Filed 5/8/17 Gee v. Joseph J. Blake & Assocs. CA4/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ALICE GEE et al.,
Plaintiffs and Appellants,
v.
JOSEPH J. BLAKE AND ASSOCIATES,
INC.,
Defendant and Respondent.
G052064
(Super. Ct. No. JCCP 4811 / 30-2012-
00554778)
O P I N I O N
Appeal from a judgment of the Superior Court of Orange County, Gail
Andrea Andler, Judge. Affirmed.
Catanzarite Law Corporation, Kenneth J. Catanzarite, Nicole M.
Catanzarite-Woodward and Eric V. Anderton for Plaintiffs and Appellants.
Gaglione, Dolan & Kaplan, Robert T. Dolan and Jack M. LaPedis for
Defendant and Respondent.
2
Last summer this court considered seven appeals arising from Judge Gail
Andler’s March 2014 rulings on 49 motions made in eight different superior court cases
in a single minute order. Those appeals presented similar fact patterns and had
overlapping legal issues. We will now consider another appeal arising from the same
2014 order: This appeal is functionally identical to one we already decided, Alice Gee v.
LaSalle Bank, N.A. (June 23, 2016, G050844) [nonpub. opn.] (Gee 1).
The gist of the complaint is that 19 plaintiffs invested in property, and
certain costs and other information about the investment was allegedly concealed from
them. The Gee 1 opinion discussed at length how the costs were disclosed to plaintiffs in
a private placement memorandum (PPM) they received before investing. We agreed with
Judge Andler’s conclusion plaintiffs were put on notice of their claim from the outset and
their claims were time barred. (Gee 1, supra, G050844.) The other information allegedly
hidden from plaintiffs was the impact of a nearby city highway widening project that
eventually reduced the number of parking spaces available at the investment property.
Based on our review of the allegations related to this issue, we affirmed the ruling
sustaining the four defendants’ demurrers without leave to amend this claim. (Ibid.)
1
We now consider Judge Andler’s ruling in favor of a fifth defendant,
Joseph J. Blake and Associates (Blake). Plaintiffs concede only the highway widening
misrepresentations are applicable to Blake. Their brief on appeal is essentially identical
to the one filed in Gee 1, except all arguments relating to the cost misrepresentations
were removed. We conclude the contentions on appeal lack merit, and we affirm the
judgment.

1
In the Gee 1 appeal the defendants/respondents were LaSalle Bank, N.A.
(LaSalle), the real estate broker CBRE, Inc., the securities broker and dealer, Burch &
Company (Burch), and the law firm Hirschler Fleischer (Hirschler).
3
FACTS
The following factual allegations are derived from the second amended
complaint (SAC). Because we have described the allegations in detail multiple times
before, we will present a simplified version of the SAC, focusing on the specific
allegations concerning the highway widening misrepresentation.
The 19 appealing plaintiffs include one individual, Alice Gee (Gee), and 18
limited partnerships (ARI-DFW East & West 1, L.P.; ARI-DFW East & West 2, L.P.;
ARI-DFW East & West 3, L.P.; ARI-DFW East & West 5, L.P.; ARI-DFW East & West
6, L.P.; ARI-DFW East & West 7, L.P.; ARI-DFW East & West 8, L.P.; ARI-DFW East
& West 10, L.P.; ARI-DFW East & West 11, L.P.; ARI-DFW East & West 12, L.P.;
ARI-DFW East & West 13, L.P.; ARI-DFW East &West 14, L.P.; ARI-DFW East &
West 15, L.P.; ARI-DFW East & West 16, L.P.; ARI-DFW East & West 20, L.P.; ARIDFW
East & West 21, L.P.; ARI-DFW East & West 22, L.P.; and ARI-DFW East &
West 23, L.P.). For convenience and clarity we will refer to the appealing ARI-DFW
East & West L.P. entities and Gee collectively as Plaintiffs.
The case concerns Plaintiffs’ failed multi-million dollar investment in
commercial real estate. In 2005, Plaintiffs invested in two office buildings located in the
Dallas, Fort Worth, Texas freeway corridor. The commercial business complex was
called DFW East & West (the Property). The transaction was promoted by ARI-DFW
Direct Participant, L.P., and its related entities and affiliates, referred to collectively by
the parties as the ARGUS Defendants.
2

The purchases were part of an Internal Revenue Code section 1031
exchange (1031 exchange), which allowed Plaintiffs to defer capital gains taxes on the

2
The trial court also sustained the ARGUS Defendants’ demurrer without
leave to amend. However, these entities are not parties to this appeal.
