Judge Stephen Morgan, Case 19AVCV00259 2022-08-11 Tentative Ruling

Judge: Stephen Morgan, Case: 19AVCV00259, Date: 2022-08-11 Tentative Ruling

Department A14 Tentative Rulings

If parties are satisfied with the tentative ruling, parties may submit by emailing the courtroom at ATPDeptA14@LACOURT.ORG.

If a matter is also scheduled for a CMC, TSC, OSC, etc., an appearance is still required even if the parties are willing to submit on the tentative ruling.

Case Number: 19AVCV00259 Hearing Date: August 11, 2022 Dept: A14

Background

This is an action based in fraud. Plaintiff Soroush Janamian (“Plaintiff”) alleges that, commencing April 2013, Defendants Raman Refaei (“Raman”)[1], Hamid Refai (“Refai”), and R & A, LLC (“R&A” and, collectively, “Defendants”) (1) rented real property to Plaintiff located at 2711 E. Avenue I, Lancaster CA 93535 (“Property No. 1”); (2) a property management agreement for 2703 E. Avenue I, Lancaster, CA 93535 (“Property No. 2” and, collectively, the “Properties”); and (3) a property management agreement for 2707 E. Avenue I, Lancaster, CA 93535 (“Property No. 3”). The residential agreement was set at the rate of $300.00 per month. Plaintiff presents:

He had accepted the rental agreement and, beginning April 2013, had occupied the apartment on the second floor of Property No. 1, and paid a total of $11,400.00 ($300.00/month) in rent for the period of April 2013 through May 2016.
He entered into a two-year commercial lease agreement with Defendants to rent a mechanic shop located on the ground floor of Property No. 1 on June 01, 2016 for a security deposit of $2,000.00 and three-months’ rent, totaling $4,800.00. Plaintiff also alleges $7,000.00 was used for miscellaneous start up expenses to establish the mechanic shop.
He was employed by Defendants to manage Properties Nos. 2 and 3 and would be paid $800.00 per month for his services and that Plaintiff would be paid when Defendants sold the Properties.

Plaintiff further alleges that, in July 2016, an inspector from the City of Lancaster informed him (1) that there was no certificate of occupancy for the apartment, the apartment was illegal, the apartment lacked proper permits, and the apartment was not habitable, and (2) Property No. 1 was not zoned for a mechanic shop, had no on-site parking for automobiles, and had not been zoned commercial for 13 years. Regarding the management agreement, Plaintiff presents that Defendants knew the representations were false and have not sold the Properties. Plaintiff contends that he has suffered damages in the amount of $30,400.00.

On April 02, 2019, Plaintiff filed his Complaint alleging one cause of action for Fraud and Deceit.

On September 10, 2019, Raman filed his Answer.

On September 17, 2019, Hamid and R&A, LLC filed its Answer.

On January 24, 2020, Plaintiff retained counsel and filed his Substitution of Attorney on January 27, 2020.

Defendants former counsel was relieved on December 05, 2019 for R&A, LLC; January 07, 2020 for Hamid Refai, and substituted on March 04, 2022 for Raman.

On June 24, 2022, Raman filed a Substitution of Attorney, retaining Andrew Davis (“Davis”) as counsel.

On June 24, 2022, Raman filed his Motion for Sanctions Against Plaintiff and his Attorney Bruce T. McIntosh (“McIntosh”) (“Motion for Sanctions”).

On June 28, 2022, Raman filed his Motion for Judgment on the Pleadings (“MJOP”).

On August 01, 2022, Raman filed a Notice of Non-Opposition for each motion.

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Analysis

Standard for MJOP – A defendant may move for judgment on the pleadings when the “complaint does not state facts sufficient to constitute a cause of action against that defendant.” (Cal. Code Civ. Proc. § 438(b)(1) and (c)(1)(B)(ii).)¿

“A motion for judgment on the pleadings may be made at any time either prior to the trial or at the trial itself. [Citation.]” (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 877.) “A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. Presentation of extrinsic evidence is therefore not proper on a motion for judgment on the pleadings.” (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999 (Citations Omitted).) The standard for ruling on a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law. (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322 (citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216).)¿

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Standard for Sanctions Under 128.7 – Cal. Code Civ. Proc. § 128.7 states that a court may impose sanctions on a party or attorney that presents a pleading, petition, motion, or other similar papers in the following circumstances:¿

1) the document is presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.¿

2) the claims, defenses, and other legal contentions therein are not warranted by existing law or by a¿nonfrivolous¿argument for the extension, modification, or reversal of existing law or the establishment of new law.¿

3) the allegations and other factual contentions have no evidentiary support;¿

4) the denials of factual contentions are not warranted on the evidence.¿

(Cal. Code Civ. Proc. §128.7(b).)

