34-2013-00147273

Mark Downie vs. Frank Radoslovich

Nature of Proceeding: Hearing on Demurrer

Filed By: Parker, Port J.

Defendants Frank Radlosovich, Radlosovich Krogh, PC and Radlosovich Law
Corporation’s demurrer to Plaintiff Mark Downie’s First Amended Complaint (“FAC”) is
sustained with leave to amend as set forth below.

Defendants’ request for judicial notice is granted. While Plaintiff objects to Defendants’
request with respect to his declaration filed in connection with Defendants’ previous
anti-SLAPP motion, judicial notice of the declaration is proper in an attempt to
demonstrate that Plaintiff has taken positions in this case that are inconsistent with the
allegations in the FAC in an attempt to avoid the Court’s prior ruling sustaining the
demurrer to the complaint. (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th
1457, 1491 [on demurrer court may “properly take judicial notice of a party’s earlier
pleadings and positions as well established facts from both the same case and other
cases…A plaintiff may not avoid a demurrer by pleading facts or positions in an
amended complaint that contradict the facts pleaded in the original complaint or by
suppressing facts which prove the pleaded facts false [citations omitted].”] In addition,
Plaintiff himself appears to argue that the declaration can be referenced to
demonstrate the details of his fraud causes of action.

Plaintiff’s request for judicial notice of an order relieving Defendants as counsel in the
underlying matter is granted.

This is an action by Plaintiff against his former attorneys related to their representation
of him in a lawsuit involving Plaintiff’s ownership of a large diamond referred to as the
“Bahia Emerald”. Defendants’ demurrer to the original complaint was sustained
without leave to amend as to Plaintiff’s breach of contract, rescission and restitution
claims on the grounds that they were barred by the one year statute of limitations in
CCP § 340.6 governing legal malpractice claims. The Court also sustained, with leave
to amend, Plaintiff’s causes of action for fraud based on intentional misrepresentations
and concealment on, among other grounds, that they were not pled with the requisite
specificity.

Defendants now demur to the two remaining fraud causes of action in the FAC on the
basis that neither are pled with the requisite specificity. As seen below, the Court
agrees.

First Cause of Action (Fraud-Intentional Misrepresentation)
Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action, it is also uncertain. Plaintiff alleges that in
“various billing statements sent by the Defendants to the Plaintiff, Defendants
represented to the Plaintiff that certain work had been done for the Plaintiff’s along with
the hours spent doing this work.” (FAC ¶ 21.)

As stated on the previous demurrer, “fraud must be pled specifically; general and
conclusory allegations do not suffice. ’Thus the policy of liberal construction of the
pleadings…will not ordinarily be invoked to sustain a pleading defective in any material
respect. This particularity requirement necessitates pleading facts which ‘show how,
when, where, to whom, and by what means the representations were tendered.’” (
th
Lazar v. Superior Court (1996) 12 Cal.4 631, 645 [citations omitted].) The fraud
cause of action is entirely lacking in this respect. Indeed, the FAC continues to fail to
allege what billing statements are at issue, which statements he paid that continued
these unidentified representations, when they were sent, what was billed for that had
not actually been done, which defendant sent the statements, etc. There are no facts
as to how the unidentified statements were false, other than the unsupported
conclusion that they were “false and fraudulent.” These details are entirely lacking.
Such allegations are insufficient and fail to state a cause of action for fraud based
upon intentional misrepresentation.

Though the first cause of action does not appear to be expressly based on these
allegation, Plaintiff also alleges that Defendants represented that they would provide
Plaintiff a budget letter or estimate of the cost of representation but failed to do so,
represented that they would represent his interests but failed to do so as they secretly
attempted to settle his claims. (FAC ¶ 17a(1)-(2), (b). These allegations are deficient
for the same reasons the allegations regarding the alleged fraudulent billing are
deficient. There simply are no factual details regarding the how, when, where, etc.

Plaintiff’s argument that the specificity requirement is relaxed when the matters are
within the particular knowledge of defendant is rejected. The Court sees no reason to
deviate from the specificity requirements in this action. Indeed, allegations that
Defendants sent billing statements which Plaintiff alleges were fraudulent because
they contained representations that certain work had been doe is not a situation where
“it appears from the nature of the allegations that the defendant must necessarily
possess full information concerning the facts of the controversy.” (Committee on
Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217). While
Plaintiff argues that his declaration in opposition to Defendants’ anti-SLAPP motion
puts Defendants on notice regarding the details of his claims, the details must be set
forth in a pleading, not a declaration.

The Court also notes that Defendants argue that the cause of action (and the second)
is barred by the statute of limitations. However, given that no specific dates are
provided with respect to the first cause of action, a statute of limitations defense does
not appear on the face of the complaint. Defendants point to Plaintiff’s declaration in
support of his opposition to their anti-SLAPP motion to argue that all his billing
complaints fall outside the statute of limitations and that he has not pled any facts
regarding the discovery rule. However, given that the demurrer to the intentional
misrepresentation cause of action in the original complaint was not sustained on
statute of limitations grounds, that no dates are alleged in the FAC, nor were any set
forth in the original complaint as it related to the alleged misrepresentations, the Court
will not find at this point that the declaration shows that Plaintiff has submitted a sham
pleading or omitted key allegations to avoid a demurrer. Indeed, the FAC simply lacks
in detail, it does not, at least at this point, expressly contradict any specific statement
made in his declaration. The Court is aware based upon the details set forth in
Plaintiff’s declaration that it is possible that Plaintiff may not be able to legitimately
plead sufficient detail without running afoul of the sham pleading doctrine but will
nevertheless allow Plaintiff an additional opportunity to amend his complaint to attempt
to allege such detail.

As a result, the demurrer to the first cause of action is sustained with leave to amend
on the basis that it fails to state facts sufficient to constitute a cause of action and is
also uncertain.

Second Cause of Action (Fraud-Concealment)

Defendants’ demurrer is sustained with leave to amend for failure to state facts
sufficient to constitute a cause of action, it is also uncertain. As he alleged in the
original complaint, Plaintiff alleges that Defendants presented unauthorized settlement
proposals whereby he would sell Plaintiff’s Bahia Emerald and split the proceeds
contrary to his wishes. (FAC ¶¶ 32-35.) He also alleges that Defendants concealed
their false entries on their billing statements. (FAC ¶ 40.)

These allegations lack the requisite specificity. Again, Plaintiff fails to allege which
defendant made the unauthorized settlement offer, when it was made, how, and by
what means. (E.g., Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) Nor does he
allege that he would have acted differently had he been aware of the settlement
proposal, instead merely alleging that he relied on the absence of a settlement
proposal to continue to employ Defendants. (FAC ¶ 37.) Similar deficiencies exist
with the alleged concealment of the billing statement entries. Again, Plaintiff does not
allege which defendant made the entries, which entries were false, or whether he paid
the specific entries alleged to be false.

The demurrer to the second cause of action is sustained with leave to amend on the
basis that it fails to state facts sufficient to constitute a cause of action and is also
uncertain.

Finally, the Court notes that as pled, the mediation privilege does not bar either cause
of action as they are based upon conduct that occurred prior to and after the mediation
in the underlying action. (FAC ¶ 17 [“prior to the mediation, between the mediation
and the mandatory settlement conference and after the mandatory settlement
conference,…) Though as with the statute of limitations issue, Plaintiff may not be
able to remedy the lack of specificity in the causes of action without running afoul of
the sham pleading doctrine.

As a result, the demurrer to the FAC is sustained with leave to amend. Plaintiff may
file and serve an amended complaint no later than May 1, 2014. Defendants shall file
and serve their response within 10 days thereafter, 15 days if the amended complaint
is served by mail. (Although not required by any statute or rule of court, Plaintiff is
requested to attach a copy of the instant minute order to the amended complaint to
facilitate the filing of the pleading.)