Judge Robert B. Broadbelt, Case Number: 24STCV14603, Date: 2025-02-14 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 24STCV14603, Date: 2025-02-14 Tentative Ruling

MOVING PARTIES: Defendants Macoy Capital Mortgage, LLC and Mitch Ohlbaum (joined by defendants Escrow of the West and Marcia Sosnow on September 17, 2024)

The court considered the moving, joinder, opposition, and reply papers filed in connection with defendants Macoy Capital Mortgage, LLC and Mitch Ohlbaum’s demurrer.

The court denies defendants Macoy Capital Mortgage, LLC and Mitch Ohlbaum’s request for judicial notice because the matters to be judicially noticed are not relevant to the court’s disposition of their demurrer. (Malek Media Group LLC v. AXQG Corp. (2020) 58 Cal.App.5th 817, 825 [“Any matter to be judicially noticed must be relevant to a material issue”].)

The court denies plaintiff SR Real Estate Holdings, LLC’s request for judicial notice because the matter to be judicially noticed is not relevant to the court’s disposition of defendants Macoy Capital Mortgage, LLC and Mitch Ohlbaum’s demurrer. (Malek Media Group LLC, supra, 58 Cal.App.5th at p. 825.)

Plaintiff SR Real Estate Holdings, LLC (“Plaintiff”) filed its Complaint in this action on June 11, 2024, alleging 11 causes of action for (1) declaratory relief; (2) breach of contract; (3) breach of the implied covenant of good faith and fair dealing; (4) tortious interference with contract; (5) intentional misrepresentation; (6) negligent misrepresentation; (7) civil conspiracy; (8) constructive fraud; (9) aiding and abetting; (10) tort of another; and (11) unfair business practices.

First, on July 31, 2024, defendants Macoy Capital Mortgage, LLC (“Macoy”) and Mitch Ohlbaum (collectively, “Macoy Defendants”) filed a demurrer to Plaintiff’s first through third and fifth through 11th causes of action. Defendants Escrow of the West and Marcia Sosnow (“Escrow Defendants”) filed a joinder to Macoy Defendants’ demurrer on September 17, 2024.

Second, on December 4, 2024, defendant Toorak Capital Partners LLC (“Toorak”) filed a demurrer and motion to strike directed to Plaintiff’s Complaint.

The court sustains Macoy’s demurrer to the first cause of action for declaratory relief because it does not state facts sufficient to constitute a cause of action since Plaintiff has not alleged the existence of a controversy that is currently active within the meaning of Code of Civil Procedure section 1060 because (1) “[d]eclaratory relief operatives prospectively, and not merely for the redress of past wrongs[,]” and (2) Plaintiff is seeking to redress past wrongs allegedly committed by Macoy by, for example, seeking declarations regarding whether the loan was for $2.7 million or another inflated amount (Compl., ¶ 33, subd. (a)), whether the amounts that were wired to another entity was a refund for refinance on the property (Compl., ¶ 33, subd. (d)), and whether the subject loan was obtained under false pretenses (Compl., ¶ 33, subd. (e). (Code Civ. Proc., § 430.10, subd. (e); SJJC Aviation Services, LLC v. City of San Jose (2017) 12 Cal.App.5th 1043, 1061 [internal quotation marks and citation omitted]; Linda Vista Village San Diego Homeowners Assn., Inc. v. Tecolote Investors, LLC (2015) 234 Cal.App.4th 166, 181 [“A matter is not justiciable or appropriate for resolution through declaratory relief unless the proper criteria are present, that there is ‘an actual controversy that is currently active’ . . . .”].)

The court overrules Macoy’s demurrer to the second cause of action for breach of contract because (1) it can be ascertained from the pleading that the subject agreement was written because Plaintiff has alleged that the defendants “had Ms. Korns sign a loan for $3 million” (Compl., ¶ 23 [emphasis added]), and (2) it states facts sufficient to constitute a cause of action since Plaintiff has adequately alleged (i) the existence of a contract between Plaintiff and Macoy (Compl., ¶¶ 23-24, 38), (ii) the legal effect of the contract (Compl., ¶ 38), and (iii) its resulting damage in the amount of $324,108.18 (Compl., ¶¶ 40-41). (Code Civ. Proc., § 430.10, subds. (g), (e); Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 993 [written contract may be pleaded by its terms or legal effect].)

The court overrules Macoy’s demurrer to the third cause of action for breach of the implied covenant of good faith and fair dealing because it states facts sufficient to constitute a cause of action since (1) as set forth above, Plaintiff has pleaded the existence of a contract between it and Macoy, and (2) the court finds that it is not superfluous and duplicative of the breach of contract cause of action since this cause of action is based on Macoy’s alleged conduct in (i) “cajoling Barbara Korns to sign documents on behalf of Plaintiff for which she had no authority and then to work together to create a sham bank account in the name of Plaintiff to receive and expend the ill-received gains” and (ii) “having Remington Chase intercept those documents so that they would never get back to Plaintiff” (Compl., ¶ 45), such that Plaintiff therefore has alleged that Macoy engaged in conduct that frustrated Plaintiff’s rights to the benefits of the loan agreement to which Plaintiff believed it had agreed. (Code Civ. Proc., § 430.10, subd. (e); Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1245 [elements of breach of implied covenant of good faith and fair dealing].)

The court overrules Macoy Defendants’ demurrer to the fifth cause of action for intentional misrepresentation because it states facts sufficient to constitute a cause of action since Plaintiff has adequately alleged that (1) Macoy Defendants, in April 2022, made misrepresentations to Plaintiff, including that the loan agreement would be for the amount of $2.7 million (Compl., ¶ 56, subd. (a))[1] and that Barbara Korns needed to be a minority member of Plaintiff in order for the loan to be approved (Compl., ¶¶ 19, 56, subd. (d)), and (2) Plaintiff was damaged as a result of its reliance on those misrepresentations (Compl., ¶¶ 61-62). (Code Civ. Proc., § 430.10, subd. (e); Aton Center, Inc. v. United Healthcare Ins. Co. (2023) 93 Cal.App.5th 1214, 1245 [elements of intentional misrepresentation].)

The court overrules Macoy Defendants’ demurrer to the sixth cause of action for negligent misrepresentation because it states facts sufficient to constitute a cause of action for the reasons set forth in connection with the court’s ruling on the fifth cause of action. (Code Civ. Proc., § 430.10, subd. (e); Aton Center, Inc., supra, 93 Cal.App.5th at pp. 1245-1246 [elements of negligent misrepresentation].)

The court sustains Macoy Defendants and Escrow Defendants’ demurrer to the seventh cause of action for civil conspiracy because it does not state facts sufficient to constitute a cause of action since “[c]ivil conspiracy is not an independent cause of action.”[2] (Code Civ. Proc., § 430.10, subd. (e); Navarrete v. Meyer (2015) 237 Cal.App.4th 1276, 1291.)

The court overrules Macoy’s demurrer to the eighth cause of action for constructive fraud because Macoy has not shown that it does not state facts sufficient to constitute a cause of action on the ground that there does not exist a fiduciary relationship between it and Plaintiff. (Code Civ. Proc., § 430.10, subd. (e).) The court acknowledges that Plaintiff has alleged Macoy is a certified financial lender (Compl., ¶¶ 2, 59, 79), and that “[t]he relationship between a lending institution and its borrower-client is not fiduciary in nature.” (Nymark v. Heart Fed. Savings & Loan Assn. (1991) 231 Cal.App.3d 1089, 1093, n. 1.) However, Plaintiff has also alleged that the defendants, including Macoy, also acted “as loan brokers” and “escrow agents” (Compl., ¶ 79), and mortgage loan brokers act as the borrower’s agent in negotiating loans. (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 782.)

The court overrules Escrow of the West’s joinder to Macoy’s demurrer to the eighth cause of action for constructive fraud because (1) Macoy did not argue that this cause of action fails against Escrow of the West, and (2) Escrow of the West did not present argument and analysis to show that this cause of action does not state facts sufficient to constitute a cause of action against it. (Code Civ. Proc., § 430.10, subd. (e).)

The court overrules Macoy Defendants’ demurrer and Escrow Defendants’ joinder to the demurrer to the ninth cause of action for aiding and abetting because they have not shown that it does not state facts sufficient to constitute a cause of action on the ground that the underlying intentional tort causes of action fail. (Code Civ. Proc., § 430.10, subd. (e); Dem., p. 13:6-9.)

The court sustains Macoy Defendants’ demurrer, and Escrow Defendants’ joinder to the demurrer, to the 10th cause of action for tort of another because it does not state facts sufficient to constitute a cause of action since (1) “the tort of another doctrine does not apply to the situation where a plaintiff has been damaged by the joint negligence of codefendants[,]” and (2) here, Plaintiff is attempting to recover attorney’s fees and costs pursuant to this doctrine on the ground that Plaintiff has been damaged by the joint wrongful conduct of all of the defendants, which is improper. (Code Civ. Proc., § 430.10, subd. (e); Gorman v. Tassajara Development Corp. (2009) 178 Cal.App.4th 44, 80.)

