James Bay Resources Limited vs. Lockett & Horwitz

Here, Plaintiffs’ counsel provides that on May 23, 2025, Plaintiffs served Requests for Production, Set One and Form Interrogatories, Set one on L&H to which Plaintiffs served deficient responses. (Declaration of Jeanine Zalduendo, ¶ 10, Exs. 2-3.) Plaintiffs’ counsel provides that L&H produced 13 documents totaling 22 pages which did not pertain to the transaction alleged in the Complaint, but to other work L&H conducted for the Borrowers. (Id., ¶ 11.) Plaintiffs’ counsel also provides that in light of L&H’s deficient responses, on September 17, 2025, Plaintiff James Bay propounded Requests for Admission, Set One and Special Interrogatories, Set One on L&H, and that L&H’s responses amounted to mostly boilerplate objections, claiming that it was not able to respond because Armstrong had all relevant information and he was purportedly incapacitated. (Id., ¶¶ 13-14, Exs. 4-5.)

Plaintiffs’ counsel met and conferred with L&H ‘s counsel, who confirmed that L&H would not be amending or supplementing any discovery responses. (Id., ¶ 15.) Plaintiffs’ counsel provides that on April 2, 2026, Plaintiffs filed Motions to Compel further responses to Plaintiffs aforementioned discovery requests, and that these motions are set for hearing on October 22, 2026. (Id., ¶ 17.)

Based on the foregoing, the declaration in support of the continuance does not detail the specific facts that would show the existence of controverting evidence, nor does it support that facts essential to opposing the motion may exist. Thus, the request for a continuance is not mandatory, and is DENIED.

Plaintiffs’ Objections to the Declaration of Lawrence W. Horwitz “In determining if the papers show that there is no triable issue as to any material fact, the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, . . . .” (Code Civ. Proc. § 437c(c).) “In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to the disposition of the motion.” (Code Civ. Proc. § 437c(q).)

The Court OVERRULES the objection to paragraphs 2, 4 (first sentence),

The Court SUSTAINS the objection to paragraphs 3, 4 (second sentence), paragraphs 2-4 collectively, and to the entire Declaration of Lawrence W. Horwitz.

L&H’s Request for Judicial Notice L&H requests that the Court take judicial notice of four documents: (1) Opinion Letter issued on December 20, 2018 by law firm Horwitz & Armstrong, processor to Defendant Lockett & Horwitz referenced in the SAC as the HA Opinion (Ex. 1); (2) Ruling on Demurrer to Complaint (Ex. 2); (3) SAC (Ex. 3); and (4) Redlined version of SAC as served by Plaintiffs on Defendants (Ex. 4.)

In response, L&H filed a separate six-page opposition, in addition to the 21-page memorandum of points and authorities filed in opposition to the motion. (See ROA 259, 261.)

California Rules of Court, Rule 3.1113(d) provides that no opening or responding memorandum in a summary judgment or summary adjudication motion may exceed 20 pages. California Rules of Court, Rule 3.1113(g) provides, “A memorandum that exceeds the page limits of these rules must be filed and considered in the same manner as a latefiled paper.” While a paper may not be rejected for filing on the ground that it was untimely submitted for filing, the court, in its discretion, may refuse to consider a late filed paper. (California Rules of Court, Rule 3.1300(d).)

The separate opposition to the request for judicial notice effectively extends the page limit for replies, without permission. The Court declines to consider the separate opposition to the request for judicial notice.

The Court GRANTS L&H’s request for judicial notice as to the Opinion Letter attached to the SAC, the ruling on the demurrer to Complaint, and the SAC, pursuant to Evidence Code section 452(d), but declines to take judicial notice of the truth of hearsay statements contained therein.

The Court DENIES the request for judicial notice as to the redlined version of the SAC.

Plaintiffs’ Request for Judicial Notice Plaintiffs request that the Court take judicial notice of the following court records: (1) The Complaint in the case Securities and Exchange Commission v. David J. Bunevacz et al., United States District Court, Central District of California, Case No. 2:22-cv-02284, (“SEC Complaint”) (Ex. 1); (2) The Complaint in the case United States of America v. David Joseph Bunevacz, United States District Court, Central District of California, Case No. 2:22-mj-01265-DUTY, (“Criminal Complaint”) (Ex. 2); and (3) The Plea Agreement in the case United States of America v. David Joseph Bunevacz, United States District Court, Central District of California Case No. 2:22-cr-00175-DSF 1 (Ex. 3).

The Court DENIES Plaintiffs’ request for judicial notice as these materials are not relevant to the determination of the issues. A court may deny a request for judicial notice on the ground that the material is not relevant to the determination of the issues. (State Compensation Ins. Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 442-443.)

First Cause of Action for Breach of Contract

Issue No. 1: Plaintiff Cannot Legally Maintain a Breach of Contract Cause of Action Against Defendant Lockett & Horwitz as Plaintiff Cannot Legally Establish that Plaintiffs Were Third Party beneficiaries of the Legal Opinion so the First Cause of Action for Breach of Contract Legally Fails.

L&H contends Plaintiffs cannot state a cause of action for breach of contract against L&H and Armstrong as a matter of law. L&H asserts that this was the holding of this court in the previous Demurrer to the original Complaint in this matter, that there were no material revisions to the Breach of Contract claim in the SAC, and request that the Court take judicial notice of its previous ruling. L&H also asserts that no third-party beneficiary rights existed as between L&H and Plaintiffs, and that no fiduciary duty was owed by a client’s lawyers, L&H, to a client’s adversary, Plaintiffs.

L&H asserts there was no attorney-client relationship as L&H’s agreement with its own client was reached over a year prior to the transaction which gave rise to the HA Opinion, and that the HA Opinion confirms that L&H does not represent Plaintiff, disclaims any factual investigations by L&H, and states that Plaintiffs have their own legal counsel. L&H additionally assert that even if the HA Opinion was delivered to Plaintiffs, delivery alone does not create privity or an attorney-client relationship.

