Judge: Melvin D. Sandvig, Case: 23CHCV00288, Date: 2025-02-06 Tentative Ruling

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Case Number: 23CHCV00288    Hearing Date: February 6, 2025    Dept: F47

Dept. F47

Date: 2/6/25                                                         TRIAL DATE: 5/12/25

Case #23CHCV00288

 

DEMURRER & MOTION TO STRIKE TO THE THIRD AMENDED COMPLAINT

 

Demurrer & Motion to Strike filed on 11/12/24.

 

MOVING PARTY: Defendants Tamar House; Ryan House; Southern California Property Management Company, Inc.; Team House Real Estate, Inc. and Cornerstone Realty Advisors, Inc.

RESPONDING PARTY: Plaintiffs Steffanie Stelnick; Todd Stelnick and Southern California Real Estate Management, Inc.

NOTICE: ok

 

Demurrer is to the 2nd, 3rd, 4th, 5th, 6th and 7th causes of action in the Third Amended Complaint:

            1.  Breach of Contract

            2.  Intentional Misrepresentation

            3.  Negligent Misrepresentation

            4.  Misappropriation of Trade Secrets

            5.  Intentional Interference With Contractual Relationship

            6.  Intentional Interference With Prospective Advantage

            7.  Negligent Interference With Prospective Advantage

 

RELIEF REQUESTED IN MOTION TO STRIKE: An order striking the following portions from the Third Amended Complaint:

1. Paragraphs 105 through 108, as well as paragraphs 119 through 128, which mischaracterize Lease Listing Agreements as “Property Management Agreements” or “PMAs.”

2. Paragraph 79, containing boilerplate allegations of “misrepresentations . . . made intentionally, willfully, and/or with reckless disregard”; “despicable conduct”; and “malicious, oppressive, and/or fraudulent” conduct to support a request for punitive damages.

3. Paragraphs 97 and 98 in the Fourth Cause of Action for Misappropriation of Trade Secrets, asserting allegations of willful and malicious misappropriation based solely on Plaintiffs’ “inform[ation] and belie[f]” and seeking “exemplary damages under Civil Code section 3426.3, subd. (c).”

4. Paragraph 5, page 22, line 14, in the Prayer, the entire paragraph that states: “For exemplary damages as the court may determine, if provided by law.”

5. Paragraph 6, page 22, line 15, in the Prayer, the entire paragraph that states: “For punitive damages as allowed by law.”

6. Paragraphs 10 through 13, regarding improper boilerplate allegations of alter egos.

 

RULING: The demurrer is sustained and the motion to strike is granted both with 5 days leave to amend. 

 

 

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of Plaintiffs Steffanie Stelnick, Todd Stelnick, and Southern California Real Estate Management, Inc.’s (SCREM) (collectively, Plaintiffs) claim that Defendants Ryan House and Tamar House (collectively, the Houses) have breached a Settlement Agreement that ended a prior lawsuit.  Plaintiffs contend that the Houses have repeatedly breached the Settlement Agreement by engaging in competing activity in violation of a non-compete clauses in the Settlement Agreement.  The Settlement Agreement provides that the Houses will owe liquidated damages of $54,000 per violation.  

 

On 2/1/23, Plaintiffs filed this action against the Houses and Southern California Property Management Company, Inc. (SCPMC) for: (1) Breach of Contract and (2) Trademark Infringement (15 U.S.C. 1114(1)).  On 2/9/23, pursuant to CCP 472(a), Plaintiff filed their First Amended Complaint alleging the same two causes of action and adding Team House Real Estate, Inc. and Cornerstone Realty Advisors, Inc. as defendants.  On 3/24/23, pursuant to a stipulation and order, Plaintiffs filed their Second Amended Complaint alleging the same two causes of action and adding/amending the named defendants. 

 

On 8/2/24, Plaintiffs substituted in their current counsel, Richard Marcus.  After Defendants refused to consent to Plaintiffs filing a Third Amended Complaint, on 8/8/24, Plaintiffs filed and served a motion seeking an order granting them leave to file a Third Amended Complaint which eliminated the cause of action for Trademark Infringement and added six new causes of action for: (1) Intentional Misrepresentation (2nd cause of action), (2) Negligent Misrepresentation (3rd cause of action), (3) Misappropriation of Trade Secrets (4th cause of action), (4) Intentional Interference With Contractual Relations (5th cause of action), (5) Intentional Interference With Prospective Advantage (6th cause of action) and (6) Negligent Interference With Prospective Advantage (7th cause of action).  On 9/4/24, the Court granted the opposed motion for leave to amend. 

