Case Number: GC050360 Hearing Date: November 07, 2014 Dept: B
NOTICE: Department B will be dark on November 7, 2014. Please review the following tentative ruling. If you wish to have oral argument, please contact opposing counsel and agree upon one of the following dates for argument: November 21 or December 5. Then, please send an email to lmcfarlane@lacourt.org stating your case number, the agreed upon date for argument, and which party will give notice. The email must be received by 4:30 p.m. on November 7, 2014, or the Court’s tentative ruling will be the ruling and order of the Court. You may also send an email if you submit to the tentative ruling.
TENTATIVE RULING:
Demurrer
Case Management Conference
The Complaint alleges that the Plaintiffs provided money to the Defendants under a promissory note with Defendant, Benju Basba. Under the note, Defendant, Benju Basba agreed to repay $1,000,000. The Defendant failed to repay the money.
Further, the Defendant, Rebecca Basba, is liable because she was married to Benju Basba at the time of the loan. In addition, the Benju Basba made a fraudulent conveyance to Rebecca Basba to avoid paying the debt. Further, the Defendants violated securities laws by selling shares to the Plaintiff.
The Causes of action in the Fifth Amended Complaint are for:
1) Money Lent
2) Breach of Promissory Note
3) Account Stated
4) Fraudulent Conveyance
5) Fraud
This hearing concerns the demurrer of Defendants, Rebecca Basba and Benju Basba, to the fifth cause of action for fraud in the Fifth Amended Complaint. The Defendants argue that this cause of action fails to plead the particular facts 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.
a. Defendant, Rebecca Basba
The Defendant argues that the cause of action lacks particular facts regarding the element of a false representation and the element of damages resulting from her alleged fraud.
The Plaintiffs allege in paragraph 87 that in November of 2008, at the Forest Avenue, Arcadia, Rebecca Du Basba verbally made false representations to Anita Wang that the Plaintiffs would be repaid. These allegations identify how, when, where, to whom, and by what means the representation was tendered. This is sufficient to plead the element of a false representation.
Further, a review of the entire fraud claim reveals that the Plaintiffs’ theory is that Rebecca Du Basba made the false representation to induce the Plaintiff not to bring a legal claim so that Benju Basba had time to liquidate his assets in the United States. The Plaintiffs allege in paragraph 96 that they have been damaged as a result of the fraud because they loaned $1,000,000 in reasonable reliance on the Benju Basba’s false promises. In addition, the Plaintiffs allege in paragraph 96 that they delayed taking legal action based on the statements of Rebecca Du Basba and that this permitted Benju Basba to liquidate his property and business interests in the United States. This is sufficient to plead the element of damages.
The Defendant also argues that the cause of action is uncertain. 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. A demurrer for uncertainty will be sustained only when the complaint is so unintelligible that the defendant cannot reasonably respond because the defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against the defendant. Id.
The Defendant can reasonably respond to the claim because the Defendant knows that this is a fraud claim and the Defendant can reasonably determine whether to admit or deny the issues in the fraud claim, e.g., whether she made a false representation. Accordingly, there are no grounds for a demurrer based on uncertainty.
Therefore, the Court overrules the demurrer of Defendant, Rebecca Du Basba, to the fifth cause of action in the Fifth Amended Complaint.
b. Defendant, Benju Basba
The Defendant argues that the fraud cause of action is uncertain against Benju Basba. 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. A demurrer for uncertainty will be sustained only when the complaint is so unintelligible that the defendant cannot reasonably respond because the defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against the defendant. Id.
A review of the fifth cause of action reveals that the Defendant can reasonably determine that it is a fraud claim based on the claim that he made false promises in order to induce the Plaintiffs to loan him money. The Defendant can reasonably determine whether to admit or deny these issues, e.g., that he made false promises. Since the Defendant can reasonably respond to the claim, there are no grounds for a demurrer based on uncertainty.
Therefore, the Court overrules the demurrer to the fifth cause of action.
c. Conspiracy Theory
The Defendants argue that the conspiracy claim in the fifth cause of action must fail because the Plaintiffs’ fraud claims are uncertain, lack specificity and there are no damages. As noted, the Plaintiffs have pleaded sufficient facts to state their fraud claims and the fraud claims are not uncertain. Accordingly, this is not grounds for a demurrer.