Superior Court of California

County of Los Angeles

Department 26

JOSHUA GREER,

Plaintiff,

vs.

HARRIS & HARRIS, LTD.,

Defendant.

Case No.: 23STCV16563

Hearing Date: January 29, 2024

[TENTATIVE] order RE:

DEFENDANT’s Demurrer to THE complaint

Procedural Background

On July 17, 2023, Plaintiff Joshua Greer (“Plaintiff”) filed the instant action against Defendant Harris & Harris, LTD. (“Defendant”). The complaint asserts two causes of action for (1) Violation of the Rosenthal Fair Debt Collection Practices Act, and (2) Violation of the Unfair Competition Law.

On September 5, 2023, Defendant filed the instant demurrer to the complaint. On October 17, 2024, Plaintiff filed an opposition. On January 22, 2024, Defendant filed a reply.

Allegations of the Operative Complaint

The Complaint alleges that:

“At various and multiple times prior to the filing of the instant Complaint and within one year thereof, [Defendant] contacted Plaintiff in connection with collection on an alleged debt.” (Complaint ¶ 8.) However, “Plaintiff does not owe the alleged debt, and never has done any business with [Defendant].” (Id. ¶ 9.)

“Feeling confused and surprised by the billing, Plaintiff sent a dispute letter, which revoked consent to be contacted by phone and disputed the purported debt. Plaintiff also requested verification and validation of the alleged debt.” (Id. ¶ 10.) “Defendant never provided any verification or validation of the alleged debt. Defendant couldn’t have done so anyway, as the debt was not owed to begin with. At the same time, Defendant has never made any indication that it stopped collection on the alleged debt.” (Id. ¶ 11.)

Legal Standard

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. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal. App. 4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at 747.)

Meet and Confer Requirement

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party 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.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension. (CCP § 430.41(a)(2).) The demurring party must also file and serve a declaration detailing the meet and confer efforts. (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading. (Id.¿at (a).)

Defendant has satisfied the meet and confer requirement. (Penn Decl. ¶ 2.)

Discussion

Violation of the Rosenthal Fair Debt Collection Practices Act

Defendant contends that the complaint fails to state a violation of the Rosenthal Fair Debt Collection Practices Act (the “Rosenthal Act”).

“The Rosenthal Act is modeled on, and applies more broadly than, the federal FDCPA.” (Paredes v. Credit Consulting Services, Inc. (2022) 82 Cal.App.5th 410, 425.) “Like its federal counterpart, the Rosenthal Act regulates the conduct of debt collectors in connection with the collection of consumer debts.” (Ibid.) Under the Rosenthal Act, “a violation of the FDCPA is per se a violation of the Rosenthal Act.” (Best v. Ocwen Loan Servicing, LLC (2021) 64 Cal.App.5th 568, 576.)

“‘[T]o prevail on an FDCPA claim, a plaintiff must prove that (1) [s]he was the object of collection activity arising from consumer debt, (2) the defendant is a debt collector within the meaning of the statute, and (3) the defendant engaged in a prohibited act or omission under the FDCPA. [Citations.]’ Similar facts must be proved to prevail on a claim under the [Rosenthal Act], which precludes a debt collector from collecting or attempting to collect from a debtor on a consumer debt in a threatening or harassing manner. (See Civ. Code, §§ 1788.10-1788.12, 1788.14-1788.16.)” (O'Neil-Rosales v. Citibank (South Dakota) N.A. (2017) 11 Cal.App.5th Supp. 1, 7.)

Here, the complaint alleges in relevant part that at various times, Defendant contacted Plaintiff in connection with collection on an alleged debt. However, Plaintiff does not owe the alleged debt. (Complaint ¶¶ 8-9.) “Plaintiff sent a dispute letter, which revoked consent to be contacted by phone and disputed the purported debt. Plaintiff also requested verification and validation of the alleged debt.” (Id. ¶ 10.) However, “Defendant never provided any verification or validation of the alleged debt. Defendant couldn’t have done so anyway, as the debt was not owed to begin with. At the same time, Defendant has never made any indication that it stopped collection on the alleged debt.” (Id. ¶ 11.)

