MARIGOLDYZP I LLC VS. 88 TUSCALOOSA AVE LLC, ET AL

Defendants Pierre and Elizabeth Buljan (collectively, “Cross-Complainants” or the “Buljans”) filed a Cross-Complaint against Marigold, Hongyu Zhang (aka Sherry Yuan, an individual and sole member of Marigold), Erin Yuan, Delia Fei, Ali Sadeghi (an individual and sole managing member of 88 Tuscaloosa Ave LLC and Eighty8Home LLC), and Ron Gable. The Cross-Complaint alleges that the Cross-

July 6, 2026, LAW AND MOTION CALENDAR PAGE 8 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ Defendants made false representations, concealed information, and otherwise deceived the Cross- Complainants in order for them to make a loan guarantee in favor of Marigold in the amount of $2,500,000. Cross-Complainants allege that they were told that the loan would be used to complete construction of the residence. Instead, the Cross-Defendants never intended for the loan to be used for this purpose, and fraudulently induced Mr. Buljan into making this guarantee knowing that construction costs were so high that the close of escrow would never result in sufficient funds to satisfy the loan guaranteed by Mr. Buljan.

Cross-Defendants Delia Fei and Ron Gable (herein, “Cross-Defendants” or the “Compass Agents”), who are not parties to the underlying Complaint, filed a motion for judgment on the pleadings, which the Court denied. May 20, 2025 Order.

The First Amended Cross-Complaint (the “FACC”) was filed June 26, 2025. Two Answers thereto were filed on July 14, 2025, and Cross-Defendants filed a demurrer thereto on July 29, 2025. The demurrer to the FACC was a general demurrer only: the ground of uncertainty was mentioned, but not pursued. This Court adopted its uncontested Tentative Ruling sustaining that demurrer as to both causes of action and both Cross-Defendants, with leave to amend. Minute Order, February 23, 2026.

In the interim, this Court granted the Motion for Summary Judgment brought by Cross-Defendant Elizabeth Buljan (November 24, 2025 Order”), and entered judgment in her favor. January 8, 2026 Judgment.

Cross-Complainant Pierre Buljan alone filed a Second Amended Cross-Complaint (the “SACC”) on March 13, 2026, to which Cross-Defendants now demur, asking that their Demurrer be sustained without leave to amend.

Clarification Concerning the Instant Demurrer

The Notice of the instant Demurrer states that Cross-Defendants demur to the two causes of action of the SACC for failure to state facts sufficient to state a cause of action (Demurrer, 2:11-14), which sounds in general demurrer. Code Civ. Proc., § 430.10, subd. (e). The Demurrer itself sets forth this ground only. Demurrer, 3:7-18. The ground of uncertainty was earlier mentioned (id., 2:9), but appears not to have been pursued. Hence, the instant Demurrer is treated as a general demurrer.

Legal Standard

A general demurrer under Section 430.10(e) of the Code of Civil Procedure for failure to state a cause of action challenges defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. Blank v. Kirwan (1985) 39 C3d 311, 318.

“It is not necessary that the cause of action be the one intended by plaintiff. The test is whether the complaint states any valid claim entitling plaintiff to relief. Thus, plaintiff may be mistaken as to the nature of the case, or the legal theory on which plaintiff can prevail. But if the essential facts of some valid cause of action are alleged, the complaint is good against a general demurrer.” Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A (citations omitted)

“For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded (i.e., all ultimate facts alleged, but not contentions, deductions or conclusions of fact or law).” Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-A (citations omitted).

July 6, 2026, LAW AND MOTION CALENDAR PAGE 9 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________

Discussion

At a minimum, the SACC states a cause of action for fraud:

The elements of a cause of action for fraud based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage. Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, 1198.

Though fraud must be pleaded specifically (Lazar v. Superior Ct. (1996) 12 Cal.4th 631, 645), this heightened pleading standard is relaxed when the allegations indicate that the defendant must necessarily possess full information concerning the facts of the controversy or when the facts lie more in the knowledge of the opposite party. Tarmann v. State Farm Mutual Automobile Ins. Co. (1991) 2 Cal.App.4th 153, 158.

Cross-Defendants understandably do not focus on this exception to the heightened pleading standard for fraud, which applies where, as here, the information about Cross-Defendants’ alleged wrongdoing lies largely within Cross-Defendants’ knowledge (see, e.g., SACC, 1:9-18, ¶¶ 23-24, 27, 29-35, 37-38). “[I]t is harder to apply [the heightened pleading requirement] to a case of simple nondisclosure. ‘How does one show “how” and “by what means” something didn’t happen, or “when” it never happened, or “where” it never happened?’” Alfaro v. Cmty. Hous. Improvement Sys. & Plan. Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384. In the Court’s view, the SACC does sufficiently plead when, where, or in what context Cross-Defendants’ alleged misrepresentations were made.

