Judge: Michelle C. Kim, Case: 23STCV17814, Date: 2024-09-12 Tentative Ruling

Case Number: 23STCV17814    Hearing Date: September 12, 2024    Dept: 78

Defendant Gary Torpy’s Demurrer to First Amended Complaint is OVERRULED.

Factual Background

This is a contractual fraud action. The First Amended Complaint (“FAC”) alleges as follows:

On or about October 11, 2013, Plaintiff Hui Jin “Becky” Brooks loaned Defendant Bradford J. Neal $800,000.00, secured by Defendant Neal’s property located at 1716 Main Street, Suite 2, Venice, CA 90291 with a Deed of Trust. (FAC ¶¶5-6, 22-24.) On or around November 15, 2013, Defendant Neal offered Plaintiff an unsigned amendment to the loan, which was drafted by Defendant Gary Torpy. (FAC ¶¶25-26.) Defendant Torpy advised Defendant Neal to have Plaintiff either sign the amendment or remove the security interest on the loan and threaten to withhold payment to Plaintiff. (FAC ¶34.)

procedural history

On May 20, 2024, Plaintiff filed the operative FAC asserting eight causes of action:

1. Breach of Contract

2. Breach of Covenant of Good Faith and Fair Dealing

3. Fraud

4. Fraud in the Inducement

5. Constructive Fraud

6. Breach of Fiduciary Duties

7. Professional Negligence

8. Conspiracy

On June 6, 2024, Defendant Torpy filed the instant Demurrer to FAC. On August 29, 2024, Plaintiff filed an opposition. On September 5, 2024, Defendant Torpy filed a reply.

DiscussioN

I.               DEMURRER

“The primary function of a pleading is to give the other party notice so that it may prepare its case [citation], and a defect in a pleading that otherwise properly notifies a party cannot be said to affect substantial rights.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.)  

“A¿demurrer¿tests the legal sufficiency of the factual allegations in a complaint.” (Ivanoff v. Bank of America, N.A.¿(2017) 9 Cal.App.5th 719, 725.) The Court looks to whether “the complaint alleges facts sufficient to state a cause of action or discloses a complete defense.” (Id.) The Court does not “read passages from a complaint in isolation; in reviewing a ruling on a demurrer, we read the complaint ‘as a whole and its parts in their context.’ [Citation.]” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 804.) The Court “assume[s] the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken.” (Harris, supra, 56 Cal.4th p. 240.) “The court does not, however, assume the truth of contentions, deductions or conclusions of law. [Citation.]” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)  

A general 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 or under section 430.10, subdivision (a), where the court has no jurisdiction of the subject of the cause of action alleged in the pleading. All other grounds listed in Section 430.10, including uncertainty under subdivision (f), are special demurrers. Special demurrers are not allowed in limited jurisdiction courts. (Code Civ. Proc., § 92, subd. (c).)  

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)  The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)   

A.   Meet and Confer

Code of Civil Procedure section 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).) The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc., § 430.41, subd. (a)(2).) Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 430.41, subd. (a)(3).)   

Defendant Torpy advances the declaration of his counsel or record, Marta A. Alcumbrac attesting to meet and confer efforts prior to the filing of the instant demurrer. Specifically, Alcumbrac avers that she engaged in two lengthy telephone calls with Plaintiff’s counsel discussing the merits of the allegations and the issues to be raised in the demurrer. (Alcumbrac Decl., ¶2, Ex. 1.)

Therefore, Defendant Torpy has complied with the meet and confer requirement.

B.   Merits of Demurrer

Defendant Torpy demurs to the fourth, seventh, and eighth causes of action on the grounds that Plaintiff fails to state a viable claim. Defendant Torpy also contends the eighth cause of action does not comply with Civil Code Section 1714.10.

Fourth Cause of Action for Fraudulent Inducement

First, Defendant Torpy asserts the fourth cause of action fails because the FAC does not allege facts supporting a false misrepresentation made to Plaintiff nor facts of Plaintiff’s reliance on such misrepresentations.

“The essential elements of fraud, generally, are (1) a misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211.) “Each element must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any basis for the cause of action, although less specificity is required if the defendant would likely have greater knowledge of the facts than the plaintiff.” (Id.)

The FAC re-alleges and re-pleads the allegations contained in the preceding paragraphs. (FAC ¶142.) The FAC alleges that Defendant Torpy intentionally made false, misleading statements to Plaintiff that the Notes containing the language “This Note was made and arranged by Maker [Defendant Neal], a licensed real estate broker” complied with the Broker’s Exception to Usury Laws. (FAC ¶143(f).) The FAC alleges that Defendant Torpy made this representation to her with intent to induce her agreement to the Notes. (FAC ¶144(f).) The FAC alleges that the misrepresentation occurred in 2016 and Plaintiff relied on the representation by consenting to the loans. (FAC ¶¶144(f), 148-150.) The FAC alleges that in January 2023, Defendant Neal claimed the transactions are usurious. (FAC ¶154.)

In reading the FAC as a whole and taking the allegations as true, Plaintiff alleges sufficient facts to support the fourth cause of action. Defendant’s arguments go to the merits of the cause of action, which the Court will not consider here.

Therefore, the demurrer to the fourth cause of action is OVERRULED.

Seventh Cause of Action for Professional Negligence

Next, Defendant Torpy argues that he owed no duty to Plaintiff and no conduct by him caused or could have caused Plaintiff’s alleged damages.

“The elements of a claim for professional negligence are: ‘(1) the duty of the professional to use such skill, prudence, and diligence as other members of his profession commonly possess and exercise; (2) a breach of that duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the professional's negligence.’” (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1095.)  “It is well established that an attorney has an independent legal duty to refrain from defrauding nonclients.” (Rickley v. Goodfriend (2013) 212 Cal.App.4th 1136, 1151.)

The FAC re-alleges and re-pleads the allegations contained in the preceding paragraphs. (FAC ¶180.) The FAC alleges that Defendant Torpy provided legal advice to Plaintiff and neither recommended nor suggested Plaintiff seek independent legal advice at any point during the mid-2016 phone call. (FAC ¶¶100-101.) The FAC alleges that Defendant Torpy did not explain to Plaintiff that he only represented Defendant Neal during this call. (FAC ¶103.) The FAC alleges after providing legal advice to Plaintiff for two years, on January 9, 2018, Defendant Torpy sent Plaintiff an email stating he is only representing Defendant Neal. (FAC ¶109.)

In reading the FAC as a whole and taking the allegations as true, Plaintiff alleges sufficient facts to support the seventh cause of action. Here, again, Defendant inappropriately argues the merits of the cause of action.

Therefore, the demurrer to the seventh cause of action is OVERRULED.

Eighth Cause of Action for Civil Conspiracy

Moreover, Defendant Torpy contends a plaintiff alleging a conspiracy between a lawyer and their client must first seek and obtain a court order permitting that claim be brought and no such order has been sought or granted in the present action.

Pursuant to Civil Code Section 1714.10, subdivision (a), “No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney's representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action.” (Civ. Code, § 1714.10, subd. (a).)

In opposition, Plaintiff does not contest that she failed to seek or obtain an order permitting her to file the civil conspiracy claim. Rather, Plaintiff argues that Civil Code Section 1714.10, subdivision (a) does not apply in this case because Defendant Torpy owed her an independent legal duty. (Civ. Code, § 1714.10, subd. (c).) Plaintiff alleges sufficient facts to establish Torpy had an independent legal duty to Plaintiff as a nonclient such that section 1714.10 does not apply. The omitted language from Favila v. Katter Muchin Rosenman LLP (2010) 188 Cal.App.4^th 189 is not applicable here because Plaintiff is not alleging that Neal owed Plaintiff a duty.

Therefore, the demurrer to the eighth cause of action is OVERRULED.

Defendant is ordered to file an answer to the FAC within ten (10) days.

Moving Party is ordered to give notice.

DATED:  September 12, 2024 

           ________________________________

Hon. Michelle C. Kim

Judge of the Superior Court