Judge: Michael J. Strickroth, Case: 2021-01204153, Date: 2023-06-12 Tentative Ruling
Demurrer to Amended Complaint
Defendant Park Regency Care LLC’s (Park Regency) Demurrer to the first cause of action for Fraud in Plaintiff’s Second Amended Complaint (SAC) is SUSTAINED without leave to amend.
Defendant demurs to the first cause of action for fraud.
“The elements of fraud . . . are: a representation, usually of fact, which is false, knowledge of its falsity, intent to defraud, justifiable reliance upon the misrepresentation, and damage resulting from that justifiable reliance.” Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72–73. “Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” (Id. at 73.) This “strict requirement” of pleading “necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Id.) “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. However, “the requirement of specificity is relaxed when the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’ . . . or when the facts lie more in the knowledge of the opposite party.” (Id. at 158.)
Promissory fraud is a subspecies of deceit: “A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” Lazar v. Superior Court (Rykoff-Sexton, Inc.) (1996) 12 Cal.4th 631, 638; CACI 1902.
CACI 1902 for “False Promise” states: “[Name of plaintiff] claims [he/she/nonbinary pronoun] was harmed because [name of defendant] made a false promise. To establish this claim, [name of plaintiff] must prove all of the following: ¶ 1. That [name of defendant] made a promise to [name of plaintiff]; ¶ 2. That [name of defendant] did not intend to perform this promise when [he/she/nonbinary pronoun] made it; ¶ 3. That [name of defendant] intended that [name of plaintiff] rely on this promise; ¶ 4. That [name of plaintiff] reasonably relied on [name of defendant]'s promise; ¶ 5. That [name of defendant] did not perform the promised act; ¶ 6. That [name of plaintiff] was harmed; and ¶ 7. That [name of plaintiff]'s reliance on [name of defendant]'s promise was a substantial factor in causing [his/her/nonbinary pronoun/its] harm.”
A claim for promissory fraud does not depend upon whether the defendant's promise is ultimately enforceable as a contract. i.e., a tort action may lie even by an at-will employee whose termination is not a breach of contract. Lazar, supra, at 638.
Conrad v. Bank of America (1996) 45 Cal. App. 4th 133, 156–57 provides: “[A] claim of fraud cannot be permitted to serve simply as an alternative cause of action whenever an enforceable contract is not formed. Accordingly, in order to support a claim of fraud based upon the alleged failure to perform a promise, it must be shown that the promisor did not intend to perform at the time the promise was made. (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30 [216 Cal.Rptr. 130, 702 P.2d 212].) Although it has been suggested that failure to perform a promise is sufficient to prove fraud, “[t]his is not, and has never been the law,” and “if plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he [should] never reach a jury.” (Id. at pp. 30-31.) On the record presented we find insufficient evidence to support the claim that Burk promised to approve a loan to Industrial Enterprises knowing that the loan would not be made. ¶ In addition to showing that the defendant knowingly made a false representation, in order to establish fraud it must be shown that the defendant thereby intended to induce the plaintiff to act to his detriment in reliance upon the false representation. (Civ. Code, § 1709; Bell v. Renaldo (1975) 51 Cal.App.3d 779, 781 [124 Cal.Rptr. 233].) The defendant must intend to induce a particular act of the plaintiff and is not liable in fraud for unintended consequences. (Carlson v. Murphy (1935) 8 Cal.App.2d 607, 611 [47 P.2d 1100].) And it must be shown that the plaintiff actually and justifiably relied upon the defendant's misrepresentation in acting to his detriment. (Spinks v. Clark (1905) 147 Cal. 439, 444 [82 P. 45]; Wilhelm v. Pray, Price, Williams & Russell, supra, 186 Cal.App.3d at p. 1332.)”
Here, Plaintiff alleges Defendant CareMore contacted it on 12-17-19 requesting services. (SAC, ¶ 9.) Plaintiff further alleges Park Regency faxed Plaintiff the LOA on 12-20-19, and Plaintiff, in reliance, began providing services on 12-17-19 through 1/31/20. (SAC, ¶¶10 and 11.)
In the fraud cause of action, Plaintiff alleges, “At the time Defendant CareMore requested the sitter services and Defendant Park Regency confirmed the request by forwarding the LOA, Defendants had reason to know that they would not remit payment to Plaintiff for sitter services. In particular, Park Regency knew they would not forward payment to Plaintiffs prior to being paid by CareMore.” (SAC, ¶ 47.) Plaintiff further alleges CareMore denied over 5 other similar claims for sitter services performed within a 5-month period of this contract. (Id.)
Plaintiff has failed to allege facts supporting the elements of its claim for fraud against Park Regency. Park Regency’s subsequent failure to remit payment is not alone sufficient to infer Park Regency engaged in fraud by transmitting the LOA to Plaintiff.
“As a general rule, if there is a reasonable possibility the defect in the complaint could be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend. Nevertheless, where the nature of the plaintiff's claim is clear, and under substantive law no liability exists, a court should deny leave to amend because no amendment could change the result.” Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400–401.
Plaintiff has not filed an opposition to the demurrer or explained how the defect could be cured by further amendment. However, in Plaintiff’s opposition to Defendants’ motions to strike, Plaintiff contends, “As no Answer has been filed on the part of Defendants, discovery has not begun.” Plaintiff does not need to wait until an answer has been filed to conduct discovery. Code Civ. Proc. § 2030.020. As this Court’s previous 9/12/22 order pointed out, “Plaintiff has had time to propound discovery to obtain the specific information it needs to properly allege this claim.” Therefore, the fact Defendants have not filed an answer is no excuse for Plaintiff’s failure to conduct discovery to support this cause of action.
