Luis Ibarra vs 4647 Carp Ave LLC et al

Case Number

25CV01602

Case Type

Hearing Date / Time

Mon, 10/13/2025 - 10:00

Nature of Proceedings

Motion: Strike Punitive Damages

Tentative Ruling

Luis Ibarra v. 4647 Carp Ave LLC, et al.                               

Case No. 25CV01602

           

Hearing Date: October 13, 2025                                             

HEARING:              Motion To Strike Punitive Damages From Plaintiff’s Unverified Complaint

ATTORNEYS:        For Plaintiff Luis Ibarra: John J. Thyne III, Law Offices of John J. Thyne III

For Defendants 4647 Carp Ave LLC, Juan Rodriguez, and Sara Dandona:  Travis C. Logue, Rogers, Sheffield & Campbell LLP

TENTATIVE RULING:

The motion of defendants to strike punitive damages from plaintiff’s complaint is granted in part, with leave to amend. The following matters are stricken from plaintiff’s complaint: (1) “of punitive damages” appearing in paragraph 64; and (2) “of punitive damages” appearing in paragraph 74. Except as otherwise herein granted, the motion is denied. Plaintiff shall, on or before October 24, 2025, file and serve any amended complaint, which shall be designated as a first amended complaint.

Background:

On March 14, 2025, plaintiff Luis Ibarra (Ibarra) filed a complaint against defendants 4647 Carp Ave LLC (the LLC), Juan Rodriguez (Rodriguez), and Sara Dandona (Dandona), alleging ten causes of action: (1) conversion; (2) fraud; (3) constructive fraud; (4) breach of fiduciary duty; (5) breach of contract; (6) unjust enrichment/restitution; (7) negligence; (8) equitable estoppel; (9) quiet title; and (10) accounting. As alleged in the complaint:

On December 20, 2023, Ibarra and his wife formed the LLC in order to purchase real property located at 4647 Carpinteria Avenue (the Property) in Carpinteria, California. (Compl., ¶¶ 1-2 & 14.) The LLC purchased the Property on January 5, 2024. (Compl., ¶ 2.) As part of that purchase, Ibarra signed a promissory note for $1.5 million to the seller of the Property, and a promissory note to Rodriguez and Dandona (collectively, defendants), who are married, in the amount of $1.35 million. (Compl., ¶¶ 4 & 17-18.) The LLC issued deeds of trust to the seller and defendants. (Compl., ¶ 2.)

Defendants convinced Ibarra to contribute his funds to acquire and improve the Property. (Compl., ¶ 39.) Defendants, who knew that they did not intend to return Ibarra’s contribution, falsely represented to Ibarra that they would return that contribution. (Compl., ¶¶ 39-40 & 76-77.) As a result, Ibarra contributed funds totaling more than $430,00 to acquire, materially renovate, and improve the Property, and to pay a financing charge. (Compl., ¶¶ 23-24 & 58.)

Defendants transferred only the sum of $1.3 million to the seller on Ibarra’s behalf. (Compl., ¶ 19.) After the closing, defendants demanded that Ibarra convey to them Ibarra’s interest in the LLC, representing to Ibarra that they required title to the Property in order to refinance and pay off the seller and to cash out their equity. (Compl., ¶ 20.) On January 8, 2024, Ibarra revised the LLC’s operating agreement to include defendants as members. (Compl., ¶ 21.)

In February 2024, defendants began leasing the Property and did not share, or inform Ibarra of, any income received from those leases. (Compl., ¶ 24.)

In September 2024, Ibarra discussed a transfer of defendants’ interest in the LLC back to Ibarra in exchange for Ibarra returning to defendants their initial contribution of $1.3 million, and procured a loan for that return. (Compl., ¶¶ 25-26.) Defendants’ attorney drafted a “Purchase, Sale and Assignment of Membership Interest Agreement” which provided for a payment of $1,474,000 to defendants instead of the $1.3 million the parties had discussed. (Compl., ¶ 27.) Because of this change in the terms of the transaction, the transfer of the LLC back to Ibarra did not occur. (Compl., ¶ 28.)

On February 21, 2025, defendants listed the Property for sale without consulting Ibarra. (Compl., ¶ 29.) As of March 13, 2025, defendants had accepted an offer for the Property without having made any arrangements to pay Ibarra the amount Ibarra contributed to the venture. (Compl., ¶ 30.) Ibarra remains legally obligated to pay the loans secured by the Property which include a promissory note for $1.5 million personally guaranteed by Ibarra’s counsel and the promissory note to defendants in the amount of $1.35 million. (Compl., ¶ 32.)

