Judge Salvatore Sirna, Case Number: 22PSCV01611, Date: 2023-08-10 Tentative Ruling

Judge: Salvatore Sirna, Case: 22PSCV01611, Date: 2023-08-10 Tentative Ruling

The Court may change tentative rulings at any time. Therefore, counsel are advised to check this website periodically to determine whether any changes or updates have been made to the tentative ruling. Counsel may submit on a tentative ruling by calling the clerk in Department G at (909) 802-1104 prior to 8:30 a.m. the morning of the hearing.

Case Number: 22PSCV01611 Hearing Date: January 23, 2024 Dept: G

Defendant George Liu’s Demurrer to the Second Amended Complaint

Respondent: Plaintiff Loa Int’l (USA) Transport Co. Inc.

Defendant George Liu’s Motion to Strike Portions of the Second Amended Complaint

Respondent: Plaintiff Loa Int’l (USA) Transport Co. Inc.

TENTATIVE RULING

Defendant George Liu’s Demurrer to the Second Amended Complaint is OVERRULED.

Defendant George Liu’s Motion to Strike Portions of the Second Amended Complaint is DENIED.

Defendant George Liu to file an Answer to the Seconded Amended Complaint in ten (10) days.

BACKGROUND

This is a breach of contract action arising between an employer and former employee. Plaintiff Loa Int’l (USA) Transport Co. Inc. (Loa) is a transportation business that worked closely with RL Jones, a customs brokerage and international logistics company in Texas. Defendant George Liu was an employee of Loa who worked closely with RL Jones and was aware of the business relationship between RL Jones and Loa. On July 6, 2022, Liu resigned from employment with Loa and signed a confidentiality and non-disclosure agreement. On September 14, 2022, Liu allegedly sent an email to RL Jones posing as a current employee of Loa to obtain Loa’s pricing and attempt to secure RL Jones as a customer for Liu. Liu also allegedly disclosed Loa’s pricing to RL Jones.

On November 1, 2022, Loa filed a complaint against Liu and Does 1-20, alleging the following causes of action: (1) breach of contract, (2) intentional interference with contractual relations, (3) intentional interference with prospective economic relations, (4) violation of California Unfair Competition Law, (5) trade secret misappropriation, and (6) common law trademark infringement. On April 6, 2023, the court sustained Liu’s demurrer to Loa’s Complaint.

On May 8, 2023, Loa filed a First Amended Complaint (FAC) against the same defendants alleging the same causes of action. On September 27, the court sustained Liu’s demurrer to Loa’s FAC.

On September 29, 2023, Liu filed a cross-complaint against Loa and Roes 1-100, alleging the following causes of action: (1) failure to pay overtime/earned wages, (2) failure to provide meal periods, (3) failure to provide rest periods, (4) waiting time penalties, (5) misclassification, (6) failure to provide one rest day in seven, and (7) violation of Business and Professions Code section 17200 et seq.

On October 18, 2023, Loa filed a Second Amended Complaint (SAC) against the same defendants alleging the same causes of action.

On November 17, 2023, Liu filed the present demurrer and motion to strike. Prior to filing, Liu’s counsel telephonically met and conferred with Loa’s counsel on November 10. (Feazell Decl., ¶ 6.)

A hearing on the present motions and case management conference are set for January 23, 2024.

ANALYSIS

Demurrer

Liu demurs to Loa’s second cause of action (intentional interference with contractual relations). For the following reasons, the court OVERRULES Liu’s demurrer.

Legal Standard

Demurrer

A party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) 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.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, at p. 747.)

Intentional Interference with Contractual Relations

The elements of a cause of action for intentional interference with contractual relations are “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 289.)

Discussion

In this case, Liu argues Loa’s cause of action for intentional interference with contractual relations is insufficiently pled because the SAC failed to establish the existence of a contractual relationship between Loa and a third party. In sustaining Liu’s previous demurrer to Loa’s FAC, the court found allegations that Loa “worked closely with RL Jones” and that Liu was “aware of substantial business activities between Loa and [RL Jones]” were insufficient to allege a contractual relationship between Loa and RL Jones. (09/27/2023 Ruling, p. 3, quoting FAC, ¶ 10-11.)

Here, however, the SAC provided further detail, stating RL Jones ships roughly 15 containers a month with Loa receiving $2,000 in profit per container. (SAC, ¶ 50.) The SAC also alleges that Liu’s conduct led to the end of the contractual relationship between RL Jones and Loa. (SAC, ¶ 52.) The court finds these facts are sufficient to adequately allege the existence of a contractual relationship between Loa and a third-party.

Liu also argues the SAC failed to establish how Liu interfered with or disrupted the contractual relations between Loa and RL Jones. In September 2022, the SAC alleges Liu posed as an employee of Loa by sending RL Jones an email that still used Loa’s logo in the email signature and copied Liu’s former Loa email addresses. (SAC, ¶ 17, Ex. A.) In other communications, Liu allegedly disclosed Loa’s pricing to RL Jones “in order to ‘beat it’” and obtain RL Jones’s business. (SAC, ¶ 18.) Last, the SAC alleges Liu expressly instructed RL Jones to stop doing business with Loa. (SAC, ¶ 51.) As a result, the SAC alleges RL Jones’s business relationship with Loa ended. (SAC, ¶ 21, 52-53.) These facts are sufficient to adequately allege how Liu disrupted or interfered with Loa and RL Jones’s contractual relationship.

Accordingly, Liu’s demurrer to this cause of action is OVERRULED.

Motion to Strike

Liu moves to strike punitive damages from Loa’s SAC. For the following reasons, the court DENIES Liu’s motion.

Legal Standard

Motion to Strike

Upon a party’s motion or the court’s own motion, the court may strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also “[s]trike out 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.” (Code Civ. Proc., § 436, subd. (b).) “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437, subd. (a).)

An immaterial or irrelevant allegation includes “(1) An allegation that is not essential to the statement of a claim or defense,” “(2)¿An allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense,” or “(3)¿A demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint.” (Code Civ. Proc., § 431.10.)

Punitive Damages

Civil Code section 3294 allows punitive damages when a plaintiff establishes by clear and convincing evidence that a defendant is guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (a).) For the purposes of determining punitive damages, malice is defined as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) Oppression is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” (Civ. Code, § 3294, subd. (c)(2).) Lastly, fraud is defined as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code, § 3294, subd. (c)(3).)

“In addition to the requirement that the operative complaint set forth the elements as stated in section 3294, it must include specific factual allegations showing that defendant's conduct was oppressive, fraudulent, or malicious to support a claim for punitive damages.” (Today’s IV, Inc. v. Los Angeles County Metropolitan Transportation Authority (2022) 83 Cal.App.5th 1137, 1193.) Furthermore, “[p]unitive damages may not be pleaded generally.” (Ibid.)

Discussion

In this case, Liu contends the SAC failed to allege sufficient facts to establish Liu’s conduct was fraudulent, oppressive, or malicious. But in alleging Liu intentionally interfered with Loa’s business, the SAC has adequately established Liu intended to cause injury to Loa by stealing its business. Thus, the SAC sufficiently alleged Liu’s actions were malicious.

Accordingly, Liu’s motion to strike punitive damages is DENIED.

CONCLUSION

Based on the foregoing, Liu’s demurrer to Loa’s second cause of action is OVERRULED. Furthermore, Liu’s motion to strike portions of Loa’s SAC is DENIED.

Defendant George Liu to file an Answer to the Seconded Amended Complaint in ten (10) days.