Judge Olivia Rosales, Case 22NWCV00423 2022-09-29 Tentative Ruling

Judge: Olivia Rosales, Case: 22NWCV00423, Date: 2022-09-29 Tentative Ruling

Case Number: 22NWCV00423 Hearing Date: September 29, 2022 Dept: SEC

RAMIREZ v. REGALADO

CASE NO.: 22NWCV00423

HEARING: 09/29/22

TENTATIVE ORDER

Defendant REGALADO’s Demurrer to Plaintiff’s Complaint is OVERRULED.

Opposing Party to give notice.

Plaintiff’s Opposition was to be filed and served by no later than September 15, 2022. Without leave of Court, Plaintiff’s Opposition was untimely filed and served (via U.S. mail) on September 22, 2022. In the interests of judicial efficiency, this Court is inclined to waive the procedural defect and consider the untimely Opposition. However, if Defendant appears at the hearing and requests a continuance in order to file and serve a substantive Reply, the Court will continue this matter to Thursday, October 6, 2022 at 10:30 a.m. in Dept. SE-C. If the matter is continued, Defendant’s Reply must be filed and served by no later than October 3, 2022.

This action was filed on June 1, 2022 by Plaintiff CARLOS A. RAMIREZ (“Plaintiff”). Plaintiff’s Complaint alleges the following relevant facts, “Plaintiff is the owner of a business named Casa de Café….” (Complaint ¶5.) “In or around March 27, 2022, Plaintiff entered into an oral agreement with Defendant for Plaintiff to sell, and Defendant to purchase the Business. The terms of the sale were as follows: (1) Plaintiff would sell the Business to Defendant for $135,700 (2) Defendant would pay Plaintiff $70,720 payable $680 per week for 2 ½ years (3) Defendant was to provide Plaintiff with a van worth $40,000; and (3) Defendant would teach Plaintiff how to make a generic produce recipe with a value of $25,000.” (Complaint ¶6.) “In April 2022, Plaintiff transferred the Business to Defendant with the expectation that Defendant would immediately start making payments to Plaintiff.” (Complaint ¶7.) “Defendant has not made a single payment to Plaintiff. Defendant obtained an operating Business without paying one penny to Plaintiff.” (Complaint ¶9.)

The Complaint asserts the following causes of action: (1) Breach of Contract; (2) Fraud; and (3) Conversion.

Defendant ULISES GONZALEZ REGALADO specially and generally demurs to each cause of action.

Uncertainty

Defendant specially demurs to Plaintiff’s Complaint, arguing that the causes of action asserted therein are fatally uncertain. This argument lacks merit because “[a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading, but is directed at the uncertainty existing in the allegations actually made.” (Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145-146.) Moreover, demurrers for uncertainty are disfavored and will only be sustained where the pleading is so bad that the defendant cannot reasonably respond, i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of Calif. Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Ibid.) Here, it is clear from the Defendant’s other arguments that they understand what Plaintiff at least attempts to allege, and there is no true uncertainty. The demurrer is not properly sustained on the basis of uncertainty.

Standing

“An action is derivative if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock or property without any severance of distribution among individual holders, or if it seeks to recover assets for the corporation or to prevent the dissipation of its assts. Shareholders may bring a derivative suit to, for example, enjoin or recover damages for breaches of fiduciary duty directors and officers owe the corporation. An individual cause of action exists only if damages to the shareholders were not incidental to damages to the corporation. Examples of direct shareholder actions include suits brough tot compel the declaration of a dividend, or the payment of lawfully declared or mandatory dividends, or to enjoin a threatened ultra vires act or enforce shareholder voting rights. [Citations Omitted.]” (Schuster v. Gardner (2005) 127 Cal.App.4th 305, 313.) Thus, an action is derivative if the gravamen of the complaint is an injury to the corporation as a whole.

Judicially noticeable documents attached to the Demurrer indicate that the business at issue is a corporation. No other facts may be inferred from the documents filed with the Secretary of State.

