Judge: Helen Zukin, Case: 22SMCV02110, Date: 2023-03-17 Tentative Ruling
Case Number: 22SMCV02110 Hearing Date: March 17, 2023 Dept: 207
Background
Plaintiff Veera Mahajan (“Plaintiff”) brings this action
against Defendants Wayne Gretzky and Janet Gretzky (“Defendants”) claiming they
induced her to invest in a third-party company which sells weight-loss gum by
falsely claiming Mr. Gretzky lost weight from his use of the product.
Plaintiff’s operative pleading is the First Amended Complaint (“FAC”) which
alleges causes of action against Defendants for fraud and negligent
misrepresentation. Defendants bring this demurrer to both causes of action,
arguing each fails to state sufficient facts to constitute causes of action
against them and is uncertain under Code Civ. Proc. § 430.10(e) and (f).
Plaintiff opposes Defendants’ demurrer.
Request for Judicial Notice
Defendants request the Court take judicial notice of the
fact that Mr. Gretzky is a former professional hockey player. Defendants’
request is unopposed and is GRANTED.
Legal Standard
When considering demurrers, courts read the allegations
liberally and in context. (Wilson v. Transit Authority of City of Sacramento
(1962) 199 Cal.App.2d 716, 720-21.) 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 on 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.) However, it does not accept as true
deductions, contentions, or conclusions of law or fact. (Stonehouse Homes
LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 538.)
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.)
A special demurrer
for uncertainty under Section 430.10(f) is disfavored and will only be
sustained where the pleading is so unintelligible that a defendant cannot
reasonably respond—i.e., cannot reasonably determine what issues must be
admitted or denied, or what counts or claims are directed against him/her. (Khoury
v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even
if the pleading is somewhat vague, “ambiguities can be clarified under modern
discovery procedures.” (Id.)
Analysis
1. Meet and
Confer
The Court finds Defendants have satisfied
the meet and confer obligations imposed by Code Civ. Proc. § 430.41. (Hedrick Decl. at ¶2.)
2. Plaintiff’s
Opposition and Second Amended Complaint
Defendants filed their demurrer to
the FAC on February 7, 2023, with a hearing date of March 17, 2023. Pursuant to
Code Civ. Proc. § 1005, Plaintiff’s opposition was due no later than March 6.
On March 6, Plaintiff filed a Second Amended Complaint (“SAC”) but did not file
an opposition to Defendants’ demurrer, apparently believing the filing of the
SAC mooted Defendants’ demurrer to the FAC. On March 10, Defendants filed a
reply pointing out Plaintiff’s SAC was filed without leave of court and thus
did not moot the pending demurrer. On March 13, Plaintiff responded by filing
an opposition responding to the merits of Defendants’ demurrer and Defendants’
argument regarding the SAC. On March 14, Defendants filed an objection asking
the Court to strike Plaintiff’s opposition as untimely.
The Court finds the SAC was
improperly filed without leave of Court and thus does not moot Defendants’
demurrer to the FAC. Plaintiff claims under Code Civ. Proc. § 472(a) she did
not need to obtain leave of Court to file the SAC. Section 472(a) provides in
pertinent part:
A party may
amend its pleading once without leave of the court at any time before the
answer, demurrer, or motion to strike is filed, or after a demurrer or motion
to strike is filed but before the demurrer or motion to strike is heard if the
amended pleading is filed and served no later than the date for filing an
opposition to the demurrer or motion to strike.
Section 472 thus gives plaintiffs
one opportunity to amend a complaint without leave of Court. To take advantage
of section 472, this amendment must either be made before a demurrer is filed
or after a demurrer is filed but within the time for filing an opposition to
the demurrer. Plaintiff’s original Complaint was filed on October 27, 2022. On
December 5, 2022, Defendants filed a demurrer to Plaintiff’s Complaint. Rather
than oppose that demurrer, Plaintiff filed the FAC on January 26, 2023.
Plaintiff thus has already amended her pleading one time by right under Code
Civ. Proc. § 472 in filing the FAC and thus was required to obtain leave of
Court before filing the SAC. The Court exercises the discretion given to
it pursuant to Code Civ. Proc. § 436 to strike Plaintiff’s unauthorized SAC on
its own motion. As the SAC has been stricken as procedurally defective, it
cannot serve to void Defendants’ pending demurrer to the FAC.
The Court also finds Plaintiff’s opposition is untimely.
Plaintiff’s opposition makes no mention of the fact that it was untimely filed
and offers no excuse or justification for this late filing. California Rules of
Court, rule 3.1300(d) gives the Court discretion in whether to consider
untimely filings. In the absence of any explanation for the untimeliness of her
opposition, the Court in its discretion declines to consider Plaintiff’s
opposition in ruling on Defendants’ demurrer.
3. Fraud
The elements of a claim for fraud
are “(a) a misrepresentation (false representation, concealment, or
nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce
reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005)
135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be
alleged factually and specifically as to every element of fraud, as the policy
of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12
Cal.4th 631, 645.)
Plaintiff’s fraud claim is
premised on representations made by Defendants indicating Mr. Gretzky lost 35
pounds by using OMG gum, a product sold by third party BuChew. Plaintiff argues
this statement was false and was made and repeated by Defendants to induce
investment in BuChew. Plaintiff claims she reasonably relied on these
representations in deciding to continue to invest her time and money into
BuChew.
Defendants argue the FAC fails to
sufficiently plead reliance because Plaintiff admits in the FAC that she
continued her investment after learning this statement was not true. The FAC
chronicles the timeline of Plaintiff’s investment in BuChew. Plaintiff
initially invested $5,000 in BuChew in June 2018, followed by an additional
$5,000 investment in August 2018. (FAC at ¶¶8-9.) Plaintiff then invested
another $10,000 in December 2019. (Id. at ¶11.) Finally, Plaintiff
invested an additional $4,000 in April 2021. (Id. at ¶15.) The FAC also
alleges Mr. Gretzky first claimed to have lost weight from using BuChew’s gum
in August 2018. Plaintiff alleges the repetition of this statement by Mrs. Gretzky
and in BuChew’s promotional materials induced her $10,000 investment in
December 2019. (Id. at ¶11.) Plaintiff admits she learned the truth
about Mr. Gretzky’s weight loss in February 2020. (Id. at ¶13.)
The FAC indicates Plaintiff has
invested $24,000 in BuChew between 2018 and 2021. Of this, $10,000 was invested
prior to the alleged misrepresentation regarding Mr. Gretzky’s weight loss and
$4,000 was invested after Plaintiff learned the truth about this statement.
Plaintiff thus cannot claim she justifiably relied on any alleged
misrepresentation made by Defendants in investing this $14,000 in BuChew.
However, this still leaves $10,000
which Plaintiff claims was invested in BuChew in reliance on Defendants’
misrepresentation. It is settled that a demurrer will only lie as to an entire
cause of action. “A
demurrer must dispose of an entire cause of action to be sustained.” (Poizner
v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119; see also Daniels
v. Select Portfolio Servicing. Inc. (2016) 246 Cal.App.4th 1150, 1167 [a
demurrer cannot lie as to only part of a cause of action but can only be
sustained as to an entire cause of action].) Plaintiff’s inability to
sufficiently allege justifiable reliance as to some of her investments is thus
not fatal to her fraud claim.
Defendants claim Plaintiff has not
sufficiently pled the element of intent. The FAC alleges Defendants
misrepresented Mr. Gretzky’s weight loss “to increase the value of BuChew’s
equity units which he surreptitiously purchased under his family’s name.” (FAC
at ¶14.) Plaintiff also alleges “Wayne and Janet intended for Plaintiff and
potential investors and customers to rely on their misrepresentations.” (Id.
at ¶20.) As evidence of this alleged intent, the FAC claims “Defendants were
aware that the misstatements were being used for promotional purposes and
advertisements to entice investors and customers. Defendants never publicly
retracted their statements.” (Id.) The Court finds these factual
assertions are sufficient to plead the element of intent.
Defendants also argue Plaintiff
has insufficiently alleged the element of causation for her claim of $250,000
in damages. The Court agrees. The FAC alleges in conclusory fashion that
“Plaintiff has been damaged in an amount of $250,000.00” without offering any
causal connection between her investment in BuChew and the claimed $250,000 she
suffered in damages. It is unclear if Plaintiff is contending she was injured
by a decrease in the value of her investment in BuChew or this $250,000 figure
represents the value of the services she donated to BuChew. The Court thus
SUSTAINS Defendants’ demurrer to Plaintiff’s first cause of action for fraud.
Because the Court finds Plaintiff can cure this defect by providing additional
specificity as to her claim for damages, the Court will grant Plaintiff leave
to amend.
4. Negligent
Misrepresentation
The
elements of a cause of action for negligent misrepresentation include
“[m]isrepresentation of a past or existing material fact, without reasonable
ground for believing it to be true, and with intent to induce another’s
reliance on the fact misrepresented; ignorance of the truth and justifiable
reliance on the misrepresentation by the party to whom it was directed; and
resulting damage.” (Hydro-Mill Co., Inc.
v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115
Cal.App.4th 1145, 1154, quotation marks omitted.) As with a claim for fraud, a
claim for negligent misrepresentation must be pled with particularity. (Daniels
v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.)
Defendants argue Plaintiff’s claim
for negligent misrepresentation is deficient for the same reasons as
Plaintiff’s cause of action for fraud. The Court agrees Plaintiff has
insufficiently pled the element of causation, as the FAC alleges only that “As
a direct and proximate result of the Defendants’ statements that Wayne ‘lost 35
pounds,’ Plaintiff has been damaged in an amount of $250,000.” (FAC at ¶35.)
This allegation, standing alone, is insufficient to pled the element of causation
for the same reasons as set forth above with respect to Plaintiff’s claim for
fraud. As the Court sustained Defendants’ demurrer to Plaintiff’s claim for
fraud with leave to amend, the same result follows here.
Conclusion
Defendants’ demurrer to Plaintiff’s causes of action for
fraud and negligent misrepresentation is SUSTAINED with 30 days’ leave to
amend.