Judge Stephen Morgan, Case Number: 22AVCV00187, Date: 2023-08-15 Tentative Ruling

This is a breach of contract action. Plaintiff Patricia Woodward (“Plaintiff”), daughter to Spencer Wallace, Jr. (“Mr. Wallace”), alleges that Mr. Wallace informed Defendant Janice Wallace (“Wallace”), wife of Mr. Wallace until his passing, that his property located at 2534 Carmina Ave., Los Angeles, CA 90016 (the “Property”) was to be given to Plaintiff upon his passing. Plaintiff contends that this was told to Wallace on several occasions and Mrs. Wallace acknowledged to Plaintiff that the house would go to her. Plaintiff further alleges that this intention was also codified in a writing when Wallace sent Plaintiff an acknowledgement of full distribution that gave Plaintiff 100% legal and equitable title in the Property (Exhibit 2) and by a follow up letter on or around November 2021 (Exhibit 3). Plaintiff believes that Wallace willfully and intentionally conspired with other defendants and sold the property below its actual value.

The operative pleading is the Second Amended Complaint (“SAC”) which alleges 14 causes of action for: (1) Breach of Contract against Defendants Cedric Age (“Age”), ACE Realty (“ACE”), and Federal Escrow Inc. (“Federal Escrow”); (2) Breach of Contract against Wallace; (3) Breach of Fiduciary Duties against all defendants; (4) Conversion against all defendants; (5) Fraud – Concealment against all defendants; (6) Fraud – Misrepresentation against all defendants; (7) Negligence against all defendants; (8) Negligent Infliction of Emotional Distress (“NIED”) against all defendants; (9) Intentional Infliction of Emotional Distress (“IIED”) against all defendants; (10) Breach of Good Faith and Fair Dealing against all defendants; (11) Quiet Title against Defendant Tiger 11 Inc. (“Tiger 11”); (12) Unjust Enrichment against all defendants; (13) Violation of Business and Professions Code § 17200 against all defendants; and (14) Declaratory Relief against all defendants.

On July 25, 2023, Wallace filed this Demurrer. The Court notes that the hearing is reserved as a Demurrer with Motion to Strike; however, the only filing from Wallace is a Demurrer.

Standard for Demurrer – A demurrer for sufficiency tests whether the complaint states a cause of action.¿ (Hahn v.¿Mirda¿(2007) 147 Cal. App. 4th 740, 747.) ¿When considering demurrers, courts read the allegations liberally and in context.¿ (Taylor v. City of Los Angeles Dept. of Water and Power¿(2006) 144 Cal. App. 4th 1216, 1228.)¿ In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice.¿ (Cal. Code Civ. Proc. § 430.30(a).)¿A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.¿ (SKF Farms v. Superior Court¿(1984) 153 Cal. App. 3d 902, 905.)¿ Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.¿¿(Ibid.)¿¿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,¿147 Cal.App.4th at 747.)¿¿¿¿¿¿¿¿¿

A general demurrer admits the truth of all factual, material allegations properly pled in the challenged pleading, regardless of possible difficulties of proof.¿¿(Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿ Thus, no matter how unlikely or improbable, plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer.¿¿(Del E. Webb Corp. v. Structural Materials Co.¿(1981) 123 Cal.App.3d 593, 604.)¿ Nevertheless, this rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken.¿¿(Vance v. Villa Park¿Mobilehome¿Estates¿(1995) 36 Cal.App.4th 698, 709.)¿A general demurrer does not admit contentions, deductions, or conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.¿¿(Blank,¿supra, 39 Cal.3d at p. 318.)¿¿¿¿¿¿¿¿¿¿

Pursuant to¿Code Civ. Proc.¿§430.10(e), the party against whom a complaint has been filed may object by demurrer to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action.¿ It is an abuse of discretion to sustain a demurrer without leave to amend if there is a reasonable probability that the defect can be cured by amendment.¿¿(Schifando¿v. City of Los Angeles¿(2003) 31 Cal.4th 1074, 1082,¿as modified (Dec. 23, 2003).)¿¿¿¿¿¿¿¿¿¿

Meet and Confer Requirement– Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike 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 demurrer. (Cal. Code Civ. Proc. §§ 430.41 and 435.5.) There is no declaration from Wallace’s counsel, Josue Guerrero (“Guerrero”). Ordinarily, the Court would order Guerrero and Plaintiff’s counsel to meet and confer prior to addressing this Demurrer due to the requirements set by Cal. Code Civ. Proc. § 430.41; however, due to the nature of this action and the fact that all demurrers from other parties have been addressed at this time, the Court addresses this Demurrer on its merits to further the interests of justice. (See also Cal. Code Civ. Proc. § 430.41(a)(4) [“A determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.”].)

Application – Wallace demurs to the Second Cause of Action (Breach of Contract), Third Cause of Action (Breach of Fiduciary Duties), Fourth Cause of Action (Conversion), Fifth Cause of Action (Fraud – Concealment), Sixth Cause of Action (Fraud – Misrepresentation), Seventh Cause of Action (Negligence), Eighth Cause of Action (NIED), Ninth Cause of Action (IIED), Tenth Cause of Action (Breach of Good Faith and Fair Dealing), Eleventh Cause of Action (Quiet Title); Twelfth Cause of Action (Unjust Enrichment) and Fourteenth Cause of Action (Declaratory Relief).

First, the Court will not address the Eleventh Cause of Action (Quiet Title). The Eleventh Cause of Action (Quiet Title) is not brought against Wallace, but rather Tiger 11.

Second, the Court must address the SAC’s pleading of conspiracy. Wallace has provided no argument in her Demurrer as to the conspiracy allegations.

Civil conspiracy is “a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. [] By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. [] In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.) The elements of conspiracy are: "(1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct." (Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1581.) "[A]ctual knowledge of the planned tort, without more, is insufficient to serve as the basis for a conspiracy claim. Knowledge of the planned tort must be combined with intent to aid in its commission.” (Id. at p. 1582.)

Woodward is informed and believes and thereon alleges that Defendants entered a conspiracy to fraudulently transfer the Property, which rightfully belonged to Woodward, without her permission. Defendants were successful with their conspiracy as a grant deed was signed, on or around December 21, 2021, granting ownership of the Property to Tiger. Said deed was record on or around January 25, 2022. (See Exhibit 6.)

The culmination of the sale and/or conspiracy could not have been executed without Federal.

