Judge: Michael E. Whitaker, Case: 23STCV00692, Date: 2023-09-14 Tentative Ruling

Case Number: 23STCV00692    Hearing Date: April 16, 2024    Dept: 207

TENTATIVE RULING

MOTION

This case arises from a dispute over the sale and ownership of real property.  Plaintiff Fred Behfarin’s (“Plaintiff”) Verified Third Amended Complaint (“TAC”) alleges eight causes of action for (1) specific performance; (2) breach of contract; (3) bad faith waste; (4) fraud – intentional misrepresentation; (5) negligent misrepresentation; (6) tortious interference with contract, prospective business advantage; (7) breach of implied covenant of good faith & fair dealing; and (8) declaratory relief against Defendants DH Distribution, Inc. (“DH”); Sergey Menshikov (“Sergey”), Beverly Hills Escrow (“BHE”), Lucy Menshikova (“Lucy”), and Larisa Menshikova (“Larisa”) (collectively, “Defendants.”) 

As to Defendant BHE, Plaintiff only alleges the first and eighth causes of action.

BHE now demurs to the first cause of action for failure to state facts sufficient to constitute a cause of action and for uncertainty, pursuant to Code of Civil Procedure section 430.10, subdivisions (e) and (f), respectively; and BHE demurs to the eighth cause of action for failure to state facts sufficient to constitute a cause of action pursuant to subdivision (e). 

Plaintiff opposes the demurrer and BHE replies.

ANALYSIS

1.     DEMURRER

“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.)

A.    UNCERTAINTY

A demurrer for uncertainty will be sustained only where the pleading is so bad that the responding party cannot reasonably respond - i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what claims are directed against him or her.  (Khoury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)  Where a demurrer is made upon the ground of uncertainty, the demurrer must distinctly specify exactly how or why the pleading is uncertain, and where such uncertainty appears by reference to page and line numbers.  (See Fenton v. Groveland Comm. Services Dist. (1982) 135 Cal.App.3d 797, 809.) 

Although BHE argues that the first cause of action for specific performance is uncertain because Plaintiff failed to allege or attach any agreement to which BHE was a party, BHE does not demonstrate that any portions of the TAC are so bad that BHE cannot reasonably determine what issues must be admitted or denied, or what claims are directed against it.  The Court thus declines to sustain BHE’s demurrer to the first cause of action on the basis of uncertainty. 

B.    FAILURE TO STATE A CAUSE OF ACTION

                                                         i.          First Cause of Action – Specific Performance

BHE argues that Plaintiff’s first cause of action for specific performance fails because (1) specific performance is a remedy for a breach of contract, not an independent cause of action; and (2) Plaintiff has failed to allege or attach a contract to which BHE is a party. 

In support of BHE’s first argument, BHE cites to Rogers v. Davis (1994) 28 Cal.App.4th 1215, 1218, fn. 2, which explains that the plaintiff’s “two” causes of action for specific performance, or in the alternative, damages, in connection with a real estate transaction, are actually a single cause of action for breach of contract, with two alternative remedies sought.  However, Rogers did not sustain a demur to either cause of action on this basis.

With regard to Plaintiff’s second argument, although the Court agrees that the TAC is not a model of clarity, it does allege facts indicating that BHE is the escrow provider for the real estate transaction between Plaintiff on the one hand, and DH/Sergey on the other hand. 

For example, the purchase agreement between Plaintiff and DH/Sergey provides “1. An Escrow will be opened no later than November 20, 2019 with Beverly Hills Escrow Company, upon execution of the Agreement for the duration of performance.”  (TAC ¶ 13 and Ex. A.)

That was apparently done, because the TAC further alleges that the parties went to BHE to sign documents (TAC ¶¶ 12-13) and that BHE has failed to release the $540,926.37 funds deposited with it to Behfarin or to record the grant deed the parties submitted to it (TAC ¶¶ 16-17, 19.) 

Moreover, in connection with BHE’s previous Motion to Discharge Stakeholder, BHE admitted that it possesses the escrow funds and fully executed but unrecorded grant deed in connection with the real estate transaction between Plaintiff and DH/Sergey.  (See October 11, 2023 Minute Order.)

As such, based on the allegations in the TAC and information in the Court’s record, BHE agreed to act and did act as the escrow provider in connection with the real estate transaction at issue.

Thus, the TAC adequately alleges facts indicating that the parties agreed that BHE would act as the escrow provider for the real estate transaction between Plaintiff and DH/Sergey, and that BHE failed to comply with the escrow instructions by not releasing the funds and recording the grant deed, for which Plaintiff now seeks specific performance compelling BHE to do so. 

Accordingly, the Court finds for pleading purposes Plaintiff has sufficiently stated a cause of action seeking specific performance against BHE.

                                                       ii.          Eighth Cause of Action – Declaratory Relief

The Court previously sustained Defendants’ demurrer to the declaratory relief cause of action alleged in Plaintiff’s Second Amended Complaint on the basis that declaratory relief is an equitable remedy, not an independent cause of action (Faunce v. Cate (2013) 222 Cal.App.4th 166, 173), but granted Plaintiff leave to plead declaratory relief as a remedy.  (December 20, 2023 Minute Order.)

Moreover, here, the declaratory relief sought is “a judicial declaration that BHE must record the Grant Deed transferring the Subject Property to Plaintiff.”  (TAC at Prayer ¶ 8.)  Thus, as alleged, the declaratory relief sought is duplicative of the specific performance sought against BHE. 

Therefore, the Court sustains BHE’s demurrer to the eighth cause of action.

2.     LEAVE TO AMEND

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v. Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, there are no facts Plaintiff could allege to state a cause of action for “declaratory relief.” 

CONCLUSION AND ORDER

For the reasons stated, the Court overrules BHE’s Demurrer to the First Cause of Action, and sustains without leave to amend BHE’s Demurrer to the Eighth Cause of Action. 

Further, the Court orders BHE to file an Answer to the Third Amended Complaint on or before May 7, 2024. 

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

DATED:  April 16, 2024                                                        ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court