Judge: Mark A. Young, Case: 23SMCV02278, Date: 2023-10-10 Tentative Ruling
Case Number: 23SMCV02278 Hearing Date: October 10, 2023 Dept: M
CASE NAME: Puerto Rico
Potential LLC, et al., v. Tallen & Tyce Development, et al.
CASE NO.: 23SMCV02278
MOTION: Special
Motion to Strike; Demurrer; Motion to Strike Punitive Damages
HEARING DATE: 10/10/2023
Legal
Standard
Anti-SLAPP
Code of Civil Procedure section
425.16 permits the Court to strike causes of action arising from an act in
furtherance of the defendant's right of free speech or petition, unless the
plaintiff establishes that there is a probability that the plaintiff will
prevail on the claim.
“The
anti-SLAPP procedures are designed to shield a defendant’s constitutionally
protected conduct from the undue
burden of frivolous litigation.” (Baral
v. Schnitt (2016) 1 Cal.5th 376, 393.) “The anti-SLAPP statute does
not insulate defendants from any
liability for claims arising from the protected rights of petition or speech.
It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected
activity.” (Id. at 384.)
“Resolution of an anti-SLAPP motion
involves two steps. First, the defendant must establish that the challenged
claim arises from activity protected by section 425.16. If the defendant makes
the required showing, the burden shifts to the plaintiff to demonstrate the
merit of the claim by establishing a probability of success.” (Baral, supra, 1 Cal.5th at 384, citation omitted.) The California Supreme Court
has “described this second step as a ‘summary-judgment-like procedure.’ The
court does not weigh evidence or resolve conflicting factual claims. Its
inquiry is limited to whether the plaintiff has stated a legally sufficient
claim and made a prima facie factual showing sufficient to sustain a favorable
judgment. It accepts the plaintiff’s evidence as true, and evaluates the
defendant’s showing only to determine if it defeats the plaintiff’s claim as a
matter of law. ‘[C]laims with the requisite minimal merit may proceed.’” (Id. at 384-385 [citations omitted].)
Demurrer and Motion to Strike
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.)
A
special demurrer for uncertainty is disfavored and will only be sustained where
the pleading is so bad that defendant cannot reasonably respond—i.e., cannot
reasonably determine what issues must be admitted or denied, or what counts or
claims are directed against him/her. (CCP § 430.10(f); Khoury v. Maly’s
of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if
the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Ibid.)
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. (CCP § 435(b)(1); Cal. Rules of Court, Rule
3.1322(b).) The court may, upon a motion or at any time in its discretion and
upon terms it deems proper: (1) strike out any irrelevant, false, or improper
matter inserted in any pleading; or (2) strike out all or any part of any
pleading not drawn or filed in conformity with the laws of California, a court
rule, or an order of the court. (CCP §§ 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a
pleading which is not essential to the claim is surplusage; probative facts are
surplusage and may be stricken out or disregarded”].)
“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.)
EVIDENTIARY ISSUES
Defendants’ request for judicial notice is DENIED. The
evidence pertaining to the amount of precipitation recorded in January 2023 is
not subject to judicial notice. (See Evid. Code § 452(a)-(h).)
Defendants’ request for judicial notice in reply is
likewise DENIED, as the extrinsic evidence cited is not subject to judicial
notice.
ANTI-SLAPP
Analysis
First Prong
Defendants
1951 Bel Air Road LLC, Tallen & Tyce Development Inc., Tallen & Tyce
Enterprises, LLC, and Huntington Estate Homes LLC (hereinafter, the “Developer
Defendants”) move to strike the sixth and seventh causes of action of Plaintiff
Puerto Rico Potential LLC’s complaint under Code of Civil Procedure section
425.16. Defendants also request attorneys’ fees and costs in the amount
of $9,283.61.
Code of Civil Procedure section
425.16(e) defines protected acts as the following: 1) any written or oral
statement or writing made before a legislative, executive, or judicial
proceeding, or any other official proceeding authorized by law; 2) any
written or oral statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial body, or any
other official proceeding authorized by law; 3) any written or oral
statement or writing made in a place open to the public or a public forum in
connection with an issue of public interest; or 4) any other conduct in
furtherance of the exercise of the constitutional right of petition or the
constitutional right of free speech in connection with a public issue or an
issue of public interest.
Defendants assert that the two
causes of action for fraud and the unfair competition law are based on what
their lawyers stated during their pre-suit investigation and related
negotiations. They reason that the claims implicate the right to petition since
the sixth and seventh cause of actions are predicated on pre-litigation
discussions and negotiations. Furthermore, Defendants argue that Plaintiff
cannot meet its burden because these pre-litigation communications are
protected by the litigation privilege.
The complaint alleges that Plaintiff
owns property commonly known as 1516 Stone Canyon Road. (Compl., ¶ 13.) Developer
Defendants are land developers which own an adjacent, up-slope luxury mansion
located at 1951 Bel Air Road (the Bel Air Property). (Compl., ¶¶ 1,5-8, 14-16.) According to the complaint, Developer
Defendants submitted faulty grading permits to the City of Los Angeles
Department of Building and Safety (“LADBS”). (Compl., ¶¶ 17-27.) Specifically,
Developer Defendants’ supplemental grading permit (permit # 22030-10000- 04805)
expanded the hillside grading work and contemplated work during the rainy
season, but contained no erosion plan to protect the hillside during rainy
season and did not obtain authorization to remove any ground cover. (¶ 27.) In
December 2022, earthmoving contractors left soil stockpiles and fill pads
insufficiently compacted, covered, and failed to implement any other erosion
protection measures. (¶¶ 28-33.) In January 2023, rain carried these loosely
compacted soils down the slopes of the Bel Air Property and onto Plaintiff’s
Property. (¶ 34.) As rains increased during the rainy season, the water
continued to erode the now-unprotected hillside, carrying more and more earth
down onto Plaintiff’s Property. (¶¶ 35-42.)
On January 19, 2023, LADBS inspected
the hillside and determined that a Class II Slope Failure, mudflow and erosion
gully occurred at the southwest facing descending slope of the property,
creating “a hazardous condition” in violation of the Los Angeles Municipal
Code. (¶ 43.) Developer Defendants had to (1) obtain a surveyor to mark the
exact location of the slope failure and property boundaries; (2) secure a
geotechnical engineer to submit a report and recommendation to correct the
slope failure; (3) obtain a civil engineer to prepare plans in line with the
recommendations of the geotechnical engineer and obtain all required permits;
and (4) request all required inspections, diligently pursue the repairs to
completion, submit all necessary reports, and obtain final approval all before
February 27, 2023. (¶ 44.)
On February 25, 2023, the complaint
alleges that Mr. Ramtin Ray Nosrati admitted that Developer Defendants were
responsible for these issues; reported that he had hired AES, a geotechnical
and environmental engineering consultant, who was in the process of developing
a plan to stabilize the hillside; promised that AES would fix the hillside; and
promised that Developer Defendants would pay for the remediation work on
Plaintiff’s Property. (Compl., ¶ 47.)
On February 27, 2023, AES sent a
clarification letter to Developer Defendants after its inspection of the
hillside, reporting that most of the mobilized debris that ended up on
Plaintiff’s Property was related to construction and grading activity on the 1951
Bel Air site. (Compl. ¶ 51.) At the time, AES wrote that they were “currently
in the process of devising recommendations and a plan;” that their plan would
be “confined to the subject property at 1951 Bel Air Road only” but that “some
remedial improvements/actions such as removal of eroded/deposited earth and
debris may also be recommended for portions of the 1516 Stone Canyon property
as well as the property in between (1922 Bel Air Road);” and that their “draft
report will be shared with Langan Engineering . . . so that their input will be
taken into consideration before our report is finalized for LADBS grading
department submittal and approval.” (Id.)
Langan Engineering conducted a
second site visit on March 3, 2023, with engineers from AES. (Compl. ¶ 49.)
Langan noticed that Developer Defendants’ temporary damage control efforts had
not prevented the conditions on the hillside from continuing to degrade. (¶ 50.)
Plaintiff submitted two invoices to Developer Defendants for a total of
$153,081.54 in costs associated with remediation efforts necessitated by
Defendants. (¶ 52.) Plaintiff also obtained two bids for the remainder of the
clean-up for $52,748.20 and $70,000.00. (¶ 53.)
