Judge: Robert S. Draper, Case: 18STCV00093, Date: 2022-08-29 Tentative Ruling

Case Number: 18STCV00093    Hearing Date: August 29, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Defendants’ Demurrer to the Sixth Cause of Action in the Second Amended Complaint is SUSTAINED. Plaintiffs are granted twenty days leave to amend.

Defendants’ Motion to Strike Portions of the Second Amended Complaint is GRANTED. Plaintiffs are granted twenty days leave to amend.

FACTUAL BACKGROUND   

This is an action for breach of a construction contract. The operative Second Amended Complaint alleges as follows. Plaintiffs Lesley Dunlap (“Dunlap”) and Amir Ettekal (“Ettekal”) (collectively “Plaintiffs”) hired Defendant CAM Development, Inc. (“CAM”) to build their home, garage, and guest suite in Manhattan Beach. (SAC ¶ 7.) In April 2017, CAM abandoned the project after numerous arguments regarding payment, work to be completed, and other issues. (SAC ¶ 9.) Additionally, CAM, through its agent Defendant Craig Maples (“Maples” and together with CAM, “Defendants”), billed Plaintiffs for 100% of the finished project when the project was 75 to 80% complete in violation of B&P Code § 7159(d). (SAC ¶ 50.)

PROCEDURAL HISTORY 

On October 9, 2018, Plaintiffs filed the Complaint asserting four causes of action:

1.    Breach of Writtne Contract;

2.    Negligence;

3.    Breach of Express Warranty; and

4.    Breach of Implied Warranty

On April 8, 2019, Plaintiffs filed the First Amended Complaint adding a fifth cause of action for Express Contractual Indemnification.

On April 13, 2022, Plaintiffs filed a Motion for Leave to File a Second Amended Complaint.

On June 13, 2022, the Court granted Plaintiffs’ Motion for Leave to File a Second Amended Complaint.

Also on June 13, 2022, Plaintiffs filed the Second Amended Complaint adding a sixth cause of action for Fraud.  

On August 3, 2022, Defendants filed the instant Demurrer to the Second Amended Complaint.

On August 16, 2022, Plaintiffs filed an Opposition.

As of August 24, 2022, no Reply has been filed.

DISCUSSION 

                         I.          DEMURRER

Defendants demur to the Sixth Cause of Action for Fraud.

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) As is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)  

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.”  (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.) 

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.) 

A.   Sixth Cause of Action – Fraud

Defendants argue that Plaintiffs’ recently added Six Cause of Action for Fraud is prohibited by the relevant three-year statute of limitations. (Cal. Code of Civ. Pro § 338.)

For a statute of limitations to bar a claim on demurrer, “the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, internal quotation marks omitted.) In general, a statute of limitations begins to run “when the cause of action is complete with all of its elements,” namely, wrongdoing, causation, and resulting harm. (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397.)   

Here, the Second Amended Complaint alleges that the events constituting the sixth cause of action occurred between March 2016, and April 2017. (SAC ¶¶ 10, 12.) Accordingly, absent an exception to the statute of limitations, Plaintiffs’ newly added cause is time-barred.

Defendants argue that the most relevant exception, the discovery rule, does not apply here.

“The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807 (Fox); Nelson v. Indevus Pharms, Inc. (2006) 142 Cal.App.4th 1202, 1206 (Nelson).) “A plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. The burden is on the plaintiff to show diligence, and conclusory allegations will not withstand demurrer.” (McKelvey v. Boeing N. Am. (1999) 74 Cal.App.4th 151, 160, superseded by statute on unrelated grounds as stated in Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 637.) 

Defendants note that the Second Amended Complaint pleads no facts demonstrating the time and manner of discovery of the alleged fraud, or the inability to have made earlier discovery despite reasonable diligence. Additionally, Defendants argue that the facts Plaintiffs allege support their fraud cause of action are identical to those alleged in their initial Complaint. (Demurrer at p. 6.) Accordingly, Defendants argue, Plaintiffs have been aware of the relevant facts for years and their new claim is not protected by the discovery rule.

In Opposition, Plaintiffs argue that they only became aware of Maples’s fraudulent actions in February, 2022, when Maples admitted in a deposition that he had overcharged Plaintiffs for work performed. (Mass Decl. ¶ 5.) Plaintiffs argue that, though they might have suspected fraud previously, this was the first time they had concrete evidence of such fraudulent activity. Accordingly, Plaintiffs argue, the new fraud cause of action is covered by the discovery rule.

While this is a compelling argument, the Second Amended Complaint is utterly bereft of facts supporting it. Plaintiffs argue that to the extent the Second Alleged Complaint fails to allege time and manner of discovery or Plaintiffs’ inability to make earlier discovery, the information in the Opposition cures those defects. However, Plaintiffs provide no authority demonstrating that facts contained in an Opposition to a Demurrer can remedy the plaintiff’s failure to include those facts in the subject complaint.

Accordingly, Defendants’ Demurrer to the Sixth Cause of Action for Fraud in the Second Amended Complaint is SUSTAINED. Plaintiffs are granted twenty days leave to file a Third Amended Complaint stating facts that demonstrate the time and manner of the relevant discovery, and Plaintiffs’ inability to discover same facts despite reasonable diligence.   

                       II.          MOTION TO STRIKE

Next, Defendants move to strike Plaintiffs’ prayer for punitive damages from the Second Amended Complaint.

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(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(b).) The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.) 

California Civil Code section 3294 authorizes the recovery of punitive damages in non-contract cases where “the defendant has been guilty of oppression, fraud, or malice . . . .” (Civ. Code § 3294(a).) Punitive damages thus require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.) Specific facts must be pleaded in support of punitive damages. (See Hillard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374, 391-92.)

Here, as Defendants have successfully demurred as to the Sixth Cause of Action for fraud, there are no remaining causes of action that can support a prayer for punitive damages.

Accordingly, Defendants’ Motion to Strike is GRANTED. As Plaintiffs have been granted twenty days leave to remedy their fraud cause of action, they are also granted twenty days leave to amend their prayer for punitive damages.

DATED: August 29, 2022 

____________________________

Hon. Robert S. Draper 

Judge of the Superior Court