Plaintiffs contend that the Court’s prior demurrer ruling does not bar Plaintiffs’ breach of contract claim; that L&H’s motion and request for judicial notice incorrectly recount Plaintiffs’ amendments to the Complaint, and that the redline version compared the SAC to the First Amended Complaint for the benefit of the Court, and it did not compare the SAC to the original Complaint, and therefore does not reflect the totality of what has been added by Plaintiffs since demurrer. Plaintiffs also assert that California law does not bar third-party beneficiary claims; that L&H ignores that David Bunevacz directed the HA Opinion to be created for the benefit of Plaintiffs per the email dated November 26, 2018; that Roberts v.

Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104 is directly on point; and that the cases cited by L&H that purportedly limit duties owed to non-clients are distinguishable.

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) “A ‘contract implied in fact “consists of obligations arising from a mutual agreement and intent to promise where the agreement and promise have not been expressed in words.” [Citation.]’ [Citation.] The essential elements of a claim of breach of contract, whether express or implied, are the contract, plaintiff’s performance or excuse for nonperformance, defendant’s breach, and the resulting damages to plaintiff. [Citations.]” (San Mateo Union High School Dist. v.

County of San Mateo (2013) 213 Cal.App.4th 418, 439-440.) “A cause of action for breach of implied contract has the same elements as does a cause of action for breach of contract, except that the promise is not expressed in words but is implied from the promisor’s conduct. [Citation.]” (Yari v. Producers Guild of America, Inc. (2008) 161 Cal.App.4th 172, 182.)

Plaintiffs assert the first cause of action for breach of contract as a third-party beneficiary. (Ex. 3 to L&H’s Request for Judicial Notice (“L&H’s RJN”), SAC, 17:19-20.) It is alleged that on a date prior to November 1, 2018, L&H entered into an express contract with CB Holding Group Corp. (“CBH”), CBN Group Inc. (“CBN”), and Brutus California Ventures Corporation (“Brutus California”) for the provision of legal services to the Borrowers [CBH, CBN, and Brutus California] related to their business pursuits in the cannabis industry (“Representation Contract”). (Id., ¶¶ 9, 57.) It is alleged that Borrowers and L&H orally agreed to the terms of a legal services agreement and subsequently operated thereunder at all times from January 2017 up until L&H’s breach on December 20, 2018. (Ibid.)

It is alleged that L&H which operated throughout the relevant period under the registered name Howitz + Armstrong, a Professional Law Corporation (“HA”) prepared a legal opinion dated December 20, 2018 (“HA Opinion”) which confirmed the legal basis for a loan by Plaintiffs to Borrowers totaling $4,600,000, and the legitimacy of the collateral provided by the Borrowers to secure repayment of the Plaintiffs’ funds, upon which Plaintiffs relied. (SAC, ¶¶ 3, 12.) Plaintiffs generally allege that between November 21, 2018, and December 20, 2018, Defendant, John R.

Armstrong (“Armstrong”) engaged in regular and direct communications with Plaintiffs’ attorney, Egan, wherein Egan directed Armstrong in the creation of the HA Opinion, and that email correspondence throughout that period demonstrates that Plaintiffs were beneficiaries of Armstrong’s legal services, opinions, and expertise, and “that Armstrong expected and intended Plaintiffs to rely on his advice and opinions in having advanced the Initial Loans, and also when deciding if they should distribute further loans to the Borrowers.” (Id., ¶ 32.)

The SAC cites to correspondence dated November 21, 2018, November 26, 2018 through November 29, 2018, December 10, 2018, December 11, 2018, and December 19, 2018. (Ibid.)

The first cause of action realleges the above allegations and alleges that that on November 26, 2018, David Bunevacz (“Bunevacz”) and Armstrong, then attorney at L&H, spoke during which Bunevacz instructed Armstrong to prepare the HA Opinion for the benefit of Plaintiffs under the pre-existing Representation Contract, and that this oral conversation was an extension to and amendment of the broader oral Representation Contract between Borrowers and L&H for the provision of legal services, which amendment expressly identified Plaintiffs as the beneficiaries of the HA Opinion. (SAC, ¶ 58.) It is alleged that Bunevacz emailed Armstrong confirming the terms of the oral extension to the Representation Contract by directing Armstrong to provide the HA Opinion to Plaintiffs, and that both Borrowers and L&H understood and intended that the HA Opinion be created for the benefit of Plaintiffs within the scope of Defendants’ representation of the Borrowers. (Ibid.)

The first cause of action alternatively alleges that Borrowers and L&H entered into a Representation Contract, which was implied-in-fact, and similarly alleges that L&H created the HA Opinion, “of which both the Borrowers and [L&H] understood and intended be created for the benefit of Plaintiffs within the scope of Defendants representation of the Borrowers.” (SAC, ¶ 59.)

Plaintiffs additionally allege that they were intended direct beneficiaries of the Representation Contract and/or oral amendment thereto because they were the recipients of legal services and express opinions provided by L&H in the HA Opinion, other draft opinions, and legal advice given to Plaintiffs in accordance with Defendants’ agreed-to obligations under the Representation Contract, and that L&H knew that Plaintiffs would benefit from the Representation Contract and that Plaintiffs could be harmed by any breach of the Representation Contract by L&H. (SAC, ¶¶ 61-62.) Plaintiffs further allege that the documents L&H prepared in connection with the Subscription Agreements were intended to benefit both the Borrowers and Plaintiffs, that the HA Opinion expressly names Plaintiffs as its intended recipient, and that the HA Opinion was rendered by HA and Armstrong for the purpose of influencing Plaintiffs’ decision to loan funds to L&H’s clients. (SAC, ¶ 62.)

At issue is the element of the existence of a contract as between Plaintiffs and L&H as third-party beneficiaries to the Representation Contract between L&H and the Borrowers.

“Limited exceptions to the privity rule have evolved in situations where the third party is the intended beneficiary of the attorney’s services or the foreseeability of harm to the third party resulting from professional negligence is not outweighed by other policy considerations. [Citation.]” (Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 701.) “Attorneys also have been held liable to third parties for their negligence in other transactions which were intended to directly benefit the third party.” (Id. at p. 702.)

“ ‘The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm.’ [Citation.]” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 342-343 (“Goodman”).)

“In order to show a duty was owed to a third party beneficiary of a legal services agreement the third party must show that ‘that was the intention of the purchaser of the legal services—the party in privity,’ and that ‘imposition of the duty carries out the prime purpose of the contract for services.’ [Citation.]” (B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823, 832.)

