Opinion
NOT TO BE PUBLISHED
Super. Ct. No. 06CV0158076
HULL, Acting P.J.When plaintiffs Jere Costello, John Costello, and Mike Costello learned that they would not be receiving an inheritance they had expected from their deceased father, they filed suit against their stepmother Mary Costello, The Preferred Land Company, and James Little, a real estate broker. They asserted that their father and stepmother had agreed that certain property would be left to plaintiffs, and their second amended complaint set forth eight causes of action centering on the alleged violation of this agreement. The trial court sustained defendants’ demurrer without leave to amend, dismissed the complaint, and entered judgment in favor of defendants.
On appeal, plaintiffs challenge the court’s ruling on only three of their causes of action. They contend that their complaint stated actionable claims for (1) breach of contract under a third party beneficiary theory, (2) false promise, and (3) concealment. Alternatively, they argue that the trial court erred in refusing to permit them to amend their complaint a fourth time. None of these claims has merit, and we therefore affirm the judgment.
Standard of Review
“‘A demurrer tests the sufficiency of a complaint and admits all facts properly pleaded.’ [Citation.] ‘When reviewing a judgment dismissing a complaint after the granting of a demurrer without leave to amend, courts must assume the truth of the complaint’s properly pleaded or implied factual allegations. [Citation.] Courts must also consider judicially noticed matters. [Citation.] In addition, we give the complaint a reasonable interpretation, and read it in context. [Citation.] If the trial court has sustained the demurrer, we determine whether the complaint states facts sufficient to state a cause of action.’ [Citation.] In making this determination, we are not bound by the trial court’s construction but instead make our own independent judgment as to the sufficiency of the complaint.” (Banis Restaurant Design, Inc. v. Serrano (2005) 134 Cal.App.4th 1035, 1038-1039.)
Facts and Proceedings
The following facts are taken from plaintiffs’ complaint, submitted exhibits, and matters that we judicially notice:
Plaintiffs are the children of decedent John Francis Costello (John). After a long relationship, John married defendant Mary Costello (Mary) in 1992. At the time of their marriage, John owned several pieces of real property in Los Angeles County and also owned shares in defendant The Preferred Land Company, which held title to other land. Mary owned other real estate in Shasta County.
On many occasions, both before and after his marriage to Mary, John told plaintiffs that he intended to leave his separate property to plaintiffs when he died. In 1988, John prepared a handwritten will “which demonstrates that his intent was to pass on to plaintiffs his property after his death and after the death of [Mary].” “At the time of the marriage between [John] and [Mary], there was an understanding between the two of them and between plaintiffs that the property they each owned separately at the time they were married would remain separate property and would be passed on to their respective biological children at the time of their death.”
In 2000, John began to develop Alzheimer’s disease and, two years later, became incapable of handling his affairs. According to the complaint, Mary devised a scheme, with defendant James Little acting as her real estate broker, to take John’s separate property as her own. Defendants created a trust that gave Mary sole control of the separate property promised to plaintiffs. The trust was fraudulently obtained and signed by John under duress.
Defendants had also previously sold a property owned by John to plaintiff Jere Costello “under the pretenses that they owned the legal right to sell that land on behalf of [John].”
John died in May 2006. Mary told plaintiffs that the property described in the trust would be sold and that they would receive nothing from it.
In their second amended complaint, plaintiffs alleged eight causes of action against defendants: (1) breach of contract under a third party beneficiary theory, (2) false promise, (3) concealment, (4) breach of fiduciary duty, (5) intentional infliction of emotional distress, (6) negligent infliction of emotional distress, (7) negligence, and (8) conspiracy.
The trial court issued a lengthy order sustaining defendants’ demurrer without leave to amend. Plaintiffs’ appeal challenges the court’s determination only as to three of the causes of action, and we limit our discussion accordingly. Briefly, the court concluded that the breach of contract/third party beneficiary claim was barred by the statute of frauds, and it rejected plaintiffs’ argument that equitable estoppel should be applied to avoid this result. The court also determined that plaintiffs’ claims for false promise and concealment could not be maintained because there was no reasonable reliance on any statements or acts by defendants.
The trial court refused to permit plaintiffs to amend their complaint, noting that plaintiffs had had three opportunities to plead their case and had offered no suggestion as to how their complaint might be further amended to state viable causes of action.
