This case was last updated from Los Angeles County Superior Courts on 04/07/2021 at 03:21:49 (UTC).

27234 PCH, LLC, ET AL. VS ED FISHMAN, ET AL.

Case Summary

On 05/12/2020 27234 PCH, LLC filed a Contract - Other Contract lawsuit against ED FISHMAN. This case was filed in Los Angeles County Superior Courts, Santa Monica Courthouse located in Los Angeles, California. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******0688

  • Filing Date:

    05/12/2020

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Santa Monica Courthouse

  • County, State:

    Los Angeles, California

 

Party Details

Plaintiffs

27234 PCH LLC

CLUB 55 LLC

Defendants and Cross Plaintiffs

LEVIN EYTAN

COLDWELL BANKER MALIBU

COLDWELL BANKER

FISHMAN JANE

JESSE FISHMAN 2013 TRUST

FRANCISCO ELLEN

FISHMAN ED

ED AND JANE FISHMAN FAMILY TRUST

4 MALIBU REAL ESTATE

FISHMAN JESSE

STEVEN M. EVANS EXTERMINATING INC.

Cross Defendants

CORTAZZO CHRISTOPHER K.

ROES 1 THROUGH 10

Attorney/Law Firm Details

Plaintiff Attorney

BOOTH AARON

Defendant and Cross Plaintiff Attorneys

MARSHALL WAYNE STANTON

CATALANOTTI PETER CHRISTOPHER

BRACKINS CHARLES G.

Cross Defendant Attorney

GRAMLING KEVIN JOSEPH

 

Court Documents

Reply - REPLY DEFENDANTS 4 MALIBU REAL ESTATE, INC. AND DAVID EYTAN LEVINS REPLY IN SUPPORT OF THEIR MOTION TO STRIKE THE FIRST AMENDED COMPLAINT

3/9/2021: Reply - REPLY DEFENDANTS 4 MALIBU REAL ESTATE, INC. AND DAVID EYTAN LEVINS REPLY IN SUPPORT OF THEIR MOTION TO STRIKE THE FIRST AMENDED COMPLAINT

Memorandum of Points & Authorities

3/10/2021: Memorandum of Points & Authorities

Request for Dismissal

3/12/2021: Request for Dismissal

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE; HEARING ON DEMURRER - WITHOUT MOT...)

3/17/2021: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE; HEARING ON DEMURRER - WITHOUT MOT...)

Proof of Service (not Summons and Complaint)

3/1/2021: Proof of Service (not Summons and Complaint)

Opposition - OPPOSITION TO MOTION TO STRIKE FIRST AMENDED COMPLAINT BY 4 MALIBU & LEVIN

3/3/2021: Opposition - OPPOSITION TO MOTION TO STRIKE FIRST AMENDED COMPLAINT BY 4 MALIBU & LEVIN

Opposition - OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT BY FISHMAN DEFENDANTS

3/4/2021: Opposition - OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT BY FISHMAN DEFENDANTS

Proof of Service by Substituted Service

2/10/2021: Proof of Service by Substituted Service

Cross-Complaint

1/13/2021: Cross-Complaint

Notice Re: Continuance of Hearing and Order

12/9/2020: Notice Re: Continuance of Hearing and Order

Notice Re: Continuance of Hearing and Order

12/9/2020: Notice Re: Continuance of Hearing and Order

Demurrer - without Motion to Strike

11/10/2020: Demurrer - without Motion to Strike

Notice Re: Continuance of Hearing and Order

10/15/2020: Notice Re: Continuance of Hearing and Order

Request for Judicial Notice

9/4/2020: Request for Judicial Notice

Amendment to Complaint (Fictitious/Incorrect Name)

8/6/2020: Amendment to Complaint (Fictitious/Incorrect Name)

Request for Dismissal

7/15/2020: Request for Dismissal

Civil Case Cover Sheet

5/12/2020: Civil Case Cover Sheet

Summons - SUMMONS ON COMPLAINT

5/12/2020: Summons - SUMMONS ON COMPLAINT

38 More Documents Available

 

Docket Entries

  • 02/28/2022
  • Hearing02/28/2022 at 09:30 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Jury Trial

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  • 02/22/2022
  • Hearing02/22/2022 at 09:00 AM in Department M at 1725 Main Street, Santa Monica, CA 90401; Final Status Conference

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  • 03/17/2021
  • Docketat 08:30 AM in Department M; Hearing on Demurrer - with Motion to Strike (CCP 430.10) - Held

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  • 03/17/2021
  • Docketat 08:30 AM in Department M; Hearing on Demurrer - without Motion to Strike - Held

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  • 03/17/2021
  • Docketat 08:30 AM in Department M; Case Management Conference - Held

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  • 03/17/2021
  • DocketMinute Order ( (Case Management Conference; Hearing on Demurrer - without Mot...)); Filed by Clerk

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  • 03/16/2021
  • Docketat 08:30 AM in Department M; Hearing on Demurrer - with Motion to Strike (CCP 430.10) - Not Held - Continued - Court's Motion

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  • 03/12/2021
  • DocketRequest for Dismissal; Filed by 27234 PCH, LLC (Plaintiff)

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  • 03/10/2021
  • DocketMemorandum of Points & Authorities; Filed by Ed Fishman (Defendant); Jane Fishman (Defendant); Jesse Fishman 2013 Trust (Defendant) et al.

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  • 03/09/2021
  • DocketReply (DEFENDANTS 4 MALIBU REAL ESTATE, INC. AND DAVID EYTAN LEVIN?S REPLY IN SUPPORT OF THEIR MOTION TO STRIKE THE FIRST AMENDED COMPLAINT); Filed by 4 Malibu Real Estate (Defendant); David Eytan Levin Erroneously Sued As Eytan Levin (Defendant)

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38 More Docket Entries
  • 08/06/2020
  • DocketAmendment to Complaint (Fictitious/Incorrect Name); Filed by 27234 PCH, LLC (Plaintiff)

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  • 07/15/2020
  • DocketRequest for Dismissal; Filed by 27234 PCH, LLC (Plaintiff)

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  • 07/10/2020
  • DocketAmended Complaint ((1st)); Filed by 27234 PCH, LLC (Plaintiff); Club 55, LLC (Plaintiff)

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  • 06/04/2020
  • DocketProof of Personal Service; Filed by 27234 PCH, LLC (Plaintiff)

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  • 05/29/2020
  • DocketNotice (of Case Management Conference); Filed by 27234 PCH, LLC (Plaintiff)

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  • 05/13/2020
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 05/12/2020
  • DocketComplaint; Filed by 27234 PCH, LLC (Plaintiff); Club 55, LLC (Plaintiff)

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  • 05/12/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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  • 05/12/2020
  • DocketCivil Case Cover Sheet; Filed by 27234 PCH, LLC (Plaintiff); Club 55, LLC (Plaintiff)

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  • 05/12/2020
  • DocketSummons (on Complaint); Filed by 27234 PCH, LLC (Plaintiff); Club 55, LLC (Plaintiff)

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Tentative Rulings

Case Number: 20SMCV00688    Hearing Date: March 17, 2021    Dept: M

CASE NAME: 27234 PCH, LLC, et al v. Ed Fishman, et al.

CASE NO.: 20SMCV00688

MOTION: 4 Malibu Real Estate, Inc. and David Eytan Levin’s Demurrer with Motion to Strike 

 

HEARING DATE: 3/16/2021

Legal Standard

“Before filing a demurrer . . . the demurring party shall meet and confer in person or by telephone with the party who filed the pleading . . . for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41.)

A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220. The court “may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.  (Young v. Gannon (2002) 97 Cal.App.4th 209, 220 (citing Moore v. Conliffe Montclair Parkowners Assn. v. City of Montclair The court treats all facts alleged in the complaint to be true. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732.)

When considering demurrers, courts “are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733 (citing Rogoff v. Grabowski (1988) 200 Cal.App.3d 624, 628.)) “The burden is on the plaintiff to demonstrate the manner in which the complaint can be amended.” (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 748.)

Where there are grounds for a demurrer and a motion to strike, they must be filed together and noticed for hearing at the same time. (Code Civ. Proc., § 435(b)(3) and CRC Rule 329.)

REQUEST FOR JUDICIAL NOTICE

Defendants’ request for judicial notice is GRANTED. However, “[w]hile the court could take judicial notice of the discovery responses, it [is] not authorized to draw from those responses the inference” that Defendants’ request in their motion. (Williams v. Southern California Gas Co. (2009) 176 Cal.App.4th 591, 600, as modified (Aug. 10, 2009).) As such, the Court will not permit Defendants to use the discovery responses to attack the complaint at the demurrer stage.

Analysis

Demurrer

Defendants 4 Malibu Real Estate, Inc. and David Eyan Levin erroneously sued as Eytan (“Listing Broker”) demur to all causes of action that are alleged against them in the FAC. This includes the second cause of action for negligent misrepresentation, third cause of action for negligence, fourth cause of action for failure to make statutory disclosures pursuant to Civil Code § 2079 et seq., fifth cause of action for failure to make statutory disclosures pursuant to Civil Code § 1102 et seq., sixth cause of action for fraud, and seventh cause of action for violation of Business & Professions Code § 17200. Defendants argue that the complaint fails to allege sufficient facts to state a cause of action against them as Listing Broker.

Meet and Confer

The Court finds that the parties complied with the meet and confer requirements of Code of Civil Procedure section 430.41. (Jin Decl. ¶¶ 2-6.)

COA 2: Negligent misrepresentation

Defendants argue that Plaintiffs have failed to state a claim against Defendants for three reasons, specifically that Plaintiffs have (1) failed to allege a positive assertion, (2) failed to allege facts that the listing broker believed the representation was true, and (3) failed to plead what material facts were not disclosed.

In opposition, Plaintiff argues that the complaint contains sufficient facts to state a cause of action for negligent misrepresentation. Plaintiffs cite Holmes v. Summer, (2010) 188 Cal. App. 4th 1510, in the FAC and in their opposition for the argument that the Agent Visual Inspection Disclosure (“AVID”) forms that Defendant Levin prepared constitute positive assertions. (FAC ¶¶ 67 – 69 [Avid #2], 74 – 76 [Avid # 4].). Plaintiffs also argue that stating something you know to be untrue satisfies the requirement that you don’t reasonably believe it to be true. On reply, Defendants argue that Plaintiff has failed to allege a positive assertion and that a nondisclosure is not the same as an affirmative disclosure.

“Negligent misrepresentation is the assertion of a false statement, honestly made in the belief it is true, but without reasonable ground for such belief.” (County of Kern v. Sparks (2007) 149 Cal.App.4th 11, 20 [emphasis added] [citing Anderson v. Deloitte & Touche (1997) 56 Cal.App.4th 1468, 1476]; see Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407–408, as modified (Nov. 12, 1992). Courts require that a positive assertion be made:

[A] positive assertion is required; an omission or an implied assertion or representation is not sufficient. (Residential Capital v. Cal–Western Reconveyance Corp. (2003) 108 Cal.App.4th 807, 828, 134 Cal.Rptr.2d 162; Shamsian, supra, 107 Cal.App.4th at p. 984, 132 Cal.Rptr.2d 635; see Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 174, 132 Cal.Rptr.2d 490, 65 P.3d 1255 (Small ) [negligent misrepresentation “encompasses ‘[t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true’ [citation], and ‘[t]he positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true’ [citations]]”.)

(Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.). The Holmes decision that Plaintiffs rely on in their opposition is inapplicable to negligent misrepresentation. The Court of Appeal in that matter explained that the plaintiffs asserted four theories of liability: “(1) deceit based on misrepresentation; (2) deceit based on failure to disclose; (3) negligent misrepresentation; and (4) negligence” and expressly noted that it did not need to “address the elements of each one of the buyers' theories, for a properly pleaded cause of action on any one of those theories will suffice to stave off a demurrer.” (Holmes v. Summer (2010) 188 Cal.App.4th 1510, 1528.) The court reversed the trial court’s demurrer ruling, because the plaintiffs had alleged sufficient facts under a negligence theory of liability. (Id. at 1528-1259.). Here, Plaintiff has not alleged a positive assertion. In addition, Plaintiff has not alleged that Defendant Eyan Levin assertion “of a false statement [was] honestly made in the belief it is true” but that he intentionally made a false statement. In their opposition, Plaintiffs conflate the differences between negligent misrepresentation and intentional misrepresentation or fraud by concealment. Therefore, the demurrer is sustained as to this cause of action without leave to amend.

