Judge: Frank M. Tavelman, Case: 22BBCV00572, Date: 2022-12-30 Tentative Ruling

Case Number: 22BBCV00572    Hearing Date: December 30, 2022    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

DEMURRER WITH MOTION TO STRIKE

ALLEGATIONS:

Erick Fernando Sosa (“Plaintiff”) filed suit against Richard Diament (“Diament”) and Elite Auto Parts (“Elite”) (collectively, "Defendants"). Plaintiff asserts his employment with Elite was terminated without warning, and that Diament was his supervisor. (Compl. ¶¶ 23, 26, 28.) Plaintiff alleges that he is owed pay for his final day of work, for breaks he was denied and overtime that he worked. (Compl. ¶ 32.)

Plaintiff further alleges that Diament orally agreed to auto deduct money from Plaintiff’s paycheck so Plaintiff could save for a house.  Because Plaintiff does not have a social security number, Diament agreed to purchase the home in his own name for Plaintiff, as Plaintiff advised Diament that Plaintiff was having a hard time purchasing a home without a Social Security Number. (Compl. ¶ 33.) Plaintiff alleges that the money taken from his paycheck was never returned by Diament. (Compl. ¶ 33.) Plaintiff asserts he was to be reimbursed for tools he purchased for Elite, but never received such reimbursement. (Compl. ¶ 34.)

On August 8, 2022, Plaintiff filed a Complaint alleging 11 causes of action: (1) Violation of Labor Code § 510 (Overtime Pay); (2) Violation of Labor Code § 204 (Paid Wages in Timely Fashion); (3) Violation of Labor Code § 226(a) (Itemized Wage); (4) Violation of Labor Code §§ 201, 202 (Wages Paid at Time of Termination); (5) Violation of Labor Code §§ 2800, 2802 (Reimburse Necessary Expenditures); (6) Unfair Business Practices in Violation of Business and Professions Code § 17200 et seq.; (7) Breach of Contract; (8) Breach of Implied Covenant of Good Faith and Fair Dealing; (9) Conversion; (10) Unjust Enrichment; (11) Failure to Permit Inspection of Personnel and Payroll Records §§ 1198.5, 226(C).

PRESENTATION:

The Court received Defendants’ Demurrer filed on October 28, 2022. Plaintiff’s opposition was filed on December 7, 2022. No reply has been filed as of December 27, 20022.

The Court received the Defendants’ Motion to Strike on October 28, 2022. The Court has received no opposition or reply.

RELIEF REQUESTED:

Defendants demur to the seventh, eighth, ninth, and tenth causes of action in the Complaint.

Defendants move to strike Plaintiff’s Exhibits A through D, Plaintiff’s alter ego, agency, and joint employer allegations, and Plaintiff’s prayer for punitive damages and liquidated damages.

ANALYSIS:

I.          LEGAL STANDARD

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.  (CCP § 430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Ibid.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.  (Blank, supra, 39 Cal. 3d at p. 318.)

Pursuant to CCP §§ 430.10(e) and (f), the party against whom a complaint has been filed may demur to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action, or that the pleading is uncertain, ambiguous and/or unintelligible. It is an abuse of discretion to sustain a demurrer if there is a reasonable probability that the defect can be cured by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1082, as modified (Dec. 23, 2003).)

II.        MEET AND CONFER

CCP § 430.41(a) requires that, at least five days prior to the date a responsive pleading is due, the demurring party meet and confer, by telephone or in person, with the party who filed the pleading subject to the demurrer. The purpose of the meet and confer is to determine whether the parties can resolve the objections to be raised in the demurrer. The demurring party must file and serve a declaration detailing their meet and confer efforts. Failure to meet and confer is not grounds to overrule or sustain a demurrer or grant or deny a motion to strike. (CCP §§ 430.41(a)(4); CCP 435.5(a)(4).)

The Court finds that meet and confer requirements have been satisfied to code. (Decl. Geragos ¶ 4, 6, 7.)

III.       MERITS

A.    Seventh Cause of Action for Breach of Oral Contracts - OVERRULED

“The standard elements of a claim for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom.’” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) For an oral contract, the plaintiff must plead the material terms to assert a breach of contract claim. (Construction Protective Servs., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–99; San Diego Housing Comm’n v. Indust. Indem. Co. (1998) 68 Cal.App.4th 526, 536.)

