Judge: Deborah C. Servino, Case: 30-2022-01255210, Date: 2022-12-16 Tentative Ruling
DEMURRER
Defendants Melissa Martinez Booth and Jeff Booth’s demurrer to Plaintiff John Dordell’s Complaint is overruled in part and sustained in part. The demurrer as to the first through third causes of action is overruled. The demurrer as to the fourth cause of action is sustained with 15 days leave to amend.
Special Demurrer
Special demurrers based on uncertainty are rarely sustained – only where the complaint is so bad that defendant cannot reasonably respond—i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (See Khoury v. Maly's of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Here, the Complaint is not so unintelligible that Defendants cannot reasonably respond. Any ambiguities can be clarified through discovery. (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135; Khoury v. Maly’s of California, 14 Cal.App.4th at p. 616.) Accordingly, the special demurrer for uncertainty is overruled.
General Demurrer
Defendants’ general demurrer is overruled as to the first through third causes of action and sustained with 15 days leave to amend as to the fourth cause of action.
A demurrer presents an issue of law regarding the sufficiency of the allegations set forth in the complaint. (Lambert v. Carneghi (2008) 158 Cal.App.4th 1120, 1126.) The challenge is limited to the “four corners” of the pleading (which includes exhibits attached and incorporated therein) or from matters outside the pleading which are judicially noticeable under Evidence Code sections 451 or 452. Although California courts take a liberal view of inartfully drawn complaints, it remains essential that a complaint set forth the actionable facts relied upon with sufficient precision to inform the defendant of what plaintiff is complaining, and what remedies are being sought. (Leek v. Cooper (2011) 194 Cal.App.4th 399, 413.) On demurrer, a complaint must be liberally construed. (Code Civ. Proc., § 452; Stevens v. Superior Court (1999) 75 Cal.App.4th 594, 601.) All material facts properly pleaded, and reasonable inferences, must be accepted as true. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)
Dissolution of Partnership (First Cause of Action)
Corporations Code section 16701, subdivision (a) states in part that if “a partner is dissociated from a partnership, the partnership shall cause the dissociated partner's interest in the partnership to be purchased for a buyout price determined pursuant to” certain parameters set forth in the statute.
In this cause of action, Plaintiff alleges that he has been cut out of the business of Pelt, Inc. and 4SOCIETEE, and that he therefore sues for the value of his partnership interests in the two companies pursuant to Corporations Code section 16701, subdivision (b), and seeks dissolution because the other partners have made it not reasonably practical to carry out the businesses. (Complaint, at ¶¶ 10-12.)
Plaintiff’s allegations are adequate to support a claim under Corporations Code section 16701. Defendants’ issues that they raise with respect to the two entities and the nature of the partnership are best flushed out in discovery. The demurrer is therefore overruled to this cause of action.
Accounting and Valuation of Partner’s Interest (Second Cause of Action)
“An action for an accounting has two elements: (1) ‘that a relationship exists between the plaintiff and defendant that requires an accounting’ and (2) “that some balance is due the plaintiff that can only be ascertained by an accounting.” (Sass v. Cohen (2020) 10 Cal.5th 861, 869.)
In the Complaint, Plaintiff alleges that pursuant to Corporations Code section 16701, he is entitled to an accounting/valuation as Defendants have failed to purchase his partnership interest pursuant to a buyout price or pay Plaintiff from the date of his disassociation.
The demurrer is also overruled to this cause of action, as Plaintiff has sufficiently alleged the two basic elements of this claim.
Conversion (Third Cause of Action)
The elements of conversion are: “(1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.) “Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved.” (PCO, Inc. v. Chistensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)
Among other things, Plaintiff alleges that he had a right to the value of his shares in Pelt, Inc. and 4Societee, and that Defendants have interfered with his right to certain identified property and money. The Complaint does allege a sum - $600k. (Complaint, at ¶ 23.) While it is an estimate, after an accounting is performed, there will be a specific identifiable sum that arguably would support a conversion claim. As a result, Defendant’s demurrer to this cause of action is overruled.
Constructive Fraud (Fourth Cause of Action)
The elements of constructive fraud are “(1) a fiduciary relationship, (2) nondisclosure, (3) intent to deceive, and (4) reliance and resulting injury. Constructive fraud is any breach of duty that, without fraudulent intent, gains an advantage to the person at fault by misleading another to his prejudice.” (Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1249–1250.)
Plaintiff alleges that Defendants acted in a confidential and fiduciary capacity relative to Plaintiff. They breached the duty owed to Plaintiff by denying him the value of his partnership interest and keeping for themselves the money and assets belonging to Plaintiff. (Complaint, at ¶¶ 28-29.)
Plaintiff did not allege a nondisclosure or misrepresentation within this cause of action. Moreover, the Complaint does not plead specific facts "to show how, when, where, to whom, and by what means the representations were tendered, from what data the falsity of [Defendant's] intentions could be inferred." (Hills Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 707; see also Schauer v. Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 961; Knox v. Dean (2012) 205 Cal.App.4th 417, 434.) The demurrer as to this cause of action is sustained with 15 days leave to amend.
MOTION TO STRIKE
Defendants’ motion to strike portions of the Complaint is denied.
The ruling on the demurrer as to the fourth cause of action renders moot the request to strike paragraph 32, lines 7-8.
As for the remainder of the motion to strike, a court may strike out any irrelevant, false, or improper matter inserted in any pleading or strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule or an order of the court. (Code Civ. Proc., § 436.) “Irrelevant” matters include: allegations not essential to the claim, allegations neither pertinent to nor supported by an otherwise sufficient claim or a demand for judgment requesting relief not supported by the allegations of the complaint. (Code Civ. Proc., § 431.10, subd. (b).) A motion to strike can also strike legal conclusions. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2021) ¶ 7:179.) Conclusory allegations are permitted, however, if they are supported by other factual allegations in the complaint. (Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6.)
Civil Code section 3294 provides that punitive damages may be awarded in an action for breach of an obligation not arising from contract, if the plaintiff proves by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice. “Malice” means conduct that is intended to cause injury or despicable conduct that is carried on with a willful and conscious disregard of the right and safety of others. (Civ. Code, § 3294 subd. (c)(1).)
Plaintiff seeks punitive damages in connection with his conversion claim. Specifically, Plaintiff alleges that Defendants acted “fraudulently, maliciously and oppressively,” and “knew and intended that said conduct has caused and will continue to cause Plaintiff the Damages as alleged herein . . .” (Complaint, at ¶ 25.) Plaintiff’s claim of conversion sufficiently supports the punitive damages allegation. The remainder of the motion to strike is denied.
Defendants shall give notice of the rulings.
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