COA 3 : Negligence; and COA 4: Failure to make statutory disclosures pursuant to Civil Code § 2079 et seq.

Defendants argue that Plaintiffs have failed to allege facts that demonstrate that they breached a duty to Plaintiffs. With respect to the fourth cause of action, Defendants argue that liability is limited by what a diligent visual inspection would reveal.

In opposition, Plaintiff argues that Holmes demonstrates that Defendant brokers owed duties to Plaintiffs, and that the Holmes Court “observe[d] that real estate agents or brokers have been held to have a duty to disclose matters that do not pertain to physical defects, but otherwise affect the desirability of the purchase. [Citations omitted.] They have also been held to have a duty to disclose conditions to close of escrow. [Citations omitted.]”. (Holmes v. Summer (2010) 188 Cal.App.4th 1510, 1520.). Plaintiffs argue that they alleged that Defendants conspired with the sellers to conceal the property’s defects, and that although the defects may have no longer been observable during a visual inspection, a listing broker cannot avoid his duty to disclose facts he knows or should have known under the excuse that he could not see them anymore.

In reply, Defendants incorporate their arguments as to fraud and concealment and generally argue that FAC fails to allege specific facts as to Listing Broker’s knowledge of certain defects. Defendants also argue that the allegation that the Listing Broker “should have been aware of” defects is conclusory, and does not come within the scope of Civil Code § 2079. Finally, Defendants argue that the allegation that the Listing Broker failed to disclose efforts to cosmetically conceal prior water damage following a sprinkler malfunction lacks factual support. As to this last contention, the Court notes that all allegations contained in the FAC are treated as true. As such, Defendants cannot dispute this allegation through judicially noticeable discovery responses.

To state a claim for negligence, a plaintiff must allege: 1) a legal duty to use due care; 2) breach of this legal duty; and 3) that results in 4) plaintiff’s injury. (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.). Under Civil Code section 2079(a), “It is the duty of a real estate broker or salesperson, licensed under Division 4 (commencing with Section 10000) of the Business and Professions Code, to a prospective buyer of residential real property improved with one to four dwelling units . . . to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective buyer all facts materially affecting the value or desirability of the property that an investigation would reveal, if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer.” (Civ. Code, § 2079(a).) “It is the intent of the Legislature to codify and make precise the holding of Easton v. Strassburger, 152 Cal.App.3d 90. It is not the intent of the Legislature to modify or restrict existing duties owed by real estate licensees.” (Civ. Code, § 2079.12(b).). The Court in Easton acknowledged that:

no appellate decision has explicitly declared that a broker is under a duty to disclose material facts which he should have known. We conclude, however, that such a duty is implicit in the rule articulated in Cooper and Lingsch, which speaks not only to facts known by the broker, but also and independently to facts that are accessible only to him and his principal. [footnote omitted] (Cooper, supra, Lingsch, supra,

(Easton v. Strassburger The Court went on to hold “that the duty of a real estate broker, representing the seller, to disclose facts, as that fundamental duty is articulated in Cooper and Lingsch, includes the affirmative duty to conduct a reasonably competent and diligent inspection of the residential [footnote omitted] property listed for sale and to disclose to prospective purchasers all facts materially affecting the value or desirability of the property that such an investigation would reveal.” (Id. at 102.). Finally, with respect to negligence cases, the Court explained the jury instruction on the brokers duty was correctly stated and that a broker is “under a duty to disclose facts materially affecting the value or desirability of the property ... which through reasonable diligence should be known to him.” (Id. at 103.)

Here, the negligence cause of action is directed at all Defendants. The cause of action under Civil Code § 2079 is directed at Francisco, Eytan, Coldwell Banker and 4 Malibu. In the FAC, Plaintiffs allege, “The Defendants had a legal duty to disclose all facts materially affecting the value or desirability of the property which they knew or should have been aware of, and which were not known to, or within the reach of the diligent attention and observation of Plaintiffs.” (FAC ¶ 117.) “The duty to make disclosures described above are to be made in good faith, meaning honesty in fact in the conduct of the transaction” (FAC ¶ 118.) “Defendant EYTAN [LEVIN] was at all times mentioned herein acting as an agent for Defendant 4 MALIBU.” (FAC ¶ 121.) “Defendants FRANCISCO, EYTAN [LEVIN], COLDWELL BANKER and 4 MALIBU breached their disclosure duties as set forth above . . . including but not limited to: [(a)] Failing to disclose all material facts and defects discoverable by a reasonable and competent visual inspection in the ‘Agent Visual Inspection Disclosure (AVID)’; [(b)] Failing to disclose all material facts and defects they were aware of or should have been aware of; and [(c)] Failing to disclose efforts to cosmetically conceal extensive water damage and structural damage, including significant and extensive dry rot.” (FAC ¶¶ 122-125.) Plaintiffs make similar allegations with respect to their civil code section 2179 claim. (See, e.g., FAC ¶¶ 134, 136.).

The court finds that Plaintiffs have alleged sufficient facts to trigger a duty under Easton. Plaintiffs alleged sufficient facts to show that Defendants colluded to hide the alleged extensive water damage. Defendant brokers also had a duty to disclose information relating to the desirability of the property. In addition, the Court is not persuaded by Defendants’ argument that the duty under Civil Code section 2079 is limited to a reasonable and diligent inspection. The conjunction “and” in the statute appears to be connecting two separate duties. Defendants have a duty “to disclose to that prospective buyer all facts materially affecting the value or desirability of the property that an investigation would reveal.” (Civ. Code § 2079.) Therefore, the demurrer is overruled as to these causes of action.

