Judge Randy Rhodes, Case 22CHCV00176 2023-01-09 Tentative Ruling

MOVING PARTY: Defendants Calantantic Group, Inc. and Lennar Title, Inc. (collectively, “Moving Defendants”)

RELIEF REQUESTED: Moving Defendants demur to the second, third, and fourth causes of action in Plaintiff’s first amended complaint (“FAC”). Moving Defendants also seek an order striking portions of the FAC relating to attorney fees and punitive damages.

TENTATIVE RULING: The demurrer is SUSTAINED as to the third and fourth causes of action in Plaintiff’s FAC, with 30 days leave to amend. The demurrer is OVERRULED as to Plaintiff’s second cause of action. Moving Defendants’ motion to strike is GRANTED.

On 7/10/21, Plaintiff agreed to purchase 20610 Galloway Drive, Valencia CA 91350 for $594,990 from defendant Calatlantic Group, Inc. (“Calatlantic”). (FAC ¶ 14.) The parties also executed a second agreement, whereby nonmoving defendant Opendoor Property Acquisition, LLC (“Opendoor”) offered to purchase Plaintiff’s existing home, located at 28721 Jardineras Drive, Valencia CA 91354, for $608,300. (Id. at ¶ 13.) Opendoor is allegedly partially owned by defendants Calatlantic and Lennar Title, Inc. (“Lennar”). (Id. at ¶ 11.)

While Plaintiff sought financing for the purchase of the Galloway Drive home, Plaintiff alleges Defendants “pushed” for his use of Defendants’ preferred lender. (Id. at ¶ 15.) When Plaintiff elected to use his own lender, Plaintiff alleges Defendants became less cooperative with closing on the Galloway Drive home, including refusal to extend the deadline for document submission. (Id. at ¶ 17.) Defendants subsequently sold the home to a third party for a $70,000 higher price. (Id. at ¶¶ 15, 18.) Defendants also allegedly conditioned any purchase of a unit in the Galloway development on the acceptance of the $608,000 sale of the Jardineras Drive home, which Plaintiff contends constituted a “low ball” offer given comparable values on homes in the area. (Id. at ¶ 17.)

Notwithstanding Plaintiff’s instruction to pause closing the sale of the home, including notification to the escrow company, Defendant Raincross Escrow, Inc. (“Raincross”), escrow apparently closed on an unspecified date. (Id. at ¶ 16.)

On 3/17/22, Plaintiff filed his original complaint against Opendoor, Lennar, Raincross, and Calatlantic (collectively, “Defendants”), alleging the following causes of action: (1) Recission; (2) Breach of Contract (Sale of Home); (3) Financial Elder Abuse; (4) Unfair Competition; (5) Breach of Contract (Escrow); and (6) Negligence.

On 5/4/22, Raincross answered the complaint. On 6/6/22, Moving Defendants filed their first demurrer and motion to strike against Plaintiff’s complaint, which the court sustained with leave to amend on 8/16/22.

On 8/2/22, Plaintiff filed his first amended complaint, alleging against the same defendants the same six causes of action. On 9/6/22, Moving Defendants filed the instant demurrer and motion to strike. On 12/22/22, Plaintiff filed his oppositions. On 12/29/22, Moving Defendants filed their replies.

Before filing its demurrer, “the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. § 430.41, subd. (a).)

Here, counsel for Moving Defendants declares that on 9/1/22, she sent a letter to Plaintiff’s attorney detailing the issues raised in the instant demurrer and motion to strike. (Decl. of Suzanne Launi, ¶ 2.) The parties’ attorneys met and conferred telephonically on 9/2/22, but were unable to reach an agreement. (Ibid.)

Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

As a general matter, a¿party may respond to a pleading against it by demurrer on the basis of any single or combination of eight enumerated grounds, including¿that¿“the pleading does not state facts sufficient to constitute a cause of action,” or is uncertain, meaning “ambiguous and unintelligible.” (Code Civ. Proc., § 430.10, subds. (e) and (f).

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 pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc.¿v.¿Accountants, Inc. Servs.¿(2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.)

Here,¿Moving Defendants¿demur to the second, third, and fourth causes of action in Plaintiff’s FAC pursuant Code of Civil Procedure section 430.10, subdivisions¿(e)¿and (f),¿arguing that each cause of action fails because¿it (1) fails¿to allege facts sufficient to¿state¿a cause of action against Moving Defendants;¿and (2) is uncertain.

