Judge: H. Jay Ford, III, Case: 23STCV24928, Date: 2024-04-25 Tentative Ruling

Case Number: 23STCV24928    Hearing Date: April 25, 2024    Dept: O

Case Name:  Greene, et al. v. Koral, et al.

SUBJECT:                DEMURRER TO COMPLAINT W/O MOTION TO STRIKE

MOVING PARTY:  Defendants Blaze Pizza International, LLC, Blaze Pizza Operations LLC, and Blaze Pizza LLC

RESP. PARTY:        Plaintiffs Anne Greene and Matthew Greene

TENTATIVE RULING

            Defendants Blaze Pizza International, LLC, Blaze Pizza Operations, LLC and Blaze Pizza, LLC’s (“Blaze Defendants) Demurrer to the 4^th, 5^th and 7^th causes of action is OVERRULED.  Plaintiffs Anne Greene and Matthew Greenes’ 4^th, 5^th, and 7^th causes of action within the FAC allege ultimate facts to allege the necessary elements of each cause of action.

As a general matter, 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 pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Plaintiff is only required to allege ultimate facts, not evidentiary facts. (See Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 212 [“the complaint should set forth the ultimate facts constituting the cause of action, not the evidence by which plaintiff proposes to prove those facts”); 1 Cal. Affirmative Def. § 10:2 (2d ed.) [allegations of agency, course and scope of employment, etc. qualify as ultimate facts].) Plaintiff’s allegations must be accepted as true on demurrer. (See Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924 [“For purposes of reviewing a demurrer, we accept the truth of material facts properly pleaded in the operative complaint”].)

“Code of Civil Procedure section 452 provides in full: “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.” This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant. (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238, quoting CCP § 452.) On a demurer “the allegations of the complaint must be read in the light most favorable to the plaintiff.” (Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1557.)

I.                   Demurrer to 4^th cause of action for Aiding and Abetting—OVERRULED

            "California imposes liability on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person." (Berger v. Varum (2019) 35 Cal.App.5th 1013, 1025.)

            Defendants Blaze Pizza International, LLC, Blaze Pizza Operations LLC, and Blaze Pizza LLC (“Blaze Defendants”) argue that the Plaintiffs Anne Greene and Matthew Greenes’ (“Plaintiffs”) conclusory allegations are to generalized to support this type of claim, but provide no authority that an aiding and abetting claim requires a heightened pleading standard like that of a fraud claim.

            Moreover, Plaintiffs plead specific facts to meet all the elements of an aiding and abetting claim against the Blaze Defendants. Specifically, Plaintiffs plead:

1.      “Blaze Pizza knew that Defendant Driz would transfer his 49% interest in LA Metro BP Holdings to Defendant Koral via a series of below-market transfers.” (SAC, ¶ 142.)

2.      “Defendants Driz and Koral executed these transfers on December 22-23, 2016, two days after Blaze Pizza had stated that it was “actively working to remove” Driz from ownership and that “due to a legal incident,” Driz had been removed from all ownership of Blaze Pizza.” (SAC, ¶ 143.)

3.      “Blaze Pizza provided substantial assistance and/or encouragement to Driz and Koral to remove Driz from Blaze Pizza ownership in order to protect its brand name, avoid associating with known criminals/tortfeasors, and to avoid the financial impact of same.” (SAC, ¶ 144.)

4.      “The Franchise Defendants provided substantial assistance and/or encouragement to Driz and Koral to remove Driz from ownership of in order to protect its brand name, avoid associating with known criminals/tortfeasors, and to avoid the financial impact of same.” (SAC, ¶ 145.)

5.      “Moreover, just two (2) days before Driz and Koral executed the December 22-23, 2016 transfers from Driz to Koral, Blaze Pizza stated that it was “actively working to remove [Driz] from ownership.” Accordingly, Blaze Pizza provided substantial assistance and/or encouragement to Driz and Koral in furtherance of the fraudulent December 22-23, 2016 transactions.” (SAC, ¶ 146.)

6.      “Blaze Pizza encouraged and/or facilitated Driz and Koral’s December 22- 23, 2016 transactions that transferred Driz’s ownership interest in eleven (11) Blaze Pizza franchises from Driz to Koral.” (SAC, ¶ 150.)_

7.      “Blaze Pizza’s encouragement and involvement thus caused Plaintiffs ANNE GREENE and MATTHEW GREENE harm because Plaintiffs have not been able to execute on Driz’s former forty-nine percent (49%) ownership interest in La Metro BP Holdings to satisfy his judgment in the underlying civil matter.” (SAC, ¶ 152.)

