Judge Salvatore Sirna, Case Number: 23PSCV03069, Date: 2024-05-13 Tentative Ruling

Judge: Salvatore Sirna, Case: 23PSCV03069, Date: 2024-05-13 Tentative Ruling

Case Number: 23PSCV03069 Hearing Date: May 13, 2024 Dept: G

Defendant Dean Ziroli’s Demurrer to Plaintiffs Vida Arbab and Jeffrey Nader’s Complaint

Respondent: Plaintiff Vida Arbab and Jeffrey Nader

Defendant Dean Ziroli’s Motion to Strike As To Portions of Plaintiffs Vida Arbab and Jeffrey Nader’s Complaint

Respondent: Plaintiff Vida Arbab and Jeffrey Nader

TENTATIVE RULING

Defendant Dean Ziroli’s Demurrer to Plaintiffs Vida Arbab and Jeffrey Nader’s Complaint is OVERRULED.

Defendant Dean Ziroli’s Motion to Strike As To Portions of Plaintiffs Vida Arbab and Jeffrey Nader’s Complaint is DENIED.

Defendant Dean Ziroli to Answer the Complaint in ten (10) days.

BACKGROUND

This is an action for fraud and negligence. In April 2016, Defendants Clement Ziroli and Hacienda Equity Corporation (Hacienda) acquired a property in Los Angeles County (Subject Property) for short-term investment purposes and transferred the Subject Property to the Ziroli Trust. Subsequently, Defendants Dean Ziroli, Clement Ziroli, and Hacienda engaged in renovations of the Subject Property by adding two additional bedrooms. Plaintiffs Vida Arbab and Jeffrey Nader then purchased the Subject Property for $1,575,000.00. In June 2023, Arbab and Nader discovered the renovations had concealed an indoor pool which resulted in moisture and noxious odors invading the Subject Property. They also allege they discovered the renovations were unpermitted.

On October 4, 2023, Arbab and Nader filed a complaint against Dean Ziroli, individually and as trustee of the Ziroli Trust; Clement Ziroli; Hacienda; Bill Abalos, doing business as Inspection Pro Home Inspectors; and Does 1-100, alleging the following causes of action: (1) fraudulent concealment, (2) unjust enrichment, and (3) negligence.

On March 21, 2024, Arbab and Nader dismissed Abalos from the present action.

On April 8, 2024, Arbab and Nader dismissed their second cause of action for unjust enrichment from their Complaint which is mislabeled as the “third cause of action.”

On April 10, 2024, Dean Ziroli filed the present demurrer and motion to strike. Prior to filing on April 4, Dean Ziroli’s counsel met and conferred telephonically with Arbab and Nader’s counsel and was unable to reach a resolution. (Setian Decl., ¶ 3.) On April 10, 2024, Clement Ziroli and Hacienda also filed a notice of joinder to Dean Ziroli’s demurrer and motion to strike.

On April 25, 2024, Arbab and Nader dismissed Clement Ziroli and Hacienda from the Complaint.

A hearing on the demurrer and motion to strike is set for May 13, 2024, along with a case management conference.

ANALYSIS

Ziroli demurs to Arbab and Nader’s first cause of action for fraudulent concealment on the grounds that the Complaint fails to allege fraud with the required specificity. For the following reasons, the Court OVERRULES Ziroli’s demurrer.

Legal Standard

Demurrer

A party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “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.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, at p. 747.)

Fraud

“[T]he elements of a cause of action for fraud based on concealment are: ‘(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’” (Kaldenbach v. Mutual of Omaha Life Ins. Co. (2009) 178 Cal.App.4th 830, 850, quoting Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 665-666.) Furthermore, 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.)

Discussion

Ziroli first argues the Complaint fails to establish how Ziroli was under a duty to disclose. (Demurrer, p. 4:4-9.) Generally, one party’s failure to disclose material facts unknown to another party is not fraud unless “unless there is¿some relationship¿between the parties which gives rise to a duty to disclose such known facts.” (LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 337, quoting BAJI No. 12.36 (8th ed. 1994.) “In transactions which do not involve fiduciary or confidential relations, a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead;¿(2)¿the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff;¿(3) the defendant actively conceals discovery from the plaintiff.” (Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294.)

In this case, the Complaint alleges Ziroli “represented in signed agreements during escrow that there were no code violations pending.” (Complaint, ¶ 22.) The Complaint further alleges Ziroli failed to disclose that the absence of pending code violations was a result of no permits being requested or inspections conducted. (Complaint, ¶ 22.) Because the alleged failure to obtain permits and inspections affects the meaning and weight of the claim that there were no pending code violations, the Complaint adequately alleges Ziroli had a duty to disclose.

Ziroli next contends the Complaint fails to allege Ziroli’s alleged misrepresentations with specificity. In alleging a cause of action for fraud, “[t]he specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

Here, the Complaint alleges Ziroli made representations about the absence of pending code violations in “signed agreements during escrow.” (Complaint, ¶ 22.) Ziroli contends this allegation is insufficient because it does not specify what the signed agreement was. (Demurrer, p. 4:12-15.) But elsewhere, the Complaint clarifies that the documents executed during escrow were seller disclosures. (Complaint, ¶ 25.) Thus, the court finds the Complaint adequately pleads Ziroli’s alleged representations with the required specificity.

Last, Ziroli maintains the Complaint fails to demonstrate how Arbab and Nader reasonably relied on Ziroli’s alleged representations as it fails to show to that they could not have determined the existence of the alleged Subject Property issues prior to purchase and close of escrow. (Demurrer, p. 5:8-11.) But the Complaint does allege so. It alleges the concealment was “so thorough that the true condition of the property was not apparent to Plaintiffs or their real estate agent.” (Complaint, ¶ 27.) Thus, the court finds the Complaint adequately alleges the reliance element of fraudulent concealment.

Accordingly, Ziroli’s demurrer to this cause of action is OVERRULED.

MOTION TO STRIKE

Ziroli moves to strike Arbab and Nader’s request for punitive damages from the Complaint on the grounds that the first cause of action for fraudulent concealment is insufficiently pled. (Motion, p. 3:15-22.) Because this motion is made upon the same grounds as the demurrer, it is DENIED for the reasons noted above.

CONCLUSION

Based on the foregoing, Ziroli’s demurrer to Arbab and Nader’s Complaint is OVERRULED.

Furthermore, Ziroli’s motion to strike is DENIED on the same grounds.

Defendant Dean Ziroli to Answer the Complaint in ten (10) days.