Court Opinion

ID: 8484672
Source: CourtListenerOpinion
Date Created: 2022-11-17 19:02:06.858833+00
Date Added: 2024-06-11T16:49:55.914200
License: Public Domain

Filed 11/17/22 Abrahams v. Askew CA1/3
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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ordered published for purposes of rule 8.1115.

          IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                      FIRST APPELLATE DISTRICT

                                                DIVISION THREE

 HARRY ABRAHAMS,
            Plaintiff and Appellant,                                      A160853, A162554
 v.
 TRENOR ASKEW et al.,                                                     (Contra Costa County Super. Ct.
           Defendants and Respondents.                                    No. CIVMSC19-01570)

         Harry Abrahams invested money in real estate owned by defendant
Kevin Hampton; their relationship ultimately soured after Hampton
experienced financial difficulties and Abrahams suffered monetary losses.
Abrahams sued Hampton, and he also sued defendants Trenor Askew, TRA
Lending, LLC, and TRA Investments, LLC (collectively TRA), alleging they
raised money from investors for a real estate scheme that benefitted only
defendants and operated to Abrahams’s detriment. Askew and TRA filed
a demurrer requesting dismissal of negligent misrepresentation, unfair
business practices, and quiet title claims alleged against them, which the
trial court sustained without leave to amend. On appeal, Abrahams argues
the court erred. We disagree and affirm.

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                              BACKGROUND1
      Hampton sold and offered to sell deeds of trust and assignment of rents
for real property and other negotiable instruments. Hampton (or one of his
limited liability corporations) was the “borrower” on the deed of trust, and
investors, who provided capital, were the “lender.” Each deed of trust was
secured by a fractional interest in a mortgage on real property. Hampton
represented that the real properties providing collateral for the investors’
deeds of trust would generate more than enough revenue to cover Hampton’s
loan payments, the properties’ operating expenses, and produce a positive
cash flow for investors.
      Beginning in 2004, Abrahams and his agent, PENSCO Trust Company
(PENSCO), invested Abrahams’s retirement funds in various property
development projects managed by Hampton. Abrahams or PENSCO had
second or third mortgage interests in 11 properties. From 2004 to 2006,
Abrahams received regular payments from Hampton from these mortgages.
But Hampton’s development projects experienced financial difficulties during
the 2008 recession. According to Abrahams, Hampton began taking
government loans intended to help banks liquidate bad loans and created
several limited liability companies to conceal this practice while avoiding
capital gains taxes. In addition, Hampton failed to record certain deeds of
trust, which made it difficult to determine each lienholder’s rights. He then
cross-collateralized multiple properties to make the requisite interest
payments on his loans to his primary lenders.

      We deny Abrahams’s request to augment the record with his fourth
      1

amended complaint because that document does not bear on our analysis
here.
                                       2
      At one point, Hampton required more funds and asked his second and
third lienholders, such as Abrahams, to execute zero-demand letters — that
is, letters indicating the lienholder was waiving a second or third lien on
a property. Hampton promised Abrahams he would nonetheless recover his
investment because Hampton would shift Abrahams’s lien to a property with
equity. Based on Abrahams’s prior business dealing with Hampton and the
trust he placed in Hampton, Abrahams executed zero-demand letters for two
specific properties.
      In August 2018, Abrahams had several conversations and meetings
with Askew, who worked with Hampton to reorganize investors’ monetary
positions on properties, regarding his investments. Abrahams wanted the
properties he invested in to be liquidated to allow him to recover his
investments. But Askew told Abrahams that Hampton intended to repay
him after the completion of construction and sale of various properties.
Askew also told Abrahams he would not foreclose on any properties
Abrahams had invested in that were owned by Askew or TRA unless
Abrahams could recover his funds. He told Abrahams that Hampton would
complete construction on one particular property, which they would then sell
and convey the funds to Abrahams. On that basis, Abrahams executed the
requested additional zero-demand letter.
      But Hampton never shifted Abrahams’s liens to other properties. And
Askew and TRA foreclosed on or are in the process of foreclosing on three of
the 11 properties Abrahams and PENSCO had invested in, with Askew and
TRA retaining the primary mortgage interest in each of the properties.
Hampton also allegedly allowed government liens, including tax liens, to
accumulate on the properties. Moreover, the intended construction was not
completed, and the interest generated on the senior loans diminished any