The sixth cause of action for fraud
arises from the following four alleged misrepresentations. First, Mr. Nosrati, representing the
Developer Defendants, promised Plaintiff that they would be a “good neighbor”
and would timely pay for Plaintiff’s costs associated with hauling soil off
Plaintiff’s property. (Compl., ¶ 117.) In reliance on this representation,
Plaintiff hired a contractor to remove the soil and incurred $153,081.54 in
expenses. (Id.) Second, Developer
Defendants’ agents misrepresented that the stabilization and repair plan
developed by their geotechnical engineers had been shared with and approved by
Plaintiff’s engineering firm prior to submission to the City. (Compl., ¶ 118.) Third, Developer Defendants’ agents
represented that they would promptly share these plans with Plaintiff’s
representatives who had not yet seen them. (Compl., ¶119.) Fourth, on February 27, 2023, Developer
Defendants’ geotechnical engineers represented they “that their ‘draft report
will be shared with Langan Engineering and McCoy Construction so that their
input will be taken into consideration before our report is finalized for LADBS
grading department submittal and approval.’ ” (Compl., ¶ 120.)
On April 25, 2023, Plaintiff first
learned that Developer Defendants had never shared the final plans with Langan
Engineers and that these plans had already been submitted to the City. (Compl.,
¶ 121.) Plaintiff relied on these representations and secured the services of
experts to evaluate the plans and incurred unpaid expenses for soil hauling
work. (¶124.) According to the complaint, Developer Defendants’ refusal to
share plans with Plaintiff before submission to the City causing the submission
of plans that may be inadequate, and deprived Plaintiff and its experts of an
opportunity to ensure the City required a permanent fix. (¶ 125.)
The complaint does not suggest that
the above misrepresentations were pre-litigation communications entitled to
protection from the anti-SLAPP statute (or the litigation privilege). The anti-SLAPP statute encompasses
statements made or actions taken that are connected to potential litigation. (Seltzer
v. Barnes (2010) 182 Cal.App.4th 953, 962-963; see Code Civ. Proc., §
425.16(e).) A statement or writing is “in connection with” litigation if it
“relates to the substantive issues in the litigation and is directed to persons
having some interest in the litigation.” (Ibid.) Thus, a
defendant must show that the statements “concern the subject of the dispute”
and were made “in anticipation of litigation ‘contemplated in good faith and
under serious consideration.’” (Neville v. Chudacoff (2008) 160
Cal.App.4th 1255, 1268.) It is not enough that the statement pertained to a topic
that eventually resulted in litigation, since this would be true of all
disputes. They must show an “actual threat of impending litigation,” not just
the “mere possibility” of it. (Id., 1268–1269.) In
other words, the mere “possibility of litigation in the event of nonperformance
is not enough to conclude the claim is made in anticipation of litigation
contemplated in good faith and under serious consideration.” (People ex rel.
Fire Ins. Exch. v. Anapol (2012) 211 Cal.App.4th at 828-829 [attorneys'
subjective belief, not communicated to insurer, that they would have to
litigate claim to receive payment was insufficient to turn ordinary claim into
protected prelitigation conduct].)
Defendants
claim that attorneys made these representations during settlement negotiations,
and thus the statements are entitled to protection. At best, the record suggests
that attorneys were present and some of the representations were made
approximately a month before this suit was filed. However, even
if the parties’ attorneys made the latter three representations, this fact
would not provide pre-litigation protection. The anti-SLAPP statute does
not apply to statements made during negotiations where “the overall tone of the
communications is one of persuasion and a desire to cooperate to achieve mutual
goals.” (Haneline Pac. Properties, LLC v. May (2008) 167 Cal.App.4th 311,
319.) The statute does not apply even
where the “specter of litigation ‘loomed’ over the entire course of the
parties’ communications” and where attorneys mention “pursuing remedies” (i.e., litigation) if
negotiations fail, since “the same could be said of nearly any high-stakes
negotiation.” (Id. at 320.)
