Brandon Giraldo v. Phuc Nguyen et al.

The case involves a dispute over construction at plaintiff’s residence. The FAC names as defendants T&T Construction (T&T); Phuc Huu Nguyen (referred to in the FAC and in this order as Andy); Tuan Quoc Nguyen (Tuan); Lexington Enterprises Group, Inc. (Lexington); and Doe defendants. The FAC alleges that Tuan was plaintiff’s real estate agent when he bought the residence in June 2023. (FAC, ¶ 11.) Lexington was Tuan’s “responsible broker,” and has a real estate broker’s license. (FAC, ¶¶ 8-9.) Tuan introduced plaintiff to Andy, who is the principal of T&T. (FAC, ¶ 13.)

Plaintiff and T&T signed a construction contract in July 2023 to remodel the residence. (FAC, ¶ 13.) The FAC alleges Tuan “acted as project coordinator/redevelopment consultant for [plaintiff] and Andy.” (Id., ¶ 14.) It also alleges “Tuan and Andy persuaded [plaintiff] that the Work could and should be accomplished without any permits.” (Id., ¶ 15.) T&T engaged in construction work between July 2023 and November 2023. Plaintiff paid T&T over $156,000. (Id., ¶ 17.) Plaintiff discovered that T&T was performing work without required permits, and that T&T’s contractor’s license had been suspended. (Id., ¶ 19.)

The FAC elsewhere alleges that T&T’s contractor’s license was suspended between August and December 2023. (Id., ¶ 3.) Plaintiff eventually terminated T&T and instructed Tuan not to return to the residence. (Id., ¶ 19.)

The FAC alleges five causes of action: (1) fraud (against T&T, Andy, and Tuan); (2) breach of contract (against T&T and Andy); (3) disgorgement (against T&T and Andy); (4) negligence (against T&T and Andy); (5) negligence (against Tuan and Lexington); and (6) negligence (against Lexington).

DEMURRER

Tuan and Lexington demur to the first, fifth, and sixth causes of action. They contend those causes of action fail to state facts sufficient to state causes of action against them. (Code Civ. Proc., § 430.10, subd. (e); unspecified statutory references are to this Code.) In ruling on a demurrer, the court accepts as true all properly pleaded material factual allegations. The court does not accept as true contentions, deductions or conclusions of fact or law. (Valero v. Spread Your Wings, LLC (2023) 88 Cal.App.5th 243, 253.)

First Cause of Action – Fraud (Against Tuan)

“The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (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.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792, citation omitted.) Fraud must be pleaded with specificity. General or conclusory allegations are insufficient. A plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. In the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Id. at p. 793.)

The specificity requirement serves two purposes. The first purpose is to give notice to the defendant with sufficiently definite charges. (Ibid.) The second is to permit a court to weed out meritless fraud claims on the basis of the pleadings; thus, the pleading should be sufficient to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud. (Ibid.)

The fraud cause of action is alleged against T&T, Andy, and Tuan. The FAC is not pleaded with sufficient specificity as to Tuan. The FAC alleges on information and belief that Tuan made misrepresentations about T&T’s qualifications; stated that permits would slow down work; and stated that T&T should keep working despite its contractor’s license being suspended. (FAC, ¶ 27.) Those general and conclusory allegations do not sufficiently state a fraud cause of action against Tuan. Tuan’s demurrer to the first cause of action is sustained.

A plaintiff bears the burden of demonstrating that an amendment would cure the defect identified on demurrer. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) Plaintiff failed to do so. But because this is the first pleading challenge, the court will grant leave to amend. The court does not grant leave to add any additional parties or causes of action.

Fifth Cause of Action – Negligence (Against Tuan and Lexington)

“An action in negligence requires a showing that the defendant owed the plaintiff a legal duty, that the defendant breached the duty, and that the breach was a proximate or legal cause of injuries suffered by the plaintiff.” (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673.) “Negligence may be alleged in general terms; that is, it is sufficient to allege an act was negligently done without stating the particular omission which rendered it negligent.” (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

The fifth cause of action lists both Tuan and Lexington as defendants. (FAC, p. 9:18- 19.) It alleges Tuan, as a licensed realtor, is bound to follow the National Association of Realtors’ Code of Ethics. It alleges Article 11 of that code states that realtors “shall not undertake to provide specialized professional services concerning a type of property or service that is outside their filed of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.” (FAC, ¶ 55-57.) It alleges, on information and belief, that Tuan breached his professional responsibilities by acting as a construction project manager and by acting as an unlicensed salesperson for T&T. (FAC, ¶ 59-60.) The fifth cause of action contains no allegations about Lexington.

As an initial matter, the fifth cause of action fails to state a cause of action against Lexington because it is entirely devoid of allegations related to Lexington.

The FAC’s fifth cause of action also does not state a cause of action as to Tuan. Although a negligence cause of action may be stated in general terms, it must nonetheless have allegations supporting each element of the cause of action. It is unclear whether plaintiff is alleging general negligence or professional negligence; those are different torts with different legal standards. The conclusory allegation that Tuan “acted as a project coordinator/redevelopment consultant,” without more, does not adequately state a cause of action. The FAC’s allegation that Tuan undertook professional services outside his field of competence without supervision is also inconsistent with the allegation that Tuan worked with T&T (which was a licensed contractor for at least part of the construction project).

