Judge: Virginia Keeny, Case: 21VECV01322, Date: 2022-10-25 Tentative Ruling

Case Number: 21VECV01322    Hearing Date: October 25, 2022    Dept: W

Mohamed alali V. durid alkurdi

[Demurrer] 

Date of Hearing:          October 25, 2022                    Trial Date:       None Set.         

Department:               W                                             Case No.:         21VECV01322 

Moving Party:             Defendant Durid Alurdi

Responding Party:       Plaintiff Mohamed Alali

BACKGROUND 

 Plaintiff Mohamed Alali alleges Plaintiff and Defendant Durid Alurdi entered an oral agreement whereby Defendant would provide seven high-end vehicles in exchange for Plaintiff’s payment of $185,532.93. Even though Plaintiff paid Defendant, Plaintiff alleges Defendant breached the agreement by failing to provide the vehicles and misrepresented to Plaintiff that he would provide Plaintiff the vehicles.

The initial complaint was filed on October 1, 2021, and the First Amended Complaint was filed on April 4, 2022.

Following a demurrer, the Second Amended Complaint was filed on August 12, 2022. The SAC alleged five causes of action: (1) Breach of Contract, (2) Common Counts, (3) Fraud, (4) Conversion, and (5) Violation of Penal Code section 496.

Defendant’s current demurrer was filed on September 15, 2022. Plaintiff’s Opposition was filed on October 12, 2022. The motions are timely.

[TENTATIVE] RULING 

Demurrer as to the Third Cause of Action for Fraud is OVERRULED.

LEGAL STANDARD 

 Demurrer

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.)

ANALYSIS 

 Meet and Confer:

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 Declaration of Arno H. Keshishian indicates that counsel for each party met and conferred via letter sent on September 2, 2022, and a responsive letter on September 13, 2022. (Dec. Keshishian ¶ 7-9.) They were unable to reach a resolution. Thus, the meet and confer requirement has been met.

Procedural Issues:

Defendant argues that Plaintiff failed to properly plead a statement of facts pursuant to CCP § 425.10.[1] However, this argument fails because Plaintiff used a judicial council form, with an attachment that contains a statement of facts.

To the extent that Defendant is arguing that the use of a judicial council form is inappropriate, this is not a valid basis for demur. (Esparza v. Kaweah Delta Dist. Hospital (2016) 3 Cal.App.5th 547, 555 [judicial council forms are equally susceptible to demur as any other complaints, but their use is both a valid and recognized method of drafting a pleading].)[2]

 Demurrer:

Defendants demur to the third cause of action on the grounds that the Second Amended Complaint fails to state sufficient facts to constitute a cause of action and the third cause of action is uncertain.

Third Cause of Action: Fraud

“The elements of fraud, which give rise to the tort action for deceit, 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.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060). “Thus, in a promissory fraud action, to sufficiently alleges defendant made a misrepresentation, the complaint must allege (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false.” (Id.).

“[W]hen averments of fraud are made, the circumstances constituting the alleged fraud must be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done anything wrong.” (Vess v. Ciba–Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.2003) (internal quotations and citations omitted). The allegations “must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged.” (Arikat v. JP Morgan Chase & Co. (N.D. Cal. 2006) 430 F.Supp.2d 1013, 1022.)

Defendant argues that the SAC does not plead specific facts; the SAC does not allege any facts that Defendant knew of the falsity of the alleged statements, the intent to defraud, or that Plaintiff reasonably relied on these alleged statements; and the statements in the SAC are conclusory, stating the elements of fraud but not facts.

Knowledge of Falsity:

“In order to satisfy the requirement of scienter, it may be established either that defendant had actual knowledge of the untruth of his statements, or that he lacked an honest belief in their truth, or that the statements were carelessly and recklessly made, in a manner not warranted by the information available to defendant.” (Wishnick v. Frye (1952) 111 Cal.App.2d 926, 930.)

A review of the complaint indicates that Plaintiff has sufficiently pleaded knowledge of falsity. Plaintiff states despite Defendant stating that he had could get a good deal and that there were a lot of Volkswagens available for purchase, Defendant knew this to be incorrect.  Specifically, Plaintiff pleads that Defendant “knew that there were no such vehicles available and/or that they could not be delivered immediately upon payment.” (Comp. 7, paragraph 3.) The Court can also infer scienter based on the allegations that the Defendant made a representation that he could provide 7 vehicles, Plaintiff paid the agreed upon amount, and the subject vehicles were not delivered.

Intent to Defraud:

“Intent to defraud is defined as the intent to induce reliance on a knowing misrepresentation or omission.” (Moss v. Kroner (2011) 197 Cal.App.4th 860, 872.) An “‘intent to deceive’ is not an essential element of the cause of action, ...” the required intent is an intent to induce action.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062.)

A review of the complaint indicates that the Plaintiff has sufficiently alleged an intent to defraud. Specifically, the complaint alleges that Plaintiff believes that Defendant had no intention of delivering the vehicles and intended to defraud Plaintiff. (Comp. 7, pg. 3.) Moreover, the misrepresentations, along with the reassurances that there were vehicles available, support a factual inference that there was an intent to defraud.

Justifiable Reliance

To establish justifiable reliance, a plaintiff must show “(1) that they actually relied on the defendant's misrepresentations, and (2) that they were reasonable in doing so.” (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 863, as modified (Dec. 26, 2007).) For actual reliance a plaintiff must “establish a complete causal relationship’ between the alleged misrepresentations and the harm claimed to have resulted therefrom.” (Id.) For reasonable reliance, a plaintiff must show that “circumstances were such to make it reasonable for [the] plaintiff to accept [the] defendant's statements without an independent inquiry or investigation.” (Id.)

Plaintiff has established both that they relied on the misrepresentation and that it was reasonable. The complaint sufficiently alleges actual reliance because Plaintiff wired over $185,000 to the Defendant for the vehicles that the Defendant indicated were going to be sent. (Complaint pg. 7, 4-5.) Additionally, Plaintiff sufficiently alleges that reliance was reasonable because Plaintiff and Defendant had previous business dealings, Defendant made statements that reassured Plaintiff that they would get a good deal, and later made excuses for delay in delivery. (Id.) These allegations are sufficient to establish justifiable reliance.

Accordingly, the Demurrer as to the Third Cause of Action for Fraud is OVERRULED.

CONCLUSION 

Demurrer as to the Third Cause of Action for Fraud is OVERRULED.