Case Name: Huynh, et al. v. Tang, et al.
Case No.: 1-13-CV-257932
Defendants Lap Tang (“Tang”) and Ha Vinh Ly (“Ly”) each separately demur to the First Amended Complaint (“FAC”) of plaintiffs Nhi Xuan Huynh and Tuye Nhu Thi Vo (collectively, “Plaintiffs”).
- Tang’s Demurrer
Tang demurs to the second cause of action in the FAC on the ground that it fails to state facts sufficient to constitute a cause of action. The second cause of action is for fraud. “The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Fraud must be pleaded specifically; general and conclusory allegations do not suffice. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)
Tang argues that Plaintiffs have failed to provide facts sufficient to show justifiable reliance. Plaintiffs make the following relevant allegations. Plaintiffs entered into agreements to purchase certain commercial condo units. (FAC, ¶¶ 10-13.) From May 2009 until May 2013 Tang made several oral promises in which he insisted that he would complete the construction and deliver the condo units or he would return the money deposited by Plaintiffs as down payments. (FAC, ¶ 15.) Unknown to Plaintiffs, Tang devised a scheme in which he solicited multiple buyers to put down payments on the same condo units. (FAC, ¶ 16.) After selling the commercial condo units to multiple buyers and obtaining their deposits, Tang’s company, TWN Investment Group, LLC, filed for bankruptcy protection in the early part of 2013. (FAC, ¶ 17.)
Tang contends that Plaintiffs’ could not have reasonably relied on Tang’s promises to return their money because they reside in Santa Clara County and the project in which Plaintiff’s invested is in San Jose, so Plaintiffs could have seen for themselves how the project was progressing over a number of years. This argument is not well taken. Plaintiffs allege that Tang made several oral promises. In other words, Plaintiffs alleged that Tang continued to promise to Plaintiffs over a period of time that their money would be returned if the construction was not completed. It is not apparent from the allegations of the FAC why Plaintiffs could not reasonably rely on Tang’s multiple promises. Plaintiffs’ allegations are sufficient for pleading purposes. Accordingly, Tang’s demurrer to the second cause of action is OVERRULED.
- Ly’s Demurrer
Ly’s demurrer to the first, third, and fourth causes of action on the grounds of uncertainty is OVERRULED. The FAC is not so unclear that Ly cannot respond.
Ly’s demurrer to the second cause of action on the ground of uncertainty is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. The heading for the second cause of action states that it is only asserted against Tang and Does 1 to 10. However, the allegations of the second cause of action refer to “Defendants.” Therefore, it is not clear whether Plaintiffs intend to assert the second cause of action against Ly.
Ly also demurs to the first, third, and fourth causes of action on the ground that they fail to state facts sufficient to constitute causes of action. The first cause of action is for breach of contract. The cause of action contains allegations regarding a written contract with all defendants and several oral contracts with Tang. Ly argues that Plaintiffs have not alleged the terms of the written contract sufficiently. Plaintiffs do not respond to this argument in their opposition papers.
Generally, if a breach of contract cause of action relies on a written contract, the contract must be set out verbatim in the body of the complaint or as a copy attached and incorporated by reference. (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 459, citing Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 59).) The other method of pleading a written contract is according to its legal effect, by alleging the making, and then proceeding to allege the substance of its relevant terms. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 519, p. 651.) Plaintiffs allege that the defendants executed a written agreement entitled “Guarantors’ Agreement to Pay Buyer deposit refunds” in which the defendants personally promised to pay back the deposits made by buyers like Plaintiffs. (FAC, ¶ 19.) Aside from stating generally that the agreement required the return of Plaintiffs’ deposits, Plaintiffs do not allege any of the terms of the agreement. Accordingly, Ly’s demurrer to the first cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.
The third cause of action is for conversion.
Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion are the plaintiff’s ownership or right to possession of the property at the time of the conversion; the defendant’s conversion by a wrongful act or disposition of property rights; and damages. It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to his own use.
(Oakdale Vill. Group v. Fong (1996) 43 Cal. App. 4th 539, 543-544.)
Ly argues, inter alia, that Plaintiffs have not alleged a right to possession of the deposits that are the subject of the conversion cause of action. Plaintiffs allege the legal conclusion that they are the equitable owners of the funds (FAC, ¶ 41), but there are no facts alleged showing Plaintiffs’ ownership or right to possession of the funds at the time of the alleged conversion. Accordingly, Ly’s demurrer to the third cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.
The fourth cause of action is for common counts. “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” (McBride v. Boughton (2004) 123 Cal. App. 4th 379, 394.) Plaintiffs’ common count cause of action is based on the same facts as the other causes of action in the FAC, to which the demurrer is being sustained. Accordingly, Ly’s demurrer to the fourth cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND.
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