Case Name: SBH Camden Properties, L.P. v. Ann R. Mirassou, et al.
Case No.: 18CV333664

I. Background

This is a dispute among owners and possessors of adjoining land over competing rights of first refusal. According to the allegations in the first amended complaint, plaintiff SBH Camden Properties, L.P. owns one parcel (parcel 5) in a shopping center at 5415 Camden Avenue, while members of the Mirassou family own the neighboring parcel (parcel 6) at 5431 Camden Avenue. Since 2001, defendant Taco Bell Corporation has operated a restaurant at the Mirassou family’s property under a 20-year lease (that was recorded in this county). The lease includes a right of first refusal giving Taco Bell the option to purchase the Mirassou family’s property. (FAC, Ex. B, § 19.) Camden Properties claims that—without knowledge of Taco Bell’s option—it also acquired a right of first refusal for the Mirassou family’s property. Camden Properties seems to allege that the Mirassou family gave it the right of first refusal as consideration for its assent to renovation of the Taco Bell restaurant, especially installation of a drive-through window impacting parking. (FAC, ¶¶ 10–15.)

In 2014, nonparty Golden Gate Bell, LLC purchased the restaurant business and took over the lease of the Mirassou family’s property. In 2018, the Mirassou family informed Camden Properties of its intention to sell the property. Camden Properties alleges it exercised its right of first refusal and opted to purchase the property but was informed that the Mirassou family sold the property to an entity affiliated with Golden Gate Bell, LLC. Camden Properties asserts causes of action against the Mirassou family for breach of contract and fraud. Camden Properties additionally asserts a third cause of action against Taco Bell for fraud based on a conspiracy theory of liability.

Taco Bell demurs to the third cause of action on the grounds of uncertainty and failure to state facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subds. (e)–(f).) Camden Properties opposes the demurrer. Both parties filed requests for judicial notice.

II. Requests for Judicial Notice

Camden Properties and Taco Bell each filed a request for judicial notice. Camden Properties requests judicial notice of the FAC. A court may take judicial notice of court records. (Evid. Code, § 452, subd. (d).) That said, a court ruling on a demurrer need not take judicial notice of the pleading under review because it must necessarily be considered by the court. (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1091, fn. 1.) Accordingly, the Court does not take judicial notice of the FAC. Additionally, Camden Properties and Taco Bell request judicial notice of a memorandum of lease recorded in this county. A court may take judicial notice of the existence and facial contents of recorded instruments. (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924, fn. 1, citing Evid. Code, § 452, subds. (c) & (h).) In doing so, a court does not take judicial notice of disputed facts or interpretations. (Yvanova, supra, 62 Cal.4th at p. 924, fn. 1; Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113.) Thus, the Court may take judicial notice of the existence and facial contents of the memorandum of lease. Camden Properties’s request is GRANTED IN PART and DENIED IN PART; Taco Bell’s request is GRANTED.

III. Demurrer

A. Uncertainty

A demurrer on the ground of uncertainty tests whether a pleading is ambiguous, uncertain, or unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) A demurrer on the ground of uncertainty “is not intended to reach the failure to incorporate sufficient facts in the pleading, but is directed at the uncertainty existing in the allegations actually made.” (Butler v. Sequeira (1950) 100 Cal.App.2d 143, 145–46.) Taco Bell does not clearly and explicitly present any argument in support of its demurrer on the ground of uncertainty. The only argument that it seemingly presents to support its demurrer on this ground is that there are insufficient facts alleged to disclose whether the rights of first refusal given to Camden Properties and Taco Bell were actually incompatible or mutually exclusive. (Mem. of Pts. & Auth. at p. 17:3–11.) This argument does not establish the pleading is too ambiguous, unintelligible, or uncertain. At its core, the argument is that more evidentiary facts should be pleaded to state a claim. Because this argument is unsubstantiated—Taco Bell does not cite authority establishing such evidentiary facts must be pleaded—and concerns the sufficiency of the allegations, it does not justify the demurrer on the ground of uncertainty. Taco Bell’s demurrer on the ground of uncertainty is, thus, OVERRULED.

B. Failure to State Sufficient Facts

In general, “a complaint must contain ‘[a] statement of the facts constituting the cause of action, in ordinary and concise language.’” (Davaloo v. State Farm Insurance Co. (2005) 135 Cal.App.4th 409, 415, quoting Code Civ. Proc., § 425.10, subd. (a)(1).) “This fact-pleading requirement obligates the plaintiff to allege ultimate facts that as a whole apprise[ ] the adversary of the factual basis of the claim.” (Davaloo, supra, 135 Cal.App.4th at p. 415 [internal quotation marks and citations omitted].) A demurrer on the ground of failure to state facts sufficient to constitute a cause of action tests whether the plaintiff alleges each ultimate fact essential to the cause of action asserted. (Code Civ. Proc., § 430.10, subd. (e); C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 873.) It solely tests the legal sufficiency of the pleading, not the plaintiff’s ability to prove his or her claim. (Nguyen v. Western Digital Corp. (2014) 229 Cal.App.4th 1522, 1536–37.) For the purpose of a demurrer, a court considers the allegations on the face of the pleading. (Code Civ. Proc., § 430.30, subd. (a).) A court accepts the factual allegations as true and gives them a reasonable, contextual interpretation. (Sisemore v. Master Financial, Inc. (2007) 151 Cal.App.4th 1386, 1396–97.) A court may also consider facts subject to judicial notice. (Code Civ. Proc., § 430.30, subd. (a).)

Taco Bell argues Camden Properties fails to allege all of the essential elements of a fraud claim, fails to plead facts with the requisite degree of particularity, and asserts a time-barred claim.

1. Sufficiency of Allegations

The essential elements of a fraudulent concealment claim are: (1) the defendant concealed or suppressed a material fact; (2) the defendant had a duty to disclose the fact to the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with intent to defraud the plaintiff; (4) the plaintiff was unaware of the fact and would not have acted in the same manner if he or she knew of the fact; (5) the plaintiff suffered damages as a result of the defendant’s concealment or suppression of the fact. (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 131, citing Civ. Code, § 1710, subd. (3).) A duty to disclose may arise from a fiduciary or confidential relationship. (Linear Technology Corp., supra, 152 Cal.App.4th at p. 131.) Additionally, “[i]n transactions which do not involve fiduciary or confidential relations,” a duty arises when “(1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff.” (Ibid. [internal quotation marks and citations omitted].)

While it is true that a fraudulent concealment claim must be pleaded with specificity, Taco Bell misstates the level of specificity required. (See Alfaro v. Community Housing Improvement System & Planning Assn. (2009) 171 Cal.App.4th 1356, 1384.) With respect to an intentional misrepresentation, a plaintiff must allege “how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 644–45 [internal quotation marks and citation omitted].) This same maxim does not apply to a claim based on concealment or nondisclosure. (Alfaro, supra, 171 Cal.App.4th at p. 1384.) “‘How does one show “how” and “by what means” something didn’t happen, or “when” it never happened, or “where” it never happened?’” (Ibid.) And so, while fraudulent concealment must still be pleaded with specificity, less specificity is required as to facts presumptively within the defendant’s knowledge. (Ibid.)

Here, Camden Properties fails to allege sufficient facts with specificity to state a claim for fraudulent concealment. Camden Properties does not allege facts giving rise to a duty to disclose by Taco Bell. Although Camden Properties alleges the Mirassou family and Taco Bell negotiated the right of first refusal in paragraph 33, this allegation is inconsistent with the prefatory allegation that Camden Properties and the Mirassou family negotiated the right of first refusal while Taco Bell and Camden Properties discussed guidelines for protecting customer parking (FAC, ¶¶ 14–15). Even accepting that Taco Bell somehow was involved in a conversation with Camden Properties, this is insufficient to plead the existence of a duty to disclose on the part of Taco Bell. For example, there are no facts pleaded that reflect Taco Bell made an incomplete disclosure that obligated it to disclose the existence of its right of first refusal. In sum, Camden Properties fails to allege facts (general or specific) sufficient to plead the existence of a duty to disclose.

