Judge: Melvin D. Sandvig, Case: 22CHCV00105, Date: 2023-11-29 Tentative Ruling

Case Number: 22CHCV00105    Hearing Date: April 8, 2024    Dept: F47

Dept. F47

Date: 4/8/24

Case #22CHCV00105

 

DEMURRER & MOTION TO STRIKE TO THE FIRST AMENDED COMPLAINT

 

Demurrer & Motion to Strike filed on 1/31/24.

 

MOVING PARTY: Defendants David Rewers, Precise Die & Finishing, Inc. and Munna Monsour

RESPONDING PARTY: Plaintiff Douglas Rewers

NOTICE: ok

 

Demurrer is to the entire First Amended Complaint:

            1.  Breach of Contract

            2.  Interference With Contract

            3.  Breach of Fiduciary Duty

            4.  Fraud In the Inducement

            5.  Accounting

 

RELIEF REQUESTED IN MOTION  TO STRIKE: An order striking the entire First Amended Complaint and/or the allegations (¶23) and the prayer for punitive damages (Prayer ¶3).

 

RULING: The request to strike the entire First Amended Complaint is denied.  The demurrer is sustained with 30 days leave to amend.  The request to strike the allegations regarding and the prayer for punitive damages is moot due to the ruling on the demurrer. 

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

Plaintiff Douglas Rewers (Plaintiff) alleges that prior to 7/31/19, he, Defendant David Rewers (David) and non-party Tuan Nguyen were shareholders in Defendant Precise Die and Finishing, Inc. (PDF).  (First Amended Complaint (FAC) ¶4).  Plaintiff alleges that on 7/31/19, David, PDF  and Plaintiff entered a written contract whereby David and PDF agreed to purchase the ownership interest of Plaintiff in PDF for $140,000.  (Id. ¶5 and Ex.1 thereto).  Plaintiff alleges that while he has performed under the contract “defendants” breached the contract.  (FAC ¶¶6-7). 

 

Plaintiff also alleges that in 2018, Defendant Munna Munsoor/Monsour (Monsour) expressed an interest in buying into PDF.  (FAC ¶9).  Additionally, Plaintiff alleges that in 2018 there were ongoing negotiations to purchase into a business known as Bullseye.  (FAC ¶10).  Based on these dealings, Plaintiff makes a claim against David, Monsour and PDF for interference with contract.  (FAC ¶¶9-15).

 

On 2/16/22, Plaintiff filed this action for: (1) Breach of Contract, (2) Fraud in the Inducement, (3) Breach of Fiduciary Duty and (4) Accounting.  On 11/29/23, this Court sustained Monsour’s demurrer to the complaint with 30 days leave to amend.  On 1/2/24, Plaintiff’s First Amended Complaint was filed alleging causes of action for: (1) Breach of Contract (against David and PDF), (2) Interference With Contract (against Monsour, David, PDF and Doe defendants), (3) Breach of Fiduciary Duty (against David, Monsour, PDF and Doe defendants), (4) Fraud In the Inducement/Fraud and Misrepresentation (against David, Monsour, PDF and Doe defendants) and (5) Accounting (against David, Monsour, PDF and Doe defendants). 

 

After meet and confer efforts failed to resolve the issues David, PDF and Monsour (collectively, Defendants) had with the First Amended Complaint, on 1/31/23, Defendants filed and served by U.S. Mail the instant demurrer to the entire First Amended Complaint and motion to strike the entire complaint and/or the allegations regarding and the prayer for punitive damages.  On 3/26/24, Plaintiff filed an opposition to the demurrer.  While the proof of service attached to the opposition indicates that it was served by U.S. Mail and email on 3/26/24, a corrected proof of service filed on 4/3/24 indicates that email service did not take place until 3/28/24.

 

On 3/29/24, Defendants filed and served a reply to the opposition to the demurrer and a notice of no opposition to motion to strike.  On 4/3/24, Plaintiff’s counsel filed a notice indicating that the motion to strike was never received which also included opposition arguments to the motion to strike. 

 

ANALYSIS

 

Plaintiff’s Request for Judicial Notice is granted.

 

Procedural Defects   

 

(1) As noted above, on 11/29/23, this Court sustained Monsour’s demurrer to the original complaint with 30 days leave to amend which made the amended pleading due on or before 12/29/23 (excluding the first day, 11/29/23, and including the last, 12/29/23, 30 days from 11/29/23 is 12/29/23).  (See 11/29/23 Minute Order); CRC 1.10(a).  Plaintiff did not submit the First Amended Complaint for filing until Saturday, 12/30/23.  (See Plaintiff’s Request for Judicial Notice). 

