Judge: Richard Y. Lee, Case: 30-2022-01242363, Date: 2023-05-25 Tentative Ruling

Defendants Riphagen & Bullerdick, Inc. dba Re/Max Tiffany Real Estate and Darryl Chrispen filed a Demurrer to the second cause of action for fraud and fourth cause of action for negligent misrepresentation in the Second Amended Complaint (“SAC”).  Defendants also filed a Motion to Strike portions of the Second Amended Complaint related to punitive damages and attorney’s fees.



Second Cause of Action for Fraud

The elements of fraud, which give rise to the tort action for deceit, are (1) misrepresentation (false representation, concealment or non-disclosure); (2) knowledge of falsity (or “scienter”); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.  (Hackethal v. National Casualty Co. (1987) 189 Cal.App.3d 1102, 1110.)


The elements of an action for fraud and 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.)


Further, fraud 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 (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248), and requires allegations showing 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, plaintiff must 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.)  Less specificity is required when it appears from the nature of the allegations that Defendant “necessarily possess full information” concerning the facts of the controversy.  (Id.)


Here, Plaintiffs correctly point out that the Demurrer to this cause of action was previously sustained with leave to amend because of one element: Plaintiffs did not allege that they “would not have acted as they did if they had known of the concealed or suppressed fact” or that their reliance was justified.  (ROA 106.)  Otherwise, the court determined that the remaining elements of a fraud cause of action were sufficiently pled in the First Amended Complaint.  Such allegations are in the Second Amended Complaint as well and therefore the court will not readdress the allegations in support of these elements.


In their Second Amended Complaint, Plaintiffs allegations in paragraphs 59 and 60 cure the previous deficiency regarding whether Plaintiffs reasonably relied on the alleged misrepresentations and concealments.  As such, the Demurrer to the second cause of action for fraud is OVERRULED.


Fourth Cause of Action for Negligent Misrepresentation

The elements of a negligent misrepresentation cause of action are the same as the ones for fraud except there is no requirement of intent to induce reliance.  (Cadlo v. Owens-Illinois, Inc. (2005) 125 Cal.App.4th 513, 519.)  Like fraud, negligent misrepresentation must be specifically pled.  (Id.)


Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit.  “Where the defendant makes false statements, honestly believing that they are true, but without reasonable ground for such belief, he may be liable for negligent misrepresentation, a form of deceit.”  (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407.)


“Negligent misrepresentation requires an assertion of fact, falsity of that assertion, and the tortfeasor’s lack of reasonable grounds for believing the assertion to be true.”  (SI 59 LLC v. Variel Warner Ventures, LLC (2018) 29 Cal.App.5th 146, 154; CACI 1903.)  “It also requires the tortfeasor’s intent to induce reliance, justifiable reliance by the person to whom the false assertion of fact was made, and damages to that person.”  (Ibid.)  “An implied assertion of fact is ‘not enough’ to support liability.”  (Ibid.)


Here, the fourth cause of action for negligent misrepresentation is OVERRULED for the reasons discussed under the fraud cause of action analysis.


Defendants Riphagen & Bullerdick, Inc. dba Re/Max Tiffany Real Estate and Darryl Chrispen moved to strike the following allegations regarding punitive damages and attorney’s fees:


•        Page 9, lines 9-10, paragraph 62, where it states: “Defendants acted with malice, oppression, or fraud, and therefore, Plaintiffs are entitled to punitive damages as against Defendants.”

•        Prayer for Relief, Page 13, line 18, where it states: “For punitive and exemplary damages.”


Here, the court previously struck these allegations regarding recovery of punitive damages without leave to amend.  (ROA 106.)  As such, the Motion to Strike is GRANTED WITHOUT LEAVE TO AMEND and these allegations are stricken from the Second Amended Complaint.


Defendants shall filed their Answer(s) to the Second Amended Complaint within 20 days of the notice of ruling.


The Case Management Conference is continued to July 6, 2023 at 1:30 p.m.


Plaintiffs to give notice.