Judge: Teresa A. Beaudet, Case: 21STCV40163, Date: 2023-11-28 Tentative Ruling

Case Number: 21STCV40163    Hearing Date: November 28, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

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

On May 8, 2023, Plaintiff filed the operative Second Amended Complaint (“SAC”). The SAC alleges causes of action for (1) false promise, (2) intentional misrepresentation, and (3) negligent misrepresentation.

AGC and Heyward (jointly, the “AGC Defendants”) now move for summary judgment, or in the alternative, summary adjudication of every cause of action of the SAC.[1] Plaintiff opposes.

Discussion  

A.    Legal Standard

“[A] motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in¿Civil Code section 3294, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.” (Code Civ. Proc., § 437c, subd. (f)(1).)¿“A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Ibid.)¿

The moving party bears the initial burden of production to make a prima facie showing that there are no triable issues of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.) If the moving party carries this burden, the burden shifts to the opposing party to make a prima facie showing that a triable issue of material fact exists. (Ibid.) Courts “liberally construe the evidence in support of the party opposing summary judgment and resolve doubts concerning the evidence in favor of that party.” (Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)

When a defendant seeks summary judgment, he/she must show either (1) that one or more elements of the cause of action cannot be established; or (2) that there is a complete defense to that cause of action. (Code Civ. Proc., § 437c, subd. (p)(2).)

B.     Allegations of the SAC

In the SAC, 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”). (SAC, ¶ 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. (SAC, ¶ 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. (SAC, ¶ 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. (SAC, ¶ 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. (SAC, ¶ 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. (SAC, ¶ 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. (SAC, ¶ 11.) 

Plaintiff alleges that it was not aware at any time, until at or about the termination of the sale of the Aircraft by AGC, that AGC was only selling the Aircraft in order to purchase a Gulfstream G4SP. (SAC, ¶ 13.) Plaintiff alleges that the sale of the Aircraft was contingent upon the purchase of the Gulfstream by AGC and/or sorting out various tax implications of the transaction. (SAC, ¶ 13.) Plaintiff alleges that “QS Partners was aware of this contingency plan and/or tax implications that could derail the sale but neither AGC nor QS Partners notified Plaintiff of these contingencies until such time that the attempted purchase was being terminated by AGC and/or when QS Partners became aware of such contingencies failed to timely and appropriately notify Plaintiff before additional sums were expended in trying to purchase the Aircraft.” (SAC, ¶ 13.) Plaintiff alleges that “AGC also continued to shop the Aircraft to other potential purchasers and/or was aware that the Aircraft could potentially be sold for a price higher than that agreed to with Plaintiff, which said facts were never disclosed to Plaintiff by either QS Partners or AGC.” (SAC, ¶ 15.) 

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. (SAC, ¶¶ 11, 17, 20.) On October 11, 2021, Mr. Stauch forwarded the draft Aircraft Purchase Agreement to Mr. Goldberg for review. (SAC, ¶ 20.) 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. (SAC, ¶ 21.)  

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.” (SAC, ¶¶ 3, 22.) 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.” (SAC, ¶ 23.) On October 18, 2021, Mr. Goldberg executed the Aircraft Purchase Agreement and returned it to QS Partners. (SAC, ¶ 24.)

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.” (SAC, ¶ 26.) 

C.     Causes of Action for False Promise and Intentional Misrepresentation

“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.)

In the motion, the AGC Defendants assert that “Plaintiff’s intentional misrepresentation and false promise claims are alternative statements of the same claim, and both claims fail because Plaintiff does not—and cannot— establish any of the essential elements of fraud.” (Mot. at p. 17:20-22.)

First, the AGC Defendants assert that they did not make any promise to perform. In the first cause of action for false promise, Plaintiff alleges, inter alia, that “Defendants 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.” (SAC, ¶ 28.)

In 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.” (Compl., ¶ 37.) Plaintiff alleges that “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.” (SAC, ¶ 37.) Plaintiff 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.” (SAC, ¶ 38.)

The AGC Defendants assert that “[c]ontrary to Plaintiff’s assertion, the undisputed record developed in this case reveals that Defendants did not make any promise to sell the Lear, and therefore Plaintiff cannot establish intentional misrepresentation or false promise.” (Mot. at p. 17:27-18:1.) The AGC Defendants submit the Declaration of Andy Heyward, who is the president and owner of AGC. (Heyward Decl., ¶ 1.) Heyward states that “[i]n or around August 2021, I decided to sell my Bombardier Lear 60 0187 (the ‘Lear’) and purchase a replacement aircraft. I hired QS Partners, LLC (‘QS Partners’) to broker the sale of the Lear and the purchase of a replacement.” (Heyward Decl., ¶ 2.)

Heyward further states that “[o]n or around September 14, 2021, I entered a non-binding letter of intent with Nevada Global Jet to govern the negotiations of the potential sale of the Lear (the ‘Non-Binding LOI’).” (Heyward Decl., ¶ 4.) Heyward “did not reach an agreement with Nevada Global Jet on the sale of the Lear.” (Heyward Decl., ¶ 5.) Heyward states that “[o]n or around September 17, 2021, I began to negotiate the sale of the Lear with Plaintiff DR Nevada Partners (‘DR Nevada’) under the Non-Binding LOI. DR Nevada placed a $100,000 fully refundable deposit into escrow and voluntarily conducted inspections at their expense.” (Heyward Decl., ¶ 6.)

            In the SAC, Plaintiff alleges that “[o]n or about September 17, 2021, AGC Aviation, LLC and Nevada Global Jet, LLC, agent and predecessor-in-interest of Plaintiff DR Nevada Partners, LLC, entered into a ‘Non-Binding Letter of Intent’ for the buyer to purchase one Bombardier Lear 60 0187 (Registration Number N470MD together with two (2) P&W305A Engines…from AGC Aviation, LLC. A true and correct copy of the Letter of Intent is attached hereto as Exhibit A.” (SAC, ¶ 8, Ex. A.) The AGC Defendants note that Section 6.1 of this Letter of Intent (“LOI”) attached to the SAC provides, inter alia, as follows:

“Non-Binding Agreement. Except for the provisions relating to Confidentiality, Escrow and the Deposit, and Governing Law, this LOI is intended solely as an expression of interest in proceeding with the transaction described herein and does not create any legally binding obligations on the Parties. Such obligations will arise only upon execution of a mutually acceptable APA. Prior to execution of the APA, either Party shall have the right to terminate this transaction for any reason or no reason at all. Upon termination, any Deposit placed by Buyer shall be immediately returned and the Parties shall have no further obligations to each other except for the obligation of Confidentiality.”

(Freenock Decl., ¶ 2, Ex. 16, p. 28.)

The AGC Defendants assert that accordingly, “a review of the Non-Binding LOI shows it was not a promise to sell of the [sic] Lear.” (Mot. at p. 18:2-3.)

The AGC Defendants also assert that “[e]ven setting aside Section 6.1, the language of the Non-Binding LOI demonstrates that it is not a promise to follow through on the sale of the Lear…The Non-Binding LOI expressly states it is an ‘offer’ that can be accepted through the execution of an APA.” (Mot. at p. 18:8-10.) The AGC Defendants note that Section 1 of the LOI provides that “Buyer offers to Seller the sum of $1,150,000 for the Aircraft.” (Freenock Decl., ¶ 2, Ex. 16, p. 27.) In addition, Section 7 of the LOI provides that “[t]his Offer is valid through Wednesday, September 8th at 5:00 P.M. Pacific. Thereafter, this Offer shall be null and void and shall have no further force or effect.” (Id. at p. 29.)

