Judge Monica Bachner, Case 22STCV25657 2023-04-28 Tentative Ruling

Defendants Pinnacle Estate Properties, Inc.’s and Jeremy Rodriguez’s general demurrer to Plaintiffs Teodulo Castellanos’ and Maria Castellanos’ Complaint is overruled and special demurrer is overruled as to the 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th causes of action.

Defendants Pinnacle Estate Properties, Inc.’s and Jeremy Rodriguez’s motion to strike is denied.

Plaintiffs’ 4/24/23 evidentiary objections to Defendants’ amended demurrer are overruled as to Nos. 1 and 2.

Plaintiffs’ 4/24/23 evidentiary objections to Defendants’ reply are overruled as to Nos. 3 and 4.

Plaintiffs’ 4/24/23 evidentiary objections to Defendants’ supplemental brief are overruled as to Nos. 5, 6, 7, 8, 9, and 10.

Defendants’ 10/26/22 request for judicial notice of the Complaint filed in LASC Case No. 22STCV01063, Castellanos v. Swaner et al. (D-RJN, Exh. A); grant deed recorded at the Los Angeles County Recorder’s Office, Document No. 20220818892 (D-RJN, Exh. B); and deed of trust recorded at the Los Angeles County Recorder’s Office, Document No. 2022081893 (D-RJN, Exh. C) is granted.

Plaintiffs’ 3/27/23 request for judicial notice of the complaint filed in the instant case, the stipulation for restraining order and protective order and order thereon in the instant case, the stipulation for preliminary injunction and protective order and order thereon in the instant case, Plaintiffs’ notice of ruling of court denying Defendants’ request for related case, and Defendant/Cross-Complainant Jose Valentin Ramirez Solano’s (“Solano”) (“Defendant”) amended cross-complaint for damages in the instant case is denied, as there is no need to take judicial notice since the Court can review the records of the case at hand.

Before filing a demurrer or motion to strike, the moving party must meet and confer in person or by telephone with the party who filed the pleading to attempt to reach an agreement that would resolve the objections to the pleading and obviate the need for filing the demurrer and/or motion to strike. (C.C.P. §430.41, §435.5.)

Moving Defendants’ counsel declares on August 24, 2022, she sent a meet and confer letter to Plaintiffs’ counsel to attempt to resolve this matter without court intervention. (Decl. of Anaya ¶2.) Moving Defendants’ counsel declares on August 25, 2022, Plaintiffs’ counsel sent a detailed email response in which counsel disagreed with Moving Defendants’ position, and as such, Moving Defendants filed with demurrer and motion to strike. (Decl. of Anaya ¶3.) Moving Defendants sufficiently demonstrated a good faith attempt to resolve the issues in the instant motions without court intervention.

Defendants Pinnacle Estate Properties, Inc. (“Pinnacle”) and Jeremy Rodriguez (“Rodriguez”) (collectively, “Moving Defendants”) demur to Plaintiffs Teodulo Castellanos’ (“Teodulo”) and Maria Castellanos’ (“Maria”) (collectively, “Plaintiffs”) Complaint. (Notice of Amended Demurrer, pgs. 1-2; C.C.P. §430.10(e).) Specifically, Defendants demur on the basis that Plaintiffs’ claims are barred by judicial estoppel, lack standing, and fail to state facts sufficient to constitute causes of action against Moving Defendants for the 1st, 2nd, 3rd, 4th, 6th, 7th, and 8th causes of action. (Notice of Amended Demurrer, pg. 2.)

This action arises out of Plaintiff Teodulo’s and Steve Swaner’s (“Steve”) and Cynthia Swaner’s (“Cynthia”) (collectively, “Swaners”) alleged entry into a written agreement for real property located at 8224 Geyser Avenue, Reseda, California 91335 (“Property”). (Complaint ¶¶11, 12.) Plaintiffs allege on or about April 1, 2018, Plaintiff Teodulo and the Swaners entered into a written agreement for Plaintiff to purchase the Property for $477,000.00. (Complaint ¶12.) Plaintiffs allege the essential terms of the Geyer [sic] Ave Sales Contract 040118 (“Contract”) were that Plaintiff Teodulo was to pay the mortgage, property tax, insurance on the property, an additional $1,000.00 a month, and the payments were to be made for five years, or until April 1, 2023. (Complaint ¶13.) Plaintiffs allege the Swaners would ask Plaintiffs to buy the Property earlier than their contract required, and Plaintiff Teodulo could not do so because he could only qualify for an ITIN loan. (Complaint ¶14.) Plaintiffs allege in or about late August and into September 2020, Steve advised Plaintiff Teodulo that he could not refinance his own residence because of the mortgage on the Property occupied by Plaintiff and asked Plaintiff to purchase the property earlier than required by the Contract. (Complaint ¶15.)

Plaintiffs allege they were contacted via email by who they believed to be a real estate agent named Efrain Florez-Yanez (“Yanez”) (“Defendant”), and Plaintiff Teodulo believed from Yanez’s representations that Yanez was a real estate agent and worked with Moving Defendants Pinnacle and Rodriguez. (Complaint ¶16, Exh. 1.) Plaintiffs allege Plaintiff Teodulo believed he was dealing with reputable real estate agency and on or about September 1, 2021, he asked Defendants to review the Greyer [sic] Ave Sales Contract and to advise regarding its enforceability. (Complaint ¶17.) Plaintiffs allege on September 2, 2021, at 3:29 PM. Defendant Yanez responded to Plaintiffs and advised Plaintiffs that the Greyer [sic] Ave Sales Contract was a good and valid contract. (Complaint ¶18.) Plaintiffs allege on September 2, 2021, after 7:52 PM, Plaintiffs asked Defendants to contact Plaintiffs for their help in going over the options regarding the Greyer [sic] Ave Sales Contract. (Complaint ¶20.) Plaintiffs alleges on September 7, 2021, at 2:49 PM, Plaintiff Teodulo asked Defendants for help in answering questions regarding what was needed for the purchase of the Greyer [sic] Ave Property. (Complaint ¶21.) Plaintiffs allege on or about September 9, 2021, at 10:37 AM, and September 10, 2021, at 12:08 PM, Defendants Yanez, Rodriguez, and Pinnacle sent Plaintiffs a Residential Purchase Agreement (“RPA”) and associated documents for the purchase of the Greyer [sic] Ave Property wherein they stated they were the broker and agent for Plaintiff Teodulo. (Complaint ¶22, Exh. 2.) Plaintiffs allege the RPA identified at ¶6 that Moving Defendants Rodriguez and Pinnacle as the agents and broker for Plaintiffs were to receive 2.5% of the sale proceeds from the Geyser Ave Property. (Complaint ¶23.) Plaintiffs allege the RPA Defendants drafted did not conform to the terms of the Greyer [sic] Ave Sales Contract. (Complaint ¶24.) Plaintiffs allege the RPA Defendants drafted contradicted the intent of, language, or wishes of Plaintiff Teodulo as it related to the purchase of the Geyser Property through the Greyer [sic] Ave Sales Contract. (Complaint ¶25.) Plaintiffs allege at no time did Defendants Yanez, Rodriguez, and Pinnacle ever advise Plaintiffs about the contents of or the interaction of the RPA as it relates to the RPA’s language and its terms and conditions of the purchase of the Geyser Property, how it differed from the Greyer [sic] Ave Sales Contract and how it limited the Plaintiffs rights from those set forth in the Greyer [sic] Ave Sales Contract and imposed additional and improper conditions on Plaintiffs. (Complaint ¶26.) Plaintiffs allege at no time did Defendants Yanez, Rodriguez, and Pinnacle, advise Plaintiff that the RPA as Defendants drafted changed the material terms of Greyer [sic] Ave Sales Contract and Plaintiffs agreement with Swaners and damaged the Plaintiffs’ ability to purchase the Geyser Property. (Complaint ¶27.) Plaintiffs allege based on Defendants’ representations, Plaintiffs then sent the RPA to the Swaners for the purchase of the Geyser Property, and on or about September 25, 2021, the Swaners signed the RPA that Defendants drafted for Plaintiffs. (Complaint ¶28.) Plaintiffs allege after an Escrow was opened for the purchase of the Geyser Property, a dispute arose as between Swaners and Plaintiffs due to the improper and inaccurate language in the RPA that Defendants drafted, and the dispute arose directly because of and due to Defendants Yanez’s, Rodriguez’s, and Pinnacle’s improper, negligent and inaccurate drafting of the RPA. (Complaint ¶¶29, 30.) Plaintiffs allege as a result of Defendants Yanez’s, Rodriguez’s, and Pinnacle’s improper, negligent and inaccurate drafting of the RPA, Plaintiff Teodulo was required to file and serve a lawsuit against the Swaners to preserve and try to save the purchase of the Geyser Property, and in retaliation, Swaner filed an Unlawful Detainer action against Plaintiff Teodulo. (Complaint ¶31.) Plaintiffs allege through protracted litigation Plaintiff Tedoulo and Swaner ultimately settled their lawsuits against each other regarding the purchase of the Geyser Property in or about June 17, 2022, upon terms that were substantially different and more difficult than the original Greyer [sic] Ave Sales Contract and the result of which was Plaintiffs were substantially damaged by Defendants’ negligence. (Complaint ¶32.)