Paragraphs 33 and 34 of the SACC allege: the when (“Just 24 hours before signing the guarantee”; “24 hours before Pierre signed the guarantee”; and “Approximately 24 hours before this call with Mr. Gable, Pierre had the same call with Ms. Fei” (SACC ¶ 34)); the where (“Pierre Bujan and Ron Gable had multiple phone calls”; “Ron unequivocally informed Pierre during this phone call”; and “Pierre had the same call with Ms. Fei”); and the context of recruiting and inducing Cross-Complainant to sign the guarantee (SACC ¶¶ 33-34).

The Jones elements are sufficiently pled as against Cross-Defendants, as follows: (1) (see, e.g., SACC 1:9-18, & ¶¶ 27-31, 33-35, 38); (2) (see, e.g., id., 1:9-18, & ¶¶ 32, 34, 45); (3) (see, e.g., id., 1:9-18, & ¶¶ 31, 33-34, 38); (4) (see, e.g., id., 1:9-18, & ¶¶ 33-35, 38, 48-51, 64); and (5) (see, e.g., id., 1:9-19, & ¶¶ 39, 53-54, 65-66).

Moreover, as to the second element:

In transactions which do not involve fiduciary or confidential relations, a cause of action for nondisclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed, or which render his disclosure likely to mislead; (2) the facts are known or accessible only to defendant, and defendant knows they are not known to or reasonably discoverable by the plaintiff; (3) the defendant actively conceals discovery from the plaintiff. Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 10 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ In the Court’s view, all three circumstances are sufficiently alleged here at the pleading stage.

Cross-Defendants’ Arguments Specifically As to Cross-Defendant Gable

As to Cross-Defendant Gable, Cross-Defendants assert that, “The alleged fraud against Mr. Gable still is not pleaded with the specificity required by Lazar v. Superior Court (1996) 12 Cal.4th 631—the SAXC pleads Cross-Complainant’s question verbatim but paraphrases Mr. Gable’s response.” Demurrer, 4:13- 15. However, as discussed above, the heightened pleading standard of Lazar “is relaxed when the allegations indicate that ‘the defendant must necessarily possess full information concerning the facts of the controversy’ or ‘when the facts lie more in the knowledge of the opposite party[.]’” Tarmann, 2 Cal.App.4th at 158 (internal quotations omitted) (citations omitted).) Here, Cross-Defendants must necessarily possess full information concerning a phone call between Cross-Complainant and a Cross- Defendant.

Further, the Court disagrees with one of Cross-Defendants’ central premises, to wit that: “Lazar and Tarmann require a plaintiff alleging fraud to plead the actual words used. (Lazar, 12 Cal.4th at 645; Tarmann, 2 Cal.App.4th at 157.).” Demurrer, 10:17-18; 9:1-5.

The Court of Appeal in Tarmann explains that the requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. Tarmann, 2 Cal.App.4th at 157. But even this requirement to allege “what they said” does not mean that a plaintiff alleging fraud must recall and plead oral representations verbatim. Moreover, Lazar explains that this requirement in Tarmann is even greater than the ordinary requirement of specificity, because it applies in a context that is not found here:

This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” A plaintiff’s burden in asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must “allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” Lazar, 12 Cal.4th 631 at 645.

Thus, the standard to which Cross-Defendants would hold the SACC is not found in the cases which they cite.

The Court further (previously) noted as to its prior ruling on Cross-Defendants’ demurrer to the FACC:

However, the FACC does not plead the alleged misrepresentation with the specificity required by Lazar. Although the pleading identifies the speaker (Gable), the recipient (Buljan), the substance of the statement, and that it occurred via telephone shortly before October 15, 2022, it does not allege a specific date, a sufficiently narrowed time frame, or additional contextual details concerning the circumstances of the communication. Given the heightened pleading standard for fraud, these omissions are material. Minute Order, February 23, 2026.