Cal. Code Civ. Proc. § 128.7 permits the Court to impose monetary sanctions on an attorney or an unrepresented party that violates any one of these requirements. (Eichenbaum¿v. Alon¿(2003) 106 Cal App 4th 967, 976.)¿Cal. Code Civ. Proc. § 128.7 also permits directives of a nonmonetary nature and orders to pay a penalty into court. (Cal. Code Civ. Proc. § 128.7 (d).) The sanction imposed “shall be limited to what is sufficient to deter repetition of this conduct or comparable conduct by others similarly situated.” (Id.) In addition, section 128.7 does not require a finding of subjective bad faith; instead, it requires only that the Court find that the conduct be objectively unreasonable.¿(In re Marriage of Reese & Guy¿(1999) 73 Cal. App. 4th 1214, 1221.)¿

Under section 128.7, a court¿may¿impose sanctions if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually.¿(Bucur¿v. Ahmad¿(2016) 244 Cal.App.4th 175, 189–190.)¿A claim is factually frivolous if it is “not well grounded in fact” and is legally frivolous if it is “not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.” (Ibid.) In either case, to obtain sanctions, the moving party must show the party's conduct in asserting the claim was objectively unreasonable. (Ibid.) A claim is objectively unreasonable if “any reasonable attorney would agree that [it] is totally and completely without merit.” (Ibid.) However, “section 128.7 sanctions should be ‘made with restraint’ [Citation], and are not mandatory even if a claim is frivolous.” (Peake v. Underwood¿(2014) 227 Cal.App.4th 428. at 448.)¿

The Legislature enacted section 128.7 based on rule 11 of the Federal Rules of Civil Procedure (28 U.S.C.), as amended in 1993 (rule 11). (Musaelian¿v. Adams¿(2009) 45 Cal.4th 512, 518, fn. 2.) As a result, federal case law construing rule 11 is persuasive authority on the meaning of section 128.7. (Guillemin v. Stein¿(2002) 104 Cal.App.4th 156, 168.) Under rule 11, even though an action may not be frivolous when it is filed, it may become so if later-acquired evidence refutes the findings of a prefiling investigation and the attorney continues to file papers supporting the client's claims. (Childs v. State Farm¿Mut. Auto. Ins. Co.¿(5th Cir.1994) 29 F.3d 1018, 1025.) Because of this, a plaintiff's attorney cannot “just cling tenaciously to the investigation he had done at the outset of the litigation and bury his head in the sand.” (Ibid.) This requires an attorney to conduct a reasonable inquiry to determine if his or her client's claim was well-grounded in fact and to take into account the adverse party's evidence. (Ibid.)¿

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Meet and Confer Requirement – Before filing a MJOP, the moving party is required to meet and confer with the party who filed the pleading subject to the MJOP for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the MJOP or Motion to Strike.¿ (Cal. Code Civ. Proc. § 439 and § 435.5.)¿¿The meet and confer is to be either in person or by telephone. (Ibid.) The moving party shall file and serve with the MJOP a declaration stating either: (1) the means by which the moving party met and conferred with the party who filed the pleading subject to the motion for judgment on the pleadings, and that the parties did not reach an agreement resolving the claims raised by the motion for judgment on the pleadings or (2) that the party who filed the pleading subject to the motion for judgment on the pleadings failed to respond to the meet and confer request of the moving party or otherwise failed to meet and confer in good faith. (Cal. Code Civ. Proc. § 439(a)(3).)

The Court highlights that no declaration has of Davis has been attached. Despite this procedural error, Davis has attached to the MJOP Exh. 1 a string of emails showing a meet and confer attempt between the parties. It appears that the parties did not communicate with each other. “A determination by the court that the meet and confer process was insufficient shall not be grounds to grant or deny the motion for judgment on the pleadings.” (Id. at (a)(4).) The Court analyzes the MJOP on its merits.