“Negotiations and persuasion
are part of any business deal. To suggest that nearly any attempt at
negotiation is covered by the privilege [or the anti-SLAPP statute], especially
when attorneys are involved, is unduly overbroad. We do not find the purposes
of the privilege stretch that far, and thus, neither should the privilege.” (Id,)
Examining the allegations and
evidence surrounding the four misrepresentations at issue, the Court cannot
conclude that they were made in anticipation of imminent litigation. The Court
agrees that the statements generally concern the subject of this dispute, i.e.,
Defendants represented that they would pay or do certain things regarding the
damages to Plaintiff’s property from Defendants’ development and that the
representations made to the parties involved in this suit. However, there is no
indication that such statements were made in anticipation of imminent litigation
that was then under serious consideration. Rather, the facts suggest that
litigation was still a possibility. Unlike all of Defendants’ cited cases,
there was no pending litigation or threatened litigation. (See Salma v.
Capon (2008) 161 Cal.App.4th 1275, 1290 [filing notices of lis pendens and
contacting the district attorney] Rubin v. Green (1993) 4 Cal.4th 1187,
1196–1197 [solicitation of mobile home park residents in preparation of
litigation]; Sylmar Air Conditioning v. Pueblo Contracting Services, Inc.
(2004) 122 Cal.App.4th 1049, 1058 [statements made during the course of
litigation]; Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 971
[statements made during settlement negotiations of pending litigation].) Notably,
the representations were not expressly related to any settlement of
claims. Furthermore, the tone of the negotiations also suggests that litigation
only remained a possibility. Mr. Nostrati, a non-attorney, made the
representations under the guise of being a “good neighbor” rather than trying
to expressly settle any specific claims. Therefore, Defendants do not meet
their initial burden to show that the fraud and UCL claims arise from protected
activity. While generally that would conclude
the Court’s anti-SLAPP analysis, the Court will briefly address the second
prong.
Second Prong
Even if
the Court were to find that the anti-SLAPP statue applied to some of the
statements, the litigation privilege would not prevent Plaintiff from demonstrating
a possibility of prevailing. The scope of the litigation privilege and of the
anti-SLAPP statute are not identical. (Flatley v. Mauro, (2006) 39 Cal.4th
299, 323-325.) The litigation privilege “arises at the point in time when
litigation is no longer a mere possibility, but has instead ripened into a
proposed proceeding that is actually contemplated in good faith and under
serious consideration as a means of obtaining access to the courts for the
purpose of resolving the dispute.” (Edwards v. Centex Real Estate Corp.
(1997) 53 Cal.App.4th 15, 39, italics omitted; see Haneline, supra, 167
Cal.App.4th at 319.)
The¿‘mere possibility or subjective
anticipation’ of litigation is insufficient; it is necessary that there be
proof of¿‘some¿actual verbalization¿of the danger that a given controversy may
turn into a lawsuit¿....’¿ Second, even though¿‘[i]t is not necessary that a
party make an actual “threat” of litigation,’¿there must be ‘a serious, good
faith proposal.’¿Third, the contemplated litigation must be¿imminent.¿
Although¿‘[t]he classic example of an instance in which the privilege would
attach to prelitigation communications is the attorney demand letter
threatening to file a lawsuit if a claim is not settled,’¿it is not the
mere¿threat¿of litigation that brings the privilege into play, but rather the
actual good faith contemplation of an imminent, impending resort to the
judicial system for the purpose of resolving a dispute.¿‘[B]ecause the
privilege does not attach prior to the actual filing of a lawsuit unless and
until litigation is seriously proposed¿in good faith¿for the purpose of
resolving the dispute, even a threat to commence litigation will be
insufficient to trigger application of the privilege if it is actually made as
a means of inducing settlement of a claim, and not in good faith contemplation
of a lawsuit.¿This is a question of fact that must be determined before the
privilege is applied.
(Strawn v. Morris, Polich & Purdy, LLP¿(2019) 30
Cal.App.5th 1087, 1095–1096, quoting Edwards¿v. Centex Real Estate Corp¿(1997)
53 Cal.App.4th 35, 34; see Eisenberg v. Alameda Newspapers, Inc. (1999)
74 Cal.App.4th 1359, 1379-1380 [trial court erred in granting summary judgment
on the basis of the litigation privilege because “[i]t remain[ed] a triable
issue of fact whether ... imminent litigation was seriously proposed and
actually contemplated in good faith as a means of resolving the dispute between
[the parties].”].)
