Judge: Michael Shultz, Case: 20CMCV00229, Date: 2022-07-26 Tentative Ruling
INSTRUCTIONS: If the parties wish to submit on the tentative ruling and avoid a court appearance on the matter, the moving party must:
1. Contact the opposing party and all other parties who have appeared in the action and confirm that each will submit on the tentative ruling.
2. No later than 4:00 p.m. on the court day before the hearing, call the Courtroom (310-761-4302) advising that all parties will submit on the tentative ruling and waive hearing; and
3. Serve notice of the Court's ruling on all parties entitled to receive service.
If this procedure is followed, when the case is called the Court will enter its ruling on the motion in accordance with its tentative ruling. If any party declines to submit on the tentative ruling, then no telephone call is necessary, and all parties should appear at the hearing. If there is neither a telephone call nor an appearance, then the matter may either be taken off calendar or ruled on.
TENTATIVE RULINGS -- http://www.lacourt.org/tentativeRulingNet/u
Case Number: 20CMCV00229 Hearing Date: July 26, 2022 Dept: A
20CMCV00229
PAGADUAN V. DE GUZMAN, ET AL.
Tuesday,
July 26, 2022, 8:30 a.m.
[TENTATIVE] ORDER
I.
BACKGROUND
The First Amended
Complaint (“FAC”) alleges that that on July 8, 2007, Plaintiff, Shelby Pagaduan
(“Pagaduan”) contracted with Defendant, Sharon Grospe De Guzman (“Sharon”) to jointly
acquire real property in Carson, in which each party holds a 50 percent
interest. Plaintiff alleges that Defendant, Edward De Guzman (“Edward” or
“Cross-Complainant”), claims an interest in the property as a marital asset.
Edward and Sharon are undergoing dissolution proceedings. Plaintiff and Sharon
entered into a buyout agreement with respect to the real property at issue in
August of 2014 which Sharon abandoned. Plaintiff accepted the abandonment.
Plaintiff alleges the parties are unable to jointly manage the real property. The
FAC alleges claims for partition and declaratory relief and to quiet title.
On January 13,
2021, Defendant Edward filed a cross-complaint against Pagaduan and Sharon.
Cross-Complainant alleges that Pagaduan relinquished her interest in the real
property pursuant to her buyout agreement with Sharon. Edward alleges that he
and Sharon own the real property pursuant to a 2020 judgment for dissolution. Cross-Defendants
are allegedly attempting to undo the judgment. The cross-complaint alleges eight
causes of action arising from Cross-Defendants alleged breach of the 2014
buyout agreement and Sharon’s breach of the 2020 marital settlement agreement
(“MSA”), fraud, and conversion of the real property.
II. MOTION FOR JUDGMENT ON THE PLEADINGS ON THE CROSS-COMPLAINT
A.
Motion filed June 9, 2022
Cross-Defendant
Pagaduan argues that Cross-Complainant lacks standing to pursue the claims
alleged in the cross-complaint. Edward is not a party to the 2014 buyout
agreement between Pagaduan and Sharon. The allegation that Edward is a
third-party beneficiary of the 2014 agreement is conclusory. Therefore, the
contract-based claims fail to state causes of action. Cross-Complainant did not
sufficiently allege the terms of the 2014 contract and failed to attach it to
the cross-complaint.
Cross-Defendant
argues that the fraud claims are not alleged with required specificity and fail
to state a cause of action. The conversion claim fails because the claim cannot
be based on money. Regardless, Edward admits he consented to paying the
mortgage on the real property which negates a conversion claim.
Cross-Complainant
Edward did not allege facts to support that Sharon owed Edward a fiduciary
duty. The claims for declaratory relief and accounting fail to state a cause of
action. The alter ego allegations are not adequately alleged.
B.
Opposition filed on July 14, 2022
Cross-Complainant
Edward argues that the relevant terms of the contracts at issue are the 2014
buyout agreement in which Edward is a third-party beneficiary, and the MSA between
Edward and Sharon. Contract claims can be alleged based on their legal effect.
The motion ignores basic facts alleged in the cross-complaint.
Cross-Complainant
argues that the fraud claims are adequately alleged with specificity. The claim
for conversion is based on mortgage payments Cross-Complainant made on the real
property loan for the refinance of the real property, which Cross-Defendants
converted to their own use. The remaining claims are adequately alleged. If the
court disagrees, Cross-Complainant asks for leave to amend.
C.
Reply filed July 20, 2022
Cross-Defendant argues that the
opposition relies on facts outside the pleading, which the court does not
consider when considering the motion. The cross-complaint alleges only one
claim for breach of contract, but the opposition states that the
cross-complaint alleges the existence of at least three contracts.
Cross-Defendant reiterates that Edward does not have standing to assert a claim
based on the 2014 agreement since he is not a signatory.
III. LEGAL STANDARDS
A motion for judgment on the
pleadings may be granted on grounds the complaint fails to state a cause of
action or the court lacks jurisdiction over the matter. Code Civ. Proc., §
438(b). A non-statutory motion for judgment on the pleading can be made at any
time either prior to the trial or at the trial itself. Stoops v. Abbassi
(2002) 100 Cal. App. 4th 644, 650. The motion performs the same function as a
general demurrer and 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. “Judicial notice” is the
recognition and acceptance by the court of the existence of a matter of law or
fact that is relevant to an issue in the action without requiring formal proof
of the matter. Poseidon Development, Inc. v. Woodland Lane Estates, LLC
(2007) 152 Cal.App.4th 1106, 1117.
The general rules
that apply to demurrers also apply to motions for judgment on the pleadings.
All facts alleged in the complaint are deemed admitted. The complaint is given a reasonable
interpretation and is considered in its entirety. Ludgate v. Lockheed
(2000) 82 Cal.App.4th 592, 602. The court is “not concerned with a plaintiff's
possible inability to prove the claims made in the complaint, the allegations
of which are accepted as true and liberally construed with a view toward
attaining substantial justice. [Citations.]” Ludgate at 602.
IV. DISCUSSION
A.
Pagaduan’s Request for Judicial
Notice (“RJN”) filed on July 20, 2022
The court grants
Pagaduan’s request for judicial notice of a grant deed recorded on August 22,
2007, purporting to transfer the real property to Pagaduan and Sharon jointly.
Evid. Code, § 450(c), Exhibit A. The court may take judicial notice of the
existence of recorded deeds but this "does not mean it may take judicial
notice of factual matters stated therein. (See Kilroy v. State of California
(2004) 119 Cal.App.4th 140, 14 Cal.Rptr.3d 109.) For example, the First
Substitution recites that Shanley ‘is the present holder of beneficial interest
under said Deed of Trust.’ By taking judicial notice of the First Substitution,
the court does not take judicial notice of this fact, because it is hearsay,
and it cannot be considered not reasonably subject to dispute." Poseidon
supra 152 Cal.App.4th at 1117.
The court grants
judicial notice of the existence of a judgment entered on April 22, 2020, in
Case No. 18CMFL00457 Edward De Guzman v. Sharon Grospe-De Guzman. Evid. Code, §
452(d) [permits judicial notice of court records, The judgment terms include
the MSA attached to the judgment. RJN, Ex. C. The MSA purports to transfer to
Cross-Complainant the real property at issue and obligates Cross-Complainant to
refinance the property from which the equalization payment to Sharon would be made.
Id., .pdf page 29. The MSA obligated Cross-Defendant Sharon to sign a
quitclaim deed in favor of Cross-Complainant. The refinance was to include
payment to Cross-Defendant Pagaduan for $32,500, an additional encumbrance on
the real property. Id., .pdf page 30, 6-8.
The court denies
the request for judicial notice of the purported 2014 agreement between
Pagaduan and Sharon dated August 26, 2014, because it is not a court record.
RJN, Ex. B. The existence of the document is not reasonably subject to dispute,
however, any facts asserted in its contents are hearsay. The court cannot
accept as true the contents of pleadings or exhibits in another action just
because they are part of the court record or file. Such documents are inadmissible hearsay. Sosinksy v. Grant (1992) 6 Cal.App.4th
1548, 1568.
B. The
first cause of action for breach of contract and the second cause of action for
breach of the implied covenant of good faith and fair dealing fail to state
causes of action.
The elements of a claim for breach
of contract are (1) the existence of a valid and existing contract between the
parties, (2) plaintiff’s performance or excuse for non-performance, (3) defendant’s
breach; and (4) resulting damage. Richman v. Hartley (2014) 224
Cal.App.4th 1182, 1186. The claim can be alleged according to the contract’s legal
effect rather than its precise language. Construction Protective Services,
Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–199.
Every action must be prosecuted by a
real party in interest unless a statute provides otherwise. Schauer v.
Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 955. If the
complaint shows that plaintiff does not possess the substantive right to
prosecute the action, it is vulnerable to a demurrer for failure to state a
cause of action. Id.
The cross-complaint alleges that the
2014 buy-out agreement was made between Sharon and Pagaduan. Cross-complaint, ¶
7. Sharon agreed to pay Pagaduan $65,000. Upon final payment, Pagaduan agreed
to sign a quit claim deed in favor of Sharon. Cross-complaint, ¶ 8. The agreement
sets forth a payment plan and conditions for delaying scheduled payments.
Cross-complaint, ¶ 9. Cross-Complainant alleges that he was a beneficiary of
the 2014 contract. ¶ 22.
A contract made expressly for the
benefit of a third person may be enforced at any time before the parties
rescind the contract. Civ. Code, § 1559. To establish third-party beneficiary
status, a party must plead a contract which was made expressly for his benefit
“and one in which it clearly appears that he [or she] was a beneficiary.” Shauer,
supra 125 Cal.App.4th at 957. “Expressly”
means in direct and unmistakable terms. The allegations must show the
contracting parties’ intent to make the obligation inure to the third party’s
benefit. Id. at 957.
The
cross-complaint does not allege facts to support the conclusory allegation that
Cross-Complainant was a third-party beneficiary of the 2014 contract.
Cross-Complainant also alleges that
Sharon breached the terms of the MSA that was incorporated into a judgment in
the dissolution action. Cross-complaint, ¶ 20. The allegations do not clearly
set forth whether Cross-Complainant is asserting a second claim for breach of
contract of the MSA. In any event, because Cross-Complainant alleges that the
agreement was signed into a judgment, it appears that contract remedies do not
apply and the proper forum for enforcing a judgment would be the family court. While
the court does not determine this issue, the cause of action remains fatally
uncertain.
The claim for breach of the implied
covenant of good faith and fair dealing is equally defective since a
prerequisite for the claim is an existing contract between the parties in which
the covenant is implied. Smith v. San Francisco (1990) 225 Cal.App.3d
38, 49. The contract claim is defective as alleged.
C.
The third cause of action for fraud and the fourth cause of action
for misrepresentation fail to state causes of action.
A claim for fraud
requires facts to support the following elements: (1) a misrepresentation, (2)
made with knowledge of its falsity, (3) intent to defraud i.e., induce
Plaintiff’s reliance, (4) Plaintiff’s justifiable reliance on the
misrepresentation, (5) and resulting damages. Nagy v. Nagy (1989) 210
Cal.App.3d 1262, 1268. Fraud claims are subject to strict requirements of
particularity in pleading. Id. The particularity requirements necessitate
pleading facts showing “how, when, where, to whom, and by what means the
representations were tendered." Stansfield v. Starkey (1990) 220
Cal.App.3d 59, 73.
The claim is not alleged with specificity.
While the cross-complaint reincorporates prior allegations, it is not clear
what Cross-Complainant asserts are the misrepresentations at issue, or to whom
or how they were tendered or how they were made. Some of the alleged
misrepresentations were made at a hearing in the family court, during a
settlement conference, and at an ex parte hearing in the dissolution action. Cross-complaint,
5:1-5, 5:16-17, 6:1-6. The facts do not clearly assert that Cross-Defendants intentionally
made these representations to Cross-Complainant to induce his reliance.
A claim for negligent
misrepresentation (a species of fraud) arises where a defendant makes false
statements, honestly believing them to be true, but without reasonable grounds
for such belief. Cicone v. URS Corp. (1986) 183 Cal.App.3d 194, 208. The
claim is equally defective since Cross-Complainant alleges the elements of the
claim without specific explanation of the representations at issue.
Cross-complaint ¶¶ 42-56. Additionally, this claim requires the existence of a
duty owed to Cross-Complainant. Cicone at 208. The absence of factual
allegations showing that Cross-Defendants owed a legal duty of care renders the
claim fatally defective. Hegyes v.
Unjian Enters (1991) 234 Cal. App. 3d 1103, 1111. The existence of such a
duty is properly challenged by demurrer and is a question of law for the court.
Id.
D.
The fifth cause of action for
conversion fails to state a cause of action.
To support a claim for conversion,
Cross-Complainant must allege facts showing an ownership interest or a right to
possession of property at the time of conversion, a wrongful act or
dispossession of Cross-Complainant’s property rights and resulting damages. Lee
v. Hanley (2015) 61 Cal.4th 1225, 1240. This claim is based on
Cross-Complainant’s payment of the mortgage on the real property on behalf of
Cross-Defendants, who allegedly converted the funds to their own use. Cross-complaint
¶ 49. Money can be the subject of an action for conversion if a specific sum
capable of identification is involved. Farmers Ins. Exchange v. Zerin
(1997) 53 Cal.App.4th 445, 452. However, the characterization of the money as
mortgage payments obligated to be made by Cross-Complainant is fatal to the
claim since "the law is well settled that there can be no conversion where
an owner either expressly or impliedly assents to or ratifies the taking, use
or disposition of his property.” Farrington v. A. Teichert & Son
(1943) 59 Cal.App.2d 468, 474.
E.
The sixth cause of action for declaratory
relief is adequately alleged.
Cross-Complainant seeks a
declaration of the parties’ rights under the April 2020 judgment for dissolution
and the 2014 buyout agreement. Cross-complaint, ¶¶ 52, 55. Cross-Complainant
also alleges that the controversy between the parties also involve the family
court’s ruling on an ex parte application to force Sharon to sign the deed for
the property. Cross-complaint ¶ 54. Under the family law judgment,
Cross-Complainant was awarded all interest in the family residence subject to a
refinance, a payment to Sharon for the equalization payment, and payment to
Pagaduan whose interest encumbered the real property. Pagaduan’s RJN, Ex. C,
.pdf page 27, ¶ 26.a.
A complaint for declaratory relief
must demonstrate: “(1) a proper subject of declaratory relief, and (2) an
actual controversy involving justiciable
questions relating to the rights or obligations of a party. The ‘proper
subjects’ of declaratory relief are set forth in Code of Civil Procedure
section 1060 and other statutes. Brownfield v. Daniel Freeman Marina
Hospital (1989) 208 Cal. App. 3d 405, 410. An action for declaratory relief
is sufficient if it alleges facts showing the existence of an actual
controversy “relating to the legal rights and duties of the respective parties
under a contract and requests that the rights and duties be adjudged. If these
requirements are met, the court must declare the rights of the parties whether
or not the facts alleged establish that the plaintiff is entitled to a
favorable declaration.” City of Tiburon v. Northwestern Pac. R. Co. (1970)
4 Cal.App.3d 160, 170.
This claim is
adequately alleged.
F.
The
sixth cause of action for accounting and for breach of fiduciary duty against
Defendant Sharon are adequately alleged.
The cross-complaint alleges that Cross-Defendant
Sharon owed Cross-Complainant a fiduciary duty to disclose all she knew
regarding the “contact” (presumably the 2014 buyout agreement) and the family
residence. She allegedly owed a fiduciary duty to protect the home and give
correct information regarding marital assets. Cross-complaint ¶ 60.
A claim for an accounting “has two
elements: (1) that a relationship exists between the plaintiff and defendant
that requires an accounting and (2) that some balance is due the plaintiff that
can only be ascertained by an accounting.” Sass v. Cohen (2020) 10
Cal.5th 861, 869. The existence of a fiduciary relationship between the parties
is not required to state a cause of action for accounting. All that is required
is that some relationship exists that requires an accounting.” Teselle v.
McLoughlin (2009) 173 Cal.App.4th 156, 179.
A claim for breach of fiduciary
requires allegations showing the existence of a fiduciary relationship, its
breach, and damage proximately caused by that breach. Pierce v. Lyman (1991)
1 Cal.App.4th 1093, 1102. The absence of any one of these elements is fatal to
the cause of action. A fiduciary relationship is defined as “any relation
existing between parties to a transaction wherein one of the parties is duty
bound to act with the utmost good faith for the benefit of the other party.” It
ordinarily arises where a confidence is reposed by one person in the integrity
of another. It is synonymous with a “confidential relationship.” Wolf v.
Superior Court (2003) 107 Cal. App. 4th 25, 29 30.
Family Code section 721 provides
that "spouses are subject to the general rules governing fiduciary
relationships that control the actions of persons occupying confidential
relations with each other. This confidential relationship imposes a duty of the
highest good faith and fair dealing on each spouse, and neither shall take any
unfair advantage of the other. This confidential relationship is a fiduciary
relationship subject to the same rights and duties of nonmarital business
partners, … .” The fiduciary relationship requires each spouse to provide the
other with access to any books kept regarding a transaction, rendering true and
full information of all things affecting any transaction concerning the
community property, and to provide an accounting to the spouse, “any benefit or
profit derived from any transaction by one spouse without the consent of the
other spouse that concerns community property.” Id. Accordingly, Cross-Complainant has properly
alleged the basis for a fiduciary relationship between spouses and Sharon’s duty
to provide an accounting. This claim is not alleged against Paduan.
However, the claim for accounting is
also alleged against Pagadaun. As explained above, a fiduciary relationship
need not exist to support an accounting. Tesselle at 179. The
allegations support an existence of a relationship between Cross-Complainant
and Pagaduan as Cross-Complainant was obligated to pay of the amount of the
loan provided by Pagaduan that encumbered the property. RJN Ex. C, ¶ 26.
Cross-Complainant alleges that Pagaduan kept the repayment from the $65,000
loan which triggered her obligation to quitclaim the property to Sharon,
however, Pagaduan has filed this lawsuit claiming to have a 50 percent interest
in the real property. Cross-complaint ¶ ¶ 6, 50. The amount of the balance due
on the loan allegedly kept changing which supports the claim for an accounting.
Cross-Complainant requests an accounting of the payments made to Pagaduan for
the loan as Sharon represented that only $32,000 remained on the loan.
Cross-complaint, ¶ 58.
G.
To
the extent the cross-complaint alleges that Cross-Defendants’ liability is
based on an alter ego theory, the claim is not adequately alleged.
Cross-Complainant alleges that both
Cross-Defendants “are the alter ego of one another.” Cross-complaint ¶ 58. The
opposition does not address this allegation. Alter ego is not a claim for
substantive relief, “but rather, procedural, i.e., to disregard the corporate
entity as a distinct defendant and to hold the alter ego individuals liable on
the obligations of the corporation where the corporate form is being used by
the individuals to escape personal liability, sanction a fraud, or promote
injustice.” Hennessey's Tavern, Inc. v. American Air Filter Co. (1988)
204, Cal.App.3d 1351, 1359. The
allegations do not involve a corporation whose veil Cross-Complainant is
attempting to pierce.
V.
CONCLUSION
To summarize, the Motion for
Judgment on the pleadings is GRANTED with respect to the claims for breach of
contract, breach of the implied covenant of good faith and fair dealing, fraud,
negligent misrepresentation, conversion and to the extent liability is based on
alter ego. The motion is DENIED as to
the claims for declaratory relief, accounting, and breach of fiduciary duty.
Leave to amend is proper where Cross-Complainant
has not had a fair opportunity to amend, and the defect is capable of being
cured. Even if the defect is substantive “a demurrer should not be sustained
without leave to amend if there is a possibility that subsequent amendments
will supply omitted allegations.” Colvig v. RKO Gen. (1965) 232 Cal.
App. 2d 56, 69 70. Accordingly, the court grants 10 days leave to amend. Cal
Rules of Court, Rule 3.1320.