Judge: Mark A. Young, Case: 20SMCV02014, Date: 2023-10-11 Tentative Ruling
Case Number: 20SMCV02014 Hearing Date: December 18, 2023 Dept: M
CASE NAME: Planeless
Pictures LLC, v. Logan Paul, et al.
CASE NO.: 20SMCV02014
MOTION: Defendants
Logan Paul and Maverick Media’s demurrer with motion to strike
HEARING DATE: 12/18/2023
Background
This action concerns
a dispute between movie creators and movie investors arising out of the failure
of a 2016 movie development deal between nominal plaintiff Planeless Pictures
LLC, a California Limited Liability Company (“Planeless”) and defendants Logan
Paul (“Paul”) and Maverick Media (“Maverick”).
On June
15, 2023, the Court granted a motion filed by Maverick and Paul for summary
judgment but granted leave to amend the complaint for the purpose of bringing
derivative claims on behalf of the Planeless. Subsequently, on July 7, 2023, plaintiff
Jonathan Ornstein (“Ornstein”) brought the first amended complaint (“FAC”)
derivatively on behalf of Planeless, alleging 1) breach of fiduciary duty
against Paul, Maverick, and Does 1-30, 2) negligence against Paul and Does
1-30, 3) gross negligence against Paul, Maverick, and Does 1-30, 4) breach of
contract against Maverick and Does 1-30, and 5) breach of contract against
Paul, Maverick, and Does 1-30. On September 21, 2023, Paul and
Maverick brought the instant demurrer to the FAC along with a motion to strike
and a request for judicial notice. On November 3, 2023, Ornstein filed
oppositions to the demurrer and motion to strike, along with a request for
judicial notice.
Legal
Standard
“Before filing a demurrer . . . the demurring party shall
meet and confer in person or by telephone with the party who
filed the pleading . . . for the purpose of determining whether an agreement
can be reached that would resolve the objections to be raised in the demurrer.”
(Code Civ. Proc., § 430.41.) To properly
file a demurrer with the court, the party must also file a declaration noting
that he or she “met and conferred with the party who filed the pleading subject
to demurrer, and that the parties did not reach an agreement resolving the
objections raised in the demurrer. [or] (B) That the party who filed the
pleading subject to demurrer failed to respond to the meet and confer request
of the demurring party or otherwise failed to meet and confer in good faith.”
(Code Civ. Proc., § 430.41(A) & (B).)
A demurrer for sufficiency
tests whether the complaint alleges facts sufficient to constitute a cause of
action. (Code Civ. Proc.,
§ 430.10; Young v. Gannon (2002) 97 Cal.App.4th 209,
220. The court
“may consider all material facts pleaded in the complaint and those arising by
reasonable implication therefrom; it may not consider contentions, deductions
or conclusions of fact or law. (Young v. Gannon (2002)
97 Cal.App.4th 209, 220 (citing Moore v. Conliffe (1994) 7 Cal.4th 634, 638; Montclair Parkowners Assn. v. City of
Montclair (1999) 76 Cal.App.4th
784, 790).) The court treats all facts alleged in the complaint to be
true. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 732.)
When considering demurrers, courts “are required to
construe the complaint liberally to determine whether a cause of action has
been stated, given the assumed truth of the facts pleaded.” (Picton v. Anderson Union High School
Dist. (1996) 50 Cal.App.4th 726, 733 (citing Rogoff v. Grabowski
(1988) 200 Cal.App.3d 624, 628.)) “The
burden is on the plaintiff to demonstrate the manner in which the complaint can
be amended.” (Ross v. Creel Printing & Publishing Co. (2002) 100
Cal.App.4th 736, 748.)
Motions to strike are used to reach defects or objections
to pleadings that are not challengeable by demurrer (i.e., words, phrases,
prayer for damages, etc.). (See Code Civ. Proc., §§ 435, 436 & 437.) “The grounds for a motion to strike shall
appear on the face of the challenged pleading or from any matter of which the
court is required to take judicial notice.” (Code Civ. Proc., § 437.) “The court may, upon a motion made pursuant to
Section 435, or at any time in its discretion, and upon terms it deems proper:
(a) Strike out any irrelevant, false, or improper matter inserted in any
pleading. [or] (b) Strike out all or any part of any pleading not drawn or
filed in conformity with the laws of this state, a court rule, or an order of
the court.” (Code Civ. Proc., § 436.) A
motion to strike must be filed within the time allowed to respond (e.g., 30
days after service of the complaint or cross-complaint) unless extended by
court order.
Where there are grounds for a demurrer and a motion to
strike, they must be filed together and noticed for hearing at the same time. (Code
Civ. Proc., § 435(b)(3) and CRC Rule 329.)
Request for
judicial Notice
Defendants
request judicial notice of Exhibit 1, this Court’s June 15, 2023 Ruling on
Defendants’ Motion for Summary Judgment. (RJN, Ex. 1.) As Exhibit 1 is a record of the courts of this state, the Court
GRANTS Defendants’ request for judicial notice.