The pleadings show that Wallace acted as a trustee and informed Plaintiff that she would modify the trust, distributing “all title, rights and obligations” to the Property to Plaintiff. (SAC Exh. 2.) Despite, this Wallace then reached out to Age. The Complaint alleges that Age does business as ACE Realty and is an owner or director of Tiger 11. (See SAC [generally], Exh. 7, Exh. 9.) “The broker as a fiduciary has a duty to learn the material facts that may affect the principal's decision. He is hired for his professional knowledge and skill; he is expected to perform the necessary research and investigation in order to know those important matters that will affect the principal's decision, and he has a duty to counsel and advise the principal regarding the propriety and ramifications of the decision. The agent's duty to disclose material information to the principal includes the duty to disclose reasonably obtainable material information. [¶]… [¶] The facts that a broker must learn, and the advice and counsel required of the broker, depend on the facts of each transaction, the knowledge and the experience of the principal, the questions asked by the principal, and the nature of the property and the terms of sale. The broker must place himself in the position of the principal and ask himself the type of information required for the principal to make a well-informed decision. This obligation requires investigation of facts not known to the agent and disclosure of all material facts that might reasonably be discovered.” (Miller & Starr, Real Estate Law 2d, Agency, § 3.17, pp. 94, 96-97, 99.) Furthermore, a broker " '… cannot accept information received from others as being true, and transmit it to the principal, without either verifying the information or disclosing to the principal that the information has not been verified. Because of the fiduciary obligations of the broker, the principal has a right to rely on the statements of the broker, and if the information is transmitted by the broker without verification and without qualification, the broker is liable to the principal for negligent misrepresentation." (Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 562-63.) The pleadings also show that Plaintiff had, at some point, ownership or an interest in the Property. (See SAC [generally], Exh. 1.) Thus, a reasonable inference is that Age, in order not to breach his fiduciary duty to Wallace, has knowledge of the material facts related to the Property and relayed such knowledge to Wallace as his principal. Tiger 11, the buyer who has relations to Age, purchased the Property below market value. (See SAC ¶ 120, Exh. 6.) Tiger 11, the buyer who has relations to Age, purchased the Property below market value. (See SAC ¶ 120, Exh. 6.) The Property was sold prior to Plaintiff’s signing of the Quitclaim Deed, resulting in damages in the form of Plaintiff’s lost interest in the Property. (See SAC Exh. 6, Exh. 8.) Further, an appraisal document from an unaffiliated entity showed: (1) the Property was acquired by Tiger 11 from Wallace, in the trust, on January 25, 2022 for $2,250,000 and then transferred back to Wallace, in the trust, on January 27, 2022 with no details. (See SAC Exh. 5.) Thus, it appears from the pleadings that Wallace participated in an alleged conspiracy or, at least, had prior knowledge or agreed to the acts committed by Age, ACE, Tiger 11, and/or Federal.

Wallace argues that the SAC fails to state any facts as to an enforceable contract. Wallace highlights that Plaintiff has stated that “she entered into two unilateral written agreements with Wallace[]” and that the agreements are: (1) the Trust, and (2) the Receipt of Final Distribution (See SAC ¶¶ 92-94.) Wallace argues that neither of these documents are recognized contracts binding Plaintiff or Wallace to certain actions.

Plaintiff argues that she has clearly alleged facts establishing a contract between Wallace and herself through the Trust and the Receipt of Final Distribution. Plaintiff presents that Wallace has not shown how these documents are not contracts. Plaintiff emphasizes that the SAC shows that Wallace created an implied in fact contract and Plaintiff has pled the required elements. Plaintiff concedes that there can be no implied in fact contract where the subject is already covered by written contract, but argues that she is not trying to collect damages on both. It appears Plaintiff is trying to make an argument that the implied in fact contract is an alternative theory at the pleading stage only.

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) “A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.” (Cal. Civ. Code § 1559.) To that end, a plaintiff must allege the following in order to plead a proper claim for breach of contract by third party beneficiary: "(1) whether the third party would in fact benefit from the contract, but also (2) whether a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) whether permitting a third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties." (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830; see also Kalmanovitz v. Bitting (1996) 43 Cal.App.4th 311, 314 ["While it is not necessary that a third party be specifically named, the contracting parties must clearly manifest their intent to benefit the third party"].)

It is recognized in California law that a trust creates a third-party beneficiary contract:

A declaration of trust constitutes a contract between the trustor and the trustee for the benefit of a third party. The trustor declares that he will transfer certain property to a trustee if the trustee agrees to use and dispose of the property and its proceeds in a manner designated by the trustor for the benefit of third parties. There is in this situation an offer by the trustor and an acceptance by the trustee. The mutual consent of the parties to the express declaration of trust constitutes a contract between them, each having rights and obligations which may be enforced by the other and by the beneficiary designated in the contract.

This legal situation is recognized by section 2218 of the Civil Code which reads as follows:

"Parties to the Contract. The person whose confidence creates a trust is called a trustor; the person in whom the confidence is reposed is called the trustee; and the person for whose benefit the trust is created is called the beneficiary."

In legal contemplation a declaration of trust is nothing other than a third party beneficiary contract. This principle was recognized in the case of In re Guasti's Estate, 117 Cal.App.2d 612 [256 P.2d 629], where a testamentary trust was involved and the same was interpreted as involving a contract between the trustor and the trustee.

In re Whitney's Estate, 78 Cal.App. 638 [248 P. 754], also recognized the testamentary trust as constituting a contract. At page 649 the court said: "Their [the trustees] acceptance of the trust will be held as an agreement to receive such compensation as the instrument directs."

Third-party beneficiary status may be determined as a question of law if there is no conflicting extrinsic evidence. (See, e.g., Kalmanovitz v. Bitting (1996) 43 Cal.App.4th 311, 315.) There is no conflicting evidence that a Trust was made that vested 10% of title and ownership to the property in Plaintiff. (See SAC [generally], Exh. 1.) Wallace is a trustee, as is deceased Mr. Wallace, and Plaintiff is a primary beneficiary. Thus, a written contract exists wherein Plaintiff is a third-party beneficiary.

Further, upon the passing of Mr. Wallace, Wallace provided Plaintiff with a Receipt of Final Distribution through her attorney Marc K. Herbert, which reads, in relevant part:

I, PATRICIA ANN WOODWARD, state that I am a named Beneficiary of the above-entitled Trust. Due to the passing of SPENCER BRACY WALLACE JR, one of the Settlors, JANICE LOUISE WALLACE, as the surviving Settlor and surviving Trustee has agreed to modify the terms of this Trust and to make full and final distribution of my inheritance at this time.

I hereby acknowledge receipt of this full and final distribution and the transfer of all title, rights and obligations to the real property, commonly known as 2534 Carmona Avenue, City of Los Angeles, State of California (Assessor Parcel Number 5048-001-043), from the surviving Settlor and Trustee, JANICE LOUISE WALLACE.

“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.” (City of Moorpark v. Moorpark Unified School Dist. (1991) 54 Cal.3d 921, 930.) Under basic contract law “ ‘[a]n offer must be sufficiently definite, or must call for such definite terms in the acceptance that the performance promised is reasonably certain.’ ” (Ladas v. California State Automobile Assn. (1993) 19Cal.App.4th 761, 770.) “[T]erms proposed in an offer must be met exactly, precisely and unequivocally for its acceptance to result in the formation of a binding contract; and a qualified acceptance amounts to a new proposal or counteroffer putting an end to the original offer.” (Panagotacos v. Bank of America (1998) 60 Cal.App.4th 851,855-856.) Thus, the SAC has alleged that Wallace presented an offer in the form of “all title, rights and obligations” to the Property to Plaintiff and Plaintiff accepted the offer. (Ibid.) A general demurrer admits the truth of all factual, material allegations properly pled in the challenged pleading, regardless of possible difficulties of proof.¿¿(Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

As pled, a contract does exist between Wallace and Plaintiff, the Trust was effective upon Mr. Wallace’s passing (SAC Exh. 1), Wallace modified the distribution of the Trust (SAC Exh. 2), Plaintiff accepted the modification (ibid.), Wallace breached the modification by selling the Property to Tiger 11 (SAC [generally], Exh. 6), and damages occurred in the form of Plaintiff’s ownership and/or interest in the Property (SAC [generally]). The Court notes that such a pleading also satisfies the Goonewardene requirements for third-party beneficiaries. (See Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830 [a plaintiff must allege the following in order to plead a proper claim for breach of contract by third party beneficiary: “(1) whether the third party would in fact benefit from the contract, but also (2) whether a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) whether permitting a third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.”].)

