John Nagle v. Private Money Lenders, Inc., et al.

Hearing Date: August 25, 2026 Case Number: 25CHCV02341 DEFENDANTS' DEMURRERS TO PLAINTIFF'S FIRST VERIFIED AMENDED COMPLAINT AND MOTIONS TO STRIKE Motions filed on May 22 and May 26, 2026. MOVING PARTIES: Defendants Hernan Abelardo Chalco, Rodney M. Gresko, Private Money Lenders, Inc., Servando Ornelas, Charles Anthony Hasbun, Saleh Abdallah Hasbun, Ric Dela Rama, and Robert Brown RESPONDING PARTY: Plaintiff John Nagle NOTICE: OK. RELIEF REQUESTED: Defendants seek relief by demurrer and/or motion to strike portions of Plaintiff's First Verified Amended Complai RULING: Demurrers overruled, except Defendant Hernan Abelardo Chalco's demurrer to the first cause of action is sustained with 20 days' leave to amend. Motions to strike granted in part and otherwise denied as set forth below.

BACKGROUND On April 23, 2026, Plaintiff John Nagle (Plaintiff) filed the First Verified Amended Complaint (FAC) against Private Money Lenders, Inc. (PML), Servando Ornelas (Ornelas), Charles Anthony Hasbun (Charles), Saleh Abdallah Hasbun (Saleh), Ric Dela Rama (Ric), Robert Brown (Brown), Hernan Abelardo Chalco (Chalco), and Rodney M. Gresko (Gresko). The FAC asserts causes of action for breach of contract, fraud based on intentional or negligent misrepresentation, breach of fiduciary duty, constructive fraud, conversion, accounting, unfair business practices, and financial elder abuse. The first, fifth, and sixth causes of action exclude Gresko.

On May 22, 2026, Chalco demurred to all eight causes of action, and Gresko demurred to the FAC as a whole and specifically to the seventh and eighth causes of action. Chalco and Gresko also filed motions to strike. On May 26, 2026, PML, Ornelas, Charles, and Ric demurred to all eight causes of action, while Saleh demurred to the first, second, and fourth causes of action. PML, Ornelas, Charles, Saleh, Ric, and Brown also filed motions to strike. Brown did not file a demurrer. Plaintiff filed oppositions and requests for judicial notice. Defendants filed replies. The demurrers and motions to strike were continued to August 25, 2026.

REQUESTS FOR JUDICIAL NOTICE Plaintiff requests judicial notice in connection with his oppositions of (1) Proof of Claim No. 6 filed in the Rubio-Acosta bankruptcy and (2) an ASC National Registry record concerning Gresko's appraiser credential. The requests are granted, though not as to the truth of any disputed factual matter asserted within the documents. (Evid. Code, Sec. 452, subds. (c), (d), (h).)

DEMURRERS "[A] demurrer tests the legal sufficiency of the allegations in a complaint." (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the Court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) A general demurrer does not lie to only part of a cause of action. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1167.)

Gresko's Demurrer to the FAC as a Whole Gresko demurs to the FAC as a whole for failure to state facts sufficient to constitute a cause of action against him. Because, as discussed below, the seventh and eighth causes of action are adequately pleaded against Gresko, his demurrer to the FAC as a whole is overruled.

First Cause of Action: Breach of Contract Defendants PML, Ornelas, Charles, Saleh, Ric, and Chalco demur to the first cause of action for breach of contract. The elements of breach of contract are the existence of a contract, Plaintiff's performance or excuse for nonperformance, Defendant's breach, and resulting damages. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) Alter ego liability may extend a corporation's contractual obligations to an individual where the requisite unity of interest and inequitable result are sufficiently alleged. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235-236.)

Here, Plaintiff alleges he entered into Loan Agreements with PML, Ornelas, Chalco, Saleh, and Charles, performed his obligations, Defendants breached, and suffered damages. (FAC P.P. 92-94, 98.) As to PML and Charles, Plaintiff separately alleges an April 2024 agreement under which PML and Charles agreed to purchase $15,000 of Plaintiff's interest in Nursery Loan 3, and alleges the amount was not paid. (FAC P.P. 47, 49, 95-98; Ex. 4.) Exhibit 4 identifies PML and Charles as parties to that agreement. Accordingly, their arguments concerning whether they were parties to the borrower loan agreements or personally liable on the Damages Note do not dispose of the first cause of action.