Here, the litigation privilege
would not apply since the claim against Defendants had not ripened into a
proposed proceeding. There is no suggestion that any party seriously
contemplated obtaining access to the courts for the purpose of resolving the
dispute. In any event, Plaintiff presents evidence that would create a dispute
of fact as to whether the communications at play were made pursuant to a
proposed proceeding, in good faith and under serious consideration.
Plaintiff also provides prima facie
evidence of fraud and UCL claims. 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.)
California Business and Professions Code section 17200 prohibits “any unlawful,
unfair or fraudulent business act or practice.” (Bus. & Prof. Code § 17200.)
To establish a fraudulent practice under the UCL, the plaintiff must show that
members of the public are likely to be deceived by the practice. (West v.
JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 806.)
In support of the second prong
burden, Plaintiff presents declarations from Diane Fiorelli, Al Clausen, and
Payton J. Lyon. Fiorelli was an engineer who examined the site and concluded
that the construction activities compromised the integrity of the slope,
causing Plaintiff’s damages. (Fiorelli Decl., ¶¶2-15.) Clausen also describes
the damage that Plaintiff’s parcel suffered. Further, Clausen describes
Plaintiff’s reliance on Defendants’ false promises. (Clausen Decl., ¶¶8-12.) Finally,
Lyon attended the April 21, 2023 site meeting, and testified as to the cooperation
between the parties at that meeting and the statements Defendants’
representatives made at that meeting. (Lyon Decl., ¶¶ 2-10.)
Liberally construing this evidence,
each element of fraud and UCL fraud is met. Defendants represented that that
they would pay for the removal of the debris from the Property and any other
damage that was caused by development activities. (Clausen Decl., ¶ 8.) Defendants’
intent to induce reliance may be inferred from the evidence of the
representations. (Id. ¶¶ 8-12.) Plaintiffs’ justifiable reliance may be
inferred from the evidence of the circumstances of the negotiations. (Id.,
¶¶3-8; Lydon Decl., ¶¶2-8.) Plaintiff presents evidence that the Defendants’
statements regarding their remediation plans were false at the time they were
made. (Lyon Decl., ¶¶ 9-10; Fiorelli Decl., ¶¶ 14-15.) This also suggests
Defendants’ knowledge of falsity and a likelihood that the public would be
deceived. The evidence of reliance also demonstrates Plaintiff’s damages
stemming from the representation.
Accordingly, the special motion to
strike is DENIED.
As to Plaintiff’s request for attorneys’
fees, the Court would tentatively conclude that the anti-SLAPP motion was not
frivolous.
DEMURRER AND MOTION
TO STRIKE ANALYSIS
Entire Complaint
Defendants argue that the entire
complaint fails to state a cause of action because it requires the Defendants
to draw inferences based entirely on “speculation and surmise” as to what each
of them is alleged to have done or failed to do. Essentially, Defendants demur
on the grounds that Plaintiff has lumped them together without making allegations
as to any single defendant. Defendants cite no authority that defining
defendants collectively as “Defendants” would be grounds for demurrer. The
complaint clearly defines the term and alleges specific conduct by Defendants. (Compl.,
¶ 16.) The complaint alleges the conduct that Defendants engaged in, including
the development of their property which led to Plaintiff’s damages. (¶¶ 18-42.)
The complaint expressly alleges legal duties owed and breached by Defendants,
including property rights such as nuisance and trespass, and intentional torts
such as fraud. (Compl., ¶¶63-65, 117-126.) These are “ultimate facts” which
demonstrate legal duties owed to Plaintiffs and breached by Defendants.
Accordingly, the demurrer to the entire
complaint is OVERRULED.
Fraud
Defendants argue that the Complaint
fails to identify any misrepresentations specifically made by Defendants. In California, fraud must be pled with
specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167,
184.) “Fraud must be pleaded with specificity rather than with “ ‘general and
conclusory allegations.’ The specificity requirement means a plaintiff must
allege facts showing how, when, where, to whom, and by what means the
representations were made, and, in the case of a corporate defendant, the
plaintiff must allege the names of the persons who made the representations,
their authority to speak on behalf of the corporation, to whom they spoke, what
they said or wrote, and when the representation was made.” (West v. JPMorgan
Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793, internal citations
omitted.)