Wallace also provides an argument for implied in fact contracts. Wallace presents that nothing was ever written or orally agreed to, so there is no implied in fact contract to enforce. Wallace also argues if an implied in fact contract existed, it would violate the Statute of Frauds for being a verbal contract and/or such a verbal contract would make it impossible to determine the nature of the contract and its enforceability. Wallace then discusses the Goonewardene requirements and argues that the requirements are not met for any alleged implied in fact contract. Wallace also argues that Plaintiff is not an owner to the Property.

California law permits plaintiffs to plead inconsistent or alternative counts. (Rader Co. v. Stone (1986) 178 Cal. App. 3d 10, 29.) It appears that Plaintiff is pleading an implied in fact contract as an alternate theory.

“A cause of action for breach of implied contract has the same elements as does a cause of action for breach of contract, except that the promise is not expressed in words but is implied from the promisor's conduct.” (Yah v. Producers Guild of America, Inc. (2008) 161 Cal.App.4th 172, 182.) The Court incorporates the elements of a contract, ante, for the discussion of the implied contract.

It appears from the SAC that the actions of Wallace (i.e., the Receipt of Final Distribution) are enough to sustain an intent to promise the “all title, rights and obligations” to the Property to Plaintiff. (See Exh. 2; see also Division of Labor Law Enforcement v. Transpacific Transportation Co. (1977) 69 Cal.App.3d 268, 275 [“As to the basic elements [of a contract cause of action], there is no difference between an express and implied contract. . . . While an implied in fact contract may be inferred from the conduct, situation or mutual relation of the parties, the very heart of this kind of agreement is an intent to promise.”].) In return, Plaintiff would forego any other inheritance in the trust. (Ibid.) Plaintiff assented and signed the Receipt of Final Distribution. (Ibid.) Further, the formation of an implied contract can become an issue for the jury to decide: “Whether or not an implied contract has been created is determined by the acts and conduct of the parties and all the surrounding circumstances involved and isa question of fact.” (Del E. Webb Corp. v. Structural Materials Co. (1981) 123Cal.App.3d 593, 611.)

It appears, at this stage, that the pleadings support an implied in fact contract (see ante), breach (selling of the property to Tiger 11, as pled in the SAC and supported by Exh. 6), and damages in the loss of Plaintiff’s ownership and/or interest in the Property (see SAC [generally].)

Accordingly, the SAC has sufficiently pled a cause of action for breach of contract between Wallace and Plaintiff.

Wallace argues that though there was a fiduciary duty between herself and Plaintiff, the duty ended when Plaintiff signed the Grant Deed. Thus, Wallace believes that no further obligation was owed to Plaintiff aside from providing Plaintiff with 10% of the proceeds from the sale, which she did. Wallace further argues that any act and omission as outlined above in SAC as pled in paragraph 103(a) is not detailed to show that Wallace participated in any act that would “destroy any fiduciary duty.” (Demurrer 10:23-24.)

Plaintiff argues that she has sufficiently pled facts showing that Wallace owed her a duty of care, including a contractual relationship and a trustee beneficiary relationship, and such facts must be taken into consideration for this cause of action.

The Court notes that it cannot consider certain arguments Wallace has presented for this cause of action as they argue the allegations of the SAC and, as such, are not appropriate. (See Demurrer 11:1-4.)

“‘The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.’” (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932.)

Both parties agree that Wallace had a fiduciary duty as trustee to Plaintiff, a beneficiary of the trust.

Wallace’s argument is not well taken by the Court. The Quitclaim Deed, between Wallace and Plaintiff, shows the date of January 25, 2022 (SAC Exh. 8) whereas the Grant Deed, between Wallace and Tiger 11, shows a date of December 21, 2021 (SAC Exh. 6). Further, the documents attached to the Complaint show that the Property was acquired by Tiger 11 from Wallace, in the trust, on January 25, 2022 for $2,250,000 and then transferred back to Wallace, in the trust, on January 27, 2022 with no details. (See SAC Exh. 5). The exhibits, which have been incorporated into the SAC, support a reasonable inference that (1) Wallace participated in a conspiracy related to the sale of the Property with Defendants Age, ACE, Tiger, and/or Federal prior to Plaintiff’s signing of the Quitclaim Deed, and (2) at least one breach of fiduciary duty occurred prior to the signing of the Quitclaim Deed while Wallace owed Plaintiff a fiduciary duty.

The Court notes that the Restatement (Second) of Torts Section 874 treats breach of fiduciary duty as a tort that subjects a fiduciary to liability to the beneficiary for harm caused by the breach. The Court turns to California case law for the application of conspiracy to breach of fiduciary duty:

Some courts, noting the close relationship between conspiracy and aiding and abetting, have suggested that the law should treat conspiracy to breach a fiduciary duty and aiding and abetting a breach of fiduciary duty similarly. For example, in In re County of Orange (Bankr. C.D.Cal. 1996) 203 B.R. 983, citing Applied Equipment Corp. and Kidron, the court stated that it saw “no reason for treating the vicarious tort of aiding and abetting breach of a fiduciary duty differently from that of conspiracy to breach a fiduciary duty. ‘Conspiracy is a concept closely allied with aiding and abetting. A conspiracy generally requires agreement plus an overt act causing damage. Aiding and abetting requires no agreement, but simply assistance. The common basis for liability for both conspiracy and aiding and abetting, however, is concerted action.’” (Id. at p. 999, quoting Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 78 [53 Cal. Rptr. 2d 741].) In Howard v. Superior Court (1992) 2 Cal.App.4th 745 [3 Cal. Rptr. 2d 575] the issue was whether a client attempting to plead a cause of action for aiding and abetting against an attorney had to comply with Civil Code former section 1714.10, which required the plaintiff to obtain a court order before pleading such a civil conspiracy claim. The court noted that “[i]n the abstract, there may be a distinction between an aiding and abetting cause of action and one for civil conspiracy,” but held that because the alleged conduct fell “within the ambit” of the statute, the statute applied to the plaintiff's aiding and abetting claim. (Howard, at p. 749, fn. omitted.) And in K & S Partnership v. Continental Bank, N.A. (8th Cir. 1991) 952 F.2d 971, the court stated, “[k]nowing participation in a breach of fiduciary duty ‘is analogous to a cause of action … for aiding and abetting a securities fraud,’ where the primary violation involves a breach of fiduciary duty. [Citation.] Likewise, liability for civil conspiracy is in substance the same thing as aiding and abetting liability. Civil conspiracy requires an agreement to participate in an unlawful activity and an overt act that causes injury, so it ‘does not set forth an independent cause of action’ but rather is ‘sustainable only after an underlying tort claim has been established.’ [Citations.]” (Id. at p. 980.)

California law, however, does not treat conspiracy to breach a fiduciary duty and aiding and abetting a breach of fiduciary duty similarly. In Casey v. U.S. Bank Nat. Assn., supra, 127 Cal.App.4th 1138, on which the trial court relied, a trustee in bankruptcy sued three banks, alleging that they aided and abetted the fiduciaries of the bankrupt corporation in a scheme to divert funds from the corporation. One of the causes of action was aiding and abetting a breach of fiduciary duty. (Id. at pp. 1141–1142.) Citing this court's opinion in Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 846 [33 Cal. Rptr. 2d 438], the court in Casey observed that “California has adopted the common law rule for subjecting a defendant to liability for aiding and abetting a tort. ‘“Liability may … be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person.” [Citations.]’ [Citation.]” (Casey, supra, at p. 1144.) The trustee in Casey attempted to allege liability under the first theory, and the banks challenged the sufficiency of the allegations of “‘substantial assistance.’” (Casey, at p. 1145.) The court noted “that liability for aiding and abetting depends on proof the defendant had actual knowledge of the specific primary wrong the defendant substantially assisted.” (Ibid.) The court concluded that the trustee had failed to allege facts showing that the banks knew the fiduciaries were misappropriating corporate funds. Thus, the trustee failed to state a cause of action for aiding and abetting a breach of fiduciary duty. (Id. at p. 1153.)