Defendants argue that Plaintiff fails to sufficiently plead the existence of an oral contact because the asserted material terms are not reasonably certain and do not give an appropriate remedy.  The Court disagrees. Plaintiff alleges two oral contracts. The first contract was that “Defendant was going to withhold money from the Plaintiffs paycheck and save it to purchase a home on behalf of the Plaintiff because the Plaintiff did not have a social security number. The second contract was an oral agreement that the Defendant promised to pay back any tools that the Plaintiff purchased on behalf of the company in order to do his work.” (Complaint ¶ 72.) As to the first contract, Plaintiff agreed to allow Defendant to take money from his paycheck. (Complaint ¶ 73.) As to the second contract, Plaintiff performed by purchasing the tools. (Complaint ¶ 73.) Plaintiff alleges that Defendant has not paid back neither, the money withheld from his paycheck, nor the money he used to purchase tools.” (Complaint ¶ 74.) Furthermore, the Complaint expressly sets for the dates and dollar amounts taken out of the paycheck to save for the house, totaling $55,000. (Complaint ¶ 34, Exh. C).  As to the monies for the tools, this was also set forth in the complaint as being $7,907.12 (Complaint ¶34, Exh. D) The Court finds this is sufficiently plead. The terms of the contract are clearly plead, and the breach is sufficiently plead and the damages are clear.  The Court declines to sustain the demurrer on this ground.

Defendants further argue that the alleged contract to withhold money from Plaintiff’s paycheck to purchase a home violates the the statute of frauds, Civil Code §1624.

The statute of frauds bars enforcement of certain agreements if the agreement was not confirmed in writing and “subscribed to the party to be charged.” (Cal. Civ. Code. § 1624.) An agreement authorizing an agent, or any other person, to “procure, introduce, or find a purchaser or seller of real estate…for compensation or a commission” falls under the statute of frauds. (Cal. Civ. Code. § 1624(a)(4).) Where the complaint seeks to enforce an agreement required to be in writing, but nonetheless alleges the agreement was oral, a general demurrer lies because the complaint discloses a bar to recover. (Parker v. Solomon (1950) 171 Cal.App.2d 125, 136; Rossberg v. Bank of America, N.A. (2013) 219 Cal.App.4th 1481, 1503.)  

Here, the contract at issue is an oral agreement for Diament to withhold portions of Plaintiff’s paycheck to facilitate Plaintiff’s purchase of a house. This agreement is not precluded by the statute of frauds because Diament was not retained and compensated or being given a commission for the purchase of property. (See Westside Estate Agency, Inc. v. Randall (2016) 6 Cal.App.5th 317, 324.) Thus, the Court cannot sustain a demurrer based on the statute of frauds.

Defendants’ demurrer to the seventh cause of action is overruled.

B.     Eighth Cause of Action (Breach of Implied Covenant of Good Faith and Fair Dealing) - SUSTAINED

“Every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.”  (Hicks v. E.T. Legg & Associates (2001) 89 Cal.App.4th 496, 508.)  “[T]he scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.”  (Id. at 509.)  “The covenant of good faith and fair dealing . . . exists . . . to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.”  (Guz v. Bechtel National Inc. (2000) 24 Cal.4th 317, 349.) 

“A breach of the implied covenant of good faith and fair dealing involves something beyond breach of the contractual duty itself and it has been held that bad faith implies unfair dealing rather than mistaken judgment.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated … .” (Id. at pp. 1394-1395.) To recover in tort for breach of the implied covenant, the defendant must “have acted unreasonably or without proper cause.” (Id. at p. 1395, citations and italics omitted.) 

The complaint alleges that Defendants breached the implied covenant of good faith and fair dealing by giving Plaintiff “false hopes in believing he would be purchasing that home” and by failing “to act in good faith.” (Complaint ¶ 79.)

Defendants allege that this cause of action fails because Plaintiff relies on the same facts as the breach of contract claim. The Court agrees. Although the Complaint states that Defendants “unfairly interfer[ed] with Plaintiff’s right to receive the benefits of both Oral Agreements,” (Complaint ¶ 77,) this is conclusory and the accompanying facts that show interference are the same facts that show breach of contract. The complaint does not state any additional facts that show any misconduct beyond the failure of Defendant to comply with the terms of the oral agreement.

