Judge: Michelle Williams Court, Case: 22STCV15772, Date: 2022-10-25 Tentative Ruling

Case Number: 22STCV15772    Hearing Date: October 25, 2022    Dept: 74

22STCV15772           CALIFORNIA LOAN SERVICING vs SIDEWAYS PROPERTIES

Defendant First American Title Insurance Company’s Demurrer and Motion to Strike Portions of the First Amended Complaint

TENTATIVE RULING:  The demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.  The motion to strike is MOOT.

Background

On May 12, 2022, Plaintiff California Loan Servicing, LLC filed this action against Defendants Sideways Properties, LLC, Bowery Fort Myers, LLC, First American Title Company, Daniel Neary, Thomas Neary, Pogback Real Estate, LLC, and So You’re Telling Me There’s a Chance, LLC (“SYTMTAC”).

On August 10, 2022, the Court issued an order sustaining Defendant First American Title Insurance Company’s demurrer to the complaint with leave to amend.

On August 29, 2022, Plaintiff filed the First Amended Complaint asserting causes of action for: (1) breach of contract; (2) money had and received; (3) open book account; (4) conversion; (5) negligence; (6) negligent misrepresentation; (7) intentional misrepresentation; (8) civil conspiracy; and (9) declaratory relief. The complaint alleges Plaintiff entered into a Financial Advisory Services agreement whereby Plaintiff would act as the exclusive agent for Pogback and SYTMTAC to obtain financing for real property in Colorado. Plaintiff entered a similar agreement with Sideways Properties in connection with a Top Golf facility in Fort Myers, Florida and escrow for the financing transaction was through First American.

Demurrer and Motion to Strike

On September 29, 2022, Defendant First American Title Company filed the instant demurrer and motion to strike. Defendant demurs to the fourth, fifth, and sixth causes of action asserted in the FAC and moves to strike the punitive damages allegation in paragraph 62 of the FAC associated with the fourth cause of action for conversion.

Opposition

In opposition, Plaintiff contends the complaint states fact sufficient to constitute the causes of action at issue and support a claim for punitive damages.

Reply

In reply, Defendant reiterates its arguments in its moving papers and contends Plaintiff does not have a sufficient interest in the escrow funds to constitute conversion, Defendant does not owe Plaintiff a duty of care, and the statements attributed to it are not actionable under a negligent misrepresentation claim.

Meet and Confer

Defendant submitted the declaration of Ali Vaqar, which satisfies the requirements of Code of Civil Procedure sections 430.41 and 435.5.

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.) 

Conversion – Fourth Cause of Action

“The elements of a conversion cause of action are (1) plaintiffs’ ownership or right to possession of the property at the time of the conversion; (2) defendants’ conversion by a wrongful act or disposition of plaintiffs' property rights; and (3) damages.” (Messerall v. Fulwider (1988) 199 Cal.App.3d 1324, 1329.) “Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)

Plaintiff alleges it was entitled to a $275,179.00 commission pursuant to its agreement with Sideways Property in connection with the financing of the Fort Myers property, which remains unpaid. (FAC ¶¶ 21-26.) Plaintiff alleges it had an immediate right to possess the commission funds at the close of escrow and Defendant failed to distribute the commission to Plaintiff. (FAC ¶¶ 56-57.)

Plaintiff has not cured the defects from the previous complaint and the Court agrees with Defendant that Plaintiff cannot state a claim for conversion.

Plaintiff contends it had a right to be paid from the escrow funds under the terms of the contract. (Opp. at 13:10-13; FAC ¶¶ 18-19.) “A mere contractual right of payment, without more, will not suffice to support a claim for conversion.” (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 233.) Nothing in Plaintiff’s agreement with Sideways Properties, which is a fully integrated agreement, establishes an affirmative right to be paid from the escrow funds. (FAC Ex. B.) Rather, the agreement provides a contractual right to payment from Sideways “equal to 1.00% of the aggregate Financing proceeds, due and payable at the close of the Financing.” (Id. at 2.) Thus, as argued by Defendant, the agreement sets an amount due and a deadline for payment, it does not set the “source” of the payment of the funds and does not entitle Plaintiff to a contractual right to obtain the funds directly in escrow. (Reply at 5:19-20.) This is further demonstrated by the agreement’s reference to Sideways Properties’ option, but not obligation, to “increase the amount of the Financing as necessary to permit payment of the Financing Fee from the proceeds of the Financing.” (FAC Ex. B at 2.) As noted by Defendant, “the Agreement states SP may opt to obtain a bigger loan to pay CLS from the proceeds of the loan itself. Only if SP opted to pay from the loan proceeds, and only if the lender agreed, could CLS be paid from the loan proceeds. Nowhere in the FAC does the CLS allege this happened.” (Dem. at 15:11-15. FAC Ex. B at 2.) Plaintiff’s interpretation of the agreement is not reasonable.

