Judge Upinder S. Kalra, Case Number: 23STCV03440, Date: 2023-09-19 Tentative Ruling

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1. Demurrer to the entire First Amended Complaint for failure to state sufficient facts to constitute a cause of action.

2. Motion to Strike Third Cause of Action for Partition because it was added without leave of court.

1. Demurrer to the First and Second Causes of Action is SUSTAINED without leave to amend;

On February 16, 2023, Plaintiffs Jose Guadalupe Cuevas and Maria R. Cuevas (“Plaintiffs”) filed a complaint against Defendant Pedro Cuevas aka Daniel Velasco and all persons known and unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in the complaint adverse to the plaintiff’s title, or any cloud on plaintiff’s title thereto (“Defendants.”) The complaint alleges three causes of action: (1) Quiet Title, (2) Breach of Fiduciary Duty, and (3) Fraud.

The complaint alleges that in 1990, Plaintiffs purchased two real properties in Los Angeles, California. In July 1990, Plaintiffs entered a verbal agreement with Defendant where they agreed that Defendant would purchase one of the properties in exchange to Defendant waiving his 1/3 interest in another property and would sign a Grant Deed to the property to the Plaintiffs. However, Plaintiffs allege that Defendant did not and has not executed the Grant Deed.

On September 19, 2023, the court SUSTAINED Defendant’s demurrer with leave to amend.

On October 6, 2023, Plaintiffs filed a First Amended Complaint (FAC) with three causes of action for: (1) Quiet Title; (2) Breah of Fiduciary Duty; and (3) Partition.

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. §430.41, and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to Code of Civ. Proc. §430.41(a)(2) & (3). ¿The meet and confer requirement also applies to motions to strike. (CCP § 435.5.) There is no declaration indicating that the parties met and conferred. Still, failure to meet and confer is not grounds to overrule or sustain a demurrer, or grant or deny a motion to strike. (Code Civ. Proc., §§ 430.41, subd. (a)(4); 435.5 subd. (a)(4).)

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.¿In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. …. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”¿(Hahn¿147 Cal.App.4th at 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.) Courts also consider exhibits attached to the complaint and incorporated by reference. (See Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94 (Frantz).)

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (CCP § 436(a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436(b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id.¿§¿437.)¿“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.” (Vaccaro v. Kaiman¿(1998) 63 Cal.App.4th 761, 768.)

Defendant contends this cause of action is barred because of the statute of frauds and the statute of limitations. Plaintiff argues the exceptions of full performance and equitable estoppel excuse requiring compliance with the statute of frauds and that the statute of limitations did not begin to run until July 10, 2022, pursuant to the discovery rule. Defendant replies that the delayed discovery rule does not apply because there was no secret or hidden breach that was difficult for Plaintiffs to detect. Defendant also argues on reply that Plaintiffs’ performance argument fails because the nature of the performance must logically connect to the alleged verbal contract.

To establish a quiet title action under CCP § 761.020, the complaint must include:

“(a) a description of the property that is the subject of the action, (b) the title of the plaintiff as to which a determination under this chapter is sought and the basis of the title, (c) the adverse claims to the title of the plaintiff against which a determination is sought, (d) the date as of which the determination is sought, and (e) a prayer for the determination of the title of the plaintiff against the adverse claims.”

In an action to quiet title, the complaint should allege,¿inter alia,¿the interest of the plaintiff in the property at the time the action is commenced. [Citation] If plaintiff owns the property in fee, a general allegation of ownership of the described property is sufficient. [Citation] However, a general allegation of ownership is treated as a conclusion if the detailed facts upon which the claim of ownership is predicated are also alleged, and in such case, the specific facts will control rather than the general allegation in determining whether the complaint states sufficient facts to constitute a cause of action. [Citations] Actually, in such circumstances only one cause of action is stated. [Citation] Accordingly, if the specifically pleaded facts affirmatively reveal the absence of an essential element in a plaintiff's claim of title, no cause of action is stated.¿¿
¿

The statute of frauds bars enforcement of certain agreements unless the agreement is confirmed in some form of writing and “subscribed to the party to be charged.” (Cal. Civ. Code. § 1624.) Subsection (a)(3) provides that “an agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.” Where the complaint seeks to enforce an agreement required to be in writing, but nonetheless alleges the agreement was oral, a general demurrer lies because the complaint discloses a bar to recover. (Parker v. Solomon (1950) 171 Cal.App.2d 125, 136; Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1503.)¿¿¿¿

A party may be estopped to assert the statute of frauds where “unconscionable injury would result from denying enforcement of the oral contract after one party has been induced by the other seriously to change his position in reliance on the contract or where there would be unjust enrichment.” (Isaac v. A & B Loan Co., Inc. (1988) 201 Cal.App.3d 307,313.)

One party's “partial” (or full) performance of, and resulting detrimental change of position in reliance on, an oral real property sale contract takes the contract out of the statute of frauds. (CCP § 1972(a); Marriage of Benson (2005) 36 Cal.4th 1096, 1108-1109.) However, the part performance must consist of acts that “unequivocally refer” to the contract or “clearly relate to” its terms (acts that would not have been performed but for the contract). (Benson, supra, at p. 1109.)

Upon reviewing the FAC, court agrees that the statute of frauds bars this action. The FAC alleges that Plaintiffs “entered into a verbal agreement with Defendant where they agreed that they would allow Defendant to purchase 2211 East 199^th Street Los Angeles, California in exchange for Defendant to waive his 1/3 interest in the Ambler Property.” (FAC ¶ 11.) Therefore, the basis for this cause of action based on the breach of an oral agreement for the transfer of property. Plaintiffs’ arguments for estoppel and part performance are unpersuasive. Notably, the FAC alleges that Plaintiffs “agreed to purchase” the 2211 East 119^th Street property, not that they had done so. (FAC ¶ 9.) So, by “allowing” Defendant to purchase the property instead, there is no allegation of detrimental reliance aside from an allegation that the 2211 East 119^th Street property “had equity immediately upon the purchase.”[1] (Ibid.) The court is not persuaded by argument that Plaintiffs had to pay taxes, upkeep, etc., for the Ambler property because they were obligated to do so anyway as joint owners and had been doing so since January 1987 when Defendant moved out. (FAC ¶ 7.) Thus, under Civil Code § 1624, the statute of fraud bars this agreement as it was not in writing.

Assuming arguendo that the statute of frauds did not bar the cause of action, the Court finds that the statute of limitation bars the cause of action.

The Legislature has not established a specific statute of limitations for actions to quiet title. [Citation.] Therefore, courts refer to the underlying theory of relief to determine the applicable period of limitations. [Citations.] An inquiry into the underlying theory requires the court to identify the nature (i.e., the ‘gravamen’) of the cause of action. [Citation.] [¶] Generally, the most likely time limits for a quiet title action are the five-year limitations period for adverse possession,[6] the four-year limitations period for the cancellation of an instrument, or the three-year limitations period for claims based on fraud and mistake.

(Walters v. Boosinger (2016) 2 Cal.App.5th 421, 428, citing Salazar v. Thomas (2015) 236 Cal.App.4^th 467,476-477.)

The discovery rule assumes the existence of all elements of the cause of action, including injury, and “protects those who are ignorant of their cause of action through no fault of their own. It permits delayed accrual until a plaintiff knew or should have known of the wrongful conduct at issue.” (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 832.) Plaintiffs bear the burden to establish not only the late discovery, but also their inability to discover the relevant facts earlier. (Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 177-178.)

Here, as Defendant correctly argues, the basis for this claim for quiet title is a breach of an oral agreement. Thus, under CCP § 339, the statute of limitation for a breach of an oral contract is two years.¹ Even if the underlying nature of the cause of action was adverse possession, cancellation of an instrument, or fraud, the alleged breach is still barred as these all have statute of limitations of five years and under. Here, the alleged breach occurred in 1990, 33 years ago. Plaintiffs’ argument for the delayed discovery rule fails because they should have known (within 2 years or within 5 years) that Defendant failed to convey the grant deed. There are no facts alleged in the FAC that Plaintiffs had an inability to discover Defendant’s breach earlier. The court is not persuaded they can do so now.

Accordingly, the court SUSTAINS Defendant’s demurrer to the First Cause of Action.

Plaintiffs argue that there was a fiduciary relationship because Plaintiff Jose and Defendant are brothers and Plaintiffs and Defendant were joint owners of the Property.[2]

The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.” (O'Neal v. Stanislaus County Employees' Retirement Assn. (2017) 8 Cal.App.5th 1184, 1215.)

After reviewing the FAC, Plaintiffs have failed to allege a fiduciary relationship. Specifically, the FAC states that fiduciary relationship is based on “prior joint ownership of the Ambler Property and because of their confidential relationship of being brothers and family members.” (FAC ¶ 24.) A fiduciary relationship is defined by the Court of Appeal in Wolf v. Superior Court as:

‘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....’

“The statute of limitations for breach of fiduciary duty is three years or four years, depending on whether the breach is fraudulent or nonfraudulent.” (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.)

Thus, the FAC fails to establish how the parties were in a fiduciary relationship, and only states conclusory allegations of a fiduciary relationship.[3] Assuming arguendo that the Plaintiffs sufficiently alleged a fiduciary relationship, the cause of action is barred by the statute of limitations for the same reasons articulated above.

Accordingly, the court SUSTAINS Defendant’s demurrer to the Second Cause of Action.

Defendant contends that this new cause of action is improper because it is outside the scope of leave granted to Plaintiffs to amend their complaint. Plaintiffs do not contest this and indicate they will file a motion for leave to amend to include this cause of action.

When a demurrer is sustained with leave to amend, the leave must be construed as permission to the pleader to amend the causes of action to which the demurrer has been sustained, not add entirely new causes of action. (Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995, 1015 [finding new cause of action appropriate because it directly related to the court’s reasons allowing amendment after sustaining a demurrer].)

Here, Plaintiffs’ new cause of action is improper. It does not directly relate to the reasons underlying Plaintiffs’ leave to amend (namely, to rectify the problems with statute of frauds and statute of limitations). However, a demurrer is not the appropriate procedural mechanism to rectify this. Defendant’s motion to strike, however, is.[4]

Accordingly, pursuant to CCP § 436(b), the court strikes this new cause of action.

Leave to amend should be liberally granted if there is a reasonable possibility an amendment could cure the defect. (County of Santa Clara v. Superior Court (2022) 77 Cal.App.5th 1018,1035.) The Plaintiff has the burden of demonstrating that leave to amend should be granted, and that the defects can be cured by amendment. (“Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) Here, it is unlikely that Plaintiffs will be able to cure the statute of limitation defects. The entire basis for this complaint is based on an alleged breach of oral contract from 1990. Thus, the statute of limitation bars all of Plaintiffs’ claims.

3. Demurrer to the First and Second Causes of Action is SUSTAINED without leave to amend;

[1] The court does not see how Plaintiffs were in a position to allow Defendant to purchase a property that they did not own.

[2] Plaintiffs cite no authority supporting this proposition.

[3] While it makes sense to rely on family, there is simply no authority imposing fiduciary liability between siblings due solely to their familial relationship.

[4] The court also has authority to strike this improperly added cause of action. (CCP. § 436.)