Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

This action arises from a failed bid for two government projects.  Plaintiff Aaron Celious is the owner of Maroon Society Inc. (“Maroon”).  Maroon has assigned its claims to Celious.  (Second Amended Complaint (“SAC”) ¶14.)  Maroon is in the business of providing data compilation, analysis and strategic services for both private and public sector entities.  (Id. ¶21.)  Maroon engaged in a competitive bid process for two different projects for Defendant City of Los Angeles (the “City”).  It was not chosen for either project.  (Id. ¶¶23-24.)   

Defendant Ernesto Morales’ company, North Star Alliances LLC, was awarded the bid for one of the projects.  (Id. ¶¶8, 28, 82.)  Defendant Robin Engel’s company, Star Insights, LLC, was awarded the bid for the other project.  (Id. ¶¶9, 28, 170.)  Plaintiff alleges that Engel and Morales grossly and fraudulently misrepresented the qualifications and experiences of their companies, to obtain an unfair competitive advantage over Maroon.  (Id. ¶28.)   

The Court previously sustained a demurrer brought by Engel on Plaintiff’s UCL claim.  The Court concluded that Maroon could not assign the UCL claim to Plaintiff, and accordingly, Plaintiff did not have standing to bring the UCL claim.  The Court also granted a motion to strike Plaintiff’s prayer for punitive damages because a claim for punitive damages cannot be assigned.  Likewise, the Court struck Plaintiff’s prayer for attorneys’ fees because Plaintiff had not stated a contractual or statutory basis for such fees.   

Plaintiff then filed the SAC.  The SAC alleges claims for (1) fraud, (2) negligence, (3) violation of Civil Rights 42 U.S.C. §1983, (4) intentional interference with prospective economic relations, (5) negligent interference with prospective economic relations and (6) violation of Cal. Bus. & Prof. Code §17200 et seq. (“UCL”).  Only the fourth, fifth and sixth causes of action are alleged against Engel and Morales.   

The SAC contains a new claim for negligent interference with prospective economic relations against Engel and Morales.  The SAC also alleges individual injuries to Plaintiff, by virtue of Plaintiff’s commission agreement with Maroon.  (SAC ¶2.)  Plaintiff alleges that he holds a “Commission Agreement with Maroon [] to prepare bids, proposals, and all tasks related to procuring new contracts for Maroon[].”  (Id. ¶22.)  As part of the Commission Agreement, Plaintiff receives 24% of the total monetary value of contracts awarded to Maroon.  (Id.)  Plaintiff further alleges that his SAC “arises from his economic relationship with Maroon [] that was damaged as a proximate result of the tortious conduct of defendants alleged herein.”  (Id.)    

The Court previously granted a motion to strike the SAC brought by Engel.  The Court concluded Plaintiff had not sought leave to add a new claim for negligent interference with prospective economic advantage or leave to re-assert his UCL and punitive damages claims.  The Court also struck all relief associated with the UCL claim.     

This hearing is on Morales’ demurrer to, and motion to strike, the SAC.  Morales argues that a demurrer should be sustained because (1) Plaintiff lacks standing to sue on his UCL claim as the claim could not be assigned from Maroon to Plaintiff, and (2) Plaintiff’s tortious interference claims fail to allege that Morales was aware of any economic relationship between Plaintiff and Maroon or between Plaintiff and the City.  Morales also moves to strike (1) Plaintiff’s request for punitive damages as Maroon could not have assigned its punitive damages claim to Plaintiff, and (2) Plaintiff’s prayer for “legal costs” as Morales claims it is a veiled attempt to recover attorneys’ fees which the Court previously concluded was not recoverable.   

MEET AND CONFER 

Code Civ. Proc. §§ 430.41 and 435.5 requires that before the filing of a demurrer or motion to strike, the moving party “shall meet and confer in person or by telephone” with the party who filed the pleading that is subject to demurrer or motion to strike for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer or motion to strike.  (Code Civ. Proc. §§ 430.41(a), 435.5(a).)  The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc. §§ 430.41(a)(2), 435.5(a)(2).)  Thereafter, the moving party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc. §§ 430.41(a)(3), 435.5(a)(3).)  Morales submits the Declaration of John Hogan which shows the parties met and conferred on multiple occasions in an attempt to informally resolve the disputes outlined in the demurrer and motion to strike.  (Hogan Decl. ¶¶2-3.)  It is not clear from the declaration whether the meet and confers were conducted by phone or in person.  In any event, the Court cannot overrule or sustain a demurrer on the ground that the meet and confer was inadequate.  (Code Civ. Proc. §§ 430.41 (a), 435.5 subd. (a)(4).)     

LEGAL STANDARD 

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable.  (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 (in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents).)  For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)  

Further, the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., §436, subd. (a).) The court may also strike 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, subd. (b).) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., §437.)¿ 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 (court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”); Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 (“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”); Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 (“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”).)  The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

DISCUSSION 

As Morales occupies the same position as Engel, the Court adopts its rulings on Engel’s motion to strike here.  (See 3/14/2024 Minute Order.)  Specifically, the Court strikes Plaintiff’s claims against Morales for negligent interference with prospective advantage, UCL and punitive damages and the requests for relief associated with Plaintiff’s UCL claim.  The Court does so on the basis Plaintiff did not seek leave to add any of these allegations. 

The only issue that remains for consideration is Morales’ demurrer to Plaintiff’s cause of action for intentional interference with prospective economic advantage.  As to that claim, Morales argues Plaintiff has not sufficiently plead his tortious interference claim because he has not plead how Morales knew of an economic relationship between Plaintiff and Maroon or between Plaintiff and the City.  The Court disagrees. 

The elements of a claim for tortious interference with prospective economic advantage include: “(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 or negligent 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.” (Crown Imports LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404.)  Further, for an intentional interference claim, “the alleged interference must have been wrongful by some measure beyond the fact of the interference itself. For an act to be independently wrongful, it must be unlawful, that is, it is proscribed by some constitutional, statutory, regulatory, common law or other determinable legal standard.” (Id.) 

Plaintiff has sufficiently alleged each of these elements. Plaintiff alleges he was in an economic relationship¿with Maroon and Maroon was in an economic relationship with the City, which would have resulted in economic benefit to Plaintiff and Maroon.  (SAC ¶¶209, 210, 211, 212, 223, 224.)  Plaintiff further alleges Morales knew of and disrupted the relationship. (Id. ¶¶ 213, 214, 225, 226.)  Plaintiff also alleges Morales engaged in independently wrongful acts, by “violat[ing] government procurement laws, City of Los Angeles Municipal Code, State Law, Federal Law and statutes that make fraud, false statements and the like, illegal and tortious acts.” (Id. ¶¶215, 230.)  Last, Plaintiff alleges that Maroon and Plaintiff suffered damages as a result of Morales’ tortious acts.  (Id. ¶¶219, 220, 233, 234.)  At the pleading stage, no further¿specificity is required.  

Morales contends Plaintiff has not shown how he became aware of the relationship between Maroon and Plaintiff and between Maroon and the City.  Plaintiff alleges that Morales became aware of the relationships based on (1) Plaintiff’s attendance at the mandatory pre-bid meetings, (2) Plaintiff’s correspondence with City procurement officers, and (3) the responsive proposals prepared by Plaintiff and submitted to the City.  (SAC ¶¶ 213, 214.)  Morales disputes that any of these things would have made him aware of the relationships between Plaintiff and Maroon and between Maroon and the City.  While his argument may ultimately prevail on a dispositive motion, it is not a basis to sustain a demurrer.  On a demurrer, all facts pleaded in a complaint are assumed to be true.   

Accordingly, the Court overrules the demurrer to the¿intentional interference claim. 

CONCLUSION 

Based on the foregoing, the Court strikes Plaintiff’s claims against Morales for negligent interference with prospective advantage, UCL and punitive damages and the requests for relief associated with Plaintiff’s UCL claim.  The Court otherwise overrules Morales’ demurrer to the intentional interference claim and denies his motion to strike as to the request for legal costs.   

 

IT IS SO ORDERED. 

 

DATED: March 27, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court