Judge: Mark C. Kim, Case: 22STCV07659, Date: 2022-09-20 Tentative Ruling
Case Number: 22STCV07659 Hearing Date: September 20, 2022 Dept: S27
1. Background
Facts
Plaintiffs, Kimberle Marie, Inc.,
Tomtech Enterprises, Inc., Vale Motors, Inc., MK Motors, Inc., Rodrigo Rodriguez,
Binky Trucking, Vidana Express, LLC, Ruben Sandoval, Andres Valderrama Cortes,
Marisol Brooks, Berenice M. Ibarra Bahena, Aligda Cortez, Luis Zarate, and
Denmark Associates, Inc. filed this action against Defendants, Sayda M. Ayala
Pinto, Meydi C. Ayala, Jaspreet Sohi, Prudencio Munoz Rivera, Tyrock Butler,
Eliza B. Cruz Herrera, Bonita Express, Inc., Fortia Enterprises, Inc., Meraki
C.J. Group, LLC, Empire JS Logistics, LLC, Elosa Logistics Corp., JT Truck
& Equipment Sales, Inc., Unstoppable Empire, Inc., Roadrunner Truck Sales,
Inc., H.E.R. Trucking, Inc., Huntington National Bank, U.S. Bank National Association,
Banner Bank, Continental Bank, Paccar Financial Corp., Steve Gordon, and the State
of California Department of Motor Vehicles.
Plaintiffs filed their original complaint
on 3/02/22, and their operative First Amended Complaint on 5/23/22. The FAC includes causes of action for:
·
RICO Violations – Racketeering Activity and
Conspiracy
·
Vehicle Code Violations
·
Intentional Misrepresentation
·
Negligent Misrepresentation
·
Concealment
·
Breach of Written & Oral Contract
·
Breach of Implied Duty to Perform with
Reasonable Care
·
Breach of Fiduciary Duty
·
Violation of BPC §17200
·
Accounting
·
Equitable Indemnity
·
Unilateral Rescission
·
Implied Warranties of Merchantability and
Fitness for Particular Purposes
·
Financial Elder Abuse
·
Theft
·
Identity Theft
·
Common Counts
·
Civil Conspiracy
·
Negligence
·
Declaratory/Injunctive Relief
2. Demurrers
A demurrer is a pleading used to test
the legal sufficiency of other pleadings. It raises issues of law, not fact,
regarding the form or content of the opposing party’s pleading. It is not the function of the demurrer to
challenge the truthfulness of the complaint; and for purpose of the ruling on
the demurrer, all facts pleaded in the complaint are assumed to be true, however
improbable they may be.
A demurrer can be used only to
challenge defects that appear on the face of the pleading under attack; or from
matters outside the pleading that are judicially noticeable. Blank v. Kirwan 39
Cal.3d 311 (1985). No other extrinsic evidence can be considered (i.e., no
“speaking demurrers”). A demurrer is brought under CCP § 430.10 [grounds], §
430.30 [as to any matter on its face or from which judicial notice may be
taken], and § 430.50(a) [can be taken to the entire complaint or any cause of
action within]. Specifically, a demurrer
may be brought per CCP § 430.10(e) if insufficient facts are stated to support the
cause of action asserted. Per CCP
§430.10(a) a demurrer may be brought where the court has no jurisdiction of the
subject of the cause of action alleged in the pleading. Furthermore, demurrer for uncertainty will be
sustained only where the complaint is so bad that the defendant cannot reasonably
respond. CCP § 430.10(f).
However, in construing the
allegations, the court is to give effect to specific factual allegations that
may modify or limit inconsistent general or conclusory allegations. Financial
Corporation of America v. Wilburn, 189 Cal.App.3rd 764, 769 (1987). And, if the
facts pled in the complaint are inconsistent with facts which are incorporated
by reference from exhibits attached to the complaint, the facts in the
incorporated exhibits control. Further, irrespective of the name or label given
to a cause of action by the plaintiff, a general demurrer must be overruled if
the facts as pled in the body of the complaint state some valid claim for relief.
Special demurrers are not allowed in limited jurisdiction courts. (CCP § 92(c).)
Leave to amend must be allowed
where there is a reasonable possibility of successful amendment. Goodman v.
Kennedy, 18 Cal.3d 335, 348 (1976). The burden is on the complainant to show
the Court that a pleading can be amended successfully. (Id.)
Finally, CCP section 430.41
requires that “[b]efore filing a demurrer pursuant to this chapter, the
demurring party shall meet and confer in person or by telephone with the party
who filed the pleading that is subject to demurrer for the purpose of determining
whether an agreement can be reached that would resolve the objections to be
raised in the demurrer.” (CCP §430.41(a).) The parties are to meet and confer
at least five days before the date the responsive pleading is due. (CCP §430.41(a)(2).)
Thereafter, the demurring party shall file and serve a declaration detailing
their meet and confer efforts. (CCP §430.41(a)(3).)
There are two demurrers on calendar
today. The first is brought by
Defendants, Prudencio Munoz Rivera and JT Truck Equipment & Sales,
Inc. The second is brought by
Defendants, Sayda M. Ayala, Meydi C. Ayala, and Eliza B. Cruz Herrera.
Defense Counsel for Rivera and JT
Truck filed a meet and confer declaration with their demurrer to the FAC. Defense Counsel for Ayala, Ayala, and Herrera
did not file a meet and confer declaration.
Plaintiffs, in their opposition to the demurrers, contend issues could
have been resolved through proper meet and confer.
For reasons that will be discussed
below, the Court is sustaining the demurrers with leave to amend. If there is a pleading challenge to the
Second Amended Complaint, Counsel MUST meet and confer prior to scheduling and
filing the pleading change. The Court
will not consider a future pleading challenge without proper meet and confer
efforts.
Opposition to the demurrers was due
on or before 9/07/22. Plaintiffs filed
their opposition untimely on 9/12/22.
Plaintiffs joined their opposition to both demurrers in one document,
despite the fact that the pleading challenges were not the same or even
particularly similar. Plaintiffs, in
their opposition, concede the opposition is due but state that Counsel was in
trial leading up to the due date and was unable to timely complete the
opposition. Plaintiffs state that
Defendants “agreed” not to file a notice of non-opposition.
Regardless of any notice of
non-opposition, the opposition was late, which rendered review of the opposition
difficult for the Court, and has led to the lack of timely reply papers. In the future, Plaintiffs must either
stipulate to a continuance of the hearing on any matter (with the agreement of
the other parties, if that agreement is available), or must timely file their
opposition papers.
Plaintiffs’ FAC is extremely
confusing and difficult to analyze on demurrer.
Plaintiffs’ FAC includes 52 pages and 359 paragraphs of
allegations. It then lists causes of
action by letter against specified defendants.
It does not, however, include any allegations in connection with the
subject causes of action, merely incorporating by reference the allegations
detailed in the first 52 pages.
CRC 2.112 requires each cause of
action to state its number, its nature, the party asserting it if more than one
party is represented on the pleading, and the party to whom it is
directed. Plaintiffs must file an
amended complaint that does so.
Plaintiffs may incorporate background facts by reference, but must state
which specific facts from the background facts section constitute the cause of
action being pled. The Court cannot meaningfully
review a pleading challenge by going through 52 pages of facts to determine whether
and which facts constitute the 20 causes of action purportedly alleged.
The Court will not rule on each and
every argument made in the parties’ demurrers at this time. Again, doing so is too confusing in light of
the style of pleading chosen by Plaintiffs.
The Court will, however, go through some of the parties’ arguments in an
attempt to streamline the parties’ meet and confer efforts going forward in
this case.
i.
Alter Ego and Agency
A major disagreement between the
parties is the pleading standard for alter ego and agency allegations. This agreement exists because the vast
majority of the conduct complained of was Sayda Ayala’s conduct, and the other
defendants are being charged with liability as a result of their relationships
with Ayala. At ¶¶51-59, Plaintiffs set
forth general alter ego and agency allegations.
Defendants, in their demurrers, contend the allegations are insufficient
because they do not contain specific factual allegations establishing the
relationships pled. Defendants, however,
cite to decisions made on summary judgment or at trial; indeed, Rivera/JT’s
brief in this regard opens by arguing, “the burden of proving agency is on the
party asserting its existence.” At the
pleading stage, there is no burden of proving anything; mere allegations are sufficient. Pursuant to Estes v. Eaton Corp. (2020) 51
Cal.App.5th 636, 643 and Foster v. Sexton (2021) 61 Cal.App.5th
998, 1027, a plaintiff need only plead “ultimate facts,” not specific
evidentiary facts. Unless Defendants, in
opposition to a further amended complaint, can cite to authority for the
position that something more must be PLED (as opposed to proven at trial) in
the context of alter ego and/or agency allegations, any future demurrer on this
ground will be overruled.
ii.
Breach of Fiduciary Duty
Rivera and JT argue Plaintiffs have
not pled the existence of a fiduciary duty running between Plaintiffs and
them. Plaintiffs do not address this argument
in their opposition papers. Unless Plaintiffs
can allege facts showing this duty existed, they must not reassert this cause
of action against Rivera and JT in their amended complaint.
iii.
