Judge: Michael E. Whitaker, Case: 24SMCV00948, Date: 2024-06-12 Tentative Ruling

Case Number: 24SMCV00948    Hearing Date: June 12, 2024    Dept: 207

TENTATIVE RULING

MOTIONS

This case arises from a dispute over medical billing services Defendants allegedly provided to Plaintiffs. 

On February 29, 2024, Plaintiffs Innovative Medical Solutions, Inc. (“Innovative”); Emerald Greens Hospice, Inc. d/b/a Butterfly Hospice; Century City Endoscopy, LLC; and Vital Solutions Medical Group (collectively, “Plaintiffs”) filed suit against Defendants Nexus Healthcare Solutions, Inc. (“Nexus”); ALN Medical Management, LLC (“ALN”); and Health Prime International, LLC (“Health Prime”) (together, “Defendants”) alleging seven causes of action for (1) breach of contract; (2) breach of implied contract; (3) violation of Business & Professions Code sections 17200 and 17500; (4) Unjust Enrichment; (5) Declaratory Relief; (6) Fraud; and (7) Negligent Misrepresentation.

Defendants now demur to all seven causes of action on the grounds that they fail to state facts sufficient to constitute a cause of action and are uncertain pursuant to Code of Civil Procedure section 430.10, subdivisions (e) and (f), respectively.  Defendants also move to strike the requests for punitive damages and attorneys’ fees from the Complaint.

Plaintiffs oppose both motions and Defendants reply.

ANALYSIS

1.     DEMURRER

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.”  (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law.  [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.”  (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.”  (See Code Civ. Proc., § 452.)  “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.”  (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)  

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that 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, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.”  (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

A.    UNCERTAINTY

A demurrer for uncertainty will be sustained only where the pleading is so bad that the responding party cannot reasonably respond - i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what claims are directed against him or her.  (Khoury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)  Where a demurrer is made upon the ground of uncertainty, the demurrer must distinctly specify exactly how or why the pleading is uncertain, and where such uncertainty appears by reference to page and line numbers.  (See Fenton v. Groveland Comm. Services Dist. (1982) 135 Cal.App.3d 797, 809.) 

Defendants argue the Complaint is uncertain because it lumps together three separate defendants, each of whom provided medical billing services to Plaintiffs during different timeframes – Nexus from 2018 to 2020; ALN from 2020 to 2023; and Health Prime from 2023.  First, this is a slight misstatement, as ALN is alleged to have acquired Nexus in 2020, and Health Prime is alleged to have acquired ALN in 2023.  Thus, the allegations are not that the three separate entities serviced Plaintiffs’ accounts during discrete timeframes, but rather the Complaint alleges that in 2020 ALN became involved by virtue of its acquisition of Nexus, and in 2023, Health Prime additionally became involved when it acquired ALN. 

Second, while the Court agrees that the Complaint alleges all causes of action against all Defendants, despite that each Defendant became involved at different intervals, Defendants do not demonstrate that any portions of the Complaint are so bad that they cannot reasonably determine what issues must be admitted or denied, or what claims are directed against them. 

The Court thus declines to sustain Defendants’ demurrer based on uncertainty. 

B.    FAILURE TO STATE A CAUSE OF ACTION

                                                       i.          Statute of Limitations

Defendants argue Plaintiffs’ Second, Fourth, Sixth, and Seventh causes of action against Nexus are barred by the applicable statutes of limitation.  The statute of limitations for breach of a contract not founded upon an instrument of writing is two years.  (Code Civ. Proc., § 339.)  Quasi-contractual actions to recover money obtained by fraud or mistake, are governed by the 3-year statute of limitations for fraud.  (First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1670.)

Because ALN acquired Nexus in 2020, Defendants argue that the medical billing services were no longer being provided by Nexus after 2020.  Yet Plaintiffs did not file suit until February 29, 2024.  Therefore, Defendants argue that the claims alleged against ALN are barred by the statute of limitations.

The Court disagrees that ALN’s acquisition of Nexus in 2020 necessarily means that Nexus ceased to be the entity servicing Plaintiff’s accounts.  There is no allegation that Nexus dissolved or otherwise stopped servicing Plaintiffs’ account after ALN acquired it.  In fact, the Complaint alleges that “a legacy Nexus employee” continued servicing Plaintiffs’ account “for several months after the acquisition.”  (Compl. ¶ 37.) 