In the opposition, Plaintiff asserts that “a claim for fraud does not require a false statement, and may be based on the concealment or suppression of a material fact that the Defendant is legally obligated to disclose.” (Opp’n at p. 11:18-19.) Plaintiff contends that “[a]lthough Defendants attempt to cast Plaintiff’s claims as involving the breach of a letter of intent (LOI) that was concededly non-binding, or as the result of active misrepresentations by Defendants, those claims are actually based on Defendants’ statements, promises, and other conduct arising after the execution of the LOI, but before a final, binding Aircraft Purchase Agreement (APA) was executed, and are based not on Defendants’ active and deliberate representations, but on negligent or reckless representations or, in particular, the concealment or suppression of material facts that Defendants were legally and morally obligated to disclose.” (Opp’n at p. 1:7-13.)

Plaintiff cites to Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248, where the Court of Appeal noted that “[t]he elements of an action for fraud and deceit based on 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.” (Internal quotations omitted.)

Plaintiff argues that “[a] review of the applicable case law establishes that each of the above requirements for a cause of action based on concealment are present in this case.” (Opp’n at p. 12:10-11.) However, Plaintiff’s opposition does not appear to apply the foregoing elements set forth in Boschma to the facts here. Rather, Plaintiff’s opposition solely cites and discusses legal authority after Plaintiff asserts that “[a] review of the applicable case law establishes that each of the above requirements for a cause of action based on concealment are present in this case.” (See Opp’n at p. 12:10-14:15.) In addition, Plaintiff’s first cause of action is for “false promise” and the second is for “intentional misrepresentation.” A cause of action for “fraudulent concealment” is not alleged in the SAC. To the extent Plaintiff is asserting that a claim for fraudulent concealment exists here, the Court notes that “[t]he complaint limits the issues to be addressed at the motion for summary judgment. The rationale is clear: It is the allegations in the complaint to which the summary judgment motion must respond.” (Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258.)

The AGC Defendants also assert that they did not intend to defraud. They argue that “[e]ven had Defendants promised to sell the Lear, the undisputed record evidence reveals this promise was genuine, which forecloses the intentional misrepresentation and false promise claims.” (Mot. at p. 19:21-23.)

In the first cause of action for false promise, Plaintiff alleges, inter alia, 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/or had an undisclosed (to Plaintiff) contingency that AGC would not sell the Aircraft until being able to  purchase a Gulfstream aircraft and/or tax implications, which facts were also known by QS Partners.” (SAC, ¶ 31.) In the second cause of action for intentional misrepresentation, Plaintiff alleges, inter alia, that “Defendants AGC and Heyward knew they did not intend to proceed with the transaction with Plaintiff, unless they located at [sic] Gulfstream airplane to replace the one they were selling (a fact also known by QS Partners) 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.” (SAC, ¶ 38.)

The AGC Defendants note that “[a] promise of future conduct is actionable as fraud only if made without a present intent to perform. A declaration of intention, although in the nature of a promise, made in good faith, without intention to deceive, and in the honest expectation that it will be fulfilled, even though it is not carried out, does not constitute a fraud.” (Magpali v. Farmers Group (1996) 48 Cal.App.4th 471, 481 [internal quotations and citations omitted].)

In his declaration, Heyward states that “[i]n or around August 2021, [he] decided to sell [his] Bombardier Lear 60 0187 (the ‘Lear’) and purchase a replacement aircraft,” and that “[b]y early September 2021, QS Partners had located a potential replacement aircraft for sale (the ‘Gulfstream’), and on or around September 7, 2021, I entered a non-binding letter of intent to purchase the Gulfstream from Ryan Air, LLC (‘Ryan Air’). On or around September 15, 2021, I funded the deposit for the purchase of the Gulfstream.” (Heyward Decl., ¶¶ 2-3.) The AGC Defendants thus assert that “even were the sale of the Lear contingent on the purchase of the Gulfstream, it is undisputed that Defendants had a present intent to purchase the Gulfstream and, in turn, had a present intent to sell the Lear.” (Mot. at p. 20:16-18.)

