Fernando Hernandez et al vs Peter Singler et al

On or about December 13, 2024, plaintiffs Fernando Hernandez (“Hernandez”), Ngoc Nguyen (“Ngoc”), Huyen Nguyen (“Audrey”), and Ha Thanh Hoang (“Kelly”) (collectively, “Buyers”), on the one hand, and defendant The Wicked Group Inc. (“Wicked” or “Seller”), on the other, entered into a Purchase and Sale Agreement (“Purchase Agreement”) of the business assets of a business which operated at the Property. (FAC, ¶21 and Exh. B). The Purchase Agreement was subject to Buyers obtaining an assignment of the lease for the Property from defendant Matthew Graham McClean (“McClean”), the sole shareholder and director of defendant Wicked. (FAC, ¶¶11, 19, and 21).

On December 19, 2024, Buyers and Wicked entered into a First Amendment to Purchase and Sale Agreement (“First Amendment”) pursuant to which Buyers were entitled to an assignment of the lease for the Property. (FAC, ¶22 and Exh. C).

On December 20, 2024, each of the Buyers wired $18,000 or a total of $72,000 into the trust account of defendant Peter A. Singler (“Singler”), attorney for defendants Wicked and McClean. (FAC, ¶¶9 and 23). Defendant Singler was the escrow holder for Buyers and Wicked/ McClean. (FAC, ¶9).

Pursuant to the First Amendment, Buyers were entitled to a full or partial refund if the lessor refused to assign the lease for the Property. (FAC, ¶24). The Property’s lessor refused to assign the lease to Buyers through no act, fault, or contribution of Buyers. (Id.) The Property’s lessor refused to assign the lease to Buyers because the lessee, defendant McClean, owed $38,000 in back rent. (Id.). Defendant McClean did not disclose this arrearage to Buyers. (Id.) In addition, the Property’s lessor refused to assign the lease to Buyers unless the lease was amended to include an “early termination” provision giving the lessor the unconditional right to terminate the lease prior to its stated termination date. (FAC, ¶25).

On January 16, 2025, Buyers’ agent emailed defendant Singler instructing Singler not to release the escrowed funds because, among other things, the Property lessor had not assigned the lease to Buyers. (FAC, ¶26).

On or about January 24, 2025, defendant Singler disbursed the escrow funds to his client(s) and himself while there was an unresolved dispute over the rights to the escrow funds, without the Buyers’ consent, and in contravention of Buyers’ specific instructions. (FAC, ¶27).

On May 22, 2025, Buyers made a written demand to defendant Singler for an accounting of the $72,000 deposited to defendant Singler’s trust account. (FAC, ¶28). Defendant Singler responded stating, “request denied.” (Id.).

On May 27, 2025, Buyers made a written demand to defendants Singler and McClean to provide Buyers with an assignment of the lease, but defendants Singler, McClean, and Wicked have failed and refused to deliver to Buyers an assignment of the lease. (FAC, ¶29).

On May 27, 2025, Buyers made a written demand to defendant Singler for a return of their $72,000.00 but defendant Singler has failed and refused to return the money to Buyers. (FAC, ¶30). Also on May 27, 2025, Buyers made a written demand to defendant Singler for all escrow instructions regarding disbursement of the $72,000.00 held in defendant Singler’s trust account, but defendant Singler failed and refused to provide Buyers with all escrow instructions. (FAC, ¶31).

On June 2, 2025, Buyers filed a complaint against defendants Singler and McClean asserting causes of action for: (1) Breach of Fiduciary Duty (2) Conversion (3) Constructive Fraud

On July 28, 2025, plaintiff Buyers and Teriyaki filed the now operative FAC adding defendants Wicked, Legacy, William M. Aboumrad (“Aboumrad”)2, and Grail Marie Nitsch (“Nitsch”)3 and asserting causes of action for: (1) Breach of Fiduciary Duty of Escrow Holder (2) Conversion (3) Rescission (4) Negligence of Agent (5) Breach of Fiduciary Duty of Agent (6) Constructive Fraud

On September 2, 2025, defendants Singler and McClean (collectively, “Moving Defendants”) filed the motion now before the court, a demurrer to the entirety of plaintiffs’ FAC.

II. LEGAL STANDARD Pursuant to Code of Civil Procedure section 430.10, a party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e)). A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn)). When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078). In ruling on a demurrer, the Court treats it “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Piccinini v.

Cal. Emergency Management Agency (2014) 226 Cal.App.4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank)). When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab,

2 Defendant Aboumrad is alleged to be the Chief Executive Officer, Chief Financial Officer, and Managing Broker of defendant Legacy. (FAC, ¶13). 3 Defendant Nitsch is alleged to be a real estate agent employed by and/or affiliated with defendant Legacy. (FAC, ¶14).

Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315). As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.).

In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian, supra, 116 Cal.App.4th at 994). “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905). “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, at p. 747). “A demurrer tests only the legal sufficiency of the pleading.

