Judge Thomas D. Long, Case 21STCV33388 2023-03-21 Tentative Ruling

On September 13, 2022, Plaintiff Elana Malekan filed a first amended complaint (“FAC”).

According to the FAC’s caption, it is brought against Defendants Rebeka Shadpour aka Rebeka Shad, Wealth Road Inc., and Wealth Road Realty the JK Land Trust.

According to the FAC’s allegations, it is brought against Defendants Rebeka Shadpour aka Rebeka Shad, Wealth Road Inc., and The JK Land Trust.

On November 18, 2022, Rebeka Shadpour aka Rebeka Shad, Wealth Road Inc., and The JK Land Trust (collectively, “Defendants”) filed a demurrer and motion to strike.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) A special demurrer for uncertainty under Code of Civil Procedure section 430.10, subdivision (f) is disfavored and will only be sustained where the pleading is so bad that defendant or plaintiff cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.)

Defendants argue that the FAC fails to allege the existence of a written agreement with Shadpour, and therefore she is improperly joined. (Demurrer at p. 4.) The FAC alleges that, based on Shadpour’s representations as a real estate broker, Plaintiff entered into a lease that identified Wealth Road Realty c/o The JK Land Trust as the landlord. (FAC ¶ 11.) This does not plead the existence of a lease between Plaintiff and Shadpour. The demurrer is sustained on this ground.

Defendants also argue that Plaintiff fails to include the written lease agreement. (Demurrer at p. 4.) The standard elements of a claim for breach of contract are (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) “A written contract may be pleaded 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.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.) To plead a contract by its legal effect, a 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.” (Ibid.)

The FAC alleges the existence of a Residential Lease or Month-to-Month Rental Agreement, commencing March 29, 2019 to June 30, 2019 for the property located at 4900 Queen Victoria Road, Woodland Hills, California 91364. (FAC ¶¶ 10-11.) The lease provided for monthly rent of $21,000 and a $21,000 security deposit. (FAC ¶ 11.) Plaintiff alleges that she “did all, or substantially all, of the significant things that the Lease required of her to do, including directing that the payment of $89,100 be done by Safeco, and except for those things that it was excused from doing.” (FAC ¶ 20.) Defendants breached the lease when they failed to deliver possession to Plaintiff, leased the property to unrelated third parties, sold the property, and leased the property to Plaintiff without being the owner of the property. (FAC ¶ 21.) Although Plaintiff alleges that Shadpour mispresented some of these terms (FAC ¶¶ 10, 16), they are not alleged to be terms of the lease. The FAC purports to attach a copy of the lease as Exhibit A (FAC ¶ 11), but as Plaintiff admits (Opposition at p. 3, fn. 2), there is no attachment to the FAC. Accordingly, the demurrer is sustained for Plaintiff to attach a copy of the full lease.

Defendants also allege that Plaintiff fails to allege damages caused by Defendants. (Demurrer at p. 5.) The FAC alleges that Plaintiff required temporary housing due to damage at her personal residence, and the rent for a temporary residence was part of the benefits of her homeowners insurance policy with Safeco. (FAC ¶ 9.) Later, “a check made payable to ‘Wealth Road, Inc.’ from ALE Solutions, Inc., on behalf of Safeco and for the benefit of Plaintiff in the sum of $89,100.00, was delivered to Defendants representing, among other things, three months' rent for the Property and the $21,000 for the security deposit as identified in the Lease.” (FAC ¶ 12.) Regardless of the source of funds, Plaintiff sufficiently pleads that the payment was for her benefit and have been withheld after the breach. (See FAC ¶ 17.) Additionally, Plaintiff alleges that she “was forced to find other living accommodations during the Lease term, which were not comparable to her personal residence, thus causing her further damage.” (FAC ¶ 17.) The demurrer is overruled on the ground.

B. Defendants Do Not Identify Deficiencies in the Second Cause of Action (Fraud).

The elements of fraud 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.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) Fraud must be pleaded with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

Defendants argue that the second cause of action for fraud alleges only a failure to perform, which is actually a claim for breach of contract. (Demurrer at p. 6.) The FAC alleges that Shadpour knowingly and falsely “represented to Plaintiff that the Property was available to rent; that Plaintiff would take possession of the Property commencing March 29, 2019; that the Property was safe and secure; that SHADPOUR was the owner of the Property; and that the Property would not be lent to any other persons or parties during Plaintiff's tenancy,” with the intent for Plaintiff to rely on the misrepresentations. (FAC ¶ 24.) “In reasonable and justifiable reliance upon SHADPOUR’s representations, Plaintiff was induced to enter into the Lease.” (FAC ¶ 25.) This sufficiently alleged the fraudulent inducement prior to and separate from Defendants’ subsequent performance under the lease. The demurrer is overruled on this ground.