COA 6: Fraud

Defendants argue that Plaintiffs have failed to allege sufficient facts for intentional misrepresentation or concealment. The sixth cause of action is directed at the Broker Defendants only.

The elements of intentional misrepresentation are (1) misrepresentation; (2) knowledge of falsity (or “scienter”); (3) intent to defraud (induce reliance); (4) justifiable reliance; and (5) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Plaintiffs are required to allege the factual basis for each of the elements of a fraud claim with specificity despite the general policy favoring liberal construction of pleadings on demurrer. (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782-783.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

Defendants argue that paragraph 152 of the FAC is insufficient to allege a misrepresentation. Defendants also argue Defendants that Plaintiffs have failed to meet the heightened pleading standard for fraud actions. In opposition, Plaintiffs argue that the FAC more than satisfies the who, what, where, when requirements for a fraud cause of action and argues that paragraph 84 has detailed information. Plaintiffs also argue that the concealment claims have also been adequately plead.

Defendants claim that Plaintiffs have failed to sufficiently plead a concealment cause of action because plaintiffs have not alleged a duty. The Court has already rejected this argument. Paragraph 67 alleges the representations made by Defendants, including the date and the method. Paragraph 85 contains specific allegations as to Defendants’ knowledge and intent to defraud. Plaintiffs have stated sufficient facts to state a cause of action for fraud under both a misrepresentation theory and a concealment theory. Therefore, the demurrer is overruled as to the fraud cause of action.

COA 5: Failure to make statutory disclosures pursuant to Civil Code § 1102 et seq.,

Defendants argue that Plaintiffs have failed to state a cause of action under Civil Code § 1102 because Civil Code § 1102.6 outlines the required disclosures to be made by a seller in a purchase transaction, including in the TDS, but Civil Code § 1102 et seq does not impose any requirements on a real estate broker. Plaintiffs argue that they can state a claim against the brokers because the brokers have a duty to not covey the seller’s representations without a reasonable basis, citing Civil Code section 1102.7.

Section 1102.7 provides that “Each disclosure required by this article and each act which may be performed in making the disclosure, shall be made in good faith. For purposes of this article, ‘good faith’ means honesty in fact in the conduct of the transaction.” (Civ. Code, § 1102.7.) Civil Code section 1102.13 provides that “No transfer subject to this article shall be invalidated solely because of the failure of any person to comply with any provision of this article. However, any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of this article shall be liable in the amount of actual damages suffered by a transferee.” (Civ. Code, § 1102.13 [emphasis added].) Civil Code section 1102.4(a) provides, “Neither the seller nor any seller's agent or buyer's agent shall be liable for an error, inaccuracy, or omission of any information delivered pursuant to this article if the error, inaccuracy or omission was not within the personal knowledge of the seller or that listing or buyer's agent, was based on information timely provided by public agencies or by other persons providing information as specified in subdivision (c) that is required to be disclosed pursuant to this article, and ordinary care was exercised in obtaining and transmitting it.” (Civ. Code, § 1102.4(a).). Finally required disclosures that a broker must make are in part III of the form provided for in Civil Code section 1102.6.

The Court disagrees with Defendants’ position that the statute does not make brokers liable. The statute states provides for liability for any person that willfully or negligently violates of fails to perform any duty in any provision of the article. Here, Plaintiffs have alleged that Defendants failed to make disclosures required by the statute. (See FAC ¶ 146.) Therefore the demurrer is overruled as to this cause of action.

COA: 7 Violation of Business & Professions Code § 17200

Unfair competition is broadly defined as “any unlawful, unfair or fraudulent business act or practice” as well as “unfair, deceptive, untrue or misleading advertising” and “any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bus. & Prof. Code, § 17200.)

Defendants argue that Plaintiffs have failed to state a cause of action for a violation of Business and Professions Code section 17200. Defendants argue that there are insufficient factual allegations to support the claim that the Defendants engaged in fraudulent, deceptive, or unfair conduct that would deceive the general public. Plaintiffs argue that for all of the reasons the complaint is sufficient, the seventh cause of action is sufficient. Plaintiffs further argue that they have alleged fraudulent and unfair conduct throughout the complaint. In reply, Defendants argue that the conduct complained of must be directed at the general public, and plaintiff has not, and cannot, allege such facts because this was a private transaction.

Defendants are correct. The conduct consisting of an unfair competition claim must be directed at the general public to be actionable. Plaintiffs have not alleged facts showing that Defendants engaged in conduct in the public sphere. Therefore, the demurrer is sustained as to this cause of action without leave to amend.

Motion to Strike

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [or] (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436.) An “immaterial allegation” means “irrelevant matter” as that term is used in Section 436. (Code Civ. Proc., § 431.10(c).) “An immaterial allegation in a pleading is any of the following: (1) An allegation that is not essential to the statement of a claim or defense. (2) An allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense. (3) A demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint.” (Code Civ. Proc., § 431.10(b).)

Defendant argues that Plaintiff’s requests for punitive damages are unsupported. Punitive damages are permitted when a party alleges that a defendant or defendants engaged in malice, oppression, or fraud. Punitive damages are requested for the fraud cause of action. Here, the Court overruled the demurrer to the fraud cause of action, which is already subject to a heightened pleading standard. Since the motion to strike is based on the fraud claim, and since the fraud claim is sufficient, Defendants’ motion to strike is DENIED.

2.  Defendants Ed Fisherman, Jane Fisherman, Family Trust, and Jesse Trust Demurrer 

   

In or about July 2018, Plaintiff 27234 PCH, LLC (“PCH”) entered into a contract (“Contract 1”) with Defendants Ed and Jane Fishman Family Trust (“Family Trust”), Jane Fishman, and Ed Fishman for the purchase of a residential home located at 27234 Pacific Coast Highway, Malibu, CA 91403 (the “Home”). (FAC ¶ 15.) At the same time, Plaintiff Club 55, LLC (“Club”) entered into a contract with Defendant Jesse Fishman 2013 Trust (“Jesse Trust”) for the purchase of the lot adjacent to Home located at 27242 Pacific Coast Highway, Malibu, CA 91403 (the “Lot” or the “27242 Property”). (Id. ¶ 16.)

