Judge: Randy Rhodes, Case: 22CHCV00493, Date: 2023-03-17 Tentative Ruling
Case Number: 22CHCV00493 Hearing Date: March 17, 2023 Dept: F51
Dept. F-51
Date: 3/17/23
Case #22CHCV00493
DEMURRER
Demurrer Filed: 1/5/23
MOVING PARTY: Defendant Topolewski America, Inc., a
Nevada corporation (“Moving Defendant”)
RESPONDING PARTY: Plaintiff Bank of the West
(“Plaintiff”)
NOTICE: OK
RELIEF REQUESTED: Moving Defendant demurs to the
eighth and tenth causes of action in Plaintiff’s complaint.
TENTATIVE RULING: The demurrer is sustained as to
Plaintiff’s tenth cause of action with 20 days leave to amend. The demurrer is
overruled as to Plaintiff’s eighth cause of action. Plaintiff’s request for
judicial notice is denied.
BACKGROUND
This action arises
out of three business loans extended by Plaintiff to Moving Defendant.
Plaintiff allegedly entered into three separate loan agreements with Moving
Defendant on 7/26/19, 5/14/20, and 7/12/21, each secured by various pieces of Moving
Defendant’s equipment as collateral. (Compl. ¶¶ 11–19.)
Plaintiff alleges
that Moving Defendant breached the loan and security agreements “by, among
other things, failing and refusing to allow [Plaintiff] to inspect the
Equipment Collateral.” (Id., ¶ 24.) Plaintiff also alleges that it has
reason to believe Moving Defendant “never actually had ownership or possession
of the Collateral and that [Moving Defendant] made continuing
misrepresentations to [Plaintiff] concerning [Moving Defendant’s] alleged
ownership and possession thereof.” (Ibid.) Plaintiff alleges that nonmoving
defendant Gary G. Topolewski and Moving Defendant (collectively, “Defendants”)
“are the alter egos of one another, and each is fully responsible and liable
for all obligations and debts.” (Compl. ¶ 7.)
On 7/6/22, Plaintiff
filed its complaint against Defendants, alleging causes of action for Breach of
Contract and Breach of Security Agreement with respect to each of the three
loans. Plaintiff’s complaint also pleads causes of action for (7) Recovery of
Personal Property; (8) Temporary
Restraining Order/Preliminary Injunction; (9) Conversion; and (10) Fraud and
Deceit.
On 1/5/23, Moving
Defendant filed the instant demurrer. On 3/2/23, Plaintiff filed its opposition
and request for judicial notice. On 3/7/23, Moving Defendant filed its reply.
On 3/14/23, this Court partially sustained nonmoving defendant Gary G.
Topolewski’s demurrer to Plaintiff’s complaint, with 20 days leave to amend.
ANALYSIS
Meet-and-Confer
Before filing its demurrer, “the demurring party shall meet
and confer in person or by telephone with the party who filed the pleading that
is subject to demurrer for the purpose of determining whether an agreement can
be reached that would resolve the objections to be raised in the demurrer.”
(Code Civ. Proc. § 430.41, subd. (a).) The demurring party must file and
serve a meet and confer declaration stating either: “(A) The means by which the
demurring party met and conferred with the party who filed the pleading subject
to demurrer, and that the parties did not reach an agreement resolving the
objections raised in the demurrer;” or “(B) That the party who filed the
pleading subject to demurrer failed to respond to the meet and confer request
of the demurring party or otherwise failed to meet and confer in good faith.” (Id.
at subd. (a)(3).)
Moving Defendant’s counsel declares that on 12/27/22, she
telephoned Plaintiffs’ counsel to meet and confer regarding the issues raised
in the instant demurrer, and the parties discussed telephonically on 12/29/22
without coming to a resolution. (Decl. of Sara Katz, ¶¶ 2–3.) Therefore, the
Court finds that Moving Defendant’s counsel has satisfied the
preliminary meet and confer requirements of Code of Civil Procedure section
430.41, subdivision (a).
Legal Standard
As a general matter, a party may respond to a pleading
against it by demurrer on the basis of any single or combination of eight
enumerated grounds, including that “the pleading does not state facts sufficient
to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) 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 pleading alone, and not the evidence
or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs.
(2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the
complaint’s properly pleaded or implied factual allegations. (Ibid.) The
only issue a demurrer is concerned with is whether the complaint, as it stands,
states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th
740, 747.)
Here, Moving
Defendant demurs to Plaintiff’s complaint for failure to allege facts sufficient
to support its eighth and tenth causes of action. (Code
Civ. Proc., § 430.10, subd. (e).)
Irreparable
Harm
Plaintiff’s
eighth cause of action seeks a temporary restraining order and preliminary
injunction against Defendants “from taking further action to interfere with
Lender’s rights to the Equipment Collateral.” (Compl. ¶ 98.) “The elements
of a cause of action for injunctive relief are (1) a tort or other wrongful act
constituting a cause of action; and (2) irreparable injury, i.e., a factual
showing that the wrongful act constitutes an actual or threatened injury to
property or personal rights which cannot be compensated by an ordinary damage
award.” (Brownfield v. Daniel Freeman
Marina Hospital (1989) 208 Cal.App.3d 405, 410.)