8.      “Blaze Pizza also possessed actual knowledge that Driz and Koral’s December 22-23, 2016 transactions would frustrate Plaintiffs’ ability to execute on their judgment obtained in the underlying civil matter.” (SAC, ¶ 153.)

            Thus, the Court finds that Plaintiffs plead specific facts to meet the elements of aiding and abetting cause of action as to the Blaze Defendants. Blaze Defendants Demurrer to the 4^th cause of action is OVERRULED.

II.                Demurrer to 5^th cause of action for Civil Conspiracy—OVERRULED

            “[T]o state a cause of action based upon a conspiracy theory the plaintiff must allege the formation and operation of the conspiracy, the wrongful act or acts done pursuant to it, and the damage resulting from such acts. [Citation.] In making such allegations bare legal conclusions, inferences, generalities, presumptions, and conclusions are insufficient.” (State of California ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal.App.4th 402, 419.)

            Plaintiffs plead the requisite factual accusations to meet the elements for a conspiracy claim. Specifically, Plaintiffs plead:

1.      On December 20, 2016, Blaze Pizza, in response to a tweet discussing the impact of the underlying assault on Blaze Pizza’s business, stated that Blaze Pizza was “actively working to remove [Driz] from ownership.” (SAC, ¶ 158.)

2.      On December 20, 2016, Blaze Pizza’s Leadership and Support Team sent an internal e-mail to all “Blaze Partners” with the subject line “BP LA Metro Group Notification.” This e-mail provided: “Due to a legal incident, Daniel Driz, his brother, and his nephew have been removed from all Blaze Pizza operations. BP LA Metro is now operated by Mr. Peter Koral and his operating partner, Mr. Tom Cook.” (SAC, ¶ 159.)

3.      The timing of Blaze Pizza’s communications with the public, and its internal communications, lay bare that Blaze Pizza worked with Koral and Driz to remove Driz from ownership of the ten (10) Blaze Pizza franchises at issue in this lawsuit. (SAC, ¶ 160.)

4.      Indeed, just two (2) days before Driz’s December 22-23, 2016 transfers to Koral, Blaze Pizza had already told its ownership group that Driz “ha[s] been removed from all Blaze Pizza operations.” (SAC, ¶ 161.)

5.      Moreover, that same day, Blaze Pizza admitted that it was “actively working to remove [Driz] from ownership.” Accordingly, Blaze Pizza was also a part of Driz’s agreement to transfer his interests to Koral, and did so for its own financial benefit. (SAC, ¶ 162.)

6.      On December 22 and 23, 2016, Driz engaged in a fire sale of his fortynine percent (49%) ownership stake in LA METRO BP HOLDING CO., LLC and ten (10) Blaze Pizza franchises. (SAC, ¶ 166.)

7.      Plaintiffs were damaged by the alleged conspiracy. (See SAC, ¶¶ 164, 165, 174.)

The Court finds that the Plaintiffs plead the necessary factual allegations to reach all the elements of a conspiracy cause of action. Blaze Defendants demurrer to the 5^th cause of action is OVERRULED.

III.             Demurrer to 7^th Cause of action for violation of unfair competition

 “To bring a UCL claim, a plaintiff must show either an (1) unlawful, unfair, or fraudulent business act or practice, or (2) unfair, deceptive, untrue or misleading advertising. [citation] Because the UCL is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.” [citation] (Adhav v. Midway Rent A Car, Inc. (2019) 37 Cal.App.5th 954, 970.)

            The UCL defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice.” (De La Torre v. CashCall, Inc. (2018) 5 Cal.5th 966, 974.) “Because Business and Professions Code section 17200 is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.”
(Beasley v. Tootsie Roll Industries, Inc. (2022) 85 Cal.App.5th 901, 911, review denied (Mar. 15, 2023).) “To prevail on a claim under the unlawful prong of the unfair competition law, the plaintiff must show that a challenged advertisement or practice violates any federal or California ‘statute or regulation.” (Id., at p. 912.)

            “[A]ny person who has suffered injury in fact and has lost money or property as a result of the unfair competition” has standing to bring a UCL claim.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 320.)

