Judge: Anne Richardson, Case: 23STCV09436, Date: 2024-04-29 Tentative Ruling

Case Number: 23STCV09436    Hearing Date: April 29, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Pleadings

Plaintiff Daniel Stevenson sues Defendants Louise Voyazis dba Louise Voyazis Interior Design (Voyazis), Louise Voyazis Interior Design (LVID), and Does 1 through 30 pursuant to an August 9, 2023, First Amended Complaint (FAC) alleging claims of (1) Breach of Contract, (2) Fraudulent Inducement, (3) Fraud/Intentional Misrepresentation, (4) Negligent Misrepresentation, (5) Violation of Bus. & Prof. Code, § 7031(b), (6) Unjust Enrichment – Constructive/Resulting Trust, (7) Negligence, (8) Rescission, (9) Money Had and Received, and (10) Accounting.

The claims arise from the following allegations. Defendants were hired to perform design and project management services in Plaintiff Stevenson’s new home, which Defendants either performed sub-standardly or did not perform at all. Defendants’ renovations have run more than $330,000 over budget and caused move-in delays of more than 1.5 years. Moreover, renovation work is ongoing at Plaintiff’s home to rectify Defendants’ mistakes and negligence.

B. Motion Before the Court

On September 25, 2023, Defendants filed a motion to strike (1) the FAC’s second and third causes of action, (2) allegations and prayers in the FAC related to punitive damages, and (3) the FAC’s prayer for attorney’s fees.

On April 9, 2024, Plaintiff Steven filed an opposition to Defendants’ motion to strike.

On April 22, 2024, Defendants filed a reply to Plaintiff’s opposition.

Defendants’ motion to strike is now before the Court.

II. Motion to Strike

A. Legal Standard

The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (a) strike out any irrelevant, false, or improper matter inserted in any pleading; or (b) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc. § 436, subds. (a), (b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)

For the purposes of a motion to strike pursuant to Sections 435 to 437 of the Code of Civil Procedure, the term “pleading” generally means a demurrer, answer, complaint, or cross-complaint, (Code Civ. Proc., § 435, subd. (a)), and an immaterial allegation or irrelevant matter in a pleading entails (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, or (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)(1)-(3), (c)).

B. Analysis

1. Motion to Strike, FAC, Second and Third Causes of Action, Fraudulent Inducement and Fraud/Intentional Misrepresentation: DENIED.

a. Relevant Law

“Fraud in the inducement is a subset of the tort of fraud. It occurs when [1] the promisor knows what he is signing but [2] his consent is induced by fraud, mutual assent is present[,] and a contract is formed, which, by reason of the fraud, is voidable.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294-295, quotations and citations omitted.)

Intentional misrepresentation involves “(1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” (Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.)

Allegations of fraud “must be pled with more detail than other causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 240 (Apollo).) “Every element of the cause of action for fraud must be alleged … factually and specifically[,] and the policy of liberal construction of the pleadings … will not ordinarily be invoked to sustain a pleading defective in any material respect. [Citations.]” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216 (Children’s Television), superseded by statute as stated in Branick v. Downey Savings & Loan Assn. (2006) 39 Cal.4th 235, 242.) A plaintiff pleading fraud must plead facts showing “how, when, where, to whom, and by what means” the allegedly fraudulent representations were tendered. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 (Lazar).) “[G]eneral and conclusory allegations do not suffice.” (Small v. Fritz Cos., Inc. (2003) 30 Cal.4th 167, 184 (Fritz), citations omitted.)

b. Court’s Determination

The Court finds in favor of Plaintiff Stevenson.

Defendants raise two challenges to these claims: (1) the second and third causes of action are duplicative, where only one of these claims can be stated based on a single primary right for fraud; and (2) the FAC insufficiently alleges facts supporting the misrepresentation (falsity) and knowledge of falsity elements of fraud. (Mot., pp. 2-4 at §§ III-IV.)

The Court disagrees on both points.

A defendant may demur to a duplicative cause of action that adds nothing by way of recovery. (Rodrigues v. Campbell Industries (1978) 87 Cal.App.3d 494, 501; accord Award Metals, Inc. v. Superior Court (1991) 228 Cal.App.3d 1128, 1135, opn. mod. Apr. 10, 1991.) However, the Court determines that the second and third causes of action are not duplicative.

The second cause of action is premised on representations by Defendants related to project management questions, the necessary qualifications to perform work in Plaintiff’s home, the completion date for the work, budget confirmation, and budget reconfirmation, as well as misrepresentations by non-party agents Tomas Chihuahua and Alex (last name unknown). (FAC, ¶¶ 136-175; see also FAC, ¶¶ 19 [project management misrepresentations occurred around August 27, 2020, and November 23, 2020; qualification misrepresentations occurred around November 23, 2020], 22 [completion misrepresentation occurred around November 11, 2020], 24 [budget confirmation misrepresentation occurred around December 7, 2020], 26, 28 [budget reconfirmation representation occurred around November 23, 2020], 54 [Tomas and Alex misrepresentations occurred around October 29, 2021].)

In contrast, the third cause of action is premised on ongoing budget reconfirmation representations by Defendants, which were made at a time differing from the misrepresentations discussed in the preceding paragraph. (FAC, ¶¶ 176-185; see FAC, ¶ 49 at page 22 [ongoing budget confirmation misrepresentations occurred on March 10-11, 2022].)

Based on these facts, the second causes of action and third causes are premised on different factual grounds, thus offering different avenues to recovery. It follows that these claims are not duplicative.

Second, the Court determines that Defendants’ falsity and knowledge arguments are unavailing.

To begin with, Defendants hardly elaborate either of these points. (See Mot., 4.) Without that elaboration, Defendants essentially ask that the Court determine whether those allegations are sufficiently stated as to each element of fraud in relation to at least seven sets of Defendants’ alleged misrepresentations.

Turning to the pleadings, the FAC alleges bases for falsity and knowledge relating to Defendants’ alleged misrepresentations. For example, in relation to the qualification misrepresentations, the FAC alleges that Defendants knew they were not properly licensed or otherwise capable to perform the work in Plaintiff’s home but nevertheless make representations to the contrary to Plaintiff to induce Plaintiff to hire them. (FAC, ¶¶ 146.) A review of the FAC shows that there are numerous and detailed assertions alleging knowledge of falsity to sufficiently state these fraud claims at this pleading stage. (For example, FAC, ¶¶ 28, 51, 57, 67, 68, 92.)

Defendants’ motion to strike the FAC’s second and third causes of action is thus DENIED.

2. Motion to Strike, FAC, Punitive Damages: DENIED.

a. Relevant Law

Claims for punitive damages are disfavored in California. (Las Palmas Assocs. v. Las Palmas Center Assocs. (1991) 235 Cal.App.3d 1220, 1258).

“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) 

When the defendant is a corporation, ‘[a]n award of punitive damages … must rest on the malice of the corporation’s employees’” specifically, “the oppression, fraud, or malice perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the corporation,” where a managing agent “include[s] only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy.’” (Wilson v. Southern California Edison Co. (2015) 234 Cal.App.4th 123, 164, citations omitted.)

b. Court’s Determination

The Court adopts its discussion in II.B.1.b. to determine that the alleged misrepresentations in the FAC’s second and third causes of action supports a prayer for punitive damages because the same conduct alleged in those claims, if taken as true, amounts to fraud for punitive damages purposes. The vast majority of the alleged fraudulent misrepresentations were alleged to be by Voyazis herself, who is both a defendant and alleged to be the founder of LVID, the other defendant; moreover, there are agency and alter ego allegations. Thus, the alleged conduct of Voyazis easily meets the managing agent requirement.

Defendants’ motion to strike the FAC’s allegations and prayer for punitive damages is thus DENIED.

3. Motion to Strike, FAC, Attorney’s Fees: GRANTED, with leave to amend.

a. Relevant Law

 “With regard to an award of attorney fees in litigation, California generally follows what is commonly referred to as the ‘American Rule,’ which provides that each party to a lawsuit must ordinarily pay his or her own attorney fees. The American Rule is codified in Code of Civil Procedure section 1021, which states in relevant part: ‘Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties ….’”  (Tract 19051 Homeowners Assn. v. Kemp (2015) 60 Cal.4th 1135, 1142.) California law requires express authorization, by statute or contract, for an attorney fees award to the prevailing party. (Code Civ. Proc., § 1021.) 

b. Court’s Determination

In their motion to strike, Defendants argue that the FAC fails to allege or show a contract between the parties supporting an award of fees.

The Court disagrees but nevertheless grants relief based on Plaintiff’s stipulation to relief.

The FAC specifically alleges that a contract exists between the parties, quoting the contract’s attorney’s fees clause verbatim in the body of the FAC. (TAC, ¶ 30.) This is sufficient for pleading purposes. (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 993 [contract must be pled verbatim in the body of the complaint, be attached to the complaint and incorporated by reference, or be pled according to its legal effect].)

Moreover, while a copy of this contract was not attached as Exhibit B to the FAC, as alleged in paragraph 30, the original Complaint attaches the contract as Exhibit B to that pleading. A review of the Payment Terms section of the contract at page two shows that the parties agreed that the “[d]esigner[, here, Defendants] shall indemnify … client [etc.] … against … loss[es] … [or] expenses, including, but not limited to attorneys’ fees and costs, arising out of, resulting from or in connection with … (c) any noncompliance … attributable to the work.” (Complaint, Ex. B.)

However, in his opposition, Plaintiff Stevenson stated that he “does not oppose this portion of Defendant[]s[’] motion.” (Opp’n, p. 10.)

Defendants’ motion to strike the FAC’s prayer for attorney’s fees is thus GRANTED, with leave to amend. 

III. Conclusion

Defendants Louise Voyazis and Louise Voyazis Interior Design, LLC’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is DENIED in part and GRANTED in part as follows:

(1) DENIED as to striking the First Amended Complaint’s second and third causes of action and the First Amended Complaint’s punitive damages allegations and prayer;

(2) GRANTED as to striking the FAC’s prayer for attorney’s fees, with leave to amend.