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possible monetary return for Abrahams. In the end, Abrahams lost much of
his investment — nearly two million dollars.
      Relevant here, Abrahams filed a complaint against Hampton, Askew,
and TRA, among other defendants, alleging they engaged in negligent
misrepresentation and unfair business practices, and seeking to quiet title.
Askew and TRA filed a demurrer on these causes of action as to them, which
the trial court sustained with leave to amend. Abrahams filed a second
amended complaint, alleging Askew and TRA negligently engaged in fraud
and misrepresentation by inducing him to continue investing money into the
properties with a promise of a return on his investment, even though there
was no equity available in the properties to allow such recovery. He also
alleged Askew and TRA engaged in unfair business practices by failing and
refusing to perform all material terms of their agreement with him, and
fraudulently conveying title to the properties identified in his complaint
through cross-collateralization, which undermined all debt owed to
Abrahams. Finally, Abrahams sought to quiet title to the investment
properties as against Askew and TRA. The court sustained Askew and TRA’s
second demurrer without leave to amend after concluding Abrahams had not
plead sufficient facts to support these claims against them.
                                DISCUSSION
      Review of an order sustaining a demurrer requires examining the
complaint de novo to determine whether it states facts sufficient to establish
every element of each cause of action. (Fremont Indemnity Co. v. Fremont
General Corp. (2007) 148 Cal.App.4th 97, 111.) “We assume the truth of the
properly pleaded factual allegations, facts that reasonably can be inferred
from those expressly pleaded, and matters of which judicial notice has been
taken.” (Ibid.) We reasonably construe the pleadings, reading the

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allegations in context, and affirm if the judgment is correct on any stated
ground in the demurrer. (Ibid.) The plaintiff must demonstrate the trial
court erred in sustaining the demurrer. (Rakestraw v. California Physicians’
Service (2000) 81 Cal.App.4th 39, 43.) And if the demurrer was sustained
without leave to amend, we must determine whether there is a reasonable
possibility the plaintiff could cure the defect with an amendment. (Dones v.
Life Ins. Co. of North America (2020) 55 Cal.App.5th 665, 676–677.) We
reverse the denial of leave to amend only where there is an abuse of
discretion. (Smith v. County of Kern (1993) 20 Cal.App.4th 1826, 1830.)
      Abrahams first contends the trial court erred by dismissing his
negligent misrepresentation claim against Askew and TRA. Specifically,
Abrahams alleged he relied on Askew’s representations that executing a zero-
demand letter would allow Abrahams to recover his investment, that
Hampton would repay Abrahams, and that Askew would not foreclose on the
properties. But after executing the zero-demand letters, the properties were
foreclosed on and Abrahams lost his investments due to the lack of equity on
the named properties. Abrahams argues Askew promised he would recover
his monetary investments, even though Askew knew or should have known
Hampton failed to pay taxes on the properties, had not disclosed private
construction liens, the equity remaining on the properties rendered it
unlikely Hampton would recoup Abrahams’s investments, and that
construction had been halted. We conclude there was no error in the court’s
ruling.
      Favorably construing Abrahams’s complaint, these allegations fail
to state a claim for negligent misrepresentation. That claim requires
a (1) misrepresentation of fact; (2) by a person who has no reasonable
grounds for believing the fact to be true; (3) intent to induce another’s

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reliance on the misrepresented fact; (4) justifiable reliance on the
misrepresentation; and (5) damage. (Civ. Code, § 1710; Chapman v. Skype
Inc. (2013) 220 Cal.App.4th 217, 230–231.) A misrepresentation is actionable
if it concerns past or existing facts, not future events. (Tarmann v. State
Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 158 (Tarmann).)
“ ‘[P]redictions as to future events, or statements as to future action by some
third party, are deemed opinions, and not actionable fraud.’ ” (Ibid.)
Statements involving a false promise to perform or not perform at a future
time may support an intentional misrepresentation claim, but not a claim
for negligent misrepresentation. (Stockton Mortgage, Inc. v. Tope (2014)
233 Cal.App.4th 437, 458; Tarmann, at p. 158 [defendant’s statement that he
would pay for repairs immediately upon completion and defendant’s failure to
do so was a promise to perform in the future].)
      Here, Askew’s statements — that Askew would not foreclose on any of
the properties until Abrahams recovered his entire investment, and that
Hampton would recover Abrahams’s investment if Abrahams refrained from
foreclosing on property and construction was completed — were predictions
regarding future actions or promises to perform in the future. Consequently,
these statements do not form the basis for a negligent misrepresentation
claim. (Tarmann, supra, 2 Cal.App.4th at p. 158.) Notably, the trial court
provided Abrahams the opportunity to amend his complaint to assert an
intentional misrepresentation cause of action after sustaining Askew’s and
TRA’s first demurrer. But Abrahams disclaimed any intention to accuse
Askew of intentional fraud.
      Askew’s statement that executing the zero-demand letters would
allow Abrahams to recover his investments likewise does not constitute

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a misrepresentation of fact. Askew merely expressed his opinion —
predicting the financial effects of the zero-demand letter and Hampton
placing Abrahams’s liens on another property with equity — regarding
a future event. (San Francisco Design Center Associates v. Portman
Companies (1995) 41 Cal.App.4th 29, 43–44.) As such, it cannot support
a negligent misrepresentation claim. (Tarmann, supra, 2 Cal.App.4th at
p. 158.) And while there are several recognized exceptions to this general
rule — “ ‘(1) where a party holds himself out to be specially qualified and the
other party is so situated that he may reasonably rely upon the former’s
superior knowledge; (2) where the opinion is by a fiduciary or other trusted
person; [and] (3) where a party states his opinion as an existing fact or as
implying facts which justify a belief in the truth of the opinion’ ” — Abrahams
has not argued or demonstrated Askew’s statements fit within any exception.
(Cohen v. S & S Construction Co. (1983) 151 Cal.App.3d 941, 946.) To the
extent Abrahams argues Askew had a contractual duty to disclose all facts
known to him about Abrahams’s investments, nothing in the complaint
indicates Abrahams had a business or contractual relationship with Askew.
      We reject Abrahams’s argument that he made out a negligent
misrepresentation claim by alleging Askew failed to disclose information he
knew or reasonably should have known — that there were other priority
mortgages and unpaid tax liens on the properties at issue, and construction
had been delayed or halted — such that Abrahams’s recovery on his
investment was unlikely. Negligent misrepresentation claims, as Abrahams
acknowledges, entail fraud or deceit and specifically require a positive
assertion or assertions of fact. (Wilson v. Century 21 Great Western Realty
(1993) 15 Cal.App.4th 298, 306.) More is required than the omission or
failure to disclose information Abrahams alleges here. (Byrum v. Brand

                                       7
(1990) 219 Cal.App.3d 926, 941.) Nor does Bock v. Hansen (2014)
225 Cal.App.4th 215, compel a different result, contrary to Abrahams’s
assertions. That case simply determined an insurance adjuster owed a duty
to the insured, and the law of negligent misrepresentation applied. (Id. at
p. 229.) Aside from noting the adjuster had a duty to communicate accurate
information, it did not address any duty to disclose information. (Ibid.
[acknowledging the relationship between an insurer and insured was
“special,” requiring the imposition of heightened, fiduciary-like duties to the
insured].) Similar circumstances are not alleged to exist here.
      Because Abrahams fails to allege any actionable misrepresentation of
fact, the trial court properly sustained the demurrer to the negligent
misrepresentation claim. Having so concluded, we need not address whether
Abrahams sufficiently alleged a causal connection between the
misrepresentation of fact and harm. (Cantu v. Resolution Trust Corp. (1992)
4 Cal.App.4th 857, 879–880 [appellate court should affirm sustaining
a demurrer if complaint fails to plead any essential element of a particular
cause of action].)
      Abrahams next contends his allegations that all defendants “failed and
refused to perform all material terms of the Agreements; and . . . fraud-
ulently conveyed title to the properties described herein through cross
collateralization thus undermining all debt owed to” him, stated an unfair
business practices claim against Askew and TRA. We disagree. The unfair
competition law prohibits “any unlawful, unfair or fraudulent business act
or practice and unfair, deceptive, untrue or misleading advertising.” (Bus.
& Prof. Code, § 17200.) Thus, a practice is prohibited as unfair or deceptive,
even if it is not unlawful. (Cel-Tech Communications, Inc. v. Los Angeles
Cellular Telephone Co. (1999) 20 Cal.4th 163, 179.) Courts broadly interpret

