Case Number:?BC573346????Hearing Date:?July 24, 2017????Dept:?73
7/24/17
Dept. 73
Rafael Ongkeko, Judge presiding
SMYTH vs. SHERMAN, et al. (BC573346)
Counsel for plaintiff/opposing party: Pier Paolo Caputo; Benjamin Eghbali (L.O. Caputo)
Counsel for defendant/moving party Scott Paul (Doe 13): Jennifer Felten; Timothy Camarena (RELAW, etc.)
Counsel for defendants Phil Duncan and BHHS Crest defendants (Does 11, 12, 14): Angelica Leon (Beverly Hills Lawyers, etc.)
Other counsel: Omitted.
Matters:
1. Defendant Scott Paul?s demurrer to the 4th amended complaint (filed 5/30/17)
2. Defendant Scott Paul?s motion to strike punitive damages; the third cause of action for misappropriation of name or likeness, and the ninth cause of action for negligence (filed 5/30/17)
3. Defendants Phil Duncan and BHHS defendants? demurrer to plaintiff?s 4th amended complaint (filed 6/22/17)
4. Plaintiff?s motion to compel further responses, etc. against defendant BHH Affiliates, LLC (filed 6/23/17)
TENTATIVE RULINGS
Defendant Scott Paul?s demurrer is OVERRULED in its entirety. Paul?s motion to strike is GRANTED as to the punitive damages allegations, but is otherwise denied.
Defendant Phil Duncan?s demurrer is OVERRULED in its entirety.
The demurrer of Defendants BHHS Crest and BHH Affiliates, LLC is SUSTAINED in its entirety WITHOUT LEAVE TO AMEND.
Plaintiff?s motion to compel further responses from Defendant BHH Affiliates, LLC is moot.
Answers shall be filed and served no later than 8/3/17.
DISCUSSION (Please note: Unfortunately, the court?s tentative ruling website, which is the source of this version, is not able to show certain formatting that may be contained in the original, such as the court?s use of footnotes, boldface, italics, or the underscoring of case citations. A hard copy will be available for review in court before the hearing.)
Procedural and factual background
On May 8, 2017, Plaintiff filed her Fourth Amended Complaint (?4AC?). The 4AC includes additional allegations surrounding the purported fraud and conspiracy that was allegedly perpetrated in July 2012 and resulted in the title of the property being transferred from Plaintiff to Kharrazi and then to D?Angelo. See ?? 11-28. The 4AC also now includes the Doe Defendants in the third cause of action in addition to the fourth cause of action. The 4AC further adds a new claim for negligence against the Doe Defendants as the ninth cause of action.
On May 30, 2017, Paul filed a demurrer and motion to strike portions of the 4AC. Paul demurs to the claims that he engaged in a conspiracy to defraud Plaintiff on the grounds that the 4AC does not provide specific facts demonstrating that he agreed to participate in any conspiracy or that there was any meeting of the minds with respect to the conspiracy. Paul further argues that Plaintiff has not alleged any facts showing that Paul was aware of Kharrazi and D?Angelo?s scheme to divest Plaintiff of her interest in the property. Accordingly, Paul contends that no facts are alleged that demonstrate that he knowingly acted to perpetrate the fraud. Paul also argues that the second purportedly forged deed (i.e., the one changing the grantee from Burris to Sherman) was not actually a forgery because the grantor may alter a deed after attestation, but before delivery. Lastly, Paul demurs to the negligence cause of action on the grounds that an escrow holder does not owe a duty of care to a third party to the escrow. In his motion to strike, Paul seeks the removal of the allegations and requests for punitive damages. (Paul also moves to strike the purportedly unauthorized amendments as to the third and ninth causes of action; however, this issue was addressed in the court?s 6/7/17 ruling.)
On June 22, 2017, Duncan, BHHS Crest, and BHH Affiliates, LLC filed a demurrer to the 4AC. These defendants also argue that the misappropriation and conspiracy claims do not contain sufficient specific factual allegations showing any wrongdoing. They further contend that BHHS Crest and BHH Affiliates, LLC cannot be liable because Duncan was not affiliated with these entities at the time of the incidents in question. Lastly, these defendants assert that there can be no liability for negligence because there was no relationship between Duncan and Plaintiff.
On July 12, 2017, Plaintiff filed her opposition papers. Plaintiff maintains that each of her causes of action is adequately pled. Plaintiff does not oppose Paul?s motion to strike punitive damages.
On July 17, 2017, Paul filed his reply.
No reply has been received from Duncan, BHHS Crest, and BHH Affiliates, LLC.
Merits
Third and Fourth Causes of Action ? Misappropriation/Conspiracy
The court finds that Plaintiff?s 4AC includes sufficient specific factual allegations to support the claims for misappropriation and/or conspiracy to engage in misappropriation.
With respect to Paul, the 4AC alleges that he worked directly with Kharrazi/D?Angelo to effectuate a sale of the property under Plaintiff?s name. However, when the title company rejected the power of attorney, it is alleged that Paul and Kharrazi/D?Angelo agreed to effectuate the sale another way by deeding the property to Kharrazi first (without Plaintiff?s knowledge, consent, or signature) and then proceeding with the transaction with Kharrazi as the seller. At a minimum, these facts demonstrate that Paul was aware that the deed purportedly transferring the property from Plaintiff to Kharrazi was a clear forgery since it was meant as an end-around for the issues with the power of attorney. Whether or not Paul was aware of Kharrazi/D?Angelo?s intent regarding the disposition of the sale proceeds is irrelevant given Paul?s allegedly direct involvement in creating the first forged deed. Even if Paul did not intend to harm Plaintiff by engaging in this conduct, the allegations in the 4AC still suggest that he agreed to the plan regarding the forgery and sale of the property.
As to Duncan, the 4AC alleges sufficient facts for similar reasons. Initially, it is alleged that Duncan worked with Kharrazi/D?Angelo in order to sell the property under Plaintiff?s name. When the issue with the power of attorney came up, Duncan allegedly agreed to continue his efforts to sell the property under Kharrazi?s name after the forged first deed was recorded. As with Paul, it is alleged that Duncan tacitly agreed to the plan involving the fraudulent change in ownership to allow Kharrazi to sell the property directly rather than having to obtain a valid power of attorney. Again, even if Duncan did not know of Kharrazi/D?Angelo?s intent regarding the disposition of the sale proceeds, he still agreed to the portion of the plan involving the forgery of a deed from Plaintiff to Kharrazi.
Based on the foregoing, the court finds that the third and fourth causes of action are sufficiently stated against Paul and Duncan and the demurrers are OVERRULED as to these defendants.
Ninth Cause of Action ? Negligence
Paul contends that he is not liable for negligence because an escrow holder has no duty of care to a non-party to an escrow. In a similar vein, Duncan argues that he owed no duty to Plaintiff because he was never engaged in any professional relationship with Plaintiff. However, the specific duty of care in this instance is the duty not to commit forgeries and this duty falls outside of the escrow or seller-agent context.
Based on the foregoing, the court finds that the ninth cause of action is sufficiently stated against Paul and Duncan and the demurrers are OVERRULED as to these defendants.
BHHS Crest and BHH Affiliates, LLC
Defendants? request for judicial notice is granted as to Ex. C only.
The parties should be prepared to confirm whether BHHS Crest is an actual defendant, Doe or otherwise.
BHHS Crest and BHH Affiliates, LLC argue that they cannot be liable for any of the acts complained of in the complaint because they were not affiliated with Duncan in 2012. These entities also contend that the judicially noticeable facts show that they are separate and have not merged, and that BHH Affiliates, LLC was not in existence until 2013. Plaintiff counters that Duncan could only act as a real estate agent on behalf of a broker, Century 21 Crest, and that BHHS Crest and BHH Affiliates, LLC are liable as successors.
Plaintiff has failed to plead any facts suggesting that BHHS Crest or BHH Affiliates, LLC are liable for Duncan?s acts based on an agency or successor theory. Plaintiff?s 4AC repeatedly identifies Century 21 Crest as the real estate brokerage under which Duncan was acting. However, other than general conclusions regarding a merger between Century 21 Crest and BHHS Crest/BHH Affiliates, LLC. Plaintiff provides no factual allegations in the 4AC that suggest that either BHHS Crest or BHH Affiliates, LLC is liable as a successor to Century 21 Crest. Lastly, Ex. C to the request for judicial notice demonstrates that BHH Affiliates, LLC was not even in existence at the time of the events in question and, therefore, could not be liable on an agency theory.
Based on the foregoing, the court finds that Plaintiff has not pled sufficient facts with respect to BHHS Crest or BHH Affiliates, LLC.
The demurrer as to these defendants is SUSTAINED without leave to amend.
Motion to Strike
Plaintiff does not oppose Paul?s motion to strike punitive damages. Accordingly, the motion is GRANTED.
Motion to compel against BHHS Affiliates, LLC
In view of the above ruling sustaining the demurrer without leave to amend, this motion is moot for that reason, and perhaps because Plaintiff already has a copy of the franchise agreement with Century 21.
Notice of ruling by the respective moving parties.