Judge Ronald F. Frank, Case 23TRCV00253 2023-04-28 Tentative Ruling

Judge: Ronald F. Frank, Case: 23TRCV00253, Date: 2023-04-28 Tentative Ruling

Case Number: 23TRCV00253 Hearing Date: April 28, 2023 Dept: 8

Tentative Ruling

HEARING DATE: April 28, 2023¿

CASE NUMBER: 23TRCV00253

CASE NAME: HL Group 2 Limited Partnership v. Pacific Point Fund I, LP, et al

MOVING PARTY: Plaintiff, HL Group 2 Limited Partnership

RESPONDING PARTY: Defendant, Pacific Point Fund I, LP (no opposition filed)

TRIAL DATE: None set.

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MOTION:¿ (1) Demurrer to Answer

Tentative Rulings: (1) OVERRULED.

I. BACKGROUND¿

A. Factual¿

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On January 27, 2023, Plaintiff, HL Group 2 Limited Partnership (“Plaintiff”) filed a verified complaint against Pacific Point Fund I, LP (“Defendant”) and DOES 1 through 10. The verified complaint alleged a cause of action for promissory estoppel. This cause of action is based on the following facts: In September 2020, Borrower LOANCO allegedly took out a business-purpose loan for $1,360,000 from Defendant PPF as first lien secured by the Property. In December 2020, Borrower LOANCO apparently entered into an agreement with Plaintiff HGL2 under which Plaintiff would manage the subdivision of the Property into three residential condominium units that, upon development completion, would be sold. Pursuant to this agreement, LOANCO quitclaimed the Property to Plaintiff. Defendant’s loan went into default and it exercised its right to commence a nonjudicial foreclosure sale. The Notice of foreclosure sale was recorded on October 12, 2022 with the sale date scheduled for November 2, 2022.

With the foreclosure sale date pending, Plaintiff contacted Defendant requesting that the foreclosure be stayed. Plaintiff allegedly claimed that it had entered into sales agreements for the three subdivisions, and Defendant agreed to extend the sale. This is where Plaintiff’s and Defendant’s accounts diverge. Plaintiff contends in Paragraph 12 of its Complaint (attached as Exhibit A to the motion) that the parties entered an oral agreement as follows: “In or about October 2022, HLG2 and PPF entered into an oral agreement with PPF which provided that HLG2: (1) would pay the real estate tax arrearages and keep all tax payments on the PROPERTY current; and (2) would, at its own cost and expense, complete the work necessary for the City of Inglewood approve the subdivision of the Property into three condominium parcels; and, (3) would complete all the necessary work to complete the renovation and/or conversion of the property to the three condominium units; and (4) markets and sell the three proposed condominiums to willing buyers.”

Based on Plaintiff’s representation of imminent sales of the subdivisions, Defendant agreed to stay the foreclosure. Defendant extended the sale from November 2, 2022 to November 30, 2022 and then again from November 30 to December 28, 2022. Apparently, on December 16, 2022, agents for LOANCO recorded a deed purporting to quitclaim the Property from Plaintiff back to LOANCO. Plaintiff claims this deed was false and further that it prevented the arranged sales from being completed on the subdivisions. Plaintiff filed suit on December 20, 2022, against LOANCO based thereon with Case No. 22TRCV01540 (the “First Action”).

On March 24, 2023, Defendant filed an answer. Plaintiff now demurs to Defendant’s answer arguing that Defendant failed to allege affirmative defenses with specificity.

B. Procedural

On March 30, 2023, Plaintiff filed a demurrer to the answer. To date, no opposition has been filed.

¿II. ANALYSIS ¿

A. Legal Standard

A plaintiff may demur to a defendant’s answer within 10 days of being served with the answer (Code Civ. Proc., § 430.40, subd. (b)) on three grounds: (1) failure to state facts sufficient to constitute a defense; (2) uncertainty; or (3) failure to state whether a contract alleged in the answer is written or oral. (Id. at § 430.20). The demurrer may be to the whole answer or to any one or more of the several defenses set up in the answer. (Code Civ. Proc., §430.50, subd. (b).) The plaintiff may not demur to part of a defense. Each defense must be considered separately without regard to any other defense, and one defense does not become insufficient because it is inconsistent with other parts of the answer. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 733.)

“[W]hether an answer states a defense is governed by the same principles which are applicable in determining if a complaint states a cause of action.” (Id. at 732.) “[T]he demurrer to the answer admits all issuable facts pleaded therein and eliminates all allegations of the complaint denied by the answer.” (Id. at 733.) But unlike a demurrer to a complaint, “the defect in question need not appear on the fact of the answer” as “[t]he determination of the sufficiency of the answer requires an examination of the complaint because its adequacy is with reference to the complaint it purports to answer.” (Ibid.)

B. Discussion

Here, Defendant raises twenty-five affirmative defenses plus one “additional defense” and an “incorporation of affirmative defenses”. As to the sufficiency of defenses in general, it is a settled rule of pleading that a plea must answer all that it professes to answer. (Wallace v. Bear River Water & Mining Co. (1861) 18 Cal. 461, 464.) That is, defenses should be relevant to a plaintiff’s legal claims and averred as carefully and with as much detail as the facts constituting the corresponding causes of action in the complaint. (See FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384. Here, in response to a verified Complaint, Defendant filed a verified Answer, admitting or denying on a paragraph-by-paragraph basis each charging allegation in the Complaint. FPI Development was a summary judgment case, not a demurrer case, and the plaintiff there did not demur to the answer. The only affirmative defenses that the Third District opined in dictum to have been so insufficient that they would not have survived a demurrer were the defenses of fraud in the inducement and failure of consideration, neither of which are alleged in this case. Accordingly, FPI Development does not support the Demurrer here, although that precedent arguably would support a demurrer to a fraud defense.

In the case at bar, Plaintiff argues that Defendant’s affirmative defenses are bare legal conclusions and do not in any matter provide facts necessary to establish the defense itself. Plaintiff is correct; the affirmative defenses do not purport to allege any facts whatsoever, only conclusions. But there is no authority cited nor has the Court located one which requires specificity in factual pleading of affirmative defenses in an Answer, other than perhaps a defense of fraud which is not asserted here. Demurrers to Answers and their affirmative defenses are rare. A trial court abuses its discretion if it sustains such a demurrer without leave to amend when the circumstances and allegations in the pleadings are such that there may well be a bona fide factual dispute that could support the defenses. (See Pacific Gas & Elec. Co. v. Minnette (1949) 92 Cal.App.2d 401, 407.) Here, the Demurrer fails to identify the statutory ground under CCP § 430.20 for demurring, i.e., that the affirmative defenses does not state sufficient facts to constitute a defense to the complaint, or that the affirmative defenses are uncertain, ambiguous or unintelligible, or some other ground. An allegation of ultimate fact is generally sufficient to overcome a general demurrer. (South Shore, supra, 226 Cal.App.2d at p. 737.) In the Court’s view, it is for the discovery phase for parties to ask each other in interrogatories and other discovery for any facts that support the allegations, witnesses to those facts, and documents that evidence the same. Indeed, the Judicial Council form interrogatory 15.1 enables a plaintiff to check a box and efficiently require a defendant to state all facts upon which an affirmative defense is based, raising an inference that it is not generally expected that affirmative defenses will contain factual details to support the ultimate facts alleged in an answer.

Accordingly, the demurrer to the Answer is OVERRULED.