Judge: David B. Gelfound, Case: 23CHCP00484, Date: 2024-05-28 Tentative Ruling

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Case Number: 23CHCP00484    Hearing Date: May 28, 2024    Dept: F49

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F49

DEMURRER

Motion filed: 1/25/24

MOVING PARTY: Defendants Jason Hennessey and Hennessey Group, Inc. (erroneously sued as Hennessey Digital) (collectively, “Defendants”)

RESPONDING PARTY: Plaintiff Adam R. Rocco (“Plaintiff”)

NOTICE: OK 

RELIEF REQUESTED: An order from this Court sustaining Defendants’ demurrer to the Complaint.

TENTATIVE RULING: The demurrer is SUSTAINED WITH LEAVE TO AMEND. The request for judicial notice is GRANTED.

BACKGROUND

On December 12, 2023, Plaintiff, in pro per, initiated this action against Defendants. It appears that the Complaint alleges the following causes of action: (1) Indemnity (Compl., at p. 4); (2) Trade Secret Misappropriation (Id., at p. 6); (3) Breach of Fiduciary Duty by Defendant Jason Hennessey (Ibid.); and (4) Intentional Infliction of Emotional Distress. (Compl., at p. 9.)

            On January 15, 2024, Defendants filed their instant Demurrer to the Complaint (the “Demurrer”). Subsequently, Plaintiff filed his Opposition on March 29, 2024. On May 1, 2024, Defendants replied.

ANALYSIS

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A general demurrer is proper, and typically used, where the plaintiff fails to allege “facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e); Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004.)

“The sufficiency of a cause of action is evaluated by presuming all of the material factual allegations in the complaint are true.” (Aubry v. TriCity Hospital Dist. (1992) 2 Cal 4th 962, 966 – 967 (Aubry).) In ruling on a demurrer, a court may consider facts that are properly subject to judicial notice. (Arroyo v. Plosay, 225 Cal. App. 4th 279.) In ruling on a demurrer, the allegations of the complaint must be liberally construed, with a view to substantial justice between the parties. (Glennen v. Allergan, Inc. (2016) 247 Cal.App.4th 1, 6.) Nevertheless, while "[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact." (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120, 135.) Additionally, “[a] complaint otherwise good on its face is subject to demurrer when facts judicially noticed render it defective.” (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6.)

“It is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 103.) And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)” Aubry, supra, 2 Cal. 4th at 967.)

A.                Request for Judicial Notice

Defendants request the Court to take judicial notice of the following documents: (1) business search information from the Georgia Corporation Division for Stompernet LLC; (2) business search information from the Georgia Corporations Division for Creative Web Ventures; and (3) Article of Incorporation for Hennessey Group, Inc. filed with the California Secretary of State on October 4, 2019. (Request for Judicial Notice, Cohen Decl., Ex. “A,” “B,” “C.”)

            The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) 

“The underlying theory of¿judicial¿notice¿is that the matter being¿judicially¿noticed¿is a law or fact that is¿not reasonably subject to dispute.”¿(Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort¿(2001) 91 Cal.App.4th 875, 882.) “Although the¿existence¿of a document may be¿judicially¿noticeable, the truth of statements contained in the document and its proper interpretation are not subject to¿judicial¿notice¿if those matters are reasonably disputable.” (Fremont Indemnity Co. v. Fremont General Corp.,¿supra, 113;¿Tenet Healthsystem Desert, Inc. v. Blue Cross of California¿(2016) 245 Cal.App.4th 821, 836.)

Here, the Court determines that the sources of the documents are deemed reliable, that the facts are capable of immediate and accurate determination by resort to the sources; and that the truth of the statements contained in the documents are not reasonably disputable.

Accordingly, the Court GRANTS the Request for Judicial Notice.

B.                 Meet and Confer

A party filing a demurrer “shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).) A failure to meet and confer does not constitute grounds to sustain or overrule a demurrer. (See Code Civ. Proc., § 430.41, subd. (a)(4).)