Here, while the SACC does not allege a specific date, the Court required this disjunctively with a sufficiently narrowed timeframe. The SACC now alleges the latter, since Cross-Complainant’s quoted call with Cross-Defendant Gable is alleged to have occurred “24 hours before Pierre signed the guarantee” (and the SACC now alleges a similar call with Cross-Defendant Fei, “[a]pproximately 24 hours before this call with Mr. Gable”). SACC ¶ 34. The FACC had lacked details from these two

July 6, 2026, LAW AND MOTION CALENDAR PAGE 11 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ alleged phone calls, had not alleged such a call with Cross-Defendant Fei, and had alleged the call with Cross-Defendant Gable to have occurred “just days before Pierre signed the guarantee[.] FACC ¶ 35. Further, the added verbatim pleading of Cross-Complainant’s question provides additional contextual details concerning the circumstances of the communication, which further specify the meaning and import of Cross-Defendant Gable’s described response.

Again, the allegations of the SACC are to be taken as true. Cross-Defendants attempt to argue that the allegations of the SACC “confirm” that the insufficiency of the alleged $2.5 million guarantee was driven by future conduct, but this is Cross-Defendants’ interpretation of the allegations, which runs counter to the allegations themselves when taken as true. Demurrer 6:4-5. For instance, the SACC alleges that “Ron unequivocally informed Pierre during this phone call 24 hours before Pierre signed the guarantee, that this amount was sufficient despite clearly having been told and shown that $2.5 million was insufficient by Ali Sadeghi.”

SACC ¶ 34. Adjudication of factual questions is inappropriate in ruling on demurrer. Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1068-69. Taking the language above to be true, the allegation is that the $2.5 million had already been shown to be insufficient. Cross- Defendants will have ample opportunity to challenge the timing, character, and even the existence of the alleged conversations through discovery and, if necessary, trial.

Cross-Defendants’ Arguments Specifically As to Cross-Defendant Fei

As to Cross-Defendant Fei, Cross-Defendants assert that the SACC without explanation adds a new allegation that Cross-Defendant Fei answered the same question that Cross-Defendant Gable had. “That belated allegation contradicts the FAXC, which expressly identified Mr. Gable as the sole ‘individual’ who personally represented anything to Cross-Complainant, and should be disregarded as sham.”

The paragraph to which Cross-Defendants appear to refer alleges in its entirety that:

Even though Ron Gable was the individual who personally represented to Pierre Buljan the false purpose of the Guarantee and the false sufficiency of its amount for the stated purpose, Ron Gable did so as the agent of and at the direction of Eric Yuan, Sherry Yuan and MARIGOLDYZP I LLC. FACC ¶ 45.

If the Court were to apply to the SACC the canon of statutory interpretation, expressio unius est exclusio alterius, Cross-Defendants’ point may be well taken that the italicized language above specifies Cross- Defendant Gable as “the” person who made the representation—not just that he did, or that he was among those who did. Thus, the addition of an allegation thereafter that Cross-Defendant Fei made the same representation colorably might be taken to contradict the FACC. However, it is also possible that Cross- Complainant has simply better recalled or understood the significance of Cross-Defendant Fei’s alleged representations to him, which he may have thought simply to be redundant before. While Cross- Defendant’s argument is reasonable and understandable—it ultimately goes to the credibility of the allegations of the SACC, which are not the concern of the Court on demurrer.

Moreover, Cross-Defendants’ quoted authority for this application of the sham pleading doctrine provides that the “general rule, as the Court of Appeal noted, is that material factual allegations in a verified pleading that are omitted in a subsequent amended pleading without adequate explanation will be considered by the court in ruling on a demurrer to the later pleading.” Shoemaker v. Myers (1990) 52 Cal.3d 1, 12 (citation omitted). Thus, the Court considers the disappearance of facts without adequate explanation in ruling on the Demurrer, but is not bound thereby to sustain it. It also may be more apt to describe the change from the FACC to the SACC as the addition of facts, rather than their disappearance, but again, this implicates a credibility issue inappropriate to ruling on demurrer.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 12 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________

The SACC also includes an alleged quotation of Cross-Defendant Fei’s own words, with which Cross- Defendants take issue for being merely a phrase accompanied by Cross-Complainant’s paraphrase of the rest of her speech on the alleged call. Again, the Court disagrees with the premise that allegations must include verbatim statements.

This Court previously reasoned that:

While a duty to disclose may arise under limited circumstances, the FACC does not allege particularized facts establishing that Fei owed such a duty to Buljan. The pleading reflects that Fei acted as an agent for the Yuans and circulated budget communications internally. It does not allege that Fei had any direct communications with Buljan, that she undertook to provide him information, or that she otherwise entered into a transactional or fiduciary relationship with him. February 23, 2026 Minute Order.

