Opinion
B322670
03-25-2024
BUCKET SOCIAL, et al., Plaintiffs and Appellants, v. KEVIN O'LEARY, Defendant and Respondent.
The Lovell Firm, Tre Lovell, Yuval M. Rogson; Vereschagin Law Firm and Bryan W. Vereschagin for Plaintiffs and Appellants. Lavely & Singer, Paul N. Sorrell; Berk Brettler and Andrew B. Brettler for Defendant and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order and a judgment of the Superior Court of Los Angeles County, No. 21STCV32370 Rupert A. Byrdsong, Judge. Affirmed.
The Lovell Firm, Tre Lovell, Yuval M. Rogson; Vereschagin Law Firm and Bryan W. Vereschagin for Plaintiffs and Appellants.
Lavely & Singer, Paul N. Sorrell; Berk Brettler and Andrew B. Brettler for Defendant and Respondent.
STRATTON, P. J.
Appellant Bucket Social and numerous other inventors and entrepreneurs (appellants) sought start-up capital to launch their products and businesses through crowdfunding platforms. Appellants engaged defendants InventureX and Ideazon (Companies) to provide crowdfunding campaigns. Defendant and respondent Kevin O'Leary (O'Leary) is a celebrity best known for his affiliation with the television program "Shark Tank" and his purported expertise in identifying financially viable business ideas and successful entrepreneurs. O'Leary permitted the Companies to include statements, photos and or video featuring him attesting to the crowdfunding acumen of two of the Companies' executives.
Collectively, appellants allege that they hired the Companies and paid hundreds of thousands of dollars for what turned out to be worthless or nonexistent phased crowdfunding campaigns. Some appellants claim to have engaged the Companies' services, in part, in reliance on O'Leary's stellar reputation and the Companies' marketing in which O'Leary praised the expertise of Matt Green and Mark Campbell, two of the Companies' executives. Appellants claim to have relied, in part, on O'Leary's statements which led them to believe these executives were seasoned, successful experts in the field, thereby luring appellants to pay and contract with the Companies for sham crowdfunding campaigns.
As against O'Leary, the complaint alleges four causes of action for unfair business practices, false advertising, negligence and negligent misrepresentation. The trial court sustained without leave to amend O'Leary's demurrer as to all four claims, and dismissed the action as to him. This appeal followed. Finding no error, we affirm.
BACKGROUND
As relevant here, the complaint alleges that O'Leary, the Companies and their possibly fictional executives and others lured entrepreneurs into paying substantial sums to launch their nascent businesses and products in "the crowdfunding space and generate great interest and investment." Unbeknownst to appellants, the Companies were engaged in a "diabolical and brazen scam to defraud . . . hundreds, if not thousands, of innocent, hard-working entrepreneurs" by "extract[ing] their money and then virtually disappear[ing] under the guise of delays, minimal to no performance, and no results."
The executives are Ideazon's vice president, Matt Green (Green), and InventureX's vice president of marketing Mark Campbell (Campbell). Appellants believe that Green is a fictitious person, and that the photograph of him on Ideazon's website is a stock photo anyone can purchase. Appellants similarly assert that Campbell is "a wholly fictitious person."
Appellants assert that the defendants "are all so intertwined and comingled" they do not exist as separate personalities, and that the Companies-which are "carbon cop[ies]" of one another-and their affiliates, "no longer exist." By late 2019, InventureX was allegedly "exposed as a sham fraud entity on various internet blog sites," and both Companies are effectively shuttered.
Several statements by O'Leary were included in the Companies' marketing materials. The complaint does not claim O'Leary had direct contact or any contractual relationship with any appellant. Rather, O'Leary is alleged to have participated in the Companies' predatory scheme in that some appellants "were lured by the involvement, endorsement and credibility" of O'Leary "who, by [his] very nature, reputation and history [is a] financial and business expert[] in identifying successful ideas, businesses and entrepreneurs." Appellants claim they trusted and relied on the judgment and endorsements of O'Leary, aka "Mr. Wonderful," a "Shark Tank powerhouse" in choosing to engage the Companies. As a result, they were unwittingly led to their demise by buying "into the dream, [only to endure] agonizing months, if not years, of frustration and distress of trying to get their products launched and businesses started with no results."
Not all appellants claim to have been misled by O'Leary's statements. We nevertheless address appellants' assertions of error collectively given their representation that "[e]ach and every victim's story is virtually the same."
Appellants maintain that O'Leary used his fame and reputation to induce them to engage the Companies' services. O'Leary "endorsed the primary executives of both companies in the scam . . ., alluding to their top qualification[s] and sound abilities in the crowdfunding world[,]" even though the executives he endorsed "were mere 'fictional profiles.'" Appellants claim O'Leary owed them a duty of care, and would have known these facts had he made even a "minimal inquiry to see if the actual individuals that he was applauding, praising and providing accolades even existed, let alone were legitimate, credible people worthy of his endorsement." O'Leary permitted his likeness and statements to be depicted in the Companies' marketing materials even though "he either knew or should have known that his [representations] were being used [by the Companies] to convince people and businesses like" appellants to sign on to the Companies' scam.
As specifically alleged in the complaint, O'Leary endorsed the Companies and their primary executives "referring to them by name, alluding to their top qualifications and sound abilities in the crowdfunding world." As to InventureX, O'Leary's alleged involvement was as follows:" 'See what Kevin O'Leary Aka "Mr. Wonderful" From The Hit TV Show SHARK TANK Has to Say about InventureX and Our Company's Vi[c]e-President.'" In a video on the website, O'Leary stated, "It's Mr. Wonderful from Shark Tank here, and I wanted to talk a little bit about InventureX. And really congratulate [Campbell] for helping over 50 entrepreneurs and ideas this year using crowd funding. Look, everybody knows crowdfunding is the new frontier in entrepreneurship and it's a fantastic way to get going. You need help to do it; Mark [Campbell]'s your man. He helped over 50 companies do this. So look, that's worth something baby. I got to tell you-anybody who can help start a company is a very cool guy. .,, Anyways, keep up the good work in 2019-why stop now? Keep helping people with crowd funding, Mark. Fantastic work." O'Leary's praise for Campbell is reiterated in an InventureX brochure entitled, "LEARN HOW YOU CAN BE OUR NEXT SUCCESS STORY!" O'Leary's photo is featured and the document states, "Kevin O'Leary, aka 'Mr. Wonderful' from the hit TV show Shark Tank congratulates [Campbell] for helping over 50 entrepreneurs launch successful crowdfunding campaigns in 2018." With regard to Ideazon, O'Leary is featured in marketing material stating, "Hi, Mr. Wonderful from Shark Tank here. I wanted to give a really big shout out to Matt Green at the Ideazon marketing agency for being a pioneer in the crowdfunding marketing space, and helping people launch their ideas on that fantastic platform that I love, Start Engine. You know, crowd funding is an amazing platform. I'll tell you why. Instead of the traditional private equity or venture capital, you get to sell equity to a wide range of people that don't have any time agenda. [Many] of them may be your customers. Now, [Green] knows this, so check out Matt [Green] at Ideazon to help you get started to put together a campaign to launch an equity crowd funding on Start Engine. It's a fantastic idea. Lots of my companies are doing it. It's the new way to fund a business. The Jobs Act allows you to do one-million and seventy-thousand. You need help in putting it together, though, and that's what [Green's] really good at. Take care, my friends." The complaint includes copies of photos and marketing materials (many of which are indiscernible) as purported examples of how O'Leary's "statements and endorsements were integrally part of the websites and marketing material for both companies."
