Judge: Mel Red Recana, Case: 23STCV30314, Date: 2024-06-28 Tentative Ruling
Case Number: 23STCV30314 Hearing Date: June 28, 2024 Dept: 45
|
AHMAN
DOLPHIN, Plaintiff, vs. EJ
HAWKINS, et al., Defendants. |
Case No.: 23STCV30314
DEPARTMENT
45 [TENTATIVE] RULING Action
Filed: 12/12/23 Trial
Date: None set. |
Hearing
date: June 28, 2024
Moving
Party: Defendant Side, Inc.
Responding
Party: Plaintiff Ahman Dolphin
Demurrer
with Motion to Strike
The Court
considered the moving papers, opposition, and reply.
The
Court SUSTAINS WITH LEAVE TO AMEND Defendant’s demurrer to the entirety
of Plaintiff’s Complaint. The Motion to Strike is MOOT. The Court orders Plaintiff to file a First
Amended Complaint within 20 days of this Order.
Background
In
or about October 2019, Plaintiff Ahman Dolphin (“Plaintiff”) entered into a
written Contract with Defendant Ej Hawkins (“Defendant” or “Hawkins”). (Complaint
¶ 14.) Under the Contract, Hawkins would represent Plaintiff as Plaintiff’s
agent in purchasing a vacant lot known as 7305 Pyramid Place, Los Angeles, CA
90046 ( “Property”) (Id.) Defendants The Orion Real Estate Investment
Group, Inc. and The Orion Group (“Orion Defendants”) are alleged to be alter
egos of Defendant Hawkins. (Complaint ¶13.)
On
October 2, 2019, Plaintiff allegedly signed an agreement to purchase the
Property for $1.8 Million, contingent upon approval of the Plans, and Seller
providing Financing for the purchase and construction. (Complaint ¶17.)
Plaintiff alleges that Defendant Hawkins instructed Plaintiff to place a
$24,000 deposit into escrow pursuant to routing and account numbers provided by
Defendant Hawkins, which—according to Plaintiff—would finalize the agreement
and complete the formation of the Real Estate Purchase Agreement (“Purchase
Agreement”). (Complaint ¶¶18-19.) From October 2019 until November 2023,
Plaintiff alleges that they relied on Defendant Hawkins’ alleged
representations that the Property was still in escrow awaiting approval of the
Plans. (Complaint ¶22.)
On
or about November 15, 2023, Plaintiff became aware that the Property had been
listed for sale at $3,995,000.00 by a different seller. (Complaint ¶23.)
Plaintiff alleges that Defendant Hawkins misrepresented that the property had
undergone a “double escrow,” and Defendant Hawkins had wired Plaintiff’s
$24,000.00 deposit into an account belonging to himself. (Complaint ¶¶23, 25.)
Plaintiff alleges further that Defendant Hawkins knew or should have known that
the Property had been sold to another buyer. (Id.)
On
December 6, 2023, Plaintiff filed a Complaint for the following causes of
action: (1) Breach of Fiduciary Duty; (2) Fraud; (3) Conversion; (4)
Professional Negligence; (5) Breach of Contract; (6) Breach of the Covenant of
Good Faith and Fair Dealing; and (7) Receiving Stolen Property, seeking actual
damages, exemplary and punitive damages, treble damages, attorney’s fees, and
costs of suit.
Legal
Standard
When
considering demurrers, courts read the allegations liberally and in context. (Taylor
v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th
1216, 1228.) “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.” (SKF Farms v. Superior
Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a
demurrer hearing is whether the complaint, as it stands, unconnected with
extraneous matters, states a cause of action.” (Hahn v. Mirda (2007) 147
Cal.App.4th 740, 747.)
Judicial
Notice
Defendant Side Inc. requests the
Court take judicial notice for the following document pursuant to California
Evidence Code sections 451 and 452:
1. Exhibit 1 - Public License
History from the Department of Real Estate in the State of California, dated
January 2, 2024, identifying Moving Party as Defendant, EJ HAWKINS’ (“Hawkins”)
Responsible Broker from October 12, 2020 until present. Prior to October 12,
2020, Defendant Hawkins’ Responsible Broker was listed as Walter L. Dees from
July 19, 2020, to October 11, 2020, and August 15, 20218 until February 2,
2019.
The Court grants judicial notice,
but not of the facts stated therein.
