Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

Plaintiff Johnny Rodriguez was a patron of a nightclub called “Micky’s West Hollywood” on February 24, 2023.  “Micky’s” is operated by Defendant WHBT, Inc.  Plaintiff was allegedly told by an employee that he had to leave the premises.  Plaintiff alleges that the “door person” named “Eric” slapped the phone out of his hand, tried to step on it, tackled Plaintiff to the floor, punched his face and kicked him.  (First Amended Complaint (“FAC”) ¶¶4-5.)  As a result, Plaintiff’s nose was fractured, his ribs and face bruised, and the inside of his lip was cut.  (Id. ¶6.)       

Defendant Michael Niemeyer is the owner and president of WBHT, Inc.  (Id. ¶1.)  Plaintiff alleges Niemeyer is the alter ego of WHBT, Inc.  (Id.)  Plaintiff alleges that Niemeyer “ratified the actions, inaction and conduct of all the other Defendants.  There is such a unity of interest and ownership between [WHBT, Inc.] and owner/president Defendant NIEMYER that the separate personalities of [WHBT, Inc.] and NIEMEYER do not in reality exist; there may be an inequitable result if the acts, in action, and conduct in question are treated as those of [WHBT, Inc.] alone.  Plaintiff is informed and believes and alleges thereon that NIEMEYER may be selling MICKY’s in the near future.  As a result, there may be an inequitable result if the acts in question are treated as those of MICKY’s alone as there may be diversion of assets from a corporation to another person or entity to the detriment of creditors,”  (FAC ¶1.)   

The operative complaint alleges five causes of action for (1) battery, (2) intentional infliction of emotional distress, (3) negligence, (4) premises liability and (5) negligent hiring, training and/or retention.  

This hearing is on Niemeyer’s demurrer and Defendants’ motion to strike.  Niemeyer demurs to the Complaint on grounds that Plaintiff’s allegations against him are based solely on alter ego liability but Plaintiff has not sufficiently alleged there is a unity of interest between Niemeyer and WHBT, Inc. or that fraud or injustice would result, both of which are required to allege alter ego liability.  Defendants also move to strike (1) Plaintiff’s claim for punitive damages because Plaintiff’s allegations are merely conclusory and do not show how Defendants ratified the conduct of “Eric”, (2) allegations relating to fifteen Yelp reviews documenting complaints of abuse by WHBT’s personnel because they are irrelevant and do not tend to prove Plaintiff’s allegation that he was a assaulted by “Eric”, and (3) prior lawsuits and other claims against Defendants because they do not concern any alleged misconduct by “Eric.”       

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.”).)  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.) 

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).)  Defendant submits the Declaration of Jamison Rayfield which shows the parties met and conferred by telephone, as required under §§ 430.41 and 435.5(a).   

DISCUSSION 

Demurrer 

Niemeyer argues that Plaintiff’s alter ego allegations are conclusory and not supported by any facts.  The Court agrees.    

“[A]lter ego is an extreme remedy, sparingly used.”  (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539.)  “It is a limited doctrine, invoked only where recognition of the corporate form would work an injustice to a third person.”  (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1285.) 

Conclusory allegations of “alter ego” status are insufficient to state a claim.  Rather, a plaintiff must allege specifically the elements of alter ego liability, as well as facts supporting each.  (Leek v. Cooper (2011) 194 Cal.App.4th 399, 414; Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749.)   

“Two requirements must be met to invoke the alter ego doctrine: (1) ‘[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist’; and (2) ‘there must be an inequitable result if the acts in question are treated¿as those of the corporation alone.’” (Turman v. Superior Court (2017) 17 Cal.App.5th 969, 980-981.)   

As to unity of interest, courts use several factors in determining whether there is such a unity of interest between an entity and an individual: (1) formation and use of a corporation to transfer to it the existing liability of another person or entity, (2) diversion of assets from a corporation by or to a stockholder or other person or entity to the detriment of creditors, (3) commingling of funds and other assets, (4) unauthorized diversion of corporate funds or assets to other than corporate uses, (5) the use of corporate entity to procure labor, services or merchandise in another person or entity, (6) the holding out by an individual that he is personally liable for the debts of the corporation, (7) disregard of legal formalities and failure to maintain an arm’s length relationship among related entities, (8) failure to obtain authority to issue stock or to subscribe to or issue the same, (9) failure to maintain minutes or adequate corporate records, (10) the treatment of an individual of the assets of the corporation as his own, (11) the use of a corporation as a mere shell, instrumentality or conduit for a single venture or business of an individual or another corporation, (12) failure to adequately capitalize a corporation, (13) the total absence of corporate assets, i.e., undercapitalization, or (14) diversion of company assets.  (See Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 512-513.) 

