Judge: Theodore R. Howard, Case: 23-1301912, Date: 2023-08-31 Tentative Ruling

The Demurrer to the Complaint filed by Defendants Juan R. Navarro and Rocio G. Navarro (“Defendants”) is SUSTAINED with 20 days leave to amend as to the fourth cause of action and OVERRULED as to the remaining causes of action.

As a preliminary matter, the court takes judicial notice of the recorded documents and court records, in the absence of any objection by Plaintiff.  

A demurrer “tests the legal sufficiency of factual allegations in a complaint.” (Rakestraw v. Cal. Physicians’ Service (2000) 81 Cal.App.4th 39, 42.) Plaintiffs’ well-pleaded facts are assumed to be true by the Court, but the Court does not assume the truth of contentions, deductions, or conclusions of fact or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “Generally, it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Cause of Action One and Three: Misrepresentation Claims

Defendants demur to the first and third causes of action for intentional and negligent misrepresentation on the grounds the complaint does not state facts sufficient to constitute a cause of action.  The elements to establish a claim for deceit based on intentional misrepresentation are: (1) a misrepresentation; (2) knowledge of falsity; (3) intent to induce reliance; (4) actual and justifiable reliance; and (5) resulting damage. (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 231-232.) 

The elements of a cause of action for negligent misrepresentation are the same as those for intentional misrepresentation except that it does not require knowledge of the falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true. (Id. at 231.)

Defendants argue that the complaint is unclear, as Plaintiffs allege they discovered the fraud in 2022 when Defendants asked them to sign a lease, however there was already a written lease beginning February 2010.  Further, Plaintiffs do not allege what misrepresentations were made by defendants with specificity.  The complaint states that Plaintiffs agreed to the various transfers and contend that Defendants agreed that Plaintiffs would continue to be the true owners of the Premises and make 100% of the mortgage payments, HOA fees, and taxes.  Defendants argue these claims are contradicted by the grant deeds and the deed of trust.

As far as the 2010 Lease Agreement is concerned, it is unauthenticated and well outside the four corners of the pleadings.  Any arguments relying on the existence of the 2010 Lease are not appropriate at the demurrer stage.

The Complaint alleges that Defendants “made the following promise to Plaintiffs: Even though Esmeralda Figueroa and Maria Cachua would be removed from the deed they would still be the true owners of the Property. The only reason Defendants’ names were being added to the title was to reduce the mortgage payments on the Property.” (Complaint ¶ 14.) The Complaint further asserts that “Defendants never intended for Plaintiffs to keep 100% ownership of the Property” and that Defendants represented to Plaintiffs that they would honor their promise “that Plaintiffs have 100% ownership rights of the Property.”  Plaintiffs identify approximate dates for the promises, and that they were made from Defendants to Plaintiffs.  The misrepresentation claims are sufficiently pled and as such the demurrer to the first and third causes of action is OVERRULED.

Cause of Action Two: Promissory Fraud

Defendants demur to the second cause of action for promissory fraud, noting it requires proof that the defendant made misrepresentation of fact or promise without any intention of performing it. (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.) Here, Plaintiffs rely on the alleged promise by Defendants that Plaintiffs would retain full ownership of the premises despite the transfer of the title.  Defendants assert that merely not fulfilling the promise does not show intent not to perform at the time of the formation.  However, the Complaint alleges that Defendants only wanted to induce Plaintiffs to pay for the expenses of the Property without allowing them the ownership promised.  The second cause of action incorporates all the allegations in paragraphs above, meaning it incorporates the allegation that “Defendants never intended for Plaintiffs to keep 100% ownership of the Property”. (Complaint ¶ 15.) As such the second cause of action for promissory fraud is sufficiently pled and the demurrer is OVERRULED.

Cause of Action Four: Civil Conspiracy

As to the fourth cause of action for civil conspiracy, Defendants note that it requires a showing of (1) formation and operation of the conspiracy, (2) damage resulting to plaintiff, and (3) from an act done in furtherance of the common design. (Thompson v. California Fair Plan Assn. (1990) 221 Cal.App.3d 760, 767.) Defendants argue it is not a separate tort or substantive basis for liability, but rather imposes vicarious liability.  They further argue there is no allegation of a relationship between the parties that would give rise to a legal duty owed to Plaintiffs.  Here, it is unclear how Plaintiffs are attempting to use civil conspiracy, as “Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510–511, internal citations omitted.) However, Plaintiffs are alleging that each Defendant actually committed the torts themselves, so it is unclear what the civil conspiracy cause of action is alleging.  Accordingly, the demurrer to the fourth cause of action is SUSTAINED with leave to amend.

Cause of Action Five: Concealment

Concealment requires a fiduciary relationship between the parties giving rise to a duty to disclose. (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186-1187.) Plaintiffs allege that Defendant had an obligation to disclose the intent to keep their ownership in the property, however Plaintiffs voluntarily transferred the title to Defendants and signed the 2010 lease agreement. Defendants assert that no facts were concealed from Plaintiff. However, Plaintiffs allege a transactional relationship between the parties and the alleged concealment is related to that transaction.  “A relationship between the parties is present if there is ‘some sort of transaction between the parties. [Citations.] Thus, a duty to disclose may arise from the relationship between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement.’ ” (Hoffman, supra, 228 Cal.App.4th at p. 1187, internal citations omitted.) As such the demurrer to the fifth cause of action is OVERRULED.

Cause of Action Six: Quiet Title

Defendants’ argument as to the quiet title cause of action centers on Plaintiff’s likelihood of prevailing.  A demurrer tests the sufficiency of a pleading, not the strength of the case.  As such, the demurrer to the sixth cause of action is OVERRULED.

Moving party to give notice.