Judge: Lynne M. Hobbs, Case: 23STCV12577, Date: 2024-05-24 Tentative Ruling

Case Number: 23STCV12577    Hearing Date: May 24, 2024    Dept: 61

MYERS COCKTAIL, INC USA, et al. vs GLANBIA NUTRITIONALS, INC AN ILLINOIS CORPORATION, et al.

TENTATIVE  

Defendant Glanbia Nutritionals, Inc.’s Demurrer to the Second Amended Complaint is SUSTAINED without leave to amend as to the fourth and fifth causes of action for breach of implied warranties, and as to the ninth, tenth, and eleventh causes of action for fraud, conspiracy, and negligent misrepresentation.

Defendant to give notice.

DISCUSSION  

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”)

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

“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 Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendant Glanbia Nutritionals, Inc. (Glanbia) demurrers to the Second Amended Complaint (SAC) of Plaintiffs Myers Cocktail, Inc. USA and Myers, Cocktail, Inc. Canada (Plaintiffs) on the grounds that the fourth and fifth causes of action for breach of implied warranty are barred by an express disclaimer in the operative agreement under Illinois law, and have not been amended since this court’s prior order sustaining Defendants’ previous demurrer to the same claims. (Demurrer at p. 7.) Glanbia also argues that the additional facts pleaded to allege a fraud claim disclose the absence of any reliance upon any misrepresentation made by Glanbia. (Demurrer at pp. 8–14.)

Glanbia is correct that the implied warranty claims contain the same defects that previously warranted demurrer. As noted in the court’s prior order:

Illinois law permits conspicuous, written disclaimers of the implied warranties of fitness and merchantability. (810 ILCS § 5/2-316, subd. (2).) The “conspicuousness” determination is made “by asking if attention can reasonably be expected to be called to the term or clause.” (R.O.W. Window Co. v. Allmetal, Inc. (Ill. App. Ct. 2006) 367 Ill.App.3d 749, 753.) The disclaimer of implied warranties here is in all capital, bolded letters, under a section heading that states in bold “Limited Warranty,” and which specifically disclaims implied warranties of merchantability and fitness for a particular purpose. (FAC Exh. 2, § 9.2.)

(11/16/2023 Ruling.)1

Plaintiff relies on 810 ILCS § 5/2-316, subd. (1), which “den[ies] effect to such [disclaimer] language when inconsistent with language of express warranty,” and identifies the “inconsistent” express warranty contained in paragraph 9.1 of the agreement. (Opposition at p. 7; SAC Exh. 2, ¶ 9.2.) But that express warranty is not inconsistent with the disclaimer of implied warranties; in fact the contract expressly states that the warranty “is in lieu of all other warranties, express or implied,” including those based on merchantability or fitness for a particular purpose. (SAC Exh. 2, ¶ 9.2.) This waiver of implied warranties is not inconsistent with the existence of an express warranty.

Plaintiff argues that the warranty disclaimer is unconscionable. (Opposition at pp. 8–9.) “Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Plaintiff makes no attempt to argue or allege in the SAC the existence of either element of unconscionability with respect to the warranty disclaimer.

Plaintiff argues that the disclaimer would preserve Glanbia from liability for its alleged fraud. (Opposition at p. 9.) Plaintiff does not explain how this could be the case, considering it is a disclaimer of implied warranties, not an exculpatory clause purporting to attach to subsequent fraudulent conduct.

Thus the demurrer is SUSTAINED as to the fourth and fifth causes of action for breach of implied warranty.

This leaves the fraud claims. In Illinois, as in California, a fraud claim must be pleaded with “particularity,” and “[t]he pleadings must contain specific allegations from which fraud is the necessary or probable inference, including what representations were made, when they were made, who made the representations, and to whom they were made.” (Hirsch v. Optima, Inc. (Ill. App. Ct. 2009) 397 Ill.App.3d 102, 117.)

