Demurrer to Complaint

A demurrer presents an issue of law regarding the sufficiency of the allegations set forth in the complaint. Lambert v. Carneghi (2008) 158 Cal.App.4th 1120, 1126. The challenge is limited to the “four corners” of the pleading (which includes exhibits attached and incorporated therein) or from matters outside the pleading which are judicially noticeable under Evidence Code §§ 451 or 452.

Defendants first object to portions of the Complaint on the ground that any oral promise is barred by the statute of limitations. A demurrer on the ground of the bar of statute of limitations will not lie where the action may be, but is not necessarily barred. It must appear clearly and affirmatively that, upon the face of the complaint, the right of action is necessarily barred. This will not be the case unless the complaint alleges every fact which the defendant would be required to prove if he were to plead the bar of the applicable statute of limitation as an affirmative defense. Committee for Green Foothills v. Santa Clara County Board of Supervisors (2010) 48 Cal.4th 32, 42; Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 881. Here, the theory that oral promises are barred because defendant hinted at her unwillingness to honor it in 2009 when she declined to convert the oral agreement into a written one is simply unsupported by the allegations. Money was continuously lent after 2009, and declining to sign the forms was not a sufficient repudiation of the agreement to trigger the running of the statute under an anticipated breach theory.

Defendants next object to portions of the Complaint on the ground of uncertainty. “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616. The pleader need not particularize matters presumptively within the knowledge of the demurring party. Fenton v. Groveland Community Services Dept. (1982) 135 Cal.App.3d 797, 809 [disapproved on other grounds in Katzberg v. Regents of the University of California (2002) 29 Cal.4th 300]. Moreover, errors and confusion created by “the inept pleader” are to be forgiven if the pleading contains sufficient facts entitling plaintiff to relief. Saunders v. Cariss (1990) 224 Cal.App.3d 905, 908. In rare instances, a demurrer for uncertainty will be sustained if the ambiguity affects a dispositive defense (Willson v. Security-First Nat. Bank of Los Angeles (1943) 21 Cal.2d 705) but otherwise “a demurrer for uncertainty will be sustained only where the complaint is so bad that the defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her.” Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, §7:85, pg. 7(I)-37 (The Rutter Group 2009). A party attacking a pleading on “uncertainty” grounds must specify how and why the pleading is uncertain, and where that uncertainty can be found in the challenged pleading. Fenton, supra. Here, there is nothing uncertain about the allegations. This is a remarkably simple lawsuit.

Lastly, defendants object to the individual causes of action for failure to state. The complaint is read as a whole: material facts properly pleaded are assumed true; contentions, deductions or conclusions of fact/law are not. Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Jenkins v. JP Morgan Chase Bank, NA (2013) 216 Cal.App.4th 497, 506. In general, a pleading is adequate if it contains a reasonably precise statement of the ultimate facts, in ordinary and concise language, and with sufficient detail to acquaint a defendant with the nature, source and extent of the claim. The degree of detail required depends on the extent to which the defendant in fairness needs such detail which can be conveniently provided by the plaintiff. Less particularity is required when the defendant ought to have co-extensive or superior knowledge of the facts. Leek v. Cooper (2011) 194 Cal.App.4th 399, 413.

After considering each cause of action in isolation, and in conjunction with the remainder of the operative pleading this Court rules as follows:

Demurrer to the 1st, 2nd, 3rd, 4th and 6th causes of action are adequately pled. The demurrer to these causes of action is overruled.

As for the 5th cause of action, constructive trust is a remedy, and not a cause of action. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 76. However, a constructive trust may only be imposed in any case where the following three conditions are satisfied: (1) the existence of a res (property or some interest in property); (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it. Civil Code §2224; Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 990; Weiss v. Marcus (1975) 51 Cal.App.3d 590, 600. The demurrer to the 5th cause of action is SUSTAINED. Plaintiff is granted 20 days leave to amend to include constructive trust as a remedy to a cause of action, not a stand-alone cause of action.

As for the 7th cause of action, conveyance is part of the Uniform Fraudulent Transfer Act (Civ.Code §§ 3439–3439.12), the purpose of which is “to prevent debtors from placing property which legitimately should be available for the satisfaction of demands of creditors beyond their reach.” Chichester v. Mason (1941) 43 Cal.App.2d 577, 584. A fraudulent transfer under the Act may be intentional (§ 3439.04(a)(1)) or constructive (§3439.04 (a)(2)); Mejia v. Reed (2003) 31 Cal.4th 657, 669–670; Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13. As this is a claim sounding in fraud, the plaintiff must plead the essential elements with particularity (except that insolvency may be pled generally). See Wald v. Truspeed Motorcars, LLC (2010) 184 Cal.App.4th 378, 393-394; Thompson v. Moore (1937) 8 Cal.2d 367, 372; Gray v. Brunold (1903) 140 Cal. 615, 619. The essential elements for a fraudulent transfer claim are as follows:

Intentional: transfer made (1) by the “debtor” (one who is liable on a claim) (2) with actual intent to hinder, delay or defraud any creditor of the debtor. CC §§ 3439.01(e), 3429.04(a)(1). “Actual intent” may be determined from a number of factors enumerated by statute, commonly referred to as “badges” of fraud. CC §3439.04(b)(1)-(11); Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, 834.

