Judge: Michael P. Linfield, Case: 22STCV10347, Date: 2023-02-21 Tentative Ruling

Case Number: 22STCV10347    Hearing Date: February 21, 2023    Dept: 34

SUBJECT:         Motion for Judgment on the Pleadings to First Amended Complaint

Moving Party:  Defendants/Cross-Complainants Gloria Shulman Hughes and John E. Hughes, Jr.

Resp. Party:    Plaintiff Living the Dream

Defendants/Cross-Defendants’ Motion for Judgment on the Pleadings is DENIED.

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 September 28, 2022, Defendants/Cross-Complainants filed their Motion for Judgment on the Pleadings to First Amended Complaint (“Motion”). Defendants/Cross-Complainants concurrently filed their Request for Judicial Notice.

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 February 1, 2023, the Court sustained Cross-Defendant’s Demurrer as to the second, fifth, and eighth causes of action in the First Amended Cross-Complaint, without leave to amend. The Court also granted Cross-Defendant’s Motion to Strike and struck certain items from the Cross-Complaint.

On February 6, 2023, Plaintiff filed its Opposition to the Motion.

On February 14, 2023, Defendants/Cross-Complainants filed an untimely Reply to the Motion. Despite this Reply being filed late, the Court still considers it.

ANALYSIS:

I.           Request for Judicial Notice

In their Request for Judicial Notice, Defendants/Cross-Complainants request that the Court take judicial notice of the following item: the “Unlawful Detainer Complaint” filed with the court as Case Number 22STCV19824.

Judicial notice is denied as irrelevant. “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.        Motion for Judgment on the Pleadings

A.      Legal Standard

“A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed.” (Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1064.) “In deciding or reviewing a judgment on the pleadings, all properly pleaded material facts are deemed to be true, as well as all facts that may be implied or inferred from those expressly alleged.” (Fire Ins. Exch. v. Super. Ct. (2004) 116 Cal.App.4th 446, 452.) A motion for judgment on the pleadings does not lie as to a portion of a cause of action. (Id.) “In the case of either a demurrer or a motion for judgment on the pleadings, leave to amend should be granted if there is any reasonable possibility that the plaintiff can state a good cause of action.” (Gami v. Mullikin Med. Ctr. (1993) 18 Cal.App.4th 870, 876.) A non-statutory motion for judgment on the pleadings may be made any time before or during trial. (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650.)¿ 

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Because a motion for judgment on the pleadings performs the same function as a general demurrer, the procedures in responding to demurrers similarly apply to motions for judgment on the pleadings. (See e.g., Evinger v. Moran (1910) 14 Cal.App. 328, 329.)¿¿ 

B.      Discussion

1.       The Parties’ Arguments

Defendants/Cross-Complainants move for judgment on the pleadings as to each of the causes of action in the First Amended Complaint. (Motion, pp. 10:23–24, 11:24–25, 13:15, 16:3–4, 16:12–13, 17:6.) Defendants argue: (1) that Plaintiff did not request or receive leave of court to file the first, second, and fourth causes of action; (2) that through the First Amended Complaint, Plaintiff is seeking to re-litigate issues of law and fact that it failed to raise during the first demurrer hearing; (3) that the First Amended Complaint violates the sham pleading doctrine; (4) that the causes of action for promissory fraud and intentional interference are premised on the false presumption of a properly extended term; (5) that the cause of action for promissory fraud is not actionable because the First Amended Complaint alleges a bargained for exchange; and (6) that the cause of action for promissory fraud is not alleged with specificity. (Id.)

Plaintiff opposes the Motion, arguing: (1) that it is improper and untimely to strike the amended first, second, and fourth causes of action; (2) that Plaintiff was entitled to amend its causes of action for declaratory relief and breach of implied covenant; (3) that Plaintiff had specifically requested leave to amend its first and second causes of action, and to add its fourth cause of action; (4) that Plaintiff is not attempting to re-litigate issues by filing its First Amended Complaint; (5) that the new allegations are not inconsistent and the First Amended Complaint is not a sham pleading; (6) that the promissory fraud and intentional interference causes of action are not based on a false presumption; (7) that the cause of action for promissory fraud does not fail because there was purportedly a bargained for exchange; and (8) that the cause of action for promissory fraud sufficiently alleges intend to defraud. (Opposition, pp. 10:1–4, 1:23–25, 12:21–22, 13:27, 14:12–13, 15:22–23, 16:10–11, 17:16–17.)

