Case Name: Fernandez v. RealtyShares, Inc., et al.
Case No.: 1-14-CV-259888

This is an action for breach of an investment agreement. In June of 2013, plaintiff Manuel Fernandez (“Plaintiff”) and defendants Trey Clark (“Clark”) and Navjot Athwal (“Athwal”) met with Plaintiff to discuss an investment opportunity in their company, RealtyShares, Inc. (“RealtyShares”). (See complaint, ¶¶ 9-11.) According to the terms of the agreement, Plaintiff was to provide $25,000 and investor support in exchange for 11.5% of the equity in Realty Shares. (See complaint, ¶ 11.) On June 27, 2013, Plaintiff presented $10,000 and Athwal deposited the check. (See complaint, ¶¶ 11-12, 17.) Plaintiff also provided investor support. (See complaint, ¶ 13.) On October 13, 2013, Plaintiff tendered the remaining $15,000, however, RealtyShares rejected the tender, returned the initial $10,000 payment, and repudiated its obligation to transfer any equity to Plaintiff. (See complaint, ¶ 17.) On January 31, 2014, Plaintiff filed a complaint against Clark, Athwal and RealtyShares (collectively, “Defendants”), asserting causes of action for: breach of contract—specific performance; breach of contract—damages; fraud; and, unfair competition. Defendants demur to each cause of action on the ground that it fails to state facts sufficient to constitute a cause of action.

As to the first cause of action for specific performance, “[t]o obtain specific performance after a breach of contract, a plaintiff must generally show: ‘(1) the inadequacy of his legal remedy; (2) an underlying contract that is both reasonable and supported by adequate consideration; (3) the existence of a mutuality of remedies; (4) contractual terms which are sufficiently definite to enable the court to know what it is to enforce; and (5) a substantial similarity of the requested performance to that promised in the contract.’” (Real Estate Analytics, LLC v. Vallas (2008) 160 Cal.App.4th 463, 472.) Here, to the extent that the breach of contract is based on the amount of monies invested in RealtyShares, that money was alleged to have been returned to Plaintiff. To the extent that the breach of contract is based on the services provided by Plaintiff, that is one of the enumerated obligations that is not subject to specific performance. (See Civ. Code § 3390.) The demurrer to the first cause of action is SUSTAINED without leave to amend.

As to the second cause of action, the complaint alleges facts to support a cause of action. Plaintiff alleges that he provided services and money in exchange for a share in RealtyShares, but that only the money was returned to him. Even if the terms of the contract are uncertain, at minimum, Plaintiff alleges facts supporting a cause of action for quantum meruit. (See Hendrickson v. California Newspapers, Inc. (1975) 48 Cal. App. 3d 59, 61 (stating that “”[i]f the complaint states any cause of action, the demurrer should have been overruled”).) The demurrer to the second cause of action is OVERRULED.

Defendants argue that the third cause of action is not pled with sufficient particularity. However, the complaint adequately alleges facts which show how, when, where, to whom and by what means the alleged promise without intent to perform was made. As previously stated, the complaint adequately alleges damages. The demurrer to the third cause of action is OVERRULED.

As to the fourth cause of action for unfair business practices, Defendants argue that the cause of action seeks only restitution, and that is unavailable to Plaintiff as he has not “lost money or property” as required by Business & Professions Code section 17204. In opposition, Plaintiff acknowledges that his claim is one for restitution, but asserts that “[t]he defendants took (and presumably used) Fernandez’ money for a period of months.” However, “restitution is limited to restoring money or property to direct victims of an unfair business practice.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1151.) The complaint alleges that Plaintiff’s money was, in fact, restored. Thus, Plaintiff cannot state a claim for unfair business practices seeking restitution and the demurrer to the fourth cause of action is SUSTAINED without leave to amend.

In light of the above ruling regarding the third cause of action, the motion to strike allegations supporting punitive damages is DENIED.