The AGC Defendants also assert that “the unrefuted record demonstrates that the sale of the Lear was not contingent on the purchase of the Gulfstream, and Defendants intended to proceed—and did in fact proceed— with the sale of the Lear to Plaintiff after their decision not to purchase the Gulfstream.” (Mot. at p. 21:6-8, emphasis omitted.) Heyward states that “[o]n or around October 11, 2021, I terminated the non-binding LOI with Ryan Air regarding the Gulfstream and informed Ryan Air I had decided not to proceed with the transaction,” and that “[n]evertheless, I wanted to proceed with the sale of the Lear and informed QS Partners that the Lear sale should move forward. However, because I would soon be without a plane after the sale of the Lear, and had planned trips for October 2021, I insisted that the APA be amended to permit use of the Lear for the trips. Thereafter, I planned to charter a plane until a suitable replacement aircraft could be purchased. (Heyward Decl., ¶¶ 12, 13.)

 Heyward states that “the parties continued to negotiate the terms of the APA. DR Nevada eventually agreed to allow for use of the Lear for the October flights.” (Heyward Decl., ¶ 15.) Heyward also states that “[o]n or around October 17, 2021, I emailed QS Partners and stated I would have my counsel conduct another review of the draft APA…I then provided the draft APA to my counsel and accountants for another review before executing the APA…” (Heyward Decl., ¶ 16.) Heyward states that “I was not aware of the recapture tax liability I would incur were I to sell the Lear—without purchasing the Gulfstream—until my accountants reviewed the draft APA and informed me of the issue on October 20, 2021.” (Heyward Decl., ¶ 19.)

The AGC Defendants assert that they thus “nevertheless continued to negotiate the terms of the sale of the Lear and exchange drafts of the APA with Plaintiff.” (Mot. at p. 21:10-11.) The AGC Defendants assert that “Plaintiff does not explain the reason Defendants undertook any of these actions if they never intended to sell the Lear to Plaintiff. Contrary to Plaintiff’s unsupported and conclusory assertions, the words and actions of Defendants demonstrate that Defendants maintained a present intent to sell the Lear to Plaintiff even after their decision not to purchase the Gulfstream.” (Mot. at p. 21:15-19, emphasis omitted.)

The AGC Defendants also assert that “Defendants were not aware of the tax recapture liability, which upended the negotiations, until their accountants informed them of the issue on or around October 20, 2021.” (Mot. at p. 21:22-23.) As set forth above, Heyward states in his declaration that “I was not aware of the recapture tax liability I would incur were I to sell the Lear—without purchasing the Gulfstream—until my accountants reviewed the draft APA and informed me of the issue on October 20, 2021.” (Heyward Decl., ¶ 19.)

Heyward indicates in his declaration that he stated in an October 22, 2021 email that he had not “properly connected the dots” on the tax impact of the decision not to purchase the Gulfstream, “which only came into focus” when the accountants informed him on October 20, 2021 of “the tax impact of a sale without the [Gulfstream] to exchange into.” (Heyward Decl., ¶ 24, Ex. 11.) Heyward states that he acknowledged that it was not a deal point QS Partners missed, but rather an issue he did not recognize until the accountants raised it, and that he again stated his desire to speak with Plaintiff and to “see if we can sort this out.” (Ibid.) The AGC Defendants assert that “[t]hese facts—which evince nothing more than an unsuccessful commercial transaction resulting from an unforeseen tax issue—are far afield from what is needed show an intent to defraud.” (Mot. at p. 22:2-4.)

In the opposition, Plaintiff asserts that “where, as here, plaintiff also alleges a claim for negligent misrepresentation, proof of intent to defraud is not required…” (Opp’n at p. 14:26-27.) In support of this assertion, Plaintiff cites to Borman v. Brown (2021) 59 Cal.App.5th 1048, 1061, where the Court of Appeal noted that “[i]n our view, and to clarify, the proper formulation of the elements is that negligent misrepresentation does require proof of intent to induce another’s reliance on the fact misrepresented…However, negligent misrepresentation does not require proof of an intent to defraud.” (Internal quotations and citation omitted, emphasis in original.) But Plaintiff does not appear to cite any legal authority demonstrating that intent to defraud is not an element of Plaintiff’s causes of action for false promise and intentional misrepresentation.

