Judge Ralph C. Hofer, Case Number: 23GDCV01777, Date: 2023-12-08 Tentative Ruling

Judge: Ralph C. Hofer, Case: 23GDCV01777, Date: 2023-12-08 Tentative Ruling

Case Number: 23GDCV01777 Hearing Date: March 29, 2024 Dept: D

TENTATIVE RULING

Calendar: 8

Date: 3/29/2024

Case No. 23 GDCV01777 Trial Date: None Set

Case Name: A & T Advisors dba Anchor Bookkeeping v. Cahit Soykat dba Roma Pizza

MOTION FOR RECONSIDERATION

Moving Party: Defendant Cahit Soykat

Responding Party: Plaintiff A & T Advisors dba Anchor Bookkeeping

When was the prior ruling made? December 8, 2023

What was the prior motion? Demurrer

Who was the prior judge (or court)? Honorable Ralph C. Hofer

What was the court's order or decision? Demurrer overruled to three causes of action, sustained with leave to amend as to one cause of action

What date was this motion filed? December 19, 2023

Motion filed within 10 days from service of notice of entry of the order? Yes

FACTUAL AND PROCEDURAL BACKGROUND:

Plaintiff A&T Advisors dba Anchor Bookkeeping (Anchor Bookkeeping) alleges that in October of 2022, plaintiff and defendant Cahit Soykat dba Roma Pizza (Soykat) entered into an Agreement for Limited Consulting Services whereby plaintiff agreed to assist, advise, consult, prepare and help defendant to apply for and become eligible for the Employee Retention Credit (ERC) program, pursuant to which a refundable tax credit was made available for businesses and tax exempt organizations that had employees and were affected during the COVID-19 pandemic.

Plaintiff alleges that pursuant to the Agreement, defendant agreed to compensate plaintiff 17.5% of the credit received under the ERC program. The complaint alleges that plaintiff assisted defendant in securing tax credits under the ERC program in the amount of $104,939.21, has sent an invoice to defendant in the amount of $18,364.36 for its services, but defendant has refused to pay for plaintiff’s services.

Plaintiff also alleges that defendant represented to plaintiff that defendant had the financial ability and would compensate plaintiff as agreed, but that this representation was false, or made without reasonable grounds for believing it was true, as plaintiff did not have the financial ability to compensate plaintiff, and that plaintiff relied on and was harmed as a result of the representation.

On December 8, 2023, the court heard a demurrer brought by defendant Soykat to the complaint. The demurrer was overruled to the second cause of action for fraud, third cause of action for negligent misrepresentation and fourth cause of action for quantum meruit. The demurrer was sustained with ten days leave to amend to the first cause of action for breach of contract. On December 8, 2023, plaintiff timely filed and served a First Amended Complaint.

DECLARATION OF MOVING PARTY includes:

Prior application made No

When the application was made No

What judge No

Order or decision made No

New or different facts, circumstances or law No

ANALYSIS:

Procedural

Declaration Insufficient

The declaration submitted with the moving papers fails to comply with any of the requirements applicable to a motion for reconsideration.

CCP § 1008(a) specifically requires:

“The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown.”

This subdivision further provides:

“For a failure to comply with this subdivision any order made on a subsequent application may be revoked or set aside on ex parte motion.”

Subdivision (d) provides that a violation of this section may be punishable as contempt and warrant sanctions.

Under CCP section 1008, subdivision (e):

“This section specifies the court's jurisdiction with regard to applications for reconsideration of its orders and renewals of previous motions, and applies to all applications to reconsider any order of a judge or court, or for the renewal of a previous motion, whether the order deciding the previous matter or motion is interim or final. No application to reconsider any order or for the renewal of a previous motion may be considered by any judge or court unless made according to this section.”

Here, the declaration fails to identify what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown. [See Soykat Declaration]. In fact, as pointed out in the opposition, the motion itself does not clearly specify which cause of action to which the demurrer was made is the subject of the portion of an order of which defendant now seeks reconsideration.

More importantly, the declaration fails to specify any new or different facts, circumstances, or law which are claimed to be shown. The declaration indicates that there was never a time when defendant made a misrepresentation or concealed facts, so that defendant is entirely unaware of what basis for the allegations of fraud are, “other than that he is alleging that I promised to pay him and never had the intention to do so.” [Soykat Decl., para. 4]. Defendant indicates this is confusing because he is not sure if this is a legitimate claim for fraud, and also that the claim is vague. [Soykat Decl., paras. 5, 6]. These are not new or different facts, as the content of the pleading, and defendant’s knowledge of the facts, were known to defendant well before the prior hearing. Moreover, as argued in the opposition, whether the facts alleged are in fact true is irrelevant to a demurrer to a pleading. See Serrano v. Priest (1971) 5 Cal.3d 584, 591; Del E. Webb Corp. v. Structural Materials Co. (1981, 2nd Dist.) 123 Cal.App.3d 593, 604 (“As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be.”)