On January 19, 2024, Defendants’ counsel wrote a letter to Plaintiff, initiating the meet and confer process and detailing issues raised in the instant Demurrer. (Dem. Cohen Decl., ¶ 3.) Following this, communications between the parties took place, via both email and phone, with regard to potential settlement and filing a First Amended Complaint. (Id., ¶¶ 4-9.) Ultimately, Plaintiff stated in his email to Defendants’ counsel on January 22, 2024, that he would not amend the Complaint. (Id., ¶ 10.) It is evident that the parties were unable to resolve the disputes on the Complaint informally. 

Consequently, the Court finds that the requirements for meet and confer have been satisfied.

C.                Indemnity

A cause of action for Express Indemnity requires (1) a contract defining the obligation for one party to make good as to a loss another party incurred.; and (2) occurrence of loss the other party incurred or of some other legal consequence of the conduct of another party. (Rossmoor Sanitation, Inc. v. Pylon, Inc. (1975) 13 Cal.3d 622, 628; McCrary Construction Co. v. Metal Deck Specialists, Inc. (2005) 133 Cal.App.4th 1528, 1536; Civil Code §2772 [“Indemnity is a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person.”].)

            Here, the Complaint alleges that parties were founding business partners and each owned fifty percent in One Wedding Source.com (“OWS”). (Compl., at p. 2.)  Plaintiff, acting in the best interest of OWS guaranteed debts via Bank of America to cover revenue shortfalls and operational expenses including rent, payroll, bonuses, supplies, phone bills, and utilities exceeding $100,000 plus unpaid accrued interest.  (Ibid.) The Complaint further alleges that the parties entered into an indemnity agreement drafted by former counsel in Nevada, referencing Exhibit 1, but not attached. (Compl., at p. 3.) Moreover, the pleading asserts that by breaching the indemnity contract, Defendant Jason Hennessey is indemnified to Plaintiff $435,000.00 plus other damages. (Id., at p. 4.)

            Defendants argue that this cause of action is uncertain as the alleged Indemnity Agreement is not attached to the Complaint, thus making it impossible to determine the terms of the purported contract, the time at which it was made, the identities of the parties, and the obligations of the parties. (Dem., at p. 9.). They further contend that Plaintiff has to establish that he has actually paid the debt, otherwise Defendants’ obligation is not triggered. (Id., at p. 10.)

            The Court notes that established case law stipulates that failure to attach or to set out verbatim the terms of the contract is not fatal to a breach of contract cause of action; a plaintiff may plead the legal effect of the contract rather than its precise language. (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 402.) However, a plaintiff still must allege the basic elements of an Express Indemnity cause of action.

            Here, the Complaint alleges the existence of the indemnity agreement. Giving the Complaint a reasonable interpretation and reading it as a whole, as required for reviewing a demurrer, the Court finds it also alleges damages of $435,000.00. (Compl., at p. 4.)

However, the Court determines that the Complaint has failed to allege the remaining elements, including what the obligation Defendant owes to indemnify Plaintiff, and the specific occurrences of loss that Plaintiff incurred. (See Rossmoor Sanitation, Inc. v. Pylon, Inc., Supra, 13 Cal.3d at p. 628.)

            Consequently, the Court concludes that Plaintiff has not sufficiently stated a cause of action for Express Indemnity.

            The Court SUSTAINS the Demurrer as to this cause of action.

D.                Breach of Fiduciary Duty

The elements of a cause of action for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2) breach of that duty; and (3) damage caused by the breach. (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932; citing Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.) To plead a cause of action for breach of fiduciary duty, a plaintiff must allege facts showing the existence of a fiduciary duty owed to that plaintiff, a breach of that duty and resulting damage. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524.) A fiduciary duty is founded upon a special relationship imposed by law or under circumstances in which “confidence is reposed by persons in the integrity of others” who voluntarily accept the confidence. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1150; see CACI 4100, et seq.)