 

The Court finds that the late filing of the First Amended Complaint did not prejudice Defendants.  Therefore, Defendants’ request to strike the First Amended Complaint because it was filed beyond the deadline set forth in the Court’s 11/29/23 Minute Order is denied. 

 

(2) The opposition was not timely filed or served.  Due to the 4/1/24 court holiday, the opposition was required to have been served on or before 3/25/24, 9 court days before the 4/8/24 hearing date.  CCP 1005(b).  The opposition was not filed until 3/26/24 and not electronically served until 3/28/24, according to the corrected proof of service.  Despite the late filing and service of the opposition(s), they were considered by the Court in ruling on the demurrer and motion to strike.  See CRC 3.1300(d)

 

(3) Defendants refer to a Request for Judicial Notice purportedly filed with the Demurrer; however, no Request for Judicial Notice filed by Defendants appears in eCourt.  (See Demurrer, p.11:10-13; Reply, p.4:27-p.5:2).

 

(4) The Court notes that both Plaintiff and Defendants failed to electronically bookmark the exhibits attached to their papers as required.  CRC 3.1110(a)(4).

 

Both Plaintiff and Defendants are warned to comply with all court orders, statutory requirements and court rules in the future or risk their papers not being considered, matters being continued for compliance and/or the imposition of sanctions.

 

Substantive Arguments

 

A demurrer may be based on the grounds, among others, that a complaint fails to allege sufficient facts to state a cause of action and/or the complaint is uncertain.  CCP 430.10(e), (f).

 

Alter Ego

 

Plaintiff has failed to include facts to support the conclusory alter ego allegations in the First Amended Complaint.  (See FAC ¶3).  Allegations of ownership and control are insufficient to support a finding of alter ego liability.  See Sonora Diamond Corp. (2000) 83 CA4th 523, 539; Dos Pueblos Ranch and Improvement Co. (1937) 8 C2d 617, 621.

 

1st cause of action – Breach of Contract

 

The First Amended Complaint contains allegations that are inconsistent with/contrary to the allegations made in the original Complaint regarding the ownership of PDF.  In the original complaint, Plaintiff alleged that prior to 7/31/19, he, David and Monsour were partners in PDF.  (See Complaint ¶4).  Without explanation, in the First Amended Complaint, Plaintiff alleges that prior to 7/31/19, Plaintiff, David and Tuan Nguyen were shareholders in PDF.  (FAC ¶4).  Nguyen is not mentioned in the contract which forms the basis of the breach of contract cause of action.  The foregoing, renders the claim uncertain and subject to demurrer.  CCP 430.10(f).  Plaintiff has incorporated these uncertain allegations into the remaining causes of action which also makes them uncertain.  (FAC ¶¶9, 16, 24, 37). 

 

2nd cause of action – Interference With Contract   

 

The elements of an interference with contract cause of action are: (1) a valid contract between plaintiff and a third party, (2) defendant’s knowledge of the contract, (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship, (4) actual breach or disruption of the contractual relationship and (5) resulting damage.  Pacific Gas & Electric Co. (1990) 50 C3d 1118, 1126; CACI 2201.

 

The First Amended Complaint fails to clearly identify the contract or contracts allegedly interfered with by Defendants.  Plaintiff alleges that Monsour “expressed an interest in buying into” PDF, that there were “on going negotiations to purchase a business known as Bullseye,” and that there were discussions and meetings regarding the foregoing.  (See FAC ¶¶10-15).  The opposition further confuses matters by seemingly claiming that there was interference with three different contracts (a contract between Plaintiff and Bullseye; a “contract for commissions referred to Precise Die & Finishing,” and Plaintiff’s ownership interest in PDF).  Based on the opposition, it also appears that Plaintiff is claiming that different defendants are allegedly liable for interfering with different contracts, none of which Plaintiff has clearly identified (i.e., it is not clear who is a party to what contract, under which contract Monsour became a shareholder of PDF, if there was ever an executed contract by which Plaintiff gained an interest in Bullseye).

 

Due to the failure to clearly identify a valid contract(s) between Plaintiff and a third party which was interfered with, Plaintiff has failed to allege sufficient facts to state a claim for interference with contract.  CCP 430.10(e).  Similarly, such failure renders the claim uncertain.  CCP 430.10(f).  Plaintiff has incorporated these uncertain allegations into the remaining causes of action which also makes them subject to demurrer for uncertainty.  (FAC ¶¶16, 24, 37).   

 

3rd cause of action – Breach of Fiduciary Duty

 

The elements of a breach of fiduciary duty cause of action are: (1) the existence of a fiduciary relationship, (2) breach of fiduciary duty, and (3) damages.  Shopoff & Cavallo LLP (2008) 167 CA4th 1489, 1509; Oasis West Realty, LLC (2011) 51 C4th 811, 820-821; Knutson (2018) 25 CA5th 1075, 1094.

 

In the original complaint, Plaintiff alleged that he entered business ventures with defendants and that a partnership existed between plaintiff and defendants.  (Complaint ¶23).  In the First Amended Complaint, Plaintiff alleges that he, David and Monsour were all owners of shares in PDF and directors and officers of the corporation and that the individual defendants entered into business ventures and were in a partnership with Plaintiff.  (FAC ¶¶17, 20).  Plaintiff also alleges David had an ownership interest in Bullseye and owned certain other commissions.  (FAC ¶18).  Based on the foregoing, like the contractual relationship(s) between the parties, the basis of the purported fiduciary relationship between Plaintiff and Defendants which was allegedly breached is not clear.  As such, the 3rd cause of action fails to allege sufficient facts to constitute a cause of action and is uncertain.  CCP 430.10(e), (f).     

 

4th cause of action – Fraud In the Inducement/Fraud and Misrepresentation

 

The elements of a fraud cause of action are: (1) misrepresentation (false representation, concealment, or nondisclosure), (2) knowledge of falsity, (3) intent to defraud, (4) justifiable reliance and (5) resulting damage.  Lazar (1996) 12 C4th 631, 638.  A fraud claim must be pled with factual specificity.  Wilhelm (1986) 186 CA3d 1324, 1331.

 

Plaintiff has alleged that “[f]rom October of 2018 through September of 2019 Defendant, David Rewers represented on numerous occasions that he would be fair in the distribution of income from the above independent customers and would distribute commissions to Douglas Rewers after he completed an accounting of the income from the above-identified businesses.”  (FAC ¶27).  Plaintiff goes on to allege that “[r]ather than accounting for the funds they have distributed the funds to themselves and failed to account for the funds received.”  Id.  Plaintiff seems to allege that only David made misrepresentations and Monsour is purportedly liable for concealing the amounts received and/or by association.  (FAC ¶¶27-30).  However, Plaintiff also at times claims that “Defendants” made the representations.  (FAC ¶28).  Plaintiff then seems to allege that David was acting on behalf PDF when making the representations.  (FAC ¶33).  It also appears that this cause of action may also be attempting to allege that Plaintiff was fraudulently induced into entering the contract which is the subject of the 1st cause of action for breach of contract.  (FAC ¶35).     

 

Plaintiff has failed to clearly allege the basis/bases for the fraud claim against each of the Defendants.  Additionally, Plaintiff has failed to plead the claim with the required factual specificity.  As such, the cause of action is subject to demurrer.  CCP 430.10(e), (f). 

 

5th cause of action - Accounting

 

The elements of an accounting cause of action are: (1) a relationship between plaintiff and defendant that requires an accounting and (2) that some balance is due the plaintiff that can only be ascertained by an accounting.  Teselle (2009) 173 CA4th 156, 179.

 

The relationship which forms the basis for the accounting claim is unclear.  Plaintiff refers to an agreement regarding commissions and joint venture agreements without setting forth sufficient information in the First Amended Complaint regarding such agreements.  As such, Plaintiff has failed to allege sufficient facts to state a cause of action for accounting and the claim is uncertain.  CCP 430.10(e), (f).

 

CONCLUSION

 

The request to strike the entire First Amended Complaint because it was untimely filed is denied.

 

The demurrer is sustained.  Due to the liberal policy of allowing leave to amend and because this is only the First Amended Complaint, Plaintiff is given another  opportunity to try to cure the defects in his pleading.  The request to strike the allegations regarding and the claim for punitive damage is moot due to the ruling on the demurrer.

 

A Second Amended Complaint is due to be filed and served within 30 days.