Case Number: EC062200    Hearing Date: August 08, 2014    Dept: A

Crowley v Deutsche Bank

DEMURRER & MOTION TO STRIKE

Calendar: 9
Case No: EC062200
Date: 8/8/14

MP: Defendant, Deutsche Bank National Trust
Defendants, First American Title Insurance
Defendants, Michael Raisin and Mr. Ventures, Inc.
RP: Plaintiff, Michael Crowley

ALLEGATIONS IN FIRST AMENDED COMPLAINT:
The Plaintiff purchased real property in 2008 at a foreclosure sale. The Plaintiff believed that the property was a triplex. On August 7, 2013, the Plaintiff received a notice that the property had unapproved construction on it and that the property did not have a permit to be used for a triplex. The Plaintiff brought this action to seek damages.

CAUSES OF ACTION IN FIRST AMENDED COMPLAINT:
1) Breach of Contract
2) Breach of Implied Covenant of Good Faith and Fair Dealing
3) Negligent Misrepresentation
4) Fraud
5) Violation of Civil Code section 2709 et seq.
6) Negligent Infliction of Emotional Distress

RELIEF REQUESTED:
1. Defendant, Deutsche Bank National Trust Company
Demurrer to each cause of action.
Strike claims for punitive damages, emotional damages, and attorney’s fees1. Defendants,

2. First American Title Insurance
Demurrer to first, third, and sixth causes of action.

3. Defendants, Michael Raisin and Mr. Ventures, Inc.
Demurrer to first, fifth, and sixth causes of action.
Strike claims for punitive damages and for attorney’s fees.

DISCUSSION:
This hearing concerns the Defendants’ demurrers and motions to strike directed at the Complaint. The Defendant, Michael Raisin, represented the seller in the sale of the real property. Another Defendant, Mr. Ventures, Inc., as discussed below, did not exist at the time of the sale of the property.

1. Defendant, Deutsche Bank National Trust Company
a. Demurrer to First Cause of Action for Breach of Contract and to Second Cause of Action for Breach of Implied Covenant of Good Faith and Fair Dealing
The Defendant argues that the dates in the pleadings indicate that these causes of action are barred. Where the dates alleged in the complaint show the action is barred by the statute of limitations, a demurrer lies. Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292, 300.
The Plaintiff’s first and second causes of action are based on the alleged breach of a written agreement. Under CCP section 337, the statute of limitations for claims based on the breach of a written agreement is four years.
The Plaintiff alleges in paragraph 30 and 35 that the Defendants breached the purchase agreement for the property by failing to disclose material defects and by failing to deliver the property free from material defects.
In paragraph 15, the Plaintiff alleges that he purchased the property on June 6, 2008. This is the date of breach because this is when the property was delivered to him. Under CCP section 337, the Plaintiff had four years, or until June 6, 2012, to bring this action.
A review of the Court file reveals that the Plaintiff commenced this action on March 10, 2014. This was after the four year period ended.
Accordingly, the dates in the pleadings indicate that the Plaintiff did not commence this action within the four year statute of limitations.

The Plaintiff argues that the discovery rule postpones the start of the cause of action. However, the discovery rule is generally inapplicable to alleged breaches of contract. Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal. App. 4th 1356, 1397. Accordingly, this does not offer any basis to find that the cause of action can be withstand a demurrer based on limitations.

Therefore, the Court will sustain the demurrers to the first and second causes of action. It is not reasonably possible to cure this defect by amendment because the dates indicate that any claim based on breach of contract is barred by the statute of limitations. Accordingly, the Court will not grant leave to amend.

b. Demurrer to Third Cause of Action for Negligent Misrepresentation
The Defendant argues that this cause of action is barred by the statute of limitations and that it is not pleaded with particularity.

i) Statute of Limitations
In order to determine the statute of limitations for a negligent misrepresentation claim, the Court considers the nature of the right at issue. Ventura County Nat. Bank v. Macker (1996) 49 Cal. App. 4th 1528, 1530. If the claim includes allegations showing a failure to meet a standard of reasonable care which results in the tortious invasion of a property right, the essence of the claim is negligence and the statute of limitations is two years. Id. Otherwise, the statute of limitations is three years because negligent misrepresentation is a form of deceit. Id.
The Plaintiff alleges that the Defendant made false representations with the intent to induce the Plaintiff to purchase the property. The essence of the cause of action is deceit. Accordingly, the statute of limitations is three years from the time of discovery, under CCP section 338.
The Plaintiff alleges in paragraphs 16 to 19 that he first discovered that the property had been misidentified on August 7, 2013 when he received a notice and order of abatement for substandard construction that advised him that the property was approved only for a duplex and not for a triplex. Since the Plaintiff discovered the claim on August 7, 2013, he had three years from August 7, 2013, or until August 7, 2016, to bring the claim. Since this time period has not yet passed, there are no grounds in the pleadings to find that the Plaintiff’s claim is barred by the statute of limitations.

