Case Number: EC061536    Hearing Date: November 07, 2014    Dept: NCG

TENTATIVE RULING (11/7/14)
#6
EC 061536
BANK OF AMERICA v. PRESTON SURATI MART, INC.

Demurrer by Bank of America, NA to Cross-Complaint
Motion of Plaintiff/Cross-Defendant Bank of America NA to Strike Portions of Cross-Complaint

TENTATIVE:
Demurrer is SUSTAINED to the first cause of action for fraud. The elements of a fraud cause of action have not been alleged against this cross-defendant, and such a claim is not alleged with the heightened level of specificity required of a fraud claim, and particularly of a fraud claim asserted against a corporate party, such as cross-defendant Bank of America. The court notes that the opposition focuses entirely on the alleged forgery engaged in by other cross-defendants to support this claim. As there is no allegation that moving party Bank of America participated in such conduct, the demurrer is sustained without leave to amend.

Demurrer is SUSTAINED to the second cause of action for negligence. The cause of action fails to state each element of a negligence claim, and it cannot be ascertained what is being alleged against this cross-defendant. This confusion may be due to the pleading of claims by incorporation by reference, and by not pleading claims separately as to each alleged cross-defendant. On amendment, cross-defendant is encouraged to more clearly plead separate causes of action specifically directed to each differently situated cross-defendant.

Demurrer is SUSTAINED to the third cause of action for Violation of Business & Professions Code §17200 for the reasons stated in the moving papers. The pleading fails to specify the provision allegedly violated, what acts done by the moving party constitute alleged violations, and cross-complainant has failed to allege facts establishing standing to bring such a claim, in effect, that cross-complainant has suffered injury in fact. Again, the court notes that the opposition focuses on the alleged forgery engaged in by other cross-defendants to support this claim, and, as there is no allegation that moving party participated in such conduct, the demurrer is sustained without leave to amend.

Demurrer is OVERRULED to the fourth cause of action for declaratory relief.

Unopposed motion to strike is DENIED as to cross-defendant’s arguments concerning punitive damages. The pleading does not appear to seek exemplary or punitive damages. Motion to strike claims for attorneys’ fees is GRANTED. The pleading fails to allege a contractual or statutory basis for the prayers for attorneys’ fees.

Ten days leave to amend the second cause of action for negligence, if possible. Cross-complainant should be prepared to demonstrate to the court under what authority and based upon what facts, Bank of America owes cross-complainant a duty of care.

RELIEF REQUESTED:
Sustain demurrer to First Amended Cross-Complaint
Strike allegations of punitive damages, attorneys’ fees

CAUSES OF ACTION: from First Amended Cross-Complaint
1) Fraud
2) Negligence
3) Violation of Business & Professions Code section 17200
4) Declaratory and Injunctive Relief

SUMMARY OF FACTS:
The complaint is brought by plaintiff Bank of America, NA, to collect sums allegedly due under a credit card agreement with defendant Preston Surati Mart, Inc. The complaint also seeks to collect the sum due based on alleged breaches of personal guarantees allegedly entered into by defendants Rajesh N. Patel and Kamesh K. Patel.

Defendant Kamesh Patel has filed a cross-complaint against Bank of America, and Rajesh Patel and Preston Surati Mart, alleging that with regard to the underlying complaint, he did not sign any note, loan agreement or guarantee with Bank of America, and did not consent or authorize any person or entity to sign on his behalf, but that R. Patel or Preston Surati Mart forged his signature to obtain a loan from Bank of America, and that Bank of America did not obtain a notarized signature or obtain tax returns or other financial information normally obtained in providing such loans to a debtor.

ANALYSIS:
First Cause of Action—Fraud
Generally, in a fraud cause of action, a plaintiff must allege specifically how, what, where, to whom and by what means a defendant made a misrepresentation. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. When such a claim is made against a corporation, the level of specificity required is even higher. Under Lazar v. Superior Court, (1996) 12 Cal.4th 631, 645, in fraud complaints against a corporation, a plaintiff must allege all of the following:
-the names of the persons who made the misrepresentation;
-their authority to speak for the corporation;
-to whom they spoke;
-what they said or wrote; and
-when it was said or written.