In reaching this conclusion, the Court clarifies that a conspiracy theory may not be used as a bootstrap for an otherwise incomplete claim. (Applied Equipment Corp. v. Litton Saudi Arabia, Ltd. (1994) 7 Cal.4th 503, 514.) To be liable on a conspiracy theory, the tortfeasor must be legally capable of committing the underlying tort. (Ibid.) Accordingly, even when a conspiracy theory is pleaded, there must still be allegations that the conspirator owed the duty breached. (Ibid.) Thus, here, Camden Properties must still allege facts showing Taco Bell had a duty to disclose irrespective of whether it also intends to proceed on a conspiracy theory.

The allegations are also insufficient with respect to the purported concealment or nondisclosure. While less specificity is required for facts presumptively within Taco Bell’s knowledge, Camden Properties does not clearly allege whether there was a complete failure to disclose, a misleading partial disclosure, or active concealment. More facts must be pleaded for this element.

Finally, Camden Properties does not adequately plead facts showing a nexus between Taco Bell’s purported concealment or nondisclosure and the damages it incurred. Camden Properties must plead additional facts in this regard.

For all of these reasons, the demurrer to the third cause of action is sustainable on the ground of failure to state facts sufficient to constitute a cause of action. To be sure, Camden Properties does not present responsive opposition arguments supported by legal analysis that warrant a contrary conclusion.

2. Statute of Limitations

A party may raise the statute of limitations as a basis for challenging the sufficiency of a pleading if the statute clearly and affirmatively bars the action. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315–16.) If the allegations merely reflect that the action may be barred, a court cannot dismiss the action at the pleading stage. (Ibid.) The moving party must demonstrate (1) which statute of limitations applies and (2) when the claim accrued. (Id. at p. 1316.)

A fraud claim is subject to the three-year statute of limitations under Code of Civil Procedure section 338, subdivision (d). “By statute, the discovery rule applies to fraud actions.” (E-Fab, supra, 153 Cal.App.4th at p. 1318, citing Code Civ. Proc., § 338, subd. (d).) Thus, a fraud cause of action does not accrue “‘until the plaintiff discovers, or has reason to discover the cause of action.’ [Citation.]” (E-Fab, supra, 153 Cal.App.4th at p. 1318.)

Taco Bell argues Camden Properties untimely commenced this action more than three years after its fraud claim accrued because it had constructive notice of the right of first refusal due to the recordation of the Mirassou-Taco Bell lease. It asserts the statute of limitations began to run when the lease was recorded in 2004. In opposition, Camden Properties argues that its claim is not time-barred because it lacked constructive notice at the time it obtained the right of first refusal from the Mirassou family in 2003. This opposition argument is neither responsive nor supported by reasoned analysis. Although the fact that Camden Properties lacked constructive notice in 2003 may establish the elements of its claim, such as the occurrence of concealment and reliance (see Alfaro, supra, 171 Cal.App.4th at pp. 1385–86), that fact does not establish whether the statute-of-limitations was triggered upon recording of the memorandum of lease in 2004. That said, constructive notice established by the recording of a written instrument is not the same as inquiry notice that triggers the running of the statute of limitations. (Id. at pp. 1385–1395.) For example, in Alfaro, the Sixth District concluded that only those purchasers who received a deed referencing a recorded covenant had actual notice of the existence of the covenant that was sufficient to trigger inquiry notice of the contents of the covenant through investigation of property records and, thus, the running of the statute of limitations; the purchasers who did not receive a deed with such a reference were not deemed to have inquiry notice of the contents of the covenant and were allowed to pursue their claims. (Id. at pp. 1393–95.) For these reasons, neither Taco Bell nor Camden Properties advance a persuasive and legally-substantiated argument. The Court cannot conclude based on the briefing and this record that the recordation of the memorandum of lease, standing alone, triggered inquiry notice of the fraud and commenced the running of the statute of limitations.

3. Conclusion

Because Camden Properties fails to allege facts sufficient to state a fraud claim against Taco Bell, the demurrer on the ground of failure to state sufficient facts as to the third cause of action (which is the entire FAC as to Taco Bell) is SUSTAINED with 10 days’ leave to amend. The Court rejects Taco Bell’s request to deny leave to amend. This is the first challenge to the sufficiency of the pleading; and, while Camden Properties does not identify new, consistent facts that could be pleaded about Taco Bell’s role in the Mirassou family’s alleged fraud, the Court cannot conclusively determine at this juncture that there is no possibility of a curative amendment.