Defendants Dan Nelson (“Nelson”), Global Cinema Distribution LLC (“Global Cinema”), California Film Investments LLC (“California Film”), and Golden Leaf Pictures dba Lava Entertainment Holdings LLC (“Golden Leaf”) (collectively, “Defendants”) demur to the second amended complaint (“SAC”) filed by plaintiff Gerald Bittner (“Plaintiff”).

Plaintiff’s request for judicial notice of Exhibits A-D is GRANTED, as the documents at issue are records of this Court and relevant to the arguments raised in the opposition to this demurrer. (Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [a court may take judicial notice of its own records if they are relevant to the issues of the case at hand]; Evid. Code § 452, subd. (d).) Plaintiff’s request for judicial notice of Exhibits E-G is DENIED, as Plaintiff seeks to have the Court judicially notice the truth of the contents of these documents. While the Court is free to take judicial notice of the existence of a document in a court file, the Court may not take judicial notice of the truth of hearsay statements in decisions and court files. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882.)

Defendants demur to the SAC on the ground that all of the causes of action are time barred. A demurrer lies where the dates alleged in the complaint show the action is barred by the statute of limitations. (See Code Civ. Proc., § 430.30, subd. (a).) The running of the statute must appear “clearly and affirmatively” from the dates alleged. It is not enough that the complaint might be barred. (See Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403.) “To determine the statute of limitations which applies to a cause of action it is necessary to identify the nature of the cause of action, i.e., the ‘gravamen’ of the cause of action.” (Lehman v. Sup. Ct. (2006) 145 Cal.App.4th 109, 122.)

Defendants argue that the first and second causes of action for fraudulent inducement and conversion, respectively, are barred by the three-year statute of limitations found in Code of Civil Procedure section 338. The statute of limitations for fraud is three years, and “is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud.” (Code Civ. Proc., § 338, subd. (d).) “The courts interpret discovery in this context to mean not when the plaintiff became aware of the specific wrong alleged, but when the plaintiff suspected or should have suspected that an injury was caused by wrongdoing.” (Kline v. Turner (2001) 87 Cal.App.4th 1369, 1374.) Similarly, the statute of limitations for conversion is three years under Code of Civil Procedure, section 338, subdivision (c), which applies to “action[s] for taking, detaining, or injuring any goods or chattels.” “[T]he statute of limitations for conversion is triggered by the act of wrongfully taking property.” (Bono v. Clark (2002) 103 Cal.App.4th 1409, 1433.)

Here, the alleged last act of conversion and fraudulent inducement occurred on April 2, 2010. (SAC, ¶ 61; see Saliter v. Perce Brothers Mortuaries (1978) 81 Cal. App. 3d 292, 296 [the statute of limitations begins to run upon the occurrence of the last fact essential to the cause of action].) The original complaint against Nelson and Global Cinema was filed on May 2, 2011, and the first amended complaint (“FAC”) was filed against the same parties on December 23, 2011, alleging causes of action for fraudulent inducement, conversion, and breach of contract. Because the conversion and fraudulent inducement causes of action were filed against Nelson and Global Cinema well within the three-year statute of limitations, those causes of action against Nelson and Global Cinema are not time-barred.

The remaining defendants, California Film and Golden Leaf, however, were not named in the lawsuit until the SAC was filed on August 6, 2013. Because the SAC was filed more than 3 years after April 2, 2010, the statute of limitations bar appears on the face of the SAC. However, Plaintiff argues that the relation back doctrine tolled the statute of limitations and therefore these causes of action asserted against California Film and Golden Leaf were timely filed. In the FAC, Plaintiff named “Doe” defendants 1-10. (FAC, ¶ 5.) A plaintiff that is ignorant of any defendant’s true name or liability may include fictitious names as defendants in the complaint and allege that the identities and capacities in which they acted are unknown. (Code Civ. Proc., § 474). The plaintiff can amend the pleading accordingly once the “Doe” defendant’s true name is discovered, and under the “relation back” doctrine, the amended complaint may “relate back” to the original complaint for statute of limitations purposes, provided that the amended complaint identifying the defendant is based on the “same general set of facts” as the original and refers to the “same injuries.” (See Austin v. Massachusetts Bonding & Ins. Co. (1961) 56 Cal. 2d 596, 600-01; see also Boyle v. City of Redondo Beach (1999) 70 Cal. App. 4th 1109, 1119). Here, California Film and Golden Leaf were named as Doe defendants and the FAC was amended to reflect their true names once their identities had been discovered by Plaintiff. (Request for Judicial Notice in Support of Opposition to Demurrer (“RJN”), Exhs. A and D.) Moreover, the SAC asserts the same causes of action, allegations, and injuries against California Film and Golden Leaf that had been asserted against the remaining defendants. (See FAC ¶¶ 17-32; SAC, ¶¶ 69-92, 88.) Accordingly, the relation back doctrine applies in this situation and the SAC naming California Film and Golden Leaf is not barred by the statute of limitations.