On August 9, 2022, Plaintiffs filed their complaint against Defendants Pinnacle, Rodriguez, Yanez, and Solano alleging nine causes of action: (1) negligence, (2) breach of fiduciary duty (I), (3) breach of fiduciary duty (II), (4) fraudulent concealment, (5) breach of duty, (6) aiding and abetting, (7) conspiracy, (8) declaratory relief, and (9) injunctive relief. On September 2, 2022, Moving Defendants filed their initial demurrer and accompanying motion to strike. On October 26, 2022, Moving Defendants filed the instant amended demurrer and accompanying amended motion to strike.[1] On March 27, 2023, Plaintiffs filed their oppositions to the amended demurrer and amended motion to strike. On April 3, 2023, Moving Defendants filed their replies. This Court continued the instant motion and allowed for supplemental briefing on the issue of standing. On April 17, 2023, Plaintiffs filed their supplemental brief in opposition to the demurrer. On April 20, 2023, Moving Defendants filed their supplemental brief in support of their demurrer.

Moving Defendants demur on the basis that Plaintiffs’ claims lack standing, are barred by judicial estoppel, and fail to state facts sufficient to constitute causes of action against Moving Defendants for the 1st, 2nd, 3rd, 4th, 6th, 7th, and 8th causes of action. (Demurrer, pg. 3.)

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

C.C.P. §367 provides, “[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.”

Moving Defendants argue Plaintiffs are not the real parties in interest and have no standing to bring this action against Moving Defendants because Plaintiffs never purchased the Property or obtain any loans on the Property. (C.C.P §367; Dino v. Pelayo (2006) 145 Cal.App.4th 347, 353; Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004; Demurrer, pg. 5.) Moving Defendants argue the Property was purchased by Jessica Oliva and the loan on the Property is in Jessica Oliva’s name only. (D-RJN, Exhs. B, C; Defendants’ Supp. Brief, pg. 4.) Moving Defendants argue that because Plaintiffs never purchased, owned, or obtained a loan on the Property, they have no standing to sue Moving Defendants. Moving Defendants argue Plaintiffs’ own specific allegations in the Complaint, specifically ¶¶47 and 54, demonstrate that Plaintiffs did not incur damages and cannot establish damages against Moving Defendants. (Defendants’ Supp. Brief, pgs. 5-6; Complaint ¶¶47, 54.)

Plaintiffs have standing to allege the causes of action in their Complaint against Moving Defendants. Specifically, Moving Defendants were Plaintiffs’ real estate broker and real estate agents. (Plaintiffs’ Supp. Brief, page. 7; Complaint ¶¶3-4, 42-47, 49, 56, Exh. 2.) Plaintiffs sufficiently allege Moving Defendants had a duty under law to Plaintiffs and were in privity of contract with Plaintiffs. Plaintiffs attach three exhibits to their Complaint demonstrating Plaintiffs’ damages from losing the house as result of Moving Defendants’ actions. Plaintiffs also argue Moving Defendants illegally obtained Plaintiff’s private confidential information and used it to create a fraudulent note, and are the real party in interest to assert such a claim. (Complaint, Exh. 3.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ Complaint for lack of standing is overruled.

“The elements of judicial estoppel are ‘(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.’ [Citations.] Even if the necessary elements of judicial estoppel are satisfied, the trial court still has discretion to not apply the doctrine. [Citation.]” (Owens v. County of Los Angeles (2013) 220 Cal.App.4th 107, 121.)