4
sale of other real estate assets they owned. However, all did not proceed as planned and
the investment property was foreclosed upon and sold.
In 2012, Plaintiffs (in a class action complaint) sued 21 defendants
including Blake, a commercial real estate valuation firm. The operative SAC alleges 13
causes of action and groups the defendants into three categories (“Class Defendants”
subject to the class action claims, “Non-Class Defendants” subject to individual claims,
and “Doe Defendants”). Blake is one of the Class Defendants and is only named in the
sixth cause of action for intentional misrepresentation and the seventh cause of action for
fraudulent concealment.
In the SAC, Plaintiffs expected to unravel the whole failed investment on
the grounds they would not have invested in the Property had they known the total upfront
costs, or “Sales Loads,” actually exceeded the 15 percent capital gains tax they
sought to defer by making the investment. Specifically, they allege there was an
undisclosed $271,000 mark up in the purchase price. The details of the transaction were
described at length in Gee 1, which we incorporate here by reference.
Plaintiffs also alleged they were misled about the negative financial impact
of plans for widening the highway next to the property. The SAC alleged the PPM and
offering documents failed to disclose the Property, which “fronts a section of Texas State
Highway 183,” was slated for a highway widening project (highway widening).
Plaintiffs alleged the following: “[The highway widening] would materially and
adversely impact the value of the Property and ergo the investment. As of the date the
subject securities were made, the following information on the [h]ighway [w]idening was
available to ARGUS Defendants and BLAKE Defendants as due diligence professionals
related to the Property:
“a. The Property . . . was identified as early as 1999 in a Texas Department
of Transportation (TxDOT) Major Improvement Study (MIS) that identified $1.4 billion
of recommended improvements including the lane additions and arterial improvements.
5
“b. The engineering and environmental analysis process for what was
called this SH183 Study Corridor continued steadily through a series of public hearings
from 1999 [to] 2005.
“c. The study and hearings process culminated in final presentations to the
Irving City Council on April 28, 2005, and as of that date the [h]ighway [w]idening
impact would have been known had the same been investigated.
“d. The [h]ighway [w]idening would have reduced the number of available
parking spaces at the Property which would have been material because, and as disclosed
by the PPM, the Property . . . already had [a] deficient number [of] parking spaces for
compliance with local zoning ordinances.”
Plaintiffs alleged they would not have acquired the Property had they
known about the widening project. In the sixth cause of action (intentional
misrepresentation), Plaintiffs alleged, “[Blake] aided and abetted the ARGUS Defendants
by preparing an appraisal report (the ‘Appraisal’) for the Property[,] which reflected a
value for the Property of $13,900,000 and rental projections for the Property.” Plaintiffs
maintained the valuation was a false statement and the rental projections failed to take
into account the impact of decreased parking for the tenants after the city widened the
highway. They alleged the following: “[Blake] knew or recklessly disregarded
substantial information regarding the [h]ighway [w]idening and loss of parking. [Blake,
responsible for the] appraisal[,] knew that the representations in the [a]ppraisal would be
disseminated to Plaintiffs as part of the TIC Offering and further knew that the [a]ppraisal
would be provided to [LaSalle] in making the Loan for the Property Acquisition.”
The seventh cause of action (fraud by concealment) was based on the same
underlying facts as the sixth cause of action. Plaintiffs asserted all defendants
collectively disclosed some facts “but intentionally failed to disclose important facts
thereby making the disclosure deceptive.” This cause of action does not specifically refer
to an action or concealment undertaken by Blake.
6
The trial court took judicial notice of the PPM. Relevant to this appeal,
within the PPM’s long list of “RISK FACTORS” it was disclosed there was a zoning
issue due to an inadequate number of parking spaces. The PPM disclosed the following
warning: “The Property has fewer parking spaces than required under existing zoning
regulations.” The PPM explained, “ARI is in the process of obtaining approval from the
requisite authorities for this nonconforming variance, but there can be no assurances that
such approvals will be obtained.”
In its demurrer, Blake argued the Plaintiffs’ intentional misrepresentation
claim was a type of fraud cause of action and must be pled with specificity.
Blake explained the SAC did not assert Plaintiffs relied on the appraisal or ever received
the report. Rather, Plaintiffs stated they relied upon representations made in the offering
documents. They made no connection between the appraisal and the offering
documentation. Blake also complained the SAC lacked certainty. It was unclear what
facts supported any cause of action regarding Blake. It noted the seventh cause of action
suffered from the same defects. It failed to name Blake as a defendant and contained
only vague and general allegations.
