This case was last updated from Los Angeles County Superior Courts on 01/27/2022 at 11:56:20 (UTC).

CALIFORNIA PARTNERS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY VS ROBERT J. HUIZENGA

Case Summary

On 07/20/2020 CALIFORNIA PARTNERS, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY filed a Contract - Other Contract lawsuit against ROBERT J HUIZENGA. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is GREGORY KEOSIAN. The case status is Pending - Other Pending.
Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******7102

  • Filing Date:

    07/20/2020

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

GREGORY KEOSIAN

 

Party Details

Plaintiff

CALIFORNIA PARTNERS LLC A CALIFORNIA LIMITED LIABILITY COMPANY

Cross Plaintiff and Defendant

HUIZENGA ROBERT J.

Cross Defendants

SPECIAL DEFAULT SERVICES INC. A CALIFORNIA CORPORATION

TRANCAS CANYON PARTNERS LLC A NEVADA LIMITED LIABILITY COMPANY

CALIFORNIA EQUITY PARTNERS LLC A CALIFORNIA LIMITED LIABILITY COMPANY

Attorney/Law Firm Details

Plaintiff Attorney

HANIGAN TIM

Cross Plaintiff and Defendant Attorneys

MYERS DAVID A.

WALDEN RICHARD ENOCH

 

Court Documents

Notice of Change of Address or Other Contact Information

6/29/2021: Notice of Change of Address or Other Contact Information

Case Management Statement

7/6/2021: Case Management Statement

Proof of Personal Service

7/12/2021: Proof of Personal Service

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

7/14/2021: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

Answer - ANSWER TO CROSS-COMPLAINT

7/14/2021: Answer - ANSWER TO CROSS-COMPLAINT

Case Management Order

7/14/2021: Case Management Order

Declaration - DECLARATION OF NONMONETARY STATUS

7/22/2021: Declaration - DECLARATION OF NONMONETARY STATUS

Notice Re: Continuance of Hearing and Order

6/10/2021: Notice Re: Continuance of Hearing and Order

Cross-Complaint

5/24/2021: Cross-Complaint

Proof of Service by Mail

5/25/2021: Proof of Service by Mail

Answer

5/25/2021: Answer

Summons - SUMMONS CROSS-COMPLAINT

5/25/2021: Summons - SUMMONS CROSS-COMPLAINT

Notice of Ruling - NOTICE OF RULING RULING RE DEFENDANT ROBERT J. HUIZENGA'S DEMURRER TO THE FIRST AMENDED COMPLAINT

5/5/2021: Notice of Ruling - NOTICE OF RULING RULING RE DEFENDANT ROBERT J. HUIZENGA'S DEMURRER TO THE FIRST AMENDED COMPLAINT

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (HEARING ON DEMURRER - WITHOUT MOTION TO STRIKE; CASE MANAGEME...) OF 05/05/2021

5/5/2021: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (HEARING ON DEMURRER - WITHOUT MOTION TO STRIKE; CASE MANAGEME...) OF 05/05/2021

Minute Order - MINUTE ORDER (HEARING ON DEMURRER - WITHOUT MOTION TO STRIKE; CASE MANAGEME...)

5/5/2021: Minute Order - MINUTE ORDER (HEARING ON DEMURRER - WITHOUT MOTION TO STRIKE; CASE MANAGEME...)

Reply - REPLY DEFENDANT ROBERT J. HUIZENGA'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS TO PLAINTIFF CALIFORNIA PARTNERS, LLC'S FIRST AMENDED COMPLAINT

4/27/2021: Reply - REPLY DEFENDANT ROBERT J. HUIZENGA'S REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRERS TO PLAINTIFF CALIFORNIA PARTNERS, LLC'S FIRST AMENDED COMPLAINT

Memorandum of Points & Authorities - MEMORANDUM OF POINTS & AUTHORITIES IN OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT

4/22/2021: Memorandum of Points & Authorities - MEMORANDUM OF POINTS & AUTHORITIES IN OPPOSITION TO DEMURRER TO FIRST AMENDED COMPLAINT

Demurrer - with Motion to Strike (CCP 430.10)

2/22/2021: Demurrer - with Motion to Strike (CCP 430.10)

25 More Documents Available

 

Docket Entries

  • 05/09/2023
  • Hearing05/09/2023 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 05/01/2023
  • Hearing05/01/2023 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 03/01/2023
  • Hearing03/01/2023 at 09:00 AM in Department 61 at 111 North Hill Street, Los Angeles, CA 90012; Post-Mediation Status Conference

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  • 07/22/2021
  • DocketDeclaration (of Nonmonetary Status); Filed by Special Default Services, Inc., a California corporation (Cross-Defendant)

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  • 07/14/2021
  • Docketat 10:00 AM in Department 61, Gregory Keosian, Presiding; Case Management Conference - Held

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  • 07/14/2021
  • DocketAnswer (TO CROSS-COMPLAINT); Filed by Trancas Canyon Partners, LLC, a Nevada limited liability company (Cross-Defendant); California Equity Partners, LLC, a California limited liability company (Cross-Defendant)

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  • 07/14/2021
  • DocketCase Management Order; Filed by Clerk

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  • 07/14/2021
  • DocketMinute Order ( (Case Management Conference)); Filed by Clerk

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  • 07/12/2021
  • DocketProof of Personal Service; Filed by Robert J. Huizenga (Cross-Complainant)

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  • 07/06/2021
  • Docketat 09:00 AM in Department 61, Gregory Keosian, Presiding; Case Management Conference - Not Held - Rescheduled by Court

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31 More Docket Entries
  • 11/16/2020
  • DocketCase Management Statement; Filed by Robert J. Huizenga (Defendant)

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  • 10/30/2020
  • DocketNotice Re: Continuance of Hearing and Order; Filed by Clerk

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  • 10/30/2020
  • DocketNotice Re: Continuance of Hearing and Order; Filed by Clerk

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  • 10/29/2020
  • Docketat 09:00 AM in Department 61, Gregory Keosian, Presiding; Order to Show Cause Re: Failure to File Proof of Service - Not Held - Taken Off Calendar by Court

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  • 10/08/2020
  • DocketDemurrer - without Motion to Strike; Filed by Robert J. Huizenga (Defendant)

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  • 07/31/2020
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 07/31/2020
  • DocketOrder to Show Cause Failure to File Proof of Service; Filed by Clerk

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  • 07/20/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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  • 07/20/2020
  • DocketComplaint; Filed by California Partners, LLC, a California limited liability company (Plaintiff)

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  • 07/20/2020
  • DocketSummons (on Complaint); Filed by California Partners, LLC, a California limited liability company (Plaintiff)

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Tentative Rulings

Case Number: *******7102    Hearing Date: December 01, 2020    Dept: 61

  1. DEMURRER

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., ;; 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. ; 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“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. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendant argues that the Complaint fails because it rests upon a contract not founded upon a writing as required by the statute of frauds, because the fraud claim is not adequately pleaded, and because the Complaint fails to name Trancas as an indispensable party. (Demurrer at pp. 1–10.)

  1. STATUTE OF FRAUDS

California’s statute of frauds provides that a contract “for the sale of real property, or of an interest therein” is invalid “unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged.” (Civ. Code ; 1624, subd. (a)(3).) Defendant argues that the agreement upon which Plaintiff seeks relief here is just such a contract, because the parties allegedly agreed to abrogate existing deeds of trust on the property, create new ones, and then develop and sell the property. (Demurrer at pp. 3–5.) Defendant relies on authority holding agreements to create deeds of trust on real property to be subject to the statute of frauds. (Reeder v. Specialized Loan Servicing LLC (2020) 52 Cal.App.5th 795, 801.)

