Judge: Gail Killefer, Case: 23STCV11420, Date: 2023-10-04 Tentative Ruling

Case Number: 23STCV11420    Hearing Date: January 30, 2024    Dept: 37

HEARING DATE:                 30 January 2024

CASE NUMBER:                   23STCV11420

CASE NAME:                        Jeryl Smith v. Los Angeles Unified School District

MOVING PARTY:                 Defendant Los Angeles Unified School District

OPPOSING PARTY:             Plaintiff Jeryl Smith

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer with Motion to Stike

OPPOSITION:                        9 January 2024

REPLY:                                  Not Filed

TENTATIVE:                         Defendant LAUSD’s demurrer is sustained with 10 days leave to amend as to the first and third causes of action and sustained without leave to amend as to the second, fourth, fifth, and sixth causes of action. LAUSD’s motion to strike is granted with 10 days leave to amend. The court set a Non-Appearance OSC re Amended Complaint for February 16, 2024, at 8:30 am. Defendant to give notice.

Background

On May 22, 2023, Jeryl Smith (“Plaintiff”), filed a Complaint against the Los Angeles Unified School District (“LAUSD” or “Defendant”) and Does 1 to 20.  

The Second Amended Complaint (“SAC”) alleges seven causes of action: (1) violation of Ed. Code § 22458, (2) negligence, (3) conversion, (4) negligent misrepresentation, (5) fraudulent misrepresentation, (6) elder abuse, and (7) retaliation.  

On October 4, 2023, Defendant LAUSD’s demurrer and motion to strike the SAC was sustained with leave to amend.

On October 27, 2023, Plaintiff filed the operative Third Amended Complaint (“TAC”) alleging six causes of action: (1) violation of Ed. Code § 22458, (2) negligence, (3) conversion, (4) negligent misrepresentation, (5) intentional misrepresentation, and (6) elder abuse.   

On December 20, 2023, Defendant LAUSD filed a demurrer with a motion to the TAC. Plaintiff opposes the demurrer and motion to strike. The matter is now before the court.

Discussion

I.         Legal Standard

A.        Demurrer 

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.)¿“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿(Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿ 

B.        Motion to Strike 

¿Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP § 435(b)(1); CRC, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿¿ 

C.        Leave to Amend 

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿¿ 

II.        Demurrer[1]

A.        Plaintiffs’ Claims Cannot Rely on the Delayed Discovery Rule Without a Showing of Diligence

On October 4, 2023, the court sustained the demurrer to the first through seventh causes of action on the basis that Plaintiff’s claims may be time barred because Plaintiff failed to state the time and manner of when she discovered that her retirement date was off by five months.

The TAC has been amended to state that in October 2019, Plaintiff decided to file for Social Security benefits, which required a Verification of Benefits letter from CalSTRS. (TAC ¶ 10.) From the CalSTRS data, Plaintiff found discrepancies, including overpayments interspersed with underpayments, and “unusual activities” in her account. (TAC ¶ 11.) Due to the COVID-19 pandemic, Plaintiff had difficulty reaching either CalSTRS or LAUSD for clarification. (TAC ¶ 11.)

Towards the end of 2020, Plaintiff established contact with CalSTRS by telephone and she requested documents showing her years of service and changes made to her account since retirement. (TAC ¶ 12.) Plaintiff received the information, but she did not understand the calculation or how the changes were made so she requested clarification from CalSTRS which informed her to expect clarification on the issue by July 2021. (TAC ¶ 14.) After receiving no response, Plaintiff called again on October 5, 2021, and a CalSTRS representative informed her that she was being paid 24.142 years of service credit instead of the 24.430 reported in the CalSTRS’ letter of February 2021. (TAC ¶ 14.) On or about October 5, 2021, Plaintiff filed a formal complaint with CalSTRS.  On October 14, 2021, CalSTRS’ Ombuds, Mark Gini, emailed Plaintiff and informed her that the form received from LAUSD in 2008 showed her termination date as being “3/6/2008” rather than August 26, 2009. (TAC ¶¶ 15, 16.) Accepting as true Plaintiff’s allegations, Plaintiff did not discover that her termination date was wrongfully reported until October 14, 2021.