It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214).

Code of Civil Procedure section 430.10(f), also allows a demurrer to a complaint on the ground the pleading is uncertain, ambiguous, or unintelligible. (Code Civ. Proc., § 430.10, subd. (f); Beresford Neighborhood Assn. v. City of San Mateo (1989) 207 Cal.App.3d 1180, 1191)). A demurrer based on uncertainty is disfavored and will be strictly construed even when the pleading is uncertain in some respects. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616). A demurrer for uncertainty may be sustained when a defendant cannot reasonably determine to what he or she is required to respond.

For example, when a plaintiff joins multiple causes of action as one, fails to properly identify each cause of action, or fails to state against which party each cause of action is asserted if there are multiple defendants, a complaint is uncertain. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2). Code of Civil Procedure section 430.10, subdivision (d) provides that a demurrer may be brought on grounds of misjoinder of parties. (Code Civ. Proc., § 430.10, subd. (d)).

But “a defendant may not make allegations of defect or misjoinder of parties in the demurrer if the pleadings do not disclose the existence of the matter relied on; such objection must be taken by plea or answer.” Harboring Villas Homeowners Association v. Superior Court (1998) 63 Cal.App.4th 426, 429. Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348). The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v.

YouTube, LLC (2015) 244 Cal.App.4th 118, 226). However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

III. DEMURRER ANALYSIS A. FAILURE TO EXHAUST ARBITRATION REMEDIES Initially, Moving Defendants demur to plaintiffs’ entire FAC on the ground that plaintiffs have failed to exhaust arbitration remedies. In Charles J. Rounds Co. v. Joint Council of Teamsters No. 42 (1971) 4 Cal.3d 888, 899 (Rounds) the California Supreme Court said:

Specifically, where the only issue litigated is covered by the arbitration clause, and where plaintiff has not first pursued or attempted to pursue his arbitration remedy, it should be held that (1) plaintiff has impliedly waived his right to arbitrate, such that defendant could elect to submit the matter to the jurisdiction of the court; (2) defendant may also elect to demur or move for summary judgment on the ground that the plaintiff has failed to exhaust arbitration remedies; and (3) defendant may also elect to move for a stay of proceedings pending arbitration if defendant also moves to compel arbitration.

Moving Defendants point to a provision in the Purchase Agreement (attached as Exhibit B to the FAC and incorporated by reference) which states, in relevant part, “Any dispute relating to or arising out of the interpretation or enforcement of this Agreement will be submitted to binding arbitration and the parties specifically waive their rights to a jury trial.”

In opposition, plaintiffs raise a number of issues concerning the enforceability of this arbitration clause identified by the Moving Defendants. Preliminarily, plaintiffs assert the arbitration clause here cannot be enforced by the Moving Defendants [Singler and McClean] as neither are a party to the Purchase Agreement. On its face, the Purchase Agreement is between the Buyers and defendant Wicked. Defendant Wicked has not yet appeared in this action. As plaintiffs point out, “Generally speaking, one must be a party to an arbitration agreement to be bound by it or invoke it.” (JSM Tuscany, LLC v.

Superior Court (2011) 193 Cal.App.4th 1222, 1236 (JSM)). Even so, the JSM decision acknowledges: “There are exceptions to the general rule that a nonsignatory to an agreement cannot be compelled to arbitrate and cannot invoke an agreement to arbitrate, without being a party to the arbitration agreement.” [Citations omitted].

One pertinent exception is based on the doctrine of equitable estoppel. [Citations omitted.] Under that doctrine, as applied in “both federal and California decisional authority, a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” [Citations omitted.] “By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.” [Citations omitted.] “The rule applies to prevent parties from trifling with their contractual obligations.” [Footnote – Where the equitable estoppel doctrine applies, the nonsignatory has a right to enforce the arbitration agreement. [Citation omitted.]

In such cases, the nonsignatory is not a “third party” within the meaning of Code of Civil Procedure section 1281.2, subdivision (c), and that provision simply does not apply. [Citation omitted.]] [Citation.] (JSM, supra, 193 Cal.App.4th at pp. 1236-1237).

Plaintiff acknowledges the exception exists but contends it does not apply here because, as an example, the first cause of action is directed against Singler for his breach of fiduciary duty as an escrow agent not for a breach of the contract (Purchase Agreement/ First Amendment). Yet, the FAC alleges “Singler was an ‘escrow holder’ under Section II.A of the Purchase Agreement and under Section 2.a of the First Amendment.” (FAC, ¶39) . Thus, it would appear that plaintiffs rely upon a provision of the subject contract in order to establish defendant Singler’s liability; i.e., defendant Singler’s liability is founded upon and necessarily intertwined with an interpretation of the contract (Purchase Agreement) obligations.