Moving Defendants argue Plaintiff’s claims are barred by judicial estoppel because on January 10, 2022, Plaintiffs filed a specific performance lawsuit against the Swaners wherein Plaintiffs requested the court enforce the RPA. (D-RJN, Exh. B at pgs. 0020 to 0029.) Moving Defendants argue that here, Plaintiffs are assuming an inconsistent position from the one they took in the lawsuit against the Swaners (namely, seeking specific performance to enforce the RPA) by suing Moving Defendants for negligent preparation of the same RPA. Moving Defendants’ argument is misplaced because the doctrine of judicial estoppel does not apply to the current lawsuit. First, the causes of action in the Swaner lawsuit are not the same as the causes of action from breach of contract and specific performance alleged in the Swaner lawsuit are between Plaintiffs and Swaner. Here, Plaintiffs assert causes of action for negligence, breach of fiduciary duty, fraudulent concealment, breach of duty, aiding and abetting, conspiracy, declaratory relief, and injunctive relief against Moving Defendants, causes of action that were not asserted in the Swaner lawsuit. (Compare Complaint with D-RJN, Exh. A.) Second, the lawsuit against Swaner was never adjudicated because it was dismissed, and Moving Defendants cannot demonstrate Plaintiffs were successful in asserting their position in the Swaner lawsuit. Third, Plaintiff’s position in the instant suit is not “totally inconsistent” with their position in the Swaner lawsuit; seeking to enforce the RPA does not preclude Plaintiffs from seeking to sue the Moving Defendants for professional negligence in drafting the document. Further, “absent success in a prior proceeding, a party’s later inconsistent position introduces no ‘risk of inconsistent court determinations.’” (Jogani v. Jogani (2006) 141 Cal.App.4th 158, 171.) Finally, there is no record to demonstrate Plaintiffs “engaged in a deliberate scheme to mislead and gain unfair advantage, as opposed to having made a mistake born of misunderstanding, ignorance of legal procedures, lack of adequate legal advice, or some other innocent cause.” (Lee v. West Kern Water District (2016) 5 Cal.App.5th 606, 630-631.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ Complaint based on judicial estoppel is overruled.

“The elements of a cause of action in tort 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.” (Budd v. Nixen (1971) 6 Cal.3d 195, 200.) “The first element, duty, ‘may be imposed by law, be assumed by the defendant, or exist by virtue of a special relationship.’” (Doe v. United States Youth Soccer Association Inc. (2017) 8 Cal.App.5th 1118, 1128.)

Plaintiffs sufficiently alleged a cause of action for professional negligence. Plaintiffs sufficiently pled the that Moving Defendants are real estate brokers and agents, respectively, and owed Plaintiffs a duty of care “to provide the necessary real estate information, support, advise, recommendations, and documentation to Plaintiffs.” (Complaint ¶¶3-4, 43.) Plaintiffs sufficiently allege Moving Defendants breached their duty of care in that they “failed to exercise the necessary degree of knowledge, education, experience, and skill ordinarily possessed and exercised by other reasonably prudent real estate agents and brokers” and Moving Defendants “breached their separate and collective duties to Plaintiffs by failing and/or refusing and/or negligently providing the necessary real estate information, support, advise, recommendations, and documentation to Plaintiff.” (Complaint ¶¶43, 44.) Plaintiffs sufficiently allege Moving Defendants’ conduct was the proximate cause of Plaintiffs’ damages. (Complaint ¶¶45-47.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 1st cause of action is overruled.

A cause of action for breach of fiduciary duty requires the following elements: (1) the existence of a fiduciary duty; (2) a breach of the fiduciary duty; and (3) resulting damage.” (See Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524; Knox v. Dean (2012) 205 Cal.App.4th 417, 432.)

Plaintiffs sufficiently alleged a cause of action for breach of fiduciary duty. Plaintiffs sufficiently allege Moving Defendants are real estate agent and broker, and such a relationship with a client is a fiduciary relationship. (Complaint ¶49; see Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1579-1580; Loughlin v. Odpra Reality Co. (1968) 259 Cal.App.2d 619, 629.) Plaintiffs sufficiently allege Moving Defendants had a duty to disclose all material issues regarding the real estate transaction and Moving Defendants breached that duty by failing to disclose such issues. (Complaint ¶¶50-51; see also ¶¶55-60, 57(a)-(d), 58.) Plaintiffs sufficiently alleged Moving Defendants’ conduct proximately caused Plaintiffs’ damages. (Complaint ¶¶52-54, 59, 60.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 2nd and 3rd causes of action is overruled.

