Judge: Christian R. Gullon, Case: 21PSCV00443, Date: 2024-07-01 Tentative Ruling

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Case Number: 21PSCV00443    Hearing Date: July 1, 2024    Dept: O

Tentative Ruling

Cross-Defendants’ Demurrer is SUSTAINED in its entirety with leave to amend as the FACC requires clearer allegations.

Background

This is a defamation case. Plaintiffs USA Tour Line, Inc. and Yunshe Shi

(collectively, “Plaintiffs”) allege the following against Defendant Shengli Zhang (“Defendant”): On March 4, 2021, Defendant was hired as a forklift driver and part of his contract was to produce evidence of a forklift operating license On March 6, 2021, Defendant was injured while at work. “Defendant attempted to extort the sum of $30,000 from the plaintiffs in order [to] not make a worker's compensation claim.” When Plaintiffs refused to pay, Defendant published defamatory statements on chineseinla.com, which has “caused the visitors to Plaintiffs site to drop from a 1000 per day.” Plaintiffs allege that they have been damaged in the amount of $500,000.00.

On May 28, 2021, Plaintiffs filed suit against Defendant for:

1.     Breach of Contract

2.     Fraud and

3.     Intentional Tort

On September 7, 2021, Defendant filed his Answer. That same day, Defendant filed a Cross

Complaint (“CC”) against Plaintiffs against for:

On September 22, 2022, the court denied Defendant’s further discovery motion and imposed monetary sanctions on Defendant and its counsel.

On April 10, 2023, Plaintiffs filed a Motion for Attorney Fees.

On June 9, 2023, the court learned that sanctions were paid to the court, thus rendering any motion moot.

On February 1, 2024, the courts attended an MSC, but no settlement was reached.

On February 20, 2024, Plaintiffs filed a notice of substitution of attorney (Ray Hsu now represents Plaintiffs).

On February 21, 2024, Defendant filed an amendment to cross-complaint (CC) naming Kong Miaomiao (“Kong”) as Doe 1.

On April 5, 2024, Kong filed his answer to the CC.

On April 19, 2024, Defendant filed an amended CC (“FACC”) (reasserting the same 5 COAs against the Plaintiffs and Kong).

On May 9, 2024, Plaintiffs and Kong (collectively, “moving parties”) filed a demurrer to the FACC.

On May 28, 2024, Defendant filed his opposition.

On June 20, 2024, moving parties filed the reply.

Discussion

The Moving parties demur to the FACC’s 2^nd  COA for Wrongful Termination, 3^rd COA for Fraud, 4^th  COA for Intentional Infliction of Emotional Distress (IIED), and 5^th COA for Negligent Infliction of Emotional Distress (NIED).[1]

For reasons to be discussed below, the FACC is somewhat unclear; therefore, the entirety of the demurrer is sustained with leave to amend. Before engaging in the merits of each COA, the court provides a general overview of the relevant allegations in the FACC.

The FACC alleges that Defendant began working for USA Tour on March 4, 2021 as an intern making $15/hour. (FACC ¶7.) Two days into the job, Defendant was injured while operating a forklift. (¶13.) On or about March 30, 2021, Plaintiff/Cross-Defendant Shi represented to Defendant that Plaintiff/Cross-Defendant UTL obtained insurance for work-related injuries, but Shi dissuaded Defendant from filing a claim, citing fears that his insurance premiums would increase substantially. (¶17.) Defendant reasserted his desire to file a claim. On April 6, 2021, Plaintiff Shi notified Defendant that he was terminated for not provided a proof of his forklift operating license/prior experience (¶22), even though upon hire he was informed that he did not need a license nor experience (¶13.) On April 20, 2021, Defendant posted on various sites in search of a new lawyer to which Plaintiffs responded by filing the instant action. (¶25.)

2^nd COA: Wrongful Termination

A claim for wrongful termination in violation of public policy must be based on a public policy articulated in state statute, federal statute, regulations, or the California Constitution. (Gantt v. Sentry Ins., (1992)1 Cal. 4th 1083, 1095.)

Here, both parties discuss Labor Code section 1102.5 and 132a in relation to the 2^nd COA, but the 2^nd COA makes no reference to 132a, only Labor Code 1102.5. On a demurrer, the facts must be found in the four corners of the complaint, not the parties’ papers. (See Melikian v. Truck Ins. Exchange (1955) 133 Cal.App.2d 113, 114 [“In approaching that issue we are bound, just as the trial court was bound, by the allegations in the verified complaint and cannot consider the outré-judicial statements of counsel nor the additional facts found in the briefs.”].)

Therefore, the demurrer is sustained on the grounds of uncertainty with leave to amend. With that, at this juncture, the court will not address the parties’ arguments relating to this COA such as whether an action for wrongful termination can only be asserted against an employer or whether the WCAB is the exclusive jurisdiction for Labor Code § 132(a) violations.

3^rd COA: Fraud

A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff, and (4) resulting damages. Every element must be specifically pleaded. (Service by Medallion, Inc. v. Clorox Co., (1996) 44 Cal.App.4th 1807, 1816).

Here, it is unclear what representation the fraud COA is based on. On the one hand, Plaintiff asserts that the purported representation is that he need not have been licensed to operate the forklift (¶54) but in the same COA he alleges that the purported misrepresentation is that Plaintiffs represented that they had insurance for work-related injuries, when they in fact did not. (¶51.) Aside from the fact that the “what” (i.e., statement that was a misrepresentation) is not clearly pled, the pleading also does not provide ultimate facts about justifiable reliance. (Demurrer p. 9.) Though the opposition largely recites allegations in the complaint and provides case law, it does not squarely address the fact that the FACC does not assert the 3^rd element of justifiable reliance.

Therefore, the court SUSTAINS the demurrer with leave to amend.

4^th COA and 5^th COA: IIED and NIED, respectively (consolidated analysis by the parties)

As for both the 4^th and 5^th COAs, The FACC alleges that “Defendant/Cross-Complainant Zhang refused to settle his injury claim privately and insisted on utilizing USA Tour Line's worker's compensation insurance, Plaintiff/Cross-Defendant Shi yelled at Defendant/Cross-Complainant Zhang, accused him of 'blackmail,' and threatened to report Zhang to immigration authorities. This conduct was outrageous and intended to cause Defendant/Cross-Complainant Zhang severe emotional distress.” (¶59, emphasis added.)

Defendants argue this doesn’t rise to the level of outrageousness required for IIED and Plaintiffs maintain otherwise. Neither party has provided a meaningful analysis. To the extent that Defendant argues these COAs are within the WCAB’s purview, that argument is improperly raised for the first time in reply. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537-1538.)

Therefore, the court SUSTAINS the demurrer on the 4^th and 5^th COAs and requests the parties on a subsequent demurrer, if filed, to provide an analysis as to the issue.[2]  

Conclusion

Based on the foregoing, as the FACC could use some clarification, the court sustains the demurrer with leave to amend.