Fernando Hernandez et al vs Peter Singler et al

Before the court is Legacy Real Estate & Associates, Inc., William M. Aboumrad, and Grail Marie Nitsch’s (1) demurrer to plaintiffs’ first amended complaint (line # 4); and (2) motion to strike regarding plaintiffs’ first amended complaint (line #5). Pursuant to California Rule of Court 3.1308, the court issues its tentative ruling as follows.

I. BACKGROUND On or about November 22, 2024, plaintiff Teriyaki City Grill Santa Clara LLC (“Teriyaki”) and defendant Legacy Real Estate & Associates, Inc. (“Legacy”) entered into a Buyer Representation and Broker Compensation Agreement

5 Code of Civil Procedure section 871.29(a) states, in relevant part: (1) A manufacturer may elect to be governed by this chapter for all actions described in subdivision (a) of Section 871.20 with respect to all of the manufacturer’s motor vehicles sold during a period of five consecutive calendar years by providing writ ten notice of that election to the Arbitration Certification Program within the Department of Consumer Affairs by October 31 of the preceding calendar year, except as provided in Section 871.30. (2) A manufacturer who makes the election described in paragraph (1) may not revoke that election during the five-year period covered by the election, but the manufacturer may make a new election under paragraph (1) that will cover motor vehicles sold in a subsequent five-year period. (b) Unless a manufacturer has made the election described in subdivision (a) that covers a given year, Sections 871.20 to 871.28, inclusive, shall not apply to an action described in subdivision (a) of Section 871.20 with respect to all of the manufacturer’s motor vehicles sold during that year, except as provided in Section 871.30. 24

(“Representation Agreement”) whereby defendant Legacy represented plaintiff Teriyaki with regard to real property located at 2565 The Alameda in the city of Santa Clara (“Property”). (First Amended Complaint (“FAC”), ¶20 and Exh. A). Defendant Legacy was retained by plaintiffs to represent, advise, explain the legal ramifications of agreements to, and negotiate on behalf of plaintiffs Teriyaki and Buyers, infra, with respect to the Purchase Agreement, First Amendment, and assignment of lease, infra.

On or about December 13, 2024, plaintiffs Fernando Hernandez (“Hernandez”), Ngoc Nguyen (“Ngoc”), Huyen Nguyen (“Audrey”), and Ha Thanh Hoang (“Kelly”) (collectively, “Buyers”), on the one hand, and defendant The Wicked Group Inc. (“Wicked” or “Seller”), on the other, entered into a Purchase and Sale Agre ement (“Purchase Agreement”) of the business assets of a business which operated at the Property. (FAC, ¶21 and Exh. B.) The Purchase Agreement was subject to Buyers obtaining an assignment of the lease for the Property from defendant Matthew Graham McClean (“McClean”), the sole shareholder and director of defendant Wicked. (FAC, ¶¶11, 19, and 21).

On December 19, 2024, Buyers and Wicked entered into a First Amendment to Purchase and Sale Agreement (“First Amendment”) pursuant to which Buyers were entitled to an assignment of the lease for the Property. (FAC, ¶22 and Exh. C).

On December 20, 2024, each of the Buyers wired $18,000 or a total of $72,000 into the trust account of defendant Peter A. Singler (“Singler”), attorney for defendants Wicked and McClean. (FAC, ¶¶9 and 23) . Defendant Singler was the escrow holder for Buyers and Wicked/ McClean. (FAC, ¶9).

Pursuant to the First Amendment, Buyers were entitled to a full or partial refund if the lessor refused to assign the lease for the Property. (FAC, ¶24). The Property’s lessor refused to assign the lease to Buyers through no act, fault, or contribution of Buyers. (Id.) The Property’s lessor refused to assign the lease to Buyers because the lessee, defendant McClean, owed $38,000 in back rent. (Id.). Defendant McClean did not disclose this arrearage to Buyers. (Id.). In addition, the Property’s lessor refused to assign the lease to Buyers unless the lease was amended to include an “early termination” provision giving the lessor the unconditional right to terminate the lease prior to its stated termination date. (FAC, ¶25).

On January 16, 2025, Buyers’ agent emailed defendant Singler instructing Singler not to release the escrowed funds because, among other things, the Property lessor had not assigned the lease to Buyers. (FAC, ¶26).

On or about January 24, 2025, defendant Singler disbursed the escrow funds to his client(s) and himself while there was an unresolved dispute over the rights to the escrow funds, without the Buyers’ consent, and in contravention of Buyers’ specific instructions. (FAC, ¶27).

On May 22, 2025, Buyers made a written demand to defendant Singler for an accounting of the $72,000 deposited to defendant Singler’s trust account. (FAC, ¶28). Defendant Singler responded stating, “request denied.” (Id.).

