Judge Teresa A. Beaudet, Case Number: 23STCV30316, Date: 2024-07-17 Tentative Ruling

Plaintiff Opera Bright, LLC (“Plaintiff”) filed this action on December 12, 2023 against Defendants Hills One, LLC (“Hills One”), Key Compounds, LLC, Hills Group, LLC (“Hills Group”), Alex Reyter, Jay Rifkin, and Paul Fiore (collectively, “Defendants”). The Complaint alleges causes of action for (1) fraud, (2) fraudulent transfer, (3) conspiracy to defraud, (4) aiding and abetting fraud, (5) negligent misrepresentation, and (6) breach of contract.

Hills One now demurs to each of the causes of action of the Complaint. Hills Group also demurs to each of the causes of action of the Complaint. Plaintiff opposes both.

In the Complaint, Plaintiff alleges that “[a]t various times from about July to October 2019, HILLS ONE took loans from Claimant’s predecessors-in-interest in varying amounts, from $5,000 up to $250,000. For each of those loans, HILLS ONE executed four separate written documents with the lender, entitled ‘Promissory Note,’ ‘Security Agreement,’ ‘Pledge Agreement’ and ‘Corporate Guaranty’ (collectively, the ‘Loan Documents’).” (Compl., ¶ 12.) Plaintiff alleges that “[a] true and correct copy of one set of Loan Documents is attached hereto as Exhibits ‘A’ through ‘D’” (Compl., ¶ 12.) “For each loan memorialized by the Loan Documents, the loan was secured by designated assets (the ‘Equipment’) purportedly owned by HILLS ONE.” (Compl., ¶ 14.)

“HILLS ONE defaulted on each loan memorialized by the Loan Documents.” (Compl., ¶ 16.) “Between about August and November 2020, the lender entities on each loan memorialized by the Loan Documents executed written assignments, assigning their respective interests and rights under the Loan Documents to Claimant OPERA BRIGHT.” (Compl., ¶ 17.) “In about April 2021, OPERA BRIGHT exercised its rights under the Loan Documents to foreclose on the Equipment. After providing all due notices and fulfilling all required prerequisites for the foreclosure, OPERA BRIGHT caused the Equipment to be sold at auction to a third party.” (Compl., ¶ 18.)

“On about December 22, 2022, KEY COMPOUNDS filed a judicial complaint against OPERA BRIGHT in the Circuit Court of the State of Oregon for the County of Linn, designated as Case No. 22CV42152, initiating the Oregon Litigation…In the Oregon Litigation, KEY COMPOUNDS alleges that it is a wholly owned subsidiary of HILLS ONE. KEY COMPOUNDS also alleges that it, not HILLS ONE, was the owner of the Equipment when OPERA BRIGHT foreclosed on the Equipment and caused it to be sold at auction.” (Compl., ¶¶ 19-20.) Plaintiff alleges that “[a]s a consequence of being forced to defend itself in the Oregon Litigation, OPERA BRIGHT has had to retain counsel and has incurred, and will continue to significant attorney’s fees and litigation costs.” (Compl., ¶ 22.)

Hills One first asserts that “[a]ll of Plaintiff’s Causes of Action fail as against Hills One because Plaintiff lacks standing to bring this lawsuit.” (Demurrer at p. 5:22-23.)

“Standing is the threshold element required to state a cause of action and, thus, lack of standing may be raised by demurrer. To have standing to sue, a person, or those whom he properly represents, must have a real interest in the ultimate adjudication because [he] has [either] suffered [or] is about to suffer any injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be adequately presented. Code of Civil Procedure section 367 establishes the rule that [e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute. A real party in interest is one who has an actual and substantial interest in the subject matter of the action and who would be benefited or injured by the judgment in the action.” ((Martin v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031-1032 [internal quotations and citations omitted].)

In the Complaint, Plaintiff alleges that “OPERA BRIGHT is the assignee of all rights of the lenders under the Loan Documents, including the right to bring this claim against Defendants.” (Compl., ¶ 36.) Hills One asserts that this allegation is “unsupported by the Exhibits attached to the Complaint. In fact, those Exhibits reveal that any such assignment requires the consent of Hills One, and Plaintiff does not allege any such consent occurred…” (Demurrer at p. 5:25-27.)

As set forth above, Plaintiff alleges that “[a]t various times from about July to October 2019, HILLS ONE took loans from Claimant’s predecessors-in-interest in varying amounts, from $5,000 up to $250,000. For each of those loans, HILLS ONE executed four separate written documents with the lender, entitled ‘Promissory Note,’ ‘Security Agreement,’ ‘Pledge Agreement’ and ‘Corporate Guaranty’ (collectively, the ‘Loan Documents’). A true and correct copy of one set of Loan Documents is attached hereto as Exhibits ‘A’ through ‘D’ and incorporated herein.” (Compl., ¶ 12.)

Hills One notes that the “Promissory Note” attached as Exhibit “A” to the Complaint states that it is “made by Hills One, LLC…in favor of Primus Trust Corp., located in Budapest, Hungary, in its capacity as the trustee of the AC Trust…” (Compl., ¶ 12, Ex. A.) The “Security Agreement” attached as Exhibit “B” to the Complaint lists the “Creditor” as “Primus Trust Corp., as the trustee of The AC Trust” and the “Debtor” as “Hills One, LLC.” (Compl., ¶ 12, Ex. B.) The “Pledge Agreement” attached as Exhibit “C” to the Complaint is “between Primus Trust Corp., located in Budapest, Hungary, in its capacity as the trustee of The AC Trust…and Hills One, LLC…” (Compl., ¶ 12, Ex. C.) The “Corporate Guaranty” attached as Exhibit “D” to the Complaint is “entered into by Hills One, LLC…for the benefit of Primus Trust Corp., located in Budapest, Hungary, as the trustee of the AC Trust.” (Compl., ¶ 12, Ex. D.)

Hills One notes that Exhibits A and B to the Complaint contain the following provision: “[t]he rights, duties and obligations of this [Note/Agreement] may not be assigned in whole or in part by either arty [sic] without the prior written consent of the non-assigning party. Any assignment without such consent shall be void.” (Compl., ¶ 12, Ex. A, § 17; Ex. B, § 13.) Hills One asserts that “Plaintiff’s Complaint does not allege that it obtained the necessary ‘prior written consent’ of Hills One. Plaintiff thus has no rights, duties, or obligations under the written agreements – to which it is not a party – and Plaintiff’s lack of standing bars the Complaint entirely.” (Demurrer at p. 6:12-15.)

As an initial matter, the Court notes that Hills One does not appear to assert that Exhibits “C” or “D” to the Complaint contain any non-assignment provision. Thus, Hills One’s standing argument only appears to apply to the documents attached as Exhibits “A” and “B” to the Complaint. As set forth above, the Complaint refers to Exhibits “A” through “D” collectively as the “Loan Documents.” (Compl., ¶ 12.) Each of the causes of action of the Complaint refer to the collective term “Loan Documents.” (See Compl., ¶¶ 30, 34, 36, 40, 41, 43, 48, 52, 56, 60, 64, 67, 68, 71, 73, 74.) The Court notes that “¿¿¿a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.¿¿¿” (¿Kong ¿v. ¿City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047¿¿¿; ¿see also ¿PH ¿II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action.”]¿¿¿.)

Hills One also asserts that “without the alleged assignment documents, it is impossible to determine the scope of the rights Plaintiff has allegedly been assigned.” (Demurrer at p. 6:21-22.) But in each of the causes of action, Plaintiff alleges that “OPERA BRIGHT is the assignee of all rights of the lenders under the Loan Documents, including the right to bring this claim against Defendants.” (Compl., ¶¶ 36, 43, 52, 60, 68, 74.) The Court notes that “[i]t is well settled that a general demurrer admits the truth of all material factual allegations in the complaint and that the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof, does not concern the reviewing court.” ((Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1267.)

Next, Hills One asserts that Plaintiff fails to “sufficiently allege falsity as to the first, second, third, fourth, and fifth causes of action.” (Demurrer at p. 7:26-27.) Hills One asserts that “Plaintiff’s First (Fraud), Second (Fraudulent Transfer), Third (Conspiracy to Defraud), Fourth (Aiding And Abetting Fraud), and Fifth (Negligent Misrepresentation) Causes of Action all require that Plaintiff sufficiently allege falsity of the alleged representations made by Hills One in the ‘Loan Documents.’” (Demurrer at pp. 7:28-8:3)

With regard to the element of “falsity,” “[t]he elements of fraud or deceit…are: a representation, usually of fact, which is false, knowledge of its falsity, intent to defraud, justifiable reliance upon the misrepresentation, and damage resulting from that justifiable reliance.” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72-73 [emphasis added].) “The elements of negligent misrepresentation are similar to intentional fraud except for the requirement of scienter; in a claim for negligent misrepresentation, the plaintiff need not allege the defendant made an intentionally false statement, but simply one as to which he or she lacked any reasonable ground for believing the statement to be true.” ((Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.)

In the Complaint, Plaintiff alleges that “in the Loan Documents, HILLS ONE represented that it owned the Equipment which was pledged as security for the underlying loans, and that it would not transfer or hypothecate the Equipment to harm the lenders’ rights,” and that “[a]s alleged by KEY COMPOUNDS in the Oregon Litigation, those representations by HILLS ONE were false because KEY COMPOUNDS was actually the owner of the Equipment.” (Compl., ¶¶ 30, 32.) In the demurrer, Hills One asserts that “Plaintiff’s Complaint and the Exhibits thereto reveal that Hills One made no false representations about ownership of the ‘Equipment’: Hills One represented that it and/or its wholly-owned subsidiaries owned the ‘Equipment’ which comprised the ‘Collateral’.” (Demurrer at p. 8:9-11.) However, in support of this assertion, Hills One only cites to certain language of Exhibit “C” to the Complaint. (See Demurrer at p. 8:16-21.) As discussed, Plaintiff refers to Exhibits “A” through “D” collectively as the “Loan Documents,” and each of the causes of action of the Complaint refer to the collective “Loan Documents.” Hills One does not appear to argue or show that the definition of “Collateral” in Appendix A to Exhibit “C” pertains to each of the other exhibits to the Complaint.

As set forth above, “¿¿¿a demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.¿¿¿” (¿Kong ¿v. ¿City of Hawaiian Gardens Redevelopment Agency, supra, 108 Cal.App.4th at p. 1047¿¿¿; ¿see also ¿PH ¿II, Inc. v. Superior Court, supra, 3 Cal.App.4th at p. 1682 [“A demurrer does not lie to a portion of a cause of action.”]¿¿¿.)

Hills One also asserts that the fraud cause of action fails. In the first cause of action for fraud, Plaintiff alleges that “in the Loan Documents, HILLS ONE represented that it owned the Equipment which was pledged as security for the underlying loans, and that it would not transfer or hypothecate the Equipment to harm the lenders’ rights,” and that “[a]s alleged by KEY COMPOUNDS in the Oregon Litigation, those representations by HILLS ONE were false because KEY COMPOUNDS was actually the owner of the Equipment.” (Compl., ¶¶ 30, 32.)

“Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made…This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield v. Starkey, supra, 220 Cal.App.3d at p. 73 [internal quotations and emphasis omitted].)

In the demurrer, Hills One asserts, inter alia, that “Plaintiff does not allege…any of the ‘when, where, to whom’ beyond pointing to one set of loan documents.” (Demurrer at p. 9:25-26, emphasis omitted.) Plaintiff does not appear to respond to this point in the opposition. Rather, Plaintiff concedes that “but for Defendants’ pending anti-SLAPP motions, OPERA BRIGHT probably would have amended its complaint to add more specificity to the fraud claims.” (Opp’n at p. 7:27-28.)

In addition, Hills One notes that the Complaint alleges that “Defendants made those false representations in the Loan Documents with the intent to induce the lenders to make the underlying loans to HILLS ONE, and those lenders reasonably relied on HILLS ONE’s false representations in making the loans.” (Compl., ¶ 34.) Hills One asserts that “Plaintiff offers no factual support for either of these legal conclusions.” (Demurrer at p. 10:3-4.) The Court agrees that paragraph 34 is conclusory. Moreover, Plaintiff does not respond to or dispute this point in the opposition.

Based on the foregoing, the Court sustains Hills One’s demurrer to the first cause of action for fraud.

In the second cause of action for fraudulent transfer, Plaintiff alleges that “Defendants caused HILLS ONE to transfer the Equipment to KEY COMPOUNDS in an effort to deprive the lenders on the Loan Documents of the value and security of the underlying loans, and to place the Equipment beyond the lenders’ reach.” (Compl., ¶ 41.) Plaintiff alleges that “[w]hen HILLS ONE transferred the Equipment to KEY COMPOUNDS, HILLS ONE did not receive reasonably equivalent value for the Equipment and HILLS ONE was left insolvent.” (Compl., ¶ 42.)

