Judge: Barbara M. Scheper, Case: 22STCV14601, Date: 2023-04-28 Tentative Ruling
Case Number: 22STCV14601 Hearing Date: April 28, 2023 Dept: 30
Dept.
30
Calendar
No.
Care
Plus Medical Group, Inc., et. al. vs. Law Offices of Michael E. Reznick, et.
al., Case No. 22STCV14601
Tentative
Ruling re: Defendants’ Demurrer to First
Amended Complaint
Defendants Miteshkumar Patel, El Monte Clinica Medica
General Medical Center, Inc., Huntington Park Clinica Medica General
Medical Center, Inc., The Valley Clinica Medica General Medical Center, Inc.,
and Los Angeles Clinica Medica General Medical Center, Inc. demur to
Plaintiffs’ First Amended Complaint (FAC).
The demurrer is sustained as to the Clinica Medica Defendants as to all
causes of action, with ten (10) days leave to amend. The
demurrer is sustained as to
the first, second, fifth, and seventh causes of action with ten (10) days leave
to amend, and overruled as to the third, fourth, and sixth causes of action as
to Defendant Patel.
In reviewing the legal sufficiency of a complaint against a
demurrer, a court will treat the demurrer as admitting all material facts
properly pleaded, but not contentions, deductions, or conclusions of law. (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co.
v. Hartford Ins. Co. (1984) 163 Cal.App.3d 1055, 1062.) It is well settled
that a “demurrer lies only for defects appearing on the face of the
complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th 594,
601.) “The rules by which the sufficiency of a complaint is tested against a
general demurrer are well settled. We not only treat the demurrer as admitting
all material facts properly pleaded, but also give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context.” (Guclimane Co. v.
Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes
omitted).) For purposes of ruling on a demurrer, the complaint must be
construed liberally by drawing reasonable inferences from the facts pleaded. (Wilner
v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)
When ruling on a demurrer, the Court may only consider the
complaint’s allegations or matters which may be judicially noticed. (Blank,
supra, 39 Cal.3d at p. 318.) The Court may not consider any other extrinsic
evidence or judge the credibility of the allegations plead or the difficulty a
plaintiff may have in proving his allegations. (Ion Equip. Corp. v. Nelson
(1980) 110 Cal.App.3d 868, 881.) A demurrer is properly sustained only when the
complaint, liberally construed, fails to state facts sufficient to constitute
any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574,
578.)
Plaintiffs in this action consist of
a group of corporations that operate medical clinics in California, as well as
their owner and manager, Ailene Bundalian Rivera (Rivera). (FAC ¶¶ 1-2.)
Plaintiffs’ claims arise out of an alleged years-long scheme by Defendants to
usurp Rivera’s control of the companies.
Defendant Miteshkumar Patel (Patel) is
alleged to be the owner of the other demurring defendants, a group of
corporations sharing the name Clinica Medical General (the CMC Defendants).
(FAC ¶ 26.) The CMC Defendants operate medical clinics in California in
competition with Rivera’s companies. (FAC ¶ 18.)
Patel allegedly met Rivera in early
2019 with Defendant Carlos Escobar Mancada (Mancada), an owner, operator, or
manager of the CMC Defendants. (FAC ¶ 26.) During this meeting, Patel and Mancada
expressed interest in acquiring Rivera’s clinics and offered to purchase the
clinics or merge them with the CMC Defendants. (Ibid.) Rivera declined
the offer, after which Defendants began their scheme to usurp Rivera’s control
of her clinics. (FAC ¶ 27.)
Patel donated $300,000 to Noblequest, Inc. (Noblequest),
one of Rivera’s companies, on the condition that Noblequest use office software
developed by Patel. (FAC ¶ 27.) Noblequest’s use of Patel’s software
surreptitiously allowed Defendants to access all medical records, files, and
operational information in Plaintiffs’ medical clinics. (Ibid.) In
January 2021, Patel began to demand the return of the $300,000 given to
Noblequest and threatened to bring suit to collect it. (FAC ¶ 31.) Mancada, now
employed by one of Rivera’s corporations as part of Defendants’ scheme, advised
Plaintiffs to reach out to Defendant Daniel Callahan, who in turn encouraged
Plaintiffs to retain attorney Michael E. Reznick (Reznick) for Patel’s suit.
(FAC ¶ 31.) Unbeknownst to Plaintiffs, Reznick was also part of Defendants’
scheme, and allegedly used his position as Plaintiffs’ counsel to, among other
things, disseminate Plaintiffs’ confidential financial and business information
to the co-conspirators. (FAC ¶ 32.)
In October 2021, Defendants filed fraudulent corporate
records documents with the California Secretary of State, which falsely named
various conspirators as CEO, Secretary, CFO, and Director of each of the
clinics. (FAC ¶ 34.) On December 9, 2021, Patel, and Yvette Hargove-Brown, who
was named as Noblequest’s CEO in the fraudulent filings, entered Noblequest’s
offices and claimed to be new management. Patel and Hargove-Brown falsely represented
that they had a court order authorizing them to take over the business and all
patient files. (FAC ¶¶ 34(J), 37.)
The FAC asserts claims against all demurring defendants,
for: (1) Preliminary Injunction, Permanent Injunction, and Damages; (2) Unfair
Competition; (3) Intentional Interference with Prospective Economic Relations;
(4) Conversion; (5) Fraud; (6) Slander of Title; and (7) Abuse of Process.
CMC
Defendants
There are no specific factual allegations concerning the
CMC Defendants other than their ownership by Patel. (FAC ¶ 26.) Consequently,
Plaintiffs have failed to plead any basis for holding the CMC Defendants liable
on any claim.
Plaintiffs argue that they need not plead any evidentiary
facts, but only “ultimate facts.” This argument is unavailing. First, Plaintiffs
have not pled any ultimate facts regarding the CMC Defendants, only legal
conclusions that cannot be admitted on demurrer.
(See Dino, Inc. v. Boreta Enterprises, Inc. (1964) 226 Cal.App.2d 336,
339-40.) Additionally, “[t]he applicable principle is that the ‘conclusion of
law—ultimate fact’ dichotomy is not an absolute but that the fair import of
language used in the pleading must be received to determine whether the
adversary has been fairly apprised of the factual basis of the claim against
him.” (Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 721.) If, as here,
a complaint pleads no facts regarding a particular defendant, that defendant
clearly has not been apprised of the factual basis of the claim against it.
Plaintiffs also argue that a declaration filed by Yvette
Hargorve-Brown in a separate case shows the participation of the CMC Defendants
in the alleged conspiracy. (Plaintiffs’ RJN, Ex. 1.) These facts are not pled
in the FAC, and so may not be relied upon by Plaintiffs in opposing the
demurrer. Accordingly, the demurrer is sustained as to all claims against the
CMC Defendants.
Defendant
Miteshkumar Patel
As an
initial matter, the first, second, and seventh causes of action fail against
Patel. Plaintiffs’ first cause of action for “Preliminary Injunction, Permanent
Injunction, and Damages” does not seek any injunctive relief concerning Patel,
and a cause of action for “Damages” is clearly improper. (FAC ¶¶ 39-49.)
Plaintiffs’ Unfair Competition Law (UCL) claim likewise fails because
Plaintiffs have pled no grounds for injunctive relief or restitution against
Patel. (FAC ¶¶ 50-56.)
As the Court
has previously found, the seventh cause of action for Abuse of Process fails
because “the mere filing or maintenance of a
lawsuit—even for an improper purpose—is not a proper basis for an abuse of
process action.” (Oren Royal Oaks Venture v. Greenberg, Bernard, Weiss &
Karma, Inc. (1986) 42 Cal.3d 1158, 1169; FAC ¶ 93.). “A conspiracy cannot be alleged as a tort separate from the
underlying wrong it is organized to achieve,” and so Plaintiffs cannot rely on civil
conspiracy to assert this claim against Patel. (Stansfield v. Starkey
(1990) 220 Cal.App.3d 59, 76.)
Third
Cause of Action for Intentional Interference with Prospective Economic
Relations
The elements for the tort of intentional interference with
prospective economic advantage are: “(1) an economic relationship between the
plaintiff and some third party, with the probability of future economic benefit
to the plaintiff; (2) the defendant’s knowledge of the relationship; (3)
intentional acts on the part of the defendant designed to disrupt the
relationship; (4) actual disruption of the relationship; and (5) economic harm
to the plaintiff proximately caused by the acts of the defendant.” (Korea
Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153.)
In order to establish intentional interference with
prospective economic advantage, a plaintiff must show that the
defendant engaged in an independently wrongful act. (See Korea Supply Co.,
supra, 29 Cal.4th at 1158.) “An act is not independently wrongful merely
because defendant acted with an improper motive.” (Ibid.) “[A]n
act is independently wrongful if it is unlawful, that is, if it is proscribed
by some constitutional, statutory, regulatory, common law, or other
determinable legal standard.” (Id. at 1159.) “[T]o satisfy the intent requirement for this tort, it is
sufficient to plead
that the defendant knew that the interference was certain or substantially
certain to occur as a result of its action.” (Id. at 1153.)
Plaintiffs’ third cause of action is premised upon Defendants’
alleged interference with Plaintiffs’ “economic
relationship with their patients, with referral clinics, with doctors,
hospitals, nurses and other health care providers and vendors.” (FAC ¶¶ 61, 64.)
Plaintiffs have pled sufficient facts to state this claim against Patel. Patel
allegedly induced Noblequest to install office software that he developed to
steal Plaintiffs’ business information, “all as part of [Defendants’] scheme to
take control and ownership of [Rivera’s] clinics.” (FAC ¶ 27.) Patel also
appeared at Noblequest’s office with Hargove-Brown, whom the conspirators had
fraudulently named CEO, and falsely claimed that they were authorized to take
over the business and its patient files. (FAC ¶ 37.) These allegations show
“independently wrongful acts” by Patel, performed with knowledge of Plaintiffs’
economic relationships and intent to disrupt those relationships, and resulting
in actual harm. Accordingly, the demurrer is overruled as to the third cause of
action against Patel.
Fourth
Cause of Action for Conversion
To plead a cause of
action for conversion, one must allege (1) the plaintiff’s ownership or right
to possession of personal property; (2) defendant’s disposition of the property
inconsistent with plaintiff’s rights; and (3) resulting damages. (Fremont
Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97,
119.) “To mandate a conversion action ‘it is not essential that plaintiff
shall be the absolute owner of the property converted but she must show that
she was Entitled to immediate possession at the time of conversion.’ ”
(Hartford Financial Corp. v. Burns (1979) 96 Cal.App.3d 591, 598.)
Plaintiffs’
conversion claim is premised upon Defendants’ alleged conversion of Plaintiffs’
bank accounts, physical office equipment, personnel records, patient files,
confidential information regarding business plans and strategy, corporate
records, and corporate identities. (FAC ¶ 68.) Plaintiffs allege that “Defendants,
and each of them, intentionally took possession and control of said assets of
Plaintiffs and/or otherwise prevented Plaintiff from having access thereto,
with the intention on the part of Defendants to permanently deprive Plaintiffs
of same.” (FAC ¶ 69.)
The Court agrees with Plaintiffs that this cause of action is
sufficiently pled against Patel based on a theory of conspiracy liability.
“Civil
conspiracy is not an independent tort. Instead, it is ‘a legal doctrine
that imposes liability on persons who, although not actually committing a tort
themselves, share with the immediate tortfeasors a common plan or design in its
perpetration. [Citation.] By participation in a civil conspiracy, a
coconspirator effectively adopts as his or her own the torts of other
coconspirators within the ambit of the conspiracy. [Citation.] In
this way, a coconspirator incurs tort liability co-equal with the immediate
tortfeasors.’ [Citation.]” (City of Industry v. City of Filmore
(2011) 198 Cal.App.4th 191, 211-212, citing Applied Equipment Corp. V.
Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.)
“The elements of a
civil conspiracy are (1) the formation of a group of two or more persons who
agreed to a common plan or design to commit a tortious act; (2) a wrongful act
committed pursuant to the agreement; and (3) resulting damages.” (City of
Industry, supra, 198 Cal.App.4th at p. 212.) “[F]acts must be alleged” as to each element. (117 Sales
Corp. v. Olsen (1978) 80 Cal.App.3d 645, 649.) “[B]are legal conclusions,
inferences, generalities, presumptions, and conclusions are insufficient.” (Nicholson
v. McClatchy Newspapers (1986) 177 Cal.App.3d 509, 521.) “The conspiring
defendants must also have actual knowledge that a tort is planned and concur in
the tortious scheme with knowledge of its unlawful purpose.” (Kidron v.
Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1582.) Even “actual
knowledge of the planned tort, without more, is insufficient to serve as the
basis for a conspiracy claim. Knowledge
of the planned tort must be combined with intent to aid in its commission.” (Ibid.)
While a complaint must contain more than a bare allegation the defendants conspired,
a complaint is sufficient if it apprises the defendant of the ‘character and
type of facts and circumstances upon which she was relying to establish the
conspiracy.’” (AREI II Cases (2013) 216 Cal.App.4th 1004, 1022.)
Here, Patel’s alleged role in pushing Noblequest to install the
malicious software and his appearance at Noblequest’s office with Hargove-Brown
show wrongful acts, committed pursuant to Defendants’ tortious scheme to
convert Plaintiffs’ property, and with intent to aid in its commission. (FAC ¶¶
27, 37.) The taking of Plaintiffs’ business information through the software
allegedly facilitated Defendants’ later conversion of Plaintiffs’ corporate
bank accounts and physical equipment. (FAC ¶¶ 35-36.) Additionally, Patel’s
initial meeting with Rivera in 2019 allegedly set off Defendants’ scheme. (FAC
¶ 26.) These allegations suffice to apprise Patel of the ”character and type of
facts and circumstances upon which” Plaintiffs seek to rely. (AREI II Cases,
216 Cal.App.4th at 1022.) The demurrer is therefore overruled as to the
fourth cause of action against Patel.
Fifth Cause of Action for Fraud
The elements of fraud are:
(1) misrepresentation (false representation, concealment, or nondisclosure);
(2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance;
(4) justifiable reliance; and (5) damages. (See Civil Code §1709.) Fraud
actions are subject to strict requirements of particularity in pleading. (Committee
on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197,
216.)
The liberal construction of pleadings does not apply to a
fraud claim. Instead, a fraud claim must be pled with specificity. (Tenet
Healthsystem Desert, Inc. v. Blue Cross of California¿(2016) 245
Cal.App.4th 821, 837.) “The particularity requirement demands that a plaintiff
plead facts which show how, when, where, to whom, and by what means the
representations were tendered.” (Cansino v. Bank of America (2014) 224
Cal.App.4th 1462, 1469.)
Plaintiffs
allege that Defendants fraudulently represented that they were the authorized
owners, officers, directors, and managing agents of the corporate Plaintiffs in
communications “to the Secretary of State of the State of California, to
Defendant, JPMorgan Chase Bank, dba Chase Bank and Does 111-120, and each of
them, to the United States District Court for the Central District of
California, to the Superior Court of the State of California, and to health
care providers with whom Plaintiffs have contractual and financial
relationships, as well as to customers and patients of Plaintiffs.” (FAC ¶ 75.)
Plaintiffs’ fraud
claim is not pled with sufficient specificity against Patel. With respect to
Patel’s appearance at Noblequest’s office on December 9, 2021, the FAC alleges
only that Patel and Hargove-Brown “entered the offices of [Noblequest],
claiming to be new management. They falsely represented that they had a court
order authorizing them to take over the business and all patient files.” (FAC ¶
37.) These allegations fail to distinguish whether Patel or Hargove-Brown made
the statements at issue. Furthermore, Plaintiffs have also not pled any
detrimental reliance on those statements.
As the Court has
previously found, the fraud claim also fails against the other conspiring
defendants. Because Plaintiffs have not pled the underlying cause of action
against the conspirators, Plaintiffs may not rely on conspiracy to assert the
fraud cause of action against Patel.
Sixth Cause of Action for Slander of Title
“The elements of a cause of action for slander
of title are (1) a publication, which is (2) without privilege or
justification, (3) false, and (4) causes pecuniary loss.” (La Jolla Group II
v. Bruce (2012) 211 Cal.App.4th 461, 472 [emphasis in original].)
Plaintiffs’ slander of title claim generally
alleges “[t]hat Defendants and each of them made statements to, among other
persons, the Secretary of State of the State of California, Defendants, JPMorgan
Chase Bank . . . and to vendors, health
care providers, customers, patients and others which statements cast doubt
about the ownership and management of Plaintiffs and their assets.” (FAC ¶ 86.)
As discussed above,
the Court agrees with Plaintiffs that the allegations are sufficient to support
conspiracy liability against Patel. Accordingly, the demurrer is overruled as
to the sixth cause of action.