In their opposition, Plaintiffs asserted the SAC was sufficient to survive a
demurrer. It conceded that if more facts were needed, it could add the following facts to
the complaint: (1) Blake’s appraisal was attached to the PPM; and (2) Blake knew
Plaintiffs investing in the property would be “intended recipients of the appraisal.”
Plaintiffs argued Blake’s rental projections and “‘as is’ valuation” were “untenable”
because both “completely disregarded the impact of the [h]ighway [w]idening and the
damage which would be caused by the reduction of available parking for the tenants.”
Plaintiffs noted the complaint alleged Blake “knowingly or recklessly disregarded”
material information necessary for preparing an accurate appraisal, which amounted to a
“material non-disclosure.”
7
Blake prepared a reply stating Plaintiffs did not allege why the appraisal
was defective for failing to take into account the highway widening. It noted Plaintiffs
made “an interesting new factual statement in their opposition” by referring to Blake’s
appraisal as an “‘as is’ valuation.” Recognizing this allegation was not in the SAC, Blake
asserted it nevertheless supported the conclusion Plaintiffs knew the appraisal was an “as
is” value rather than a hypothetical future value or “subject to completion value” based
on a proposed and uncompleted city works highway project. The SAC alleged that at the
time the appraisal was made the city works project was still undergoing an approval
process. Thus, the appraisal reflected the estimated value on that particular day, when the
property was not yet affected by the highway widening project. “Nothing was
undisclosed, hidden[,] or concealed.”
Blake argued there were other problems with the complaint. The SAC did
not say the appraisal was part of the offering or PPM. And it did not provide any facts to
support the contention Blake knew Plaintiffs would receive the appraisal. In addition,
Blake argued there were no facts to support the allegation Blake aided and abetted other
defendants in committing fraud. The SAC did not allege Blake gave “‘substantial
assistance’” to others or suggest who was aided. Finally, no facts or allegations
supported Blake’s role in the alleged fraud by concealment.
Judge Andler sustained Blake’s demurrer to the SAC, without leave to
amend (in addition to ruling on the other 49 motions). Judge Andler did not specifically
discuss the highway widening issue when sustaining the multiple demurrers without
leave to amend. Instead, Judge Andler made several general comments about the nature
and history of the cases. She explained, “It is an understatement to say that much time
and effort has been spent by counsel and the court discussing these pleadings, in some
case for years, in order to determine if a pleading could be crafted which could survive a
challenge. Each version of each complaint generated demurrers and motions to strike.
Although recognizing the valid concerns expressed by a number of defendants, leave to
8
amend was previously granted in recognition of the great liberality the law provides for
amending pleadings. There were specific discussions as to what the concerns were, and
counsel for plaintiffs had asserted, at oral argument, that the deficiencies could and would
be cured. . . . [P]laintiffs were put on notice as to the need to plead with greater
specificity regarding the roles played by each of the defendants and their alleged acts or
omissions. [¶] The court previously commented that plaintiffs appear in some of the
pleadings to simply sue anyone and everyone who had anything to do with the
transactions, regardless of how remote the participation of some of the defendants might
be.”
The trial court stated that in addition to sustaining the demurrers on statute
of limitations grounds, the court also considered and ruled on causes of action for
alternative grounds alleged by defendants. For example, the court determined some of
the fraud-based causes of action failed because Plaintiffs “still plead elements of . . . each
cause of action in general terms-identifying the alleged responsible defendant by group,
and failing to plead each element with specific facts. It strains credibility to believe that
none of the plaintiffs have any recall or records on which to rely in sufficiently pleading
these causes of action, given the nature of these transactions and the amount of money
involved.”
Judge Andler added the aiding and abetting allegations failed because
Plaintiffs did not allege facts “that said defendants had ‘actual knowledge’ that the
directly liable defendant intended to commit ‘a specific wrongful act’ and that said
defendants gave substantial assistance to the directly liable defendant.” The court
repeated the pleadings were defective because, despite “having been previously
admonished” by the court, Plaintiffs “have continued to use ‘group pleading’ for
apparently related entities . . . and the parties must be able to differentiate the specific
roles, acts and omissions alleged as to each defendant ‘lumped together’ in the group
allegations.” (Emphasis omitted.) Plaintiffs challenge this ruling on appeal, maintaining
9
their claims against Blake were not uncertain and fraud was pled with adequate
specificity.
DISCUSSION
I. Standard of Review
“In conducting our de novo review, we ‘must “give[ ] the complaint a
reasonable interpretation, and treat[ ] the demurrer as admitting all material facts properly
pleaded.” [Citation.] Because only factual allegations are considered on demurrer, we
must disregard any “contentions, deductions or conclusions of fact or law alleged . . . .”’
[Citation.]” (WA Southwest 2, LLC v. First American Title Ins. Co. (2015)
240 Cal.App.4th 148, 151 (WA Southwest).) “When a demurrer is sustained, we
determine whether the complaint states facts sufficient to constitute a cause of action.
[Citation.] And when it is sustained without leave to amend, we decide whether there is a
reasonable possibility that the defect can be cured by amendment: if it can be, the trial
court has abused its discretion and we reverse; if not, there has been no abuse of
discretion and we affirm. [Citations.] The burden of proving such reasonable possibility
is squarely on the plaintiff. [Citation.]” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Moreover, “As a general rule in testing a pleading against a demurrer the
facts alleged in the pleading are deemed to be true, however improbable they may be.
[Citation.] The courts, however, will not close their eyes to situations where a complaint
contains allegations of fact inconsistent with attached documents, or allegations contrary
to facts which are judicially noticed.” (Del E. Webb Corp. v. Structural Materials Co.
(1981) 123 Cal.App.3d 593, 604.)
II. Two Fraud Causes of Action in the SAC
We begin our analysis by reviewing the elements required for a fraud cause
of action. “‘“The elements of fraud, which gives rise to the tort action for deceit, are (a)
misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of
falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance;
10
and (e) resulting damage.”’ [Citation.]” (Small v. Fritz Companies, Inc. (2003) 30
Cal.4th 167, 173-174.) “Fraud must be pleaded with specificity rather than with
‘“general and conclusory allegations.”’ [Citation.] The specificity requirement means a
plaintiff must allege facts showing how, when, where, to whom, and by what means the
representations were made, and, in the case of a corporate defendant, the plaintiff must
allege the names of the persons who made the representations, their authority to speak on
behalf of the corporation, to whom they spoke, what they said or wrote, and when the
representation was made. [Citation.] [¶] We enforce the specificity requirement in
consideration of its two purposes. The first purpose is to give notice to the defendant
with sufficiently definite charges that the defendant can meet them. [Citation.] The
second is to permit a court to weed out meritless fraud claims on the basis of the
pleadings; thus, ‘the pleading should be sufficient “‘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.]” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th
780, 793.)
In making her ruling, Judge Andler did not directly discuss Blake or the
fraud-related highway widening allegations. However, in sustaining the demurrers she
reminded the parties of prior discussions about the need for pleading allegations with
greater specificity and concluded some claims failed for lack of certainty. On appeal,
Plaintiffs argued the court erred in concluding the SAC was uncertain because they
clearly defined Blake’s “roles, acts, and omissions.” Plaintiffs also maintain the court
erroneously concluded their theories of liability against Blake were unclear. They
maintain the SAC clearly indicated the intentional misrepresentation claim was based on
an aider and abettor theory of liability, whereas the fraudulent concealment claim alleged
Blake was directly liable. In addition, they argue the SAC contained ample specific facts
to support both theories of recovery. We disagree.
11
A careful comparison between the original and SAC reveals Plaintiffs made
only minor changes in attempting to comply with Judge Andler’s prior directions. For
example, the original complaint’s factual summary Plaintiffs alleged “information on the
[h]ighway [w]idening was available to due diligence professionals related to the
Property.” The SAC narrowed the scope of possible due diligence professionals to be
“the ARGUS Defendants and BLAKE Defendants.” However, the term ARGUS
Defendants was defined in the complaint as a shorthand way to refer to 13 different
entities and individuals who allegedly orchestrated the entire investment scam. The
“Blake Defendants” encompassed Blake and “Does 41-60.” This change did little to
achieve the specificity requested by the trial court.
The same is true for the allegations made in the SAC’s sixth cause of action
for intentional misrepresentation. While it is true Plaintiffs specifically alleged Blake
“aided and abetted” the ARGUS Defendants by preparing an appraisal report, this
statement cannot be read in a vacuum. The cause of action also alleged the appraised
valuation of the property itself was a “false statement.” Plaintiffs maintained Blake knew
the representations in the appraisal would be “disseminated to Plaintiffs” as part of the
offering and “would be provided to [the bank] in making the [l]oan for the [p]roperty
[a]cquisition.” These statements support the conclusion Plaintiffs were also proceeding
on a theory of direct liability for intentional misrepresentation.