According to appellants, O'Leary's actions demonstrate a complete lack of due diligence to determine the existence or legitimacy of people or companies he endorsed. Indeed, appellants claim O'Leary operates a "cottage industry" selling his name and reputation, and that his endorsement may readily be obtained simply "by filling out a short form and paying a fee." Such endorsements are allegedly made "without [O'Leary] knowing anything about the person or the business prior to endorsing them."
In one video in which he extolls the virtues of crowdfunding, O'Leary notes that he is a shareholder, "strategic advisor" and paid spokesperson for "Start Engine," a separate crowdfunding platform that Green helped launch. Appellants "believe" that Start Engine "works with and collaborates with" at least one of the Companies. Appellants claim that by "convincing people to sign up with [the Companies]," O'Leary's own business "directly profit[ed] and financially benefit[ted].
Appellants claim that O'Leary's celebrity reputation, his financial credibility, and his involvement with and endorsement of the Companies made the Companies stand out from their competitors. These factors were a material component in inducing appellants to pay thousands of dollars to engage in Companies' fraudulent scheme, for which they received none or virtually none of the promised services.
In September 2021, appellants filed the operative initial complaint alleging 16 claims against 17 named entities and individuals. O'Leary is a defendant as to four claims:
(1) Unfair Business Practices: O'Leary's conduct allegedly constitutes "unlawful, unfair and/or fraudulent business practices in violation" of section 17200 of the Business and Professions Code (UCL): Appellants seek "restitution and the disgorgement of all earnings, profits, compensation and benefit obtained by [O'Leary] as a result of [his] conduct."
(2) False Advertising: O'Leary's conduct constituted "untrue and/or misleading advertising in the form of written and oral statements "included in the Companies' promotional materials, websites, videos, marketing and other forms of media advertising, in violation of Business and Professions Code section 17500 (FAL). O'Leary's conduct represents a pattern of "improper business practices . . . that deceived [appellants] into investing money into a fraudulent crowdfunding development, marketing and launch scheme." O'Leary "knew or should have known in the exercise of reasonable care" that his representations were false or misleading. Appellants seek restitution and disgorgement of all earnings, profits, compensation and benefits O'Leary obtained by O'Leary as a result of his conduct.
(3) Negligence: O'Leary's conduct was negligent in that he breached an unspecified duty of care owed to appellants. His negligent acts or omissions were a substantial factor in causing appellants' harm. As a direct and proximate result of O'Leary's conduct, appellants claim to have suffered "actual, general and special damages."
(4) Negligent Misrepresentation: O'Leary made numerous false representations regarding the Companies' crowdfunding development, marketing, launch services and products, as well as false statements attesting to the credibility of the Companies' principals. O'Leary lacked a "reasonable basis for making the representations, and either knew or should have known [they] were false." O'Leary allegedly intended for appellants to rely on his endorsements and attestations. Appellants claim to have reasonably relied on O'Leary's representations and, as a result, suffered "actual, general and special damages."
O'Leary responded to the complaint by filing a demurrer. He argued appellants had failed to state facts sufficient to constitute a viable claim against him, and the claims were fatally uncertain. (Code Civ. Proc., § 430.10, subds. (e), (f).)
Following a hearing in February 2022, the trial court sustained O'Leary's demurrer as to each cause of action, and denied appellants' request for leave to amend. In sustaining the demurrer the trial court observed:
"I have tried to-based on what I could see in the complaint, I've tried to put together, you know, how this relationship came about and I don't see the relationship. I don't see the privity. I don't see any rational reliance upon any representation [O'Leary] may have made to the public universe, vis-a-vis making specific representations and misleading statements to [appellants]. [¶] [Appellants] would be inviting what I would fairly characterize as Pandora's Box for any pitch person who indicates that they're supporting a type of product or person and they would be liable based on people's belief that what they said was true ....[¶] There may be some other things going on, but based on what I saw as to what O'Leary did and for which he should be liable, I am struggling to see that. [¶] . . . [¶] If [appellants] had direct communication from [O'Leary] regarding these representations, that would be a different story. [¶] But what [the court] glean[s] from the complaint is this is a pitchman and somehow because of his status, expertise, or whatnot, if anything goes south based on his representation, that he's supposed to be accountable to that when he's speaking to the public. That . . . is not supported by any case law ...."
