Judge: Ronald F. Frank, Case: 22TRCV00900, Date: 2023-08-08 Tentative Ruling
Case Number: 22TRCV00900 Hearing Date: December 20, 2023 Dept: 8
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HEARING DATE: December 20, 2023
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CASE NUMBER: 22TRCV00900
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CASE NAME: Puente Hills Financing, LLC v. Repossession
Empire, Inc., et al.
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MOVING PARTY: (1)
Cross-Defendant, Kara Imbriani
(2)
Defendants, Lloyd Joseph Collins, Repossession Empire, Inc. dba Legion
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RESPONDING PARTY: (1) Cross-Complainants, Lloyd Joseph Collins, Repossession
Empire, Inc. dba Legion
(2)
Puente Hills Financing, LLC
TRIAL DATE: Not Set.
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MOTION:¿ (1) Cross-Defendant, Kara Imbriani’s Demurrer
(2)
Cross-Defendant, Kara Imbriani’s Motion to Strike
(3)
Defendants, Lloyd Joseph Collins, Repossession
Empire, Inc. dba Legion Demurrer
(4)
Defendants, Lloyd Joseph Collins, Repossession
Empire, Inc. dba Legion Motion to Strike
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Tentative Rulings: (1) Cross-Defendant, Kara Imbriani’s Demurrer is SUSTAINED in part
and Overruled in part.
(2)
Cross-Defendant, Kara Imbriani’s Motion to Strike is GRANTED
(3)
Defendants, Lloyd Joseph Collins, Repossession
Empire, Inc. dba Legion Demurrer SUSTAINED
(4)
Defendants, Lloyd Joseph Collins, Repossession
Empire, Inc. dba Legion Motion to Strike GRANTED
As an initial matter, the parties had indicated that another
pending matter, case No. 19STCV41528, involving many of the parties was proceeding to trial
several month ago in the Stanley Mosk Courthouse. It now appears that trial has been re-set for
January of 2024. Are there any issues that
may be decided for or against any of the parties here that will be litigated
and decided in that other case? Is there
good cause for awaiting the outcome of that earlier-filed case before moving
forward with this one?
I. BACKGROUND¿¿¿
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A. Factual¿¿¿
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On October 6, 2022, Plaintiff filed a
complaint in this case. On March 16, 2023, Plaintiff filed a First Amended
Complaint (“FAC”) against Defendants, Repossession Empire, Inc. dba Legion and
Lloyd Joseph Collins (collectively, “Defendants”), and Does 1 through 10. On
June 8, 2023, Plaintiff filed a Second Amended Complaint (“SAC”). On September
7, 2023, Plaintiff filed a Third Amended Complaint (“TAC”) alleging causes of
action for: (1) Fraud; (2) Breach of Contract; (3) Common Count; (4)
Conversion; (5) Declaratory Relief.
On September 26, 2023, Lloyd Joseph Collins
and Repossession Empire, Inc., dba Legion now file a Demurrer and Motion to
Strike portions of the TAC.
Additionally, on February 28, 2023,
Cross-Complainants, Repossession Empire and Mr. Collins filed a Cross-Complaint
against Puente Hills Financing, LLC, Puente Hills Hyundai, LLC, Sam Lim, Newton
Lim, Kara Imbriani, and DOES 1 through 10. On September 5, 2023,
Cross-Complainants, Lloyd Joseph Collins and Repossession Empire, Inc. dba
Legion filed a First Amended Cross-Complaint (“FAXC”) alleging causes of action
for: (1) Breach of written contract; (2) Tortious breach of covenant of good
faith and fair dealing and denial of the existence of a contract; (3) Fraud;
(4) Common Count: Open Book Account; (5) Common Count: Goods and Services
rendered; (6) Restitution based upon unjust enrichment; and (7) Declaratory
relief.
Cross-Defendant, Kara Imbriani now files a
Demurrer and Motion to Strike the FAXC.
