Judge: Lee W. Tsao, Case: 19NWCV00841, Date: 2023-05-16 Tentative Ruling
Case Number: 19NWCV00841 Hearing Date: May 16, 2023 Dept: C
NATIONAL GROUP CONSTRUCTION & MANAGEMENT, INC. v. IGLESIA DE
MINISTERIOS LLAMADA FINAL, INC., et al.
CASE NO.:
19NWCV00841
HEARING:
5/16/23 @ 1:30 PM
#Add-On
TENTATIVE RULING
Defendant Iglesia de Cristo Ministerios Llamada Final, Inc.’s demurrer
to – and motion to strike portions of – Plaintiff’s second amended complaint is
SUSTAINED without leave to amend as to the 1st cause of action pled
against Iglesia, and OVERRULED on all remaining grounds.
The Clerk is ORDERED to strike the labels, “2nd,
4th, 6th, 8th, and 13th – 14th
causes of action” and ¶¶ 51, 67, 94, 158, by interlineation, but the
allegations in ¶¶ 52-57, 68-75, 95-101, 159-165 may remain. The Clerk is ORDERED to strike the 8th
and 14th causes of action from the caption of the SAC.
Defendant is ORDERED to file and serve its Answers within 10 days.
Opposing Party to give NOTICE.
Defendant Iglesia de Cristo Ministerios
Llamada Final, Inc. (“Iglesia”) demurs to the Second Amended Complaint (“SAC”) on
the ground that it fails to state facts sufficient to constitute a cause of
action.
The operative SAC alleges, in relevant part:
“On
or about May of 2018, Defendant MAYORGA approached an individual, Defendant HUMBERTO
ESPINOLA, who was an agent of Plaintiff.
Specifically, Defendant ESPINOLA was the Responsible Managing Officer
(“RMO”) of Plaintiff… Defendant ESPINOLA held the General Contractor’s license
through which Plaintiff performed its business operations in the construction
industry. As such, Defendant ESPINOLA
was an officer and representative of Plaintiff.” (SAC, ¶ 10.)
“Defendant MAYORGA explained to Defendant ESPINOLA that he… was working
on a construction project on behalf of Defendant IGLESIA, the owner of a
certain real property located at 12145 Woodruff Ave, Downey, California 90241,
on which Defendant IGLESIA owns and operates a church (“The Church”). Defendant MAYORGA explained to Defendant
ESPINOLA that Defendant IGLESIA was looking for a general contractor to perform
a rehabilitation and construction of an extension of a building on which the
Church was located. Defendant ESPINOLA was present on the real property and jobsite
during the time he was in communication with Defendant IGLESIA.” (SAC, ¶ 11.) “Defendant MAYORGA, as an agent of Defendant
IGLESIA, made representations of fact to Defendant ESPINOLA, who was
Plaintiff’s agent, that Defendant IGLESIA was going to hire Plaintiff to serve
as the general contractor on the construction project at The Church. Defendant
ESPINOLA signed a building permit on behalf of Plaintiff for the benefit of
Defendant IGLESIA, who then presented said permit to inspectors from the city of
Downey’s Building and Safety Department, who then allowed the project to
proceed. Despite numerous communications between Defendant ESPINOLA and
Defendant IGLESIA, including representations by Defendant MAYORGA to Defendant
ESPINOLA that Defendant IGLESIA would hire Plaintiff as a general contractor to
perform the construction work at The Church, the parties never arrived at an
agreement and no written contract was ever entered into between Plaintiff and
Defendant IGLESIA.” (Id., ¶ 12.) “As the project proceeded, Defendant MAYORGA
assumed complete control of the construction project, and excluded ESPINOLA
from the project and jobsite.” (Id., ¶
13.) “On or about August 2019, one of
Plaintiff’s representatives, OSCAR MENDOZA, received a telephone call from an
inspector with the City of Downey Building and Safety Department. The inspector
had questions for OSCAR MENDOZA regarding the purported construction work that
Plaintiff had purportedly performed at The Church. This call surprised OSCAR
MENDOZA as Plaintiff had never entered into an agreement with Defendant
IGLESIA or Defendant MAYORGA to perform construction work at The Church.
The inspection further conveyed to OSCAR MENDOZA that Defendant MAYORGA was
presenting himself to the city’s inspectors as a representative of Plaintiff,
who had charged Defendant MAYORGA with the duty of managing and coordinated the
construction work at The Church.” (Id.,
¶ 14.) “Defendant MAYORGA had hired subcontractors
and other third parties to perform work at The Church construction project, and
that said defendant hired those third parties under the false
representations that he was Plaintiff’s project manager and that Plaintiff was
the general contractor on the project.”
(Id., ¶ 17.) “The estimated
contract price for the construction of the Church was 2.5 million dollars and
was nearing completion in September 2019.”
(Id., ¶ 18.) “Plaintiff has not
received any compensation in relation to any of the construction work performed
at The Church.” (Id., ¶ 19.) “Defendant MAYORGA received payments from
Defendant IGLESIA for the work he performed at The Church construction project
for his own benefit, and for himself, despite performing such work under the
guise of Plaintiff’s agent.” (Id., ¶
20.) “Defendant MAYORGA’s
above-described false statements to inspectors, subcontractors and other
parties with the intent to falsely represent to said third parties that
Defendant IGLESIA had contracted a general contractor on the project, and thus
gain the benefits and advantages of having third parties believe that Plaintiff
was serving as the general contractor on the project, and that there was a
licensed general contractor in charge of the project—all to avoid having to
actually hire and pay Plaintiff to perform said services—all for the financial
gain of the defendants who bypassed having to hire a licensed general
contractor for the project.” (Id., ¶
24.) “Defendant ESPINOLA received cash payments from Defendant IGLESIA,
Defendant MAYORGA, and Defendant LOPEZ for Defendant ESPINOLA’s services and
participation in relation to the project.”
(Id., ¶ 26.)
Based thereon, the SAC asserts causes of action for:
1.
Breach of
Fiduciary Duty and Duty of Loyalty
2.
Aiding
and Abetting a Breach of Fiduciary Duty and Duty of Loyalty
3.
Fraud—Intentional
Misrepresentation of Fact
4.
Aiding
and Abetting Fraud—Intentional Misrepresentation
5.
Fraud—Concealment
6.
Aiding
and Abetting Fraud—Concealment
7.
Negligent
Misrepresentation
8.
Aiding
and Abetting Negligent Misrepresentation
9.
Negligence
10.
Violation
of Trade Secrets Act
11.
Unfair
Competition (Business and Professions Code §17200)
12.
Declaratory
Relief
13.
Civil
Conspiracy
14.
Unjust
Enrichment
1st
– 10th CAUSES OF ACTION
Defendant
Iglesia initially contends that the 1st – 10th causes of
action exceed the scope of leave to amend.
While this court would generally agree with Defendant, because this
demurrer has been pending since 2021, in the interest of judicial efficiency,
this court will examine the SAC based on the merits.
1st
CAUSE OF ACTION
BREACH OF FIDUCIARY DUTY AND DUTY OF
LOYALTY: The elements are: 1) existence of a fiduciary duty; 2) breach
of the duty; and 3) damage caused by the breach. (Charnay v. Cobert (2006) 145
Cal.App.4th 170, 182; Stanley v. Richmond (1995) 35 Cal.App.4th
1070, 1086.)
The
1st cause of action is directed against Defendant Espinola
only. Because Espinola is alleged to
have an employment relationship with Plaintiff, the 1st cause of
action is properly pled against Espinola.
However, Espinola is not the moving party.
The
moving party is Iglesia. Iglesia is not
liable for Breach of Fiduciary Duty and Duty of Loyalty under a conspiracy
theory because Iglesia has no relationship with Plaintiff to give rise to any
fiduciary duty. Accordingly, Iglesia’s
demurrer to the 1st cause of action is SUSTAINED without leave to
amend. The 1st cause of
action remains viable against Espinola.
2nd, 4th, 6th,
and 13th CAUSES OF ACTION
AIDING AND ABETTING and CIVIL
CONSPIRACY:
These theories of liability are not
independent causes of action. Although
they are not causes of action, Plaintiff may plead them as theories supporting
liability against Iglesia based on Espinola and Mayorga’s wrongful conduct. Accordingly, the Clerk is ORDERED to strike
the labels, “2nd, 4th, 6th, 8th,
and 13th – 14th causes of action” and ¶¶ 51, 67, 94, 158,
by interlineation, but the allegations in ¶¶ 52-57, 68-75, 95-101, 159-165 may
remain.
8th and 14th CAUSES OF
ACTION
Although the caption contains an 8th
and 14th causes of action, the body of the SAC contains no such
causes of action. Accordingly, the Clerk
is ORDERED to strike the 8th and 14th causes of action
from the caption of the SAC.
3rd, 5th, and 7th
CAUSES OF ACTION
FRAUD, CONCEALMENT, and NEGLIGENT
MISREPRESENTATION: Whether intentional
or negligent in nature, fraud actions are subject to strict requirements of
particularity in pleading. (Committee
on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197,
216.) Fraud must be pleaded with
specificity rather than with general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003)
30 Cal.4th 167, 184.) The
specificity requirement means a Plaintiff must allege facts showing how, when,
where, to whom, and by what means the representations were made, and, in the
case of corporate Defendant, the Plaintiff must allege the names of the persons
who made the representations, their authority to speak on behalf of the
corporation, to whom they spoke, what they said or wrote, and when the representation
was made. (Lazar v. Superior Court
(1996) 12 Cal.4th 631, 645.)
Fraud and Negligent Misrepresentation: ¶ 11 alleges oral communications. ¶ 12 alleges that “Defendant MAYORGA, as an agent of Defendant IGLESIA, made representations
of fact to Defendant ESPINOLA, who was Plaintiff’s agent, that Defendant
IGLESIA was going to hire Plaintiff to serve as the general contractor on the
construction project at The Church. Defendant ESPINOLA signed a building permit
on behalf of Plaintiff for the benefit of Defendant IGLESIA, who then presented
said permit to inspectors from the city of Downey’s Building and Safety
Department, who then allowed the project to proceed.” ¶ 13 alleges, “The majority of the
communications between Defendant ESPINOLA and Defendant IGLESIA were conducted
between ESPINOLA and Defendant MAYORGA, who was Defendant IGLESIA’s
point-person and coordinator on the project relating to the construction work
that was performed at the Church.” ¶¶ 59 and 103 allege that “Defendant ESPINOLA represented to and advised
Plaintiff that Defendant IGLESIA had agreed to hire Plaintiff as the general
contractor on the project, and based on that representation, Defendant
ESPINOLA, as Plaintiff’s RMO applied for and signed for building permits with
the city of Downey’s building and safety department; Later, Defendant ESPINOLA
represented to and advised to Plaintiff’s principals, Oscar Mendoza and Edwin
Figueroa, that Defendant IGLESIA had rejected Plaintiff’s bid to serve as the
general contractor on the project and that Defendant IGLESIA would not contract
with Plaintiff. In turn, Plaintiff was led to believe, based on Defendant
ESPINOLA’s affirmative representations to Plaintiff, that Plaintiff was turned
down for the job, and therefore no longer had any involvement whatsoever in the
project—all while said defendants represented to the city, subcontractors,
vendors and the general public that Plaintiff was the de jure general
contractor, and all unbeknownst to Plaintiff until its subsequent discovery of
the true facts.” ¶¶ 60 and 104 allege
that “Defendant ESPINOLA’s representations were, in fact, false.”
Concealment: ¶ 77 alleges, “on or around May of 2018,
Defendant IGLESIA, Defendant MAYORGA and Defendant LOPEZ lured Plaintiff’s
agent, HUMBERTO ESPINOLA, to assist them with The Church project.” ¶ 78 alleges that “Defendant ESPINOLA
received compensation from Defendant IGLESIA, Defendant MAYORGA, and Defendant
LOPEZ to impersonate Plaintiff as the general contractor in the project to the
city of Downey inspectors, subcontractors, vendors and other parties.” ¶ 79 alleges that “Defendant ESPINOLA,
Defendant IGLESIA, Defendant MAYORGA, and Defendant LOPEZ agreed to falsely use
Defendant ESPINOLA as the representative of Plaintiff to procure building
permits from the city, subcontracts, and other agreements with vendors, suppliers
and other third parties—all for the benefit of Defendant IGLESIA.” ¶ 80 alleges that “Defendant ESPINOLA,
Defendant IGLESIA, Defendant MAYORGA, and Defendant LOPEZ agreed to this scheme
through a surreptitious agreement between said parties to (1) by-pass and
exclude Plaintiff’s involvement as the actual general contractor in the
project, and (2) use Plaintiff’s name and trade secrets to procure and command
better prices and agreements with subcontractors and vendors, such as material
suppliers.”
The SAC alleges that Defendant Iglesia is liable
for Fraud and Concealment based on the Aiding and Abetting and Conspiracy
allegations supporting the fraudulent scheme.
The
court finds the allegations are sufficient to withstand demurrer. Demurrer is OVERRULED.
11th CAUSE OF ACTION
UNFAIR COMPETITION (BUSINESS AND PROFESSIONS
CODE §17200): The Unfair Business
Practices Act shall include “any unlawful, unfair or fraudulent business act or
practice.” (B&P Code § 17200.) A
plaintiff alleging unfair business practices under these statutes must state
with reasonable particularity the facts supporting the statutory elements of
the violation. (Khoury v. Maly's of
California, Inc. (1993) 14 Cal.App.4th 612, 619.) Even a single incident - a one-time act that
is unfair, unlawful or fraudulent - is sufficient to state a claim under
17200. (Klein v. Earth Elements, Inc.
(1997) 59 Cal.App.4th 965, 969 fn. 3.)
The court finds the SAC adequately alleges an
unfair business practice based on the use of Plaintiff’s license to obtain
building permits without Plaintiff’s consent.
The court also finds that Plaintiff has
standing to assert a UCL claim. As
alleged, Espinola and Iglesia used Plaintiff’s license to obtain the permits
for the project. As alleged, Plaintiff’s
standing is based on being a business competitor. Accordingly, demurrer is OVERRULED.
10th CAUSE OF ACTION
VIOLATION OF TRADE SECRETS ACT: Essential elements of a trade secret
misappropriation cause of action are: 1)
the existence of a trade secret; and 2) misappropriation of that trade secret. (CC § 3426.1.) The California Uniform Trade Secrets Act
(“CUTSA”) defines a “trade secret” as “information, including a formula,
pattern, compilation, program, device, method, technique, or process,” that
“[d]erives independent economic value, actual or potential, from not being
generally known to the public or to other persons who can obtain economic value
from its disclosure or use” and [i]s the subject of efforts that are reasonable
under the circumstances to maintain its secrecy.” (CC § 3426.1(d)(1), (2).)
¶¶ 127-129, 131-132 allege
Plaintiff’s trade secrets. ¶¶ 130,
133-147 allege Defendant’s misappropriation of Plaintiff’s trade secrets.
Further, a “demurrer for
uncertainty is strictly construed, even where a complaint is in some respects
uncertain, because ambiguities can be clarified under modern discovery
procedures.” (Khoury v. Maly's of
California, Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer
for uncertainty will be sustained only where the complaint is so bad that a
defendant cannot reasonably respond. (Ibid.)
The court does not find that the claim
is so uncertain that Defendant cannot reasonably respond.
The court finds that the complaint
adequately alleges a trade secrets claim.
Accordingly, the demurrer is OVERRULED.
12th CAUSE OF ACTION
DECLARATORY RELIEF: “Any person
interested under a written instrument…or under a contract, or who desires a
declaration of his or her rights with respect to another, or in respect to,
in, over or upon property…may, in cases of actual controversy relating to the
legal rights and duties of the respective parties, bring an original action…for
a declaration of his or her rights and duties in the premises, including a
determination of any question or construction or validity arising under the
instrument or contract.” (CCP §1060.)
Plaintiff has alleged a declaration of rights with respect to
Plaintiff’s license and trade secrets.
(SAC, ¶ 156.) ¶ 136 alleges that
Defendants’ acts are “ongoing.”
Accordingly, the court finds that the claim is adequately
pled. Demurrer is OVERRULED.