Deborah LaBarre vs John J Thyne, III

Case Number

25CV03941

Case Type

Hearing Date / Time

Fri, 12/19/2025 - 10:00

Nature of Proceedings

CMC; Demurrer

Tentative Ruling

For all the reasons stated herein, the court sustains defendant John J. Thyne III’s demurrer as to the fourth cause of action for fraud and fifth cause of action for attorney malpractice with leave to amend. The demurrer is otherwise overruled. Plaintiff may file an amended pleading on or before January 7, 2026.

Background:

On June 25, 2025, plaintiff Deborah LaBarre initiated this action by filing a complaint against defendant John J. Thyne III alleging five causes of action for (1) money had and received, (2) elder abuse, (3) breach of fiduciary duty, (4) fraud, and (5) attorney malpractice.

On July 21, 2025, plaintiff filed a first amended complaint (FAC) against defendant alleging six causes of action for (1) money had and received, (2) elder abuse, (3) breach of fiduciary duty, (4) fraud, (5) attorney malpractice, and (6) conversion.

As alleged in the FAC:

Plaintiff is 77 years old, resides in Colorado, has difficulty seeing because she has macular degeneration, has difficulty hearing because of congenital hearing loss, and has difficulty ambulating. (FAC, ¶¶ 1-2.)

Plaintiff is a retired schoolteacher who has never operated a business. (FAC, ¶ 3.)

Defendant is an attorney and has practiced in California for 24 years. (FAC, ¶¶ 4-5.)

In October and November of 2023, defendant was working as an attorney for a real estate development company in Santa Barbara. (FAC, ¶ 6.)

As part of his work for a real estate development company, defendant held money invested by people such as the plaintiff in one or more trust accounts and disbursed funds from those accounts. (FAC, ¶ 9.)

Defendant drafted an investment proposal for a real estate development project that was sent to plaintiff. (FAC, ¶ 10.) Defendant was involved with this project. (Ibid.)

A more detailed proposal was subsequently sent to plaintiff. (FAC, ¶ 11.) This proposal would become a contract if plaintiff agreed to the terms and contributed $50,000 or $100,000 towards financing for a real estate development at 75267 Morningstar Drive, Indian Wells, California (Morningstar Property). (Ibid.)

If plaintiff contributed $100,000, plaintiff would be repaid her investment plus 8 percent interest after the Morningstar Property was sold, plus a share of any profits. (FAC, ¶ 12.)

Plaintiff accepted the investment proposal. (FAC, ¶ 13.) On November 8, 2023, plaintiff wired $100,000 into an account controlled by defendant. (Ibid.)

After wiring the $100,000, plaintiff became a participant in the Residential Real Estate Financing And Equity Share Agreement By And Between 75267 Morning Star Properties LLC And MS Development Capital Group (Morningstar Agreement). (FAC, ¶¶ 14-15, Ex. 1.)

Plaintiff wired the investment funds with the intention that they be used for the Morningstar Property pursuant to the Morningstar Agreement. (FAC, ¶ 17.)

Pursuant to the Morningstar Agreement, plaintiff and other investors were to be repaid from the net proceeds (Net Proceeds) of the sale of the Morningstar Property. (FAC, ¶ 20.)

The parties to the Morningstar Agreement were 75267 Morningstar Properties LLC and the unincorporated investor group MS Development Capital Group (MSDCG). (FAC, Ex. 1 at pp. 1, 6.) 

“Upon sale of the Property, MSDCG will receive repayment of any priority notes for advances pursuant to paragraph 7 herein, then a return of the Advanced Funds with 8% interest, plus 8% of net profits. At the direction of MSDCG, these funds must be paid to a law firm or other third party to hold and distribute as agreed among the participants of MSDCG.” (FAC, Ex. 1 at ¶ 10.)

“Following sale of the property and distribution of the proceeds thereof, this agreement shall be extinguished as complete. The term is expected to be fifteen (15) months or less.” (FAC, Ex. 2 at ¶ 2.) “The plan for this project is to complete improvements and sell for a profit within 15 months of this Agreement….” (FAC, Ex. 1 at ¶ 8.) 

“Fiduciary Duties: All parties to this agreement, regardless of when said party joined, shall have the utmost duty of care and competence to the best interests of the remaining parties to the fullest extent of the law and any injured party for breach of such duties may seek all legal remedies on behalf of the Property, that party, or any combination of parties hereto.” (FAC, Ex. 1 at ¶ 16.) 

The Morningstar Property was sold in May 2024. (FAC, ¶ 19.)

In May 2024, the Net Proceeds were paid to defendant. (FAC, ¶ 23.)

In May 2024, the Net Proceeds were deposited in a trust account controlled by defendant. (FAC, ¶ 24.) Defendant was the only person with access to this trust account. (FAC, ¶ 25.)

There were sufficient Net Proceeds to repay with interest all that was due to the investors in the Morningstar Agreement including plaintiff. (FAC, ¶ 22.)

Upon receipt of the Net Proceeds and depositing such funds into the trust account, defendant was obligated to repay the investors including plaintiff the amount of their investment plus 8 percent interest. (FAC, ¶ 26.)

On June, 9, 2024, defendant repaid $50,000 plus 8 percent interest to another investor in the Morningstar Property. (FAC, ¶ 28.)

Defendant failed to notify plaintiff of the sale of the Morningstar Property, that he had received the Net Proceeds, that he had placed the Net Proceeds in a trust account, or that any other investor had been repaid their investment from the Net Proceeds. (FAC, ¶¶ 27-30.)

Plaintiff learned of the Morningstar Property sale in August or September 2024. (FAC, ¶ 33.)

Defendant refused to repay plaintiff her investment funds or the 8 percent interest due to her. (FAC, ¶¶ 34-35.)

Plaintiff never authorized defendant to use her investment funds for any purpose other than the Morningstar Agreement or Morningstar Property. (FAC, ¶¶ 17, 36.)

After the Morningstar property was sold in May 2024, the defendant gambled with the money that he was obligated to deliver to the plaintiff by using plaintiff’s money to finance risky ventures for his own potential benefit. (FAC, ¶ 50.)

More than a year after the sale of the Morningstar Property, defendant refuses to deliver the money plaintiff was entitled to receive from the sale of the Morningstar Property. (FAC, ¶ 49.)

Defendant wrongfully withheld plaintiff’s assets for his own use. (FAC, ¶ 65.)

On August 20, 2025, defendant filed a demurrer to the FAC on the grounds that the FAC failed to join necessary and indispensable parties, failed to allege facts sufficient to state a cause of action, and is uncertain. The demurrer is opposed.

Analysis:

“Because the function of a demurrer is to test the sufficiency of a pleading as a matter of law, we … assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law. [Citation.] It is error for the trial court to sustain a demurrer if the plaintiff has stated a cause of action under any possible legal theory, and it is an abuse of discretion for the court to sustain a demurrer without leave to amend if the plaintiff has shown there is a reasonable possibility a defect can be cured by amendment.” (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242, 247.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Payne v. National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1043.) “[I]n ruling on a demurrer the trial court may take into account in addition to the complaint itself any matter that may be properly considered under the doctrine of judicial notice.” (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1133-1134.)

(1)       Necessary and Indispensable Parties

Defendant argues that the entire complaint is subject to a general demurrer because plaintiff failed to join necessary and indispensable parties including absent investors, the attorney-in-fact for the investor group MSDCG, Bruce Wellens, and the ultimate recipients of the funds from the joint venture, Country Club Lifestyle 2 LLC and 35 Las Alturas LLC. Plaintiff argues the absent parties are not necessary or indispensable to this action based on the allegations in the FAC. The court agrees with plaintiff.

“A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.” (Code Civ. Proc, § 389, subd. (a).)

