Judge: Robert B. Broadbelt, Case: 22STCV38520, Date: 2023-11-28 Tentative Ruling

Tentative rulings are sometimes, but not always, posted. The purpose of posting a tentative ruling is to to help focus the argument. The posting of a tentative ruling is not an invitation for the filing of additional papers shortly before the hearing.

Case Number: 22STCV38520    Hearing Date: November 28, 2023    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:             Cross-defendants Westchester Playa Realty Alliance, Inc., and Andre Morgan

RESPONDING PARTY:       Cross-complainant Prosodos Holdings V, LLC

(1)   Demurrer to First Amended Cross-Complaint

(2)   Motion to Strike Portions of First Amended Cross-Complaint

The court considered the moving and opposition papers filed in connection with the demurrer and motion to strike.  No reply papers were filed.

BACKGROUND

Plaintiff Patricia Galea filed this promissory fraud action on December 9, 2022, against, inter alia, defendant Prosodos Holdings V, LLC.

Thereafter, on June 21, 2023, Prosodos Holdings V, LLC (“Cross-Complainant”) filed its operative First Amended Cross-Complaint against Patricia Galea, Andre Morgan, and Westchester Playa Realty Alliance, Inc., d/b/a Pacific Playa Realty, alleging six causes of action for (1) specific performance; (2) breach of written contract; (3) negligence; (4) breach of fiduciary duty; (5) indemnification; and (6) declaratory relief.

Cross-defendants Westchester Playa Realty Alliance, Inc., d/b/a Pacific Playa Realty and Andre Morgan ( “Cross-Defendants”) now move the court for an order (1) sustaining their demurrer to the third through sixth causes of action, and (2) striking from the First Amended Cross-Complaint the fourth through sixth causes of action in their entirety.

DEMURRER

The court sustains Cross-Defendants’ demurrer to the third cause of action for negligence because it does not state facts sufficient to constitute a cause of action since Cross-Complainant has not alleged facts establishing that (1) Cross-Defendants owed a duty to Cross-Complainant, and (2) Cross-Defendants’ alleged failure to prepare the contingency removal caused Cross-Complainant’s injury.  (Code Civ. Proc., § 430.10, subd. (e); Romero v. Los Angeles Rams (2023) 91 Cal.App.5th 562, 567 [“The elements of a negligence cause of action are 1) the existence of a duty, 2) a breach of that duty, 3) injury to the plaintiff caused by the defendant’s breach, and 4) actual damages”] [emphasis added].) 

The court notes that Cross-Complainant has argued that Cross-Defendants owed it a duty of care because (1) a buyer’s real estate broker owes duties of care to the seller, (2) the transaction affected Cross-Complainant, who was the seller of the subject property, and (3) it was foreseeable that negligently preparing the contingency removal would affect Cross-Complainant, as it depended on an accurate version of the document to proceed with the transaction.  (Opp., pp. 5:26-27, 6:6, 6:12-14.)  But Cross-Complainant did not allege all of these facts in the First Amended Cross-Complaint.  Specifically, Cross-Complainant did not clearly allege (1) that Cross-Defendants acted as the real estate broker for the buyer (i.e., plaintiff Patricia Galea), and (2) facts showing that it would be foreseeable to Cross-Defendants that negligently preparing the contingency removal would cause harm to Cross-Complainant and facts showing the harm suffered by Cross-Complainant as a result of their alleged negligence.  Thus, as pleaded, Cross-Complainant has not alleged facts sufficient to establish the existence of a duty of care and the element of causation.

The court sustains Cross-Defendants’ demurrer to the fourth cause of action for breach of fiduciary duty because it does not state facts sufficient to constitute a cause of action since Cross-Complainant has not alleged facts establishing the existence of a fiduciary duty owed by Cross-Defendants to Cross-Complainant.  (Code Civ. Proc., § 430.10, subd. (e).)  The court acknowledges that (1) real estate brokers “owe third parties who are not their clients, including the adverse party in a real estate transaction, only those duties imposed by regulatory statutes[,]” including general obligations of honesty, fairness, and full disclosure toward all parties, and (2) a real estate agent working for the buyer owes a duty of honest and fair dealing and good faith to a seller.  (Saffie v. Schmeling (2014) 224 Cal.App.4th 563, 568; Civ. Code, § 2079.16.)  However, as set forth above, Cross-Complainant has not pleaded facts (1) establishing that Cross-Defendants were acting as real estate agents or brokers on behalf of the buyer (i.e., plaintiff Galea), or (2) establishing the involvement of Cross-Defendants in the underlying sale.  Thus, Cross-Complainant has not alleged facts establishing that Cross-Defendants owed a fiduciary duty to Cross-Complainant.

The court sustains Cross-Defendants’ demurrer to the fifth cause of action for indemnification because it does not state facts sufficient to constitute a cause of action since Cross-Complainant has not alleged sufficient facts establishing (1) fault on the part of Cross-Defendants, and (2) resulting damages to Cross-Complainant for which Cross-Defendants are equitably responsible.  (Code Civ. Proc., § 430.10, subd. (e); FACC ¶¶ 31, 33-34; C.W. Howe Partners, Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 700 [elements of cause of action for equitable indemnity].)

The court sustains Cross-Defendants’ demurrer to the sixth cause of action for declaratory relief because it does not state facts sufficient to constitute a cause of action since Cross-Complainant has not alleged the existence of an “actual controversy” between them that is encompassed by Code of Civil Procedure section 1060.  (Code Civ. Proc., § 1060; Lee v. Silveira (2016) 6 Cal.App.5th 527, 546 [elements of cause of action for declaratory relief].)

The burden is on the plaintiff or cross-complainant “to articulate how it could amend its pleading to render it sufficient.”¿ (Palm Springs Villas II Homeowners Assn., Inc. v. Parth (2016) 248 Cal.App.4th 268, 290.)¿ To satisfy that burden, a plaintiff or cross-complainant “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.”¿ (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)¿ The court finds that Cross-Complainant has not met its burden to show how it could amend its sixth cause of action for declaratory relief and therefore sustains the demurrer to that cause of action without leave to amend.  The court grants Cross-Complainant leave to amend its third, fourth, and fifth causes of action only.

MOTION TO STRIKE

Cross-Defendants move the court for an order striking from the First Amended Cross-Complaint (1) the fourth, fifth, and sixth causes of action in their entirety, and (2) the request for a judicial declaration as set forth in paragraph 5 of the prayer.

The court denies as moot Cross-Defendants’ motion to strike the fourth, fifth, and sixth cause of actions in their entirety because the court has sustained Cross-Defendants’ demurrer to those causes of action.

Further, the court acknowledges that Cross-Complainant exceeded the scope of the court’s June 12, 2023 order granting it leave to amend to “cure[] the deficiencies with its cause of action for negligence” by alleging three new causes of action against Cross-Defendants.  (June 12, 2023 Order, p. 3:1-3; Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023 [“Following an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court’s order”].)  However, the court finds it appropriate to exercise its discretion to permit Cross-Complainant’s amendment of its cross-complaint to include the fourth and fifth causes of action in furtherance of justice, judicial economy, and efficiency.  (Code Civ. Proc., §§ 436, 473, subd. (a).)

The court grants Cross-Defendants’ motion to strike the prayer for a judicial declaration because the court has sustained the declaratory relief cause of action without leave to amend.  (Code Civ. Proc., § 436.)

ORDER

The court sustains cross-defendants Westchester Playa Realty Alliance, Inc., d/b/a Pacific Playa Realty and Andre Morgan’s demurrer to cross-complainant Prosodos Holdings V, LLC’s third cause of action for negligence, fourth cause of action for breach of fiduciary duty, and fifth cause of action for indemnification with leave to amend.

The court sustains cross-defendants Westchester Playa Realty Alliance, Inc., d/b/a Pacific Playa Realty and Andre Morgan’s demurrer to cross-complainant Prosodos Holdings V, LLC’s sixth cause of action for declaratory relief without leave to amend.

The court grants cross-defendants Westchester Playa Realty Alliance, Inc., d/b/a Pacific Playa Realty and Andre Morgan’s motion to strike paragraph 4 of cross-complainant Prosodos Holdings V, LLC’s prayer without leave to amend.

The court grants cross-complainant Prosodos Holdings V, LLC 20 days leave to file a Second Amended Cross-Complaint that cures the deficiencies with the third, fourth, and fifth causes of action.

The court orders cross-defendants Westchester Playa Realty Alliance, Inc., d/b/a Pacific Playa Realty and Andre Morgan to give notice of this ruling.

IT IS SO ORDERED.

DATED:  November 28, 2023

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court