Sofia Moreno v. Thomas James Turner, et al.

(1) DEMURRER TO SECOND AMENDED COMPLAINT

(2) MOTION TO STRIKE 

 

MOVING PARTY: Defendant New Era Escrow, Inc. and Defendant Terrica Banks

RESPONDING PARTY(S): Plaintiff Sofia Moreno

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Sofia Moreno formerly owned commercial real property at 486 E. Vernon Ave, Los Angeles, CA, 90011. Plaintiff alleges she sold the Property to Defendant Thomas James Turner III through Defendant Turner Brothers Asset Holding, LLC in August 2019. The majority of the purchase price was to be paid by a purchase money note secured by a first deed of trust on the property. After executing the note, Plaintiff alleges that Defendants presented Plaintiff with a new note, which Defendants led Plaintiff to believe was still secured by the first deed of trust. Plaintiff alleges, however, that Defendants simultaneously presented her with a “Full Conveyance” for the property, which she mistakenly signed. Defendant New Era Escrow, Inc., handled the escrow. 

Defendants New Era Escrow, Inc., and Terrica Banks now demurrer only to the Thirteenth Cause of Action to the Second Amended Complaint and moves to strike portions therein.  Plaintiff opposed.

TENTATIVE RULING:

Defendant’s Demurrer to the Thirteenth Cause of Action is SUSTAINED without leave to amend.

Defendants’ Motion to Strike is MOOT. 

Defendants are ordered to file an Answer to the SAC (minus the Thirteenth Cause of Action) within 14 days.

Plaintiff to give notice, unless waived.

DISCUSSION:

Demurrer

I. Judicial Notice

Pursuant to Defendant’s request, the court takes judicial notice of Exhibits 1 through 4.

II. Meet and Confer

III. Legal 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.  (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice.  (CCP § 430.30(a).)  A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.  (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.)  Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.  (Id.)  The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.  (Hahn, 147 Cal.App.4th at 747.)

IV. Analysis

Defendant New Era Escrow, Inc., demurrers to the Thirteenth Cause of Action in the Second Amended Complaint for breach of fiduciary duty.

“The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932 [125 Cal.Rptr.3d 210].) “An escrow involves the deposit of documents and/or money with a third party to be delivered on the occurrence of some condition.” (3 Miller & Starr, Cal. Real Estate (3d ed.1989) § 6:1, pp. 2–3 (rev.9/00); see Fin.Code, § 17003, subd. (a).) An escrow holder is an agent and fiduciary of the parties to the escrow. [Citation.]  The agency created by the escrow is limited—limited to the obligation of the escrow holder to carry out the instructions of each of the parties to the escrow.”  (Summit Fin. Holdings, Ltd. v. Cont'l Laws. Title Co. (2002) 27 Cal. 4th 705, 711.)

“[A]n 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.’ [Citations.] Absent clear evidence of fraud, an escrow holder's obligations are limited to compliance with the parties' instructions.”  (Id.)

The sale of the property occurred on September 24, 2019, in an escrow conducted by Better Escrow Service. (SAC ¶ 16.) There was a second escrow opened with Defendant New Era Escrow in December of 2019. (Id. ¶ 19.)

Defendant argues that Plaintiff cannot maintain this cause of action because she “was not a party to the [New Era] escrow,” but “merely a note holder for the Property which was subject to the escrow opened by Turner.” (Mtn. 9: 13-15.) 

On this point, Plaintiff counters that the Escrow was “essentially a continuation” of the previous “underlying escrow”—handled by a different escrow company—that occurred three months earlier. (Opp. 4: 17-22.)

Plaintiff cites no authority for her contention that the separate, second escrow was “essentially a continuation” of the first, so as to designate Plaintiff a “party” to that escrow. Plaintiff goes on to argue that even if she wasn’t a party to the escrow, a fiduciary duty still arises because “Plaintiff reposes trust in New Era.” (Opp. 5: 11.) 

A “confidential relationship” describes “... any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party.”  (Barbara A. v. John G. (1983) 145 Cal. App. 3d 369, 382) (Emphasis added). The essential elements of a “confidential relationship” are: “(1) the vulnerability of one party to the other; (2) results in the empowerment of the stronger party by the weaker which (3) empowerment has been solicited or accepted by the stronger party and (4) prevents the weaker party from effectively protecting itself.” (Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1161.) In addition, “[a] confidential relationship cannot be imposed on an individual, but must be voluntarily accepted.” (Richelle L. v. Roman Catholic Archbishop (2003) 106 Cal.App.4th 257, 272, fn. 6).  [A] “confidential relationship” may be founded on a moral, social, domestic, or merely personal relationship as well as on a legal relationship.  (Barbara A. v. John G. (1983) 145 C.A.3d 369, 382).  Absent a legally recognized fiduciary relationship, a confidential relationship is a question of fact.  (Id.)

Although normally a question of fact, Plaintiff has not alleged facts supporting the existence of a confidential relationship. There are no allegations in the pleading suggesting that Defendant took any acts to form a confidential relationship. Defendant did little more than follow the escrow instructions. 

Accordingly, Defendant’s Demurrer to the Thirteenth Cause of Action is SUSTAINED. Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) Plaintiff was already once given leave to amend her complaint and failed to plead a cognizable claim against Defendant. Therefore, no leave to amend is given. 

Motion to Strike

I. Legal Standard

A motion to strike lies either (1) to strike any irrelevant, false or improper matter inserted in any pleading; or (2) to strike any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of court.  (CCP § 436.)

II. Analysis

Defendants move to strike the thirteenth cause of action for breach of fiduciary duty and all allegations against Defendant Terrica Banks.

On October 18, 2023, this court sustained Defendant’s demurrer to the First Amended Complaint, with 30 days leave to amend. (See 10/18/23 Minute Order.) On November 18, 2023, Plaintiff filed her Second Amended Complaint. The SAC added a new cause of action against New Era for Breach of Fiduciary duty and added Defendant Terrica Banks (the CEO of New Era Escrow) as a party to the lawsuit. Neither this cause of action nor Defendant were named previously in the FAC. 

“It is the rule that when a trial court sustains a demurrer with leave to amend, the scope of the grant of leave is ordinarily a limited one. It gives the pleader an opportunity to cure the defects in the particular causes of action to which the demurrer was sustained, but that is all.” (Cmty. Water Coal. v. Santa Cruz Cnty. Loc. Agency Formation Com. (2011) 200 Cal. App. 4th 1317, 1329.) Plaintiff has exceeded that limited scope by adding a new cause of action and new party to this lawsuit. 

Be that as it may, there is a liberal policy of amendment in this state. “A trial court has wide discretion to allow the amendment of pleadings, and generally courts will liberally allow amendments at any stage of the proceeding.” (Falcon v. Long Beach Genetics, Inc. (2014) 224 Cal. App. 4th 1263, 1280.) Moreover, “it is irrelevant that new legal theories are introduced as long as the proposed amendments ‘relate to the same general set of facts.’ [Citation.]”  (Atkinson v. Elk Corp., (2003) 109 Cal. App. 4th 739, 761.) Importantly, given the early stage here, there is little prejudice to Defendants if this court permits the amendment. (See, e.g., Hirsa v. Superior Court (1981) 118 Cal.App.3d 486.) Thus, this court exercises its discretion to permit and consider the amendment, as well as the demurrer thereto.

With that said, the court has SUSTAINED the demurrer to the Thirteenth Cause of Action, which is apparently the only cause of action involving the moving Defendants. Therefore, the motion to strike is MOOT.

IT IS SO ORDERED.

Dated:   January 26, 2024 ___________________________________