ii) Lack of Sufficient Facts
The elements of negligent misrepresentation are the following:

1) a misrepresentation of a past or existing material fact;
2) without reasonable grounds for believing it to be true;
3) with intent to induce another’s reliance on the fact misrepresented;
4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and
5) damages.
B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.

Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit. Bily v. Arthur Young & Co. (1992) 3 Cal. 4th 370, 407. Since it is a tort of fraud, facts constituting each element must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. The complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. In addition, to plead the claim against a corporation the plaintiff must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the third cause of action reveals that it lacks any particular facts regarding any Defendant. The Plaintiff does not allege the misrepresentation made by each separate Defendant. The Plaintiff does not allege when, how, where, or by what means each Defendant made a misrepresentation. The Plaintiff does not identify who spoke on behalf of the Defendant or the person’s authority to speak. Further, there are no particular facts regarding the rest of the elements, e.g., intent to induce reliance, ignorance of the truth, or justifiable reliance. This is insufficient.

Therefore, the Court will sustain the demurrer to the third cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that this cause of action can be corrected by amendment. Accordingly, the Court should not grant leave to amend.

c. Demurrer to Fourth Cause of Action for Intentional Misrepresentation
The Defendant argues that this cause of action lacks the particular facts needed to plead a fraud claim. The Plaintiff’s fourth cause of action include the following elements:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of fraud must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. In addition, fraud pleadings against a corporation must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the fourth cause of action reveals that it lacks any particular facts regarding any Defendant. The Plaintiff does not allege the misrepresentation made by each, separate Defendant. The Plaintiff does not allege when, how, where, or by what means each Defendant made a misrepresentation. The Plaintiff does not identify who spoke on behalf of the Defendant or the person’s authority to speak. Further, there are no particular facts regarding the rest of the elements, e.g., intent to defraud or justifiable reliance. This is insufficient.

Therefore, the Court will sustain the demurrer to the fourth cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that this cause of action can be corrected by amendment. Accordingly, the Court should not grant leave to amend.

d. Demurrer to Fifth Cause of Action for Violation of Civil Code section 2079
The Defendant made a demurrer to this claim, but admits that the cause of action is not directed at it. Since the fifth cause of action is not directed at the Defendant, the demurrer will be overruled.

e. Demurrer to Sixth Cause of Action for Negligent Infliction of Emotional Distress
The Defendant argues that this cause of action fails to plead any facts indicating that it had a duty, it breached a duty, or that it caused any damages. A review of the cause of action reveals that it pleads in paragraph 70 that Washington Mutual Bank had knowledge that the property was a duplex and not a triplex. There are no allegations that Deutsche Bank National Trust had knowledge that the property was a duplex and not a triplex. Since there are no allegations that Deutsche Bank National Bank had knowledge that the property was a duplex, the allegations are insufficient to impose a duty on Deutsche Bank National Bank to disclose information.

Therefore, the Court will sustain the demurrer to the seventh cause of action.

It is not reasonably possible to correct these defects by amendment because under California law, emotional distress damages in connection with property damages are not compensable. Erlich v. Menezes (1999) 21 Cal. 4th 543, 557. A review of the Plaintiff’s seventh cause of action reveals that he alleges in paragraph 75 that as a result of the Defendants’ failure to disclose the number of units that were permitted for the property, he suffered emotional distress. Since the Plaintiff’s claim arises from property damages, i.e., the reduction in property value caused by the lack of a permit for a triplex, the Plaintiff cannot seek emotional distress damages.
Accordingly, the Court should not grant leave to amend.

f. Motion to Strike
In light of the recommendation to sustain the demurrers to each cause of action directed at the moving Defendant, the request to strike is moot and will be taken off calendar.