            It is rare to sustain a demurrer to a § 17200 “unfairness” claim because a determination of whether a practice is unfair requires a full factual record. (Motors, Inc. v. Times Mirror Co. (1980) 102 Cal. App. 3d 735, 740.)

            Blaze Defendants argue the UCL claim is not based on the aiding and abetting claims in the SAC, but instead are based on a violation of the Uniform Voidable Transactions Act (“UVTA”), or a violation of Cal Civ. Code §§ 3439, without a UVTA claim alleged against Blaze Defendants in the FAC. (Demurrer, pp. 13–15.) However, in addition to basing the claim on the UVTA violation, Plaintiffs also include the conspiracy and aiding and abetting allegations within the cause of action by incorporating and re-alleging each and every allegation prior to the cause of action, and specifically including facts within the cause of action itself. These specific allegations include:  

1.      “On December 20, 2016, Blaze Pizza, in response to a tweet discussing the impact of the underlying assault on Blaze Pizza’s business, stated that Blaze Pizza was “actively working to remove [Driz] from ownership.” (FAC, ¶ 202.)

2.      “On December 20, 2016, Blaze Pizza’s Leadership and Support Team sent an internal e-mail to all “Blaze Partners” with the subject line “BP LA Metro Group Notification.” This e-mail provided: “Due to a legal incident, Daniel Driz, his brother, and his nephew have been removed from all Blaze Pizza operations. BP LA Metro is now operated by Mr. Peter Koral and his operating partner, Mr. Tom Cook.” (FAC, ¶ 203.)

3.      “In the course of conducting business, Defendants, and each of them, committed unlawful business practices by, inter alia, intentionally aiding Driz in attempting to conceal his assets in violation of Plaintiffs’ rights, thus violating the Uniform Voidable Transactions Act, Cal. Civ. Code §§ 3439 et seq., and any other applicable statutes and common law causes of action, whether or not specifically alleged herein by intentionally assisting, encouraging, and/or ratifying Driz’s attempts to conceal his assets from Plaintiffs just fifteen days after Plaintiffs filed their original Complaint.” (FAC, ¶ 204.)

4.      “As stated in this Complaint, Plaintiffs allege violations of various laws and regulations resulting in harm to Plaintiffs as a result of Defendants’ unfair business practices. Defendants, and each of them, either affirmatively encouraged and/or assisted Driz in attempting to conceal his assets from Plaintiffs or ratified this conduct after the fact. This is fraudulent business practice because it was not done to further any legitimate interest of either party, only to frustrate Plaintiffs’ exercise of their rights. Plaintiffs also assert violations of the public policy against engaging in fraudulent business acts and/or practices, including by affirmative assisting, encouraging, and/or ratifying a debtor’s attempt to conceal his assets from legitimate creditors. This conduct constitutes violations of the unfair prong of Cal. Bus. & Prof. Code §§ 17200, et seq.” (FAC, ¶ 207.)

5.      “Defendants also violated, and in some instances continues to violate, the UCL through one or more of the following unfair and/or fraudulent practices: a. Failing to disclose that Driz intentionally concealed his assets from Plaintiffs as a result of Defendants’ fraudulent business acts and/or practices; b. Misrepresenting, or making statements or omissions that were likely to deceive Plaintiffs that Driz is insolvent and/or judgment proof; c. Violating Cal. Civ. Code §3439, et seq.; and d. Defrauding Plaintiffs.” (FAC, ¶ 208.)

6.      “Specifically, Defendants Blaze Pizza International, LLC, Blaze Pizza Operations, LLC and Blaze Pizza, LLC forced the sale of the Blaze Pizza assets to insulate their brand and received a benefit as transfer beneficiaries of Driz’s fraudulent conveyances and acquired ownership interests therein.” (FAC, ¶ 209.)

The Court finds that Plaintiffs have alleged ultimate facts to meet the elements of the unfair competition claim. Blaze Defendants’ Demurrer to the 7th cause of action for unfair competition is OVERRULED.

IV.             Demurrer for uncertainty - OVERRULED

            "Demurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond . . . . We strictly construe such demurrers because ambiguities can reasonably be clarified under modern rules of discovery." (Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135. ["demurrers for uncertainty are disfavored"].)

            Demurrers for uncertainty are disfavored and any ambiguity can be clarified in discovery. Thus, Blaze Defendants demurrer for uncertainty as to the FAC is OVERRULED.