Plaintiffs PCH and Club (collectively “Plaintiffs”) filed the first amended complaint (“FAC”) on July 10, 2020 for: (1) breach of contract; (2) negligent misrepresentation; (3) negligence; (4) failure to make statutory disclosures pursuant to California Civil Code § 2079 et seq.; (5) failure to make statutory disclosures pursuant to California Civil Code § 1102 et seq.; (6) fraud; and (7) unfair business practices under Business and Professions Code §§ 17200 et seq. Defendants Ed Fisherman, Jane Fisherman, Family Trust, and Jesse Trust (collectively “Fisherman Defendants” or “Seller Defendants”) filed a demurrer for the first and the fifth causes of action of FAC on November 10, 2020 and base the demurrer on Plaintiffs’ failure to state a valid cause of action under Code of Civil Procedure, section 430.10.

Legal Standard

“Before filing a demurrer . . . the demurring party shall meet and confer in person or by telephone with the party who filed the pleading . . . for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41.)

A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220. The court “may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.  (Young v. Gannon (2002) 97 Cal.App.4th 209, 220 (citing Moore v. Conliffe Montclair Parkowners Assn. v. City of Montclair The court treats all facts alleged in the complaint to be true. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732.)

When considering demurrers, courts “are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733 (citing Rogoff v. Grabowski (1988) 200 Cal.App.3d 624, 628.)) “The burden is on the plaintiff to demonstrate the manner in which the complaint can be amended.” (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 748.)

Analysis

Demurrer

Seller Defendants demur to the first and the fifth causes of action for failure to state a valid cause of action under Code of Civil Procedure section 430.10. Seller Defendants argue that the first cause of action -- the breach of contract claim against the Fisherman Defendants -- should be two separate causes of action, one for the sale of Home, and the other for the sale of Lot. Seller Defendants also argue that the fifth cause of action -- the failure to make statutory disclosures pursuant to California Civil Code section 1102 -- is inapplicable to the sale of the Lot because it is not a single-family residence, and therefore the seller of the Lot, Jesse Trust, should be dismissed from the fifth cause of action.

Meet and Confer

The parties met and conferred through emails only. (See Brackins Decl. ¶3; Brackins Reply Decl. ¶ 3, Exs. A – C.) The Court finds that Defendants did not comply with the requirements of Code of Civil Procedure, section 430.41 to meet and confer by telephone.

COA 1: Breach of Contract

Plaintiff must plead the contract, plaintiff’s performance or excuse for non-performance, defendant’s breach, and damage to plaintiff therefrom. (Acoustics, Inc. v. Trepte Constr. Co. (1971) 14 Cal.App.3d 887, 913.)

Defendants argue that Plaintiff failed to state two separate causes of action for the breach of Contract 1 (the sale of the Home) and for the breach of Contract 2 (the sale of the Lot), because the two parcels were sold and bought by two different sets of sellers and buyers. They further argue that Plaintiffs have not stated a claim based on a breach of a single primary right. In opposition, Plaintiffs assert that all the transactions were done by the same parties. As stated in the agreement, “Buyer acknowledges that the two properties are owned by different Trusts and shall be in two separate escrows, each one contingent on the closing of the other and they must close currently.” (Opp. 4:10-12.) Plaintiffs argue that the language in the agreement shows that the two transactions are contingent to one another, and there was only one agreement. (See FAC, Ex. A at pp. 17, 20 (60, 63 of 120), Ex. B at pp. 17, 20 (81, 84 of 120).) In reply, Defendants argue that failure to separate the purchases of the Home and the Lot into two causes of action would create difficulties for future damage calculations.

“On a demurrer, the court must consider the sufficiency of the allegations, including any allegations, to determine whether the contract is reasonably susceptible to the plaintiff’s alleged interpretation.” (George v. Automobile Club of So. Cal. (2011) 201 Cal.App.4th 1112, 1128.) In the complaint, Plaintiffs alleged that they entered into two contracts requiring the Seller Defendants to disclose all known or reasonably discoverable material facts and defects of the Home and the Lot. Seller Defendants materially breached the contracts by failing to disclose certain conditions relating to the properties, and Plaintiffs sustained damages because of the defects of the House and the Lot. Taking all the alleged facts as true, Plaintiffs have successfully stated a claim for breach of contract. Although there were two property transactions, all defendants entered the agreement for the sale of both the Home and the Lot, and other related forms for disclosures as one agreement. (See, e.g., Ex. C to FAC [“this sale includes two legal lots and the escrow is contingent upon and shall close both parcels concurrently”].) Since Plaintiffs have successfully stated a claim for breach of contract, Seller Defendants’ demurrer to the first cause of action is overruled.

COA 5: Failure to Make Statutory Disclosures Pursuant to California Civil Code § 1102 et seq.

Under California Civil Code section 1102 et seq., a seller is required to make certain disclosures as to the conditions of the property. (Assilzadeh v. California Fed. Bank (2000) 82 Cal.App.4th 399, 409.) Specifically, under section 1102(a), the article applies to “any single-family residential property.” (Civ. Code § 1102(a).) In addition, pursuant to subdivision (b), under “this article, the definitions contained in Chapter 1 (commencing with Section 10000) of Part 1 of Division 4 of the Business and Professions Code shall apply.” (Civ. Code, § 1102(b).) The definition of single-family residential property is defined in Chapter 1 of Part 1 of Division 4 of the Business and Professions Code. (See Bus. & Prof. Code, § 10018.08.) Under Business and Professions Code section 10018.08, a “single-family residential property” or “single-family residential real property” means “(a) real property improved with one to four dwelling units, including any leasehold exceeding one year's duration of such, (b) a unit in a residential stock cooperative, condominium, or planned unit development, or (c) a mobilehome or manufactured home when offered for sale or sold through a real estate broker pursuant to Section 10131.6.” (Bus. & Prof. Code, § 10018.08.)

