Judge: Michael Shultz, Case: 22CMCV00314, Date: 2023-02-09 Tentative Ruling
Case Number: 22CMCV00314 Hearing Date: February 9, 2023 Dept: A
22CMCV00314
Dwayne Hamilton v. Tanya Hamilton
[TENTATIVE] ORDER
I.
BACKGROUND
The complaint alleges that Plaintiff,
Dwayne Hamilton (Dwayne) obtained an order from the Los Angeles Superior Court transferring
four parcels of real property to Dwayne in a probate matter settling the Estate
of Margie Lee Hamilton (Estate). Prior to this order, the parties, who are
siblings, entered into an informal verbal agreement wherein Defendant, Tanya
Hamilton, (Tanya) would collect the rental proceeds from tenants on the
property and deposit it into the Estate’s account. Dwayne alleges he discovered
that Tanya misappropriated rental income and acted as de facto landlord/owner
of the properties without Dwayne’s knowledge. Dwayne alleges claims for conversion
and private nuisance.
On October 31, 2022, Tanya filed a
cross-complaint against Dwayne alleging claims for fraud, intentional and
negligent interference with prospective economic advantage, breach of contract,
and breach of implied-in-fact contract. Cross-Defendant Dwayne now demurs to all
claims alleged in the cross-complaint.
II.
LEGAL STANDARDS
A demurrer reaches defects that appear
on the face of the pleading. The court considers the allegations and matters
that are subject to judicial notice. All facts are accepted as true. Saunders v. Superior Court (1994) 27
Cal.App.4th 832, 837–838.
A demurrer tests the legal sufficiency of the allegations. It does not test
their truth, the plaintiff’s ability to prove them, or the possible difficulty
in making such proof. Saunders v. Superior Court (1994) 27
Cal.App.4th 832, 840.
III.
CAUSES OF
ACTION AT ISSUE
A.
Intentional misrepresentation,
negligent misrepresentation, and fraud
1)
Allegations.
All three causes
of action are premised on the allegation that in 2014, pursuant to discussions
between the parties, Dwayne assured Tanya that to speed up their mother’s
probate matter, Tanya would sign an Irrevocable Assignment of Interest
(“Assignment”) transferring the real property to Dwayne. Cross-complaint, ¶¶
22-23. Dwayne allegedly promised that once the probate matter was completed and
Dwayne refinanced the property, he would return to Tanya her interests in the
real property. Cross-complaint, ¶ 24. Tanya had Dwayne sign a document entitled,
“Reason for Signing the Irrevocable Assignment of Interest” on June 5, 2016
(“the June 2016 Document”). Cross-complaint, ¶ 25.
2)
Arguments.
In his demurrer, Dwayne
argues that it is impossible for Tanya to base the fraud claims on the June
2016 document because Tanya signed the Assignment on May 31, 2016, which
precedes the June 2016 document. She could not have relied on the June 2016
document in deciding to sign the Assignment.
3)
Discussion.
A claim for fraud requires facts to
support the following elements: (1) a misrepresentation, (2) made with
knowledge of its falsity, (3) Defendant intended to defraud Plaintiff, i.e.,
induce Plaintiff’s reliance, (4) Plaintiff justifiably relied on the misrepresentation,
(5) causing damage. Nagy
v. Nagy (1989) 210 Cal.App.3d 1262, 1268. A claim for false
promise is a type of intentional misrepresentation, i.e., actual fraud.
Contrary to Dwayne’s argument, the date
of signing of the June 2016 document does not render the fraud claims
defective. Tanya adequately alleges that the fraud claims are based on 2014
representations made by Dwayne that Tanya wished to have acknowledged in writing,
hence the document’s title, “Reason for Signing the Irrevocable Assignment of
Interest. Cross-complaint, ¶ 25.
Dwayne correctly argues that Tanya is
precluded from alleging a claim for negligent misrepresentation if Tanya also
alleges that Dwayne intentionally and falsely promised to transfer the property
back to Tanya. An action for
promissory fraud (or false promise) may lie where a defendant “fraudulently
induces the plaintiff to enter into a contract." Service
by Medallion, Inc. v. Clorox Co.(1996)
44 Cal.App.4th 1807, 1816. The action is one of deceit, which requires proof
that the “defendant made a misrepresentation of fact or a promise without any
intention of performing it.” Id. The
same elements for intentional fraud apply in a claim for false promise, and
every element must be specifically pleaded. Id.
