BERG VS. GRIFFIN

v. North (2006) 135 Cal.App.4th 1188, 1210-12. The complaint must allege ultimate facts of the oppression, fraud, or malice. Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316-17. A complaint must set forth the facts with sufficient precision to put the defendant on notice about what the plaintiff is complaining and what remedies are being sought. Signal Hill Aviation Co., Inc. v. Stroppe (1979) 96 Cal.App.3d 627, 636.

The Court overruled the demurrer to the fraud causes of action. Because punitive damages are permitted for fraudulent conduct, the prayer for punitive damages based on fraud will not be stricken. Punitive damages are also sought under the Third Cause of Action for breach of fiduciary duty. In ¶ 117, Plaintiffs allege that FPI’s conduct was willful, oppressive, and carried out with a conscious disregard for Plaintiffs’ rights. The allegations made in the Summary of Factual Allegations support this.

A pattern of mismanagement is alleged in ¶ 48. Specific examples are provided in ¶¶ 51, 53, 54, and 56. Plaintiffs allege in ¶ 57 that FPI demonstrated carelessness and recklessness. Plaintiffs allege that at least four formal claims and lawsuits were filed for discrimination related to Plaintiffs’ properties. ¶ 58. FPI regularly overspent Plaintiffs’ budgets and withdrew funds from Security Deposit Accounts without authorization. ¶ 60-61. While there are several additional allegations in the Complaint, the allegations described thus far are sufficient to support malice or oppression in the breach of fiduciary duty.

Therefore, punitive damages are properly alleged.

Defendants argue that Plaintiffs have not sufficiently plead a claim for punitive damages against FPI, which is an entity rather than a person.

An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation. Civ. Code § 3294(b).

The two employees mostly listed in the Complaint are Treadaway and Tumbaga who are the CEO and Vice President of Affordable Housing. These contracts were for affordable housing. When the fraud is by concealment versus misrepresentation, a party is not able to allege who, what, when, etc. for a disclosure that did not happen. The allegations made by Plaintiffs are against Defendants as a whole and are sufficient at this stage of the proceedings, especially given that concealment is attributed to the CEO and Vice President.

The motion is DENIED. Defendants provided a proposed Order that will be modified to reflect the Court’s ruling.

BERG VS. GRIFFIN CASE NUMBER: 25CV-0208647 Tentative Ruling on Order to Show Cause Re: Sanctions: An Order to Show Cause Re: Sanctions issued on June 4, 2026 to Plaintiff Adam Berg and counsel Legal Needs, APC for failure to timely seek entry of default as required by CRC 3.110(g). Defendant filed an Answer on June 18, 2026. The matter is now at issue. The Order to Show Cause is DISCHARGED. The Court calendars the matter on Monday, August 10, 2026 at 9:00 a.m. in Department 63 for a trial setting conference. Plaintiff is ORDERED to provide notice of the August 10, 2026 hearing.

4