Judge Michael E. Whitaker, Case Number: 23SMCV03311, Date: 2024-01-16 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV03311, Date: 2024-01-16 Tentative Ruling

This action stems from a dispute over a broker’s commission between Plaintiff Rone Oren (“Plaintiff”), a real estate broker, and Defendant Svetlana Vodolazhskaya (“Defendant”), Plaintiff’s client.

In the First Amended Complaint (“FAC”), Plaintiff asserts three causes of action: (1) breach of contract; (2) common counts; and (3) fraud.

Defendant demurs to all three causes of action and moves to strike the request for punitive damages in the FAC. Plaintiff opposes the demurrer and motion, and Defendant replies.

Defendant requests the Court to take judicial notice of Plaintiff’s original complaint filed in this action.

Judicial notice may be taken of records of any court in this state. (Evid. Code, § 452, subd. (d)(1).) Because the complaint is part of the Court’s record for this case, the Court may take judicial notice of it. (Ibid.) However, “while courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files. Courts may not take judicial notice of allegations in affidavits, declarations and probation reports in court records because such matters are reasonably subject to dispute and therefore require formal proof.” (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [cleaned up].) Accordingly, the Court takes judicial notice of the existence of the original complaint filed in this matter as a court record, but not the truth of the allegations contained therein.

Defendant demurs to all three causes of action in Plaintiff’s Complaint on the basis that they failed to state facts sufficient to constitute causes of action against Chan under Code of Civil Procedure section 430.10(e).

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if one consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Defendant argues the breach of contract claim fails because (1) the allegations of the FAC contradict those of the original complaint, and therefore the FAC constitutes a sham pleading; (2) Plaintiff fails to either include the written agreement or plead its legal effect; and (3) the statute of frauds bars Plaintiff’s claim because Plaintiff did not attach the contract to the Complaint.

“Under the sham pleading doctrine, plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers or motions for summary judgment.” (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425.)

3. In or about January 2021, Defendant enlisted Plaintiff to help her purchase a residential real property located at 650 Resolano Drive, Pacific Palisades, Ca 90272 (the “Resolano Property”).

2.[1] On or about January 26, 2021, the former owner and seller of the Resolano paid Plaintiff a commission of $55,000.00. A true and correct copy of the Seller’s instructions to pay Plaintiff a $55,000 commission is attached hereto as Exhibit 1.

3. On or about January 28, 2021, Defendant learned that she needed additional cash to purchase the Resolano Property. Defendant asked Plaintiff to give him his $55,000 so she could close escrow for the Resolano Property. Plaintiff agreed to give Defendant $55,000 so she could close escrow. In consideration for the loan, Defendant, in writing, agreed that Plaintiff could list and sell the Resolano Property.

4. On January 28, 2021, Plaintiff and Defendant executed an amended escrow instruction instructing escrow to credit Defendant his $55,000.00 commission. A true and correct copy of the amended escrow instruction signed by Defendant is attached hereto as Exhibit 2.

5. On February 2, 2021, Defendant closed escrow utilizing Plaintiff’s $55,000 to pay for her purchase and acquisition of the Resolano property. A true and correct copy of the Defendant’s estimated settlement statement is attached hereto as Exhibit 3.

6. On February 3, 2021, Defendant confirmed, in writing, that Plaintiff could list and sell the Resolano Property. A true and correct copy of Defendant’s confirmation is attached hereto as Exhibit 4.

7. From February 3, 2021 through September 2022, Defendant assured Plaintiff that she was rehabilitating the Property and she would soon be ready to list and sell the Property.

8. Defendant stopped responding to Plaintiff’s request that she list and sell the Property in January 2023.

9. On or about June 6, 2023, Defendant accused Plaintiff of stalking and harassing her. Defendant informed Plaintiff that she would not allow him to list and sell the Resolano Property.

10. Plaintiff is informed and believes that the commission he would earn if he listed and sold the Resolano Property in July 2023 would exceed $150,000.00.