LAUSD asserts that Plaintiff’s claims are time-barred under the applicable statute of limitations because the issue with Plaintiff’s retirement date should have been discovered in 2008 when Plaintiff retired. However, LAUSD fails to show how Plaintiff would have become aware of such discrepancies in her date of retirement when she started receiving benefits from CalSTRS. LAUSD does not assert that every time that Plaintiff received benefits a Verification of Benefits letter or other similar document was attached that would have given Plaintiff notice that there were discrepancies in her benefits.

Alternatively, LAUSD claims that the statute of limitations began to run when Plaintiff suspected that there were discrepancies with her benefits in  October 2019 when she began making inquiries into the alleged discrepancies in her benefits from CalSTRS. (TAC ¶¶ 11, 13.)

To invoke the delayed discovery rule, Plaintiff must specifically allege “(1) the time and manner of discovery” and (2) the inability to have made earlier discovery despite reasonable diligence.” (Saliter v. Pierce Bros. Mortuaries (1978) 81 Cal.App.3d 292, 297 (Saliter).) The TAC admits that Plaintiff suspected discrepancies in her retirement benefits in October 2019 but it was  not until “[t]owards the end of 2020, that Plaintiff finally established contact with CalSTRS.” (TAC ¶ 12.) Plaintiff fails to allege that from October 2019 to the end of 2020 she diligently tried to contact CalSTRS such that she could not have discovered the reason for the discrepancy “despite reasonable diligence.” (Saliter, supra, 81 Cal.App.3d at p. 297.) Accordingly, the court agrees that Plaintiff has failed to show that earlier discovery was not possible despite reasonable diligence.

However, the TAC alleges that “[a]s a result of the misrepresentation, Plaintiff received and has continued to receive retirement benefits calculated at a reduced rate.” (TAC ¶ 80)

In Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, the California Supreme Court recognized two theories that may extend the statute of limitations: “The continuing violation doctrine aggregates a series of wrongs or injuries for purposes of the statute of limitations, treating the limitations period as accruing for all of them upon commission or sufferance of the last of them. [Citations.] Finally, under the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period.” (Id. at p. 832.)

Here, the unlawful act of paying Plaintiff retirement benefits at a reduced rate continues to occur. (TAC ¶ 80.) “The right to pension payments is a continuing right. Petitioner by her conduct may have barred herself from collecting payments which have accrued, but this does not mean that she is without means to enforce the right to present and future pension payments, as distinguished from past and accrued pension payments, provided she proceeds to do so in the manner required by law. (Dryden v. Board of Pension Com'rs of City of Los Angeles (1936) 6 Cal.2d 575, 580–581 [italics original].) In Blaser v. State Teachers' Retirement System (2019) 37 Cal.App.5th 349, the appellate court found that the continuous accrual theory applied to CalSTRS monthly pension payment such that CalSTRS was entitled to recoup prior overpayments and to correct errors. (Id. at p. 367.)

Since Plaintiff’s right to correct pension benefits is a continuing one, the statute of limitations accrues each time a deficient payment is made. Therefore, the statute of limitations for the first cause of action for violation of Ed. Code § 22458 and the third cause of action for conversion continue to accrue. Section 22458 requires that the information “be submitted annually,” such that any reports by LAUSD that do not contain the correct retirement date can be deemed a violation of section 22458. Moreover, Plaintiff asserts that she never saw LAUSD’s letter to CalSTRS such that she could have discovered the incorrect retirement date in 2008. TAC ¶ 16.)

