Judge: Michael P. Linfield, Case: 22STCV41019, Date: 2023-08-25 Tentative Ruling
Case Number: 22STCV41019 Hearing Date: August 25, 2023 Dept: 34
SUBJECT: Demurrer to
First Amended Complaint
Moving Party: Defendant
Lauren Beauty, Inc.
Resp. Party: Plaintiff Marie Quaid
SUBJECT: Motion to
Strike First Amended Complaint
Moving Party: Defendant
Lauren Beauty, Inc.
Resp. Party: Plaintiff Marie Quaid
SUBJECT: Demurrer to
First Amended Complaint
Moving Party: Defendant
Ortal Alaluf
Resp. Party: Plaintiff Marie Quaid
SUBJECT: Motion to
Strike First Amended Complaint
Moving Party: Defendant
Ortal Alaluf
Resp. Party: Plaintiff Marie Quaid
SUBJECT: Demurrer to
First Amended Complaint
Moving Party: Defendant
Jill Max
Resp. Party: Plaintiff Marie Quaid
SUBJECT: Motion to
Strike First Amended Complaint
Moving Party: Defendant
Jill Max
Resp. Party: Plaintiff Marie Quaid
The Demurrers are SUSTAINED in part. The
Demurrers are SUSTAINED without leave to amend to the fifth cause of action for
negligence. The Demurrers are OVERRULED to the first, second, third, fourth,
and sixth causes of action, and on the grounds of civil conspiracy.
The Motions to Strike are DENIED.
BACKGROUND:
On December
30, 2022, Plaintiff Marie Quaid filed her Complaint against Defendants Lionesse
Beauty Bar, Inc., Lauren Beauty, Inc., Radient Beauty, Ortal Alaluf, and Jill
Max on causes of action of: (1) elder financial abuse; (2) fraud; (3)
conversion; (4) unfair business practices; (5) negligence; and (6) intentional
infliction of emotional distress.
On March 9,
2023, Plaintiff filed her First Amended Complaint (FAC).
On July 25,
2023, Defendant Lauren Beauty, Inc. filed: (1) Demurrer to First Amended Complaint;
(2) Memorandum of Points and Authorities in Support of Demurrer; (3) Motion to
Strike First Amended Complaint; (4) Declaration of Gennady L. Lebedev in
Support of Demurrer and Motion to Strike; and (5) Proposed Order.
On July 25,
2023, Defendant Ortal Alaluf filed: (1) Demurrer to First Amended Complaint;
(2) Memorandum of Points and Authorities in Support of Demurrer; (3) Motion to
Strike First Amended Complaint; (4) Declaration of Gennady L. Lebedev in
Support of Demurrer and Motion to Strike; and (5) Proposed Order.
On July 25,
2023, Defendant Jill Max filed: (1) Demurrer to First Amended Complaint; (2)
Memorandum of Points and Authorities in Support of Demurrer; (3) Motion to
Strike First Amended Complaint; (4) Declaration of Gennady L. Lebedev in
Support of Demurrer and Motion to Strike; and (5) Proposed Order.
On August 14,
2023, Plaintiff filed separate Oppositions to each of the Demurrers and a
Combined Opposition to the Motions to Strike.
On August 18,
2023, Defendants Lauren Beauty, Inc., Ortal Alaluf, and Jill Max (“Defendants”)
filed their Combined Reply regarding the Demurrers and their Combined Reply
regarding the Motions to Strike.
ANALYSIS:
I.
Demurrers
A. Legal
Standard
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. (Code Civ. Proc., §§ 422.10, 589.)¿
¿¿¿
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 (1985) 39 Cal.3d 311.) No other extrinsic
evidence can be considered (i.e., no “speaking demurrers”). A demurrer is
brought under Code of Civil Procedure section 430.10 (grounds), section 430.30
(as to any matter on its face or from which judicial notice may be taken), and
section 430.50(a) (can be taken to the entire complaint or any cause of action
within).¿¿
¿¿¿¿
A demurrer
may be brought under Code of Civil Procedure section 430.10, subdivision (e) if
insufficient facts are stated to support the cause of action asserted. A
demurrer for uncertainty (Code of Civil Procedure section 430.10, subdivision
(f)), is disfavored and will only be sustained where the pleading is so bad
that defendant cannot reasonably respond—i.e., cannot reasonably determine what
issues must be admitted or denied, or what counts or claims are directed
against him/her. (Khoury v. Maly's of Cal., Inc. (1993) 14 Cal.App.4th
612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can
be clarified under modern discovery procedures.” (Id.)¿¿¿
B. Discussion
Defendants demur to all six causes of action
in the FAC. Defendants also make an argument about conspiracy. The Court first
considers the conspiracy issue and then discusses each of the causes of action.