Defendants’ demurrer to the eighth cause of action for breach of implied covenant of good faith and fair dealing is sustained with leave to amend.

C.     Ninth Cause of Action (Conversion) - OVERRULED

To plead a cause of action for conversion, one must allege (1) the plaintiff’s ownership or right to possession of personal property; (2) defendant’s disposition of the property inconsistent with plaintiff’s rights; and (3) resulting damages. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

Plaintiff’s complaint states that “Defendant failed and/or refused to account for the Plaintiff’s funds and have completely failed and/or refused to return any of Plaintiff’s funds… [amounting to] $62,907.12.” (Complaint ¶ 85-86.) Further, the complaint alleges that Defendant withheld funds from Plaintiff’s paychecks for Plaintiff to save for a home purchase, which never occurred. (Complaint ¶ 33.) Plaintiff also alleged that Defendant asked Plaintiff to purchase tools to use at work out of pocket and did not reimburse him. (Complaint ¶ 34.)

The Court finds that this cause of action is sufficiently plead as to the money withheld from Plaintiff’s paycheck for the house because the complaint sufficiently alleges that Defendant withheld money that was rightfully Plaintiff’s and has not paid him back, despite failing to purchase the house. This is sufficient.

Defendants argue that this cause of action fails because Plaintiff did not allege that Defendants retained possession of the tools that Plaintiff purchased. However, because Plaintiff successfully plead conversion of the money from Plaintiff’s paycheck, this argument does not justify sustaining the demurrer.

The Court thus overrules the demurrer as to the ninth cause of action.  

D.    Tenth Cause of Action (Unjust Enrichment) - OVERRULED

“The elements for a claim of unjust enrichment are receipt of a benefit and unjust retention of the benefit at the expense of another. The theory of unjust enrichment requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769.)

Plaintiff alleges that “Defendants have been unjustly enriched at the expense of Plaintiff by keeping the initial $55,000 that was meant to be used to purchase a home for the Plaintiff based on the first oral agreement by both parties. The Defendant has also not paid the Plaintiff back the additional money he used to buy tools for the business totaling to $7,907.12.” (Complaint 17:17-20.)

Plaintiff argues that the cause of action fails as to Plaintiff’s purchase of the tools because the complaint does not allege that Defendant kept the tools. However, this is not necessary for Plaintiff to plead for an unjust enrichment cause of action. Here, Defendant received a benefit by not paying for Plaintiff’s tools needed for his job. This is sufficient to show unjust enrichment.

Defendants’ demurrer as to the tenth cause of action for unjust enrichment is overruled.

IV.       CONCLUSION

The Court thus overrules the demurrer as to the seventh, ninth, and tenth causes of action. The Court sustains the demurrer as to the eighth cause of action with leave to amend. 

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Motion to Strike

I.          LEGAL STANDARD

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer, such as words, phrases, and prayers for damages. (See CCP §§ 435, 436, and 437.) The proper procedure to attack false allegations in a pleading is a motion to strike. (CCP § 436(a).) In granting a motion to strike made under CCP § 435, “[t]he court may, upon a motion made pursuant to Section 435 [notice of motion to strike whole or part of complaint], or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (CCP § 436(a).) Irrelevant matters include immaterial allegations that are not essential to the claim or those not pertinent to or supported by an otherwise sufficient claim. (CCP § 431.10.) The court may also “[s]trike 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.” (CCP § 436 (b).)

II.        MEET AND CONFER

CCP § 435.5(a) provides that before filing a 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 the motion to strike for the purpose of determining if an agreement can be reached that resolves the objections to be raised in the motion to strike.

The Court finds that meet and confer requirements have been satisfied to code. (Decl. Geragos ¶ 4, 6, 7.)

III.       MERITS

A.    Exhibits A through D - DENIED

Defendants move to strike Exhibits A through D as evidence of the two alleged oral agreements. Defendants move to strike these exhibits because they state that the cause of action for breach of contract fails. However, as the court overruled Defendants’ demurrer as to the breach of contract claim, the motion to strike Exhibits A through D is denied.

B.     Alter Ego, Agency, and Joint Employer Allegations - DENIED

“To recover on an alter ego theory, a plaintiff need not use the words ‘alter ego,’ but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.” (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 696.) A showing of inadequate capitalization, commingling of assets, and disregard of corporate formalities are critical facts which may demonstrate that an inequitable result would have followed.  (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1285.)

