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Miorelli v. Wyndham Vacation Ownership

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO
Sep 12, 2017
No. A145839 (Cal. Ct. App. Sep. 12, 2017)

Opinion

A145839

09-12-2017

CHRIS MIORELLI et al., Plaintiffs and Appellants, v. WYNDHAM VACATION OWNERSHIP et al., Defendants and Respondents.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (San Francisco City and County Super. Ct. No. CGC-14-538177)

Christopher Miorelli and Trina USA, LLC, appeal from a judgment entered against them after the trial court sustained respondents' demurrer without leave to amend and denied appellants' motion for reconsideration. They argue the trial court erred in sustaining the demurrer without leave to amend and denying their motion for reconsideration, and urge that their complaint alleged facts sufficient to state all the pleaded causes of action.

We conclude that the trial court erred in entering judgment for respondents because respondents did not demur to the cause of action for suppression, and that the demurrer should not have been sustained with respect to the cause of action for breach of contract. We find no error with respect to the court's rulings on the remaining causes of action.

STATEMENT OF THE CASE AND FACTS

This case began when appellants filed a civil action against respondents Wyndham Vacation Resorts, Inc. (WVR) and Wyndham Vacation Ownership (WVO) in the United States District Court for the Northern District of Alabama on October 9, 2012. WVO, described as "the world's largest vacation ownership business," was alleged to be the parent company of WVR, which "markets, sells and finances vacation ownership interests," provides property management services and develops vacation ownership resorts. Appellants alleged that they are "some of the largest Wyndham point holders in the world," owning more than 30 million points.

As described in one of appellants' pleadings, the case was consolidated for discovery purposes with six others filed against respondents by other plaintiffs alleging similar claims. Two of the cases settled and, on respondents' motion, the other five were transferred to federal district court in Orlando, Florida, on grounds of forum non conveniens. The Florida federal magistrate sua sponte questioned whether the plaintiffs had adequately pled the jurisdictional amount in controversy and, after providing an opportunity to amend, found the allegations insufficient and recommended dismissal for lack of jurisdiction. On March 11, 2014, the Florida federal district court adopted the magistrate's report and recommendation, finding the plaintiffs' "generic and conclusory pleading" insufficient to establish the amount in controversy.

Appellants filed an amended complaint in the Florida federal district court in October 2013, and, after the magistrate's November 2013 decision, filed a second amended complaint on December 20, 2013.

Appellants filed their complaint in the San Francisco County Superior Court on March 21, 2014. In addition to WVR and WVO, the complaint named as defendants Wyndham Worldwide (WW), alleged to be engaged in "selling, financing, and managing timeshares to numerous individuals throughout the United States" and to be the parent corporation of WVO, and two individuals, Charles Bowman and Douglas Park. Appellants described this complaint as alleging facts and theories "virtually identical" to the federal complaint, differing only "by the addition of causes of action unique to the California plaintiffs."

The complaint alleged 10 causes of action: (1) breach of contract; (2) fraud and fraudulent inducement; (3) suppression; (4) wantonness; (5) negligence; (6) negligent hiring, retention, training and supervision; (7) wanton hiring, retention, training and supervision; (8) violation of Business and Professions Code section 17200 (UCL); (9) violation of the California Legal Remedies Act (CLRA); and (10) intentional misrepresentation. The gist of the claims was that appellants, with respondents' "knowledge, expectation and encouragement," earned income by "renting" their timeshare, and after encouraging and inducing appellants to purchase millions of points for this purpose, respondents "systematically eliminated benefits making it increasingly difficult for [appellants] to use/rent their points." Many of the benefits allegedly eliminated were part of a "VIP Platinum" program under which members with successively higher point balances became entitled to greater benefits. Appellants alleged that respondents made false representations about appellants' ability to rent points, knowing them to be false, and secretly schemed to limit and prevent the rentals.

Respondents removed the case to federal court on May 6, 2014, alleging diversity of citizenship, then filed a motion to dismiss on May 13, 2014. Respondents argued that the entire complaint should be dismissed because the court lacked personal jurisdiction over the defendants, as none had its principal place of business in California, and because appellants failed to join an indispensable party, in that the damage they claimed was due to alleged changes in the "FairShare Plus VIP Program," changes to which were made by the FairShare Vacation Plan Use Management Trust (Trust), not by respondents. They further argued that nine of the 10 causes of action (all but the third) should be dismissed for failure to state a claim or because it was time barred, or both.

Respondents alleged that the principal place of business for WVR and WVO was Florida and for WW, New Jersey. Appellants had alleged in their original federal court complaint that the principal place of business for WVO and WVR was Florida. They alleged in the California complaint that the principal place of business for all three corporate defendants was California, and that WVO's and WVR's corporate headquarters were in Florida and WW's in New Jersey.

Respondents argued the causes of action for breach of contract, fraud and under the Consumer Legal Remedies Act failed to state a claim, the causes of action for negligence and negligent supervision were time barred and failed to state a claim, the wantonness claims were non-cognizable or time barred, and the claim under the Unfair Competition Law was time barred.

Appellants opposed this motion and moved for remand to the superior court, arguing that respondents did more business in California than in any state in the country through operating at least 16 resorts in the state. Appellants argued that they had named all indispensable parties, as WVR could adequately represent the interests of the Trust, which was a subsidiary or other entity controlled by WVR, and pointed out that the Alabama federal district court had rejected respondents' failure to join an indispensable party argument as a basis for dismissal of the action in that court. Alternatively, appellants sought leave to substitute the Trust for Doe defendant No. 1. They argued that they had alleged facts sufficient to state a claim for all their causes of action.

The relevant portion of the federal court's order is quoted at footnote 34, post.

At a hearing on July 11, 2014, the federal district court focused on whether the individually named defendants, alleged to reside in California, were sham defendants joined in order to defeat diversity jurisdiction. The court granted appellants leave to amend the complaint to state facts indicating the basis for individual liability, directed appellants to serve the individuals within 30 days, deferred hearing the motion to dismiss and continued the hearing on the motion to remand. Appellants filed their first amended complaint on August 11, 2014, and, on August 22, 2014, over respondents' opposition, the court remanded the case to the superior court. As far as the record reflects, it does not appear the federal court took any action on the motion to dismiss.

On October 8, 2014, respondents filed a demurrer to the amended complaint, again alleging that appellants failed to join an indispensable party and that the causes of action failed to state sufficient facts to constitute a claim, were time barred, or both. Like their motion to dismiss in federal court, respondents' demurrer did not address the third cause of action. Hearing on the demurrer was set for February 3, 2015. Under the California Rules of Court, opposition to the demurrer was due at least nine court days before the hearing (Cal. Rules of Court, rule 3.513)—that is, no later than January 21, 2015.

Further references to dates will be to 2015 unless otherwise specified.

On January 27, respondents filed a notice of non-opposition to demurrer, stating that no opposition to the demurrer had been received and the last day for service and filing of opposition was January 21. On the same date, respondents' counsel emailed appellants' counsel, Barbara Figari, stating that respondents had not received opposition to the demurrer and asking whether appellants intended to oppose it. Counsel did not receive a response.

On January 30, appellants filed a "Request for Judicial Notice in Opposition to Defendants' Demurrer." Appellants sought judicial notice of six items: "Exhibits A and B," a 2012 Alabama federal district court "Memorandum of Opinion and Order" in a case by other plaintiffs presenting similar claims to appellants' against WVR, WVO and another entity, in which the court denied respondents' motions to dismiss based on grounds including failure to join an indispensable party and failure to state a claim; "Exhibit C," appellants' opposition to respondents' motion to dismiss in federal district court in the present case; "Exhibit D," a stipulation by the parties in federal district court in the present case; "Exhibit E," the federal district court's order remanding the present case to the superior court; and "Exhibit F," the federal court docket sheet for the present case. Although the superior court's electronic filing system "received" this filing, it was apparently not "accepted" until after the February 3 hearing on respondents' demurrer, at which time it was "deemed" filed as of the date of receipt.

Sirmon v. Wyndham Vacation Resorts, Inc., et al. (N.D. Ala. Sept. 18, 2012) 2012 WL 4341819, against defendants WVR, WVO and Resort Condominiums International, LLC (RCI).

As the request for judicial notice appears in the record on appeal, only the first two of the exhibits are included in full. Exhibit C, the opposition to dismissal, stops after the introduction and statement of facts, and exhibits D, E, and F are not present.

The hearing on February 3, began with the court's statement, "This was sustained without leave to amend. No opposition was filed." Attorney Caroline McCormick, making a special appearance for appellants, apologized to the court for failing to give notice that appellants were planning to appear at the hearing, then stated that the request for judicial notice included "papers that would show that this matter was not unopposed" and that papers were filed with the court on January 30. Counsel for respondents stated they had not received any papers and had asked Figari if appellants intended to oppose the demurrer but had not received a response. The court reiterated that no opposition had been filed, and stated that a request for judicial notice would have to be "in relation to some contested motion." When McCormick sought to clarify that the court "did not receive anything on the 30th," the court said it would not have made any difference: "It wouldn't have been timely anyway. . . . We certainly didn't get a courtesy copy of it. And if we did, I'd be bound not to consider it." The court filed its order sustaining the demurrer without leave to amend the same day, noting that no opposition had been received.

On February 9, appellants filed an ex parte application for reconsideration (Code Civ. Proc., § 1008) and relief (§ 473), asserting that ex parte relief was necessary because there was not time on the court's calendar for the motion to be heard before "severe prejudice would occur" to appellants in that judgment would be entered on the order sustaining the demurrer, and that relief was appropriate because the court had ruled on the demurrer without appellants' request for judicial notice and should reconsider the demurrer in light of those documents. Appellants urged that if the court had not received appellants' papers, it was the result of excusable inadvertence or error: Counsel declared that she e-filed the request for judicial notice on January 30, four days ahead of the scheduled hearing, and did not receive any communication indicating a problem with the filing, then on February 5—two days after the hearing—received two emails stating the papers had been "deemed filed as of January 30, 2015." The exhibit attached to document the email communications shows that counsel was informed on January 30 that the documents had been "received" but not yet "accepted into the official court record," then informed on February 5 that the documents had been "accepted" or "lodged," with a January 30 transaction date. Appellants also argued that reconsideration was required in light of new facts alleged in a proposed second amended complaint.

Further statutory references will be to the Code of Civil Procedure except as otherwise specified.

Exhibit 1 to counsel's declaration consisted of four emails generated by the electronic filing system, two dated January 30, 2015, and two dated February 5. The January 30 emails indicated that the request for judicial notice and a "Proposed Order Overruling Defendants Demurrer" had been "received" by the e-filing system but not yet "accepted into the official court record," with transactions times of "10:59:01" a.m. for the request for judicial notice and "11:01:03" a.m. for the proposed order. The two emails dated February 5 indicated that the request for judicial notice had been "updated as accepted" and the proposed order "updated as lodged, with transaction times corresponding to the times the request and proposed order were transmitted on January 30 ("10:59:01" a.m. for the request for judicial notice and "11:01:03" a.m. for the proposed order).

Respondents opposed the ex parte motion, which was denied. On February 19, 2015, appellants filed a noticed motion seeking the same relief. Respondents' opposition noted, among other things, that appellants had not explained the delay between January 21, the deadline for filing opposition to the demurrer, and January 30, when appellants submitted the request for judicial notice for electronic filing. Respondents sought sanctions (§ 128.5) for appellants' failure to adhere to the court's deadlines and wasting the court's and respondents' time and resources.

Appellants' reply argued that relief under section 473 was appropriate since the request for judicial notice had been deemed filed on January 30, before the February 3 demurrer hearing. Appellants stated that the court's e-filing system had first been put into use approximately six weeks before the January 30 filing, and that respondents had encountered the same issue with the system when they filed their opposition to the reconsideration motion. Appellants described the request for judicial notice as having urged the court to take judicial notice and "adopt the reasoning contained in" the United States District Court for the Northern District of California's order denying respondents' motion to dismiss this case. Because the superior court had not been aware of the January 30 filing, they urged, the motion for reconsideration raised new facts or circumstances the court could consider under section 1008. With respect to sanctions, appellants argued it was respondents who filed frivolous motions and pleadings, removing the case to federal court, where its motion to dismiss was denied, and then on remand filing a demurrer on the same grounds "despite an Order from a Federal District Court Judge explaining why defendant's attempts to dismiss must be denied."

According to appellants' reply, respondents filed their attorney's declaration on March 24, 2015, then filed a "larger version of the same thing" on March 27, 2015. The exhibits to appellant's counsel's declaration show (1) an email "notification of service" to appellant's attorney dated March 24, 2015, stating that respondents' "Opposition to the Motion for Reconsideration," the declaration of respondent's attorney, "Exhibits A and B" to that declaration, and a "Request for Sanctions" were electronically submitted on that date, and (2) an email notification of service dated March 27, 2015, reflecting the electronic submission of exhibits A and B to respondent's attorney's declaration, each one page longer than indicated in the March 24 notice. It is not apparent to us how these notifications suggest respondents encountered the same difficulty with the e-filing system as appellants did: Both transmissions state, "You are being served with documents that have been electronically submitted" whereas the notification received by appellants' attorney on the day she filed the motion for reconsideration stated that the filing had been received but not yet accepted. The record reflects that the submission on March 24 was of counsel's declaration without exhibits attached and the filing on March 27 was of exhibits A and B to the declaration.

The trial court filed a tentative ruling finding that appellants demonstrated excusable neglect, granting leave to file the amended complaint and ordering appellant's counsel to pay $2,000 for the fees respondents' incurred as a result of appellants' "failure to file a timely and proper opposition to the demurrer, failure to comply with the court's rules regarding contesting a tentative ruling, etc."

At a hearing on April 28, respondents emphasized appellants' failure to explain their delay in filing between January 21 and January 30, and argued that the proposed second amended complaint was appellants' "third bite at the apple," following three complaints by the same plaintiffs in "virtually same lawsuit" in federal court in 2012. Appellants were represented at the hearing by attorney Lawrence Organ, making a special appearance. Organ attributed the delay prior to January 30 to a calendaring error and acknowledged that this was not addressed in Figari's declaration. Asked what information in the declaration provided a basis for relief, Organ stated that law of the case precluded respondents from filing the demurrer based on arguments that had been rejected in federal court and raised the issue of the January 30 filing not reaching the court due to problems with the e-filing system. The court agreed with respondents' attorney's statement that the federal court decision did not have law of the case, res judicata or collateral estoppel effect in the superior court case. It expressed skepticism that Figari could have been unaware there was a problem with the e-filed documents, and considerable frustration with appellants' failures to comply with procedural rules, noting that the court had not been provided a courtesy copy of the e-filed documents before the February 3 hearing, as required by the Superior Court of San Francisco County Local Rules, rule 2.6(B) and that the documents it had at the present hearing did not include the attachments Figari's declaration described. Taking the matter under submission, the court made clear that it was struggling to weigh the strong policy favoring hearing cases on the merits against appellants' failures to follow procedural rules and requests "for one pass after another."

Organ explained that the delay between January 21 and January 30 was not addressed in the declaration because Figari wanted to protect the privacy of the calendar clerk (her mother), who was undergoing chemotherapy.

Organ asserted that the demurrer was prohibited by "law of the case" because it was based on the same grounds that the federal court had rejected in denying respondents' motions to dismiss. Respondents argued that law of the case, res judicata or collateral estoppel would not apply because under California law, "the court doesn't take judicial notice of the findings of another court; it merely takes judicial notice that the court did, in fact, enter that order with those particular findings."

When Organ, who was appearing by telephone, apologized for not being present in court and asked the court to "at least give Ms. Figari a chance to supplement her papers if the court doesn't have that so we can at least have this matter adjudicated on the merits," the court asked, "When's this gonna end? It's one thing after another; isn't it?" The court declined to give Figari more time, stating, "It is what it is. I've got the papers, and . . . a decision will be made based on what I have. . . . Enough is enough with Ms. Figarti's problems." The court acknowledged the strong policy in favor of hearing matters on the merits but stated, "you fail on everything else."

Further references to local rules will be to the Superior Court of San Francisco County Local Rules.
Rule 2.6(B) requires that a "file-endorsed courtesy copy of any case management statement, response to order to show cause, brief, memorandum, motion or response thereto with supporting papers must be lodged with the clerk of the department (including Law and Motion, Housing Court, Discovery, Presiding Judge, and departments of judges assigned to a case for all purposes) to which the matter has been assigned." "Failure to lodge courtesy copies of opposition papers at least three days before a hearing or as otherwise required by statute, rule or court order may, in the discretion of the judicial officer presiding over the hearing, result in the granting of the motion or continuance of the hearing." (Local rule 2.6(B).) (<http://www.sfsuperiorcourt.org/sites/default/files/pdfs/Local%20Rules/Local-Rules-of-Court-Effective-January-1-2015.pdf> [as of Sept. 12, 2017].)

As it appears in the record on appeal, counsel's declaration in support of the motion for relief described three exhibits (exhibit 1, the emails concerning the January 30 electronic filing; exhibit 2, the request for judicial notice, with "all exhibits thereto" and the proposed order filed on Jan. 30; and exhibit 3, appellants' proposed second amended complaint), but none were included. Another declaration filed about a week later described the same three exhibits and, in our record, includes Exhibit 1 and part of exhibit 2—the request for judicial notice and the first of its six exhibits—but does not include the other five exhibits to the request for judicial notice or exhibit 3.

On May 11, 2015, the court filed its order denying appellants' motion for reconsideration and/or relief from default. The order stated that instead of filing a "formal timely opposition" to the demurrer, appellants filed a "request for judicial notice in opposition to the demurrer" four days before the hearing; the court was unaware of the filing and appellants failed to provide a courtesy copy to the court as required by Local rule 2.6B; after the court issued its tentative ruling sustaining the demurrer without leave to amend as unopposed, appellants appeared at the hearing but the court did not permit argument because notice had not been given that they intended to contest the tentative ruling. The court found appellants were not entitled to relief under section 473 because the "failure to file a formal opposition, late filing of a purported opposition, and failure to contest the tentative ruling in a proper manner were inexcusable." Nor were appellants entitled to relief under section 1008, because they had not demonstrated a new fact, law or circumstance or provided a satisfactory explanation for failing to do so earlier, and they had not complied with the affidavit requirement of section 1008, subdivision (a). Judgment in respondents favor was entered on June 2, 2015.

Appellants filed a timely notice of appeal on July 27, 2015.

DISCUSSION

I.

Appellants describe this appeal as presenting two questions: whether the trial court erred in sustaining the demurrer without leave to amend, "particularly" after a Federal Court denied [respondents'] Motion to Dismiss based upon identical grounds," and whether the trial court erred in refusing to take judicial notice "of matters timely filed, simply because the court's new electronic filing system did not show the documents in the record for over a week after filing." This description presents an inaccurate picture of the case.

First, as far as we can tell from the record, the federal district court did not deny the motion to dismiss; it did not act on that motion because it determined that jurisdiction belonged in the state superior court. As reflected in the transcript of the hearing in federal court and the court's minutes, the court made clear that it had to decide whether it had jurisdiction before it could act on the motion to dismiss. The jurisdictional question was whether the individual defendants were sham defendants named in order to defeat diversity jurisdiction. The court allowed appellants to amend the complaint to plead facts showing liability of the individual defendants, stating that it would remand the case to state court if they could, and the case would remain in federal court if the court found the individuals were sham defendants. The motion to dismiss was expressly "table[d]"; the court's minutes show that the motion to dismiss was "deferred" and the hearing on the motion to remand was "reset." At the next hearing, on August 22, 2014, the case was remanded to the San Francisco Superior Court. While appellants repeatedly refer to the federal court having denied the motion to dismiss, and asked the trial court to "adopt the reasoning contained in" the federal court's order denying respondents' motion to dismiss, if such an order exists, it was not made part of the record on appeal. The only orders from the federal court that appear in our record are the minute order deferring the motion to dismiss and the minute order remanding to state court, neither of which decide the motion to dismiss, much less include any reasoning. Accordingly, there is no basis in the record for appellants' suggestion that the trial court erred in sustaining respondents' demurrer because the federal district court, in denying respondents' motion to dismiss, rejected the arguments upon which the demurrer was based.

Further, at least as it appears in the record on appeal, although the request for judicial notice listed the federal court's remand order as one of the six exhibits for which judicial notice was sought, that exhibit is not attached to the request for judicial notice. Nor does it appear in the record as an attachment to the request for judicial notice where that request was itself submitted as an exhibit to appellants' ex parte and noticed motions for reconsideration. And at the hearing on the motion for reconsideration, the trial court stated there were no attachments to appellants' counsel's declaration. So far as the record on appeal discloses, this critical document appellants portrayed as having already rejected respondents' arguments was not even presented to the trial court.

As described in footnotes 7 and 14, ante, the record on appeal does not include all the documents described in the request for judicial notice: Two appear in full, a third appear in part, and three are not present at all.

Appellants' characterization of the trial court's response to their request for judicial notice also distorts the record. The representation that the court refused to take judicial notice "simply because the court's new electronic filing system did not show the documents in the record for over a week after filing" can only refer to the court's denial of appellants' motion for reconsideration or section 473 relief. The court could not have granted the request for judicial notice at the hearing on February 3, as it had not yet received the documents appellants attempted to file on January 30; the court's e-filing system did not reflect the filing until after the February 3 hearing and the court stated at the hearing that it had not received a courtesy copy. With respect to the motion for reconsideration or relief, the transcript of the hearing reflects that while the court was skeptical of the argument that appellants' counsel was unaware the request for judicial notice had not been processed by the court's system, its primary concern was that the attempted filing on January 30 was untimely even without consideration of further delay due to technical issues, the deadline for filing opposition to the demurrer having passed on January 21.

Opposition to a demurrer is required to be filed at least nine court days before the hearing. (Cal. Rules of Court, rule 3.513.) Since February 3, 2015, had been set as the date for hearing on the demurrer in October 2014, appellants had known for several months that opposition to the demurrer had to be filed on or before January 21, 2015. Appellants view the electronic filing on Friday, January 30, 2015—three court days ahead of the hearing set for Tuesday, February 3—as timely on the theory that there is no set deadline for filing a request for judicial notice. But, as appellants repeatedly assert, the request for judicial notice was intended to serve as their opposition to the demurrer. Appellants could not make this point more clear: They state that they "opposed the demurrer by filing a Request for Judicial Notice containing the ruling of the Federal Court, arguing that res judicata applied"; filed the request "in opposition" to the demurrer "to highlight the identical nature of Respondents' successive and meritless attacks on the same pleadings"; "opposed Respondents' demurrer through the Request for Judicial Notice in an effort to highlight to the court the fact that Respondents were, in effect, asking the court to rule for a fourth time on the exact same arguments unsuccessfully advanced and rejected by at least two United States District Courts"; and filed the request for judicial notice "simply intending that this court adopt the ruling of the Federal District Court Judge, since these exact issues have already been ruled upon in this case."

Thus, appellants' description of the request for judicial notice as having been timely filed is unfounded and misleading. If appellants could extend the deadline for filing opposition by simply filing papers under another name to serve the purpose of opposition, the deadline would be meaningless. The filing on January 30, 2015, was clearly not timely.

Moreover, appellants provide no authority for the proposition that a request for judicial notice can serve as opposition to a demurrer. The request for judicial notice contained no argument addressing the demurrer and no explanation of the relevance of the documents offered. We fail to see how a trial court can be expected to determine the significance of documents submitted in this fashion.

In sum, appellants present a distorted view of the case by describing the federal court as having denied respondents' motion to dismiss when the only orders included in the record show the court deferred the motion to dismiss and then remanded the case to superior court; treating their request for judicial notice, unaccompanied by any argument or explanation of the documents for which such notice was sought (and apparently missing more of the listed exhibits than were attached), as a valid substitute for written opposition to the demurrer; and assuming the deadline for filing opposition did not apply to the request for judicial notice despite the fact that it was filed precisely for the purpose of opposing the demurrer.

II.

Turning to the actual arguments on appeal, we first consider whether the trial court abused its discretion in denying appellants' motion for reconsideration or relief under section 473. The relief appellants sought by this motion was to have the court reconsider its decision on the demurrer in light of the documents appellants submitted for judicial notice. Appellants argued that the court sustained the demurrer without leave to amend due to the mistaken belief that no opposition had been filed, and its decision should be reconsidered because the reason the court had not received the request for judicial notice was a technical problem with the court's electronic filing system. Appellants also argued that the court was required to grant the motion for reconsideration because the proposed second amended complaint alleged new facts.

Section 1008, subdivision (a), provides: "When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown." The party seeking reconsideration "must provide a satisfactory explanation for the failure to produce the evidence at an earlier time" and the trial court's ruling on the motion is reviewed for abuse of discretion. (New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212; In re Marriage of Herr (2009) 174 Cal.App.4th 1463, 1468.)

Appellants maintain that the trial court was required to grant reconsideration based upon the new facts alleged in their proposed second amended complaint. They rely upon Rains v. Superior Court (1984) 150 Cal.App.3d 933, 944, which held that the different facts warranting reconsideration could be alleged in a proposed amended complaint, and Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1387, which relied upon Rains in holding that if the proposed amended complaint submitted on a motion for reconsideration stated any causes of action, the trial court was obligated to vacate its prior order sustaining demurrers without leave to amend and permit the plaintiffs to file an amended complaint.

Here, the trial court found that appellants failed to demonstrate a new fact, law or circumstance or provide a satisfactory explanation for failing to produce any such evidence earlier, and failed to comply with the requirement to "state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown." (§ 1008, subd. (a).) Appellants' motion for reconsideration offered no explanation of what new facts appeared in the proposed amended complaint, how they were sufficient to demonstrate that all indispensable parties had been joined or that the causes of action were adequately stated or why they had not been presented previously. The memorandum of points and authorities in support of the motion for reconsideration made only the conclusory statement that the proposed second amended complaint alleged "facts sufficient to establish that all indispensable parties have been joined" and "new facts relative to [respondents'] prior assertions that [appellants] failed to state a claim." Counsel's declaration was similarly conclusory: "A true and correct copy of [appellants'] Proposed Second Amended Complaint, alleging new facts and incorporating newly added Exhibit A by reference. Is [sic] attached hereto as Exhibit 3." Exhibit A was described in the memorandum of points and authorities as "the Memorandum Opinion by United States District Court Judge L. Scott Coogler, further addressing this issues [sic]." Appellants' brief on appeal repeats the same conclusory statement quoted above.

This is the opinion in Sirmon v. Wyndham Vacation Resorts, Inc., supra, 2012 WL 4341819.

Although counsel's declarations in support of both the ex parte and the noticed motions for reconsideration and section 473 relief state that the proposed second amended complaint is attached as exhibit 3, the exhibit does not appear in the record on appeal. Nor have we been able to locate the proposed second amended complaint elsewhere in the record. Accordingly, we are not able to review the proposed pleading. "Appealed judgments and orders are presumed correct, and error must be affirmatively shown. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)" (Hernandez v. California Hospital Medical Center (2000) 78 Cal.App.4th 498, 502.) It is appellants' burden to provide an adequate record on appeal, and "[f]ailure to provide an adequate record on an issue requires that the issue be resolved against [appellants]." (Ibid.) Appellant has not demonstrated that the proposed second amended complaint alleged new or different facts or sufficiently stated any cause of action against respondents.

Strangely, respondents do not mention the absence of the second amended complaint from the record. In fact, respondents' brief purports to quote from the second amended complaint at page 17 of their brief, but the citation to the record they provide is to the first amended complaint.

Appellants additionally urge that the trial court acted "capriciously" in denying their motion for relief in that its tentative ruling granted their motion for reconsideration and relief and the court offered no explanation for changing its mind and denying them the right to have their case adjudicated on the merits. The court's tentative ruling granted the motion to vacate the February 3 demurrer order pursuant to section 473, subdivision (b), stating that appellants demonstrated excusable neglect without explaining its reasoning. Appellants take the tentative ruling to mean that the court found they had shown they were entitled to relief "based on the malfunction of the Superior Court's new filing system," "considering that Appellants had timely filed a request for judicial notice in advance of the hearing on Respondents' demurrer."

Whatever the reasons for the trial court's tentative ruling, the trial court did explain its decision to deny relief after hearing argument. The court's concerns were evident at the hearing on April 28, particularly with regard to appellants' failure to explain the delay between the January 21 deadline for filing opposition and January 30, when they submitted the request for judicial notice to the electronic filing system. This is clear from the court's response, when toward the end of the hearing, appellant's attorney said he had not heard anything to suggest the tentative decision granting relief was not warranted: The court replied that respondents' counsel had "said plenty," and had respondents' counsel repeat his arguments about the unexplained delay before January 30. Figari's declaration addressed the technical problems with the January 30 filing but, as Organ acknowledged at the hearing, said nothing about the failure to file opposition by the January 21 deadline. Additionally, the court pointed out that the technical problems did not explain the fact that the court had not received a courtesy copy of the request for judicial notice as required by the local rules. And even at the April 28 hearing, the court stated that none of the three exhibits referred to in counsel's declaration were attached. The court's order denying relief made clear that its decision was also based on appellants' filing of the request for judicial notice in lieu of opposition to the demurrer and failure to comply with the court's rules regarding contesting the tentative decision that preceded the February 3 hearing: The court found that appellants failed to demonstrate "mistake, inadvertence, surprise, or excusable neglect" as required for discretionary relief under section 473 in that their "failure to file a formal opposition, late filing of a purported opposition, and failure to contest the tentative ruling in a proper manner were inexcusable."

Appellants have not demonstrated that the court abused its discretion. Their briefs offer no explanation whatsoever for their failure to file timely opposition to the demurrer and no authority for utilizing a request for judicial notice in place of formal opposition. Their reliance upon the technical issues with processing the January 30 electronic filing is misguided, even aside from failing to address the delay before January 30. Counsel stated in her declaration below that she did not "receive any communications stating that the filings had been rejected or otherwise not submitted to the court," and asserts in her opening brief that, using the e-filing system for the first time, she incorrectly assumed she would receive notice before the hearing date if the filing was delayed. But the emails from the e-filing system that appellants submitted to the trial court to demonstrate counsel had filed the request for judicial notice on January 30 clearly stated that the documents had been "received" and had "not yet been accepted into the official court record." The emails stated that a follow-up email would be sent "once the document has been processed," but the follow-up email stating the documents had been "accepted" was dated February 5, two days after the hearing. Thus, despite having been informed that the filing had not yet been "accepted" by the court and having not received the promised follow-up confirmation of processing, counsel failed to make any inquiry as to the status of the filing prior to the February 3 hearing. Under the Rules of Court, "[t]he electronic filer is responsible for verifying that the court received and filed any document that the electronic filer submitted to the court electronically." (Cal. Rules of Court, rule 2.259(a)(4).) And, despite counsel's assertion that appellants provided a courtesy copy of the request for judicial notice and exhibits to the law and motion department on January 30, the pages of the record cited in support of this statement do not mention such delivery and the court stated at the February 3 hearing that it had not received a courtesy copy. Opposing counsel also had not received the request for judicial notice, nor had counsel received notice that appellants were going to appear at the hearing.

Appellants' motion for reconsideration stated that appellants "paid to ensure that the Department would receive courtesy copies, and Defendants' counsel would be served through the same system," citing exhibits 1 and 2 to Figari's declaration. Exhibit 1 contained the emails described in footnote 9 ante. Exhibit 2 is described in the declaration as a copy of the request for judicial notice, all exhibits thereto and the proposed order submitted for e-filing on January 30, 2015. In our record on appeal, however, only the face sheet for exhibit 2 appears with the declaration.

In any event, the issue of problems with the e-filing system is a red herring. Appellants filed no opposition of any kind by the January 21, 2015, deadline and then—seven court days after the deadline—filed a request for judicial notice containing no argument or explanation how or why the court should treat it as opposition to the demurrer. Even accepting that technological issues delayed the processing of the January 30 filing, this could not excuse the failure to file timely opposition, as January 30 was already beyond the deadline. The superior court rules provide that technical problems with electronic filing may provide the basis for an extension of time. (Local rule 2.10(W), <http://www.sfsuperiorcourt.org/sites/default/files/pdfs/Local%20Rules/Local-Rules-of-Court-Effective-January-1-2015.pdf> [as of Sept.12, 2017].) But technical problems with an untimely attempted filing cannot excuse the untimeliness of the attempt.

This provision, which in January 2015 was contained in Local rule 2.10(W), appears as Local rule 2.11(W) in the currently operative version of the rules (<http://www.sfsuperiorcourt.org/sites/default/files/pdfs/Local%20Rules/Uniform-Local-Rules-of-Court-January-1-%202017_FINAL.pdf> [as of Sept. 12, 2017]).

"A trial court has broad discretion under rule 3.1300(d) of the [California] Rules of Court to refuse to consider papers served and filed beyond the deadline without a prior court order finding good cause for late submission." (Bozzi v. Nordstrom, Inc. (2010) 186 Cal.App.4th 755, 765; Rancho Mirage Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5th 252, 261-262.) Appellants have demonstrated no abuse of discretion here. Appellants offered no explanation for their failure to file timely opposition to the demurrer and, even when they attempted to oppose the demurrer by filing a request for judicial notice—after the deadline for opposition and unaccompanied by any argument or explanation of its relevance—failed to investigate whether the filing had reached the court despite receiving indication it had not been processed. Appellants also failed to give notice to the court or opposing counsel that they intended to appear at the February 3 hearing on the demurrer, in violation of the court's rule requiring that such notice be given no later than 4:00 p.m. the day before the hearing. (Local rule 8.3(D); see Cal. Rules of Court, rule 3.1308(a)(1).) And, at the hearing on the motion for reconsideration or section 473 relief, the court stated that none of the exhibits referred to in counsel's declaration in support of the motion were in fact attached to the declaration.

In the record on appeal, the copy of counsel's declaration filed on the same date as the notice of motion and memorandum of points and authorities in support of the motion is unaccompanied by any of the three exhibits to which it refers; another copy of the same declaration, filed a week later, is accompanied by exhibit 1 (emails from the e-filing system) and part of exhibit 2 (request for judicial notice with exhibit A thereto but not exhibits B through F), but not exhibit 3 (proposed second amended complaint).

In sum, appellants have not demonstrated that the trial court abused its discretion in refusing to reconsider its ruling on the demurrer in light of the documents submitted with the request for judicial notice or in light of the proposed second amended complaint.

III.

It remains for us to review the court's original decision to sustain the demurrer without leave to amend—based on the allegations of the first amended complaint and the demurrer, without reference to the documents appellants unsuccessfully sought to put before the trial court.

As described in the first amended complaint, when individuals purchase timeshare interests from respondents, they "receive a deed for the portion of the property they purchased," with the value of their ownership represented by points that can be used to reserve accommodations at any of respondents' resorts through a reservation system owned and operated by respondents. Appellants alleged that respondents induced them to purchase millions of points with false representations that appellants would be able to rent their points and use respondents' system and facilities to run a rental business, while simultaneously secretly developing strategies to restrict and eventually eliminate "Megarenters" (owners who owned large numbers of points and rented them for profit). Respondents allegedly engaged in various deceptive sales tactics, used "company-wide with the knowledge, endorsement and encouragement of senior management" as part of a corporate philosophy to "make the sale at any cost," including lying. Respondents allegedly enticed owners to purchase additional interests through the VIP Program, which offers increasing benefits at each of three levels, but made various self-serving changes to the VIP Program which significantly "diluted and devalued" appellants' property interests and severely impeded appellants' ability to use the vacation interests they own.

Of particular importance, through a "Rental Pitch," appellants and others were induced to purchase substantial numbers of points with representations that they would be able to cover their expenses and make a profit by renting their points, running a rental business through respondents' systems. While employing these sales tactics, however, respondents were simultaneously and secretly developing and implementing a strategy to restrict and eventually eliminate the ability of appellants and other Megarenters to rent their points, and began to eliminate benefits and change rules in ways that undermined appellants' rental business. Eventually, respondents adopted a provision prohibiting owners from using the program for commercial purposes, which appellants alleged was "currently" not being enforced, thereby "lulling [appellants] into inaction."

The first amended complaint describes the alleged conduct in great detail. We present only a summary.

The first amended complaint noted 101 complaints against respondents filed by a Florida law firm with Attorney Generals in 17 states and with the Federal Trade Commission concerning alleged unlawful timeshare sales methods, primarily involving exploitation of prospective purchasers including senior citizens and describing similar sales and closing practices. It also noted that the Better Business Bureau had in the past given WVO an "F" rating based upon some 1,314 complaints, 884 relating to "advertising/sales issues."

As we have said, respondents demurred on the grounds that appellants failed to join an indispensable party and that they failed to allege sufficient facts to state any of their causes of action. The standard of review on appeal following the sustaining of a demurrer is de novo. (Barroso v. Ocwen Loan Servicing, LLC (2012) 208 Cal.App.4th 1001, 1008; Sprinkles v. Associated Indemnity Corp. (2010) 188 Cal.App.4th 69, 75-76.) " ' "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed." ' " (Serrano v. Priest (1971) 5 Cal.3d 584.)' " (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6, quoting Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Loeffler v. Target Corp. (2014) 58 Cal.4th 1081, 1100.) We must determine "whether the complaint states facts sufficient to constitute a cause of action." (Loeffler, at p. 1100; Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081 (Schifando).) Appellants bear the burden of demonstrating that the trial court erred in sustaining the demurrer. (Baldwin v. AAA Northern California, Nevada & Utah Ins. Exchange (2016) 1 Cal.App.5th 545, 549.) Where the trial court sustained the demurrer without leave to amend, " 'we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse.' " (Loeffler, at p. 1100, quoting City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) "The plaintiff has the burden of proving that an amendment would cure the defect." (Schifando, at p. 1081.)

Preliminarily, appellants urge that aside from any issues with the specific grounds of respondents' demurrer, the court erred in entering judgment in respondents' favor because while they purported to demur to the complaint in its entirety, they in fact failed to demur to the third cause of action (suppression). Appellants are correct that the demurrer addressed each of the other causes of action in the first amended complaint but made no mention of the third cause of action. If the demurrer was sustained as to the entire complaint on the theory that none of the causes of action were properly pled, appellants would be correct: The court could not properly enter a judgment of dismissal on a cause of action to which respondents did not demur. But respondents also demurred to the entire complaint on the ground that appellants failed to join an indispensable party. If the demurrer was properly sustained on this basis, respondents are entitled to judgment.

Although "[a] court sustaining a demurrer without leave to amend is required to state 'the specific ground or grounds upon which the decision or order is based' " (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 111, quoting § 472d), the trial court here did not do so. The trial court's order states only: "Having read and considered the demurrer, and there having been no opposition filed by the plaintiffs, [¶] IT IS HEREBY ORDERED that [respondents'] demurrer is SUSTAINED WITHOUT LEAVE TO AMEND." Nevertheless, "a reviewing court reviews the judgment rather than the reasons for the judgment and must affirm the judgment if any of the grounds stated in the demurrer is well taken. (E.L. White, Inc. v. City of Huntington Beach (1978) 21 Cal.3d 497, 504, fn. 2; Maheu v. CBS, Inc. (1988) 201 Cal.App.3d 662, 670; Weinstock v. Eissler (1964) 224 Cal.App.2d 212, 224-225.)" (Fremont Indemnity Co., at p. 111.)

A.

Respondents argued that appellants failed to join an indispensable party because they claimed they were damaged due to changes made to the VIP Program and changes to that program were made by the Trust, not by respondents. Further, respondents urged that the Trust could not be joined because it is not domiciled in California and the Trust Agreement's forum selection clause calls for litigation in Florida, and the court had authority to sustain a demurrer where an indispensable party has not been, and cannot be, joined. (Save the Bay, Inc. v. San Diego Unified Port Dist. (1996) 42 Cal.App.4th 686, 690, 699 [statute of limitations had run as to indispensable party].)

The forum selection provision states, "Any action brought to enforce the terms or interpret any provision of this Trust Agreement or any other action in any manner relating to the Trust, the Trustee, the Trust Properties or the Plan shall be brought in the State Courts in Orange County, Florida or the Federal District Courts for the Middle District of Florida."

Under section 389, in order to determine whether a party is "indispensable," the court must first determine whether the party is "necessary" under subdivision (a) of the statute. (Deltakeeper v. Oakdale Irrigation Dist. (2001) 94 Cal.App.4th 1092, 1100.) Section 389, subdivision (a), provides: "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. If he has not been so joined, the court shall order that he be made a party." Under subdivision (b) of section 389, if a party found to be necessary under subdivision (a) cannot be joined in the action, "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."

Respondents' argument draws on two parts of section 389: They argue that the court would not have been able to afford complete relief without the Trust as a party because the Trust Agreement makes the Trust responsible for the policies and procedures governing the VIP Program (§ 389, subd. (a)(1)), and that proceeding without the Trust might " 'impair or impede the [Trust's] ability to protect [its] interest.' " (§ 389, subd. (a)(2)(i).) Accordingly, respondents asked the trial court to take judicial notice of the Trust Agreement establishing the Trust. As indicated above, "a demurrer lies if the grounds on which it is based appear on the face of the complaint or from a matter of which the court is required to or may take judicial notice." (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 325 (Brosterhous).) "[A] demurrer may be sustained where judicially noticeable facts render the pleading defective (Evans v. City of Berkeley, supra, 38 Cal.4th at p. 6), and allegations in the pleading may be disregarded if they are contrary to facts judicially noticed. (Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 400; see Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-266 (Fontenot) [in sustaining demurrer, court properly took judicial notice of recorded documents that clarified and to some extent contradicted plaintiff's allegations].)" (Scott v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 743, 751.)

Respondents also cited a judicial opinion they described as "providing a detailed explanation of the relationships between Wyndham, the Trust, the trustee, and the beneficiaries of the Trust," Perret v. Wyndham Vacation Resorts, Inc. (S.D. Fla. 2012) 889 F. Supp.2d 1333, 1338-1339 (Perret). The relationships described in Perret, however, are not particularly helpful in understanding the entities' responsibility for the decisions at issue in the present case. The plaintiffs in that case sued WVR and FairShare Vacation Owners Association over sales and management of timeshare vacation properties, alleging the sales transactions were misleading and deceptive and the management costs assessed were excessive and unreasonable. (Perret, at p. 1335.) The court explained that under the Trust Agreement, the Trustee, FairShare, "agreed to develop or contract with a third party to provide a reservation system to enable members to reserve the use of Trust properties" and members "agreed to allow the Trustee to collect POA [property owners' association] fees, hold the fees in escrow, and remit the fees to the POAs when appropriate." (Id. at p. 1338.) The Trustee was to determine the amount of the "Program Fee" needed to cover the cost of operation and administration of the Plan, while the POA, not the Trustee, would determine the amount of each Member's POA fee. (Ibid.) The Trustee retained Wyndham as manager of the Trust and the Plan, and the manager was required to prepare a budget and submit it to the Trustee. (Id. at p. 1339.) These aspects of the parties' roles under the Trust Agreement cast no light on their roles with respect to the very different claims in the present case, which related to decision making regarding program policies and rules.

Fontenot, supra, 198 Cal.App.4th 256, was disapproved on other grounds by Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919.

The record in the present case does not disclose what action, if any, the trial court took on respondents' request for judicial notice of the Trust Agreement. "Because we review the judgment of the trial court, and the question posed is whether the trial court erred in sustaining the demurrer to the complaint, we ordinarily look only to the record made in the trial court. (Brosterhous[, supra,] 12 Cal.4th [at p.] 325.)" (Verizon California Inc. v. Board of Equalization (2014) 230 Cal.App.4th 666, 674, fn. 2, (Verizon).) Where a matter was not before the trial court, a reviewing court may take judicial notice but need not do so, and often will not where there is no explanation for the requesting party's failure to request judicial notice in the trial court. (Brosterhous, at p. 325; Doers v. Golden Gate Bridge, etc. Dist. (1979) 23 Cal.3d 180, 184, fn. 1.) Here, as respondents did request judicial notice below, and we see no indication in the record that appellants objected, we find it appropriate to take judicial notice of the existence of the Trust Agreement. This does not mean, however, that we take judicial notice of respondents' interpretation of that document.

"Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning." (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374 (Joslin).) Generally, when judicial notice is taken of the existence of a document, "the truthfulness and proper interpretation of the document are disputable." (StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 457, fn. 9.) Respondents argued below that judicial notice of contracts is appropriate under Evidence Code section 452 (Performance Plastering v. Richmond American Homes of California, Inc. (2007) 153 Cal.App.4th 659, 666, fn. 2 [settlement agreements]), and that "[w]here . . . judicial notice is requested of a legally operative document—like a contract—the court may take notice not only of the fact of the document and its recording or publication, but also facts that clearly derive from its legal effect. (Fontenot, supra, 198 Cal.App.4th at p. 265.)" (Scott v. JPMorgan Chase Bank, N.A, supra, 214 Cal.App.4th at p. 754.) Thus, for example, "a court may take judicial notice of the fact of a document's recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document's legally operative language, assuming there is no genuine dispute regarding the document's authenticity. From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face." (Fontenot, at p. 265; Linda Vista Village San Diego Homeowners Association, Inc. v. Tecolote Investors, LLC (2015) 234 Cal.App.4th 166, 184.)

Evidence Code section 452, subdivision (h), gives courts discretion to take judicial notice of "[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy."

But judicial notice may not be taken of disputed facts stated in the document. (Fontenot, supra, 198 Cal.App.4th at pp. 266-267.) " '[J]udicial notice of matters upon demurrer will be dispositive only in those instances where there is not or cannot be a factual dispute concerning that which is sought to be judicially noticed.' (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134.)" (Joslin, supra, 184 Cal.App.3d at p. 375.) That is not the case regarding the respective responsibilities of respondents and the Trust for the actions challenged in the first amended complaint. It is not at all clear that, as respondents' represent, the Trust Agreement makes the Trust responsible for the policies and procedures governing the VIP Program.

Respondents point to page 1 of the Trust Agreement, which contains the prefatory "whereas" and "now, therefore" provisions describing the purpose of the trust. These provisions describe the basic structure of the timeshare program, under which persons who assign rights to use interests in a vacation unit or vacation plan to the Trust, or purchase such property interests previously subjected to the Trust Agreement, are allocated points that can be used to reserve properties subjected to the Trust Agreement, pursuant to procedures described in the Trust Agreement and the FairShare Plus Member's Directory (Directory). It is stated that WVR established the Trust to "permit the Beneficiaries to use and exchange the Use Rights available through the Trust" and that the Trustee is to develop, or contract for the provision of, a reservation system to enable Members to reserve use of Trust Properties. The Trustee is defined as FairShare Vacation Owners Association.

The Directory "describes the Trust Properties and the terms and conditions of the FairShare Vacation Plan, as may be amended, supplemented, updated and/or replaced from time to time."

The Trust Agreement refers to Wyndham, defined as WVR and "such other subsidiaries and affiliates of [WVR] that may from time to time desire to subject Property Interests or the Use Rights therein to this Trust Agreement in accordance with the terms and conditions set forth herein."

"Beneficiaries" are defined as including "the Members, the Plan Manager, Wyndham and the Third Parties" "Members" are "Wyndham and the holder of a right to occupy an Accommodation as a consequence of such holder having his Property Interests (or the Use Rights therein) subjected to this Trust Agreement"; Members of the FairShare Vacation Plan are also members of the FairShare Vacation Owners Association. "Accommodation" is a vacation unit or the "Use Rights" thereto, which has been subjected to the Trust Agreement; "Use Rights" are "those rights a Member has to use, occupy and/or possess a Vacation Unit as a consequence of the ownership of a Property Interest in a Vacation Plan which includes that Vacation Unit"; "Property Interest" is an interest in a vacation unit or vacation plan, or the use rights therein, that is subjected to the Trust Agreement. The "Plan Manager" is the manager of the FairShare Vacation Plan, and "Third Parties" are "individuals or entities not affiliated with Wyndham who develop Property Interests for sale to the public and who subject such Property interests (or the Use Rights in such Property Interest) to this Trust Agreement."

The trustee is also to collect fees due from Members and remit them to the appropriate owners' association or manager when the Member would be obligated to make payment, and may hold legal or equitable title to, or use rights associated with, trust properties.

Nothing in these provisions expressly refers to the VIP Program, nor do any other provisions of the Trust Agreement. One provision that appears to bear on the subject appears in Article XI, "Trust Property Reservations," and provides that the Trustee "may establish different rules and reservation rights for Members based upon (a) levels of Points owned, or (b) the location of the Accommodations available through the Property Interest purchased by a member, or (c) the specific Use Rights assigned to the Trust, or (d) any other criteria determined by Trustee." But the Trust Agreement as a whole indicates that WVR has the ultimate control over decisions governing the timeshare program. Section 11.11 of the Trust Property Reservations itself goes on to state that "[s]uch rules and reservation rights, including priorities, fees, reservation periods, and other policies, guidelines and restriction shall be set forth in the Directory." The Directory, which contains the "rules, regulations, guidelines, policies and procedures related to the allocation of Points to the Trust Properties and the use of Points by Members," is issued and updated by the Plan Manager —specified as initially being "Wyndham, its successors or assigns" —with the consent of the Trustee and "[s]subject to the right of Wyndham under Section 11.01." The referenced section 11.01 provides that "Wyndham, in its sole discretion, reserves the right to amend the Directory and the provisions therein from time to time as may be necessary to implement the Plan."

The Plan Manager establishes point values for use of the properties and may adjust the number of points required for reservations in response to actual use patterns and changes in demand. Points are assigned based on factors such as location, size, season, capacity and demand, and the adjustment of points required for reservations is subject to a set limitation that may be exceeded only by majority vote of the Members at an annual or special meeting of the Members. The Trustee may delegate any or all of its duties to the Plan Manager.

The plan manager may be removed "only if those members entitled to cast at least seventy-five percent (75%) of the then total votes of all of the Members vote, at an annual or special meeting of the Members of the Association . . . , for the removal of the Plan Manager." As indicated above, members of the FairShare Vacation Plan are also members of the FairShare Vacation Owners Association.

At a minimum, these provisions indicate Wyndham holds considerable authority over the rules, policies and practices concerning the allocation and use of points in the VIP program. Respondents point to nothing in the Trust Agreement that indisputably confers authority over such policies and practices on the Trust to the exclusion of respondents, no way in which the Trust Agreement necessarily contradicts the allegations of the complaint that respondents were responsible for the challenged conduct. At most, respondents raised factual questions not suitable to resolution on demurrer.

"A demurrer is particularly unsuited to resolving questions of fact regarding the misjoinder of parties because 'a demurrer lies only for defects appearing on the face of the pleadings [and] a defendant may not make allegations of defect or misjoinder of parties in the demurrer if the pleadings do not disclose the existence of the matter relied on; such objection must be taken by plea or answer.' (Harboring Villas Homeowners Assn. v. Superior Court (1998) 63 Cal.App.4th 426, 429.)" (Verizon, supra, 230 Cal.App.4th at p. 680.) Since the court's function on a demurrer "is limited to testing the legal sufficiency of the complaint[,]" " '[a] demurrer is simply not the appropriate procedure for determining the truth of disputed facts.' (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879.) The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whose truthfulness or proper interpretation are disputable. (See Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 605.)" (Joslin, supra, 184 Cal.App.3d at p. 374.) " ' "[T]he relationship of an absent person to the action, and the practical effects of an adjudication upon him and others, may not be sufficiently revealed at the pleading stage; in such a case it would be appropriate to defer decision until the action was further advanced. . . ." ' " (Countrywide Home Loans, Inc. v. Superior Court (1999) 69 Cal.App.4th 785, 792-793, quoting Union Carbide Corp. v. Superior Court (1984) 36 Cal.3d 15, 22.)

Moreover, respondents' argument that appellants could not be afforded complete relief without the Trust being joined as a party ignores the fact that appellants' claims are based not on the changes to the VIP Program per se but on respondents' conduct in misleading appellants about the benefits available to them and their ability to run their rental business, deliberately inducing appellants to purchase more points while simultaneously acting to undermine appellants' ability to use them as represented. In other words, appellants alleged conduct beyond making changes to the VIP program—which respondents claim would be made by the Trust—that is attributed directly to respondents: promoting benefits that were in fact being eliminated; misrepresenting appellants' ability to rent their points and training employees to disregard internal sales compliance manuals prohibiting practices related to promotion of such rentals; training employees to employ deceptive sales practices; and secretly developing and implementing strategies to negatively impact the businesses Megarenters, including by "rejuvenat[ing]" programs to compete with the Megarenters and restricting the inventory available to Megarenters through Wyndham's control over the inventory allocated to itself and its own programs. Individuals to whom the complaint attributed the described conduct included various Wyndham employees and officers, such as a "Vice President of Sales for Wyndham," the "Senior Vice President of the Wyndham Club Management," the "Executive Vice President" and sales associates, and it was alleged that the strategy to negatively impact Megarenters such as appellants was developed by a "Wyndham Taskforce regarding Owner Rentals." Respondents do not explain how the absence of the Trust as a party would preclude the trial court from granting relief if appellants were able to prove their allegations.

Nor did the demurrer establish that the Trust has interests so independent of respondents' that it is an indispensable party. Appellants argue that the Trust's interests can be adequately protected by WVR because the Trust is a "subsidiary and/or other entity controlled by WVR." Respondents have not suggested any divergence of interests between the Trust and respondents. " '[A] party's ability to protect its interest is not impaired or impeded as a practical matter where a joined party has the same interest in the litigation." (Verizon, supra, 230 Cal.App.4th at p. 684, quoting Deltakeeper v. Oakdale Irrigation Dist., supra, 94 Cal.App.4th at p. 1102.)

We conclude the demurrer could not properly be sustained on the ground that appellants failed to join an indispensable party.

"A trial court's determination whether a party is necessary or indispensable is reviewed for abuse of discretion. (TG Oceanside, L.P. v. City of Oceanside (2007) 156 Cal.App.4th 1355, 1366.) Here, as we have said, the trial court did not state the grounds upon which the demurrer was sustained. If we assume its decision was based upon a determination that the Trust was an indispensable party—that being the only ground that could support sustaining the demurrer to the entire complaint, since respondents did not demur to the third cause of action—that determination was an abuse of discretion on this record.
Our conclusion that respondents' demurrer was insufficient to establish that the Trust is an indispensable party is consistent with that of the Alabama federal district court, which, as appellants emphasize, in 2012 denied respondents' motions to dismiss in several cases raising similar arguments to those in the present case. (Sirmon v. Wyndham Vacation Resorts, Inc., supra, 2012 WL 4341819.) With respect to the indispensable party argument, the court stated: "The final basis for dismissal asserted by Defendants is that Plaintiffs failed to join an indispensable party, namely the FairShare Vacation Plan Use Management Trust (the 'Trust'). The Court is not convinced that the Trust is a necessary party to this litigation and sees no reason why it cannot accord complete relief among the current parties to the lawsuit without the inclusion of the Trust. There is no indication the Trust played any role in the allegedly fraudulent sales practices employed by Defendants. Furthermore, the Court finds no reason why a jury could not award damages against the current Defendants without adversely impacting the rights of the Trust. Accordingly, Defendants' motions to dismiss for failure to join an indispensable party are due to be denied." (Id. at p. *7; see Brouwer v. Wyndham Vacation Resorts, Inc. (N.D. Ala., Western Div. Sept. 18, 2012) 2012 WL 4335986, *2; Yaeger v. Wyndham Vacation Resorts, Inc. (N.D. Ala., Western Div. Sept. 18, 2012) 2012 WL 4340255, *2; Spearman v. Wyndham Vacation Resorts, Inc. (N.D. Ala., Western Div. Sept. 18, 2012) 2012 WL 4335996, *4.)

B.

Respondents' demurrer was also based on the grounds that the allegations of the first amended complaint were insufficient to state a claim in nine of the 10 causes of action.

The third cause of action for suppression, which the demurrer did not address, alleged that respondents had a duty to disclose to appellants their intent and efforts to eliminate or reduce VIP benefits and prevent appellants from running their rental business, due to the "trust and reliance" appellants "had to repose on" respondents, respondents' "superior and virtually exclusive knowledge," the sales representations made to appellants and the fact that respondent discussed using points for rental purposes. Without benefit of the suppressed information, appellants did not liquidate their points and purchased additional points "well in excess" of the amount that could be used personally, and respondents knew appellants were purchasing the points for the express purpose of renting, resulting in the damages described in the second cause of action.

Breach of contract

Appellants' first cause of action for breach of contract alleged that respondents unilaterally changed the rules concerning "use years" (the year in which purchased points must be used) in a manner that would cause appellants to lose substantial numbers of points each year. The first amended complaint alleged five specific contracts for which respondents unilaterally changed the use year, two changed from "a September use year to a December use year" and two from "a March use year to a December use year."

Respondents argue, as they did below, that appellants failed to state a cause of action because they did not specifically identify the contractual terms that were allegedly breached. They rely on cases stating the rule that "[i]f the action is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference." (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307; Otworth v. Southern Pac. Transportation Co (1985) 166 Cal.App.3d 452, 459.) Appellants did not attach any contracts to their complaint, and respondents assert that appellants did not "specifically reference[]" any contracts or allege which contract term or provision was breached by respondents' change in the use year. According to respondents, appellants merely alleged what a use year is, that "current sales documents do not allow Wyndham to make this change," and that respondents unilaterally changed the use year in five of their contracts.

The cases respondents rely upon do not establish "the exclusive means of pleading a contract. The correct rule is that 'a plaintiff may plead the legal effect of the contract rather than its precise language.' (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199.)" (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 401-402.) Appellants identified the contracts they claim respondents breached, listing them by name and number in paragraph 98 of the first amended complaint, and the term they claim was breached—the term defining the "use year" for each contract. Appellants alleged that respondents breached the use year provision of three of the contracts, which specified a "September use year," by unilaterally altering the use years for those contracts to a "December use year," and breached the use year provision of the other two contracts, which specified a "March use year," by unilaterally altering the use years for those contracts to a "December use year." These allegations identify the specific terms they allege respondents breached.

Respondents' reference to the allegation that "current sales documents do not allow Wyndham to make this change" suggests they believe appellants were required to identify a contractual provision expressly prohibiting them from unilaterally altering the use year specified in a contract. If so, they miss the point. Appellants alleged that each contract defined a specific use year. A unilateral change in that definition, absent contractual language reserving respondents' right to make such a change, would defeat the parties' bargain. Appellants highlight this point with their allegation that Wyndham "admits that . . . the current sales documents do not allow Wyndham to make this change and that verbiage would have to be added to the sales documents with a disclaimer that the use year may change."

As respondents suggest no other deficiency in the cause of action for breach of contract, we conclude the first amended complaint sufficiently stated this claim.

The plaintiffs in Spearman v. Wyndham Vacation Resorts, Inc. (N.D. Ala. 2014) 69 F.Supp.3d 1273, similarly alleged breach of contract based on respondents unilaterally changing the use year terms of their contracts. Respondents sought summary judgment, claiming (among other things) that the plaintiffs failed to "cite to a breached contractual provision in a contract between the Plaintiffs and Wyndham" in that the changes were made to contracts the plaintiffs had purchased from third parties and the plaintiffs had been unable to produce the actual contracts at issue. (Id. at p. 1291.) The court found it sufficient that the plaintiffs "produced evidence supporting the existence of such a contractual term" through deposition testimony from a Wyndham employee that all contracts have a "use year," documents in which Wyndham acknowledged that the plaintiffs owned contracts purchased from third parties that had use years other than January to December, and testimony from a plaintiff that all his contracts were altered to have January to December use years. (Ibid.) "[T]here is enough evidence for a reasonable jury to determine that there was a term in these contracts, assigned to the Plaintiffs by third parties, that established a use year other than January-December. A reasonable jury could also determine that Wyndham breached these contracts by unilaterally altering the Plaintiffs' contracts to all have the same use year." (Ibid.)

Fraud and intentional misrepresentation

The second cause of action for fraud and fraudulent inducement was based on alleged representations made by respondents concerning appellants' ability to rent their points and use respondents' systems and facilities to run a rental business. Appellants alleged they were told by salesperson T.K. Armstrong in 2007 that their points could be used to rent; they could make enough money by renting points to cover their maintenance fees and expenses; if they purchased sufficient points, they could start a rental business; Wyndham's system supported a point rental business by owners, its system and facilities were available for this purpose and appellants could use the system and facilities to run a rental business; and these benefits would not change "except for the better for [appellants]." These representations were allegedly part of a "fraudulent pitch" created by the individual defendants, Bowman and Park, and condoned by respondents.

Appellants alleged that they purchased points, including on the resale market, in reliance upon these representations, investing approximately $1 million in points and incurring obligations of $12,000 per month for maintenance and fees, "and began running a rental business with the support of [respondents'] systems and facilities." Respondents allegedly secretly schemed about how to limit and prevent the rentals throughout the time the false representations were made, and therefore knew the representations were false at the time they were made and never intended to perform their promises to appellants; respondents knew the representations were false because they knew the "2005 Megarenter strategy and later the Voyager Project were in place"; and appellants did not discover the "full extent of the falsity of these representations and the true intent of" respondents until the 2011-2012 Members Directory announced that owners could not use their points for commercial purposes. The "Megarenter strategy" was, allegedly, an internal, confidentially developed strategy to identify Megarenters, analyze their financial impact on Wyndham, and create and implement policies and procedures to restrict and ultimately eliminate them. The Voyager Project was alleged to be a new inventory allotment and reservation system being implemented by respondents to restrict inventory available to, and change cancellation policies for, Megarenters.

" ' "[T]he necessary elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage." [Citations.]' (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239, fn. omitted.) ' "[F]alse representations made recklessly and without regard for their truth in order to induce action by another are the equivalent of misrepresentations knowingly and intentionally uttered." [Citation.]' (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.)" (Brakke v. Economic Concepts, Inc. (2013) 213 Cal.App.4th 761, 767.)

Respondents argue, again as they did below, that appellants' allegations were insufficient to show the first two required elements—misrepresentation and knowledge of falsity. "A promise is only false if the promisor did not intend to perform the promise when it was made, i.e., had knowledge of its falsity." (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061-1062.) Respondents maintain that the promises allegedly made by T.K. Armstrong were true, as shown by appellants' allegations that they " 'rented' their points to earn income . . . at Wyndham's urging" and "with Wyndham's knowledge and encouragement, began running a rental business," and that Wyndham unilaterally added a provision to the 2011-2012 Members Directory stating the program could not be used for commercial purposes, but was currently not enforcing this provision. Second, respondents argue "it is not plausible" that they "honored a promise that they intended to dishonor at the time they made the promise."

We agree with respondents' first point. The cause of action for fraud is based on the representations that appellants could rent their points, and could do so for profit by using respondents' systems and facilities to run a rental business. Appellants alleged that they did in fact run a rental business with respondents' support: They " 'rented' their points to earn income . . . at Wyndham's urging"; "with Wyndham's knowledge and encouragement, began running a rental business"; and "began running a rental business with the support of [respondents'] systems and facilities." Appellants did not allege that they were ever prevented from doing the things Armstrong represented they would be able to do—rent points and use respondents' systems to run a rental business. In fact, while they alleged that respondents revealed their intention to eliminate Megarenters when they announced a policy of precluding owners from using points for commercial purposes in the 2011-2012 Members Directory, they also alleged that, as of the drafting of the complaint, respondents were not enforcing this policy.

Respondents second point is not persuasive. The general theory of the complaint is that respondents induced appellants to purchase large numbers of points by promising appellants would be able to rent the points for profit in a business run through respondents' facilities while simultaneously scheming to restrict and eventually eliminate appellants' ability to run such a rental business. Under this theory, it is perfectly plausible that respondents would give the appearance of honoring the promise that appellants would be able to run the business—thereby inducing appellants to continue to purchase points—even though respondents always intended to later restrict and/or prohibit the business.

Appellants do allege that "throughout the time Wyndham was making these fraudulent representations to [appellants], Wyndham was secretly scheming to determine how to limit and prevent [appellants'] and other Megarenters' rentals." But all they allege to have occurred before 2007, when the representations upon which the fraud claim is based were alleged to have been made, was that in 2005 respondents began to develop the "Megarenter strategy." The complaint alleged that this began with investigation into the financial impact Megarenters were having on respondents and discussion of various alternatives that might be pursued, including maintaining the status quo; although changes that would negatively impact Megarenters were proposed in 2006, the recommended rule changes were not brought to Wyndham's CEO until 2008 and rule changes were first made in late 2008 and early 2009. According to these allegations, when Armstrong represented in 2007 that appellants would be able to run a rental business through respondents' systems, respondents had begun to consider changes that would negatively affect Megarenters in an as yet undetermined way, but had not yet decided to restrict or eliminate owners' rental businesses.

In addition to the specific representations alleged in the fraud cause of action, appellants alleged that "[i]n making the 'Rental Pitch,' Wyndham sales representatives promise customers that they will always have the benefits available at the various VIP levels, and that any changes made will either be for the better or the customers will be grandfathered in. Either way, the customer is promised that the benefits would stay the same or be better for the customer/owner." But appellants do not allege that they were promised such benefits would never be changed. This was not among the representations they alleged Armstrong made to them, and they did not allege that such promises were made to them by any other individual.

Curiously, appellant's briefs on appeal do not address the issues raised by respondents. Instead, appellants state that their allegations were sufficient and claim that respondents' only argument challenging the fraud cause of action is that appellants "have not identified the fraudulent statements or how they relied on them to their detriment." It is not apparent where appellants believe respondent made this argument; we do not find it in respondents' briefs on appeal or in the trial court. Having failed to respond to the argument respondents did make, however, it is not surprising that appellants have not suggested how they might be able to amend the complaint to overcome the difficulties discussed above. As we have said, it is appellants' burden to prove that an amendment would cure the defect in pleading. (Schifando, supra, 31 Cal.4th at p. 1081.) Negligence , negligent supervision , wantonness , and wanton supervision

The parties' briefs each discuss the causes of action for fraud and for intentional misrepresentation together in a single section, with arguments addressed specifically to the fraud claim and no separate reference to intentional misrepresentation. Accordingly, we will not further consider the cause of action for intentional misrepresentation.

Appellant's cause of action for negligence alleged that respondents breached their duty to follow and enforce their internal sales compliance procedures and to act with reasonably prudent care in "administering appellants' vacation ownership points." The first aspect of this claim, we infer, is based on the allegations that respondents' internal sales compliance manuals prohibit certain sales tactics, including discussing the likelihood of owners being able to rent their timeshares, providing examples or opinions regarding the amount of rent owners could expect from such rentals and suggesting such rentals could cover owners' maintenance fees, but that respondents do not enforce these provisions and instead train sales representatives to do exactly what the manuals prohibit.

Respondents, citing Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49 Cal.App.4th 472, 482, and Fireman's Fund Ins. Co. v. Security Pacific Natl. Bank (1978) 85 Cal.App.3d 797, 829, argue that appellants' allegations cannot support a claim for negligence because a company has no legal duty to third parties to enforce its own internal policies. As appellants recognize, "violation of a self-imposed rule does not create actionable negligence unless plaintiff (1) suffers the type of harm sought to be prevented by the rule and (2) is a member of the class of people for whose protection the rule was promulgated. (Fireman's Fund Ins. Co.[, at p.] 829.)" (Software Design & Application, Ltd., at p. 482.)

Appellants argue that respondents have not explained why they do not fall into this exception, apparently taking it as self-evident that the rules were promulgated in order to protect potential timeshare purchasers like appellants from being misled by representations regarding rental of timeshare points. But the first amended complaint alleges that the internal policies upon which the negligence claim is based were adopted to protect respondents, not timeshare purchasers and owners. Appellants alleged that the inclusion of the policies in question in internal sales compliance manuals was an example of how "Wyndham, foreseeing possible future litigation, took advance measures to legally protect themselves in case they were exposed." After stating that management was aware of, condoned and encouraged violations of the policies, the first amended complaint alleged that "these pretend internal prohibitions relating to rental representations are only in place to attempt to provide legal protection against various allegations, including allegations that these timeshare sales are in reality the sale of a security." As appellants' allegations make clear that appellants are not within the class of people for whose protection the internal policies were promulgated, respondents owed no duty to appellants to adhere to the policies and failure to follow them does not give appellants a viable negligence claim.

The second aspect of appellants' negligence claim is less clear. Appellants alleged that respondents had a duty "to act with reasonably prudent care in the administration of [appellants'] vacation ownership points," and breached this duty by "making it difficult, if not impossible, for [appellants] to utilize their points to the fullest extent possible and as they were represented they could when they purchased the points." We assume this claim is based on the same alleged unilateral changes to benefits associated with points, and ability to rent points, as appellants' other claims, as no other predicate for the negligence claim is described.

Despite appellants' "use of negligence terminology," the misconduct they allege, if proven, would amount to a breach of contract, not breach of a legal duty of care. (Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041 (Stop Loss).) The first amended complaint describes appellants' timeshare points as a matter of contract between them and respondents. They alleged, "[a]ll persons who own vacation ownership interests ('Members') receive a symbolic point allocation based upon their ownership interest. . . . When a Member buys their timeshare from Wyndham they receive a deed for the portion of the property they purchased. The value of their ownership, however, is represented by points." The first amended complaint refers to "sales documents and contracts regarding the sale of points" and alleges that the "sales documents and contracts executed by [appellants] and Wyndham for the purchase of points constitute contracts between the parties." The claim that respondents breached a duty to act with reasonable prudence in administering appellants' points by making it difficult or impossible for appellants to use those points to the fullest extent and as promised at the time of purchase is really a claim of breach of contract.

" 'A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations. Instead, " '[c]ourts will generally enforce the breach of a contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.' " [Citation.]' (Aas v. Superior Court (2000) 24 Cal.4th 627, 643, superseded by statute on another ground as stated in Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1079-1080.)" (Stop Loss, supra, 143 Cal.App.4th at p. 1041; Erlich v. Menezes (1999) 21 Cal.4th 543, 552.) "The economic loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed expectations, unless he can demonstrate harm above and beyond a broken contractual promise." (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 988.) "[C]onduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law. (Applied Equipment [Corp. v. Litton Saudi Arabia Ltd. (1994)] 7 Cal.4th [503,] 515.) ' " 'An omission to perform a contract obligation is never a tort, unless that omission is also an omission of a legal duty.' " ' (Ibid., quoting Jones v. Kelly (1929) 208 Cal. 251, 255.)" (Erlich, at p. 551.)

Here, appellants identify no duty respondents had toward them independent of the contracts governing their timeshare purchases. Accordingly, they failed to state a cause of action for negligence on the theory that respondents did not properly administer their points and deliver on promises as to how appellants would be able to use their points.

In the fourth cause of action, appellants alleged that respondents' "behavior as described above and incorporated herein constitutes wanton behavior" without further describing the conduct at issue. Respondents view this claim as a "corollary" to the cause of action for negligence claim and argue that "wantonness" is not a separate cause of action but rather " 'an aggravated form of negligence.' " (Morgan v. Southern Pacific Trans. Co. (1974) 37 Cal.App.3d 1006, 1011 [referring to the meaning of " 'interchangeable' " terms including " 'wilful or wanton misconduct,' " " 'serious and willful misconduct,' 'wanton misconduct,' 'reckless disregard,' 'recklessness,' and combinations of some or all of these"].) As the negligence cause of action was insufficient, respondents argue, the "wantonness" claim is as well. Appellants accept respondents' definition of "wantonness" as "an aggravated form of negligence" and offer no argument with respect to this cause of action other than to state that the wantonness claim should proceed for the same reasons as the one for negligence. It necessarily follows that since the negligence cause of action was not sufficiently pleaded, the wantonness claim was insufficient as well.

This conclusion makes it unnecessary for us to address respondents' argument that these causes of action were barred by the statute of limitations.
Appellants' sixth and seventh causes of action, for negligent and wanton hiring, retention, training and supervision, alleged that respondents breached a duty to exercise reasonable care in hiring, selecting, training, supervising and retaining their sales persons by failing to exercise such reasonable care (wantonly, in the seventh cause of action) and deliberately training the salespersons to make fraudulent statements to appellants. As appellants offer no argument specific to these causes of action, we will not address them.

Unfair business practices

The eighth cause of action alleged that respondents' "conduct, as alleged above" constituted "unlawful, unfair and/or fraudulent business practices" within the meaning of the UCL (Bus. & Prof. Code, § 17200 et seq.) "for the reasons set forth below, without limitation, violation of the California Labor Code and the California Welfare and Institutions Code." The only additional reference to the conduct underlying this cause of action appeared in a paragraph alleging appellants' injuries: "As a result of [respondent's] unlawful, unfair and fraudulent conduct, [appellants] suffered injury in fact and lost money and property, including, but not limited to lost wages due to sales [appellants] refused to make by violating the California Welfare Code, among other state and/or federal laws or regulations, mental anguish, and lost wages due to [appellants'] termination for refusal to do the same."

The complaint did not explain the references to the Labor Code or Welfare and Institutions Code and, as respondents point out, the claim of lost wages due to termination makes no sense, as appellants never claimed to be respondents' employees. Respondents assume that this cause of action is based on the same conduct as the remainder of the complaint—alleged misrepresentations when respondents sold appellants timeshare interests and subsequent secret and unilateral changes to program rules—and argue the cause of action is barred by the statute of limitations.

The limitations period for a cause of action for violation of the UCL is four years. (Bus. & Prof. Code, § 17208.) "Under the discovery rule, which delays accrual of a cause of action until a party discovers or has reason to discover the cause of action (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1192 (Aryeh)), if the party has notice of facts that would put a reasonable person on inquiry, or has the reasonable opportunity to obtain information from sources open to investigation, the limitations period begins to run (Community Cause v. Boatwright (1981) 124 Cal.App.3d 888, 902)." (Fuller v. First Franklin Financial Corporation (2013) 216 Cal.App.4th 955, 962.)

Appellants alleged that the first rule changes made pursuant to the respondents' secret scheme to restrict and eliminate Megarenters were made in were made in late 2008 and 2009, followed by additional changes in 2010, 2011 and 2012. These changes were alleged to have placed "severe impediments on" appellants' ability to use their vacation interests and to have "diluted and devalued" their ownership interests. Accordingly, respondents argue that appellants knew by early 2009, at the latest, that respondents were making changes that negatively impacted appellants' rental business, but did not file this action until March 2014, outside the four-year statute of limitations.

Appellants do not challenge the premise of respondents' argument but maintain that their UCL cause of action is not time barred because respondents' conduct "is continuing unabated." This statement, with citation to two cases, is full extent of appellants' argument. The first of these two cases, Harris v. Forklift Systems, Inc. (1993) 510 U.S. 17, has nothing to do with statutes of limitations. The other, Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, addressed the question whether an employer could be held liable under the Fair Employment and Housing Act (FEHA) (Gov. Code, § 12960) for unlawful actions that occurred outside the one-year statute of limitations. In that case, a disabled employee resigned after a five-year period in which her employer allegedly was unwilling to effectively accommodate her disability. (Richards, at p. 802.) Applying the interpretation of the "continuing violation doctrine" that "best serve[d] [FEHA's] legislative purposes," the court held that "when an employer engages in a continuing course of unlawful conduct under the FEHA by refusing reasonable accommodation of a disabled employee or engaging in disability harassment, and this course of conduct does not constitute a constructive discharge, the statute of limitations begins to run, not necessarily when the employee first believes that his or her rights may have been violated, but rather, either when the course of conduct is brought to an end, as by the employer's cessation of such conduct or by the employee's resignation, or when the employee is on notice that further efforts to end the unlawful conduct will be in vain." (Richards, at pp. 819, 823.)

Harris v. Forklift Systems, Inc., supra, 510 U.S. 17, addressed the definition of "a discriminatorily 'abusive work environment' (also known as a 'hostile work environment') under Title VII of the Civil Rights Act of 1964." At page 21, the point page in appellants' citation, the court explained its reaffirmation of a standard that "takes a middle path between making actionable any conduct that is merely offensive and requiring the conduct to cause a tangible psychological injury." (Id. at p. 21.)