Further confusing the matter is the very next paragraph, containing a vague
statement of direct liability of other misrepresentations: “As described above, the
Defendants knew the forgoing representations concerning the unrelated seller paid
commission markup of the Property purchase price scheme in the PPM and related
offering documents were false and/or misleading at the time made and that the
representation was material to Plaintiffs who were tax advantaged and motivated
investors who would justifiably rely thereon.” The phrase “foregoing representations”
could relate to highway widening issue discussed in the sentence above, however, it is
12
followed by a statement referring to a different misrepresentation, i.e., the purchase price
markup. In any event, it is reasonable to infer Blake was lumped in with the group of
defendants directly liable for the purported price markup misrepresentations because next
several paragraphs shifted the focus away from Blake and contained allegations
concerning CBRE’s, LaSalle’s, Burch’s, and Hirschler’s roles in aiding and abetting the
ARGUS Defendants in various ways and concerning other alleged misrepresentations.
Thus, contrary to Plaintiffs’ argument on appeal, the SAC does not
“sufficiently distinguish” between direct and aider and abettor liability. Additionally, we
note that in the final few paragraph of this cause of action, Plaintiffs twice used the
phrase, “Defendants made such representations or aided and abetted their dissemination”
without specifying which category Blake (or any other defendant) fell into. (Italics
added.) These ambiguous allegations are identical to the ones contained in the original
complaint. We conclude Plaintiffs did not address the uncertainty and lack of specificity
issues with respect to this cause of action.
A. Aiding and Abetting Fraud
We turn next to Plaintiffs’ assertion there were sufficient facts to support
the theory Blake was liable for aiding and abetting the ARGUS Defendants’ tort of
intentional misrepresentation. They offer no argument suggesting Blake directly made an
intentional misrepresentation to the investors. Rather, they devote much of the argument
repeating specific allegations supporting the conclusion that the ARGUS Defendants
made many different intentional misrepresentations in connection with the overall real
estate scam. After reviewing the complaint, we agree with the trial court’s conclusion the
complaint lacked the required specificity to support Blake’s liability for this purported
tort.
“California has adopted the common law rule for subjecting a defendant to
liability for aiding and abetting a tort. ‘“Liability may . . . be imposed on one who aids
and abets the commission of an intentional tort if the person (a) knows the other’s
13
conduct constitutes a breach of duty and gives substantial assistance or encouragement to
the other to so act or (b) gives substantial assistance to the other in accomplishing a
tortious result and the person’s own conduct, separately considered, constitutes a breach
of duty to the third person.” [Citation.]’ [Citation.]” (Casey v. U.S. Bank National Assn.
(2005) 127 Cal.App.4th 1138, 1144 (Casey).)
“California courts have long held that liability for aiding and abetting
depends on proof the defendant had actual knowledge of the specific primary wrong the
defendant substantially assisted. . . . [¶] In Howard v. Superior Court (1992) 2
Cal.App.4th 745, the court stated that ‘“[a]iding-abetting focuses on whether a defendant
knowingly gave ‘substantial assistance’ to someone who performed wrongful conduct . . .
.” [Citation.] [¶] . . . [A]iding and abetting . . . necessarily requires a defendant to reach a
conscious decision to participate in tortious activity for the purpose of assisting another
in performing a wrongful act.’ [Citation.]” (Casey, supra, 127 Cal.App.4th at pp. 1145-
1146.)
Here, Plaintiffs have not alleged Blake had actual knowledge of the
underlying fraudulent scheme orchestrated by the ARGUS Defendants, that Blake
consciously decided to participate, or that Blake substantially assisted the ARGUS
Defendants in running the sham 1031 exchange. Blake is a corporation, not an
individual, yet there are no allegations identifying who knowingly assisted in the ruse. It
is merely alleged Blake, the entity, prepared an “as is” real estate appraisal used by a
bank/lender and which was also referred to in the offering documents. On the other hand,
there are many specific allegations regarding how the ARGUS Defendants and others
prepared the PPM, advertised the investment, and persuaded investors to participate in a
complex “real estate scam” profiting those directly liable defendants. There are no
allegations suggesting Blake profited due to its purported role in defrauding the Plaintiffs.
Plaintiffs argue the complaint alleged or could be amended to say Blake
had “actual knowledge” the appraisal would be given to the Plaintiffs and that Blake
14
knew the financial impact of the highway expansion was concealed. These are tangential
allegations, insufficient to revive a claim based on an aiding and abetting theory. Aiding
and abetting depends on proof Blake had actual knowledge of the true nature of the entire
real estate scam and gave substantial assistance to the directly liable defendant (the
ARGUS Defendants). In this case, the SAC alleged the fraudulent scheme involved
multiple layers of intricate misrepresentations reaching far beyond the contents of the
appraisal. Moreover, the complaint was silent as to the relationships between the
appraiser and others in this complex transaction. How did Blake learn its appraisal would
be given to and relied on by others in addition to the bank? The allegation Blake
“recklessly disregarded” information about the highway widening is at absolute odds
with the theory Blake actually knew the highway plans were being concealed from
potential investors. Blake cannot knowingly withhold information it may have recklessly
failed to discover. We conclude the pleadings in the SAC were insufficient to support an
“aiding and abetting” claim against Blake. We agree with the trial court’s decision the
complaint failed to allege facts to support the conclusion Blake had “‘actual knowledge’
that the directly liable defendant intended to commit ‘a specific wrongful act’ and that
[Blake] gave substantial assistance to the directly liable defendant.”
B. Direct Liability for Fraud
Plaintiffs maintain the seventh cause of action for fraudulent concealment
“sufficiently alleges [Blake was] directly liable.” They acknowledge the cause of action
“consists of allegations against all defendants generally” but also “only advances a direct
theory of liability against” them all. Plaintiffs point out this cause of action does not
mention the phrases aiding and abetting or vicarious liability. In addition, Plaintiffs
contend the SAC sufficiently alleged Blake had an “[a]ffirmative [d]uty” to disclose the
financial impact of the highway widening project in its “as is” appraisal. Blake’s
disregard of information about the highway when valuing the property meant the
“appraisal concealed material facts”
15
We agree the cause of action appears to be based on a theory of direct
liability as to all defendants. But only that much is clear. The same cannot be said about
the allegations connecting Blake’s appraisal to any actionable misconduct. As noted in
the trial court’s minute order, “[P]laintiffs were put on notice as to the need to plead with
greater specificity regarding the roles played by each of the defendants and their alleged
acts or omissions.” The court previously cautioned Plaintiffs to stop simply suing anyone
who had anything to do with the transaction. Apparently this warning went unheeded.
The sixth seventh cause of action simply pleads all defendants concealed all the same
facts, making “the disclosures deceptive.”
We recognize the seventh cause of action refers to facts described in
paragraphs 1 to 217 of the SAC, which provided more details about the perceived real
estate scam. Within this lengthy factual summary, a subheading titled, “The
Misrepresentations and Material Non-disclosures,” containing paragraphs 107 to 128
devoted to discussing several different instances of misconduct. Blake’s name is
mentioned one time in paragraph 115, and Plaintiffs maintain this reference satisfies the
specificity requirements to support their theory Blake was directly liable for fraudulent
concealment. We disagree.
In paragraph 115, Plaintiffs alleged the following: “The PPM and Offering
failed to disclose that the Property building . . . fronts a section of Texas State Highway
183 (SH183) was slated for widening (the ‘Highway Widening’) which would materially
and adversely impact the value of the Property and ergo the investment.” (Italics added.)
Plaintiffs alleged information about the highway widening “was available” to Blake and
the ARGUS Defendants when the investment was made. They refer to a 1999 TxDOT
study, a series of public hearing from 1999-2005 concerning engineering and
environmental matters, and presentations at a City Council meeting on April 28, 2005.
The SAC alleged the PPM was dated August 4, 2005, but did not include the date the
highway widening project was actually approved by city officials or scheduled to begin.
16
Plaintiffs did not unequivocally assert the “due diligence professionals” actually knew
about the city works project and intentionally withheld the information, rather they allege
the professionals either “knew or recklessly disregarded information” regarding the
highway widening project. Finally, Plaintiffs offered no explanation as to why these
specific professionals owed Plaintiffs the duty of due diligence or to report on a proposed
highway widening project.
We conclude the “who,” “when,” and “where” allegations were not
sufficiently pled. The SAC does not identify how Blake allegedly made a
misrepresentation to Plaintiffs. Who at the corporation directly made the false
representation? How did Plaintiffs see the appraisal, and what were they told about it?