Plaintiff also asserts that “even if Defendants did in fact intend to sell the plane to Plaintiff, their concealment of the fact that contingencies could (and did) thwart that ‘intent’ nonetheless reflects the existence of an intent to deceive or, at the very least, creates a triable issue of fact.” (Opp’n at p. 18:19-22.) Plaintiff notes that an October 21, 2021 email attached to Heyward’s declaration provides, inter alia, that “I think we should have probably explained to him that I was selling the Lear so I could buy a G4sp. I take responsibility for not having insisted we make that clear.” (Heyward Decl., ¶ 19, Ex. 11.) But Plaintiff does not address the AGC Defendants’ assertion, discussed above, that “Defendants intended to proceed—and did in fact proceed— with the sale of the Lear to Plaintiff after their decision not to purchase the Gulfstream,” and that “the words and actions of Defendants demonstrate that Defendants maintained a present intent to sell the Lear to Plaintiff even after their decision not to purchase the Gulfstream.” (Mot. at p. 21:7-8; 21:17-19.)

Based on the foregoing, the Court finds that the AGC Defendants have demonstrated that Plaintiff’s first and second causes of action against them are without merit, and that Plaintiff has failed to raise a triable issue of material fact as to these causes of action. Accordingly, the Court need not and does not address the AGC Defendants’ remaining arguments that the AGC Defendants did not have knowledge of falsity, that Plaintiff cannot establish justifiable reliance, and that Plaintiff cannot establish resulting damage.

D.    Third Cause of Action for Negligent Misrepresentation

“¿The elements of negligent misrepresentation are (1) a misrepresentation of a past or existing material fact, (2) made without reasonable ground for believing it to be true, (3) made with the intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.¿” (¿¿Ragland v. U.S. Bank National Assn. (2012) 209 Cal.App.4th 182, 196¿¿.) In addition, “[t]o state a cause of action for negligent misrepresentation, plaintiff must allege facts establishing that defendants owed him a duty to communicate accurate information.” (Friedman v. Merck & Co.¿(2003) 107 Cal.App.4th 454, 477.) 

The AGC Defendants assert that “Plaintiff does not—and cannot—put forward evidence to sustain its claim against Mr. Heyward for negligent misrepresentation.” (Mot. at p. 25:6-7.) First, the AGC Defendants assert that Plaintiff cannot show that Heyward owed Plaintiff any duty. The AGC Defendants cite to Peterson Dev. Co. v. Torrey Pines Bank (1991) 233 Cal.App.3d 103, 107, where the Court of Appeal noted that “[t]he trial court granted a motion for summary judgment made by defendants Torrey Pines Bank (TPB) and Torrey Pines Equity Corporation (TPEC) in this action by Peterson Development Company, Inc., and its president and sole shareholder, Eric Peterson (collectively Peterson)…Peterson’s action for damages against TPB and TPEC arose out of a construction loan transaction and alleged theories of breach of contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, and constructive fraud.” The Peterson Cout noted, inter alia, that “absent any fiduciary duty undertaken by TPB, we find no duty on its part to disclose the internal breakdown of the loan fees charged.” (Id. at pp. 119-120.) The AGC Defendants also cite to Henry v. Associated Indem. Corp. (1990) 217 Cal.App.3d 1405, 1419, where the Court of Appeal noted that “[w]ith regard to the specific allegations of Henry’s complaint, the letter attached as an exhibit to the complaint, purporting to show the creation or evidence of a special relationship that was fiduciary in nature, does not reveal anything other than an ordinary arm’s-length business relationship between the insured and the insurers and its agents. We do not believe Henry has successfully alleged facts showing these insurers held themselves out as fiduciaries in such a way as to justify Henry’s alleged extensive reliance on their honesty, integrity and fidelity or to enhance their existing duties under their contracts.” (Internal quotations omitted.)

In the opposition, Plaintiff cites to SCC Acquisitions, Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 864, where the Court of Appeal noted that “[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.” (Internal quotations omitted.) Plaintiff argues that “a duty to disclose arises where, as here, there is a business relationship between the parties, and where the Defendant’s conduct makes it wrong for it to remain silent.” (Opp’n at p. 12:8-9.)