On May 30, 2025, defendants filed a motion for an order striking references to or claims for punitive damages appearing in paragraphs 37, 44, 51, 56, 64, 74, and prayer paragraphs 2 and 4 of the complaint. (Notice at p. 1.) The motion is made on the grounds that the complaint fails to allege facts sufficient to show fraud, malice, despicable conduct, or intentional injury caused by defendants.

The motion is opposed by Ibarra.

Analysis:

“The court may, upon a motion made pursuant to [Code of Civil Procedure] [s]ection 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.” (Code Civ. Proc., § 436, subd. (a)-(b).)

“The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437, subd. (a).)

Punitive damages alleged in paragraph 64 of the complaint:

In paragraph 64 of the complaint, Ibarra alleges that defendants “acted with malice, oppression of fraud such that their actions should be subject to an award of punitive damages.” This paragraph appears as part of the fifth cause of action for breach of contract alleged in the complaint. (Compl. at p. 11.)

As ostensible grounds for the motion to strike the allegations of punitive damages appearing in paragraph 64 of the complaint, defendants contend that Ibarra cannot recover punitive damages based on any breach of contract by defendants. Though Ibarra asserts in the opposition to the motion that the complaint does not merely allege a breach of contract, Ibarra does not otherwise respond to defendants’ contention or address whether the claim for punitive damages effectively alleged in paragraph 64 of the complaint is proper.

“[U]nder California law, punitive damages are constrained generally by the restriction that they are ordinarily recoverable only in ‘an action for the breach of an obligation not arising from contract’ where the requisite culpable conduct is also present. [Citations.] ‘The word “contract” is used in this section in its ordinary sense to mean an agreement between the parties, not an obligation imposed by law despite the absence of any such agreement.’ [Citation.] Accordingly, when the cause of action is based on an agreement between the parties, rather than ex delicto obligations arising by law, punitive damages are ordinarily not recoverable, even where the defendant has violated his or her obligations maliciously or in bad faith.” (Brewer v. Premier Golf Properties, LP (2008) 168 Cal.App.4th 1243, 1251-1252.)

The fifth cause of action for breach of contract, which ostensibly gives rise to the claim for punitive damages described above, alleges that defendants made an oral contract to return to Ibarra his contribution of at least $430,285.21, and that this contract is memorialized in the closing statement for the purchase of the Property, the LLC’s operating agreement, receipts of funds by First American Title Company, and written communications between Ibarra and defendants. (Compl., ¶¶ 58 & 60.) Ibarra further alleges in the fifth cause of action that defendants breached this contract by “failing to effectuate” its purposes, which caused Ibarra “harm in an amount of not less than $430,000.” (Compl., ¶¶ 62-63.)

The allegations described above show that the fifth cause of action is based solely on a purported breach by defendants of an alleged oral contract between the parties for the return Ibarra’s contribution of funds as further described above. For all reasons discussed above, and notwithstanding whether the allegations of the complaint are sufficient to show that defendants breached the alleged contract in bad faith, the claim alleged in the fifth cause of action for breach of contract is insufficient to support an award of punitive damages. For these reasons, the court will grant the motion as to the terms “of punitive damages” appearing in paragraph 64 of the complaint, as requested in the notice of the present motion. (See Notice at p. 1, ¶ 5.)

Punitive damages alleged in paragraph 74 of the complaint:

The motion also seeks an order striking allegations of punitive damages appearing in paragraph 74 of the complaint, which is contained in the seventh cause of action for negligence, and which asserts that “[d]efendants’ conduct was grossly negligent and should result in the imposition of punitive damages.” (Compl. at p. 12, ¶ 74.)

“[M]ere negligence, [e]ven gross negligence is not sufficient to justify an award of punitive damages.” (Ebaugh v. Rabkin (1972) 22 Cal.App.3d 891, 894.) As the punitive damages alleged in paragraph 74 appear to arise from facts which Ibarra contends demonstrates gross negligence by defendants, the court will, for all reasons discussed above, grant the motion as to the terms “of punitive damages” appearing in this paragraph, as also requested in the notice. (Notice at p. 1, ¶ 6.)

Punitive damages alleged in paragraphs 37, 44, 51, and 56, and prayer paragraphs 2 and 4, of the complaint:

The motion also requests an order striking the terms “of punitive damages” from paragraphs 37, 44, 51, and 56 of the complaint. (Notice at p. 1, ¶¶ 1-4.) These paragraphs appear as part of, respectively, the first, second, third, and fourth causes of action for conversion, fraud, constructive fraud, and breach of fiduciary duty alleged in the complaint. (See Compl. at pp. 8-10.) In each of these paragraphs, Ibarra asserts that defendants “acted with malice, oppression or fraud such that their actions should be subject to an award of punitive damages.” (Ibid.)

As to the causes of action for conversion, fraud, constructive fraud, and breach of fiduciary duty alleged in the complaint, defendants contend that the allegation of punitive damages appearing in paragraphs 37, 44, 51, and 56, are improper because Ibarra has failed to plead facts sufficient to show any act of fraud, malice, oppression, or despicable conduct by defendants, or that defendants acted with a conscious disregard of Ibarra’s interests. Ibarra contends that the complaint alleges facts which are sufficient to show fraudulent conduct by defendants.

Under Civil Code section 3294, “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) The statute defines “[m]alice” as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “ ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, § 3294, subd. (c)(2).) “ ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code, § 3294, subd. (c)(3).)

“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) As is relevant here, “ ‘[i]t is essential that the facts and circumstances which constitute the fraud should bet set out clearly, concisely, and with sufficient particularity to apprise the opposite party of what he is called on to answer, and to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.’ [Citation.]” (Lehto v. Underground Constr. Co. (1977) 69 Cal.App.3d 933, 944.)

Noted above, the complaint alleges that defendants represented to Ibarra that they would return funds contributed by Ibarra to acquire and improve the Property, that defendants knew these representations were false, that defendants intended to convince or induce Ibarra to rely on these representations to contribute funds to acquire and improve the Property, and that Ibarra relied on these representations by contributing those funds to his detriment. (Compl., ¶¶ 34-36, 39-43, 47-48 & 54-55.)

For present purposes, the allegations described above are sufficient to show a prima facie foundation for a claim of fraud arising from a purported intentional misrepresentation, deceit, or concealment of a material fact known to defendants in regard to defendants’ return of Ibarra’s contribution of funds to acquire and improve the Property, which Ibarra alleges was made by defendants with the intent to induce Ibarra to make, and to deprive Ibarra of, that contribution. (Tenet Healthsystem Desert, Inc. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 837-839 [general discussion]; Hall v. Mitchell (1922) 59 Cal.App. 743, 749 [intent may be set forth with a “simple and direct” allegation].) These allegations are also sufficient to apprise defendants of the facts giving rise to the claim for punitive damages alleged in paragraph 44 of the complaint.

Further, “ ‘ “[a] promise to do something necessarily implies [t]he intention to perform, and, where such an intention is absent, there is an implied misrepresentation of fact, which is actionable fraud.” (Citations.)’ [Citation.]” (Joanaco Projects, Inc. v. Nixon & Tierney Const. Co. (1967) 248 Cal.App.2d 821, 831.) The allegations described above effectively assert that defendants made a promise to return Ibarra’s contribution, and that defendants had no intention to return that contribution at the time they made that promise. For all reasons discussed above, these allegations provide a sufficient foundation for a claim of fraud.

“Although punitive damages may not ordinarily be given for breach of contract, whether the breach be intentional, willful, or in bad faith [citations], such damages may be awarded where a defendant fraudulently induces the plaintiff to enter into a contract. [Citations.] The words ‘oppression, fraud, or malice’ in Civil Code section 3294 being in the disjunctive, fraud alone is an adequate basis for awarding punitive damages.” (Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 135.) The allegations of the complaint described above also show a sufficient prima facie foundation for a claim that defendants fraudulently induced Ibarra to enter into the oral contract described above.

For all further reasons discussed above, the allegations of the complaint provide a foundation for a claim of fraud, which is sufficient to support an award of punitive damages. Moreover, to the extent defendants contend that the complaint fails to state facts sufficient to state a cause of action for fraud, this is not grounds for a motion to strike under Code of Civil Procedure section 436. (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 529.) For these reasons, the court will deny the motion as to the punitive damages alleged in paragraph 44 of the complaint.