Here, Plaintiff alleges that Niemeyer is the “owner/president.”  But ownership of all the stock and control and management of a corporation by one individual is not of itself sufficient to support a unity of interest.  (Leek, 194 Cal.App.4th at 415.)  In Leek, the court recognized that even “[a]n allegation that a person owns all of the corporate stock and makes all the management decisions is insufficient to cause the court to disregard the corporate entity.”  (Id.) 

Plaintiff further alleges Niemeyer may be selling Micky’s which would result in a diversion of assets to the detriment of creditors.  This allegation is too conclusory to support a claim of alter ego liability.  The implication is that Plaintiff may have difficulty enforcing any future judgment against Micky’s after it is sold.  But the alter ego doctrine “does not guard every unsatisfied creditor of a corporation but instead affords protection where some conduct amounting to bad faith makes it inequitable for the corporate owner to hide behind the corporate form.  Difficulty in enforcing a judgment or collecting a debt does not satisfy this standard.”  (Sonora Diamond, 83 Cal.App.4th at 539.) 

Plaintiff also fails to sufficiently plead facts to support the second alter ego requirement of fraud or injustice.  Plaintiff’s sole allegation of injustice is that “there may be an inequitable result if the acts, in action, and conduct in question are treated as those of [WHBT, Inc.’s] alone.”  (FAC ¶1.)  This conclusory allegation is completely deficient; the complaint fails to allege facts showing that application of the alter ego doctrine is necessary to prevent fraud or injustice.  WHBT Inc. is not alleged to be insolvent or unable to respond to any judgment which may be imposed upon it.  The potential sale of Micky’s does not by itself mean that WHBT, Inc. will be unable to respond to any judgment against it.     

Leek is instructive.  There, the pertinent allegations of the complaint were: “(1) that the plaintiffs were employed by Auburn Honda and Jay Cooper; (2) that Auburn Honda is a corporation; (3) that Defendant Cooper is the sole owner of Auburn HONDA, owning all of its stock and making all of its business decisions personally and (4) that all defendants were the agents, servants and employees of their co-defendants, and in doing the things hereinafter alleged were acting within the scope and authority as such agents, servants and employees and with the permission and consent of their co-defendants.”  (Id. at 415.)  The Court concluded that “[t]he allegations neither specifically alleged alter ego liability nor alleged facts showing a unity of interest and inequitable result from the treatment of the corporation as the sole actor.”  (Id.) 

As in Leek, the allegations here are conclusory, and there are no facts alleged to show either a unity of interest or an inequitable result.   

Plaintiff argues that the “[i]nitial pleading requirements for alleging alter ego status in California are minimal,” citing to two cases, First W. Bank & Tr. Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915 and Neilson v. Union Bank of California (C.D. Cal. 2003) 290 F. Supp. 2d 1101, 1116.  But neither case says alter ego liability may be pleaded in a conclusory fashion.   

To the contrary, in Neilson, the court expressly held “[c]onclusory allegations of ‘alter ego’ status are insufficient to state a claim.¿Rather, a plaintiff must allege specifically both of the elements of alter ego liability, as well as facts supporting each.”  (290 F. Supp. 2d 1116.)  Moreover, the court there found that the plaintiff had not sufficiently pled alter ego, because the complaint failed to allege the defendant engaged in any bad faith conduct in its acquisition and/or management of the entity.  Plaintiff alleged only that the entity does not presently have sufficient funds to pay a money judgment in the case.  (Id. at 1117.)  This allegation is more specific than that made by Plaintiff here, yet the Neilson court concluded it was inadequate.  (Id.) 

Also, unlike here, in Bookasta, the plaintiff set forth specific allegations supporting a finding of alter ego liability including that the individual defendants “dominated” the affairs of the corporation; that a “unity of interest and ownership” existed between defendants and the corporation; that the corporation is a “mere shell and naked framework” for individual manipulations; that its income was diverted to the use of the individual defendants; that the corporation was, in effect, inadequately capitalized; that the corporation failed to issue stock and to¿abide by the formalities of corporate existence; that the corporation is and has been insolvent; and that adherence to the fiction of separate corporate existence would, under the circumstances, promote injustice.  (267 Cal.App.2d at 915-916.)  These allegations are far more specific than those made by Plaintiff here.   

Accordingly, the Court sustains Niemeyer’s demurrer without leave to amend.            

Motion to Strike  

Defendants move to strike allegations relating to fifteen Yelp reviews complaining of abuse by Defendants’ staff on the ground they are irrelevant to Plaintiff’s allegations that he was assaulted by “Eric.”  The Court agrees in part.  

Yelp reviews related to dissimilar complaints of unspecified staff are irrelevant and should be stricken.  (See FAC, 4:10-11, 5:20-6:3, 6:5-8, 6:12-21, 6:21-7:9, 7:10-15, 7:16-21, 7:22-8:3, 8:9-14, 8:15-25, 8:26-28.)  However, Yelp reviews relating to alleged abuse by “Eric” are potentially relevant and should not be stricken.  (See FAC p. 4:26-5:7, 6:9-11, 8:4-8, 9:10-10:10.)  These latter allegations may be relevant to show advance knowledge on the part of Defendants about the unfitness of “Eric.” 

Defendants also move to strike allegations in paragraphs 13 and 14 of the FAC relating to complaints and other claims by Micky’s customers.  The allegations do not reference “Eric”.  None of the allegations tend to prove Defendants had previous knowledge of “Eric’s” unfitness, and ultimately none of these allegations are related to Plaintiff’s claims.  Accordingly, the Court grants the motion to strike these allegations.   

Defendants also move to strike Plaintiff’s claim for punitive damages on the ground Plaintiff has failed to set forth sufficient facts to support a finding of malice, oppression or fraud.  The Court disagrees.       

Civil Code § 3294(a) authorizes the recovery of punitive damages in non-contract cases “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.”  

 

(1) ‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. 

(2) ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. 

(3) ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the party of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.”  

 

Civ. Code § 3294(c)(1)-(3). 

“Despicable conduct” that rises to the level of supporting an award of punitive damages against a defendant is that which is “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people” and has been described as “conduct…having the character of outrage frequently associated with a crime.”  (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.)   

“Conscious disregard” means “the defendant was aware of the probable dangerous consequences of his conduct, and that he willfully and deliberately failed to avoid those consequences.”  (Hoch v. Allied-Signal, Inc. (1994) 25 Cal.App.4th 1269, 1287.)  To be liable for punitive damages, the defendant must “have actual knowledge of the risk of harm it is creating, and in the face of the knowledge, fail to take steps it knows will reduce or eliminate the risk of harm.”  (Ehrhardt v. Brunswick, Inc. (1986) 186 Cal.App.3d 734, 742.) 

Punitive damages are appropriate if the defendant’s acts are reprehensible, fraudulent or in blatant violation of law or policy.  (American Airlines, Inc. v. Sheppard, Mullin, Richter & Hampton (2002) 96 Cal.App.4th 1017, 1051.)  “The mere carelessness or ignorance of the defendant does not justify the imposition of punitive damages.”  (Tomaselli, 25 Cal.App.4th at 1287.)  “Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.”  (Id.) 

Civ. Code § 3294(b) precludes an award of punitive damages against an employer absent facts that establish “the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud or malice.  With respect to a corporate employer, the advantage knowledge and conscious disregard, authorization, ratification or act of oppression, fraud or malice must be on the part of an officer, director or managing agent of the corporation.”   

Here, Plaintiff alleges he was kicked and punched by “Eric”, and the actions of “Eric” were ratified by Defendants.  (FAC ¶10.)  Plaintiff alleges that “NIEMEYER and MICKY’S directed the ‘door person’ to use force on Plaintiff; NIEMEYER and MICKY’S had advance notice of the unfitness of the ‘door person’; and NIEMEYER ratified the conduct in his capacity as a managing agent of WHBT.”  (Id.)  Plaintiff alleges Defendants had advance notice of the unfitness of “Eric” due to prior customer complaints in Yelp reviews, and yet continued to employ him with a conscious disregard of the rights and safety of others.  These facts are sufficient to support a claim for punitive damages.  Accordingly, the Court denies the motion to strike the claim for punitive damages.           

CONCLUSION 

Based on the foregoing, the Court SUSTAINS Niemeyer’s demurrer without leave to amend and GRANTS IN PART and DENIES IN PART Defendants’ motion to strike.  The Court strikes 4:10-11, 5:20-6:3, 6:5-8, 6:12-21, 6:21-7:9, 7:10-15, 7:16-21, 7:22-8:3, 8:9-14, 8:15-25, 8:26-28 and paragraphs 13 and 14 of the First Amended Complaint. 

 

IT IS SO ORDERED. 

 

DATED: February 20, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court