Plaintiff responds that the alleged agreement falls within the “joint venture” exception to the statute of frauds, where the agreement between the venturers contemplates the potential sale of land to another party and the sharing of profits between the venturers. (Opposition at pp. 5–8, citing Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 586.)

The alleged context of the agreement is as follows. Plaintiff loaned funds to Trancas to purchase property from Defendant, who also loaned funds to Trancas for the transaction, or he secured a promissory note as part of the down payment. (Complaint ¶¶ 5–6.) In any case, deeds of trust were recorded on the property securing Trancas’s obligations to both Plaintiff and Defendant. (Complaint ¶ 6.)

After some difficulties hampered the development’s progress, the parties — Plaintiff, Defendant, and Trancas — entered into the following “joint venture agreement.” (Complaint ¶ 11.) Defendant would provide an additional $2 million, with $600,000 to pay down Plaintiff’s note (and thus his interest in the property secured by the deed of trust), $45,000 to pay taxes and closing costs, and $1,355,000 to pay for physical development and construction on the property. (Complaint ¶ 11.) In exchange, the existing deeds of trust would be reconveyed, and Trancas would execute new deeds of trust on the property, securing Defendant’s debt in the amount of $2 million, Plaintiff’s in the amount of $450,000, and a third for Defendant in the amount of $475,000. (Complaint ¶ 13.) Trancas and Plaintiff agreed to develop the property. (Complaint ¶ 12.) The parties further agreed that after the property was sold, the proceeds would pay all secured debt, then $230,000 would go to Plaintiff, $80,000 to Trancas, and the remaining proceeds would go 90% to Trancas and 10% to Plaintiff. (Complaint ¶ 12.)

The breach that the Complaint identifies is Defendant’s failure to pay the $1,355,000 that he agreed to contribute for the construction of the property. (Complaint ¶ 14.) When Plaintiffs sought a payoff demand to satisfy Defendant’s $2 million deed of trust (which was supposed to secure the funds that Defendant had largely failed to provide), he demanded an inflated $1.5 million, which encompassed funds not secured by the note. (Complaint ¶¶ 15–16.)

It is true that a wide range of authority exempts from the statute of frauds agreements between joint venturers or partners to develop and convey properties for sale to others. (See Kaljian v. Menezes (1995) 36 Cal.App.4th 573, 586.) Yet as the Kaljian court explained, the exemption applies to agreements whereby a single party conveys real property to the joint venture itself, or where the venturers agree to sell the property of a party to a party outside the joint venture: “[N]one of the cited cases dealt with an agreement which contemplated a transfer of real property from one joint venturer to another.” (Id. at p. 584.) The Kaljian court held, with reference to the case before it, that the evidence could support either a joint venture agreement to develop property and sell to others, or an agreement of one party to sell property to another member of the joint venture, who would then develop and sell the property. (Id. at pp. 587–89.) In the latter case, the court held that even if a joint venture existed, a statute of frauds instruction was proper. (Id. at pp. 588–89.)

Here, the agreement at issue involves the transfer of interests in real property from one joint-venturer to another, and thus falls within the statute of frauds. The agreement expressly provided that the existing deeds of trust would be “reconveyed” — not between the joint venture and some third party, but among the venturers themselves. (Complaint ¶ 13.) The agreement specifically contemplates the creation of new interests in real property — deeds of trust — conveyed by Trancas to Plaintiff and Defendant. (Complaint ¶ 13.) Although Plaintiff contends that contracts involving the purchase and satisfaction of encumbrances upon real property do not necessarily fall within the statute of frauds, this authority merely restates the rule that agreements whereby the joint venture itself pays down encumbrances or transfers title to property originally belonging to one member do not require a written agreement. (Opposition at p. 7, citing Bates v. Babcock (1892) 95 Cal. 479, 486 [agreement “does not contemplate any transfer of land from one party to the other, or the creation of any interest or estate in lands”].) This is quite unlike the present case, which involves the creation of distinct interests in real property that are particular to the individual venturers.

