Demurrer CLM

Cal. Super. - 2nd Dist.March 2, 2015

123 Judge SUPERIOR COURT OF CALIFORNIA, TENTATIVE RULINGS EVENT DATE: EVENT TIME: VENTURA DIVISION October 31, 2016 11/01/2016 08:20:00 AM DEPT.: 43 COUNTY OF VENTURA JUDICIAL OFFICER: Kevin DeNoce CASE NUM: CASE CATEGORY: EVENT TYPE: CASE TITLE: CASE TYPE:Civil - Unlimited Fraud 56-2015-00464684-CU-FR-VTA WINSTON VS. LANDSAFE INC Demurrer (CLM) - To Plaintiffs Second Amended Complaint CAUSAL DOCUMENT/DATE FILED: Demurrer, 09/27/2016 stolo The morning calendar in courtroom 43 will begin at 9 a.m. Cases including ex parte matters will not be called prior to 9 a.m. Please check in with the courtroom clerk by no later than 8:45 a.m. If appearing by CourtCall, please call in between 8:35 and 8:45 a.m. With respect to the below scheduled tentative ruling, no notice of intent to appear is required. If you wish to submit on the tentative decision, you can send an email to the court at: Courtroom43@ventura.courts.ca.gov or send a telefax to Judge DeNoce's secretary, Hellmi McIntyre at 805-477-5894, stating that you submit on the tentative. Do not call in lieu of sending an email or telefax. If you submit on the tentative without appearing and the opposing party appears, the hearing will be conducted in your absence. This case has been assigned to Judge DeNoce for all purposes. Absent waiver of notice and in the event an order is not signed at the hearing, the prevailing party shall prepare a proposed order and comply with CRC 3.1312 subdivisions (a), (b), (d) and (e). The signed order shall be served on all parties and a proof of service filed with the court. A "notice of ruling" in lieu of this procedure is not authorized. For general information regarding Judge DeNoce's rules and procedures for law and motion matters, ex parte matters, telephonic appearances, trial rules and procedures, etc., please visit: http://www.ventura.courts.ca.gov/Courtroom/C43 ______________________________________________ The court's tentative ruling is as follows: Grant Defendants' unopposed request for judicial notice of the Assignment of Deed of Trust. Sustain Defendants' demurrer to the Second Amended Complaint, without leave to amend, on the grounds that it continues to (i) fail to plead around the statute of limitations bar apparent on the face of the SAC because equitable tolling is insufficiently pled, (ii) fails to allege the causes of action with the particularity required of fraud claims, and (iii) fails to allege a sufficient basis to hold Defendants responsible for the appraisal report it issued to third-party lender as a matter of law (See Soderberg). Discussion: Uncertainty While the Notice claims that the Demurrer is being made because the 1st and 2nd causes of action are "uncertain," CCP §430.10(f) is not cited and no argument is made regarding uncertainty in the Memo. The Reply raises the issue of uncertainty. To the extent that Defendants' demurrer is based on uncertainty, it is overruled. Fail to State a Claim TENTATIVE RULINGS Page: 1 CASE NUMBER: CASE TITLE: WINSTON VS. LANDSAFE INC 56-2015-00464684-CU-FR-VTA Demurrer is only appropriate where the grounds for objection appear on the face of the complaint or from any matter of which the court is required to or may take judicial notice. CCP § 430.30(a). A demurrer must be sustained without leave to amend if no liability exists as a matter of law, and where a plaintiff cannot possibly amend to state a cause of action. Blank v Kirwan (1985) 39 Cal.3d 311, 318. Fraud: heightened pleading requirements The elements of fraud are 1) misrepresentation of a material fact, 2) knowledge of falsity, 3) intent to deceive and induce reliance, 4) justifiable reliance, and 5) resulting damage. Negligent misrepresentation must be pled with same level of specificity as fraud. "[G]eneral pleading of the legal conclusion of fraud is insufficient; the facts constituting the fraud must be alleged, and the policy of liberal construction will not ordinarily be involved to sustain such a pleading defective in any material respect. [citation]. The rationale for the rule requiring specificity is that allegations of fraud are serious, and the defendant is entitled to receive sufficient details in order to prepare his defense." Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 901. Statute of limitations: The parties agree that the claims are subject to a 3-year statute of limitations. The accrual of a fraud cause of action, per CCP §338(d), is when the aggrieved party discovered the facts constituting the fraud. The discovery rule "postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." Norgart v. Upjohn Co., 21 Cal.4th at p. 397. As Plaintiff acknowledges, if it appears from the face of a pleading that the limitations period has run, a plaintiff must state with particularity the facts that excuse his failure to learn of the fraud within the statutory period. "A plaintiff seeking to utilize the discovery rule must plead facts to show his or her inability to have discovered the necessary information earlier despite reasonable diligence." Fox v. Ethicon Endo-Surgery, Inc. 35 Cal.4th at p. 815. See also Casualty Ins. Co. v. Ress Inv. Co. (1971) 14 Cal.App.3d 716, 719-20. A plaintiff must show diligence exercised to discover the facts