B. Procedural¿¿¿
¿¿
On October 24,
2023, Imbriani filed a Demurrer and Motion to Strike FAXC. On December 5, 2023,
Cross-Complainants Lloyd Joseph Collins and Repossession Empire, Inc. dba
Legion filed an opposition brief. On December 13, 2023, Imbriani filed reply
papers.
Additionally, on September 26, 2023,
Collins and Repossession Empire filed a Demurrer and Motion to Strike
Plaintiff’s TAC. On December 7, 2023, Plaintiff filed opposition briefs. On December
13, 2023, Mr. Collins and Repossession Empire filed reply briefs.
II. ANALYSIS¿¿
A.
Imbriani’s Demurrer
Legal Standard
A demurrer can be
used only to challenge defects that appear on the face of the pleading under
attack or from matters outside the pleading that are judicially noticeable. (Blank
v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint
need only allege facts sufficient to state a cause of action; each evidentiary
fact that might eventually form part of the plaintiff’s proof need not be
alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53
Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of
action, the demurrer admits the truth of all material facts properly pleaded. (Aubry
v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does
not admit contentions, deductions or conclusions of fact or law.” (Daar v.
Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿¿¿
¿¿¿
A pleading is
uncertain if it is ambiguous or unintelligible. (Code Civ. Proc., § 430.10,
subd. (f).) A demurrer for uncertainty may lie if the failure to label the
parties and claims renders the complaint so confusing defendant cannot tell
what he or she is supposed to respond to.¿ (Williams v. Beechnut Nutrition
Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.) However, “[a] demurrer for
uncertainty is strictly construed, even where a complaint is in some respects
uncertain, because ambiguities can be clarified under modern discovery
procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th
612, 616.)¿¿¿
Discussion
Imbriani’s
demurs to the Cross-Complaint on the grounds that she argues the Third, Fourth,
Fifth, Sixth, and Seventh causes of action fail to allege sufficient facts to
state causes of action. Imbriani also specifies that the First and Second
causes of action for Breach of Contract and Bad Faith Denial of Existence of
Contract are not alleged against Imbriani as cross-complainants have neither
named her in either the first or second cause of action and those claims are
only against Puente Hills Financing.
Fraud
Imbriani argues that Cross-Complainants
cannot state a cause of action for fraud based upon non-disclosure given the
absence of any duty. As such, Imbriani contends that in the absence of any such
duty there can be no claim for Fraud based upon non-disclosure. “The elements
of fraud are (a) a misrepresentation (false representation, concealment, or
nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce
reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v.
Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting
the alleged fraud must be alleged factually and specifically as to every
element of fraud, as the policy of “liberal construction” of the pleadings will
not ordinarily be invoked. (Lazar v. Superior Court (1996) 12 Cal.4th
631, 645.) To properly allege fraud against a corporation, the plaintiffs must
plead the names of the persons allegedly making the false representations,
their authority to speak, to whom they spoke, what they said or wrote, and when
it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal.App.4th 153, 157.)
The FAXC alleges that when Imbriani entered
into the storage contract with cross-complainant, Repossession Empire, she
concealed a material fact that she was entering into the agreement on behalf of
cross-defendant Puente Hills Financing, LLC, when, in fact, she was using the
arrangement to conceal and have access to curbed cars originally repossessed on
behalf of, and owned by Puente Hills Financing, LLC, so that she could sell
them off the books and pocket the proceeds for her own personal benefit. (FAXC,
¶ 53.) The Court’s main issue with the previously deficient cause of action for
fraud, was that cross-complainants had not alleged Imbriani’s intent to induce,
how their reliance was justifiable, nor the relationship giving rise to a duty
to disclose. Since then, this Court acknowledges that cross-complainant has
added the following to their FAXC: “…Imbriani intended to and did induce
cross-complainant’s reliance on the agreement and agreeing to, and actually
storing automobiles. (FAXC, ¶ 53.1.) Cross-Complainants also allege that
“Imbriani’s concealed knowledge of this transaction gives rise to a special
relationship under California law which gives rise to a duty to prevent
economic loss to cross-complainants because: (1) the transaction was intended
to affect cross-complainants; (2) cross-complainants were foreseeably harmed
when ultimately the bill came due and no one was willing to pay; (3)
cross-complainants actually suffered the injury; (4) there is a close connection
between cross-defendant Imbriani's conduct and the injury suffered; (5) there
is moral blame attached to the cross-defendant Imbriani's conduct; and (6) and
the law favors preventing future harm.” (FAXC, ¶ 53.2.)
