Demurrer to Amended Complaint; Motion to Strike Complaint
Air Combat USA, Inc., was given notice of the continued hearing date, or of the location of the newly assigned Department.
Based on the foregoing, the Court CONTINUES the motion to be relieved as counsel of record to July 13, 2026 at 9:00 a.m. in Department N14.
Moving Counsel is ORDERED to file a supplemental declaration providing general facts sufficient to show that mandatory and/or permissive withdrawal is appropriate. Said declaration to be filed and served no later than nine (9) courts day before the continued hearing date.
Moving Counsel is also ORDERED to immediately serve notice on the clients and on all parties to the action. Moving Counsel to file proof of service of the same no later than nine (9) court days before the continued hearing date.
104 Fu vs. Action Property Management, Inc., 2021-01207341 Demurrer to Amended Complaint – OVERRULED Motion to Strike Complaint – DENIED
Plaintiffs Jian Fu and Xiaodan Qu (collectively, “Plaintiffs”) filed a complaint against defendant Action Property Management, Inc. (“Defendant”) for negligence in June 2021. Plaintiffs own a residence located in a common interest development managed by an HOA. The HOA hired Defendant to provide property management services. Plaintiffs allege: in August 2014, they moved out of the Property but retained ownership and submitted to Defendant a request to receive annual policy statements and mailings and notices at another address; Defendant failed to update the HOA’s records and did not send annual policy statements, mailings, or notices to the secondary address, including notice of increased monthly assessments; while Plaintiffs continued making assessment payments at the original amount, they fell into arrears; the HOA recorded a lien on the Property and filed a lawsuit against Plaintiffs; that because of Defendant’s negligence, Plaintiffs suffered damages from late fees, penalties, collection fees, and attorney fees in the HOA lawsuit.
This court granted a motion for judgment on the pleadings by Defendant without leave to amend. The Court of Appeal agreed that the Complaint failed to allege that Defendant owed Plaintiffs a duty, but reversed because Plaintiffs should have been granted leave to amend. (ROA 249).
Plaintiffs filed a first amended complaint (FAC) alleging causes of action for negligent misrepresentation; intentional misrepresentation; and unfair business practices. The FAC adds new allegations that APM, through Cassidy Feder, misrepresented to Fu and Qu via phone and email that it would update the mailing list and send statements and notices to their new address. Fu and Qu allege that APM made the misrepresentation with no reasonable grounds for believing its representation to be true when made or made the misrepresentation intentionally to increase its own profits, as APM makes money off of homeowner delinquencies. They further allege that APM intended that Fu and Qu would rely on the representation, they reasonably did rely on the representation, and they were harmed as a result.
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1 st & 2 nd Causes of action - Negligent and Intentional Misrepresentation APM argues these causes of action fail because Plaintiffs do not allege that Ms. Feder had authority to make statements on its behalf.
The Court finds that Plaintiffs’ allegation that Ms. Feder made the misrepresentations on APM’s behalf are sufficient, as a reasonable inference from the allegations is that Ms. Feder was acting with authority. (See Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517 [“The complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.”].)
APM also argues that these causes of action fail because Plaintiffs have not alleged that Ms. Feder did not have reasonable grounds for believing her statements to be true or that she intended to deceive Plaintiffs. However, Plaintiffs do allege both that APM had no reasonable grounds for believing the representation to be true and,
alternatively, that APM knew the representation was false when it was made or made it recklessly without regard for its truth. Again, a reasonable inference from the allegations is that Ms. Feder made the misrepresentations while acting on APM’s behalf and that she and others acting for APM had no reasonable basis to believe them to be true or knew they were untrue. These allegations are sufficient to support the causes of action. (Chapman v. Skype, Inc. (2013) 220 Cal.App.4th 217, 230-231.)
APM argues that Plaintiffs have not adequately alleged damages because if APM truly failed to update Plaintiffs’ address, then the lack of notices would mean the damages claimed here would not be owed according to Plaintiffs’ own arguments. They further argue that Plaintiffs fail to plead that they updated their address in 2017 or that their requests to update their address by email were accepted by the HOA.
Plaintiffs allege that as a result of APM’s misrepresentations, they suffered damages in the form of late fees, penalties, and collection fees. On a demurrer, the relevant inquiry is whether the pleading adequately alleges sufficient facts, not whether all allegations can ultimately be proven. (Nolte v. Cedars- Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406 [“Because a demurrer tests only the legal sufficiency of the pleading, we accept as true even the most improbable alleged facts, and we do not concern ourselves with the plaintiff's ability to prove its factual allegations.”].) Here, Plaintiffs have adequately alleged that they suffered damages as a result of APM’s conduct. Whether those damages are barred or can be defended against by other means, which is what APM argues, is irrelevant at this time.
APM argues that the FAC is uncertain because Plaintiffs have not alleged privity of contract or intended beneficiary status and have not attached a copy of the contract. However, Plaintiffs’ fraud causes of action are not based on any contract or intended beneficiary status. Thus, the Court finds that this argument fails.
APM contends that Plaintiffs have failed to allege justifiable reliance because they had no justifiable basis to believe that their address would be updated because the HOA did not consent to delivery by email. This argument goes beyond the four corners of the FAC or matters which are judicially noticeable, as there are no allegations regarding any request to update addresses sent by email. Further, it ignores the allegations that Plaintiffs were expressly informed that their address would be updated by an APM representative. APM offers no reasonable argument as to why Plaintiffs’ allegations that they reasonably relied upon such representations was unjustified.
3 rd Cause of action - Unfair Business Practices Because Plaintiffs have stated causes of action for negligent and intentional misrepresentation, which are both fraud-based claims, their unfair business practices cause of action is sufficiently supported. (Schnall v. Hertz Corp. (2000) 78 Cal.App.4th 1144, 1153 [section 17200’s scope is broad and “it defines ‘unfair competition’ to include ‘any unlawful, unfair or fraudulent business act or practice.’”].)
Issue Preclusion APM argues the entire action should be dismissed pursuant to the doctrine of issue preclusion. APM contends that each cause of action is premised on whether Fu and Qu actually made an update to their legal address for all communications and that issue was decided in a 2018 assessment lawsuit between the HOA and Fu and Qu. In that 2018 lawsuit, a final judgment was entered against Fu and Qu. APM argues that because the prior trial necessarily decided that Fu and Qu did not make an attempt to update their legal address for all HOA notices, which would have been a defense, issue preclusion prevents them from relitigating the issue.
“Issue preclusion [] prevents ‘relitigation of previously decided issues,’ . . . . [Citation.] It applies only ‘(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or
one in privity with that party.’ ” (Samara v. Matar (2018) 5 Cal.5th 322, 327.) “The point is that, once an issue has been finally decided against such a party, that party should not be allowed to relitigate the same issue in a new lawsuit.” (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 827.)
The HOA’s 2018 complaint sought to recover unpaid sums owed by Fu and Qu related to maintenance assessments. The judgment entered on December 20, 2023 states that the jury found that Fu and Qu were delinquent in their assessment payments and owed for delinquent assessments, late fees, interests, and costs and that the HOA kept a written or electronic account of the debits and credits involved for the unpaid amounts owed.
While APM argues that the 2018 lawsuit involved an identical issue about whether Fu and Qu actually updated their address, it provides no evidence in support. Further, even if the 2018 issue involved the issue of whether Fu and Qu actually updated their address, issue preclusion would not apply because here, Fu and Qu’s claims are not based on whether they actually updated their address but rather on whether APM fraudulently or negligently misrepresented to Fu and Qu that their address for notices would be updated. Whether Fu and Qu actually updated their address is a separate issue from whether APM made misrepresentations to them and they reasonably relied upon those representations to their detriment.
Economic Loss Rule APM argues that Plaintiffs have alleged nothing beyond a failure to complete a contractual duty, as the contract between APM and the HOA obligated APM to maintain membership address lists. APM argues that the economic loss rule therefore precludes all three causes of action. However, “[a] plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independent of the parties’ contractual rights and obligations . . . .” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1,
38.) Here, the allegations of APM’s fraud are independent of APM’s obligations under its contract with the HOA to update addresses and send out notices properly. They are based on APM’s obligation not to make misrepresentations, whether intentionally or negligently, to Plaintiffs. Thus, the economic loss rule does not apply.
Motion to Strike The prayer for punitive damages is supported by the fraud-based claims. (Civil Code, § 3294(a).)
APM to file an answer to the FAC within 20 days.
Moving party to give notice.
105 Fundulea vs. Divine, 2024-01375051 Demurrer to Amended Cross-Complaint – OVERRULED IN PART AND SUSTAINED IN PART WITH 20 DAYS LEAVE TO AMEND Motion to Strike Portions Of Complaint – DENIED
This case arises out of the sale of a small business by Anca and Eugen Fundulea (Sellers) to The Renaissance Company et al (Buyers). Sellers sued Buyers for multiple causes of action, including breach of contract and fraud, and Buyers filed a cross-complaint for essentially the same causes of action. Before the court are Sellers’ demurrer to Buyers’ first amended crosscomplaint (FACC) and Sellers’ motion to strike portions of the FACC.
“A complaint, with certain exceptions, need only contain a ‘statement of the facts constituting the cause of action, in ordinary and concise language’ (Code Civ. Proc., § 425.10, subd. (a)(1)) and will be upheld ‘ “so long as [it] gives notice of the issues sufficient to enable preparation of a defense.” ’ [Citation.]” (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 292.)
“[T]o withstand a demurrer, a complaint must allege ultimate facts, not evidentiary facts or conclusions of law.’ [Citation.]” (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 292.) “However, ‘ “[t]he fact that a party has alleged more than is required to justify