Case Number: EC067509 Hearing Date: June 29, 2018 Dept: B

# 17

raelene arreguin,

Plaintiff,

v.

preferred auto body shop, llc,

Defendant.

Case No.: EC067509

Hearing Date: June 29, 2018

[TENTATIVE] order RE:

(1) demurrer to complaint

(2) Motion for leave to file second amended complaint

BACKGROUND

In this action, Plaintiff Raelene Arreguin (“Plaintiff”) alleges that Defendant Preferred Auto Body Shop, LLC (“Defendant”) wrongfully possessed her 2013 Ford Fusion (“Vehicle”) sometime in February 2017, and refused to release it to her. The complaint, filed October 24, 2017, alleged causes of action for: (1) intentional tort (trespass to chattel); (2) fraud (fraudulent misrepresentation); (3) fraud (negligent misrepresentation); and (4) intentional tort (conversion).

On March 9, 2018, Defendant demurred to the complaint. The Court sustained the demurrer with leave to amend as to the second and third causes of action, and overruled the demurrer as to the first and fourth causes of action. Accordingly, on March 26, 2018, Plaintiff filed a first amended complaint asserting the same four causes of action.

On April 30, 2018, Defendant filed the instant demurrer to second and third causes of action in the FAC. Plaintiff opposes.

Additionally, on June 04, 2018, Plaintiff filed a motion for leave to file a second amended complaint. Plaintiff seeks to add a fifth cause of action, for violation of the Consumer Legal Remedies Act. Defendant opposes.

DISCUSSION

A. Demurrer Meet and Confer Requirement

CCP §430.41(a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Emphasis added.) The parties are to meet and confer at least five days before the date the responsive pleading is due. (CCP §430.41(a)(2).) The demurring party must also file and serve a declaration detailing their meet and confer efforts. (CCP §430.41(a)(3).)

Here, Defendant provides the declaration of its counsel, C.R. McReynolds, stating that Defendant sent Plaintiff a letter, requesting to meet and confer, five days before the demurrer was filed. (See McReynolds Decl., ¶ 2, Ex. A.) Plaintiff argues in opposition that this is insufficient, given that the code requires that meet and confer efforts occur in person or by telephone. The Court agrees this would generally be insufficient.

In reply, Defendant argues it attempted to meet and confer by telephone before it sent the aforementioned letter. It is unclear, however, why such efforts were not mentioned in the original declaration. Additionally, Defendant argues it attempted to meet and confer by email, and attaches those emails to the reply, but those emails all postdate both the filing of the demurrer and the filing of the opposition. Accordingly, while the Court is always supportive of efforts to resolve disputes before matters come on for hearing, these efforts do not constitute pre-filing meet and confer efforts.

Regardless, per CCP § 430.41(a)(4), “Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” The Court therefore considers the demurrer on the merits.

B. Request for Judicial Notice

Plaintiff requests judicial notice of the complaint and FAC filed in this action. The request for judicial notice is granted pursuant to Evidence Code, §452(d).

C. Demurrer Legal Standard

A demurrer for sufficiency tests whether the complaint states a cause of action.¿ (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) ¿When considering demurrers, courts read the allegations liberally and in context.¿ (Taylor v. City of Los Angeles Dept. of Water and Power¿(2006) 144 Cal. App. 4th 1216, 1228.)¿ In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿ (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.)¿ “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters.¿ Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”¿ (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.)¿ “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”¿ (Hahn, supra, 147 Cal. App. 4th at 747.)

D. Demurrer Analysis

1. Second and Third Causes of Action for Fraud (Fraudulent Misrepresentation and Negligent Misrepresentation)

To allege a cause of action for fraud, the requisite elements are: (1) a representation, usually of fact, which is false; (2) knowledge of its falsity; (3) intent to defraud; (4) justifiable reliance upon the misrepresentation; and (5) damage resulting from that justifiable reliance. (Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.)

To allege a cause of action for negligent misrepresentation, the requisite elements are: (1) a misrepresentation of a past or existing material fact; (2) without reasonable grounds for believing it to be true; (3) with intent to induce another’s reliance on the fact misrepresented; (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and (5) damages. (B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.)

These causes of action are torts of deceit and the facts constituting each element must be alleged with particularity; the claims cannot be saved by referring to the policy favoring liberal construction of pleadings. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) Since the claims must be pleaded with particularity, the causes of action based on misrepresentations must allege facts showing how, when, where, to whom, and by what means the misrepresentations were tendered. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.)

In the original complaint, Plaintiff alleged that in February 2017, Defendant made misrepresentations that it was authorized and approved to make repairs to her Vehicle, and Defendant knew the falsity of its statements because Plaintiff had not signed papers or delivered her vehicle to Defendant for repairs. The Court held that these were insufficiently specific facts showing how and by what means these representations were made and who made them to Plaintiff. The Court also stated it was unclear how Plaintiff had relied on Defendant’s misrepresentations.

Plaintiff’s FAC does not remedy these problems. In seeking to clarify her position, Plaintiff argues that the misrepresentation is not that Defendant was authorized to repair the Vehicle. Plaintiff is essentially conceding the merits of Defendant’s argument in demurrer, namely that this misrepresentation could not support a fraud cause of action, because Plaintiff also maintained (both at that time and presently) that Defendant was not authorized to repair the Vehicle; Plaintiff therefore could not have relied on a statement by Defendant that Plaintiff herself already knew to be false.

Instead, Plaintiff alleges Defendant misrepresented “that Plaintiff had to sign and backdate documents regarding authorization for repairs” before the Vehicle could be released back to her. (FAC p. 7.) Plaintiff alleges that “[i]n reliance on Defendant’s false statements that signing the backdated documents was required to retrieve her vehicle, Plaintiff did not pick up her vehicle.” (FAC p. 7.)

The foregoing can only be reasonably framed in two ways, and either of those options demonstrate that there is no claim for fraud here. First, it appears there was no actual misrepresentation: Defendant stated that Plaintiff had to sign documents to get her car. This statement may have been false in the abstract sense that, under the law, Plaintiff should not have needed to sign the documents, but it was not false in the more concrete sense that Defendant was not going to release the vehicle unless she signed. In other words, even if Defendant will ultimately be held liable under one of Plaintiff’s other causes of action for making the statement, Defendant’s statement was not untrue: He would not release the car without Plaintiff’s signature, and he did not release the car without Plaintiff’s signature. The first element of both intentional and negligent misrepresentation—that there be a misrepresentation—has therefore not been met.

Alternatively, if the statement is framed as a misrepresentation, because, as noted, in some abstract sense, Defendant was allegedly lying when Defendant stated Plaintiff had to sign the documents to obtain the release of her vehicle, Plaintiff cannot show that she relied on that misrepresentation. Plaintiff alleges that, in reliance on the misrepresentation, she did not pick up her vehicle. This makes it sound as though she had a choice. Elsewhere in the FAC, however, she makes clear that it was Defendant that “refus[ed] to return the Subject Vehicle after Plaintiff demanded its return.” (FAC p. 10.) “Reliance” requires that the misrepresentation “has been a substantial factor in influencing [plaintiff’s] decision.” (OCM Principal Opportunities Fund v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 856; see also Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1193 [reliance exists where “the misrepresentation or nondisclosure was an immediate cause of the plaintiff’s conduct”].) Reliance necessarily requires an element of choice; the party must do or not do something differently because of the misrepresentation. Here, however, accepting that the statement that Plaintiff had to sign the documents was a misrepresentation, Plaintiff did not change her conduct. She did not choose to not pick up her car; Defendant refused to release her car.

Separately, the Court also agrees that Plaintiff’s allegations regarding fraud continue to lack sufficient specificity. For example, where she previously alleged that Defendant—a corporation—made certain misrepresentations, she now merely alleges “Defendant and its agents” made the misrepresentations. This is insufficient. Moreover, to the extent Plaintiff disagrees with any of the above analysis, regarding what misrepresentation was made and how she relied on the misrepresentation, that would necessarily be additional evidence that Plaintiff’s complaints have not been pled with sufficient clarity for Defendant—or the Court—to be apprised of Plaintiff’s position.

As such, the demurrer to the second and third causes of action are sustained with 10 days leave to amend.

E. Leave to Amend Legal Standard

CCP §473(a)(1) states: “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.”

“[T]he court’s discretion will usually be exercised liberally to permit amendment of the pleadings. The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified. Leave to amend should be denied only where the facts are not in dispute, and the nature of the plaintiff’s claim is clear, but under substantive law, no liability exists and no amendment would change the result.” (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428 [internal quotations and citations omitted].)

F. Leave to Amend Analysis

Plaintiff moves for leave to add a fifth cause of action to the complaint, to allege that Defendant has violated the Consumers Legal Remedies Act (“CLRA”).

CRC Rule 3.1324 provides the requirements for a motion to amend the pleading. Subsection (a) requires that the moving party provide a copy of the proposed amended pleading and a statement of what allegations are proposed to be added and/or deleted. Here, Plaintiff has provided a copy of the proposed SAC, and has stated what additions/deletions are proposed. (See Woo Decl. ¶ 10, Exh. A.)

CRC Rule 3.1324(b) requires that a supporting declaration accompany the motion and specify: (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier. In the declaration of Plaintiff’s counsel, Noah Woo, counsel declares that it is necessary to add this cause of action so that all claims may be resolved in a single suit. Woo also states that it was still investigating this cause of action at the time the original complaint was filed, and that it was providing Defendant additional time to respond to Plaintiff’s demand letter, which was required under the CLRA. (Woo Decl. ¶ 10.)

The Court concludes the foregoing is sufficient. Defendant argues Plaintiff has known about these claims since September 2017—one month before the complaint was filed—because Plaintiff attaches a copy of the letter sent to Defendant at that time asserting violations of the CLRA. The Court agrees that Plaintiff could have brought this amendment sooner. However, it was reasonable for Plaintiff to wait somewhat longer to see if Defendant would provide a response to the letter, pursuant to Civ. Code § 1782. Plaintiff also asserts—admittedly vaguely—that discovery regarding the plausibility of this cause of action was ongoing. In light of the fact that there was only an eight-month delay between filing the original complaint and moving for leave to amend, and in light of the fact that no trial has yet been set, the Court concludes the policy of liberality regarding amendments requires that leave to amend be granted.

Defendant separately argues that the fifth cause of action is meritless. Such arguments should be raised in later responsive pleadings or motions. (See California Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 281 [where “the legal sufficiency” of the proposed amendment is unclear, “the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.”] [disapproved on other grounds, Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390].)

CONCLUSION AND ORDER

For the reasons above, Defendant’s demurrer is sustained with 10 days leave to amend as to the second and third causes of action (fraud).

Plaintiff’s motion for leave to file a second amended complaint is granted. Plaintiff shall not file the proposed second amended complaint (attached to the motion) with the Court, because it includes the now-defunct second and third cause of action. Rather, within ten days, Plaintiff is instructed to file a new second amended complaint, which includes the proposed fifth cause of action, and either omits or substantially revises the second and third causes of action, consistent with the decision above.

The Case Management Conference is continued to Tuesday, September 25, 2018.

Defendant is ordered to provide notice of this ruling.

Posted 6/26/18 at 3:04 p.m. Minor date correction updated 6/27/18 at 8:24 a.m.