First, this Court notes that the FAXC failed
to allege that cross-complainant’s reliance was justifiable – a required
element of a fraud claim. As such, the FAXC cause of action for fraud fails
because cross-complainants’ general allegations of reliance do not alleged
facts showing the reliance was justifiable. Second, as for duty,
cross-complainants rely on the standard for fraudulent concealment, where under
California law, a duty to disclose material facts may arise (1) when the
defendant is in a fiduciary relationship with the plaintiff; (2) when the
defendant has exclusive knowledge of material facts not known to the plaintiff;
(3) when the defendant actively conceals a material fact from the plaintiff; or
(4) when the defendant makes partial representations but also suppresses some
material facts. (Falk v. General Motors Corp. (N.D. Cal. 2007) 496
F.Supp.2d 1088, 1098-1099 citing LiMandri v. Judkins (1997) 52
Cal.App.4th 326.) The Opposition alleges
that the FAXC applies the second and third standards. Here, the Court
understands that the only allegation relating to duty as to Imbriani in the
FAXC is as follows: “Defendant Imbriani’s concealed knowledge of this
transaction gives rise to a special relationship under California law which
gives a duty to prevent economic loss to cross-complainant…” (FAXC, ¶ 33.3.) and
“Imbriani…concealed a material fact that she was entering into an agreement on
behalf of cross-defendant…” (FAXC, ¶ 53.) Here, the Court does not find that
this is enough to allege a duty to disclose. Cross-Complainants do not ever
allege “exclusive knowledge” nor do they allege “active concealment”. The FAXC
is devoid of any allegations that the concealment occurred over a consistent
period of time, how Imbriani continued to conceal material facts from
Plaintiff, etc.. As such, the Court sustains the demurrer to the cause of
action for fraud.
Common Count: Open Book Account; Common
Count: Goods and Services rendered;
Imbriani argues
that FAXC cannot state a cause of action for common count. The required
elements of a common count claim are “(1) the statement of indebtedness in a
certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3)
nonpayment. A cause of action for money had and received is stated if it is
alleged the defendant is indebted to the plaintiff in a certain sum for money
had and received by the defendant for the use of the plaintiff.” (Farmers Insurance Exchange v. Zerin
(1997) 53 Cal.App.4th 445, 460, citation and quotation marks omitted.)
Previously, the
Court found that cross-complainants failed to allege any indebtedness of
Imbriani, the consideration, or the nonpayment. The Demurrer argues that the
Fifth Cause of action for common count does not include any new allegations,
and the Fourth Cause of Action has new allegations, but does not allege the
required indebtedness of Imbriani. The Court agrees. The FAXC does not state
any indebtedness in a certain sum. Cross-Complainants may not merely allege
that Imbriani is generally indebted without any basis of such a claim and
without any basis for the allegedly indebted party for a sum certain. As such,
the demurrer to the fourth and fifth causes of action is sustained.
Restitution Based Upon Unjust Enrichment
Imbriani argues that Cross-Complainants
cannot state a cause of action for Restitution based on Unjust Enrichment. “The
elements for a claim of unjust enrichment are receipt of a benefit and unjust
retention of the benefit at the expense of another. The theory of unjust
enrichment requires one who acquires a benefit which may not justly be
retained, to return either the thing or its equivalent to the aggrieved party
so as not to be unjustly enriched.” (Lyles
v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769, quotation marks and
citations omitted.) Notably, “[u]njust enrichment is not a cause of action”; it
is simply “a restitution claim.” (Hill v.