Similarly, nothing in Stearns’ escrow instruction entitles Plaintiff to payment from the escrow or directs Defendant to pay Plaintiff from the escrow. (FAC Ex. C.) The instructions do not mention Plaintiff or the financing fee and there is no basis to conclude Plaintiff’s financing fee is a cost or expense to close the loan between Stearns and Sideways Properties. Plaintiff contends “Para 8 of the Stearns Closing Instructions letter indicated that fees due under the Escrow would be paid from Escrow prior to the net funding of the Aggregate Finance Proceeds to SP and BFM; such language confirms that Plaintiff held an equitable lien on the portion of the Escrow funds that would serve to pay Plaintiff’s Commission.” (Opp. at 9:19-23.) However, Paragraph 8 of the instructions relate entirely to the Stearns’ fees and is therefore irrelevant as to Plaintiff. (FAC Ex. C § 8 (“Bank will ‘net fund’ its fees from the loan proceeds.”).)

Accordingly, based upon the allegations in the FAC and the documents attached thereto, Plaintiff did not have a contractual right to payment from the escrow. (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1091 (“Facts appearing in exhibits attached to the first amended complaint also are accepted as true and are given precedence, to the extent they contradict the allegations.”); Alphonzo E. Bell Corp. v. Bell View Oil Syndicate (1941) 46 Cal.App.2d 684, 691 (“All these conclusions of the pleader are contrary to the express terms of the instrument creating the trust which is pleaded in full and made a part of the complaint. Under these circumstances the court will, in hearing on the demurrer, examine the exhibits and treat the pleader's conclusions as surplusage.”).)

Plaintiff also contends, without citation to California law, that a non-party creditor can unilaterally become a party to the escrow by submitting a demand for payment. (Opp. at 13:13-19; FAC ¶ 26.) Plaintiff cites a non-binding federal district court case, Jafari v. F.D.I.C. (S.D. Cal. 2014) 2 F.Supp.3d 1125, which in turn cited an unpublished California Court of Appeal opinion. (Jafari, supra, 2 F.Supp.3d at 1133 (“the overarching message in those cases is that an escrow holder owes a duty of care only to actual parties to the escrow, not third parties with an interest in the escrow. Moreover, only parties that actually submit instructions to escrow can rightfully be considered parties to it.”).) As noted in Jafari, California law provides that an escrow holder owes no duty to third parties and strangers to the escrow, such as Plaintiff, cannot supersede or amend the instructions by the parties. (See Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, 714.) The allegations in the FAC and the attached exhibits demonstrate Plaintiff was not a party to the escrow and therefore Defendant was not required to honor Plaintiff’s unilateral demand for payment.

Plaintiff also summarily asserts it was a third-party beneficiary of the escrow. However, the Court agrees with Defendant that the facts alleged in the FAC and the nature of the financing transaction, precludes this argument. As alleged in the FAC, the escrow was created to finalize the Fort Myers Financing between Stearns, as the lender, Sideways Properties, as the borrower. (FAC ¶¶ 24-25.) Plaintiff, as a creditor to Sideways Properties involved in securing financing, would merely be an incidental beneficiary to the escrow. (Markowitz v. Fidelity Nat. Title Co. (2006) 142 Cal.App.4th 508, 527.) Plaintiff does not cite any allegations in the FAC which would satisfy the requirements to demonstrate a third-party beneficiary status. (See Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.)

Plaintiff contends it had an equitable lien or an assignment right to a portion of the escrow proceeds. However, even if Sideways Properties had agreed to pay Plaintiff out of the escrow, it would not create an equitable lien sufficient for a conversion claim. (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 454 (“A promise to pay a debt out of a particular fund, without more, will not create an equitable lien on that fund.”).) Contrary to Plaintiff’s allegations, (see e.g. FAC ¶ 66), nothing in the agreement between Plaintiff and Sideways Properties can be construed as an assignment of the loan proceeds from escrow. (FAC Ex. B. See generally Contemporary Investments, Inc. v. Safeco Title Ins. Co. (1983) 145 Cal.App.3d 999, 1004 (“The contract does not provide that the broker has a lien on the proceeds of sale or is the assignee of those funds. Its commission could have been paid outside of escrow, with other funds of the sellers.”).)

The allegations in the FAC, the agreements attached thereto, and Plaintiff’s arguments in opposition allege Plaintiff had a contractual right to payment from Sideways Properties in a specified amount that became due from Sideways when the financing transaction closed. Plaintiff failed to allege facts demonstrating it has an immediate right to payment from the escrow itself. Plaintiff’s recourse is to seek relief from Sideways Properties, not Defendant as the escrow holder.

Plaintiff lacks the requisite interest in the escrow funds to support a conversion claim. It is clear Plaintiff has asserted all the facts it contends would establish Defendant’s liability. The demurrer to the fourth cause of action is SUSTAINED without leave to amend. (Schonfeldt v. State of California (1998) 61 Cal.App.4th 1462, 1465 (“If there is no liability as a matter of law, leave to amend should not be granted.”); Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 (“The plaintiff has the burden of proving that an amendment would cure the defect.”).)

Negligence – Fifth Cause of Action

The elements of a negligence cause of action are “duty, breach of duty, proximate cause, and damages.” (Paz v. State of California (2000) 22 Cal.4th 550, 559.) The issue of duty is a question of law for the court. (Id. at 557.)

Defendant contends it did not owe a duty to Plaintiff in connection with the escrow. (Dem. at 18:18-19:18.) “[A]n escrow holder must comply strictly with the instructions of the parties. On the other hand, an escrow holder has no general duty to police the affairs of its depositors; rather, an escrow holder’s obligations are limited to faithful compliance with the depositors instructions.” (Summit, supra, 27 Cal.4th at 710 (citations and quotations omitted).) Plaintiff is not a depositor. Thus, “it is generally held that no liability attaches to the escrow holder for his failure to do something not required by the terms of the escrow or for a loss incurred while obediently following his escrow instructions.” (Lee v. Title Ins. & Trust Co. (1968) 264 Cal.App.2d 160, 163.)

As noted above, the allegations in the FAC and the documents attached thereto do not demonstrate Plaintiff was a party to the escrow. In Summit, a case involving two non-parties to the escrow, “[t]he question presented by this case is whether an escrow holder owes a duty of care to a nonparty to the escrow based on an assignment to that nonparty by another nonparty to the escrow. We answer this question in the negative.” (Id. at 707–708.) However, its discussion that there should be no duty applies equally to the facts alleged by Plaintiff. The escrow transaction at issue was for Defendant Sideways Properties to obtain financing from lender Stearns Bank National Association, (FAC ¶¶ 24-25), and therefore “was not intended to affect or benefit” Plaintiff. (Summit, supra, 27 Cal.4th at 715.) Defendant First American “was engaged by [Sideways Properties] and [Stearns] to assist them in closing a loan transaction between [Sideways Properties] and [Stearns], and any impact that transaction may have had on [Plaintiff] was collateral to the primary purpose of the escrow.” (Ibid.) “[T]he foreseeability of harm element does not support a duty because there is no suggestion [First American] could have foreseen that [Sideways Properties] would not disburse the funds to [Plaintiff].” (Id. at 715–716.) There are no allegations that First American failed to comply with the escrow instructions of the parties thereto, which “militates against concluding the company had a tort duty in this case.” (Id. at 716.) Finally, Plaintiff’s alleged “injury was caused by [Sideways Properties’] breach of its contractual obligation to” Plaintiff. (Ibid.) Plaintiff seeks to impose a rule that “would, by subjecting an escrow holder to conflicting obligations, undermine a valuable business procedure.” (Ibid.)

Plaintiff contends “First American still owed Plaintiff a duty since the FAC pleads ‘clear evidence of fraud’ as to First American’s conduct in regarding Plaintiff’s commission in the Escrow.” (Opp. at 17:18-20 citing FAC ¶¶ 29-34.) Paragraphs 29 through 34 refer to different settlement statements issued by First American. This is not the “clear evidence of fraud” referred to in Summit, such that a duty of care would be imposed on the escrow holder. In Summit, the Court stated “[a]bsent clear evidence of fraud, an escrow holder's obligations are limited to compliance with the parties’ instructions” and noted “there is no evidence CLTC [the escrow holder] was aware of any collusion or fraud in the fund disbursement that would have adversely affected any party to the escrow.” (Summit, supra, 27 Cal.4th at 711.) The clear evidence of fraud refers the escrow holder’s knowledge of fraud by one of the parties to the escrow. (2 Miller & Starr Cal. Real Estate (4th ed.) § 6:28 (“Moreover, when the escrow holder proceeds to perform the escrow with knowledge of ‘clear evidence of fraud,’ the escrow holder is in effect a participant in the fraud and may be liable to the defrauded party if the fraud is not disclosed.”). ) It does not create a duty of care to a non-party to the escrow. Plaintiff’s reliance upon Markowitz v. Fidelity Nat. Title Co. (2006) 142 Cal.App.4th 508 is similarly misplaced because Plaintiff is not a party to the escrow. (Id. at 528 (“When an escrow holder knows a party to the escrow is relying on it for protection as to facts learned by the escrow holder, the escrow holder can be held liable if it does not disclose those facts to the party.”).) Moreover, “Plaintiff [is] not left without recourse. [Plaintiff’s] remedy [is] to look to [Sideways Properties.]” (Ibid.)