As to Saleh, Ornelas, and Ric, the FAC alleges they held ownership or business interests in PML, controlled or dominated PML, commingled or diverted its funds, disregarded corporate formalities, and used PML as a shell, and that respecting PML's separate existence would promote injustice. (FAC P.P. 73-75.) These allegations sufficiently plead alter ego liability for PML's contractual obligations at this stage. Their arguments concerning direct contractual liability, conspiracy, and aiding and abetting therefore do not dispose of the cause of action.

As to Chalco, Plaintiff alleges that the $70,000 principal on the Rental Loan was fully repaid and attaches a Deed of Full Reconveyance stating that the remaining balance on the secured note was $30,000 and that the deed would be recorded upon payment of that amount. (FAC P. 54; Ex. 5.) Plaintiff alleges that payment was thereafter made. Under Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 47-49, acceptance of a payoff and voluntary reconveyance of the security generally preclude a subsequent action on the secured note.

The FAC does not presently allege a separate contractual basis for recovery against Chalco that remained enforceable following the payoff and reconveyance. Plaintiff's allegations that the reconveyance was procured through fraud may support his separately pleaded tort theories, but they do not presently identify an unpaid contractual obligation remaining after the alleged payoff and reconveyance. Accordingly, the demurrers of PML, Ornelas, Charles, Saleh, and Ric to the first cause of action are overruled.

Chalco's demurrer is sustained with 20 days' leave to amend.

Second Cause of Action: Intentional or Negligent Misrepresentation Defendants PML, Ornelas, Charles, Saleh, Ric, and Chalco demur to the second cause of action for intentional or negligent misrepresentation. Intentional misrepresentation requires a misrepresentation, knowledge of falsity, intent to induce reliance, justifiable reliance, and resulting damage. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Negligent misrepresentation requires a material misrepresentation made without reasonable grounds for believing it true, intended and actual reliance, and resulting damage. (Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1154.) Misrepresentation must be pleaded with particularity, including how, when, where, to whom, and by what means the representation was made. (Lazar, supra, at p. 645.)

Here, Plaintiff alleges Charles and Saleh told him before funding, at PML's office, that the loan-package information was accurate, including the Nursery Loan security and the ownership and intended use of the Rental Loan security. (FAC P.P. 19, 25, 30, 35-39, 82.) Plaintiff separately alleges PML and Ornelas provided or participated in the loan information and concealed a prior loan by misstating the lien amounts in packages used to induce Nursery Loans 2 and 3. (FAC P.P. 30, 68, 101.) Plaintiff alleges the information was false, that he relied on it in funding the loans, and that he suffered resulting loss. (FAC P.P. 42-43, 57-61, 102, 107-110.) The alleged statements, circumstances, reliance, and resulting loss satisfy the required elements and particularity.

As to Ric, Plaintiff alleges he provided valuation information for Nursery Loan 2 and participated in misrepresenting lien amounts in loan packages used to induce Nursery Loans 2 and 3. (FAC P.P. 25, 68.) Unlike Summit Financial Holdings, Ltd. v. Continental Lawyers Title Co. (2002) 27 Cal.4th 705, Plaintiff alleges affirmative misrepresentations by Ric, not merely nondisclosure outside the escrow instructions.

As to Chalco, Plaintiff alleges he relied on Chalco's loan application, which identified the loan as a refinance, and on documents representing the secured properties as Chalco's sole and separate property. Plaintiff alleges the properties were community property, the loan proceeds were used for Brown's attorney fees, and Plaintiff would not have made the loan had he known those facts. (FAC P.P. 39, 42-43; Exs. 2, 6.) Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1237-1238, does not require sustaining the demurrer under the antideficiency statutes where the alleged fraud induced the loan. Accordingly, the demurrers of PML, Ornelas, Charles, Saleh, Ric, and Chalco to the second cause of action are overruled.

Third Cause of Action: Breach of Fiduciary Duty Defendants PML, Ornelas, Charles, Ric, and Chalco demur to the third cause of action for breach of fiduciary duty. Breach of fiduciary duty requires the existence of a fiduciary duty, breach, and resulting damages. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 182.) An agent is a fiduciary as a matter of law. (Brown v. Wells Fargo Bank (2008) 168 Cal.App.4th 938, 960.) A defendant who does not independently owe a fiduciary duty may nevertheless be liable for aiding and abetting a breach where the defendant knows the other's conduct constitutes a breach of duty and provides substantial assistance or encouragement. (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1475-1478.)

Here, Plaintiff alleges PML acted as the private money broker, Ornelas was PML's supervising licensed broker, and Charles was a licensed real estate salesperson involved in procuring the loans. Plaintiff alleges they owed him fiduciary duties and breached those duties by failing to disclose material information, failing to account, obtaining advantages over Plaintiff, and misrepresenting the loan security, causing resulting damages. (FAC P.P. 3-6, 113-116.) The allegations address duty, breach, and resulting damage.

As to Ric, the FAC alleges he held an ownership or business interest in PML, participated in its control, shared in commissions or profits, and commingled or diverted corporate funds, and further alleges that recognizing PML as separate would result in injustice. (FAC P.P. 73-75.) Those allegations support the asserted alter ego theory at the pleading stage.

As to Chalco, Plaintiff alleges the fiduciary Defendants procured the Rental Loan using false information concerning its security. Plaintiff alleges Chalco supplied that information concerning his own properties while acting with full knowledge of the other Defendants' wrongful conduct and assisting them in carrying it out. (FAC P.P. 35-43, 78-81.) Thus, the alleged knowledge is knowledge of the fiduciary Defendants' conduct in procuring the loan, and the alleged assistance is Chalco's supplying the information used to obtain Plaintiff's funds. Accordingly, the demurrers of PML, Ornelas, Charles, Ric, and Chalco to the third cause of action are overruled.

Fourth Cause of Action: Constructive Fraud Defendants PML, Ornelas, Charles, Saleh, Ric, and Chalco demur to the fourth cause of action for constructive fraud. Constructive fraud requires a fiduciary, confidential, or special relationship, breach of a duty arising from that relationship, reliance, causation, and damages. (Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 516-517, fn. 14; Schauer v. Mandarin Gems of California, Inc. (2005) 125 Cal.App.4th 949, 960-961.) Actual fraudulent intent is not required. (Assilzadeh v. California Federal Bank (2000) 82 Cal.App.4th 399, 415.) Constructive fraud must be pleaded with specificity. (Knox v. Dean (2012) 205 Cal.App.4th 417, 434.)

Here, Plaintiff alleges PML, Ornelas, Charles, and Saleh stood in fiduciary or confidential relationships with him and breached duties arising from those relationships by misrepresenting the use of his funds and loan security and obtaining an advantage through misleading him. (FAC P.P. 119-121.) The incorporated allegations discussed above identify the alleged misrepresentations and omissions, Plaintiff's reliance in funding the loans, and resulting loss. Those allegations address the relationship, breach, reliance, causation, and damages required for constructive fraud.

As to Ric, the FAC expressly alleges a confidential relationship and incorporates the allegations that Ric participated in the loan-document and concealment conduct described above. (FAC P.P. 7, 68, 87-88, 119-120.) Plaintiff also incorporates the reliance and resulting loss alleged from that conduct.

As to Chalco, the fourth cause of action incorporates the aiding-and-abetting allegations addressed under the third cause of action. The underlying wrong is the fiduciary Defendants' alleged use of false Rental Loan information to obtain Plaintiff's funds. Chalco's alleged assistance is supplying the false security and loan-purpose information with knowledge of Defendants' wrongful conduct. (FAC P.P. 35-43, 78-81, 118-120; Exs. 2, 6.) No separate fiduciary relationship between Chalco and Plaintiff is alleged or required for that aiding-and-abetting theory. Accordingly, the demurrers of PML, Ornelas, Charles, Saleh, Ric, and Chalco to the fourth cause of action are overruled.