Citing Casey, Saunders, and the Restatement Second of Torts, the court in Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802 [32 Cal. Rptr. 3d 325] explained: “Despite some conceptual similarities, civil liability for aiding and abetting the commission of a tort, which has no overlaid requirement of an independent duty, differs fundamentally from liability based on conspiracy to commit a tort. [Citations.] ‘“[A]iding-abetting focuses on whether a defendant knowingly gave ‘substantial assistance’ to someone who performed wrongful conduct, not on whether the defendant agreed to join the wrongful conduct.” [¶] … [W]hile aiding and abetting may not require a defendant to agree to join the wrongful conduct, it necessarily requires a defendant to reach a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act. …’ [Citation.] The aider and abetter's conduct need not, as ‘separately considered,’ constitute a breach of duty. [Citations.]” (Id. at pp. 823–824, fn. 10.)

In Neilson v. Union Bank of California, N.A. (C.D.Cal. 2003) 290 F.Supp.2d 1101, the court thoroughly reviewed California case law and concluded that under California law a defendant can be liable for aiding and abetting a breach of fiduciary duty in the absence of an independent duty owed to the plaintiff. (Id. at p. 1135.) After noting that conspiracy and aiding and abetting “are closely allied forms of liability,” the court found that “[n]o California case, however, holds that a party must owe the plaintiff a duty before he or she can be held liable as an aider and abettor. Rather, California cases outlining the elements of aiding and abetting liability have consistently cited the elements of the tort as they are set forth in the Restatement (Second) of Torts, § 876, and have omitted any reference to an independent duty on the part of the aider and abettor. Under this formulation, liability may properly be imposed on one who knows that another's conduct constitutes a breach of duty and substantially assists or encourages the breach.” (Id. at p. 1133.)

The Neilson court explained why this is so: “Unlike a conspirator, an aider and abettor does not ‘adopt as his or her own’ the tort of the primary violator. Rather, the act of aiding and abetting is distinct from the primary violation; liability attaches because the aider and abettor behaves in a manner that enables the primary violator to commit the underlying tort. [Citations.] … Because aiders and abettors do not agree to commit, and are not held liable as joint tortfeasors for committing, the underlying tort, it is not necessary that they owe plaintiff the same duty as the primary violator. Conspirators, by contrast, are held liable for the tort committed by their co-conspirator. [Citation.] Because liability is premised on the commission of a single tort, it is logical that all conspirators must be legally capable of committing the wrong.” (Neilson v. Union Bank of California, N.A., supra, 290 F.Supp.2d at pp. 1134–1135, fn. omitted.) “Additionally, causation is an essential element of an aiding and abetting claim, i.e., plaintiff must show that the aider and abettor providedassistance that was a substantial factor in causing the harm suffered. [Citations.] … This difference too demonstrates the distinction between the forms of liability, and argues in favor of a rule that permits the imposition of aider and abettor liability in the absence of a duty owed directly to the plaintiff.” (Id. at p. 1135; see Simi Management Corp. v. Bank of America, N.A. (N.D.Cal. 2013) 930 F.Supp.2d 1082, 1099, fn. 15 [“‘liability for aiding and abetting may exist even where the defendant's conduct does not independently breach a duty to the plaintiff’”]; Villains, Inc. v. American Economy Ins. Co. (N.D.Cal. 2012) 870 F.Supp.2d 792, 795 [“‘[t]he differences between conspiracy and aiding and abetting are not merely semantic’ and … ‘[t]hese differences have led several courts … to recognize that a non-fiduciary can aid and abet a breach of fiduciary duty’”]; Granewich v. Harding (1999) 329 Ore. 47 [985 P.2d 788, 793–794] [“[l]egal authorities … virtually are unanimous in expressing the proposition that one who knowingly aids another in the breach of a fiduciary duty is liable to the one harmed thereby,” and “[n]one of those authorities even implies that liability for participants in the breach of fiduciary duty is confined to those who themselves owe such duty”]; see also Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 127 [214 Cal. Rptr. 177] [third party greenmailer purchasers of corporation's shares in takeover attempt can be liable for aiding and abetting breach of fiduciary duty of corporation's directors who authorized corporation's purchase of the third parties' shares at a premium]; accord, Feinberg Testamentary Trust v. Carter (S.D.N.Y. 1987) 652 F.Supp. 1066, 1083.)

Thus, there are two different theories pursuant to which a person may be liable for aiding and abetting a breach of fiduciary duty. One theory, like conspiracy to breach a fiduciary duty, requires that the aider and abettor owe a fiduciary duty to the victim and requires only that the aider and abettor provide substantial assistance to the person breaching his or her fiduciary duty. (Casey v. U.S. Bank Nat. Assn, supra, 127 Cal.App.4th at p. 1144; Coffman v. Kennedy (1977) 74 Cal.App.3d 28, 32 [141 Cal. Rptr. 267].) On this theory, California law treats aiding and abetting a breach of fiduciary duty and conspiracy to breach a fiduciary duty similarly. Courts impose liability for concerted action that violates the aider and abettor's fiduciary duty. (See Janken v. GM Hughes Electronics, supra, 46 Cal.App.4th at p. 78; In re County of Orange, supra, 203 B.R. at p. 999.) The second theory for imposing liability for aiding and abetting a breach of fiduciary duty arises when the aider and abettor commits an independent tort. (See Casey, supra, at p. 1144; Saunders v. Superior Court, supra, 27 Cal.App.4th at p. 846.) This occurs when the aider and abettor makes “‘a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act.’” (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc., supra, 131 Cal.App.4th at p. 823, fn. 10; accord, Central Bank of Denver, N. A. v. First Interstate Bank of Denver, N. A. (1994) 511 U.S. 164, 181 [128 L. Ed. 2d 119, 114 S. Ct. 1439].)

(American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1473-77 (“American Master Lease”).)

The Court has held that, at this stage of the pleadings, Plaintiff has sufficiently pled a cause of action for Breach of Fiduciary Duty as to Federal. (See 08/15/2023 Statement of Decision (“SOD”).) Thus, under this theory, conspiracy and aiding and abetting a breach of fiduciary duty are treated similarly and liability is imposed for concerted actions with Federal that violates another’s fiduciary duty. (See American Master Lease, supra, 225 Cal.App.4th at 1477.) The Court notes that the holding in its tentative regarding Defendants Age, ACE, and Tiger 11 was different due to Age’s position as a broker and Plaintiff’s position as a non-principal which is distinguished from Wallace’s position in which both parties agree there was a fiduciary relationship.

As mentioned, ante, by participating in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. (See Applied Equipment Corp., supra, 7 Cal.4th at 510-511.)

Accordingly, because the pleadings have sufficiently alleged a cause of action for (1) breach of fiduciary duty against Wallace; and (2) as to at least one co-conspirator, and that Wallace is a co-conspirator, the SAC has sufficiently pled a claim for breach of fiduciary duty as to Wallace.

Wallace argues that Plaintiff had quitclaimed her interest in the Property. Next, Wallace presents that, despite the Quitclaim Deed, the Property was held in the trust and the Property’s title was transferred to Tiger 11 before January 25, 2022. Wallace contends that the Quitclaim Deed was done as a precautionary measure to ensure title was cleared and was not necessary. Based on this, Wallace argues that Plaintiff was, at no time, an owner of the Property and any interest in the Property was waived with the Quitclaim Deed.