The court acknowledged that appellants may have viable claims, just not against O'Leary.
The court entered judgment in May 2022 and the action was dismissed as to O'Leary. This appeal followed.
DISCUSSION
Appellants maintain that the trial court erred in sustaining O'Leary's demurrer without leave to amend because the complaint alleges facts sufficient to support the claims alleged. Alternatively, they maintain that they should be given an opportunity to amend their initial complaint.
1. The Standard of Review.
A demurrer tests the legal sufficiency of the challenged pleading. (Milligan v. Golden Gate Bridge Highway & Transportation Dist. (2004) 120 Cal.App.4th 1, 5.) In reviewing a judgment of dismissal after a demurrer is sustained without leave to amend, we assume the truth of all properly pleaded facts and examine the factual allegations to determine if they state a cause of action on any available legal theory. (Fischer v. Time Warner Cable Inc. (2015) 234 Cal.App.4th 784, 790.) We do not assume the truth of contentions, deductions, or conclusions of fact or law. (Dudek v. Dudek (2019) 34 Cal.App.5th 154, 163 (Dudek).)
" 'When a demurrer 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." '" (Dudek, supra, 34 Cal.App.5th at p. 163.) Appellants shoulder the burden of showing that an amendment would cure the defect (Campbell v. Regents of University of California (2005) 35 Cal.4th 311, 320), and may make that showing in the first instance on appeal. (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 322.)
2. The Complaint Fails to Allege Facts Sufficient to State a Claim for Violation of the UCL or the FAL.
Appellants merge their assertions of error as to dismissal of their statutory claims because the UCL claim for unfair business practices is predicated on O'Leary's violation of the FAL. The statutes share similar attributes and often are analyzed together. (Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 210, superseded by statute on other grounds as stated in Californians for Disability Rights v. Mervyn's,, LLC (2006) 39 Cal.4th 223, 228 (Committee on Children's Television); Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 320 (Kwikset) [the FAL is as comprehensive as the UCL within the narrower field of false and misleading advertising].) A practice that violates the FAL also violates the UCL. (See Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 950-951 (Kasky); Hadley v. Kellogg Sales Co. (N.D. Cal. 2017) 243 F.Supp.3d 1074, 1089 [In determining whether a complaint was properly dismissed at the pleading stage, claims for violation of the FAL and the fraudulent or unlawful prongs of the UCL are analyzed simultaneously].)
a. Unfair Competition
The UCL does not proscribe specific acts, but broadly prohibits unfair competition, which it defines as "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising." (Bus. & Prof. Code, § 17200.) Its purpose "is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services." (Kasky, supra, 27 Cal.4th at p. 949; see Kwikset, supra, 51 Cal.4th at p. 320.) Individual standing to sue under the UCL is limited to persons who have had business dealings with a defendant and have lost money or property as a result of the defendant's unfair business practices. (Kwikset, at p. 321.)
To succeed on a claim for violation of the UCL the plaintiff must plead and prove: (1) either an" 'unlawful, unfair, or fraudulent business act or practice,'" or" 'unfair, deceptive, untrue or misleading advertising'" (Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal.4th 163, 180 & fn. 8 (Cel-Tech), (2) plaintiff suffered economic injury (§ 17204; Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th 544, 555 (Law Offices); Kwikset, supra, 51 Cal.4th at p. 322), and (3) the economic injury was caused by defendant's unfair business practice. (Kwikset, at p. 322.) Because the statute is written in the disjunctive, a business practice need meet only one of these criteria to be considered unfair competition. (Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1381.)
b. False Advertising
The FAL "broadly prohibit[s] false or misleading advertising, declaring that it is unlawful for any person or business to make or distribute any statement to induce the public to enter into a transaction 'which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading.'" (Nationwide Biweekly Administration, Inc. v. Superior Court (2020) 9 Cal.5th 279, 305-306 (Nationwide).) The FAL is" 'designed to protect consumers from false or deceptive advertising'." (Id. at p. 305.)
