Adams vs. Colliers International Group, Inc.

# Case Name Tentative 1 25-01452685 1) Demurrer to Amended Complaint 2) Demurrer to Amended Complaint Adams vs. Colliers 3) Motion to Strike Portions Of Complaint International Group, Inc. MOTION NO. 1: Defendant Colliers International Group, Inc.’s (“CIGI”) demurrer to the Second Amended Complaint (“SAC”) filed by Plaintiff Irene Adams is OVERRULED.

Second Cause of Action for Financial Elder Abuse: Defendant contends plaintiff Adams lacks standing to bring a claim for financial elder abuse.

In support, Defendant cites Hilliard v. Harbour (2017) 12 Cal.App.5th 1006 (Hillard). In Hilliard, the plaintiff was the controlling shareholder, and presumably the founder of several companies. (Id. at p. 1008.) The companies took out loans from Wells Fargo over the years, secured by their assets. At a certain point, the loans went into default and plaintiff Hilliard began negotiating with Harbour, Wells Fargo's representative, about liquidating certain personal interests and providing further collateral to satisfy the debt. (Id. at pp. 1008-1009.)

In final settlement of the debt, Hilliard agreed to sell a radio station by a date certain and give Wells Fargo the proceeds. However, he was unable to sell the radio station by that date, and Wells Fargo sold the loan to a new creditor, who instituted legal action against the companies and ultimately obtained a judgment. (Id. at pp. 1009-1010.) Hilliard filed a complaint with a single cause of action for financial elder abuse, alleging Wells Fargo took the companies from him for a wrongful use. (Id. at p. 1010.)

Wells Fargo and Harbour filed a demurrer, claiming Hilliard lacked standing because his claim was derivative and not personal, and the trial court sustained it without leave to amend. (Ibid.)

The court of appeal affirmed and extensively discussed Sutter v. General Petroleum Corp. (1946) 28 Cal.2d 525, 530 (Sutter) on which Plaintiff relies, as an example of a viable direct action for fraud in the shareholder context. (Hilliard, supra, 12 Cal.App.5th at pp. 1013-1014.) In Sutter, the plaintiff alleged that “by reason of the fraudulent representations of defendants, [plaintiff] was induced to do several things, namely, abandon his own oil development projects [and] devote his time to the project whereby [certain] facilities would be used [] to form and invest in a corporation (the Development Company).” (Sutter, supra, 28 Cal.2d at p. 530.)

In Sutter, plaintiff “took steps in reliance upon the misrepresentations including the formation of the Development Company before that company was formed.” (Id. at p. 531.) In that context, the California Supreme Court held that “the failure to perform the promises injured the Development Company ... but there was also a direct individual injury to plaintiff [] and ... the dual nature of the injury does not necessarily preclude an action by the stockholder as an individual.” (Ibid.)

As to Sutter, the Hilliard court explained that “The point of the Supreme Court opinion is that while Sutter lost his investment, which was represented by the value of the stock, and its reduction in value was the measure of his loss, the damages all flowed from the defendants’ tort that preceded and induced the investment.” (Hilliard, supra, 12 Cal.App.5th at pp. 1014.)

The Court finds Sutter to be controlling under the facts alleged in the SAC. Although in Sutter, the plaintiff was induced by defendant’s fraud to form a corporation and invest his money by reason of that fraud, the allegations, here, that Defendants induced Adams, to sell the triplex and invest in the TIC property at issue through their misrepresentations are sufficient under Sutter. (SAC, ¶¶ 7, 117, 128, 132-133.)

Accordingly, the demurrer to the second cause of action is OVERRULED.

Eighth Cause of Action for Violation of Unfair Competition Laws: Defendant contends plaintiff Adams lacks standing to bring a Business and Professions Code section 17200 claim.

To have standing to bring a cause of action under Cal. Bus. & Prof. Code § 17200 et seq., a plaintiff must “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Bower v. AT&T Mobility, LLC (2011) 196 Cal.App.4th 1545, 1554.)

Since the eighth cause of action rests on the same personal losses as alleged in the financial elder abuse cause of action, the SAC adequately pleads a cause of action for Business and Professions Code section 17200.

Accordingly, the demurrer to the eighth cause of action is OVERRULED.

First and Third through Seventh Causes of Action: Defendant contends that although the SAC does not identify Plaintiff Adams as a party asserting the First, Third, Fourth, Fifth, Sixth, and Seventh Causes of Action, the allegations in each of these causes of action assert that both Plaintiffs have suffered damages, and each cause of action seeks relief on behalf of both Plaintiffs. (SAC ¶¶148, 149, 158, 160, 168, 169, 178, 179, 185, and 186.)

“A demurrer must dispose of an entire cause of action to be sustained.” (Fremont Indem. Co. v. Fremont Gen. Corp. (2007) 148 Cal.App.4th 97, 119.) “[A] demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.” (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1047.)

Here, Defendant attacks the prayer and not any cause of action. Further, Plaintiffs state that West Palmyra is the sole plaintiff asserting these

claims and the residual references to “Plaintiffs” in the damages paragraphs are an artifact of the FAC. (Opp., 17:26-28.) Therefore, the demurrer to First and Third through Seventh Causes of Action is OVERRULED.

Moving Defendant to give notice.

MOTION NO. 2: Defendant Colliers International Group, Inc.’s motion to strike portions of plaintiffs Irene Adams and West Palmyra Ltd.’s Second Amended Complaint (“SAC”) is GRANTED with 20-days leave to amend.

Defendant seeks to strike the request for treble damages under Civil Code section 3345 from the following portions of the SAC: Page 23, ¶106, lines 9-13; Page 31, ¶151, lines 2-6; Page 32, ¶161, lines 10-14; Page 33, ¶171, lines 14-18.

Civil Code Section 3345 provides: “(a) This section shall apply only in actions brought by, on behalf of, or for the benefit of those individuals specified in paragraphs (1) to (3), inclusive, to redress unfair or deceptive acts or practices or unfair methods of competition. [¶] (1) Senior citizens, as defined in subdivision (f) of Section 1761. [¶] (2) Disabled persons, as defined in subdivision (g) of Section 1761. [¶] (3) Veterans, as defined in Section 18540.4 of the Government Code.” (Civ. Code § 3345, subd. (a) [emphasis added].)

Plaintiff West Palmyra Ltd. seeks treble damages pursuant to section 3345 in connection with the first cause of action for Violation of California Corporate Securities Law of 1968, third cause of action for Breach of Fiduciary Duty, fourth cause of action for Aiding and Abetting Breach of Fiduciary Duty, and fifth cause of action for Constructive Fraud. These causes of action are not being brought by plaintiff Adams or any other senior citizen. The SAC also does not sufficiently allege “on behalf of, or for the benefit of” plaintiff Adams. (See Code Civ. Proc., ¶ 369; Wallner v. Parry Professional Bldg., Ltd. (1994) 22 Cal.App.4th 1446, 1449 (“Although a limited partner is named as the plaintiff, it is the limited partnership which derives the benefits of the action.”)

Moving Defendant to give notice.

MOTION NO. 3: Defendant Brent Smith and Millrock Investment Fund 1, LLC’s demurrer to the Second Amended Complaint (“SAC”) filed by Plaintiff Irene Adams is OVERULED.

For the reasons discussed in the court’s ruling on Defendant Colliers International Group, Inc.’s demurrer, the demurrer to Defendant Brent Smith and Millrock Investment Fund 1, LLC’s demurrer is OVERRULED.

Moving Defendant to give notice.