Plaintiff argues that she has properly pled facts to establish that conversion existed as she was the owner of the Property and her right to possession has also been established through the trust, the Final Distribution, and the Deed. Plaintiff further highlights that she has alleged that title transferred to her “immediate and outright” due to these various documents.

“The essential elements of conversion are: (1) the plaintiff owned or had the right to possess the personal property; (2) the defendant disposed of the property in a manner inconsistent with the plaintiff's property rights; and (3) resulting damages. (Voris v. Lampert (2019) 7 Cal.5th 1141, 1150–1151 [250 Cal. Rptr. 3d 779, 446 P.3d 284].) The defendant's conduct ‘must be knowingly or intentionally done,’ but a ‘wrongful intent’ or motive is not a requirement. (Taylor v. Forte Hotels International (1991) 235 Cal.App.3d 1119, 1124 [1 Cal. Rptr. 2d 189], original italics (Taylor); see Voris, supra, at p. 1150.) Because the defendant's conduct ‘must be knowingly done, “neither negligence, active or passive, nor a breach of contract, even though it results in injury to, or loss of, specific property, constitutes a conversion.” [Citation.] It follows therefore that mistake, good faith, and due care are ordinarily immaterial, and cannot be set up as defenses in an action for conversion.’ (Taylor, supra, at p. 1124.) Nonetheless, ‘there can be no conversion where an owner either expressly or impliedly assents to or ratifies the taking, use or disposition of his property.’ (Farrington v. A. Teichert & Son, Inc. (1943) 59 Cal.App.2d 468, 474 [139 P.2d 80].)” (Berry v. Frazier (2023) 90 Cal.App.5th 1258.)

The Court notes that Wallace’s waiver argument concede that Plaintiff had some interest in the Property. Further, the Quitclaim Deed, attached as Exh. 8 to the SAC, creates a reasonable inference that Plaintiff did have, at some point, ownership or an interest in the Property. (See Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1239 [“Code of Civil Procedure section 452 provides in full: ‘In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.’ This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. (Carney v. Simmonds (1957) 49 Cal.2d 84, 93 [315 P.2d 305]; Advanced Modular Sputtering, Inc. v. Superior Court (2005) 132 Cal.App.4th 826, 835 [33 Cal. Rptr. 3d 901] [“pleadings are to be liberally construed in favor of the pleader …”].)”].)

Wallace’s presentation that the Quitclaim Deed was not necessary is a conclusory statement. No evidentiary backing is presented.

The Court follows the legal standard for a demurrer and draws inferences favorable to Plaintiff, not Wallace. (See ante.) Accordingly, Plaintiff, for the purposes of this Demurrer, had some ownership or interest in the Property.

As mentioned, ante, a broker learns the material facts that may affect the principal's decision. Thus, a reasonable inference is that Age, in order not to breach his fiduciary duty to Wallace, has knowledge of the material facts related to the Property and relayed such knowledge to Wallace. It is unclear how the Property sold. It appears that several transactions have occurred: (1) Tiger 11, the buyer who has relations to Age, was granted the Property on December 21, 2021 ( SAC ¶ 120, Exh. 6; see also Exh. 7 [Age is listed as Incorporator]); (2) the Property was granted prior to Plaintiff’s signing of the Quitclaim Deed on January 25, 2022 (SAC Exh. 8); (3) simultaneously on January 25, 2022, Tiger 11 acquired the Property for $2,250,000 (Exh. 5); and (4) the Property was transferred back to Wallace, in the trust, on January 27, 2022 with no details (ibid.). Plaintiff later received $50,000.00. As Plaintiff’s interest in the Property under the trust is 10%, Plaintiff believes the property was sold for $500,000. (SAC ¶ 43.)

A reasonable inference from the sequence of events is that the Property was granted to Tiger 11 prior to Plaintiff’s signing of the Quitclaim Deed, resulting in damages in the form of Plaintiff’s lost interest in the Property. (See SAC Exh. 6, Exh. 8.)

Conversion is a strict liability tort. (See Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, 1387 [citing Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066].) As mentioned, ante, participation in a civil conspiracy causes a co-conspirator to effectively adopt as his or her own the torts of other coconspirators within the ambit of the conspiracy. (See Applied Equipment Corp., supra, 7 Cal.4th at 510-511.) The Court held previously that the SAC sufficiently pleads a claim of Conversion against Federal. (See 08/15/2023 SOD.) Likewise, the Court believes that the SAC sufficiently pleads a claim of Conversion against Age, ACE, and Tiger 11. The Court directs the parties to the tentative Statement of Decision for Age, ACE, and Tiger 11’s Demurrer. (See 9/26/2023 tentative SOD as to Age, ACE, and Tiger 11.)

Wallace argues that the alleged acts of fraudulent concealment are undermined by the Quitclaim Deed as there are no allegations of fraud surrounding the transfer of the Property, so any claim for fraudulent concealment fails as Plaintiff was no longer an owner of the Property at the time the Property was sold. Wallace alternatively argues that, should the allegations be taken as truth, the SAC does not meet the standards set by Lazar. Wallace does not provide the full case name or the case citation. However, it appears to be an argument regarding heightened specificity when pleading fraud as Wallace states that: (1) Lazar sets out particularity standards, and (2) presents that one is unable to determine the “how, when, where, to whom, and by what means” elements for fraud from the SAC. Wallace further presents that the SAC is relying on conclusions of Plaintiff’s belief rather than details.

Plaintiff argues that she has alleged facts sufficient for a claim of Fraudulent Concealment against Wallace and highlights the relevant allegations within the SAC.

“The elements of fraud that will give rise to a tort action for deceit are: “ ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ ” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.)

For concealment, a more specific set of elements exists: “(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.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.) “A duty to speak may arise in four ways: it may be directly imposed by statute or other prescriptive law; it may be voluntarily assumed by contractual undertaking; it may arise as an incident of a relationship between the defendant and the plaintiff; and it may arise as a result of other conduct by the defendant that makes it wrongful for him to remain silent.” (SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 860.) “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. L.A. (1970) 2 Cal.3d 285, 294.)

a. Wallace concealed the nature of Woodward’s right to the Property as detailed in the Trust.

b. Wallace concealed the fact that Woodward’s permission was needed to sell the Property.

c. Wallace concealed the fact that she had no interest and or right to sell the Property and/or keep any of the proceeds.

d. Defendants concealed the true purchase price. An appraisal dated February 22, 2022, stated Tiger paid $2,250,000 for the Property.

e. Defendants concealed the fact the sales transaction was fraudulent as no one had the authority to sell the Property.

Woodward is informed and believes, and based thereon, alleges that Defendants also concealed or suppressed other facts regarding their involvement with each other.

Woodward is informed and believes, and based thereon, alleges that the Defendants were under a duty to disclose these facts to her by way of contract, (i.e., listing agreement and agency disclosure relationship agreement), her ownership interest, as well as California laws and rules governing agents, brokers, and escrow companies. Moreover, Wallace had a duty to disclose the facts under her obligations as trustee

Here, as analyzed ante, the trust constitutes a contract and Wallace owed Plaintiff a fiduciary duty as trustee. Thus, Wallace had a duty to speak regarding Plaintiff’s right to the Property as detailed in the trust and the potential need for Plaintiff’s permission to sell the Property. Wallace granted the Property to Tiger 11 prior to Plaintiff’s signing of the Quitclaim Deed. (SAC Exh. 6, Exh. 8.) Further, both parties agree that, even after the Quitclaim Deed was signed, Wallace needed to provide Plaintiff with 10% of the proceeds from the sale; however, Plaintiff received only $50,000.00 when the appraisal done by a third-party revealed that a sale was made from Wallace to Tiger for the Property at a price of $2,250,000. 10% of $2,250,000 is $225,000, $175,000 over what Plaintiff had received.