A claim for negligent misrepresentation on
the other hand 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. In
support of this claim, Tanya alleges that Dwayne never had any intention of
returning Tanya’s interests, which is the same as deceit, not an honest belief
that the representation was true. Cross-complaint, ¶ 52. Therefore, the claim
for negligent misrepresentation is defective as alleged. Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159. [Wherein
the court of appeal sustained demurrer to the claim for negligent
misrepresentation given the claim for intentional misrepresentation and the
refused to recognize a claim for “negligent false promise.”].
B. Breach
of contract and breach of implied-in-fact contract.
1) Allegations.
The contract claims are based on the
June 2016 document, wherein the parties agreed that Tanya would transfer her
interests in the real property to Dwayne to facilitate refinance of the
property. Cross-complaint, ¶ 75. Tanya alleges she continued to provide upkeep
and maintenance of the properties in reliance of Dwayne’s agreement with Tanya.
Cross-complaint, ¶ 76-77.
2) Arguments.
Dwayne
argues that the contract is not supported by consideration, and past
performance cannot constitute consideration for a new agreement. The June 2016
document does not require a promise or performance from Tanya. There is no
indication of mutual assent since the document is signed only by Dwayne.
Tanya
argues that the parties entered into an oral agreement where Plaintiff was to
refinance the properties in exchange for Tanya transferring her interests to
Dwayne. Upon completion of the refinance, Dwayne was to return Tanya’s
interests. Cross-complaint ¶ 75. The contract claims are adequately alleged
based on the parties’ oral agreement.
3) Discussion.
The June
2016 document signed by Dwayne acknowledges that he entered into an agreement
with his sister with respect to the temporary transfer of Tanya’s interests and
the purpose of that transfer. Cross-complaint, Ex. A, ¶ 1. The document infers
that the agreement was previously made. The Cross-Complainant alleges that the
agreement occurred “circa 2014.” Cross-complaint, ¶ 23.
The oral
contract is supported by consideration. 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. A
valid contract requires (1) parties capable of contracting; (2) their consent;
(3) a lawful object; and, (4) sufficient cause or consideration." Civ.
Code, § 1550.
There are
two requirements to find consideration: "[t]he promisee must confer (or
agree to confer) a benefit or must suffer (or agree to suffer) prejudice …
the second requirement is that the benefit or prejudice ‘must actually be
bargained for as the exchange for the promise.’ ” Steiner
v. Thexton (2010) 48 Cal.4th 411, 420-421.
Here, Tanya alleges that she agreed to waive her beneficial share (prejudice) and
assign her rights to the property to Dwayne who promised to refinance the
property and upon its completion, return Tanya’s interest. Cross-complaint, ¶
75. Tanya alleges that these discussions preceded her signing of the
Assignment. Cross-complaint, ¶ 23.
Even if the
contract claims are allegedly based on the June 2016 document, the Court is not
limited to Plaintiff’s theory of recovery in testing the sufficiency of their
complaint. The Court “must determine if the factual allegations
of the complaint are adequate to state a cause of action under any legal
theory. The courts of this state have ... long since departed from holding a
plaintiff strictly to the 'form of action' he has pleaded and instead have
adopted the more flexible approach of examining the facts alleged to determine
if a demurrer should be sustained.” Quelimane
Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38–39.
C. Intentional and negligent interference with
prospective economic advantage.
1) Allegations.
Tanya
alleges that she had an economic relationship with the tenants of the rental
properties at issue that would have resulted in an economic benefit to her. Dwayne
allegedly disrupted this relationship by harassing both Tanya and the tenants leading
to difficulties in Tanya’s collection of rents. Cross-complaint ¶ 57-59.
The
claim for negligent interference with prospective economic advantage is based
on the same facts but alleges Dwayne failed to act with reasonable care by not
returning Tanya’s interests in the properties. Cross-complaint, ¶ 68-69.
2)
Arguments.
Dwayne
argues that this claim is barred by the two-year statute of limitations. Tanya
alleges that Dwayne interfered beginning May 31, 2016. Therefore, the
limitations period expired on May 31, 2018. Tanya filed the cross-complaint on October
31, 2022.
Tanya
argues that the interference claims did not accrue until the date of discovery,
which occurred on April 1, 2022, when Dwayne cutoff all communication with
Defendant. However, in Reply, Dwayne contends that Tanya knew or had reason to
know of all underlying facts by July 9, 2018, at the latest.
3) Discussion.
Claims
for intentional and negligent interference with prospective economic advantage
is two years from the date the claim accrues. Guess,
Inc. v. Superior Court (1986) 176 Cal.App.3d 473, 478. ["A
number of California cases have held that tortious interference with a person's
trade or business comes within the two-year limitation in section 339,
subdivision (1), as an action upon an obligation or liability not founded upon
an instrument in writing."].