1. Civil
Conspiracy
a. Legal
Standard
Civil
conspiracy is not a standalone tort — it is only an alternate manner of
obtaining liability against other parties. (Applied Equip. Corp. v. Litton Saudi Arabia
Ltd. (1994) 7
Cal.4th 503, 510–11.)
b. Discussion
Defendants
argue that the FAC fails to allege sufficient facts to hold Defendants liable
under a conspiracy umbrella. (Demurrer, p. 2:16–17.)
The Court disagrees
with this argument. Civil conspiracy is not a cause of action, nor is it
pleaded as one in the FAC. It is only an alternate theory of liability, and to
the extent Plaintiff is alleging it, Plaintiff has sufficiently done so to withstand
a demur.
The Court OVERRULES the
Demurrers on the ground of civil conspiracy.
2. Elder
Financial Abuse
a. Legal
Standard
“‘Elder’
means any person residing in this state, 65 years of age or older.” (Welf. & Inst. Code, § 15610.27.)
“‘Abuse of an elder or a dependent adult’ means any
of the following:
(1) “Physical abuse, neglect, abandonment, isolation,
abduction, or other treatment with resulting physical harm or pain or mental
suffering.
(2) “The deprivation by a care custodian of goods or
services that are necessary to avoid physical harm or mental suffering.
(3) “Financial abuse, as defined in Section 15610.30.”
(Welf. & Inst. Code, § 15610.07, subd.
(a)(1)–(3).)
“‘Financial abuse’ of an elder or dependent adult occurs
when a person or entity does any of the following:
(1) “Takes, secretes,
appropriates, obtains, or retains real or personal property of an elder or
dependent adult for a wrongful use or with intent to defraud, or both.
(2) “Assists in taking,
secreting, appropriating, obtaining, or retaining real or personal property of
an elder or dependent adult for a wrongful use or with intent to defraud, or
both.
(3) “Takes, secretes,
appropriates, obtains, or retains, or assists in taking, secreting,
appropriating, obtaining, or retaining, real or personal property of an elder
or dependent adult by undue influence, as defined in Section 15610.70.”
(Welf. & Inst. Code, § 15610.30, subd. (a).)
“A person or entity shall be deemed to have taken,
secreted, appropriated, obtained, or retained property for a wrongful use if,
among other things, the person or entity takes, secretes, appropriates,
obtains, or retains the property and the person or entity knew or should have
known that this conduct is likely to be harmful to the elder or dependent
adult.” (Welf. & Inst. Code, § 15610.30, subd. (b).)
“For purposes of this section, a person or entity takes,
secretes, appropriates, obtains, or retains real or personal property when an
elder or dependent adult is deprived of any property right, including by means
of an agreement, donative transfer, or testamentary bequest, regardless of
whether the property is held directly or by a representative of an elder or
dependent adult.” (Welf. & Inst. Code, § 15610.30, subd. (c).)
“Where it is proven by a preponderance of the evidence that a
defendant is liable for financial abuse, as defined in Section 15610.30, in
addition to compensatory damages and all other remedies otherwise provided by
law, the court shall award to the plaintiff reasonable attorney’s fees and
costs. The term “costs” includes, but is not limited to, reasonable fees for
the services of a conservator, if any, devoted to the litigation of a claim
brought under this article.” (Welf. & Inst. Code, § 15657.5, subd.
(a).)
“Where it is
proven by a preponderance of the evidence that a defendant is liable for
financial abuse, as defined in Section 15610.30, and where it is proven by
clear and convincing evidence that the defendant has been guilty of
recklessness, oppression, fraud, or malice in the commission of the abuse, in
addition to reasonable attorney’s fees and costs set forth in subdivision (a),
compensatory damages, and all other remedies otherwise provided by law, the
limitations imposed by Section 377.34 of the Code of Civil Procedure on the
damages recoverable shall not apply.” (Welf. & Inst. Code, § 15657.5, subd. (b).)
b. Discussion
Defendants argue that Plaintiff’s first cause
of action for elder financial abuse fails because the allegations are only
generally asserted against all Defendants and lack various specific details.
(Demurrer, pp. 3:2, 3:25–28, 4:1–5.)
The Court disagrees with this argument.
First, Plaintiff alleges in multiple paragraphs
of the FAC which individuals made which allegedly fraudulent charges on which
instances. (See, for example, FAC, ¶¶ 15, 17, 24–26, 28–29.)
Second, Plaintiff alleges in multiple paragrpahs
of the FAC which individuals were asked for refunds and when they failed to
provide those refunds. (See, for example, FAC, ¶¶ 18–19, 26, 30–31.)
Third, Plaintiff alleges both alter ego
theory between the individual and the corporate Defendants, as well as civil
conspiracy. (FAC, ¶¶ 2, 13.)
Finally, Plaintiff alleges that she was over
70 years old at all relevant times to this action. (FAC, ¶ 1.)
Taken together, these allegations are
sufficiently specific as to each Defendant for the first cause of action for
elder financial abuse to withstand demur.
The Court OVERRULES the Demurrers to the
first cause of action for elder financial abuse.
3. Fraud
a. Legal
Standard
“The elements of fraud are (a) a
misrepresentation (false representation, concealment, or nondisclosure); (b)
scienter or knowledge of its falsity; (c) intent to induce reliance; (d)
justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town
Ctr. (2005) 135 Cal.App.4th 289, 294.)
The facts constituting the alleged fraud must be
alleged factually and specifically as to every element of fraud, as the policy
of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar
v. Super. Ct. (1996) 12 Cal.4th 631, 645.)
To properly allege fraud against a
corporation, the plaintiff must plead the names of the persons allegedly making
the false representations, their authority to speak, to whom they spoke, what
they said or wrote, and when it was said or written. (Tarmann v. State Farm
Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)
b. Discussion
Defendants make a similar argument regarding
the third cause of action for fraud, arguing that it is insufficiently pleaded.
(Demurrer, p. 4:12–14.)
The Court disagrees with this argument.
As discussed above regarding the first cause
of action for elder financial abuse, the allegations are clearly pleaded
regarding what the misrepresentations were on purchases and refunds, who made
them, and in what instances those misrepresentations were made. Further,
Plaintiff alleges: (1) Defendants were aware of and agreed in advance to
efforts to defraud Plaintiff; (2) that they intended to defraud Plaintiff and
never refund her money; (3) that Plaintiff relied on the misrepresentations;
and (4) that Plaintiff was harmed by the misrepresentations. (FAC, ¶¶ 47–54.)
These allegations are sufficiently to meet the higher pleading standard for
fraud and for the second cause of action to withstand demur.
The Court OVERRULES the Demurrers to the
second cause of action for fraud.
4. Conversion
a. Legal
Standard
“Conversion is
the wrongful exercise of dominion over the property of another. The elements of
a conversion claim are: (1) the plaintiff’s ownership or right to possession of
the property; (2) the defendant’s conversion by a wrongful act or disposition
of property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th
1225, 1240.)
b.
Discussion
Defendants argue that the third cause of
action for conversion fails because: (1) it was not sufficiently pleaded; (2)
there is no nexus between the charges allegedly made and Defendants’ alleged
actions; (3) there is no allegation that any specific defendant had any knowledge
that charges were made, received, or kept (not refunded); and (4) that
Plaintiff must have consented to her credit charged being charged by virtue of
her receiving products and services and handing over her cards to a
salesperson. (Demurrer, pp. 5:22–23, 5:27–28, 6:1, 6:19–26.)
The Court disagrees with
these arguments.
Plaintiff alleges, among
other things, that Defendants overcharged her, charged her multiple times at
higher prices for the same things, refused to refund her, and took her credit cards
without her consent and charged them. (FAC, ¶¶ 15, 17–19, 24–26, 28–31.)
According to the allegations, she did not consent to many of the transactions
at all. (Ibid.) These allegations are sufficient for the third cause of
action for conversion to withstand demur.
The Court OVERRULES the
Demurrers to the third cause of action for conversion.
5. Unfair
Business Practices
a. Legal
Standard
“As used in this
chapter, unfair competition shall mean and include any unlawful, unfair or
fraudulent business act or practice and unfair, deceptive, untrue or misleading
advertising and any act prohibited by Chapter 1 (commencing with Section 17500)
of Part 3 of Division 7 of the Business and Professions Code.” (Bus. &
Prof. Code, § 17200.)
“Actions for Injunctions
by Attorney General, District Attorney, County Counsel, and City Attorneys[:]
Actions for relief pursuant to this chapter shall be prosecuted exclusively in
a court of competent jurisdiction by the Attorney General or a district
attorney or by a county counsel authorized by agreement with the district
attorney in actions involving violation of a county ordinance, or by a city
attorney of a city having a population in excess of 750,000, or by a county
counsel of any county within which a city has a population in excess of
750,000, or by a city attorney in a city and county or, with the consent of the
district attorney, by a city prosecutor in a city having a full-time city
prosecutor in the name of the people of the State of California upon their own
complaint or upon the complaint of a board, officer, person, corporation, or
association, or by a person who has suffered injury in fact and has lost money
or property as a result of the unfair competition.” (Bus. & Prof. Code, §
17204.)
b. Discussion
Defendants argue that Plaintiff’s fourth
cause of action for unfair business practices (otherwise known as violation of
the unfair competition law, or “UCL”) fails because: (1) Plaintiff lacks
standing to enforce ordinances; (2) Plaintiff has not suffered any injury from
Defendants’ failure to pay sales taxes; and (3) Plaintiff did not make specific
pleadings as to Defendants. (Demurrer, p. 7:8–9, 7:18–27.)
The Court disagrees with Defendants’
arguments.
Plaintiff is alleging: (1) that Defendants
engaged in an unfair business practice by harming elder and dependent adults as
a business model; (2) that Defendants do this by taking a variety of actions
(not just failing to pay sales tax); and (3) that Plaintiff was harmed by this.
(FAC, ¶¶ 59–60.) These allegations are sufficient to show that Plaintiff: (1)
has standing as “a person who has suffered injury in fact and has lost money or
property as a result of the unfair competition” to pursue an injunction under
the UCL; and (2) has sufficiently pleaded the elements of the fourth cause of
action for unfair business practices. (Bus. & Prof. Code, § 17204.)
The Court OVERRULES the Demurrer to the
fourth cause of action for unfair business practices.
6. Negligence
a. Legal
Standard
In order to state a claim for negligence,
Plaintiff must allege the elements of (1) “the existence of a legal duty of
care,” (2) “breach of that duty,” and (3) “proximate cause resulting in an
injury.” (McIntyre v. Colonies-Pacific, LLC (2014) 228 Cal.App.4th 664,
671.)
b. Discussion
Defendants argue that the fifth cause of
action for negligence fails because of the economic loss rule. (Demurrer, p. 8:3–4.)
The Court agrees with this argument.
The recent opinion by the Supreme Court is very clear:
“We begin with a review of the contours of the economic loss rule. The
rule itself is deceptively easy to state: in general, there is no recovery in
tort for negligently inflicted ‘purely economic losses,’ meaning financial harm
unaccompanied by physical or property damages.” (Sheen v. Wells Fargo Bank,
N.A. (2022) 12 Cal.5th 905, citations omitted.)
Here, there are no
allegations of physical abuse or property damages. The allegations are of
financial abuse and related causes of action that are separate torts apart from
the financial abuse itself. (Accord Robinson Helicopter Co., Inc. v. Dana
Corp. (2004) 34 Cal.4th 979, 991–93, allowing fraud claims where there has
been fraud in the performance or inducement of a contract.) As the negligence
cause of action is not apart from the financial abuse but is another theory of
it, that cause of action is barred. (FAC, ¶¶ 63–65.)
The Court SUSTAINS the
Demurrers to the fifth cause of action for negligence, without leave to amend.
7. Intentional
Infliction of Emotional Distress
a. Legal
Standard
“The elements of a prima facie case for the
tort of intentional infliction of emotional distress are: (1) extreme and
outrageous conduct by the defendant with the intention of causing, or reckless
disregard of the probability of causing, emotional distress; (2) the plaintiff’s
suffering severe or extreme emotional distress; and (3) actual and proximate
causation of the emotional distress by the defendant’s outrageous conduct.
Conduct to be outrageous must be so extreme as to exceed all bounds of that
usually tolerated in a civilized community.” (Wilson v. Hynek (2012) 207
Cal.App.4th 999, 1009, citation and ellipses omitted.)
b.
Discussion
Defendants argue that the sixth cause of
action for intentional infliction of emotional distress fails because: (1)
there are no allegations that Defendants intended to inflict any emotional
distress on Plaintiff; (2) a contractual relationship, without more, will not
support a recovery of mental suffering where there has only been economic
injury; and (3) the allegations are not specific as to Defendants. (Demurrer,
pp. 9:5–6, 9:8–20, 10:3–5.)
The Court disagrees with Defendants’
arguments.
Plaintiff is an elderly woman who has
difficulty remembering the details of what has happened in her daily life. She alleges
that Defendants attempt to treat her like “family” was an elaborate fraud in
order to steal tens of thousands of dollars from her. (FAC, ¶¶ 39–40, 69.)
Plaintiff also alleges that Defendants engaged in this conduct with fraud,
malice, and oppression, as well as intentional or reckless disregard for the
probability that it would cause Plaintiff emotional distress. (Id. at ¶
70.) These allegations are sufficiently specific as to Defendants, and a trier
of fact will be able to judge at trial whether such allegations, if proven to
be true, rise to level of extreme and outrageous conduct.
The Court OVERRULES the Demurrers to the
sixth cause of action for intentional infliction of emotional distress.
C. Conclusion
The Demurrers are SUSTAINED in part. The
Demurrers are SUSTAINED without leave to amend to the fifth cause of action for
negligence. The Demurrers are OVERRULED to the first, second, third, fourth,
and sixth causes of action, and on the grounds of civil conspiracy.
II. Motions
to Strike
A. Legal
Standard
Any party, within the time allowed to respond
to a pleading, may serve and file a notice of motion to strike the whole or any
part thereof. (Code Civ. Proc., § 435, subd. (b)(1)). The notice of motion to
strike a portion of a pleading shall quote in full the portions sought to be
stricken except where the motion is to strike an entire paragraph, cause of
action, count or defense. (Cal. Rules of Court Rule 3.1322.)
The grounds for a motion to strike shall
appear on the face of the challenged pleading or form any matter of which the
court is required to take judicial notice. (Code Civ. Proc., § 437, subd. (a).)
The court then may strike out any irrelevant, false, or improper matter
inserted in any pleading and 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.) When the defect which justifies
striking a complaint is capable of cure, the court should allow leave to amend.
(Perlman v. Mun. Ct. (1979) 99 Cal.App.3d 568, 575.)
B.
Discussion
Defendants move the Court to strike: (1)
certain paragraphs from the Complaint on the grounds that these paragraphs contain
inadmissible hearsay, character evidence, and settlement discussions; (2)
Plaintiff’s prayer for attorney’s fees and costs; and (3) Plaintiff’s prayer
for a judicial declaration. (Motions to Strike, pp. 3:20–24, 5:10–11, 5:19–21,
6:5.)
The Court disagrees with Defendants’
arguments.
Plaintiff is entitled to make these
allegations in her Complaint. Hearsay is not a valid objection to an unverified
statement in a complaint. These
allegations, which involve Plaintiff’s interactions with Defendants, are not
irrelevant, false, or improper. It will ultimately be Plaintiff’s burden to
prove with admissible evidence that she is entitled to the relief she seeks.
Further, striking certain allegations would
be a waste of time. There is no motion
to redact these allegations; even if the allegations were stricken, they would still
be available in the original complaint and FAC that is available to the public.
Regarding the prayers for relief, it is a
question of fact as to whether resolution of Plaintiff’s claims in her favor
would convey a broad public benefit that entitles her to attorney’s fees under
Code of Civil Procedure section 1021.5. (Combined Opposition to Motions to
Strike, p. 3:11–15.) Praying for this relief is not irrelevant, false, or
improper. Nor is requesting declaratory relief as an equitable remedy to the unfair
competition law claim. (Id. at p. 3:17–23.)
“The court must, in every
stage of an action, disregard any error, improper ruling, instruction, or
defect, in the pleadings or proceedings which, in the opinion of said court,
does not affect the substantial rights of the parties. . . .” (Code Civ. Proc.,
§ 475.)
Here, the
pleading of various allegations and prayers for relief do not at this time
affect the substantial rights of the Parties.
C. Conclusion
The Motions to Strike are DENIED.