The court overrules Macoy’s demurrer to the 11th cause of action for unfair business practices because Macoy has not shown that it does not state facts sufficient to constitute a cause of action since Macoy (1) appears to only challenge the allegations in which Plaintiff alleges that Macoy engaged in fraudulent business practices, but (2) does not address Plaintiff’s allegations that Macoy engaged in unlawful and unfair business practices, including its allegations that Macoy’s conduct violated several statutes (Compl., ¶¶ 100, 101). (Code Civ. Proc., § 430.10, subd. (e); Dem., p. 14:5-21.)

The court overrules Escrow of the West’s joinder to Macoy’s demurrer to the 11th cause of action for unfair business practices because (1) Macoy did not argue that this cause of action fails against Escrow of the West, and (2) Escrow of the West did not present argument and analysis to show that this cause of action does not state facts sufficient to constitute a cause of action against it. (Code Civ. Proc., § 430.10, subd. (e).)

The burden is on the plaintiff “to articulate how it could amend its pleading to render it sufficient.”¿ (Palm Springs Villas II Homeowners Assn., Inc., supra, 248 Cal.App.4th at p. 290.) To satisfy that burden, a plaintiff “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 Plaintiff has not met its burden to articulate how it can amend its first, seventh, and 10th causes of action to render them sufficient. The court therefore sustains the demurrers to those causes of action without leave to amend.

As set forth above, on December 4, 2024, defendant Toorak filed (1) a demurrer to Plaintiff’s Complaint, and (2) a motion to strike portions of Plaintiff’s Complaint. On January 31, 2025, Plaintiff lodged a Request for Dismissal of defendant Toorak. (Jan. 31, 2025 Req. for Dismissal, ¶ 1.) The clerk dismissed defendant Toorak pursuant to that request on February 3, 2025. (Id. at ¶ 5.)

The court therefore takes off calendar the demurrer and motion to strike filed by defendant Toorak.

The court sustains defendant Macoy Capital Mortgage LLC’s demurrer to plaintiff SR Real Estate Holdings, LLC’s first cause of action for declaratory relief without leave to amend.

The court sustains defendants Macoy Capital Mortgage LLC and Mitch Ohlbaum’s demurrer, and defendants Escrow of the West and Marcia Sosnow’s joinder to the demurrer, to plaintiff SR Real Estate Holdings, LLC’s seventh cause of action for civil conspiracy and 10th cause of action for tort of another without leave to amend.

The court overrules defendant Macoy Capital Mortgage LLC’s demurrer to plaintiff SR Real Estate Holdings, LLC’s second, third, eighth, and 11th causes of action.

The court overrules defendants Macoy Capital Mortgage LLC and Mitch Ohlbaum’s demurrer to plaintiff SR Real Estate Holdings, LLC’s fifth and sixth causes of action.

The court overrules Escrow of the West’s joinder to the demurrer directed to plaintiff SR Real Estate Holdings, LLC’s eighth and 11th causes of action.

The court overrules defendants Macoy Capital Mortgage LLC and Mitch Ohlbaum’s demurrer, and defendants Escrow of the West and Marcia Sosnow’s joinder to the demurrer, to plaintiff SR Real Estate Holdings, LLC’s ninth cause of action.

The court orders that the demurrer and motion to strike filed by defendant Toorak Capital Partners LLC are taken off calendar as moot.

The court orders defendants Macoy Capital Mortgage LLC, Mitch Ohlbaum, Escrow of the West, and Marcia Sosnow to file an answer to plaintiff SR Real Estate Holdings, LLC’s Complaint within 10 days of the date of this order.

The court orders defendant Macoy Capital Mortgage LLC to give notice of this ruling.

[1] The court notes that Plaintiff alleged that it “was always told that the loan would be $2.7 million” in paragraph 20 of the Complaint without specifying the name of the person or entity that made that misrepresentation. However, in support of the fifth cause of action, Plaintiff alleged that Macoy Defendants, in or about April 2022, misrepresented the loan amount to Plaintiff, thereby adding details that were not included in paragraph 20. (Compl., ¶ 56.)

[2] The court notes that Plaintiff has alleged its theory of liability against all defendants based on conspiracy in paragraphs 29-31 of the Complaint.

sr real estate holdings, llc ; Plaintiff, vs. macoy capital mortgage llc , et al.; Defendants.	Case No.:	24STCV14603

	Hearing Date:	February 14, 2025

	Time:	8:30 a.m.

	[tentative] Order RE: (1) defendants’ joint demurrer to complaint (2) defendant’s demurrer to complaint (3) defendant’s motion to strike portions of complaint