Fifth Cause of Action: Conversion Defendants PML, Ornelas, Charles, Ric, and Chalco demur to the fifth cause of action for 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. (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)

Here, Plaintiff alleges he deposited $120,000 with PML for Nursery Loan 3 and that PML used those funds to create a new first deed of trust ahead of Plaintiff's interest. (FAC P.P. 31, 33, 122.) These allegations identify a specific sum allegedly entrusted to PML and an allegedly inconsistent disposition of those funds, rather than merely a contractual right to payment. Plaintiff further alleges Charles and Ornelas controlled PML's lending affairs, Ric handled PML's wire transfers, bank transfers, and deposits, and Charles, Ornelas, and Ric participated in controlling PML and commingling or diverting its funds. (FAC P.P. 4, 6-7, 73-75.)

As to Chalco, Plaintiff alleges he agreed to provide the specifically identified $70,000 Rental Loan after being told the funds would not be used to pay Brown's attorney fees and that the collateral was Chalco's separate property. Plaintiff alleges the $70,000 was thereafter used to pay Brown's fees in Chalco's divorce without Plaintiff's agreement. (FAC P.P. 35-43; Ex. 3.) The FAC further alleges Chalco participated in procuring the transaction through false information concerning the collateral and that Defendants acted with full knowledge of and participated in or assisted one another's wrongful conduct. (FAC P.P. 42, 78-81.)

At the pleading stage, these allegations permit the inference that PML disposed of Plaintiff's identifiable funds contrary to the purpose for which PML was handling them and sufficiently support the pleaded conspiracy and aiding-and-abetting theories against Chalco arising from the same transaction. The debtor-creditor rule in Watson v. Stockton Morris Plan Co. (1939) 34 Cal.App.2d 393, 403 does not require a different result because the asserted theory is not limited to Chalco's obligation to repay the Rental Loan.

Accordingly, the demurrers of PML, Ornelas, Charles, Ric, and Chalco to the fifth cause of action are overruled.

Sixth Cause of Action: Accounting Defendants PML, Ornelas, Charles, and Chalco demur to the sixth cause of action for accounting. A cause of action for accounting requires a relationship between the parties that requires an accounting and a balance due that can only be ascertained by an accounting. (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) A fiduciary relationship is not required. (Id. at p. 180.) An accounting is unavailable where the amount due is certain or can be made certain by calculation. (Id. at p. 179; Sass v. Cohen (2020) 10 Cal.5th 861, 863.)

Here, as to PML, Ornelas, Charles, and Ric, Plaintiff alleges PML and its agents were obligated to hold money or property on his behalf and failed to provide an accounting of the fees, commissions, charges, proceeds, costs, and payments associated with the loans. (FAC P.P. 70, 129-134.) The incorporated allegations further allege Plaintiff deposited loan funds into PML's escrow or trust accounts, that commissions and other amounts were deducted or disbursed from those funds, and that Ric handled PML's wire transfers, bank transfers, and deposits. (FAC P.P. 7, 21, 26, 31.) These allegations sufficiently plead a relationship requiring an accounting and an unascertained balance. The allegation that Standard Mortgage separately serviced borrower payments does not negate the pleaded handling and disbursement of Plaintiff's funds by PML and its agents.

As to Chalco, Plaintiff alleges Chalco was obligated to account for the use and disposition of the Rental Loan proceeds and for the payments, costs, and other amounts associated with that transaction. (FAC P.P. 130-134.) Although the FAC does not presently allege an enforceable contractual balance remaining on the secured note following the payoff and reconveyance, the accounting cause of action incorporates Plaintiff's surviving tort allegations and is not limited to enforcement of that note. The FAC does not establish on its face that all amounts allegedly arising from the transaction can be determined by simple calculation without an accounting. Accordingly, the demurrers of PML, Ornelas, Charles, Ric, and Chalco to the sixth cause of action are overruled.