Defendants argue that the conduct of Defendant Jason Hennessey, which Plaintiff alleges constitutes a breach of fiduciary duty, occurred “post-merger.” (Dem., at p. 13, citing Compl., ¶¶ 8, 10-11.) According to Plaintiff’s own allegations, Plaintiff and Defendant Jason Hennessey became “employee shareholders” after the OWS/Stompernet, LLC merger in 2009. (Compl., at p. 4, ¶ 7.) Defendants maintain that neither employees nor shareholders of the same company share a fiduciary relationship or owe a fiduciary duty to each other. (Dem., at p. 13.)

The Complaint states that “the person (or entity) owed a fiduciary duty could be a client or business partner,” and cites multiple legal authorities for the elements of a Breach of Fiduciary Duty claim.  (Compl., at pp. 6-7.) In a separate paragraph, the Complaint enumerates the conducts alleged to amount to Defendant Jason Hennessey’s breach of fiduciary duty, including (1) denial of any shared responsibility for $100,000 debts guaranteed by Plaintiff; (2) politically targeting Plaintiff post-merger, causing Plaintiff’s ouster; (3) aiding in misappropriation conversion theft of over $150,000 in investor funds conspiring with Brad Fallon of Stompernet, LLC to the detriment of OWS causing merged entity to go bankrupt; (5) starting a competing business lawyer marketing in California. (Id., at p. 5.)

The Court notes the Complaint explicitly states the relationship between the parties to be employee shareholders since the OWS merger in 2009 (Compl., at p. 4, ¶ 7.) Consequently, the Court deems Plaintiff’s allegation of the existence of a fiduciary duty to be conclusory, as the Complaint has failed to demonstrate any special relationship imposed by law or under circumstances where confidence is reposed by Plaintiff in the integrity of Defendant who voluntarily accepted the confidence. (See Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg, supra, 216 Cal.App.3d at p. 1150.)

Accordingly, the Complaint fails to state the first element of the cause of action, warranting the Court to SUSTAIN the Demurrer as to the Breach of Fiduciary Duty cause of action.

E.                 Trade Secret Misappropriation

In a cause of action for Trade Secret Misappropriation, the plaintiff must establish the following elements: (1) Plaintiff’s ownership of trade secret; (2) Defendant acquired, disclosed, or used the trade secret through improper means; and (3) such actions damaged Plaintiff. Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1665. (See also Vacco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 50 [“By its adoption of the Uniform Trade Secrets Act, California effectively adopted the common law definition.”];  FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1279 [Trade Secrets Act requires actual or threatened misappropriation, beyond mere possession of trade secrets by employees]; PMC, Inc. v. Kadisha (2000) 78 Cal.App.4th 1368, 1385 [“misappropriation is not limited to the initial act of improperly acquiring trade secrets; the use and continuing use of the trade secrets is also misappropriation.”]; see CACI 4401.)

            Here, Defendants argue that the Complaint admits that the trade secrets were obtained “from OWS interim CEO Brad Fallon, as well-known SEO guru,” thus lacking standing to assert the cause of action due to the failure to claim ownership of trade secret. (Dem., at p. 14.)

            The Court finds the Complaint’s factual allegation in Trade Secret Misappropriation to be patently deficient. There is no factual showing of Plaintiff’s ownership of the trade secret, other than admitting the proprietary methodologies were from Brad Fallon, a party not named in the present action. (Compl., at p. 6.) Plaintiff’s mere allegation that Defendant Jason Hennessey “obtained trade secrets post-merger” only amounts to a conclusion of fact, which is insufficient to meet the pleading standards in stating the elements of a cause of action.

            As a result, the Court SUSTAINS the Demurrer as to the cause of action for Trade Secret Misappropriation.      

