CLEANRITE, INC. v. PATEL, ET AL.

complainants allege cross-defendant failed to complete the contract in the amount

LAW AND MOTION CALENDAR JULY 24, 2026

agreed upon ($880,493.85) and overcharged for its work and materials. (Am. Cross-

Compl., ¶¶ 9, 12–13.)

2. Legal Principles

“[A] demurrer challenges only the legal sufficiency of the complaint, not the truth or

the accuracy of its factual allegations or the plaintiff’s ability to prove those allegations.”

(Amarel v. Connell (1998) 202 Cal.App.3d 137, 140.) A demurrer is directed at the face of

the complaint and to matters subject to judicial notice. (Code Civ. Proc., § 430.30,

subd. (a).) All properly pleaded allegations of fact in the complaint are accepted as true, however improbable they may be, but not the contentions, deductions, or conclusions

of facts or law. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Del E. Webb Corp. v.

Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) A judge gives “the complaint a

reasonable interpretation, reading it as a whole and its parts in their context.” (Blank,

supra, 39 Cal.3d at p. 318.)

3. Discussion

3.1. Third C/A for Negligent Economic Interference

Cross-complainants’ theory behind the third cause of action for negligent

interference with prospective economic advantage is that, by failing to timely complete

the agreed-upon work, cross-defendant interfered with cross-complainants’ economic

relationship with its guests due to the lack of motel rooms available for hire.

“The tort of negligent interference with prospective economic advantage is established where a plaintiff demonstrates that (1) an economic relationship existed

between the plaintiff and a third party which contained a reasonably probable future

economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of

the relationship and was aware that if it did not act with due care its actions would

interfere with this relationship and cause plaintiff to lose in whole or in part the

probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the

LAW AND MOTION CALENDAR JULY 24, 2026

relationship was actually interfered with or disrupted and plaintiff lost in whole or in

part the economic benefits or advantage reasonably expected from the relationship.

[Citation.]” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764,

786.)

Cross-defendant claims the amended cross-complaint fails to allege an existing

economic relationship between cross-complainants and a third party.

Cross-complainants argue that the third party need not be specified by name. (Opp.

at 2:9–16 (citing North American Chemical Co., supra, 59 Cal.App.4th at p. 786; J’Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804 (“J’Aire”).)). However, neither of the cases

cited by cross-complainants stands for the proposition that the third party need not be

identified. In both North American Chemical Co. and J’Aire, there was an existing

economic relationship with a third party that was specifically identified.

Cross-complainants further argue that the following allegation in their pleading is

sufficient: “Prior to the damage to the Pine Wood Lodge, it enjoyed a constant and

consistent high level of occupancy of local and tourist patrons and profitability.” The

court, however, is unable to locate this allegation in the amended cross-complaint

(cross-complainant’s opposition brief cites to “Second Amended Complaint pp. 3:15-

18”). Additionally, such allegation does not identify an existing relationship with any

specific third party. At most, cross-complainants have alleged “a hope for an economic

relationship and a desire for future benefit” from “a class of as yet unknown patrons.” (See, Blank, supra, 39 Cal.3d at p. 330, 331.)

The court sustains cross-defendant’s demurrer with leave to amend.

3.2. Fourth C/A for Fraudulent Nondisclosure

“ ‘The elements of fraud ... are: (a) misrepresentation (false representation,

concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to

defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’ ” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638, quoting 5 Witkin, Summary of Cal.

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Law (9th ed. 1988), § 676, p. 778.) “In California, fraud must be pled specifically; general

and conclusory allegations do not suffice. [Citations.] ... This particularity requirement

necessitates pleading facts which show how, when, where, to whom, and by what

means the representations were tendered. [Citation.]” (Lazar, supra, 12 Cal.4th at

p. 645 [internal quotations omitted].) Further, “when a plaintiff asserts fraud against a

corporation, the plaintiff must ‘allege the names of the persons who made the allegedly

fraudulent representations, their authority to speak, to whom they spoke, what they

said or wrote, and when it was said it was written.’ [Citation.]” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

Cross-defendant claims the amended cross-complaint fails to allege fraud with

particularity. In their opposition brief, cross-complainants state, “[c]ross defendants [sic]

have not specified the particular elements that they assert are not pled with specificity.

The necessary elements have been alleged, see, Amended Complaint, pp 7:1-10, 3:9-23,

EX ‘A’, 6:3-24.” (Opp. at 2:19–22.)

Having read and considered the entire amended cross-complaint, the court agrees

with cross-defendant that cross-complainants fail to allege fraud with the required

particularity. The relevant allegations are found in Paragraph 7 of the amended cross-

complaint: “[Cross-defendant] contacted Cross-Complainants and represented that it

was competent and skilled in remediating commercial and hospitality properties similar

to the Pine Wood Lodge and was ready to begin immediately and to completely restore the property in its pre-fire condition within the time limits required by Cross-Complaints

[sic] and within budget.” (Am. Cross-Compl., ¶ 7.) Cross-defendant is a corporation. The

amended cross-complaint does not allege “the names of the persons who made the

allegedly fraudulent representations, their authority to speak, to whom they spoke,

what they said or wrote, and when it was said it was written.” (Cansino, supra, 224

Cal.App.4th at p. 1469.) The court sustains the demurrer to this cause of action with leave to amend.

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TENTATIVE RULING # 2: THE DEMURRER TO THE THIRD AND FOURTH CAUSES OF

ACTION IN CROSS-COMPLAINANTS’ FIRST AMENDED COMPLAINT IS SUSTAINED WITH

LEAVE TO AMEND. NO HEARING ON THIS MATTER WILL BE HELD (LEWIS v. SUPERIOR

COURT (1999) 19 CAL.4TH 1232, 1247), UNLESS A NOTICE OF INTENT TO APPEAR AND

REQUEST FOR ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE

COURT’S WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 573-3042 BY 4:00 P.M.

ON THE DAY THE TENTATIVE RULING IS ISSUED. NOTICE TO ALL PARTIES OF AN INTENT

TO APPEAR MUST BE MADE BY TELEPHONE OR IN PERSON. PROOF OF SERVICE OF SAID NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING.