Judge: Michelle Williams Court, Case: 22STCV11656, Date: 2022-08-30 Tentative Ruling

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Case Number: 22STCV11656    Hearing Date: August 30, 2022    Dept: 74

22STCV11656           JOHN C. CHIU vs HANDOKO WIDJAJA CHEN

Demurrer and Motion to Strike

TENTATIVE RULING: Defendants’ Demurrer to Plaintiff's Complaint is OVERRULED as to the second and third causes of action, SUSTAINED with leave to amend as to the fourth cause of action, and MOOT as to the fifth cause of action.  Defendants' Motion to Strike Portions of Plaintiff's Complaint is MOOT as to paragraphs 71 and 81 and otherwise DENIED.  Plaintiff shall have 20 days leave to amend.

Background

On April 6, 2022, Plaintiff John Chiu filed this action against Defendants Handoko Widjaja Chen A.K.A. Han Widjaja Chen A.K.A. Han Chen, and Gig Real Estate Inc. dba Growth Investment Group. The complaint asserted causes of action for: (1) breach of fiduciary duty; (2) fraud and deceit; (3) elder abuse—financial abuse; (4) elder abuse—physical abuse; and (5) elder abuse—neglect. Plaintiff, an 84 year-old man, alleges he was coerced into signing documents related to the purchase of four apartment complexes.

On August 3, 2022, the Court entered Plaintiff’s request to dismiss the fifth cause of action for elder abuse – neglect.

Demurrer and Motion to Strike

On July 20, 2022, Defendants Handoko Widjaja Chen and Gig Real Estate, Inc. filed their demurrer to the second, third, fourth, and fifth causes of action as well as a motion to strike the claim for punitive damages and reference to another case involving Chen.

Opposition

In opposition, Plaintiff contends Defendant failed to adequately meet and confer, notes he dismissed the fifth cause of action, and argues the claims for fraud, elder abuse, and punitive damages are adequately stated and reference to another case is relevant to Defendant’s pattern and practice.

Reply

The Court did not receive a timely reply. (Code Civ. Proc. § 1005(c).)

Meet and Confer

Defendants filed the declaration of Chad Wilcox in support of the demurrer and motion to strike. (Code Civ. Proc. §§ 430.41, 435.5.) The evidence demonstrates Defendants failed to adequately meet and confer.

Wilcox’s declaration notes the parties discussed the demurrer, but makes no reference to the motion to strike, other than to state it was filed. (Wilcox Decl. ¶ 6 (“On July 11, 2022, . . . [w]e discussed the factual background of the claims and my clients' intention to file a demurrer as to the fraud and elder abuse causes of action. Unfortunately, we were unable to resolve the dispute informally. As a result, Defendants have filed a demurrer and motion to strike.”).)

Wilcox contends, on July 8, 2022, he “sent Plaintiff's counsel, Karl Schlecht, an email detailing the deficiencies with Plaintiff's Complaint and to request a time to meet and confer.” (Wilcox Decl. ¶ 5.) In opposition, Plaintiff provides a copy of that email, which solely addressed the elder abuse claims. (Schlecht Decl. Ex. C (“[W]e don’t believe the Complaint has been sufficiently pleaded as to the Elder Abuse causes of action. . . . Therefore, we request that your client dismiss his Elder Abuse causes of action.”).) Plaintiff’s counsel also states that, during the July 11, 2022 meet and confer “[i]ssues related to the Second Cause of Action for Fraud and Deceit were NEVER mentioned by anybody during this meet and confer teleconference.” (Schlecht Decl. ¶ 9.)

Pursuant to Code of Civil Procedure section 430.41(a)(1), “the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies.” The evidence indicates Defendants failed to discuss the second cause of action for fraud. Similarly, Code of Civil Procedure section 435.5 provides, “the moving party shall identify all of the specific allegations that it believes are subject to being stricken and identify with legal support the basis of the deficiencies.” Defendants failed to demonstrate they discussed the motion to strike with Plaintiff.

In opposition to the demurrer, Plaintiff notes Defendants failed to adequately meet and confer as to the second cause of action and “requests that the Court OVERRULE Defendants’ Demurrer to Plaintiff’s Second Cause of Action.” (Opp. at 5:20-6:16.) Defendants’ failure to adequately meet and confer is not a basis to overrule the demurrer or deny the motion to strike. (Code Civ. Proc. §§ 430.41(a)(4); 435.5(a)(4).)

However, the Court expects Defendants to fully comply with the requirements of the Code of Civil Procedure in all future submissions.

Demurrer

Standard

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A complaint need not allege evidentiary facts noting plaintiff’s proof. (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)

A special demurrer to a complaint is appropriate when the grounds of the pleading are uncertain, ambiguous, or unintelligible. (Code Civ. Proc. § 430.10(f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191.) Courts typically disfavor demurrers based on uncertainty, which the court strictly construes even when the pleading is uncertain in some respects. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

If the demurrer is sustained, plaintiff must prove the possibility of cure by amendment. (Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 173 (citing Grinzi v. San Diego Hospice Corp. (2004) 120 Cal.App.4th 72, 78-79).) Leave to amend must be allowed where there is a reasonable possibility of successfully stating a cause of action. (Schulz v. Neovi Data Corp. (2007) 152 Cal.App.4th 86, 92.) 

Fraud and Deceit (Second Cause of Action)

The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v. Sup. Ct. (1996) 12 Cal.4th 631, 638.)  Fraud must be pled with particularity which “necessitates pleading facts which 'show how, when, where, to whom, and by what means the representations were tendered.” (Id. at 645.) The burden of pleading fraud against a corporate entity is even greater as the 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. (Ibid.)

Defendants contend the complaint lacks the required specificity to state a cause of action for fraud. (Dem. at 6:1-7:20.)

However, the specificity requirements of alleging “how, when, where, to whom, and by what means” the fraud was tendered by defendant does not apply to a fraudulent concealment claim. (Alfaro v. Community Housing Imp. System & Planning Ass'n, Inc. (2009) 171 Cal.App.4th 1356, 1384 (“This statement of the rule reveals that it is intended to apply to affirmative misrepresentations. . . . As plaintiffs accurately respond, it is harder to apply this rule to a case of simple nondisclosure. How does one show ‘how’ and ‘by what means' something didn't happen, or ‘when’ it never happened, or ‘where’ it never happened?”).) Additionally, “even in the pleading of fraud, the rule is relaxed when it is apparent from the allegations that the defendant necessarily possesses knowledge of the facts.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 47.)

The complaint alleges Defendants failed to disclose the separate commission agreement with the sellers, falsely represented that the sellers had received multiple offers for the properties to rush the sale, and “misrepresented and failed to inform Plaintiff of the material terms of the Contingency Removal Agreement.” (Compl. ¶ 41.) Defendant Chen made the “multiple offers” misrepresentation on June 26, 2020 at Defendant’s office in San Gabriel. (Compl. ¶ 12.) The complaint alleges Defendant Chen is the owner, manager, and/or controller of Defendant Gig, there is no legal separation between the two, and they acted collectively as brokers and dual agents for the sellers and Plaintiff. (Compl. ¶¶ 3, 8, 23, 28), and therefore adequately attributes the alleged fraud to Defendant Gig. Plaintiff relied upon the misrepresentations and omissions to his detriment. (Compl. ¶¶ 43-47.) The Court finds the allegations of fraud and deceit are sufficient at the pleading stage.

The demurrer to the second cause of action is OVERRULED.

Elder Abuse – Financial Abuse (Third Cause of Action)

“Financial abuse of an elder or dependent adult occurs when a person or entity does any of the following: (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.” (Welf. & Inst. Code § 15610.30(a).) Undue influence “means excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.” (Welf. & Ins. Code § 15610.70(a).)

Defendants argue they could not have taken Plaintiff’s property because he voluntarily deposited the money into escrow and remove the contingencies. (Dem. at 8:7-17.) However, the complaint alleges these acts were not voluntary, but rather the result of Defendants’ coercive tactics and concealments. Defendants also argue the complaint fails to allege sufficient facts to demonstrate they acted willfully, intentionally, or wrongfully appropriated anything from Plaintiff.

In opposition, Plaintiff correctly notes Defendants need not have obtained property themselves to be liable for financial elder abuse. (See Welf. & Inst. Code, § 15610.30(c) (“a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement . . .  , regardless of whether the property is held directly or by a representative of an elder or dependent adult.”); Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 480 (“Real parties in interest's proposed interpretation of the Act's definition of financial elder abuse is troubling. Under this interpretation, a person or entity that seeks to defraud an elder into transferring title to property, or to obtain title through undue influence, would be immune from the remedies available under the Act until the object of the abuse was achieved—a transfer of title from the elder to the abuser. Only then, after having lost title to the property, could an elder invoke the Act. For several reasons, we decline to take such a narrow view of financial elder abuse.”).) Additionally, the complaint contains numerous allegations of fraud and undue influence exerted by Defendants to cause Plaintiff to sign the agreements at issue. (Compl. ¶¶ 14, 17-19, 30, 55.) The Court finds the allegations sufficient to state a cause of action for financial elder abuse.

The demurrer to the third cause of action is OVERRULED.

Elder Abuse – Physical Abuse (Fourth Cause of Action)

Pursuant to Welfare and Institutions Code section 15610.07(a)(1), “Abuse of an elder or a dependent adult” means any of the following: (1) Physical abuse, neglect, abandonment, isolation, abduction, or other treatment with resulting physical harm or pain or mental suffering.” “‘Physical abuse’ means any of the following: (a) Assault, as defined in Section 240 of the Penal Code. (b) Battery, as defined in Section 242 of the Penal Code. (c) Assault with a deadly weapon or force likely to produce great bodily injury, as defined in Section 245 of the Penal Code. (d) Unreasonable physical constraint, or prolonged or continual deprivation of food or water. (e) Sexual assault . . . and (f) [u]se of a physical or chemical restraint or psychotropic medication” under specific circumstances not alleged here. (Welf. & Ins. Code § 15610.63.)

Defendants argue the complaint merely alleges Plaintiff was deprived of sleep, which is not sufficient to state a claim for physical abuse. (Dem. at 9:1-18; Compl. ¶ 66 (“Plaintiff is informed and believes, and thereon alleges, that defendants acted with recklessness, oppression, fraud and malice in continually depriving Plaintiff of sleep and rest on June 26, 2020 to the early morning of June 27, 2020 as alleged above.”).)

In opposition, Plaintiff contends the complaint alleges physical abuse through “Unreasonable physical constraint.” (Welf. & Ins. Code § 15610.63(d).) Plaintiff contends after visiting the properties on June 26, 2020, “Chen did not allow Dr. Chiu to go home” and “refused to drive Dr. Chiu back to his office in Thousand Oaks until all the paperwork was signed for all 4 Subject Properties.” (Opp. at 13:17-19.)

However, the complaint does not contain these allegations. Rather, the complaint alleges “Defendant CHEN coerced Plaintiff to remain at Defendant Chen’s office until 3:00 a.m. – 4:00 a.m. on the morning of Saturday, June 27, 2020 until all the paperwork was signed . . . refused to provide Plaintiff access to the documents for review and required that Plaintiff sign the documents without review. . . . [and] prohibited Plaintiff from consulting with his financial advisors, attorneys or anyone else regarding the purchase of the four Subject Properties prior to signing.” (Compl. ¶ 13.) The complaint does not allege Plaintiff was coerced via unreasonable physical constraint, was not allowed to leave, or asked to leave and was denied. Plaintiff does not cite any authority supporting the contention that the allegations in the complaint are sufficient to rise to the level of “unreasonable physical constraint” as defined in Section 15610.63(d). Notably, statute pairs unreasonable physical restraint with “prolonged or continual deprivation of food or water,” which suggests more is required than waking Plaintiff up to complete a transaction.

Moreover, the alleged physical abuse must cause “resulting physical harm or pain or mental suffering.” (Welf & Ins. Code § 15610.07(a)(1).) “The plaintiff must also allege . . . that the [physical abuse] caused the elder or dependent adult to suffer physical harm, pain or mental suffering. [Citation] Finally, the facts constituting the neglect and establishing the causal link between the neglect and the injury ‘must be pleaded with particularity,’ in accordance with the pleading rules governing statutory claims.” (Carter v. Prime Healthcare Paradise Valley LLC (2011) 198 Cal.App.4th 396, 407.) The complaint fails to meet the specificity requirements as to how Plaintiff suffered physical harm, pain or mental suffering, rather than mere financial harm, as result of the alleged conduct. Plaintiff must provide more specific allegations to support the fourth cause of action.