3. In January, 2021, Defendant wanted to purchase a residential real property at 650 Resolano Drive, Pacific Palisades, Ca 90272 (the “Resolano Property”). Defendant required the services of a real estate broker to purchase the Resolano Property.

4. On January 19, 2021, Defendant told Plaintiff that he would receive a broker’s commission if he served as her real estate broker and she was able to acquire the Resolano Property. Plaintiff agreed to be Defendant’s real estate broker in exchange for a broker’s commission.

5. On January 19, 2021, Defendant signed the Disclosure of Regarding Real Estate Agency Relationship attached hereto as Exhibit 1. On January 19, 2021, Defendant signed the California Residential Purchase Agreement and Joint Escrow Instructions (“Purchase Agreement”) attached hereto as Exhibit 2. ¶ 2(B) of the Purchase Agreement identifies Plaintiff as Defendant’s Real Estate Broker. ¶ 18 of the Purchase Agreement provides that Plaintiff will receive his real estate commission at Close of Escrow. Plaintiff is a third party beneficiary of the Purchase Agreement.

6. On or about January 26, 2021, the seller of the Resolano Property instructed escrow to pay Plaintiff a commission of $55,000.00. A true and correct copy of the Seller’s instructions to pay Plaintiff a $55,000 commission is attached hereto as Exhibit 3.

7. On or about January 28, 2021, Defendant told Plaintiff that she would give Plaintiff the listing to sell the Resolano Property after escrow closed if Plaintiff would advance her his $55,000 commission so she could close escrow for the Resolano Property.

8. On January 28, 2021, in consideration for Defendant’s promise to allow Plaintiff to list and sell the Resolano Property after escrow closed, Plaintiff signed an escrow instruction instructing escrow to credit his $55,000 commission to Defendant. A true and correct copy of this escrow instruction is attached hereto as Exhibit 4.

9. On January 28, 2021, Defendant used Plaintiff’s $55,000 commission to acquire the Resolano Property as evidence by the Closing Statement attached hereto as Exhibit 5. Escrow closed on February 2, 2021.

10. On February 3, 2021, Plaintiff sent a text message to Defendant requesting that Defendant acknowledge her agreement to give Plaintiff the listing to sell the Resolano Property. Defendant acknowledged that she would give Plaintiff the listing. A true and correct copy of this text message exchange is attached hereto as Exhibit 6.

11. From February 3, 2021 through September 2022, Defendant and Plaintiff spoke about the Resolano Property and Defendant’s promise to allow Plaintiff to list and sell the Property. Defendant told Plaintiff that she was fixing up the Property and Defendant showed Plaintiff that she was fixing up the Resolano Property. Defendant told Plaintiff that she would be ready to list and sell the Property soon. Plaintiff reminded Defendant that she still owed him the $55,000 broker’s commission.

13. On or about June 6, 2023, Defendant accused Plaintiff of stalking and harassing her. Defendant informed Plaintiff that she would not allow him to list and sell the Resolano Property and would not pay him his $55,000.00 commission.

The Court finds that the underlying facts between both versions of the complaint are essentially the same. Namely, Plaintiff was Defendant’s real estate broker in connection with Defendant’s purchase of real property, Plaintiff’s commission on that purchase was $55,000, Plaintiff either loaned or advanced that $55,000 to Defendant so Defendant could complete the purchase of the property in exchange for Plaintiff’s agreement to allow Defendant to list the property for sale after Plaintiff renovated it. While the FAC contains more clarifying details, the Court does not find that the FAC fundamentally contradicts the initial complaint or is otherwise a sham pleading.

Defendant next emphasizes that Plaintiff does not attach any purported written contract to the complaint, and therefore the pleading fails to state a cause of action for breach of written contract and also violates the statute of frauds. The Court disagrees.