Defendants/Cross-Complainants reiterate their arguments in their Reply.

2.       Procedural Arguments

        On May 24, 2022, the Court sustained Defendants/Cross-Complainants’ Demurrer as to both causes of action listed in the Complaint, with 20 days leave for Plaintiff to amend the Complaint. On June 13, 2022, Plaintiff filed its First Amended Complaint. Plaintiff did not need further leave to amend to file any of these causes of action. Indeed, by granting Plaintiff leave to amend, the Court anticipated that at least some issues that were not initially raised could be addressed. That is acceptable in a motion for judgment on the pleadings.

        Further, Plaintiff’s First Amended Complaint contains additional allegations regarding oral offers made to Defendants/Cross-Complainants. While there are changes from the Complaint regarding the written offer made, allegations about the written offer remain. The Court does not find that the changes made between the pleadings constitute a sham pleading.

        The Motion is DENIED regarding any alleged procedural defects with the First Amended Complaint.

3.       Promissory Fraud

a.       Legal Standard

“Promissory fraud is a subspecies of the action for fraud and 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. The elements of promissory fraud (i.e., of fraud or deceit based on a promise made without any intention of performing it) are: (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise.” (Behnke v. State Farm Gen. Ins. Co. (2011) 196 Cal.App.4th 1443, 1453, citation and quotation marks omitted.)

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.)

b.       Discussion

Defendants/Cross-Complainants are incorrect when they argue that a cause of action for promissory fraud is not actionable on the grounds that there is a bargained for exchange. As stated above, promissory fraud can still exist where there was a bargained for exchange if, among other things, the promise for the bargained for exchange was made without any intention of performance. Similarly, whether there was a properly extended term or not is irrelevant to the analysis of whether there was promissory fraud at the time the contract was entered into.

Here, Plaintiff alleges, among other things: (1) that the Parties entered into the Lease and 2019 Addendum; (2) that at the time the Parties entered into these agreements, Defendants/Cross-Complainants did not intend to honor the Option to extend the term of the Lease on the terms set forth in the 2019 Addendum; (3) that Defendants/Cross-Complainants granted Plaintiff an option to extend the term of the Lease so as to induce Plaintiff to enter into the Lease with Defendants/Cross-Complainants and make improvements to the Property; (4) that Plaintiff reasonably relied on Defendants/Cross-Defendants’ actions and entered into the Lease, sublease, and 2020 Addendum, and made significant improvements to the property; (5) that Plaintiff did not perform by refusing to approve the Option; and (6) that Plaintiffs have suffered damages as a proximate result of the refusal to approve the Option. (First Amended Complaint, ¶¶ 14–15, 25, 30, 51–57.)

These allegations constitute all of the elements for a cause of action of promissory fraud, and the allegations are sufficiently specific to constitute the cause of action for the purposes of a motion for judgment on the pleadings.

        The Motion is DENIED regarding the cause of action for promissory fraud.

4.           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. Super. Ct. (2014) 223 Cal.App.4th 1395, 1404, citations, brackets, and quotation marks omitted.)¿¿ 

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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.” (Id., citation, ellipsis, and quotation marks omitted.)¿ 

b.       Discussion

Defendants/Cross-Complainants are incorrect when they argue that a cause of action for intentional interference with prospective economic advantage cannot be maintained on the grounds that there has not been a properly extended term. Whether there was a properly extended term or not is irrelevant to the analysis of whether there was such intentional interference prior to any extension of the term, which is what Plaintiff has alleged. (First Amended Complaint, ¶ 21, 24.)

As Defendants/Cross-Complainants have not argued that this cause of action is not sufficiently specific, the Court does not assess whether each element of the cause of action has been sufficiently pleaded.

        The Motion is DENIED regarding the cause of action for intentional interference with prospective economic advantage.

C.      Conclusion 

Defendants/Cross-Defendants’ Motion for Judgment on the Pleadings is DENIED.