L&H relies on the contents of the HA Opinion which is submitted as part of its request for judicial notice of the SAC as the HA Opinion is attached as Exhibit 14 to the SAC.

“ ‘ “Judicial notice is the recognition and acceptance by the court, for use by the trier of fact or by the court, of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” [Citation.]’ (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882, 110 Cal.Rptr.2d 877 (Lockley).) ‘ “Judicial notice may not be taken of any matter unless authorized or required by law.” (Evid.Code, § 450.)

Matters that are subject to judicial notice are listed in Evidence Code sections 451 and 452. A matter ordinarily is subject to judicial notice only if the matter is reasonably beyond dispute. [Citation.] Although the existence of a document may be judicially noticeable, the truth of statements contained in the document and its proper interpretation are not subject to judicial notice if those matters are reasonably disputable. [Citation.]’ (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113, 55 Cal.Rptr.3d 621 (Fremont).)” (Unruh-Haxton v.

Regents of University of California (2008) 162 Cal.App.4th 343, 364.)

The express statements in the HA Opinion are not reasonable disputable. The plain language of the HA opinion expressly disclaims any representation of Plaintiffs. The HA opinion, dated December 20, 2018, upon which Plaintiffs rely is attached and incorporated into the SAC as Exhibit 14. The HA opinion states, “[o]ur law firm is legal counsel for CB Holding Group Corp., a Nevada corporation (‘CBH’), CBN Group, Inc., a Nevada corporation (‘CBN’), Brutus California Ventures Corporation, a California corporation (collectively . . . ‘Borrowers’).” (Ex. 14 to SAC, HA Opinion at p. 1.)

It also states, “[o]ur firm does not represent the Lenders [Plaintiffs] in this transaction, and Lenders have their own legal counsel.” (Id. at p. 2.) The last paragraph of the HA Opinion states: “This opinion is being delivered to you and is solely for the benefit of you and your successors and assigns in connection with the closing, administration and enforcement of the financing transaction contemplated by the Documents and for which this opinion is given and is effective as of the date of this letter as we have no ability to accurately predict what might happen in the future.

This opinion may not be used or relied on by any other person or for any other purpose.” (Id. at p. 7.)

However, to establish that Plaintiffs were not third-party beneficiaries to the Representation Contract, L&H relies solely on statements in the HA Opinion. L&H does not discuss the or establish the terms of the alleged oral or implied-in-fact Representation Contract. Nor does L&H address the allegation in the SAC that an oral conversation on November 26, 2018, between David Bunevacz and Defendant Armstrong extended and amended the oral Representation Contract between Borrowers and L&H for the provision of legal services, and which amendment expressly identified Plaintiffs as the beneficiaries of the HA Opinion. (SAC, ¶ 58.)

L&H additionally does not address the allegation that Bunevacz emailed Armstrong confirming the terms of the oral extension to the Representation Contract by directing Armstrong to provide the HA Opinion to Plaintiffs, and that both Borrowers and L&H understood and intended that the HA Opinion be created for the benefit of Plaintiffs within the scope of Defendants’ representation of the Borrowers. (Ibid.)

Where a moving parties’ separate statement does not address a material fact in the complaint, it does not assert a prima facie case of entitlement to summary judgment and does not shift the burden to plaintiff to file an opposing separate statement. (Teselle v. McLoughlin (2009) 173 Cal.App.4th 159, 160.) “A summary judgment may not be granted when the moving party has failed to ‘refute [a] tenable pleaded theor[y].’ [Citation.]” (Id. at pp. 161-162.) Where a defendant fails to establish every fact necessary to show the causes of action against them are without merit, they fail to meet their initial burden and the motion must be denied. (Cates v. California Gambling Control Com. (2007) 154 Cal.App.4th 1302, 1310.)

Based on the foregoing, L&H fails to meet its initial burden to show that Plaintiffs cannot maintain their first cause of action for breach of contact because Plaintiffs cannot establish they were third-party beneficiaries of the HA Opinion.

Though the burden does not shift to Plaintiffs, in opposition, Plaintiffs submit evidence supporting the aforementioned allegations, along with evidence of communications between Plaintiffs’ counsel, Wayne Egan at WeirFoulds LLP, and Armstrong where Armstrong provided information to Plaintiffs, as requested, which was needed to close the loan, and which create a triable issue of material fact as to whether Plaintiffs were third-party beneficiaries of the Representation Contract. (Declaration of Wayne Egan (“Egan Decl.”), ¶¶ 1, 3-14, Exs. 1, 2, 5-13.) Plaintiffs correctly argue that the HA Opinion is specifically directed to Plaintiffs and their counsel. (See Ex. 13 to Egan Decl.)

L&H relies on Goodman v. Kennedy (1976) 18 Cal.3d 335 (“Goodman”), as holding that attorneys owe no duty to nonclient third parties who rely on advice given by the attorneys to their client, but that case is factually distinctive as there was no allegation that the advice was ever communicated to plaintiffs, and thus, there was no basis for any claim that the plaintiff relied upon it in purchasing or retaining the stock. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 343.) The advice was also not given for the purpose of enabling defendant’s clients to discharge any obligation to plaintiffs. (Ibid.)

For this reason, the Court in Goodman stated: “We are therefore not concerned with such cases as Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 110–111 [128 Cal.Rptr. 901], in which an attorney gives his client a written opinion with the intention that it be transmitted to and relied upon by the plaintiff in dealing with the client. In that situation the attorney owes the plaintiff a duty of care in providing the advice because the plaintiff's anticipated reliance upon it is ‘the end and aim of the transaction’ (Glanzer v.

Shepard (1922) 233 N.Y. 236, 238–239 [135 N.E. 275, 23 A.L.R. 1425]).” (Id. at p. 343, fn. 4.)

In contrast, here, the SAC alleges, and the motion does not address the material allegations, that Plaintiffs were the recipients of legal services and express opinions provided by L&H in the HA Opinion, other draft opinions, and legal advice given to Plaintiffs, that L&H knew that Plaintiffs would benefit from the Representation Contract and that Plaintiffs could be harmed by any breach of the Representation Contract by L&H, and that the HA Opinion was rendered by HA and Armstrong for the purpose of influencing Plaintiffs’ decision to loan funds to L&H’s clients, i.e., the Borrowers.

