Judge: Michael Shultz, Case: 24STCV25952, Date: 2025-01-30 Tentative Ruling

Case Number: 24STCV25952    Hearing Date: January 30, 2025    Dept: 40

24STCV25952 GNSI/Directors, Michael Lambert, Collection Agent/Assignee v. Daniel Louis Losito

Thursday, January 30, 2025

 

[TENTATIVE] ORDER SUSTAINING DEMURRER TO PLAINTIFFS’ COMPLAINT

 

                                                                                              I.         BACKGROUND

      The complaint alleges that Plaintiffs, GNSI/Directors, Michael Lambert, Collection Agent/Assignee, are “Principals’ Collection Agent/Assignee” (the “Firm”.) (Complaint, 2:13.) Defendant, Daniel Louis Losito, allegedly made certain statements in July 2007 to Special Investigator Michael H. Hagerman of the Financial Industry Regulatory Authority (“FINRA”). Plaintiffs seek a judicial determination that Defendant’s admissions provided under oath to FINRA are truthful and legally binding “and relevant to ongoing regulatory and legal matters involving Plaintiff GNSI, its directors, and Defendant Losito”.

      Plaintiffs seek a permanent injunction against Losito to prevent further threats or harm and criminal extortion. Plaintiffs contend Defendant also failed to respond to requests for admission resulting in his responses being deemed admitted. Among other relief prayed for, Plaintiffs ask for an order dismissing with prejudice a FINRA District 11 arbitration initiated by Defendant, which was a fraudulent and vexatious action.  Plaintiff alleges one cause of action for declaratory relief.

                                                                                               II.        ARGUMENTS

      Defendant argues that Plaintiffs fail to state a cause of action, the claims are barred by res judicata and/or collateral estoppel, and the complaint fails to allege any wrongdoing by Defendant. Plaintiffs' counsel met and conferred with Defendant, but the parties were unable to resolve their differences.

      Defendant timely served the demurrer on Plaintiffs, who did not file an opposition.

                                                                                       III.       LEGAL STANDARDS

      A demurrer tests the sufficiency of a complaint as a matter of law and raises only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) In testing the complaint’s sufficiency, the court must assume the truth of the properly pleaded factual allegations as well as facts that can be reasonably inferred from those expressly pleaded facts. The court may also consider matters properly subject to judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

      The court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.4th 634, 638.) Plaintiff is required to allege facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the complaint fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer. Code Civ. Proc., § 430.10(e); (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126.)

      Sufficient facts are the essential facts of the case “with reasonable precision and with particularity that is sufficiently specific to acquaint the defendant with the nature, source, and extent of his cause of action.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.)  Whether the Plaintiff will be able to prove the pleaded facts is irrelevant. (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.)      

                                                                                                IV.       DISCUSSION

      Defendant argues that the complaint is brought to relitigate a 2011 FINRA Arbitration award in favor of Defendant. Two superior court judges have denied Plaintiffs’ efforts to vacate the FINRA award. The complaint is based on allegations concerning a subpoena seeking documents and requests for admissions from Defendant that ignored the 10-day discovery hold.

      The court grants Defendant’s request for judicial notice of the a FINRA arbitration award issued in Case No. 10-02853 between Losito as claimant and respondents, Felix E. Ajegbo individually and as an agent/employee of Go Now Securities; a court order in BS135405 Ajegbo, et al v. Dennis Paul Encapera; a First Amended Verified Petition and orders in BS173053 Felix Ajegbo et al. Dennis Paul Encapera. (RJN Exs. 2-5; Evid. Code, § 452(d) and (h).)

      The court takes judicial notice of the existence of these documents but not of facts stated therein as the truthfulness and proper interpretation of the document are disputable. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113–114.)

      Defendant has not persuasively established that the present lawsuit is precluded by collateral estoppel. The complaint seeks a determination that certain statements made by Defendant in 2007 should be declared “truthful” and “legally binding.” (Complaint, ¶ 1-2.)  Defendant Losito initiated an arbitration against Felix E. Ajegbo aka Jerry Jones as agent/employee of GoNow Securities and third party, Dennis Paul Encapera, filed June 17, 2010. (RJN, Ex. 1.) The arbitration arose from Losito’s termination of employment with Respondent, GoNow. (Id. pg. 6).

      In its primary aspect, res judicata, or “claim preclusion” prevents relitigation of the same cause of action in a second suit between the same parties or their privities where the claim was finally litigated. (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.) The second aspect of res judicata known as collateral estoppel, or issue preclusion, prohibits the relitigation of issues decided in a prior proceeding. Issue preclusion applies "(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party." (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 825.) Collateral estoppel applies even if the second lawsuit alleges different causes of action. (Id.)

      Defendant has not persuasively established that Losito’s alleged statements about the “Firm” that form the basis of this action relates to Losito’s employment action against third parties not involved in this action. Defendant has not established that identical issues were litigated in the other court cases or the arbitration or that the Firm Plaintiffs are in privity with the GoNow Respondents, who were purportedly Defendant’s employer.

      The complaint, however, fails to allege facts sufficient to support a claim for declaratory relief. To state a claim, a plaintiff must allege: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party or with respect to property (among other things). (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410; Code Civ. Proc., § 1060.)  A declaratory relief claim may be brought by any person interested under a written instrument or under a contract, or who desires a declaration of his or her rights or duties with respect to another. (Code Civ. Proc., § 1060.)

      The claim is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a contract and requests that the rights and duties be adjudged. (Condor Ins. Co. v. Williamsburg Nat. Ins. Co. (1996) 49 Cal.App.4th 554, 565.)

      Plaintiffs do not allege an “actual controversy.” Plaintiffs contend that Defendant made admissions under oath that must be declared legally binding. (Complaint, ¶ 16.) The complaint further alleges that “no actual controversy exists between Plaintiff[s] and Defendant regarding the effect of Defendant’s sworn admissions to FINRA.” (Complaint, ¶ 15.)

      Plaintiffs do not allege any cause of action that would entitle them to the relief requested which includes a dismissal with prejudice of the “invalid FINRA District 11 arbitration Losito initiated and maintained … as a fraudulent and vexatious action;” for a permanent injunction against Defendant precluding Defendant from issuing “further threats and harassment;” an order deeming the “invalid District 11 action” “void on its face [] hateful, [and] racist;” and compensatory and punitive damages for Losito’s alleged extortion, defamation, and theft of funds. (Complaint, ¶ 5:20 – 6:15.)

                                                                                               V.        CONCLUSION

      A demurrer may be sustained if a complaint is “uncertain.” Uncertainty exists where a complaint’s factual allegations are so confusing, they do not sufficiently apprise a defendant of the issues it is being asked to meet. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2; Code Civ. Proc., § 430.10(f).) The complaint is fatally uncertain.

      Leave to amend is ordinarily given if there is a reasonable possibility that the defect can be cured. However, it is a plaintiffs’ burden to demonstrate how he or she can amend the complaint and how that 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.)

      Plaintiffs have not filed an opposition to demonstrate how the defects can be cured to state a cognizable cause of action. Without more, demurrer is SUSTAINED without leave to amend.