 

After meet and confer efforts (which both parties claim were insufficient on the other’s part) failed to resolve the issues Defendants have with the Third Amended Complaint, on 11/12/24, pursuant to extensions of time to file a responsive pleading, Defendants filed and served the instant demurrer to the 2nd – 7th causes of action in the Third Amended Complaint and motion to strike which seeks to strike the following portions of the Third Amended Complaint: (1) Paragraphs 105 through 108, as well as paragraphs 119 through 128, which mischaracterize Lease Listing Agreements as “Property Management Agreements” or “PMAs;” (2) Paragraph 79, containing boilerplate allegations of “misrepresentations . . . made intentionally, willfully, and/or with reckless disregard”; “despicable conduct”; and “malicious, oppressive, and/or fraudulent” conduct to support a request for punitive damages; (3) Paragraphs 97 and 98 in the Fourth Cause of Action for Misappropriation of Trade Secrets, asserting allegations of willful and malicious misappropriation based solely on Plaintiffs’ “inform[ation] and belie[f]” and seeking “exemplary damages under Civil Code section 3426.3, subd. (c);” (4) Paragraph 5, page 22, line 14, in the Prayer, the entire paragraph that states: “For exemplary damages as the court may determine, if provided by law;” (5) Paragraph 6, page 22, line 15, in the Prayer, the entire paragraph that states: “For punitive damages as allowed by law;” and (6) Paragraphs 10 through 13, regarding improper boilerplate allegations of alter egos.

On 1/24/25, Plaintiffs filed and served an opposition to the demurrer.  On 1/28/25, Defendants filed a Notice of Non-Opposition to the motion to strike.  On 1/28/25, Plaintiffs’ counsel filed and served a declaration in response to the notice of non-opposition.  On 1/30/25, Defendants filed and served a reply in support of the demurrer to the Third Amended Complaint.   

 

ANALYSIS

 

In opposition to the demurrer, Plaintiffs contend that the demurrer should be “denied as moot” because they offered to file a Fourth Amended Complaint during the meet and confer process and have submitted a copy of the proposed Fourth Amended Complaint with the opposition.  (See Opposition Memorandum of Points & Authorities, p.1:2-5); (Marcus Decl. ¶3, Ex.A).  In their counsel’s declaration filed on 1/28/25, Plaintiffs’ attorney explains that he intended the opposition to the demurrer to also apply to the motion to strike (i.e., the offer to file a Fourth Amended Complaint rendered the motion to strike moot).

 

The Court finds Plaintiffs’ counsel understanding of their meet and confer obligations and ability to amend their complaint under CCP 430.41 to be incorrect.    

 

CCP 430.41(a)(1) provides:

 

“(a) Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person, by telephone, or by video conference 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. If an amended complaint, cross-complaint, or answer is filed, the responding party shall meet and confer again with the party who filed the amended pleading before filing a demurrer to the amended pleading.

(1) As part of the meet and confer process, the demurring party shall identify all of the specific causes of action that it believes are subject to demurrer and identify with legal support the basis of the deficiencies. The party who filed the complaint, cross-complaint, or answer shall provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency.”

 

Nothing in CCP 430.41(a)(1) allows Plaintiffs to file a Fourth Amended Complaint as a matter of right merely because they claim that the pleading cures all of the defects noted by Defendants in the Third Amended Complaint.  CCP 472(a) provides:

 

“A party may amend its pleading once without leave of the court at any time before the answer, demurrer, or motion to strike is filed, or after a demurrer or motion to strike is filed but before the demurrer or motion to strike is heard if the amended pleading is filed and served no later than the date for filing an opposition to the demurrer or motion to strike. A party may amend the pleading after the date for filing an opposition to the demurrer or motion to strike, upon stipulation by the parties. The time for responding to an amended pleading shall be computed from the date of service of the amended pleading.”

 

As noted above, Plaintiffs already exercised their right to amend their complaint once without leave of court when they filed their First Amended Complaint.  Further, Defendants answered the Second Amended Complaint on 4/20/23.  As such, in order to file a Fourth Amended Complaint, Plaintiff had to obtain a stipulation from Defendants and/or an order from the Court. 

 

The Court finds that Plaintiffs’ proposal to file a Fourth Amended Complaint in the face of Defendants’ demurrer and motion to strike as to the Third Amended Complaint essentially concedes that the demurrer and motion to strike have merit.  While Plaintiffs have already had four opportunities to plead their claims against Defendants (the original, first amended, second amended and third amended complaints), since this is the first time the pleading is before the Court on demurrer and/or motion to strike and considering the liberal policy of allowing leave to amend, the Court finds that it is in the interests of justice to allow Plaintiffs one more opportunity to amend their pleading against Defendants. 

 

CONCLUSION

 

The demurrer is sustained and the motion to strike is granted, both with 5 days leave to amend.  Since Plaintiffs already have a proposed Fourth Amended Complaint prepared, the Court finds that 5 days leave to amend is sufficient to make any final adjustments and file the amended pleading