Discussion
As a preliminary matter, the Court notes that
Plaintiff’s opposition was untimely by one court day. Code of Civil Procedure,
section 1005(b) provides that “[a]ll papers opposing a motion so noticed shall
be filed with the court and a copy served on each party at least nine court days…before
the hearing. The hearing is scheduled for June 28, 2024; thus, the opposition
was due on June 14, 2024, but was filed on June 17, 2024. Nonetheless, the
Court in its discretion considers the opposition.
Demurrer
First Cause of Action: Breach of Fiduciary
Duty
Defendant
argues that the First Cause of Action fails to state facts sufficient to
constitute a cause of action as against Moving Party. (Code of Civil Procedure,
§430.10(e).) Moreover, it is uncertain. (Code of Civil Procedure, §430.10(f).)
Plaintiff argues that the cause of action is adequately plead because Side, Inc
is a real estate brokerage company and would have owed a fiduciary duty to
disclose relevant details of the transaction.
To
establish a cause of action for breach of fiduciary duty, plaintiff must plead
“(1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3)
damage proximately caused by the breach.” (Gutierrez v. Girardi
(2011) 194 Cal. App. 4th 925, 932.) A fiduciary relationship requires that
a relation existing between parties to a transaction wherein one of the parties
is duty bound to act with the utmost good faith for the benefit of the other
party. (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29
[internal citations omitted].) A relationship ordinarily exists when “a
con¿dence is reposed by one person in the integrity of another, and . . . the
party in whom the con¿dence is reposed, if he voluntarily accepts or assumes to
accept the con¿dence, can take no advantage from his acts relating to the
interest of the other party without the latter’s knowledge or consent.’” (Ibid.)
The
Complaint alleges “[b]y virtue of being Plaintiff’s agent, Hawkins owe a
fiduciary duty to the Plaintiff.” (Complaint ¶27.) For instance, “Hawkins held
himself out to Plaintiff as a California licensed Real Estate Broker holding
license # 01339756. In communicating offers and responses to counter-offers,
Hawkins acted as Plaintiff’s Buyer’s Agent (as defined in Cal. Bus. & Prof.
Code § 10018.06).” (Complaint ¶¶ 15-16.) The Complaint also alleges “Defendant
Hawkins has advised Plaintiff that he is affiliated with, under the control of
and insured by Side.” (Complaint ¶8.) The Complaint further alleges “The
Complaint also alleges that “[Defendant] Hawkins has, with the intent to injure
Plaintiff, breached his fiduciary duty by engaging in actions alleged above,”
and “[Defendant] Hawkins willfully misinformed Plaintiff of the actual status
of the Property”. (Complaint ¶¶28-31.) Moreover, the Complaint alleges “Hawkins
instructed Plaintiff to place a Twenty-four Thousand dollar ($24,000.00)
deposit (the “Deposit”) into an escrow account to finalize the agreement.
Plaintiff agreed to do so completing the formation of the Real Estate Purchase
Agreement.” (Complaint ¶ 18.) However, “Plaintiff is informed and believes, and
thereupon alleges that Hawkins failed to complete the transaction on
Plaintiff’s behalf, routed Plaintiff’s Deposit into an account belonging to
and/or controlled by Hawkins and/or other Doe Defendants, and over the next
four years, covered up his malfeasance by repeatedly informing Plaintiff that
the property remained in escrow after he knew . . ..” (Complaint ¶25.)
Plaintiff’s
reliance on Horiike v. Coldwell Banker Residential Brokerage Co., is instructive.
(Horiike v. Coldwell Banker Residential Brokerage Co (2016) 1 Cal. 5th
1024, 1036–37.) Although the Horiike case is not factually similar to
the instant case because it is not “a case of vicarious liability”, the
California Supreme Court’s reasoning discusses fiduciary duty and the role
between brokers and realtors/salespersons. (Horiike v. Coldwell Banker
Residential Brokerage Co. (2016) 1 Cal.5th 1024, 1038.) For instance, the
California Supreme Court states “Brokers, in turn, are required to supervise
the activities of their salespersons and may be disciplined and held liable
based on salespersons' conduct within the scope of their employment. (Civ.
Code, § 2338; see also Bus. & Prof. Code, § 10177, subd. (h) (Horiike v.
Coldwell Banker Residential Brokerage Co. (2016) 1 Cal.5th 1024,
1036-1037.) Here, Defendant Side Inc is alleged to be the broker for Defendant
Hawkins. Nevertheless, the State of California Department of Real Estate’s
records show that Defendant Hawkins’s former responsible broker during the
alleged period of the incident was Walter L. Dees and not Side, Inc. (RJN No.
1) Plaintiff did not dispute this claim
or object to the judicial notice request. Whether Defendant Hawkins advised Defendant
Side, Inc that the deal was still progressing when he became associated with Defendant
Side, Inc is also unpled. There are no allegations as to why Moving Party would
be obligated to supervise a deal between Defendant Hawkins, the Orion
Defendants and Plaintiff retroactively.
Therefore, the Court SUSTAINS WITH
LEAVE TO AMEND the First Cause of Action for breach of fiduciary duty.
Second Cause of Action: Fraud
“The elements of fraud, which give
rise to the tort action for deceit, 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.” (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 638.) “[F]raud must be
pled specifically; general and conclusory allegations do not suffice. . . .This
particularity requirement necessitates pleading facts which show how, when,
where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal. 4th at 645 [internal quotation
marks and ellipses omitted].)The law holds plaintiffs
to a higher stand where there is a corporate defendant. In that case plaintiff
must “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.” (Id. at p.
645; See also Wald v. TruSpeed Motorcars, LLC (2010)
184 Cal.App.4th 378 [applying the heightened corporate pleading standing to an
LLC].)
For
the same reasons mentioned above regarding Side, Inc.’s involvement in its
supervision of Defendant Hawkins, the facts provided are insufficient to state
a cause of action as to Defendant Side, Inc.
Therefore,
the Court SUSTAINS WITH LEAVE TO AMEND the Second Cause of Action for Fraud.
Third Cause of Action: Conversion
“Conversion is the wrongful exercise
of dominion over the property of another.
The elements of a conversion claim are: (1) the plaintiff’s ownership or
right to possession of the property; (2) the defendant’s conversion by a
wrongful act or disposition of property rights; and (3) damages.” (Lee
v. Hanley (2015) 61
Cal.4th 1225, 1240; see also Farmers
Ins. Exchange v. Zerin (1997)
53 Cal.App.4th 445, 451“[C]onversion is a strict liability tort. It does not
require bad faith, knowledge, or even negligence; it requires only that the
defendant have intentionally done the act depriving the plaintiff of his or her
rightful possession.” (Voris
v. Lampert (2019) 7 Cal.
5th 1141, 1158.)
Money cannot be the subject of a
conversion unless a specific, identifiable sum is involved. (5 Witkin, Summary
11th Torts § 815 (2023); see also Fischer
v. Machado (1996) 50
Cal.App.4th 1069, 1072 [action for conversion was proper where a commission
merchant received funds for sale of products and used them for his personal
use, rather than turning them over to plaintiff as obligated to do].)
The Complaint alleges, “Plaintiff is
informed and believes, and thereupon alleges that Hawkins and one or more of
the Doe defendants converted the $24,000 Deposit by instructing Plaintiff to
wire the funds to an account over which Hawkins had actual or constructive
control. As a direct and proximate result of the foregoing acts of Defendants,
Plaintiff has been damaged in an amount of not less than $24,000.” (Complaint
¶¶ 39-40.) The Complaint further alleges “Defendant Hawkins has advised
Plaintiff that he is affiliated with, [and] under the control of and insured by
Side” and that “at all times herein relevant, Defendants and each of them, were
the agents, servants and employees of their Co-defendants . . ..” (Complaint ¶¶ 8,12.)
For the same reasons above regarding
the uncertainty of Defendant Side, Inc.’s involvement at the time of the
alleged incident and given the lack of facts pled as to Side, Inc, there are
insufficient facts to state a cause of action as to Side, Inc.
Therefore, the Court SUSTAINS WITH
LEAVE TO AMEND the Third Cause of Action for Fraud.
Fourth Cause of Action: Professional
Negligence
“The elements for negligence cause
of action are duty, breach, causation and damages.” (County of Santa Clara v. Atlantic
Richfield Co. (2006) 137
Cal.App.4th 292, 318.)¿ “Ordinarily, negligence may be alleged in general
terms, without specific facts showing how the injury occurred, but there are
limits to the generality with which a plaintiff is permitted to state his cause
of action, and the plaintiff must indicate the acts or omissions which are said
to have been negligently performed. He
may not recover upon the bare statement that the defendant’s negligence has
caused him injury.” (Berkley
v. Dowds (2007) 152 Cal.App.4th
518, 527 [Internal quotations and ellipses omitted].) “However, there is no requirement that
plaintiff identify and allege the precise moment of the injury or the exact
nature of the wrongful act.” (Hahn
v. Mirda (2007) 147
Cal.App.4th 740, 747 [internal brackets omitted].)
