Umesh Maharaj et al. v. Joe Velasco et al.

Plaintiffs filed their original complaint in February 2025. Plaintiffs filed the operative first amended complaint (FAC) in September 2025, alleging five causes of action: (1) breach of contract; (2) accounting; (3) false promise; (4) negligent misrepresentation; and (5) intentional misrepresentation.

The FAC alleges that defendant Joe Velasco emailed Maharaj in June 2021, seeking a $750,000 investment for the O’Conner Project. Joe promised a $160,000 to $200,000 return on the investment, secured by a promissory note between Defendants and BAPD (O’Conner Note). (FAC, ¶¶ 11, 16; Ex.

1. For clarity, and meaning no disrespect, defendant Joe Velasco will be referred to by his first name in this order.) Plaintiffs expected the return of the initial $750,000 investment and an estimated payout of $157,786.60 by November 2022. (Id. at ¶ 16.) Plaintiffs made the investment. (FAC, ¶¶ 14, 15.) Defendants returned the initial investment in three installments well after the contracted payment date. Defendants never paid the interest owed. (Id. at ¶¶ 18, 20.)

BAPD invested $350,000 in June 2022, as a general member with a 15% equity share, in the Oaklane Project after Joe pitched the project. (Complaint, ¶¶ 22, 24.) BAPD and Defendants executed a promissory note under which BAPD would receive interest on the unpaid principal balance of the note at the 15% equity rate and a return of the initial investment (Oaklane Note). (Id. at ¶ 27.) The estimated payout was $170,995.65, with a projected payment in December 2023. (Ibid.) Defendants paid $116,666.67 in July 2024, but did not pay the remaining amount due and owing under the Oaklane Note. (Id. at ¶ 34.)

LEGAL STANDARDS FOR DEMURRERS

In ruling on a demurrer, the court accepts as true all properly pleaded material factual allegations but does not accept as true contentions, deductions or conclusions of fact or law. (Valero v. Spread Your Wings, LLC (2023) 88 Cal.App.5th 243, 253.) Code of Civil Procedure section 430.60 states that “[a] demurrer shall distinctly specify the grounds upon which any of the objections to the complaint, cross-complaint, or answer are taken. Unless it does so, it may be disregarded.” The California Rules of Court also require that the demurrer itself (distinct from a supporting memorandum) specify the target of any objection and the grounds. (Cal.

Rules of Court, rules 3.1103(c), 3.1112(a), 3.1320(a) [“Each ground of demurrer must be in a separate paragraph and must state whether it applies to the entire complaint, cross-complaint, or answer, or to specified causes of action or defenses.”].)

Where a demurrer is to an amended complaint or cross-complaint, the court “may consider the factual allegations of prior complaints, which a plaintiff may not discard or avoid by making contradictory averments, in a superseding, amended pleading.” (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1034, internal quotations omitted (Berg & Berg); see also Doe v. United States Youth Soccer Assoc. (2017) 8 Cal.App.5th 1118, 1122.)

The court cannot consider extrinsic evidence when ruling on a demurrer. This includes declarations. The court has considered the declaration from Shawn Parr filed in support of the demurrer only to the extent it discusses the meet and confer efforts required by statute.

DISCUSSION

Defendants demur to the entire FAC, and also demur to each cause of action.

Demurrer to the Entire FAC

Defendants demur to the entire FAC on the ground that the pleading fails to state facts sufficient to constitute a cause of action because Maharaj lacks standing and privity to bring the breach of contract and accounting claims. (See demurrer.) Defendants also demur to the entire FAC on the ground that the general allegations of “Plaintiff” where there are two plaintiffs in this action renders the pleading uncertain, ambiguous, and unintelligible. (See ibid.)

The court overrules the demurrer to the entire FAC because (1) Defendants’ argument regarding standing and privity only pertains to two out of five causes of action; and (2) Defendants do not substantively argue that the FAC is uncertain. (Public Employment Relations Bd. v. Bellflower Unified School Dist. (2018) 29 Cal.App.5th 927, 939 (Public Employment) [“The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived.”].)

Maharaj’s Standing to Sue (First and Second Causes of Action)

In demurring to the first cause of action for breach of written contract and second cause of action for accounting, Defendants argue that Maharaj has no standing to bring these claims because the two contracts forming the bases of these claims—the O’Conner Note and Oaklane Note—are solely between BAPD and Defendants. (See FAC, ¶¶ 55, 63; see also id. at Exs. 2- 3.)

Standing goes to the existence of a cause of action. A plaintiff must demonstrate that he or she has some special interest to be served or a particular right to be preserved or protected. (Spotlight on Coastal Corruption v. Kinsey (2020) 57 Cal.App.5th 874, 882.)

Maharaj contends that he has standing as a third-party beneficiary of the two promissory notes. But the FAC does not contain any allegations supporting that theory. The FAC alleges “Plaintiff used cash, tapped into an existing home equity line of credit and accessed other loans for the $750,000 investment amount.” But it is unclear which Plaintiff took these actions. (FAC, ¶ 15; see id. at ¶ 25 [alleging “Plaintiff” funded the O’Conner Note].) Plaintiffs’ citations to Principal Mut. Life Ins. Co. v. Vars (1998) 65 Cal.App.4th 1469, 7

1485 (Principal) and Kaiser Eng’rs v. Grinnell Fire Prot. Sys. Co. (1985) 173 Cal.App.3d 1050, 1055 (Kaiser) are unpersuasive. Both cases permit a third party to enforce a contract only “if it can be shown that he or she is a member of the class for whose express benefit the contract was made.” (Kaiser, supra, 173 Cal.App.3d at p. 1055.) Plaintiffs have not made this showing through allegations in the FAC. And the promissory notes do not express an intent for Maharaj to benefit as a third party. (Principal, supra, 65 Cal.App.4th at p. 1486 [“A third party may qualify as a contract beneficiary where the contracting parties must have intended to benefit that individual, an intent which must appear in the terms of the agreement.”].) Absent allegations supporting Maharaj’s third-party beneficiary theory, the breach of contract and accounting claims are subject to demurrer.

