2013-00145704-CU-OR

Ivories Management LLC vs. Konstantin Tsaplin

Nature of Proceeding: Hearing on Demurrer to Complaint

Filed By: Kerle, Peter

*** If oral argument is requested, the parties are directed to notify the clerk and
opposing counsel at the time of the request which causes of action will be
addressed at the hearing. Counsel are reminded that pursuant to Local Rules,
only limited oral argument is permitted on law and motion matters. ***

Defendants’ demurrer to the original complaint is SUSTAINED with leave to amend.

Moving counsel is admonished because the notice of hearing/motion/demurrer does
not provide notice of the Court’s tentative ruling system, as required by Local Rule
1.06, and does not provide the correct address for Dept. 54. Moving counsel is
directed to contact opposing counsel and advise him/her of Local Rule 1.06 and the
Court’s tentative ruling procedure and the manner to request a hearing. If moving
counsel is unable to contact opposing counsel prior to hearing, moving counsel
is ordered to appear at the hearing in person or by telephone.

Both moving and opposing counsel are admonished for failing to comply with CRC
Rule 3.1110(b)(3)-(4).

The complaint here purports to assert multiple causes of action (“COA”) against
defendants. Although the facts giving rise to this case remain unclear, defendants are
alleged to have used plaintiffs’ money to purchase at least one single family residence
but then placed title in the name of defendants rather than plaintiffs. Additionally,
defendants allegedly undertook the management of several properties on behalf of
plaintiffs, including the collection of rent and payment of expenses, but defendants
failed to timely pay the expenses and also failed to provide plaintiffs with an accounting
of the amounts received and disbursed.
Defendants now demur on various grounds to just three of the COA asserted.
Plaintiffs oppose.

3rd COA for “Fraud.” Defendants contend this COA fails to plead with sufficient
specificity “facts” which establish each of the required elements for fraud.

The Court agrees and sustains the demurrer to the 3rd COA. First, plaintiffs have failed
to explicitly identify which theory of fraud (i.e., misrepresentation, concealment and/or
false promise) is being asserted here. Second, this COA appears to include
allegations applicable to each of these three distinct theories of fraud, making it more
unclear as to exactly what is being alleged. Should plaintiffs desire to assert more
than one theory of fraud, they should plead each theory in a separate COA. Third, to
the extent it appears plaintiffs are attempting to allege a misrepresentation claim, the
complaint must plead “the names of the persons who made the allegedly fraudulent
misrepresentations, their authority to speak, to whom they spoke, what they said or
wrote, and when it was said or written” ( Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal.App.4th 153, 157-158), but the complaint on file fails to include such
specificity. To the extent plaintiffs are trying to plead a claim for concealment, they
must plead facts which establish the existence of a duty to disclose the material facts
allegedly concealed as well as each of the other prima facie elements for concealment.
For all these reasons, the demurrer to the “fraud” COA must be sustained.

5th COA for “Negligence.” Defendants argue that the complaint fails to plead facts
sufficient to establish the existence of a duty of care owed to plaintiffs, breach of such
duty, causation and damages.

The demurrer to this COA is sustained because plaintiffs have not pled specific facts
which show that defendants owed a duty of care to plaintiffs. Instead, the complaint
alleges in purely conclusory terms, “Defendants undertook the management and repair
of the properties described herein. In so doing, Defendants owed a duty to exercise
due care in the management of the properties.” (Compl., ¶34.) Noticeably absent are
specific facts which support the conclusion that defendants “undertook the
management and repair of the properties” or that defendants “owed a duty to exercise
due care.” Likewise, the complaint fails to state “facts” which tend to show the breach
of any duty of care or which tend to establish a causal link between a breach of duty
and some injury or damage to plaintiffs.

Finally, it appears the sole damages attributed to the alleged negligence are monetary
losses despite the “economic loss rule,” which typically precludes a tort claim based on
negligence in the absence of personal injury or physical damage to property. (See, e.g
., Robinson Helicopter Co. (2004) 34 Cal.4th 979, 984 [“economic loss rule” bars tort
action in absence of personal injury or physical damage to property]; Food Safety Net
Services v. Eco Safe Systems USA, Inc. (2012) 209 Cal.App.4th 1118, 1130 [where
purchaser’s expectations are frustrated, his remedy is in contract alone for he has
suffered only “economic” losses;” the economic loss rule prevents the law of contract
and the law of tort from dissolving one into the other; a party alleging fraud or deceit in
connection with contract must establish tortious conduct independent of breach of
contract itself, a violation of “some independent duty arising from tort law”].)

2nd COA for “Declaratory Relief.” Defendants maintain that this COA is deficient
because it lacks “facts” which show the existence of an actual controversy requiring
judicial intervention. In particular, defendants point out that this COA appears to be
based on the following allegation:

“21. … Plaintiffs are informed and believe that Defendants claim an interest in
said property adverse to Plaintiffs.” (Emphasis added.)

Defendants suggest that this allegation based on “information and belief” reveals that
“Plaintiffs are not even certain themselves whether an actual controversy exists” with
respect to the real property in question. Defendants also contend that the complaint
makes no mention of a writing or other agreement giving rise to either party’s alleged
rights and obligations which need to be resolved.

While the Court finds the dispute over the sufficiency of this COA to be a close
question particularly when the entirety of the complaint is taken into account, there is
no question that this COA could be pled with greater accuracy and clarity. Coupled
with the fact that the demurrers to the other COA have been sustained, the Court
hereby sustains the demurrer to the declaratory relief claim as well on the grounds
cited by defendants.

As this is the first challenge to the complaint, leave to amend is granted. Plaintiffs may
file and serve an amended complaint no later than 4/4/2014. Although not required
by court rule or statute, plaintiffs are directed to present a copy of this order
when the amended complaint is presented for filing.

Demurring defendants to respond within 10 days if the amended complaint is
personally served, 15 days if served by mail. If the response is either a demurrer or
motion to strike, a copy of the new amended complaint must be included with the
moving papers.

Additionally, defendants shall contact any other defendant who has appeared in this
action and if any intends also to demur or move to strike, the parties shall coordinate
a single hearing date for all demurrers and/or motions to strike.

This minute order is effective immediately. No formal order or other notice is required.
(Code Civ. Proc. §1019.5; CRC Rule 3.1312.)