Appellants do not explain how this analysis, based on the policies underlying the FEHA, apply to the very different circumstances of the present case. On the face of the first amended complaint, appellants alleged misconduct that occurred in 2007, when they were induced to purchase large numbers of timeshare points by representations that they would receive certain benefits and be able to run a business renting the points while respondents were simultaneously planning to restrict or eliminate their ability to use the points for business purposes as promised. Any claim they might have under the UCL would have accrued once they learned of respondents' duplicity, or were reasonably put on notice of it, by virtue of the plan changes that negated the promises.

Appellants' allegations that respondents' strategy to eliminate Megarenters "was not fully known" until the provision prohibiting owners' commercial use of points appeared in the 2011-2012 Members Directory, and that appellants "just recently discovered the full extent of the falsity of these representations and the true intent of Wyndham," in effect acknowledge that appellants became aware of respondents' strategy before this, albeit not its full extent.

As we have said, appellants' argument regarding the UCL cause of action explains neither what particular conduct amounted to violation of the statute nor how that conduct fits into a theory of continuing violation. " 'Appellate briefs must provide argument and legal authority for the positions taken. "When an appellant fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived." ' (Nelson v. Avondale Homeowners Assn. (2009) 172 Cal.App.4th 857, 862.) 'We are not bound to develop appellants' argument for them. [Citation.] The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived.' (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830; see also Associated Builders & Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352, 366, fn. 2; People v. Stanley (1995) 10 Cal.4th 764, 793.)" (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956.)

Consumers Legal Remedies Act

The ninth cause of action alleged that respondents violated the CLRA (Civ. Code, §§ 1750-1784.) Appellants alleged the importance of the CLRA, quoting Civil Code section 1751, which makes waivers of the statutes' protection unenforceable, and section 1760, describing the CLRA's purpose of "protecting consumers against unfair and deceptive business practices." Appellants also quoted Business and Professions Code section 17500, making false and misleading advertising unlawful; Business and Professions Code section 17509, concerning a particular advertising practice; and Civil Code section 1770, making it unlawful to "[a]dvertis[e] goods or services with intent not to sell them as advertised." Other than incorporating by reference the preceding allegations of the complaint, appellants did not describe how respondents' conduct violated the statutes.

Civil Code section 1751 provides, "Any waiver by a consumer of the provisions of this title is contrary to public policy and shall be unenforceable and void."

Civil Code section 1760 provides, "This title shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection."

Business and Professions Code section 17500 provides: "It is unlawful for any person, firm, corporation or association, or any employee thereof with intent directly or indirectly to dispose of real or personal property or to perform services, professional or otherwise, or anything of any nature whatsoever or to induce the public to enter into any obligation relating thereto, to make or disseminate or cause to be made or disseminated before the public in this state, or to make or disseminate or cause to be made or disseminated from this state before the public in any state, in any newspaper or other publication, or any advertising device, or by public outcry or proclamation, or in any other manner or means whatever, including over the Internet, any statement, concerning that real or personal property or those services, professional or otherwise, or concerning any circumstance or matter of fact connected with the proposed performance or disposition thereof, which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading, or for any person, firm, or corporation to so make or disseminate or cause to be so made or disseminated any such statement as part of a plan or scheme with the intent not to sell that personal property or those services, professional or otherwise, so advertised at the price stated therein, or as so advertised. Any violation of the provisions of this section is a misdemeanor punishable by imprisonment in the county jail not exceeding six months, or by a fine not exceeding two thousand five hundred dollars ($2,500), or by both that imprisonment and fine."

Business and Professions Code section 17509, subdivision (a), provides, "(a) Any advertisement, including any advertisement over the Internet, soliciting the purchase or lease of a product or service, or any combination thereof, that requires, as a condition of sale, the purchase or lease of a different product or service, or any combination thereof, shall conspicuously disclose in the advertisement the price of all those products or services. . . ."

Civil Code section 1770, subdivision (a), provides in pertinent part, "The following unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer are unlawful: [¶] . . . [¶] (9) Advertising goods or services with intent not to sell them as advertised."

Respondents argue that appellants failed to state a claim under the CLRA because timeshare interests do not fall within its purview. Civil Code section 1770, subdivision (a), makes unlawful specified "unfair methods of competition and unfair or deceptive acts or practices undertaken by any person in a transaction intended to result or that results in the sale or lease of goods or services to any consumer." (Italics added.) "Goods," as defined by the CLRA, "means tangible chattels bought or leased for use primarily for personal, family, or household purposes, including certificates or coupons exchangeable for these goods, and including goods that, at the time of the sale or subsequently, are to be so affixed to real property as to become a part of real property, whether or not they are severable from the real property." (Civ. Code, § 1761, subd. (a).) " 'Services' means work, labor, and services for other than a commercial or business use, including services furnished in connection with the sale or repair of goods." (Civ. Code, § 1761, subd. (b).)

Federal district courts in California have concluded that timeshare interests are not "goods" or "services" under the CLRA. (Wixon v. Wyndham Resort Development Corp. (N.D. Cal., Apr. 18, 2008, No. C07-02361 JSW) 2008 WL 1777590 (Wixon); Kissling v. Wyndham Vacation Resorts, Inc. (N.D. Cal., Nov. 18, 2015, No. 15-CV-04004-EMC) 2015 WL 7283038 (Kissling).) In holding timeshare interests are not "goods" within the meaning of the CLRA, these courts looked to our Supreme Court's statement in Kazi v. State Farm Fire and Cas. Co. (2001) 24 Cal.4th 871, 880, that " 'tangible property' refers to things that can be touched, seen, and smelled." (Wixon, at p. *4; Kissling, at p. *3.) Intangible property, by contrast, "is generally defined as property that is a 'right' rather than a physical object." (Navistar Internat. Transportation Corp. v. State Bd. of Equalization (1994) 8 Cal.4th 868.) Kissling described the timeshare points at issue as "an incorporeal right in real property." (Kissling, at p. *4.) Noting that the plaintiffs "purchase of timeshare points came with a deed of trust, Kissling stated that their "rights emanate from a purchase of real property, not tangible chattels." (Ibid.) Kissling noted that the CLRA excludes from its coverage transactions providing for the sale of real property. (Ibid.; Civ. Code, § 1754.)

Kissling drew on an unpublished California Court of Appeal case that held that "a form of timeshares" sold as "vacation club memberships" were not "goods" within the meaning of the CLRA. (Kissling, supra, 2015 WL 7283038 at p. *3, discussing Boling v. Trendwest Resorts, Inc. (May 19, 2005, G034203) 2005 WL 1186519.) The timeshare interests were viewed as analogous to timeshare interests in resort condominiums that Cal-Am Corp. v. Department of Real Estate (1980) 104 Cal.App.3d 453, 457, had held to be "interests in real property" in the "nature of" a lease for purposes of jurisdiction of the California Department of Real Estate. (Kissling, at p. *3.)

Civil Code section 1754 provides: "The provisions of this title shall not apply to any transaction which provides for the construction, sale, or construction and sale of an entire residence or all or part of a structure designed for commercial or industrial occupancy, with or without a parcel of real property or an interest therein, or for the sale of a lot or parcel of real property, including any site preparation incidental to such sale."

Kissling and Wixon also rejected arguments that the timeshare interests were "services" under the CLRA (§ 1761, subd. (b)). (Kissling, supra, 2015 WL 7283038, at p. *5; Wixon, supra, 2008 WL 1777590, at p. *4.) As Kissling stated, the "core value of the timeshare points is the interest in and use of real estate." (Kissling, at p. *5.) The "right to use and occupy a unit was not a service covered by the CLRA, even when applying a liberal construction of the CLRA." (Ibid.; Wixon, at p. *4.)

Appellants offer no reason for us to disagree with these courts' reading of the CLRA. Appellants assert that timeshare points "are not real property—they are a commodity like any other good, which is protected under the CLRA, and further, simultaneously constitute a 'service' under the same. (Civ. Code, § 1761, subd. (b).)" They provide no argument in support of this assertion. Appellants state they alleged that respondents sold them property management services and consumer financing, citing two pages of the first amended complaint, but they do not identify the specific allegations to which they refer. The only ones we have found that mention property management services and consumer financing alleged that WVR "markets, sells and finances vacation ownership interests, provides property management services to property owners' associations, and develops vacation ownership resorts" and that WVO "develops, markets and sells vacation ownership interests, provides consumer financing to owners, and manages properties through its three primary consumer brands. . . ." But appellants' claims are not based on respondents' conduct with respect to property management and consumer financing; the claims are based on respondents' conduct with respect to sales of timeshare interests and changes to the rules governing the timeshare program. Appellants' only reference to the federal court cases discussed above is to state that they are distinguishable because appellants' ownership of over 29 million points is "a far cry" from the occasional timeshare use of the plaintiffs in the federal cases. They do not explain how this difference in scale changes the nature of the interests at issue for purposes of the CLRA. The demurrer was properly sustained as to this cause of action.

C.

The trial court erred in sustaining the demurrer as to the cause of action for suppression, to which respondents did not demur, and in sustaining the demurrer to the cause of action for breach of contract. The first amended complaint failed to allege sufficient facts to state the remaining causes of action. Appellants have not met their burden of demonstrating an amendment would cure the defect in any of these causes of action. (Schifando, supra, 31 Cal.4th at p. 1081.) They state that they provided "demonstrable and specific proposed amendments" to the trial court but have not provided this court with a record permitting review: The proposed second amended complaint does not appear in the record on appeal and appellants do not describe any proposed amendments. (See Hernandez v. California Hospital Medical Center, supra, 78 Cal.App.4th at p. 502 [appellants' burden to provide adequate record on appeal].) In fact, their discussion of the individual causes of action suggests amendment only with respect to the indispensable party issue and breach of contract claim, as to which the first amended complaint was sufficient, and the fraud claim, as to which they erroneously suggest it is respondents' burden to prove appellants cannot amend their complaint to state a claim. Accordingly, we will not disturb the trial court's ruling sustaining the demurrer without leave to amend as to the second (fraud), fourth (wantonness), fifth (negligence), sixth (negligent hiring, etc.), seventh (wanton hiring, etc.), eighth (UCL), ninth (CLRA), and tenth (intentional misrepresentation) causes of action.

DISPOSITION

The judgment is reversed. The trial court's order sustaining the demurrer as to the first cause of action for breach of contract and the third cause of action for suppression is reversed. As to the remaining causes of action, the order sustaining the demurrer without leave to amend is affirmed. The matter is remanded for proceedings consistent with the views expressed herein.

The parties shall bear their own costs on appeal.

/s/_________

Kline, P.J. We concur: /s/_________
Richman, J. /s/_________
Miller, J.


Summaries of

Miorelli v. Wyndham Vacation Ownership

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO
Sep 12, 2017
No. A145839 (Cal. Ct. App. Sep. 12, 2017)
Case details for

Miorelli v. Wyndham Vacation Ownership

Case Details

Full title:CHRIS MIORELLI et al., Plaintiffs and Appellants, v. WYNDHAM VACATION…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO

Date published: Sep 12, 2017

Citations

No. A145839 (Cal. Ct. App. Sep. 12, 2017)