Judge Ronald F. Frank, Case Number: 22TRCV00429, Date: 2024-10-09 Tentative Ruling

MOVING PARTY: Defendants Charlie Echeverry aka Carlos Echeverry, Jessica Echeverry and SOFESA.

Joseph Gazal (Plaintiff) filed a Complaint against Charlie Echeverry (Charlie), Jessica Echeverry (Jessica), and entity Defendant Sofesa (collectively, Defendants). The Complaint alleges the following.

Plaintiff is an 80-year-old parishioner at St. Gerard Majella Church (the Church) where Charlie is the Deacon. (Compl.,¶¶8 and 10.) On December 19, 2021 Charlie told the parishioners about a family in need; a mother and four children who fled an abusive husband and were currently living in a Motel 6 in Los Angeles. (Id., ¶9.) Charlie told the parishioners that the family had no home and needed money for a house and a car. (Id., ¶12.) Plaintiff then donated $1,047,143.91 to the Church to assist the alleged family in need and asked that any funds leftover be returned to him. (Id., at ¶13.) On January 18, 2022 Defendants told Plaintiff that a home had been purchased for the family, but Defendants did identify the cost of the home, instead asking Plaintiff to complete a W-9. (Id., at ¶14.) Plaintiff’s subsequent requests for an accounting were ignored until Plaintiff retained legal counsel, who requested documentation of the donation only to receive a one-page escrow statement with pertinent information redacted. (Id., at ¶15.) An accounting sheet provided by Defendants was also produced revealing Plaintiff’s donation was used for items never agreed upon, including the fact that the home and car were purchased in the name of entity Defendant Sofesa, a non-profit owned by Charlie and his wife Jessica. (Id.) Plaintiff then filed suit.

The Complaint filed on June 1, 2022, alleges the following nine causes of action:

The motion now before the Court is Defendants’ demurrer to Plaintiff’s Complaint. Defendants demur to all nine causes of action. Plaintiff opposes the demurrer; Defendants filed a reply.

Concurrently filed with their demurrer, Defendants also file a Request for Judicial Notice (RJN), requesting the Court judicially notice the following:

1. the Court’s minute dated March 7, 2023, issued following the hearing on Defendants’ anti-SLAPP motion;

2. the Court’s minute dated March 13, 2023, ruling on Defendants’ anti-SLAPP motion;

3. the Reporter’s Transcript of Proceedings, dated March 7, 2023, regarding the hearing on Defendants’ anti-SLAPP motion;

4. Court of Appeal’s decision, dated March 29, 2024, affirming this Court’s ruling on Defendants’ anti-SLAPP motion; and

5. Respondent’s Brief filed by Plaintiff, dated September 26, 2023, in the appeal from this Court’s ruling on Defendants’ anti-SLAPP motion.

Pursuant to Evid. Code §§452(d)(1) and (d)(2), all items are judicially noticed.

“Before filing a demurrer…the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc. §430.41(a); see also Code Civ. Proc. §435.5 (imposing similar requirements for a motion to strike).) Defendants provide the Declaration of Paul M. Jonna which states the parties conferred telephonically on July 29, 2024, and attempted to continue conferring over email. Although the parties did not reach an agreement, the requirements of Code Civ. Proc. §430.41(a) have been met.

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)

a) First Cause of Action for Breach of Contract & Breach of Covenant of Good Faith and Fair Dealing

Within the first cause of action, Plaintiff combined two causes of action within one caption, i.e., both a contract claim and an implied covenant claim. To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated … [T]he only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.” (Id. at pp. 1394-1395.) To recover in tort for breach of the implied covenant, the defendant must “have acted unreasonably or without proper cause.” (Id. at p. 1395, citations and italics omitted.)

The Complaint’s first task is to establish the existence of a contract. The Complaint alleges an oral contract was entered into by the parties where Defendants would use Plaintiff’s donation to purchase a car and house for the alleged family in need. (Compl., ¶22.) In its demurrer, Defendants do not contest the existence of the claimed contract; rather, Defendants argue the object of the contract is unlawful, therefore rendering the Contract void. In his opposition, Plaintiff contends the object was not unlawful, the object was to assist a family in need and Defendants breached the contract by purchasing a house and car for Sofesa in Sofesa’s name rather than in the name of the needy family. Although not explicitly stated, Plaintiff seems to imply that the house and car never went to the family. (Opp Papers, 11:10-18.) Defendants contend in their Reply brief that the contract claim fails for for lack of consideration. The Court agrees.