Hills One cites to Optional Capital, Inc. v. DAS Corp. (2014) 222 Cal.App.4th 1388, 1401-1402, where the Court of Appeal noted that “California has adopted the Uniform Fraudulent Transfer Act (Civ. Code §§ 3439–3439.12). The purpose of the Act is to prevent debtors from placing property which legitimately should be available for the satisfaction of demands of creditors beyond their reach…Civil Code section 3439.04 provides two methods of establishing a fraudulent transfer. Actual fraud, as defined in subdivision (a)(1), is a transfer made with actual intent to hinder, delay, or defraud any creditor of the debtor. Constructive fraud, as defined in subdivision (a)(2), requires a showing that the debtor did not receive reasonably equivalent value for the transfer, and the transfer was made when the debtor (A) [w]as engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or (B) the debtor [i]ntended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due. Section 3439.04 is construed to mean a transfer is fraudulent if the provisions of either subdivision (a)(1) or subdivision (a)(2) are satisfied.” (Internal quotations omitted.)

In the demurrer, Hills One notes that “Plaintiff’s Complaint fails to allege any details surrounding the purported fraudulent transfers. Plaintiff fails to allege the value of the assets, when the transfers were made, how they were made, or any other details that would transform an ordinary transfer of assets routinely done by businesses into a fraudulent transfer.” (Demurrer at p. 10:15-19.) Plaintiff does not appear to dispute this point in the opposition.[1]

Based on the foregoing, the Court sustains Hills One’s demurrer to the second cause of action for fraudulent transfer.

The third cause of action, Plaintiff alleges that “[a]ll Defendants were aware that HILLS ONE represented in the Loan Documents that it had pledged the Equipment as security for the underlying loans…All Defendants knew those representations were false, and intended for the lenders to rely on those false statements…All Defendants except KEY COMPOUNDS directed and caused HILLS ONE to make those false statements.” (Compl., ¶¶ 48-50.) Plaintiff further alleges that “KEY COMPOUNDS, under the direction and management of all Defendants, planned to use the lenders’ deception and HILLS ONE’s default on the loans to set up the Oregon Litigation, to fraudulently collect money from the lenders or their assignees.” (Compl., ¶ 51.)

In the demurrer, Hills One asserts that “Plaintiff’s cause of action for conspiracy to defraud fails because as a matter of law under the ‘agent’s immunity rule’, Hills One cannot conspire with its own agents.” (Demurrer at p. 11:4-5.) Hills One cites to Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 512, footnote 4, where the Court of Appeal noted that “[t]he agent’s immunity rule emanates from a further holding in Wise that: ‘Agents and employees of a corporation cannot conspire with their corporate principal or employer where they act in their official capacities on behalf of the corporation and not as individuals for their individual advantage.’” Hills One notes that Plaintiff alleges that “HILLS ONE, as the sole member and manager of KEY COMPOUNDS, directed all actions and conduct of KEY COMPOUNDS which is alleged herein.” (Compl., ¶ 24.) As noted by Hills One, Plaintiff also alleges that “HILLS GROUP was the designated manager of HILLS ONE,” and that “[a]t all times relevant, FIORE, RIFKIN and REYTER together were the designated ‘management team’ of HILLS ONE.” (Compl., ¶¶ 8-9.)

In the opposition, Plaintiff asserts that the “agent’s immunity rule” is inapplicable here because “OPERA BRIGHT alleges the other Defendants were primarily managers of HILLS ONE, not its agents.” (Opp’n at p. 6:7-8.) However, as Plaintiff acknowledges, the Complaint alleges that “at all times herein mentioned each of the defendants, including each of the unidentified and fictitiously named defendants, was the agent, principal, employer or employee of each other defendant, and they were acting within the course and scope of such relationship in doing the things herein alleged, or they ratified, acquiesced in, consented to or approved each and all of the acts of each of the other defendants, so that each defendant is jointly and severally responsible and liable for the acts alleged herein.” (Compl., ¶ 11, emphasis added.) In addition, in the reply, Hills One cites to Western Surety Co. v. La Cumbre Office Partners, LLC (2017) 8 Cal.App.5th 125, 131, where the Court of Appeal noted that “[t]he management of a limited liability company may be vested in the company’s members. Where such vesting occurs, every member is an agent of the limited liability company for the purpose of its business or affairs, and the act of any member…binds the limited liability company, unless the member so acting has, in fact, no authority to act for the limited liability company in the particular matter, and the person with whom the member is dealing has actual knowledge of the fact that the member has no such authority.” (Internal quotations and citations omitted)

Plaintiff also asserts that “to the extent there was an agent/principal relationship between HILLS ONE and other Defendants, HILLS ONE played the role of principal, not agent.” (Opp’n at p. 6, fn. 2.) But here, Hills One is arguing that “Hills One cannot conspire with its own agents.” (Demurrer at p. 11:5.) Moreover, Plaintiff does not cite to any legal authority demonstrating that such circumstances would mean that the “agent’s immunity rule” is inapplicable here.

Hills One also asserts that “[e]ven assuming arguendo that the ‘agent’s immunity’ rule might be applicable, it still would not shield HILLS ONE or any Defendant from liability in this case because that rule does not apply when the agents are acting ‘as individuals for their individual advantage’… In this case, OPERA BRIGHT alleges that Defendants each worked to defraud their lenders (OPERA BRIGHT’s predecessors) for their separate and collective benefit.” (Opp’n at pp. 6:17-7:2.) But Plaintiff does not point to any allegations of the Complaint stating that Defendants each worked to defraud their lenders for their “separate benefit.” Plaintiff does not point to any allegations that the Defendants acted “as individuals for their individual advantage.” ((Applied Equipment Corp. v. Litton Saudi Arabia Ltd., supra, 7 Cal.4th at p. 512, fn. 4.)

Based on the foregoing, the Court sustains Hills One’s demurrer to the third cause of action for conspiracy to defraud.

In the fourth cause of action, Plaintiff alleges that “[a]ll Defendants were aware of the fraudulent statements HILLS ONE made in the Loan Documents about the Equipment, and were aware of how those statements would damage the lenders or their assignees…All Defendants were aware of how KEY COMPOUNDS would use and is using the Oregon Litigation to continue the fraud on the lenders or their assignees and to fraudulently collect money from the lenders or their assignees…All Defendants participated in, aided and abetted the other Defendants in perpetrating that fraud.” (Compl., ¶¶ 56-58.)

“California has adopted the common law rule for subjecting a defendant to liability for aiding and abetting a tort. Liability may…be imposed on one who aids and abets the commission of an intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” ((Austin B. v. Escondido Union School Dist. (2007) 149 Cal.App.4th 860, 879 [internal quotations omitted].)

In the demurrer, Hills One asserts, inter alia, that “Plaintiff’s allegation that Hills One ‘participated in, aided and abetted the other Defendants’ is merely a legal conclusion.” (Demurrer at p. 13:6-7.) Plaintiff does not respond to or dispute this point in the opposition. Indeed, the fourth cause of action does not appear to include factual allegations demonstrating how Defendants purportedly “participated in, aided and abetted the other Defendants in perpetrating that fraud.” (Compl., ¶ 58.)

Based on the foregoing, the Court sustains Hills One’s demurrer to the fourth cause of action for aiding and abetting fraud.

In the fifth cause of action, Plaintiff alleges that “in the Loan Documents, HILLS ONE represented that it owned the Equipment which was pledged as security for the underlying loans, and that it would not transfer or hypothecate the Equipment to harm the lenders’ rights…As alleged by KEY COMPOUNDS in the Oregon Litigation, those representations by HILLS ONE were false because KEY COMPOUNDS was actually the owner of the Equipment…Defendants failed to act in a reasonably prudent manner to ensure the representations by HILLS ONE in Loan Documents were true.” (Compl., ¶¶ 64, 66-67.)

In the demurrer, Hills One asserts that the negligent misrepresentation cause of action fails “because Plaintiff fails to identify what, if any, legal duty Hills One owed either to Plaintiff or its alleged predecessor in interest.” (Demurrer at p. 13:20-22.) Plaintiff does not appear to address this point in the opposition. Hills One notes that “[a]s is true of negligence, responsibility for negligent misrepresentation rests upon the existence of a legal duty, imposed by contract, statute or otherwise, owed by a defendant to the injured person. The determination of whether a duty exists is primarily a question of law.” ((Eddy v. Sharp (1988) 199 Cal.App.3d 858, 864 [internal citation omitted].) Here, the fifth cause of action does not appear to allege the existence of any legal duty owed by any of the Defendants to Plaintiff.

In light of the foregoing, the Court sustains Hills One’s demurrer to the fifth cause of action for negligent misrepresentation.

