Case Name:   Delmy Shephard v. William Frankel, et al.

Case No.:       1-13-CV-257934

 

After full consideration of the arguments, authorities, and papers submitted by each party, the court makes the following rulings:

 

Currently before the Court is the demurrer of defendants William Frankel (“Mr. Frankel”) and Amkai, Inc. (“Amkai,” collectively with Mr. Frankel “Defendants”) to the second amended complaint (“SAC”) of plaintiff Delmy Shephard (“Plaintiff”).

 

Defendants demur to each cause of action in the SAC on the ground that it fails to state facts sufficient to constitute a cause of action and to the first and third causes of action for breach of contract on the additional ground that it cannot be ascertained whether the contracts alleged are written, oral, or implied by conduct.  (See Code Civ. Proc., § 430.10, subds. (e) and (g).)

 

Defendants’ request for judicial notice of the SAC is GRANTED because it is a court record 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 request for judicial notice of Defendants’ previous demurrer to the FAC filed on April 22, 2014, and the Court’s Order Re: Demurrer to the First Amended Complaint filed on June 9, 2014, is GRANTED because the documents are court records that are relevant to the pending matter.  (See Evid. Code, § 452, subd. (d); People ex rel. Lockyer v. Shamrock Foods Co., supra, 24 Cal.4th at p. 422, fn. 2.)

 

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

 

The first cause of action fails to state whether the agreement to sell Plaintiff the property located at 11432 Chula Vista Court in San Jose (the “Property”) for $1,088,000 is written, is oral, or is implied by conduct.  (See Code Civ. Proc., 430.10, subd. (g) [a demurrer will lie when, in an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct].)

 

In addition, the first cause of action for breach of contract fails to state a claim because the agreement alleged by Plaintiff is unenforceable due to the statute of frauds.  (See 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”].)  Plaintiff argues that an exception to the statute of frauds applies because she partially performed her agreement with Defendant by paying $30,000 towards the purchase of the home, paying maintenance and utility bills, and taking possession of the Property.  (See SAC, ¶¶ 7, 10, 19.)  As a preliminary matter, the allegation that Plaintiff paid $30,000 as a down payment in and of itself is insufficient part performance to preclude application of the statute of frauds. (See Sutton v. Warner, supra,12 Cal. App. 4th at p. 422 quoting 1 Miller & Starr, supra, § 1:60, p. 168 [“Payment of the purchase price alone, without the buyer obtaining possession or making substantial improvements to the property, is not sufficient part performance to preclude application of the statute of frauds”].)  In addition, while the SAC alleges in a conclusory manner that Plaintiff took “physical possession of the house,” (SAC, ¶¶ 7, 10, 19) that allegation constitutes a conclusion of fact and law, the truth of which is not admitted on demurrer.  (See George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120 [while “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact”].)

 

Moreover, the general allegation that Plaintiff had possession of the house is belied by the specific facts alleged in the SAC.  The fact that Plaintiff was provided with keys to the home, had access to the home, and paid maintenance and utility bills is not visible or notorious as these things would not be open to observation of the neighborhood. (See Hambey v. Wise (1919) 181 Cal. 286, 290 [possession of the property 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”]; see also Wood v. Anderson (1926) 199 Cal. 440, 445 [possession 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].)

 

Furthermore, Plaintiff has not demonstrated that she exclusively possessed the Property.  Even though she was provided with keys to the home and permitted to access the home those facts do not establish that Defendants or another third party could not access the home as well.  (See Wood v. Anderson (1926) 199 Cal. 440, 445.)  Most importantly, courts have found possession for purposes of establishing partial performance only when the plaintiff has shown actual possession of the property (i.e., physical occupation), and Plaintiff does not allege that she occupied the home or any part of the Property for any period of time.  (See e.g. Sutton v. Warner (1993) 12 Cal. App. 4th 415, 423; see also Francis v. Colendich (1961) 193 Cal. App. 2d 128, 130-132; see also Hambey v. Wise (1919) 181 Cal. 286, 291; see also Davis v. Judson (1910) 159 Cal. 121, 129; see also Wood v. Anderson (1926) 199 Cal. 440, 445; see also Harrison v. Hanson (1958) 165 Cal. App. 2d 370, 376-377.)