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Discussion

Application –

MJOP

Raman presents that (1) there are no facts pleaded that he engaged in any purported fraudulent conduct towards Plaintiff, (2) Plaintiff has failed to allege fraud with the requisite specificity; (3) Plaintiff has and cannot allege the requisite element of a duty owed to Plaintiff by Raman, and (4) Plaintiff has failed to plead the requisite element of reliance on any alleged misrepresentation by Raman. Specifically, Raman highlights that fraud must be specifically plead, i.e., general pleadings of legal conclusions of fraud are insufficient, the facts constituting the fraud must be alleged, every element of the cause of action for fraud must be alleged in the proper manner (i.e., factually and specifically), and the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect. (See Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) Raman also presents that the heightened pleading standard requires Plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (See Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157 (“Tarmann”).)

Raman contends that the Complaint is devoid of any allegations regarding himself specifically and those actions that are alleged are conclusory. Thus, Plaintiff’s Fraud and Deceit cause of action is legally defective.

“The elements of common law fraud are: ‘(1) a misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter); (3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting damage.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990 [22 Cal. Rptr. 3d 352, 102 P.3d 268].)’ ” (AREI II Cases (2013) 216 Cal. App. 4th 1004, 1021-1022. See also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974) “To withstand demurrer, facts constituting every element of fraud must be alleged with particularity.” (Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 35.) Tarmann holds:

"Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made." (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109 [128 Cal.Rptr. 901]; Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217 [197 Cal.Rptr. 783, 673 P.2d 660]; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 [269 Cal.Rptr. 337].

The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Archuleta v. Grand Lodge etc. of Machinists (1968) 262 Cal.App.2d 202, 208-209 [68 Cal.Rptr. 694]; Gautier v. General Telephone Co. (1965) 234 Cal.App.2d 302, 308 [44 Cal.Rptr. 404]; Mason v. Drug, Inc. (1939) 31 Cal.App.2d 697, 703 [88 P.2d 929]; Sanders v. Ford Motor Co. (1979) 96 Cal.App.3d Supp. 43, 46 [158 Cal.Rptr. 656]; see Grossman & Van Alstyne, California Practice (2d ed. 1976) § 984, pp. 111-114.)

(Tarmann, supra, 2 Cal.App.4th 153, 157.)

Tarmann remains binding case precedent.

Here, Plaintiff has alleged that Defendants, together, provided misrepresentations regarding the Properties and the reliance of such statements lead Plaintiff to enter into three agreements between the parties (i.e., two rental agreements and one property management agreement). The pleadings must be further delineated to achieve the specificity required for pleadings of fraud and deceit.

Accordingly, Raman’s MJOP is GRANTED.

Motion for Sanctions

Raman presents the same reasoning as in his MJOP for his Motion for Sanctions. Raman concludes that, because of these deficiencies, the instant action is frivolous and pursued in bad faith, thus sanctions are justified.

The Court does not find that the Complaint, as pled is neither frivolous nor without merit. It appears that there may be a basis for Fraud and Deceit from the allegations. However, the Court cannot tell which defendant(s) the allegations apply to.

Raman has not met his burden to show that the Fraud and Deceit claim is objectively unreasonable.

Accordingly, Raman’s Motion for Sanctions is DENIED.

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Leave to Amend

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy¿(1976), 18 Cal.3d 335, 348.) While under California law leave to amend is liberally granted, “leave to amend should not be granted where, in all probability, amendment would be futile.” (Vaillette v. Fireman's Fund Ins. Co. (1993), 18 Cal. App. 4th 680, 685). “A trial court does not abuse its discretion when it sustains a demurrer without¿leave to amend¿if either (a) the facts and the nature of the claims are clear and no liability exists, or (b) it is probable from the nature of the defects and previous unsuccessful attempts to plead that the plaintiff cannot state a claim.” (Cantu v. Resolution Trust Corp.¿(1992)¿4 Cal.App.4th 857, 889.)¿¿¿¿

Here, it appears that an amendment may remedy the deficiencies in the current Complaint. As such, the Court grants leave to amend.

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Conclusion

Plaintiff Raman Refaei’s Motion for Judgment on the Pleadings is GRANTED with 30 days’ leave to amend.

Plaintiff Raman Refaei’s Motion for Sanctions Against Plaintiff Souroush Janamian and His Attorney Bruce McIntosh is DENIED.

[1] Due to the similarities in Defendants’ surnames, the Court addresses individuals by their first names for purposes of clarity.