Like the term "unfair" in the UCL, the governing standard of the FAL is set forth in open-ended language intended to permit a court of equity to reach novel or creative schemes of false or misleading advertising deceptive businesses may devise. (Nationwide, supra, 9 Cal.5th at p. 308; see, e.g., Kwikset, supra, 51 Cal.4th at p. 320.) The FAL prohibits" 'not only advertising which is false, but also advertising which[,] although true, is either actually misleading or which has a capacity, likelihood or tendency to deceive or confuse the public.' [Citation.] Thus, to state a claim under either the UCL or the [FAL], based on false advertising or promotional practices, 'it is necessary only to show that "members of the public are likely to be deceived." '" (Kasky, supra, 27 Cal.4th at p. 951; Committee on Children's Television, supra, 35 Cal.3d at p. 211.)
c. Analysis
Appellants have failed to make a sufficient showing under either statute. O'Leary's vague statements of opinion regarding the benefits of crowdfunding, and praise for the business acumen of two of the Companies' executives did not constitute factual statements on which a reasonable business person would credibly rely.
As detailed above, the statements attributed to O'Leary reflect his personal enthusiasm for crowdfunding as a new frontier for entrepreneurs. O'Leary also expressed his view that the Companies' principals were experienced in the field, were "cool" and could help. Such vague and generalized statements of opinion are merely generalized hype. They cannot reasonably be construed as specific factual representations upon which members of the public seeking crowdfunding assistance for new projects or businesses would reasonably rely. (See Hasso v. Hapke (2014) 227 Cal.App.4th 107, 139-140 [no justifiable reliance on investment advisor's statements that risk of investment would result in anything more than minimal loss].)
First, as to Ideazon, the complaint alleges only that, O'Leary said he "wanted to give a really big shout out to [Green] for being a pioneer in the crowd-funding marketing space, and helping people launch their ideas." O'Leary extolls the virtues of crowdfunding as a funding source. O'Leary also refers to Green's help launching Start Engine, a crowdfunding platform with which O'Leary is affiliated. However, to the extent that his statements relate to Ideazon, they refer specifically only to O'Leary's expression of opinion as to Green's experience in the field. We reject appellants' assertion that O'Leary's back-slapping statements that Green had been "really good" at "put[ting] together a campaign to launch an equity crowd funding on Start Engine[s]'" platform, constitutes an endorsement of Ideazon itself on which the public could reasonably rely.
As to InventureX, the complaint alleges that appellants were exposed to O'Leary's statements through the company's marketing materials and website. Again, however, the statements ascribed to O'Leary in those materials do not endorse InventureX, per se. Rather, in the material in which he is featured, O'Leary specifically "congratulate[s] Mark [Campbell] for helping over 50 entrepreneurs and ideas . . . using crowd funding," and opined that, "Mark's your man.... [A]nybody who can help start a company is a very cool guy." (Italics added.) Without referring either to InventureX or Campbell, O'Leary broadly asserts that "everybody knows crowdfunding is the new frontier in entrepreneurship and it's a fantastic way to get going."
Under the UCL, appellants must establish a causal link between the challenged act (alleged unfair competition) and their injuries. (Hall v. Time, Inc. (2008) 158 Cal.App.4th 847, 855-856, fn. omitted (Hall); see Kwikset, supra, 51 Cal.4th at p. 326.) To do so, plaintiffs need not show they engaged in direct business dealings with the defendant. (Law Offices, supra, 214 Cal.App.4th at pp. 563-565.) But appellants must demonstrate "actual reliance on the allegedly deceptive or misleading statements," and that they were motivated to act based, at least in part, on defendant's representations. (In re Tobacco II Cases (2009) 46 Cal.4th 298, 306, 326 [plaintiff must show the defendant's misrepresentation was an immediate-but not necessarily the sole-cause of the injury].)
O'Leary's broad expression of enthusiasm for crowdfunding in general, his vague statements that crowdfunding is a "new frontier" in entrepreneurship and his opinion and representations that the Companies' executives were "cool," or good at what they did are subjective statements of opinion or mere "puffery." As such, the statements are insufficient to rise to the level of actionable representations likely to deceive a target audience, and on which that audience could or did justifiably rely. "Representations of opinion, particularly involving matters of value, are ordinarily not actionable representations of fact" and cannot support a claim for "fraudulent" business practices under the UCL. (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606; Newcal Industries v. Ikon Office Solution (9th Cir. 2008) 513 F.3d 1038, 1053 ["A statement is considered puffery if the claim is extremely unlikely to induce consumer reliance. Ultimately, the difference between a statement of fact and mere puffery rests in the specificity or generality of the claim"].)
Appellants' failure to state a claim under the FAL also defeats their contention that O'Leary violated the UCL. The UCL prohibits "unlawful, unfair or fraudulent business act or practice," as well as a violation of the FAL. (See Puentes v. Wells Fargo Home Mortgage, Inc. (2008) 160 Cal.App.4th 638, 643644.) The UCL"' "borrows" '" violations under other laws and treats them as actionable unlawful practices. (Cel-Tech, supra, 20 Cal.4th at p. 180.) Other than their claims that O'Leary falsely advertised the virtues of the Companies-which we reject- there is no underlying claim for "unlawful, unfair, or fraudulent business act or practice," a necessary predicate for violation of the UCL.
Appellants failed to state an actionable violation of the FAL-and by extension the UCL. The trial court did not err in dismissing the sixth and eighth causes of action.
The parties devote portions of their appellate briefs to the nature and propriety of relief appellants sought. We need not discuss these contentions. First, a motion to strike, not a general demurrer, is the procedure to attack an improper claim for remedies demanded in the complaint. A general demurrer challenges only the sufficiency of the cause of action pleaded; a demand for improper relief does not vitiate an otherwise valid cause of action. (Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1561-1562; Caliber Bodyworks, Inc. v. Superior Court. (2005) 134 Cal.App.4th 365, 385, (disapproved on other grounds by ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 196, fn. 8.) An improper remedy is grounds for a motion to strike. The record indicates that O'Leary may have filed a motion to strike concurrently with his demurrer. However, that motion is not part of the record, and there is no indication that the trial court relied on O'Leary's improper remedy theory as a basis for its ruling on the demurrer. Indeed, the court took O'Leary's motion to strike off calendar.
3. The Court did not Err in Sustaining the Demurrer to the Claims for Negligence and Negligent Misrepresentation.
a. Negligence
The overarching question is whether O'Leary had a duty to appellants. The claim for negligence alleges only that O'Leary owed appellants an unspecified duty of care, and that his acts or omissions were a substantial factor in causing appellants' harm. Appellants do not provide any authority to support their contention that O'Leary owed them a duty of care, the nature of such a duty, nor do they claim to have been in privity with the celebrity spokesman.
The predicate of any negligence claim is that the defendant owes a duty to the plaintiff. The existence and scope of duty are questions of law. (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 674, disapproved on another ground by Reid v. Google, Inc. (2010) 50 Cal.4th 512, 527, fn. 5.) "To say that someone owes another a duty of care' "is a shorthand statement of a conclusion, rather than an aid to analysis in itself.... '[D]uty' is not sacrosanct in itself, but only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection." [Citation.]' [Citation.] '[L]egal duties are not discoverable facts of nature, but merely conclusory expressions that, in cases of a particular type, liability should be imposed for damage done.' [Citation.]" (Hoff v. Vacaville Unified School Dist. (1998) 19 Cal.4th 925, 933.)