 

The demurrer to the second cause of action for fraud is OVERRULED.

 

The August 27, 2013 representation made by Mr. Frankel to Michael Sheldon is alleged with sufficient specificity because it states how, when, to whom, and by whom the representation was made.  (See Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 74; see also Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14.)  Defendants’ argument that the SAC does not state where or how the representation was made is not well-taken, as the second cause of action clearly indicates that the August 27, 2013 representation was made over the phone.  (See SAC, ¶ 23.)  In addition, while the July 2013 misrepresentation alleged in the SAC is not pled with the requisite specificity, the August 27, 2013 misrepresentation is adequately pled and Defendants cannot demur to a portion of a cause of action.  (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778 [“[A] defendant cannot demur generally to part of a cause of action];” see also PH II, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [“A demurrer does not lie to a portion of a cause of action”].)  Furthermore, Defendants’ argument that Plaintiff’s reliance on the representations could not have been reasonable is without merit.  (See Alliance Mortgage Co. v. Rothwell, (1995) 10 Cal.4th 1226, 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”].)  Plaintiff’s allegations as a whole—in particular her allegation that Mr. Frankel used the $30,000 she paid him to purchase the Property—support the conclusion that her reliance was justified.  Moreover, Plaintiff is not charged with knowledge of the statute of frauds.  (See Alliance Mortgage Co. v. Rothwell, supra, 10 Cal.4th at pp. 1239-1240 [plaintiff is not held to the minimum knowledge of a hypothetical, reasonable person].)

 

The demurrer to the third cause of action for breach of contract is SUSTAINED, with 10 days’ leave to amend.

 

As a preliminary matter, Plaintiff asserts that Defendants’ arguments with respect to the third cause of action are improper because the Court previously overruled Defendants’ demurrer to the third cause of action of the FAC.  Where a prior demurrer has been sustained as to some causes of action but overruled as to others, a defendant may not demur again on the same grounds to those portions of an amended pleading as to which the prior demurrer was overruled.  (See Berg & Berg Enterprises LLC v. Boyle (2009) 178 Cal. App. 4th 1020, 1035; see also Bennett v. Suncloud (1997) 56 Cal.App.4th 91.)   The instant demurrer to the third cause of action of the SAC is brought on the same grounds as the prior demurrer to the extent that Defendants argue that the third cause of action fails for lack of consideration.  The Court rejected this argument in its June 9, 2014 ruling on Defendants’ prior demurrer.  (See Order Re: Demurrer to the First Amended Complaint, p. 6:6-10.)  However, the instant demurrer is also made on additional and different grounds.  The Defendants now argue that the third cause of action fails to state whether the contract at issue is written, oral, or implied by conduct, and fails to allege that Plaintiff performed under the contract or that her performance was excused because the Court did not consider those arguments in its June 9, 2014 order.  (See Order Re: Demurrer to the First Amended Complaint, p. 6:1-10.)  The Court may properly consider the new arguments raised by Defendants.

 

Defendants persuasively argue that the third cause of action fails to state whether the agreement to provide the personal property at the Property to Plaintiff is written, is oral, or is implied by conduct. (See Code Civ. Proc., 430.10, subd. (g).)  In addition, Defendants persuasively argue that the third cause of action fails to state a claim for breach of contract as it is clear that Plaintiff is not alleging that she fully performed under the contract—the SAC alleges only that she paid Defendants $30,000 as well as maintenance and utility bills— and the SAC does not allege that Plaintiff’s nonperformance was excused.  (See Bushell v. JPMorgan Chase Bank, N.A. (2013) 220 Cal.App.4th 915, 921 [to allege a cause of action for breach of contract, a plaintiff must allege (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff]; see also Kennedy v. Reece (1964) 225 Cal.App.2d 717, 726.)

 

Plaintiff is advised that the Complaint needs to be corrected to cure these defects or the Court may consider sustaining demurrer without leave to amend.  This order contemplates the filings of a Third Amended Complaint, representing Plaintiff’s fourth attempt to state a claim.

The Court will prepare the order.