Judge: Michael Shultz, Case: 21CMCV00048, Date: 2023-10-24 Tentative Ruling
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Case Number: 21CMCV00048 Hearing Date: October 24, 2023 Dept: A
[TENTATIVE] ORDER
The third
amended complaint (“TAC”) alleges claims for theft by false pretenses, breach of fiduciary duty, conversion,
accounting, and for an appointment of receiver arising from the parties’ purchase of Main Street Gas & Food Mart
(“the Mart”). Plaintiff contends Defendants deprived him of his shares and
joint ownership of the Mart.
RHDM and Ansari (collectively,
“RHDM” or “Cross-Complainants”) filed a cross-complaint against Hesham Elbialy;
Elbialy Group, Inc.; HM Petroleum Group, Inc, and Emesiry, Inc. (“Elbialy” or “Cross-Defendants”) and Monem
alleging 17 causes of action for breach of contract among other claims arising
from the purchase of the Mart. The Court overruled the demurrer to the
cross-complaint and denied the motion on July 18, 2023. Cross-Defendants
answered the cross-complaint on July 27, 2023.
Cross-Complainants
demur to the first and seventh through 16th affirmative defenses on grounds they
all fail to state facts to support an affirmative defense. They are improper or
boilerplate or do not constitute an affirmative defense. Cross-Defendants do
not assert “new matter,” and the affirmative defenses are general denials.
In
opposition, Cross-Defendants contend they adequately alleged ultimate facts. If
the Court disagrees, Cross-Defendants ask for leave to amend.
In reply,
Cross-Complainants argue that the alleged affirmative defenses are futile
attempts to “rehash” their demurrer to the cross-complaint, which the Court
overruled.
A demurrer reaches defects that appear on
the face of the pleading. The court considers the allegations and matters that
are subject to judicial notice. All facts are accepted as true. (Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 837–838.) A demurrer tests the legal sufficiency of
the allegations. It does not test their truth, the plaintiff’s ability to prove
them, or the possible difficulty in making such proof. (Saunders at 840.)
The sufficiency of an answer depends on
the complaint to which it purports to answer. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 733.) Therefore, the answer does not stand
alone; rather it is read with reference to the facts alleged in plaintiff’s
complaint. The pleading must “minimally advise the opposing party of the nature
of the defense even if defective as conclusory.” (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 385.)
The critical inquiry when a plaintiff
demurs to an answer is whether the answer raises a defense to plaintiff’s
stated cause of action. (Timberidge Enterprises, Inc. v. City of
Santa Rosa (1978) 86
Cal.App.3d 873, 880.) The
demurrer raises the objection that the answer does not state facts sufficient
to constitute a defense. (Id.)
The answer to a complaint must include any statement of any new matter
constituting a defense. (Code Civ. Proc., § 431.430(b)(2).)
“New matter” refers to “something relied
on by a defendant which is not put in issue by the plaintiff. [Citation.] Thus,
where matters are not responsive to essential allegations of the complaint,
they must be raised in the answer as “new matter.” (Walsh v. West Valley Mission Community
College Dist. (1998) 66
Cal.App.4th 1532, 1546.)
Thus, “new matter” is “any ground urged in avoidance of the complaint, i.e.,
some independent reason why plaintiff should be barred from recovery, even if
everything alleged in the complaint was true.” (Walsh at 1546, [“Thus,
where matters are not responsive to essential allegations of the complaint,
they must be raised in the answer as 'new matter.' [Citation.] Where,
however, the answer sets forth facts showing some essential allegation
of the complaint is not true, such facts are not 'new matter,' but only a
traverse.”].)
The answer is liberally construed with a
view to substantial justice between the parties. The answer should make clear
what issues the adverse parties must meet such that when taken in connection
with the complaint, “no reasonable person could be in any doubt about the
issues to be met.” (Hoelzle v. Fresno County (1958) 159 Cal.App.2d 478, 483.)
A
demurrer to an answer is limited to the following: failure to state facts
sufficient to constitute a defense, uncertainty, and failure to allege whether
a contract is written or oral. (Code
Civ. Proc., § 430.20.) The demurrer is well taken. The first affirmative
defense and the seventh through 16th affirmative defenses do not
state new matter or any recognized affirmative defenses. The affirmative
defenses merely deny what is alleged in the Cross-complaint or asserts the
Cross-complaint is unclear or that Cross-Defendants did not engage in the acts
as alleged. As Cross-Complainants observe, Cross-Defendants are reasserting
arguments made in their demurrer to the cross-complaint for failure to state a
claim.
The sixteenth affirmative defense is not
an affirmative defense. Rather Cross-Defendants reserve their rights to amend
the Answer. That is not an affirmative defense; it is a remedy available to a
party who can establish the requirements under Civil Procedure, section 473.
Cross-Defendants have not demonstrated how
any of the non-affirmative defenses can be cured. Leave to amend is ordinarily
given if there is a reasonable possibility of cure. However, it is the requesting
party’s burden to demonstrate how any amendment will change the legal effect of
the pleading. (Association of Community Organizations for Reform Now v. Department
of Industrial Relations (1995) 41
Cal.App.4th 298, 302.)
Cross-Defendants
do not offer any argument for leave to amend. Rather, Cross-Defendants contend
any uncertainty can be clarified with discovery. It is Cross-Defendants’ burden
to assert defenses that do not simply dispute the facts alleged in the
Cross-complaint; Cross-Defendants must raise new matter beyond the
cross-complaint.
Cross-Complainants
separately move to strike the same affirmative defenses at issue as they are
irrelevant and improper and not filed
in conformity with the laws of California, a court rule, or an order of the
Court. (Code Civ. Proc., § 436 subd (a)-(b)). Grounds for the motion to
strike are limited to matters that appear on the face of the pleading or on any
matter which the court shall or may take judicial notice. (Code Civ. Proc., § 437). Cross-Complainants have met their burden
for the reasons previously discussed.
Based on
the foregoing, the demurrer to Cross-Defendants’ answer
is SUSTAINED as to the first and seventh through 16th affirmative defenses
without leave to amend. Cross-Complainants’ motion to strike the
affirmative defenses at issue are GRANTED without leave to amend.