Civ. Code §1549 defines a contract as “an agreement to do or not to do a certain thing.” A contract must have an offer, acceptance, and consideration. “An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it.” (Rest.2d, § 24.) An acceptance is a manifestation of assent to the terms of an offer. Consideration is a bargained for exchange of a promise for a return promise or performance that benefits the promisor or causes detriment to the promisee. (See generally, 1 Witkin, Summary 11th Contracts § 3 (2024).)

Although the Complaint alleges an oral contract, it is unclear which party made what offer. The Complaint makes clear the intent of Plaintiff was to donate funds to assist a family in need, and that Defendants would facilitate using those funds to provide the assistance. However, the Complaint fails to detail what the offer was, and there are no facts detailing the terms of the offer nor the acceptance. Finally, Defendants argue there was no consideration flowing from one party to the other. The Complaint fails to describe with any detail the exchange of a promise or performance. With regard to the cause of action for breach of the implied covenant of good faith and fair dealing, with no contract there can be no breach of the covenant of good faith and fair dealing.

Therefore, the first element of the cause of action for a breach of contract has not been met, and the demurrer to the first cause of action for breach of contract is sustained, as is the demurrer to the cause of action for breach of the implied covenant of good faith and fair dealing. The pleading is uncertain as to the offer, the acceptance and the consideration for the claimed oral promise. Because the Court believes these matters can be corrected, Plaintiff is granted 20 leave to amend.

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.) “…examples of relationships that impose a fiduciary obligation to act on behalf of and for the benefit of another are “a joint venture, a partnership, or an agency.” (Cleveland v. Johnson, (2012) 209 Cal.App.4th 1315, 1339.) As applied to these facts, the Court notes that Business and Professions Code §17510.8 provides:

“there exists a fiduciary relationship between a charity or any person soliciting on behalf of a charity, and the person from whom a charitable contribution is being solicited. The acceptance of charitable contributions by a charity or any person soliciting on behalf of a charity establishes a charitable trust and a duty on the part of the charity and the person soliciting on behalf of the charity to use those charitable contributions for the declared charitable purposes for which they are sought.”

The Complaint alleges the breach here was using Plaintiff’s funds to purchase a house and car for Sofesa and in Sofesa’s name, instead of for the family in need. Defendants’ demurrer argues that it is the Attorney General’s duty to supervise and enforce violations by charitable trusts. Upon opposition, Plaintiff counters arguing that because Plaintiff has a reversionary interest in the trust property, Plaintiff has standing to sue, relying on L.B. Research & Education Foundation v. UCLA Foundation (2005) 130 Cal.App.4^th 171 (L.B.). L.B. was a case where a donor contributed $1 million to establish anendowed chair at UCLA’s medical school. The plaintiff there sued UCLA arguing UCLA failed to comply with the parteis’ alleged agreement as to how the funds were to be used. The court there then analyzed whether the plaintiff intended to create a charitable trust or a conditional gift. (L.B., supra, at 178.) A charitable trust would mean the attorney general would have the power to enforce a violation rather than plaintiff[2]. If it were a conditional gift, the plaintiff would have standing.

Here, the Complaint is clear in alleging that the intent of the parties was that the donated funds be used for the family, and that any unused funds be returned to Plaintiff. (Compl., ¶13.) Defendants’ Reply brief argues that the gift lacked any specific terms or written agreement, therefore rendering it a donative gift. The Court disagrees. The Complaint’s conditions suffice to show what the gift was for, and what was to happen with the remaining funds, rendering it a conditional gift, which gives Plaintiff standing. Therefore, the demurrer to the second cause of action is overruled.

c) Third Cause of Action for Common Law Fraud & Deceit and Fourth Cause of Action for Constructive Fraud

“The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Here, both the third cause of action for fraud and fourth cause of action for constructive fraud fail for lack of specificity. The Complaint alleges the first element of misrepresentation was using Plaintiff’s funds for a family in need, when in reality they were used to purchase a home and car for Sofesa. However, there is little detail as to the second element of scienter, the third element of intent to induce reliance, nor the fourth element of justifiable reliance.