In the Demurrer, Hills One asserts that “Plaintiff’s Sixth Cause of Action for Breach of Contract is deficient because it fails to attach or even reference all of the ‘Loan Documents’ purportedly at issue.” (Demurrer at p. 14:25-26.) Hills One asserts that “the Complaint attaches only one set of ‘Loan Documents’ that were purportedly breached – not all of the loan documents that it is now seeking to collect on.” (Demurrer at p. 15:3-4.) Hills One argues that “[i]t is impossible for Hills One to defend this litigation when Plaintiff refuses to identify the documents allegedly at issue – Defendant cannot infer how much it is being sued for or to articulate defenses to the breaches of loan documents without Plaintiff alleging the critical terms of those purported contracts.” (Demurrer at p. 15:10-13.)

As set forth above, paragraph 12 of the Complaint alleges that “[a]t various times from about July to October 2019, HILLS ONE took loans from Claimant’s predecessors-in-interest in varying amounts, from $5,000 up to $250,000. For each of those loans, HILLS ONE executed four separate written documents with the lender, entitled ‘Promissory Note,’ ‘Security Agreement,’ ‘Pledge Agreement’ and ‘Corporate Guaranty’ (collectively, the ‘Loan Documents’). A true and correct copy of one set of Loan Documents is attached hereto as Exhibits ‘A’ through ‘D’ and incorporated herein.” (Compl., ¶ 12, emphasis added.) The Court agrees that Plaintiff’s reference to “one set of Loan Documents” makes it unclear what loan documents are purportedly at issue. (Ibid.)

In the opposition, Plaintiff appears to concede that other loan documents in addition to those attached as Exhibit “A” through “D” of the Complaint are at issue here. Plaintiff states that it “attached only one set of loan documents to its complaint for efficiency and because, again, this case was supposed to be resolved through ADR. Of course OPERA BRIGHT can and will, if necessary, attach the other loan documents to an amended pleading.” (Opp’n at p. 8:7-9.) As noted by Hills One, “[i]f the action is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” ((Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.)

Plaintiff also asserts in the opposition that it “alleges the effect of the loan documents…” (Opp’n at p. 8:20.) In McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489, cited by Plaintiff, the Court of Appeal noted that “[a] cause of action for breach of contract requires pleading of a contract, plaintiff’s performance or excuse for failure to perform, defendant’s breach and damage to plaintiff resulting therefrom. A written contract may be pleaded either by its terms—set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference—or by its legal effect. In order to plead a contract by its legal effect, plaintiff must allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.” (Internal quotations and citations omitted.) Plaintiff does not appear to point to any allegations of the substance of the relevant terms of the purported loan documents that are not attached to the Complaint.

Based on the foregoing, the Court sustains Hills One’s demurrer to the sixth cause of action for breach of contract.

Hills Group also demurs to each of the causes of action of the Complaint. In its demurrer, Hills Group asserts that “instead of Hills Group submitting an identical Memorandum of Points and Authorities here that mainly changes Hills One to Hills Group, Hills Group incorporates by reference the Memorandum of Points And Authorities filed by Defendant Hills One as if fully set forth herein…” (Demurrer at p. 1:10-13.) In light of the foregoing discussion pertaining to Hills One’s demurrer, the Court also sustains Hills Group’s demurrer to the first, second, third, fourth, fifth, and sixth causes of action of the Complaint.

Based on the foregoing, the Court sustains Hills One’s demurrer to the first, second, third, fourth, fifth, and sixth causes of action of the Complaint. In addition, the Court sustains Hills Group’s demurrer to the first, second, third, fourth, fifth, and sixth causes of action of the Complaint.

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, the Court orders Hills One and Hills Group to file and serve proposed judgment(s) of dismissal within 30 days of the date of this Order.¿¿¿

[1]As set forth above, Plaintiff concedes that “but for Defendants’ pending anti-SLAPP motions, OPERA BRIGHT probably would have amended its complaint to add more specificity to the fraud claims.” (Opp’n at p. 7:27-28.)

OPERA BRIGHT, LLC, Plaintiff, vs. HILLS ONE, LLC, et al. Defendants.	Case No.:	23STCV30316
	Hearing Date:	July 17, 2024
	Hearing Time:	2:00 p.m.
	[TENTATIVE] ORDER RE: DEMURRER OF DEFENDANT HILLS ONE, LLC TO PLAINTIFF’S COMPLAINT; DEMURRER OF DEFENDANT HILLS GROUP, LLC TO PLAINTIFF’S COMPLAINT

Superior Court of California

County of Los Angeles

Department 50