Although not discussed by Plaintiffs in their opposition, McClean’s liability here also appears to be founded upon and necessarily intertwined with obligations found in the Purchase Agreement (McClean alleged to be lessee of Property where business assets, subject of the Purchase Agreement, were located; McClean alleged to be sole shareholder, director, CEO, Secretary, and CFO of defendant Wicked; McClean executed Purchase Agreement as President of Wicked; McClean/ Wicked alleged to have “wrongfully received” a portion of the $72,000.00 plaintiffs paid pursuant to the Purchase Agreement/ First Amendment).

In the court’s view, it is not clear from the face of the pleading that “ the only issue litigated is covered by the arbitration clause” as the Rounds court requires in order for a demurrer based on failure to exhaust administrative remedies to apply. (See also Badgley v. Van Upp (1993) 20 Cal.App.4th 218, 221—“Where the complaint ‘raises issues not susceptible to arbitration’ the defendant ‘may not merely assert failure to arbitrate an issue as an affirmative defense.’ Rather, the defendant must demand arbitration and seek a stay of the litigation.” [Citations omitted]).

If there is a dispute as to the enforceability of an agreement to arbitrate, an evidentiary hearing is required. The facts are to be proven by affidavit or declaration and documentary evidence with oral testimony taken only in the court’s discretion. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1157). “In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Rosenthal v.

Great Western Finance Securities Corp. (1996) 14 Cal.4th 394, 413-414). Consequently, moving party/Defendants’ demurrer to plaintiffs’ FAC on the ground that plaintiffs have failed to exhaust administrative remedies is OVERRULED without prejudice4 to Moving Defendants pursuing the right to compel arbitration through other procedures.

B. UNCERTAINTY Moving Defendants contend the FAC is subject to demurrer for being uncertain in that each claim is asserted by all plaintiffs including plaintiff Teriyaki. Moving Defendants argue that plaintiff Teriyaki did not come into existence until December 19, 2024. However, the date plaintiff Teriyaki came into existence is a fact extrinsic to the FAC. Moving Defendants contend, nevertheless, that it is a fact that this court can take judicial notice of. Moving Defendants cite Code of Civil Procedure section 430.70 which states, “When the ground of demurrer is based on a matter of which the court may take judicial notice pursuant to Section 452 or 453 of the Evidence Code, such matter shall be specified in the demurrer, or in the supporting points and authorities for the purpose of invoking such notice, except as the court may otherwise permit.”

Even so, Moving Defendants’ request for judicial notice is procedurally defective in that it fails to comply with California Rules of Court, rule 3.1113, subdivision (l) which states, “Any request for judicial notice must be made in a separate document....” Defendant Tim’s request fur ther violates California Rules of Court, rule 3.1306, subdivision (c) which states, “A party requesting judicial notice of material under Evidence Code section 452 or 453 must provide the court and each party with a copy of the material.” Since Moving Defendants have not complied with these Rules of Court, their request for judicial notice is DENIED.

Moving Defendants contend further that the FAC is uncertain because plaintiff Teriyaki is not a party to the contracts (Purchase Agreement/ First Amendment) and thus lack standing. The court agrees that plaintiffs’ FAC is made confusing due to plaintiffs’ failure to comply with California Rules of Court, rule 2.112 which states, “Each separately stated cause of action ... must specifically state ... [t]he party asserting it if more than one party is represented on the pleading (e.g., ‘by plaintiff Jones’); and [t]he party or parties to whom it is directed (e.g., ‘against defendant Smith’).” [Plaintiffs acknowledge as much in conceding that the third cause of action is not directed against the Moving Defendants.]

Accordingly, Moving Defendants’ demurrer to plaintiffs’ FAC on the ground that the pleading is uncertain [Code Civ. Proc., §430.10, subd. (f)] is SUSTAINED with 10 days’ leave to amend.

C. BREACH OF FIDUCIARY DUTY Plaintiffs’ first cause of action, entitled “Breach of Fiduciary Duty of Escrow Holder,” is directed at defendant Singler only. “In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. The absence of any one of these elements is fatal to the cause of action.” (Brown v. California Pension Administrators & Consultants, Inc. (1996) 45 Cal.App.4th 333, 347 – 348). “While breach of fiduciary duty is a question of fact, the existence of legal duty in the first instance and its scope are questions of law.” (Kirschner Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d 784, 790; internal citations omitted).

4 As Rounds specifically allows a defendant to demur on the grounds that plaintiff failed to exhaust administrative remedies, the court rejects plaintiffs’ argument in opposition that the Moving Defendants have waived their right to compel arbitration.

The FAC alleges, in relevant part, “Defendant SINGLER agreed to act as an escrow or stakeholder for his clients (i.e., defendant McCLEAN and . . . WICKED) and a third party (i.e., plaintiffs Buyers) with respect to the Funds.” (FAC, ¶33.) In demurring, defendant Singler contends this allegation is contradicted by provisions of the Purchase Agreement/ First Amendment which are attached to the FAC and incorporated by reference. Specifically, defendant Singler directs the court’s attention to section I(C) of the Purchase Agreement defining “Seller’s Attorney” to mean “Peter A. Singler/ Singler PLC” and section XIV(D)(1) of the Purchase Agreement which states, “Brokers. . . . Seller is represented by Peter A. Singler, Singler, PLC. Although a licensed broker, Mr. Singler is serving solely as Seller’s legal counsel and Seller will be solely responsible for his compensation.”

“Where an ambiguous contract is the basis of an action, it is proper, if not essential, for a plaintiff to allege its own construction of the agreement. So long as the pleading does not place a clearly erroneous construction upon the provisions of the contract, in passing upon the sufficiency of the complaint, we must accept as correct plaintiff’s allegations as to the meaning of the agreement.” (Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239).

The provisions cited by defendant Singler are not read in isolation. The First Amendment states, “The Purchase Price will be sent via wire or ACH, in full, to Seller’s Attorney’s trust account, no later than December 20, 2024. The Purchase Price is agreed to be fully earned, and no portion will be refunded to Buyer except as specifically provided immediately below.” “If Landlord refuses to assign the Lease to Buyers, through no act, fault or contribution of Buyers, then: (i) the Purchase Price, less $10,000, will be retained in Seller’s Attorney’s trust account; (ii) Seller, after reasonable attempts to mitigate, will determine its damages due to Buyer’s breaches. If such damages, after giving effect to any mitigation (including the proceeds of a sale to a third party), are less than the amount retained, Seller will return such excess to Buyers.”

Plaintiffs go on to allege their interpretation of this language at paragraph 39 – “Said $72,000 was to be delivered to Seller when Buyers received an assignment of the Lease. Buyers did not receive an assignment of the Lease.” In the court’s view, looking at the provisions relied upon by plaintiffs and defendant Singler, plaintiffs’ interpretation does not place a clearly erroneous construction of the contract provisions. Defendant Singler acknowledges that escrow involves the deposit of money with a third party.

The parties to the Purchase Agreement/ First Amendment are Buyers and Wicked. Singler is reasonably construed under the contract to be a third party with whom money is being deposited. The contract language can also reasonably be construed to impose a condition upon the delivery of that money, i.e., if5 Landlord refuses to assign the Lease to Buyers through no act, fault, or contribution of Buyers. Defendant Singler’s denial that the specified condition(s) occurred involves defendant Singler’s interpretation of the contract provisions and the events; it does not support demurrer.

Defendant Singler also denies he was an escrow agent under the circumstances alleged. However, “ the existence or extent of an agency relationship is a question of fact.” (Universal Bank v. Lawyers Title Ins. Corp. (1997) 62 Cal.App.4th 1062, 1066). Plaintiffs specifically allege defendant Singler agreed to act as an escrow [agent] and such an agreement can also be implied from plaintiffs’ allegation that Buyers wired $72,000 into Singler’s trust account and defendant Singler’s subsequent disbursement of those funds to his client(s) and himself which suggests defendant Singler accepted the role.

5 “No particular form of language is necessary to make an event a condition, although such words as ‘on condition that,’ ‘provided that’ and ‘if’ are often used for this purpose. An intention to make a duty conditional may be manifested by the general nature of an agreement, as well as by specific language. Whether the parties have, by their agreement, made an event a condition is determined by the process of interpretation.” (Rest.2d of Contracts, §226, Comment a; see also 1 Witkin, Summary of California Law (10th ed. 2010) Contra cts, §777— “The words ‘provided’ and ‘upon the condition’ are appropriate methods of stating express conditions.”).

Accordingly, defendant Singler’s demurrer to the first cause of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of fiduciary duty is OVERRULED.

D. CONVERSION “Conversion is the wrongful exercise of dominion over the property of another. 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. Conversion is a strict liability tort. The foundation of the action rests neither in the knowledge nor the intent of the defendant. Instead, the tort consists in the breach of an absolute duty; the act of conversion itself is tortious.

Therefore, questions of the defendant’s good faith, lack of knowledge, and motive are ordinarily immaterial. [Citations.]” (Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066, [80 Cal.Rptr.2d 704]). The basis of a conversion action “ ‘rests upon the unwarranted interference by defendant with the dominion over the property of the plaintiff from which injury to the latter results. Therefore, neither good nor bad faith, neither care nor negligence, neither knowledge nor ignorance, are the gist of the action.’ [Citations.]” (Ibid.). (Los Angeles Federal Credit Union v.

Madatyan (2012) 209 Cal.App.4th 1383, 1387; see also CACI, No. 2100).

Moving Defendants contend the FAC and attached exhibits definitively establish that the $72,000 was fully earned and thus plaintiffs had no longer had ownership or right to possession of those funds. Moving Defendants’ denial of the events as alleged and Moving Defendants’ interpretation of the contract provisions does not persuade this court to find plaintiffs’ interpretation and application of the contract provisions to be clearly erroneous.

Likewise, Moving Defendants’ assertions with regard to damages and/or causation involve their own interpretation or assertion of events which transpired; they are not a proper basis for demurrer.

Accordingly, Moving Defendants’ demurrer to the second cause of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for conversion is OVERRULED.

E. RECISSION The third cause of action seeks rescission of the Purchase Agreement and First Amendment. Moving Defendants contend plaintiffs cannot seek rescission against them as they are not parties to either of these contracts. Although the FAC clearly directs this third cause of action at defendants Singler and McClean, plaintiffs concede in opposition that this third cause of action “is only against [defendant Wicked].”

Accordingly, Moving Defendants’ demurrer to the third cause of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for rescission is SUSTAINED WITHOUT LEAVE TO AMEND.

F. CONSTRUCTIVE FRAUD Constructive fraud is defined by Civil Code section 1573 to consist of, “any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or anyone claiming under him, by misleading another to his prejudice, or to the prejudice of anyone claiming under him; or, any such act or omission as the law specially declares to be fraudulent, without respect to actual fraud.” (See also CACI, No. 4111). “In addition to the traditional liability for intentional or actual fraud, a fiduciary is liable to his principal for constructive fraud even though his conduct is not actually fraudulent.

Constructive fraud is a unique species of fraud applicable only to a fiduciary or confidential relationship.” (Salahutdin v. Valley of California, Inc. (1994) 24 Cal.App.4th 555, 562). “[A]s a general principle constructive fraud comprises any act, omission or concealment involving a breach of legal or equitable duty, trust or confidence which results in damage to another even though the conduct is not otherwise fraudulent. Most acts by an agent in breach of his fiduciary duties constitute constructive fraud.

The failure of the fiduciary to disclose a material fact to his principal which might affect the fiduciary’s motives or the principal’s decision, which is known (or should be known) to the fiduciary, may constitute constructive fraud. Also, a careless misstatement may constitute constructive fraud even though there is no fraudulent intent.” (Ibid.).

Moving Defendants demur by arguing that they did not owe a fiduciary duty to plaintiffs. For the reasons discussed above in connection with the first cause of action (breach of fiduciary duty), plaintiffs have stated sufficient allegations to give rise to an escrow agent relationship between plaintiff Buyers and defendant Singler.

However, as to defendant McClean, the court does not agree that plaintiffs have sufficiently alleged defendant McClean owed plaintiffs a fiduciary duty. Plaintiffs argue in opposition that defendant McClean made certain representations in the Purchase Agreement and therefore had an affirmative duty not to mislead the plaintiffs. However, the Purchase Agreement/ First Amendment is entered into between plaintiff Buyers and defendant Wicked. Defendant McClean executed the contracts as the President of Wicked, not in his own individual capacity. “[A] corporation . . . may act only through its officers, agents, and employees.” (Burdette v. Carrier Corp. (2008) 158 Cal.App.4th 1668, 1689).

Consequently, defendant Singler’s demurrer to the sixth cause of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for constructive fraud is OVERRULED.

Defendant McClean’s demurrer to the sixth cause of action of plaintiffs’ FAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for constructive fraud is SUSTAINED with 10 d ays’ leave to amend.

IV. CONCLUSION Based on the foregoing, moving party/Defendant’s demurrer to plaintiffs’’ FAC is SUSTAINED, in part, and OVERRULED in part as follows: (A) Failure to Exhaust Administrative Remedies is OVERRULED without prejudice; (B) Uncertainty is SUSTAINED with 10 days’ leave to amend; (C) Breach of Fiduciary Duty is OVERRULED; (D) Conversion is OVERRULED; (E) Recission is SUSTAINED WITHOUT LEAVE TO AMEND; (F) Constructive Fraud, defendant Singler’s demurrer to the sixth cause of action of plaintiffs’ FAC is OVERRULED. Defendant McClean’s demurrer to the sixth cause of action of plaintiffs’ FAC is SUSTAINED with 10 days’ leave to amend. The Court will prepare the formal Order.

MOTION FOR SANCTIONS (Line #4) I. BACKGROUND Before this Court is Defendant Peter Singler and Matthew Graham McClean’s (collectively “Defendants”) motion for sanctions in the amount of $45,353.00 against Fernando Hernandez, Ngoc Thamhon Nguyen, Huyen Nguyen, Ha Thanh Hoang, and Teriyaki City Grill Santa Clara LLC (collectively “Plaintiffs”) and Plaintiffs’ attorneys of record, Matthew A. Crosby and Michael C. Crosby under Code of Civil Procedure section 128.7 and 128.5. Defendant filed the motion for sanctions on October 6, 2025, the motion was accompanied by a proof of service indicating electronic service.

Plaintiffs oppose the motion and filed opposition papers on May 6, 2026.

The Court has carefully reviewed the following moving papers: notice of motion (totaling 2 pages); memorandum of points and authorities regarding request for sanctions (totaling 18 pages); Declaration of Peter Singler and attached Exhibits marked as B, C, D, E-1, E-2, E-3, and 1 (totaling 47 pages); proof of service (totaling 3 pages); Plaintiffs opposition to sanctions (totaling 11 pages); Declaration of Matthew A. Crosby (totaling 6 pages); Defendant’s reply brief (totaling 2 pages); and the pleadings.

II. LEGAL STANDARD A. PROCEDURAL REQUIREMENT Code of Civil Procedure section 128.7(c)(1) requires that a motion for sanctions brought under section 128.7 to be made separately from other motions and that notice of the motion must be served, but not filed with the Court, unless, within 21 days after service of the motion, the challenged paper is not withdrawn. This 21-day time period is known as a "safe harbor" period and its purpose is to permit an offending party to avoid sanctions by withdrawing the improper pleading during the safe harbor period. (Li v. Majestic Industry Hills LLC (2009) 177 Cal. App. 4th 585, 591). This permits a party to withdraw a questionable pleading without penalty, thus saving the court and the parties time and money litigating the pleading as well as the sanctions request. (Id.).

Here, the proof of service of the motion for sanctions under section 128.7 and 128.5 indicate that the notice of the motion was served and filed with the Court on the same date on October 6, 2025. However, Defendants counsel, Peter Singler attests in his Declaration that he complied with the 21-day safe harbor period pursuant to section 128.7(c)(1). Mr. Singler attests that he warned Plaintiffs’ counsel on several occasions regarding the frivolous claims in the Complaint and directed Plaintiffs’ counsel to review the contract at issue and emails from Plaintiffs. (Declaration of Singler, at p.2; Exhibit E-1-E-3).

On July 28 2025, Plaintiffs’ counsel rejected the request. Defense counsel stated he served a copy of the motion for sanctions more than 21-days before service. Nearing the last day, Plaintiffs amended and filed a FAC, which reset the process. (Id. at p. 2-3). The demurrer was not scheduled to be heard until May 19, 2026, and the defendants served this current motion and waited an additional 21-days before filing.

The Court finds that the procedural 21 safe harbor period has been met and will weigh the substance of the motion.

B. SUBSTANTIVE REQUIREMENT Pursuant to Code of Civil Procedure section 128.5: “A trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous6 or solely intended to cause unnecessary delay.” (Code Civ. Proc., § 128.5, subd. (a)). If warranted, the court may award to the party prevailing on the motion the reasonable expenses and attorney’s fees incurred in presenting or opposing the motion. (Id., subd. (f)(1)(C)). “In determining what sanctions, if any, should be ordered, the court shall consider whether a party seeking sanctions has exercised due diligence.” (Id., subd. (f)(1)).

Pursuant to Code of Civil Procedure section 128.7: “Every pleading, petition, written notice of motion, or other similar paper shall be signed by at least one attorney of record in the attorney’s individual name, or, if the party is not represented by an attorney, shall be signed by the party. Each paper shall state the signer’s address and telephone number, if any. Except when otherwise provided by law, pleadings need not be verified or accompanied by affidavit. An unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to the attention of the attorney or party.” (Code Civ. Proc., § 128.7, subd. (a).)

“By presenting to the court, whether by signing, filing, submitting, or later advocating, a pleading, petition, written notice of motion, or other similar paper, an attorney or unrepresented party is certifying that to the best of the

6 The term “frivolous” is defined as “totally and completely without merit or for the sole purpose of harassing an opposing party.” (Code Civ. Proc., § 128.5, subd. (b)(2)).

person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following conditions are met: (1) It is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

(2) The claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.

(3) The allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.

(4) The denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on a lack of information or belief. (Code Civ. Proc., § 128.7, subd. (b)).

If the court determines that subdivision (b) has been violated, the court may “impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation. In determining what sanctions, if any, should be ordered, the court shall consider whether a party seeking sanctions has exercised due diligence.” (Id., subd. (c); Eichenbaum v. Alon (2003) 106 Cal App 4th 967, 976)). Section 128.7 does not require a finding of subjective bad faith; instead it requires only that the Court find that the conduct be objectively unreasonable. (In re Marriage of Reese & Guy (1999) 73 Cal. App. 4th 1214, 1221).

A court may impose sanctions under section 128.7 if it concludes a pleading was filed for an improper purpose or was indisputably without merit, either legally or factually. (Bucur v. Ahmad (2016) 244 Cal.App.4th 175, 189– 190). A claim is factually frivolous if it is “not well grounded in fact” and is legally frivolous if it is “not warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law.” (Id.). The moving party bears the burden of showing that the party’s conduct in asserting the claim was objectively unreasonable. (Id.).

A claim is objectively unreasonable if “any reasonable attorney would agree that [it] is totally and completely without merit.” (Id.). However, “section 128.7 sanctions should be ‘made with restraint’ [Citation], and are not mandatory even if a claim is frivolous.” (Peake v. Underwood (2014) 227 Cal.App.4th 428. at 448).

Section 128.7 was enacted by the Legislature based on rule 11 of the Federal Rules of Civil Procedure (28 U.S.C.), as amended in 1993 (rule 11). (Musaelian v. Adams (2009) 45 Cal.4th 512, 518, fn. 2.) Accordingly, federal case law construing rule 11 is persuasive authority on the meaning of section 128.7. (Guillemin v. Stein (2002) 104 Cal.App.4th 156, 168). Under rule 11, even though an action may not be frivolous when it is filed, it may become so if later-acquired evidence refutes the findings of a prefiling investigation and the attorney continues to file papers supporting the client’s claims. (Childs v.

State Farm Mut. Auto. Ins. Co. (5th Cir.1994) 29 F.3d 1018, 1025). As a result, a plaintiff's attorney cannot “just cling tenaciously to the investigation he had done at the outset of the litigation and bury his head in the sand.” (Id.). This requires an attorney to conduct a reasonable inquiry to determine if his or her client’s claim was well-grounded in fact and to take into account the adverse party’s evidence. (Id.).

III. ANALYSIS Here, Defendants seek sanctions in the amount of $45,353.00 against the Plaintiffs and Plaintiffs’ counsel of record for filing an improper, factually and legally frivolous FAC that lacks evidentiary supports and violates the requirements imposed by section 128.7(b) and repeated filing of baseless complaints requiring Defendants to incur attorney’s fees. Defendants assert that Plaintiffs acted in bad faith or that Plaintiffs’ tactical actions seeking a payout by an insurance carrier warrant sanctions. (Defendants motion, at p. 4-5).

Defendants raise several issues that attack Plaintiffs’ FAC, including but not limited to: allegations that Plaintiffs breached the agreement; Defendant Singler owed no fiduciary duty to Plaintiffs as he was exclusively TWG’s attorney; Defendant McClean was not party of the Contract and thus had no duty to disclose; and Plaintiffs request to reinstate the Contrast and subsequent actions to move forward with closing despite a breach of Contract. Despite contending that Plaintiffs FAC is baseless, Defendants emphasize that all of Plaintiffs’ claims are subject to a mandatory arbitration provision stated within the Contract. (Id.).

Plaintiffs did not comply with the arbitration provision before filing this action. (Id.). Defendants have filed demurrers on this case and expended significant attorney’s fees and cost as a result and seeks sanctions for Plaintiffs conduct which defense deserves as frivolous, bad faith, and tactical to drive up defense costs. (Id.). Defense counsel attest that through August 31, 2025, he spent 32 hours attempting to meet and confer, research review, manage his staff in preparation of the demurrer to the original complaint and motion for sanctions. (Declaration of Singler, at p. 7).

Mr. Singler spent an additional 18.7 hours repeating this process for the FAC and estimates to likely spend another 6 hours in reviewing opposition briefs, preparing a reply brief, and appearing in court. (Id.). Mr. Singler’s hourly rate for this matter is $750.00. Defense also wrote off 11 hours for an Neema Desai who has an hourly rate of $175.00. (Id.). Defense seeks 23.3 hours of time for Laura Feil for paralegal work at the hourly rate of $160.00. (Id.). In total, the defendants seek $45,353.00 in sanctions for attorney’s fees and costs. (Id., at p. 5; Exhibit 1).

In opposition, Plaintiffs contend that Defendants seek to litigate the substance of the underlying case that should be reserved for another motion, i.e. summary judgment, and that a motion for sanctions is improper if material facts are in dispute as in this matter. (Plaintiff’s Opposition, p. 2). Plaintiffs’ counsel refute Defendants’ assertion that the action is frivolous, Plaintiffs’ counsel claims he has diligently fulfilled his duty to investigate the case both factually and legally. (Id., at p. 6).

Plaintiff asserts that section 128.7 and 128.5 are limited and inapplicable in this case. (Id.). Plaintiffs assert that Mr. Singler was hired by the Buyers and Sellers to serve as an escrow holder and was obligated to keep $72,000.00 in an Interest on Lawyers Trust Account (“IOLTA ”) pending assignment by the landlord of the Lease. Plaintiffs did not receive assignment of the existing lease or a new lease, but on or about January 24, 2025, Mr. Singler disbursed the funds to his client and himself. (Id.).

Plaintiff asserts that the six causes of actions set forth in Plaintiffs’ FAC was not made for an improper purpose and warranted by law arising from factual contentions that are supported by evidence. (Id., at p. 3). Plaintiffs points to some of the material facts in dispute, such as, Defendant McClean’s executive role in the Wicked Group, Inc., and lessee under the lease that was anticipated to be assigned to Plaintiffs Buyers; the purchase agreement was subject to Buyers obtaining an assignment on the lease; the agreement to acquire fixtures; the price increase from $67,000.00 to $72,000.00 to acquire fixtures; conditions to Seller’s retention of the purchase price; and Mr.

Singler’s duty to Plaintiffs Buyers as the escrow holder of the $72,000.00 that was to be held until a specific event or performance was competed. (Id., at p. 3-5). Plaintiff also refutes Defendants claims that the FAC was filed for an improper purpose, such as to harass, cause unnecessary delay, or drive up litigation costs. (Id., at p. 7). Plaintiffs filed the FAC in good faith based on conducting formal inquiry, information, and evidence of facts that are disputed. (Id.; Declaration of Crosby, p. 3).

Prior to filing the complaint, Plaintiffs’ counsel met with all of the plaintiffs and interviewed them in regards to the facts of the case, conducted third party percipient interviews, and investigation of persons knowledge of the transaction. (Declaration of Crosby, p. 3). Prior to filing a FAC, counsel conducted further investigation of fact and determined that all factual contentions are supported by evidence. (Id.). Plaintiffs’ counsel also attest to having conducted legal research in support of its claims to refute defendants’ claim that the action is frivolous, “totally and completely without merit or for the sole purpose of harassing an opposing party.” (Id., at p. 4).

In its reply brief, Defendants assert that Plaintiffs fails to raise any viable defense in its opposition. Defendants claim that all of Plaintiffs’ claims are subject to mandatory arbitration and that the required elements of Plaintiffs’ claims are directly contradicted by the agreements with control the FAC. (Defendant’s Reply, at p. 2). Defendants allege that despite being warned of these defects and motion for sanctions, Plaintiffs filed the original complaint, FAC, and presented meritless opposition to Defendant’s demur. (Id.). Accordingly, Defendants request sanctions in the amount of $45,353.00 against the Plaintiffs and Plaintiffs’ counsel of record.

The Court finds that there are material facts in dispute. Defendants have not met its prima facie burden of showing that the plaintiffs filed the FAC primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; the claims, defenses, or other legal contents are not warranted by law or by nonfrivolous argument for extension, modification, or reversal of existing law or establishment of new law; the allegations and other factual contentions have no evidentiary support; and the denials of factual contentions are not warranted on evidence. In line with the court’s ruling on the Defendants’ demurrer, which overruled some of the causes of actions, the defendants cannot demonstrate that the FAC is completely without merit.

IV. CONCLUSION Based on the foregoing, Defendants motion for sanctions is DENIED.

Calendar Line # 5 Case Name Bradley Land vs Apple, Inc., a Delaware Corp. Case No. 23CV427732 Motion for Summary Judgment/Adjudication Before the court is Defendant Apple Inc.’s motion for summary judgment or, in the alternative summary adjudication. Pursuant to California Rule of Court 3.1308, the court issues its tentative ruling as follows.

I. BACKGROUND During the second half of 2021, many employers decided to require their employees to get COVID shots in order to keep their jobs. (Complaint, ¶12). Defendant Apple Inc. (“Apple”) did not enact a mandatory COVID vaccine policy for employees at its Cupertino headquarters or its retail stores. (Complaint, ¶13). At most, defendant Apple required employees take a COVID test before going to work. (Id.)

Plaintiff Bradley Land (“Plaintiff”) worked as a Threat Intelligence Analyst on defendant Apple’s Security Engineering and Architecture team. (Complaint, ¶14). By the fall of 2021, Plaintiff had worked at defendant Apple for over thirteen years. (Id.) Plaintiff received excellent reviews and had no record of discipline. (Id.).

In 2021, defendant Apple distributed a COVID vaccination survey to its corporate employees. (Complaint, ¶15.) The survey allowed for four possible answers: (a) I am fully vaccinated; (b) I have received the first vaccine shot but not the second; (c) I am unvaccinated; (d) I choose not to answer. (Id.) Defendant Apple stated in the survey that it would assume anybody who selected “d” was unvaccinated, whether true or not. (Complaint, ¶16.) Defendant Apple also stated the survey results would be shared with other employees and unnamed third parties. (Id.).

Plaintiff was working remotely from Virginia when he received the survey. (Complaint, ¶17). Plaintiff informed his supervisor, senior manager, and the human resources department that he objected to the forced disclosure of his personal health information. (Id.) Plaintiff also told them that he objected to defendant Apple making assumptions about his vaccination status and sharing that confidential information with other Apple employees and third parties. (Id.).

Defendant Apple responded to Plaintiff’s objection by terminating his employment. (Complaint, ¶18). Plaintiff’s employment was terminated effective December 15, 2021. (Id.) Defendant Apple said it fired Plaintiff for not complying with its COVID-19-related policies. (Complaint, ¶19). On December 14, 2023, Plaintiff filed a complaint against defendant Apple asserting causes of action for: