Case Name: Kelly Shoemake v. Elaine Peters

Case No.: 2018-CV-337020

Demurrer to the Complaint by Defendant Elaine Peters

Factual and Procedural Background

This is an action for fraud and breach of oral contract. Plaintiff Kelly Shoemake (“Plaintiff”) and defendant Elaine Peters (“Defendant”) met in 1995 and, beginning in 1998, lived together at a two-bedroom townhouse located at 550 Forest Avenue in Palo Alto, California. (Complaint at ¶ 5.) They rented the townhouse from Defendant’s father, Alphonse Peters (“Peters”). (Ibid.)

In 2000, Plaintiff and Defendant got married. (Complaint at ¶ 6.) The parties did not have a prenuptial agreement. (Ibid.) In 2004, the parties purchased the townhouse from Peters. (Id. at ¶ 7.) The down payment consisted of rental money the parties had paid to Peters from 1998 to 2004. (Ibid.) Both parties did not have the financial resources to buy the house themselves. (Id. at ¶ 8.) The parties thus agreed they would own the house equally – 50/50. (Ibid.)

In October 2004, Defendant made the following representations to Plaintiff: (1) that if Plaintiff agreed to use the couple’s money “to buy” and “to pay the mortgage” on the townhouse, that Plaintiff would always own “50%” of the townhouse, and that Defendant “would never do anything” to deprive Plaintiff of his 50% ownership; and (2) that given Plaintiff’s poor credit, “to get better financing,” Plaintiff needed to sign “a deed” that he was giving up his interest in the townhouse, but that he would always own “50%” of the townhouse, and that Defendant “would never do anything” to deprive him of his 50% ownership. (Complaint at ¶¶ 9, 16.)

Plaintiff alleges these representations were false. (Complaint at ¶ 10.) Instead, Defendant, after using the parties’ money to buy and pay the mortgage on the townhouse for the past 18 years, is now claiming in the divorce action (case no. 16FL177129) that Plaintiff does not own 50% of the townhouse. (Id. at ¶¶ 10, 18.) Defendant is further seeking to enforce the interspousal transfer deed that she induced Plaintiff to sign “to get better financing.” (Ibid.) Plaintiff now claims Defendant had a secret “lease with option to buy” written agreement with her father that predated the marriage, which Defendant contends makes the townhouse her separate property. (Ibid.) The written agreement was never revealed to Plaintiff until late June 2018 when it was disclosed in the discovery process of the parties’ divorce. (Ibid.)

Relying on these false representations, Plaintiff consented to the purchase of the Palo Alto townhome, agreed to the use of the married couple’s money to pay the carrying costs of the townhome, and agreed to a number of refinancing of the property from the 2004 purchase date to the present day. (Complaint at ¶ 11.) As a result, Plaintiff suffered damages in the amount of half of the equity of the townhome, or $870,000, with interest at the legal rate. (Id. at ¶¶ 11, 19.)

On October 24, 2018, Plaintiff filed the operative Complaint against Defendant alleging causes of action for fraud, breach of oral contract, money had and received, quantum meruit, and breach of fiduciary duty.

Demurrer to the Complaint

Currently before the Court is Defendant’s demurrer to the first, second, and fifth causes of action. (Code Civ. Proc., § 430.10, subds. (c), (e).) Defendant filed a request for judicial notice in conjunction with the motion. Plaintiff filed written opposition. Defendant filed reply papers.

Request for Judicial Notice

In support of the motion, Defendant requests judicial notice of the following: (1) The November 20, 2018 Minute Order prepared by Courtroom Clerk Betty Wilson for Department 65 of the Santa Clara County Superior Court before the Honorable Roberta S. Hayashi (Exhibit A); and (2) excerpts from the reporter’s transcripts related to the proceedings in the divorce action (case no. 16FL177129) on November 20, 2018 (Exhibit B).

Here, the Court may take judicial notice of Exhibits A and B as records of the superior court under Evidence Code section 452, subdivision (d). (See Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file]; In re Marina S. (2005) 132 Cal.App.4th 158, 166 [appellate court took judicial notice of clerk’s minute order where validity and accuracy of the document was not disputed]; see also Miller v. Super. Ct. (2002) 101 Cal.App.4th 728, 734 fn.2 [appellate court took judicial notice of superior court files and reporter’s transcript under Sections 452, subd. (d) and 459].) There is no opposition to the request. In addition, the request appears relevant to issues raised on demurrer. (See Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [judicial notice is confined to those matters which are relevant to the issue at hand].)

Accordingly, the request for judicial notice is GRANTED.

Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

First and Fifth Causes of Action: Fraud and Breach of Fiduciary Duty

Defendant demurs to the first and fifth causes of action for fraud and breach of fiduciary duty on the ground such claims are duplicative of those involved in the parties’ family law case. Thus, as another action is pending in the family court, Defendant argues that an interlocutory judgment should be entered in her favor stating that no trial shall take place until the conclusion of the divorce proceeding. (See Code Civ. Proc., § 597.)

A demurrer on the ground that there is another action pending action pending between the same parties on the same cause of action is not judicially favored. (Conservatorship of Pacheco (1990) 224 Cal.App.3d 171, 176.) “A demurrer raising this objection to a second action between the same parties ‘is strictly limited so that . . . the defendant must show that the parties, cause of action, and issues are identical, and that the same evidence would support the judgment in each case.’ ” (Pitts v. City of Sacramento (2006) 138 Cal App 4th 853, 856, italics omitted.) As explained by another case:

A plea in abatement pursuant to section 430.10, subdivision (c), may be made by demurrer or answer when there is another action pending between the same parties on the same cause of action. In determining whether the causes of action are the same for purposes of pleas in abatement, the rule is that such a plea may be maintained only where a judgment in the first action would be a complete bar to the second action. Where a demurrer is sustained on the ground of another action pending, the proper order is not a dismissal, but abatement of further proceedings pending termination of the first action.

(Plant Insulation Co. v. Fibreboard Corp. (1990) 224 Cal. App. 3d 781, 787-788, citations omitted.) The rule that the pendency of one action abates another is based in part upon the practical supposition that the first suit is effective and affords an ample remedy to the party and that the second is unnecessary and vexatious, and in part upon the legal principle that the law abhors a multiplicity of actions.” (National Auto. Ins. Co. v. Winter (1943) 58 Cal.App.2d 11, 16.)

“In a proceeding for dissolution of marriage, for nullity of marriage, or for legal separation of the parties, the court has continuing jurisdiction to award community estate assets or community estate liabilities to the parties that have not been previously adjudicated by a judgment in the proceeding.” (Fam. Code, § 2556.) This is because the State of California has a strong policy of ensuring the division of community and quasi-community property in the dissolution of a marriage. (Fam. Code, § 2120.)

Furthermore, a recurrent theme in the family law opinions is the disfavoring of civil actions which are really nothing more than reruns of a family law case. (Neal v. Super. Ct. (2001) 90 Cal.App.4th 22, 25.) “Almost all events in family law litigation can be reframed as civil law actions if a litigant wants to be creative with various causes of action. It is therefore incumbent on courts to examine the substance of claims, not just their nominal headings.” (Ibid.)

Here, Defendant argues the fraud and breach of fiduciary duty claims in the civil action are duplicative of relief sought in the divorce proceeding in the family court. There is no dispute that both actions involve Plaintiff and Defendant who are formerly husband and wife. In addition, the issues raised in the first and fifth causes of action appear to be identical in both the civil action and the family law case. For example, Defendant relies on a transcript from the divorce proceeding where the family court judge specifically states that Plaintiff’s claims for breach of fiduciary duty and fraud will be incorporated as part of the family court trial. (See Request for Judicial Notice at Ex. B.) In opposition, Plaintiff argues the alleged real estate option agreement between Defendant and her father also constitutes the fraud claim and is beyond the jurisdiction of the family court. This argument however is not persuasive as the trial judge specifically indicates that the alleged option agreement will be tried as part of the family law case. (Ibid. [see transcript at p. 18].) Moreover, any such consideration of the option agreement is intertwined with the issues of characterization and division of the property which is properly the domain of the family law court. As these claims come under the jurisdiction of the family court, the demurrer is sustainable on this ground.

Therefore, the demurrer to the first and fifth causes of action on the ground that another action is pending is SUSTAINED. Accordingly, the proceedings on the Complaint are STAYED pending the outcome of the family law case.

Second Cause of Action: Breach of Oral Contract

Defendant demurs to the second cause of action for breach of oral contract on the ground that it is barred by the statute of frauds. (See Parker v. Solomon (1959) 171 Cal.App.2d 125, 136 [“A general demurrer may be interposed when the complaint shows on its face that the agreement sued on is within the statute of frauds and does not comply with its requirements”].)

“The statute of frauds requires any contract subject to its provisions to be memorialized in a writing subscribed by the party to be charged or by the party’s agent.” (Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1503; Civ. Code, § 1624.) An agreement for the sale of real property or an interest in real property comes within the statute of frauds. (Civ. Code, § 1624, subd. (a)(3).) As the second cause of action involves the purchase of real property, Defendant argues it does not satisfy the writing requirement and is therefore subject to the statute of frauds. Plaintiff appears to concede this argument as he fails to address it in opposition to the motion.

Consequently, the demurrer to the second cause of action is SUSTAINED WITHOUT LEAVE TO AMEND for failure to state a claim. (See Rakestraw v. California Physicians’ Service (2000) 81 Cal.App.4th 39, 43 [“The plaintiff bears the burden of proving there is a reasonable possibility of amendment.”]; Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [plaintiff “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”].)

The Court will prepare the Order.