Demurrer to Amended Complaint; Motion to Strike Portions of Complaint
109 2025-01467077 Motion for Terminating Sanctions
Monsalvo vs. Elite The hearing on Plaintiff Diana Monsalvo’s Motion for Terminating Sanctions is continued Beverage from 8/03/26 to 10/05/26 at 2:00 PM in Department C27, unless Plaintiff files a proof of International, Inc. service showing that the motion was properly served on Defendants Elite Beverage International, Inc. and Steve Rice.
The proof of service attached to the motion reflects that the motion was served on Defendants’ counsel at: “tnonnandin@pnbd.com” and “cathyjones@pnbd.com.” (ROA 165.) Neither address is recognized as an email address of record for Defendants’ counsel. Because the motion is not opposed, the Court cannot confirm whether the motion was properly served. If a corrected proof of service is filed before the hearing, the Court will proceed to the merits of the motion. Otherwise, the hearing on the motion is continued to 10/5/26, at set forth above, and Plaintiff is ordered to file a proper proof of service no later than 9/21/26.
If continued, Plaintiff is ordered to give notice of the continued hearing.
110 2025-01467876 1. Demurrer to Amended Complaint 2. Motion to Strike Portions of Complaint VM Development II LLC vs. Sea Defendant William O’Keefe’s demurrer to Plaintiff VM Development II LLC’s first amended Pointe Estates complaint (“FAC”) is sustained with 15 days leave to amend. [ROA # 108.] Homeowners Associations Defendant’s motion to strike punitive damage allegations and prayer is moot as to paragraph 137 in light of the demurrer ruling. The motion is granted as to paragraph 133 with 15 days leave to amend.
Plaintiff’s FAC Plaintiff alleges it owns residential property governed by a homeowners’ association, Defendant Sea Pointe Estates Homeowners Association (sometimes hereinafter referred to as the “HOA”) and CC&Rs. Plaintiff sought approval to construct an ADU on the property, which ADU would front a different street from the main house. The ADU itself was approved but “[t]he HOA has functionally denied the construction of the ADU on the Property by refusing to approve the construction of reasonable and necessary structures allowing access to the ADU, including a garage, a driveway, and a short set of stairs from the driveway to the ADU front entrance (the “Access Components”).” [FAC, ¶¶ 5, 41.] This denial makes the ADU unusable as a practical matter. [Id., 6.]
Plaintiff alleges this denial was unsupported by the CC&Rs and unlawful for a variety of reasons. [FAC, ¶¶ 26-91.]
Defendant O’Keefe is alleged to be an agent of the HOA, its “Consulting Architect.” [FAC, ¶ 19.] As an agent of the HOA, O’Keefe is alleged to have an important role in its wrongful denial of the approvals needed for the Access Components. [See, e.g., FAC, ¶¶ 19, 41, 45, 56, 72, 87, 89.]
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Plaintiff asserts six causes of action in total:
1. DECLARATORY RELIEF; 2. BREACH OF CONTRACT (COVENANTS, CONDITIONS, AND RESTRICTIONS AND RULES); 3. BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING; 4. UNFAIR BUSINESS PRACTICES;
5. BREACH OF FIDUCIARY DUTIES; and 6. PROFESSIONAL NEGLIGENCE.
Plaintiff also seeks punitive damages on the fourth and fifth causes of action. [FAC, ¶¶ 133, 137 and prayer item 5.]
Demurrer Legal Standard A demurrer can be used only to challenge defects that appear within the “four corners” of the pleading – which includes the pleading, any exhibits attached, and matters of which the court is permitted to take judicial notice. Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994. Limited to the “four corners” as such, a pleading is adequate if it contains a reasonably precise statement of the ultimate facts, in ordinary and concise language, and with sufficient detail to acquaint a defendant with the nature, source and extent of the claim. Leek v. Cooper (2011) 194 Cal.App.4th 399, 413.
On demurrer, a complaint must be liberally construed. Code Civ. Proc. § 452; Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601. All material facts properly pleaded, and reasonable inferences, must be accepted as true. Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.
Discussion
Second and Third Causes of Action for Breach of Contract and Breach of the Covenant of Good Faith and Fair Dealing
A core element for both the first and second causes of action is the existence of a contract between Plaintiff and O’Keefe. First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 745 (stating elements for breach of contract cause of action); CACI 325 (setting out elements for breach of the covenant of good faith and fair dealing cause of action).
The only contract alleged in the FAC is the HOA’s CC&Rs. There is no allegation that O’Keefe is a party to the CC&Rs. Rather, he acted as the HOA’s agent in connection with the HOA’s actions relative to the CC&Rs.
Plaintiff argues that because O’Keefe is alleged to have acted wrongfully as the agent of the HOA, that is sufficient to state a cause of action against him for breach of the HOA’s contract with Plaintiff.