Vehicle Code Violations and Theft
Rivera and JT correctly note that Plaintiffs
have not actually identified any vehicle code sections that were violated in
their FAC. If Plaintiffs re-assert these
claims in their SAC, they must identify which vehicle code sections are at issue. Rivera and JT also argue theft is not pled because
Plaintiffs have not pled facts showing these defendants stole their property. If this cause of action is reasserted against
Rivera and JT in the SAC, the parties must be prepared to brief whether the
cause of action can be asserted on an agency or alter ego theory (unless
specific facts showing Rivera/JT engaged personally in the theft are pled).
iv.
Breach of Implied Duty to Perform with
Reasonable Care
The Court agrees with JT/Rivera’s
position that this is not a recognized cause of action under CA law. If Plaintiffs continue to plead this cause of
action, they must be prepared to brief its existence in connection with opposition
to any future pleading challenge.
v.
Remaining Arguments
The remaining arguments by JT/Rivera
all appear to rise and fall based on whether the agency and alter ego
allegations are properly pled. Again, if
there is a future pleading challenge, the parties must discuss cases that were
decided at the pleading, as opposed to fact-finding, stage.
vi.
Breach of Oral and Written Contract
The Ayala Defendants correctly note
that breach of oral contract and breach of written contract are two separate causes
of action, and are improperly being conflated into one cause of action
here. They also correctly note that a
copy of any written contract is not attached to the FAC, nor are its terms pled
in haec verba. Plaintiffs did not
address these problems in their opposition, and must cure them by way of an SAC.
vii.
Indemnification
The Ayala Defendants correctly note
that the indemnification claim is confusing.
Who is expected to indemnify whom and for what? This must be clarified.
viii.
Rescission
The Ayala Defendants correctly note
that the rescission claim is also confusing.
What contract is at issue? What
should be rescinded? Is there a contract
running between Plaintiffs and the Ayala Defendants that can be rescinded?
ix.
Warranties
The Ayala Defendants correctly note
that Plaintiffs have mixed together claims for breach of implied warranty of merchantability
and breach of implied warranty of fitness for a particular purpose into one
cause of action, even though they are separate causes of action under CA
law. If Plaintiffs continue to assert
these claims, they must be prepared to specifically address the adequacy of
their pleading in opposition to any future pleading challenge, which they have
failed to do here.
x.
Identity Theft
The Ayala Defendants argue
Plaintiffs cannot pursue a claim for identity theft absent a police
report. Plaintiffs, in a footnote in
their opposition, concede a police report is necessary if seeking to recover
actual damages and attorneys’ fees.
Plaintiffs fail to explain what they are seeking to recover if they are
not seeking to recover such damages. The
Court located the prayer in connection with this cause of action, and it seeks
both “special/economic damages” and also “attorney’s fees.” Plaintiffs must adequately brief this issue
if they oppose a future pleading challenge to this claim.
xi.
Declaratory Relief
The Ayala Defendants correctly note
that the FAC appears to be entirely focused on damages due to past breaches,
not on any prospective need for a declaration.
Plaintiffs must clarify the nature of this claim if they continue to assert
it in their SAC, and must be prepared to defend it in connection with any
future pleading challenge.
xii.
Vale Motors, Inc.
The Ayala Defendants contend all
claims by Vale Motors are subject to demurrer because they are duplicative of
claims already being asserted in 20LBCV00117.
Plaintiffs do not address this issue in opposition to the demurrer, other
than to mention that Vale Motors’ claims in 20LBCV00117 are set for trial in
January of 2023. If Vale Motors wishes
to continue to assert claims in this action, it must be prepared to address, in
opposition to a future pleading challenge, why those claims are not barred in light
of the ongoing proceedings in 20LBCV00117.
Both sets of defendants’ demurrers
are sustained with leave to amend. Again,
the Court has not considered all arguments made by all parties, as the nature of
Plaintiffs’ pleading rendered it impossible to do so. The Court is aware that it has not expressly
addressed the RICO and/or fraud causes of action. Plaintiffs must plead these causes of action in
their SAC in a way that makes it clear which allegations relate to which claims,
so the Court can meaningfully address the elements of the causes of action pled
if the pleading is challenged.
Again, the Court reiterates its requirement
that the parties meet and confer in good faith before any future pleading
challenge is filed. The Court strongly encourages
Counsel to engage in this process BEFORE Plaintiffs file the SAC. Plaintiffs should provide Defendants with a
copy of the proposed SAC for review before it is filed, so the parties can
discuss potential pleading errors without the need for a future demurrer.
Because this pleading is extremely
complicated, because a major revision will be necessary for the SAC, and
because the Court wants Counsel to work together prior to the filing of the
SAC, the Court gives Plaintiffs sixty days to draft and file the SAC. Plaintiffs are encouraged to commence this
process forthwith and to not wait until the penultimate moment to meet and confer
and to draft the SAC.
3. CMC