Defendants argue that the sale of the Lot is not within the scope of California Civil Code section 1102 et seq., because the Lot is not a single-family residence and thus, Plaintiffs cannot state a claim against Defendant Jesse Trust. In opposition, Plaintiffs argue that the Lot is considered a single-family residence because it consists of a cabana, a living room, a dining room, and a bathroom with electricity and other utilities. (Opp. p. 13:18-26; see FAC ¶¶ 21, 24.) Plaintiffs further argue that the AVID forms included with the FAC indicate that the Lot could be a single family residential unit. (FAC ¶ 75, Ex. J [“27242 Property AVID form”].) In reply, Defendants argue that since Plaintiffs failed to state facts to support their claim that the Lot may be a single-family residence, the demurrer should be sustained.

Here, Plaintiffs’ FAC specifically defines the Home as “a residential home” and the Lot as “the lot adjacent to Home.” (FAC ¶¶ 15-16.) However, Plaintiffs also point to various portions of the complaint that indicate that the Lot may be a single family residence under Business and Professions Code section 10018.08. Since the Court construes the complaint broadly on demurrer and cannot resolve this factual dispute at the demurrer stage, the demurrer to the fifth cause of action is overruled.

Case Number: 20SMCV00688    Hearing Date: March 15, 2021    Dept: M

Legal Standard

“Before filing a demurrer . . . the demurring party shall meet and confer in person or by telephone with the party who filed the pleading . . . for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41.)

A demurrer for sufficiency tests whether the complaint alleges facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209, 220. The court “may consider all material facts pleaded in the complaint and those arising by reasonable implication therefrom; it may not consider contentions, deductions or conclusions of fact or law.  (Young v. Gannon (2002) 97 Cal.App.4th 209, 220 (citing Moore v. Conliffe Montclair Parkowners Assn. v. City of Montclair The court treats all facts alleged in the complaint to be true. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732.)

When considering demurrers, courts “are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733 (citing Rogoff v. Grabowski (1988) 200 Cal.App.3d 624, 628.)) “The burden is on the plaintiff to demonstrate the manner in which the complaint can be amended.” (Ross v. Creel Printing & Publishing Co. (2002) 100 Cal.App.4th 736, 748.)

Where there are grounds for a demurrer and a motion to strike, they must be filed together and noticed for hearing at the same time. (Code Civ. Proc., § 435(b)(3) and CRC Rule 329.)

REQUEST FOR JUDICIAL NOTICE

Defendants’ request for judicial notice is GRANTED. However, “[w]hile the court could take judicial notice of the discovery responses, it [is] not authorized to draw from those responses the inference” that Defendants’ request in their motion. (Williams v. Southern California Gas Co. (2009) 176 Cal.App.4th 591, 600, as modified (Aug. 10, 2009).) As such, the Court will not permit Defendants to use the discovery responses to attack the complaint at the demurrer stage.

Analysis

Demurrer

Defendants 4 Malibu Real Estate, Inc. and David Eyan Levin erroneously sued as Eytan (“Listing Broker”) demur to all causes of action that are alleged against them in the FAC. This includes the second cause of action for negligent misrepresentation, third cause of action for negligence, fourth cause of action for failure to make statutory disclosures pursuant to Civil Code § 2079 et seq., fifth cause of action for failure to make statutory disclosures pursuant to Civil Code § 1102 et seq., sixth cause of action for fraud, and seventh cause of action for violation of Business & Professions Code § 17200. Defendants argue that the complaint fails to allege sufficient facts to state a cause of action against them as Listing Broker.

Meet and Confer

The Court finds that the parties complied with the meet and confer requirements of Code of Civil Procedure section 430.41. (Jin Decl. ¶¶ 2-6.)

COA 2: Negligent misrepresentation

Defendants argue that Plaintiffs have failed to state a claim against Defendants for three reasons, specifically that Plaintiffs have (1) failed to allege a positive assertion, (2) failed to allege facts that the listing broker believed the representation was true, and (3) failed to plead what material facts were not disclosed.

In opposition, Plaintiff argues that the complaint contains sufficient facts to state a cause of action for negligent misrepresentation. Plaintiffs cite Holmes v. Summer, (2010) 188 Cal. App. 4th 1510, in the FAC and in their opposition for the argument that the Agent Visual Inspection Disclosure (“AVID”) forms that Defendant Levin prepared constitute positive assertions. (FAC ¶¶ 67 – 69 [Avid #2], 74 – 76 [Avid # 4].). Plaintiffs also argue that stating something you know to be untrue satisfies the requirement that you don’t reasonably believe it to be true. On reply, Defendants argue that Plaintiff has failed to allege a positive assertion and that a nondisclosure is not the same as an affirmative disclosure.

“Negligent misrepresentation is the assertion of a false statement, honestly made in the belief it is true, but without reasonable ground for such belief.” (County of Kern v. Sparks (2007) 149 Cal.App.4th 11, 20 [emphasis added] [citing Anderson v. Deloitte & Touche (1997) 56 Cal.App.4th 1468, 1476]; see Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 407–408, as modified (Nov. 12, 1992). Courts require that a positive assertion be made:

[A] positive assertion is required; an omission or an implied assertion or representation is not sufficient. (Residential Capital v. Cal–Western Reconveyance Corp. (2003) 108 Cal.App.4th 807, 828, 134 Cal.Rptr.2d 162; Shamsian, supra, 107 Cal.App.4th at p. 984, 132 Cal.Rptr.2d 635; see Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 174, 132 Cal.Rptr.2d 490, 65 P.3d 1255 (Small ) [negligent misrepresentation “encompasses ‘[t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true’ [citation], and ‘[t]he positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true’ [citations]]”.)

(Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.). The Holmes decision that Plaintiffs rely on in their opposition is inapplicable to negligent misrepresentation. The Court of Appeal in that matter explained that the plaintiffs asserted four theories of liability: “(1) deceit based on misrepresentation; (2) deceit based on failure to disclose; (3) negligent misrepresentation; and (4) negligence” and expressly noted that it did not need to “address the elements of each one of the buyers' theories, for a properly pleaded cause of action on any one of those theories will suffice to stave off a demurrer.” (Holmes v. Summer (2010) 188 Cal.App.4th 1510, 1528.) The court reversed the trial court’s demurrer ruling, because the plaintiffs had alleged sufficient facts under a negligence theory of liability. (Id. at 1528-1259.). Here, Plaintiff has not alleged a positive assertion. In addition, Plaintiff has not alleged that Defendant Eyan Levin assertion “of a false statement [was] honestly made in the belief it is true” but that he intentionally made a false statement. In their opposition, Plaintiffs conflate the differences between negligent misrepresentation and intentional misrepresentation or fraud by concealment. Therefore, the demurrer is sustained as to this cause of action without leave to amend.

COA 3 : Negligence; and COA 4: Failure to make statutory disclosures pursuant to Civil Code § 2079 et seq.

Defendants argue that Plaintiffs have failed to allege facts that demonstrate that they breached a duty to Plaintiffs. With respect to the fourth cause of action, Defendants argue that liability is limited by what a diligent visual inspection would reveal.

In opposition, Plaintiff argues that Holmes demonstrates that Defendant brokers owed duties to Plaintiffs, and that the Holmes Court “observe[d] that real estate agents or brokers have been held to have a duty to disclose matters that do not pertain to physical defects, but otherwise affect the desirability of the purchase. [Citations omitted.] They have also been held to have a duty to disclose conditions to close of escrow. [Citations omitted.]”. (Holmes v. Summer (2010) 188 Cal.App.4th 1510, 1520.). Plaintiffs argue that they alleged that Defendants conspired with the sellers to conceal the property’s defects, and that although the defects may have no longer been observable during a visual inspection, a listing broker cannot avoid his duty to disclose facts he knows or should have known under the excuse that he could not see them anymore.

In reply, Defendants incorporate their arguments as to fraud and concealment and generally argue that FAC fails to allege specific facts as to Listing Broker’s knowledge of certain defects. Defendants also argue that the allegation that the Listing Broker “should have been aware of” defects is conclusory, and does not come within the scope of Civil Code § 2079. Finally, Defendants argue that the allegation that the Listing Broker failed to disclose efforts to cosmetically conceal prior water damage following a sprinkler malfunction lacks factual support. As to this last contention, the Court notes that all allegations contained in the FAC are treated as true. As such, Defendants cannot dispute this allegation through judicially noticeable discovery responses.

To state a claim for negligence, a plaintiff must allege: 1) a legal duty to use due care; 2) breach of this legal duty; and 3) that results in 4) plaintiff’s injury. (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.). Under Civil Code section 2079(a), “It is the duty of a real estate broker or salesperson, licensed under Division 4 (commencing with Section 10000) of the Business and Professions Code, to a prospective buyer of residential real property improved with one to four dwelling units . . . to conduct a reasonably competent and diligent visual inspection of the property offered for sale and to disclose to that prospective buyer all facts materially affecting the value or desirability of the property that an investigation would reveal, if that broker has a written contract with the seller to find or obtain a buyer or is a broker who acts in cooperation with that broker to find and obtain a buyer.” (Civ. Code, § 2079(a).) “It is the intent of the Legislature to codify and make precise the holding of Easton v. Strassburger, 152 Cal.App.3d 90. It is not the intent of the Legislature to modify or restrict existing duties owed by real estate licensees.” (Civ. Code, § 2079.12(b).). The Court in Easton acknowledged that:

no appellate decision has explicitly declared that a broker is under a duty to disclose material facts which he should have known. We conclude, however, that such a duty is implicit in the rule articulated in Cooper and Lingsch, which speaks not only to facts known by the broker, but also and independently to facts that are accessible only to him and his principal. [footnote omitted] (Cooper, supra, Lingsch, supra,

(Easton v. Strassburger The Court went on to hold “that the duty of a real estate broker, representing the seller, to disclose facts, as that fundamental duty is articulated in Cooper and Lingsch, includes the affirmative duty to conduct a reasonably competent and diligent inspection of the residential [footnote omitted] property listed for sale and to disclose to prospective purchasers all facts materially affecting the value or desirability of the property that such an investigation would reveal.” (Id. at 102.). Finally, with respect to negligence cases, the Court explained the jury instruction on the brokers duty was correctly stated and that a broker is “under a duty to disclose facts materially affecting the value or desirability of the property ... which through reasonable diligence should be known to him.” (Id. at 103.)

Here, the negligence cause of action is directed at all Defendants. The cause of action under Civil Code § 2079 is directed at Francisco, Eytan, Coldwell Banker and 4 Malibu. In the FAC, Plaintiffs allege, “The Defendants had a legal duty to disclose all facts materially affecting the value or desirability of the property which they knew or should have been aware of, and which were not known to, or within the reach of the diligent attention and observation of Plaintiffs.” (FAC ¶ 117.) “The duty to make disclosures described above are to be made in good faith, meaning honesty in fact in the conduct of the transaction” (FAC ¶ 118.) “Defendant EYTAN [LEVIN] was at all times mentioned herein acting as an agent for Defendant 4 MALIBU.” (FAC ¶ 121.) “Defendants FRANCISCO, EYTAN [LEVIN], COLDWELL BANKER and 4 MALIBU breached their disclosure duties as set forth above . . . including but not limited to: [(a)] Failing to disclose all material facts and defects discoverable by a reasonable and competent visual inspection in the ‘Agent Visual Inspection Disclosure (AVID)’; [(b)] Failing to disclose all material facts and defects they were aware of or should have been aware of; and [(c)] Failing to disclose efforts to cosmetically conceal extensive water damage and structural damage, including significant and extensive dry rot.” (FAC ¶¶ 122-125.) Plaintiffs make similar allegations with respect to their civil code section 2179 claim. (See, e.g., FAC ¶¶ 134, 136.).