Thus, from the SAC, it is alleged that (1) Wallace had a duty to disclose material facts related to the Property due to Wallace’s position as a trustee; (2) Wallace did not disclose material facts related to the Property; (3) by failing to do so, Plaintiff has been harmed in loss of ownership or interest in the Property and/or the correct price that constitutes 10%.

The Court also notes that, due to Wallace’s particularity argument that “[l]ess specificity is required when it ‘appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.’ ” (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216 [quoting Bradley v. Hartford Acc.& Indem. Co. (1973) 30 Cal.App.3d 818, 825].) The specificity requirement is greatly relaxed or eliminated under circumstances where the defendant must necessarily possess superior information of the fraud. (Id, at 216-217; see also Silberg v. Anderson (1990) 50 Cal.3d 205, 212-213.) The Court believes that this action is one in which the pleadings support an inference that all defendants possess superior information.

“[T]he elements of an action for fraud and deceit based on a 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.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.) “A duty to speak may arise in four ways: it may be directly imposed by statute or other prescriptive law; it may be voluntarily assumed by contractual undertaking; it may arise as an incident of a relationship between the defendant and the plaintiff; and it may arise as a result of other conduct by the defendant that makes it wrongful for him to remain silent.” (SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 860.)

On or around January 25, 2022, a representative, by the name of Shawna Holbrook, who worked for Federal and having the express and/or implied authority to speak on Federal’s behalf, concealed the fact that the document she asked Woodward to sign was in fact a document to transfer all her interest in the Property to Wallace; thereby, taking all her rights away.

The representative who worked for Federal, by the name of Shawna Holbrook, an escrow officer, alleging she had the express and/or implied authority to speak on Federal’s behalf, knew the fact that the document she asked Woodward to sign was in fact a document to transfer all her interest in the Property to Wallace not just a document to give her 10% percent. She knew this as she requested an agency send a notary to Woodward’s house to sign a quitclaim deed. The document Woodward signed was a quitclaim deed that completely transferred any and all rights of Woodward to Wallace, which was never told to Woodward. Said conversation and transfer occurred on or around January 25, 2022.

At issue is Federal Escrow’s representation of the Quitclaim Deed. Federal Escrow, through Holbrook, disclosed only part of the purpose of the document. The Court notes “[t]he fact that a false statement may be obviously false to those who are trained and experienced does not change its character, nor take away its power to deceive others less experienced. There is no duty resting upon a citizen to suspect the honesty of those with whom he [or she] transacts business. Laws are made to protect the trusting as well as the suspicious.” (Boschma, supra, 198 Cal.App.4th at 249 [original italics].) Though this was discussed in the context of caveat emptor, the Court believes it is applicable to this situation as well. That is, based on the allegations, it is reasonable to infer that an average layperson would rely on the representations from an escrow agent, especially when property interest is at stake.

Here, the Court addressed the issue of fiduciary duty, ante. Accordingly, the duty to disclose arose from the fiduciary relationship between the parties.

Regarding the element of intent, “fraudulent intent is an issue for the trier of fact to decide.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.)

As to the fourth element, Plaintiff states: “Woodward relied on Wallace and Defendants concealed or suppressed facts by believing she had no real interest in the Property and that Wallace had the right to do whatever she wanted with the Property. Furthermore, she believed that the deal as consummated was valid and arm’s length and not the result of fraud and conspiracy. Woodward relied on Federal’s employee, by the name of Shawna Holbrook’s, statement that what she was signing was the only way to obtain her 10% of the sale, which is why she signed it.” (SAC ¶ 125.) The Court finds this sufficient as, taken along with rest of the allegations, the SAC shows Plaintiff was unaware that her property interest clouded title, a sale between Wallace and Tiger 11 had occurred before Plaintiff was contacted, Plaintiff believed the only way to receive anything related to the Property was through signing the Quitclaim Deed presented by Federal Escrow, and Plaintiff repeatedly emphasizes that she never agreed to sell the Property and that such action disregarded her father’s wishes and caused her emotion[al] turmoil.

As analyzed, the SAC sufficiently pleads a claim for fraud based in concealment.

So, with conspiracy allegation taken into consideration, the SAC has also sufficiently pled a cause of action for fraud based in concealment against Wallace as a co-conspirator.

Wallace argues that this cause of action fails to state facts constituting the essential elements of fraud. Wallace, again, emphasizes that Plaintiff gave Wallace full rights to the Property and, as such, “everything that occurred afterwards was only the representation of agreements made.” (Demurrer 14:26.) Wallace further argues that Plaintiff fails to allege a misrepresentation was made to her. Wallace brings up Lazar, again without the full case name or case citation, for a heightened specificity standard for fraud.

Plaintiff argues that she has alleged facts sufficient for a claim of Fraudulent Misrepresentation against Wallace and highlights the relevant allegations within the SAC.

As cited, ante, “[t]he elements of fraud that will give rise to a tort action for deceit are: “ ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ ” (Engalla, supra,15 Cal.4th 951, 974.)

a. Wallace misrepresented the exact ownership interest Woodward had in the Property;

b. Wallace misrepresented the authority she had over the Property; Wallace misrepresented the title of the Property;

Knowledge of Falsity: At the time Wallace and Defendants made the aforementioned misrepresentations, they knew that they were false and were made solely to induce reliance upon them by Woodward. Namely Defendants wanted to improperly and wrongfully sell the Property to Tiger. The representative who worked for Federal, by the name of Shawna Holbrook, an escrow officer, alleging she had the express and/or implied authority to speak on Federal’s behalf, knew the fact that the document she asked Woodward to sign was in fact a document to transfer all her interest in the Property to Wallace not just a document to give her 10% percent. She knew this as she requested an agency send a notary to Woodward’s house to sign a quitclaim deed. The document Woodward signed was a quitclaim deed that completely transferred any and all rights of Woodward to Wallace, which was never told to Woodward. Said conversation and transfer occurred on or around January 25, 2022

Regarding Wallace’s particularity requirement, the Court directs the parties to its analysis, ante, in the Fifth Cause of Action.

A cause of action for misrepresentation requires an affirmative statement. (See SB Vineyards, LLC v. Orsi (2017) 15 Cal.App.5th 1089, 1102.) Here, there are no allegations related to statements that Wallace made to Plaintiff. Despite the SAC’s allegations in paragraph 131, the only statement discussed in this cause of action is that from Shawna Holbrook, an escrow officer from Federal. (See SAC ¶¶ 131(e), 92.) However, the cause of action incorporates each preceding paragraph. The beginning paragraphs of the SAC describe the interactions that Plaintiff had with Wallace:

Wallace acknowledged the fact the Property was going to Woodward on several occasions

On or around October 8, 2021, Wallace caused her retained counsel to send Woodward a Receipt of Final Distribution whereby Wallace transferred all rights in the Property to Woodward outright; therein waving her and the Trust’s ability to hold the remaining 90% until her death. Woodward accepted. Woodward signed and returned the Receipt of Final Distribution. (See Exhibit 2.) Therein Woodward immediately became a 100% equitable and legal owner in the Property.

On or around November 2021, Wallace again contacted Woodward through counsel letting her know the deed had been signed and Woodward needed to send back the preliminary change of ownership form to be filed with the county. (See Exhibit 4.)

