Judge: Richard Y. Lee, Case: 30-2022-01279919, Date: 2023-05-25 Tentative Ruling

Defendant Tim S. Kling as Trustee of The Kingsley Trust dated February 7, 2022’s demurs to the 1st through 3rd causes of action in the complaint

2nd cause of action for specific performance

“To obtain specific performance after a breach of contract, a plaintiff must generally show: ‘(1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract. [Citations.]’ [Citations.]” (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.)  “To obtain specific performance, a plaintiff must… prov[e] the elements of a standard breach of contract.”  (Darbun Enterprises, Inc. v. San Fernando Community Hosp. (2015) 239 Cal.App.4th 399, 409, footnote omitted.) 

The statute of frauds requires certain contracts to be in writing signed by the party to be charged or the party’s agent.  (Civ. Code § 1624, subd. (a).)  An agreement for the sale of real property is within the statute of frauds.  (Civ. Code § 1624, subd. (a)(3).)

Defendant Kling contends that the complaint does not allege adequate consideration.  The consideration just needs to be “fair and reasonable under the circumstances.” (Jenkins v. Teegarden (2014) 230 Cal.App.4th 1128, 1142.)  The complaint alleges that Plaintiffs were to pay $350K for the Property.  “[C]onsideration, to be adequate, need not amount to the full value of the property.” (Ibid., internal quotation marks omitted.) 

However, as currently pled, Defendant Tran did not own the Property at the time she allegedly entered into an agreement to sell it to Plaintiffs.  Plaintiff concedes that this defect and seeks leave to amend to allege that Defendant Tran had authority to enter into the agreement. 

The specific performance cause of action is insufficient because it fails to allege the existence of a written agreement for the sale of the Property, or a reason why the agreement is outside the Statute of Frauds.  It is also insufficient because it fails to allege an inadequate legal remedy.  Accordingly, the demurrer to the 2nd cause of action specific performance is SUSTAINED WITH LEAVE TO AMEND. 

3rd cause of action for unjust enrichment

“‘The elements for a claim of unjust enrichment are “receipt of a benefit and unjust retention of the benefit at the expense of another.” [Citation.] “The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” [Citation.]’ [Citation.]”  (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769.)

Here, the 3rd cause of action alleges that Defendant Kling, as current title holder of the Property, has retained the benefit of the substantial improvements that Plaintiffs made to the Property, which were made based on Plaintiffs’ agreement with Defendant Tran.  The claim is sufficiently alleged.  The demurrer to the 3rd cause of action for unjust enrichment is therefore OVERRULED.

1st cause of action for constructive trust

“‘A constructive trust is an involuntary equitable trust created by operation of law as a remedy to compel the transfer of property from the person wrongfully holding it to the rightful owner. [Citations.] The essence of the theory of constructive trust is to prevent unjust enrichment and to prevent a person from taking advantage of his or her own wrongdoing. [Citations.]’ [Citation.]… It is not “a substantive claim for relief.’ [Citations.]”  (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1485; see Davies v. Krasna (1975) 14 Cal.3d 502, 515-516 [constructive trust is not a substantive device but merely a remedy; an action seeking to establish a constructive trust is subject to the limitations period of the underlying substantive right].)

The 1st cause of action for constructive trust is a remedy that is dependent on a substantive right, and should be subsumed in the 2nd and/or 3rd causes of action for specific performance and unjust enrichment.  As such, the demurrer to the 1st cause of action for constructive trust is SUSTAINED WITHOUT LEAVE TO AMEND.

Plaintiffs are given 20 days leave to amend.

The Case Management Conference is continued to July 27, 2023 at 1:30 p.m.

Defendant to give notice of ruling.