Judge: Michael Shultz, Case: 25STCV05080, Date: 2025-06-03 Tentative Ruling

Case Number: 25STCV05080    Hearing Date: June 3, 2025    Dept: 40

25STCV05080 P.L.A.C.T. Bros, LLC v. California Department of Tax and Fee Administration

[TENTATIVE] ORDER SUSTAINING DEMURRER TO COMPLAINT

I.        BACKGROUND

       The complaint alleges that Plaintiff became obligated to pay restitution to Defendant pursuant to a plea agreement. Plaintiff fulfilled its obligations; however, Defendant sent a notice that Plaintiff was required to pay additional restitution in breach of the parties’ settlement agreement. Defendant also incorrectly calculated the interest rate.

       Plaintiff alleges claims for breach of the plea agreement, a claim for the court to modify the restitution order to reflect the accurate tax liability, and failure to comply with the Market Place Facilitator Act.

II.      ARGUMENTS

       Defendant argues that Plaintiff lacks standing to pursue these claims because the plea agreement for restitution in an underlying criminal matter was made between Defendant and non-parties Derek and Justin Stradley.  By way of this complaint, Plaintiff seeks reconsideration of an order made by the criminal court. The criminal court denied the motion.

       The claims are barred by res judicata as they were fully adjudicated by the criminal court in 2023. The court lacks authority to modify the terms of the criminal plea agreement, years after full performance and release from the criminal court’s jurisdiction.

       Neither Plaintiff nor the Stradleys exhausted their administrative remedies to support a judicial tax-refund action.

       Defendant timely served Plaintiff by email. Plaintiff did not file an opposition.

III.    DISCUSSION

1. Procedural issues

       The court grants Defendant’s request for judicial notice of court records filed in BA484107 The People of the State of California v. Derek Ryan Stradley and Justin Royce Stradley. (Evid. Code, § 452 (d) (court records).) The court also takes judicial notice of the agency’s letter to Plaintiff of a revised billing order. (Evid. Code, § 452 (c).)

       Defendant’s claim that the court can sustain demurrer without leave to amend based on Plaintiff’s failure to file an opposition is not supported. The court of appeal in Herzberg v. County of Plumas (2005) 133 Cal.App.4th 1, cited by Defendant, determined that Plaintiff abandoned an issue by failing to address it in their appeal briefs.  The court has a duty to "examine the pleading, and determine as to its sufficiency, whether the demurrer is argued or not.’" (Greninger v. Fischer (1947) 81 Cal.App.2d 549, 554 [“A demurrer raises an issue of law. To overrule the demurrer is to decide that issue.”].)

B.      Standing

       Standing is established where a party has a beneficial interest in the controversy, and "‘some special interest to be served or some particular right to be preserved or protected.’ [Citation.] This interest must be concrete and actual and must not be conjectural or hypothetical." (Limon v. Circle K Stores Inc. (2022) 84 Cal.App.5th 671, 699.)

       The complaint alleges that P.L.A.C.T. Bros entered into a plea agreement with Defendant to pay restitution of $809,621. (Complaint, ¶ 6.) The plea agreement attached to the complaint reflects that settling parties were Defendant and non-parties, Derek Ryan Stradley and Justin Royce Stradley (“the Stradleys”). (Complaint, Ex. 1.)  Exhibits attached to the complaint that contradict allegations take precedence." (Mead v. Sanwa Bank California (1998) 61 Cal.App.4th 561, 567–568.)  

C.      Res judicata

       Defendant has not supported the claim that res judicata applies. 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.) Here, there are no facts to suggest that Plaintiff is a party in privity with the Stradleys.

       Finally, whether the claims fail on the substantive merits is not addressed given the issue of standing is fatal to all the claims asserted by P.L.A.C.T. Brothers who were not involved in the underlying plea agreement.

IV.    CONCLUSION

       Based on the foregoing, demurrer to the complaint is SUSTAINED. Plaintiff has not demonstrated how the defects can be corrected, and Plaintiff did not request leave to amend, therefore, the court is inclined to deny leave to amend. (Association of Community Organizations for Reform Now v. Department of Industrial Relations (1995) 41 Cal.App.4th 298, 302. [“The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended.”].)