Case Number: EC061381    Hearing Date: July 25, 2014    Dept: NCB

13. EC061381
HUIJIAO GUO v ANTERMITE CONTROL CO, et al
Demurrer
Case Management Conference

The Second Amended Complaint alleges that the Plaintiff purchased real property at 127 E. Camino Real Avenue, Arcadia, under a purchase agreement with Defendants, Hwang Ming and Hwang Shiow-er. The Defendants failed to disclose a number of defects with the property.
Also, the Defendants, Antermite Control Company and Frank Chen, discovered a termite infestation during an inspection. This discovery was not reported to the Plaintiff and the Plaintiff’s signature on the termite inspection report was forged by Defendant, Robinson Luo, to ensure that the bank released the funds needed to purchase the property. The Defendants, Rachel Shui and Garden Escrow, Inc., failed to discover the forgery on the termite inspection report.

The Causes of action in the Second Amended Complaint are:
1) Breach of Contract
2) Violation of California Civil Code sections 1102 et seq.
3) Conversion
4) Unjust Enrichment
5) Fraud
6) Negligent Misrepresentation
7) Negligence
8) Breach of Fiduciary Duty
9) Intentional Infliction of Emotional Distress
10) Negligent Infliction of Emotional Distress
11) Violation of Business and Professions Code section 17200
12) Violation of Business and Professions Code section 17500

This hearing concerns the demurrer of Defendants, Yu Hwang and Shiow-er Hwang. These Defendants were prior owners of the property.

1. Demurrer to First Cause of Action for Breach of Contract
This cause of action is directed at Defendants, Hwang Ming, Hwang Shiow-er, and Yao Tian Luo. It begins on page 14 at paragraph 97.
The Defendants argue that the cause of action does not identify the contract that was breached.
A breach of contract cause of action must include the following elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language. Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal. 4th 189, 198-199. In order to plead a contract by its legal effect, plaintiff must allege the substance of its relevant terms. McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1489.
The Plaintiff alleges in paragraph 102 that the Plaintiff entered into a contract with Hwang Yu Ming and Hwang Shiow-er under which the Defendants agreed to sell real property at 127 E. Camino Real Avenue, Arcadia. The Plaintiff states in paragraph 102 that the term “the agreement” will be used to refer to this real estate purchase agreement. The Plaintiff alleges in paragraph 106 that, pursuant to the agreement, she deposited amounts into escrow. In paragraph 107, the Plaintiff alleges that the Defendants breached the agreement by failing to disclose information about the condition of the real property.
These allegations are sufficient to identify the contract and the legal effect of the contract, i.e., it was a contract for the sale of real property from the Defendants to the Plaintiff. This is sufficient to plead the existence of the contract that was allegedly breached.
Therefore, the Court overrules the demurrer to the first cause of action.

2. Demurrer to Second Cause of Action for Violation of Civil Code section 1102 et seq.
The Defendants argue that the Plaintiff has failed to identify the specific code sections that were allegedly violated by the Defendants.
The Plaintiff is attempting to plead a statutory cause of action for the violation of a code section. Since this is a statutory cause of action, it must be pleaded with particularity. Covenant Care, Inc. v. Superior Court (2004) 32 Cal. 4th 771, 790.
The Plaintiff fails to plead the cause of action with particularity because the Plaintiff does not identify the statute that was violated. Instead, the Plaintiff uses the imprecise phrase “Civil Code sections 1102 et seq.” Since the Plaintiff used the Latin abbreviation “et seq.”, which means “and the following”, the Defendant must speculate as to the specific statute at issue in this cause of action. Since the Plaintiff is required to plead the statutory cause of action with particularity, the Plaintiff must identify the statute that was violated and plead the facts demonstrating that the Defendants violated the statute.
The Plaintiff’s opposition fails to offer assistance by identifying the statute at issue. Instead, the Plaintiff ignores the basis of the demurrer and simply concludes that the cause of action has been pleaded.

Accordingly, the Court sustains the demurrer to the second cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff made a generic request for amendment, but did not offer any basis to find that the defect can be corrected by amendment, e.g., the identity of the statute that she claims was violated.
Accordingly, Plaintiff at the hearing must demonstrate how she can amend this cause of action in order for the Court to grant leave to amend.

3. Demurrer to Third Cause of Action for Conversion
The Defendants argue that the Plaintiff does not plead that the Plaintiff had possession or the right to possession of the property at issue or that the Defendants took possession of the money. A claim for conversion must allege the following elements:

1) Plaintiff had the right of ownership and possession to the property converted;
2) Defendant unlawfully took the property, and
3) the value of the property converted.
Taylor v. S & M Lamp Co. (1961) 190 Cal. App. 2d 700, 705.

The Plaintiff alleges in paragraph 118 that the Plaintiff was the owner of or entitled to immediately possession of the amount of $1,688,888, which was the amount paid by the Plaintiff to the sellers, which were Defendants, Hwang Yu Ming and Hwang Shiow-er, for the purchase of the property. The Plaintiff alleges in paragraph 119 that this payment under a contract was a conversion because the Defendants had failed to disclose information about the property.
These allegations do not identify a wrongful taking. The Plaintiff transferred the money to the Defendants under a contract. The Plaintiff is claiming that a payment made under a contractual obligation was a wrongful act; however, this should be pleaded as a breach of contract claim because it involves the parties’ duties under a contract.
Conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law. Erlich v. Menezes (1999) 21 Cal. 4th 543, 551. An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty. Id. Examples of cases permitting tort damages in contract cases are the following:

1) breaches of contractual duties that cause physical injuries;
2) breaches of the covenant of good faith and fair dealing in insurance contracts;
3) wrongful discharge in violation of public policy;
4) the fraudulent inducement of a contract.
Id. at 551-552.

There is no basis to plead a conversion claim for the payment of money under a contract.

Therefore, the Court sustains the demurrer to the third cause of action. It does not appear reasonably possible to correct this by amendment because the Defendants received the $1,688,888 purchase price under a contract.
California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff does not meet this burden because the Plaintiff did not offer any basis by which she could correct this claim by amendment.
Accordingly, the Court does not grant leave to amend.

4. Demurrer to Fourth Cause of Action for Unjust Enrichment
The Defendants argue that this is not a cause of action. Under California law, there is no cause of action for unjust enrichment. Melchior v. New Line Productions, Inc. (2003) 106 Cal. App. 4th 779, 794. The phrase “unjust enrichment” does not describe a theory of recovery, but a general principle underlying various legal doctrines and remedies. Id. It is synonymous with restitution. Id. Accordingly, the fourth cause of action does not plead a cause of action.

Therefore, the Court sustains the demurrer to the fourth cause of action. It does not appear reasonably possible to correct this by amendment because unjust enrichment is a remedy. Accordingly, the Court does not grant leave to amend.

5. Demurrer to Fifth Cause of Action for Fraud
This cause of action is directed at all the Defendants. It begins on page 19 at paragraph 125.
The Defendants argue that the Plaintiff has not pleaded the elements of fraud with the particularity required to plead the torts of deceit. The elements of a fraud cause of action are the following:

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.

Facts constituting each element of fraud must be alleged with particularity; the claim 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 fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.

The Plaintiff alleges in paragraph 126 that the Defendants induced the Plaintiff to enter into a contract to purchase the property. In paragraph 127, subparagraph “j”, the Plaintiff alleges that Hwang Yu Ming and Hwang Shiow-er had actual knowledge of the termite damages and communicated this information to Empire Realty Group.
There are no allegations identifying the representation that the Defendants tendered to the Plaintiff. There are no allegations identifying how, when, where, to whom, or by what means the representation were tendered. Further, if this is a fraud by concealment claim, there are no facts indicating that the Defendants had a duty to disclose the information to the Plaintiff. This is insufficient to plead the element of a false representation.

Further, in paragraph 127, subparagraph “l”, the Plaintiff alleges that she entered into the purchase agreement with the Defendants on July 20, 2013. However, in paragraph 127, subparagraph “m” and subparagraph “n”, the Plaintiff alleges that the Sellers presented four days later, on July 24, 2013, a real estate transfer disclosure agreement and a Seller Property Questionnaire in which they denied being aware of any defects with the property. Since the Defendants presented these documents after the Plaintiff had entered into the contract, the Plaintiff did not rely upon the future misrepresentations to induce her into the contract.

Therefore, the Court sustains the demurrer to the fifth cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that the defect can be corrected by amendment. The Court will wait for the hearing to determine whether Plaintiff can reasonably amend this cause of action.

2. Demurrer to Sixth Cause of Action for Negligent Misrepresentation
The Defendants argue that the Plaintiff has not pleaded this cause of action with the particularity necessary to state a claim of deceit. The elements of negligent misrepresentation are the following:

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.

Negligent misrepresentation is a separate and distinct tort, a species of the tort of deceit. Bily v. Arthur Young & Co. (1992) 3 Cal. 4th 370, 407. Since it is a tort of fraud, facts constituting each element must be alleged with particularity; the claim 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.

The Plaintiff alleges in paragraph 134 that the Defendants made false representations to induce the Plaintiff into purchasing the property. In paragraph 134, subparagraph “j”, the Plaintiff alleges that Hwang Yu Ming and Hwang Shiow-er had actual knowledge of the termite damages and communicated this information to Empire Realty Group.
There are no allegations identifying the representation that the Defendants tendered to the Plaintiff. There are no allegations identifying how, when, where, to whom, or by what means the representation were tendered. Further, if this is a fraud by concealment claim, there are no facts indicating that the Defendants had a duty to disclose the information to the Plaintiff. This is insufficient to plead the element of a false representation.

Further, in paragraph 134, subparagraph “l”, the Plaintiff alleges that she entered into the purchase agreement with the Defendants on July 20, 2013. However, in paragraph 134, subparagraph “m” and subparagraph “n”, the Plaintiff alleges that the Sellers presented four days later, on July 24, 2013, a real estate transfer disclosure agreement and a Seller Property Questionnaire in which they denied being aware of any defects with the property. Since the Defendants presented these documents on July 24, 2013, which was four days after the Plaintiff had entered into the contract on July 20, 2014, the Plaintiff did not rely upon the future misrepresentations to induce her into the contract.

Therefore, the Court sustains the demurrer to the sixth cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that the defect can be corrected by amendment. The Court will expect Plaintiff to indicate how this cause of action can be amended in order to Grant leave to amend.

3. Demurrer to Ninth Cause of Action for Intentional Infliction of Emotional Distress
The Defendants argue that there are no allegations demonstrating that the Defendants engaged in outrageous conduct. The elements of the tort of intentional infliction of emotional distress are the following:

1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress;
2) the plaintiff’s suffering severe or extreme emotional distress; and
3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct. Conduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.”
Christensen v. Superior Court (1991) 54 Cal.3d 868, 903

The Plaintiff alleges in paragraph 149 the conclusion that the Defendants engaged in outrageous conduct. There are no allegations that support this conclusion or that identify the Defendants’ conduct that was “so extreme as to exceed all bounds of that usually tolerated in a civilized community.” Instead, the Plaintiff states in paragraph 149 that she incorporates paragraph 142 “in support of her identification of Defendants’ conducts that were ‘so extreme as to exceed al (sic) bounds of that usually tolerated in a civilized community”.
Paragraph 142 does not plead any facts. Instead, paragraph 142 is a paragraph that incorporates all prior allegations.
This is an improper use of incorporation. A civil plaintiff may, for the sake of convenience, incorporate by reference previous portions of the pleading for informational purposes only. Cal-West Nat. Bank v. Superior Court (1986) 185 Cal. App. 3d 96, 101. Neither the Court nor the Defendants are required to search the pleadings in order to determine whether the Plaintiff has pleaded a cause of action. Instead, the essential elements of each cause of action must be pleaded within the cause of action.
Further, a review of the Second Amended Complaint reveals no outrageous conduct by the Defendants. Instead, the Plaintiff alleges that a termite report was not disclosed to the Plaintiff. This is insufficient to plead that the Defendants engaged in conduct so extreme as to exceed all bounds of that usually tolerated in a civilized community.

Therefore, the Court sustains the demurrer to the ninth cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that the defect can be corrected by amendment.
Accordingly, the Court does not grant leave to amend.

4. Demurrer to Tenth Cause of Action for Negligent Infliction of Emotional Distress
The Defendants argue that there are no allegations identifying their duty to the Plaintiff. The tenth cause of action for negligent infliction of emotional distress (“NIED”) is not an independent tort in California, but is regarded simply as the tort of negligence. Burgess v. Superior Court (1992) 2 Cal. 4th 1064, 1072. Whether plaintiffs can recover damages for NIED is dependent upon traditional tort analysis, and the elements of duty, breach of duty, causation and damages must exist to support the cause of action. Burgess, 2 Cal. 4th at 1072.
NIED claims may fall into two: “bystander” claims and “direct victim” claims. “Bystander” claims involve emotional distress caused by witnessing an injury to another and are limited to close family members. Thing v. La Chusa (1989) 48 Cal. 3d 644, 667-668. These claims arise when the defendant has no duty of care to the plaintiff. Christensen v. Superior Court (1991) 54 Cal.3d 868, 882, 884. The plaintiff must be:

1) closely related to the injury victim;
2) present at the scene of the injury-producing event at the time it occurs and aware, at that time, that it is causing injury to the victim; and
3) suffers emotional distress beyond that which would be anticipated in a disinterested witness as a result of the awareness of injury.
Thing, 48 Cal.3d at 647.

“Direct victim” claims arise in cases where the defendant had a duty to the plaintiff that arises from a preexisting relationship and the duty is breached. Burgess, 2 Cal. 4th at 1074.
The Plaintiff alleges in paragraph 152 that the Defendants knew or should have known that the conduct “described herein” would cause emotional distress. There are no allegations identifying the conduct.
It appears that this is a “direct victim” claim because there are no allegations that an individual closely related to the Plaintiff was injured. Since this is a direct victim claim, there must be a preexisting relationship in which there is a tort duty of care regarding the Plaintiff. The Plaintiff does not allege any facts to demonstrate that the Plaintiff had a preexisting relationship with Defendants, Hwang Yu and Hwang Shiow-er, in which there was a tort duty of care.

Therefore, the Court sustains the demurrer to the tenth cause of action.

California law imposes the burden on the Plaintiff to demonstrate the manner in which the Plaintiff can amend the pleadings to correct the defects in her Complaint. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiff did not offer any basis to find that the defect can be corrected by amendment.
Accordingly, the Court does not grant leave to amend.