Roll International Corp. (2011) 195 Cal.App.4th 1295, 1307; see also Melchior v. New Line Productions, Inc. (2003)
106 Cal.App.4th 779, 793 [“there is no cause of action in California for unjust
enrichment”].)
Previously, this Court found that for the
same reasons as common count causes of action, Cross-complainants failed to
allege a cause of action in their original cross-complaint because the cause of
action failed to allege any claim for unjust enrichment against Imbriani. Since
then, the FAXC now states that “Defendant Imbriani is holding on to, or is
responsible for $8,000 which she could not have made on her own behalf from
illicitly selling curbed automobiles but for the existence of the storage
agreement which, in turn, gave her privileged access to the automobiles. (FAXC,
¶ 66.1.) Here, the Court finds that this allegation cures the previously
deficient cause of action for restitution of the $8,000 amount alleged. As
such, the Court overrules demurrer as to this cause of action.
Declaratory Relief
Lastly, Imbriani argues that Cross-Complainants have
failed to allege a cause of action for declaratory relief as there is no
controversy upon which to based a cause of action for declaratory relief. The FAXC
alleges that there is a dispute between the parties as to who is entitled to
the title and possession of the 41 cars and as to what sum might be due and
owing. (FAXC, ¶ 68.) Cross-Complainants further allege that Cross-Complainant,
Repossession Empire seeks a declaration from this Court that it is entitled to
the title and possession of the 41 cars absent satisfaction of the fees owned
for their storage. (FAXC, ¶ 68.) Cross-Complainants have also added that:
“Cross-Complainant Kara Imbriani, who set up this arrangement for the storage
of cars by concealing from all contracting parties her true purpose, is the
only person who has made a net-profit of the arrangement and, therefore, should
be a contributor to its resolution. (FAXC, ¶ 69.)
Here, although
the Court has sustained the demurrer as to the majority of the causes of
action, Cross-Complainants’ addition to the restitution / unjust enrichment
cause of action makes it so that a claim or controversy may exist based on that
cause of action. As such, the Court OVERRULES demurrer as to this cause of
action.
B.
Imbriani’s Motion to
Strike
Legal Standard
The court may, upon a motion, or at any
time in its discretion, and upon terms it deems proper, strike any irrelevant,
false, or improper matter inserted in any pleading.¿ (Code Civ. Proc., §
436(a).)¿ The court may also strike all or any part of any pleading not drawn
or filed in conformity with the laws of this state, a court rule, or an order
of the court.¿ (Id., § 436(b).)¿ The grounds for a motion to strike are
that the pleading has irrelevant, false improper matter, or has not been drawn
or filed in conformity with laws.¿ (Id., § 436.)¿ The grounds for moving
to strike must appear on the face of the pleading or by way of judicial
notice.¿ (Id., § 437.)¿ “When the defect which justifies striking a
complaint is capable of cure, the court should allow leave to amend.”¿ (Vaccaro
v. Kaiman (1998) 63 Cal.App.4th 761, 768.)¿ ¿
Discussion
Here, Imbriani has filed a Motion to Strike: (1) paragraph
58, “Cross-Complainant Lloyd Joseph Collins is entitled to tort damages
to be proven at trial, including damages for the substantial pain, discomfort,
fear, anxiety and other mental and emotional distress and aggravation
occasioned by defendants' actions."; (2) paragraph 59, “Because
the acts taken toward cross-complainants by cross-defendants were carried out
in an oppressive' fraudulent, malicious, vexatious, deliberate, cold, callous
and intentional manner and in conscious disregard of cross-complainants'
protected rights, in order to injure and damage cross-complainants,
cross-complainants request the assessment of exemplary damages against each
cross defendant in an amount to be proved at trial"; (3) Prayer of Relief
for general damages; and (4) prayer of relief for punitive damages.
Imbriani’s
motion to strike the prayer of relief for general damages and punitive damages
is GRANTED. There are no tort claims as
to which the Court has overruled a demurrer as to Imbriani, only a claim for
which restitution may be recovered rather than general or punitive damages.
