Judge: Stephen P. Pfahler, Case: 23STCV01648, Date: 2024-02-08 Tentative Ruling

Case Number: 23STCV01648    Hearing Date: February 8, 2024    Dept: 68

Dept. 68

Date: 2-8-24

Case #23STCV016448

Trial Date: 7-22-24

DEMURRER

MOVING PARTY: Defendants, Kamran Rahimi, et al.

RESPONDING PARTY: Plaintiff, Elliot Tishbi

RELIEF REQUESTED

Demurrer to the Second Amended Complaint

·         2^nd Cause of Action: Fraud

SUMMARY OF ACTION

Plaintiff Elliot Tishbi alleges an oral agreement with defendants Kamran and Ramin Rahimi in May 2021, whereby if Plaintiff found a tenant to enter into a one year minimum lease for premises located at 794-796 Stanford Avenue, Los Angeles, Defendants would pay Plaintiff a $50,000 fee. Plaintiff alleges the placement of a tenant for a three year lease term. No fee was ever paid.

On January 25, 2023, Plaintiff filed a complaint for Breach of Oral Contract, Fraud, and Violation of Penal Code section 496, subdivision (a). On July 5, 2023, the court sustained the demurrer to the complaint. On August 1, 2023, Plaintiff filed a first amended complaint for Breach of Oral Contract, Fraud, and Violation of Penal Code section 496, subdivision (a) on August 1, 2023. On December 11, 2023, the court overruled the demurrer to the breach of contract cause of action, and sustained the demurrer to the remainder of the first amended complaint with 20 days leave to amend. On December 29, 2023, Plaintiff filed a second amended complaint for Breach of Oral Contract, and Fraud.

RULING: Sustained without Leave to Amend.

Defendants Kamran and Ramin Rahimi submit a demurrer to the second cause of action for fraud in the second amended complaint. Defendants challenge the fraud claim on grounds that Plaintiff fails to allege a separate and independent cause of action from the breach of contract claim, including a claim of damages beyond the contract. Defendants also contend Plaintiff added new, inconsistent factual allegations from the complaint and first amended complaint in order to evade a demurrer. Plaintiff in opposition denies pleading the fraud claim as an improper alternative to the breach of contract claim. Plaintiff additionally maintains the fraud claim is pled with sufficient factual particularity.

The court electronic filing system shows no reply on file 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.]

“‘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.’” … [¶] ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “Fraud in the inducement is a subset of the tort of fraud. It ‘occurs when “‘the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.’”’ (Citations.)” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294-295.) “[I]n order to support a claim of fraud based upon the alleged failure to perform a promise, it must be shown that the promisor did not intend to perform at the time the promise was made. (Conrad v. Bank of America (1996) 45 Cal.App.4th 133, 157 accord Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.)

On the inconsistencies argument, the court addresses the standard for a sham pleading. “Where a party files an amended complaint and seeks to avoid the defects of a prior complaint either by omitting the facts that rendered the complaint defective or by pleading facts inconsistent with the allegations of prior pleadings” the pleading is considered a sham pleading. (Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 383-384; Berman v. Bromberg (1997) 56 Cal.App.4th 936, 946 [“A pleader may not attempt to breathe life into a complaint by omitting relevant facts which made his previous complaint defective”].) A pleader is entitled to explain any inconsistencies. (Ibid.)

Defendants focus on the additional allegations regarding “lost profits” from an “overseas” order, as the basis of the contention for newly manufactured allegations regarding efforts to evade the prior orders sustaining the demurrer. As addressed below, the court finds the additional arguments inconsequential to the demurrer itself, and therefore declines to determine any improper inconsistencies.

The fraud claim initially appears to arise in promissory fraud in that Defendants never intended to pay at the time of making the purported agreement. [Sec. Amend. Comp., ¶ 31.] Plaintiff then adds in said new allegations regarding the needed commission for an overseas textile purchase. [Sec. Amend. Comp., ¶ 32.] Finally, Plaintiff also alleges fraud based on “an attempt to avoid litigation” through an offer to pay the commission if Plaintiff delayed suing. [Sec. Amend. Comp., ¶ 36.]

Consistent with the prior holdings, Plaintiff cannot allege a fraud claim arising from the non-performance of the oral contract, no matter how the claim is framed and pled. (Tenzer v. Superscope, Inc., supra, 39 Cal.3d at pp. 30-31; Conrad v. Bank of America, supra, 45 Cal.App.4th at p. 157.) Decoupling the fraud claim from the breach of contract, as argued by Plaintiff, renders the damages sought as not from the lost commission, but the “lost profits” from the failed overseas textile purchase. [Sec. Amend. Comp., ¶ 42.] The court finds the additional lost opportunity profits in the overseas textile deal allegations, also lack a separate and independent basis for recovery in fraud.

Again, assuming the change in the basis of the claim, the elements of fraud still require consideration of the reliance and causation elements of the claim. “The plaintiff must also plead the injury or damage suffered and its causal connection to plaintiff's reliance on the defendant's misrepresentations.” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1239.) “Actual reliance occurs when a misrepresentation is an immediate cause of [a plaintiff's] conduct, which alters his legal relations, and when, absent such representation, he would not, in all reasonable probability, have entered into the contract or other transaction.” (Conroy v. Regents of University of California (2009) 45 Cal.4th 1244, 1256 (internal quotation marks omitted).)

Essentially, Plaintiff seeks to allege fraud by characterizing the lease commission as part of a separate, unrelated business dealing with third parties. The presumption further requires a finding that the communication of urgency to receive said payment, due to the pending transaction for the overseas shipment in no way reflects back on the purported agreement between the parties. The court finds no basis for an independent fraud claim under this factual scenario.

The operative complaint indicates Plaintiff agreed to perform the brokerage services for payment, whether or not the secondary deal was pending or not. Knowledge of the outstanding “overseas” textile order by Defendants in no way alters the underlying agreement between the parties for payment of a commission upon the placement of a tenant for a minimum of one year. Thus, the court finds no basis of reasonable reliance or causation based on knowledge of the other pending transaction(s) with third parties. The promise on the failure to perform claim arises from the core lease commission agreement, not the overseas transaction. The damages are therefore subsumed into the breach of contract claim and cannot be separately pled as an alternative fraud claim.

After three successive efforts, and three demurrers, the court finds Plaintiff is unable to establish a basis of a claim against defendant on the fraud claim. The court therefore sustains the demurrer without leave to amend as to the second cause of action. (Code Civ. Proc., § 430.41, subd. (e)(1); Youngman v. Nevada Irr. Dist. (1969) 70 Cal.2d 240, 245.) Defendant to answer the breach of contract cause of action within 10 days of this order.

Defendant to give notice.