Defendants also argue that Plaintiff does not plead justifiable reliance because “it is patently unreasonable why there was no objection to the Lease for the entirety of duration. It was not till after the Lease expired did Plaintiff raise any concern to possession.” (Demurrer at p. 6.) The FAC alleges that Plaintiff reasonably and justifiably relied on Shadpour’s representations before entering into the lease, and as a result of those representations, Plaintiff was induced to enter into the lease. (FAC ¶ 25.) This sufficiently pleads her reliance prior to entering into the lease. The demurrer is overruled on this ground.

C. The Third (Unjust Enrichment) and Fourth (Rescission and Restitution) Causes of Action Should Be Consolidated.

Defendants argue that the third and fourth causes of action are improperly pleaded as separate causes of action. (Demurrer at p. 7.) “The elements of an unjust enrichment claim are the ‘receipt of a benefit and [the] unjust retention of the benefit at the expense of another.’ [Citation.]” (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593.) Unjust enrichment is not a cause of action, but a court may construe a cause of action for unjust enrichment as a cause of action for quasi-contract seeking restitution. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.) Accordingly, the demurrer is sustained with leave to amend to consolidate the unjust enrichment and restitution allegations.

Defendants also argue that the third and fourth causes of action seek the same recovery as the first cause of action and do not add anything to the complaint. (Demurrer at p. 7.) Plaintiff may plead in the alternative; a claim for restitution based in quasi-contract may, in some cases, survive when a claim for breach of written contract fails. The demurrer is overruled on this ground.

D. The Fifth Cause of Action (Breach of Fiduciary Duty) Is Sufficiently Pleaded.

A cause of action for breach of fiduciary duty requires (1) a fiduciary duty, (2) breach of the duty, and (3) damage caused by the breach. (Charnay v. Cobert¿(2006) 145 Cal.App.4th 170, 182.) “A fiduciary relationship is ‘ “ ‘any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent . . . . ’ ” ’ ” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29.) Legal relationships that give rise to fiduciary duties include “principal and agent, including real estate broker/agent and client, and stockbroker and customer.” (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 632, citation and footnote omitted.)

Defendants argues that Plaintiff fails to plead damages from a breach of fiduciary duty, alleges only that Defendants failed to deliver possession of the property, and is unclear about who held the fiduciary relationship. (Demurrer at p. 8.)

The FAC alleges that Shadpour acted as a real estate broker for Plaintiff and therefore owed her fiduciary duties. (FAC ¶ 49; see FAC ¶¶ 10-11.) Shadpour “failed to perform and abide by her fiduciary duties, and breached her duties of care, loyalty, trust and performance to Plaintiff by, and as a result of, acts and omissions, including, but not limited to properly representing and protecting Plaintiff’s interest in connection with the leasing of Defendants' property.” (FAC ¶ 50; see FAC ¶ 10.) As a result of Shadpour’s actions, Plaintiff was harmed. (FAC ¶ 51.) This sufficiently pleads Shadpour’s breach of fiduciary duty. The demurrer is overruled.

The demurrer to the first, third, and fourth causes of action is SUSTAINED with 20 days’ leave to amend. The demurrer to the second and fifth causes of action is OVERRULED.

If Plaintiff files an amended complaint, she is ordered to also amend the Defendants’ names to be consistent in the caption and in the complaint’s allegations.

The court may, upon a motion or at any time in its discretion: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc., § 436, subds. (a)-(b).)

Defendants move to strike allegations relating to Plaintiff’s damages (FAC ¶ 27, lines 22-24; FAC ¶ 52). (Notice of Motion at p. 2.) However, they provide no argument or legal basis in support, abandoning this basis after the Notice of Motion. The motion to strike is denied on this ground.

Defendants also move to strike allegations relating to punitive damages (FAC ¶ 28, lines 25-26; FAC ¶ 52, lines 19-23; Prayer for Relief ¶ 4). (Notice of Motion at p. 2; Motion at pp. 2-4.) A plaintiff can recover punitive damages in tort cases where “the defendant has been guilty of oppression, fraud, or malice.” (Civ. Code § 3294, subd. (a).) “The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. [Citation.] Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim. [Citation.]” (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166, fn. omitted.)

The FAC seeks punitive damages in connection with the second cause of action for fraud and the fifth cause of action for breach of fiduciary duty. Both of these causes of action are based on Shadpour’s alleged fraud, and both causes of action have survived Defendants’ demurrer. If a jury finds that Shadpour did engage in fraud and thereby breached her fiduciary duties, it could award punitive damages on that basis.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court