Judge: Mark H. Epstein, Case: 22SMCV01197, Date: 2023-05-05 Tentative Ruling

Case Number: 22SMCV01197    Hearing Date: May 5, 2023    Dept: R

The demurrer is OVERRULED.  The motion to strike is DENIED.

This is a breach of contract action and now also a fraud action.  Plaintiff contends that defendant entered into a lease agreement but in 2022, defendant sought to terminate the tenancy early.  According to plaintiff, defendant’s principal, Mike Simpson, promised that if plaintiff agreed to terminate the lease early and not pursue damages for the remainder of the lease (which extended through December 2022), defendant would pay the sums that had accrued up to the termination date and would not assert any defenses thereto.  (FAC ¶8.)  Plaintiff did agree.  However, defendant did not pay the promised amount.  When plaintiff brought suit, plaintiff honored the agreement and did not seek damages for the early termination.  However, the tenant did assert various defenses.  Defendant’s position was confirmed in discovery.  Plaintiff then amended the complaint to add a cause of action for fraud, alleging that the promises discussed above were knowingly false when made because defendant had no intention of honoring the agreement.  And Simpson is sued personally because he is the one who made the allegedly knowingly false statement.

Defendants demur to the fraud cause of action stating that insufficient facts are alleged, specifically as to whether the statements made were knowingly false when made.  The court disagrees.  Given the tenant’s virtually immediate breach of the alleged promise, one can infer—at least for pleading purposes—that the promise was never intended to be kept.  While it is true that, at trial, more than mere non-performance of a contractual promise is required to establish fraud, this is not the trial; this is the complaint.  Plaintiff need not provide more details as to defendants’ state of mind.  (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169.)  Because the fraud cause of action survives, so does the request for punitive damages.

Defendants have 20 days to answer.