Constructive: transfer made (1) by the “debtor” (2) without receiving a reasonably equivalent value in exchange for the transfer, and (3) while the debtor was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction. CC §3439.04(a)(2). Actual intent must be established by a preponderance of the evidence. Whitehouse v. Six Corp (1995) 40 Cal.App.4th 527, 533-535; in accord, Grubb Co. Inc. v. Department of Real Estate (2011) 194 Cal.App.4th 1494, 1503.

In addition, the plaintiff must plead damage resulting from the fraudulent conveyance. Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 80 [“mere intent to delay or defraud is not sufficient; injury to the creditor must be shown affirmatively. It cannot be said that a creditor has been injured unless the transfer puts beyond its reach property it otherwise would be able to subject to the payment of the debt”]; in accord, Haskins v. Certified Escrow & Mtge. Co. (1950) 96 Cal.App.2d 688, 691, 216 P.2d 90 [“A creditor does not sustain injury unless the transfer puts beyond his reach property which he otherwise would be able to subject to the payment of his debt”].

Lastly, when suing the transferee, the plaintiff must further plead that the transferee acted in bad faith, to wit: collusion or active participation with the debtor, coupled with actual subjective knowledge of the deceit. Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1858-1859; McKnight v. Superior Court (1985) 170 Cal.App.3d 291, 299. In other words, there must be allegations of “deliberate wrongful conduct” on the part of the transferee.

Here, plaintiff has failed to make clear which version – intentional of constructive – he is relying upon. In addition, the transfer here did not put any asset outside plaintiff’s reach since the transfer was to individually alleged to be directly liable for the wrong. Demurrer to the 7th cause of action is SUSTAINED. Plaintiff is granted 20 days leave to amend.

As for the 8th cause of action, conspiracy is not an independent tort; it cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles. Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514; in accord, Brown v. Professional Community Management (2005) 127 Cal.App.4th 532, 540; Everest Investors 8 v. Whitehall Real Estate Ltd. Partnership XI (2002) 100 Cal.App.4th 1102, 1106-1107. Demurrer to the 8th cause of action is SUSTAINED. Plaintiff is granted 20 days leave to amend to include conspiracy as a remedy to another cause of action, not a stand-alone cause of action.

As for the 9th cause of action, conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. However, “not every failure to deliver property to the rightful owner constitutes a conversion. To establish a conversion, it is incumbent upon the plaintiff to show an intention or purpose to convert the goods and to exercise ownership over them, or to prevent the owner from taking possession of the property.” Spates v. Dameron Hosp. Assn. (2003) 114 Cal.App.4th 208, 222. A cause of action for conversion of money can be stated only where defendant interferes with plaintiff’s possessory interest in a specific, identifiable sum, such as when a trustee or agent misappropriates the money entrusted to him. Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267; PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395–396. See Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49 Cal.App.4th 472, 485 [no claim for conversion is stated where money was allegedly misappropriated over time, in various sums, without any indication that it was held in trust for plaintiff]. Here, plaintiff voluntarily, and willingness, paid for remodeling expenses at the property. He was allegedly entitled to reimbursement only if the relationship went south, which means at the time he tendered the money he had no guaranteed residual right to it. This was not conversion. Demurrer to the 9th cause of action is SUSTAINED. Plaintiff is granted 20 days leave to amend.

Motion to Expunge

Motion GRANTED, if a lis pendens was recorded.

A lis pendens is a recorded document giving constructive notice that an action has been filed affecting right or title to possession of the real property described in the notice. Park 1000 Investment Group II v. Ryan (2010) 180 Cal.App.4th 795, 807. To perfect a lis pendens, a claimant must – pursuant to CCP §§ 405.22 and 405.23 – follow three steps:
1. prior to recordation, serve by registered or certified mail, return receipt requested, a copy of the notice on all known owners and those with adverse claims to the property;
2. concurrent with recordation of the notice, record a proof of service consistent with CCP §1013a. if service cannot be effectuated, a declaration of due diligence is needed (§405.22);
3. immediately following recordation of the notice and proof of service, file a copy of both with the court in which the action is pending.

Pursuant to CCP §405.23, the notice of lis pendens “shall be void and invalid” as to any adverse party or owner of record unless the above requirements have been met.

Here, it would appear from the dialogue between the parties that no lis pendens was ever actually recorded or filed. If none was recorded, the motion is a nullity. If there is indeed a lis pendens recorded (but not filed), it is invalid and subject to expungement. McNight v. Superior Court (1985) 170 Cal.App.3d 291, 303. Setting aside the technical defect, this case does not appear to have a valid “real property claim” to support a lis pendens – which can only be used in favor of a cause of action which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading. CCP §405.4. The test to determine whether or not a cause of action is a “real property claim” turns on the adequacy of the pleadings and not evidence submitted for or against the issue. In other words, trial courts engage in a “demurrer-like” review only. Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 647-648; Campbell v. Superior Court (2005) 132 Cal.App.4th 904, 911. In general, claims relating to collection of debts are not “real property claims” merely because the money absconded with was used in some manner to affect real property. See Lewis v. Superior Court (1994) 30 Cal.App.4th 1850, 1862-1866. Stated another way, a claim that seeks an interest in real property merely for the purpose of securing a money damage judgment does not support the recording of a lis pendens. Campbell v. Superior Court (2005) 132 Cal.App.4th 904, 912. Although a fraudulent conveyance claim can support a lis pendens, in this instance plaintiff never had an enforceable right to the property and the conveyance complained about was not to a third-party but rather a conveyance within the three individuals accused of breaching the same oral agreement with plaintiff.

Requests for attorney fees denied.