Judge: Lee W. Tsao, Case: 22NWCV00443, Date: 2023-03-30 Tentative Ruling

Case Number: 22NWCV00443    Hearing Date: March 30, 2023    Dept: C

AJAMIAN v. THIRFTY CLEANERS

CASE NO.:  22NWCV00443

HEARING: 03/30/23

#9

TENTATIVE ORDER

     I.        Defendants ALMA ANGELICA ESPINOSA CONTRERAS & ALEXIS PEREZ’s Demurrer to Plaintiff’s First Amended Complaint is SUSTAINED with 20 days leave to amend in part and OVERRULED in part.

    II.        Defendants ALMA ANGELICA ESPINOSA CONTRERAS & ALEXIS PEREZ’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is DENIED in part, MOOT in part, and GRANTED without leave to amend in part.

Moving Party to give Notice.

Plaintiffs’ Request for Judicial Notice is DENIED. Judicial notice of discovery responses may be taken when the discovery responses contradict allegations in the pleading at issue. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604-605.) The discovery responses of which Plaintiff seeks judicial notice does not contradict the allegations of the pleading; they simply provide further clarification. Thus, the discovery responses do not fall in the limited exception allowing the Court to take judicial notice of Defendant Alma Perez’s discovery responses in conjunction with an attack on a pleading.

This contractual fraud action was filed by ANNIE AJAMIAN (“Plaintiff”) on June 7, 2022. On October 14, 2022, the operative First Amended Complaint (“FAC”) was filed. The FAC alleges, in pertinent part: “On or about December 31, 2014, to ANNIE AJAMIAN (‘Buyer’) entered into an agreement to purchase NEW SANTA FE CLEANERS…. From ALMA A. PEREZ, ALICE DERDIYAR and HAMPARSUM ‘MIKE’ DERDIYAR (collectively ‘Sellers’) in the amount of $140,000.00.” (FAC ¶7.) “A Deposit of $50,000.00 was made by the Buyer on December 31, 2014, upon which time the Covenant Not to Compete, which was an integral part of Buyer’s decision to purchase the business, was signed by the parties….” (FAC ¶8.) “Beginning January 2021, Plaintiff started receiving calls from her loyal customers informing her that PEREZ had contacted them. PEREZ informed the customers that she purchased a new dry cleaning business, THRIFTY CLEANERS… and requested that the clients bring their business to Thrifty Cleaners. THRIFTY CLEANERS is located exactly 5.2 miles away from NEW SANTA FE CLEANERS. Plaintiff is informed that although THRIFTY CLEANERS is listed under her son, Alexis’ name, ALMA PEREZ maintains control and at least ap atrial ownership of the business.” (FAC ¶15.) Plaintiff alleges that Alma Perez had access to New Santa Fe Cleaners’ computers, which contained proprietary information, and that Alma Perez stole mail sent to the business, including notices sent from CA EDD. (FAC ¶18.) “PEREZ also hired the seamstress from NEW SANTA FE CLEANERS to work at THRIFTY CLEANERS. Additionally, Defendant, ALMA A. PEREZ is continuing to disparage NEW SANTA FE CLEANERS by calling customers and telling them that the seamstress at NEW SANTA FE CLEANERS is ‘not good’ and ‘the good seamstress is now working for me’ and asking customers to leave NEW SANTA FE CLEANERS and bring their business to THRIFTY CLEANERS.” (FAC ¶19.)

The FAC asserts the following causes of action: (1) Breach of Contract; (2) Conversion; (3) Intentional Interference with Prospective Economic Advantage; (4) Negligent Misrepresentation; (5) Intentional Misrepresentation; (6) Constructive Fraud; (7) Promissory Fraud; (8) Misappropriation of Trade Secrets; and (9) Unfair Competition.

Defendants ALMA ANGELICA ESPINOSA CONTRERAS aka ALMA ANGELICA PEREZ (“Alma Perez”) & ALEXIS PEREZ (“Alexis Perez”) generally demur to each cause of action.

First, Fourth, Fifth, Sixth, and Seventh Causes of Action – as to ALEXIS PEREZ/THRIFTY CLEANERS only

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Plaintiff does not allege that she entered into any contract/non-compete agreement with Defendant Alexis Perez/Thrifty Cleaners. There is no contract pled between Plaintiff and Alexis Perez/Thrifty Cleaners. The demurrer to the first cause of action is SUSTAINED with 20 days leave to amend as to Defendant Thrifty Cleaners.  

The elements of a cause of action for intentional fraud are 1) misrepresentation (false representation, concealment, or nondisclosure); 2) knowledge of falsity (scienter); 3) intent to defraud or induce reliance; 4) justifiable reliance; and 5) damages. (See Cal. Civ. Code §1709.)

“The elements of negligent misrepresentation are (1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage…. [T]he allegations of reliance, must be specifically pleaded.” (National Union Fire Ins. Cor. Of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50.)

Constructive fraud is generally asserted against a fiduciary by one to whom a fiduciary duty is owed. ‘Constructive fraud’ allows conduct insufficient to constitute actual fraud to be treated as such where parties stand in a fiduciary relationship. (Cal. Civ. Code §1573; Engalla v. Permanente Medical Group (1997) 15 Cal.4th 951, 982.) Constructive fraud doesn’t necessarily require a representation be made and that someone ‘rely’ on it—constructive fraud can be based on any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault by misleading another to his prejudice, and it exists where conduct, though not actually fraudulent, has all the actual consequences and all the legal effects of actual fraud. (Devers v. Greenwood (1956) 139 Cal.App.2d 345, 348.)

“The elements of promissory fraud… are: (1) a promise made regarding a material fact without any intention of performing it; (2) the existence of the intent not to perform at the time the promise was made; (3) intent to deceive or induce the promisee to enter into a transaction; (4) reasonable reliance by the promise; (5) nonperformance by the party making the promise; and (6) resulting damage to the promise[e].” (Behnke v. State Farm General Ins. Co. (2011) 196 Cal.App.4th 1443, 1453.)

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… [t]o withstand a demurrer, the facts constituting every element of the fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings. (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Here, the FAC does not allege that Alexis Perez/Thrifty Cleaners made any misrepresentations, or statements to Plaintiff. The demurrer to the fourth, fifth, sixth, and seventh causes of action is SUSTAINED with 20 days leave to amend as to Defendant Thrifty Cleaners.

The Court notes that Alexis Perez is not a named defendant to this action.

Fourth – Seventh Causes of Action as to Defendant ALMA PEREZ only

The elements for negligent misrepresentation, intentional misrepresentation, constructive fraud, and promissory fraud are stated above.

The demurrer to the fourth, fifth, and seventh causes of action is OVERRULED as to Defendant ALMA PEREZ. Plaintiff has alleged sufficient facts for the purpose of surviving demurrer. Plaintiff alleges that Alma Perez signed the Covenant Not to Compete, but had no intention of upholding that agreement. “Defendant knew that the representations were false at the time she made them…. Since Defendant opened a dry cleaner within a 10 mile radius and also took the client information and began to contact Plaintiff’s customers and encourage them to visit Defendant’s newly opened dry cleaners.” (FAC ¶62.) The Court must accept these allegations as true at this stage in the litigation.

The demurrer to sixth cause of action for constructive fraud is SUSTAINED with 20 days leave to amend as to Defendant ALMA PEREZ. Plaintiff does not allege a fiduciary relationship between Plaintiff and Alma Perez.

Second Cause of Action – Conversion – As to Alma Perez and Thrifty Cleaners

The elements of a cause of action for conversion are: (1) Plaintiff’s ownership or right to possession of personal property; (2) defendant’s disposition of the property inconsistent with plaintiff’s rights; and (3) resulting damages. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

The demurrer to the second cause of action is SUSTAINED with 20 days leave to amend. There are no allegations that Defendants took Plaintiff’s tangible property. Generally conversion requires interference with tangible property. However, over time, the “tort of conversion has been adapted to new property rights and modern commercial transactions” to expand “well beyond its original boundaries.” (Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 211.) However, the intangible property at issue must be sufficiently certain, and the plaintiff’s rights of possession and use of the property must be exclusive. As stated in Welco Electonrics, Inc.: “Plaintiff had a property right in its credit card account because plaintiff’s interest was specific, plaintiff had control over its credit card account, and plaintiff had an exclusive claim to the balance in the account. (Id. at 211.)  Plaintiffs have not alleged the misappropriation of intangible property that meets this standard.

Third Cause of Action – Intentional Interference with Prospective Economic Advantage – As to Alma Perez and Thrifty Cleaners

To prevail on a cause of action for intentional interference with prospective economic advantage, a plaintiff must plead: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) the defendant’s intentional acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the defendant’s acts. (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152, fn. 6.) A plaintiff that chooses to bring a claim for interference with prospective economic advantage has a more rigorous pleading burden since it must show that the defendant’s conduct was independently wrongful. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134; Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393.)

The demurrer to the third cause of action as to Defendant Alma Perez is OVERRULED. The alleged independently actionable conduct is Alma Perez’s alleged fraud.

The demurrer to the third cause of action as to Defendant Thrifty Cleaners is SUSTAINED with 20 days leave to amend. Plaintiff has not sufficiently alleged that Thrifty Cleaners engaged in any independently actionable conduct.

Eighth Cause of Action – Misappropriation of Trade Secrets – as to Alma Perez and Thrifty Cleaners

Defendants argue that the eighth cause of action fails because Plaintiff does not allege any protectible trade secret.

“‘Trade Secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives 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 (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Cal. Civ. Code §3426.1(d).) “The test for trade secrets is whether the matter sought to be protected is information (1) which is valuable because it is unknown to others and (2) which the owner has attempted to keep secret. (ABBA Rubber co. v. Seaquist (1991) 235 Cal.App.3d 1, 18.)

“Salary information, unlike the mere names of employees, has long been recognized as potentially sensitive in a competitive labor market. [Citations.]” (Cypress Semiconductor Corp. v. Maxim Integrated Products, Inc. (2015) 236 Cal.App.4th 243, 263. fn. 11.) Client lists may also constitute trade secrets. A client list “built up by ingenuity, time, labor and expense of the owner over a period of many years is property of the employer.” (Courtesy Temporary Service, Inc. v. Camacho (1990) 222 Cal.App.3d 1278, 1287-1288.)  The Court finds that Plaintiff’s client lists/client information and employee information constitute protectable trade secrets under UTSA.

The demurrer to the eighth cause of action is OVERRULED.

Ninth Cause of Action – Unfair Competition – as to Alma Perez and Thrifty Cleaners

To state a claim under §17200, Plaintiffs must allege whether the conduct complained of is a fraudulent, unlawful or an unfair business practice. To bring a claim under the fraud prong, Plaintiffs must allege an affirmative misrepresentation, conduct or business practice on the part of a defendant; or an omission in violation of defendant’s duty to disclose; and that is likely to deceive members of the public. (Buller v. Sutter Health (2008) 160 Cal.App.4th 981, 986.) To state a claim under the unfairness prong, Plaintiffs must allege that one or more of Defendant’s business practices are unfair, unlawful or fraudulent; and the remedy sought is authorized by law. (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 676; see also Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 337.) To state a claim under the unlawful prong, Plaintiffs must allege a violation of law and cite that law. (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 610 [demurrer to SAC which failed to allege violation of a law was properly sustained without leave to amend].) 

The demurrer to the ninth cause of action is OVERRULED as to Defendant Alma Perez. Plaintiff has adequately alleged claims of fraud in order to maintain a claim under the “fraudulent” prong of the Business and Professions Code.

The demurrer to the ninth cause of action is SUSTAINED with 20 days leave to amend as to Thrifty Cleaners. As indicated above, Plaintiff has not sufficiently alleged fraud as to Thrifty Cleaners (or Alexis Perez, in his individual capacity).

Motion to Strike

A motion to strike lies either when (1) there is “irrelevant, false or improper matter inserted in any pleading”; or (2) to strike any pleading or part thereof “not drawn or filed in conformity with the laws of this state, a court rule or order of court.” (CCP §436.)

The basis for punitive damages must be pled with specificity. Plaintiff must allege specific facts showing that Defendant Reyes’s conduct was oppressive, fraudulent, or malicious. (Smith v. Superior Court (1992) Cal.App.4th 1033, 1041-1042.) The motion to strike punitive damages is DENIED as to Defendant Alma Perez for the reasons stated above, and rendered MOOT as to Defendant Thrifty Cleaners.

In the absence of an express agreement or statute, each party to a lawsuit is responsible for its own attorney fees. (CCP §1021.) Plaintiff has not alleged facts to support an entitlement to attorney’s fees, and Plaintiff’s Opposition does not address Defendants arguments. The motion to strike attorney’s fees is GRANTED without leave to amend.

The motion to strike “irrelevant allegations” or “surplusage” is DENIED. The Court cannot make factual determinations in response to a Motion to Strike.  (See Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 966-967.) The Court must accept the factual allegations set forth in the FAC as true at this stage in the litigation.