Judge Ronald F. Frank, Case Number: 21TRCV00897, Date: 2023-05-11 Tentative Ruling

Judge: Ronald F. Frank, Case: 21TRCV00897, Date: 2023-05-11 Tentative Ruling

Case Number: 21TRCV00897 Hearing Date: May 11, 2023 Dept: 8

Tentative Ruling¿

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HEARING DATE: May 11, 2023¿¿

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CASE NUMBER: 22TRCV00897

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CASE NAME: Hillcrest Ventures LLC v. Beverly Hills Glass, Inc, et al .¿¿¿

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MOVING PARTY: Defendants, Beverly Hills Glass, Inc. and Richard Jastrow

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RESPONDING PARTY: Plaintiff, Hillcrest Ventures, LLC

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TRIAL DATE: None set¿

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MOTION:¿ (1) Demurrer¿

(2) Motion to Strike

(3) Writ of Attachment

Tentative Rulings: (1) Defendants’ Demurrer is mostly OVERRULED but SUSTAINED in part, if the parties have not reached the settlement discussed with the Court on May 8, 2023

(2) Defendants’ Motion to Strike is DENIED

(3) CONTINUE

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I. BACKGROUND¿¿

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A. Factual¿¿

On October 17, 2022, Plaintiff, Hillcrest Ventures, LLC (“Plaintiff”) filed a Complaint against Defendants, Beverly Hills Glass, Inc, Richard Jastrow, and DOES 1 through 50. The Complaint alleges causes of action for: (1) Breach of Oral and Implied In Fact Contract; (2) Breach of the Covenant of Good Faith and Fair Dealing; (3) Conversion; (4) Common Count; (5) Unjust Enrichment/Restitution; (6) Fraud – Intentional Misrepresentation; (7) Fraud – Negligent Misrepresentation; (8) Fraud – Concealment; (9) Fraud – False Promise; and (10) Unfair Business Practices. Plaintiff alleges that this case arises from Defendant, Beverly Hills Glass, Inc.’s breach of a binging agreement for Contractor to perform the glasswork for Owner’s project in the amount of over $2.7 Million.

Defendants, Beverly Hills Glass, Inc, Richard Jastrow (collectively “Defendants”) now Demur to the Complaint and have also filed a Motion to Strike portions of the Complaint.

B. Procedural¿¿

On November 30, 2022, Defendants filed a Demurrer and Motion to Strike Plaintiff’s Complaint.

On April 20, 2023, Plaintiff filed an opposition to the Demurrer. To date, no opposition has been filed to the Motion to Strike, nor has any reply brief been filed. The parties reported that there is a pending closing on an unrelated property in another state in the Eastern Time Zone that may provide a funding vehicle for an expedited payment of a potential settlement.

¿II. GROUNDS FOR DEMURRER & MOTION TO STRIKE

Defendants demur to the First, Second, Sixth, Seventh, Eighth, and Ninth causes of action on the grounds it argues the Complaint does not allege sufficient facts to constitute a cause of action.

Defendants also filed a Motion to Strike the following paragraphs from Plaintiff’s Complaint on the grounds they argue Plaintiff has failed to allege any facts supporting the claims for punitive damages.

Plaintiff has successfully argued an offer, acceptance, breach, and damages. (Complaint, ¶ 21-27.) As such, the demurrer to the breach of contract cause of action is overruled.

Plaintiff’s Complaint alleges elements of bad faith and unfair dealings such as the claimed failure of Defendants to return the deposit, and use of the deposited moneys on expenses unrelated to the agreement or project between the Plaintiff and Defendant. (Complaint, ¶ 31.) The issue of whether Plaintiff can offer proof of these allegations to overcome the letter is an issue for a later motion. As such, the demurrer to the breach of the covenant of good faith and fair dealing cause of action is overruled.

The Court also finds that Plaintiff has alleged sufficient facts to state a cause of action for fraud. Plaintiff alleges facts of misrepresentation (Complaint ¶ 50); knowledge of that falsity (Complaint ¶ 53); intent to induce Plaintiff’s reliance (Complaint ¶ 55); justifiable reliance on said misrepresentation (Complaint ¶¶ 51, 55, 57); and damages. (Complaint ¶¶ 56-59.) Plaintiff alleges facts of misrepresentation (Complaint ¶ 61); knowledge of that falsity (Complaint ¶ 63); intent to induce Plaintiff’s reliance (Complaint ¶ 65); justifiable reliance on said misrepresentation (Complaint ¶¶ 62, 65, 67); and damages. (Complaint ¶¶ 66-69.) As such, Plaintiff has sufficiently alleged the elements of fraud in its Complaint, and the demurrer is overruled.

The Court agrees with Plaintiff that its tort allegations go well beyond a mere breach of contract, violate a duty independent from the breach of contract, and mean that the economic loss doctrine does not apply. Although bred from the same contractual relationship, the fraud claims go further than merely alleging that Defendants did not perform their portion of the contract. The Complaint alleges nefarious use of Plaintiff’s deposit, and alleged tortious conduct predating the alleged contract.

As to the fraudulent concealment claim, the Court sustains the demurrer, not because of the economic loss rule, but because Plaintiff has failed to allege sufficient facts to constitute a cause of action for fraudulent concealment. This Court notes that Plaintiff has alleged sufficient facts that Defendants concealed a material fact from Plaintiff (Complaint ¶¶ 72-73). However, although Plaintiff alleges that Defendant did not disclose said facts, Plaintiff’s Complaint is devoid of any allegations of duty to disclose. As such, the demurrer is sustained.

As to the deceit or false promise claim, the Complaint alleges that Hillcrest paid and Contractor accepted a deposit of $634,460.19, in reliance on the Agreement and “Contractor, by and through its agents, made a promise to Hillcrest’s agents that the deposit would be used to lock in labor and material pricing in accordance with the documentation provided to Hillcrest and pursuant to the parties’ Agreement” but that “Contractor did not uphold its promise. Instead, Contractor used the deposit on expenses unrelated to the Agreement or the Project.” (Complaint, ¶¶ 81-85.) As with the other three fraud causes of action, Defendants assert the Ninth Cause of Action is an attempt to recast the breach of contract claims as a tort cause of action. The Court disagrees. The Complaint alleges that Defendants made a promise regarding a material fact (Complaint, ¶ 82); that Defendants did not intend to perform (Complaint, ¶ 83); that Defendants intended to deceive or induce Plaintiff (Complaint, ¶ 84); that it relied on Defendants promise(Complaint, ¶ 87); nonperformance by Defendants (Complaint, ¶ 85); and damages (Complaint, ¶ 86-89.) As such, the demurrer to this cause of action is overruled.

As noted above, the Court found the majority of Plaintiff’s causes of action to be sufficiently pled. As such, if Plaintiff could prove each of these causes of action, they would support the awarding of Punitive Damages. Thus, the Motion to Strike is DENIED even though the Court notes Plaintiff failed to file an opposition.

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