L&H also cites to Fox v. Pollack (1986) 181 Cal.App.3d 954 as support for finding no duty where a seller’s attorney drafted a real estate contract and the buyers alleged reliance on that attorney’s work. However, there, the Court of Appeal found that an attorney owed no duty to nonclients where the attorney did not render any legal advice to the nonclients and merely prepared documents for an agreement to exchange parcels of real property, the plaintiffs’ only contact with the attorney was at a meeting on the date, that the plaintiffs had no prior contact with the attorney, that the plaintiff did not request any legal advice from the attorney, among other things. (Fox v. Pollack (1986) 181 Cal.App.3d 954, 957-958.)

In contrast, here, Armstrong communicated directly with Plaintiffs from November 1, 2018, up until the HA Opinion was sent to Plaintiffs on December 20, 2018, which indicates that legal advice was requested and provided to Plaintiffs. (See Egan Decl., ¶¶ 3-14.)

L&H additionally cites to Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, which is likewise distinguishable. The plaintiff did not have close interaction, or any interaction at all, with the defendant attorneys during the time period in which the legal services sued upon were rendered and the evidence at trial established that no relationship of trust and confidence existed between plaintiff and the defendant attorneys which would give rise to a fiduciary duty. (Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 705 (“Skarbrevik”).) Instead, as noted by the Court of Appeal in Skarbrevik, Roberts involved a third party that was expressly intended to receive the benefit of the attorney’s work or advice such that the imposition of a duty of care to the third party was both reasonable and expected. (Id. at p. 702.)

Here, as stated above, the allegations in the SAC and the evidence submitted by Plaintiffs show repeated interactions with L&H during the time period in which the legal services sued upon were rendered.

The Court’s prior ruling on demurrer is not determinative as the standard on a demurrer is not identical to a standard on a motion for summary judgment which places the burden of production and persuasion on the moving party.

The Court therefore DENIES the motion for summary adjudication as to the first cause of action (Issue No. 1).

Second Cause of Action for Breach of Fiduciary Duty Issue No. 2: Plaintiffs Cannot Legally Establish that Defendant Lockett & Horwitz Breached a Fiduciary Duty as Plaintiffs were Never Clients of Defendant Lockett & Horwitz Nor were Plaintiffs Legally Intended Beneficiaries of the Legal Opinion so the Second Cause of Action Legally Fails.

Issue No. 3: A Fiduciary Duty Does Not Legally Arise from the Delivery of a Legal Opinion so the Second Cause of Action Legally Fails.

L&H contends that Plaintiffs cannot establish a breach of fiduciary duty as Plaintiffs were never clients or intended beneficiaries. L&H also contends that the fiduciary-duty claim fails because Plaintiffs’ alleged reliance was not reasonable.

Plaintiffs contend that a fiduciary relationship existed between L&H and Plaintiffs; that the existence of a fiduciary relationship is question of fact; and that Armstrong’s communications with Plaintiffs for seven weeks where Armstrong claimed detailed personal knowledge of the Fraudulent Borrowers’ operations, claimed to conduct diligence, prepared UCC filings, Notes, Warrants, and corporate resolutions purportedly to protect Plaintiffs’ security interests, and told Plaintiffs they were “presently secured” is a question for jury.

Plaintiffs also contend that Chang v. Lederman (2009) 172 Cal.App.4th 67 does not stand for the proposition that fiduciary duties cannot extend to adverse parties; that L&H concedes that an attorney can owe a duty to a nonclient; and that such conditions are satisfied here. Plaintiffs additionally assert that their reliance on L&H was reasonable, and is a question of fact for the jury; that Greycas, Inc. v. Proud (7th Cir. 1987) 826 F.2d 1560 is factually identical to the present case; and that L&H fails to address the factual misrepresentations outside the HA Opinion which give rise to fiduciary duties to Plaintiffs, in addition to the preparation and delivery of the HA Opinion.

The three elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)

“The imposition of a duty of professional care toward nonclients has generally been confined to those situations wherein the nonclient was an intended beneficiary of the attorney’s services, or where it was reasonably foreseeable that negligent service or advice to or on behalf of the client could cause harm to others.” (Fox v. Pollack (1986) 181 Cal.App.3d 954, 960.) “However, an attorney has no duty to protect the interests of an adverse party [citations] for the obvious reasons that the adverse party is not the intended beneficiary of the attorney’s services, and that the attorney’s undivided loyalty belongs to the client. [Citation.]

The same principles apply to transactions wherein the nonclients deal at arm’s length with the attorney’s clients. Goodman resolved ‘the legal question of whether or under what circumstances an attorney’s duty of care in giving legal advice to a client extends to persons with whom the client in acting upon the advice deals wholly at arm’s length . . . . [Attorneys have] no such duty in the absence of any showing that the legal advice was foreseeably transmitted to or relied upon by [the nonclients] or that [the nonclients] were intended beneficiaries of a transaction to which the advice pertained.’ [Citation.]” (Id. at p. 961.)

Here, the second cause of action realleges the allegations set forth above as to the first cause of action, and alleges that “Defendants owed Plaintiffs fiduciary duties because Plaintiffs were among the intended beneficiaries of the legal services and opinions that Defendants provided to Borrowers, which services and opinions Defendants knew and understood Plaintiffs would rely on in their decision to fund loans to the Borrowers.” (SAC, ¶¶ 66-67.) The SAC generally alleges that in November 2018, Plaintiffs commenced formal legal negotiations with Bunevacz regarding the provision of the series of loans to the Borrowers; that in October or November 2018, Bunevacz introduced Plaintiffs’ attorney, Wayne Egan, to Armstrong of HA, the Borrowers’ legal representatives; that Armstrong owed Plaintiffs fiduciary duties of care and good faith, as he was providing legal advice, opinions, and expertise to Plaintiffs on the cannabis licensing regime in California and the Borrowers’ organizational structure and business operations, upon which he knew and understood that Plaintiffs would be relying as they determined whether to undertake the proposed loans to the Borrowers; and that Armstrong also owed Plaintiffs fiduciary duties in that the HA Opinion and related information he provided was intended to influence and persuade Plaintiffs to provide the proposed loans for the benefit of his clients, the Borrowers.” (Id., ¶¶ 20-21.)

