Judge Kerry Bensinger, Case Number: 24STCV21160, Date: 2024-10-16 Tentative Ruling

On August 20, 2024, Plaintiff healthPiper LLC (healthPiper) filed this action against Defendants Suma Gowda (Gowda) and Gowda Innovations for (1) fraudulent concealment, (2) conversion, (3) breach of employment agreement, (4) intentional interference with contractual relations against Gowda Innovations, (5) intentional interference with contractual relations against Gowda, and (6) breach of fiduciary duty. The only cause of action alleged against Gowda Innovations is the fourth cause of action.

As alleged in the Complaint, “Dr. Joshua Freedman is the CEO of healthPiper. healthPiper is an on-line company that offers accessible and effective psychiatry treatment. Gowda worked for Dr. Freedman and healthPiper as a software engineer and chief technology officers from 2014 until 2022. Gowda strung healthPiper along for years in an elaborate scheme that had healthPiper paying Gowda a salary for full-time employment, as well as, to pay for Gowda’s attorney to help her navigate the US immigration system to obtain permanent resident status in the US. The entire time her application was being processed by the attorneys that healthPiper paid for, Gowda thanked healthPiper for supporting her H-1B and permanent residency visa applications and that she desired to work for healthPiper for a decade.” (Complaint, ¶ 1.) Upon becoming a US permanent resident, Gowda left healthPiper’s employ, converted healthPiper’s intellectual property, and besmirched Dr. Freedman’s reputation. After Gowda’s departure, healthPiper learned she was operating and managing the day-to-day operations of her own company, Gowda Innovations.

On September 9, 2024, this case was related to Suma Gowda v. healthPiper, LLC, et al., Los Angeles County Superior Court, Case No. 22STCV34766. In the related action, Gowda brings numerous causes of action arising from her employment with healthPiper. healthPiper and Dr. Freedman answered the complaint in the related action on December 22, 2022.

A demurrer for sufficiency tests whether the complaint states a cause of action.¿ (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)¿ When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true.¿ (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.)¿ “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.”¿ (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)¿ ¿

Gowda and Gowda Innovations requests judicial notice of Gowda’s complaint and healthPiper’s answer filed in the related case, Case No. 22STCV34766.

Gowda and Gowda Innovations (hereafter, Defendants) demur to healthPiper’s Complaint on the following grounds: (1) the Complaint is an untimely compulsory Cross-Complaint; (2) the first and third claims are barred by judicial estoppel and the affirmative defenses of at-will employment pled in the related case; (3) the fourth and fifth claims for tortious interference are barred by statutes of limitations; (4) the Complaint is preempted by the CUTSA, and (5) all claims arose from an employment relationship and are subject to California Labor Code section 2802. The court addresses these arguments in turn.

Gowda and Gowda Innovations demur to the Complaint on the grounds it is compulsory cross-complaint which should have been asserted in the related action. When a cross-complaint arises out of the same transaction, occurrence, or series of transactions or occurrences as the plaintiff’s cause of action, the cross-complaint is compulsory, and if a defendant fails to timely file the cross-complaint, he may not bring them in a later action. (Code Civ. Proc., §¿426.30, subd. (a).) A court must grant an application for leave to file such a related cross-complaint if the defendant acted in good faith, especially if denial would lead to forfeiture of claims. (Code Civ. Proc., §¿426.50.)

With respect to the first, second, third, fifth, and sixth causes of action, the court agrees. healthPiper’s claims against Gowda for fraudulent concealment, conversion, breach of employment agreement, intentional interference with contractual relations, and breach of fiduciary duty all arise from Gowda’s employment with healthPiper. Specifically, these claims, and the claims asserted by Gowda in the related action, all concern the obligations the parties owed to each other as employee and employer. In essence, the claims are logically related and should have been asserted in a cross-complaint by healthPiper in the related action. (See, e.g., Align v. Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 960 [reasoning the plaintiff employer should have brought its claims in a prior suit with its defendant employee because they involved employment obligations which arose during Tran’s employment and were thus logically related].)

healthPiper does not dispute the relatedness of its claims to Gowda’s related action. Instead, healthPiper argues Section 426.30 “precludes claims in a subsequent action if any only if the claims could have been raised by the party ‘at the time of serving his answer to the complaint’ in the prior action.” (Opposition, p. 5:21-22.) Further, because the facts supporting the causes of action were later discovered, healthPiper contends it was not required to assert the claims as compulsory cross-claims. In support, healthPiper cites Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509. healthPiper misreads Ferraro. In Ferraro, the Court of Appeal rejected a compulsory crossclaim argument by emphasizing Section 426.30 prohibits a party against whom a complaint been filed and served and fails to allege in a cross-complaint any related cause of action to thereafter assert against the plaintiff the related cause of action not pleaded. (Ferraro, at p. 559.) Ferraro does not stand for the proposition that a crossclaim is compulsory if and only if the defendant is aware of the claim at the time it files its answer to a complaint. Rather, the proper course of action upon discovery of their claims against Gowda was to seek leave to file a cross-complaint pursuant to Code of Civil Procedure section 426.50. healthPiper did not do so in the related action. It may not circumvent the mandates of Section 426.30 by simply filing a separate action.

Accordingly, healthPiper’s causes of action against Gowda (first, second, third, fifth, and sixth) are subject to demurrer on these grounds.[1] The court proceeds to consider Defendants’ challenge to the fourth cause of action which is asserted against Gowda Innovations alone.

In the fourth cause of action for tortious interference with contractual relations, healthPiper alleges Gowda Innovations knew of the employment contract between healthPiper and Gowda and intentionally prevented performance or made performance difficult for Gowda. (Complaint, ¶¶ 48-52.)

“It has long been held that a stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract. The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.)

Interference or disruption of the contract includes conduct that “prevented performance or made performance more expensive or difficult.” (See CACI No. 2201; see also Pacific Gas & Electric Co., 50 Cal.3d at p. 1129.) The statute of limitations for tortious interference with contract is two years. (Code Civ. Proc., § 339, subd. (1).)

Defendants argue the fourth cause of action is time barred. The point is well taken. As alleged, Gowda’s employment ended in January 2022. Therefore, Defendants had until January 2024 to bring this cause of action but did not do so until August 2024.

healthPiper argues the delayed discovery rule applies. “In order to rely on the discovery rule for delayed accrual of a cause of action, [a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence. In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to show diligence; conclusory allegations will not withstand demurrer.” (Nguyen v. W. Digital Corp. (2014) 229 Cal.App.4th 1522, 1553 (cleaned up).)

Here, healthPiper does not allege any facts to obtain the benefit of the discovery rule. healthPiper does not allege the time and manner of discovery, or explain why it could not have made the discovery earlier despite reasonable diligence. The fourth cause of action is subject to demurrer.[2] [3]

The demurrer is SUSTAINED. Leave to amend is GRANTED as to the fourth cause of action only.

Plaintiff is to serve and file the First Amended Complaint within 20 days of this order.

Kerry Bensinger

Judge of the Superior Court

[1] The court is not foreclosing healthPiper’s ability to seek leave to file a cross-complaint in the related action. If healthPiper chooses to bring such a motion, the court will entertain the motion.

[2] The fifth cause of action for tortious interference with contractual relations against Gowda is also subject to demurrer on statute of limitation grounds.

[3] Defendants argue the fourth cause of action (and indeed, the entire complaint) is preempted by the California Uniform Trade Secrets Act and barred under Labor Code section 2802. At least with respect to the fourth cause of action, these arguments are underdeveloped or meritless. The court does not address them further.