Judge Randolph M. Hammock, Case 20STCV06656 2023-04-18 Tentative Ruling

Plaintiff Karl Roller alleges he worked as an “executive distributor” with Defendants Wendy R. Lewis, Randy Ray, and their companies Defendants Jeunesse LLC and Jeunesse Global Holdings LLC. As part of this role, Plaintiff alleges he brokered a business deal between the Jeunesse business organizations and now-dismissed Defendants Yolanda Halston and Rodger Halston. Plaintiff contends that a deal materialized but that he was denied a commission. Plaintiff brings causes of action for (1) constructive fraud, (2) fiduciary fraud, (3) conspiracy to commit and aiding and abetting constructive fraud, (4) conspiracy to commit and aiding and abetting fiduciary fraud, (5) unfair business practices, and (6) accounting.

Defendants’ Motion for Judgment on the Pleadings is GRANTED only as to the Third and Fourth Causes of Action, without leave to amend. It is DENIED WITHOUT PREJUDICE as to all other causes of action and claims for attorneys fees and punitive damages.

The rules applicable to demurrers also apply to motions for judgment on the pleadings. (County of Orange v. Association of Orange County Deputy Sheriffs (2011) 192 Cal.App.4th 21, 32.) The trial court must accept as true all material facts properly pleaded, but does not consider conclusions of law or fact, opinions, speculation, or allegations contrary to law or facts that are judicially noticed. (Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215, 1219-20.) “A motion for judgment on the pleadings may be made at any time either prior to the trial or at the trial itself.” (Stoops v. Abbassi (2002) 100 Cal.App.4th 644, 650.)

Defendants first argue that all causes of action are barred by a three-year statute of limitations. They contend that Plaintiff discovered the constructive fraud “by no later than February 13, 2017, when he contacted the Halston Defendants upon learning of the alleged concealed ‘launch deal’ with the Jeunesse Defendants.” (Mtn. 6: 18-21.) Based on that date, Plaintiff had to file suit by on or about February 12, 2020. He did not file this action, however, until February 18, 2020.

Plaintiff alleges that “in or about February 2017,” he “first received information” that a “launch deal” had been reached with the Jeunesse Defendants. (Compl. ¶ 29.) Then, “[o]n or about, February 13, 2017,” Plaintiff contacted Yolanda Halston “to ascertain her position regarding his ongoing commission and return on investment in her company.” (Id. ¶ 30.) “On or about February 27, 2017,” Halston “first denied and repudiated her relationship with and obligations to Plaintiff.” (Id. ¶ 31.)

“[T]he uniform California rule is that a limitations period dependent on discovery of the cause of action begins to run no later than the time the plaintiff learns, or should have learned, the facts essential to his claim. [Citation.] Thus, for example, the statute of limitations in a cause of action for fraud ‘commences to run after one has knowledge of facts sufficient to make a reasonably prudent person suspicious of fraud, thus putting him on inquiry....’” (Cleveland v. Internet Specialties W., Inc. (2009) 171 Cal. App. 4th 24, 31.)

This court cannot find from the face of the complaint that the claims are barred by the three-year statute of limitations. Based on the allegations, Plaintiff may have known that a “launch deal” had been reached on February 13, 2017. However, he did not learn that he would not be paid for initiating that deal until later on February 27, 2017. (Id. ¶¶ 30, 31.)

Thus, Plaintiff did not know—and there is nothing to suggest he should have known—of the alleged fraud until February 27, 2017. Plaintiff brought this action within three-years of that date. At least for pleadings purposes, his action is therefore timely.

Constructive fraud “is a unique species of fraud applicable only to a fiduciary or confidential relationship.” [Citation.] “Constructive fraud ‘arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice.’ [Citation.] Actual reliance and causation of injury must be shown. [Citation.]” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal. App. 4th 1105, 1131.) “[W]hether a fiduciary duty has been breached, and whether [conduct] constitutes constructive ... fraud, depends on the facts and circumstances of each case.” (Id.)

Defendants first argue the fraud claims fail because Plaintiff was acting as an agent of Defendants—and not the other way around. Thus, Defendants contend, no fiduciary duty was owed. This court need not address whether a fiduciary duty arises in that context, because Plaintiff also alleges that he entered into a joint venture with the Defendants. (Compl. ¶¶ 22, 52, 53; see also Dubin v. Robert Newhall Chesebrough Tr. (2002) 96 Cal. App. 4th 465, 477 [“A plaintiff is permitted to plead alternative inconsistent theories.”].) “Parties to a joint venture agreement assume the status of fiduciaries.” (Boyd v. Bevilacqua (1966) 247 Cal.App.2d 272, 290; see also Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1338 [“[E]xamples of relationships that impose a fiduciary obligation to act on behalf of and for the benefit of another are ‘a joint venture, a partnership, or an agency.”].) Thus, a fiduciary duty exists by virtue of the alleged joint venture.

But Defendants also argue Plaintiff has not alleged a joint venture involving them. “A joint venture is ‘an undertaking by two or more persons jointly to carry out a single business enterprise for profit.’ ” (Weiner v. Fleischman (1991) 54 Cal.3d 476, 482.) “ ‘There are three basic elements of a joint venture: the members must have joint control over the venture (even though they may delegate it), they must share the profits of the undertaking, and the members must each have an ownership interest in the enterprise.’” (Cochrum v. Costa Victoria Healthcare, LLC (2018) 25 Cal.App.5th 1034, 1053.)

Although Defendants’ argument does have surface appeal—the existence of a joint venture is questionable on these allegations—it is settled that “[w]hether a joint venture actually exists depends on the intention of the parties.” (Unruh-Haxton v. Regents of University of California (2008) 162 Cal.App.4th 343, 370.) “[W]here evidence is in dispute the existence or nonexistence of a joint venture is a question of fact to be determined by the jury. [Citation.]’ ” (Id.) For pleadings purposes, Plaintiff has alleged the existence of a joint venture involving the moving Defendants.

Defendants next argue the fraud causes of action are not pled with the requisite specificity. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Plaintiff alleges that an agreement between the moving Defendants and Halston parties materialized—in part because of Plaintiff’s efforts—but that Defendants concealed that fact from him. Thus, Plaintiff alleges that he was essentially cut-out of the joint venture by the other Defendants. The facts of the fraud are therefore more likely within the knowledge of the moving parties. (Comm. On Children's Television, Inc. v. Gen. Foods Corp. (1983) 35 Cal. 3d 197, 217 [“Less specificity is required when ‘it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.’”].)

“Civil conspiracy is not an independent tort. Instead, it is ‘a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.’” (City of Indus. v. City of Fillmore (2011) 198 Cal. App. 4th 191, 211–12.) Courts have disregarded a standalone cause of action for conspiracy to commit a tort, and instead construed the claim as a single cause of action together with the underlying tort. (Id.) This court will do the same.

Accordingly, Defendants’ Motion for Judgment on the Pleadings as to the Third and Fourth causes of action is GRANTED, without leave to amend. However, this court will construe the allegations together with the underlying fraud claims.

Business and Professions Code section 17200 defines “unfair competition” to include “any unlawful, unfair or fraudulent business act or practice....” “The scope of section 17200 is broad, encompassing ‘anything that can properly be called a business practice and that at the same time is forbidden by law.’ ... It governs ‘anti-competitive business practices’ as well as injuries to consumers, and has as a major purpose ‘the preservation of fair business competition.’” [Citations.] (Linear Tech. Corp. v. Applied Materials, Inc., (2007) 152 Cal. App. 4th 115, 133). Whether a practice violates the section “is generally a question of fact which requires ‘consideration and weighing of evidence from both sides’ and which usually cannot be made on demurrer.” [Citation]. (Id.)

Given the broad applicability of section 17200 and the requirement that a court “weigh[] evidence from both sides,” the demurrer is improper. Plaintiff has properly alleged facts, that if proven true, could violate the UCL.

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin, (2009) 173 Cal. App. 4th 156, 179.) “An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” (Id.) “[T]he nature of a cause of action in accounting is unique in that it is a means of discovery. An accounting is a ‘species of disclosure, predicated upon the plaintiff's legal inability to determine how much money, if any, is due. [Citation.] Thus, the purpose of the accounting is, in part, to discover what, if any, sums are owed to the plaintiff, and an accounting may be used as a discovery device.” (Id. at 180.)

Here, Plaintiff has sufficiently alleged a “relationship” between him and Defendants to maintain the cause of action, and at least at this stage, there appears to be some dispute as to whether the sum in dispute is certain or not.

Defendants also contend the pleading lacks facts sufficient to support an award of punitive damages or attorney’s fees. Defendants therefore seek a motion for judgment on the pleadings “with respect to Plaintiff’s meritless claims for punitive damages and attorney’s fees.” (Mtn. 15: 7-8.)

Generally, the proper vehicle for challenging a request for punitive damages and attorney’s fees is a motion to strike. (See CCP § 436 [A motion to strike lies either (1) to strike any irrelevant, false or improper matter inserted in any pleading; or (2) to strike any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of court].)

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.