is followed by generalized examples of breaches, such as failing to “properly research[] legal structural and building requirements[.]” (Id.) This general allegation does not have the specificity hallmarks required for a fraud cause of action. Specificity is required as to the misrepresentations, including the specific representations and how, when, where, and by what means such representations were tendered.
Plaintiff also fails to plead: 1) allegations regarding Defendants’ present intent to perform while making such representations; and 2) allegations connecting the intent to induce reliance on the representations. (See FAC ¶¶ 29-32.) Merely failing to perform under a contract is not actionable fraud. (See Tenzer v. Superscope (1985) 39 Cal.3d 18, 31 [mere contract breach is insufficient to infer fraudulent intent].) Thus, the demurrer is sustained with leave to amend.
Unfair Competition Law (“UCL”)
Defendant also demurs to the fourth cause of action for UCL. UCL prohibits unlawful, unfair or fraudulent business acts or practices. (Bus. & Prof. Code, § 17200.) It is a tool with which to enjoin deceptive or sharp practices. (Samura v. Kaiser Foundation Health Plan, Inc. (1993) 17 Cal.App.4th 1284, 1299, fn. 6.) It is intended to “safeguard the public against the creation or perpetuation of monopolies and to foster and encourage competition, by prohibiting unfair, dishonest, deceptive, destructive, fraudulent and discriminatory practices by which fair and honest competition is destroyed or prevented.” (Bus. & Prof. Code, § 17001.) A UCL plaintiff must therefore plead that the defendant engaged in a business practice that was either unlawful (i.e., is forbidden by law, such as a statute) or unfair (i.e., harm to victim outweighs any benefit) or fraudulent (i.e., is likely to deceive members of the public). (Albillo v. Intermodal Container Services, Inc. (2003) 114 Cal.App.4th 190, 206.)
Plaintiff alleges that Defendants committed unlawful and fraudulent business acts, including taking Plaintiff’s deposit and not performing work on the signed contract, and employing deceptive practices such as inducing Plaintiff to enter into the agreement. (FAC ¶¶ 42-43.) Thus, the UCL claims targets Defendants’ breach of contract and fraud. As discussed above, the fraud is generally pled. This is insufficient to meet the heightened pleading standard of fraud and statutory claims such as those under the UCL. When recovery is sought under a statute the facts must be pled with particularity. (See Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396, 407 [discussing elder abuse].) Further, the UCL “is not an all-purpose substitute for a tort or contract action[.]” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.) Thus, further facts are required regarding the unlawful or fraudulent business practices.
Accordingly, Defendants’ demurrer is SUSTAINED with ten days leave to amend.