Indigo Sports, LLC v. JP International USA, Inc.

“Fraud in the inducement . . . occurs when the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.” (Najarro v. Superior Court (2021) 70 Cal.App.5th 871, 889 [internal quotations omitted].) “In order to escape from its obligations the aggrieved party must rescind.” (Ibid.)

Fraud causes of action must be pled with specificity. “...Fraud causes of action must be pled with specificity. “...This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom and by what means the representations were tendered.”’ (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the false representations were made.” (State ex rel. Edelweiss Fund, LLC v. JPMorgan Chase & Co. (2023) 90 Cal.App.5th 1119, 1136–1137.) “The complaint must plead the time, place, and contents of the false representations, as well as the identity of the person making the misrepresentation and what he obtained thereby.” (Ibid.)

Here, Cross-Complainant has sufficiently alleged facts in support of each element of the fraud in the inducement cause of action. Cross-Complainant alleges (a) a misrepresentation [¶¶ 3, 10 & 11]; (b) knowledge of falsity [¶ 6]; (c) intent to defraud [¶¶ 6, 7]; (d) justifiable reliance [¶ 12]; and (e) resulting damage [¶ 12]. Cross- Complainant sufficiently stated a cause of action for fraudulent inducement.

B. Defense of Economic Loss Rule

Defendant argues that the first cause of action for fraudulent inducement is barred by the economic loss rule, relying primarily on Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1.

“[U]nder the economic loss rule, tort recovery for breach of a contract duty is generally barred . . . unless two conditions are satisfied. A plaintiff must first demonstrate the defendant’s injury-causing conduct

violated a duty that is independent of the duties and rights assumed by the parties when they entered the contract. Second, the defendant’s conduct must have caused injury to persons or property that was not reasonably contemplated by the parties when the contract was formed.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 20-21.)

Importantly, “the economic loss rule does not apply to limit recovery for intentional tort claims like fraud. The doctrine only applies to bar tort recovery for negligently inflicted economic losses unaccompanied by physical or property damage under the limits recognized in Sheen.” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 38.)

In Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844, however, the court found that the economic loss rule did not bar plaintiff’s claim for fraudulent inducement by concealment. Importantly, Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828 governs fraudulent concealment in inducing the formation of a contract whereas Rattagan controls fraudulent concealment within contractual relationships.

Given the holding in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 844, the Court finds that economic loss rule does not bar the first cause of action for fraud in the inducement based on the allegation in the FACC. The demurrer to the first cause of action for fraud in the inducement is OVERRULED.

2nd CAUSE OF ACTION: FAILURE OF CONSIDERATION

“Failure of consideration is the failure to execute a promise, the performance of which has been exchanged for performance by the other party.” (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 230.)

Here, Cross-Complainant alleges that as part of the consideration for the monies paid related to the terms of

the Termination Agreement, Cross-Defendant agreed to provide a “full and accurate financial disclosures.” (FACC, ¶ 14.) “Indigo failed to perform this essential part of the bargain” and therefore Cross-Complainant did not receive some of the consideration that it bargained for in the exchange memorized in the Termination Agreement. (FACC, ¶ 14.)

Given these allegations, the demurrer to the second cause of action for failure of consideration is OVERRULED.

3rd CAUSE OF ACTION: ECONOMIC DURESS “The doctrine of ‘economic duress’ can apply when one party has done a wrongful act which is sufficiently coercive to cause a reasonably prudent person, faced with no reasonable alternative, to agree to an unfavorable contract.” (Crosstalk Productions, Inc. v. Jacobson (1998) 65 Cal.App.4th 631, 644.) “The party subjected to the coercive act, and having no reasonable alternative, can then plead ‘economic duress’ to avoid the contract.” (Ibid.)

Here, Cross-Complainant alleges that “[i]n early 2024, JP International sought to terminate the Golf Management Agreement before its contractual end. Negotiations resulted in a Termination Agreement dated October 31, 2024.” (FACC, ¶ 2.) Cross-Complainant further alleges that “Indigo engaged in wrongful acts and threats that left JP International with no reasonable alternative but to execute the Termination Agreement.” (FACC, ¶ 17.) Such wrongful acts and threats “ included Indigo's stated intent to block the reopening of the golf course and to pursue immediate legal action unless JP International signed the agreement.

Because the Palm Desert region’s short seasonal revenue window was fast approaching (beginning November), such a closure would have caused devastating financial consequences on JP International for the entire year.” (FACC, ¶ 18.) “JP International had no meaningful alternative to signing the Termination Agreement due to economic coercion applied by Indigo, including threats to cease essential services and to prevent the golf course from reopening

for the season unless the agreement was signed immediately.” (FACC, ¶ 7.)

These allegations are sufficient at this stage in the proceedings. The demurrer to the third cause of action for economic duress is OVERRULED.

4th CAUSE OF ACTION: DECLARATORY RELIEF

“A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a written instrument and requests that these rights and duties be adjudged by the court.” (Leonard Carder, LLP v. Patten, Faith & Sandford (2010) 189 Cal.App.4th 92, 97.)

