Case Name: Shephard v. Frankel, et al.
Case No.: 1-13-CV-257934

Currently before the Court is the demurrer of defendants William Frankel (“Frankel”) and Amkai, Inc. (collectively, “Defendants”) to the first amended complaint (the “FAC”) of Plaintiff Delmy Shephard (“Plaintiff”).

Defendants’ requests for judicial notice of the FAC and original complaint are GRANTED given that these are court records relevant to the issues to be decided in this demurrer. (See Evid. Code, § 452, subd. (d); People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 [only relevant matters are subject to judicial notice].) Plaintiff’s initial request for judicial notice is also GRANTED. (See Evid. Code, § 451, subd. (a).) Plaintiff’s supplemental request for judicial notice is DENIED given that the subject discovery order at issue is not relevant to Defendants’ demurrer. (See People ex rel. Lockyer v. Shamrock Foods Co., supra, 24 Cal.4th at p. 422, fn. 2.)

The Court declines to rule on Defendants’ evidentiary objections. There is no authority for the proposition that a court must rule on evidentiary objections made in connection with a motion other than a motion for summary judgment or an anti-SLAPP motion, and the evidence at issue is unnecessary to the resolution of Defendants’ demurrer.

The demurrer to the first cause of action is SUSTAINED with 10 days’ leave to amend.

The first cause of action for breach of contract fails to state a claim because the agreement alleged by Plaintiff in therein is unenforceable due to the statute of frauds. (Civ. Code, § 1624, subd. (a)(3) [an agreement for the sale of real property is invalid “unless [it], or some note or memorandum thereof, [is] in writing and subscribed by the party to be charged or by the party’s agent”]; see also Civ. Code, § 1091 and Code Civ. Proc., § 1971 [providing that the transfer of an estate in real property other than by operation of law must be in writing].)

Plaintiff contends that an email from Frankel instructing Plaintiff’s agent Michael Sheldon to send him the contract “signed by the buyers” and stating that Frankel would have it countersigned (FAC, Ex. D) constitutes a memorandum adequate to satisfy the statute of frauds. An earlier email reproduced by Frankel’s email also indicates that Frankel “will give the buyer one week if they release $150k and the purchase price is $1,088,000.” (Id.) However, these communications, while allegedly sent from Frankel’s email account, are not signed by him as required to satisfy the statute of frauds. (See Marks v. Walter G. McCarty Corp. (1949) 33 Cal.2d 814, 821 [letterhead did not satisfy statute of frauds where nothing on the face of the documents indicated it was intended to function as a signature; “where it is claimed that a name appearing on a document was intended as a signature satisfying the statute of frauds, the intention must appear on the face of the document itself and ‘proof of such intention may not rest in parol’”].) Even if Frankel had affixed his electronic signature to the email, Plaintiff does not allege that Defendants agreed to conduct the transaction at issue by electronic means, so an email would not suffice to satisfy the statute of frauds. (See Civ. Code, §§ 1633.5, subd. (b) 1633.7, subd (c) [law providing that an electronic record and signature satisfy laws requiring a record to be signed and/or in writing requires the parties’ agreement to conduct a transaction by electronic means]; see also 1 Miller & Starr, Cal. Real Estate (3rd ed. 2000) Form of the memorandum, §1:79, p. 265-266.)

Plaintiff also contends that Frankel’s execution of a release of funds acknowledging that he would not sell the Property for 90 days satisfies the requirement of a memorandum. However, there is no indication that this release, which was executed in connection with Frankel’s purchase of the Property rather than its sale to Plaintiff (see FAC, ¶ 9), reflected any of the essential terms of Plaintiff’s alleged agreement with Frankel or even referenced Plaintiff at all. Consequently, this document is also inadequate to satisfy the statute of frauds. (See Gordon v. Perkins (1930) 108 Cal.App. 336, 339-340 [“[T]he contract, note or memorandum is insufficient where parol evidence is necessary to supply the description, or part thereof, to determine and define the subject matter, and to show the intention and agreement of the parties as to the subject matter.”]; Burgess v. Rodom (1953) 121 Cal.App.2d 71, 73-74 [“‘It is indispensable to a valid memorandum of an agreement to sell and convey land that it be complete evidence of the terms to which the parties have assented. …’ Applying these principles, it is clear that the deposit receipt is incomplete in one essential feature, viz., the terms upon which the balance of the purchase price is to be paid.”]; see also 1 Miller & Starr, Cal. Real Estate (3rd ed. 2000) Contents of the memorandum, §1:80, p. 271 [“In the case of a contract for the sale of real property, a memorandum must name the parties, identify the property, and set forth the price and terms of payment with a reasonable degree of certainty.”].)

The documents identified by Plaintiff thus fail to satisfy the statute of frauds. (See Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners (1997) 52 Cal.App.4th 867, 875 [lease agreement unenforceable due to statute of frauds where lessor never signed the draft instrument it had sent to plaintiff with a cover letter indicating it should be executed and returned to the lessor for execution, and which plaintiff had executed and returned].)

Plaintiff further argues that an exception to the statute of frauds applies because she partially performed her agreement with Defendants by paying $30,000 towards their purchase of the Property, paying for maintenance and utilities, and leaving her personal property at the Property. However, for the doctrine of part performance to apply, a purchaser must have taken possession of the property. (See Sutton v. Warner (1993) 12 Cal.App.4th 415, 422 [“‘Under the doctrine of part performance, the oral agreement for the transfer of an interest in real property is enforced when the buyer has taken possession of the property and either makes a full or partial payment of the purchase price, or makes valuable and substantial improvements on the property, in reliance on the oral agreement.’ [Citation.] Payment of the purchase price alone … is not sufficient part performance to preclude application of the statute of frauds.”], italics original.) Plaintiff’s mere storage of certain items at the Property (which were already located there when Defendants purchased it) is not possession adequate to bring her within the partial performance exception to the statute of frauds, and Plaintiff does not attempt to argue that it is. (See Sutton v. Warner, supra, 12 Cal.App.4th at pp. 422-423 [“Possession must be more than a ‘mere technical possession, not open to observation of the neighborhood, and capable of being proved only by select and confidential witnesses ….’ [Citation.] It must be actual, visible, notorious and exclusive, so that it manifests clearly that the buyer is claiming and asserting a distinctive ownership of the property inconsistent with the right of possession or ownership in any other person.”].)

The demurrer to the second cause of action is SUSTAINED with 10 days’ leave to amend. As urged by Defendants, the allegations supporting the second cause of action for fraud are not specific enough to state a claim for fraud because they omit the detail of how Frankel’s representation was tendered to Mr. Sheldon. (See Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14 [fraud and negligent misrepresentation must be pleaded with particularity and by facts that show how, when, where, to whom, and by what means the representations were tendered].) Defendants also contend that Plaintiff’s reliance on this statement could not have been reasonable because she fails to allege specific facts in support of this element, an oral promise to sell real property could not be justifiably relied upon in light of the statute of frauds, and Plaintiff could not rely upon Frankel’s promise to sell the Property on August 27 given that he did not yet own the Property at that time. However, Plaintiff’s allegations as a whole—in particular her allegation that Frankel used $30,000 she paid him to purchase the Property—support the conclusion that her reliance was justified. Plaintiff is not charged with knowledge of the statute of frauds (see Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239-1240 [plaintiff is not held to the minimum knowledge of a hypothetical, reasonable person; the issue is whether the person who claims reliance was justified in believing the representation in the light of his or her own knowledge and experience]), and the statute of frauds does not bar an action for promissory fraud (see 1 Miller & Starr, Cal. Real Estate (3rd ed. 2000) False promises (promissory fraud), §1:137, p. 493 [“the statute of frauds is not a bar to an action based on promissory fraud even if the action involves an oral agreement that is unenforceable under the statute of frauds”]). Although Defendants did not yet own the Property at the time of Frankel’s alleged promise, there is no indication that it would have been unreasonable for Plaintiff to believe that Frankel would be able to purchase the Property as he claimed he would. Thus, Defendants’ argument that Plaintiff fails to allege her reliance was reasonable lacks merit, and Plaintiff is permitted leave to amend her claim to plead all the details of Frankel’s alleged representation. (See Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at p. 1239 [“Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether a plaintiff’s reliance is reasonable is a question of fact.”].)

The demurrer to the third cause of action is OVERRULED. In the third cause of action, Plaintiff alleges that Frankel agreed that he would retain and provide to Plaintiff upon her purchase of the Property certain items of personal property located there. (FAC, ¶¶ 8, 26.) Defendants contend that Plaintiff fails to allege she provided any consideration in exchange for this promise and that she had some right to possession of the personal property at issue, which Defendants argue is required to establish Plaintiff’s standing to sue. As to Defendants’ first argument, Plaintiff clearly alleges that the personal property was promised along with the sale of the Property to Plaintiff in exchange for her payment of $30,000 towards Frankel’s purchase of the Property and utility and maintenance expenses pending the close of escrow. (FAC, ¶¶ 7 and 8.) As to their second argument, Defendants utterly fail to explain why a prior right of possession in the property at issue would be required for Plaintiff to establish standing to sue for breach of a contract to acquire the property, and the Court finds that there is no such requirement. Consequently, Defendants’ argument that the third cause of action fails to state a claim lacks merit.

The Court will prepare the order.

The parties are reminded of the case management conference scheduled for June 3, 2014 at 10:00 A.M.