However, the second and fourth causes of action for negligence and negligent representation appear to be barred as Plaintiff lacked diligence as she waited until “the end of year 2020” to contact CalSTRS, despite being on notice of the benefit discrepancies in October 2019. (TAC ¶¶ 10, 11.) The fifth and sixth causes of action also similarly appear to be barred since they relate to intentional misrepresentations made by LAUSD and Elder Abuse rather than the Plaintiff’s continued entitlement to retirement benefits. As Plaintiff fails to show diligence, the court is persuaded that the delayed discovery rule does not apply to Plaintiff’s second, fourth, fifth, and sixth causes of action. Moreover, Plaintiff fails to allege any alternate theories that may extend the statute of limitations as to these claims.

B.        Plaintiff’s Failure to Comply with the Government Tort Claims Act in Seeking Damages

Defendant LAUSD alleges that Plaintiffs’ claims are barred for failing to comply with the Government Tort Claims Act. However, in the previous demurrer, the court found that under Gov. Code § 905(f), “[a]ppications or claims or money or benefits under any public retirement or pension system” were exempt from the Government Tort Claims Act.

The court previously found that the first and third causes of action fall under the exemption of Gov. Code § 905(f) but not the remaining claims. (See Order of 10/04/23.) Although the first and third causes of action allege violation under Ed. Code § 22458 and conversion, Plaintiff is not seeking to recover “money or benefits” but instead alleges she was “deprived of her property rights in violation of the California Constitution, art. 1 § 7”, and she is entitled to “damages according to proof.” (TAC ¶¶ 45, 61.) Additionally, both the first and second causes of action incorporate Paragraph 39, wherein Plaintiff alleges she is entitled to general damages. (TAC ¶¶ 39.)

To obtain general damages, Plaintiff is required to comply with the Government Tort Claims Act such that the first and third causes of action no longer fall exclusively under the exemption outlined in Gov. Code § 905(f). See Dalton v. East Bay Mun. Utility Dist. (1993) 18 Cal.App.4th 1566, 1574 [“[Plaintiffs] do not seek money due to them under the terms of the existing pension system; rather, they claim defendants treated them unfairly in administrating the system and seek to change the 1989 administrative decisions. Consequently, we conclude plaintiffs were required to file a claim pursuant to section 905. Having failed to file their claim, plaintiffs' suit is barred by section 911.2”].)

The court is not persuaded that the remaining causes of action fall under the exemption outlined in Gov. Code § 905(f).  The second, fourth, fifth, and sixth causes of action seek damages due to LAUSD’s misrepresenting Plaintiff’s retirement date to CalSTRS, including compensatory damages, attorney’s fees, and prejudgment interest. These damages do not seek to purely recover money or benefits due under CalSTRS. “[C]ommentators have construed the section 905 exceptions as essentially nontortious claims ‘for which some other adequate claims procedure has already been devised or for which the procedural protection of the Tort Claims Act is believed to be unnecessary.’ ” (Dalton, supra, 18 Cal.App.4th at p. 1574.) Accordingly, the court finds that Plaintiff was required to comply with the Government Tort Claims Act. (TAC ¶ 39.)

Had Plaintiffs’ relief been limited to the correct payment of money due rather than damages, Plaintiffs’ claims would not be time-barred and would be exempt under section 905(f). Based on the above, the demurrer to the first and third causes of action is sustained; those claims may amended to limit the relief sought money due under a retirement system. However, the demurrer to the second, fourth, fifth, and sixth causes of action is sustained without leave to amend.

III.      Motion to Strike

Defendant moves to strike Plaintiff’s request for prejudgment interest and attorney’s fees. Plaintiff asserts she is entitled to prejudgment interest under Ed. Code § 23006 and attorney’s fees under CCP § 1021.5 for enforcing an important right. The court notes that section 23006 awards penalties and not prejudgment interest.

As the demurrer has been sustained, Defendant’s motion to strike is granted with leave to amend.

Conclusion

Defendant LAUSD’s demurrer is sustained with 10 days leave to amend as to the first and third causes of action and sustained without leave to amend as to the second, fourth, fifth, and sixth causes of action. LAUSD’s motion to strike is granted with 10 days leave to amend. The court set a Non-Appearance OSC re Amended Complaint for February 16, 2024, at 8:30 am. Defendant to give notice.