“Declaratory relief is available to ‘[a]ny person interested under a written instrument ... who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property ... in cases of actual controversy relating to the legal rights and duties of the respective parties ....’ ” (Camden Systems, LLC v. 409 North Camden, LLC (2024) 103 Cal.App.5th 1068, 1078–1079, reh’g denied (Aug. 8, 2024) [citing Code Civ. Proc., § 1060].) “Declaratory relief pursuant to this section has frequently been used as a means of settling controversies between parties to a contract regarding the nature of their contractual rights and obligations.” (Id., 1079.)

Here, Cross-Complainant sufficiently states a claim for declaratory relief. Cross-Complainant alleges a dispute over the contractual rights and obligations between the parties regarding the Termination Agreement. Specifically, Cross-Complainant alleges that “[a]n actual and justiciable controversy has arisen between JP and Indigo regarding their respective rights and obligations under the Termination Agreement.” (FACC, ¶19.) Cross-Complainant further alleges that it contends that the “agreement is void and unenforceable due to fraud, duress, and failure of consideration.” (FACC, ¶ 20.) “A judicial declaration is necessary to determine whether JP remains bound by the Termination Agreement and

whether Indigo is entitled to the amounts it claims under the agreement. The Termination Agreement contains an attorney fee clause, and, pursuant to the same, Cross-Complainant is entitled to an award of reasonable attorney fees.” (FACC, ¶ 21.)

The demurrer to the fourth cause of action for declaratory relief is OVERRULED.

5TH CAUSE OF ACTION: MONEY HAD AND RECEIVED

Cross-Complainant’s fifth cause of action is for money had and received.

“A common count for money had and received is not a specific cause of action ...; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness.” (Camden Systems, LLC v. 409 North Camden, LLC (2024) 103 Cal.App.5th 1068, 1082, reh’g denied (Aug. 8, 2024) [internal quotations omitted].) “Although such an action is one at law, it is governed by principles of equity.” (Ibid.)

“A cause of action for money had and received is stated if it is alleged [that] the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff.” (Camden Systems, LLC v. 409 North Camden, LLC (2024) 103 Cal.App.5th 1068, 1082, reh’g denied (Aug. 8, 2024) [internal quotations omitted]; Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 230 [““To prevail on a common count for money had and received, the plaintiff must prove that the defendant is indebted to the plaintiff for money the defendant received for the use and benefit of the plaintiff.”].) “The claim is viable wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.” (Ibid.) “[T]he plaintiff must prove that the defendant received money ‘intended to be used for the benefit of [the plaintiff],’ that the money was not used for the plaintiff’s benefit, and that

the defendant has not given the money to the plaintiff.” (Ibid.)

Here, Cross-Complainant alleges that “Indigo received funds from JP International for services and expenses that were unauthorized, duplicative, or improperly charged, including the amounts set forth in paragraph 5 above.” (FACC, ¶ 24.) Paragraph 5 states:

“For example, Indigo failed to account for significant overpayments and questionable charges, including $240,476.56 in "Account Services" expenses, $52,190.17 paid - to Troon Golf without JP’s consent, and $9,888.68 in duplicate payroll payments. These overcharges were discovered only after execution of the Termination Agreement.” (FACC, ¶ 5.)

Based on the above, Cross-Complainant has sufficiently stated a cause of action for money had and received. The demurrer to the fifth cause of action for money had and received is OVERRULED.

6TH CAUSE OF ACTION: CONVERSION

“Conversion is the wrongful exercise of dominion over the property of another.” (Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, 1387.) “The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. Conversion is a strict liability tort.” (Ibid.)

Importantly, “the foundation of the action rests neither in the knowledge nor the intent of the defendant” and “[t]herefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial.” (Los Angeles Federal Credit Union v. Madatyan (2012) 209 Cal.App.4th 1383, 1387.)

“Money can be the subject of a conversion action if a specific, identifiable sum is involved.” (Ortega v. Toyota Motor Sales, USA, Inc. (S.D. Cal. 2008) 572 F.Supp.2d 1218, 1220.) However, “the simple failure to pay money

owed does not constitute conversion.” (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284.) Similarly, “a mere contractual right of payment, without more, will not suffice.” (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 452.)

Rather, “[a] cause of action for conversion of money can be stated only where a defendant interferes with the plaintiff’s possessory interest in a specific, identifiable sum, such as when a trustee or agent misappropriates the money entrusted to him.” (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284.)

Here, Cross-Complainant alleges that “Indigo wrongfully retained funds that were earmarked for legitimate golf course operations but instead applied them to unauthorized accounts or duplicate payroll.” (FACC, ¶ 27.) Cross-Complainant further alleges that “Indigo exercised dominion and control over JP’s funds in a manner inconsistent with JP's rights, causing damages.” (FACC, ¶ 28.)

Based on these allegations, the demurrer to the sixth cause of action for conversion is OVERRULED.

Cross-Defendant shall file an answer to the FACC within 20 days of notice of this ruling.

Cross-Complainant to give notice.

Case Management Conference 110

111 Johnson v Connie, LLC 2022-01248762

Johnson v. Zelaya 2026-01541888

Motion to Consolidate -DENIED

Motion to Consolidate - DENIED

Plaintiff Randy R. Johnson moves to consolidate Johnson v. Connie, LLC, et al., Case No. 22-01248762 with Johnson v. Zelaya, et al., Case No. 26-01541888.

When there are two or more actions that involve common questions of law or fact, a court may order them to be consolidated, or order a joint trial, or issue orders