Here, the Complaint alleges injuries to Plaintiff in his individual capacity. Specifically, the Complaint alleges that Plaintiff was the owner of the business, and that Defendant breached the oral agreement to purchase the business from Plaintiff. These allegations show direct injury to Plaintiff, not the corporation. The Court notes that “[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.” (SKF Farms v. Sup. Ct. (1987) 153 Cal.App.3d 902, 905.) Taking Plaintiff’s allegations as true, Plaintiff has alleged standing to withstand the pleading stage.

First Cause of Action – Breach of Oral Contract

Defendant argues that this cause of action is barred by the statute of frauds.

In Opposition, Plaintiff argues that Defendant is estopped from relying on the statute of frauds.

Generally, the statute of frauds bars an oral agreement that cannot be completed within one year, and for the sale of goods exceeding $500. (See Cal. Civ. Code §1624 and UCC §2-201.) However, equitable estoppel may preclude the use of a statute of frauds defense. (Byrne v. Laura (1997) 52 Cal.App.4th 1054, 1068.) Equitable estoppel applies “where an unconscionable injury would result from denying enforcement after one party has been induced to make a serious change of position in reliance on the contract or where unjust enrichment would result if the party who has received the benefits of the other’s performance were allowed to invoke the statute.” (Chavez v. Indymac Mortg. Svcs. (2013) 219 Cal.App.4th 1052, 1058.) To invoke equitable estoppel, plaintiffs must allege facts showing: (1) the party to be estopped was apprised of the facts; (2) the party to be estopped intended that his conduct be acted upon, or acted so that the party asserting estoppel had a right to believe it was so intended; (3) the other party was ignorant of the true state of facts; and (4) the other party relied upon the conduct to his injury. (Driscoll v. City of Los Angeles (1967) 67 Cal.2d 297, 305.)

Here, Plaintiff alleges that in reliance on Defendant’s oral promise to purchase the business, Plaintiff transferred the rights to said business to Defendant. (See Complaint ¶¶6-7.) Plaintiff’s factual allegations are sufficient to allege that equitable estoppel prohibits Defendant from asserting the statute of frauds as a bar to the first cause of action for breach of oral contract. Whether the doctrine of equitable estoppel may be applied in a particular case is generally a question of fact. (Byrne v. Laura (1997) 52 Cal.App.4th 1054, 1068.)

The demurrer to the first cause of action is OVERRULED.

Second Cause of Action – Fraud

The elements of a cause of action for intentional fraud are 1) misrepresentation (false representation, concealment, or nondisclosure); 2) knowledge of falsity (scienter); 3) intent to defraud or induce reliance; 4) justifiable reliance; and 5) damages. (See Cal. Civ. Code §1709.)

The elements of a fraudulent misrepresentation cause of action 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.” (Engalia v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.)

“Fraud must be pleaded with specificity… [t]o withstand a demurrer, the facts constituting every element of the fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings. (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) “The requirement of specific in a fraud action against a corporation requires the plaintiff to 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.” (Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

The demurrer to the second cause of action is OVERRULED. Plaintiff adequately allege that Defendant orally made false representations on or about March 27, 2022 to purchase the business from Plaintiff in order to induce Plaintiff into transferring his ownership interest over to Defendant, with the intent to defraud Plaintiff out of his interest in the business. Plaintiff adequately alleges facts to support a cause of action for fraud to survive demurrer.

Third Cause of Action – Conversion

The elements of a cause of action for conversion are: (1) Plaintiff’s ownership or right to possession of personal property; (2) defendant’s disposition of the property inconsistent with plaintiff’s rights; and (3) resulting damages. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

The demurrer to the third cause of action is OVERRULED. Plaintiff adequately alleges that Defendant intentionally and wrongfully gained ownership of the business in a manner inconsistent with Plaintiff’s rights. (Complaint ¶24.)