Judge: Peter A. Hernandez, Case: 22PSCV00424, Date: 2022-09-06 Tentative Ruling

Case Number: 22PSCV00424    Hearing Date: September 6, 2022    Dept: O

Plaintiff/Cross-Defendant Trans Knights, Inc.’s and Cross-Defendant Rachel Zhou Zhu’s

Motion to Dismiss Cross-Complaint is DENIED.

Background     

Plaintiff Trans Knights, Inc. (“Trans Knights”) alleges as follows:

Trans Knights is the employer and operator of an international freight business; Jessica Soto (“Soto”), Mary Yafuso (“Yafuso”) and Maximiliano Quezada (“Quezada”) are now-former employees. Soto, Yafuso and Quezada misappropriated and used confidential trade secret information without authorization during and after their employment with Trans Knights to form and operate Jam Freight Services LLC (“Jam Freight”), a business in direct competition with Trans Knights. 

On May 2, 2022, Trans Knights filed a complaint, asserting causes of action against Jam Freight, Soto, Yafuso, Quezada and Does 1-50 for:

1.               Breach of Contract

2.               Fraud/Concealment

3.               Breach of Loyalty and Breach of Fiduciary Duties

4.               Conversion

5.               Violation of California Uniform Trade Secrets Act

6.               Unjust Enrichment and Constructive Trust

7.               Unfair Business Practices 

On June 16, 2022, Soto, Yafuso and Quezada filed a cross-complaint, asserting causes of action against Trans Knights, Rachel Zhou Zhu (“Zhu”) and Roes 1-50 for:

1.               Unpaid Overtime Wages

2.               Statutory Penalties Under Labor Code Section 203

3.               Statutory Penalties Under Labor Code Section 226

4.               Additional Wages Under Labor Code Section 226.7

5.               Violation of Labor Code § 2802

6.               Violation of Unfair Competition Laws 

A Case Management Conference is set for September 6, 2022.

Discussion 

Trans Knights and Zhu move the court for an order dismissing Soto’s, Yafuso’s and Quezada’s cross-complaint, on the basis that it fails to state claims for which relief may be granted. Trans Knights and Zhu alternatively request the court for leave to amend the complaint. 

Trans Knights and Zhu bring the aforesaid motion pursuant to Code of Civil Procedure § 581, subdivision (m), which provides that “[t]he provisions of this section shall not be deemed to be an exclusive enumeration of the court's power to dismiss an action or dismiss a complaint as to a defendant.” 

“A motion to dismiss may be substituted for a demurrer as the first pleading. If denied, it is treated as an overruled demurrer.” (Barragan v. Banco BCH (1986) 188 Cal.App.3d 283, 299.) A demurrer may be made on grounds that the pleading, inter alia, does not state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).)

When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905 [citations omitted].) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) “[A] demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction placed on an instrument pleaded therein, or facts impossible in law, or allegations contrary to facts of which a court may take judicial knowledge.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [citations omitted].) 

Here, Trans Knights and Zhu contend that the cross-complaint fails to state claims with respect to Yafuso and Quezada on the basis that these two cross-complainants allegedly entered into severance agreements prior to filing the cross-complaint wherein they waived their wage-and-hour claims. The fact that Yafuso and Quezada may have entered into such severance agreements, however, is improper for consideration, inasmuch as said agreements are not referenced anywhere in the cross-complaint, nor are they subject to judicial notice. 

Accordingly, the motion to dismiss is denied. The court also denies Trans Knights and Zhu’s alternative request for leave to amend their complaint, inasmuch as such relief was not requested in the notice or motion and as it must be the subject of its own motion.