Judge: Walter P. Schwarm, Case: 30-2021-01229679, Date: 2022-11-01 Tentative Ruling
Motion No. 1:
Defendant’s (Equity Wave Lending, Inc.) unopposed Demurrer to First Amended Complaint (Demurrer), filed on 8-22-22 under ROA No. 95, is SUSTAINED.
The court GRANTS Defendant’s Request for Judicial Notice filed on 8-22-22 under ROA No. 90, pursuant to Evidence Code section 452, subdivision (c), as to Exhibits 1 and 2. (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 (disapproved on other grounds in Yvanova v. New Century Mortgage Corporation (2016) 62 Cal.4th 919, 939, footnote 13.)
“A demurrer tests the pleading alone, and not the evidence or the facts alleged. . . . To the extent there are factual issues in dispute, however, this court must assume the truth not only of all facts properly pled, but also of those facts that may be implied or inferred from those expressly alleged in the complaint. [Citations.]” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 459.) Committee for Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42, states, “ ‘ “A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar . . . to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred. [Citation.]” [Citation.]’ [Citation.]”
The Demurrer challenges the second, third, third, fourth, sixth seventh, and eighth causes of action contained in Plaintiff’s (James Louis Jenkins) First Amended Complaint (FAC), filed on 7-19-22 under ROA No. 79, pursuant to Code of Civil Procedure section 410.30, subdivisions (e) and (f).
Second Cause of Action (Fraud):
CACI No. 1900 sets forth the elements for Intentional Misrepresentation. Lazar v. Superior Court (1996) 12 Cal.4th 631, 638 (Lazar), states, “ ‘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.’ [Citations.] [¶] ‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud. [Citations.]” “In California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.] A plaintiff's burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must ‘allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.’ [Citation.]” (Id., at p. 645.) Italics in Lazar.)
“ ‘ “The elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” ’ [Citation.] Fraud must be pleaded with specificity rather than with ‘ “general and conclusory” ’ allegations. [Citation.] (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 (Boschma).)
Alfaro v. Community Housing Improvement System & Planning Association, Inc. (2009) 171 Cal.App.4th 1356, 1384 (Alfaro) states, “As restated by Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 993, 22 Cal.Rptr.3d 352, 102 P.3d 268, ‘ “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice. [Citations.] ‘Thus “ ‘the policy of liberal construction of the pleadings ... will not ordinarily be invoked to sustain a pleading defective in any material respect.’ ” [Citation.] [¶] This particularity requirement necessitates pleading facts which “show how, when, where, to whom, and by what means the representations were tendered.” ’ ” ’ [Citation.] [¶] This statement of the rule reveals that it is intended to apply to affirmative misrepresentations. If the duty to disclose arises from the making of representations that were misleading or false, then those allegations should be described. [Citation.] However, as noted above [citation], plaintiffs have apparently abandoned their earlier claims of intentional and negligent misrepresentations. As plaintiffs accurately respond, it is harder to apply this rule to a case of simple nondisclosure. ‘How does one show ‘how’ and “by what means” something didn't happen, or “when” it never happened, or “where” it never happened?’ [¶] We believe that certain observations made in the context of a class action are relevant here, where there are 38 plaintiffs. One of the purposes of the specificity requirement is ‘notice to the defendant, to “furnish the defendant with certain definite charges which can be intelligently met.” ’ [Citation.] Less specificity should be required of fraud claims ‘when “it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy,” [citation]; “[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party. . . .” ’ [Citation.]”
Here, the FAC still fails to allege fraud with the requisite specificity. The FAC alleges, “. . . In or about 2019, Equity Wave represented to the public by recording loan documents against Plaintiff’s real property that they had secured a loan against the property for the financing of a home improvement project to be performed by House Next Door. This alleged loan to Plaintiff was neither executed by Plaintiff or his wife nor was it validly acknowledged by a notary as required in California. Equity Wave knew that neither the Plaintiff nor his wife had executed the loan documents or had no reasonable basis for believing that they had, and thus made said representations knowing that they were false. It is believed that Equity Wave has or had an ongoing relationship with Home Next Door pushing financing for home improvements projects and entering into third party agreements based on knowingly falsified signatures and notary acknowledgements. It is further believed that Equity Wave, in conjunction with House Next Door, utilized these fraudulent tactics to secure this lending agreement as a third-party agreement with House Next Door and falsified signatures and notaries to facilitate this financial transaction, in which resulted in and 8.99% interest rate, balloon payments, penalties etc. As a result of Equity Wave’s false representations, a lien was created against Plaintiff’s real property thereby clouding title and prohibiting Plaintiff from selling and/or utilizing the equity in his property.” (FAC, ¶ 33.)
Although a concealment cause of action requires less specificity than an intentional or negligent misrepresentation cause of action, these allegations are still too general and conclusory as to the acts by Defendant to support a cause of action for fraud based on concealment. Therefore, the court SUSTAINS the Demurrer to the second cause of action.
Third Cause of Action (Conspiracy):
“Conspiracy is not a separate tort, but a form of vicarious liability by which one defendant can be held liable for the acts of another. [Citations.] To establish conspiracy, a plaintiff must allege that the defendant had knowledge of and agreed to both the objective and the course of action that resulted in the injury, that there was a wrongful act committed pursuant to that agreement, and that there was resulting damage.” (IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 652 (IIG).)
The FAC pleads, “Plaintiff is informed and believes that Defendants, and each of them, conspired to defraud Plaintiff into hiring House Next Door to do home improvement work to be funded by Equity Wave and for Equity Wave to obtain a $300,000 lien on Plaintiff’s property to fund the construction work. Equity Wave fraudulently used tactics to secure this lending agreement as a third party agreement with House Next Door and falsified signatures and notaries to facilitate this financial transaction and/or recorded a lien against Plaintiff’s real property based on documents they knew were based on falsified signatures and notaries, which resulted in an alleged debt owed by Plaintiff to Equity Wave and a real property lien recorded against Plaintiff’s real property clouding title and causing damage to Plaintiff, including an 8.99% interest rate, balloon payments, penalties etc.” (FAC, ¶ 38.)
The FAC still does not sufficiently plead Defendant’s knowledge and agreement as to both the objective and the course of action that resulted in the injury. Therefore, the court SUSTAINS the Demurrer to the third cause of action.
Fourth Cause of Action (Elder Abuse):
Welfare and Institutions Code section 15610.30 states in part, “(a) ‘Financial abuse’ of an elder or dependent adult occurs when a person or entity does any of the following: [¶] (1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. [¶] (2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both. [¶] (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70. [¶] (b) A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.”
The FAC alleges, “Plaintiff is informed and believes, and based therein alleges, that Defendants, and each of them, appropriated or assisted in the appropriation of money from Plaintiff and the execution (by forgery and false notary acknowledgment) loan documents and security agreements providing Equity Wave and Greensky a security interest in Plaintiff’s real property that was recorded in public records against the property.” (FAC, ¶ 44.)
These allegations are still insufficient because the FAC does not adequately plead fraud or knowledge by Defendant. Therefore, the court SUSTAINS the Demurrer to the fourth cause of action.
Sixth Cause of Action (Rescission):
Nakash v. Superior Court (1987) 196 Cal.App.3d 59, 70 (Nakash), states, “Rescission is not a cause of action; it is a remedy. [Citations.]” (Italics in Nakash.) Wong v. Stoller (2015) 237 Cal.App.4th 1375, 1385 (Wong), states, “Rescission and damages are alternative remedies. [Citation.] A party may seek rescission or damages for breach of contract or fraud ‘in the event rescission cannot be obtained’ in the same action. [Citations.]”
The FAC does not plead breach of contract against Defendant. Although the FAC alleges a cause of action for breach of contract, it is only alleged against defendant House Next Door. The FAC does not adequately plead the remedy of rescission against Defendant. Therefore, the court SUSTAINS the Demurrer to the sixth cause of action.
Seventh Cause of Action (Restitution):
Munoz v. MacMillan (2011) 195 Cal.App.4th 648, 661 (Munoz), states, “There is no freestanding cause of action for ‘restitution’ in California. [Citation.] Common law principles of restitution require a party to return a benefit when the retention of such benefit would unjustly enrich the recipient; a typical cause of action involving such remedy is ‘quasi-contract.’ [Citations.]”
Plaintiffs’ allegations of restitution in the FAC (FAC, ¶¶ 56-60) are identical to the allegations in the Complaint filed on 11-2-21 under ROA No. 2. (Complaint, ¶¶ 54-58.) Therefore, the FAC still fails to adequately allege a benefit that Defendant received. (FAC, ¶¶ 57-60.) Therefore, the court SUSTAINS the Demurrer to the seventh cause of action.
Eighth Cause of Action (Unfair Competition)
Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 351-352 (Bernardo), states, “An ‘unlawful’ business practice or act within the meaning of the UCL ‘is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law. [Citation.]’ [Citation.] The California Supreme Court has explained that ‘[b]y proscribing “any unlawful” business practice, “[Business and Professions Code] section 17200 ‘borrows’ violations of other laws and treats them as unlawful practices” that the unfair competition law makes independently actionable. [Citation.]’ [Citation.]” (Italics in Bernardo.)
Bardin v. DaimlerChrysler Corp. (2006) 136 Cal.App.4th 1255, 1261 (Bardin), states, “The ‘fraud’ prong of the UCL requires that ‘ “members of the public are likely to be deceived” ’ by the challenged conduct. [Citation.]” “ ‘In order to state a cause of action under the fraud prong of the UCL a plaintiff need not show that he or others were actually deceived or confused by the conduct or business practice in question. “The ‘fraud’ prong of the [UCL] is unlike common law fraud or deception. A violation can be shown even if no one was actually deceived, relied upon the fraudulent practice, or sustained any damage. Instead, it is only necessary to show that members of the public are likely to be deceived.” ’ [Citation.]” (Id., at p. 1274; Footnote 8 omitted.)
McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473 (McKell), provides, “A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits. [Citations.] The determination whether a business practice is unfair ‘ “ ‘involves an examination of [that practice's] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer. In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim. . . . [Citations.]’ [Citation.]” ’ [Citation.]”
Since the FAC still fails to adequately plead fraud and elder abuse, it does not sufficiently plead a cause of action for violation of Business and Professions Code section 17200 for an unlawful business practice. Further, the FAC still fails to adequately plead a cause of action for Business and Professions Code section 17200 for a fraudulent or unfair business practice based on Bardin and McKell. Therefore, the court SUSTAINS the Demurrer to the eighth cause of action
Based on the above, the court SUSTAINS Defendant’s (Equity Wave Lending, Inc.) unopposed Demurrer to First Amended Complaint. Shaeffer v. Califia Farms, Inc. (2020) 44 Cal.App.5th 1125, 1145 (Shaeffer), states, “A plaintiff against whom a demurrer is sustained is entitled to leave to amend the defective complaint if she can ‘prov[e] a reasonable possibility that the defect can be cured by amendment.’ [Citations.] The onus is on the plaintiff to articulate the ‘specifi[c] ways’ to cure the identified defect, and absent such an articulation, a trial or appellate court may grant leave to amend ‘only if a potentially effective amendment [is] both apparent and consistent with the plaintiff's theory of the case.’ [Citation.]” (Italics in Shaeffer.) “The court abuses its discretion in sustaining the demurrer without leave to amend if the plaintiff can show a reasonable possibility of curing the defect in the complaint by amendment. [Citation.] Heritage has the burden of proving that an amendment would cure the defect. [Citation.]” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 994.) Since Plaintiff has not opposed the Demurrer, Plaintiff has not shown a reasonable possibility of curing the defects raised by the Demurrer. If Plaintiff cannot demonstrate a reasonable possibility of curing the defects, the court intends to SUSTAIN the Demurrer without leave to amend. The court notes that it previously granted Plaintiff leave to amend when it sustained Defendant’s (Equity Wave Lending, Inc.) unopposed Demurrer to Complaint filed on 2-8-22 under ROA No. 24 on 6-28-22. (6-28-22 Minute Order.)
Based on the above decision, the court does not reach Defendant’s contention that the FAC is barred by the applicable statute of limitations.
Defendant is to give notice.
Motion No. 2:
Defendant’s (Equity Wave Lending, Inc.) Motion to Strike Portions of the First Amended Complaint, filed on 8-22-22 under ROA No. 96, is DENIED as MOOT based on the court’s ruling as to Motion No. 1.
Defendant is to give notice.