The court will grant leave to amend as to Tuan. Any amendment must include greater detail about Tuan’s involvement in the project. The demurrer to the fifth cause of action is sustained without leave to amend as to Lexington.

Sixth Cause of Action – Negligence (Against Lexington)

An employer can be liable to a third person for negligently hiring, supervising, or retaining an unfit employee. “ ‘Liability is based upon the facts that the employer knew or should have known that hiring the employee created a particular risk or hazard and that particular harm materializes.’ ” (Alexander v. Community Hospital of Long Beach (2020) 46 Cal.App.5th 238, 264.) “ ‘To establish negligent supervision, a plaintiff must show that a person in a supervisorial position over the actor had prior knowledge of the actor’s propensity to do the bad act.’ ” (Ibid.)

The FAC’s sixth cause of action alleges Lexington had a duty to properly train and supervise Tuan. The FAC alleges that Lexington breached that duty by allowing Tuan to advise plaintiff to undertake unlawful construction. (FAC, ¶ 67.) The fatal defect in the FAC’s allegations against Lexington is that the extent of any duty Lexington had to supervise Tuan’s behavior as a realtor ceased when escrow closed on the property. (See Robinson v. Grossman (1997) 57 Cal.App.4th 634, 646 [“The duties of real estate agents, even to their own clients, terminate ‘when the subject matter of the agency is sold or otherwise disposed of.’ ”].)

The FAC alleges that plaintiff bought the residence in June 2023. (FAC, ¶ 11.) Tuan’s allegedly negligent actions in serving as a project coordinator all occurred after that date. The FAC also provides no allegations supporting a finding that Lexington knew or should have known that Tuan would undertake the bad acts alleged in the FAC.

The demurrer to the sixth cause of action is sustained. Plaintiff has not demonstrated a reasonable possibility that the complaint can be amended to overcome the defects as to Lexington. But because this is the first pleading challenge, the court will grant leave to amend. Any amendment must be factually consistent with the FAC’s allegations.

MOTION TO STRIKE

Tuan and Lexington move to strike all references to emotional distress and punitive damages from the FAC. (See Notice of Motion to Strike, quoting FAC, ¶¶ 32, 33, 64, 65, Prayer No. 3.)

Under section 436, a court may strike out any irrelevant, false, or improper matter inserted into any pleading, or strike out all or 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. Irrelevant matter includes (1) an allegation that is not essential to the statement of a claim or defense, (2) an allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense, and (3) a demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint. (Code Civ. Proc., § 431.10, subds. (b), (c).) The grounds for a motion to strike must appear on the face of the challenged pleading or from matters of which the court may take judicial notice. (Code Civ.

Proc., § 437, subd. (a); City and County of San Francisco v. Strahlendorf (1992) 7 Cal.App.4th 1911, 1913.) In ruling on a motion to strike, the court reads the complaint as a whole, all parts in their context, and assumes the truth of all well-pleaded allegations. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63.)

Regarding punitive damages, the court’s order sustaining the demurrer to the fraud cause of action as to Tuan means there is no cause of action supporting punitive damages left in the FAC. The motion to strike references to punitive damages in relation to Tuan is granted. But because the court is granting leave to amend the complaint as to the fraud cause of action, the motion to strike is likewise granted with leave to amend.

Regarding emotional distress, “ ‘unless the defendant has assumed a duty to plaintiff in which the emotional condition of the plaintiff is an object, recovery is available only if the emotional distress arises out of the defendant’s breach of some other legal duty and the emotional distress is proximately caused by [breach of the independent duty]. Even then, with rare exceptions, a breach of the duty must threaten physical injury, not simply damage to property or financial interests.’ ” (Erlich v.

Menezes (1999) 21 Cal.4th 543, 555-556 & 548 [finding emotional distress damages were not recoverable in a negligent breach of construction contract action because the negligence caused only economic injury and the defendant breached no duty independent of contract].) The FAC does not allege that Tuan or Lexington assumed a duty to plaintiff in which plaintiff’s emotional condition was an object. The court therefore grants the motion to strike references to emotional distress as to Tuan and Lexington.

Although it seems unlikely plaintiff will be able to amend the complaint to allow for the recovery emotional distress damages, the court will grant leave to amend because this is the first pleading challenge.

The motion to strike is granted with leave to amend.

CONCLUSION

Tuan’s demurrer to the FAC’s first and fifth causes of action is SUSTAINED WITH LEAVE TO AMEND. Lexington’s demurrer to the fifth cause of action is SUSTAINED WITHOUT LEAVE TO AMEND. Lexington’s demurrer to the sixth cause of action is SUSTAINED WITH LEAVE TO AMEND. The court does not grant leave to add any additional parties or causes of action. The motion to strike references to emotional distress and punitive damages is GRANTED WITH LEAVE TO AMEND.

Any amended pleading must be filed and served no later than July 9, 2026.

The court will prepare the order. - oo0oo -