Judge: Michael Shultz, Case: 24STCV14012, Date: 2025-01-28 Tentative Ruling

Case Number: 24STCV14012    Hearing Date: January 28, 2025    Dept: 40

24STCV14012 Tara International Trading, et al. v. Are Builders, et al.

Tuesday, January 28, 2025

 

[TENTATIVE] ORDER OVERRULING DEMURRER TO COMPLAINT BY FAM PROMOTIONS, INC. dba ACT CONSTRUCTION

 

[TENTATIVE] ORDER OVERRULING DEMURRER TO COMPLAINT BY FRANK FAM-TAFRESHI

 

I.       BACKGROUND

      The complaint arises­ from­­­ Defendants’ alleged failure to complete Plaintiffs’ construction project consisting of the construction of a four-unit fourplex. pursuant to the terms of the written agreements. Plaintiffs allege contract-related claims, and claims for fraud and negligence.

II.     ARGUMENTS

      Defendant, FAM Promotions, Inc., dba ACT Construction (“FAM”) demurs to the second cause of action for fraud in the inducement and the third cause of action for intentional misrepresentation and fraud on grounds of uncertainty, failure to allege facts to support the claim, and for lack of particularity in pleading.

      Defendant, Frank Fam-Tafreshi “(Tafreshi”), separately demurs to the same causes of action for the same reasons.

      In opposition, Plaintiffs argue that Defendants overlook the factual and legal basis for Plaintiffs’ claims.

      In reply, Defendants argue that the claims have alleged do not explain or support the conclusory statements alleged.

III.    LEGAL STANDARDS

      A demurrer tests the sufficiency of a complaint as a matter of law and raises only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) In testing the complaint’s sufficiency, the court must assume the truth of the properly pleaded factual allegations as well as facts that can be reasonably inferred from those expressly pleaded facts. The court may also consider matters properly subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

      The court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.4th 634, 638.) Plaintiff is required to allege facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the complaint fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer. (Code Civ. Proc., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)

      Sufficient facts are the essential facts of the case “with reasonable precision and with particularity that is sufficiently specific to acquaint the defendant with the nature, source, and extent of his cause of action.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.)  Whether the Plaintiff will be able to prove the pleaded facts is irrelevant. (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.)

      A demurrer may also be sustained if a complaint is “uncertain.” Uncertainty exists where a complaint’s factual allegations are so confusing, they do not sufficiently apprise a defendant of the issues it is being asked to meet. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2; Code Civ. Proc., § 430.10(f).)

      A pleading is required to assert general allegations of ultimate fact. Evidentiary facts are not required. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47; Lim v. The.TV Corp. Internat. (2002) 99 Cal. App. 4th 684, 690.) However, unlike federal courts, California state courts are not a notice pleading jurisdiction, and notice alone is not a sufficient basis for any pleading. California is a fact pleading jurisdiction. Merely putting an opposing party on notice is not sufficient. (Bach v. County of Butte (1983) 147 Cal.App.3d 554, 561; see Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 250.)

IV.   DISCUSSION

      The court addresses both demurrers in this ruling as they are essentially identical in substance.

A.     Relevant allegations of the complaint.

      Plaintiffs incorporate the following allegations into each cause of action at issue. Plaintiffs allege that on March 4, 2020, Plaintiffs contracted with FAM to build a four-unit fourplex on Plaintiffs’ real property located in Tujunga (the “Project”). (Complaint, ¶ 15.) Defendant, Frank Fam-Tafreshi (“Tafreshi”) is alleged to be the CEO, President, and Managing Officer of FAM and was the responsible managing officer for the Project. (Complaint, ¶ 16.)

      As a result of FAM’s negligent excavation of a retaining wall and inability to repair it, FAM convinced Plaintiffs to contract with ARE Builders, alleged to be a joint venture between Hillside and Roberto Espino (“Espino”) (collectively, “ARE”). (Complaint, ¶ 6.) At FAM’s urging, Plaintiffs contracted with ARE on September 2, 2020, to complete the retaining walls and underlying foundation (Complaint, ¶¶ 34, 35, Ex. B.)

      ARE ceased performance after pouring only a part of the foundation, building portions of the retaining wall, and causing further damage to a neighboring driveway. Instead, ARE offered to purchase the property from Plaintiffs for below market value. (Complaint, ¶¶ 38, 39.)  ARE abandoned the Project after Plaintiffs refused to sell the property. (Complaint, ¶42.)

B.     Demurrer to the second cause of action for fraud in the inducement and violation of Bus & Prof. Code § 7160 is OVERRULED.

      Section 7160 of the Business and Professions Code states the following:

“Any person who is induced to contract for a work of improvement, including but not limited to a home improvement, in reliance on false or fraudulent representations or false statements knowingly made, may sue and recover from such contractor or solicitor a penalty of five hundred dollars ($500), plus reasonable attorney’s fees, in addition to any damages sustained by him by reason of such statements or representations made by the contractor or solicitor.” (Bus. & Prof. Code, § 7160.)

      A claim for fraud in the inducement is a “subset” of the tort of fraud that “occurs when ‘the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present, and a contract is formed, which, by reason of the fraud, is voidable.’” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294–295.)  Fraud claims are subject to strict requirements of particularity in pleading. (Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268.) 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.)

      Where fraud is alleged against a corporation, the pleading standards are even greater. A Plaintiff must allege “the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written." (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 645.)

      Plaintiffs allege they contracted with Tafreshi/FAM who knew they were not qualified to build retaining walls, although Tafreshi/FAM represented that they were qualified to construct the retaining walls in order to induce Plaintiffs to enter into the contract with Tafreshi/FAM. (Complaint, ¶ 64-65, 68) Tafreshi/FAM subsequently admitted they did not have the ability to complete the retaining walls on the project after they caused damage to neighboring property and refused to pay for it, and subsequently abandoned the job, causing Plaintiff to replace the soil that Tafreshi/FAM had excavated to temporarily shore up the property. (Complaint, ¶¶ 28, 47, 67, 72.)

      Contrary to Defendants’ arguments, the foregoing allegations assert that Tafreshi/FAM’s statements misrepresenting their qualifications were false at the time Tafreshi/FAM contracted with Plaintiffs in order to induce Plaintiffs to enter into the agreement. (Complaint, ¶¶ 64-55.) Plaintiffs attach the contract with Tafreshi/FAM signed on March 4, 2020, identifying the time of contracting which can infer the time these misrepresentations were made. The contract also provides more specificity. (Complaint, ¶ 15, Ex. A.)

      Plaintiffs allege that Tafreshi/FAM’s representations were false because they (as well as ARE) abandoned the project when Plaintiffs refused to sell the property to ARE. (Complaint, ¶ 42.)

C.     Demurrer to the third cause of action for intentional misrepresentation and fraud is OVERRULED.

      Fraud claims require specific allegations of fact 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.)

      The alleged facts cited with regard to the demurrer to the second cause of action also support the elements for fraud, supporting the third cause of action. Plaintiffs allege Tafreshi/FAM knew they were not qualified to build retaining walls, but intentionally misrepresented to Plaintiffs that they were so qualified in order to induce Plaintiffs to enter into that agreement. (Complaint, ¶ ¶ 78-79.)

V.     CONCLUSION

      Based on the foregoing, both demurrers to the complaint filed by FAM Promotions, Inc., dba ACT Construction and Frank Fam-Tafreshi, respectively, are OVERRULED. Defendants are ordered to file an answer within 30 days.