It is correct that when an agent acting for a principal acts wrongfully, he may be personally liable to a third party (rather than only the principal being liable). See Civ. Code §2343. But that liability takes the form of breach of contract liability for a purported contract of the principal only in the limited circumstance when the agent himself enters into the contract in the name of the principal in bad faith – that is, knowing he does not have authority to enter into the contract on behalf of his purported principal. Hill v. Superior Court (2016) 244 Cal.App.4th 1281, 1287–1288.
Plaintiff has alleged neither a contract between it and O’Keefe nor a written contract that O’Keefe in bad faith purported to enter into on behalf of the HOA.
The demurrer to both the first and second causes of action is therefore sustained.
Fifth Cause of Action for Breach of Fiduciary Duty The elements of breach of fiduciary duty are (1) existence of a fiduciary duty, (2) breach of that duty, and (3) damages. Twomey v. Mitchum, Jones & Templeton Inc. (1968) 262 Cal. App. 2d 690.
A fiduciary or confidential relationship can arise when confidence is reposed by persons in the integrity of others, and if the latter voluntarily accepts or assumes to accept the confidence, he or she may not act so as to take advantage of the other's interest without that person's knowledge or consent. Slovensky v. Friedman (2006) 142 Cal.App.4th 1518, 1534; Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101–02. A fiduciary relationship is a relationship existing between parties to a transaction wherein one party is duty bound to act with the utmost good faith for the benefit of the other. “Before a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.”
A fiduciary relationship is “any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter's knowledge or consent....”
Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 (citations and internal quote marks omitted). Traditional examples of fiduciary relationships in the commercial context include trustee/beneficiary, directors and majority shareholders of a corporation, business partners, joint adventurers, and agent/principal. Id. Inherent in each of these relationships is the duty of undivided loyalty the fiduciary owes to its beneficiary, imposing on the fiduciary obligations far more stringent than those required of ordinary contractors.
Id.
The essential elements of a fiduciary relationship can be distilled as follows: 1) The vulnerability of one party to the other which 2) results in the empowerment of the stronger party by the weaker which 3) empowerment has been solicited or accepted by the stronger party and 4) prevents the weaker party from effectively protecting itself. In short, vulnerability is the necessary predicate of a confidential relation, and the law treats it as absolutely essential.” Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1161; in accord, Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 31.
Plaintiff has not alleged the elements of a fiduciary relationship between itself and O’Keefe.
Nor would an HOA’s fiduciary duty fill the gap. The HOA appears to have a fiduciary duty to Plaintiff here. See Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642, 650- 651 (holding the homeowners' association owed a fiduciary duty to its members in connection with its approval or rejection of certain improvements proposed by homeowners).
But the apparent fact that the HOA has a fiduciary duty to Plaintiff in making approval/disapproval decisions in connection with the ADU does not mean that O’Keefe himself, acting as an agent for the HOA, had a fiduciary duty to Plaintiff. See Everest Investors 8 v. Whitehall Real Estate Limited Partnership XI (2002) 100 Cal.App.4th 1102,
1104 (“When the nonfiduciary is an agent or employee of the fiduciary, the nonfiduciary is entitled to the benefit of the “agent's immunity rule” (and thus not liable on a conspiracy theory) unless the nonfiduciary was acting for its own benefit.”).
Accordingly, the demurrer to this cause of action is sustained.
Motion to Strike Legal Standard A court may strike out any irrelevant, false, or improper matter inserted in any pleading or strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule or an order of the court. Code Civ. Proc. § 436. “Irrelevant” matters include: allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not support by the allegations of the complaint. Code Civ. Proc. § 431.10(b).
The same liberal policy regarding amendments that applies to the sustaining of demurrers applies for motions to strike. If a defect may be correctible, leave to amend should usually be given.
Discussion
Punitive Damages To support exemplary damages, the complaint must allege facts of defendant’s oppression, fraud, or malice. Civ. Code § 3294(a). “Malice” is defined as conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. Civ. Code § 3294(c)(1). “Oppression” is defined as despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. Civ. Code § 3294(c)(2). “Fraud” is defined as an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. Civ. Code § 3294(c)(3).
As noted above, the punitive damage allegations that Defendant seeks to strike include paragraph 133, which is in the fourth cause of action for unfair competition (violation of B&P Code §17200) and paragraph 137, which is in the fifth cause of action for breach of fiduciary duty.
As to the latter paragraph (137), the motion to strike is moot in light of the Court sustaining the demurrer to the fifth cause of action for breach of fiduciary duty.
As to paragraph 133, punitive damages are not available on a claim for unfair competition under Business and Professions Code section 17200. See Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1148 (“attorney fees and damages, including punitive damages, are not available under the UCL”).
The Court is thus inclined to grant the motion to strike as to paragraph 133. As this issue was not briefed, the Court will hear from counsel should any party wish to be heard.
Moving party is ordered to give notice.