However, sometime after November 2021, Wallace contacted Woodward and told her she was no longer transferring the Property to her, which had already 100% vested in Plaintiff, and instead would be selling the Property, which the Trust no longer had title to and did not authorize.

The exhibits incorporated into the Complaint support this. Exh. 1 is the trust which provides: “If SPENCER BRACEY WALLACE JR is the Deceased Settler, then ten percent (10%) of title and ownership to the property located at 2534 Carmona Avenue, Los Angeles, California, shall be transferred to PATRICIA ANN WOODWARD, immediately and outright.” (SAC Exh. 1 at Trust Division IV.) Exh. 2 depicts contact between Wallace, through counsel, sent on October 04, 2021, which states that (1) the Receipt of Final Distribution will enable Plaintiff to receive title to the Property; (2) Plaintiff needs to sign and date the document; (3) contains a document which reads, in relevant part: “I hereby acknowledge receipt of this full and final distribution and transfer of all title, rights and obligations to the real property, commonly known as 2534 Carmona Avenue, City of Los Angeles, State of California (Assessor Parcel Number 5048-001-042), from the Surviving Settlor and Trustee, JANICE LOUISE WALLACE. In addition, I acknowledge and accept that I have been advised that this a full and final distribution of my inheritance under this Trust . . .[;]” and (4) the document is signed by Plaintiff and dated October 08, 2021. Exh. 4 depicts contact between Wallace, through counsel, sent on November 23, 2021, which states: (1) Wallace signed a Quitclaim Deed, naming Plaintiff as owner of the Property; (2) Plaintiff needed to sign and file documents, such as a Preliminary Change of Ownership Report and Reassessment Exclusion for Transfer Between Parent and Child, and provide a filing fee; (3) certain items are not mandatory (ex. documents can be recorded without the PCOR, but tax will be based on an assessed value and a re-assessment will occur); and (4) as a result of this inheritance, Plaintiff will be responsible for all expenses related to the Property.

These interactions between Wallace and Plaintiff are sufficient to plead an affirmative statement. It also appears that these interactions, and the later selling of the Property, led to the statement by Shawna Holbrook, an escrow officer from Federal, which resulted in Plaintiff’s signing of the Quitclaim Deed.

There are two types of misrepresentation: intentional and negligent. The SAC appears to be alleging intentional misrepresentation. (See SAC ¶ 132.) “[F]raudulent intent is an issue for the trier of fact to decide.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.) At the pleading stage, with regards to intent, a plaintiff need must allege a knowingly false representation by the defendant and an intent to deceive or induce reliance. (Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.) Such allegations are alleged and supported by the exhibits.

Plaintiff relied on the statements made by all defendants at different points throughout the events that make up this action – (1) that Plaintiff would receive title to the Property stated by Wallace, through counsel; (2) later, that Wallace could sell and would sell the Property; (3) that the Property was sold; and (4) that in order to obtain the anything from the Property, specifically 10% of the proceeds, Plaintiff had to sign the Quitclaim Deed. The SAC is unclear as to whether Plaintiff took action after receiving the correspondence shown in Exhibit 4. However, the SAC shows reliance on Wallace’s aforementioned statements as Plaintiff signed the Final Receipt of Distribution. The Court believes this to be sufficient at this stage of the pleadings.

The resulting damage is clear: Plaintiff was deprived of ownership in the Property.

The SAC has sufficiently pled a claim for Fraud – Misrepresentation as to Wallace.

Though the notice states that Wallace is demurring to the Seventh Cause of Action (Negligence) and no argument is presented as to either. The Demurrer jumps from an argument regarding the Sixth Cause of Action (Fraud – Misrepresentation) to a section titled “Failure to Allege Extreme and Outrageous Conduct for Emotional Distress” which discusses IIED and NIED.

Wallace argues that the SAC omits any extreme and outrageous conduct as the SAC alleges that Wallace sold a property that Plaintiff was not an owner of. Wallace also compares the actions in this case to that of McMahon v. Craig (2009) 176 Cal.App.4th 1502 (“McMahon”), arguing that the actions alleged in the SAC were not done in Plaintiff’s presence and were not directed at Plaintiff. Wallace argues that, because of this, there are no actions that can be deemed extreme and outrageous so as to constitute intentional or negligent emotional distress.

First, the Court notes that facts in McMahon are extremely different from the facts in this action. Specifically, McMahon concerns the hiding of defendants acts of giving a dog food two hours after surgery, failing to provide the necessary postoperative care, and lying about the severity of the dog’s recovery complication and its cause, ultimately leading to the dog’s death. (McMahon, supra, 176 Cal.App.4th at 1507.) McMahon is not comparable to facts within this action. The Court will, however, address McMahon and the legal standard it provides, if necessary.

Crouch provides a summary of IIED at the demurrer stage in the context of California law:

A cause of action for IIED requires proof of: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff suffered severe emotional distress; and (3) the defendant's extreme and outrageous conduct was the actual and proximate cause of the severe emotional distress. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050 [95 Cal. Rptr. 3d 636, 209 P.3d 963].)

A defendant's conduct is considered to be outrageous if “it is so ‘“‘extreme as to exceed all bounds of that usually tolerated in a civilized community.’”’” (Hughes v. Pair, supra, 46 Cal.4th at p. 1051; see Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001 [25 Cal. Rptr. 2d 550, 863 P.2d 795]; see also Rest.2d Torts, § 46, com. d, p. 73.) Liability for IIED does not extend to “‘“mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.”’” (Hughes v. Pair, supra, 46 Cal.4th at p. 1051.) Malicious or evil purpose is not essential to liability for IIED. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1045 [90 Cal. Rptr. 3d 453].)

California's definition of extreme and outrageous conduct is based on comment d to section 46 of the Restatement Second of Torts. (See Hughes v. Pair, supra, 46 Cal.4th at p. 1051.) Comment d to section 46 states: “Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. Generally, the case is one in which the recitation of the facts to an average member of the community would arouse his resentment against the actor, and lead him to exclaim, ‘Outrageous!’” (Rest.2d Torts, § 46, com. d, p. 73.)

In Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, the appellate court held: “ ‘Behavior may be considered outrageous if a defendant (1) abuses a relation or position which gives him power to damage the plaintiff's interest; (2) knows the plaintiff is susceptible to injuries through mental distress; or (3) acts intentionally or unreasonably with the recognition that the acts are likely to result in illness through mental distress.’ [Citation.]” In this case, Plaintiff alleges that she suffered “extreme emotional distress” as a result of defendants due to Wallace’s conduct, which includes “1) converting Woodward’s Property; 2) misrepresenting key facts about her interest and rights in the sale; and 3) fraudulently inducing her into signing her interest away, with the intention of causing, or in reckless disregard of the probability of causing, severe emotional and physical pain and distress to [Plaintiff.]” (SAC ¶ 152.) It is clear that the actions taken by Wallace, and her alleged co-conspirators go beyond “mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities.” (See Crouch, supra, 39 Cal.App.5th at 1007 [citing Hughes v. Pair, supra, 46 Cal.4th at 1051].)

As Wallace’s argument for NIED is encompassed by the IIED claim, so too does this analysis apply to NIED.

Liberally construing the allegations of the SAC in favor of Plaintiff, the Court finds the Eighth Cause of Action (NIED) and Ninth Cause of Action for IIED sufficiently pled.

h. Tenth Cause of Action (Breach of Covenant of Good Faith and Fair Dealings)

Wallace argues that there was and is no contract between Plaintiff and herself, that the trust and Receipt of Final Distribution are not enforceable nor are they contracts, and so without a contract there is no duty owed by herself to Plaintiff with respect to good faith and fair dealing.

Plaintiff’s argument for this cause of action is included in her Breach of Contract argument.

The Court directs the parties to its analysis of the Second Cause of Action (Breach of Contract). (See ante.) As analyzed, there is a contract between Plaintiff and Wallace.

“There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.” (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.) “There is no obligation to deal fairly or in good faith absent an existing contract. If there exists a contractual relationship between the parties . . . the implied covenant is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated in the contract.” (Racine &Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1032 [internal citations omitted].) “Although breach of the implied covenant often is pleaded as a separate count, a breach of the implied covenant is necessarily a breach of contract.” (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194Cal.App.4th 873, 885.)

The Court incorporates its analysis for the First Cause of Action. The Court found that there was no contract between the parties. As such, the Tenth Cause of Action is sufficiently pled.

The Court notes that no argument is presented for the Eleventh Cause of Action (Quiet Title), despite notice that Wallace would be demurring. Further, the Eleventh Cause of Action (Quiet Title) is directed only as to Tiger 11.

Wallace argues that California courts do not recognize unjust enrichment as a cause of action or a remedy, citing to McBride v. Boughton (2004) 123 Cal.App.4th 379, 387 (“McBride”). Wallace then presents an argument for Right to Restitution.

Unjust enrichment is not a cause of action, however, or even a remedy, but rather “ ‘ “a general principle, underlying various legal doctrines and remedies” ’ … . [Citation.] It is synonymous with restitution. [Citation.]” (Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793 [131 Cal. Rptr. 2d 347].) Unjust enrichment has also been characterized as describing “ ‘the result of a failure to make restitution … .’ ” (Dunkin, supra, 82 Cal.App.4th at p. 198, fn. 15, quoting Lauriedale Associates, Ltd. v. Wilson (1992) 7 Cal.App.4th 1439, 1448 [9 Cal. Rptr. 2d 774] (Lauriedale).)

Further, McBride is not the only California case to discuss unjust enrichment. Rather, court’s are split on whether unjust enrichment is a cause of action. (See Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723 (“Lectrodryer”) [a case in the Second Appellate District, recognizing a cause of action for unjust enrichment] and Rutherford Holdings LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221 [a case in the Sixth Appellate District, holding “[u]njust enrichment is not a cause of action, however, or even a remedy, but rather a general principle, underlying various legal doctrines and remedies...it is synonymous with restitution.”].)

When appellate decisions are in conflict on a point, the court exercising inferior jurisdiction must choose between the conflicting decisions. (Auto Equity Sales, Inc. v. Superior Court of Santa Clara County (1962) 57 Cal.2d 450, 456.) “

An individual who has been unjustly enriched at the expense of another may be required to make restitution. (See Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51 [57 Cal. Rptr. 2d 687, 924 P.2d 996]; see also Rest.3d Restitution and Unjust Enrichment, § 1; 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 1013, p. 1102.) Where the doctrine applies, the law implies a restitutionary obligation, even if no contract between the parties itself expresses or implies such a duty. (See Buss, supra, 16 Cal.4th at p. 51.) Though this restitutionary obligation is often described as quasi-contractual, a privity of relationship between the parties is not necessarily required. (Ibid.; see CTC Real Estate Services v. Lepe (2006) 140 Cal.App.4th 856, 860–861 [44 Cal. Rptr. 3d 823].)

Restitution is not mandated merely because one person has realized a gain at another's expense. Rather, the obligation arises when the enrichment obtained lacks any adequate legal basis and thus “cannot conscientiously be retained.” (Rest.3d Restitution and Unjust Enrichment, § 1, com. b, p. 6.)

(Hartford Casualty Ins. Co. v. J.R. Marketing L.L.C. (2015) 61 Cal.4th 988, 998 (“Hartford Casualty Ins. Co.”) [emphasis added].)

The Court turns to the holding in Lectrodryer. “The elements for a claim of unjust enrichment [are] receipt of a benefit and unjust retention of the benefit at the expense of another.” (Lectrodryer, supra, 77 Cal.App.4th at 726.)

The Court has discussed Plaintiff’s ownership and/or interest in the Property, ante. It is clear that Wallace has received a benefit from the Property at the expense of Plaintiff either through her actions, the actions of her co-conspirators, or both.

Accordingly, the Twelfth Cause of Action for Unjust Enrichment has been sufficiently pled.

Wallace argues that Declaratory Relief is an equitable remedy and not a cause of action, citing Wong v. Tai Jing (2010) 189 Cal.App.4th 1354, 1361, fn.2. Wallace presents that Plaintiff has pled a cause of action with no facts or issues alleged and, to the extent that this cause of action is based on a breach of contract or breach of fiduciary duty, those causes of action are subject to demurrer.

Plaintiff argues that she has alleged ownership/title throughout the SAC and this Opposition and the allegations of the SAC must be taken as true. Thus, Plaintiff presents that she has properly pled facts sufficient to constitute a valid claim for Declaratory Relief against Wallace.

“The object of the [declaratory relief] statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues. [Citation.] Under section 1061 of the Code of Civil Procedure the court may refuse to exercise the power to grant declaratory relief where such relief is not necessary or proper at the time under all of the circumstances. The availability of another form of relief that is adequate will usually justify refusal to grant declaratory relief. The refusal to exercise the power is within the court's legal discretion and will not be disturbed on appeal except for abuse of discretion.” (California Insurance Guaranty Association v. Superior Court (1991) 231 Cal.App.3d 1617, 1623-1624.) "Declaratory relief operates prospectively, serving to set controversies at rest. If there is a controversy that calls for a declaration of rights, it is no objection that past wrongs are also to be redressed; but there is no basis for declaratory relief where only past wrongs are involved. Hence, where there is an accrued cause of action for an actual breach of contract or other wrongful act, declaratory relief may be denied." (Osseous Technologies of America, Inc. v. Discovery Ortho Partners, LLC (2010) 191 Cal.App.4th 357, 366.) “ ‘To qualify for declaratory relief, [a party] would have to demonstrate its action presented two essential elements: “(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [the party's] rights or obligations.” ’ [Citation.] (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

Cal. Code Civ. Proc. 1060 authorizes actions for declaratory relief under a “written instrument” or “contract.” An actual controversy exists as pointed out in Plaintiff's SAC due to the fraud perpetrated by defendants related to the distribution of the Property from the trust, the sale of the Property, and the recording of title related to the property. Plaintiff seeks to quiet title and determine the validity of all deeds related to the Property to determine her rights and duties as to the Property. Thus, the SAC has met the requirements to qualify for declaratory relief.

Defendant Janice Wallace, an individual and as trustee of the Spencer and Wallace Living Trust’s Demurrer is OVERRULED as to the Second Cause of Action (Breach of Contract against Wallace), the Third Cause of Action (Breach of Fiduciary Duties against all defendants), the Fourth Cause of Action (Conversion against all defendants), the Fifth Cause of Action (Fraud – Concealment against all defendants), the Sixth Cause of Action (Fraud – Misrepresentation against all defendants), Eighth Cause of Action (Negligent Infliction of Emotional Distress), Ninth Cause of Action (Intentional Infliction of Emotional Distress against all defendants), Twelfth Cause of Action (Unjust Enrichment), and Fourteenth Cause of Action (Declaratory Relief).

[1] The Court notes that SAC ¶ 92 with this wording is mislabeled as it appears between ¶¶ 131 and 132. The Court references the paragraph by the number designated in the SAC despite the incorrect numbering.