The court dismissed the complaint and entered judgment in favor of defendants. This appeal followed.
Discussion
I
Cause of Action for Breach of Contract-Third Party Beneficiary
Plaintiffs contend that the trial court erred in ruling that the statute of frauds barred their cause of action for breach of contract under a third party beneficiary theory. They assert that the lack of a writing is not fatal because equitable estoppel can be applied to avoid the statute of frauds. The trial court’s ruling was correct.
Plaintiffs’ first cause of action alleged that they were the “intended third party beneficiaries of an oral contract between [Mary] and [John].” According to the complaint, this contract provided that the property each owned at the time of their marriage would remain separate property “and would be passed on to their respective biological children at the time of their death. Furthermore, each party to the contract promised that, should that party predecease the other party or become incompetent, the surviving and/or competent party would not attempt to take the separate property of the other to the exclusion of the predeceasing party’s biological children.”
Plaintiffs alleged that defendants “breached this contract by causing a trust to be prepared while [John] was incompetent, the effect of which was to deprive plaintiffs of the separate property belonging to their father which was promised to them.” Plaintiffs asserted that they did not learn of this trust until after the death of their father.
In their demurrer, defendants argued that plaintiffs’ claims as third party beneficiaries under a contract could not be maintained because, as the complaint itself stated, the agreement between John and Mary was oral, not written. Plaintiffs implicitly acknowledged that such an agreement had to be in writing, but countered that equitable estoppel could be invoked to excuse noncompliance with the statute of frauds. The trial court found no basis to apply equitable estoppel, and it is that finding that plaintiffs challenge on appeal.
“A person may make a valid agreement binding himself to make a disposition by will and a third party beneficiary may enforce such agreement.” (Juran v. Epstein (1994) 23 Cal.App.4th 882, 889.)
The parties agree, however, that such an agreement must be in writing. Former Probate Code section 150 provided that a contract to make a will or devise, if made after December 31, 1984, could be established only by (1) the provisions of a will, (2) an express reference in a will to a contract and extrinsic evidence proving the terms of the contract, or (3) a writing signed by the decedent evidencing the contract. (See Stats. 1990, ch. 79, § 14, p. 474, repealed by Stats. 2000, ch. 17, § 2.) Similar provisions are now contained in Probate Code section 21700, but because the alleged agreement between John and Mary antedates the current statute, it is former Probate Code section 150 that applies in this case. (Prob. Code, § 21700, subd. (c).)
Equitable estoppel permits enforcement of an oral agreement in order to prevent fraud “when one party has detrimentally relied on an oral promise or another party has been unjustly enriched.” (Juran v. Epstein, supra, 23 Cal.App.4th at p. 892.) “[E]quitable estoppel may apply to avoid the statutes of fraud and to make an oral agreement enforceable if (a) the promisee detrimentally relied on the agreement and would suffer an unconscionable injury if the oral agreement were not enforced or (b) the promisor would receive unjust enrichment if allowed to retain the benefit of the promisee’s performance without abiding by the promisor’s obligations under the oral agreement.” (Estate of Housley (1997) 56 Cal.App.4th 342, 359, italics omitted.)
Equitable estoppel was applied in Notten v. Mensing (1935) 3 Cal.2d 469, a case relied upon by plaintiffs, in which the California Supreme Court explained that “when two parties execute reciprocal wills pursuant to an oral agreement, and one of the parties dies before either will is revoked, and the other party accepts the benefit of the decedent’s will, and then revokes, a constructive fraud sufficient to raise the estoppel has been practiced on the first decedent and on the beneficiaries of the oral agreement.” (Notten v. Mensing, supra, 3 Cal.2d atp. 474.)
The facts in this case, however, do not support the application of equitable estoppel. The complaint and associated materials establish that even if John once had the intent to leave his property to his children on his death, he subsequently changed his mind, and his wills reflect that decision. (See Estate of Housley, supra, 56 Cal.App.4th at pp. 357-358 [will can be amended or revoked any time prior to death].)