Moving
Defendant demurs to this cause of action on the basis that Plaintiff has not
pled irreparable harm “or any kind of harm that monetary damages would
not fully compensate. The amount claimed owed is certain—the amount of the
loans.” (Dem. 1:25–26.) Moving Defendant further asserts that the instant action
is based on Defendants’ alleged outstanding obligations under the subject loan
agreements, and therefore “when an identifiable sum of money would be
adequate damages, injunctive relief is inappropriate.” (Def.’s Reply, 1:28–2:1.)
In
opposition, Plaintiff notes that it has specifically alleged in its complaint “that,
‘if the Equipment Collateral is continuing to be used, the Equipment Collateral
may be damaged, transferred, concealed, or disposed of, and therefore, such
factors may render it impossible for [Plaintiff] to recover the value thereof.’”
(Pl.’s Opp. 6:2–5, quoting Compl. ¶
95.)
Based on
the foregoing, the Court finds that Plaintiff has sufficiently pled irreparable
harm as to the potential damage to the Equipment Collateral that could not be
remedied by monetary damages. Accordingly, the demurrer is overruled as to
Plaintiff’s eighth cause of action.
Fraud
Plaintiff’s
tenth cause of action alleges Fraud and Deceit. The Court notes that Plaintiff
has alleged this cause of action “as to Mr. Topolewski and Does 226-250,” and
not against Moving Defendant. (Compl. 25:3.) Nevertheless, the Court offers the
following analysis of the parties’ arguments as to this cause of action.
The
elements that must be pleaded in a cause of action for fraud are: (1) a
misrepresentation (false representation, concealment or nondisclosure); (2)
knowledge of its falsity (or “scienter”); (3) intent to defraud (i.e., to
induce reliance); (4) justifiable reliance; and (5) resulting damage. (Philipson
& Simon v. Gulsvig (2007) 154 Cal.App.4th 347, 363.)
Fairness
requires that allegations of fraud be pled “with particularity” so that the
court can weed out nonmeritorious actions before a defendant is required to
answer. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The
particularity requirement necessitates pleading facts that “show how, when,
where, to whom, and by what means the representations were tendered.” (Lazar
v. Superior Court (1996) 12 Cal.4th 631, 645.)
Moving
Defendant argues that this cause of action has not been pled with the requisite
degree of particularity. In opposition, Plaintiff cites to paragraphs 35
through 44 of the complaint, which detail Plaintiff’s investigation efforts,
and allegations that Defendants manufactured false documents and made
misrepresentations to Plaintiff “concerning the Equipment Collateral, insurance
certificates, and the business of the Borrower, in order to misappropriate
proceeds from the Loans for their own personal gain.” (Compl. ¶ 44.) Moreover, “the
Complaint alleges that Topolewski America made specific misrepresentations to
Plaintiff with full knowledge that each was false, with the intent to defraud
Plaintiff and to induce reliance by Plaintiff, and which Plaintiff justifiably
relied upon.” (Pl.’s Opp., 8:1–3, citing Compl. ¶¶ 110–112.)
The Court
finds that Plaintiff’s allegations fall short of pleading a fraud cause of action
against Moving Defendant with the requisite degree of particularity. Plaintiff
is required to plead facts showing “how, when, where, to whom, and by what
means the representations were tendered.” (Lazar, 12 Cal.4th at 645.)
Here, the complaint does not contain these specific allegations.
Accordingly,
the demurrer is sustained as to Plaintiff’s tenth cause of action.
LEAVE TO AMEND
Where a
demurrer is sustained, leave to amend must be allowed where there is a
reasonable possibility of successful amendment. (Goodman v. Kennedy
(1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court
that a pleading can be amended successfully. (Ibid.; Lewis v.
YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any
reasonable possibility that the plaintiff can state a good cause of action, it
is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada
Irrigation Dist. (1969) 70 Cal.2d 240, 245).¿
Here, the
Court notes that this demurrer is to the original complaint, and Plaintiff has
specifically requested leave to amend the complaint in the event that the Court
finds merit in any of Moving Defendant’s arguments. (Pl.’s Opp. 8:7–12.) Accordingly,
under the Court’s liberal policy of granting leave to amend, the Court grants
Plaintiff 20 days leave to amend the complaint to cure the defects set forth
above.
“Following
an order sustaining a demurrer or a motion for judgment on the pleadings with
leave to amend, the plaintiff may amend his or her complaint only as authorized
by the court's order. The plaintiff may not amend the complaint to add a new
cause of action without having obtained permission to do so, unless the new
cause of action is within the scope of the order granting leave to amend.” (Harris
v. Wachovia Mortgage, FSB¿(2010) 185 Cal.App.4th 1018, 1023.)
CONCLUSION
The demurrer is sustained as to Plaintiff’s tenth cause of
action with 20 days leave to amend. The demurrer is overruled as to Plaintiff’s
eighth cause of action. Plaintiff’s request for judicial notice is denied.