Judge: Stephen P. Pfahler, Case: 22CHCV00178, Date: 2022-08-24 Tentative Ruling

Case Number: 22CHCV00178    Hearing Date: August 24, 2022    Dept: F49

Dept. F-49
Date: 8-24-22
Case #22CHCV00178
Trial Date: Not Set

DEMURRER

MOVING PARTY: Defendant, Tammy Booker

RESPONDING PARTY: Unopposed/Plaintiff, Don Khalighi, et al.

RELIEF REQUESTED

Demurrer to the Complaint

· 1st Cause of Action: Breach of Contract

· 2nd Cause of Action: Negligence

· 3rd Cause of Action: Embezzlement

· 4th Cause of Action: Fraud

· 6th Cause of Action: Declaratory Relief

SUMMARY OF ACTION

Plaintiffs Don and Armenouhi Khalighi are homeowners within a real estate development governed by Quail Ranch Estates HOA, Inc. (HOA). Pursuant to “Articles and Bylaws,” the HOA collected $150/month in assessments for the benefit of participating homeowners. Plaintiffs alleges the individual defendant officers comprising the HOA board violated “respective fiduciary duties,” due to their failure to pay annual fees to the State of California, thereby leading to the suspension of the HOA as a corporate entity; failed to hold required meetings; failed to inform homeowner members regarding “various contracts” for common area maintenance and landscaping; failed to provide adequate financial records upon demand of Plaintiffs; and, authorized improper expenditures and withdrawals without apparent board and/or homeowner approval.

On March 17, 2022, Plaintiffs filed their complaint for Breach of Contract, Negligence, Embezzlement, Fraud, Accounting and Declaratory Relief. On July 11, 2022, Defendant Michael Morrell answered the complaint.

On August 2, 2022, the court sustained the demurrer of Quail Ranch Estates HOA, Inc. with 30 days leave to amend.

RULING: Moot in Part/Sustained with Leave to Amend Remainder.

Defendant Tammy Booker, pro per,1 brings the subject demurrer to the breach of contract, negligence, embezzlement, fraud, and declaratory relief causes of action. Given the August 2, 2022 ruling on the demurrer of Quail Ranch Estates HOA, Inc., the challenges to the Contract, Negligence, and Declaratory Relief causes of action is moot.

Defendant challenges the embezzlement and fraud claims on grounds that nothing in the complaint alleges a criminal act in support of the embezzlement claim, and the fraud claim is pled with insufficient factual particularity. The court electronic filing system shows no opposition or 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.] 3rd Cause of Action: Embezzlement

The criminal act of embezzlement is the conversion of property within the intent to defraud for personal benefit. (People v. Sisuphan (2010) 181 Cal.App.4th 800, 814 (footnote 12).) The demurrer lacks any support for the argument of whether embezzlement can be stated in a civil cause of action, including whether the claim should be stated as one for 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.) Even considering the conversion elements, it’s not clear how Plaintiff alleges ownership of the property or basis of standing to act on behalf of the HOA. The demurrer is sustained.

4th Cause of Action: Fraud

“‘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 insufficiently articulates the elements of fraud. Plaintiff relies at least in part on the alleged representations by defendant Michael Morrell as to Booker. Like the embezzlement claim, it’s also not clear how Plaintiff seeks to allege a basis of standing for alleged misrepresentations to the HOA. The demurrer is sustained.

In summary, the unopposed demurrer is moot as to the breach of contract, negligence and declaratory relief causes of action, and sustained with 30 days leave to amend as to fraud and embezzlement. Plaintiff may not add new or different causes of action beyond the scope of the existing claims though the court grants Plaintiff leave to address the disparate fraud claims, if necessary. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) If Plaintiff choses to file a first complaint from the prior HOA demurrer prior to this demurrer, and then amends the complaint a second time, then said potential complaint following this demurrer must be identified as a second amended complaint.

Demurrer of Patrick Brooker, in pro per, set for August 31, 2022.

Defendant to give notice.