DEMURRER & MOTION TO STRIKE

Calendar: 36
Case No: EC060677
Date: 4/4/14

MP: Cross-Defendants, Amnon Ambar and Galit Ambar
RP: Cross-Complainants, David Cohen and Nureet Cohen

ALLEGATIONS IN CROSS-COMPLAINT:
The Cross-Complainants and Cross-Defendants entered in an Option Agreement with regards to a real state development project. A copy is attached as exhibit A to the Cross-Complaint.
The Cross-Defendants agreed to provide funding to allow the purchase of the property. In addition, the Cross-Defendants would manage the property. The Cross-Defendants breached their obligations by failing to provide funding for the project.

CAUSES OF ACTION IN CROSS-COMPLAINT:
1) Breach of Contract
2) Breach of Fiduciary Duty
3) Fraud
4) Declaratory Relief

RELIEF REQUESTED:
1. Demurrer to first, second, and third causes of action.
2. Strike claim for punitive damages.

DISCUSSION:
This hearing concerns the demurrer and motion to strike of Cross-Defendants, Amnon Ambar and Galit Ambar.

1. Demurrer
a. First Cause of Action for Breach of Contract
The Cross-Defendants argue that the first cause of action lacks sufficient facts to plead that they breached the contract. The first cause of action for breach of contract has 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.

The Cross-Complainants allege in paragraph 15 that the parties entered into an option agreement and that a copy is attached as exhibit A to the Cross-Complaint. In paragraph 17, the Cross-Complainant alleges “by their conduct described more fully above, Amnon and Galit Ambar have breached their obligations under the Option Agreement”. There are no allegations that identify an obligation in the option agreement that was breached. There are no allegations that identify the conduct that breached the obligation. This is insufficient to plead the breach of contract.
Further, it is an improper use of incorporation. A civil plaintiff may, for the sake of convenience, incorporate by reference previous portions of the pleading for informational purposes only. Cal-West Nat. Bank v. Superior Court (1986) 185 Cal. App. 3d 96, 101. Here, the Cross-Complainants are not incorporating portions for informational purposes. Instead, the Cross-Complainants are attempting to plead the essential elements of their claim for breach of contract by incorporation. Neither the Court nor the Cross-Defendants should be required to search the pleadings and guess at what obligation the Cross-Complainants claim was breached.
The opposition papers fail to offer any grounds to find that the cause of action was pleaded sufficiently. Instead, the opposition papers simply offer conclusions, e.g., the cause of action was adequately pleaded and the Cross-Complainants disagree with the Cross-Defendants’ arguments. An effective opposition would direct the Court to the specific paragraphs that establish that the cause of action was pleaded with sufficient facts.
Therefore, the Court will sustain the demurrer to the first cause of action.

In order to obtain leave to amend, California law imposes the burden on the Cross-Complainants to demonstrate the manner in which they can amend their pleadings to state a cause of action. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants make a generic request for leave to amend. This does not meet the Cross-Complainants’ burden to demonstrate the manner by which they can correct their cause of action.
Accordingly, the Court should not grant leave to amend.

b. Second Cause of Action for Breach of Fiduciary Duty
The Cross-Defendants argue that this cause of action also fails to plead that they had any fiduciary duty to the Cross-Complainants. To state a cause of action for breach of fiduciary duty, the Cross-Complainants must allege the following:

1) the existence of a fiduciary relationship;
2) its breach; and
3) damage proximately caused by that breach.
Roberts v. Lomanto (2003) 112 Cal. App. 4th 1553, 1562.

The Cross-Complainants allege in paragraph 20 that as members and managers of LRG Capital, Amnon Ambar and Galit Ambar, owed a fiduciary duty to LRG Capital. There are no allegations that the Cross-Defendants, Amnon Ambar and Galit Ambar, owed a fiduciary duty to the Cross-Complainants, David Cohen and Nureet Cohen.

The opposition papers fail to offer any grounds to find that the cause of action was pleaded sufficiently. Instead, the opposition papers simply offer conclusions, e.g., the cause of action was adequately pleaded and the Cross-Complainants disagree with the Cross-Defendants’ arguments. A proper opposition would direct the Court to the specific paragraphs that establish that the cause of action was pleaded with sufficient facts.
Therefore, the Court should sustain the demurrer to the second cause of action.

In order to obtain leave to amend, California law imposes the burden on the Cross-Complainants to demonstrate the manner in which they can amend their pleadings to state a cause of action. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants make a generic request for leave to amend. This does not meet the Cross-Complainants’ burden to demonstrate the manner by which they can correct their cause of action.
Accordingly, the Court should not grant leave to amend.

c. Third Cause of Action for Fraud
The Cross-Defendants argue that this cause of action lacks the particularity needed to plead a fraud claim. The elements of a fraud cause of action are the following:

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.

The Cross-Complainants allege in paragraph 26 that before and after the execution of the option agreement, Amnon Ambar and Galit Ambar made representations that they would fund LRG and that LRG would providing funding that would allow LRG to purchase real property “as described above”. There are no allegations that specify which Cross-Defendant made which representations. There are no allegations that plead how, where, to whom, or by what means the representations were tendered.
The Cross-Complainants allege in paragraph 27 that they reasonably relied on the representations. There are no particular allegations demonstrating that the Cross-Complainants acted reasonably when they relied upon the Cross-Defendants’ representations.

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

In order to obtain leave to amend, California law imposes the burden on the Cross-Complainants to demonstrate the manner in which they can amend their pleadings to state a cause of action. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Cross-Complainants make a generic request for leave to amend. This does not meet the Cross-Complainants’ burden to demonstrate the manner by which they can correct their cause of action.
Accordingly, the Court should not grant leave to amend.

2. Motion to Strike
The Cross-Defendants request that the Court strike the claim for punitive damages from the third cause of action. Since the demurrer to the third cause of action should be sustained, the claim for punitive damages will be removed.
Accordingly, the Cross-Defendants’ motion to strike is moot and will be taken off calendar.

RULING:
Sustain demurrer to first, second, and third causes of action without leave to amend.
Take off calendar motion to strike.