In order
for the court to sustain demurrer to the complaint based on a statute of
limitations defect, the defect must clearly and affirmatively appear on the
face of the complaint. It is not enough that the complaint might be barred. Citizens
for a Responsible Caltrans Decision v. Department of Transportation (2020)
46 Cal.App.5th 1103, 1117
Dwayne
contends that the interference claims accrued on May 31, 2016, when Tanya
transferred her interests in the properties to Dwayne. However, the claims are
based on Dwayne’s alleged interference in the economic relationship between
Tanya and the tenants by harassing both Tanya and the tenants. Cross-complaint,
¶ 58-59, ¶ 62, 66-67. Dwayne also interfered with Tanya’s relationship with the
tenants by deciding to keep the properties for himself and not returning
Tanya’s interests precluding her ability to collect rents resulting in
financial harm to Tanya. Cross-complaint, ¶ 68, 70-72. While the
cross-complaint does not allege the date that the harassment began, Tanya
alleges that on Dwayne, through his attorney, left the tenants with a “Notice
of Ownership Change” on October 25th, 2022. Cross-complaint, ¶ 38,
Ex. D.
Based on
these allegations, the interference claims have not expired. Dwayne has not
demonstrated that the pleading clearly and affirmatively bars
Cross-Complainant’s interference claims.
D. Statutes
of limitation on the fraud and contract claims.
1) Fraud
Fraud claims must be commenced within
three years of the date the claim accrued. Code Civ. Proc., § 338 subd. (d).
However, the claim is not deemed to have accrued until the discovery, by the
aggrieved party, of the facts constituting the fraud. Id., subd. (d). Moreover, actual
discovery does not include constructive knowledge imputed by law. Id., subdv (c)(3)(C)(i). Dwayne argues the fraud claims are barred because
Tanya should have known of the alleged fraud by March 2, 2018, when Dwayne
completed the refinancing, completed the probate proceeding, and allegedly
refused to return Tanya’s interests. Therefore, Dwayne argues that claims
expired on June 11, 2021. The cross-complaint was filed on October 31, 2022.
In opposition, Tanya
alleges that the fraud claims are not barred since they accrued on the date
Tanya discovered that the misrepresentations were false which occurred on April
1, 2022, when Dwayne cutoff all communications with Tanya.
The cross-complaint
does not clearly allege the date Tanya discovered that Dwayne’s representations
concerning the return of Tanya’s interests were false. Thus, the pleading does
not clearly and affirmatively establish that Tanya’s fraud claim is barred. Instead,
Tanya affirmatively alleges that Dwayne cutoff all communication between
himself and Tanya in April of 2022. Cross-complaint, ¶ 35. The three-year
limitations period has not expired.
2)
Contract claims.
The statute of limitations for
claims arising from breach of an oral contract is two years. Code Civ. Proc., § 339. The claim accrues from the date of
the promisor’s failure “to do the thing contracted for at the time and in the
manner contracted.” Professional Collection Consultants v.
Lauron (2017) 8 Cal.App.5th 958, 966. The cross-complaint does not clearly allege the date at
which Dwayne failed to return Tanya’s interests as promised. Tanya does not
allege the date at which she was informed that Dwayne removed her from the
mortgage account, preventing Tanya from making mortgage payments.
Cross-complaint, ¶ 29. However, she also alleges that Dwayne would add her to
the mortgage account. Cross-complaint, ¶ 31. While the cross-complaint
expressly alleges that the parties’ mother’s estate was finalized on March 2,
2018, the cross-complaint does not allege that Tanya learned on this date that
Dwayne would not return Tanya’s interests. Cross-complaint, ¶ 32. The
cross-complaint does affirmatively allege that Dwayne cut off all
communications with Tanya on April 2022. Cross-complaint, ¶ 35. Therefore, the
contract claims are not clearly barred.
IV.
CONCLUSION
Based on the foregoing, the demurrer
is sustained in part and denied in part. The Court SUSTAINS demurrer without
leave to amend as to the second cause of action for negligent
misrepresentation, which is precluded as a matter of law by the first and
seventh causes of action for fraud. The Court OVERRULES demurrer to the first and
seventh causes of action for fraud (promissory fraud) and intentional fraud,
respectively; the third and fourth causes of action for intentional and
negligent interference, respectively; and the fifth and sixth causes of action
for breach of contract and implied-in-fact contract, respectively.
Cross-Defendant is ordered to answer the cross-complaint withing 10 days.