Judge: Thomas Falls, Case: 20PSCV00447, Date: 2023-02-22 Tentative Ruling

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Case Number: 20PSCV00447    Hearing Date: February 22, 2023    Dept: O

HEARING DATE:                 Wednesday, February 22, 2023

RE:                                          CARLOS LABACO vs QUI D ONG (20PSCV00447)

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DEFENDANT’S DEMURRER

                                                Responding Party: Unopposed as of 2/8 (due 2/7)

Tentative Ruling

DEFENDANT’S DEMURRER is OVERRULED in its entirety.  

Background

This case arises from alleged unpaid loans. Plaintiff alleges that he gave Defendant two loans:

one in November 2018 for $94,788 and another loan in February 2019 for $29,000. To date,

Defendant has not paid the payments, including the promised profits, for a total of $133,788.

On July 10, 2020, Plaintiff filed suit.[1]

On July 15, 2021, Plaintiff filed his Third Amended Complaint (“TAC”) for Breach of Contract

and Fraud.

On January 24, 2023, Defendant filed the instant Demurrer. That same day, the court set aside

default entered against Defendant for his failure to timely answer the TAC.

Discussion

Defendant demurs to both causes of action.

1.      Breach of Contract

Defendant argues that the breach of contract cause of action fails to comply with the statute of fraud because all contracts to loan money or extend credit in an amount greater than $100,000 must be evidenced by a writing signed by the party to be charged. (Motion p. 4, citing California Civil Code, Section 1624(a)(7).)

Here, the allegations are that Plaintiff made two loans and that each of the two loans was in an amount less than $100,000. Accordingly, even though the lump sum amounts to more than $100,000, the writing requirement is for a loan (i.e., singular) that is more than $100,000.

Therefore, the court OVERRULES the demurrer as to the breach of contract cause of action.

2.      Fraud

Next, Defendant argues that the fraud cause of action fails because it falls short of the particularity requirement.  

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.) In California, fraud, including negligent misrepresentation, must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)  “There is no absolute or fixed rule for determining what facts will constitute fraud; whether or not it is found depends upon the particular facts of the case under inquiry . . . fraud

May be proved by direct evidence or it may be inferred from all of the circumstances in the case.” (Pearson v. Norton (1964) 230 Ccal.App.2d 1, 7) (emphasis added).

Here, Plaintiff premises his fraud cause of action based upon the allegation that Defendant never invested the money in the real estate project as promised. Additionally, when Plaintiff checked the address from Defendant’s business card, Defendant provided a fake address. Accordingly, Plaintiff has pled a misrepresentation (i.e., Defendant would invest the loaned sums) and that this misrepresentation was made with the intent to defraud Plaintiff as evidenced by Defendant’s failure to invest the money and providing fake information.

Therefore, considering that fraud may be inferred from the circumstances and that on a demurrer all reasonable inferences in drawn in favor of the complaint, the court OVERRULES the demurrer as to the fraud cause of action.

Lastly, Defendant notes that Plaintiff has changed his damages in the complaints. The court observes the same inconsistency: the complaint claims damages of $129,000 (first loan of $90,000 and a second loan of $39,000) and the SAC claims damages of $133,788 (first loan of $94,788 and a second loan of $29,000).[2] Considering that the amount of the loans should not have changed absent a meaningful explanation such that Defendant’s concern is warranted, the court will inquire to the matter during the hearing. That said, as the demurrer does not advance a reason as to why these changes suffice to sustain a demurrer, the court still overrules the demurrer as to both causes of action.

Conclusion

Based on the foregoing, the demurrer is OVERRULED in its entirety.