Judge Martha K. Gooding, Case 2020-01168363 2022-08-22 Tentative Ruling

Judge: Martha K. Gooding, Case: 2020-01168363, Date: 2022-08-22 Tentative Ruling

1. Demurrer to Amended Complaint
2. Motion to Strike Complaint

3. Motion to Strike Complaint

4. Case Management Conference

Defendants Alex Horowitz (“Horowitz”) and Red Door Realty & Investments DBA Coldwell Banker Diamond (“Red Door”) (collectively, “Sellers’ Agents”) demur generally and specially to the first four causes of action alleged in the Third Amended Complaint (“TAC”) filed by Plaintiffs Michael Doutt and Amber Kriens-Doutt (collectively, “Plaintiffs”). Sellers’ Agents also seeks an order striking punitive damages allegations and prayer for punitive damages and attorneys’ fees from Plaintiffs’ TAC.

Defendants James Lee (“Lee”), Jeanette Karla Fuentes (“Fuentes”), and Top Producers A & L dba Re/Max Top Producers (“Top Producers”) (collectively, “Plaintiffs’ Agents”) seek an order striking certain allegations, attorneys’ fees and cost allegations, and prayer for attorneys’ fees from Plaintiffs’ TAC.

As an initial matter, it appears Plaintiffs have agreed to dismiss without prejudice the first cause of action for negligence and third cause of action for concealment against Sellers’ Agents. (Opposition, Page 2, fn. 2.; Reply, 2:4-6.) The Court notes Plaintiffs only referenced dismissing these two causes of action against Horowitz in the opposition, although Sellers’ Agents’ reply contends Plaintiffs will be dismissing both Horowitz and Red Door. Subject to Plaintiffs’ objection, the first and third causes of action against Horowitz and Red Door are dismissed without prejudice.

Accordingly, the only two causes of action alleged against Sellers’ Agents in the TAC are the Second Cause of Action for negligent misrepresentation and Fourth Cause of Action for intentional misrepresentation.

DEMURRER TO TAC

Second Cause of Action for Negligent Misrepresentation

To state a Cause of Action for Negligent Misrepresentation, plaintiffs must plead the following elements: “(1) a false statement of a material fact that the defendant honestly believes to be true, but made without reasonable grounds for such belief, (2) made with the intent to induce reliance, (3) reasonable reliance on the statement, and (4) damages.” (Century Sur. Co. v. Crosby Ins., Inc. (2004) 124 Cal.App.4th 116, 129.)

Every element of fraud must be pleaded with specificity. The particularity requirement for fraud requires the pleading of facts showing how, when, where, to whom, and by what means the representations were made. (Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 73.) This is to provide the defendant with notice and to give the court enough information to assess whether there is a foundation for the charge of fraud. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 216.) The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) Nonetheless, “[l]ess specificity is required when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.” (Committee on Children’s Television, 35 Cal. 3d at 216 [citation and internal quote marks omitted].)

“The maker of a fraudulent misrepresentation is subject to liability for pecuniary loss to another who acts in justifiable reliance upon it if the misrepresentation, although not made directly to the other, is made to a third person and the maker intends or has reason to expect that its terms will be repeated or its substance communicated to the other, and that it will influence his conduct in the transaction or type of transactions involved.” (Hasso v. Hapke (2014) 227 Cal.App.4th 107, 130.)

Plaintiffs did not allege sufficient facts to state this cause of action because they did not allege this cause of action with the required specificity. Plaintiffs did not allege how, where, or when Horowitz represented to Plaintiffs’ agent, Lee, that there was no damage to the foundation. Although this was noted in the Court’s Order sustaining Sellers’ Agents’ demurrer to Plaintiffs’ Second Amended Complaint (“SAC”), it appears Plaintiffs made no effort to address this deficiency.

In addition, the Court notes Plaintiffs allege Red Door and Horowitz “had actual knowledge of the 2013 landslide and foundation damage.” (TAC, ¶¶ 22.) The Court also notes the TAC eliminates this allegation in the second cause of action. (See, SAC, ¶ 62 [“Sellers Agents knew about the 2013 landslide and serious damage to the Residence’s foundation at all times material to this action.”]; TAC, ¶ 64 [Seller’s Agents knew and/or should have known about the damage to the Residence foundation.”].) In light of Plaintiffs’ allegation, it is unclear how Plaintiffs will be able to amend the cause of action to allege Horowitz honestly believed the statement that there was no damage to the foundation to be true, but made the statement without reasonable grounds for such belief. (See, TAC, ¶ 66.)

The demurrer is sustained with one final opportunity to amend within 20 days. Before filing a Fourth Amended Complaint, Plaintiffs shall meet and confer with Sellers’ Agents in accordance with Code of Civil Procedure section 430.41, subdivision (c).

Fourth Cause of Action for Intentional Misrepresentation

The essential elements for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231.)

Plaintiffs did not allege this cause of action with the required specificity. More specifically, Plaintiffs did not allege how, where, or when Horowitz represented to Plaintiffs’ agent, Lee, that there was no damage to the foundation. As with the Second Cause of Action, the Court noted this pleading deficiency when the Court sustained Sellers’ Agents demurrer to this cause of action as alleged in the SAC. No additional allegations were added to the TAC to address this deficiency.

The demurrer to this cause of action is sustained with one final opportunity to amend within 20 days. Before filing a Fourth Amended Complaint, Plaintiffs shall meet and confer with Sellers’ Agents in accordance with Code of Civil Procedure section 430.41, subdivision (c).

Statute of Limitations

Horowitz and Red Door contend the Second and Fourth Causes of Action are barred by the two-year statute of limitations set forth in Civil Code section 2079.4. Plaintiffs’ opposition did not address this contention.

Civil Code section 2079.4 provides as follows: “In no event shall the time for commencement of legal action for breach of duty imposed by this article exceed two years from the date of possession, which means the date of recordation, the date of close of escrow, or the date of occupancy, whichever occurs first.”

Horowitz and Red Door contend the statute was triggered upon the close of escrow on the Residence and that Plaintiffs purchased the Residence on or about 8/21/2017. (Demurrer, 9:15-19, referencing paragraph 50 of the TAC.)

The same allegation appears in the SAC. (SAC, ¶¶ 1, 49, 60, 71, and 82.) Horowitz and Red Door did not raise this ground in their demurrer to the SAC. Accordingly, Horowitz and Red Door cannot now demur on this ground to the TAC. (Code Civ. Proc., § 430.41, subd. (b) [“A party demurring to a pleading that has been amended after a demurrer to an earlier version of the pleading was sustained shall not demur to any portion of the amended complaint, cross-complaint, or answer on grounds that could have been raised by demurrer to the earlier version of the complaint, cross-complaint, or answer.”].)

Even if the Court were to consider this ground, the demurrer would be overruled because there is no allegation that 8/21/2017 was the date escrow closed, any document recorded, or the date of occupancy. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403 [“In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.”].) The TAC alleges Defendant Mike Booth conducted a home inspection 8/23/2017 and that Plaintiffs relied, in part, on Booth’s home inspection before closing escrow. (TAC, ¶ 11.)

Uncertainty

Although the Demurrer by Horowitz and Red Door states they demur to each cause of action on the ground of uncertainty, the memorandum does not address uncertainty. It is referenced only in the reply brief. (Reply, 2:14-17.) This alone is grounds to overrule the demurrer.

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 California, Inc. (1993) 14 Cal.App.4th 612, 616.) Errors and confusion created by “the inept pleader” are to be forgiven if the pleading contains sufficient facts entitling plaintiff to relief. (Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908.) A demurrer for uncertainty should be overruled if the facts are presumptively within defendant’s knowledge. (Khoury, 14 Cal.App.4th at 616.) A party attacking a pleading on “uncertainty” grounds must specify how and why the pleading is uncertain, and where that uncertainty can be found in the challenged pleading. (Fenton v. Groveland Community Services Dept. (1982) 135 Cal.App.3d 797, 809, disapproved on other grounds in Katzberg v. Regents of the University of California (2002) 29 Cal.4th 300.)

Here, the Second and Fourth Causes of Action are not so unintelligible that Horowitz and Red Door cannot reasonably respond. Any ambiguities can be clarified through discovery. (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135; Khoury, 14 Cal.App.4th at 616.)

Accordingly, the demurrer to the second and fourth causes of action on this ground is overruled.

MOTIONS TO STRIKE

In light of the parties’ representation that Plaintiffs will dismiss the First and Third Causes of Action against Horowitz and Red Door without prejudice and the Court’s ruling on Horowitz’s and Red Door’s demurrer, the Motion to Strike by Horowitz and Red Door is moot.

Plaintiffs’ Agents seek an order striking the following from Plaintiffs’ TAC:

1) Paragraph 112

2) The words “attorney [sic] fees and costs” from paragraph 113

3) Paragraph 120

4) The words “attorney [sic] fees and costs” from paragraph 121

5) The words “Attorneys’ fees and costs, according to proof” from the prayer

Legal authority

Pursuant to Code of Civil Procedure section 436, the Court may:

(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.