Plaintiff’s second cause of action alleges breach of contract against Calatlantic as to the agreement to sell Plaintiff the Galloway property. To state this cause of action, a plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.)

Here, the parties do not dispute that a valid, binding written contract existed between Plaintiff and Calatlantic. The subject agreement is attached to the FAC as Exhibit 2 and incorporated by reference. (Compl. ¶ 14.)

Plaintiff alleges that Calatlantic breached the written agreement it made with Plaintiff “by failing to take the necessary steps to convey the Galloway Property to Plaintiff, unilaterally cancelling the transaction, and selling the Galloway Property to another buyer, all to obtain a higher price than that reflected in the Galloway Agreement.” (FAC ¶ 26.) Moving Defendants argue that “the FAC fails to (1) set out the provisions that Plaintiff alleges [Calatlantic] breached; or (2) provide specificity as to the provisions allegedly breached,” and therefore fails to state facts sufficient to constitute a cause of action for breach of contract. (Dem. 7:20–21.)

Plaintiff asserts in opposition that Calatlantic breached the agreement by failing to sell Plaintiff the Galloway property “as agreed.” (Pl.’s Opp. 5:24.) Plaintiff further argues that the agreement’s “central purpose – the sale of the home to Plaintiff – is plain throughout.” (Id. at 5:25–26.) Plaintiff cites to two portions of the attached agreement which state that he agreed to purchase the subject property at a certain price, “which self-evidently shows CALATLANTIC’s obligation to transfer title to Plaintiff if he performed, which he did (except as excused).” (Id. at 5:27–6:6.)

In reply, Moving Defendants observe that Plaintiff “still fails to cite to and/or to provide specificity as to the provisions allegedly breached by CAG. … No specific provision is cited.” (Def.’s Reply, 4:12–13, 17–18.) However, the Court notes that Moving Defendants rely on two cases which misstate the pleading standard required of Plaintiff in a cause of action for breach of contract, particularly where, as here, Plaintiff has attached the agreement to his complaint and incorporated it by reference therein. (Dem. 7:24–27, citing Davies v. Sallie Mae, Inc. (2008) 168 Cal.App.4th 1086 and Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497.)

In Davies, the Court of Appeal stated, “where a written contract is pleaded by attachment to and incorporation in a complaint, and where the complaint fails to allege that the terms of the contract have any special meaning, a court will construe the language of the contract on its face to determine whether, as a matter of law, the contract is reasonably subject to a construction sufficient to sustain a cause of action for breach.” (168 Cal.App.4th at 1091 [emphasis added].) In Jenkins, the pleading at issue alleged a breach of the implied covenant of good faith and fair dealing. (216 Cal.App.4th at 524.) Neither of these cases, as cited by Moving Defendants, stands for the proposition that a plaintiff, who has attached a copy of a written agreement and incorporated it into his complaint by reference, cannot state a cause of action for breach of contract without additionally citing the specific terms a defendant has allegedly breached.

Additionally, upon the Court’s review of the entire agreement, the Court observes specific contractual language which states: “By Close of Escrow (i) Buyer shall deposit with Escrow Holder (or with Seller if this Contract so provides) all funds and documents required to pay the Purchase Price and to comply with Buyer's obligations under this Contract, and (ii) Seller shall deposit a Deed and all other documents required to comply with Seller's obligations under this Contract.” (Ex. 2 to FAC, p. 13.) This provision sufficiently states that Calatlantic was under an obligation to, at minimum, deliver a deed and title documents to Plaintiff by close of escrow.

The Court finds it sufficient at the demurrer stage that Plaintiff attached the written agreement between the parties to his FAC and incorporated it by reference to allege that Calatlantic breached said agreement. (Harris, 74 Cal.App.4th at 307.) As Moving Defendants have not cited to any relevant authority to support their argument that Plaintiff must specifically cite to the contract provisions allegedly breached, the demurrer is overruled as to Plaintiff’s second cause of action.

