Jennifer Broomal as Successor Trustee of the CBR/KMB Family 1999 Trust - Trust A vs. California Department of Financial Protection and Innovation

A public entity is not liable for an injury except as otherwise provided by statute. (Gov. Code, § 815, subd. (a).) Direct tort liability of public entities “must be based on a specific statute declaring them to be liable, or at least creating some specific duty of care, and not on the general tort provisions of Civil Code section 1714. Otherwise, the general rule of immunity for public entities would be largely eroded by the routine application of general tort principles.” (Eastburn v. Regional Fire Authority (2003) 31 Cal.4th 1175, 1183.)

To state a cause of action against a public entity, “every fact essential to the existence of statutory liability must be pleaded with particularity, including the existence of a statutory duty...Duty cannot be alleged simply by stating ‘defendant had a duty under the law’; that is a conclusion of law, not an allegation of fact. The facts showing the existence of the claimed duty must be alleged...Since the duty of a governmental agency can only be created by statute or ‘enactment,’ the statute or ‘enactment’ claimed to establish the duty must at the very least be identified.” (Searcy v.

Hemet Unified School Dist. (1986) 177 Cal.App.3d 792, 802; see, Lopez v. Southern Cal. Rapid Transit Dist. (1985) 40 Cal.3d 780, 795 [Under the Government Tort Claims Act, “all governmental tort liability is based on statute” and “statutory causes of action must be pleaded with particularity.”].)

Although Plaintiff identifies nine statutes in Plaintiff’s opposition, Plaintiff did not identify any statutes in the SAC.

A public entity “is liable for injury proximately caused by an act or omission of an employee of the public entity within the scope of his employment if the act or omission would, apart from this section, have given rise to a cause of action against that employee or his personal representative.” (Gov. Code, § 815.2, subd. (a).) “Except as otherwise provided by statute (including Section 820.2), a public employee is liable for injury caused by his act or omission to the same extent as a private person.” (Gov.

Code, § 820, subd. (a).) However, except as otherwise provided by statute, a public entity is not liable for an injury resulting from an act or omission of an employee of the public entity where the employee is immune from liability. (Gov. Code, § 815.2, subd. (b).) “Except as otherwise provided by statute, a public employee is not liable for an injury resulting from his act or omission where the act or omission was the result of the exercise of the discretion vested in him, whether or not such discretion be abused.” (Id., § 820.2.)

The elements of a negligence cause of action are: (a) a legal duty to use due care; (b) a breach of such legal duty; and (c) the breach as the proximate or legal cause of the resulting injury. (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917.)

Plaintiff alleges Suzuki was negligent in ordering the misappropriation of escrow depositor’s funds by instructing FVE to withdraw $500,000 of FVE’s depositors’/buyers’ purchase money out of FVE’s trust account and deposit it into Integrity’s trust account. (SAC, ¶¶ 66 and 68.) However, Suzuki’s letter did not instruct Nguyen to take money from FVE and deposit it into Integrity’s trust account. (Request for Judicial Notice, Exhibit 1.) Plaintiff did not allege sufficient facts to allege Suzuki was negligent.

Accordingly, DFPI’s demurrer is sustained with 15 days leave to amend.

In DFPI’s reply, DFPI contends the Court need not decide whether Plaintiff timely complied with the Government Claims Act claim presentation requirement because Plaintiff did not state an actionable negligence claim against DFPI. (Reply, 5:11-13.) The Court declines to address whether Suzuki is immune from liability and whether Plaintiff’s claim was timely presented because Plaintiff did not allege sufficient facts to state a cause of action for negligence against Suzuki.

Second cause of action for unconstitutional taking DFPI contends Plaintiff did not allege Plaintiff’s property was taken for a public use or that her property was taken by a government actor.

The parties do not dispute the California and U.S. Constitution make it unlawful for the government to take private property for a public purpose without compensation.

“The words ‘public use,’ in the eighth section of article one of our Constitution, mean a use which concerns the whole community, as distinguished from a particular individual or a particular number of individuals. But it is not necessary that each and every individual member of society should have the same degree of interest in this use, or be personally or

directly affected by it, in order to make it public.” (Gilmer v. Lime Point (1861) 18 Cal. 229, 229.)

The SAC alleges DFPI is an agency of the State of California and that DFPI unlawfully seized money from FVE’s escrow account. (SAC, ¶¶ 2 and 79.) Plaintiff alleges DFPI used the money for its own purposes, converted the majority of the money to pay itself “investigative costs,” and “absconded with the funds.” (Id., ¶¶ 56 and 79.) However, Plaintiff also alleged DFPI used a small portion to pay restitution to victims of the misappropriation. (Id., ¶ 56.) Plaintiff sufficiently alleged public use by a public actor. Accordingly, the demurrer on this ground is overruled.

The Court notes DFPI did not demur to this cause of action on the ground that it is beyond the scope of the Court’s November 10, 2025 Order sustaining DFPI’s demurrer to the cause of action for negligence alleged in Plaintiff’s First Amended Complaint. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)

The case management conference is continued to October 26, 2026 at 10:00 a.m. in Department C27.

DFPI is directed to give notice.

102 2024-01386407 Case Management Conference

Broomall vs. The case management conference is continued to October 26, 2026 at 10:00 a.m. in Fountain Valley Department C27. Escrow, Inc.