Judge: H. Jay Ford, III, Case: 19SMCV01498, Date: 2023-01-23 Tentative Ruling

Case Number: 19SMCV01498    Hearing Date: January 23, 2023    Dept: O

  Case Name:  Moda v. Finnegan and Diba, et al.

SUBJECT:                MOTION FOR LEAVE TO FILE A FOURTH AMENDED COMPLAINT

MOVING PARTY:  Plaintiff/Cross-Defendant Kevin Moda

RESP. PARTY:        Defendants/Cross-Complainant Kasey Diba, an individual and Finnegan & Diba, a Law Corporation 

TENTATIVE RULING

            Plaintiff/Cross-Defendant Kevin Moda’s Motion for Leave to File a Fourth Amended Complaint is DENIED.

            Moda previously sought reconsideration of the Court’s order striking his claim for treble damages under Penal Code §496(c) from the Third Amended Complaint based on Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5^th 333 (“Siry II”).  The Court denied the motion for reconsideration on 9-22-22, stating that no new facts, circumstances, or law warranted reconsideration of the Court’s 2-8-22 and 5-17-22 orders. 

            The Court’s 2-8-22 and 5-17-22 orders striking the treble damages claim stated as follows:  “The motion to strike reference to Penal code §496(c) is GRANTED. Plaintiff fails to allege a cause of action for violation of Penal Code §496(c).”  The Court went on to state in its 5-17-22 that all references to Penal Code §496(c) were stricken.

            As pointed out by Defendants, nowhere in the order did the Court reference the split in authority over the availability of CCP §496(c) treble damages where the alleged property was obtained from the plaintiff voluntarily through fraud (Bell v. Feibush (2013) 212 Cal.App.4^th 1041, 1043 vs. Siry Investment, L.P. v. Farkhndehpour (2020) 45 Cal.App.5^th 1098).  The Court’s analysis was not based at all on that complex issue, which was resolved in Siry II. 

            Moreover, nowhere in Defendants’ motions to strike were there any references to Siry or the split in authority over the availability of Penal Code §496(c) damages where the plaintiff voluntarily relinquished the property through fraud.  See Diba Defendants’ MTS filed on 1-10-22, pp. 19-20; Diba and Sichi Defendants’ MTS filed on 3-9-22, 15:16-20.  Defendants expressly acknowledged that a private right of action existed under Penal Code §496, but Plaintiff did not plead allegations of a violation of Penal Code §496.  See Diba Defendants’ MTS filed on 1-10-22, 19:14-15; Sichi MTS filed on 3-9-22, 15:16. 

            Instead, Defendants argued that the only reference in the entire complaint to Penal Code §496 was in the prayer for relief, and there, the only reference was to Penal Code §496(c).  “There is not one allegation plead that these defendants received stolen property or concealed from plaintiff their receipt of stolen property. The recital to Penal Code section 496, as solely stated in the prayer, is therefore an improper request and must be stricken.” See Diba Defendants’ MTS filed on 1-10-22, 20:6-9.  On reply, Defendants stated, “As pointed out in the moving papers, there is not one allegation plead that these defendants received stolen property.”  Defendants’ Reply filed on 1-27-22, 4:21-22. 

            Penal Code §496(c) remedies are only available where the specific elements of an offence under Penal Code §496(a) are clearly pled.  “While section 496(a) covers a spectrum of impermissible activity relating to stolen property, the elements required to show a violation of section 496(a) are simply that (i) property was stolen or obtained in a manner constituting theft, (ii) the defendant knew the property was so stolen or obtained, and (iii) the defendant received or had possession of the stolen property.”  Switzer v. Wood (2019) 35 Cal.App.5th 116, 126.

The issue of whether specific alleged conduct could qualify as “theft” under Penal Code §496(a) was not the basis of the Court’s ruling. The Court’s ruling was based on a much simpler ground.  Plaintiff simply did not allege a cause of action for violation of Penal Code §496.  The bare reference to the remedy available under Penal Code §496(c) was improper and irrelevant under CCP §436 without an accompanying cause of action specifically alleging the elements of a statutory claim under CCP §496(a).  The TAC’s references to Penal Code §496 and “theft” had nothing to do with stating a claim against the Defendants for violation of Penal Code §496.  Moda only referenced Penal Code §496(a) and (c) to describe how Defendants were inept at litigating the underlying action. See TAC,¶28. 

As such, Siry II did not in any way affect the Court’s original ruling striking the reference to Penal Code §496(c) in the TAC.  If anything, Siry II confirmed that the Court could not assume that the fraud claim alleged in the TAC was a claim for violation of Penal Code §496(a).  Siry II confirmed that “theft” under Penal Code §496(a) was an essential element of a claim for treble damages under Penal Code §496(c), but “not all commercial or consumer disputes alleging that a defendant obtained money or property through fraud, misrepresentation or breach of a contractual promise will amount to a theft.”  Siry, supra, 13 Cal.5^th at 361-362. 

For this reason, the Court had no basis to reconsider its prior orders based on Siry II, nor was Siry II necessary for Moda to cure the defect raised by the Motion to Strike and set forth in the Court’s prior orders—the simple failure to specifically plead the elements of a statutory claim for violation of Penal Code §496(a).  Even prior to Siry II, Plaintiff would have had authority to plead a cause of action for violation of Penal Code based on the Bell line of authority. 

Plaintiff’s proposed Fourth Amended Complaint still fails to allege a cause of action specifically pleading the elements of a Penal Code §496(a) offense.  Instead, Plaintiff has a jumble of unintelligible allegations and references to Penal Code §496 and “theft” thereunder in a section entitled “Defendants…are Liable to the Plaintiff for Penal Code §496c Damages.”  See Proposed Fourth Amended Complaint, pp. 7-8. 

In addition, Plaintiff’s declaration in support of the Motion for Leave is nearly incomprehensible and therefore fails to comply with CRC Rule 3.1324.  Plaintiff must clearly identify the proposed deletions and additions are proposed by page, paragraph and line number. See CRC Rule 3.1324(a)(2)-(3).  Plaintiff must also comply with subsection (b) as to each proposed amendment, stating the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amended allegations were discovered and the responses why the requested amendment was not made earlier. 

Plaintiff’s Motion for Leave to Amend is therefore DENIED.