Judge Lee W. Tsao, Case Number: 23NWCV00879, Date: 2023-11-01 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV00879, Date: 2023-11-01 Tentative Ruling

Case Number: 23NWCV00879 Hearing Date: November 1, 2023 Dept: C

Hoag Property Management v. Palencia, et al.

CASE NO.: 23NWCV00879

HEARING: 11/1/23 @ 10:30 AM

Defendants’ Demurrer is SUSTAINED in part and OVERRULED in part as set forth below. Defendants’ Motion to Strike is GRANTED in part and DENIED in part. Plaintiff is granted 20 days leave to amend.

Moving Party to give NOTICE.

Defendants Luis Palencia and Uptown Property Management (collectively Defendants) demur to Plaintiff Hoag Property Management (Plaintiff)’s Complaint and move to strike seven portions of the Complaint.

Background

Plaintiff alleges that Defendant Luis Palencia (Palencia) obtained proprietary knowledge during his 25 year employment with Plaintiff. Further, Palencia signed Confidentiality Agreements pursuant to his employment which prevented Palencia from using the proprietary knowledge and from diverting any of Plaintiff’s customers for three years. Plaintiff alleges that Palencia resigned in March 2022 and then started his own company, Defendant Uptown Property Management (Uptown). Plaintiff claims that Palencia used the proprietary information at Uptown and solicited Plaintiff’s clients.

Plaintiff brings causes of action for: (1) Breach of Contract, (2) Intentional Interference with Contractual Relations, (3) Intentional Interference with Prospective Economic Relations, (4) Misappropriation of Trade Secrets, and (5) Violation of Business and Professions Code Section 17200.

Legal Standard

The party against whom a complaint has been filed may object to the pleading, by demurrer, on several grounds, including the ground that the pleading does not state facts sufficient to constitute a cause of action. (CCP § 430.10(e).) A party may demur to an entire complaint, or to any causes of action stated therein. (CCP § 430.50(a).)

Motions to strike are used to reach defects or objections to pleadings which are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.). (CCP §§ 435, 436 & 437.) A motion to strike lies only where the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (C.C.P. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (C.C.P. § 437.)

Discussion

Defendants argue that the Complaint is uncertain. Demurrers for uncertainty are strictly construed, because discovery can be used for clarification, and apply where defendants cannot reasonably determine what issues or claims are stated. (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) The Complaint is not uncertain because Defendant can reasonably determine what claims are stated. Thus, Defendants’ Demurrer is overruled on the grounds of uncertainty.

Defendants argue that the First Cause of Action for Breach of Contract fails because Plaintiff did not attach all contracts to the Complaint. “[A] plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 199.) Here, Plaintiff alleges that Defendant signed a Confidentiality Agreement and Agreement Regarding Confidentiality of Trade Secrets and Proprietary Information (collectively the Agreements) and the terms of the Agreements (Compl. ¶¶ 7-17.) Thus, Plaintiff pleaded sufficient facts to constitute a cause of action for breach of contract. Defendant’s Demurrer to the first cause of action is overruled.

Defendants argue that the Second and Third Causes of Action for Intentional Interference with Contractual Relations and Prospective Economic Relations fail because Plaintiff did not identify a third party and allege any intentional wrongful acts by Defendants. However, Plaintiff identifies the third parties as its current customers. (See Roth v. Rhodes (1994) 25 Cal. App. 4th 530, 546) (doctor alleging intentional interference had to identify “an existing relationship” and could not rely on “speculative ‘future patients.’ ”).) Further, the Complaint alleges that Defendants “contacted various property owners with current contracts with HPM in an effort to solicit business away from Plaintiff” and they “intended to disrupt the performance of certain contracts ….” (Compl. ¶¶ 30 and 31.) Thus, Plaintiff pleaded sufficient facts to constitute a cause of action for Intentional Interference with Contractual Relations and Prospective Economic Relations. Therefore, Defendant’s Demurrer to the second and third causes of action is overruled.

Defendants argue that the Fourth Cause of Action for Misappropriation of Trade Secrets fails because Plaintiff failed to identify the trade secret with reasonable particularity. “Before a defendant is compelled to respond to a complaint based upon claimed misappropriation or misuse of a trade secret and to embark on discovery which may be both prolonged and expensive, the complainant should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.” (Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 253.) Here, Plaintiff provides no particularity as to what proprietary information it alleges that Defendants misappropriated. It simply claims the information was not generally known or available to the public and it spent tremendous time, effort, and resources developing it. (Compl. ¶¶ 48 and 49.) Thus, Plaintiff has failed to plead sufficient facts to constitute a cause of action for Misappropriation of Trade Secrets. Therefore, Defendant’s Demurrer to the fourth cause of action is sustained.

Defendants argue that the Fifth Cause of Action for Unfair Business Practices fails because Plaintiff’s other causes of action fail. However, as stated above, Plaintiff’s First through Third Causes of Action are sufficiently pled. Therefore, Defendant’s Demurrer to the fifth cause of action is overruled.

Defendants argue that Plaintiff has failed to allege sufficient facts to support a claim for punitive damages. Plaintiff alleges in its Misappropriation of Trade Secrets Cause of Action that “Defendants took these actions deliberately, callously, malicious, fraudulently and in an oppressive manner to cause harm to Plaintiff, and that such improper motives amounted to malice and a conscious disregard of Plaintiff’s rights.” “In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.” (Clauson v. Sup. Ct..(1998) 67 Cal. App. 4th 1253, 1255.) Here, Plaintiff does not allege ultimate facts which can support a claim for punitive damages. Thus, Defendants’ Motion to Strike is granted as to Requests to Strike Nos. 4 and 5.

Defendants include seven requests to strike. However, they fail to present any argument as to why Requests Nos. 1-3, 6, and 7 should be struck. Therefore, the remaining part of Defendants’ Motion to Strike is denied.

Plaintiff is granted leave to amend because Plaintiff has not yet amended its Complaint and Defendant has failed to show that the defects cannot be cured.

Accordingly, Defendants’ Demurrer is SUSTAINED in part and OVERRULED in part as set forth above. Defendants’ Motion to Strike is GRANTED in part and DENIED in part. Plaintiff is granted 20 days leave to amend.