“The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437, subd. (a).)

“[J]udges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

Attorneys’ fees generally are not recoverable unless specifically provided for by statute or subject to an express agreement between the parties. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 25; Code Civ. Proc., §§ 1021 and 1717.)

Plaintiffs contend they are entitled to fees pursuant to CCP section 1021, CRC Rule 3.1702, and the “tort of another” doctrine.

CCP section 1021 provides, “Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties; but parties to actions or proceedings are entitled to their costs, as hereinafter provided.”

CRC Rule 3.1702(a) provides, “Except as otherwise provided by statute, this rule applies in civil cases to claims for statutory attorney’s fees and claims for attorney’s fees provided for in a contract.”

The damages recoverable through the “tort of another” doctrine are often referred to as an exception to the “American Rule”, whereby litigants are required to pay their own legal fees, absent an agreement to the contrary, or a statute. (Trope v. Katz (1995) 11 Cal.4th 274; Code Civ. Proc., § 1021.) Under the “tort of another” doctrine, a person “who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney’s fees, and other expenditures thereby suffered or incurred.” (Prentice v. North Am. Title Guaranty Corp., Alameda Division (1963) 59 Cal.2d 618, 620; Electrical Electronic Control, Inc. v. Los Angeles Unified School Dist. (2005) 126 Cal.App.4th 601, 617.)

Under this doctrine, attorneys’ fees are recoverable as an item of damages. “The theory of recovery is that the attorney fees are recoverable as damages resulting from a tort in the same way that medical fees would be part of the damages in a personal injury action.” (Sooy v. Peter (1990) 220 Cal.App.3d 1305, 1310.)

“When a plaintiff must bring an action against a third party as ‘the natural and probable consequence’ of the defendant’s negligence, the attorney’s fees in that action are recoverable as damages against the defendant…Conversely, when the action against the third party is not a natural and probable consequence of the defendant’s negligence, the attorney’s fees are not recoverable…When two defendants jointly commit a tort, a plaintiff cannot simply argue that one defendant’s conduct caused the plaintiff to pursue an action against the other. ‘The rule of Prentice was not intended to apply to one of several joint tortfeasors in order to justify additional attorney fee damages.’” (Electrical Electronic Control, Inc. v. Los Angeles Unified School Dist. (2005) 126 Cal.App.4th 601, 616-617 [internal citations omitted]; see Vacco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 57 [“The rule of Prentice was not intended to apply to one of several joint tortfeasors in order to justify additional attorney’s fee damages. If that were the rule there is no reason why it could not be applied in every multiple tortfeasor case with the plaintiff simply choosing the one with the deepest pocket as the ‘Prentice target.’ Such a result would be a total emasculation of Code of Civil Procedure section 1021 in tort cases.”]; Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 80-81 [The tort of another doctrine does not apply to the situation where a plaintiff has been damaged by the joint negligence of codefendants, where there is no evidence plaintiffs named subcontractors as defendants as a result of contractor’s negligence, as opposed to subcontractors’ own negligence.].)

Plaintiffs did not show they may recover attorneys’ fees from Plaintiffs’ Agents pursuant to a contract or statute. Plaintiffs contend their attorneys’ fees and costs allegations and prayer for attorneys’ fees and costs are proper because of the “tort of another” doctrine. However, Plaintiffs did not show the action against the other defendants was a natural and probable consequence of Plaintiffs’ Agents’ negligence. Rather, the TAC alleges separate acts of misconduct by the co-defendants, as opposed to Plaintiffs’ Agents. Although Plaintiffs allege they relied on Plaintiffs’ Agents’ expertise and that Plaintiffs’ Agents were negligent and breached their fiduciary duties, the action against the other defendants were not a natural and probable consequence of Plaintiffs’ Agents’ actions.

Accordingly, Plaintiffs’ Agents’ motion to strike the language regarding attorneys’ fees and the prayer for attorneys’ fees is granted with 20 days leave to amend.

The Court notes Plaintiffs’ Agents also seek to strike the words “and costs” from paragraphs 113 and 121 and the prayer. Plaintiffs’ Agents have not shown this language is subject to strike. Accordingly, Plaintiffs’ Agents’ motion to strike the words “and costs” is denied.

Lastly, Plaintiffs’ Agents also did not show paragraphs 112 and 120 are subject to strike. The motion to strike these two paragraphs is denied.

Horowitz and Red Door shall give notice.

CASE MANAGEMENT CONFERENCE-continued to October 24, 2022 at 9:00 a.m.