Plaintiff further argues that the agreement does not fall within the statute of frauds because that portion of the agreement involving Trancas’s execution and recording of these new property interests has already been performed. (Opposition at p. 8, citing Dutton v. Interstate Inv. Corp. (1941) 19 Cal.2d 65, 70 [“Assuming that the agreement in the present case falls within this provision of the statute of frauds, the finding of the trial court that Dutton had fully performed all of his obligations under the contract operates to remove the bar of the statute.”].)

This argument does not save the present iteration of the pleading from the statute of frauds, but it may do so by amendment. The position that one’s performance prevents the application of the statute of frauds is an argument from estoppel. (See Dutton, supra, 19 Cal.2d at pp. 70–71 [expressly stating that performance induced by the oral promise of another “creates an estoppel” against the statute of frauds].) A party whose claims are facially subject to the statute of frauds, to allege estoppel, “must allege that refusal to enforce the oral contract will result in (1) unconscionable injury because the party pleading estoppel seriously changed its position in reliance on the oral contract, or (2) the unjust enrichment of the party pleading the statute of frauds as a defense because that party received the benefits of the other's performance.” (Smyth v. Berman (2019) 31 Cal.App.5th 183, 198.) These elements are not pleaded in the Complaint as written.

Accordingly, the demurrer is SUSTAINED as to the first cause of action, with leave to amend.

  1. INDISPENSABLE PARTY

Defendant next argues that the first, third, and fourth causes of action are infirm because they fails to name Trancas, whom Defendant claims is an indispensable party. (Demurrer at pp. 5–7, 8–10.)

“A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.” (Code Civ. Proc. ; 389, subd. (a).)

“If a person is determined to qualify as a ‘necessary’ party under one of the standards outlined above, courts then determine if the party is also ‘indispensable.’ Under this analysis ‘the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.” (American Indian Model Schools v. Oakland Unified School Dist. (2014) 227 Cal.App.4th 258, 297.)

The court agrees with Defendant that Trancas is a necessary party to this action. ““Ordinarily where the rights involved in litigation arise upon a contract, courts refuse to adjudicate the rights of some of the parties to the contract if the others are not before it.” (Deltakeeper v. Oakdale Irrigation District (2001) 94 Cal.App.4th 1092, 1106.) Thus Trancas, a party to the joint venture agreement and presently the owner of the property, is a necessary party to this action. (Complaint ¶ 7.)

Trancas’s joinder is also rendered appropriate by other practical considerations. As Defendant points out, this dispute may involve the adjudication of the existence of the joint venture. (Demurrer at p. 6.) The payoff demand that Plaintiff contends is excessive was a demand sought by both Plaintiff and Trancas, and which is pleaded as being made by Defendant to Trancas alone. (Complaint ¶ 15.) Although Plaintiff contends that Trancas is not indispensable because it does not seek relief against Trancas, the Complaint discloses that Trancas’s joinder is necessary because Plaintiff seeks relief belonging equally to Trancas. Because Plaintiff’s claims require adjudication of Defendant’s obligations to both Plaintiff and Trancas, the demurrer is properly SUSTAINED with leave to amend as to the first, third, and fourth causes of action.

  1. PROMISSORY FRAUD

Defendant finally argues that the second cause of action for promissory fraud is defective because it is not pleaded with specificity. (Demurrer at pp. 7–8.)

The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) It is well-established that “[t]o withstand a demurrer, the facts constituting every element of fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal.4th at p. 645 (internal quotation marks omitted).)

The court agrees that Plaintiff has not pleaded fraud with particularity, i.e. how, when where, to whom, and by what means the representations were tendered. The Complaint merely alleges that in July 2019, “Huizenga promised to fund the construction of the Property in an amount of $1,355,000.” (Complaint ¶ 26.) Although the terms of the alleged oral contract are elsewhere stated, the precise circumstances of Huizenga’s alleged fraud are not.