It is alleged that Armstrong expected and intended Plaintiffs to rely on the HA Opinion, as he worked closely with Plaintiffs and Egan to prepare the HA Opinion according to their specific instruction and feedback.” (Id., ¶ 22.) The second cause of action alleges that as Plaintiffs’ fiduciaries, Defendants owed duties of care to act in good faith and in Plaintiffs’ interests as well as to give full and frank disclosure. (SAC, ¶ 68.) It is alleged that “Defendants breached their fiduciary duties to Plaintiffs by at least one of the following actions (1) failing to provide legal services with such skill, prudence and diligence as lawyers of ordinary skill and capacity commonly possess, (2) recklessly failing to disclose material facts which Defendants knew, or should have known, were contrary to Plaintiffs’ interests and was likely to affect Plaintiffs decision, and/or (3) taking actions intentionally and with malice, and contrary to Plaintiffs’ best interests by failing to provide full and frank disclosure of material facts with the intention of influencing Plaintiffs to take decisions that were detrimental to their best interests.” (Id., ¶ 69.)

It is also alleged: “Armstrong provided Plaintiffs with much information regarding his purported personal knowledge of the Borrowers’ business practices as well as the Borrowers’ purported business dealings with HA’s other clients in the cannabis industry in order to provide the appearance of being knowledgeable and trustworthy in Defendants’ role of fiduciary to Plaintiffs.” (Id., ¶ 70.) It is additionally alleged that Defendants directly benefited from the funding of the loans, that Plaintiffs were harmed by loaning $4.6 million to Borrowers, which loans Borrowers defaulted on within months of the provision of the loans; that had the HA Opinion and Defendants’ representations to the Plaintiffs honestly described the non-existence of the Collateral and the lack of the Borrowers’ business operations in the cannabis industry, Plaintiffs would have not made the loans to Borrowers; and that “Defendants’ actions were a substantial factor in causing Plaintiffs’ harm, which harm was foreseeable in light of Defendants’ intentional misstatements and/or intentional failure to investigate the Borrowers.” (Id., ¶¶ 71-73.)

It is further alleged: “Defendants knew that Plaintiffs would rely on their legal advice, factual statements, and the HA Opinion. Indeed, Defendants intentionally provided legal advice, factual statements, and the HA Opinion in such a manner so as to influence Plaintiffs to grant, rather than decline, loan funding to the Borrowers.” (Id., ¶ 76.) Initially, for the second issue on summary adjudication, L&H relies on the same material facts asserted for the first issue on summary adjudication.

L&H fails to meet its initial burden to show that it did not owe Plaintiffs fiduciary duties because Plaintiffs were not intended beneficiaries of the legal services and opinions that L&H provided for the same reason discussed above as to the first cause of action.

Additionally, the evidence presented by Plaintiffs, as set forth above, creates a triable issue of fact as to the existence of a fiduciary relationship. “Generally, the existence of a confidential relationship is question of fact for the jury or the trial court. [Citations.]” (Barbara A. v. John G. (1983) 145 Cal.App.3d 369, 383.)

L&H cites to Chang v. Lederman (2009) 172 Cal.App.4th 67 for the proposition that an attorney’s duty of loyalty cannot extend to an adverse party. However, Chang does not stand for this proposition, and provides for “an enforceable duty of care in cases involving a negligently drafted or executed testamentary instrument when the plaintiff was an expressly named beneficiary of an express bequest.” (Chang v. Lederman (2009) 172 Cal.App.4th 67, 82.)

L&H also argues in conclusory fashion that imposing such a duty here would have required L&H to act against the interests of their client, violating Rule 1.7 of the California Rules of Professional Conduct. L&H cites to no facts or evidence, let alone discusses Rule 1.7, and thus, fails to establish any violation of Rule 1.7 under the facts here.

Lastly, L&H argues that the fiduciary duty claim fails because Plaintiffs’ alleged reliance was not reasonable, citing to Skarbrevik for the proposition that sophisticated parties with independent counsel cannot justifiably rely on statements of opposing counsel. However, Skarbrevik did not determine that no duty was owed because the parties involved were sophisticated with independent counsel. Instead, the Court of Appeal in Skarbrevik found that the evidence at trial established no relationship of trust and confidence between plaintiff and the defendant attorneys which would give rise to a fiduciary duty where the plaintiff did not have a close interaction, or any interaction at all, with the defendant attorneys during the time period in in which the legal services sued upon were rendered and where there was no basis for plaintiff to place faith, confidence or trust in the corporation’s attorney to protect his interests as a shareholder of the corporation. (Skarbrevik, supra, 231 Cal.App.3d at pp. 698- 696, 705.)

Based on the foregoing, the Court DENIES the motion for summary adjudication as to Issue No. 2 (second cause of action).

As to Issue No. 3, which provides that a fiduciary duty does not arise from a legal opinion such that the second cause of action fails, it does not resolve the cause of action. “Summary adjudication must completely dispose of the cause of action to which it is directed. [Citations.]” (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 251.) This is because L&H fails to address the allegations in the SAC for the basis of a fiduciary duty which does not rest solely on the HA Opinion, but also includes other information and representations made by Armstrong. (See SAC, ¶¶ 11, 21, 22, 35, 66, 70, 72, 76.) Consequently, the Court DENIES the motion for summary adjudication as to Issue No. 3 (second cause of action).

Third Cause of Action for Negligent Misrepresentation Issue No. 4: Plaintiffs Cannot Legally State a Negligent Misrepresentation Cause of Action Against Defendant Lockett & Horwitz so the Third Cause of Action Against Defendant Lockett & Horwitz Legally Fails.

L&H contends that Plaintiffs’ negligent misrepresentation claim fails because California law squarely holds that legal opinions, standing alone, are not actionable as negligent misrepresentation, and that the HA Opinion contains legal conclusions, not factual assertions. L&H also contends that there are no allegations in the SAC that L&H knowingly made false statements of fact and there is not a cause of action for intentional misrepresentation. Additionally, L&H contends that disclaimers of factual investigation, as here, negate reasonable reliance, that California law limits third-party professional liability, and that Plaintiffs were adverse parties represented by independent counsel.

Plaintiffs contend that the claim for negligent misrepresentation is not barred as a matter of law; that L&H’s argument that California law does not recognize causes of action against any attorney for negligent misrepresentation is incorrect and unsupported; that L&H’s assertion that a statement of a legal opinion is not actionable as negligent misrepresentation and that attorneys cannot be held liable to nonclients absent intentional fraud does not exist; and that every authority cited by L&H either does not say what L&H claims, addresses a different tort or a different question, or holds the opposite.

Plaintiffs also contend that even if L&H’s assertion that negligent misrepresentation cannot be based on legal opinion were true, Plaintiffs’ claims are based upon nearly two months of false factual assertions made by Defendants to Plaintiffs regarding the Borrowers in response to myriad questions regarding how the Borrowers’ operated, which L&H fails to acknowledge or address, and that the HA Opinion itself also contains factual misrepresentations. Plaintiffs additional contend that the HA Opinion’s disclaimer of investigation is at odds with Armstrong’s stated behavior.

The elements of a claim for negligent misrepresentation are “(1) the defendant made a false representation as to a past or existing material fact; (2) the defendant made the representation without reasonable ground for believing it to be true; (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. [Citation.]” (Majd v. Bank of America, NA (2015) 243 Cal.App.4th 1293, 1307.) “[A] positive assertion is required; an omission or an implied assertion or representation is not sufficient. [Citations.]” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)

“ ‘An attorney may be liable for damage caused by his negligence to a person intended to be benefited by his performance irrespective of any lack of privity of contract between the attorney and the party to be benefited. [Citation.] The liability sounds in tort. [Citation.] . . . .’ [Citations.]” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 110.)

Here, initially, the third cause of action realleges the prior allegations set forth above, and again alleges that “Defendants owed Plaintiffs a duty of care because Plaintiffs were among the intended beneficiaries of the HA Opinion, upon which Defendants knew that Plaintiffs would rely in making significant financial decisions” (SAC, ¶ 79.) It is alleged that Defendants made the following misrepresentations of material facts or statements omitting or presenting only partial material facts to Plaintiffs, and all of which statements have since been revealed as false:

a. “The Security Documents create a valid security interest in favor of the Lenders in the personal property comprising the collateral described therein in which any of the Borrowers now has rights, and is sufficient to create a valid security interest in favor of the Lenders in any personal property comprising the collateral described therein in which any of the Borrowers hereafter acquires rights, when those rights are subsequently acquired by such Borrower, to secure payment and performance of the obligations described therein as being secured thereby.” (Exhibit 14, HA Opinion, page 5, ¶ 7, emphasis added.)

b. “CB Holdings Group presently sells electronic vape pens and CBD oil.” (Id., page 6.)

c. “[CaeserBrutus, LLC “CB”] has successfully developed both brands and strong commercial relationships in both the business to business and consumer markets with its branded vape pens and CBD oil cartridges.” (Exhibit 21, November 29, 2018 Draft Opinion Letter.)

d. “CB has contracts to operate a licensed cannabis growing operation and is negotiations to operate a licensed volatile cannabis manufacturing and distribution business with Goodness4Life in Huntington Park, California in Los Angeles County in addition to its vape pens and CBD operations...” (Id.)

e. “Regarding financing, CB has signed a letter of intent to borrow money secured by all its business assets, including its inventory and accounts receivables, as well as its real and personal property of CB’s principals with the expectation that this debt will be later converted into equity by lender to effectively have CB operating debt free after obtaining capital it needs to expand its present CBD vape pen operations and to enable it to grow, manufacture, and distribute cannabis oil all on its own in the future, thereby reducing its operating costs for its future cannabis operations under the Goodness4Life license.” (Id.)

f. “First the pens are ordered in China and then delivered to where the pens are assembled with their cartridges loaded with CBD; usually a distributor buys the pens and cartridges from [D Bunevacz] for cash-distributors generally not extended credit so a UCC-1 would attach to the inventory and to the cash.” (Exhibit 22, December 10, 2018 email chain.)

(SAC, ¶ 81.)

The third cause of action additionally alleges that Armstrong “provided Plaintiffs with information regarding his purported personal knowledge of the Borrowers’ business practices as well as the Borrowers’ purported dealings with HA’s other clients in the cannabis industry in order to provide the appearance of being knowledgeable and trustworthy such that Plaintiffs would rely on his representations. This is confirmed by Armstrong’s statements throughout the emails exchanged between the parties while working to arrive at a final draft of the HA Opinion, as well as in the HA Opinion, which noted that “[t]he knowledge referred to in paragraphs 4 below is derived solely from a review by us of our own records and the actual knowledge of the lawyers principally involved in the transactions described in this letter.” (Exhibit 14, HA Opinion, page 4)(emphasis added.)” (SAC, ¶ 83.)

Plaintiffs allege that given that the Borrowers’ business has now been shown to be entirely fraudulent and nonexistent, it is clear that Armstrong and HA were either negligently or intentionally misrepresenting these facts or withholding material facts regarding the Borrowers in order to persuade Plaintiffs to fund $4.6 million in loans to the Borrowers. (Id., ¶ 82.)

As a threshold matter, contrary to L&H’s contentions that a statement of a legal opinion is not actionable as negligent misrepresentation, Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104 (“Roberts”) supports that a claim for negligent misrepresentation may be maintained against an attorney who prepares a legal opinion by a third person who was intended to be benefited by the attorney’s performance and is injured by his negligent execution of that duty. (Roberts, supra, 57 Cal.App.3d at p. 111.)

Indeed, L&H cites to Shafer v. Berger, Kahn, Shafton, Moss, Fingler, Simon & Gladstone (2003) 107 Cal.App.4th 54 (“Shafer”), which states, “ ‘In general, a lawyer who makes a fraudulent misrepresentation is subject to liability to the injured person when the other elements of the tort are established ....’ (Rest.3d, Law Governing Lawyers, § 98, com. g, p. 61.) This rule ‘applies equally to statements made to a sophisticated person, such as to a lawyer representing another client, as well as to an unsophisticated person.’ (Id., com. b, p. 59.) ‘Misrepresentation is not part of proper legal assistance; vigorous argument often is.

