Judge Michael P. Linfield, Case Number: 3STCV16510, Date: 2023-10-19 Tentative Ruling

Judge: Michael P. Linfield, Case: 3STCV16510, Date: 2023-10-19 Tentative Ruling

Case Number: 3STCV16510 Hearing Date: October 19, 2023 Dept: 34

SUBJECT: Demurrer to Complaint

Moving Party: Defendants PRBC 9 Limited Partnership, Southern California Commercial Regional Center, and YK America Regional Center

Resp. Party: Plaintiff Mengwen Tu

The Demurrer is SUSTAINED in part. The Demurrer is SUSTAINED to the third and fourth causes of action, solely to Defendant PRBC 9 Limited Partnership, without leave to amend the Complaint. The Demurrer is OVERRULED to the first and second causes of action.

BACKGROUND:

On July 14, 2023, Plaintiff Mengwen Tu filed her Complaint against Defendants PRBC 9 Limited Partnership, Southern California Commercial Regional Center, LLC, and YK America Regional Center, LLC.

On August 30, 2023, Defendants filed their Demurrer to the Complaint. In support of their Demurrer, Defendants concurrently filed Declaration of Joseph Lian.

On October 6, 2023, Plaintiff filed her Opposition to the Demurrer.

On October 12, 2023, Defendants filed their Reply regarding the Demurrer.

ANALYSIS:

I. 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 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.)¿

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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).¿¿

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A demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted. A demurrer for uncertainty (Code of Civil Procedure section 430.10, subdivision (f)), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly's of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Id.)¿¿¿

II. Discussion

Defendants demur to the first, second, third, and fourth causes of action in the Complaint.

A. Fraud by False Promise

1. Legal Standard

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.)

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 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.)

2. Discussion

Defendants argue that the first cause of action fails because: (1) this cause of action is barred by the economic loss rule; and (2) Plaintiff cannot claim justifiable reliance. (Demurrer, pp. 8:7, 11:1–2.)

The Court disagrees with these arguments.

Fraud claims are allowed despite the economic loss rule where there has been fraud in the performance or inducement of a contract. (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 991–93.) That is the situation here, where, among other things, Plaintiff has alleged fraud in the inducement of the contracts. (Complaint, ¶¶ 30–34, 39, 46–50.)

Further, whether there has actually been justifiable reliance is a question of fact not suitable for resolution on a demurrer.

The Court OVERRRULES the Demurrer to the first cause of action.

B. Negligent Misrepresentation

1. 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.)

2. Discussion

Defendants make the same arguments for the second cause of action that they made for the first cause of action. (Demurrer, pp. 8:7, 11:1–2.)

The Court disagrees for the same reasons discussed above in section 2(A).

The Court OVERRULES the Demurrer to the second cause of action.

C. Stipulation Re: Third and Fourth Causes of Action

Defendants contend that Plaintiff stipulated to remove Defendant PRBC 9 Limited Partnership from the third cause of action (breach of contract) and the fourth cause of action (breach of fiduciary duty). (Demurrer, p. 12:3–9.)

Plaintiff does not address this issue in its Opposition and hence concedes this point by omission.

The Court SUSTAINS the Demurrer to the third and fourth causes of action, solely to Defendant PRBC 9 Limited Partnership, without leave to amend the Complaint.

III. Conclusion