Richard S. Arno vs. The Robert B. Arno Trust
Nature of Proceeding:
Filed By:
Motion to Strike
Foster, Phil

Defendants James and Kenneth Arno as successor co-trustees of the Robert B. Arno Estate’s motion to strike portions of Plaintiff Richard Arno’s Second Amended Complaint (“SAC”) is ruled upon as follows.

Defendants’ requests for judicial notice are granted.

Defendants seek to: strike allegations relating to (1) naming a Trust and an Estate as a defendant, given that neither are legal entities that may be sued, (2) quiet title allegations which have not been verified as required and (3) attorneys’ fees and (4) punitive damages allegations.

The motion is granted as it relates to the allegations naming the “Robert B. Arno Trust” and “The Estate of Robert B. Arno” as defendants. “Unlike a corporation, a trust is not a legal entity. Legal title to property owned by a trust is held by the trustee, and common law viewed the trustee as the owner of the trust’s property.” (Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1343-1344 [citing Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2003) ¶ 2:126, p. 2-36 [“A probate or trust estate is not a legal entity; it is simply a collection of assets and liabilities. As such, it has no capacity to sue or be sued, or to defend an action. Any litigation must be maintained by, or against, the executor or administrator of the estate”].) While Plaintiff is correct that Defendants cannot base the motion on their additional factual contention that no probate estate has been opened for Robert B. Arno, the motion is nevertheless meritorious because neither “Robert B. Arno Trust” nor “The Estate of Robert B. Arno” are legal entities that can be sued and therefore are improperly named as defendants. Plaintiff may have leave to amend to add the proper entities (e.g., the trustees of the trust or the executor of any estate). While Defendants argue in reply that any amendment to add them as defendants to the fraud and breach of fiduciary duty causes of action (given their status as co-trustees) would fail as it would be barred by the statute of limitations and would not relate back is premature.

Defendants will be able to test the validity of any amendment at the appropriate time by way of an appropriate motion.

The motion to strike the fourth cause of action for quiet title on the basis that Plaintiff failed to verify the cause of action as required by CCP § 761.020 is granted with leave to amend. Plaintiff concedes that the verification is required and the Court grants leave to amend to cure this readily curable defect.

The motion to strike attorneys’ fees allegations is granted. Plaintiff concedes that he has not alleged any basis for recovery of such fees. Plaintiff requests that he not be precluded from seeking to amend the SAC in the event discovery reveals a basis for such fees. Nothing in this ruling precludes Plaintiff from attempting to seek leave to amend at a later date if the circumstances render such a motion appropriate.

The motion to strike punitive damages allegations is denied. Here, Defendants seek to strike the punitive damages allegations sought in connection with Plaintiff’s fraud and breach of fiduciary causes of action. Defendants’ argue that such damages cannot be recovered because the fraud and fiduciary duty causes of action arise from a breach of an alleged partnership agreement and “in the absence of an independent tort, punitive damages may not be awarded for breach of contract even where the defendant’s conduct in breaching the contract was willful, fraudulent, or malicious.” (Applied Equipment Corp. v. Litton Saudi Arabia, Ltd. (1994) 7 Cal.4th 503, 516.) Here, the motion is denied, because the fraud and fiduciary duty causes of action, as alleged in the SAC, are independent torts, and are not based upon a breach of contract. (SAC
¶¶ 44-54.) Indeed, the second cause of action for fraud alleges that Defendants made false representations that certain properties would be a partnership asset and would be placed in trust for Plaintiff’s benefit. (SAC ¶ 44.) Further, the third cause of action for breach of fiduciary duty involves allegations that Defendants breached fiduciary duties owed to Plaintiff based on a partner/joint venturer relationship. (SAC ¶ 51.)

These are torts are based on entirely different duties and are independent from a breach of contract. The breach of contract may give context to the claims of fraud and breach of fiduciary duty, but, as noted, these torts involve different duties and claims.

Punitive damages are recoverable in a tort action despite the fact that the tort incidentally involves a breach of contract. (Miller v. National American Life Ins. Co. (1976) 54 Cal.App.3d 331, 336.) “Punitive damages are not available in an action based solely upon breach of a contractual obligation, even where the breach is intentional, willful, or in bad faith. [citations omitted] However, if the action is also in tort, ‘exemplary damages may be recovered upon a proper showing of malice, fraud or oppression even though the tort incidentally involves a breach of contract.’” (Id.) Such is the case here.

The Court realizes in reply that Defendants argue that the punitive damages allegations fail because they were only sought in connection with the fraud and breach of fiduciary duty causes of action which were only alleged against “Robert B. Arno Trust” and “The Estate of Robert B. Arno” which are not legal entities and that the individual alleged to have committed the acts for which punitive damages are warranted, Robert B. Arno, is deceased and punitive damages do not survive the death of a defendant. However, these arguments were not the arguments made in the moving papers. As set forth above, Defendants only argued that punitive damages should be stricken because the fraud and fiduciary duty causes of action did not set forth an independent tort upon which punitive damages could be recovered. Thus the Court does not consider these new arguments raised for the first time in reply with respect to the punitive damages.

Plaintiff may file and serve an amended complaint no later than January 31, 2014.

Defendants shall file and serve their responses 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.)

The notice of motion does not provide notice of the Court’s tentative ruling system as required by CRC Rule 3.1308 and Local Rule 1.06(D). Defendants’ counsel is ordered to notify Plaintiff’s counsel immediately of the tentative ruling system and to be available at the hearing, in person or by telephone, in the event Plaintiff’s counsel appears without following the procedures set forth in Local Rule 1.06(D).

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.