As to the second element of scienter, the Complaint alleges there were further conversations that followed the initial Homily where the parties discussed the funds, and Plaintiff donated varying amounts on December 24, 27, 28, and 29 of 2021. However, who said what to whom is not alleged as required by Tarmann. Without these details, the allegations do not meet the heightened pleading requirement. Accordingly, the demurrer to both the third and fourth causes of action is sustained, but Plaintiff is granted 20 days leave to amend.

Again, the Complaint couples two separate causes of action into one. In order to state a claim for negligence, Plaintiff must allege the elements of (1) “the existence of a legal duty of care,” (2) “breach of that duty,” and (3) “proximate cause resulting in an injury.” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664, 671.)

The elements of a cause of action for negligent misrepresentation include the affirmative “[m]isrepresentation of a past or existing material fact, without reasonable ground for believing it to be true, and with intent to induce another’s reliance on the fact misrepresented; ignorance of the truth and justifiable reliance on the misrepresentation by the party to whom it was directed; and resulting damage.” (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154, quotation marks omitted.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiff must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

In alleging both a breach of fiduciary duty in the second cause of action and negligence in the fifth cause of action, the Complaint alleges that a legal duty was owed, and that Defendants breached that legal duty. Plaintiff alleges the fiduciary duty that was owed was also a legal duty owed to Plaintiff. Plaintiff alleges the funds donated were not used in accordance with the conditions of the gift. This was proximately caused by Defendants’ alleged misuse of funds on items never discussed. (Compl., ¶55.) The damages are the funds that were never returned to Plaintiff. Therefore, negligence has been successfully plead.

However, the cause of action for negligent misrepresentation falls to demurrer for the same deficiencies discussed with regard to the fraud cause of action above. Accordingly, the demurrer is overruled as to the negligence cause of action but is sustained as to the negligent misrepresentation cause of action.

The Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.) provides for steep penalties against those who abuse an elder or a dependent adult. Dependent adult abuse includes physical abuse, neglect, isolation, deprivation by a care custodian of necessary goods or services, and financial abuse. (Welf. & Inst. Code, § 15610.07, subd. (a).) Plaintiff specifically contends financial abuse (1) the plaintiff was an

"elder" within the meaning of the Elder Abuse Act (Welfare & Institutions Code section15600 et

seq.), i.e., 65 years of age or older; (2) the defendant took or retained the plaintiffs property with

the intent to defraud the plaintiff, for a wrongful use, or by undue influence; (3) the plaintiff was

harmed; and (4) the defendant's conduct was a substantial factor in causing in the plaintiffs harm.

Plaintiff alleges he was 80-years-old, and therefore an elder. (Compl., ¶3.) Plaintiff alleges the funds donated were donated because he was under the impression they would be used to help a family in need. Plaintiff was harmed because at least some of the funds were not used for their stated purpose, and Defendant’s alleged misuse was a substantial factor in the harm of the funds being lost from Plaintiff and gained by Sofesa. Defendants argue the Complaint does not specify what was false. The Court disagrees, the Complaint is clear that Plaintiff donated under the impression of helping a family not Sofesa. Therefore, the demurrer to the cause of action for financial elder abuse is overruled.

The seventh cause of action is grounded in California Code of Regulations, Title 11 §999.9.9.4 (CCR §999.9.4) which mandates that a charitable organization like Sofesa be registered and in good standing with the Registry of Charitable Trusts in order to solicit for charitable purposes in California. Plaintiff alleges the registration for Sofesa was delinquent at the time the solicitation to Plaintiff was made. Plaintiff urges the Court to find an implied private right of action to CCR §999.9.4 and relies on Animal Legal Defense Fund v. Mendes (2008) 160 Cal.App.4^th 136 (Mendes).