The required elements for fraudulent concealment are: “(1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” (See Bank of America Corp. v. Superior Court (2011) 198 Cal.App.4th 862, 870; Civil Code §1710(3); CACI 1901.) The rule of specificity of pleading is only intended for affirmative fraud cases not fraud by concealment. (See Alfaro v. Community Housing Improvement Systems & Planning Association, Inc. (2009) 171 Cal.App.4th 1356, 1384.)

Plaintiffs sufficiently allege a cause of action for fraudulent concealment. Plaintiffs sufficiently allege Defendants were fiduciaries to Plaintiff. (Complaint ¶¶3-5, 49, 62.) Plaintiffs allege that Defendants requested through an unlicensed real estate agent Plaintiffs’ personal and financial information and that Defendants engaged in a concealed scheme to obtain Plaintiffs’ information to create a note upon which to defraud Plaintiffs. (Complaint ¶¶63-64.) Plaintiffs allege that they reasonably believed Defendants’ representations and that the representations were not false. (Complaint ¶¶65-66.) Plaintiffs allege Defendants conspired and worked together to create a fraudulent note. (Complaint ¶¶67-72.) Plaintiffs sufficiently allege Defendants’ conduct was a proximate cause of Plaintiffs’ injuries. (Complaint ¶¶73-76.)

Moving Defendants’ argument that Exhibit 3 to the Complaint contradicts Plaintiff’s 4th cause of action is unavailing, as Plaintiff has sufficiently alleged causes of action for conspiracy and aiding and abetting, discussed below, that implicates Moving Defendants’ conduct despite the absence of their names on the Note.

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 4th cause of action is overruled.

Liability for aiding and abetting another’s tort may be imposed upon a party where that party “(a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” (Casey v. U.S. Bank National Association (2005) 127 Cal.App.4th 1138, 1144.) A defendant is liable for aiding and abetting another in the commission of an intentional tort, including a breach of fiduciary duty, if the defendant ‘knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act. [Citation.]” (See Nasrawi v. Buck Consultants LLC (2014) 231 Cal.App.4th 328, 343.)

Plaintiffs sufficiently allege Defendants substantially helped in played a role in and aided and abetted and conspired with each other in the fraudulent scheme and in breaching their fiduciary duties. (Complaint ¶¶3-5, 9, 16-40, 58, 68, 72.) Plaintiffs’ cause of action for aiding and abetting incorporates the intentional torts for which Defendants aided and abetted each other. (Complaint ¶¶86-90.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 5th cause of action is overruled.

“Civil conspiracy is not an independent tort. Instead, it is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211-212, quotation marks omitted.) “The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages.” (Id. at pg. 212.)

Plaintiffs sufficiently allege Defendants substantially helped play a role in aiding and abetting and conspiring with each other in the fraudulent scheme and to breach their fiduciary duties. (Complaint ¶¶3-5, 9, 16-40, 58, 68, 72.) Plaintiffs sufficiently allege a cause of action for conspiracy, which incorporates the intentional torts Defendants conspired to commit. (Complaint ¶¶91-95.) Plaintiffs alleged Defendants knowingly and intentionally engaged in the underlying tortious conduct alleged in the 1st through 5th causes of action, and their alleged concerted acts are sufficiently alleged to be in furtherance of a conspiracy to commit those torts.

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 7th cause of action is overruled.

A complaint is to be liberally construed where a Plaintiff requests declaratory relief. (See Strozier v. Williams (1960) 187 Cal.App.2d 528, 531.) The “fundamental basis for declaratory relief is the existence of an actual, present controversy over a proper subject.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79; see also Coruccini v. Lambert (1952) 113 Cal.App.2d 486, 490; Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

Plaintiffs sufficiently allege a cause of action for declaratory relief that is a live controversy regarding the allegedly fraudulent note and the relief sought seeks a ruling as to Plaintiffs’ rights and obligation under the note. (Complaint ¶¶3-5, 9, 16-40, 96-100.)

Accordingly, Moving Defendants’ demurrer to Plaintiffs’ 8th cause of action is overruled.

Moving Defendants move to strike portions of Plaintiffs’ Complaint. (Notice of Amended MTS, pgs. 1-2; C.C.P. §436.) Specifically, Defendants move to strike (1) the words “Plaintiffs are entitled to exemplary and punitive damages under Civil Code §3294 in ¶¶60, 74, 89, 94 and the Prayer; and (2) the words “For attorney’s fees in an amount to be determined by the court” contained in the Prayer for each of the eight causes of action in Plaintiffs’ Complaint. (Amended MTS, pg. 3.)

C.C.P. §436 provides that the Court may, upon a motion made pursuant to C.C.P. §435, or at any time within its discretion and upon terms it deems proper, “strike out any irrelevant, false, or improper matter inserted in any pleading” and/or “strike out all or part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” A motion to strike should be applied cautiously and sparingly because it is used to strike substantive defects. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683.) The grounds for a motion to strike must appear on the face of the pleading under attack, or from matter which the court may judicially notice. (C.C.P. §437.)

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression. (Civ. Code §3294(a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Id.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Id.) Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud, or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.)

Punitive damages are recoverable in breach of fiduciary duty cases when the
Plaintiff is able to allege factual allegations reasonably demonstrating that the fiduciaries breaches were oppressive, fraudulent, or malicious or a conscious disregard of the Plaintiffs’ rights. (See Cleveland v. Johnson (2012) 209 Cal.App.4th 1315; Michelson v. Hamada (1994) 29 Cal.App.4th 1566, 1582.) Punitive damages are also appropriate where the Plaintiff alleges a separate cause of action for fraud. (See Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 610.)

Moving Defendants argue they are not parties to the subject note and as such Plaintiffs’ claims for punitive and exemplary damages in ¶¶60 (3rd COA), 74 (4th COA), 89 (6th COA), 94 (7th COA), and the Prayer fails. Moving Defendants’ argument is unavailing because Plaintiffs’ Complaint provides factual allegations demonstrating the following under each cause of action: (3rd COA) fiduciaries’ breaches were oppressive and fraudulent (Complaint ¶¶3-5, 9, 16-40, 56-60); (4th COA) Defendants engaged in a scheme to defraud Plaintiffs and conceal material facts from them (Complaint ¶¶3-5, 9, 16-40, 61-76); (6th COA) Defendants intentionally engaged in tortious conduct in the underlying 1st-5th causes of action, and their concerted acts are actionable as aiders and abettors of the underlying torts (Complaint ¶¶86-90); (7th COA) Defendants knowingly and intentionally engaged in the underlying tortious activity in the 1st-5th causes of action, and their concerted acts are actionable as civil conspirators who are jointly and severally liable for all damages arising from the torts they committed (Complaint ¶92). Further, Moving Defendants’ argument that Plaintiffs failed to demonstrate the requisite facts against Defendant Pinnacle to properly seek punitive damages against the entity under Civil Code §3294(b) is similarly unavailing because Plaintiff adequately alleges both aiding and abetting and conspiracy claims implicating the entity and its alleged agents, Defendants Yanez and Rodriguez.

Accordingly, the Court denies Moving Defendants’ request to strike Plaintiffs’ request for punitive damages.

An award of attorney’s fees is proper when authorized by contract, statute, or law. (C.C.P. §§1032(b), 1033.5(a)(10).)

Moving Defendants’ argument that Plaintiffs fail to cite any legal basis or attach any written contract that would provide for attorneys’ fees against Moving Defendants is unavailing. Here, Plaintiffs move for attorneys’ fees on the basis they are entitled to recover fees as damages resulting from a tort. (Prentice v. North American Title Guaranty Corp., Alameda Division (1963) 59 Cal.2d 618, 620 [“A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney’s fees, and other expenditures thereby suffered or incurred. [Citations.]”].)

However, the Court disagrees that Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333 applies to the instant matter, as the cause of action alleged in Siry Investment was alleged under Penal Code §496(a) for receipt of stolen property, which is not alleged in Plaintiffs’ Complaint. Despite this distinction, the Court finds Plaintiffs have sufficiently alleged causes of action for fraud sufficient to entitle them to recover fees as damages resulting from a tort.

Accordingly, Moving Defendants’ motion to strike Plaintiffs’ request for attorneys’ fees is denied.

[1] Plaintiffs object to consideration of Moving Defendants’ amended demurrer and motion to strike as untimely filed. The Court, in its discretion, will consider Moving Defendants’ amended demurrer and motion to strike.