Plaintiff’s fraud claims are based on the allegation that Glanbia represented the product to be delivered to Plaintiff would meet its specifications. (SAC ¶ 19.) The court previously sustained the demurrer to these claims on the basis that the FAC contained no identification of the speakers who made the relevant representations, to whom they spoke, or by what means, and only related the alleged misrepresentations by reference to the corporate identities of the defendants. Here, the SAC includes several discrete communications between the parties and identified individuals, but is vague as to which of the representations identified are the ones that Plaintiff relied upon. The SAC references the following communications:

· A January 7, 2022 email from Mary Zhang of Glanbia, stating “that Glanbia is attempting to meet the nutritional composition claim of Myers and . . . that the discrepancy is based on problems with the composition (that Glanbia provided).” (SAC ¶ 20.)

· A January 18, 2022 email from Zhang stating that “the master formula was Glanbia’s IP and that they shared the formulation with Simpson and would not share this with Plaintiffs.” (SAC ¶ 25.)

· On September 21, 2022, Tim Green of Glanbia informed Plaintiff by email that “they delivered a product according to the formulations provided by Plaintiff.” (SAC ¶ 30, Exh. 6.)

Although the SAC states that Green’s September 2022 statement was “blatantly false,” it does not describe how the Zhang representations were false. (SAC ¶ 134), but rather includes a blanket allegation that “the representations made by the Defendants and each of them were false.” (SAC ¶ 121.)

Yet the SAC also contains problematic allegations with respect to Plaintiff’s reliance. It alleges that Defendant Simpson put Plaintiff on notice in January 2022 that the product composition was non-compliant. (SAC ¶ 21.) It alleges that many of the communications from Plaintiff during this time were addressed to the discrepancy in nutritional values. (SAC ¶ 28.) And it attaches the “blatantly false” email from Tim Green, which indicates it was sent in response to another email with the subject line “unacceptable overages,” and by its content indicates a response to a complaint from Plaintiff about the product quality. (SAC Exh. 6.) What’s more, the SAC alleges on one hand that this representation took place after Plaintiffs relied on the representations at issue by packing and distributing the products in “Spring 2022.” (SAC ¶ 43.) But even this ambiguous, as the SAC alleges that Plaintiffs were in contact with Glanbia regarding the ill-formulated products through May 2022. (SAC ¶ 26.) But perhaps this too is immaterial, as the

SAC contains another allegation stating that it only began delivering the product in Fall 2022. (SAC ¶ 31.)

Plaintiff in opposition complicates matters even further. Instead of identifying which of the representations above were material and false, Plaintiff instead introduces another alleged representation — not contained in the pleadings — in which Mary Zhang on January 14, 2022, provided a rationale for the noncompliance and stated, “That was the hold up and we’re really happy this is resolved and eager to move forward.” (Opposition at p. 10.) But as with the other representations of Zhang alleged in the SAC, Plaintiffs do not explain how this representation is false.

Plaintiff also asserts that the allegation of reliance that took place in Fall 2022 is incorrect, and that the product was delivered in reliance on Glanbia’s misrepresentations in Spring 2022. (Schneider Decl. ¶ 20.) Thus there is no grounds for any fraud claim based on Tim Green’s September 2022 representation. Yet at the same time, the SAC alleges that Plaintiff was aware of deviations from formulations in May 2022. (SAC ¶ 26.) It is unclear if this awareness pre-dated Plaintiffs’ alleged acts in reliance on Glanbia’s misrepresentation.

Plaintiffs have failed to remedy their fraud claims. Plaintiffs were given leave to amend to plead their fraud claims with particularity. Their amendment has instead added a maze of extraneous and contradictory detail. The SAC does not allege which representations Plaintiffs contend were false, or in what respect they were false — save one representation by Tim Green that Plaintiffs have shown can form no basis for their claims. The SAC does not allege a coherent basis for reliance on any particular representation or concealment by Glanbia.

Accordingly, the demurrer is SUSTAINED as to the ninth, tenth, and eleventh causes of action, without leave to amend.