Seventh Cause of Action: Unfair Business Practices Defendants PML, Ornelas, Charles, Ric, Chalco, and Gresko demur to the seventh cause of action for unfair business practices. Business and Professions Code section 17200 prohibits any unlawful, unfair, or fraudulent business act or practice. (Bus. & Prof. Code, Sec. 17200.) A private plaintiff must allege economic injury caused by the alleged unfair competition. (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 254.) A pattern of misconduct is not required. The UCL extends to a single act of misconduct. (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969, fn. 3.)

Here, the seventh cause of action incorporates the preceding allegations and alleges Defendants engaged in unlawful, unfair, or fraudulent business practices that caused Plaintiff economic loss. (FAC P.P. 135-140.) As to PML, Ornelas, Charles, and Ric, the incorporated allegations concern representations regarding the loan security, concealment of loan and lien information, handling of Plaintiff's funds, unauthorized use of Plaintiff's name, and nondisclosure of fees or commissions. (FAC P.P. 19, 25, 30-33, 65-70, 82-90.)

These allegations are sufficient at the pleading stage. As to Chalco, Plaintiff alleges he relied on information in Chalco's loan application in making the Rental Loan and that Chalco misrepresented the ownership of the properties securing that loan. (FAC P.P. 35-43.) As to Gresko, Plaintiff alleges Gresko appraised properties related to Plaintiff's loans and, as to the property securing Nursery Loan 1, improperly used comparable information resulting in an allegedly inflated appraisal. (FAC P.P. 8, 19, 57-59.)

Defendants' reliance on the private or isolated nature of these transactions does not establish a pleading defect because section 17200 does not require a pattern of misconduct. The FAC's requests for compensatory and punitive damages concern the remedies available under the UCL and are addressed below in connection with the motions to strike. Accordingly, the demurrers of PML, Ornelas, Charles, Ric, Chalco, and Gresko to the seventh cause of action are overruled.

Eighth Cause of Action: Financial Elder Abuse Defendants PML, Ornelas, Charles, Ric, Chalco, and Gresko demur to the eighth cause of action for financial elder abuse. Financial elder abuse occurs when a person or entity: "(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both"; "(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both"; or "(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70." (Welf. & Inst.

Code, Sec. 15610.30, subd. (a).) Here, Plaintiff alleges he was over 65 years old and that Defendants took, retained, or assisted in taking or retaining his property for a wrongful use or with intent to defraud. (FAC P.P. 1, 143-147.)

As to PML, Ornelas, Charles, and Ric, the incorporated allegations include Plaintiff's deposit of $120,000 with PML for Nursery Loan 3, PML's alleged use of those funds in a new first deed of trust ahead of Plaintiff, concealment of prior loan and lien information, preparation and review of the loan documents, and communications to borrowers concerning nonpayment to Plaintiff. (FAC P.P. 31, 33, 68, 82-90.) These allegations are sufficient at the pleading stage.

As to Chalco and Gresko, the eighth cause of action expressly incorporates the preceding allegations and is not limited to their direct involvement in Nursery Loan 3. (FAC P. 143.) Plaintiff alleges Chalco participated in procuring the Rental Loan through false information concerning the collateral and that the loan proceeds were used to pay attorney fees in his divorce without Plaintiff's agreement. (FAC P.P. 35-43.) Plaintiff alleges Gresko prepared the appraisal used in connection with Plaintiff's lending, improperly used comparable information, and inflated or misrepresented the value of the security in inducing Plaintiff to enter the Loan Agreements. (FAC P.P. 8, 19, 57-59, 120.)

The FAC further alleges Defendants acted with full knowledge of one another's wrongful conduct and participated in or assisted one another in carrying it out. (FAC P.P. 78-81.) At the pleading stage, these allegations sufficiently allege knowing assistance in the alleged taking or retention of Plaintiff's property. Accordingly, the demurrers of PML, Ornelas, Charles, Ric, Chalco, and Gresko to the eighth cause of action are overruled.

MOTIONS TO STRIKE "Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof, but this time limitation shall not apply to motions specified in subdivision (e)." (Code Civ. Proc., Sec. 435, subd. (b)(1) .) "The court may, upon a motion made pursuant to Section 435, 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. (b) 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." (Id., Sec. 436.)

