Judge Michael P. Linfield, Case 22STCV10347 2023-02-01 Tentative Ruling

Judge: Michael P. Linfield, Case: 22STCV10347, Date: 2023-02-01 Tentative Ruling

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Case Number: 22STCV10347 Hearing Date: February 1, 2023 Dept: 34

SUBJECT: Demurrer and Motion to Strike

Moving Party: Cross-Defendants Living the Dream and Shalom Gozlan

Resp. Party: Cross-Complainants Gloria Shulman Hughes and John E. Hughes, Jr.

Cross-Complainants’ Demurrer is SUSTAINED in part and DENIED in part. Cross-Complainants’ Demurrer is SUSTAINED without leave to amend as to the second, fifth, and eighth causes of action of the First Amended Cross-Complaint. Cross-Complainants’ Demurrer is OVERRULED as to the third, sixth, and seventh causes of action of the First Amended Cross-Complaint.

Cross-Defendants’ Motion to Strike is GRANTED in part. The motion is granted as to striking Items 1, 2, 4, and 12. The motion is denied as to the remaining requests.

BACKGROUND:

On March 24, 2022, Plaintiff Living the Dream filed its Complaint against Defendants Gloria Shulman Hughes and John E. Hughes, Jr. on causes of action regarding a dispute over real property.

On March 25, 2022, Plaintiff filed its Lis Pendens on the real property at issue in this matter.

On June 13, 2022, Plaintiff filed its First Amended Complaint against Defendants on the following causes of action:

(1) Declaratory relief;

(2) Breach of the implied covenant of good faith and fair dealing;

(3) Promissory fraud; and

(4) Intentional interference with prospective economic advantage.

On September 21, 2022, Defendants/Cross-Complainants filed their Answer and their Cross-Complaint against Plaintiff/Cross-Defendant Living the Dream.

On October 10, 2022, Defendants/Cross-Complainants filed their First Amended Cross-Complaint against Cross-Defendants Living the Dream, California Numbered Company 4009746, Applied Plant Science, and Shalom Gozlan on the following causes of action:

(1) Breach of lease;

(2) Declaratory judgment;

(3) Conversion;

(4) Negligence;

(5) Negligence per se;

(6) Intentional misrepresentation;

(7) Negligent misrepresentation;

(8) Intentional interference with prospective economic advantage; and

(9) Common counts.

On December 7, 2022, Cross-Defendants Living the Dream and Shalom Shay Gozlan filed: (1) Demurrer to First Amended Cross-Complaint; and (2) Motion to Strike Portions of First Amended Cross-Complaint. With each of these filings, Plaintiff/Cross-Defendant concurrently filed: (1) Memorandum of Points & Authorities; (2) Declaration of Adam J. Yarbrough; (3) Request for Judicial Notice; and (4) Proof of Service.

On December 29, 2022, Cross-Defendant Applied Plant Science filed its Answer to the First Amended Cross-Complaint.

On January 19, 2023, Defendants/Cross-Complainants filed their Opposition to the Demurrer.

On January 25, 2023, Cross-Defendants Living the Dream and Shalom Shay Gozlan (“Cross-Defendants”) filed their Reply to the Demurrer.

Cross-Complainants have not filed an opposition to the motion to strike.

ANALYSIS:

I. Request for Judicial Notice

In two separate Requests for Judicial Notice, Cross-Defendants request that the Court take judicial notice of the following items:

(1) The “Unlawful Detainer Complaint” filed with the court as Case Number 22STCV19824; and

(2) Corporate Statement of Information for Plaintiff/Cross-Defendant Living the Dream, filed February 10, 2022 with the California Secretary of State.

Judicial notice is denied as irrelevant to both items. “Although a court may judicially notice a variety of matters (Evid. Code, §¿450 et seq.), only relevant material may be noticed” (Am. Cemwood Corp. v. Am. Home Assurance Co. (2001) 87 Cal.App.4th 431, 441, fn. 7.)

II. Demurrer

A. Legal Standard

A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to challenge the truthfulness of the complaint; and for the purpose of the ruling on the demurrer, all facts pleaded in the complaint are assumed to be true, however improbable they may be. (Code Civ. Proc., §§ 422.10, 589.)

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). A demurrer is brought under Code of Civil Procedure section 430.10 (grounds), section 430.30 (as to any matter on its face or from which judicial notice may be taken), and section 430.50(a) (can be taken to the entire complaint or any cause of action within).

B. Discussion

Plaintiff/Cross-Defendant demurs as to the second, third, fifth, sixth, seventh, and eighth causes of action in the First Amended Cross-Complaint. (Demurrer, pp. 2–3.)

1. Declaratory Relief

a. Legal Standard

“To qualify for declaratory relief, a party would have to demonstrate its action presented two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909, quotation marks and brackets omitted.)

A cause of action for declaratory relief should not be used as a second cause of action for the determination of identical issues raised in another cause of action. (General of America Insurance Co. v. Lilly (1968) 258 Cal.App.2d 465, 470.) “The availability of another form of relief that is adequate will usually justify refusal to grant declaratory relief” (Cal. Ins. Guar. Ass’n v. Super. Ct. (1991) 231 Cal.App.3d 1617, 1624), and a duplicative cause of action is subject to demurrer (Palm Springs Villas II Homeowners Ass’n, Inc. v. Parth (2016) 248 Cal.App.4th 268, 290). Further, “there is no basis for declaratory relief where only past wrongs are involved.” (Osseous Tech. of Am., Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366, quotation marks omitted.)

b. Analysis

Cross-Defendants argue that the First Amended Cross-Complaint fails to state facts sufficient to constitute a cause of action for declaratory relief. (Demurrer Memorandum, p. 4:8–9.)

Cross-Complainants disagree, arguing that the cause of action for declaratory relief is appropriate here as an alternative theory under the circumstances of the case. (Opposition, p. 5:6–7.)

The Court agrees with Cross-Defendants’ argument. There are multiple causes of action listed in the First Amended Cross-Complaint. As the declaratory relief requested is entirely covered by the other causes of action, the availability of another form of relief is adequate to sustain the demur as to the second cause of action for declaratory relief.

The Court SUSTAINS without leave to amend the Demurrer as to the second cause of action for declaratory relief listed in the First Amended Cross-Complaint.

2. Conversion

a. Legal Standard

“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.)

b. Analysis

Cross-Defendants argue that the third cause of action for conversion should be dismissed from the First Amended Cross-Complaint because Cross-Complainants do not have a right to immediate possession of the property at issue. (Demurrer Memorandum, p. 5:8–10.)

Defendants/Cross-Complainants allege, among other things: (1) that Defendants/Cross-Complainants owned all the personal property at issue; (2) that Plaintiff/Cross-Defendant Living the Dream removed this personal property and never returned it; (3) that Plaintiff/Cross-Defendant Living the Dream used the personal property to furnish other properties that it leased for short- and long-term rentals without Defendants/Cross-Complainants’ permission, knowledge or consent; and (4) that Defendants/Cross-Complainants suffered damages in an amount to be proven at Trial. (First Amended Cross-Complaint, ¶¶ 71-73, 79.)

These allegations are sufficient to constitute a cause of action for conversion. The Court OVERRULES the Demurrer because Cross-Complainants sufficiently alleged the elements of conversion.

3. Negligence Per Se

a. Legal Standard

“The negligence per se doctrine, as codified in Evidence Code section 669, creates a presumption of negligence if four elements are established: (1) the defendant violated a statute, ordinance, or regulation of a public entity; (2) the violation proximately caused death or injury to person or property; (3) the death or injury resulted from an occurrence of the nature of which the statute, ordinance, or regulation was designed to prevent; and (4) the person suffering the death or the injury to his person or property was one of the class of persons for whose protection the statute, ordinance, or regulation was adopted.” (Spates v. Dameron Hospital Association (2003) 114 Cal.App.4th 208, 218, quotation marks omitted.)

“The doctrine of negligence per se is not a separate cause of action, but creates an evidentiary presumption that affects the standard of care in a cause of action for negligence.” (Johnson v. Honeywell Int’l. Inc. (2009) 179 Cal.App.4th 549, 555, quotation marks and brackets omitted.)

b. Analysis

Cross-Defendants argue that the fifth cause of action for negligence per se should be dismissed because it is not an independent cause of action. (Demurrer Memorandum, p. 6:4.)

Cross-Complainants clearly admit that “negligence per se is not an independent cause of action” from the cause of action for negligence. (Opposition, p. 7:16–17.)

The First Amended Cross-Complaint already pleads a cause of action for negligence. While negligence per se may be available as an evidentiary standard created by statute for proving negligence, it is not a cause of action based on the allegations made.

The Court SUSTAINS without leave the Demurrer as to the fifth cause of action for negligence per se.

4. Intentional Misrepresentation

a. Legal Standard

“The elements of a cause of action for intentional misrepresentation are (1) a misrepresentation, (2) with knowledge of its falsity, (3) with the intent to induce another’s reliance on the misrepresentation, (4) actual and justifiable reliance, and (5) resulting damage.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)

The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)

To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false 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.)

b. Analysis

Cross-Defendants argue that the sixth cause of action for intentional misrepresentation is uncertain and barred by the economic loss rule. (Demurrer Memorandum, p. 6:11–12.)

Cross-Complainants disagree, arguing that the allegations are sufficiently certain and citing Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988–89 for the proposition that the economic loss rule does not bar intentional and negligent misrepresentation claims. (Opposition, p. 8:4–24.)

Defendants/Cross-Complainants allege: (1) that Cross-Defendant Shalom Shay Gozlan, who identified himself as President of Cross-Defendant Living the Dream, orally misrepresented multiple, specified statements to Defendant/Cross-Complainant Gloria Shulman Hughes; (2) that these misrepresentations were intentional; (3) that Cross-Defendant Living the Dream knew the misrepresentations were not true at the time they were made; (4) that Defendants/Cross-Complainants had no reason to know that the misrepresentations were not true at the time they were made; (5) that Defendants/Cross-Complainants reasonably relied upon the misrepresentations; and (6) that Cross-Complainants have been damages as a direct and proximate result of the misrepresentations. (First Amended Cross-Complaint, ¶¶ 99–103.)

These allegations are sufficiently certain to withstand demur.

Moreover, the Court agrees with Defendants/Cross-Complainants’ argument regarding the economic loss rule. Claims for intentional misrepresentation and negligent misrepresentation are torts separate from any claims stemming from the underlying contract, and the economic loss rule does not bar tort recovery when there has been fraud in the performance of a contract. (Robinson Helicopter Co., Inc., supra, at 985, 991–93.)

Cross-Complainants meet the specific pleading standard here, and thus their sixth cause of action for intentional misrepresentation is not barred by the economic loss rule.

The Court OVERRULES the Demurrer because Cross-Complainants have sufficiently alleged facts for a cause of action for intentional misrepresentation and this sixth cause of action is not barred by the economic loss rule.

5. Negligent Misrepresentation

a. Legal Standard

The elements of a cause of action for negligent misrepresentation include “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks omitted.)

To properly allege fraud against a corporation, the plaintiff must plead the names of the persons allegedly making the false 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.)

b. Analysis

The Parties make the same arguments as to the seventh cause of action for negligent misrepresentation, and the Court adopts the same analysis as above regarding the sixth cause of action for intentional misrepresentation.

The Court OVERRULES the Demurrer on the grounds that Cross-Complainants have failed to sufficiently allege certain facts for a cause of action for negligent misrepresentation or that the seventh cause of action is barred by the economic loss rule.

6. Intentional Interference with Prospective Economic Advantage

a. Legal Standard

The elements of a claim for intentional interference with prospective economic advantage include “(1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional or negligent acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.” (Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404, citations, brackets, and quotation marks omitted.)