But the Court of Appeal in SCC Acquisitions, Inc. v. Central Pacific Bank, supra, 207 Cal.App.4th at page 864 noted that “[t]he elements of an action for fraud and deceit based on 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. 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.” (Internal quotations and citations omitted, emphasis added.) The

SCC Acquisitions case did not discuss any cause of action for negligent misrepresentation.

The AGC Defendants also assert that Heyward did not misrepresent a past or existing material fact. In the third cause of action for negligent misrepresentation, Plaintiff alleges 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. In its Letter of Intent, and in the email correspondence that followed between AGC, through its agent QS Partners, LLC and Heyward, to Plaintiff, Defendant AGC promised that it was its intention to sell the Aircraft, that the Aircraft was for sale, that Plaintiff was the intended buyer, and ultimately that Defendant AGC Aviation, LLC (and its counsel) and Heyward had even approved the terms of the Aircraft Purchase Agreement signed by DR Nevada Partners, LLC.” (SAC, ¶ 45.) Plaintiff alleges that “[a]lthough Defendants may have believed the representations were true when they were made, that AGC intended to offer the Aircraft for sale to Plaintiff, Defendants had no reasonable grounds for believing they were true when made.” (SAC, ¶ 47.)

The AGC Defendants cite to Tarmann v. State Farm Mut. Auto. Ins. Co., supra, 2 Cal.App.4th at page 159, where the Court of Appeal noted that “[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. Given this requirement, an action based on a false promise is simply a type of intentional misrepresentation, i.e., actual fraud…The specific intent requirement also precludes pleading a false promise claim as a negligent misrepresentation, i.e., The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true.” (Internal quotations, citations, and emphasis omitted.) The AGC Defendants assert that “Plaintiff relies on the same purported false promise described above for its negligence claim,” and that “Plaintiff is not permitted to repackage his false promise and intentional misrepresentation claims as negligent misrepresentation.” (Mot. at p. 26:13-14; 26:24-25.) Plaintiff does not appear to address or dispute this point in the opposition.

The AGC Defendants also cite to Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 458, where the Court of Appeal noted that “[a]lthough a false promise to perform in the future can support an intentional misrepresentation claim, it does not support a claim for negligent misrepresentation. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158–159 [2 Cal. Rptr. 2d 861] (Tarmann).) In Tarmann, the court held that a misrepresentation that the insurer ‘would pay for [the insured’s] repairs immediately upon their completion’ was not actionable negligent misrepresentation because it was a promise of future performance…According to the Tarmann court, there was actionable deceit only if the insurer never intended, at the time it made the representations, to follow through on its promise…Here, Alliance’s representation that it would obtain a release of the notice of abatement action prior to the close of escrow likewise was a promise of future performance, and thus cannot be the basis for a negligent misrepresentation cause of action.”  (Emphasis in original.) The AGC Defendants assert that here, “[t]he gist of Plaintiff’s negligent misrepresentation claim is that Defendants promised to follow through on the sale of the Lear. Even had Defendants made these promises, the purported misrepresentations…did not involve a past or existing material fact. Rather, [they] involved a promise to perform at some future time…Plaintiff’s negligent misrepresentation claim therefore fails as a matter of law.” (Mot. at p. 27:7-11.) Plaintiff also does not appear to address or dispute this point in the opposition.

            Based on the foregoing, the Court finds that the AGC Defendants have demonstrated that Plaintiff’s third cause of action against Heyward is without merit, and that Plaintiff has failed to raise a triable issue of material fact as to this cause of action.

Conclusion

Based on the foregoing, the Court grants the AGC Defendants’ motion for summary judgment.

The Court orders the AGC Defendants to file and serve a proposed judgment of dismissal within 10 days of the date of this Order.¿ The AGC Defendants are ordered to give notice of this Order.

DATED:  November 28, 2023           

                        ________________________________

Hon. Rolf M. Treu

Judge, Los Angeles Superior Court