Case Name: Civic Property Group, Inc. v. The Suner Corporation, Inc., et al.

Case No.: 1-13-CV-256739

Plaintiff/cross-defendant Civic Property Group, Inc. (“CPG”) and cross-defendants Civic Rancho Meadows, LLC (“CRM”), Denova Homes, Inc. (“Denova”), and David B. Sanson (“Sanson”) (collectively, “Cross-Defendants”) demur to the first amended cross-complaint (“FAXC”) by defendant/cross-complainant The Suner Corporation, Inc. d.b.a. The James Group (“Suner”) on the ground of failure to allege sufficient facts and move to strike portions of the FAXC. (See Code of Civ. Proc. [“CCP”], §§ 430.10, subd. (e) & 435-436.)

Cross-Defendants’ request for judicial notice is GRANTED IN PART and DENIED IN PART. The request is GRANTED as to the complaint, the cross-complaint (“XC”), and the FAXC. (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 subject to judicial notice].) The request is DENIED as to the requests for admission (“RFA”) and Suner’s responses to the RFA. (See Evid. Code, § 450 [“[j]udicial notice may not be taken of any matter unless authorized or required by law”]; see also Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 605 [“[t]he hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of affidavits, declarations, depositions, and other such material which was filed on behalf of the adverse party and which purports to contradict the allegations and contentions of the plaintiff”].)

CPG and CRM demur to the first and fifth causes of action, CRM and Sanson demur to the second and fourth causes of action, and Cross-Defendants demur to the third cause of action on the ground of failure to allege sufficient facts.

CPG and CRM’s demurrer to the first and fifth causes of action (breach of contract and breach of the implied covenant of good faith and fair dealing) is OVERRULED. Suner alleges, “[o]n information and belief,” that CPG assigned its rights and obligations under the subject contract (“the Agreement”) to CRM. (FAXC, ¶¶ 19 & 25; see also Wuest v. Wuest (1942) 53 Cal.App.2d 339, 344 [an allegation based on information and belief is accepted as true on demurrer].) CRM argues that this allegation contradicts Suner’s RFA responses, but the RFA responses are not subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) CRM also asserts that the alleged assignment contradicts inferences that could be drawn from other allegations; however, where an allegation contradicts an inference that could be drawn from another allegation, the inference is disregarded and the express allegation is presumed true. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1235-1236 & 1238-1239.) CPG argues that since it allegedly assigned its obligations, then Suner does not allege facts to support the existence of a contract with CPG. To the contrary, assigning obligations does not release the assignor from liability absent the other party’s consent (see Civ. Code, § 1457), and Suner alleges that CPG failed to obtain its consent (FAXC, ¶ 22). Therefore, Suner alleges sufficient facts to support the existence of a contract. CPG and CRM next contend that Suner has not adequately alleged any breach. To the extent they assert that the alleged sale of the property to a third party cannot support the breach element because it occurred after Suner allegedly terminated the Agreement, their argument is well-taken. (See Civ. Code, § 1699 [termination extinguishes the contract].) In any event, Suner alleges other facts to support the breach element, e.g., that CPG assigned its obligations under the Agreement without Suner’s written consent, and that CPG—and its assignee, CRM—failed to construct homes on the property. (FAXC, Ex. A at ¶ 4.4 & p. 32 [the terms of the Agreement state that Suner entered into the Agreement for CPG’s intended purpose of developing the property and selling homes] & FAXC ¶¶ 22 & 25-26 [Suner alleges that the Agreement required CPG and CRM to construct homes]; see also Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239 [“we must accept as correct plaintiff’s allegations as to the meaning of the agreement”]; see also Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047 [“a demurrer cannot rightfully be sustained to part of a cause of action”].) Thus, Suner alleges sufficient facts to support the breach element against both CPG and CRM.

CRM’s demurrer to the second and fourth causes of action (intentional misrepresentation and fraud) is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. CRM persuasively argues that Suner does not specifically allege that CRM (or any of its officers or agents) made a misrepresentation. In its opposition, Suner proffers facts to support an alter ego theory of liability against CRM, but since those facts are not alleged in the FAXC, they are not considered on demurrer. (See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47.)

Sanson’s demurrer to the second and fourth causes of action (intentional misrepresentation and fraud) is OVERRULED. Sanson proffers no arguments in support of the demurrer to these claims. (See Badie v. Bank of America (1998) 67 Cal. App. 4th 779, 784-785 [“[w]hen [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived”]; see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 [“a point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion”].)

Cross-Defendants’ demurrer to the third cause of action (negligent misrepresentation) is SUSTAINED WITHOUT LEAVE TO AMEND. (See Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 [California does not recognize a cause of action for a negligent promise]; see also Findley v. Garrett (1952) 109 Cal.App.2d 166, 179 [where demurrer to original complaint was based upon defects and pleadings which were similar to defects in amended complaint, refusal to allow plaintiffs to amend after demurrer was sustained to amended complaint was not abuse of discretion].)

Cross-Defendants move to strike the allegations pertaining to punitive damages in paragraphs 40 and 55 and the prayer for punitive damages (see FAXC, prayer ¶ 2) in the FAXC on the ground that Suner does not specifically allege supporting facts. (See Clauson v. Super. Ct. (1998) 67 Cal.App.4th 1253, 1255 [to survive a motion to strike a punitive damages claim, “the ultimate facts showing an entitlement to such relief must be pled”; allegations are presumed true, and the complaint is read as a whole and each portion is read in context]; see also Civ. Code, § 3294, subds. (a) & (c)(3) [fraud is “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury”]; see also Perkins v. Super. Ct. (1981) 117 Cal.App.3d 1, 7-8 [alleging that defendants are “guilty of ‘oppression, fraud, and malice’ simply plead[s] a claim for punitive damages in the language of the statute” and “is not objectionable when sufficient facts are alleged to support the allegation”].)

Since the demurrer to the second and fourth causes of action is sustained as to CRM, the motion to strike is MOOT as to CRM.

The motion to strike is DENIED as to CPG, Denova, and Sanson. CPG, Denova, and Sanson cite several cases for the proposition that conclusory allegations of malice, oppression, and fraud are insufficient and should be stricken; however, those cases held that striking such conclusory allegations is only proper where no other factual allegations support the claim. (See G.D. Searle & Co. v. Super. Ct. (1975) 49 Cal.App.3d 22, 29; see also Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.) Here, Suner specifically alleges the fraudulent conduct that supports the punitive damages claim. (See FAC, ¶¶ 34.1, 34.3, 34.4, 34.5, 34.6, 35-37, & 49-52.) Taken in context, the allegations in paragraphs 40 and 55 are proper because they summarize the previous factual allegations and recite the language from Civil Code section