Further, “the alleged interference must have been wrongful by some measure beyond the fact of the interference itself. For an act to be sufficiently independently wrongful, it must be unlawful, that is, it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Ibid., citation, ellipsis, and quotation marks omitted.)

b. Analysis

Cross-Complainants argue that the claim for intentional interference with prospective economic advantage fails to state facts sufficient to constitute a cause of action. (Demurrer Memorandum, p. 7:1–2.) Cross-Complainants specifically argue that there is no actual relationship that was interfered with. (Id. at 8:1–12.)

Cross-Defendants do not argue this point in their Opposition.

The Court agrees with Cross-Complainants. At most, Cross-Complainants have alleged that there was interference with their intent to form economic relationships, not interference with an actual relationship. (First Amended Cross-Complaint, ¶ 113.) As the allegations seem to admit that there was no economic relationship, it is not appropriate to grant leave to amend this cause of action.

The Court SUSTAINS without leave to amend the Demurrer as to the eighth cause of action for intentional interference with prospective economic advantage.

C. Conclusion

Cross-Complainants’ Demurrer is SUSTAINED in part. Cross-Complainants’ Demurrer is SUSTAINED without leave to amend as to the second, fifth, and eighth causes of action listed in the First Amended Cross-Complaint. Cross-Complainants’ Demurrer is OVERRULED as to the third, sixth, and seventh causes of action listed in the First Amended Cross-Complaint.

III. Motion to Strike

A. Legal Standard

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)¿¿¿

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and 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 Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)¿¿¿

B. Discussion

Cross-Defendants request that the Court strike the following items from the First Amended Cross-Complaint:

(1) From paragraph 55 on page 18: “... and Cross-Complainants are entitled to statutory damages under California Code of Civil Procedure Section 1174(b).”

(2) From Cross-Complainants’ prayer on page 30, lines 1-2: “3. Statutory damages up to $600.00 for Tenant’s continued malicious possession of the Property.”

(3) From paragraph 104 on page 26: “.... Pursuant to California Civil Code § 3294, Cross-Complainants are entitled to recover from Tenant exemplary and punitive damages in an amount to be determined at time of trial”

(4) From paragraph 121 on page 29: “.... Pursuant to California Civil Code § 3294, Cross-Complainant is entitled to recover from Tenant exemplary and punitive damages.”

(5) From Cross-Complainants’ prayer on page 30, line 24: “2. For exemplary and punitive damages.”

(6) From Cross-Complainants’ prayer on page 31, line 19: “5. For exemplary and punitive damages.”

(7) From Cross-Complainants’ prayer on page 32, line 6: “3. For exemplary and punitive damages.”

(8) From Cross-Complainants’ prayer on 31, line 5: “3. For the recovery of reasonable attorneys’ fees under Tort of Another Doctrine.”

(9) From Cross-Complainants’ prayer on 31, line 11: “3. For the recovery of reasonable attorneys’ fees under Tort of Another Doctrine.”

(10) From Cross-Complainants’ prayer on 31, line 17: “3. For the recovery of reasonable attorneys’ fees under Tort of Another Doctrine.”

(11) From Cross-Complainants’ prayer on 31, line 24: “3. For the recovery of reasonable attorneys’ fees under Tort of Another Doctrine.”

(12) The entire First Amended Cross-Complaint as to Cross-Defendant “California Numbered Company 4009746.”

(Motion to Strike, pp. 2–3.)

The Court agrees that some of these items are improperly in the First Amended Cross-Complaint. Items 1 and 2 (regarding statutory damages) are not proper as they only relate to unlawful detainer cases; this is not a UD case. Item 4 (regarding whether Cross-Defendants acted with malice, oppression, and fraud) may be stricken as the Court has sustained without leave to amend the underlying cause of action for intentional interference with prospective economic advantage. Item 12 (regarding the existence of “California Numbered Company 4009746”) may be stricken because this “Defendant” is just Plaintiff/Cross-Defendant Living the Dream. The rest of the items are properly within the First Amended Cross-Complaint.

C. Conclusion

Cross-Defendants’ Motion to Strike is GRANTED in part. The motion is granted as to striking Items 1, 2, 4, and 12. The motion is denied as to the remaining requests.