Defendants argue that the remaining contract-based causes of action are barred by the two-year statute of limitations found in Code of Civil Procedure section 339 (“Section 339”). In opposition, Plaintiff states that Section 339 does not apply because that statute governs oral contracts. Because the SAC alleges breaches of written contracts, Plaintiff argues that the four-year statute of limitations found in Code of Civil Procedure section 337 (“Section 337”) applies instead. Plaintiff is correct that breaches of written contracts are alleged. (See SAC, ¶¶ 58-59, 112-116, 48, 93-111, and 155-163.) Thus, the four-year statute of limitations applies.

According to the SAC, the contracts alleged to have been breached were formed on or about March 2010. (See SAC, ¶¶ 48, 52-53, 58-59.) Although the dates of the breaches are not expressly pleaded, even if the contracts were breached immediately after they were formed in March 2010, the SAC was filed within the four-year statute of limitations period. Accordingly, the contract-based causes of action are not barred by the statute of limitations.

Based on the foregoing, the demurrer to the SAC on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

Next, Defendants demur to the SAC on the grounds of “failure to prosecute” and “delay in service” of pleadings. However, neither of these purported “grounds” constitutes a ground on which a party may demur to a pleading. (See Code Civ. Proc., § 430.10.) Accordingly, the demurrer to the SAC on these grounds is OVERRULED.

Defendants argue that the SAC does not contain facts sufficient to state the first cause of action for conversion because Plaintiff did not allege that he did not consent to the taking of his monies. However, Plaintiff is not required to allege as such in asserting a conversion claim. He merely has to allege the following: his ownership or right to possession of the property at the time of the conversion; Defendants’ conversion by a wrongful act or disposition of property rights; and damages. (See Spates v. Dameron Hospital Assn. (2003) 114 Cal.App.4th 208, 221.) Here, the SAC expressly alleges that Defendants wrongfully used “Plaintiff’s investment funds for their own purposes, not using Plaintiff’s investment monies for the purpose intended, and commingling the investment monies with personal funds and the funds of organizations in which Plaintiff did not invest” and that Plaintiff was damaged as a result of Defendants’ actions. (SAC, ¶¶ 83, 88.) These allegations are sufficient to constitute a conversion cause of action. Accordingly, the demurrer to the first cause of action on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

Defendants argue that Plaintiff cannot state facts sufficient to establish the second cause of action for fraudulent inducement because he has waived such a claim, based on case law holding that “one who, after discovery of an alleged fraud, ratifies the original contract be entering into a new agreement…, is deemed to have waived his right to claim damages for fraudulent inducement.” (Oakland Raiders v. Oakland-Alameda County Coliseum, Inc. (2006) 144 Cal. App. 4th 1175, 1186.) Defendants argue that because Plaintiff alleges that he entered into two agreements after he was fraudulently induced to enter into the original investment agreement, Plaintiff waives a claim for fraudulent inducement. Defendants misunderstand the allegations. The SAC expressly alleges that Plaintiff entered into each of the alleged contracts before he learned of Defendants’ fraud. (See SAC, ¶¶ 47-68, 74, and 158-163.) Thus, Oakland Raiders does not apply and Defendants’ argument lacks merit.

Defendants also argue that Plaintiff failed to plead facts establishing all the elements of the fraudulent inducement claim. “A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.) First, Defendants argue that the alleged misrepresentations regarding the expected financial performance of Plaintiff’s investment were nonactionable opinions. However, Defendants mischaracterize the allegations on which this claim is based. For example, Plaintiff alleges that in order to induce Plaintiff to invest in Nelson’s movie (“Movie”), Nelson falsely represented that all investment income would be run through Global Cinema, and that Nelson would not personally obtain or receive any income or profits ahead of Plaintiff. (SAC, ¶ 70.) Plaintiff further alleges that at the time Nelson made these promises to Plaintiff, Nelson knew that Global Cinema was insolvent and did not have sufficient funds to distribute the Movie. (SAC, ¶ 72.) Contrary to Defendants’ argument, these allegations are not about predicting the financial performance of Plaintiff’s investment. Rather, Plaintiff alleges that Nelson made false representations to Plaintiff with the intent to induce Plaintiff to invest in the Movie (SAC, ¶¶ 70-72), Plaintiff justifiably relied on these representations in investing his money in the Movie (SAC, ¶¶ 49-58), and therefore Plaintiff was damaged in an amount that exceeds $975,000 (SAC, ¶ 76.) Based on these allegations, Plaintiff sufficiently states facts sufficient to establish the elements of his fraudulent inducement claim.

In connection with the second cause of action for fraudulent inducement, Defendants argue that the parol evidence rule bars Plaintiff from introducing evidence regarding the alleged false representations made by Nelson regarding the effects of the contracts which Plaintiff signed. However, Plaintiff alleges fraud here, and a well-settled exception to the parol evidence rule is that parol evidence is admissible to show that a writing, through fraud or mistake, does not express the intention of the parties. (Hess v. Ford Motor Company (2002) 27 Cal.4th 516, 525; Berendsen v. McIver (1954) 126 Cal.App.2d 347, 356.) Although Defendants argue that the fraud exception does not apply in this case, relying on Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Ass’n (2013) 55 Cal. 4th 1169, Defendants erroneously rely on the discussion of a case that the California Supreme Court overruled in Riverisland. (Riverisland, supra, 55 Cal. 4th at p. 1182 [“The fraud exception has been part of the parol evidence rule since the earliest days of our jurisprudence, and the Pendergrass opinion did not justify the abridgment it imposed.”].) Accordingly, this argument lacks merit.

Based on the foregoing, the demurrer to the second cause of action for fraudulent inducement on the ground that it fails to state facts sufficient to constitute a cause of action is OVERRULED.

Defendants argue that the contract-based claims found in the third, fourth, and seventh causes of action fail to state facts sufficient to constitute a claim because Plaintiff fails to allege the essential contract terms. “A written contract is usually pleaded by alleging its making and then setting it out verbatim (‘in haec verba’) in the body of the complaint or as a copy attached and incorporated by reference. (Roth v. Malson (1998) 67 Cal.App.4th 552, 572.) If the contract is written, “the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” (Otworth v. Southern Pacific Transportation Co. (1985) 166 Cal.App.3d 452, 459.) Alternatively, “[i]n 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, 199.) To plead the “legal effect” of a contract, a plaintiff need only “allege the substance of its relevant terms.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1489.)

Here, Plaintiff did not attach a copy of the contracts at issue to the SAC nor did he set out the material terms verbatim in the body of the complaint. However, Plaintiff argues that he sufficiently alleges the substance of the relevant terms of the contracts at issue. Plaintiff alleges the existence of three contracts and describes their terms as follows: on March 4, 2010, Plaintiff and “Global Cinema” entered into a written agreement in which Plaintiff agreed to invest $100,000 in exchange for a 50% return on his investment no later than 150 days following the theatrical release of the Movie (March 4, 2010 Agreement) (SAC, ¶ 48); the March 4, 2010 Agreement also required that Plaintiff was to be first in line to be paid out of Global Cinema’s gross proceeds from distribution of the Movie (Id.); on March 8, 2010, Plaintiff and Global Cinema was induced to enter into a written agreement in which Plaintiff agreed to invest an additional $300,000 in the Movie in exchange for what Plaintiff thought to be the same consideration provided in the March 4, 2010 Agreement, based on Nelson’s representations (“March 8, 2010 Agreement”) (SAC, ¶ 52); however, the March 8, 2010 Agreement contained different material terms than the March 4, 2010 Agreement, making Plaintiff lower in priority to be paid, after third parties and California Film (SAC, ¶ 53); on March 30, 2010, Nelson induced Plaintiff to pay an additional $250,000 to Global Cinema, representing to Plaintiff that he would be paid under the same terms as the March 4, 2010 Agreement (“March 30, 2010 Agreement”) (SAC, ¶ 58); and that in actuality, the terms of the March 30, 2010 Agreement matched the terms of the March 8, 2010 Agreement, not the March 4, 2010 Agreement as Nelson had represented (SAC, ¶ 58.) Based on these allegations, Plaintiff sufficiently alleges the substance of the material terms of the agreements at issue, as he alleges the parties between whom the agreements were made, the mutual consideration given, and the relevant terms. Accordingly, the demurrer to the contract-based claims found in the third, fourth, and seventh causes of action on the ground that they fail to state facts sufficient to constitute a cause of action is OVERRULED.

Defendants argue that the fifth and sixth causes of action for inducing breach of contract and intentional interference with contractual relations, respectively, are not adequately pleaded because Plaintiff does not plead the existence of a contract between Plaintiff and a third party. These causes of action share a common element: the existence of a valid contract between the Plaintiff and a third party. (See Quelimane Co. v. Steward Title Company (1998) 19 Cal. 4th 26, 55; see also Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal. 3d 1118, 1126.) The parties to the contracts at issue here are alleged to be between Plaintiff and Golden Cinema. (SAC, ¶¶ 48, 52, 58.) However, Plaintiff alleges that “at all times…defendants and each of them, were the agents…of their co-defendants” (SAC, ¶ 45) and that Nelson is the alter ego of Global Cinema (SAC, ¶¶ 25-29, 40-44). Based on these allegations, Plaintiff has not and cannot plead that the contracts Plaintiff entered into were with a third party. Hence, the SAC does not contain sufficient allegations to establish the existence of a contract between Plaintiff and a third party. Accordingly, the demurrer to the fifth and sixth causes of action for inducing breach of contract and intentional interference with contractual relations on the ground of failure to state facts sufficient to constitute a cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.

Defendants argue that the seventh cause of action for reformation is subject to demurrer because reformation is a remedy, not a cause of action. This is not correct. Plaintiff seeks to reform the March 8, 2010 Agreement and March 30, 2010 Agreement because they do not reflect his true intention when he signed the agreements due to fraud. (SAC, ¶¶ 156-162.) Under such circumstances, a party may bring a cause of action to reform a contract, and a court may issue a judgment reforming the contract to reflect the true intent of the parties in executing the instrument. (Civil Code § 3399; Good v. Lindstrom (1947) 80 Cal.App.2d 476, 477; Martinelli v. Gabriel (1951) 103 Cal.App.2d 818.) Accordingly, the demurrer to the seventh cause of action for reformation on the ground of failure to state facts sufficient to constitute a cause of action is OVERRULED.

Lastly, Defendants state in their memorandum of points and authorities in support of their demurrer that they move to strike Plaintiff’s prayer for punitive and exemplary damages. Defendants’ request to strike is procedurally defective. A motion to strike, not a general demurrer, is the proper vehicle to attack an improper claim for punitive damages or other remedy demanded in the complaint. A general demurrer challenges only the sufficiency of a cause of action pleaded, and must be overruled if any valid cause of action is pleaded. (See Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal. App. 4th 1547, 1557 [“a demurrer tests the sufficiency of the factual allegations of the complaint rather than the relief suggested in the prayer of the complaint”].) Here, Defendants failed to file a separate motion to strike and request the Court to strike the punitive damages allegations as part of their demurrer. Because a demurrer is not the proper vehicle to make such a request, Defendants’ request to strike the prayer for punitive and exemplary damages is DENIED.