Plaintiffs’ complaint alleged that John’s 1988 handwritten will “demonstrates that his intent was to pass on to plaintiffs his property after his death and after the death of [Mary].” That is not the case. This will provided: “My intent and desire is to leave all my worldly goods, both personal and realty, whether presently held in title by me or by equity ownership, in the care and custody of [Mary] for her lifetime. I would hope that a trust will be created in which [Mary] is the sole trustee of all my worldly goods. . . . During her lifetime she has all the authority I am capable, by this instrument, in giving her, to sell or not sell any of my real or personal property. She also has the right to spend whatever she receives from any sales as she sees fit for herself or anyone else or any cause she decides to help. Whatever property, real or personal that remains after her death will be divided among my three sons and a memorial to my daughter as [Mary] instructs.”
Plaintiffs err in characterizing this will as establishing an intent to leave property to them. It left everything to Mary, giving her the right to use or dispose of all of John’s property. Plaintiffs were to inherit only whatever remained on Mary’s death.
Plaintiffs fare no better with John’s subsequent 2001 will, the will that was admitted to probate. In this will, John gave his personal property to Mary “if she survives me, and if she does not, to my sons, share and share alike.” The remainder of his estate was left to the trustees of the John Costello Trust dated November 19, 2001, to be distributed under the terms of that trust.
John executed a separate will distributing the assets of the John Costello Trust. It directed the trustees to give the remaining assets to Mary or, if she did not survive, to the children of plaintiffs John Costello and Michael Costello. The will specified that “[n]o provision is made for [plaintiff] Jere G. Costello . . . or his children.”
There is no indication that plaintiffs contested the probate proceedings or otherwise challenged John’s competency to make these bequests.
Given these circumstances and the lack of any evidence of detrimental reliance or unjust enrichment, equitable estoppel cannot be applied to avoid the statute of frauds. John may have once wanted to leave his real property to his three children, but the wills he prepared, beginning in 1988, demonstrated a contrary intent to leave everything to Mary. To ignore those wishes would be anything but equitable.
Moreover, even plaintiffs seem unsure of the terms of any agreement between John and Mary. Their complaint asserted both that plaintiffs were to receive John’s property on John’s death and that they were to receive John’s property on Mary’s death. This lack of certainty also weighs against application of equitable estoppel.
Finally, we note that nothing in this cause of action implicated defendants The Preferred Land Company or James Little, and their demurrers were properly sustained on this basis alone. In fact, at the hearing on the demurrer, plaintiffs’ attorney advised the trial court that she would be dismissing these two defendants from the lawsuit. No such dismissal appears in the record.
In short, the trial court properly concluded that the absence of a writing precluded plaintiffs from enforcing any oral agreement between John and Mary. Plaintiffs’ claim to the contrary is meritless.
II
Cause of Action for False Promise
Plaintiffs’ contend that their complaint stated a valid cause of action for false promise. We disagree.
The complaint’s second cause of action alleged that Mary “promised plaintiffs that the separate property owned by [John] would be passed on to plaintiffs when [John] died, and that she would not interfere with this agreement. [¶] . . . [W]hen this promise was made, [Mary] had no intention of performing the promise.”
The complaint continued: “This promise was important to plaintiffs because they expected to receive their father’s separate property from him when he died. If [Mary] had not made this promise, Plaintiffs would have persuaded their father to protect his separate property from Mary and to ensure that it would go to his children at the time of his death.”
Plaintiffs asserted that Mary intended them to rely on this promise and they did so “because they trusted [Mary].” Mary “broke her promise by interfering with the separate property of [John] and by causing a trust to be executed while [John] was incompetent.” Plaintiffs concluded that their reliance on Mary’s promise was a substantial factor in causing their damages.
In sustaining defendants’ demurrer to this cause of action, the trial court explained, “Plaintiffs allege only that they relied on Mary because they trusted her, but plead no facts establishing why this might be so. They also attempt to plead a changed position by alleging that they would have persuaded their father to protect his separate property from Mary, but allege no facts that this was within their power, and thus an action actually available to them that they could forego.”
The court also noted that there had been litigation between plaintiff Jere Costello and Mary, as trustee of the 2001 John Costello Trust. Judgment in that case had been entered in favor of Jere in 2004, a fact that demonstrated that “at least one plaintiff knew or should have known that a trust for [John] had been established in 2001 and that Mary was the trustee,” further undercutting plaintiffs’ claims of reasonable reliance.
Again, the trial court’s ruling was correct.
