Judge Teresa A. Beaudet, Case 21STCV40163 2023-04-17 Tentative Ruling

Plaintiff DR Nevada Partners, LLC (“Plaintiff”) filed this action on November 1, 2021 against Defendants AGC Aviation, LLC (“AGC”), Andy Heyward (“Heyward”), and QS Partners, LLC (“QS Partners”) (collectively, “Defendants”). The original Complaint asserted causes of action for (1) false promise, (2) intentional misrepresentation, (3) negligent misrepresentation, (4) breach of contract, and (5) breach of the covenant of good faith and fair dealing.

AGC demurred to each cause of action of the Complaint, and on April 22, 2022, the Court issued an Order sustaining AGC’s demurrer to the Complaint in its entirety, with leave to amend.

On May 12, 2022, Plaintiff filed the operative First Amended Complaint (“FAC”), asserting causes of action for (1) false promise, (2) intentional misrepresentation, (3) negligent misrepresentation, (4) breach of contract, and (5) breach of the covenant of good faith and fair dealing.[1]

AGC demurred to each cause of action of the FAC. On August 22, 2022, the Court issued an Order, inter alia, overruling AGC’s demurrer to the first and second causes of action, and sustaining AGC’s demurrer to the third, fourth, and fifth causes of action, without leave to amend.

QS Partners now demurs to the first and second causes of action of the FAC. Plaintiff opposes.

In the FAC, Plaintiff alleges that on or about September 17, 2021, AGC and Nevada Global Jet, LLC, the predecessor-in-interest of Plaintiff, entered into a “Non-Binding Letter of Intent” (“LOI”) for the buyer to purchase from AGC one “Bombardier Lear 60 0187” together with two “P&W305A Engines” (the “Aircraft”). (FAC, ¶ 8, Ex. A.)

Plaintiff was finalizing its registration as a limited liability company in the State of Nevada with the intent of being the purchaser of the Aircraft. (FAC, ¶ 9.) On September 21, 2021, four days after Nevada Global Jet, LLC entered into the LOI on its behalf, Plaintiff obtained its formal registration with the State of Nevada. (FAC, ¶ 9.)

Among other terms and conditions, the LOI required that the buyer place a $100,000 deposit into escrow and allowed the buyer to conduct a visual inspection and records review within five business days of execution of the LOI. (FAC, ¶ 10.) Plaintiff alleges that upon execution of the LOI, Plaintiff wired the required $100,000 deposit to escrow, retained third-parties to inspect the Aircraft, obtained a required appraisal, and secured financing for the purchase of the Aircraft. (FAC, ¶ 11.) Plaintiff alleges that it incurred significant expenses in reliance on the LOI and representations made by AGC, Heyward, and their aircraft broker, QS Partners. (FAC, ¶ 11.) Plaintiff alleges that Defendants accepted the deposit from Plaintiff and understood and agreed that Plaintiff would be the buyer completing the purchase pursuant to the LOI. (FAC, ¶ 11.)

On October 9, 2021, Tyler Stauch, the Vice President of AGC’s aircraft broker QS Partners, advised Plaintiff’s Rodney Goldberg that AGC’s attorney had approved a draft Aircraft Purchase Agreement and Mr. Stauch was waiting for the seller to confirm. (FAC, ¶¶ 11, 12, 15.)

On October 11, 2021, Mr. Stauch forwarded the draft Aircraft Purchase Agreement to Mr. Goldberg for review. (FAC, ¶ 15.) On October 13, 2021, Mr. Stauch suggested to Mr. Goldberg by email to schedule a test flight to the delivery location on October 25 or 26, 2021 and to plan to close on the Aircraft immediately after. (FAC, ¶ 16.)

On October 17, 2021, Heyward, a member of AGC, advised by email that he approved the Aircraft Purchase Agreement once Stephen Hofer, counsel for AGC, “gives me the ok.” (FAC, ¶ 17.) On October 18, 2021, Mr. Stauch provided a “clean” approved version of the Aircraft Purchase Agreement to Mr. Goldberg by email for signature, and stated that “we are looking forward to the next steps.” (FAC, ¶ 18.) On October 18, 2021, Mr. Goldberg executed the Aircraft Purchase Agreement and returned it to QS Partners. (FAC, ¶ 19.)

On October 27, 2021, Mr. Hofer sent Mr. Goldberg an email stating that AGC Aviation, LLC “decided not to proceed with the sale of the Aircraft at this time and is giving formal notice, through this email communication, that it is terminating the LOI and ending the proposed transaction.” (FAC, ¶ 20.)

“To maintain an action for deceit based on a false promise, one must specifically allege and prove, among other things, that the promisor did not intend to perform at the time he or she made the promise and that it was intended to deceive or induce the promisee to do or not do a particular thing. Given this requirement, an action based on a false promise is simply a type of intentional misrepresentation, i.e., actual fraud.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 159 [internal citations omitted, emphasis in original].)

“To plead a cause of action for fraud, a plaintiff must plead facts showing the following elements: (1) misrepresentation, (2) knowledge of falsity, (3) intent to defraud, (4) justifiable reliance, and (5) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) “[F]raud must be specifically pleaded. This means: (1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action for fraud must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.” (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.)

QS Partners asserts that Plaintiff’s false promise and intentional misrepresentation causes of action fail, because Plaintiff does not allege knowledge of falsity or intent to defraud as to QS Partners. QS Partners asserts that “Plaintiff makes many allegations that QS Partners made statements on behalf of the Putative Sellers but does not provide any particular factual allegations that QS Partners had knowledge that such statements were false, let alone that QS Partners intended to defraud AGC.” (Demurrer at p. 4:25-27.)