Thus, lawyers are civilly liable to clients and nonclients for fraudulent misrepresentation, but are not liable for such conduct as using legally innocuous hyperbole or proper argument in negotiations ... or presenting an argument to a tribunal in litigation.’ (Id., § 56, com. f, p. 418.)” (Shafer, supra, 107 Cal.App.4th at p. 69-70.)

L&H cites to Vega v. Jones, Day, Reavis & Pogue (2004) 121 Cal.App.4th 282 which cites to B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823, and provides “third parties may recover against an attorney under a negligent misrepresentation theory, in cases involving misrepresentations of fact rather than legal opinions. [Citation.]”

However, L&H does not address the material allegations set forth above in the third cause of action as to specific alleged misrepresentations within the HA Opinion, in a draft opinion letter, and in an email communication, and does not show that each of the alleged misrepresentation was a legal opinion as opposed to a misrepresentation of fact. (SAC, ¶¶ 82-92.) Nor does L&H address the material allegation that L&H made either negligent or intentional misrepresentations. (SAC, ¶ 83.) Contrary to L&H’s assertion that Plaintiffs do not allege that Defendants knowingly made false factual statements and do not plead intentional fraud, the allegations in the SAC under the third cause of action do so allege.

In order to be entitled to summary judgment, a moving party must defeat all theories asserted as to a cause of action alleged in a complaint. (Marketing West, Inc. v. Sanyo Fisher (USA) Corp. (1992) 6 Cal.App.4th 603, 613 [“in order to be entitled to summary judgment, respondent had to defeat that theory [fraud based on concealment] in addition to the fraud based on affirmative misrepresentation” and the burden is on respondent to negate at least one element of the action for fraud based on concealment].) “[I]f the showing by the defendant does not support judgment in his favor, the burden does not shift to the plaintiff and the motion must be denied without regard to the plaintiff’s showing. [Citation.]” (Crouse v.

Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1534.)

Based on the foregoing, L&H fails to meet its burden to show that Plaintiffs cannot state a negligent misrepresentation cause of action against it. The Court DENIES the motion for summary adjudication as to the third cause of action (Issue No. 4).

All Causes of Action Issue No. 5: All of Plaintiffs Causes of Action Against Lockett & Horwitz are Raised After the Expiration of the Statute of Limitations so All Causes of Action Legally Fail.

L&H contends that Plaintiffs’ claims are time-barred under Code of Civil Procedure sections 340.6 and 339, which impose a one-year limitations period against attorneys arising out of the performance of professional services, and two-year limitations period for breach of contract and breach of fiduciary duty, respectively.

Plaintiffs contend the claims are not time-barred; that this Court already decided the statute of limitations question in L&H’s November 2023, demurrer ruling and held that Plaintiffs’ claims accrued in April 2022 when they received the SEC complaint revealing that the HA Opinion’s representations were false and the collateral was fictitious, and that all claims were timely under Code of Civil Procedure section 340.6. Plaintiffs assert that L&H attempts to avoid the prior ruling by now arguing that Code of Civil Procedure section 339 which provides a two-year statute of limitations for oral contract and fiduciary duty applies, but that this is incorrect, and that even if Section 339 applied, the discovery rule governs accrual of the claims and the two-year period would run from April 2022, making the March 2023 filing timely.

“A plaintiff must bring a claim within the limitations period after accrual of the cause of action.” (Fox v. Ethicon Endo- Surgery, Inc. (2005) 35 Cal.4th 797, 806.) “Generally speaking, a cause of action accrues at ‘the time when the cause of action is complete with all of its elements.’ [Citations.] An important exception to the general rule of accrual is the ‘discovery rule,’ which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Id., at pp. 806-807.) “A plaintiff has reason to discover a cause of action when he or she ‘has reason at least to suspect a factual basis for its elements.’” (Id., at p. 807.) “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action.” (Ibid.)

“Section 340.6 states two distinct and alternative limitations periods: One year after actual or constructive discovery, or four years after occurrence (the date of the wrongful act or omission), whichever occurs first. The statute applies to an action for malpractice as well as a breach of fiduciary duty arising out of the performance of an attorney’s duties. [Citation.]” (Britton v. Girardi (2015) 235 Cal.App.4th 721, 732-733.) “Under Code of Civil Procedure section 340.6, . . ., the one-year period is triggered by the client’s discovery of ‘the facts constituting the wrongful act or omission,’ not by his discovery that such facts constitute professional negligence, i.e., by discovery that a particular legal theory is applicable based on the known facts. ‘It is irrelevant that the plaintiff is ignorant of his legal remedy or the legal theories underlying his cause of action.

Thus, if one has suffered appreciable harm and knows or suspects that professional blunderings is its cause, the fact that an attorney has not yet advised him does not postpone commencement of the limitations period.’ [Citations.]” (Worton v. Worton (1991) 234 Cal.App.3d 1638.)

L&H’s argument is premised upon an assertion that Plaintiff’s SAC concedes that they discovered their harm by June 30, 2019, citing to the SAC. (SSUMF, 171.) In L&H’s demurrer to the original Complaint, L&H similarly argued that Plaintiffs’ claims for breach of contract and breach of fiduciary duty were barred by Code of Civil Procedure section 340.6 based on the allegations of the Complaint. This argument was rejected as the Court concluded that the allegations of the Complaint supported that Plaintiffs discovered facts constituting the wrongful act or omission by L&H in April 2022, such that the Complaint filed on March 13, 2023, was timely. (Ex. 2 to L&H’s RJN.)

L&H cites only to paragraph 14 of the SAC and presents no other evidence supporting that Plaintiffs discovered their harm by June 30, 2019. Paragraph 14 of the SAC alleges: “Between April and June 2019, the Borrowers defaulted on the Four Loans. Consequently, on October 23, 2019, Plaintiffs filed a lawsuit in the Superior Court for the State of California, County of Los Angeles, against D Bunevacz, the Borrowers, and the Personal Guarantors seeking damages and/or to exercise their rights over the allegedly secured property (the ‘2019 California Claim’).