Plaintiff
requests judicial notice of Exhibits A, B, and C. Exhibit A is also the Court’s
June 15, 2023, Order. Exhibit B is the Court’s October 11, 2023, Order. Exhibit
C is Defendants’ Ex Parte Application For An Order Dismissing The Complaint And
Action, Or, In The Alternative, An Order Shortening Time On Motion To Dismiss;
Declaration Of Tamar Yeghiayan, Esq. ISO Thereof. As these are all records of the courts of this
state, the Court GRANTS Plaintiff’s request for judicial notice of Exhibits A,
B, and C.
0Analysis
DEMURRER
Paul and Maverick demur to the entire FAC on the
following grounds: 1) the June 15, 2023 order bars the newly asserted causes of
action because they exceed the scope of what the Court authorized, 2) all of
the causes of action in the FAC are time-barred because they do not relate back
to the time when the case was initially filed, and 3) the FAC is fatally
uncertain.
First, Paul and Maverick contend
that the newly asserted COAs are barred by the Court’s June 15, 2023 order. In
that hearing regarding Defendants’ summary judgment motion, Plaintiff’s counsel
requested leave to amend the complaint to file a derivative action in order to
substitute plaintiffs. In granting this request, the Court stated: “At
oral argument, Plaintiff requested leave to amend the complaint to bring a
derivative claim . . .. Here, the issue underlying the Court’s granting the
motion is a defect in the pleadings as a matter of law, to wit, plaintiff
brought the action in the wrong technical form . . .. Planeless still could
state a derivative claim as Planeless . . .. Given the preference to resolving
issues on the merits, the Court GRANTS leave to amend.” (RJN, Ex. 1 at 12-13.)
Paul and Maverick accuse Plaintiff of misleading the Court in order to gain
permission to file a new complaint, arguing that nothing in the record of the
June 15, 2023 order indicates that Plaintiff was given carte blanche to draft
an entirely new complaint which seeks to impose greater liability on
Defendants.
In
opposition, Plaintiff contends that the “purpose of granting leave to amend was
to enable Ornstein (and/or another member) to allege derivative claims, but the
Court did not, in its order on the motion . . . restrict the nature of the
amendment.” (Opposition, p. 6.) In support of this contention, Plaintiff points
to the October 11, 2023 order, in which the Court denied Plaitniff’s motion for
leave to amend as moot, finding that the Court did not intend to strictly limit
the FAC to a substitution of the plaintiff.
Turning
toward the exact wording of the October 11, 2023 order, the Court stated the
following: “The Court did not intend to limit the amendment to only a
substitution of Plaintiff. The Court granted leave for Plaintiff to correct the
technical form of this action as a derivative claim, which would include leave
to make any necessary allegations to support the derivative action (e.g.,
futility and other derivative claim issues).” (Plaintiff’s RJN, Exh. B, p. 2.) Considering
this language, the Court did not intend to strictly limit the FAC to a
substitution of the plaintiff. The FAC is based on substantially the same set
of facts as the original complaint, yet adds new causes of action and certain
additional facts to support those causes of action. The FAC does not appear to
surprise Paul and Maverick with new details they were not aware of, nor do Paul
or Maverick contend they were unaware of the facts underlying the new
allegations. Instead, they contend that Ornstein should not be rewarded for
failing to bring the initial complaint under his name. However, considering the
court’s strong preference for deciding cases on their merits, the Court
declines to punish Ornstein (and the other members of Planeless) for their
initial failure to bring a derivative action.
Accordingly,
the FAC does not violate any parameters purportedly set by June 15, 2023,
order. This ground for demurrer is overruled.
Paul and Maverick next contend that
the newly asserted causes of action in the FAC are time-barred because they do
not relate back to the original complaint. (Demurrer, pp. 7-10.) They contend
that the FAC sets forth entirely new claims for breach of fiduciary duty,
negligence, gross negligence, and breach of contract and introduces facts in
support of those claims that are wholly separate and distinct from those
previously asserted in the original complaint. Moreover, they argue that
Ornstein could have brought a derivative action originally but chose not to,
instead filing the action under the former plaintiff, Planeless. They argue
that the fact that this strategy did not work because Planeless did not have
standing to bring this action without the approval of its managers should not
excuse Ornstein’s tactical error. Paul and Maverick contend that Plaintiff
improperly relies on Jo Redland Tr., U.A.D. 4-6-05 v. CIT Bank,
N.A., 92 Cal. App. 5th 142 (2023) in support of their position. In opposition, Plaintiff contends that
the relation back doctrine applies and that none of the claims are time-barred.
Plaintiff argues that the claims in the FAC are based on the same general set
of facts as the original complaint and thus relate back to December 29, 2020,
which is within the statute of limitations for all five causes of action in the
FAC.
“An amended complaint is considered a new
action for purposes of the statute of limitations only if the claims do not
‘relate back’ to an earlier, timely-filed complaint. Under the relation-back
doctrine, an amendment relates back to the original complaint if the amendment:
(1) rests on the same general set of facts; (2) involves the same injury; and
(3) refers to the same instrumentality. An amended complaint relates back to an
earlier complaint if it is based on the same general set of facts, even if the plaintiff
alleges a different legal theory or new cause of action. However, the doctrine
will not apply if the plaintiff seeks by amendment to recover upon a set of
facts entirely unrelated to those pleaded in the original complaint.” (Pointe
San Diego Residential Cmty., L.P. v.
Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 276-277
(internal citations and quotations omitted).) “The criterion of relation back
is whether the original complaint gave the defendant enough notice of the nature
and scope of the plaintiff's claim that he shouldn't have been surprised by the
amplification of the allegations of the original complaint in the amended one.”
(Id. at 279.) Further, “in applying the relation-back analysis, courts
should consider the ‘strong policy in this state that cases should be decided
on their merits.’” (Id. at 277.)
Here, the Court finds that the
claims in the FAC relate back to the original complaint and thus that none of
the claims are time-barred. The original complaint and the FAC are predicated
on the same set of general facts and both seek damages for the same primary
alleged injury, which was harm to Planeless and its investors caused by Paul’s
December, 2017 broadcast of a suicide. The fact that the FAC alleges new causes
of action does not preclude application of the relation back doctrine, as those
new causes of action are based on the same set of general facts.
Accordingly, the demurrer based on
statute of limitations is overruled.
Finally,
Paul and Maverick contend that the entire FAC is fatally uncertain and full of
legal conclusions. Specifically, they contend that “the FAC continuously lumps
Ornstein and Planeless making it impossible to understand why Ornstein has
brought a derivative lawsuit on behalf of Planeless and what duties were owed
to Planeless.” (Demurrer, p. 11.)
The Court
rejects this argument. The FAC clearly defines the various parties contained in
the allegations and lays out their relationship to the nominal plaintiff,
Planeless. Planeless is a member-managed LLC formed in 2015 for the purpose
of developing the movie, “Airplane Mode.” (FAC, p. 2, lines 16-22.) Orenstein
is a member of Planeless and has functioned as its manager since June 1, 2017.
(Id. at p. 2, lines 23-25.) Ornstein is one of the Planeless’ Class B
members. He states that he is bringing the derivative lawsuit on behalf of
Planeless because the Class A members, including Defendants Paul and Maverick,
would not move forward with the claims.
Accordingly, the Court finds that the FAC is sufficiently certain
to survive demurrer.
Sufficiency
As a final matter, though the
notice of demurrer states that the demurrer is based in part on sufficiency,
nowhere in the memorandum of points and authorities do Paul and Maverick argue
or support this theory. Therefore, the demurrer based on sufficiency is
overruled.
Conclusion
In conclusion,
the Court overrules Paul and Maverick’s demurrer in its entirety.
MOTION TO STRIKE
“The court may, upon a motion made
pursuant to Section 435, or at any time in its discretion, and upon terms it
deems proper: (a) Strike out any irrelevant, false, or improper matter inserted
in any pleading. [or] (b) Strike out all or any part of any pleading not drawn
or filed in conformity with the laws of this state, a court rule, or an order
of the court.” (Code Civ. Proc., § 436.)
An “immaterial allegation” means “irrelevant matter” as that term is
used in Section 436. (Code Civ. Proc., § 431.10(c).) “An immaterial allegation in a pleading is
any of the following: (1) An allegation that is not essential to the statement of a claim or defense. (2)
An allegation that is neither pertinent
to nor supported by an otherwise
sufficient claim or defense. (3) A
demand for judgment requesting relief not supported by the allegations of the
complaint or cross-complaint.” (Code
Civ. Proc., § 431.10(b).)
Paul and Maverick move to strike 1) each of the five
causes of action in the FAC in their entirety, 2) the request for attorney’s
fees in the prayer for relief, and 3) numerous statements in the FAC.
The Causes
of Action
Paul and Maverick’s arguments in support of their request
to strike all five causes of action from the FAC were addressed above, as they
made identical arguments in support of their demurrer to the FAC. For those same reasons, the motion is DENIED
on these grounds.
The Prayer
for Relief
Paul and Maverick also move to
strike the attorney’s fees in the prayer for relief. Claims for attorney’s fees
must be either under contract or under a statute. (See Code Civ. Proc., § 1021.) Plaintiff acknowledges this but argues that
striking the claim for attorney’s fees would be premature. The Court disagrees with Plaintiff. Should Plaintiff later discover a basis for
attorney’s fees, Plaintiff can then file a motion for leave to amend the
complaint. Since the request for
attorney’s fees is not supported, the motion to strike that part of the prayer
for relief is GRANTED.
Various
Statements in the FAC
Paul and Maverick also request that
the Court strike various statements that were not contained in the original
complaint or that they deem false and misleading. However, Paul and Maverick do
no more than list the statements, without any legal support or explanation for
why these statements are false or misleading. Without any justification, this
unsupported request cannot be granted.
Conclusion
In conclusion, Paul and Maverick’s
motion to strike various statements from the FAC is DENIED. Their request to
strike all five causes of action from the FAC is DENIED. However, their request
to strike the request for attorney’s fees from the prayer for relief is
GRANTED.