Judge Gail Killefer, Case 20STCV49811 2022-09-21 Tentative Ruling

MOTION: Defendant’s Demurrer to the Complaint; Defendant’s Motion to Strike Portions of Complaint

RECOMMENDATION: Defendant’s demurrer is sustained without leave to amend. Defendant is to give notice.

This is an action arising out of the legal representation of Kristy Keers (“Plaintiff”) by Defendants John Koutsoukos and JMK Law Group in a matter filed with the Riverside Superior Court on June 18, 2018, Case No. RIC1804747. Plaintiff alleges Defendants Koutsoukos and JMK Law Group committed legal malpractice as a result of their representation and connection to Defendants Michael Koutsoukos and Eleni Koutsoukos, trustees for the Michael and Eleni Koutsoukos Trust, and their alleged long-standing relationship with Defendant Starbucks Corporation (“Starbucks”).

Plaintiff filed her original Complaint on December 30, 2020 and alleged the following three causes of action: (1) legal malpractice against John Koutsoukos and JMK Law Group; (2) breach of fiduciary duty against John Koutsoukos and JMK Law Group; and (3) fraud/deceit and conspiracy to commit fraud/deceit against all defendants.

On March 15, 2022, Plaintiff filed her First Amended Complaint (“FAC”) alleging identical causes of action.

On June 23, 2022, Starbucks’ demurrer as to the third cause of action was sustained.

On July 29, 2022, Plaintiff filed her operative Second Amended Complaint (“SAC”) alleging identical causes of action.

Starbucks now demurrers to the third cause of action, and moves to strike portions of the SAC. The motions are unopposed.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

The elements of a fraud cause of action are: (1) misrepresentation (false representation, concealment, or omission); (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Davis v. Southern California Edison Co. (2015) 236 Cal.App.4th 619.) Fraud must be pled in the complaint specifically. General and conclusory allegations are not sufficient. (Stansfield v. Starkey¿(1990)¿220 Cal.App.3d 59,¿74;¿Nagy v. Nagy¿(1989) 210 Cal.App.3d 1262, 1268.) Unlike most causes of action where the “the policy of liberal construction of the pleadings,” fraud requires particularity, that is, “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield, supra, 220 Cal.App.3d at 73;¿Lazar v. Superior Court¿(1996) 12 Cal.4th 631, 645.) Every element of a fraud cause of action must be alleged both factually and specifically. (Hall v. Department of Adoptions¿(1975) 47 Cal.App.3d 898, 904; Cooper v. Equity General Insurance¿(1990) 219 Cal.App.3d 1252, 1262.)¿

The elements of a civil conspiracy are: “(1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 212.) “A conspiracy cannot be alleged as a tort separate from the underlying wrong it is organized to achieve. [citation] As long as the underlying wrongs are subject to privilege, defendants cannot be held liable for a conspiracy to commit these wrongs. Acting in concert with others does not destroy the immunity of defendants.” (McMartin v. Children’s Institute International (1989) 212 Cal.App.3d 1393, 1406.)

“The court agrees with Starbucks that the third cause of action is insufficiently pled because the FAC fails to allege that Starbucks had any duty to disclose to Plaintiff, how such concealments or misrepresentations were made, how Plaintiff acted reasonably in relying on such concealments or misrepresentations, and how Plaintiff suffered harm as a result of Starbucks’ conduct. Plaintiff’s allegations speaking in a conclusory fashion as to the conduct of all defendants do not meet the heightened pleading standards of fraud causes in action.” (June 23, 2022 Order, 3-4.)

Starbucks again contends that the third cause of action is insufficiently pled because the allegations of the SAC “are woefully insufficiently pled to establish either fraud or conspiracy to commit fraud.” (Demurrer, 5-6.) Starbucks again further contends the allegations “are nothing more than bare legal conclusions,” and “the only allegation against Starbucks is that it ‘actively concealed the fact that it had a mutually beneficial relationship with the various defendants.’” (Id.) Starbucks then cites State of California ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal.App.4th 402, 419 for its contention that such bare legal conclusions are appropriate to sustain on demurrer. (Id.) Namely, Starbucks again further contends that the SAC is

“utterly silent as to how Starbucks owed any duty to a plaintiff suing it in a personal injury action to make a disclosure that it had previously done business with Plaintiff’s counsel or his parents, i.e.—how such an alleged nondisclosure by Starbucks was wrongful in the context of the underlying litigation. Further, there are no facts whatsoever to establish who, what, when, and where such disclosures should have been made, or that they were made by a person authorized to speak on behalf of the corporation. Plaintiff cites no authority for the proposition that defense counsel owes a duty to Plaintiff to inform her of the alleged malpractice of her own attorney.” (Id.)

“50. Here, the fraudulent misrepresentation of a material fact came in the form of a positive misrepresentation, as well as concealments. Koutsoukos made a positive misrepresentation to Keers that he would represent her interests as her legal fiduciary and that he was continuing to do so throughout the litigation. Both Koutsoukos and Starbucks’ lawyers concealed that they were not adversarial, when in fact, they were conspiring for a result favorable to Starbucks. Additionally, Keers is informed and believes Starbucks and Koutsoukos also concealed a private arrangement regarding delivery of the nuisance value settlement. Following the outright dismissal of the action, Keers sent a message to Koutsoukos asking if there was anything he could do to get her case back on track. Refusing to respond back in writing, Koutsoukos called her back saying it was done and insinuated he had received the funds and just needed her signature to release her portion to her. If true, Koutsoukos’ receipt of any funds from Starbucks, either directly or through the various commercial entities of the Koutsoukos’ Trust, is a concealment of titanic proportions.

51. Counsel for both parties undoubtedly had knowledge of the falsity of their charade and intended Keers to rely upon the belief that she was properly represented and allowed her to continue under the mistaken belief that her interests were being properly represented in her case.” (SAC ¶¶ 51-2.)

Upon review of the SAC, the court agrees with Starbucks that the third cause of action is still insufficiently pled regarding any duty to disclose to Plaintiff, the concealments or misrepresentations made, and harm suffered by Plaintiff as a result of Starbucks’ conduct. Plaintiff’s allegations in a conclusory fashion regarding her beliefs of potential misrepresentations made do not establish a duty to disclose onto Starbucks, and fail to establish Plaintiff suffered harm specifically as a result of Starbucks’ conduct.

For these reasons, Starbucks’ demurrer to the third cause of action is sustained.

Starbucks’ demurrer is sustained as to the third cause of action without leave to amend.

[1] Starbucks again submits the declaration of its counsel, Samuel S. Baxter (“Baxter”), to demonstrate its compliance with statutory meet and confer requirements. Baxter attests that Defense counsel “placed a phone call to Plaintiff’s counsel to ‘meet and confer’” regarding the instant filings “but [the call] was not returned.” (Baxter Decl. ¶ 4.) The Baxter Declaration is insufficient for purposes of CCP §§ 430.41 and 435.5, as the declaration fails to state that the parties met and conferred regarding the issues in this present motion before filing. However, as the failure to meet and confer is not grounds to overrule a demurrer in its entirety, the court continues with its analysis of the substantive arguments.