Judge: Michael P. Linfield, Case: 23STCV11408, Date: 2023-08-31 Tentative Ruling
Case Number: 23STCV11408 Hearing Date: August 31, 2023 Dept: 34
SUBJECT: Demurrer to Plaintiff’s Complaint
Moving Party: Defendant
Steven M. Spiker
Resp. Party: Plaintiff Talent Management Partners, Inc.
The Demurrer is
OVERRULED.
On May 19, 2023, Plaintiff Talent Management Partners,
Inc. filed its Complaint against Defendants Richard M. Spiker and Steven M.
Spiker on causes of action for declaratory relief, breach of fiduciary duty,
and conversion.
On August 4, 2023, Defendant Steven M. Spiker
(“Defendant”) filed his Demurrer to Plaintiff’s Complaint. Defendant
concurrently filed Judicial Council Form CIV-140, Declaration of Demurring or
Moving Party Regarding Meet and Confer.
On August 18, 2023, Plaintiff filed its Opposition to the
Demurrer.
On August 22, 2023, Defendant filed his Reply regarding
the Demurrer.
ANALYSIS:
I.
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.)¿¿¿
II.
Discussion
Defendant demurs to all three causes
of action in the Complaint. The Court will analyze the three causes of action in
the reverse order.
A. Conversion
1. 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.)
2. Discussion
Defendant argues that the third
cause of action for conversion is barred by the statute of limitations.
(Demurrer, pp. 8–9.)
Plaintiff argues that the statute of
limitation argument fails due to the discovery rule because, as alleged in the
Complaint, Plaintiff was unable to discover what the Defendants did.
(Opposition, p. 3:7–25.)
Defendant
reiterates his arguments in his Reply.
Plaintiff
has the better argument here.
“The periods
prescribed for the commencement of actions other than for the recovery of real
property, are as follows: . . . Within
three years: . . . (c) (1) An action for taking, detaining, or injuring goods
or chattels, including an action for the specific recovery of personal
property.” (Code Civ. Proc., §§ 335, 338, subd. (c)(1).)
“Under California law, the general rule is well established:
‘[T]he statute of limitations for conversion is triggered by the act of
wrongfully taking property.’” (AmerUS Life Ins. Co. v.
Bank of Am., N.A. (2006) 143 Cal.App.4th 631, 639, quoting Bono v. Clark
(2002) 103 Cal.App.4th 1409, 1433, other citations omitted.)
“To the extent our courts have recognized a
‘discovery rule’ exception to toll the statute, it has only been when the
defendant in a conversion action fraudulently conceals the relevant facts or
where the defendant fails to disclose such facts in violation of his or her
fiduciary duty to the plaintiff. In those instances, ‘the statute of
limitations does not commence to run until the aggrieved party discovers or
ought to have discovered the existence of the cause of action for conversion.”
(AmerUS, supra, at p. 639, quoting Strasberg v. Odyssey Group (1996)
51 Cal.App.4th 906, 916–17, other citations omitted.)
Among other things,
Plaintiff alleges: (1) that Plaintiff owned, possessed, and controlled
property, including but not limited to funds, credits, monies, cash,
registration fees, commercial instruments, receivables, assets, contractual
rights, intellectual property, personal property, tangible property, and
intangible property; (2) that Defendants knowingly or intentionally took
possession of Plaintiff’s property; (3) that Defendants were not entitled to
take Plaintiff’s property; (4) that Plaintiff did not consent to the
conversion; (5) that Plaintiff was harmed by the conversion; (6) that
Defendants had a fiduciary duty to Plaintiffs; (7) that Defendants failed to
disclose various things relating to the conversion, including the amounts they
received from Plaintiff; and (8) that Defendants took multiple deliberate and
intentional steps to disguise and obfuscate their true relationship with
Plaintiff, including creating a facsimile of a signature. (Complaint, ¶¶ 26–30,
54–55, 62, 67–69.)
Thus, the pleading
sufficiently alleges (1) all of the elements of a cause of action for
conversion and (2) that there may be tolling of the relevant statute(s) of
limitations. (The Court notes that there may be multiple different statutes of
limitations at issue here because of the diverse set of items that are alleged
to have been converted.)
Further, the questions of (1)
exactly when the statute(s) of limitations began and (2) for what period, if
any, the statute(s) of limitations was/were tolled are mixed questions of law
and fact that are not suitable for resolution on a demurrer.
The Court OVERRULES the
Demurrer to the third cause of action for conversion.
B. Breach
of Fiduciary Duty
1. Legal
Standard
“The elements of a cause of action for breach of fiduciary
duty are the existence of a fiduciary relationship, its breach, and damage
proximately caused by that breach.” (City of Atascadero v. Merrill Lynch,
Pierce, Fenner, & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.)
“There are¿two kinds¿of fiduciary duties — those imposed by
law and those undertaken by agreement.” (Gab Bus. Servs. v. Lindsey &
Newsom Claim Servs. (2000) 83 Cal.App.4th 409, 416, emphasis omitted,
overruled in part on other grounds by Reeves v. Hanlon (2004) 33 Cal.4th
1140, 1154.)
“Fiduciary duties are imposed
by law in certain technical, legal relationships such as those between partners
or joint venturers, husbands and wives, guardians and wards, trustees and
beneficiaries, principals and agents, and attorneys and clients.” (Id.,
citations omitted.)
“A fiduciary duty is undertaken by agreement when one person
enters into a confidential relationship
with another.” (Id. at 417.)
2.
Discussion
Defendant argues that the second
cause of action for breach of fiduciary is barred by the statute of
limitations. (Demurrer, pp. 6–7.) Defendant specifically argues: (1) that at
most there is a four-year statute of limitations, which would have run because
Defendant was fired on May 11, 2018 and the Complaint was not filed until May
19, 2023; (2) that a three-year statute of limitations should apply to
Defendant based on the conduct alleged, which strengthens this argument; and
(3) that there should be no tolling because Plaintiff had been informed about the
underlying facts that it relies upon for this cause of action. (Ibid.)
Plaintiff argues that the statute of
limitation argument fails due to the discovery rule because, as alleged in the
Complaint, Plaintiff was unable to discover what the Defendants did.
(Opposition, p. 3:7–25.)
Again, Plaintiff has the
better argument.
“The limitations
period for fraud is three years. (Code Civ. Proc., § 338, subd.
(c).) The limitations period for breach of fiduciary duty is at most
four years. (Code Civ. Proc., § 343.) The limitations period for unfair
and unlawful business practices is four years. (Bus. & Prof. Code, § 17208.)”
(Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 744, fn.
4.)
“The
statute of limitations usually commences when a cause of action accrues, and it
is generally said that an action accrues on the date of injury. Alternatively,
it is often stated that the statute commences upon the occurrence of the last
element essential to the cause of action. These general principles have been
significantly modified by the common law ‘discovery rule,’ which provides that
the accrual date may be delayed until the plaintiff is aware of her injury and
its negligent cause.” (Bernson v.
Browning-Ferris Indus. (1994) 7 Cal.4th 926, 931 [cleaned up].)
“A close cousin of the discovery rule is the well accepted
principle of fraudulent concealment. It has long been established that the
defendant's fraud in concealing a cause of action against him tolls the
applicable statute of limitations, but only for that period during which the
claim is undiscovered by plaintiff or until such time as plaintiff, by the
exercise of reasonable diligence, should have discovered it. Like the discovery
rule, the rule of fraudulent concealment is an equitable principle designed to
effect substantial justice between the parties; its rationale is that the
culpable defendant should be estopped from profiting by his own wrong to the
extent that it hindered an otherwise diligent plaintiff in discovering his
cause of action.” (Bernson, supra, at p. 931 [cleaned up].)
“While ignorance of the existence of an injury or cause of
action may delay the running of the statute of limitations until the date of
discovery, the general rule in California has been that ignorance of the
identity of the defendant is not essential to a claim and therefore will not
toll the statute. As we have observed, the statute of limitations begins to run
when the plaintiff suspects or should suspect that her injury was caused by
wrongdoing, that someone has done something wrong to her. Aggrieved parties generally
need not know the exact manner in which their injuries were effected, nor the
identities of all parties who may have played a role therein.” (Bernson,
supra, at p. 932 [cleaned up].)
Among other things,
Plaintiff alleges that Defendants: (1) breached their fiduciary duty; and (2)
did so in a fraudulent way that hid the breaches from Plaintiff. (Complaint, ¶¶
26–30, 54–55, 62, 67–69.) For the purposes of a demurrer, the Court must assume
that these allegations are true. While establishing the truth of Plaintiff’s
allegations will eventually be important for both the purpose of ascertaining
the extent of any tolling of the statute of limitations and for the purpose of
ascertaining liability, it suffices to say that the second cause of action for
breach of fiduciary duty withstands Defendant’s demur.
The Court OVERRULES the
Demurrer to the second cause of action for breach of fiduciary duty.
C. Declaratory
Relief
1. Legal
Standard
“To qualify for declaratory relief, a party
would have to demonstrate its action presented two essential elements: (1) a
proper subject of declaratory relief, and (2) an actual controversy involving
justiciable questions relating to the party’s rights or obligations.” (Jolley
v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909, quotation marks
and brackets omitted.)¿
¿
A cause of action for declaratory relief
should not be used as a second cause of action for the determination of
identical issues raised in another cause of action. (General of America Insurance
Co. v. Lilly (1968) 258 Cal.App.2d 465, 470.) “The availability of another
form of relief that is adequate will usually justify refusal to grant
declaratory relief” (Cal. Ins. Guar. Ass’n v. Super. Ct. (1991) 231
Cal.App.3d 1617, 1624), and a duplicative cause of action is subject to
demurrer (Palm Springs Villas II Homeowners Ass’n, Inc. v. Parth (2016)
248 Cal.App.4th 268, 290). Further, “there is no basis for declaratory relief
where only past wrongs are involved.” (Osseous Tech. of Am., Inc. v.
DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366, quotation
marks omitted.)¿
2. Discussion
Defendant is somewhat vague about
the basis for his demur to the first cause of action for declaratory relief.
The Reply does not mention declaratory relief, and from what the Court is able
to tell, it appears that Defendant demurs to the first cause of action on the
basis of the statute of limitations and that this cause of action is tied to
the second cause of action for breach of fiduciary duty. (Demurrer, pp. 4:25–6,
5:11–12.)
Plaintiff argues that there are
current matters which require a declaration, such as to the ownership of
Plaintiff, the ownership of certain portions of property (i.e., the “Kids
Business”), and whether a “Note” is null and void. (Opposition, p. 5:4–13.)
The Court agrees with Plaintiff’s
argument. Certain items for which declaratory relief are proper objects for
this cause of action. (Complaint, ¶¶ 74–77.) Further, as discussed with the
prior causes of action, determinations surrounding the statute(s) of
limitations and whether there has in fact been a breach of fiduciary duty are
questions for another day.
The Court OVERRULES the Demurrer to
the first cause of action for declaratory relief.
III.
Conclusion
The Demurrer is OVERRULED.