These allegations do state a violation of the FDCPA – namely that Defendant made false representations to Plaintiff about the existence of a debt. “The federal FDCPA regulates the conduct of debt collectors by prohibiting ‘any false, deceptive, or misleading representation or means in connection with the collection of any debt.’ (15 U.S.C. § 1692e.) It is a violation of the FDCPA to falsely represent “the character, amount, or legal status of any debt” (id., § 1692e(2)(A)) or to “use ... any false representation or deceptive means to collect or attempt to collect any debt.” (Id.,§ 1692e(10).)” (Aguilar v. Mandarich Law Group, LLP (2023) 87 Cal.App.5th 607, 622.)

Here, Plaintiff’s allegation of Defendant’s attempt to collect a non-existent debt – i.e., falsely representing the character, amount, or legal status of such a non-existent debt as one that is valid, existing, and in an amount greater than $0.00 – would indeed constitute an express violation of the FDCPA and thus the Rosenthal Act. The Complaint sufficiently alleges a violation of the Rosenthal Act, and thus, Defendant’s demurrer to the first cause of action is OVERRULED.

Second Cause of Action: Unfair Competition Law

Defendant contends that Plaintiff has failed to allege any unfair, unlawful, or fraudulent actions. The Court disagrees.

The purpose of California’s Unfair Competition Law (“UCL”) “is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services. [Citation.]” (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) Thus, the UCL prohibits unlawful, unfair or fraudulent business acts or practices. (Bus. & Prof. Code, § 17200.) “The Legislature intended this ‘sweeping language’ to include ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’” (Bank of the West v. Sup. Ct. (1992) 2 Cal.4th 1254, 1266.) “A plaintiff alleging unfair business practices under these statutes must state with reasonable particularity the facts supporting the statutory elements of the violation.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.)

“Because the statute is framed in the disjunctive, a business practice need only meet one of the three criteria to be considered unfair competition.” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1359.) Section 17200’s “unlawful” prong “borrows violations of other laws ... and makes those unlawful practices actionable under the UCL.” (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.) “[V]irtually any law or regulation—federal or state, statutory or common law—can serve as [a] predicate for a ... [section] 17200 ‘unlawful’ violation.’ ” (Ibid.) “A business practice is “fraudulent” within the meaning of section 17200 if it is “likely to deceive the public.” (Id. at p.1380.) “‘A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.’ [Citation.]” (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1407–1408.) The determination of whether a business practice is unfair involves an examination of that practice’s impact on its alleged victim, balanced against the reasons, justifications, and motives of the alleged wrongdoer. (Ibid.) In brief, the court must weigh the utility of the defendant's conduct against the gravity of the harm to the alleged victim. (Nolte, Supra, 236 Cal.App.4th at pp. 1407–1408; Cf. Durell v. Sharp Healthcare, supra, 183 Cal.App.4th at 1365 [“[u]nfair” business practices are those which offend an “established public policy” that is tethered to “specific constitutional, statutory, or regulatory provisions”]; Morgan v. AT & T Wireless Services, Inc. (2009) 177 Cal.App.4th 1235, 1254–1255.)

For the reasons stated above in the discussion of the first cause of action, the complaint alleges an unlawful action under the Rosenthal Act. Thus, Plaintiff does state a claim under the “unlawful” prong of the UCL. Accordingly, Defendant’s demurrer to the second cause of action is OVERRULED.

CONCLUSIONS AND ORDER

Based on the foregoing, Defendant Harris & Harris, LTD’s demurrer to the complaint is OVERRULED.

Defendant is to file and serve an answer no later than February 29, 2024.

The case management conference is continued to March 7, 2024 at 8:30 am.

Moving Party is to give notice and file proof of service of such.

DATED: January ___, 2024 ___________________________

Elaine Lu

Judge of the Superior Court