Demurrer to Amended Cross-Complaint; Case Management Conference
(CRC 3.1113(a).) Based upon these grounds, the court sustains the unopposed demurrer. Although the demurrer is unopposed, the court finds that Plaintiff should be given an opportunity to cure the defects in the operative complaint that were raised by the OCFA in the demurrer.
Plaintiff has 30 days leave to amend.
The Case Management Conference is CONTINUED to August 21, 2026, at 9:30 a.m. in Department C12.
Each Moving Defendant to give notice of these rulings.
6. Seacoast Capital 1. Demurrer to Amended Cross-Complaint Partners IV L.P. vs.
2. Case Management Conference Martin Cross-Defendant Seacoast Capital Partners IV, LP’s demurrer to 25-01473117 Cross-Complainants Michael Martin and Philip Nabal’s Second Amended Complaint is OVERRULED as to the First Cause of Action and SUSTAINED as to the Second and Third Causes of Action.
Cross-Complainants have 30 days to file a Third Amended Cross- Complaint.
COA 1: Intentional Interference with Contractual Relations
The elements of a cause of action for intentional interference with contractual relations are: (1) a valid contract between the complainant and a third party; (2) the defendant’s knowledge of the contract; (3) Intentional conduct on the part of the defendant that was intended to or would necessarily result in a breach or disruption of the contractual relationship; (4) an actual breach or disruption of the contractual relationship; and (5) resulting damages. (See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55.)
The SAXC adequately alleges these elements. Cross-Complainants allege they had a valid contract with DI Overnite, LLC involving a promissory note for $136,682.95. (SAXC ¶5.) Cross-Complainants allege Cross-Defendants were aware of this relationship as shown by their alleged forgery of a subordination agreement that was intended to subordinate this debt to other debts DI Overnite, LLC owed to Cross-Defendants. (SAXC ¶¶7-8.) The SAXC alleges that Cross- Defendants engaged in conduct that would necessarily result in a disruption of the contract between Cross-Complainant DI Overnite,
LLC by consenting to DIO incurring millions of dollars to indebtedness to third parties so as to make it impossible for DIO to fulfill its repayment obligations to Cross-Complainant. (See SAXC ¶¶11-13.) The SAXC alleges resulting damages. (See SAXC ¶15.)
Looking for case law or statutes not cited here? Search published authorities
Examples: “Why did the court rule this way?” · “What were the procedural grounds?” · “Is appearance required?”
Cross-Defendants attempt to raise disputes regarding the factual accuracy of the Cross-Complaint’s allegations by introducing evidence that Cross-Complainants’ allegations regarding the forgery of Martin’s signature on the subordination agreements is false. Factual disputes such as this are not appropriate for resolution on demurrer.
Accordingly, the demurrer to this cause of action is overruled.
COA 2: Breach of Implied Covenant of Good Faith and Fair Dealing
“‘The [implied] covenant of good faith and fair dealing [is] implied by law in every contract.’” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1369.) The covenant is read into contracts and functions “‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract.’ ” (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031–1032.) The covenant also requires each party to do everything the contract presupposes the party will do to accomplish the agreement's purposes. (Harm v. Frasher (1960) 181 Cal.App.2d 405, 417.)
The cause of action as alleged in the SAXC is premised upon a breach of the covenant of good faith and fair dealing arising from the subordination agreements which Cross-Complainants allege were not valid contracts, as Martin’s signature on those agreements was forged. Since there is no underlying contract, there is no implied covenant of good faith and fair dealing for Cross-Defendant to breach.
Accordingly, the demurrer to this cause of action is sustained.
COA 3: Fraud
To plead a legally sufficient cause of action for fraud, the pleader must allege (1) a misrepresentation; (2) the defendant’s knowledge of the falsity of the misrepresentation; (3) intent to induce plaintiff’s reliance on the misrepresentation; (4) actual reliance upon the misrepresentation; (5) causation; and (6) resulting damages. (Robinson Helicopter Co., Inc. v. Dana Corp. (2005) 35 Cal.4th 979, 990.)
“The elements of a claim for fraudulent concealment require a plaintiff to show that: ‘(1) the defendant . . . concealed or suppressed a material fact, (2) the defendant [was] under a duty to disclose the fact to the plaintiff, (3) the defendant . . . intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff [was] unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’ ” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1130.)
Fraud must be pleaded specifically to withstand a general demurrer. Thus, to state a legally sufficient cause of action for fraud, a plaintiff must plead specific facts that “show how, when, where, to whom, and by what means the representations were tendered.” (Hamilton v. Greenwich Investors XXVI, LLC (2011) 195 Cal.App.4th 1602, 1614.)
While Cross-Complainants have managed to submit a sprawling pleading of their third cause of action for fraud, the SAXC is not pleaded with sufficient particularity. The third cause of action is not pleaded clearly. It is not clear what the allegedly misrepresented and/or concealed material facts are, who engaged in the misrepresentation/concealment, and how Cross-Complainants relied upon any misrepresentation/concealment to their detriment. Accordingly, the demurrer to this cause of action is sustained.
Finally, Cross-Defendant appears to request the court to take judicial notice of emails transmitting a signed copy of the affirmation of the subordination agreement. This request is DENIED. As an initial matter, a request for judicial notice must be made in a separate document. (See Cal. Rules of Court 3.1113, subd. (l).) Additionally, even if the request was procedurally correct, Cross-Defendant has not established that this material is the proper subject of judicial notice.
The Case Management Conference is CONTINUED to August 27, 2026, at 9:30 a.m. in Department C12.
If they choose to, Cross-Complainants have 30 days to file a Third Amended Cross-Complaint.
Cross-Defendant shall provide notice of this ruling.