The court finds that Plaintiffs have alleged sufficient facts to trigger a duty under Easton. Plaintiffs alleged sufficient facts to show that Defendants colluded to hide the alleged extensive water damage. Defendant brokers also had a duty to disclose information relating to the desirability of the property. In addition, the Court is not persuaded by Defendants’ argument that the duty under Civil Code section 2079 is limited to a reasonable and diligent inspection. The conjunction “and” in the statute appears to be connecting two separate duties. Defendants have a duty “to disclose to that prospective buyer all facts materially affecting the value or desirability of the property that an investigation would reveal.” (Civ. Code § 2079.) Therefore, the demurrer is overruled as to these causes of action.

COA 6: Fraud

Defendants argue that Plaintiffs have failed to allege sufficient facts for intentional misrepresentation or concealment. The sixth cause of action is directed at the Broker Defendants only.

The elements of intentional misrepresentation are (1) misrepresentation; (2) knowledge of falsity (or “scienter”); (3) intent to defraud (induce reliance); (4) justifiable reliance; and (5) resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Plaintiffs are required to allege the factual basis for each of the elements of a fraud claim with specificity despite the general policy favoring liberal construction of pleadings on demurrer. (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782-783.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

Defendants argue that paragraph 152 of the FAC is insufficient to allege a misrepresentation. Defendants also argue Defendants that Plaintiffs have failed to meet the heightened pleading standard for fraud actions. In opposition, Plaintiffs argue that the FAC more than satisfies the who, what, where, when requirements for a fraud cause of action and argues that paragraph 84 has detailed information. Plaintiffs also argue that the concealment claims have also been adequately plead.

Defendants claim that Plaintiffs have failed to sufficiently plead a concealment cause of action because plaintiffs have not alleged a duty. The Court has already rejected this argument. Paragraph 67 alleges the representations made by Defendants, including the date and the method. Paragraph 85 contains specific allegations as to Defendants’ knowledge and intent to defraud. Plaintiffs have stated sufficient facts to state a cause of action for fraud under both a misrepresentation theory and a concealment theory. Therefore, the demurrer is overruled as to the fraud cause of action.

COA 5: Failure to make statutory disclosures pursuant to Civil Code § 1102 et seq.,

Defendants argue that Plaintiffs have failed to state a cause of action under Civil Code § 1102 because Civil Code § 1102.6 outlines the required disclosures to be made by a seller in a purchase transaction, including in the TDS, but Civil Code § 1102 et seq does not impose any requirements on a real estate broker. Plaintiffs argue that they can state a claim against the brokers because the brokers have a duty to not covey the seller’s representations without a reasonable basis, citing Civil Code section 1102.7.

Section 1102.7 provides that “Each disclosure required by this article and each act which may be performed in making the disclosure, shall be made in good faith. For purposes of this article, ‘good faith’ means honesty in fact in the conduct of the transaction.” (Civ. Code, § 1102.7.) Civil Code section 1102.13 provides that “No transfer subject to this article shall be invalidated solely because of the failure of any person to comply with any provision of this article. However, any person who willfully or negligently violates or fails to perform any duty prescribed by any provision of this article shall be liable in the amount of actual damages suffered by a transferee.” (Civ. Code, § 1102.13 [emphasis added].) Civil Code section 1102.4(a) provides, “Neither the seller nor any seller's agent or buyer's agent shall be liable for an error, inaccuracy, or omission of any information delivered pursuant to this article if the error, inaccuracy or omission was not within the personal knowledge of the seller or that listing or buyer's agent, was based on information timely provided by public agencies or by other persons providing information as specified in subdivision (c) that is required to be disclosed pursuant to this article, and ordinary care was exercised in obtaining and transmitting it.” (Civ. Code, § 1102.4(a).). Finally required disclosures that a broker must make are in part III of the form provided for in Civil Code section 1102.6.

The Court disagrees with Defendants’ position that the statute does not make brokers liable. The statute states provides for liability for any person that willfully or negligently violates of fails to perform any duty in any provision of the article. Here, Plaintiffs have alleged that Defendants failed to make disclosures required by the statute. (See FAC ¶ 146.) Therefore the demurrer is overruled as to this cause of action.

COA: 7 Violation of Business & Professions Code § 17200

Unfair competition is broadly defined as “any unlawful, unfair or fraudulent business act or practice” as well as “unfair, deceptive, untrue or misleading advertising” and “any act prohibited by Chapter 1 (commencing with Section 17500) of Part 3 of Division 7 of the Business and Professions Code.” (Bus. & Prof. Code, § 17200.)

Defendants argue that Plaintiffs have failed to state a cause of action for a violation of Business and Professions Code section 17200. Defendants argue that there are insufficient factual allegations to support the claim that the Defendants engaged in fraudulent, deceptive, or unfair conduct that would deceive the general public. Plaintiffs argue that for all of the reasons the complaint is sufficient, the seventh cause of action is sufficient. Plaintiffs further argue that they have alleged fraudulent and unfair conduct throughout the complaint. In reply, Defendants argue that the conduct complained of must be directed at the general public, and plaintiff has not, and cannot, allege such facts because this was a private transaction.

Defendants are correct. The conduct consisting of an unfair competition claim must be directed at the general public to be actionable. Plaintiffs have not alleged facts showing that Defendants engaged in conduct in the public sphere. Therefore, the demurrer is sustained as to this cause of action without leave to amend.

Motion to Strike

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [or] (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436.) An “immaterial allegation” means “irrelevant matter” as that term is used in Section 436. (Code Civ. Proc., § 431.10(c).) “An immaterial allegation in a pleading is any of the following: (1) An allegation that is not essential to the statement of a claim or defense. (2) An allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense. (3) A demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint.” (Code Civ. Proc., § 431.10(b).)

Defendant argues that Plaintiff’s requests for punitive damages are unsupported. Punitive damages are permitted when a party alleges that a defendant or defendants engaged in malice, oppression, or fraud. Punitive damages are requested for the fraud cause of action. Here, the Court overruled the demurrer to the fraud cause of action, which is already subject to a heightened pleading standard. Since the motion to strike is based on the fraud claim, and since the fraud claim is sufficient, Defendants’ motion to strike is DENIED.

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