According to the complaint, Defendants
made multiple misrepresentations and false promises to Plaintiff to forestall
Plaintiff’s attempts to protect its property and causing Plaintiff to undertake
certain remediation efforts. Mr. Nosrati owns and operates 1951 Bel Air Road
LLC and Huntington Estate Homes, LLC. (¶¶ 5-6.) Nosrati caused 1951 Bel Air
Road LLC to acquire the Bel Air Property through Huntington Estate Properties
and the Tallen entities. (¶ 16.) On February 25, 2023, Nosrati spoke with
Plaintiff’s representative by phone to discuss the condition of the hillside.
(Compl., ¶ 47.) During that conversation, Nosrati admitted that Defendants were
responsible for the damage, reported that he had hired AES, a geotechnical and
environmental engineering consultant, who was in the process of developing a
plan to stabilize the hillside, promised that AES would fix the hillside, and
promised that Developer Defendants would pay for the remediation work on
Plaintiff’s Property in order to make it right, as a “good neighbor” ought to
do. (Id.)
Furthermore, Plaintiff’s
unspecified attorneys met with counsel for Developer Defendants on April 21,
2023, to conduct a site visit of Plaintiff’s Property. (¶¶ 54, 117.)
Defendants’ unspecified agents told Plaintiff (1) they had completed a
comprehensive plan to stabilize the slope and prevent further damage to
Plaintiff’s property and submitted this plan to the City; (2) that Plaintiff’s
geotechnical engineers at Langan had been consulted and had approved of this
plan; and (3) that Developer Defendants would evaluate and quickly respond to
the remediation invoices sent to them for reimbursement. (¶ 55.) Defendants
assured Plaintiff that they would be a “good neighbors” cause Plaintiff to
delay remediation efforts. (¶ 58.)
Reviewing the above allegations,
the misrepresentations do not meet the heightened pleading standards for fraud.
As to the February 25, 2023, representation, the complaint does not state the
precise misrepresentation(s). Instead, the complaint only states that,
generally, Defendants would fix the hillside and pay for remediation work. The
complaint also does not state to whom Nosrati spoke. It only vaguely refers to
Plaintiff’s agents. The complaint also does not state Nosrati’s authority
to speak on behalf of the Tallen entities, although there is a general allegation
that he acquired the Developer Defendants through Huntington Estate Properties. (Compl. ¶ 16.) As to the April
21, 2023, representations, Plaintiff does not state who made the
representations on behalf of Defendants, to whom Defendants’ agent made
representations to, and by what means the representations were made. (See
Compl., ¶¶55, 118-120.) Thus,
further facts are required.
The Court is otherwise not
persuaded by Defendants’ other arguments. Defendants also raises the litigation
privilege. This argument is rejected for the same reasons discussed in the
anti-SLAPP motion. In sum, the complaint does not reveal that litigation was
imminent and seriously contemplated at the time the alleged misrepresentations
were made. To the extent there is a question of fact concerning the privilege,
it cannot be resolved on demurrer.
Defendants also argue that none of
the allegations contained in the complaint amount to a “statements of fact”
which are actionable as fraud. “To be actionable, a negligent misrepresentation
must ordinarily be as to past or existing material facts.” (Tarmann v. State
Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 158.)
Statements as to future action do not constitute actionable fraud. (Id.)
However, a promise of future conduct is actionable if it is made without a
present intent to perform. (Magpali v. Farmers Group, Inc. (1996) 48
Cal.App.4th 471, 481.) “[I]n pleading a fraud action based on the alleged
falsity of a representation or a promise to perform a future act it is not
necessary to allege the circumstantial evidence from which it may be inferred
that the representation or promise was false—these are evidentiary matters
which give rise to the misrepresentation.” (Universal By-Products, Inc. v.
City of Modesto (1974) 43 Cal.App.3d 145, 151.) “The only essential
allegation is the general statement that the representation or promise was
false and that the defendant knew it to be false at the time it was made.” (Id.)
Additionally, whether a statement is nonactionable opinion or actionable
misrepresentation of fact requires a factual determination, which is beyond the
scope of a demurrer. (Furla v. Jon Douglas Co. (1998) 65 Cal.App.4th
1069, 1081.) While some of the misrepresentations are vague, such as the “good
neighbors” or “quickly respond” representations, the other representations
imply Defendants’ present intent to reimburse Plaintiff. Such representation
would not be a mere statement of opinion or prediction of future events, but of
their present intent. Plaintiff alleges that this representation was false and
Defendants knew it was false. (Compl., ¶ 122.)