Accordingly, the demurrer is SUSTAINED with leave to amend.


Case Number: *******7102    Hearing Date: May 5, 2021    Dept: 61

Defendant Robert J. Huizenga’s Demurrer to the First Amended Complaint is OVERRULED.

I. DEMURRER

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., ;; 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. ; 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“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. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

A. PROMISSORY FRAUD

Defendant argues that the second cause of action for promissory fraud is defective because it is not pleaded with specificity. (Demurrer at pp. 7–8.)

The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) It is well-established that “[t]o withstand a demurrer, the facts constituting every element of fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal.4th at p. 645 (internal quotation marks omitted).)

The FAC alleges the circumstances of the fraudulent promise as follows: “In or about July 2019, defendant Huizenga orally promised to Danny Simon, the principle of CEP, and to Vince Hall, the principle of Trancas, that Huizenga would fund the construction of the Property in an amount of $ 1,355,000.” (FAC ¶ 27.) Unlike the prior iteration of the same pleading, this allegation names the individuals who made the promise and when they were made. This is sufficient to plead the misrepresentation element of fraud.

Defendant relies on the case Reeder v. Specialized Loan Servicing LLC (2020) 52 Cal.App.5th 795, 803–804, in which the appellate court affirmed an order sustaining a demurrer against a claim for promissory fraud. The court held that the claim failed to allege reasonable reliance based on the outlandish nature of the promise made — that the plaintiff would be able to obtain refinancing 10 years after the promise was made — but also held that the claim failed to allege adequate facts showing knowledge of falsity and intention to defraud:

The complaint alleges that when defendants made their promise that plaintiff would be able to re-amortize or refinance after 10 years, they “had no intention of allowing Plaintiff to re-amortize or re-finance.” The complaint alleges defendants, through Ms. Harmon, “made their false promises with the intent to induce Plaintiff to enter into the 2005 [line of credit]”; plaintiff “had a right to rely on Defendants’ false promises, acted in reasonable reliance on those promises, and, in ignorance of their falsity, entered into the 2005 [line of credit].”

These allegations are the very sort of general and conclusory allegations that are insufficient to state a fraud claim. For one thing, plaintiff has alleged no facts or circumstances suggesting defendants’ intent not to perform the alleged promise when it was made. “It is insufficient to show an unkept but honest promise, or mere subsequent failure of performance.” (Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1183, 151 Cal.Rptr.3d 93, 291 P.3d 316 (Riverisland).) Plaintiff has alleged no facts or surrounding circumstances suggesting anything more.

(Reeder, supra, 52 Cal.App.5th at p. 803–04.) Defendant argues that the present Complaint is similarly defective.

The Reeder case is distinguishable from the present because Plaintiffs actually plead circumstances suggestive of fraudulent motive, rather than the conclusory allegations of intent contained in Reeder. Specifically, the FAC does not merely allege that Defendant failed to perform a contractual promise, but that Defendant made the promise to loan $2 million to fund construction on the property in order to secure Plaintiffs’ agreement to record a prioritized security interest on the property in favor of Defendant, which has been accomplished, even without the benefit of the funding promised. (FAC ¶¶ 29–30.) As the FAC states: “Defendants made the false promise to fund the construction of the Property so as to be able to record a $2 million deed of trust against the Property, and then falsely claiming that there is more than $ 1.5 million owed under that deed of trust, so as to wrongfully foreclose on the Property, thereby eliminating Trancas and CEP's ownership interests in the Property.” (FAC ¶ 32.) This is more detailed than the allegations in Reeder.

Reeder should not be interpreted to require the same particularity of pleading with regard to a defendant’s intent and knowledge as to the nature of the misrepresentations themselves. Knowledge and intent are facts internal to a defendant’s mind, and “[t]he rule of particular pleadings, even where applicable to certain claims, does not pertain with the same force “when the facts lie more in the knowledge of the opposite party.” (Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 838.)

The demurrer is therefore OVERRULED.


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