A true and correct copy of the 2019 California Claim is attached as Exhibit 1.” (SAC, ¶ 14.) However, L&H again ignores the material allegations of the SAC, which also allege that in April 2022, Plaintiffs received an advanced copy of a complaint that the Securities and Exchange Commission (“SEC”) intended to file in the US District Court for the Central District of California against Bunevacz, CBH, Brutus California, and others, and that after reading this Complaint, “Plaintiffs learned they had been the victims of an offering fraud and Ponzi scheme, and that the Borrowers were sham businesses that D Bunevacz used to raise over US $39,000,000 from at least 40 investors (including Plaintiffs).” (SAC, ¶¶ 16-17.)

The SAC additionally alleges that as a result of the SEC Complaint, “it became clear to the Plaintiffs that, contrary to the assurances contained in the HA Opinion, the security over the loans and guarantees provided by the Borrowers and their shareholders were completely invalid and unenforceable, and indeed, much of the collateral did not even exist.” (SAC, ¶ 18.)

By failing to submit evidence showing that Plaintiffs discovered their alleged harm by June 30, 2019, and failing to address allegations supporting the application of the discovery rule, L&H fails to meet its initial burden to establish that it is entitled to summary judgment on the ground that all claims are barred by the statute of limitations.

The Court DENIES the motion for summary judgment/adjudication as to all causes of action on the basis that they are barred by the statute of limitations (Issue No. 5).

Additionally, though the motion must be denied without regard to Plaintiffs showing under these circumstances, Plaintiffs provide evidence that the sham nature of the Borrowers’ entire enterprise and the lack of any actual collateral was discovered on or about April 4, 2022, which creates a triable issue of material fact as to when Plaintiffs discovered facts constituting their claims. (Egan Decl., ¶ 19.)

Plaintiffs to give notice. 109 BKC Entertainment LLC vs. K1 Speed Franchising, Inc., 23-01317103 Defendants K1 Speed Franchising, Inc., Kart 1, LLC, Protex Karting Barrier, LLC, David Danglard, and Uli Perez and Cross-Complainants K1 Speed, Inc., K1 Speed Franchising, Inc., and Protex Karting Barrier, LLC (“Defendants”) move for summary adjudication of the fourth through eighth causes of action asserted by plaintiff BKC Entertainment LLC (“BKC” or “Plaintiff”) on the ground that they are preempted by the California Franchise Investment Law (CFIL).

Plaintiff’s unopposed request for judicial notice is GRANTED. (Evid. Code, § 452(c).)

Plaintiff alleges causes of action for violations of section 31110, 31200, and 31201 of the CFIL. Sections 31200 and 31201 make it unlawful to make any untrue statement of material fact (or omit the same) in any application, notice or report filed with the commissioner under the CFIL and to offer or sell a franchise by any written or oral communication which includes an untrue statement of material fact or omits a material fact, respectively.

When the parties entered into the subject franchise agreements, section 31306 read: “Except as explicitly provided in this chapter, no civil liability in favor of any private party shall arise against any person by implication from or as a result of the violation of any provision of this law or any rule or order hereunder. Nothing in this chapter shall limit any liability which may exist by virtue of any other statute or under common law if this law were not in effect.”

Defendants cite Samica Enterprises, LLC v. Mail Boxes Etc. USA, Inc. (C.D. Cal. 2008) 637 F.Supp.2d 712. The defendants there argued that the plaintiffs’ common law claims for fraud and negligent misrepresentation were preempted by section 31306 of the CFIL. (Id. at p. 721.) The Samica court held that “section 31306 is best understood as displacing those claims that rest on misrepresentations or omissions covered by the several provisions of the CFIL, and the saving clause merely clarifies that the CFIL does not completely preempt the field” and that “[t]his straightforward interpretation gives meaning to both sections, reconciles any perceived inconsistency, and comports with fundamental principles of statutory construction.” (Ibid.)

Plaintiff cites to Bowden v. Robinson (1977) 67 Cal.App.3d 705 in support of the opposite conclusion. In Bowden, the Court of Appeal held that Corporations Code section 25510, which is identical to section 31306 of the CFIL, should be interpreted as supplementing rather than displacing common law fraud. (67 Cal.App.3d at p. 716.)

As the Court previously held in overruling the Demurrer filed by some of the Defendants, given that section 31306 and section 25510 are identical, there is no reason why the reasoning in Bowden should not apply here. Further, that reasoning is sound. The Bowden court noted that Corporations Code section 25006 defined “fraud,” “deceit,” and “defraud” as not being limited to common law fraud or deceit and held that sections 25006 and 25510 read together “express a clear legislative intent . . . to supplement common law causes of action, not to repudiate them.” (Id. at p.716.)

Here, the CFIL also has a virtually identical provision in section 31012, which provides: “ ‘Fraud’ and ‘deceit’ are not limited to common law fraud or deceit.” Pursuant to Bowden, sections 31306 and 31012 read together express a legislative intent to supplement common law causes of action rather than repudiate them. While Samica reached the opposite conclusion, it is not controlling on this Court. Thus, the Court finds that the causes of action are not preempted.

Because the Court finds no preemption, it need not reach the arguments regarding retroactivity of the amended section 31306 or whether Plaintiff’s causes of action are based on post-sale misrepresentations.

In accordance with the above, the Motion for Summary Adjudication is DENIED.

Moving party to give notice. 110 Daniels vs. Balderas, 25-01515105 Defendants Guillermo E. Balderas (sued as Ernie Balderas) (“Balderas”), Angelica Garcia (sued as Angelique Garcia) (“Garcia”), Vicente Lopez, Yesenia Mendoza (“Mendoza”), and Carlos Portillo (sued as Carlos Porpillo) (collectively, “Superior Court Defendants”) seek an order sustaining their demurrer to the first, second, third, fourth, fifth, and sixth causes of action of the Complaint filed by Plaintiff Dominique Daniels, based on failure to state sufficient facts to constitute a cause of action. (ROA 109)

Defendants also seek to strike Page 52, Prayer for Relief Paragraph 5, which provides: “Punitive damages according to proof.” (ROA 104)

As a threshold matter, before filing a demurrer, the demurring party must meet and confer in person, by video conference, or by telephone with the party who filed the pleading to attempt to reach an agreement that would