Likewise, the Court cannot hold, as
a matter of law, that the alleged ultimate facts would not support scienter,
intent to induce reliance or justifiable reliance. (See Compl., ¶¶ 117-118,
122-125.) Generally, such factual questions can only be resolved on demurrer
where reasonable minds can come to only one conclusion based on the facts. (Guido
v. Koopman (1991) 1 Cal.App.4th 837, 843.)
Accordingly, Defendants’ demurrer
is SUSTAINED with leave to amend.
UCL
Defendants demur to the UCL claim
on the grounds that the discussed statements do not constitute a “business
activity” of Defendants and there is no valid remedy pled. Defendants argue that the alleged statements cannot
constitute “business activity.” However, a business act or practice under the
UCL is broadly defined to permit courts to enjoin on-going wrongful business
conduct in whatever context they might occur. (People v. McKale (1979)
25 Cal.3d 626, 632.) The complaint alleges facts that these misrepresentations
were made in the course of Defendants’ business of developing the Bel Air
property. Defendants do not explain why these representations could not be
considered a “act or practice” of their business. A single act is sufficient
under the UCL. (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965,
969.) Moreover, the complaint also targets Defendants’ development and grading
work, which is certainly a business activity. (Compl., ¶17.)
To bring a claim under the fraud
prong, a plaintiff must allege an affirmative misrepresentation, conduct, or
business practice on the part of a defendant; or an omission in violation of a
defendant’s duty to disclose; and that is likely to deceive members of the
public. (Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986; Hypertouch,
Inc. v. ValueClick, Inc. (2011) 192 Cal.App.4th 805, 839-840 [whether
statements or advertisements are likely to deceive a reasonable consumer, is a
fact question].) To state a claim under the unlawful prong, a plaintiff must
allege a violation of law and cite that law. (Graham v. Bank of America,
N.A. (2014) 226 Cal.App.4th 594, 610.) To state a claim under the
unfairness prong, a plaintiff must allege that one or more of the business
practices are unfair, unlawful or fraudulent; and the remedy sought is
authorized by law. (Paulus v. Bob Lynch Ford, Inc. (2006) 139
Cal.App.4th 659, 676; Kwikset Corp. v. Superior Court (2011) 51 Cal.4th
310, 337.)
The complaint alleges several
business practices that are unfair and unlawful and identifies an authorized
remedy. (Compl., ¶¶ 128–136.) On the “unlawful” prong, the complaint alleges
Defendants’ development activities violated two specific provisions of the LAMC
on erosion control plans. (Compl., ¶¶ 17–27, 132–133.) This same conduct may be
seen as unfair for the same reasons the acts may be fraudulent or unlawful.
Therefore, the complaint does allege unlawful, fraudulent or unfair business
practices.
However, Plaintiff improperly seeks
an award of damages to compensate and reimburse for the costs of repair and
remediation of Plaintiff’s property. The remedies for UCL claims brought by
private individuals are limited to injunctive relief and restitution. (Prakashpalan
v. Engstrom, Lipscomb and Lack (2014) 223 Cal.App.4th 1105, 1133.) “The
word ‘restitution’ means the return of money or other property obtained through
an improper means to the person from whom the property was taken.” (Clark v.
Superior Court (2010) 50 Cal.4th 605, 614.) “‘The object of restitution is
to restore the status quo by returning to the plaintiff funds in which he or
she has an ownership interest.’” (Id.) Non-restitution disgorgement of
profits is not an available remedy under a UCL claim brought by a private
individual. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th
1134, 1150-52.) As a result of the alleged conduct, Plaintiff suffered a loss
of $200,000 in damages. (Compl., ¶ 134.) This is not a claim of restitution,
but of damages. Plaintiff does not request an injunction as to the UCL
violation. Thus, Plaintiff does not request any cognizable relief under the UCL
cause. Accordingly, Defendants’ demurrer
is SUSTAINED with leave to amend as to the relief.
The motion to strike punitive
damages is MOOT per the grant of leave on demurrer.
Plaintiff to file an amended complaint
within 10 days.