2017-00219020-CU-FR

Fern L. Matin vs. Lon Lundgren

Nature of Proceeding: Hearing on Demurrer to Plaintiff’s Verified Complaint

Filed By: Perkins, Robin K.

** If a request for oral argument is made, then the hearing will take place at

9:00AM on Monday, March 26, 2018 in this department. If a Monday hearing is inconvenient, then counsel (and any parties in propria persona) shall meet and confer and, at the time oral argument is requested, shall notify the Department 54 Clerk of their request for a different date for the hearing. Any request for oral argument must still be made by 4:00PM today. (See Local Rule 1.06.) **

Defendant Crazy Heart Properties, LLC’s (“CHP”) demurrer to the complaint is OVERRULED, as follows.

Moving counsel failed to comply with CRC Rule 3.1110(b)(3)-(4).

Factual Background

This action arises from a personal and professional relationship between plaintiff Matin and defendant Lundgren. According to the complaint, defendant Lundgren owned and operated as sole proprietorship a business known as “Mr. Motorhome” through early 2011, when he met plaintiff Matin and allegedly urged her to quit her salaried job to become co-owner/co-manager of the Mr. Motorhome business in Elk Grove. Plaintiff states she relied on defendant Lundgren’s representations and in late 2012 began working at the Mr. Motorhome business for 50-60 hours per week without receiving any compensation prior to November 2016.

The complaint asserts that in 2015, money from the Mr. Motorhome business was used not only for down payments on two parcels of land on which the business operates in Elk Grove but also for all subsequent mortgage payments, improvements and maintenance costs. Despite using these funds from the Mr. Motorhome business, the properties were titled in the name of CHP which is described as a limited liability company owned solely by defendant Lundgren. According to the complaint, the properties were titled in this fashion because plaintiff “could not be a signer on the purchase money loans…[since] she had no income to qualify for such loans.”

Beginning 2017, defendant Lundgren began telling plaintiff that the Mr. Motorhome business was his alone and later, he ejected plaintiff from not only the business but also the home the two had shared for years. Plaintiff insists defendant drained a business bank account and is currently attempting to sell both the Mr. Motorhome business and the two properties titled in the name of CHP.

The complaint names as defendants both Mr. Lundgren and CHP, purporting to assert a total of eight causes of action. As against the demurring party CHP, plaintiff has directed causes of action for quiet title, declaratory relief, “voidable transfers” and constructive trust.

Moving Papers. CHP now demurs to all four of the above-listed causes of action on the grounds they are each barred by the statute of frauds since there is no allegation in the complaint of “any writing signed by Plaintiff [sic] regarding the sale or purchase of the properties which are the subject of this litigation.”

Opposition. Plaintiff opposes, arguing that the statute of frauds is “simply inapplicable” inasmuch as her claims relative to the properties arise from her rights as a partner in the Mr. Motorhome business and California law indicating that property acquired with partnership funds is deemed partnership property.

Analysis

Defendant CHP’s demurrer is overruled because the court finds that the statute of frauds, the sole ground advanced by CHP, is inapplicable to the four causes of action challenged by CHP.

The statute of frauds is set forth in Civil Code §1624 and provides as follows:

(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent:

(1) An agreement that by its terms is not to be performed within a year from the making thereof.

(2) A special promise to answer for the debt, default, or miscarriage of another…

(3) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of an interest therein; such an agreement, if made by an agent of the party sought to be charged, is invalid, unless the authority of the agent is in writing, subscribed by the party sought to be charged.

…

(Underline added for emphasis.)

None of the four causes of action at issue in this demurrer alleges, either explicitly or implicitly, the existence of any contract for the sale of real property or any interest therein to plaintiff and none of the causes of action against CHP purport to seek enforcement of an oral agreement in favor of plaintiff. Accordingly, the statute of frauds is by its own terms not applicable to the causes of action currently challenged by CHP.

CHP’s citation to Code of Civil Procedure §1971’s similar language does not alter the court’s conclusion. This statute merely states in pertinent part:

No estate or interest in real property…can be created, granted, assigned, surrendered, or declared, otherwise than by operation of law, or a conveyance or other instrument in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring the same… (Underline added for emphasis.)

In the case at bar, it is apparent plaintiff is claiming an interest in the two properties pursuant to operation of law inasmuch as the complaint asserts that the two parcels

were bought and paid for with money from the Mr. Motorhome business, thereby falling within the stated exception to §1971’s requirement for a writing reflecting an interest in real property.

Finally, even if the statute of frauds were otherwise applicable to this action, this court cannot conclude it would as a matter of law necessarily operate as a complete bar to these causes of action as against CHP. According to California decisional law, the statute of frauds is designed to prevent fraud and cannot be invoked to perpetrate fraud or to effectuate a wrong. (See, e.g., Hansen Pacific Corp. v. Buck Mountain Logging Co. (1961) 191 Cal.App.2d 826; Michael Distributing Co. v. Tobin (1964) 225 Cal.App.2d 655.) Moreover, California law recognizes situations where a party may be estopped from asserting the statute of frauds, something which is usually a question of fact which cannot be resolved on demurrer. (See, e.g., Reynolds v. Special Projects, Inc. (1968) 260 Cal.App.2d 496.)

Conclusion

Based on the foregoing, CHP’s demurrer to the complaint is overruled.

If not already done, CHP to file and serve its answer to complaint no later than 4/2/2018.