Plaintiff alleges in his third cause of action that Defendants violated Welfare and Institutions Code section 15610.30 et seq. (the “Elder Abuse Act”), which applies to California residents over the age of 65. (FAC ¶¶ 30–37.) Under the Elder Abuse Act, one has committed “financial abuse” of an elder adult if one “takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult,” either for a wrongful use, with intent to defraud, or by undue influence, or assists another in doing so. (Welf. & Inst. Code § 15610.30, subd. (a).) A plaintiff can show a “wrongful use” under the statute by alleging that the “person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.” (Id., subd. (b).)

Here, Plaintiff alleges that he was over the age of 65 at all relevant times, and that “Defendants improperly took, hid, appropriated, obtained and retained money and other property from the Plaintiff for a wrongful use, with the intent to defraud and by undue influence over Plaintiff.” (FAC ¶¶ 32–33.) Plaintiff further alleges that “Defendants knew or should have known that their wrongful actions and omissions, as alleged herein, were likely to be harmful to Plaintiff,” and did cause Plaintiff harm. (Id. at ¶¶ 34–36.)

Moving Defendants argue that Plaintiff has failed to allege any facts to support the allegation that their conduct was “wrongful, with intent to defraud, or by undue influence.” (Welf. & Inst. Code § 15610.30, subd. (b); Dem. 9:23–27.) Plaintiff argues in opposition that he has alleged that Lennar unilaterally cancelled his purchase of the Galloway property when Plaintiff decided not to use its preferred lender, and that this cancellation was “‘wrongful,’ not only in terms of the breach itself but the greed-based, unethical rationale for that breach.” (Pl.’s Opp., 6:9–22.)

The Court agrees with Plaintiff that he has sufficiently pled conduct that may be considered “wrongful” as defined by Welfare and Institutions Code section 15610.30, subdivision (b). However, as Moving Defendants observe, “Plaintiff’s reliance on the Galloway Property, a property he never owned, does nothing to meet the proper standards to maintain a claim for financial elder abuse which requires that Plaintiff have a property right of which he was deprived.” (Def.’s Reply, 6:3–5 [emphasis added].)

Nor can Plaintiff rely on the closing of the Jardineras property for this cause of action, as “Plaintiff fails to allege any facts that the closing of the Jardineras Property was wrongful or that he did not receive the money from the sale proceeds.” (Id. at 5:20–21.) Without any additional facts supporting Plaintiff’s allegations that “Defendants improperly took, hid, appropriated, obtained and retained money and other property from the Plaintiff for a wrongful use, with the intent to defraud and by undue influence over Plaintiff,” Plaintiff cannot state a cause of action for financial elder abuse. (FAC ¶ 33.)

Accordingly, Moving Defendant’s demurrer is sustained as to Plaintiff’s third cause of action.

Plaintiff’s fourth cause of action alleges that Defendants violated Business and Professions Code section 17200 et seq. (the “UCL”). To set forth a claim for unfair business practices in violation of the UCL, a plaintiff must establish that the defendant was engaged in an “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising” and certain specific acts. (Bus. & Prof. Code, § 17200.)

“In essence, an action based on Business and Professions Code section 17200 to redress an unlawful business practice ‘borrows’ violations of other laws and treats these violations, when committed pursuant to business activity, as unlawful practices independently actionable under section 17200 et seq. and subject to the distinct remedies provided thereunder.” (People ex rel. Bill Lockyer v. Fremont Life Ins. Co. (2002) 104 Cal.App.4th 508, 515.)

Here, Moving Defendants argue that Plaintiff has failed to allege any illegal conduct that would give rise to a violation under the “unlawful” prong of the UCL. (Dem. 10:13–16.) Plaintiff argues in opposition that he has pled a violation of the Elder Abuse Act in his third cause of action for financial elder abuse. (Pl.’s Opp., 6:25–26.)

However, as Moving Defendants argue, and as set forth above, Plaintiff has failed to allege facts sufficient to state a cause of action under the Elder Abuse Act. (Def.’s Reply, 7:2–5.) Accordingly, Plaintiff has not alleged facts sufficient state a cause of action for a violation of the UCL under the “unlawful” prong.

A plaintiff alleging an “unfair” business practice under the UCL must show that the defendant's conduct is “tethered to an underlying constitutional, statutory or regulatory provision, or that it threatens an incipient violation of an antitrust law, or violates the policy or spirit of an antitrust law.” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 613.)

Here, Moving Defendants argue that Plaintiffs allege no requisite “tether” or “threat” under Graham to state a UCL violation for unfair business practices. (Dem. 10:20–21.) Plaintiff argues in opposition that “Defendants greedily cancelled the sale to Plaintiff when he chose not to use their ‘preferred’ lender and when they realized that they could promptly sell the property, post-cancellation, to another buyer for $70,000 more than the Agreement price.” (Pl.’s Opp. 7:1–3.) As Moving Defendants observe, Plaintiff’s argument falls short of alleging that the conduct described is in any way tethered to a violation of a constitutional, statutory, or regulatory provision, or threatens to violate an antitrust law or policy.

Accordingly, Plaintiff has not alleged facts sufficient state a cause of action for a violation of the UCL under the “unfair” prong.

“‘Fraudulent,’ as used in the statute, does not refer to the common law tort of fraud but only requires a showing members of the public ‘are likely to be deceived.’” (Olsen v. Breeze, Inc. (1996) 48 Cal.App.4th 608, 618.)

Here, Plaintiff alleges that Defendants’ businesses practices are “deceptive … in violation of California law” and that Plaintiff’s action aims to confer “a benefit upon the general public, by seeking to protect the public from the predations of Defendants.” (FAC ¶¶ 39, 41.) Moving Defendant argues that “the cancellation of the purchase of the Galloway Property by CAG is simply not enough to substantiate Plaintiff’s claim that CAG and/or Lennar are somehow deceiving the members of the public and preying on elders.” (Dem. 11:3–6.)

The Court notes that Plaintiff does not argue in opposition that the FAC pleads fraudulent business practices under the UCL. Additionally, the Court agrees with Moving Defendants that Plaintiff has not alleged facts to show that members of the public are likely to be deceived by Defendants’ conduct. Accordingly, Plaintiff has not alleged facts sufficient state a cause of action for a violation of the UCL under the “fraudulent” prong.

As such, Plaintiff has failed to successfully allege facts sufficient to support a cause of action for a violation of Business and Professions Code section 17200 et seq., and Moving Defendant’s demurrer is sustained as to Plaintiff’s fourth cause of action.

Generally speaking, “demurrers for uncertainty are disfavored and thus are strictly construed because ambiguities can reasonably be clarified under modern rules of discovery. Such demurrers are granted only if the pleading is so incomprehensible that defendant cannot reasonably respond.” (Cal.Jur.3d § 137.) “Where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.” (Williams v. Beechnut Nutrition Corp. (2011) 185 Cal.App.3d 135, 139 fn.2.)

Here, Moving Defendants argue that the second, third, and fourth causes of action in the FAC are uncertain pursuant to Code of Civil Procedure section 430.10, subdivision (f). In applying the stringent standard for demurrers filed on this ground, the Court finds that the FAC is not “so incomprehensible” that Moving Defendants cannot respond, especially given the extensive analyses they have offered in attacking the pleading. Accordingly, the demurrer is overruled on this ground.

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any 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. (Id., § 436, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

Here, Moving Defendants move to strike the portions of the FAC pertaining to attorney fees and punitive damages.

“Before filing a motion to strike pursuant to this chapter, the moving party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to the motion to strike for the purpose of determining if an agreement can be reached that resolves the objections to be raised in the motion to strike.” (Code Civ. Proc. § 435.5, subd. (a).) The parties are required to meet and confer at least five days before the date a motion to strike must be filed, otherwise the moving party is granted a 30-day extension to file the motion. (Ibid.)

Here, as set forth above, counsel for Moving Defendants and Plaintiff met and conferred telephonically on 9/2/22, and discussed the issues raised in the instant demurrer and motion to strike. (Launi Decl., ¶ 2.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 435.5, subdivision (a).

An award of attorney fees is proper when authorized by contract, statute, or law. (Code Civ. Proc. §§ 1032, subd. (b); 1033.5, subd. (a)(10).) Here, Plaintiff alleges that he is entitled to recover attorney fees under both the Galloway agreement and the Private Attorney General Doctrine. (FAC ¶¶ 28, 41.)

However, as Moving Defendant observes, “the agreement expressly waives any right to the recovery of attorneys’ fees.” (Def.’s Mot. to Strike, 6:17.) The agreement provides as follows: “(d) NO RECOVERY OF ATTORNEYS' FEES OR EXPERT WITNESS FEES. TO THE FULLEST EXTENT PERMITTED BY LAW, BUYER AND SELLER WAIVE ANY RIGHT TO RECOVER ATTORNEYS' OR EXPERT WITNESS FEES INCURRED IN ANY DISPUTE.” (Ex. 2 to FAC [emphasis in original].)[1] Plaintiff does not address this contract provision in his opposition papers. Accordingly, Plaintiff cannot recover attorney fees under the agreement.

The private attorney general doctrine applies to a Court’s discretion to award attorney fees to a successful party in an action which has resulted in public benefit. (Code Civ. Proc. § 1021.5.) Here, without any further allegations as to which “important rights affecting the public interest” are implicated by Moving Defendants’ conduct, Code of Civil Procedure section 1021.5 is inapplicable to this action.

In his opposition, Plaintiff argues that he is entitled to recover reasonable attorney fees and costs under the Elder Abuse Act. (Pl.’s MTS Opp. 5:15–21.) However, as Moving Defendants observe, “Plaintiff’s request for attorneys’ fees under the financial elder abuse cause of action does not exist in either the Complaint or the FAC.” (Def.’s MTS Reply, 4:19–20.) As Plaintiff does not raise this issue in the FAC, the Court declines to address Plaintiff’s argument as it relates to the instant motion to strike.

Accordingly, as Plaintiff is not entitled to the recovery of attorney fees by either contract or statute as pled, the Court grants Moving Defendant’s motion to strike paragraphs 28, 41, and page 9, line 27 of Plaintiff’s FAC.

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression by clear and convincing evidence. (Civ. Code § 3294, subd. (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 Cent. Cal., 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. (Ibid.) “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. (Ibid.) Punitive damages must be supported by factual allegations. 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; Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643.)

Here, Plaintiff prays for punitive damages under his third cause of action for financial abuse as defined the Elder Abuse Act. (FAC ¶ 37.) Specifically, Plaintiff alleges that Defendants “victimized an innocent and vulnerable Elder and sought to deprive him of his existing home and his hoped-for new home. Such acts were oppressive, malicious, and fraudulent, and Plaintiff is accordingly entitled to receive punitive damages in an amount sufficient to punish Defendants and deter them and others from similar wrongful acts in the future.” (Ibid.)

As Moving Defendants observe, “all of Plaintiff’s allegations for punitive damages amount to nothing more than mere conclusory statements and/or recitations of the language of Civil Code section 3294.” (Def.’s MTS, 7:20–21.) Such conclusory allegations are insufficient to support a finding of malice, oppression, or fraud warranting punitive damages. (Smith, 10 Cal.App.4th at 1042.)

Plaintiff argues in opposition that paragraph 15 of the FAC alleges facts to support the requisite finding of malice, oppression, or fraud. (Pl.’s MTS Opp. 5:23–24.) This portion of the FAC alleges that Defendants unilaterally cancelled the sale of the Galloway property with the “obvious motivation” to re-sell the property for a higher price. (FAC ¶ 15.) However, as Moving Defendants observe, this alleged conduct alone is insufficient to give rise to a finding of malice, fraud, or oppression as defined above. (Def.’s MTS Reply, 5:15–20.)

Accordingly, the Court grants Moving Defendant’s motion to strike paragraph 37, and page 9, line 25 of Plaintiff’s FAC.

Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

Here, the Court notes that Plaintiff has previously been granted leave to amend his complaint after it sustained Moving Defendant’s previous demurrer. Nevertheless, Plaintiff requests leave to amend in the event that the Court sustains the instant demurrer. (Pl.’s Opp., 7:5–6.) Under the Court’s liberal policy of granting leave to amend, Plaintiff is granted 30 days leave to amend the FAC to cure the defects set forth above.

The demurrer is SUSTAINED as to the third and fourth causes of action in Plaintiff’s FAC, with 30 days leave to amend. The demurrer is OVERRULED as to Plaintiff’s second cause of action. Moving Defendants’ motion to strike is GRANTED.

1. The agreement, attached to the FAC as Exhibit 2, is comprised of many sub-exhibits and addenda, which are not properly bookmarked/paginated. This particular provision can be found on pages 92–93 of the entire 197-page document.