The demurrer is SUSTAINED with leave to amend as to the fourth cause of action.

Elder Abuse – Neglect (Fifth Cause of Action)

On August 3, 2022, the clerk entered Plaintiff’s request to dismiss the fifth cause of action. Accordingly, the demurrer to the fifth cause of action is MOOT.

Motion to Strike

Defendants move to strike the claims for punitive damages, (Compl. ¶¶ 49, 61, 71, 81, and the prayer for relief), as well as paragraph 22 and Exhibits 3 and 4 referenced therein.

The motion is MOOT as to paragraphs 71 and 81 as result of the Court’s ruling on the demurrer and Plaintiff’s dismissal of the fifth cause of action.

Standard

Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (Code of Civ. Proc. § 435(b)(1); Cal. Rules of Court, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc. § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)

“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. [Citations.] In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. [Citations.] In ruling on a motion to strike, courts do not read allegations in isolation. [Citation.]” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) “Pleading in the language of the statute is not objectionable when sufficient facts are alleged to support the allegation.” (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6-7.)

Punitive Damages

Defendants contend the complaint does not allege sufficient facts to support a claim for punitive damages. (Mot. at 6:1-8:4.) As noted above, the Court found the complaint adequately states a cause of action for fraud, which is sufficient to support a claim for punitive damages as to the second cause of action. (See Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610 (“A fraud cause seeking punitive damages need not include an allegation that the fraud was motivated by the malicious desire to inflict injury upon the victim. The pleading of fraud is sufficient.”).)

Additionally, the complaint adequately states a claim for financial elder abuse and alleges Defendants intentionally took advantage of Plaintiff’s age and infirmities, concealed their dual representation, and coerced Plaintiff into a transaction to enable Defendants to obtain commission fees. The allegations are sufficient to demonstrate malice supporting a claim for punitive damages. (Civ. Code § 3294(c)(1) (“‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.”).) Furthermore, the third cause of action is based, in part, upon the same fraudulent conduct supporting the second cause of action. The punitive damages allegations are sufficient.

The motion is DENIED as to paragraphs 49 and 61 as well as the prayer for relief.

Allegations and Exhibits Regarding a Separate Action

Defendants also move to strike paragraph 22 of the complaint and the two exhibits attached to the complaint and referenced therein:

Plaintiff is informed and believes, and thereon alleges, that, Defendant CHEN has targeted other senior citizens in similar schemes, including coercing an 89-year-old woman, Kay Kamei, to sell her apartment in Pasadena, CA. The alleged facts in that case are similar to the present matter in that Defendant CHEN also exerted undue influence and coercion on an 89-yearold woman in forcing her to sell a 29 unit apartment worth $10.7 million in Pasadena, CA in exchange for a 300 unit apartment in Las Vegas, NV valued at $24.7 million. On July 11, 2018, this 89-year-old woman, Kay Kamei and the other trustees, filed a Cross-Complaint against Defendant CHEN alleging elder financial abuse. A copy of the Cross-Complaint filed by said 89-year-old woman for Financial Elder Abuse and Declaratory Relief is attached hereto as Exhibit 3 and made a part of this pleading. A copy of the letter dated March 17, 2018, from attorney Duane O. Kamei to CHEN summarizing the case against CHEN is attached hereto as Exhibit 4 and made a part of this pleading.

(Compl. ¶ 22.) Defendants contend the information is irrelevant because it is not essential to Plaintiff’s claim or defense. (Mot. at 8:8-16.) In opposition, Plaintiff notes CACI 3940 and 3945 demonstrate pattern and practice evidence is relevant to punitive damages. (See also George F. Hillenbrand, Inc. v. Insurance Co. of North America (2002) 104 Cal.App.4th 784, 820–821 (“A pattern or practice of wrongful conduct is often introduced as evidence of malice or oppression to justify a punitive damage award.”).) The Court finds no reason to strike paragraph 22 or the attached exhibits from the complaint and the motion to strike these items is DENIED.