For the same reasons above regarding the
uncertainty of Defendant Side, Inc.’s involvement at the time of the alleged
incident and given the lack of facts pled as to Side, Inc, there are
insufficient facts to state a cause of action as to Side, Inc.
Therefore, the Court SUSTAINS WITH
LEAVE TO AMEND the Fourth Cause of Action for Professional Negligence.
Fifth Cause of Action: Breach of
Contract
“To establish a cause
of action for breach of contract, the plaintiff must plead and prove (1) the
existence of the contract, (2) the plaintiff’s performance or excuse for
nonperformance, (3) the defendant’s breach, and (4) resulting damages to the
plaintiff.” (Maxwell v. Dolezal (2014)
231 Cal.App.4th 93, 97-98 [internal citation omitted].) For a written contract, the plaintiff may “plead
the legal effect of the contract rather than the price language.” (Ibid.) To “plead a contract by its legal effect,
plaintiff must ‘allege the substance of its relevant terms. This is more
difficult, for it requires a careful analysis of the instrument,
comprehensiveness in statement, and avoidance of legal conclusions.’ ” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)
For the same reasons above regarding
the uncertainty of Defendant Side, Inc.’s involvement at the time of the
alleged incident and given the lack of facts pled as to Side, Inc, there are
insufficient facts to state a cause of action as to Side, Inc.
Therefore, the Court SUSTAINS WITH
LEAVE TO AMEND the Fifth Cause of Action for Breach of Contract.
Sixth Cause of Action: Breach of
Covenant of Good Faith and Fair Dealing
The covenant of good faith and fair
dealing is “implied by law in every contract.” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) It “requires
each party to do everything the contract presupposes the party will do to
accomplish the agreement’s purposes.” (Ibid.) “[T]he covenant of good faith and fair dealing applies to employment
contracts and that breach of the covenant may give rise to contract but not
tort damages.” (Foley
v. Interactive Data Corp. (1988)
47 Cal.3d 654, 663.)
To state a claim for the breach of
the covenant of good faith and fair dealing, the plaintiff must allege “that
the conduct of the defendant. . . demonstrates a failure or refusal to
discharge contractual responsibilities, prompted not by an honest mistake, bad
judgment or negligence but rather by a conscious and deliberate act, which
unfairly frustrates the agreed common purposes and disappoints the reasonable
expectations of the other party thereby depriving that party of the benefits of
the agreement.” (Careau
& Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.) To decide
if this has occurred, the court looks at the “contractual purposes and
reasonably justified expectations of the parties.” (Ibid.)
“The prerequisite for any action for
breach of the implied covenant of good faith and fair dealing is the existence
of a contractual relationship between the parties, since the covenant is an
implied term in the contract.” (Smith
v. City and County of San Francisco (2002) 225 Cal.App.3d 48, 49.)
For the same reasons above regarding
the uncertainty of Defendant Side, Inc.’s involvement at the time of the
alleged incident and given the lack of facts pled as to Side, Inc, there are
insufficient facts to state a cause of action as to Side, Inc.
Therefore, the Court SUSTAINS WITH
LEAVE TO AMEND the Sixth Cause of Action for Breach of Covenant of Good Faith
and Fair Dealing.
Seventh Cause of Action: Receiving
Stolen Property
Defendant
argues that the Seventh Cause of Action fails to state facts sufficient to
constitute a cause of action as against Moving Party. Code of Civil Procedure,
§430.10(e).
For the same reasons above regarding
the uncertainty of Defendant Side, Inc.’s involvement at the time of the
alleged incident and given the lack of facts pled as to Side, Inc, there are
insufficient facts to state a cause of action as to Side, Inc.
Therefore, the Court SUSTAINS WITH
LEAVE TO AMEND the Seventh Cause of Action for Receiving Stolen Property.
Motion to Strike
As
the Demurrer has been sustained with leave to amend as to the entire Complaint,
the Motion to Strike is Moot.
It
is so ordered.
Dated: June 28, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court