Case Number: BC629121 Hearing Date: September 10, 2019 Dept: 78
Superior Court of California
County of Los Angeles
Department 78
gary paul o’connor;
Plaintiff,
vs.
BOOSTZ, INC., et al.;
Defendants.
AND ALL RELATED CROSS-ACTIONS
Case No.:
BC629121
Hearing Date:
September 10, 2019
[TENTATIVE] RULING RE:
DefendantS DR. ROOT HERBS, LLC AND GRETA CURTIS’ DEMURRER TO the SECOND AMENDED COMPLAINT AND MOTION TO STRIKE
Defendant Dr. Root Herbs, LLC and Greta Curtis’s Demurrer to the Second Amended Complaint is OVERRULED as to all causes of action; Defendant Curtis’ Motion to Strike is DENIED.
Factual Background
This action involves the sale of real property. Plaintiff Gary O’Connor (“O’Connor”) alleges that he is the trustee of a trust that is the owner of a 90.05 percent share in two parcels of real property in Los Angeles, the “Compton Property” and the “East 1st Property.” (First Amended Complaint (“FAC”) ¶ 1.) The Complaint alleges generally that O’Connor entered into a Purchase Agreement (“Purchase Agreement”) with the owners of the remaining 9.95 percent interest in both properties in September 2014: Greta Curtis (“Curtis”), Baypoint Mortgage, Inc. (“Baypoint”), Boostz, Inc. (“Boostz”), and Dr. Roots Herbs, LLC (“Roots”) (SAC ¶ 5), and later entered into various Amendments, none of which were executed, through the fault of defendants. (SAC ¶¶ 2–4.) Curtis’ corporate alter egos include Defendants Baypoint, Boostz, Roots, as well as Sisters, LLC. (SAC ¶ 34.)
Curtis filed a Cross-Complaint on May 25, 2017, and an amended cross-complaint (“FAXC”) on July 26, 2017, alleging that O’Connor breached his fiduciary duty to her by filing the instant lawsuit to enforce an allegedly void sales agreement, and by failing to account for or distribute rent to his co-tenants in the relevant property, including Curtis. (FAXC ¶¶ 42–50.)
procedural history
O’Connor filed his Complaint on August 1, 2016, alleging six causes of action:
Breach of Contract
Fraud
Specific Performance
Quiet title
Declaratory Relief
Injunctions
On May 25, 2017, Curtis filed a Cross Complaint (“XC”).
On June 9, 2017, this case was reassigned to this department.
On July 26, 2017, Curtis filed an Amended Cross-Complaint (“FAXC”) naming as cross-defendants O’Connor, Boostz, Hasbun, Baypoint Mortgage, Inc. (“Baypoint”), Valley Trust Deed Services, Inc., Amber Hasbun, Melissa Hasbun, Ammec, Inc., Westar Loan Servicing, Inc. Westar Financial Group, Inc., asserting claims for:
INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE (against Baypoint, Boost and Hasbun)
RESCISSION OF ESCROW AGREEMENT PURSUANT TO REVENUE AND TAXATION CODE §23304.1, 23304.5 (against Baypoint)
BREACH OF FIDUCIARY DUTY (against Hasbun)
BREACH OF FIDUCIARY DUTY (against Baypoint)
BREACH OF FIDUCIARY DUTY (against O’Connor)
BREACH OF FIDUCIARY DUTY (against Boostz)
QUANTUM MERUIT (against all Cross-Defendants except O’Connor)
UNFAIR BUSINESS PRACTICES (B&P SEC. 17200) (against O’Connor)
ACCOUNTING (against O’Connor)
INDEMNIFICATION (against all cross-defendants)
COMPARATIVE INDEMNITY (against all cross-defendants)
DECLARATORY RELIEF (against all cross-defendants)
EQUITABLE INDEMNITY (against all cross-defendants)
CONTRIBUTION (against all cross-defendants)
On September 6, 2017, this Court granted Curtis’ Motion for Judgment on the Pleadings with leave to amend as to the Fourth, Fifth, and Sixth Causes of Action, denied the motion as moot as to the First and Third Causes of Action, and denied the motion as to the second cause of action.
On September 18, 2017, O’Connor filed his First Amended Complaint alleging six causes of action:
BREACH OF CONTRACT;
FRAUD AND DECEIT;
SPECIFIC PERFORMANCE;
QUIET TITLE;
DECLARATORY RELIEF; and
INJUNCTIONS
This Court on September 27, 2017, granted Cross-Defendants Boostz, Inc., Saleh Hasbun, Baypoint Mortgage, Inc., Westar Financial Group, Inc., Valley Trust Deed Services, Inc., and Melissa Hasbun’s Motion to Strike Curtis’s FAXC. The court, however, limited its ruling to striking the portions of the FAXC not related to O’Connor.
Curtis on October 19, 2017, filed eight Roe amendments adding the cross-defendants that this Court had ordered stricken from the FAXC.
This Court on November 17, 2017, overruled O’Connor’s Demurrer to the FAXC. This Court also sua sponte ordered Curtis’s October 19, 2017 amendments stricken.
This Court on October 2, 2018, granted O’Connor’s Motion for Leave to File Second Amended Complaint (“SAC”). The SAC alleges seven causes of action:
BREACH OF CONTRACT;
FRAUD AND DECEIT;
SPECIFIC PERFORMANCE;
QUIET TITLE;
DECLARATORY RELIEF; and
INJUNCTIONS
PARTITION
Curtis on January 2, 2018, filed a Notice of Appeal of this Court’s September 27, 2017 order striking certain defendants from Curtis’s FAXC.
On April 9, 2019, a Remittitur was issued denying Curtis’s appeal on the grounds that she had impermissibly appealed from an interlocutory order.
On June 19, 2019, this Court denied without prejudice Curtis’ Motion for Leave to Add Nine Cross-Defendants because it was not accompanied by a proposed amended cross-complaint and described the additional defendants only as Roe defendants.
Curtis and Dr. Root Herbs, LLC (“Roots”) filed the instant Demurrer to the Second Amended Complaint and Motion to Strike on June 3, 2019.
O’Connor filed oppositions to the instant Demurrer and Motion to Strike on August 27, 2019.
A reply has not been filed.
Discussion
DEMURRER
A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) A court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action.¿(See id.¿§ 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.”¿(Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 (“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”))
“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)
First Cause of Action – Breach of Contract (Roots)
Roots argues that the First Cause of Action is defective because it is barred by the statute of frauds and because this cause of action was voluntarily dismissed against Curtis, who is the alter ego of Roots, thus the claim must also be dismissed against Roots. (Demurrer to SAC at p. 2.) Specifically, Roots contends that Roots was not a party to the purchase agreement on the theory that a May 8, 2015 amendment to the agreement did not substitute Roots in place of Sisters in the purchase agreement. (Demurrer to SAC at p. 4.) Roots does not further explain its argument regarding the statute of frauds to this cause of action nor its argument regarding voluntary dismissal.
In opposition, O’Connor argues that the SAC alleges that the documents forming the totality of the contract include not only the purchase agreement, but also the amendments, including the May 8, 2015 amendment that specifically identifies Roots as a seller. (Opposition to Demurrer at p. 2.) O’Connor further contends that Roots’ reliance on an interrogatory response that said that the amendment did not substitute Roots for Sisters (Demurrer to SAC at p. 4.) is misplaced because the SAC includes the amendments in the contract and because it was not incorrect to say that the contract was not terminated by mutual agreement in the interrogatory. (Opposition at p. 2.)
Here, the Court finds that the SAC alleges Roots to be a party to the agreement. (SAC ¶¶ 57-60, 113.) Further, the purchase agreement and amendments were attached to the SAC as exhibits. (SAC, Exhs. G-1-G-4.) Roots fails to cite any legal authority for the proposition that Roots must be dismissed because O’Connor voluntarily dismissed Curtis from this cause of action.
Accordingly, the demurrer is OVERRRULED as to the First Cause of Action.
Second Cause of Action – Fraud and Deceit (Roots and Curtis)
The elements of fraud are: (1) misrepresentation or concealment, (2) knowledge of its falsity, (3) intent to defraud, (4) justifiable reliance and (5) resulting damage. (Gil v. Bank of America, Nat. Ass’n (2006) 138 Cal. App. 4th 1371, 1381; Barbara A. v. John G. (1983) 145 C.A.3d 369, 376.)
“Fraud causes of actions must be pled with specificity in order to give notice to the defendant and to furnish him or her with definite charges.” (Gil. v. Bank of Am., supra, 138 Cal.App.4th at p. 1381; see also Blickman Turkus, LP v. MF Downtown Sunnyvale LLC (2008) 162 Ca1.App.4th 858, 878.) “Fraud allegations must be pled with more detail than other causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 240.)
Roots and Curtis argue that the Second Cause of Action is defective because Plaintiff does not have a binding contract with Curtis and because the SAC fails to set forth any misrepresentations made by Curtis or Roots that would constitute a claim for fraud. (Demurrer to SAC at pp. 5-6.) Roots and Curtis argue that they did not cause Plaintiff’s damages as a result of fraudulent conduct because they were not parties to the purchase agreement. (Demurrer to SAC at p. 8.) Curtis argues that because Plaintiff agreed that Sisters was not the owner of the 5.774% real property interest, pursuant to the May 8, 2015 amendment which divested Sisters of all sale proceeds, Curtis cannot be held liable for fraud under the theory that she signed the agreement for Sisters. (Demurrer to SAC at p. 8.)
In opposition, Plaintiff argues that this Court already previously denied Curtis’ motion for judgment on the pleadings as to this cause of action, and thus that there is not basis for Curtis to bring a demurrer which advances the same arguments. (Opposition to Demurrer at p. 3.) Further, Plaintiff argues as to Roots that the SAC alleges that all defendants, including Roots, made numerous specific representations of fact and alleges that such representations were false when made, were made willfully and knowingly intended to deceive and defraud Plaintiff, and that Plaintiff justifiably relied. (Opposition to Demurrer at p. 3.) Plaintiff contends that a fraud claim is not based on a written argument, and thus that Curtis/Roots’ arguments regarding the enforcement of the purchase agreement are unavailing, and even so that SAC alleges the existence of a written contract binding both defendants that is attached to the SAC. (Opposition to Demurrer at pp. 3-4.)
Plaintiff is correct that this Court has already denied Curtis’ Motion for Judgment on the Pleadings as the to the Second Cause of Action. As in the Motion for Judgment on Pleadings, the Court is unpersuaded by Curtis’ arguments. The Court finds that the fraud cause of action is pleaded properly against both Curtis and Roots. The SAC alleges that all defendants, including Curtis (as an alter ego) and Roots made oral and written representations to Plaintiff including that they would perform under the contract, that they owned legally marketable title to the real property interests and that they had the ability to enter the agreement. (SAC at ¶ 122.) These misrepresentations are alleged with sufficient particularity. Further, although Curtis and Roots allege that they were not parties to the purchase agreement, the SAC alleges that both Curtis and Roots were parties. (SAC ¶¶ 45-66.) Even so, in an action for promissory fraud, “the plaintiff’s claim does not depend upon whether the defendant’s promise is ultimately enforceable as a contract.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)
Accordingly, the demurrer is OVERRRULED as to the Second Cause of Action.
Third Cause of Action – Specific Performance (Roots)
Roots argues that specific performance is not a cause of action, but a remedy. (Demurrer to SAC at p. 9.) Roots further argues that the SAC alleges that Roots is not a legal entity and that since Plaintiff dismissed Curtis from this cause of action that the Court must find that Roots is not a proper party. (Demurrer to SAC at p. 10.) Further, Roots argues that Roots did not enter into a contract to sell the property Plaintiff and the lack of a signed writing defeats a property claim for specific performance. (Demurrer to SAC at p. 10.)
In opposition, Plaintiff argues that the SAC does not alleges that Roots is not a legal entity and does not allege that Roots cannot be sued. (Opposition to Demurrer at p. 4.) Plaintiff further alleges that a specific performance may be a cause of action and that the SAC alleges the existence of an agreement and attaches a written agreement to the SAC. (Opposition to Demurrer at pp. 4-5.)
Specific performance may be a cause of action, and the elements of a cause of action for specific performance of a contact include not only the contract, but defendant’s breach of the contract. (Mansouri v. Superior Court (2010) 181 Cal.App.4th 633, 642.)
Here, the SAC alleges that Roots, along with Baypoint, Boostz, and Sisters LLC were parties to the purchase agreement and Plaintiff may enforce the contract and close the sale. (SAC at ¶¶ 130-137.) The SAC further alleges that all defendants, including Roots, breached their obligations under the agreement, including failing to close and consummate the agreement. (SAC at ¶¶ 11, 13.)
Accordingly, the demurrer is OVERRULED as to the Third Cause of Action.
Fourth Cause of Action – Quiet Title (Roots and Curtis)
An action for quiet title seeks “to establish title against adverse claims to real or personal property or any interest therein.” (Code Civ. Proc., § 760.020, subd. (a).) The elements of an action to quiet title are (1) one who alleges that he is the owner of certain described real property, (2) that defendants claim an interest therein adversely to him, (3) that such claim is without right, and (4) that the defendants have no estate, title or interest whatever in said premises. The complaint need not particularly state the facts in regard to the asserted invalidity nor attack the instrument which is claimed to be a cloud against the title of the plaintiff (Code Civ. Proc., § 760.020.)
Curtis argues that this Court sustained her Motion for Judgment on the Pleadings as to this cause of action, and thus that Curtis and Roots are entitled to a court order sustaining the demurrer. (Demurrer to SAC at p. 11.)
In opposition, Plaintiff argues that the quiet title cause of action is properly alleged against record owners and those who may assert or have some right, title, estate, lien, cloud or other claim or interest. (Opposition at p. 5.)
The SAC alleges that all defendants, including Roots, claim legal, equitable, right, title, estate, lien, or interest in the properties adverse to Plaintiff. (SAC ¶ 143.) Further, the May 8, 2015 amendment to the agreement, attached to the SAC, reflects Roots’ signature and thus their claim of right, title and interest under the agreement to the real property. (SAC, Exh. G-4.) The Court granted leave to amend following the Motion for Judgment on the Pleadings with respect to whether the May 8, 2015 Amendment was executed. The allegations and the exhibits reflect execution of the amendment by Roots, and thus Curtis by alter-ego.
Accordingly, the demurrer is OVERRRULED as to the Fourth Cause of Action.
Fifth Cause of Action – Injunctive Relief (Roots and Curtis)
Roots and Curtis argue that the Fifth Cause of Action is barred by res judicata based on the Court’s September 6, 2017 ruling on the Motion for Judgment on the Pleadings. (Demurrer to SAC at p. 12.)
In opposition, Plaintiff alleges that res judicata is not applicable because there has been no final adjudication in this action, and argues that injunctive relief has been properly alleged in the SAC. (Opposition at p. 12.)
Here, the Court previously granted leave to amend to establish that the May 8, 2015 amendment was executed by Roots and Curtis (by alter ego). The SAC alleges that Roots signed the May 8, 2015 amendment and attaches a copy of the amendment reflecting Roots’ signature. (SAC ¶¶ 57-58, Exh. G-4.)
Accordingly, the demurrer is OVERRULED as to the Fifth Cause of Action.
Sixth Cause of Action – Declaratory Relief (Roots and Curtis)
Roots and Curtis argue first that the Court granted Curtis’ Motion for Judgment on the Pleadings and that the defects were not cured. (Demurrer to SAC at p. 12.) Roots and Curtis further argue that a request for declaratory relief does not create a cause of action where the matter has ripened to a legal claim that must be adjudicated. (Demurrer to SAC at pp. 12-13.)
In opposition, Plaintiff contends that a cause of action for declaratory relief is proper where there is actual controversy between the parties as to the meaning, effect, terms or enforceability of a written instrument, and that there is a written instrument in this case that is plainly in dispute. (Opposition at p. 5.)
“Any person interested under a written instrument, . . . or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, . . . may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract.” (Code Civ. Proc. § 1060.) Thus, any cause of action for declaratory relief under this statute must allege an “actual controversy.”
Roots and Curtis’ claims are without merit. As established in the fourth and fifth causes of action, the defects of the Motion for Judgment on the Pleadings are cured regarding Roots’ execution of the May 8, 2015 amendment. Further, a controversy exists, which the SAC alleges, regarding the properties, the agreement and the acts and omissions of the parties.
Accordingly, the demurrer is OVERRULED as to the Sixth Cause of Action.
Seventh Cause of Action – Partition (Roots and Curtis)
In an action for partition, the complaint shall set forth:
(a) A description of the property that is the subject of the action. In the case of tangible personal property, the description shall include its usual location. In the case of real property, the description shall include both its legal description and its street address or common designation, if any.
(b) All interests the plaintiff has or claims in the property.
(c) All interests of record or actually known to the plaintiff that persons other than the plaintiff have or claim in the property and that the plaintiff reasonably believes will be materially affected by the action, whether the names of such persons are known or unknown to the plaintiff.
(d) The estate as to which partition is sought and a prayer for partition of the interests therein.
(e) Where the plaintiff seeks sale of the property, an allegation of the facts justifying such relief in ordinary and concise language.
Code Civ. Proc., § 872.230
Roots and Curtis argue that a partition action is not appropriate because the parties already know their fractionalized interest in the real property and there is no dispute or need to determine the percentage interest. (Demurrer to SAC at p. 13.) Further, they argue, without citation, that the parties agreed to co-own the real properties and therefore do not have the right to seek. partition. (Demurrer to SAC at p. 13.)
In opposition, Plaintiff contends that a partition right of action is appropriate where owners of real property cannot agree on whether to hold to sell, and that there is a dispute as to the percentage interests and that there is a separate law suit dedicated to such matter. (Opposition at pp. 5-6.)
Here, the SAC alleges sufficient facts regarding the elements for partition. Without evidence or citation, Roots and Curtis have failed to establish waiver of the right to partition.
Accordingly, the demurrer is OVERRULED as to the Seventh Cause of Action.
REQUEST FOR JUDICIAL NOTICE
The grounds for a motion for judicial notice provided for in this section shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice. Where the motion is based on a matter of which the court may take judicial notice pursuant to Section 452 or 453 of the Evidence Code, the matter shall be specified in the notice of motion, or in the supporting points and authorities, except as the court may otherwise permit. (California Code of Civil Procedure §438(d)). Any request for judicial notice must be made in a separate document listing the items for which notice is requested. (CRC 3.1113(l)). Evidence Code § 452 provides that courts may take judicial notice of “[r]ecords of . . . any court of this state.” (Cal. Evid. Code § 452(d).) The court may take judicial notice of discovery responses, but not to contest the evidence or whether there is a facial dispute concerning that which is sought to be judicially noticed. (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 478-479.)
Plaintiff asks the Court to take judicial notice of:
Court ruling dated September 6, 2017 on Defendant Curtis’ Motion for Judgment on the Pleadings.
Plaintiff’s Interrogatory Response to Form Interrogatory No. 50.4.
The Court grants judicial notice as to the Court ruling.
The Court denies judicial notice as to the interrogatory response, as the meaning of the response is disputed by the parties in the instant demurrer and opposition papers.
MOTION TO STRIKE
Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court, Rule 3.1322).
The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)
Defendant Curtis moves to strike the SAC on the grounds that the May 8, 2015 amendment to the purchase agreement did not substitute Roots in place of Sisters in the purchase agreement and thus that Curtis, as an alter ego, was not a party to the purchase agreement. (Motion to Strike at p. 5.)
Plaintiff objects to the Motion to Strike, noting that the motion is merely a repackaged demurrer. (Opposition to Motion to Strike at p. 1.) Plaintiff asserts that Curtis did not file a declaration with the Motion, as required by Code of Civil Procedure section 435.5(a), and did not otherwise state that the parties met and conferred. (Opposition at p. 3.) Plaintiff further argues that the Motion for Judgment on the Pleadings was granted with leave to amend, that the SAC was later filed, and thus that Curtis’ arguments regarding res judicata fails. (Opposition at p. 5.)
In this case, whether Roots is a party to the agreement is a matter of dispute, for which the SAC attaches an alleged written agreement. A motion to strike is therefore an improper vehicle to challenge the factual basis for Plaintiff’s claims based on the fact that Roots is a party to the agreement. Further, a number of claims in the SAC, including the fraud claim, do not rely on the existence of a valid contract.
Accordingly, the Motion to Strike is DENIED.
DATED: September 10, 2019
________________________________
Hon. Robert S. Draper
Judge of the Superior Court
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