On appeal, Plaintiffs claim they could add to their complaint allegations the
appraisal was attached to the PPM. We note the appraisal was not previously attached to
the PPMs presented to, and accepted by, the trial court or this court via judicial notice
requests. And more importantly, showing the appraisal was attached to the ARGUS
Defendant’s PPM does not solve the specificity problems. The SAC stated the appraisal
was prepared for and used by the lender (LaSalle). It can reasonably be inferred from
these allegations Blake was hired to create an appraisal to assist the bank in its evaluation
of the risks in lending money and using the Property as security. We are left guessing as
to what relationship between Plaintiffs and Blake would support the vague allegation
Blake also owed these 19 potential investors a duty to perform due diligence as part of
the “as is” appraisal. Plaintiffs do not suggest they also hired Blake to assist them in
valuing the property before investing. Significantly, there is no indication how Blake
knew Plaintiffs would receive a copy of the appraisal. As noted by Blake, a fraud claim
required allegations suggesting Blake intended to mislead or influence the Plaintiffs.
(Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 607 [“appraisal is a
value opinion performed for the benefit of the lender, there is no representation of fact
upon which a buyer may reasonably rely”]; Nymark v. Heart Fed. Savings & Loan Assn.
17
(1991) 231 Cal.App.3d 1089, 1099 [lender appraising property used as security for loan
owed no duty to borrower in preparing appraisal because its purpose was to protect lender
not borrower].)
The complaint also lacks specificity with respect to the elements of actual
and justifiable reliance. “‘The causation aspect of actions for damage for fraud and
deceit involves three distinct elements: (1) actual reliance, (2) damage resulting from
such reliance, and (3) right to rely or justifiable reliance.’ [Citation.] Thus, there are two
causation elements in a fraud cause of action. First, the plaintiff’s actual and justifiable
reliance on the defendant’s misrepresentation must have caused him to take a detrimental
course of action. Second, the detrimental action taken by the plaintiff must have caused
his alleged damage.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062 (Beckwith).)
“To allege actual reliance with the requisite specificity, ‘[t]he plaintiff must
plead that he believed the representations to be true . . . and that in reliance thereon (or
induced thereby) he entered into the transaction. [Citation.]’ [Citation.]” (Beckwith,
supra, 205 Cal.App.4th at p. 1063.) To allege the reliance was justifiable, “[t]here must
be more pled than a simple statement plaintiff justifiably relied on the statements.
[Citation.] The complaint must contain ‘allegations of facts showing that the actual
inducement of plaintiffs . . . was justifiable or reasonable. [Citations.]’ [Citation.]” (Id.
at pp. 1066-1067.) Blake points to allegations in the original complaint where Plaintiffs
admitted the highway widening was publically available news when Plaintiffs invested in
the Property. Blake argues deletion of these allegations from the SAC was a transparent
attempt to breathe life into a defective complaint.
We agree it is significant Plaintiffs deleted from the original complaint a
paragraph stating the Property, fronting the highway, “had well known bottleneck issues”
and was “slated for widening.” This allegation suggests a concession the 1.4 billion
dollar city works project was a familiar public news event by the date of Plaintiffs’
investment in late 2005. As noted in the SAC, the Texas Department of Transportation
18
proposed the roadwork as early as 1999, and there were public hearings held for the next
six years (including a City Council meeting). Plaintiffs made no effort to explain why
they would be legally excused from discovering matters of public knowledge.
“Under the sham pleading doctrine, plaintiffs are precluded from amending
complaints to omit harmful allegations, without explanation, from previous complaints to
avoid attacks raised in demurrers or motions for summary judgment. [Citations.] A
noted commentator has explained, ‘Allegations in the original pleading that rendered it
vulnerable to demurrer or other attack cannot simply be omitted without explanation in
the amended pleading. The policy against sham pleadings requires the pleader to explain
satisfactorily any such omission.’ (Weil & Brown, Cal. Practice Guide: Civil Procedure
Before Trial (The Rutter Group 2005) ¶ 6.708, p. 6-142.1.)” (Deveny v. Entropin, Inc.
(2006) 139 Cal.App.4th 408, 425-426.)
Plaintiffs provide no explanation for why the allegation was omitted from
the SAC. Nor do Plaintiffs allege they were prevented from learning about the wellknown
highway expansion plans. As noted by Blake, the SAC asserts the information
was readily available to anyone, and even the most superficial diligence regarding the
Property would have revealed it would lose parking if the highway project was approved.
We find inadequate the vague allegations that a group of defendants owed
Plaintiffs a special “duty” to conduct due diligence on their behalf. Plaintiffs do not
describe any relationship creating such a duty. As mentioned, Plaintiffs do not assert
they hired Blake or why they would reasonably anticipate Blake would conduct the
appraisal to protect Plaintiffs’ financial interests. Additional and specific allegations
would have been required to raise the inference the entity preparing this type of appraisal
also owed each individual (who were merely potential investors) a duty to predict the
Property’s value if a proposed highway project was approved and if the city’s plans
negatively impacted the Property. And we find telling Plaintiffs’ opposition (and
argument on appeal) conceded Blake prepared an “as is” valuation for the bank before the
19
highway project was officially approved. Plaintiffs do not explain why an “as is”
appraisal must disclose unapproved city construction plans. Additional facts were
required to establish such a specific and unusual duty between the Plaintiffs and bank’s
appraiser. We conclude the pleadings in the SAC were insufficient to support a
fraudulent concealment cause of action against Blake.
III. Questions of Fact in the SAC
Plaintiffs assert the court erroneously decided questions of fact when ruling
on the demurrer. They argue “a pivotal issue in the case” was what the PPM disclosed
regarding the Property’s purchase price. They add, “Notwithstanding [that Blake was]
not alleged to have aided and abetting the costs misrepresentations . . . and the court
offered no discussion on the [highway] expansion misrepresentations . . . the trial court
sustained [Blake’s demurrer] on this basis.” Not so.
Blake’s demurrer did not contain any argument concerning what the PPM
disclosed regarding the purchase price. Plaintiffs reply to Blake’s demurrer did not
mention it either. All the briefing concerned the two fraud claims based on the highway
widening issue. We found nothing in the court’s ruling suggesting the PPM’s purchase
price disclosure was the reason it sustained Blake’s demurrer without leave to amend.
We have concluded Blake’s demurrer to the two fraud claims was properly sustained
without leave to amend because there were problems with specificity and certainty.
These problems were discussed in general terms in the court’s mega ruling. We need not
consider an issue having no relevance to merits of the fraud claims alleged against
Blake.
3
IV. Discussion of Original Complaint-Unfair Competition Law (UCL) Cause of Action
Plaintiffs argue Judge Andler improperly sustained demurrers to their UCL
(Bus. & Prof. Code, §17200 et seq.) claim asserted in the original complaint. They

3 We reviewed and rejected the cost misrepresentation issue in Gee I, supra,
G050844.
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explain her ruling was based on the determination the UCL did not apply to security
transactions pursuant to Bowen v. Ziasun Technologies, Inc. (2004) 116 Cal.App.4th 777
(Bowen). They assert the case is no longer controlling.
Blake argues the UCL claim was deleted from the SAC and was not subject
to Blake’s demurrer to the SAC. Blake did not demur to the original complaint and it
was not the basis for the trial court’s ruling dismissing Blake from the case. Blake
concludes the argument is moot.
In the beginning of their opening brief, Plaintiffs appear to concede this
point. They state “There was no final determination against any cause of action in the
first amended complaint relevant to this appeal. The SAC is the operative complaint
here.” Along the lines of this statement, Plaintiffs did not include in the appellant’s
appendix any documents relating to the earlier rounds of demurrers. However, in their
reply brief, Plaintiffs argue Blake received the benefit of the ruling on the original
complaint although it did not demur to it. They explain deletion of the UCL claim was
not a voluntary dismissal of the claim and therefore the issue was not moot.
It is our task to review the complaint de novo to determine whether or not
the complaint “alleges facts sufficient to state a cause of action under any legal theory[.]”
(Cantu v. Resolution Trust Corp. (1992) 4 Cal.App.4th 857, 879.) However, to establish
Plaintiffs adequately pleaded the UCL claim, they “must show that [they] pleaded facts
sufficient to establish every element of that cause of action. [Citation.] (Ibid.; Friendly
Village Community Assn., Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220,
224-225.) Plaintiffs do not discuss the required elements of a UCL cause of action, refer
to facts supporting their UCL claim, or provide legal authority to support the argument
they alleged sufficient facts to overcome a demurrer. Instead, Plaintiffs limit their
argument on appeal to attack the applicability of the Bowen case and cite case authority
to support their theory Business and Professions Code section 17200 applies to a
securities transaction. Thus, if we assume for the sake of argument (without deciding)
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Plaintiffs were right about the applicability of the Bowen case and right about the
mootness issue, we would still affirm the judgment because Plaintiffs did not meet their
burden of demonstrating error.
Finally, we note Blake did not demurrer to the original complaint and the
UCL claim was deleted from the SAC. Our record does not contain copies of the
successful demurrers filed by various defendants to the original complaint.
Consequently, we cannot determine if there were other arguments raised in those
demurrers that would have negated other elements of the UCL cause of action. Plaintiffs
made no effort to take the basic steps of stating which facts properly establish any
element of the UCL cause of action against Blake.
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
O’LEARY, P. J.
WE CONCUR:
BEDSWORTH, J.
MOORE, J.