The first cause of action for conversion arises from the same allegations further discussed above. For example, Ibarra alleges that defendants “acted in concert with one another, and aided and abetted each other, to solicit and receive $430,285.21 of funds owned by” Ibarra, and “converted $430,285.21 of [Ibarra’s] property” by convincing Ibarra “to use his funds to acquire and then improve the ... Property” and by failing to “return these finds to [Ibarra] while ... attempting to sell the ... Property without [Ibarra’s] consent or knowledge.” (Compl., ¶¶ 34-35.)

“Exemplary damages are properly awardable in an action for conversion, given the required showing of malice, fraud, or oppression.” (Ferraro v. Pacific Fin. Corp. (1970) 8 Cal.App.3d 339, 351.) The same reasoning and analysis apply as to defendants’ request to strike punitive damages allegations appearing in paragraph 37 of the complaint. For all reasons discussed above, as the complaint alleges a sufficient foundation for a claim of fraud by which the purported conversion occurred, the court will deny the motion as to the punitive damages allegation appearing in paragraph 37 of the first cause of action.

As to the punitive damages asserted in paragraphs 51 and 56 of the complaint, these allegations appear in the causes of action for constructive fraud and breach of fiduciary duty. In these causes of action, Ibarra alleges that the parties’ joint venture and co-ownership of the LLC give rise to fiduciary duties owed by defendants to Ibarra; that defendants breached these fiduciary duties by failing to disclose material facts concerning defendants’ return of funds contributed by Ibarra as further detailed above, by making false representations concerning defendants’ intent to return Ibarra’s contribution, and by converting Ibarra’s funds and committing fraud, among other things; and that the breach of these fiduciary duties caused Ibarra to suffer damages. (Compl., ¶¶ 46-49 & 53-54.)

“ ‘ “ ‘[A] breach of a fiduciary duty alone without malice, fraud or oppression does not permit an award of punitive damages. [Citation.] ... Punitive damages are appropriate if the defendant’s acts are reprehensible, fraudulent or in blatant violation of law or policy. The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages.... Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff's rights, a level which decent citizens should not have to tolerate.’ ” [Citation.]’ [Citation.]” (Scott v. Phoenix Schools, Inc. (2009) 175 Cal.App.4th 702, 715-716.)

The same reasoning and analysis apply with respect to the punitive damages allegations appearing in paragraphs 51 and 56 of the complaint. For all reasons discussed above, the complaint alleges a sufficient foundation for breach of fiduciary duty constituting constructive fraud, and apprises defendants of the facts giving rise to these causes. Therefore, the complaint is sufficient to show an entitlement to an award of punitive damages. (Stokes v. Henson (1990) 217 Cal.App.3d 187, 198 [breach of fiduciary duty constituting constructive fraud warranted punitive damages award].) For these reasons, the court will deny the motion as to the punitive damages allegations appearing in paragraphs 51 and 56 of the complaint.

As the court will deny the motion as to the punitive damages allegations appearing in paragraphs 37, 44, 51, and 56 of the complaint, the court will also, for all reasons discussed above, deny the motion as to the punitive damages alleged in prayer paragraphs 2 and 4.

Leave to amend:

Ibarra asserts that “[i]f the Court finds [the] original complaint fails to allege facts that constitute a cause of action supporting an award of punitive damages, it is reversible error to grant [the motion] without leave to amend unless the [c]omplaint shows on its face that [Ibarra] can allege no facts that would entitle [Ibarra] to an award of punitive damages.” (Opp. at p. 5, ll. 1-5.)

Under the circumstances present here, the standards for granting leave to amend are “analogous to an order sustaining a demurrer. If there is a reasonable possibility a demurrable defect could be cured by amendment, it is ordinarily an abuse of discretion to deny leave to amend....” (Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768.) Ibarra “must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Wholly absent from the opposition of Ibarra is any reasoned argument showing why the complaint can be amended to show an entitlement to punitive damages arising from the claims alleged in the fifth cause of action for breach of contract, or in the seventh cause of action for negligence. Furthermore, and for all reasons discussed above, there does not appear to be any reasonable possibility that the defects discussed herein can be cured by an amendment to the complaint. Notwithstanding that Ibarra has failed to show the manner in which the complaint can be amended to cure the defects appearing in paragraphs 64 and 74 of the complaint, as this is Ibarra’s original complaint, the court will grant Ibarra leave to amend. (Eghtesad v. State Farm General Insurance Company (2020) 51 Cal.App.5th 406, 411.)