F.                 Intentional Infliction of Emotional Distress

The tort of intentional infliction of emotional distress is comprised of three elements: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff suffered severe or extreme emotional distress; and (3) the plaintiff's injuries were actually and proximately caused by the defendant's outrageous conduct. (KOVR–TV, Inc. v. Superior Court (1995) 31 Cal.App.4th 1023, 1028.)

A defendant’s conduct is “outrageous” when it is so extreme as to exceed all bounds of that usually tolerated in a civilized community. And the defendant must either intend his or her conduct to inflict injury or engaged in it with the realization that injury will result. Liability for intentional infliction of emotional distress does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-1051 [citations and quotations omitted].) While those cases say that it is ‘usually’ a question of fact, many cases have dismissed intentional infliction of emotional distress cases on demurrer, concluding that the facts alleged do not amount to outrageous conduct as a matter of law. (See, e.g., Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1608–1609; Coleman v. Republic Indemnity Ins. Co. (2005) 132 Cal.App.4th 403, 416–417; Ricard v. Pacific Indemnity (1982) 132 Cal.App.3d 886, 895.)” (Barker v. Fox & Associates (2015) 240 Cal.App.4th 333, 355-356; see CACI 1600, et seq.)

“With respect to the requirement that a plaintiff show severe emotional distress, this court has set a high bar. ‘Severe emotional distress means “‘“emotional distress of such substantial quality or enduring quality that no reasonable [person] in civilized society should be expected to endure it.”’”’ [Citation.]” (Hughes v. Pair, supra, 46 Cal.4th at p. 1051.)

Here, the Complaint does not allege any of the Defendant’s conduct to be extreme and outrageous. Nor does it present evidence showing Jason Hennessey’s intent or any severe or extreme emotional distress that Plaintiff has suffered. The Complaint summarily asserts that “Defendant Jason Hennessey’s actions with respect to the political coup against Plaintiff and misappropriation of investor funds have caused emotional distress to Plaintiff.” (Compl., at p. 9.) However, this alone does not present factual allegations to state all the required elements for a cause of action for Intentional Infliction of Emotional Distress.

Therefore, the Court must SUSTAIN the Demurrer as to this cause of action.

G.                Statute of Limitation

As the Court has sustained the Demurrer, concluding that the Complaint fails to sufficiently state any of the alleged causes of action, it is unnecessary to examine the statute of limitation argument, as it would be relevant only if the cause of action were sufficiently stated.

H.                Absence of Prayer for Relief

Defendants also note that the Complaint does not contain a prayer for relief, rendering it uncertain, unintelligible, vague and ambiguous under Code of Civil Procedure section 430.10 subdivision (f).

A demurrer tests the legal sufficiency of the factual allegations in a complaint. (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) The prayer for damages itself is not a part of the complaint, thus not subject to demurrer. The fact that a plaintiff has prayed for relief to which he may not be entitled does not affect the sufficiency of his complaint. (Moropoulos v. C.H. & O.B. Fuller Co. (1921) 186 Cal. 679, 688.)

Mirroring the reasoning outlined in Moropoulos v. C.H. & O.B. Fuller Co., the Court concludes that the absence of Prayer for Relief is not an issue under the review of a demurrer. Thus, it does not constitute alternative grounds for sustaining a demurrer.

I.                   Leave to Amend

“[F]or an original complaint, regardless of whether the plaintiff has requested leave to amend, it has long been the rule that a trial court's denial of leave to amend constitutes an abuse of discretion unless the complaint ‘shows on its face that it is incapable of amendment.’ (King v. Mortimer (1948) 83 Cal.App.2d 153, 158.)

Considering the liberality in permitting amendment following an order sustaining a demurrer, the Court GRANTS Plaintiff’s request for leave to amend.

In sum, the Court SUSTAINS WITH LEAVE TO AMEND the Demurrer based on the foregoing reasons.

CONCLUSION

Defendants’ Demurrer is SUSTAINED WITH LEAVE TO AMEND.

Plaintiff is ordered to serve and file a First Amended Complaint within 20 days.

Moving party is ordered to give notice.