Defendants move to strike all alter ego, agency, and joint employer allegations. Defendants argue that Plaintiff’s complaint failed to allege sufficient facts showing a unity of interest and ownership.

The Complaint states the following:

·         “Company, is completely dominated and controlled by Diament…who personally committed the frauds and violated the laws as set forth… who have hidden and currently hide behind Company to perpetuate frauds, circumvent statutes, or accomplish some other wrongful or inequitable purpose.” (Complaint ¶ 19a.)

·         “Diament…derive actual and significant monetary benefits by and through Company unlawful conduct, and by using Company as the funding source for their own personal expenditure.” (Complaint ¶ 19b.)

·         “Company, Diament…were segregated to appear as though separate and distinct for purposes of perpetuating a fraud, circumventing a statute, or accomplish some other wrongful or inequitable purpose. (Complaint ¶ 19c.)

·         “Company, Diament… do not comply with all requisite corporate formalities to maintain a legal and separate corporate existence.” (Complaint ¶ 19d.)

Defendant argues that these allegations are conclusory, and Plaintiff failed to allege specific facts to support an alter ego theory. However, Plaintiff was required to allege only “ultimate rather than evidentiary facts” necessary to support alter ego theory. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236; Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) Moreover, the “less particularity [of pleading] is required where the defendant may be assumed to possess knowledge of the facts at least equal, if not superior, to that possessed by the plaintiff,” which is the case here. (Burks v. Poppy Construction Co. (1962) 57 Cal.2d 463, 474.)

Therefore, the Court finds these allegations sufficient to maintain an alter-ego theory of liability and denies Defendants’ motion to strike.

C.     Punitive Damage Claims - GRANTED

A Court will properly grant a motion to strike punitive damages when a plaintiff fails to state prima facie claim for punitive damages, including allegations that defendant is guilty of oppression, fraud, or malice.¿ (Turman¿v. Turning Point of Cent. California, Inc.¿(2010) 191 Cal.App.4th 53, 63; Cal. Civ. Code § 3294(a); See also, Clauson v. Superior Court¿(1998) 67 Cal.App.4th 1253, 1255 (“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff”).

To succeed on a motion to strike punitive damages allegations, as a matter of law the alleged behavior must not be so vile, base, or contemptible that it would not be looked down upon and despised by ordinary decent people. (Angie M. v. Superior Court (1995) 37 Cal. App. 4th 1217, 1228-1229.)

The Court’s review of the Complaint cannot identify any factual allegations that support an inference for either oppression, fraud, or malice. 

Accordingly, the motion to strike is granted with leave to amend.

D.    Liquidated Damages - GRANTED

“In any action under Section 98, 1193.6, 1194, or 1197.1 to recover wages because of the payment of a wage less than the minimum wage fixed by an order of the commission or by statute, an employee shall be entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon.” (Code Civ. Proc. § 1194.2.)

Because Plaintiff does not plead that he was paid less than the minimum wage, the motion to strike as to the prayer for relief for liquidated damages is granted with leave to amend.

IV.       CONCLUSION

The Court thus grants the motion to strike in part, as to the punitive and liquidated damages prayers for relief; and denies the motion to strike in part, as to Exhibits A through D and the alter ego allegations.  The Court grants leave to amend.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants Demurrer and Motion to Strike came on regularly for hearing on December 30, 2022, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE DEMURRER IS OVERRULED AS TO THE SEVENTH, NINTH, AND TENTH CAUSES OF ACTION.

THE DEMURRER IS SUSTAINED WITH LEAVE TO AMEND, AS TO THE EIGHTH CAUSE OF ACTION.

THE MOTION TO STRIKE IS DENIED AS TO EXHIBITS A THROUGH D AND THE ALTER EGO ALLEGATIONS.

THE MOTION TO STRIKE IS GRANTED WITH LEAVE TO AMEND, AS TO THE PRAYERS FOR PUNITVE AND LIQUIDATED DAMAGES.  

THE COURT GRANTS 20 DAYS’ LEAVE TO AMEND.

PLAINTIFF TO GIVE NOTICE.

IT IS SO ORDERED.

DATE:  December 30, 2022                          _______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles