Judge: Stephen P. Pfahler, Case: 22CHCV00061, Date: 2022-09-06 Tentative Ruling

Case Number: 22CHCV00061    Hearing Date: September 6, 2022    Dept: F49

Dept. F-49

Date: 9-6-22

Case #22CHCV00061

Trial Date: Not Set

 

DEMURRER

 

MOVING PARTY: Defendant, Mohammad Saadatmandi

RESPONDING PARTY: Unopposed/Plaintiffs, Sylmar Discount Collective, et al.

 

RELIEF REQUESTED

Demurrer to the Complaint

·         2nd Cause of Action: Negligent Misrepresentation

·         3rd Cause of Action: Fraud and Deceit

·         4th Cause of Action:  Conversion

·         6th Cause of Action: Constructive Trust

·         10th Cause of Action: Injunctive Relief

 

SUMMARY OF ACTION

On August 1, 2019, plaintiff Sylmar Discount Collective (SDC) began leasing certain real property located at 12806 Bradley Ave., Sylmar for the purpose of “growing and cultivating cannabis.” On December 21, 2021, SDC and plaintiff Pacific Grow (PG) entered into a “subscription agreement,” whereby PG agreed to fund $500,000 in “start up expenses” of SDC in exchange for a 40% ownership interest in SDC. The company would appoint two directors—one from each respective entity representative. Defendant Mohammad Saadatmandi, chief executive officer for SDC at the time signed the agreement on behalf of SDC.

 

PG is represented as owned by Anthony Freitag and Julie Le. On January 4, 2021, Freitag entered into an employment agreement with SDC to become the designated “Master Grower at the Facility.”

 

Plaintiffs allege that following the transfer of the $500,000 from PG to SDC in October and November 2020, Saadatmandi misappropriated corporate funds for personal use. Plaintiffs also allege Saadatmandi mismanaged the facilities thereby causing damage to the plants, failed to deposit revenue from any sales of the harvests, and improperly represented the weight of plants removed from the facility for personal use or outside business interests.

 

On July 10, 2021, Saadatmandi “fired” Freitag, and changed the locks on the facility. Plaintiffs allege Saadatmandi continues to operate the facility under the SDC name.

 

On January 25, 2022, Plaintiffs filed their complaint for Breach of Fiduciary Duty, Negligent Misrepresentation, Fraud and Deceit, Conversion, Violation of Penal Code section 496, Imposition of Constructive Trust, Unfair Business Practices, Accounting, Trespass to Real Property and Injunction, and Injunctive Relief.

 

RULING: Sustained with Leave to Amend.

Defendant Mohammad Saadatmandi brings the subject demurrer to the Negligent Misrepresentation, Fraud and Deceit, Conversion, Constructive Trust, and Injunctive Relief causes of action. Defendant challenges the claims on grounds that the fraud claims are not pled with sufficient factual particularity, and constructive trust and injunctive relief are remedies rather than causes of action. Plaintiff in opposition contends the complaint sufficiently articulates the subject claims with factual particularity, and Plaintiff properly pleads claims for relief.

 

The court electronic filing system shows no reply at the time of the tentative ruling publication cutoff.

 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “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.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.

 

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

 

2nd Cause of Action: Negligent Misrepresentation

Defendant specifically challenges the negligent misrepresentation cause of action on grounds that the complaint fails to allege an actual misrepresentation of past or existing fact, and instead presents a series of promised future actions. “The elements of a negligent misrepresentation are ‘(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’ Negligent misrepresentation does not require knowledge of falsity, unlike a cause of action for fraud.” (Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1252.) Plaintiff reiterates the allegations of the complaint regarding the propriety of the claim.

 

The court finds the complaint at least in part incorporates future representations, thereby undermining the required elements for negligent misrepresentation. [Comp., ¶ 36.] The claim is integral to the cause of action. The citation to paragraphs 18-24, 31 and 39 constitutes conclusions and/or allegations in support of other causes of action. The demurrer is sustained.

 

3rd Cause of Action: Fraud and Deceit

“‘The elements of fraud, which give rise to the 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.’” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “‘Active concealment or suppression of facts by a nonfiduciary “is the equivalent of a false representation, i.e., actual fraud.” [Citation.] (Citation).)’ A fraud claim based upon the suppression or concealment of a material fact must involve a defendant who had a legal duty to disclose the fact. (Civ.Code, § 1710, subd. (3) [a deceit includes “[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact”]; Citation.)” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186.) Plaintiff again cites to the operative complaint for support.

 

Like the negligent misrepresentation cause of action, Plaintiff insufficiently articulates the elements of fraud. [Comp., ¶ 44.] The reliance on the legal conclusions following the defective factual allegation will not support a valid fraud claim. The demurrer is sustained.

 

4th Cause of Action: Conversion

“‘A cause of action for conversion requires allegations of plaintiff's ownership or right to possession of property; defendant's wrongful act toward or disposition of the property, interfering with plaintiff's possession; and damage to plaintiff. [Citation.] Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved.’” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)

 

Defendant challenges the claim on grounds that the complaint insufficiently identifies a specific sum of funds and alleged documents. [Comp., ¶¶ 54-55.] Plaintiff cites to a prior paragraph whereby missing funds were unaccounted for, and therefore serving as the basis of the claim.

 

While Plaintiff cites to the totals in paragraph 18, the actual cause of action states a claim for no  “less than $3,000,000.” This is a significant disparity from the totals in paragraph 18. The speculative disparity in sums renders the conversion claim uncertain. (Id., at pp. 396-397.) The demurrer is sustained.

 

6th Cause of Action: Constructive Trust

10th Cause of Action: Injunctive Relief

Defendant challenges the subject claims on grounds that Plaintiffs seek a remedy rather than allege causes of action. Defendant also argues that the underlying claims for fraud and conversion insufficiently support the sought after relief. Plaintiff in opposition agrees the subject causes of action depend on the fraud and conversion causes of action. The court finds the fraud and conversion causes of action lack support for the sought after relief, and therefore sustain the demurrer to the subject causes of action.

 

The court sustains the demurrer with 30 days leave to amend. If Plaintiffs elect to not file a first amended complaint, Defendant may answer the complaint upon the lapse of the amendment period thereby rendering the action at issue.

 

Defendant to give notice.