On May 27, 2025, Buyers made a written demand to defendants Singler and McClean to provide Buyers with an assignment of the lease, but defendants Singler, McClean, and Wicked have failed and refused to deliver to Buyers an assignment of the lease. (FAC, ¶29).

On May 27, 2025, Buyers made a written demand to defendant Singler for a return of their $72,000 but defendant Singler has failed and refused to return the money to Buyers. (FAC, ¶30). Also on May 27, 2025, Buyers made a written demand to defendant Singler for all escrow instructions regarding disbursement of the $72,000 held in 25

defendant Singler’s trust account, but defendant Singler failed and refused to provide Buyers with all escrow instructions. (FAC, ¶31).

On June 2, 2025, Buyers filed a complaint against defendants Singler and McClean asserting causes of action for: (1) Breach of Fiduciary Duty (2) Conversion (3) Constructive Fraud

On July 28, 2025, plaintiff Buyers and Teriyaki filed the now operative FAC adding defendants Wicked, Legacy, William M. Aboumrad (“Aboumrad”)6, and Grail Marie Nitsch (“Nitsch”)7 and asserting causes of action for: (1) Breach of Fiduciary Duty of Escrow Holder (2) Conversion (3) Rescission (4) Negligence of Agent (5) Breach of Fiduciary Duty of Agent (6) Constructive Fraud

On October 14, 2025, defendants Legacy, Aboumrad, and Nitsch (collectively, “Legacy Defendants”) filed the two motions now before the court: (1) a demurrer to the fourth through sixth causes of action of plaintiffs’ FAC; and (2) a motion to strike paragraph 27 (attorney’s fees) from plaintiffs’ FAC.

II. LEGAL STANDARD Pursuant to Code of Civil Procedure section 430.10, a party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e)). A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn)). When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078). In ruling on a demurrer, the Court treats it “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank)). When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.)

In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian, supra, 116 Cal.App.4th at 994). “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905). “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, at p. 747). “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214).

6 Defendant Aboumrad is alleged to be the Chief Executive Officer, Chief Financial Officer, and Managing Broker of defendant Legacy. (FAC, ¶13). 7 Defendant Nitsch is alleged to be a real estate agent employed by and/or affiliated with defendant Legacy. (FAC, ¶14). 26

Code of Civil Procedure section 430.10(f), also allows a demurrer to a complaint on the ground the pleading is uncertain, ambiguous, or unintelligible. (Code Civ. Proc., § 430.10, subd. (f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191)). A demurrer based on uncertainty is disfavored and will be strictly construed even when the pleading is uncertain in some respects. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616). A demurrer for uncertainty may be sustained when a defendant cannot reasonably determine to what he or she is required to respond. For example, when a plaintiff joins multiple causes of action as one, fails to properly identify each cause of action, or fails to state against which party each cause of action is asserted if there are multiple defendants, a complaint is uncertain. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2). Code of Civil Procedure section 430.10, subdivision (d) provides that a demurrer may be brought on grounds of misjoinder of parties. (Code Civ. Proc., § 430.10, subd. (d)). But “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 Association v. Superior Court (1998) 63 Cal.App.4th 426, 429. Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348). The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226). However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

III. DEMURRER ANALYSIS A. PROXIMATE CAUSE Only the fourth, fifth, and sixth causes of action of plaintiffs’ FAC are directed at the Legacy Defendants. Legacy Defendants demur by asserting that plaintiffs cannot establish proximate causation, an element of each of the subject causes of action8, as a matter of law.

The Legacy Defendants cite Antique Arts Corp. v. Torrance (1974) 39 Cal.App.3d 588 (Antique) where a store owner sued a city alleging police delay in responding to a silent alarm allowed robbers to escape. In affirming a judgment of dismissal entered after a general demurrer had been sustained, the Antique court wrote, “Initially it is obvious to us that the alleged 10-minute delay of the police dispatcher was not the causal or proximate cause of Siam’s loss. The one and only cause was the robbery.” (Antique, supra, 39 Cal.App.3d at p. 590).

This court views the Antique court’s conclusion to be the result of a determination that the robber was, as a matter of law, an intervening force and a superseding cause of harm to the plaintiff, thus absolving defendant from liability. "An intervening force is one which actively operates in producing harm to another after the actor’s negligent act or omission has been committed." [Citation.] Whether it prevents an actor’s antecedent negligence from being a legal cause of harm to another is determined by other rules [citation], chiefly those governing the related concept of superseding cause.

8 "To prevail in a negligence action, a plaintiff must show the defendant owed a legal duty to her, the defendant breached that duty, and the breach proximately caused injury to the plaintiff." (Doe v. L.A. County Dep’t of Children & Family Servs. (2019) 37 Cal.App.5th 675, 682).

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Knox v. Dean (2012) 205 Cal.App.4th 417, 432; see also CACI, No. 4100).

