Case Name: Yan v. Garlock, et al.

Case No.: 1-11-CV-208575

Defendants John Luk, GD Commercial Real Estate, Inc., and GD Commercial, Inc. (collectively, “Defendants”) demur to each cause of action in the First Amended Complaint (“FAC”) of plaintiff Ruihua “Rebecca” Yan (“Plaintiff”) on the grounds that each cause of action fails to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).)

Plaintiff’s request for judicial notice is GRANTED. (Evid. Code, § 452, subd. (d).)

As an initial matter, Plaintiff contends that Defendants’ demurrer should be denied on procedural grounds as an improper motion for reconsideration pursuant to Code of Civil Procedure section 1008. Section 1008 allows a party to make an application to a judge to reconsider and modify, amend, or revoke a prior order. (Code Civ. Proc., § 1008.) Defendants are not requesting reconsideration of a prior order; rather, Defendants are demurring to an entirely new pleading. Consequently, Code of Civil Procedure section 1008 is inapplicable.

Plaintiff’s first three causes of action are based on fraud: (1) fraud and deceit; (2) negligent misrepresentation; and (3) fraud by a fiduciary. Defendants argue that Plaintiff has failed to plead these causes of action with sufficient specificity. The general rule is that every element necessary to state a cause of action for fraud must be specifically pleaded. (Committee On Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216-217.) In pleading the element of misrepresentation or false promise against a corporate defendant, the requirement that fraud be pleaded with specificity “requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) As the Court (Hon. Kirwan) held in connection with the prior demurrer in this action, however, the heightened specificity requirement is not applied strictly to a cause of action for fraudulent concealment. (See Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal. App. 4th 1356, 1384 [“How does one show ‘how’ and ‘by what means’ something didn’t happen, or ‘when’ it never happened, or ‘where’ it never happened?”].) Plaintiff’s fraud causes of action include allegations not only of affirmative representations, but also of concealment of material facts. (See FAC, ¶ 20.) Since a party cannot demur to only part of a cause of action, (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal. App. 4th 1028, 1047), Defendants’ demurrer to the first and third causes of action on this basis must fail.

A cause of action for negligent misrepresentation, however, must be based on a representation, not an omission. (See Byrum v. Brand (1990) 219 Cal. App. 3d 926, 942 [“[F]or a cause of action for negligent misrepresentation, clearly a representation is an essential element.”].) Consequently, Plaintiff’s second cause of action must be based solely on allegations of affirmative representations and is therefore subject to the heightened specificity pleading requirements generally applicable to a fraud cause of action. Plaintiff alleges only that “[a]t all times herein mentioned, through writings and oral representations, Defendants . . . represented to Plaintiff . . . .” In other words, Plaintiff’s allegations are not specific as to when, how, or by whom each representation was made. Therefore, the second cause of action is not alleged with the requisite specificity.

Defendants argue that all of Plaintiff’s causes of action are time-barred. A cause of action based on fraud is subject to a three-year statute of limitations. (Code Civ. Proc., § 338, subd. (d).) A cause of action for breach of fiduciary duty is also subject to a three-year statute of limitations where the gravamen of the complaint is that the defendant’s conduct constituted fraud. (Thomson v. Canyon (2011) 198 Cal. App. 4th 594, 607.) Defendants assert that the conduct at issue allegedly occurred on three occasions in “late 2007,” “early 2008,” and “June 2008.” (FAC, ¶¶ 8-11.)

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred.” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403, citing Mosely v. Abrams (1985) 170 Cal.App.3d 355, 359-360).) “In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Id., citing Mangini v. Aerojet-General Corp. (1991) 230 Cal.App.3d 1125, 1155).) Plaintiff’s FAC sets forth allegations of fraud occurring beyond September 5, 2008. (FAC, ¶ 24.) The FAC was filed on September 2, 2011, less than three years later. Therefore, it is not apparent from the face of the FAC that the action is time-barred.

Defendants argue that the third cause of action cannot be maintained because no cause of action for fraud by a fiduciary exists. The title of a cause of action is not controlling; if the allegations of a complaint state a cause of action under any theory, that aspect of the complaint is good against a demurrer. (See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 38.) The third cause of action states a claim for fraud. Therefore, the fact that it is title a cause of action for “fraud by a fiduciary” does not make it susceptible to demurrer.

Defendants’ final argument is that the third and fourth causes of action fail against GD Commercial because Plaintiff did not plead facts showing the existence of a fiduciary relationship between Plaintiff and GD Commercial, Inc.. The Court (Hon. Kirwan) previously found that a fiduciary relationship was sufficiently alleged between Plaintiff and defendant John Luk based on the case of Montoya v. McLeod (1985) 176 Cal.App.3d 57. Defendants do not challenge this finding and the allegations of the FAC support the same conclusion. Plaintiff alleges that Luk was the agent and employee of GD Commercial Real Estate. (FAC, ¶ 11.) Plaintiff also alleges that each defendant was an agent of each other defendant. Accordingly, Plaintiff has sufficiently alleged a fiduciary relationship with defendant GD Commercial, Inc..

In sum, for the reasons discussed above, Defendants’ demurrer is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND as to the second cause of action and otherwise OVERRULED.