This reliance is misplaced. Mendes was a case that discussed whether the Animal Legal Defense Fund (ALDF) could enforce a violation of Pen. Code §597(t), which provides that it is a misdemeanor to confine an animal without an “adequate exercise area”. (Mendes, supra, at 140.) The Mendes Court provided careful analysis of whether there was either an explicit or implied private right of action for ALDF to enforce Pen. Code §597(t) and concluded there was not. (Id., at 141- 145.)

This Court concludes the same here as to CCR §999.9.4. “Courts will allow a private right of action only where a statute allows one. The statute must contain clear, understandable, unmistakable terms, which strongly and directly’ indicate a private right of action is allowed.” (Lagrisola v. North American Financial Corp. (2023) 96 Cal.App.5^th 1178, 1196. Internal citations and quotation marks omitted.) Not only is there absolutely no indication of permitting a private right of action in CCR §999.9.4, the “Initial Statement of Reasons” for Title 11 aims to alleviate any burden to affected persons by placing responsibility of enforcement of Title 11 solely with the California Department of Justice. (See Initial Statement of Reasons for Title 11, Chaps. 4 & 15, pg. 39.)

In the more developed federal jurisprudence concerning the factors for implying a private right of action from a statute, the U.S. Supreme Court has noted these factors as being pertinent: “First, is the plaintiff ‘one of the class for whose especial benefit the statute was enacted’[citation omitted] . . . Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? [citation omitted, and] Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff?” (Cort v. Ash (1975) 422 U.S. 66, 78.) Applying this federal standard, the Court would also find there to be no basis for implied a private right of action under a regulatory statute to grant a new civil action for damages against the allegedly tardy registrant.

Accordingly, as the Legislature has not expressed its intent to create an express or implied private right of action and no such intent can reasonably be suggested for the type of claim asserted here in favor of the Plaintiff, the demurrer to the seventh cause of action is sustained, without leave to amend.

To set forth a claim for a violation of Business and Professions Code section 17200 (“UCL”), Plaintiff must establish Defendant was engaged in an “unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising” and certain specific acts. (Bus. & Prof. Code, § 17200.) A cause of action for unfair competition “is not an all-purpose substitute for a tort or contract action.” (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 173.)

As noted, Plaintiff donated under the impression of helping a family in need, not assisting Sofesa – the non-profit owned by Charlie and Jessica Echeverry – in purchasing a car and a home. The Complaint alleges clearly that the funds donated were to be used for one purpose, and instead, they were used for another. Prevailing plaintiffs in a UCL cause of action are generally limited to injunctive relief and restitution. (B&P Code § 17203; see ABC Internat. Traders, Inc. v. Matsushita Electric Corp. (1997) 14 Cal.4th 1247, 1268.) Plaintiffs may not receive damages, much less treble damages, or attorney fees. (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1266.) The eighth cause of action appears to allege entitlement to monetary damages in the amount of $852,000 as well as consequential damages. Accordingly, the demurrer as to the eighth cause of action is sustained, with 20 days leave to amend if Plaintiff elects to pursue one of the statutory remedies under the UCL as distinct from a claim for monetary damages.

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179, citations and paragraph break omitted.)

The cause of action of accounting here is grounded in the allegations that Defendants refused to inform Plaintiff of how much the purchased home cost (Comp., ¶14), nor why funds were spent on items never discussed. (Compl., ¶55.) Although $195,000 was allegedly returned to Plaintiff, Plaintiff contends it is still unclear how the rest of the funds were used and what else may still be owed to him. Plaintiff alleges the damages could exceed the $852,000.00 alleged in the Complaint, therefore an accounting is necessary. Accordingly, the demurrer to the ninth cause of action is overruled.

Accordingly, the demurrer filed by Defendants Charlie Echeverry aka Carlos Echeverry, Jessica Echeverry and Sofesa is SUSTAINED in part and OVERRULED in part. Moving defendant to give notice of the ruling.

[1] The Court notes that although the caption page lists the sixth cause of action as “Unlawful Solicitation”, the sixth cause of action in the body of the Complaint refers to allegations of elder abuse, while the seventh cause of action refers to allegations of Unlawful Solicitation.

[2] The Court in L.B. Research & Education Foundation v. UCLA Foundation (2005) 130 Cal.App.4^th 171 noted this power was not necessarily exclusive (See L.B., supra, at 179-182.).