The FAC fails to demonstrate Defendant, as the escrow holder, owed a duty of care to Plaintiff or caused Plaintiff’s damages. The demurrer is SUSTAINED without leave to amend as to the fifth cause of action.

Negligent Misrepresentation – Sixth 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.) “The same elements comprise a cause of action for negligent misrepresentation, except there is no requirement of intent to induce reliance.” (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) “Each element in a cause of action for fraud or negligent misrepresentation must be factually and specifically alleged.” (Id.) “To be actionable, a negligent misrepresentation must ordinarily be as to past or existing material facts. Predictions as to future events, or statements as to future action by some third party, are deemed opinions, and not actionable fraud.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158. See Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243 (“a positive assertion is required; an omission or an implied assertion or representation is not sufficient.”); Lopez v. Nissan North America, Inc. (2011) 201 Cal.App.4th 572, 596 (“A negligent misrepresentation claim requires a positive assertion, not merely an omission.).)

The FAC alleges Defendant “represent[ed] to CLS that certain facts were true. Namely, that the Misrepresented Final Settlement Statement was the operative final settlement statement and that SP, BFM, First American, Daniel Neary, [and] Thomas Neary . . . had already made arrangements for Plaintiff to be paid the Commission by the escrow agent out of the Escrow funds at the Close of Financing as stated in the Fort Myers Financing Agreement and in line with the course of conduct established by the successfully closed Denver Property Financing. The representation that arrangements had been made for Plaintiff’s Commission to be paid in full to Plaintiff by First American at the Close of Financing was also memorialized in the Misrepresented Final Settlement Statement that First American provided to Plaintiff the day before the Close of Financing.” (FAC ¶ 75.) These representations were not true. (Id. ¶ 76.)

Defendant contends the sixth cause of action fails under the sham pleading doctrine. (Dem. at 22:5-23.) “Where a verified complaint contains allegations destructive of a cause of action, the defect cannot be cured in subsequently filed pleadings by simply omitting such allegations without explanation” (Hendy v. Losse (1991) 54 Cal.3d 723, 742.)

The original complaint alleged the misrepresentation was that “CLS would be receiving its Commission as per the December 1, 2021 Agreement at the close of Escrow, as expressly granted in the December 1, 2021 Agreement as well as the last version of the ‘Settlement Statement’ for the close of Escrow provided in the afternoon of March 30, 2022 by First American.” (Compl. ¶ 60.) The Court sustained Defendant’s initial demurrer partially due to Plaintiff’s attempt to impose liability for an alleged negligent misrepresentation of future payment. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 (“the gist of both Tarmann’s fraud and negligent misrepresentation claims is that State Farm said it would pay for her repairs immediately upon their completion, it failed to do so, Tarmann could not complete the repairs or redeem her vehicle, and she lost the use of it until State Farm settled the case.  The critical alleged misrepresentation as to immediate payment upon completion did not involve a past or existing material fact.”); Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 458 (“Alliance's representation that it would obtain a release of the notice of abatement action prior to the close of escrow likewise was a promise of future performance, and thus cannot be the basis for a negligent misrepresentation cause of action.”).) In opposition, Plaintiff notes the FAC maintains this allegation of future payment. (Opp. at 20:21-21:5; FAC ¶ 31.)

As argued by Plaintiff, there are exceptions to this rule. (See e.g. Borba v. Thomas (1977) 70 Cal.App.3d 144, 152 (“(1) where a party holds himself out to be specially qualified and the other party is so situated that he may reasonably rely upon the former's superior knowledge; (2) where the opinion is by a fiduciary or other trusted person; (3) where a party states his opinion as an existing fact or as implying facts which justify a belief in the truth of the opinion.”).)

However, the Court agrees with Defendant in reply that the FAC lacks sufficient facts to demonstrate any applicable exception to the rule. (Reply at 9:14-11:20.) There is no basis to conclude Defendant had superior knowledge, special information, or expertise regarding Plaintiff’s own contract rights. Moreover, as to Plaintiff’s payment rights, Plaintiff is “just as knowledgeable” as Defendant. (Borba, supra, 70 Cal.App.3d at 153.)

Plaintiff contends “[t]he second exception is met because First American was SP’s agent and therefore had an obligation to distribute the Commission to Plaintiff, making First American a trusted person” citing Civ. Code § 2344. (Opp. at 19:7-10.) Plaintiff’s statement lacks analysis. As noted by Defendant, it does not have a fiduciary relationship with Plaintiff. (Borba, supra, 70 Cal.App.3d 144, 153 (“there is no evidence to support a finding that Thomas was in a fiduciary or trust relationship with Borba; Thomas dealt with Borba only on an arm’s length basis in a commercial endeavor to sell his land.”).) Here, Plaintiff is a stranger to the escrow and an alleged creditor of Sideways Properties. Civil Code section 2344 does not apply as Plaintiff is not “entitled” to the specific funds held in escrow for the reasons stated herein, including the absence of an assignment of rights to the escrow funds. (See e.g. Builders' Control Service of Northern Cal., Inc. v. North Am. Title Guaranty Co. (1962) 205 Cal.App.2d 68, 73 (“At that point, since the escrow holder received notice of the assignments, it could not properly pay the funds to the assignor or to any other person. (Civ.Code, § 2344).”); Summit, supra, 27 Cal.4th at 714 (“Builders' Control Service stands for the proposition only that an agent’s obligation to disburse proceeds held by the agent for its principal is coextensive with the principal's obligation to disburse those proceeds to the assignee.”).)

Finally, Plaintiff contends, without authority or analysis, that “[t]he third exception is met because First American shared the Settlement Statement that was time stamped 3/30/22, 1:47 p.m. with Plaintiff as an existing fact that it was a confirmed fact that Plaintiff’s Commission was already accounted for and the formal document provided so close to the close of Escrow justified Plaintiff’s belief in the truth of the opinion.” (Opp. at 19:11-14.) Defendant does not specifically address this exception in its reply. However, the closing statement is not an opinion stated as an existing fact and is not materially different from the statement of future payment in Tarmann, supra.

Separately, “[a] plaintiff asserting fraud by misrepresentation is obliged to establish a complete causal relationship between the alleged misrepresentations and the harm claimed to have resulted therefrom. This requires a plaintiff to allege specific facts not only showing he or she actually and justifiably relied on the defendant’s misrepresentations, but also how the actions he or she took in reliance on the defendant's misrepresentations caused the alleged damages.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1499  (citations and quotations omitted).) Plaintiff fails to demonstrate any justifiable reliance or resulting harm from its receipt of the allegedly false settlement statement. In opposition, Plaintiff refers to paragraphs 34, 76-78, and 80-81 as demonstrating its justifiable reliance to its detriment. (Opp. at 20:11-15.) However, each of these allegations relies upon the premise, found unsupported by the Court herein, that Plaintiff had an automatic and immediate right to the funds from the escrow. (See e.g. FAC ¶ 34 (First American’s improper distribution . . . forced Plaintiff to extend a great deal of resources chasing funds that should have been automatically distributed to Plaintiff . . .”); FAC ¶ 76 (“all such parties knew that Plaintiff was to be paid its Commission directly from Escrow.”); FAC ¶ 81 (“Plaintiff was harmed . . . because instead of automatically receiving the Commission as promised . . . Plaintiff has to expend a great deal of energy, time, and other resources to obtain the Commission that Plaintiff rightfully earned.”).) As found herein, Plaintiff did not have any right to be paid from the escrow. Accordingly, its alleged reliance that it would be paid from the escrow is objectively unreasonable  and Plaintiff’s asserted damages were not caused by Defendant’s alleged misrepresentation.

The demurrer to the sixth cause of action is SUSTAINED without leave to amend. (Schonfeldt, supra, 61 Cal.App.4th at 1465; Schifando, supra, 31 Cal.4th at 1081.)

Motion to Strike

Defendant also moves to strike the punitive damages allegation in paragraph 62 of the FAC, which was alleged in connection with the conversion cause of action. As a result of the Court’s ruling on the demurrer, the motion to strike is MOOT.