But the SACC now pleads that Cross-Defendant Fei communicated directly with Cross-Complainant, that she undertook to provide him information and in fact encouraged his involvement in the transaction.

In addition, the Court of Appeal explains that:

[A]ctive concealment of facts and mere nondisclosure of facts may under certain circumstances be actionable without such a [confidential or fiduciary] relationship. For example, a duty to disclose may arise without a confidential or fiduciary relationship where the defendant, a real estate agent or broker, alone has knowledge of material facts which are not accessible to the plaintiff, a buyer of real property. Kovich v. Paseo Del Mar Homeowners’ Assn. (1996) 41 Cal.App.4th 863, 866 (Kovich) (quotation and citation omitted).)

The duty-bearing relationship in Kovich is close to that here, where the Cross-Complainant is an investor in the Property, whose investment was sought by the Cross-Defendant real estate agents or brokers.

This Court previously reasoned that:

The negligent misrepresentation claim likewise fails as to Fei because no affirmative misstatement by her is alleged. Negligent misrepresentation requires a positive assertion of fact made without reasonable grounds for believing it true. Mere silence, in the absence of a well-pled duty to disclose, is insufficient to state a claim. February 23, 2026 Minute Order.

The SACC now includes the required allegations. SACC ¶¶ 34, 44.

Additional Note Regarding the Second Cause of Action

Further, since the Court looks to the facts alleged and not to the Complaint’s labels for its causes of action, since the second cause of action incorporates all prior paragraphs of the SACC (SACC ¶ 57), the Motion fails as to each cause of action. Even where the result would be that a cause of action may be taken to be duplicative of others, duplicative pleading need not result in demurrer. Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 890.

Nonetheless, the SACC also sufficiently pleads negligent misrepresentation. As the Supreme Court of California explained:

July 6, 2026, LAW AND MOTION CALENDAR PAGE 13 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ For the guidance of trial courts, we suggest the jury be instructed on the elements of negligent misrepresentation as [follows]:

“The representation must have been made with the intent to induce plaintiff, or a particular class of persons to which plaintiff belongs, to act in reliance upon the representation in a specific transaction, or a specific type of transaction, that defendant intended to influence. Defendant is deemed to have intended to influence [its client’s] transaction with plaintiff whenever defendant knows with substantial certainty that plaintiff, or the particular class of persons to which plaintiff belongs, will rely on the representation in the course of the transaction. If others become aware of the representation and act upon it, there is no liability even though defendant should reasonably have foreseen such a possibility.” Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 414 (quotation and citation omitted).

Here, the SACC clearly alleges that Cross-Defendants made misrepresentations to Cross-Complainant with the intent to induce him to sign the guarantee, which they intended to influence for their financial benefit. See, e.g., SACC 1:9-18, & ¶¶ 23, 27, 32-34, 38.

Note Regarding This Court’s Ruling on the Demurrer to the FACC

Cross-Defendants, at a minimum, imply that parts of the SACC that are identical to the FACC are new. For example, the Demurrer asserts that, “The SAXC, however, now affirmatively alleges facts confirming that the ‘insufficiency’ of the budget was a moving target driven by future conduct that no party could have known with certainty,” citing paragraphs 31 and 36, which are identical to paragraphs 32 and 37 of the FACC, respectively. Cross-Defendants claim this purported newness to overcome the Court’s determination that, “At the pleading stage, the allegation that Gable had access to cost estimates exceeding $2.5 million is sufficient to avoid dismissal solely on the ground that the alleged statement constitutes nonactionable opinion.” February 23, 2026 Minute Order. This allegation appears in the SACC. (SACC, ¶ 31.) The Court’s prior conclusion stands.

Moreover, Cross-Defendants’ Reply asserts that this Court’s findings reflected in the Minute Order of February 23, 2026, do not apply to the Court’s ruling on the Demurrer to the SACC, which “stands or falls on its own allegations.” Reply 5:21. The Reply thus revisits arguments on which the Court has already ruled. However, the allegations of the SACC consist almost entirely of those of the FACC, so that the Court’s findings as to the sufficiency of those allegations do apply here and the Court does not change its ruling.

Cross-Defendants’ Request for Judicial Notice Is Procedurally Defective

The Court has reviewed Cross-Defendants’ Request for Judicial Notice (“RJN”), which accompanies the Motion, and is made as to four documents described as:

1. The Minute Order of the Court (Hon. Don R. Franchi) entered May 19, 2025, granting Cross- Defendants’ Motion for Judgment on the Pleadings on Cross-Complainant Pierre Buljan’s original Cross- Complaint, with leave to amend.