“If a person as described in paragraph (1) or (2) of subdivision (a) cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person's absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person's absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.” (Code Civ. Proc., § 389, subd. (b).)

Here, if plaintiff succeeds in her claims as pleaded, defendant could be ordered to pay the funds allegedly owed to plaintiff plus other damages. If defendant succeeds in his defense, a defense verdict could be rendered. This would be complete relief amongst the parties to this action. “[T]he term complete relief refers only ‘to relief as between the persons already parties, and not as between a party and the absent person whose joinder is sought.’ ” (Countrywide Home Loans, Inc. v. Superior Court (1999) 69 Cal.App.4th 785, 794 (Countrywide).)

As to the interests of absent parties, defendant could be ordered to make plaintiff whole if she prevails. “A defendant’s potential loss in a subsequent suit for contribution against the absentee does not subject it to multiple liability under the compulsory party joinder rule .... [T]he defendant is in a position to avoid this harm by impleading the joint tortfeasor in the pending case.” (Countrywide, supra, 69 Cal.App.4th at p. 797.)

There are no allegations that defendant is at substantial risk of inconsistent, double or multiple obligations if this lawsuit proceeds as currently pleaded. There is no mention in the FAC of any other pending disputes on these issues. Defendant did not raise via judicial notice the existence of any other pending disputes that could subject him or others to inconsistent, double or multiple obligations. “[A] ‘substantial risk’ means more than a theoretical possibility of the absent party’s asserting a claim that would result in multiple liability. The risk must be substantial as a practical matter.” (Countrywide, supra, 69 Cal.App.4th at p. 796.)

Defendant has not established a misjoinder under Code of Civil Procedure section 389 based on the allegations in the FAC or any other basis appropriate for consideration on demurrer.

The court will overrule the demurrer as to plaintiff’s alleged failure to join necessary and indispensable parties.

(2)       Money Had and Received

Defendant argues that the FAC fails to state a claim for money had and received because defendant was not obligated under the Morningstar Agreement to repay plaintiff’s investment funds. Defendant argues that the Morningstar Agreement provides that the sale proceeds were to be distributed according to instructions from the investor group MSDCG and not pursuant to instructions from an individual investor such as plaintiff. (See FAC, Ex. 1 at ¶ 10.) Plaintiff argues that she has alleged the elements of this cause of action assuming her allegations are true. The court agrees with plaintiff.

“A cause of action is stated for money had and received if the defendant is indebted to the plaintiff in a certain sum ‘for money had and received by the defendant for the use of the plaintiff.’ This common count is available in a great variety of situations [citation] and ‘lies wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.’ “ (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 937.) “The plaintiff must prove that the defendant received money ‘intended to be used for the benefit of [the plaintiff],’ that the money was not used for the plaintiff’s benefit, and that the defendant has not given the money to the plaintiff.” (Camden Systems, LLC v. 409 North Camden, LLC (2024) 103 Cal.App.5th 1068, 1082.)

Here, plaintiff alleges that she wired $100,000 to an account controlled by defendant. (FAC, ¶ 13.) Plaintiff understood and intended that these funds would be used for the Morningstar Agreement and Morningstar Property. (FAC, ¶¶ 17, 36.) After the Morningstar Property was sold, the Net Proceeds were paid to defendant. (FAC, ¶ 23.) The net proceeds were placed in a trust account over which defendant had exclusive control. (FAC, ¶¶ 24-25.) Defendant was obligated to repay plaintiff’s investment plus 8 percent interest once the Net Proceeds were placed in the trust account. (FAC, ¶ 26.) Defendant engaged in subsequent risky investments with the Net Proceeds for defendant’s own potential benefit without plaintiff’s authorization. (FAC, ¶¶ 27-30, 50.)

The parties dispute defendant’s obligations. “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.… Where a complaint is based on a written contract which it sets out in full, a general demurrer to the complaint admits not only the contents of the instrument but also any pleaded meaning to which the instrument is reasonably susceptible.” (Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 238-239.)