C.
Lloyd Joseph
Collins and Repossession Empire, Inc. dba Legion’s Demurrer
Discussion
Defendants Collins and Repossession Empire demur to the
First and Second causes of action for Fraud and Breach of Contract on the
grounds they argue they fail to state causes of action, are uncertain, and are
barred by the statute of limitations.
Fraud
“The elements of fraud are (a) a
misrepresentation (false representation, concealment, or nondisclosure); (b)
scienter or knowledge of its falsity; (c) intent to induce reliance; (d)
justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town
Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged
fraud must be alleged factually and specifically as to every element of fraud,
as the policy of “liberal construction” of the pleadings will not ordinarily be
invoked. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) To
properly allege fraud against a corporation, the plaintiffs must plead the
names of the persons allegedly making the false representations, their
authority to speak, to whom they spoke, what they said or wrote, and when it
was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2
Cal.App.4th 153, 157.)
In this Court’s previous ruling on the
demurrer to the SAC, it found that it was still confused and found the fraud
cause of action to be vague in several respects: (1) as it did not clearly allege that when
Imbriani allegedly entered into the oral repossession agreement, whether she
did so on her own behalf, on behalf of Plaintiff, and whether it was or was not
disclosed as to whether she was purporting to act on behalf of her employer. Paragraph
28 alleged that the contract was entered into with Plaintiff “through
Imbriani,” but the Court found that the allegation required clarification –
especially for purposes of the specificity requirements for alleged fraud; and
(2) the Court noted that the alleged written contract Plaintiff allegedly
became aware of in 2021, the SAC did not allege whether Imbriani entered into
that written contract on her own behalf, on behalf of Plaintiff, or on behalf
of her employer at the time of her pre-Puente Hills employment.
Since then, Plaintiff has filed a TAC. In
the TAC, Plaintiff appears to attempt to cure these deficiencies by including
the following: “Defendants entered into an oral agreement with the Plaintiff
prior to June 13, 2023. The oral agreement was for the ongoing repossession and
return of vehicles on behalf of Plaintiff. Based on information and belief the
oral agreement was for the repossession and return of vehicles for a fee of
$400. The oral agreement was made on behalf of Plaintiff by the then Finance
Manager for Plaintiff and Defendant Collins. Based on information and belief
this agreement was in effect until June 14, 2023, when Ms. Imbriani was hired
by Plaintiff. Unbeknownst to Plaintiff, Ms. Imbriani had a pre-existing
relationship with Defendants, specifically she had a personal relationship with
Defendant Collins. Upon Ms. Imbriani’s hire as the new Finance Manager of
Plaintiff, on or about June 14, 2013, Defendants represented to Plaintiff by and
through Ms. Imbriani that they would continue to repossess certain vehicles
owned by Plaintiff for a fee of $400 and return said vehicles to Plaintiff who
is the rightful owner.” (TAC, ¶ 28.)
The Court is not certain that the new
allegations in the TAC entirely clarify the fraud issue. Again, paragraph 28 indicates
that Defendant made representations to Plaintiff, by and through Imbriani, that
she would continue to repossess certain vehicles owned by Plaintiff for a fee
of $400 and return said vehicles to Plaintiff who is the rightful owner. (TAC,
¶ 28.) Plaintiff further contends that Defendants coerced Imbriani into signing
the alleged written agreement. (TAC, ¶ 30.) However, if Plaintiff was unaware
of the written agreement, then a misrepresentation to Plaintiff could not have
taken place as Plaintiff seems to – at the same time – assert that Imbriani was
being coerced to sign the agreement she knew was detrimental to Plaintiff. These
are inconsistent factual allegations that cannot both be true. The Court is also uncertain how the
misrepresentation was made to Plaintiff “by and through Imbriani” to continue
to repossess. On June 14, 2013 did Imbriani relay information from Defendant to
Plaintiff? If not – the Court does not believe Plaintiff can maintain a cause
of action for fraud against Defendants when Imbriani, purportedly acting on Defendants’
behalf, knew about the alleged fraud and continued to engage in the activity. If
Imbriani relayed fraudulent information to Plaintiff, than the
misrepresentation would come from Imbriani herself, and not per se from
Defendants Collins and Repossession Empire, Inc.. Further still, the allegation
of the timing of the alleged oral contract is inadequate, i.e., “prior to June
13, 2023.” This is no better than the allegations
proscribed by the Court in its August 8 tentative ruling because it “camouflages
a possible statute of limitations issue.”
How long before that date, i.e., more than two years before, more than
five years before . . .? As such, the Court sustains demurrer again.
The Court will allow oral argument as to whether Plaintiff believes it can cure
these defects.
Breach of Oral
Contract
Again, Defendants demur to the cause of
action for Breach of Oral Contract. To state a cause of action for breach of
oral contract, Plaintiff must be able to establish “(1) the existence of the
contract, (2) plaintiff’s performance or excuse for nonperformance, (3)
defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis
West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of
contract claim “is based on alleged breach of a written contract, the terms
must be set out verbatim in the body of the complaint or a copy of the written
agreement must be attached and incorporated by reference.” (Harris v. Rudin,
Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a
plaintiff may also “plead the legal effect of the contract rather than its
precise language.” (Construction Protective Services, Inc. v. TIG Specialty
Ins. Co. (2002) 29 Cal.4th 189, 198-199.)
Defendants argue that Plaintiff, in its TAC,
has conceded that Imbriani entered into an oral agreement on behalf of
Plaintiff, and argues that assuming there was such an oral contract, it was on
the self-serving terms plaintiff alleges under information and belief, Defendants
argue that the question Plaintiff has still inadequately addressed is why the
storage contract is not, itself, a very clear notice of a breach. Defendants’
argument rests on the fact that Plaintiff became aware of the contract in 2016,
through Imbriani, as she was the highest ranking individual working for
Plaintiff. The Demurrer is sustained.
D.
Lloyd Joseph Collins and Repossession Empire,
Inc. dba Legion’s Motion to Strike
Legal Standard
The court may, upon a motion, or at any
time in its discretion, and upon terms it deems proper, strike any irrelevant,
false, or improper matter inserted in any pleading.¿ (Code Civ. Proc., §
436(a).)¿ The court may also strike all or any part of any pleading not drawn
or filed in conformity with the laws of this state, a court rule, or an order
of the court.¿ (Id., § 436(b).)¿ The grounds for a motion to strike are
that the pleading has irrelevant, false improper matter, or has not been drawn
or filed in conformity with laws.¿ (Id., § 436.)¿ The grounds for moving
to strike must appear on the face of the pleading or by way of judicial
notice.¿ (Id., § 437.)¿ “When the defect which justifies striking a
complaint is capable of cure, the court should allow leave to amend.”¿ (Vaccaro
v. Kaiman (1998) 63 Cal.App.4th 761, 768.)¿ ¿
Discussion
Defendants argue that Plaintiff’s alter ego allegations
are still insufficiently pled and should be stricken. Defendants argue that
Plaintiff’s paragraphs 22-26 are pure conclusions without a single supporting
fact. Defendants argue the sole exception is Plaintiff’s paragraph 26 which
states: “Defendant Collins disregarded the corporate entity when he used the
corporation for his own personal benefit as a tool against Imbriani as a result
of their toxic, personal relationship and proceeded to use said relationship as
an instrument to defraud and damage Plaintiff. (TAC, ¶ 26.) However, Defendants
argue that Plaintiff does not represent Imbriani’s interests or is entitled to
receive damages for Imbriani’s failed relationship. Defendants also argue that
Plaintiff does not have a viable fraud claim against them. As noted above, the
Court agrees. The Court notes that these allegations have not changed since the
previous Motion to Strike – as such, again, and for the same reasons, this
Court GRANTS the Motion to Strike.