Defendant Bank of America argues that there are no allegations pertaining to anything done by Bank of America in this cause of action, and that the claim is not stated with the specificity required when pleading such a claim against a corporate defendant.

The pleading incorporates previous allegations and states that cross-defendants, “by taking the actions set forth above,” damaged cross-complainant. [Para. 13]. It is not alleged what representation was made, that it was false, or that plaintiff relied on it to his damage. At best, the pleading appears to allege some possible fraud on Bank of America by R. Patel by the forging of cross-complainant’s signature on the guaranty. There is certainly nothing alleged against Bank of America which could be construed to support a fraud claim. In addition, any fraud is not pled with a sufficient level of specificity against this party.

The opposition does not address these arguments, but argues that a claim is sufficiently stated against R. Patel and Preston Surati Mart.

Second Cause of Action—Negligence
Cross-defendant argues that the only potential negligence alleged against Bank of America is the general allegation that “On information and belief, Cross-Complainant alleges that Cross-Defendant BA in accepting and processing and issuing the note, loan or guarantee that is the subject of the complaint did not obtain from cross-defendants R. Patel and Surati Mart a notarized signature of cross-complainant in the application of the note, loan or guarantee not [sic] obtain any tax returns or other standard financial information that it normally obtained in such loans from a debtor.” [Para. 11].

Bank of America argues that this claim cannot be stated on information and belief, but the case law relied upon pertained to an application for preliminary injunction, where evidence is required to support a claim, not a demurrer to a negligence claim.

Bank of America also argues that the allegations fail to allege any legal duty on the part of Bank of America. The pleading again incorporates previous allegations and alleges that by taking the actions set forth above, cross-complainant has been damaged, and is entitled to be indemnified. [Para. 15]. It is not alleged that Bank of America owed any duty, even in a general sense, that it breached such a duty or that the breach caused the alleged damages.

The opposition merely argues that legal causation is generally a question of fact, but does not seem to acknowledge that this claim lacks a statement of the basic elements of a negligence claim. The demurrer is sustained.

Third Cause of Action—Violation of B&P Section 17200
Bank of America argues that there has been no conduct alleged which could be considered a business practice or an improper activity by Bank of America.

Pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation, including the particular section of the statutory scheme violated and the particular facts showing that the statute was violated. Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.

Here, there is no statutory provision identified, and no specific facts supporting any alleged violation.

The opposition again seems to focus on the alleged forgery by the other two cross-defendants.

Bank of America also argues that cross-complainant has no standing to bring the cause of action as he cannot establish an injury in fact, as he has not suffered any loss, monetary or otherwise, by any act of Bank of America.

The opposition does not address this argument, which appears to be a valid one. The demurrer is sustained.

Fourth Cause of Action—Declaratory Relief
Under CCP Section 1061:
“The court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.”

A very liberal pleading standard applies:
“A complaint for declaratory relief is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties… and requests that these rights and duties be adjudged by the court.”
Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947.

The pleading states that a dispute has arisen in that cross-complainant contends that with regard to the underlying complaint if cross-complainant’s name appears on any note or guarantee, he did not consent but that the document was forged. [Para. 20]. The allegation is that “A judicial declaration of the respective rights and duties…and an injunction that Ba cannot enforce the note, and loan guarantee against Cross-Complainant.” [Para. 21]. However, this is probably sufficient to state a claim for at least declaratory relief concerning the validity of the guaranty.

Cross-defendant argues that the claim is not necessary as in his answer to the complaint, cross-complainant asserts an affirmative defense, and the issue of forgery will be resolved in the complaint. It is not clear that this issue will be resolved with a declaration of rights as requested here, and the demurrer to this cause of action is accordingly overruled.

Motion to Strike
No timely opposition to the motion to strike has been filed.

Punitive Damages
Bank of America argues that the pleading improperly states an amount of punitive damages sought, and improperly seeks punitive damages.

A review of the pleading, however, does not show any mention of punitive or exemplary damages. The motion to strike is accordingly denied.

Attorneys’ Fees
With respect to the claims for attorneys’ fees, CCP section 1021 provides in pertinent part:
“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties…”

Here, the cross-complaint seeks attorney’s fees, but there is no allegation that these fees are provided for by contract, and it is not alleged that any statute provides for such fees. The motion is therefore granted.