As Defendant acknowledges, it suffices to plead the legal effect of the written agreement. Plaintiff has done so here with detailed factual allegations.[2] In addition to the above allegations, the FAC alleges:

20. Defendant and Defendants have materially breached and failed to perform the condition of their Agreement to pay Plaintiff his real estate commission for acting as their real estate broker during the purchase and acquisition of the Resolano Property.

21. Plaintiff has performed each covenant and condition of the Parties agreement.

22. As a direct, proximate and foreseeable result of the Defendant and the Defendants breach of her written agreement to pay Plaintiff his broker’s commission, Plaintiff has suffered and sustained damages in the sum of $55,000.

Therefore, Plaintiff has adequately pleaded a cause of action for breach of contract. Ultimately, whether an agreement in fact exists or is barred by the statute of frauds are factual questions to be resolved at later stages of the litigation.

Therefore, the Court overrules Plaintiff’s demurrer to the first cause of action.

The elements of a common count are (1) statement of indebtedness in a certain sum; (2) consideration; and (3) nonpayment. (Allen v. Powell (1967) 248 Cal.App.2d 502, 510.)

Defendant argues that Plaintiff fails to allege a common count cause of action because there was no agreement for Defendant to repay the $55,000. The Court disagrees. Plaintiff alleges an indebtedness in the amount of $55,000. Whether Plaintiff can ultimately prove that element of indebtedness is a factual issue to be determined at later stages of the litigation.

Therefore, the Court overrules Plaintiff’s demurrer to the second cause of action.

“In a promissory fraud action, to sufficiently alleges [sic] defendant made a misrepresentation, the complaint must allege (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060.)

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Ibid.)

“One of the purposes of the specificity requirement is notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.) As such, less 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[.]” (Ibid.) “Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.” (Ibid.)

27. On January 21, 2021, Defendant told Plaintiff that he would be paid a buyer’s broker’s commission if he acted as Defendant’s real estate broker. Plaintiff relied upon Defendant’ representation that he would be paid his broker’s commission when escrow closed. Plaintiff agreed to act as Defendants real estate broker in exchange for a buyer’s broker’s commission.

28. Defendant intended that Plaintiff rely upon their representation that he would be paid a commission for acting as her real estate broker.

29. Defendant’s representation that Plaintiff would be paid a real estate commission for acting as her real estate broker was false. Defendant knew that her representation was false when she made the representation to Plaintiff on January 21, 2021.

30. Defendant and Defendants did not pay Plaintiff his buyer’s brokers commission on February 2, 2021 or at any time thereafter. On June 6, 2023, Defendant told Plaintiff that Defendant and Defendants would never pay Plaintiff his buyer’s brokers commission.

31. Plaintiff’s reliance on Defendant’s promise to pay him a broker’s commission was a substantial factor in causing Plaintiff’s harm. Plaintiff would not have acted as Defendant’s real estate broker in the transaction if he was not going to be paid a commission for his broker services.

32. Immediately prior to the closing of escrow on January 28, 2021, Defendant deceived Plaintiff into believing that Plaintiff's $55,000 commission would be paid to him, along with an additional sales commission, after escrow closed. Defendant falsely told the Plaintiff that his commission (including the additional sales commission) would be immediately paid from her subsequent sale of the Resolano Property if the Plaintiff allowed her to use the $55,000 commission, which Defendant had promised the Plaintiff he would receive, to acquire the Resolano Property.

33. Defendant falsely assured Plaintiff that as soon as escrow closed, she would list the property for sale and provide the Plaintiff with the listing, ensuring he would receive both a buyer's broker's commission and a seller's broker's commission. The Defendant even claimed that the Plaintiff could expect to make over $150,000.00 when he listed and sold the Resolano Property for the Defendant post-escrow closing.

34. After escrow closed on February 3, 2021, Plaintiff wrote to the Defendant, asking her to re-affirm her promise to let Plaintiff list and sell the Resolano Property. Defendant again confirmed her promise in a text message on February 3, 2021.

35. Defendant conspired with the other Defendants before January 21, 2021, to defraud the Plaintiff. Whenever Plaintiff contacted Defendant to inquire about the listing and\or his commission, Defendant would claim that she was renovating the Property, even inviting the Plaintiff to the Resolano Property to show him the renovations to deter him from asking for his broker's commission. In January 2023, the Defendant ceased responding to the Plaintiff's inquiries, likely due to the Plaintiff persistently seeking his broker's commission. On June 6, 2023, Defendant informed Plaintiff that she would never pay his broker's commission or permit him to list and sell the Resolano Property. In an attempt to discredit the Plaintiff and dissuade him from demanding the compensation that the Defendant had initially agreed to pay, Defendant accused Plaintiff of stalking her, a criminal offense.

36. The Defendant's actions, as described in this Third Cause of Action for Fraud and specifically in ¶ 31-36, constitute fraud, malice, and oppression, as defined in Cal. Civil Code § 3294. Consequently, the Plaintiff is entitled to recover not only actual damages but also punitive and exemplary damages, the amount of which will be determined according to the evidence, to make an example of and punish the Defendant for her reprehensible and fraudulent behavior.

Therefore, Plaintiff adequately alleges with the requisite specificity that Defendant’s promises to pay Plaintiff’s $55,000 commission in connection with Defendant’s purchase of the property and to let Plaintiff earn a commission for subsequently listing the property for resale were both false when made, causing Plaintiff’s damages.

Defendant argues that the allegations regarding the first allegedly false promise fail because the $55,000 commission was originally paid to Plaintiff, and the second allegedly false promise is speculative and unripe. The Court disagrees.

Plaintiff has adequately pleaded sufficient facts with particularity indicating that Defendant never intended Plaintiff to retain the $55,000 commission on Plaintiff’s purchase because Plaintiff allegedly lacked the funds to complete the purchase without that $55,000 commission. Furthermore, the FAC alleges that Defendant has affirmatively reneged on the agreement to allow Plaintiff to list the property for sale, making that alleged false promise ripe for adjudication.

Therefore, the Court overrules Plaintiff’s demurrer to the third cause of action.

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof. (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).) On a motion to strike, the court may: (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. (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.) Here, Chan moves to strike from the complaint, references to and claims for punitive damages.

In ruling on a motion to strike punitive damages, “judges 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.) To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294. (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (a).) As set forth in the Civil Code,

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice. To wit, there is a heightened pleading requirement regarding a claim for punitive damages. (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.) “When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice. When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].) In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs’ assertions related to their claim for punitive damages were “insufficient to meet the specific pleading requirement.” (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged “the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff's rights. Plaintiff's injuries were exacerbated by the malicious conduct of Defendants. Defendants' conduct justifies an award of exemplary and punitive damages”]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim”].)

Here, as discussed above, because Plaintiff has adequately alleged fraud, the allegations also support Plaintiff’s claim for punitive damages. Therefore, Plaintiff’s motion to strike is denied.

For the reasons stated, the Court overrules Defendant’s Demurrer to all three causes of action in its entirety. The Court also denies Defendant’s motion to strike the request for punitive damages from the first amended complaint.

Further, the Court orders Defendant to file an Answer to the First Amended Complaint on or before on or before February 2, 2024.

Defendant shall provide notice of the Court’s ruling and file a proof of service regarding the same.

[1] Errors in paragraph numbering in original pleading.

[2] “A contract should be pleaded either in haec verba or according to its legal intendment and effect. An oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words.” (Scolinos v. Kolts (1995) 37 Cal.App.4th 635, 640 [cleaned up].)

DEPARTMENT	207
HEARING DATE	January 16, 2024
CASE NUMBER	23SMCV03311
MOTIONS	Demurrer and Motion to Strike Portions of First Amended Complaint
MOVING PARTY	Defendant Svetlana Vodolazhskaya
OPPOSING PARTY	Plaintiff Rone Oren