The demurrer to the first and second causes of action based on Maharaj’s lack of standing is sustained.

Sufficiency of the Fraud Claims (Third, Fourth, and Fifth Causes of Action)

In demurring to the third cause of action for false promise, fourth cause of action for negligent misrepresentation, and fifth cause of action for intentional misrepresentation, Defendants assert that Plaintiffs have not adequately alleged the fraud claims with the requisite specificity.

The elements of fraud are: (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792, citation omitted.)

Each element in a fraud cause of action must be pleaded with specificity. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645 (Lazar).) A plaintiff must plead “facts which show how, when, where, to whom, and by what means the representations were tendered.” (Id. at p. 645, quotations omitted.) In the case of a corporate defendant, the plaintiff must also “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.” (Ibid., citation and quotations omitted.)

Third Cause of Action – False Promise

The FAC alleges that, in July 2021 and June 2022, Defendants falsely promised, via the O’Conner Note and Oaklane Note, to pay a 20% equity share of the profits and interests on the sale of the O’Conner Property and a 15% equity share of the profits and interest on the sale of the Oakland Property. (FAC, ¶¶ 16, 27, 67, 69.)

Defendants contend that under Reeder v. Specialized Loan Servicing LLC (2020) 52 Cal.App.5th 795, 804 (Reeder), the false promise claim is insufficiently pleaded because it does not allege facts showing Defendants’ intent not to perform at the time the promise was made, only that Defendants have since failed to perform on the promissory note. In Reeder, the court noted that an unkept but honest promise or subsequent failure to perform on a

promise is insufficient to establish a defendant’s intent not to perform the alleged promise. (Id. at p. 804.)

Plaintiffs do not meaningfully address Reeder. They instead insist, without citation to legal authority, that the repeated failure to perform indicates the false nature of the promise. (See Public Employment, supra, 29 Cal.App.5th at p. 939 [arguments not supported by reasoned argument are forfeited].) The FAC alleges, “Plaintiffs believe there was never any intent to pay any of the contracted-for benefit of the contract.” But the FAC is devoid of allegations—beyond the mere failure to perform—supporting that belief. (FAC, ¶¶ 39, 43 [alleging intent based on a history of failure to perform]; see Brown v. USA Taekwondo (2019) 40 Cal.App.5th 100, 1106 [requiring allegations of information and belief to also plead information leading the plaintiff to believe the allegation is true].)

The demurrer to the third cause of action is sustained.

Fourth and Fifth Causes of Action – Negligent and Intentional Misrepresentation

The FAC alleges that Defendants “grossly misrepresented” their expertise in real estate development and their ability to complete the development projects in pursuing Plaintiffs for investment in the real estate projects. (FAC, ¶¶ 75-77, 83-85.)

Defendants contend that the misrepresentation claims are inadequately pleaded because the FAC “lumps” the Defendants together without identifying which of the Defendants made specific misrepresentations. An intentional or negligent misrepresentation claim cannot be adequately alleged against multiple individuals and an entity through general allegations about “Defendants.” Each element must be alleged with specificity as to each named defendant the claim is brought against. (Lazar, supra, 12 Cal.4th at p. 645.)

Each misrepresentation claim alleges that all “Defendants” made misrepresentations about their experience and abilities and pursued Plaintiffs to invest. (FAC, ¶¶ 75-77, 83-85.) The general factual allegations, however, allege only that Joe misrepresented his experience in the real estate business and Plaintiffs’ expected payout and that Joe pursued Maharaj or BAPD for an investment. (Id. at ¶¶ 11, 13-14, 22.) The FAC also does not allege how or when Joe made misrepresentations about his experience and abilities.

In opposition, Plaintiffs insist that Defendants cannot claim ignorance on who made certain misrepresentations or when and how misrepresentations were made because the information has been shielded from the Plaintiffs. Plaintiffs accuse Defendants of intentionally withholding information in discovery, precluding Plaintiffs from refining any allegations. But Plaintiffs are aware who made misrepresentations to them, when they were made, and how they were made. Those details are not facts that courts have recognized those that lie more in the knowledge of Defendants. (See Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217.)

The demurrer to the fourth and fifth causes of action is sustained.

Leave to Amend

A plaintiff bears the burden of proving an amendment would cure any defect identified on demurrer. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) Plaintiffs’ opposition failed to meet that burden. The opposition neither requests leave to amend nor explains how the pleading defects could be cured. But because this is the first pleading challenge, the court will grant leave to amend. (City of Stockton v. Super. Ct. (2007) 42 Cal.4th 730, 747 [leave to amend is liberally allowed as a matter of fairness, unless the pleading shows on its face that it is incapable of amendment].)

CONCLUSION

Defendants’ demurrer to the entire FAC is overruled.

Defendants’ demurrer to the first and second causes of action as to Maharaj’s standing to sue is sustained with leave to amend.

Defendants’ demurrer to the third, fourth, and fifth causes of action based on failing to plead fraud is specificity is sustained with leave to amend.

Any amended pleading must be filed and served no later than August 7, 2026.

The court will prepare the order.

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