Sunday v. Kazweeny

Pending Motions

Defendant Light Speed Escrow, Inc. (Defendant Lightspeed) demurs to the 1st through 7th Causes of Action of the First Amended Complaint (FAC) filed by Plaintiffs Karen Sunday & Associates, Inc. (Plaintiff Associates, Inc.) and Karen Sunday (Plaintiff Sunday).

Defendant Ahmed Kazweeny (Defendant Kazweeny) and Defendant Reeland Investments LLC (Defendant Reeland) also demur to the 1st through 7th Causes of Action of the FAC.

Standard for Demurrer

A demurrer challenges only the legal sufficiency of the affected pleading, not the truth of the factual allegations in the pleading or the pleader’s ability to prove those allegations. (Cundiff v. GTE Cal., Inc. (2002) 101 Cal.App.4th 1395, 1404-05.)

For this reason, the court will not decide questions of fact on demurrer. (See Berryman v. Merit Prop. Mgmt., Inc. (2007) 152 Cal.App.4th 1544, 1556.)

Instead, the court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” (Serrano v. Priest (1971) 5 Cal.3d 584, 591, citation omitted; see Blank v. Kirwan (1985) 39 Cal.3d 311, 318).

Therefore, the court will not consider facts that have not been alleged in the complaint unless they may be reasonably inferred from the matters alleged or are proper subjects of judicial notice.

(Hall v. Great W. Bank (1991) 231 Cal.App.3d 713, 718 fn.7.)

However, “where facts appearing in attached exhibits or judicially noticed documents contradict, or are inconsistent with, the complaint's allegations, we must rely on the facts in the exhibits and judicially noticed documents.” (Jimenez vs. Mrs. Gooch’s Natural Foods Markets, Inc. (2023) 95 Cal.App.5th 645, 653.)

Although courts should take a liberal view of inartfully drawn pleadings, (see Code Civ. Proc., § 452), it remains essential that a pleading set forth the actionable facts relied upon with sufficient precision to inform the responding party of the matters that the pleading party is alleging, and what remedies or relief is being sought, (see Leek v. Cooper (2011) 194 Cal.App.4th 399, 413).

Bare conclusions of law devoid of any facts are insufficient to withstand demurrer. (Schmid v. City and County of San Francisco (2021) 60 Cal.App.5th 470, 481; see Code Civ. Proc., § 425.10, subd. (a).)

1st Cause of Action (Breach of Contract)

The 1st Cause of Action is asserted only by Plaintiff Associates, Inc. and alleges that Defendants breached the parties’ joint venture agreements by misappropriating Plaintiff Associates, Inc.’s capital investment, which should have been repaid as a priority payment upon sale of the two properties. (See FAC, ¶¶ 12-17.)

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Defendant Lightspeed contends that the contract claim against it fails because there is no contract alleged between Plaintiffs and Defendants. Plaintiffs concede that the 1st Cause of Action is not directed at Defendant Lightspeed.

Defendant Kazweeny demurs to the contract claim on the ground that he did not sign and is not a party to either contract.

However, this is inconsistent with the allegations of the FAC and the copies of the FAC attached to the Complaint, which the court must accept as true. (See FAC, ¶¶ 12, 14, Exh.s A, B.)

The FAC alleges facts to support the remaining elements of a breach of contract, including Plaintiff Associates, Inc.’s performance in advancing the funds, Defendants Kazweeny’s and Reeland’s breach, and the resulting damage to Plaintiff Associates, Inc.. (See FAC, ¶¶ 13, 15-17.)

The court will sustain Defendant Lightspeed’s demurrer to the 1st Cause of Action and overrule Defendants Kazweeny’s and Reeland’s demurrer to the 1st Cause of Action.

2nd Cause of Action (Promissory Fraud)

The FAC alleges Defendants fraudulently promised to secure Plaintiff Associates, Inc.’s capital contribution with a deed of trust and that the capital contribution would receive priority status and be fully paid upon closing. (See FAC, ¶¶ 14, 27.)

“’Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Lazar v. Superior Court, supra, 12 Cal.4th at p. 638).

“[P]romissory fraud requires proof of ‘(1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promisee; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise[e].’ [Citation.]” (Gruber v. Gruber (2020) 48 Cal.App.5th 529, 540, quoting Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1453.)

“In California, fraud must be pled specifically . . . .” (Lazar vs. Superior Court (1996) 12 Cal.4th 631, 645; see also Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th

115, 132 [“Fraud must be pleaded with specificity.”].)

As the Court of Appeal has explained:

This means: (1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action for fraud must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.

(Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.)

“The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, 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.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

Here, the FAC alleges no false promise by Defendant Lightspeed.

In addition, with respect to Defendants Kazweeny and Reeland, the FAC does not allege with specificity who made the alleged false promise(s), facts supporting each Defendant’s intent not to perform, or facts supporting each Defendant’s intent to induce reliance. The conclusory allegations in Paragraph 28 do not suffice.

The court will sustain all of the Defendants’ demurrers to the 2nd cause of action.

3rd Cause of Action (Negligent Misrepresentation)

The FAC alleges Defendants negligently misrepresented misappropriating Plaintiff’s funds in violation of the terms of Agreement I and Agreement II. (See FAC, ¶ 31.)

“The elements of a negligent misrepresentation [cause of action] are ‘(1) the misrepresentation of a past or existing material fact, (2) without

reasonable ground for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.’ Negligent misrepresentation does not require knowledge of falsity, unlike a cause of action fraud.” (Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1252, no citation given for quotation.)

“[A] positive assertion is required; an omission or an implied assertion or representation is not sufficient.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)

“Causes of action for intentional and negligent misrepresentation sound in fraud and, therefore, each element must be pleaded with specificity.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166, overruled on other grounds, Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 919-920, 948, fn.12.)

Here, the FAC does not allege with specificity what false statement(s) of material fact (if any) were made by the Defendants, facts supporting the Defendants’ intent to induce reliance, or Plaintiffs’ reasonable reliance on the alleged negligently misrepresented fact(s).

The court will sustain all of the Defendants’ demurrers to the 3rd cause of action.

4th Cause of Action (Violation of Penal Code § 496(c))

The FAC alleges an unidentified “Defendant” misappropriated no less than $594,000 in Plaintiffs’ investment funds. (See FAC, ¶ 36.)

Penal Code section 496(a) states that “[e]very person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished. . . .” (Penal Code, § 496, subd. (a).)

Penal Code section 496(c) also allows any person who has been injured by a violation of Section

496(a) to bring a civil claim against the violator. (See Penal Code, § 496, subd. (c).)

The elements of a civil claim under Penal Code Section 496 are: (1) that particular property was stolen; (2) that the accused received, concealed, or withheld the property from the owner thereof; (3) that the accused knew that the property was stolen, and (4) that this caused harm to the owner. (Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 213; see also Penal Code, § 484, subd. (a) [defining “theft” to include fraudulent appropriation of money or property by false pretenses].)

Defendants contend that the FAC fails to allege that any of them obtained by theft or fraud any property belonging to Plaintiffs.

Defendants argue that the allegation that Defendant Lightspeed credited $195,000 to Defendant Reeland is insufficient to support a claim for violation of Penal Code section 496(c).)

Here, the FAC alleges that Defendant Lightspeed improperly credited Defendant Reeland with $195,000, and Plaintiff Associates, Inc.’s investment, which should have been repaid as a priority payment to Plaintiff Associates, Inc., was instead deposited into a bank account controlled by all Defendants. (FAC, ¶ 17.)

These allegations are sufficient to make out a claim for Violation of Penal Code section 496(c).

The court will overrule all of the Defendants’ demurrers to the 4th cause of action.

5th Cause of Action (Breach of Fiduciary Duty)

The FAC alleges Defendants breached their fiduciary duty and duty of loyalty to Plaintiffs, by misappropriating Plaintiffs’ funds, depositing funds until a bank account controlled by Defendants, failing to disclose the Sunnybrook sale, and thereafter misusing the funds as security for financing other properties. (FAC, ¶ 38.)

The elements of a breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach. (Oasis West Realty, LLC v.

Goldman (2011) 51 Cal.4th 811, 820; Stanley v. Richmond, (1995) 35 Cal.App.4th 1070, 1086.)

“[B]efore 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.” (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 221, superseded by statute on other grounds, Californians for Disability Rights v. Mervyn’s, LLC (2006) 39 Cal.4th 223, 227.)

Defendant Lightspeed argues that the FAC alleges no facts to establish a fiduciary duty owed to Plaintiffs, as the only alleged joint venture relationship was between Plaintiffs, Defendant Kazweeny, and Defendant Reeland. (FAC, ¶ 38.)

Plaintiffs contend Defendant Lightspeed is liable as Defendant Kazweeny’s alter ego for the breach of fiduciary duty.

Reverse veil piercing is not available to plaintiffs seeking to pierce the corporate veil to reach corporate assets to satisfy a shareholder’s personal liability. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1513.)

Defendants Kazweeny and Reeland contend that the breach of fiduciary duty claim fails because there are no facts establishing that either of them owed a fiduciary duty to Plaintiffs.

Defendants are correct. The fact that Defendants Kazweeny and Reeland had a contractual relationship with Plaintiffs does not, by itself, create a fiduciary duty. (See Gilman v. Dalby (2009) 176 Cal.App.4th 606, 614 [“Absent [a fiduciary] relationship, a plaintiff cannot turn an ordinary breach of contract into a breach of fiduciary duty based solely on the breach of the implied covenant of good faith and fair dealing contained in every contract.”].)

The court will sustain all of the Defendants’ demurrers to the 5th cause of action.

6th Cause of Action (Fraudulent Concealment)

The FAC alleges Defendants concealed among other things that Defendants had sold the

Sunnybrook Property and used Plaintiffs’ investment funds to purchase other properties. (See FAC, ¶¶ 13, 17, 44.)

“[T]he elements of an action for fraud and deceit based on a concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been 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.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.)

In order to hold a defendant liable for the nondisclosure of facts, a plaintiff must show that the defendant was under a legal duty to disclose those facts. (Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294.)

The duty to disclose may arise in four circumstances: “(1) when the defendant is in a fiduciary relationship with the plaintiff, (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff, (3) when the defendant actively conceals a material fact from the plaintiff and (4) when the defendant makes partial representations but also suppresses some material facts.” (Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 651.)

“If the duty allegedly arose by virtue of the parties’ relationship and defendant’s exclusive knowledge or access to certain facts, . . . the complaint must also include specific allegations establishing all the required elements, including (1) the content of the omitted facts, (2) defendant’s awareness of the materiality of those facts, (3) the inaccessibility of the facts to plaintiff, (4) the general point at which the omitted facts should or could have been revealed, and (5) justifiable and actual reliance, either through action or forbearance, based on the defendant's omission. ‘[M]ere conclusionary allegations that the omissions were intentional and for the purpose of defrauding and deceiving plaintiff[] . . . are insufficient for the foregoing

purposes.’” (Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 43–44, quoting Goodman v. Kennedy (1976) 18 Cal.3d 335, 347.)

Defendants correctly argue that the FAC alleges no facts to support a duty to disclose and the FAC’s conclusory allegations lack the specificity required for fraud cause of action.

While Plaintiffs contend that Defendant Lightspeed is liable as Defendant Kazweeny’s alter ego, as discussed above, reverse veil piercing is not available to Plaintiffs here. (Postal Instant Press, Inc. v. Kaswa Corp., supra, 162 Cal.App.4th at p. 1513.)

The court will overrule all of the Defendants’ demurrers to the 6th cause of action.

7th Cause of Action (Conversion)

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. (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)

“[M]oney cannot be the subject of a conversion action unless a specific sum capable of identification is involved.” (Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. (1996) 49 Cal.App.4th 472, 485.)

“[C]ases recognizing claims for the conversion of money ‘typically involve those who have misappropriated, commingled, or misapplied specific funds held for the benefit of others.’” (Voris v. Lampert (2019) 7 Cal.5th 1141, 1152, quoting PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 394.)

As a result, “’a mere contractual right of payment, without more, will not suffice’ to support a claim for conversion.” (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal. App. 4th 221, 233, quoting Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 452; see also Vu v. California Commerce Club, Inc. (1997) 58 Cal.App.4th 229, 235 (where plaintiffs failed to “identify any specific, identifiable sums that the [defendant]

took from them[, t]hat rendered the generalized claim for money not actionable as conversion.”)

Plaintiffs concede that the 7th Cause of Action should be dismissed.

Therefore, the court will sustain all of the Defendants’ demurrers to the 7th cause of action.

Alter Ego Liability, Aiding and Abetting, and/or Conspiracy Liability

Defendants attack the FAC’s alter ego, aiding and abetting, and conspiracy allegations in their demurrers.

However, “[a] demurrer must dispose of an entire cause of action to be sustained.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

Here, the alter ego, aiding and abetting, and conspiracy allegations do not form an complete cause of action. They are only allegations stated in support of the 1st through 8th Causes of Action.

Therefore, the court will overrule the demurrer to these allegations.

Uncertainty

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers for uncertainty “are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) “[A] demurrer for uncertainty will not be sustained where the facts claimed to be uncertain or ambiguous are presumptively within the knowledge of the demurring party.” (Ching v. Dy Foon (1956) 143 Cal.App.2d 129, 136.)

“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to

amend.” (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 695.)

Here, the FAC is not so poorly pled that Defendants cannot reasonably respond and any ambiguities can be clarified in discovery.

The court will overrule the demurrer on this basis.

Leave to Amend

“It is an abuse of the trial court's discretion to sustain a demurrer without leave to amend if there is a reasonable possibility the plaintiff can amend the complaint to allege any cause of action.” (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 711.)

However, it is the plaintiff's “burden to establish how the complaint can be amended to state a valid cause of action.” (Sanowicz v. Bacal (2015) 234 Cal.App.4th 1027, 1044.) In order to meet this burden, a plaintiff may submit a proposed amended complaint or enumerate facts and demonstrate how those facts establish a cause of action. (See Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 890.)

Nonetheless, “for an original complaint, regardless whether the plaintiff has requested leave to amend, it has long been the rule that a trial court's denial of leave to amend constitutes an abuse of discretion unless the complaint ‘shows on its face that it is incapable of amendment.’” (Eghtesad v. State Farm General Insurance. Co. (2020) 51 Cal.App.5th 406, 411, quoting King v. Mortimer (1948) 83 Cal.App.2d 153, 158; see Cabral v. Soares (2007) 157 Cal.App.4th 1234, 1240 [“Only rarely should a demurrer to an initial complaint be sustained without leave to amend.”].)

As the Court of Appeal has explained: “Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.)

Here, Plaintiffs have requested leave to amend and they have not had a prior opportunity to amend in response to the court’s ruling. Therefore, the court will exercise its discretion and

grant leave to amend.

The parties are reminded that, when leave to amend is granted upon the sustaining of a demurrer or motion to strike, amendments are limited to the issues addressed in the court’s ruling and generally may not include amendments to causes of action not addressed in the ruling or the addition of new causes of action. (See Community Water Coalition v. Santa Cruz County Local Agency Formation Com. (2011) 200 Cal.App.4th 1317, 1329 [“It is the rule that when a trial court sustains a demurrer with leave to amend, the scope of the grant of leave is ordinarily a limited one. It gives the pleader an opportunity to cure the defects in the particular causes of action to which the demurrer was sustained, but that is all.”].)

Motion to Strike

Defendants Ahmed Kazweeny’s; Reeland Investments LLC’s; and Lightspeed Escrow, Inc.’s Motion to Strike Portions of First Amended Complaint, Code of Civil Procedure § 435.5 is GRANTED with 15 days leave to amend as to the allegations and prayer for relief for constructive trust (FAC, ¶ 18, Prayer for Relief, ¶ 4) and punitive damages (FAC ¶¶ 19, 31, 42, 46, and Prayer for Relief¶ 2), and is DENIED as to the allegations as to attorney’s fees and costs (FAC ¶ 19).

If Plaintiffs Karen Sunday & Associates, Inc. and Karen Sunday do not amend the First Amended Complaint within the period of time stated above, Defendant Light Speed Escrow, Inc.; Ahmed Kazweeny; and Reeland Investments LLC shall file an answer or other pleading in response to the remaining causes of action of the First Amended Complaint within 10 days of the expiration of the period of time to amend. (See Cal. Rules of Court rule 3.1320(j).)

Pending Motion

Defendants Ahmed Kazweeny; Reeland Investments LLC; and Lightspeed Escrow, Inc. move to strike allegations and prayers for relief relating to constructive trust, punitive damages, and attorney’s fees and costs, contained in the First Amended Complaint (FAC) filed by Plaintiffs

Karen Sunday & Associates, Inc. (Plaintiff Associates, Inc.) and Karen Sunday (Plaintiff Sunday).

Standard for Motion to Strike

A party may move to 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 supported by the allegations of the complaint. (Code Civ. Proc., § 431.10, subd. (b).)

A party may also request to strike legal conclusions. (Weil & Brown, Cal. Prac. Guide, Civil Proc. before Trial, ¶ 7:179 (2010).) Specifically, conclusory allegations that are not supported by factual allegations in the complaint may be stricken. (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6.)

For example, prayers for relief that lack factual foundation may be stricken from a complaint. (See Turman v. Turning Point of Central Calif., Inc. (2010) 191 Cal.App.4th 53, 63 [trial court properly struck prayer for punitive damages where complaint failed to allege sufficient facts to show that defendant acted with malice, oppression, or fraud].)

The grounds for a motion to strike must appear on the face of the pleading or from matters which the court may judicially notice. (See Code Civ. Proc., § 437.)

However, pleadings are to be construed liberally with a view to substantial justice. (Code Civ. Proc., § 452; Weil & Brown, Cal. Prac. Guide, Civil Proc. before Trial, ¶ 7:197 (2010).)

“In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. In ruling on a motion to strike, courts do not read allegations in isolation.” (Clauson v. Superior

Court (1998) 67 Cal.App.4th 1253, 1255, citations omitted.)

Here, Plaintiffs seek a constructive trust securing “her 50% interest in the profits” Defendants receive from the sale of four properties identified in Paragraph 17 of the FAC, but fail to alleges facts to showing that Plaintiffs are entitled to a 50% interest in the profits from each property.

To obtain punitive damages, a plaintiff must plead and prove one of the following: malice, oppression, or fraud. (See Civil Code, § 3294, subd. (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.” (Civil Code, § 3294, subd. (a)(1).)

“Oppression” means “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” (Civil Code, § 3294, subd. (a)(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.” (Civil Code, § 3294, subd. (a)(3).)

The FAC contains no factual allegations establishing that Defendants acted with malice, oppression or fraud.

Finally, Defendants do not explain why the allegations regarding attorney’s fees and costs should be stricken.

Therefore, the court will grant the motion as to constructive trust and punitive damages, and deny the motion as to attorney’s fees and costs.

Leave to Amend (After Granting Demurrer or Motion to Strike)

In ruling on a motion to strike, the court employs the same liberality to amend as used for demurrers. As long as there is a reasonable

possibility that plaintiffs can cure the defects, leave to amend is appropriate. (See Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 168; Price v. Dames & Moore (2001) 92 Cal.App.4th 355, 360.)

For the reasons stated with respect to Defendants’ demurrers, the court will exercise its discretion and grant leave to amend with respect to the motion to strike.

The parties are reminded that, when leave to amend is granted upon the sustaining of a demurrer or motion to strike, amendments are limited to the issues addressed in the court’s ruling and generally may not include amendments to causes of action not addressed in the ruling or the addition of new causes of action. (See Community Water Coalition v. Santa Cruz County Local Agency Formation Com. (2011) 200 Cal.App.4th 1317, 1329 [“It is the rule that when a trial court sustains a demurrer with leave to amend, the scope of the grant of leave is ordinarily a limited one. It gives the pleader an opportunity to cure the defects in the particular causes of action to which the demurrer was sustained, but that is all.”].)

Defendants shall give notice of these rulings.