Moreover, when bringing a motion for reconsideration based on new facts, the moving party must present “a satisfactory explanation for failing to provide the evidence earlier, which can only be described as a strict requirement of diligence.” Garcia v. Hejmadi, (1997) 58 Cal.App.4th 674, 690.

Accordingly, by citation to Garcia, the Second District holds:

“Section 1008, subdivision (a) requires that a motion for reconsideration be based on new or different facts, circumstances, or law. A party seeking reconsideration also must provide a satisfactory explanation for the failure to produce the evidence at an earlier time.”

New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212.

The motion fails to explain why plaintiff did not or was unable to make the current arguments in connection with the previous demurrer. The opposition points out that plaintiff did not previously argue that the tort causes of action lacked specificity, so that plaintiff could not reasonably respond, when this argument clearly could have been made previously. The opposition also points out that to the extent plaintiff’s declaration seems to now argue that plaintiff was not provided sufficient notice of the claims being asserted against plaintiff, despite plaintiff’s thorough opposition to the previous demurrer and the citation to legal authority which affirmatively reject the necessity of pleading a concealment claim with heightened specificity, defendant failed to file a written reply to plaintiff’s opposition.

In the absence of new or different facts, circumstances, or law, as set forth above, and any attempt to explain, let alone satisfactorily explain, the failure to offer them previously, the statute provides that the court may not reconsider its previous ruling. The motion for reconsideration pursuant to CCP section 1008 is denied for failure of defendant to submit the information required in the moving declaration.

Substantive

CCP § 1008(a) provides, in pertinent part:

“When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order.”

This subdivision further provides:

“For a failure to comply with this subdivision any order made on a subsequent application may be revoked or set aside on ex parte motion.”

Again, as set forth above, under CCP section 1008, subdivision (e):

The trial court’s determination of a motion for reconsideration is reviewed for abuse of discretion. See Wiz Technology, Inc. v. Coopers & Lybrand (2003, 2nd Dist.) 106 Cal.App.4th 1, 16.

As discussed above, the declaration as well as the moving papers fail to specify any ground for reconsideration “based upon new or different facts, circumstances, or law,” and further fail to specify what part of the order is challenged, and how the court should “modify, amend, or revoke the prior order.”

The legal authorities on the merits of the economic loss rule cited are the same authorities discussed by the parties in the previous papers, so there is no new law, and the facts were all within the knowledge of defendant at the time defendant filed the previous demurrer.

The motion appears to acknowledge this irregularity, but argues that the court may, on its own motion, correct clerical errors or on its own motion change its mind. Defendant cites to “Henry Ramirez Morataya, et al. v. Toyota Motor Sales, U.S.A., Inc. (2023).” There is no citation to this legal authority other than this name and the date. The court was able to locate a Los Angeles County Superior Court case by this name pending in the North Central District, Burbank Courthouse, but is unable to ascertain how that trial court case file would include citable legal authority at all which would be binding on this court and is unable to ascertain how that case addressed any issue raised by this motion.

Plaintiff in opposition appears to also have been unable to locate this authority as well, and assumes defendant is relying on Le Francois v. Goel (2005) 35 Cal.4th 1094, in which the California Supreme Court held a trial court lacks authority to hear and determine a second motion for summary judgment brought by a party which is not based on new facts or law or otherwise conforms with the summary judgment statutory limitations on such motions. Le Francois, at 1104. The Court then considered whether the legislature through such statutes can limit the authority of the court to act on its own motion to correct its own errors, and construed the statutes as not imposing a limitation on the court’s authority to reconsider:

“We hold that sections 437c and 1008 limit the parties’ ability to file repetitive motions but do not limit the court’s ability, on its own motion, to reconsider its prior interim orders so that it may correct its own errors.”

Le Francois, at 1107.

The Court then noted that a party could not be prevented from “communicating the view to a court that it should reconsider a prior ruling,” but in that case, or where the judge “has an unprovoked flash of understanding in the middle of the night,” the Court imposed specific conditions on the trial court’s authority to reconsider a decision on its own motion:

“Unless the requirements of section 437c, subdivision (f)(2) or 1008 are satisfied, any action to consider a prior interim order must formally begin with the court on its own motion. To be fair to the parties, if the court is seriously concerned that one of its prior interim rulings might have been erroneous, and thus that it might want to reconsider that ruling on its own motion— something we think will happen rather rarely— it should inform the parties of this concern, solicit briefing, and hold a hearing. Then, and only then, would a party be expected to respond to another party’s suggestion that the court should reconsider a previous ruling. This procedure provides a reasonable balance between the conflicting goals of limiting repetitive litigation and permitting a court to correct its own erroneous interim orders.”

Le Francois, at 1108-1109. (Internal citations omitted).

It should be noted that since the holding in Le Francois, the legislature has amended the summary judgment statute to set forth a procedure for bringing a second motion for summary judgment. See CCP § 437c(f)(2):

“A party shall not move for summary judgment based on issues asserted in a prior motion for summary adjudication and denied by the court, unless that party establishes to the satisfaction of the court, newly discovered facts or circumstances or a change of law supporting the issues reasserted in the summary judgment motion.”

In any case, defendant’s argument does not provide authority for defendant to simply disregard the statutory requirements applicable to motions for reconsideration, and make a second demurrer on the same grounds, and the court in this situation is not persuaded, to nor inclined to, on its own motion, issue notice inviting further briefing for reconsideration of its prior ruling.

The motion does not establish that reconsideration here is warranted under the statute or any cognizable authority based on new or different facts, circumstances, or law.

Even if the court were to reconsider the matter in light of defendant’s renewed arguments, the court’s ruling would not change.

The court’s previous minute order states in connection with the Second Cause of Action for Fraud—Intentional Misrepresentation, Third Cause of Action for Negligent Misrepresentation and Fourth Cause of Action for Quantum Meruit

“Defendant in the demurrer argues that these tort causes of action are barred by the economic loss doctrine.

Defendant briefly argues that these claims are barred because in general there is no recovery in tort for negligently inflicted “purely economic loss,” meaning financial harm unaccompanied by physical or property damage.

Plaintiff argues in the opposition that the complaint alleges each element of the subject fraud, negligent misrepresentation, and quantum meruit causes of action, and also relies on legal authority under which an exception to the economic loss rule is recognized, and tort damages are available in contract-based cases where the contract was fraudulently induced. Dhital v. Nissan North America, Inc. (2022) 84 Cal.App. 5th 828, 839. The court of appeal in Dhital found that the trial court had improperly sustained a demurrer based on the bar of the economic loss rule, noting that the California Supreme Court in Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, had “affirmed that tort damages are available in contract cases where the contract was fraudulently induced.” Dhital, at 839, italics in original, citing Robinson, at 989-990.

The complaint here rests on theories that defendant made representations to plaintiff which caused plaintiff to enter into a contract and perform services plaintiff would not otherwise have entered into or performed. [Complaint, paras. 20-25, 30-35]. This is sufficient to plead around the economic loss rule, and the demurrer on this ground is overruled. To the extent the argument is meant to apply to the fourth cause of action for quantum meruit, the demurrer fails on the additional ground that this does not appear to be a tort cause of action subject to the economic loss rule, but a common count. In any case, generally, common counts are not subject to general or special demurrer. See Moya v. Northrup (1970) 10 Cal.App.3d 276, 279.

No other grounds are argued with respect to the sufficiency of the second through fourth causes of action. The demurrer to these three causes of action will accordingly be overruled.”

[Minute Order 12/8/2023, p. 7].

Defendant here seems to argue that the courts in Dhital and Robinson Helicopter required a duty that is either completely independent of the contract or arises from conduct that is intentional and intended to harm. However, the complaint expressly alleged that there was a duty owed to not conceal material facts, and that there was an awareness on the part of defendant that defendant would be unable to pay for the services solicited. [Complaint, paras. . 20-25, 30-35].

This court notes that although neither party has raised the issue, the California Supreme Court has granted review of the opinion in Dhital v. Nissan North America, Inc. (2022) 84 Cal.App. 5th 828. See Dhital v. Nissan North America (2023) 523 P.3d 392. Although review has been granted by the California Supreme Court, the Court in its granting of the petition for review denied a request for an order directing depublication of the opinion. [Id.].

Under CRC Rule 8.1115(e):(3):

“(e) When review of published opinion has been granted

(1) While review is pending

Pending review and filing of the Supreme Court's opinion, unless otherwise ordered by the Supreme Court under (3), a published opinion of a Court of Appeal in the matter has no binding or precedential effect, and may be cited for potentially persuasive value only.”

The court continues to find Dhital persuasive authority pending review, and the previous analysis based on Robinson Helicopter, which continues to be good law, also would not change. It also bears noting again that defendant previously made no legal argument based on lack of specificity, when defendant had clear opportunity to do so.

The motion for reconsideration accordingly is denied.

The ruling of December 8, 2023 will stand as the order of the court.

RULING:

Motion for Reconsider [sic] is DENIED.

Procedurally, the declaration in support of the motion fails to indicate what application was made before, when and to what judge, what order or decisions being challenged were made, and what new or different facts, circumstances, or law are claimed to be shown, which were not known to the moving party or could not have been or were not argued at the previous hearing on which the motion is based, as required under CCP § 1008. No showing of diligence is attempted to be made. The arguments, law, and facts asserted were in fact addressed to the Court at the previous hearing, at which defendant was fully heard, or such arguments could have been addressed in the motion, a written reply, or oral argument.

Even if the Court were to reconsider its previous rulings in light of the arguments made in the moving papers, the rulings would not change. The Court would again find that the demurrer was previously properly overruled as to three causes of action and sustained with leave to amend as to one cause of action.

DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE

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