Failure to state facts sufficient to constitute a cause of action is a ground for demurrer, not a motion to strike. (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 529.) Although a motion to strike may reach a substantive defect affecting only part of a claim, that use must be cautious and sparing and may not become a procedural "line item veto." (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682-1683.) The adequacy of punitive damages allegations may be tested by motion to strike. (Grieves v.

Superior Court (1984) 157 Cal.App.3d 159, 164.)

Damages Note and Compensatory Damages PML, Ornelas, Charles, and Saleh seek to strike "$35,000 from the Damages Note" from paragraph 98. PML, Ornelas, Charles, Saleh, Ric, Brown, Chalco, and Gresko seek to strike paragraphs 110 and 115. PML, Ornelas, Charles, Saleh, Ric, Brown, and Chalco also seek to strike paragraph 126. Gresko does not seek to strike paragraph 126. The requests are denied. The challenges to paragraphs 110, 115, and 126 principally repeat Defendants' contentions that the FAC does not sufficiently allege the particular moving Defendant committed the underlying fraud, fiduciary breach, or conversion giving rise to the damages alleged.

Those arguments concern the sufficiency of the underlying claims. They do not establish that the damages alleged in paragraphs 110, 115, or 126 are themselves legally unavailable. The request concerning the $35,000 Damages Note likewise does not establish a clear facial defect warranting partial striking. The FAC alleges Charles and Brown gave Plaintiff the Damages Note after Plaintiff confronted Defendants concerning the Rental Loan, and the first cause of action separately alleges that Plaintiff, Charles, and Brown entered an agreement under which Plaintiff would be paid $35,000. (FAC P.P. 51-53, 95-98.)

The incorporated allegations also plead agency and alter ego theories. (FAC P.P. 73-81.) The moving Defendants therefore have not established from the face of the FAC that "$35,000 from the Damages Note" is an improper item of damages subject to striking.

Unfair Competition Damages and Punitive Damages PML, Ornelas, Charles, Saleh, Ric, Brown, Chalco, and Gresko seek to strike paragraphs 140 and 141. Paragraph 140 alleges Plaintiff suffered $276,000 in damages. Paragraph 141 seeks punitive damages under the seventh cause of action. The requests to strike paragraph 140 are denied. Although compensatory damages are not recoverable under the UCL, paragraph 140 alleges the economic loss Plaintiff claims to have suffered, which is relevant to UCL standing.

Paragraph 142 separately seeks equitable relief, restitution, and disgorgement. (FAC P.P. 140-142.) The Court therefore does not construe paragraph 140 as authorizing recovery of compensatory damages under the UCL. The requests to strike paragraph 141 are granted without leave to amend. Punitive damages are not an available remedy under the UCL. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1148.) Paragraph 142 was not identified in the notices of motion. The Court therefore does not reach it.

Punitive Damages PML, Ornelas, Charles, Saleh, Ric, Brown, Chalco, and Gresko seek to strike the punitive damages allegations in paragraphs 111, 117, and 151. The requests directed to paragraphs 111, 117, and 151 are denied except as to Gresko. As to PML, Ornelas, Charles, Saleh, Ric, Brown, and Chalco, the incorporated allegations include intentional misrepresentation, concealment, knowing participation in the challenged conduct, and other intentional misconduct. (FAC P.P. 12-15, 78-90, 101-110.) As to PML, the FAC further alleges that Charles and Saleh are owners and/or officers, that Ornelas is an owner and supervising broker responsible for PML's activities, and that these individuals personally participated in the challenged conduct. (FAC P.P. 4, 6, 73-74.) Those allegations are sufficient at the pleading stage. (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6.)

As to Gresko, Plaintiff alleges Gresko improperly appraised the Nursery Loan 1 property and used improper comparable or incorrect information. (FAC P.P. 57-59.) The Gresko-specific factual allegations do not presently allege facts showing Gresko knew the appraisal information was false or otherwise acted with the malice, fraud, or oppression required by Civil Code section 3294. The general allegations of knowledge and assistance that permit the underlying claims to proceed do not supply Gresko-specific facts showing the malice, fraud, or oppression required for the enhanced punitive remedy. Accordingly, Gresko's motion to strike paragraphs 111, 117, and 151 is granted with 20 days' leave to amend. The remaining motions as to those paragraphs are denied.

Emotional and Physical Distress PML, Ornelas, Charles, Saleh, Ric, Brown, and Chalco seek to strike the phrase "emotional and physical distress" from paragraphs 99, 116, and 127. Gresko seeks to strike that phrase only from paragraph 116. The requests to strike "emotional and physical distress" from paragraph 99 are granted. Paragraph 99 alleges those damages as a direct result of the contractual breaches. Damages for mental suffering and emotional distress generally are not recoverable for breach of contract absent circumstances not alleged here. (Erlich v. Menezes (1999) 21 Cal.4th 543, 558-559.) The phrase "emotional and physical distress" is therefore stricken from paragraph 99 without leave to amend as to PML, Ornelas, Charles, Saleh, Ric, and Brown. Chalco's request as to paragraph 99 is moot in light of the ruling sustaining his demurrer to the first cause of action.

The requests to strike "emotional and physical distress" from paragraph 116 are denied. Knutson v. Foster (2018) 25 Cal.App.5th 1075 recognized emotional distress resulting from intentional breaches of fiduciary duty. (Id. at pp. 1094-1095.) The third cause of action incorporates allegations of intentional and knowing fiduciary misconduct. Defendants therefore have not established that emotional distress damages are categorically unavailable under the theory pleaded.

The requests to strike "emotional and physical distress" from paragraph 127 are denied. Gonzales v. Personal Storage, Inc. (1997) 56 Cal.App.4th 464 distinguished negligent property damage from conversion and held that "damages for emotional distress growing out of a defendant's conversion of personal property are recoverable." (Id. at p. 478.) Whether Plaintiff can establish that the alleged conversion proximately caused such damages is not resolved on these motions to strike.

Investment Opportunities and Valuable Time PML, Ornelas, Charles, Saleh, Ric, Brown, and Chalco seek to strike "investment opportunities" and "valuable time" from paragraph 99 and "investment opportunities" and "lost valuable time" from paragraphs 116 and 127. Gresko seeks to strike "investment opportunities" and "lost valuable time" only from paragraph 116. Defendants principally contend these alleged losses are insufficiently particularized or too speculative. The cited authorities do not establish that these categories of damages are facially unavailable or otherwise improper under Code of Civil Procedure section 436.

Shook v. Pearson (1950) 99 Cal.App.2d 348, 351-353 treated inadequate particularity of special damages as a matter raised by special demurrer for uncertainty. Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935 arose on summary judgment, and Lewis Jorge Construction Management, Inc. v. Pomona Unified School District (2004) 34 Cal.4th 960 addressed prospective lost profits following trial. Whether Plaintiff can establish entitlement to and prove these alleged losses with the required certainty is not resolved on these motions to strike.

Matters Not Identified in the Notices All moving Defendants also challenge paragraph 121 in their memoranda. Charles and Saleh additionally address paragraph 149 in their memoranda. Those portions were not identified in the applicable notices of motion and are therefore not considered. The Court likewise does not consider any request first asserted in a memorandum or reply to strike matter not identified in the applicable notice. (Cal. Rules of Court, rule 3.1322.)

CONCLUSION Chalco's demurrer to the first cause of action is sustained with 20 days' leave to amend. Gresko's demurrer to the FAC as a whole and all remaining demurrers are overruled. The motions to strike are granted in part. Paragraph 141 is stricken without leave to amend as to all moving Defendants. The phrase "emotional and physical distress" is stricken from paragraph 99 without leave to amend as to PML, Ornelas, Charles, Saleh, Ric, and Brown. Chalco's requests directed to paragraph 99 are moot. Paragraphs 111, 117, and 151 are stricken as to Gresko only, with 20 days' leave to amend. The motions are otherwise denied. Plaintiff may file and serve a Second Amended Complaint within 20 days of service of notice of this ruling | Home -->)" -->