Actionable fraud includes “a promise, made without any intention of performing it.” (Civ. Code, § 1710(4).) The elements of such a tort are misrepresentation, knowledge of falsity, intent to induce reliance, actual and justifiable reliance, and resulting damage. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974; Conrad v. Bank of America (1996) 45 Cal.App.4th 133, 156, 157.) “To withstand a demurrer, the facts constituting every element of the fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782, italics omitted.)
The reliance requirement dooms plaintiffs’ complaint. As the court noted, nothing in the complaint demonstrated that plaintiffs’ reliance on Mary’s promise was reasonable. Plaintiffs simply claim that they trusted Mary and therefore relied on her. Such a conclusory statement will not suffice. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; Conrad v. Bank of America, supra, 45 Cal.App.4th at p. 156.)
According to the complaint, plaintiffs relied on this promise and demonstrated by the fact that they otherwise would have persuaded their father to give his separate property to his children “at the time of his death.” This claim does not demonstrate reasonable reliance because there are no facts pleaded to demonstrate that such persuasion would have been effective. In fact, the pleadings demonstrate just the opposite. John did not intend to leave his property to his children: his wills gave his property to Mary. If Mary did not survive, the assets in the trust were to pass to the children of two of the plaintiffs, not plaintiffs themselves. Plaintiffs were to receive only John’s personal property, and then only if Mary did not survive John. Given these circumstances, the trial court properly concluded that plaintiffs could not plead detrimental reliance.
And again, nothing in this cause of action implicated defendants The Preferred Land Company or James Little.
The court properly sustained defendants’ demurrer to the cause of action for false promise.
III
Cause of Action for Concealment
Plaintiffs contend that the trial court erred in sustaining defendants’ demurrer to the third cause of action for concealment. We disagree.
The complaint alleged that “defendants failed to disclose that they had caused a trust to be executed while [John] was incompetent.” Plaintiffs asserted that defendants intended to deceive them by concealing this fact, and that plaintiffs did not know that such a trust had been executed. They added: “If Plaintiff[s] had known about the trust and about defendants’ efforts to deprive plaintiffs of the separate property which [John] intended for plaintiffs to have, Plaintiffs would have attempted to establish a guardianship and/or conservatorship for [John] to protect his property and his wishes regarding the property.” The complaint alleged that plaintiffs’ reliance on this deception caused their damages.
In sustaining defendants’ demurrer to this cause of action, the trial court ruled that plaintiffs’ complaint did not demonstrate reasonable reliance. Contrary to plaintiffs’ argument on appeal, the trial court did not err in reaching this conclusion.
Like the false promise claim, a cause of action for concealment is also a form of fraud. (Civ. Code, § 1710.) And again, it is the reliance element of the tort that dooms plaintiffs’ complaint.
As the court noted, at least one plaintiff, Jere Costello, knew of the existence of the trust because he had been embroiled in litigation with the trust during his father’s lifetime and had received a judgment in his favor and against Mary, as trustee. The complaint also alleged that “defendants previously sold another property owned by [John] to Jere Costello under the pretenses that they owned the legal right to sell that land on behalf of [John].”
Plaintiffs were aware of the trust and could have sought a conservatorship or guardianship for John to protect his property. They did not. The failure to do so was not the result of reasonable reliance on any concealment by Mary but the result of their own inaction.
The trial court properly sustained defendants’ demurrer to this cause of action.
IV
Leave to Amend
Plaintiffs contend that the trial court erred in refusing to grant leave to amend their complaint a fourth time. We disagree.
“If a court sustains a demurrer without leave to amend, ‘we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect.’ [Citation.] This showing may be made for the first time in the appellate court, but it must be made.” (Banis Restaurant Design, Inc. v. Serrano, supra, 134 Cal.App.4th at p. 1039.)
Plaintiffs have not established that an amendment would cure the defects of their complaint. In fact, they have not even suggested how their complaint might be amended. Instead, they argue only that these three causes of actions were new to the second amended complaint and that they should therefore be given an opportunity to amend. Such a claim is insufficient to demonstrate an abuse of discretion in sustaining a demurrer without leave to amend. There was no error.
Disposition
The judgment is affirmed. Defendants are awarded their costs on appeal.
We concur: ROBIE, J., CANTIL, J.