2. First American Title Insurance
a. Demurrer to First Cause of Action for Breach of Contract
The Defendant argues that the Plaintiff has not pleaded facts demonstrating that First American Title Insurance was a party to the purchase agreement at issue. A breach of contract cause of action must include the following elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal. 4th 189, 198-199. In order to plead a contract by its legal effect, plaintiff must allege the substance of its relevant terms. McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1489.
A review of the first cause of action reveals that it does not plead that the parties entered into a contract. Further, the Plaintiff did not plead the terms or legal effect of the contract. Instead, the Plaintiff begins the cause of action in paragraph 29 by alleging that the Plaintiff performed his obligations under the agreement. The Plaintiff neglected to plead the first element of the cause of action, i.e., to plead that the parties entered into a contract.

Accordingly, the Court will sustain the demurrer to the first cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff offers no grounds to find that he can plead that the title insurance company breached the purchase agreement for the property. Accordingly, the Court should not grant leave to amend.

b. Demurrer to Third Cause of Action for Negligent Misrepresentation
The Defendant argues that this cause of action is not pleaded with particularity.
The elements of negligent misrepresentation are the following:

1) a misrepresentation of a past or existing material fact;
2) without reasonable grounds for believing it to be true;
3) with intent to induce another’s reliance on the fact misrepresented;
4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and
5) damages.
B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.

Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit. Bily v. Arthur Young & Co. (1992) 3 Cal. 4th 370, 407. Since it is a tort of fraud, facts constituting each element must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. The complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. In addition, to plead the claim against a corporation the plaintiff must allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann v. State Farm Mutual Automobile Insurance Co. (1991) 2 Cal.App.4th 153, 157.

A review of the third cause of action reveals that it lacks any particular facts regarding any Defendant. The Plaintiff does not allege the misrepresentation made by each, separate Defendant. The Plaintiff does not allege when, how, where, or by what means each Defendant made a misrepresentation. The Plaintiff does not identify who spoke on behalf of the Defendant or the person’s authority to speak. Further, there are no particular facts regarding the rest of the elements, e.g., intent to induce reliance, ignorance of the truth, or justifiable reliance. This is insufficient.

Therefore, the Court will sustain the demurrer to the third cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that this cause of action can be corrected by amendment. Accordingly, the Court should not grant leave to amend.

c. Demurrer to Sixth Cause of Action for Negligent Infliction of Emotional Distress
The Defendant argues that this cause of action fails to plead any facts indicating that it had a duty, it breached a duty, or that it caused any damages. A review of the cause of action reveals that it pleads in paragraph 70 that Washington Mutual Bank had knowledge that the property was a duplex and not a triplex. There are no allegations that First American Title Insurance had knowledge that the property was a duplex and not a triplex. Since there are no allegations that First American Title Insurance had knowledge that the property was a duplex, the allegations are insufficient to impose a duty on First American Title Insurance to disclose information.

Therefore, the Court will sustain the demurrer to the seventh cause of action.

It is not reasonably possible to correct these defects by amendment because under California law, emotional distress damages in connection with property damages are not compensable. Erlich v. Menezes (1999) 21 Cal. 4th 543, 557. A review of the Plaintiff’s seventh cause of action reveals that he alleges in paragraph 75 that as a result of the Defendants’ failure to disclose the number of units that were permitted for the property, he suffered emotional distress. Since the Plaintiff’s claim arises from property damages, i.e., the reduction in property value caused by the lack of a permit for a triplex, the Plaintiff cannot seek emotional distress damages.
Accordingly, the Court should not grant leave to amend.

3. Defendants, Michael Raisin and Mr. Ventures, Inc.
a. Demurrer by Mr. Ventures, Inc.
The Defendant, Mr. Ventures, Inc., argues that no cause of action can be directed at it because it did not exist at the time that the Plaintiff purchased the property. The Defendant requests that the Court take judicial notice of the licensing information regarding Mr. Ventures, Inc. that is in the records of the State of California, Bureau of Real Estate. The Plaintiff did not file any opposition or objection to the request.
The licensing information indicates that Mr. Ventures, Inc. became active on March 17, 2009. A review of the Complaint reveals that the Plaintiff alleges in paragraph 15 that he purchased the property on June 6, 2008. Since Mr. Ventures, Inc. became active on March 17, 2009, it did not exist on June 6, 2008 when the Plaintiff alleges that he purchased the property.
A review of the Plaintiff’s causes of action reveal that each is based on claims that the Plaintiff suffered damages as a result of the sale, e.g., the first cause of action for breach of contract claims that the Defendants breached the purchase agreement and the fourth cause of action for fraud claims that the Defendants made false statements to induce the Plaintiff to purchase the property. The facts of which the Court may take judicial notice indicate that the Defendant, Mr. Ventures, Inc., did not exist on June 6, 2008. Since Mr. Ventures Inc. did not exist on June 6, 2008, it could not have entered into the contract, made representations, or failed to disclose information regarding the property. This indicates that there are grounds for a demurrer to the entire Complaint.

Therefore, the Court will sustain the demurrer of Mr. Ventures, Inc. to the entire Complaint.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff offers no grounds to find that he can correct this defect by amendment. Accordingly, the Court should not grant leave to amend.

b. Demurrer to First Cause of Action for Breach of Contract
The Defendants argue that this cause of action fails to plead that they were parties to the contract that was breached. A breach of contract cause of action must include the following elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal. 4th 189, 198-199. In order to plead a contract by its legal effect, plaintiff must allege the substance of its relevant terms. McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1489.
A review of the first cause of action reveals that it does not plead that the parties entered into a contract. Further, the Plaintiff did not plead the terms or legal effect of the contract. Instead, the Plaintiff begins the cause of action in paragraph 29 by alleging that the Plaintiff performed his obligations under the agreement. The Plaintiff neglected to plead the first element of the cause of action, i.e., to plead that the parties entered into a contract.

Accordingly, the Court will sustain the demurrer to the first cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any grounds to find that he can correct the defect by amendment. Accordingly, the Court should not grant leave to amend.

c. Demurrer to Fifth Cause of Action for Violation of Civil Code section 2079 et seq.
The Defendant argues that this claim is barred by the statute of limitations. Where the dates alleged in the complaint show the action is barred by the statute of limitations, a general demurrer lies. Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292, 300.
The Plaintiff’s claim is based on the duty of a seller’s broker to disclose information that is imposed under Civil Code sections 2079 to 2079.6. Under Civil Code section 2079.4, the Plaintiff had two years to bring a claim from the date of possession, which is defined as the date of recordation, the date of close of escrow, or the date of occupancy, whichever occurs first.
The Plaintiff alleges in paragraph 15 that he purchased the property on June 6, 2008. This indicates that the escrow had closed by June 6, 2008.
Under Civil Code section 2079.4, the Plaintiff had two years to bring a claim from June 6, 2008. This time period ended on June 6, 2010.
A review of the Court file reveals that the Plaintiff commenced this action on March 10, 2014. Since the Plaintiff did not commence the action within the time period required under Civil Code section 2079.4, the dates within the pleadings indicate that the cause of action is barred.

Therefore, the Court will sustain the demurrer to the sixth cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any grounds to find that he can correct this defect by amendment. Accordingly, the Court should not grant leave to amend.

d. Demurrer to Sixth Cause of Action for Negligent Infliction of Emotional Distress
The Defendants argue that this cause of action cannot be brought because emotional distress damages cannot be obtained in connection with property damages.
Under California law, emotional distress damages in connection with property damages are not compensable. Erlich v. Menezes (1999) 21 Cal. 4th 543, 557. A review of the Plaintiff’s sixth cause of action reveals that he alleges in paragraph 75 that as a result of the Defendants’ failure to disclose the number of units that were permitted for the property, he suffered emotional distress. Since the Plaintiff’s claim arises from property damages, i.e., the reduction in property value caused by the lack of a permit for a triplex, the Plaintiff cannot seek emotional distress damages.

Therefore, the Court will sustain the demurrer to the sixth cause of action.

It is not reasonably possible to correct these defects by amendment because under California law, emotional distress damages in connection with property damages are not compensable. Accordingly, the Court should not grant leave to amend.

e. Motion to Strike
In light of the sustaining of the demurrers to each cause of action directed at the moving Defendants, the request to strike is moot and will be taken off calendar.

TENTATIVE RULINGS:
1. Defendant, Deutsche Bank National Trust Company
SUSTAIN demurrer to first, second, third, fourth, and sixth causes of action without leave to amend.
OVERRULE demurrer to fifth cause of action.

TAKE OFF CALENDAR motion to strike.

2. First American Title Insurance
SUSTAIN demurrers to first, third, and sixth causes of action without leave to amend.

3. Defendants, Michael Raisin and Mr. Ventures, Inc.
SUSTAIN demurrer to first, fifth, and sixth causes of action without leave to amend.

TAKE OFF CALENDAR motion to strike.