2. Cross-Complainant Pierre Buljan’s First Amended Cross-Complaint filed June 26, 2025.

3. The Tentative Ruling of the Court (Hon. Amarra Lee), adopted as the order of the Court on February 23, 2026, sustaining Cross-Defendants’ demurrer to the First and Second Causes of Action of the First Amended Cross-Complaint, with leave to amend.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 14 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________

4. Cross-Complainant Pierre Buljan’s Second Amended Cross-Complaint filed March 13, 2026.

The Court notes that the pleadings are not file-stamped and thus are not in the Court’s records.

Further, Exhibit 1 is not the Minute Order of the Court entered on May 19, 2025, as described, but instead shows a Tentative Ruling for that date. Exhibit 3 is a Tentative Ruling, but as counsel is aware, such is not an Order of this Court. The Minute Order of February 23, 2026, showing the Tentative Ruling, with the Court’s docket entry of that date, “02/23/2026 Tentative ruling adopted and becomes order: [¶] Comment [¶] TENTATIVE IS UNCONTESTED,” are more likely the Court’s records to which Cross- Defendants intend to direct their request.

Though the defective RJN is denied, the Court nevertheless finds that, to the extent it is even necessary, it may take judicial notice of documents that are part of this Court’s file in this case, and does so.

Any party who contests a tentative ruling must email Dept.11@sanmateocourt.org with a copy to all other parties by 4:00 p.m. stating, without argument, the portion(s) of the tentative ruling that the party contests.

If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, Counsel for the prevailing party shall prepare for the Court’s signature a written order consistent with the Court’s ruling pursuant to California Rules of Court, rule 3.1312 and provide written notice of the ruling to all parties who have appeared in the action, as required by law and by the California Rules of Court. Please note that Local Rule 3.403(b)(iv) states in part “prevailing party on a tentative ruling is required to prepare a proposed order REPEATING VERBATIM the tentative ruling” (emphasis added). The order should be efiled only, do not email or mail a hard copy to the Court.

July 6, 2026, LAW AND MOTION CALENDAR PAGE 15 Judge: HONORABLE DAVID A. SILBERMAN, DEPARTMENT 11 ________________________________________________________________________ 2:00 PM LINE 5 23-CIV-04063 MARIGOLDYZP I LLC VS. 88 TUSCALOOSA AVE LLC, ET AL

MARIGOLDYZP I LLC CATHERINE S. ROBERTSON ALI SADEGHI MATTHEW S. KENEFICK

CROSS-DEFENDANTS DELIA FEI AND RON GABLE’S MOTION TO STRIKE PORTIONS OF DEFENDANTS PIERRE BULJAN AND ELIZABETH BULJAN’S 2ND AMENDED CROSS-COMPLAINT

TENTATIVE RULING:

The Court incorporates by reference its tentative ruling overruling Cross-Defendants’ demurrer issued herewith.

The Motion to Strike Portions of Defendants Pierre Buljan and Elizabeth Buljan’s 2nd Amended Cross- Complaint (the “Motion”) brought by Cross-Defendants Delia Fei and Ron Gable (herein, “Cross- Defendants”) is DENIED.

The governing statute provides that: The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

Strike out any irrelevant, false, or improper matter inserted in any pleading. Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. Code Civ. Proc. § 436.

Cross-Defendants move to strike the following from the Second Amended Cross-Complaint (“SACC”):

1. Paragraph 55 in its entirety: “In subjecting Pierre Buljan to the wrongful treatment herein described, the Cross-Defendants, each of them willfully and maliciously with the intent to harm Pierre Buljan, and in conscious disregard of Pierre Buljan’s rights, acted with oppression, fraud, and/or malice under California Civil Code § 3294. Pierre Buljan is informed, and on that basis alleges, that these willful, oppressive, fraudulent and/or malicious acts as alleged herein above were ratified by the officers, directors and/or managing agents of the Cross-Defendants.”

2. The following language from paragraph 56: “As a legal result of Defendants’ oppression, fraud and/or malice, Pierre Buljan is entitled, in addition to compensatory damages, to punitive damages under California Civil Code § 3294.”

3. Paragraph 3 of the Prayer for Relief: “Punitive damages, according to proof.”

Motion at 2:10-20.

Cross-Defendants assert that these pleas for punitive damages are merely conclusory, and thus insufficient. The argument is essentially that since the SACC fails to plead the underlying torts, then it does not meet the heightened pleading standard for punitive damages. The Motion thus fails with the Demurrer.