34-2012-00123353

SC Anderson Inc vs. Surprise Development Inc

Nature of Proceeding:    Hearing on Demurrer to Second Amended Complaint

Filed By:   Gesund, Keren E.

Defendant Suneet Singal’s (“Singal”) demurrer to Plaintiff S.C. Anderson, Inc.’s second
amended complaint (“SAC”) is ruled upon as follows.

This litigation arises out of the parties’ plans to construct an assisted living facility in
Chowchilla, California. Plaintiff is a general contractor/builder who in August 2009
entered into a contract with defendant Surprise Development, Inc. (“SDI”) to provide
pre-construction services (architecture, design, etc.) and soft costs needed to obtain
financing. In exchange, plaintiff
would be reimbursed for its pre-construction services upon receipt of the financing,
would be the general contractor to construct the facility and would be the general
contractor for other projects SDI identified for future development.   Plaintiff alleges
that Singal held himself out as a partner and owner of SDI.  (SAC, ¶3.)  The SAC  includes causes of action for:  breach of contract (COA 1), money lent (COA 2),
intentional misrepresentation (COA 3), negligent misrepresentation (COA 4), civil
conspiracy (COA 5), and theft/conversion (COA 6).

Joint Venture Allegations

Singal demurs to the first, second, third, and sixth causes of action.  These causes of
action are alleged against the “Sterling Group” and the “Surprise Group.” The SAC
defines the “Surprise Group” as Singal, Carl Wescott, and SDI.  (SAC, ¶12.)  The SAC
also alleges alter ego liability between Singal, Carl Wescott, and SDI (i.e. the “Surprise
Group”).  (SAC, ¶12.)

Signal demurs on the grounds that Plaintiff has failed to sufficiently alleged the
elements of a joint venture between Singal and the Sterling Group.  Rather, Singal
argues that Plaintiff has only conclusorily alleged that the joint venture existed between
the Surprise Group and the Sterling Group.

Singal’s liability, however, is not based solely on joint venture liability.  As noted above,
Plaintiff has also alleged that Singal is liable as the alter ego of Surprise.  Singal has
not argued that the alter-ego allegations are deficient.  Accordingly, the demurrer is
OVERRULED.

Conversion

Singal demurs to this cause of action on the grounds that Plaintiff has not pled facts to
show ownership or right to possession of the $32,225 refund from Wells Fargo after
the HUD funding failed to be approved.  Singal argues that the SAC alleges that
Plaintiff loaned the money to Singal which was to be repaid by Singal.  Thus, Plaintiff
lost its right to the possession of the money at the time it was borrowed or delivered.  (
Stafford v. Oil Tool Corp. (1955) 133 Cal.App.2d 763, 767.)

“Conversion is the wrongful exercise of dominion over the property of another. The
elements of a conversion claim are: (1) the plaintiffs ownership or a right to possession
of the property; (2) the defendant’s conversion by a wrongful act or disposition of
property rights; and (3) damages.”  (Burlesci v.
Petersen (1998) 68 Cal.App.4th 1062, 1065, see also Civil Code sections 1712 and
3336.)  “The simple failure to pay money owed does not constitute conversion. A
cause of action for conversion of money can be stated only where a defendant
interferes with the plaintiff’s possessory interest in a specific, identifiable sum, such as
when a trustee or agent misappropriates the money entrusted to him.” (Kim v.
Westmore Partners, Inc. (2011) 201 Cal.App.4th 267, 284.) Here, Plaintiff does not
allege any interference with its possessory interest in the funds at issue; to the
contrary, Plaintiff alleges it loaned the money to Singal. Plaintiff merely
contends that Singal failed to pay monies pursuant to their agreement, which does not
constitute conversion.

Accordingly, the demurrer to the conversion cause of action is SUSTAINED with leave
to amend.

Having sustained the demurrer on this grounds, the Court need not address Singal’s
remaining arguments.
The Court will not address Singal’s argument that the civil conspiracy cause of action
is a form of secondary liability as it was raised fir the first time on reply.

Leave to amend is granted as this is Singal’s first challenge to the complaint.

Where leave to amend is granted, Plaintiff may file and serve a third amended
complaint (“TAC”) by no later than June 10, 2014, Response to be filed and served
within 10 days thereafter, 15 days if the TAC is served by mail. (Although not required
by any statute or rule of court, Plaintiff is requested to attach a copy of the instant
minute order to the TAC to facilitate the filing of the pleading.)

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.

The court notes that moving party has indicated the incorrect address in its notice of
motion.  The correct address for Department 54 of the Sacramento County Superior
th
Court is 800 9   Street, Sacramento California  95814.  Moving party shall notify
responding party(ies) immediately.

Item   24     34-2012-00123353

SC Anderson Inc vs. Surprise Development Inc

Nature of Proceeding:      Motion to Strike Portions of Second Amended Complaint

Filed By:   Gesund, Keren E.

Defendant Suneet Singal’s (“Singal”) motion to strike portions of Plaintiff S.C.
Anderson, Inc.’s second amended complaint (“SAC”) is ruled upon as follows.

Singal’s request for judicial notice is granted. However, the request does not comply
with CRC rule 3.1113(l).  In taking judicial notice of these documents, the court
accepts the fact of their existence, not the truth of their contents.  (See Professional
th
Engineers v. Dep’t of Transp. (1997) 15 Cal.4   543, 590 [judicial notice of findings of
fact does not mean that those findings of fact are true]; Steed v. Department of
Consumer Affairs (2012) 204 Cal.App.4th 112, 120-121.)

Removal of “Singal” from Paragraph 12

Paragraph 12 contains Plaintiff’s alter ego allegations. Singal moves to strike the
above references to his name on the grounds that Plaintiff did not dispute the following
fact in Singal’s motion for summary judgment, or in the alternative, summary
adjudication, “Singal does not and has never had an ownership interest in Surprise.”
While the Court has taken judicial notice of Plaintiff’s Separate Statement in Opposition
to Singal’s motion for summary judgment, or in the alternative, summary adjudication,
the Court does not accept the truth of its contents.

Accordingly, the motion to strike is DENIED.

“On or about July 30, 2009 ANDERSON entered into an agreement”

Singal moves to strike the above allegation on the grounds that it is false because the
agreement was not fully executed and accepted by both parties until Plaintiff signed it
on August 20, 2009.

The motion to strike is DENIED.  The agreement attached as Exhibit A to the SAC
states that the agreement was made “as of July 30, 2009”, there is nothing false about
Plaintiff’s statement.

Paragraph 30(3)

The motion to strike is GRANTED.  Plaintiff does not substantively dispute Singal’s
argument, which the Court construes as a concession on the merits.  Although the
notice of motion does not comply with CRC rule 3.1322(a), it is clear that the sentence
which Singal seeks to strike is “VILLA DEL SOL would provide a new deed of trust to
ANDERSON in the interim.”

Paragraphs 94 and 95, and 119(1), (3), (4), (9)

The motion to strike is DENIED.  Motions to strike are disfavored. Courts considering
such motions must presume the allegations contained therein are true and must
consider those allegations in context.  (Clauson v Superior Court (1998) 67
Cal.App.4th 1253, 1255  . The use of the motion to strike should be cautious and
sparing. It should not be a procedural “line item veto” for the civil defendant. PH II, Inc.
v. Superior Court (1995) 33 Cal. App. 4th 1680, 1683.)

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.

The court notes that moving party has indicated the incorrect address in its notice of
motion.  The correct address for Department 54 of the Sacramento County Superior
th
Court is 800 9   Street, Sacramento California  95814.  Moving party shall notify
responding party(ies) immediately.