“Constructive fraud ‘arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice.’ [Citation.] Actual reliance and causation of injury must be shown. [Citation.]” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131; see also CACI, No. 4111). 27

"A superseding cause is an act of a third person or other force which by its intervention prevents the actor from being liable for harm to another which his antecedent negligence is a substantial factor in bringing about." [Citation.] If the cause is superseding, it relieves the actor from liability whether or not that person’s negligence was a substantial factor in bringing about the harm. [Citation.] (Brewer v. Teano (1995) 40 Cal.App.4th 1024, 1031 (Brewer); see also Safeco Ins. Co. v. J&D Painting (1993) 17 Cal.App.4th 1199, 1204—“A superseding cause utterly unrelated to the defendant’s negligence breaks the chain of proximate causation and is a bar to recovery.).

“In many cases, the issue whether an intervening force is superseding or not is a question of fact for the jury to decide. But, like proximate cause generally, it is a matter of l aw where only one reasonable conclusion may be reached.” (Brewer, supra, 40 Cal.App.4th at p. 1035; see also Koepke v. Loo (1993) 18 Cal.App.4th 1444, 1449–1450—“In any event this issue, being a question of proximate cause, was a jury question which could not be decided as a matter of law by the trial court unless from the facts only one reasonable conclusion could be drawn.” See also Ash v. North American Title Co. (2014) 223 Cal.App.4th 1258, 1274—“Whether an intervening force is superseding or not generally presents a question of fact, but becomes a matter of law where only one reasonable conclusion may be reached. [Citation.]”).

At the demurrer stage, the court cannot definitively state that only one reasonable conclusion may be reached with regard to whether defendant Singler’s conversion of/ refusal to return plaintiffs’ escrowed funds operates as a superseding cause of harm absolving the Legacy Defendants of liability.

Accordingly, the Legacy Defendants’ demurrer to the third, fourth, and fifth causes of action in plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] is OVERRULED. B. DUTY In relevant part, plaintiffs’ fourth cause of action for negligence alleges, “the broker’s duties are not limited to matters of fact but also include the legal ramifications of the transaction. (Alhino v. Starr (1980) 112 Cal.App.3d 158). A broker and a salesperson have a duty to competently explain the legal ramifications of contracts, especially those contracts which the broker and/or salesperson read and approved.” (FAC, ¶93) . “Between November 22, 2024 and on or about February 20, 2025, the [Legacy Defendants] reviewed, approved, and incompetently explained the Purchase Agreement and the First Amendment; and negotiated with defendant SINGLER as to whether the Funds would be continued to be held in SINGLER’s attorney-client trust account or, in the alternative, withdrawn and paid to SINGLER, WICKED, and/or McCLEAN.” (FAC, ¶94) . The [Legacy Defendants] engaged in the unauthorized practice of law when they approved the Purchase Agreement, approved the First Amendment, and negotiated with defendant SINGLER for release of the Funds to Buyers.” (FAC, ¶95) . The [Legacy Defendants] were negligent in ... approv[ing] the Purchase Agreement and the First Amendment which were vague, ambiguous, unconscionable, and failed to protect the legitimate business interests of the Plaintiffs.” (FAC, ¶98).

Similarly, plaintiffs’ fifth cause of action for breach of fiduciary duty alleges, “The [Legacy Defendants] reviewed and approved the Purchase Agreement and the First Amendment and, in doing so, failed to assure that those contracts accurately set forth the Plaintiffs’ intention. The [Legacy Defendants] also failed to competently explain to Plaintiffs the legal ramifications of the Purchase Agreement and the First Amendment.” (FAC, ¶104). The [Legacy Defendants] failed to take the necessary and appropriate action to prevent the wrongful withdrawal of those Funds; and they failed to assure the Funds would be returned to Plaintiffs.” (FAC, ¶105).

In demurring to the fourth through sixth causes of action, the Legacy Defendants argue alternatively that they did not owe plaintiffs a duty to explain the legal ramification of the various contracts here. The Legacy Defendants rely on Carleton v. Tortosa (1993) 14 Cal.App.4th 745, 749 (Carleton) where the court addressed the question of “whether a real estate broker had a duty to advise her client that the client’s real estate transactions could have adverse tax 28

consequences.” In Carleton, the plaintiff hired defendant real estate broker for the sale of two residential rental properties and the purchase of two residential rental properties. Following completion of the contemplated transactions, plaintiff’s accountant informed plaintiff that he incurred a tax liability because the transactions were not structured to qualify for tax-deferred treatment. Plaintiff sued defendant broker claiming she neglected to warn him that the transactions could have adverse tax consequences. The trial court granted defendant’s motion for summary judgment because the listing agreement/ disclosure statements that parties executed specifically excluded the provision of tax advice and plaintiff was specifically instructed to look to other professionals for tax advice. Real estate brokers are subject to two sets of duties: those imposed by regulatory statutes, and those arising from the general law of agency. [Citation.] Plaintiff does not contend defendant failed to fulfill a duty imposed by statute or implementing regulation [Citation]. Thus, he must derive defendant’s duty from the general law of agency, i.e., from the agreement between the principal and agent. "The existence and extent of the duties of the agent to the principal are determined by the terms of the agreement between the parties, interpreted in light of the circumstances under which it is made. . . (Carleton, supra, 14 Cal.App.4th at p. 755).

In Carleton, “The real estate purchase contracts informed plaintiff that ‘[a] real estate broker or agent is qualified to advise on real estate. If you require legal or tax advice, consult your attorney or accountant.’” (Id. at p. 756). “These documents negate plaintiff’s claim of duty.” (Ibid.). “Defendant cannot be negligent for failing to do what she had no duty to do. ... The trial court properly granted summary judgment because defendant demonstrated her entitlement to judgment as a matter of law.” (Id. at p. 759).

The Legacy Defendants point out the Representation Agreement that plaintiff Teriyaki and the Legacy Defendants entered into here and which is attached to the FAC also includes an identical provision to the one in Carleton. On that basis, the Legacy Defendants contend they cannot, as a matter of law, be negligent for failing to do what they did not have a duty to do, i.e., provide competent legal advice.

Here, however, plaintiffs allege more than just the Legacy D efendants’ failure to competently explain the legal ramifications of the Purchase Agreement and First Amendment. As noted above, plaintiff allege the Legacy Defendants acted negligently and in breach of their fiduciary duty by failing to assure that those contracts accurately set forth the Plaintiffs’ intention. Such a failure does not implicate legal advice. Such a failure goes to the heart of an agent’s duty, i.e., to represent the principal.9 Thus, the Legacy Defendants’ demurrer would not dispose of the entirety of plaintiffs’ fourth, fifth, and/or sixth causes of action. (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778—“[A] defendant cannot demur generally to part of a cause of action;” see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682—“A demurrer does not lie to a portion of a cause of action;” Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274—“A demurrer challenges a cause of action and cannot be used to attack a portion of a cause of action.”).

Accordingly, the Legacy Defendants’ demurrer to the fourth, fifth, and sixth causes of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] is OVERRULED.

IV. MOTION TO STRIKE Pursuant to Code of Civil Procedure section 436(a), the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. The court may also strike 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, subd. (b)). The grounds for a motion to strike are that the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws. (Code

9 Civil Code section 2295 provides: “An agent is one who represents another, called the principal, in dealings with third persons.” 29

Civ. Proc. §436). The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc. §437).

The Legacy Defendants move to strike plaintiffs’ prayer “[f]or reasonable attorney’s fees pursuant to applicable law and contracts.” “Under California law, ‘each party to a lawsuit must pay its own attorney fees unless a contract or statute or other law authorizes a fee award.’” (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 237; see Code Civ. Proc., § 1021.) Thus, unless specifically provided by statute or agreement, attorney fees are not recoverable.” (K.I. v. Wagner (2014) 225 Cal.App.4th 1412, 1420–1421).

Plaintiffs point to paragraphs 10 and 12 of the Representation Agreement which is attached to the FAC. At paragraph 10, the Representation Agreement states, “In any action, proceeding or arbitration between Buyer and Broker arising out of this Agreement, Buyer and Broker are each responsible for paying their own attorney fees and costs, except as otherwise specified in paragraph 12A.” Paragraph 12A then goes on to state, in relevant part, “Buyer and Broker agree to mediate any dispute or claim arising between them under this Agreement, before resorting to arbitration or court action. ... If, for any dispute or claim to which this paragraph applies, any party (i) commences an action without first attempting to resolve the matter through mediation; or (ii) before commencement of an action, refuses to mediate after a request has been made, then if that party is the losing party in any such action, the prevailing party shall be entitled to recover attorney’s fees from the non-mediating party, notwithstanding the terms in paragraph 10.”

Plaintiffs contend they come within this contractual exception because they served the Legacy Defendants with a demand for mediation prior to commencement of this action. Plaintiffs attach a copy of this purported demand to their opposition. However, as plaintiffs are well aware, “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., §437, subd. (a); see also CPF Agency Corp. v. R&S Towing (2005) 132 Cal.App.4th 1014, 1032—"our review disregards facts extrinsic to his pleadings.”). The rule applies not just to defendants but to plaintiffs as well.

V. CONCLUSION Based on the foregoing, the Legacy Defendants’ demurrer to the fourth, fifth, and sixth causes of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] is OVERRULED.

The Legacy Defendants’ motion to strike is GRANTED with 10 days’ leave to amend.