Thus, the Court cannot say, based on the four corners of the Complaint, that these causes of action against Nexus are necessarily time barred.

                                                     ii.          First Cause of Action – Breach of Contract

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.”  (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) 

Defendants argue that the Plaintiffs other than Innovative cannot state the first cause of action for breach of written contract against Defendants, because the contract at issue was between only Innovative and Nexus. 

The Complaint alleges:

2.  In 2018, [Innovative] entered into a contract with Nexus to provide medical billing and related services. The parties agreed that each Plaintiff could and would submit billings under this contract.

[…]

53. Plaintiff IMS and Defendant Nexus executed the Agreement. Following execution of the Agreement, Nexus agreed that Butterfly Hospice, CC Endoscopy, and Vital Solutions could also submit bills pursuant to the Agreement. As a result, the Agreement was modified to include Butterfly Hospice, CC Endoscopy, and Vital Solutions, in addition to IMS.

(Compl. ¶¶ 2, 53.)  Thus, Plaintiffs allege that the written agreement between Innovative and Nexus was modified to encompass all of Plaintiffs’ medical billing submissions.  Whether the written agreement in fact governed the submissions by the Plaintiffs other than Innovative is a factual question to be determined at later stages of the litigation.

                                                   iii.          Fourth Cause of Action – Unjust Enrichment

Defendants demur to the fourth cause of action on the grounds that (1) there is no valid cause of action for “Unjust Enrichment;” and (2) a quasi-contract claim like unjust enrichment cannot lie where there is an actual contract, as Plaintiffs have alleged in Causes of Action 1 and 2.

In support of Defendants’ first argument, they cite Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231 (hereafter Rutherford.)  In Rutherford, the court held that although “unjust enrichment” is not a valid cause of action, it is synonymous with restitution, and construed the claim for “unjust enrichment” as one for “restitution.”  (Ibid.)  Moreover, other courts have recognized unjust enrichment as a valid cause of action.  (See, e.g., Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726 [explaining the elements of an unjust enrichment claim are “receipt of a benefit and unjust retention of the benefit at the expense of another.”]; Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769 [same].)

In analyzing pleadings, Courts elevate substance over form.  (See Plumlee v. Poag (1984) 150 Cal.App.3d 541, 546 [“Courts under the reformed system of procedure look to the substance of things rather than to form”].)  Thus, regardless of whether unjust enrichment is a valid cause of action in its own right, or if it must be construed as a cause of action for restitution, the Court declines to sustain Defendants’ demurrer on this basis, which would improperly elevate form over substance.

Regarding Defendants’ second argument, Plaintiffs are permitted to “plead in the alternative and make inconsistent allegations.”  (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1388.)  Thus, the Court declines to sustain Defendants’ demurrer to Plaintiffs’ quasi-contractual cause of action merely because Plaintiffs alternatively plead that a contract exists.

                                                   iv.          Fifth Cause of Action – Declaratory Relief

Defendants contend that the Fifth Cause of Action seeks Declaratory Relief only as between Innovative and Health Prime, and therefore demurs as to all other Plaintiffs and Defendants.

The Complaint alleges:

80. Defendant HPI contends that Plaintiffs owe it approximately $400,000 in unpaid invoices. Plaintiffs dispute this amount, in light of Defendants’ long-running breaches of contract, which have harmed Plaintiffs in amounts far exceeding $400,000.

81. Plaintiffs contend any purported obligation for them to pay the approximately $400,000 demanded is excused by law, as Defendants have failed to live up to their contractual obligations for years.

82. Plaintiffs seek a declaration from the Court that they do not owe Defendants the approximately $400,000 that Defendants seek to collect, and that Defendants must cease any attempts to collect such amounts, including that Defendants must halt any debt collection activities they have initiated.

(Compl. ¶¶ 80-82.)

            Although the Complaint specifically references Health Prime’s position that Plaintiffs owe approximately $400,000 in unpaid invoices, Plaintiffs allege the invoices are owed to all Defendants, by virtue of Nexus providing the services, ALN’s acquisition of Nexus, and Health Prime’s subsequent acquisition of ALN.  Further, there is an actual controversy regarding whether all Plaintiffs’ claims are covered by the agreement.  Therefore, as pled, declaratory relief is generally proper as to the rights and responsibilities among all Plaintiffs and Defendants.

                                                     v.          Sixth and Seventh Causes of Action – Fraud and Negligent Misrepresentation

The elements for fraudulent misrepresentation are “(1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff.”  (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 605–606.) 

“The essential elements of a count for negligent misrepresentation are the same [as intentional misrepresentation] except that it does not require knowledge of falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true.”  (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231 (hereafter Chapman).)  Like intentional misrepresentation, causes of action for negligent misrepresentation sound in fraud, and must also, therefore, be pleaded with particularity.  (Ibid.) 

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice.”  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)  “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.”  (Ibid.)  Causes of action for negligent misrepresentation sound in fraud, and must also, therefore, be pleaded with particularity.  (Chapman, supra, 220 Cal.App.4th at pp. 230-231.) 

“One of the purposes of the specificity requirement is notice to the defendant, to furnish the defendant with certain definite charges which can be intelligently met.”  (Alfaro v. Community Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1384.)  As such, less specificity is required “when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy[.]”  (Ibid.)  “Even under the strict rules of common law pleading, one of the canons was that less particularity is required when the facts lie more in the knowledge of the opposite party.”  (Ibid.)

            The Complaint alleges:

36. Specifically, in the lead up to the Nexus acquisition and thereafter, ALN— including through its CEO, Tim Coan, who met with Plaintiffs—made statements to Plaintiff s assuring them that the transition would not impact the quality of services provided and that ALN was well qualified and equipped to handle Plaintiffs billing needs.

[…]

84. As alleged herein, Defendants made numerous false representations of material fact to Plaintiffs. Specifically, ALN, including through its CEO, Tim Coan, assured Plaintiff s that there would be no loss in quality of service as a result of the transition and that ALN was able to provide satisfactory services to Plaintiffs.

85. ALN made these statements knowing that they were false and that ALN had not adequately prepared for the transition, nor did it have the appropriate expertise to provide the services.

86. If Plaintiffs had known ALN’s statements were untrue, they would not have stayed on with ALN following the transition. Plaintiffs reasonably relied on ALN’s statements.

87. Plaintiffs have been harmed by their reliance on Mr. Coan’s statements, including in the form of unpaid claims and monies spent to try and correct ALN’s billing failures.

88. As a result, Plaintiffs have been harmed by Defendants’ misrepresentations in an amount to be proven at trial, but believed to be in excess of $1,000,000.

[…]

91. Defendants made material misrepresentations of fact, as set forth in the foregoing paragraphs, that the transitions from Nexus to ALN and ALN to HPI, including the statements made by ALN’s CEO Tim Coan, would not impact the quality of services provided to Plaintiffs.

92. Defendants’ representations were false and Defendants either knew them to be false, or made them without reasonable grounds for believing they were true.

93. Plaintiffs reasonably relied on Defendants’ misrepresentations, and stayed with ALN and HPI through the transitions.

94. Plaintiffs were harmed by their reliance on Defendants’ misrepresentations, in the form of unpaid claims, and resources expended correcting Defendants’ failures, in an amount to be proven at trial, but believed to be in excess of $1,000,000.

(Compl. ¶¶ 36, 84-88, 91-94.)

Regarding Nexus and Health Prime, Plaintiffs effectively concede that they do not presently have the facts to adequately allege fraud or negligent misrepresentation with requisite particularity: “As to HPI and Nexus, discovery will reveal precisely if and when Mr. Coan was acting as an agent for them, or whether any of their agents participated in the misrepresentations set forth herein.”  (Opp. at p. 15:8-10.)  Further, to the extent Mr. Coan’s alleged statements preceded ALN’s acquisition of Nexus, it is unclear how Coan could have been acting as Nexus’s agent.  Similarly, to the extent Mr. Coan’s statements preceded Health Prime’s acquisition of ALN, it is unclear how Coan could have been acting as Health Prime’s agent when the statements were made.  Therefore, the Court sustains the demurrer of Health Prime and Nexus as to the sixth and seventh causes of action.

As for ALN, Plaintiffs adequately allege the who (ALN’s CEO, Tim Coan); what (“the transition would not impact the quality of services provided and that ALN was well qualified and equipped to handle Plaintiffs billing needs”); when (“in the lead up to the Nexus acquisition and thereafter”); and where/how (during meetings with Plaintiffs) with requisite particularity.  To the extent Plaintiffs have not alleged the specific dates of the meetings, ALN, and specifically Mr. Coan, should already have that information by virtue of his participation in those meetings.  Thus, Plaintiffs have alleged the sixth and seventh causes of action against ALN with requisite particularity for ALN to address those causes of action.

Finally, ALN argues these statements were just non-actionable puffery, statement of opinion, and or predictions as to future events.  In support, ALN cites to Nibbi Bros., Inc. v. Home Fed. Sav. & Loan Assn. (1988) 205 Cal.App.3d 1415, 1423 (hereafter Nibbi.)  The Court finds Nibbi distinguishable.  In Nibbi, the court held that a vague assertion that the plaintiff would be paid for its work, which was not a promise to personally pay plaintiff for the work, could only be construed at best as an optimistic assessment that the developer would sustain continued financing, which is a nonactionable expression of opinion.  By contrast, here, Plaintiffs allege ALN’s CEO personally assured them that the quality of services would not diminish once ALN acquired Nexus (and therefore became ultimately responsible for providing those services), despite knowing the sweeping changes ALN intended to make immediately following the acquisition.

Therefore, the Court overrules ALN’s demurrer to the sixth and seventh causes of action.

2.     MOTION TO STRIKE

Any party, within the time allowed to respond to a pleading, may serve and file a motion to strike the whole pleading or any part thereof.  (Code Civ. Proc., § 435, subd. (b)(1); Cal. Rules of Court, rule 3.1322, subd. (b).)  On a motion to strike, the court may: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court.  (Code Civ. Proc., § 436, subd. (a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)  Here, Defendants move to strike from the complaint, references to and claims for punitive damages and attorneys’ fees.    

                                                       i.          Punitive Damages

In ruling on a motion to strike punitive damages, “judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.”  (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  To state a prima facie claim for punitive damages, a plaintiff must allege the elements set forth in the punitive damages statute, Civil Code section 3294.  (College Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.)  Per Civil Code section 3294, a plaintiff must allege that the defendant has been guilty of oppression, fraud, or malice.  (Civ. Code, § 3294, subd. (a).)   As set forth in the Civil Code,

(1) “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.  (2) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.  (3) “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

(Civ. Code, § 3294, subd. (c)(1)-(3), emphasis added.) 

Further, a plaintiff must assert facts with specificity to support a conclusion that a defendant acted with oppression, fraud or malice.  To wit, there is a heightened pleading requirement regarding a claim for punitive damages.  (See Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-1042.)  “When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice.  When a defendant must produce evidence in defense of an exemplary damage claim, fairness demands that he receive adequate notice of the kind of conduct charged against him.” (G. D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29 [cleaned up].)  In Anschutz Entertainment Group, Inc. v. Snepp, the Court of Appeal noted that the plaintiffs’ assertions related to their claim for punitive damages were “insufficient to meet the specific pleading requirement.”  (Anschutz Entertainment Group, Inc. v. Snepp (2009) 171 Cal.App.4th 598, 643 [plaintiffs alleged “the conduct of Defendants was intentional, and done willfully, maliciously, with ill will towards Plaintiffs, and with conscious disregard for Plaintiff's rights. Plaintiff's injuries were exacerbated by the malicious conduct of Defendants. Defendants' conduct justifies an award of exemplary and punitive damages”]; see also Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166 [“The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages.  Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim”].) 

Moreover, “the imposition of punitive damages upon a corporation is based upon its own fault.  It is not imposed vicariously by virtue of the fault of others.”  (City Products Corp. v. Globe Indemnity Co. (1979) 88 Cal.App.3d 31, 36.)  “Corporations are legal entities which do not have minds capable of recklessness, wickedness, or intent to injure or deceive.  An award of punitive damages against a corporation therefore must rest on the malice of the corporation’s employees.  But the law does not impute every employee’s malice to the corporation.  Instead, the punitive damages statute requires proof of malice among corporate leaders:  the officers, directors, or managing agents.”  (Cruz v. Home Base (2000) 83 Cal.App.4th 160, 167 [cleaned up].) 

            Here, as discussed above, Plaintiffs have adequately alleged fraud against ALN, but not against Nexus or Health Prime.  Further, because the fraudulent misrepresentation is alleged to have been made by ALN’s CEO, Tim Coan, the statements can be imputed to ALN for punitive damages purposes. 

            Therefore, the Court grants Nexus’s and Health Prime’s motion to strike punitive damages, but denies ALN’s motion to strike the punitive damages claims.

                                                     ii.          Attorneys’ Fees

Defendants argue that Plaintiffs have provided no statutory or contractual basis to recover attorneys’ fees.  In opposition, Plaintiffs contend that their requested injunctive relief under their unfair competition law cause of action warrants attorneys’ fees under Code of Civil Procedure section 1021.5 because it will provide a significant benefit to the public or a large class of persons.  Section 1021.5 provides:

a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any.

(Code Civ. Proc., § 1021.5.)

Thus, private attorney general fees are appropriate only when a significant benefit is conferred on the public or a large class of persons and the costs of litigating the issue greatly burdens the plaintiff out of proportion to his individual stake in the matter.  (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 941 (hereafter Woodland).)  The Court finds on the allegations of the Complaint that these requirements are not satisfied here.

First, the injunctive relief sought – that Defendants stop falsely advertising their services as being better than they actually are – does not implicate an important right likely to impact a large class of persons.  Rather, the injunction would primarily impact only this particular company’s existing and prospective clients.  “Of course, the public always has a significant interest in seeing that legal strictures are properly enforced and thus, in a real sense, the public always derives a ‘benefit’ when illegal private or public conduct is rectified.” (Woodland, supra, 23 Cal.3d at p. 939.)  But “the Legislature did not intend to authorize an award of attorney fees in every case involving a statutory violation.”  (Ibid.)  Permitting attorneys’ fees in every case where a company is alleged to have falsely advertised an aspect of its services would be inconsistent with the Legislature’s intent to shift fees only in those cases conferring a “significant” benefit to a large class of persons. 

Second, there is no indication that Plaintiffs’ individual financial stake in this matter is so vastly outweighed by the cost of vindicating their rights on behalf of the public at large that justice requires fee shifting.  To the contrary, Plaintiffs seek $1 million in damages (and Defendants allegedly seek $400,000 in unpaid invoices.)  Thus, Plaintiffs’ legal fees are unlikely to outweigh Plaintiffs’ personal financial stake so vastly in litigating this matter that justice requires fee shifting to encourage Plaintiffs to continue to seek vindication of important public rights.

Therefore, the Court grants Defendants’ motion to strike the claims for attorneys’ fees asserted in the Complaint.

3.     LEAVE TO AMEND

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, although Plaintiffs generally request that leave be granted, they do not identify any additional facts they could add to the complaint to cure the identified deficiencies.  In fact, as discussed above, Plaintiffs have tacitly conceded that they do not have any additional facts to allege the fraud and negligent misrepresentation causes of action against Nexus or Health Prime unless and until discovery reveals them.   

Therefore, the Court denies Plaintiffs leave to amend.

CONCLUSION AND ORDER

For the reasons stated, the Court sustains Nexus’s and Health Prime’s demurrer to the sixth and seventh causes of action for fraud and negligent misrepresentation, respectively, without leave to amend.  The Court overrules Defendant’s demurrer in all other respects.

Further, the Court grants in part and denies in part Defendants’ motion to strike.  The Court strikes Plaintiffs’ request for attorneys’ fees in its entirety, and strikes Plaintiffs’ request for punitive damages as to Nexus and Health Prime only without leave to amend.  The Court denies Defendants’ motion to strike punitive damages alleged against ALN. 

Further, the Court orders Defendants to file and serve an Answer to the Complaint on or before July 3, 2024. 

Defendants shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

DATED:  June 12, 2024                                                         ___________________________

                                                                                    Michael E. Whitaker

                                                                                    Judge of the Superior Court