In support of the first cause of action for false promise, Plaintiff alleges that “AGC Aviation, LLC, Andy Heyward, and QS Partners, LLC each made false promises to Plaintiff and to its agent/predecessor-in-interest that Defendant AGC Aviation, LLC intended to sell the Aircraft, and to follow through with the proposed sale of the Aircraft.” (FAC, ¶ 22.) However,

Plaintiff alleges that “Defendants AGC and Heyward did not intend to perform the promises when the promises were made, waiting instead until after Plaintiff had made significant expenditures of time and money and signed the Aircraft Purchase Agreement to ‘terminate’ the Letter of Intent.” (FAC, ¶ 25, underline added.) Plaintiff also alleges that “Defendants AGC and Heyward knew they did not intend to proceed with the transaction with Plaintiff, and that they were not interested in completing the sale with Plaintiff, as they continued to entertain other sales opportunities and offer the Aircraft to other purchasers despite the Letter of Intent representing that it was AGC’s interest in selling the Aircraft specifically to Plaintiff, and despite email correspondence from AGC, Heyward, and AGC’s agent QS Partners, LLC representing

that the sales transaction was moving forward with Plaintiff.” (FAC, ¶ 25, underline added.)

Plaintiff does not allege that QS Partners did not intend to perform the alleged

promise to Plaintiff that AGC intended to sell the Aircraft. As set forth above, “[t]o maintain an action for deceit based on a false promise, one must specifically allege and prove, among other things, that the promisor did not intend to perform at the time he or she made the promise and that it was intended to deceive or induce the promisee to do or not do a particular thing.” (Tarmann v. State Farm Mut. Auto. Ins. Co., supra, 2 Cal.App.4th at p. 159.) Accordingly, the Court sustains QS Partners’ demurrer to the first cause of action.

In support of the second cause of action for intentional misrepresentation, Plaintiff alleges, inter alia, that “Defendants made representations to Plaintiff that Defendant AGC Aviation, LLC would negotiate in good faith an Aircraft Purchase Agreement commemorating the sale of its Aircraft to Plaintiff...Defendants promised that it was their intention to sell the Aircraft, that the Aircraft was for sale, and ultimately that Defendant AGC Aviation, LLC (and its counsel) had even approved the terms of the Aircraft Purchase Agreement signed by DR Nevada Partners, LLC.” (FAC, ¶ 30.) Plaintiff alleges that “Defendants AGC and Heyward knew they did not intend to proceed with the transaction with Plaintiff, and that they were not interested in completing the sale with Plaintiff, as they continued to entertain other sales opportunities and offer the Aircraft to other purchasers despite the Letter of Intent representing that it was AGC’s interest in selling the Aircraft specifically to Plaintiff, and despite email correspondence from AGC, Heyward, and AGC’s agent QS Partners, LLC representing that the sales transaction was moving forward with Plaintiff.” (FAC, ¶ 30, underline added.)

However, as noted by QS Partners, Plaintiff does not allege with specificity how QS Partners engaged in any knowing misconduct. Plaintiff generally alleges that “Defendants knew the representations that they made were false when they were made, or made the representations recklessly without regard to their truth.” (Compl., ¶ 30.) However, Plaintiff does not allege with factual specificity how QS Partners allegedly knew of the falsity of Defendants’ purported misrepresentation.

Based on the foregoing, the Court sustains QS Partners’ demurrer to the second cause of action.

Lastly, the Court notes that QS Partners does not demur to Plaintiff’s third cause of action for negligent misrepresentation. However, in the reply, QS Partners asserts that “[a]s the Court previously dismissed Plaintiffs’ Third Cause of Action without leave to amend before QS Partners responded to the FAC, there is no pending Third Cause of Action for Negligent Misrepresentation pending against QS Partners.” (Reply at p. 2:19-22, emphasis in original.) QS Partners also notes that the Court’s August 22, 2022 Order indicates in connection with the negligent misrepresentation cause of action that, inter alia, “Plaintiff failed to allege that Defendants owed him a duty to communicate accurate information.” (Order at p. 11:21-22.)

But QS Partners was not a party to AGC’s demurrer, and AGC’s demurrer to the cause of action for negligent misrepresentation was only sustained as to AGC. QS Partners does not cite any legal authority demonstrating that a Court’s ruling on one defendant’s demurrer operates to bar a cause of action against a different defendant. Thus, as Plaintiff notes, the third cause of action for negligent misrepresentation is still asserted as to QS Partners.

Based on the foregoing, QS Partners’s demurrer to the first and second causes of action of the FAC is sustained, with leave to amend.

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this Order. If no amended complaint is filed within 20 days of this Order, QS Partners is ordered to file and serve its answer within 30 days of the date of this Order.¿¿

[1]The first, second, and third causes of action of the FAC are alleged against all Defendants. The fourth and fifth causes of action are alleged only against AGC and Heyward.

DR NEVADA PARTNERS, LLC, Plaintiff, vs. AGC AVIATION, LLC, et al., Defendants.	Case No.:	21STCV40163
	Hearing Date:	April 17, 2023
	Hearing Time:	2:00 p.m.
	[TENTATIVE] ORDER RE: DEFENDANT QS PARTNERS, LLC’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT

Superior Court of California

County of Los Angeles

Department 50