O'Leary is a celebrity spokesman purportedly known for his financial expertise. O'Leary had no direct contact with any appellant, but his broad statements regarding his positive experiences with the Companies' executives were included in marketing materials to which appellants were exposed as they shopped for a crowd funding source.
As explained above, a glaring deficiency in the complaint is appellants' conclusory allegation that O'Leary actually endorsed and promoted the Companies' themselves. Our reading of the complaint reflects only that O'Leary expressed his enthusiasm for crowdfunding as a business model, and his positive experiences with and opinions about the crowdfunding acumen of two of the Companies' executives. Nothing in the complaint indicates O'Leary certified the Companies as valid investment firms.
Further, the complaint does not allege that O'Leary was in privity with appellants and failed an obligation to ensure that the Companies he allegedly promoted put appellants' funds to proper use or fulfilled their contractual obligations. Nor do appellants cite any authority to suggest such a duty exists. "The determination whether in a specific case the defendant will be held liable to a third person not in privity is a matter of policy and involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm. [Citations.]" (Biakanja v. Irving (1958) 49 Cal.2d 647, 650.)
Appellants allege no facts to indicate that O'Leary's praise for the Companies' principals or crowdfunding itself as a promising source for start-up capital was intended to affect appellants or that it was foreseeable to him that appellants would be harmed by his subjective opinion. Nor is there any close causal connection between O'Leary's statements and the harm appellants concededly suffered. As noted by the trial court, the complaint does contain allegations that indicate appellants were wronged and that "somebody should be held responsible for what happened to [them, but] [i]t doesn't sound like [O'Leary] is the particular person." We agree. "As a matter of economic and social policy, third parties should be encouraged to rely on their own prudence, diligence, and contracting power, as well as other informational tools. This kind of self-reliance promotes sound investment . . . practices and discourages the careless use of monetary resources." (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 403 (Bily).)
b. Negligent Misrepresentation
The elements of a claim for negligent misrepresentation are: (1) a misrepresentation of a past or existing material fact, (2) made without reasonable grounds for believing it to be true, (3) with intent to induce another's reliance on the fact misrepresented, (4) plaintiff's ignorance of the truth and justifiable reliance on the misrepresentation, and (5) damages. (Fox v. Pollack (1986) 181 Cal.App.3d 954, 962.) The causal elements, particularly allegations of actual and justifiable reliance, must be pled specifically. (See Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184-185; Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.)
The gravamen of appellants' claims for negligence and negligent misrepresentation are premised on the same alleged acts or omissions. There is no meaningful distinction between the two claims. (See Holcomb v. Wells Fargo Bank, N.A. (2007) 155 Cal.App.4th 490, 501.) [allegations of negligence claim which duplicate a claim for negligent misrepresentation are insufficient to support a separate cause of action].) In Bily, investors alleged claims of negligent misrepresentation and negligence against the company's auditor, premised on the investors' reliance on the auditor's findings. The Court held that, although such statements might give rise to a claim of negligent misrepresentation if the investors could establish justifiable reliance, among other things, the duplicative claim for mere negligence was improper. (Bily, supra, 3 Cal.4th at p. 413.) So too here.
An actionable misrepresentation need not be made with knowledge of actual falsity, but it must be an assertion of fact, which is not true, made without a reasonable ground for believing it to be true, and with the intent to induce the recipient to alter his position to his injury or his risk. (B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823, 834.) Opinions are ordinarily not actionable representations of fact. (Neu-Visions Sports, Inc. v. Soren/McAdam/Bartells (2000) 86 Cal.App.4th 303, 308.) However, in some instances, where a party possesses or claims to possess superior knowledge, the other party may reasonably rely on a statement of opinion as a representation of fact. (Bily, supra, 3 Cal.4th at p. 408.) In such instances," 'a deliberate affirmation of the matters stated'" can be regarded as a representation of fact even if the statement is made in the form of an opinion. (Ibid.)
Appellants contend that O'Leary's endorsements of the Companies constitute "[s]tatements of fact relating to a potential service provider's qualifications, experience, track record and detailed success [which] are material considerations in the purchase of services." They also argue they adequately alleged O'Leary specifically "promoted the services of the Companies through statements of fact that [he] 'knew or reasonably should have known' were not true" and that his "false statements were broadcast and disseminated to potential customers of the Companies expressly to induce a transaction." As detailed above, the record reflects otherwise.
The complaint does reflect that O'Leary referred to Green as a pioneer in the crowdfunding field who helped "people launch their ideas on that fantastic platform that [O'Leary loves], Start Engine." O'Leary's other statements, however, do not rise to the level of factual representations. Rather, our reading of the complaint reflects that O'Leary made only general statements about his personal enthusiasm for the crowdfunding vehicle. Nowhere is O'Leary alleged to have represented that hiring the Companies would ensure crowdfunding success, nor did he make assurances that the Companies' methods were failproof. For example, as to InventureX, O'Leary merely "congratulate[d] Mark [Campbell]," and vaguely opined that "Mark's your man. He helped over 50 companies do this. . . . I got to tell you- anybody who can help start a company is a very cool guy." Such statements cannot reasonably be construed as factual descriptions or characteristics of a service. They are merely O'Leary's subjective statements of opinion, i.e., nonactionable "puffery." (See Hauter v. Zogarts (1975) 14 Cal.3d 104, 111-113 [although representations that that the "Golfing Gizmo" training equipment itself was safe constituted a specific statements of fact, but a representation that anyone who used the training tool would soon play like golf pro Jack Nicklaus was mere puffery].)
Appellants failed to identify a reasonable basis upon which they may justifiably have relied on O'Leary's general statements or expressions of opinion. The trial court did not err in sustaining without leave the demurrers to the ninth and tenth causes of action for negligence and negligent misrepresentation.
4. Denial of Leave to Amend
Appellants argue that the trial court abused its discretion by denying them leave to amend to assert viable claims. As the party challenging the denial of leave to amend, it is appellants' burden "to show what facts [they] could plead to cure the existing defects in the complaint. [Citation.] 'To meet this burden, [appellants] must submit a proposed amended complaint or, on appeal, enumerate the facts and demonstrate how those facts establish a cause of action.'" (Total Call Internat., Inc. v. Peerless Ins. Co. (2010) 181 Cal.App.4th 161, 166.)
Appellants assert that they "can supply more facts to demonstrate [O'Leary's] reckless and negligent conduct," including allegations that O'Leary lacked an "informed basis on which to assert that the Companies or their fabricated executives launched '50' successful crowdfunding campaigns or had any experience in crowdfunding." Appellants also maintain they can allege an additional legal theory of intentional deceit.
Appellants have failed to make a sufficient showing. They did not provide the trial court their proposed amendments, nor have they enumerated a detailed explanation on appeal as to how they could cure the legal defects in the claims at issue. Where, as here, "the appellant offers no allegations to support the possibility of amendment and no legal authority showing the viability of new causes of action, there is no basis for finding the trial court abused its discretion when it sustained the demurrer without leave to amend." (Rakestraw v. California Physicians' Service (2000) 81 Cal.App.4th 39, 44.)
In light of appellants' failure to demonstrate how they could cure the defective claims, we affirm the trial court's denial of leave to amend.
DISPOSITION
The trial court order sustaining O'Leary's demurrer without leave to amend and judgment thereafter are affirmed. Respondent O'Leary shall recover costs incurred on appeal.
We concur: GRIMES, J., VIRAMONTES, J.