Because Plaintiff has not shown the defect in the SAC can be cured by further amendment, Park Regency’s Demurrer to the SAC is SUSTAINED without leave to amend.
Demurring party defendant to give notice.
Motion to Strike Portions of Complaint
Defendant Park Regency’s Motion to Strike Portions of the SAC related to punitive damages and attorney fees is GRANTED.
Defendant moves to strike Plaintiff’s allegations seeking punitive damages and attorney fees.
Code of Civil Procedure section 436, states, “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: [¶] (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.”
Code of Civil Procedure section 437 states: “(a) 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. ¶ (b) Where the motion to strike is based on matter of which the court may take judicial notice pursuant to Section 452 or 453 of the Evidence Code, such matter shall be specified in the notice of motion, or in the supporting points and authorities, except as the court may otherwise permit.”
Punitive Damages
Civil Code section 3294 provides that punitive damages may be awarded in an action for breach of an obligation not arising from contract, if the plaintiff proves by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice. “Malice” is conduct that is intended to cause injury or despicable conduct that is carried on with a willful and conscious disregard of the right and safety of others. Civil Code § 3294(c)(1). “Oppression” means conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. Civil Code § 3294(c)(2).
At the pleading stage, the complaint must allege facts supporting circumstances of oppression, fraud, or malice. 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. [Citation] Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim. [Citation].”).
In 1987, however, the legislature amended the definition of “malice” to require proof that the defendant's conduct is "despicable" and "willful." The statute's reference to "despicable conduct" represents "a new substantive limitation on punitive damage awards.” College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725.
Defendant asserts the allegations are insufficient to support oppression, fraud, or malice. The Court agrees there are insufficient specific allegations which support a claim for punitive damages.
Attorney Fees
Plaintiff also makes a claim for attorney fees. California follows the “American Rule” that each party to a lawsuit must bear its own attorney fees. Exceptions to this rule are actions on contract where a fee clause is included under Civil Code section 1717 , or by express statutory authorization—neither of which apply. A careful review of the Second Amended Complaint (ROA 259) confirms that any contract which did exist did NOT include an attorney fee clause (ROA 259, para. 81).
Defendant claims Plaintiff’s causes of actions do not support a potential award for attorneys’ fees. The Court agrees there are insufficient allegations of any contract, statute, or law that allow for the recovery of attorneys’ fees at this stage nor does Plaintiff cite to a contract, statute, or law in Opposition to the Motion. Further, a close review of the SAC also shows that any claim for attorney fees claimed in each/all seven causes of action were qua cost attorney fees and not qua damages attorney fees. See Brandt v. Superior Court (1985) 37 Cal. 3d 813, 819.
Because Plaintiff has not shown that further amendment will cure the defective claims for punitive damages and attorney fees, the motion to strike is granted without leave to amend.
Moving party defendant to give notice.
Demurrer to Amended Complaint
Defendant CareMore Health Plan’s (CareMore) Demurrer to the first cause of action for Fraud and the fourth cause of action for Breach of Contract—Third Party Beneficiary to the SAC is SUSTAINED without leave to amend.
CareMore demurs to the first cause of action for fraud and the fourth cause of action for breach of contract – third party beneficiary.
The elements of fraud are set out above as to Park Regency’s demurrer. As against CareMore, Plaintiff’s SAC alleges, “CareMore knew they would refuse to remit payment to Plaintiff for the sitter services performed over 7 days, although they had previously paid for services over this amount of time. In addition, unbeknownst to Plaintiff, CareMore denied over 5 other similar claims for sitter services performed within a 5-month period of this contract.” (SAC, ¶ 47.)
Similar to Defendant Park Regency, Plaintiff has failed to allege facts supporting the first cause of action against CareMore. CareMore’s subsequent failure to remit payment is not alone sufficient to infer it engaged in fraud regarding the LOA.
The fourth cause of action is for breach of contract (the LOA) between CareMore and Park Regency. Plaintiff, a third party to the contract, alleges, “The LOA was made for Plaintiff’s benefit. The LOA expressly authorizes performance of sitter services Plaintiff provides.” (SAC, ¶ 94.) Plaintiff alleges it was a third-party beneficiary of the contract “as the third-party vendor who had previously provided sitter services to CareMore members and who would be contacted to furnish the present services…” (SAC, ¶ 96.)
Civil Code § 1559 states: “WHEN CONTRACT FOR BENEFIT OF THIRD PERSON MAY BE ENFORCED. A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.”
Although Plaintiff was used as a vendor as to the LOA, Plaintiff has failed to allege facts showing the contract was expressly for Plaintiff’s benefit. Therefore, Plaintiff has failed to adequately plead the fourth cause of action.
Because Plaintiff has not shown the defects in the SAC can be cured by further amendment, CareMore’s Demurrer to the SAC is SUSTAINED without leave to amend.
Demurring party defendant to give notice.
Motion to Strike Portions of Complaint
Defendant CareMore’s motion to strike punitive damages and attorney fee claims in the SAC is GRANTED.
CareMore moves to strike Plaintiff’s punitive damages and attorney fee allegations in the SAC. Plaintiff has failed to allege facts sufficient to demonstrate oppression, fraud, or malice by Defendant or its agents. The same rationale expressed in the ruling on the motion to strike for Park Regency equally applies here.
Plaintiff has also failed to allege a statutory or contractual basis to recover attorney fees in this action. The same rationale expressed in the ruling on the motion to strike for Park Regency equally applies here.
Plaintiff has not shown that further amendment will resolve these defects, so the motion to strike is granted without leave to amend.
Moving party defendant to give notice.
Case Management Conference
Regardless whether counsel submit on the tentative rulings as to the motions above, the parties through counsel are required to attend the case management conference, either remotely or in person.