and must plead facts showing (1) lack of knowledge, (2) lack of means of obtaining knowledge, and (3) how and when the plaintiff actually did discover the fraud. Id. On the face of the SAC, it appears that the statute of limitations has run. Plaintiff has alleged facts showing that he was put on notice that Landsafe's appraisal was allegedly inaccurate in June 2005. Given that the SAC alleges that the Landsafe appraisal represented the residence to have 6,269 sq.ft. and his own realtors allegedly represented the residence had 6,276 sq.ft., the discrepancy would have put him on notice as of June 2005 at the time of the purchase. The SAC reveals that Plaintiff had a reason to suspect a factual basis for his causes of action because he had notice or information of circumstances to put a reasonable person on inquiry. Defendants note that Plaintiff could have conducted his own independent appraisal at any time, or reviewed the publically available VC Assessor records. There is no allegation that he was prevented from doing so. Plaintiff was living in the home as his principal residence during the relevant period. The SAC arguably satisfies the 1st element and 3rd element of the Casualty test (as the Court previously noted regarding the FAC, Plaintiff has alleged that he lacked the knowledge that he discovered the fraud in March 2012 when a real estate agent told him it was 5,500 sq.ft.); but like the FAC, the SAC fails to plead facts showing a lack of means of obtaining knowledge (element 2). Plaintiff has not alleged that (or how) he was diligent in discovering the facts regarding sq. ft. of the home. He certainly has not pled those facts with particularity required for a fraud claim. The only allegation in the SAC is that he didn't discover the misrepresentations "because he had no reason to doubt the veracity of their representations about the square footage of his residence." ¶17. That tries to explain his lack of knowledge, but does not allege that he lacked the means to obtain the knowledge. And given the allegation that the Landsafe appraisal provided a different sq.ft. figure from his realtors' representation, the statute of limitations would have commenced running in 2005. The real estate agent's statement in 2012 was not based on some source of knowledge unavailable to Plaintiff, but was apparently based on the VC Assessor's office records. The documents which allegedly revealed the fraud were publically available for over 10 years. Plaintiff has not alleged facts showing that he had no means of knowledge or notice that, with inquiry, would have shown the fraud. See Bainbridge v. Stoner (1940) 16 Cal.2d 423, 430; and Saliter v. Pierce Brothers Mortuaries (1978) 81 Cal.App.3d 292, 297. Based on the above, the Court sustains the demurrer without leave to amend on statute of limitations grounds. Reliance on Lender's Appraisal Defendant points to Graham v. Bank of AM., N.A. (2014) 226 Cal.App.4th 594 for the argument that an appraisal is performed during the loan process in order to protect the lender's interest, "to determine if the property provides adequate security for the loan." At 607. And "Since the appraisal is a value opinion performed for the benefit of the TENTATIVE RULINGS Page: 2 CASE NUMBER: CASE TITLE: WINSTON VS. LANDSAFE INC 56-2015-00464684-CU-FR-VTA lender, there is no representation of fact upon which a buyer may reasonably rely." Id. Plaintiff, on the other hand, points to the Soderberg case, which held that an appraiser may be liable to 3rd party investors who rely on an appraisal to make loans in reliance on the report, when they know or intent that the buyer will rely on the report. (Soderberg v. McKinney (1996) 44 Cal.App.4th 1760.) In Soderberg, the appraisals were done for the mortgage broker, who would then always send a copy to potential investors. Here the appraisal was done for the lender, and there are no factual allegations showing how the appraisal made its way from the lender Countrywide to Plaintiff. Countrywide is not a named Defendant. There are still no allegations that show that the lender, Countrywide, ever made a representation to Plaintiff. How did the Landsafe appraisal make its way to Plaintiff? The SAC alleges that Landsafe knew that Countrywide would use the appraisal to make representations to Plaintiff, but there are no facts alleged showing when, where, how, or who made a representation to Plaintiff regarding the Landsafe appraisal report of 6,296 sq.ft. In fact the SAC doesn't even allege that Plaintiff relied on the Landsafe report figure of 6,296, but instead "when Winston purchased his residence he believed the residence was 6,276 square feet, and he had no reason to believe otherwise." ¶16. There is no alleged causal link between the report and the misrepresentation. Plaintiff is alleging that he relied on the 6,276 figure. Sustain the demurrer without leave to amend for failing to sufficiently allege reliance on the lender's appraisal, within the exception provided for in Soderberg. The allegations also fail to allege facts meeting the pleading required of fraud claims; i.e., who made the misrepresentation, their authority to speak for the corporation, to whom they spoke, what they said/wrote, and when it was said/written. TENTATIVE RULINGS Page: 3