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the language in Business and Professions Code section 17200 since the
statute targets the public’s right to protection from fraud, deceit, and
unlawful conduct. (South Bay Chevrolet v. General Motors Acceptance Corp.
(1999) 72 Cal.App.4th 861, 877.)
      Despite this broad construction, Abrahams failed to allege facts
supporting the statutory elements of an unfair business practices violation.
(Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 619.)
Although Abrahams alleges Askew and TRA engaged in unfair business
practices by failing to comply with their agreement with him, the complaint
fails to allege the existence of any contract or agreement between Abrahams
and Askew or TRA. Nor are there any facts to support the allegation that
Askew or TRA fraudulently conveyed title to any of the properties identified
in Abrahams’s complaint. The complaint refers to Hampton incorrectly filing
the deed concerning one particular property in the wrong county, Askew’s
statement that he would ask Hampton to rectify the issue, and Hampton’s
failure to follow through. But Abrahams does not argue, nor do we conclude,
that this allegation rises to the level of a fraudulent conveyance by Askew
and TRA — “a transfer by the debtor of property to a third person
undertaken with the intent to prevent a creditor from reaching that interest
to satisfy its claim” — let alone an unfair business practice claim. (Yaesu
Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13.)
      We do not address Abrahams’s argument, as we understand it, that he
properly alleged an unfair business practices claim because Askew and TRA
violated the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.). That
statute prohibits using deceptive representations, advertising goods or
services with the intent not to sell them as advertised, or misrepresenting the
authority of a representative. (Id., § 1770.) The complaint contains no

                                        9
allegations regarding this statute, nor did Abrahams raise this argument in
the trial court. The argument is thus forfeited. (Truck Ins. Exchange v.
AMCO Ins. Co. (2020) 56 Cal.App.5th 619, 635 [arguments raised for the first
time on appeal are generally deemed forfeited].)
      Finally, Abrahams fails to state a quiet title claim against Askew and
TRA. One of the elements for a quiet title cause of action is the existence of
“adverse claims to the title of the plaintiff against which a determination is
sought.” (Code Civ. Proc., § 761.020.) But Abrahams only alleges that he,
Hampton, and several limited liability companies — Enigami Global
Investments, LLC, Community First Development, LLC, Focus Group
Lounge Pinole, LLC, Focus Group Ventures, LLC — have adverse claims to
the title for any of the identified properties at issue. There is no allegation
Askew or TRA has any adverse claims to title. Accordingly, Abrahams’s quiet
title claim against Askew and TRA fails. (Orcilla v. Big Sur, Inc. (2016)
244 Cal.App.4th 982, 1010.)
      We reject Abrahams’s remaining arguments. The trial court did not
abuse its discretion by denying Abrahams leave to further amend his claims.
Abrahams has not demonstrated a reasonable possibility another amendment
could cure the defects identified above. (Dones v. Life Ins. Co. of North
America, supra, 55 Cal.App.5th at p. 677.) In fact, despite being given the
opportunity to allege an intentional fraud claim against Askew, Abrahams
disclaimed any intention to do so. Abrahams’s conclusory statement that he
can amend his complaint to state facts making out these claims fails to
satisfy his burden here. And the court did not improperly consider facts
asserted in Askew’s or TRA’s memorandum supporting their demurrer.
Relevant here, the court’s decision cites only the facts alleged in Abrahams’s

                                       10
complaint. (Fremont Indemnity Co. v. Fremont General Corp., supra,
148 Cal.App.4th at p. 111.)
                              DISPOSITION
      The judgment of dismissal is affirmed.

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                                 _________________________
                                 Rodríguez, J.

WE CONCUR:

_________________________
Fujisaki, Acting P. J.

_________________________
Petrou, J.

A160853 & A162554

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