Judge: Nathan Vu, Case: 2022-01252337, Date: 2022-09-19 Tentative Ruling

Demurrer

The demurrer of Defendants Crest Foods, Inc.; Crest Foods Systems, Inc.; and Ziad S. Dilal is SUSTAINED as to the first and second causes of action, with 21 days leave to amend.

Defendants Crest Foods, Inc.; Crest Foods Systems, Inc.; and Ziad S. Dilal (collectively, Crest Defendants) demur to the first and second causes of action of the complaint filed by Plaintiff NTHC, LLC (Complaint).

In ruling on a demurrer, a court must accept as true all allegations of fact contained in the complaint. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A demurrer challenges only the legal sufficiency of the affected pleading, not the truth of the factual allegations in the pleading or the pleader’s ability to prove those allegations. (Cundiff v. GTE Cal., Inc. (2002) 101 Cal.App.4th 1395, 1404-05.)

Questions of fact cannot be decided on demurrer. (Berryman v. Merit Prop. Mgmt., Inc. (2007) 152 Cal.App.4th 1544, 1556.) Because a demurrer tests only the sufficiency of the complaint, a court will not consider facts that have not been alleged in the complaint unless they may be reasonably inferred from the matters alleged or are proper subjects of judicial notice. (Hall v. Great W. Bank (1991) 231 Cal.App.3d 713, 718 fn.7.)

Although courts should take a liberal view of inartfully drawn complaints, (see Civil Proc. Code, § 452), it remains essential that a complaint set forth the actionable facts relied upon with sufficient precision to inform the defendant of what plaintiff is complaining, and what remedies are being sought, (Leek v. Cooper (2011) 194 Cal.App.4th 399, 413). Bare conclusions of law devoid of any facts are insufficient to withstand demurrer. (Schmid v. City and County of San Francisco (2021) 60 Cal.App.5th 470, 481; see Civil Proc. Code, § 425.10, subd. (a).)

Untimely Opposition

Plaintiff's opposition to the demurrer was filed on 09/06/2022, only 4 court days before the original hearing date set for the demurrer. The opposition should have been filed no later than 9 court days before the original hearing date. (Civil Proc. Code, § 1005, subd. (b).) In addition, Plaintiff failed to give any reason for its tardy opposition.

The court has the discretion to not consider late-filed papers. (See Rules of Ct. R. 3.1300, subd. (d).) However, the court continued the hearing date on the demurrer, which gave the Crest Defendants a sufficient opportunity to file a reply. Therefore, the court will exercise its discretion and consider the opposition.

However, Plaintiff is informed that the court is unlikely to consider untimely filed papers in the future.

First Cause of Action (Deceit – Intentional Misrepresentation\Concealment)

The elements of an intentional misrepresentation claim are: (1) a misrepresentation; (2) defendant’s knowledge of the statement’s falsity; (3) defendant’s intent to defraud or induce reliance; (4) plaintiff’s justifiable reliance; and (5) resulting damage. (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231.)

Plaintiff asserts that its first cause of action is also one for concealment, in the alternative. The elements of a cause of action for deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. (Boschma v. Home Loan Center, Inc. (2011) 198 Cal. App. 4th 230, 248.)

In addition, fraud (including intentional misrepresentation) must be plead with particularity rather than with “general and conclusory” allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) This heightened pleading requirement also applies to fraudulent concealment claims. (Boschma v. Home Loan Center, Inc., supra, 198 Cal.App.4th at p. 248.)

The allegations of fraud must show how, when, where, to whom, and by what means the representations or omissions were made. (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) When fraud is alleged against a corporation, the plaintiff must also allege the identities of the persons who made the representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Id.)

Here, the main factual allegations contained in the Complaint are set forth in paragraphs 10—21. The gravamen of the Complaint was that the Crest Defendants represented to Plaintiff that the Franchise Agreement was for 10 years when it was only possible for 5 years.

While the Complaint alleges that Defendant Dalal made the misrepresentation, it is devoid of all the other required specificity, including precisely what was stated, how the statement was made, when it was made, where it was made, to whom it was made, and by what means the representation or omission was made. (See Compl., ¶¶ 10-24.)

Further, while the Complaint contains a bare, conclusory allegation that “NTHC did rely on these representations,” (Compl., ¶ 25), there are no allegations that the reliance was justifiable nor are there any facts alleged to support a pleading of justifiable reliance

Similarly, there is a conclusory allegation that Plaintiff was damaged by the misrepresentations, but no explanation or facts in support of that allegation. (See Compl., ¶ 27.)  This is important where, as here, Plaintiff concedes that the truth was contained in the agreements that made up the deal, including the fact that the master lease expired after about 5 years and Plaintiff did not have the right to extend the master lease beyond the 5 years.

Plaintiff alleges that it retained counsel to review the agreements and provide legal advice. The Complaint pleads that Plaintiff entered into the deal based on the fact that its counsel had reviewed the agreements.

For similar reasons, the Complaint fails to sufficiently plead a cause of action for fraudulent concealment. As with intentional misrepresentation, fraudulent concealment must also be plead with specificity. The Complaint lacks specific allegations that material facts were concealed or suppressed, and the basis of the Crest Defendants’ duty to disclose. In addition, the Complaint does not sufficiently plead facts to show that any concealment or suppression caused Plaintiff to sustain damage, in light of the fact that the truth was contained in the agreements and Plaintiff’s counsel reviewed the agreements.

Second Cause of Action (Unfair Business Practices)

Business and Professions Code section 17200, et seq. (Unfair Competition Law) prohibits unlawful, unfair or fraudulent business act or practice or any unfair, deceptive, untrue, or misleading advertising. (Business & Prof. Code, s 17200; Cel-Tech Comm., Inc. v. Los Angeles Cellular Tele. Co. (1999) 20 Cal. 4th 163, 180.)

“A plaintiff alleging unfair business practices under [the UCL] must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619, emphasis added.)

In this case, the Complaint contains no allegation that the Crest Defendants acted in a manner which was unlawful or that they engaged in unfair, deceptive, untrue, or misleading advertising.

In addition, while there are conclusory allegations that the Crest Defendants committed acts or practices that were fraudulent or unfair, there are insufficient pleadings of facts to support these allegations.

The Complaint fails to state actionable facts with sufficient clarity to inform the Crest Defendants of the conduct of which Plaintiff is complaining.

Motion to Strike

The Crest Defendants’ motion to strike is DENIED without prejudice, as moot.

Defendants Crest Foods, Inc.; Crest Foods Systems, Inc.; and Ziad S. Dilal (Crest Defendants) move to strike the prayers for relief for punitive damages, attorney’s fees, and restitution contained in the complaint filed by Plaintiff NTHC, LLC (Complaint).

Untimely Opposition

Plaintiff's opposition to the motion to strike was filed on 09/07/2022, one day late. (See Civil Proc. Code, § 1005, subd. (b).) As with its tardy opposition to the demurrer, Plaintiff failed to give any reason for its tardy opposition to the motion to strike.

Because the opposition was only one day late and the court need not reach the merits of the motion to strike, the court will not ignore the opposition. However, Plaintiff is informed that the court is unlikely to consider untimely filed papers in the future.

Merits

In light of the court’s ruling sustaining the demurrer, there is no need to address the merits of the motion to strike. The motion to strike is thus moot.

The Crest Defendants shall give notice of this ruling.