No investments other than the Morningstar Property were referenced in the Morningstar Agreement. (FAC, Ex. 1.) The Morningstar Agreement indicates it would be extinguished as complete after the sale of the Morningstar Property and distribution of the proceeds. (FAC, Ex. 2 at ¶ 2.) The anticipated term of the Morningstar Agreement was 15 months or less. (Ibid.) Plaintiff’s interpretation of the Morningstar Agreement and defendant’s obligations is not clearly erroneous accepting all alleged facts as true.

Plaintiff has alleged a cause of action for money had and received.

(3)       Elder Abuse

Defendant argues that plaintiff failed to state a claim for elder abuse because the FAC does not allege that he wrongfully took or retained plaintiff’s property. Plaintiff argues that she alleged the elements of this cause of action. The court agrees with plaintiff.

Financial elder abuse is a statutory cause of action. (Welf. & Inst. Code, §§ 15610.30, 15657.5.) “[F]inancial abuse of an elder occurs when any person or entity takes, secretes, appropriates, or retains real or personal property of an elder adult to a wrongful use or with an intent to defraud, or both. A wrongful use is defined as taking, secreting, appropriating, or retaining property in bad faith. Bad faith occurs where the person or entity knew or should have known that the elder had the right to have the property transferred or made readily available to the elder or to his or her representative.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 174.)

Here, plaintiff alleges that she is 77 years old with certain age-related medical conditions, and defendant used the Net Proceeds from her invested funds to engage in risky investment activity for the potential benefit of defendant without plaintiff’s authorization. Plaintiff alleges that defendant wrongfully retained and misused her investment funds in violation of his obligations.

Plaintiff has alleged a cause of action for financial elder abuse.

(4)       Breach of Fiduciary Duty

Defendant argues that he did not owe a fiduciary duty to plaintiff because he was not a party to the Morningstar Agreement and was the attorney for Bruce Wellens, the attorney-in-fact of the investor group MSDCG. Plaintiff argues that she has alleged a fiduciary duty assuming all facts alleged in the FAC are true. The court agrees with plaintiff.

“The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez, supra, 194 Cal.App.4th at p. 932.)

“A fiduciary duty is a duty to act with the utmost good faith for the benefit of the other party. It can arise from a recognized legal relationship such as guardian and ward, trustee and beneficiary, principal and agent, or attorney and client or from a ‘confidential relationship’ ... founded on a moral, social, domestic, or merely personal relationship. The ‘essential elements’ of a confidential relationship have been described as 1) The vulnerability of one party to the other which 2) results in the empowerment of the stronger party by the weaker which 3) empowerment has been solicited or accepted by the stronger party and 4) prevents the weaker party from effectively protecting itself.” (Thomas v. Regents of University of California (2023) 97 Cal.App.5th 587, 629 (Thomas).)

“[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law. The mere placing of a trust in another person does not create a fiduciary relationship. Whether a fiduciary duty exists is generally a question of law.” (Thomas, supra, 97 Cal.App.5th at p. 629.)

“Whether the defendant breached that duty towards the plaintiff is a question of fact.” (Marzec v. California Public Employees Retirement System (2015) 236 Cal.App.4th 889, 915.) “The breach of fiduciary duty can be based upon either negligence or fraud depending on the circumstances.” (Ash v. North American Title Co. (2014) 223 Cal.App.4th 1258, 1276.)

Here, the Morningstar Agreement provides that “[a]ll parties to this agreement, regardless of when said party joined, shall have the utmost duty of care and competence to the best interests of the remaining parties to the fullest extent of the law and any injured party for breach of such duties may seek all legal remedies….” (FAC, Ex. 1 at ¶ 16.) “The rights and liabilities of joint adventurers, as between themselves, are governed by the same rules which apply to partnerships.” (Boyd v. Bevilacqua (1966) 247 Cal.App.2d 272, 288.)

Defendant was one of the initial members of the unincorporated investor group MSDCG. (FAC, Ex. 1 at ¶ 3.) Plaintiff later became an investor participant. (FAC, ¶ 15.) The Morningstar Agreement requires that the proceeds from the property sale be provided to a law firm or other third party to distribute. (FAC, Ex. 1 at ¶ 10.) As alleged, the sale proceeds were placed in a trust account over which defendant had exclusive control. (FAC, ¶¶ 24-25.) Rather than repay the investment funds with interest as required, defendant allegedly invested the sale proceeds in risky investments for the potential benefit of defendant without plaintiff’s authorization. (FAC, ¶¶ 33-36, 50.)

Plaintiff has alleged a cause of action for breach of fiduciary duty.

(5)       Fraud

Defendant argues that plaintiff failed to allege the elements of fraud with particularity. Plaintiff argues that she alleged a cause of action for fraudulent concealment. The court agrees with defendant.

Plaintiff alleges a cause of action for fraud in the nature of concealment. “Fraud, including concealment, must be pleaded with specificity.” (Dhital v. Nissan North America, Inc. (2022) 84 Cal.App.5th 828, 843-844.) “[T]he elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (SCC Acquisitions Inc. v. Central Pacific Bank (2012) 207 Cal.App.4th 859, 864 (SCC Acquisitions Inc.).)

“Less specificity should be required of fraud claims ‘when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy,’ [citation] ‘[e]ven under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party....’ ” (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)

As alleged, defendant was under a duty to inform plaintiff of the status of her investment when the sale proceeds were placed in the trust account under the exclusive control of defendant. Defendant’s failure to keep plaintiff apprised of her investment and subsequent misuse of funds was allegedly intentional. “Allegations of the defendant’s knowledge and intent to deceive may use conclusive language ….” (City of Pomona v. Superior Court (2001) 89 Cal.App.4th 793, 803.) “[F]raudulent intent is an issue for the trier of fact to decide.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1061.)

Plaintiff, however, did not allege facts sufficient to establish that she would have acted differently had she known of the material facts that were concealed, or that the concealment caused her damages. A “specific pleading is necessary to ‘establish a complete causal relationship’ between the alleged [fraud] and the harm claimed to have resulted therefrom.” (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1092.)

Because plaintiff has not alleged a complete causal link between the alleged concealment and her damages, the court will sustain the demurrer to the fourth cause of action for fraud with leave to amend.

(6)       Attorney Malpractice

Defendant argues that plaintiff failed to state a claim for legal malpractice because there are no allegations that he acted as plaintiff’s attorney. The court agrees with defendant.

“In order to establish a cause of action for legal malpractice the plaintiff must demonstrate: (1) breach of the attorney’s duty to use such skill, prudence, and diligence as other members of the profession commonly possess and exercise; (2) a proximate causal connection between the negligent conduct and the resulting injury; and (3) actual loss or damage resulting from the negligence” (Carlton v. Quint (2000) 77 Cal.App.4th 690, 699.) “One of the requisite elements of a legal malpractice claim is the existence of an attorney-client relationship or other basis for a duty of care owed by the attorney.” (Streit v. Covington & Crowe (2000) 82 Cal.App.4th 441, 444.) “The question of whether an attorney-client relationship exists is one of law. [Citation.] However, when the evidence is conflicting, the factual basis for the determination must be determined before the legal question is addressed.” (Responsible Citizens v. Superior Court (1993) 16 Cal.App.4th 1717, 1733.)

Here, the FAC does not allege an attorney-client relationship between defendant and plaintiff or other basis on which defendant could be liable to plaintiff for legal malpractice. The FAC alleges that defendant was “the attorney for the Morningstar project.” (FAC, ¶ 71.) The FAC alleges that defendant was the attorney for a real estate development company in Santa Barbara. (FAC, ¶ 6.) The Morningstar Agreement indicates that defendant was the attorney for Bruce Wellens. (FAC, Ex. 1 at p.1.)

The court will sustain defendant’s demurrer to the fifth cause of action for attorney malpractice with leave to amend.