Judge: Stephen I. Goorvitch, Case: 23STCV01444, Date: 2023-06-22 Tentative Ruling
Case Number: 23STCV01444 Hearing Date: June 22, 2023 Dept: 39
Matthew Henderson
v. Goodwin & Associates Hospitality Services, LLC
Case No. 23STCV01444
Demurrer
Plaintiff
Matthew Henderson (“Plaintiff”) filed this action against Goodwin &
Associates Hospitality Services, LLC (“Defendant”) for declaratory relief. Plaintiff is a recruiter who did work for
Defendant. (Second Amended Complaint, ¶
5.) Plaintiff allegedly was forced to
form his own limited liability company, Henderson Recruiting, LLC, for that
purpose. (Ibid.) Plaintiff alleges that as a condition of
working for Defendant, he was required to enter into an agreement stating that
he is an independent contractor, even though he was an employee under
California law. (Id., ¶¶ 6, 8.) The agreement also had a non-compete
agreement. (Id., ¶ 6.) Now, Plaintiff seeks a declaratory judgment
that the agreement is governed by California law; he was an employee; and the
non-compete agreement is void. Defendant
demurs, arguing that the causes of action were compulsory counterclaims in the
parties’ litigation in New Hampshire; the causes of action are moot; and
Plaintiff lacks standing to assert the claims.
“It is black letter law that a
demurrer tests the legal sufficiency of the allegations in a complaint.”
(Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In
ruling on a demurrer, the court must “liberally construe[]” the allegations of
the complaint. (Code Civ. Proc., § 452.)
“This rule of liberal construction means that the reviewing court draws
inferences favorable to the plaintiff, not the defendant.” (Perez v.
Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)
Defendant previously sued Plaintiff
in Goodwin & Associates Hospitality Services LLC (Super. Ct. Merrimack
County, N.H., 2022, No. 217-2022-CV-00541) (the “New Hampshire case”). In that case, Defendant sought to enforce the
covenant not to compete in the agreement between the parties, based upon which
Defendant argues these were compulsory counterclaims. Per New Hampshire
Superior Court Civil Rule 10, “A pleading shall state as a counterclaim any
claim which at the time of serving the pleader has against any opposing party,
if it arises out of the transaction or occurrence that is the subject matter of
the opposing party’s claim and does not require for its adjudication the
presence of third parties over whom the court cannot acquire
jurisdiction.” (N.H. Super. Ct. R. CIV
10, subd. (a).)
However, per Labor Code section
925, an employer cannot require an employee who primarily resides and works in
California to agree to adjudicate a claim that arises in California outside of
California, or to apply other law to a claim that arises in California. (Lab. Code, § 925, subd. (a).) As Defendant acknowledges, the California
Court of Appeal has held that the Full Faith and Credit Clause of the United
States Constitution does not require this Court to apply New Hampshire’s
compulsory cross-complaint rule. (LGCY
Power, LLC v. Superior Court (2022) 75 Cal.App.5th 844, 868.) The mere fact that Plaintiff did not raised
Labor Code section 925 in the New Hampshire action is immaterial. “There is no federal or California authority
standing for the proposition that, in situations where an action is pending in
one state and no final judgment has been entered, and a related action is filed
in a sister state, full faith and credit principles compel the second state's
court to give credit to the first state's compulsory cross-complaint
statute.” (LGCY Power, LLC v.
Superior Court (2022) 75 Cal.App.5th 844, 870.) Accordingly, the Court overrules the
demurrer.
Defendant argues that Plaintiff is
an independent contractor and not entitled to the protections of Labor Code
section 925. Plaintiff alleges that he
is an employee of Defendant, and that Defendant mischaracterized Plaintiff as
an independent contractor. (First Amended Complaint, ¶¶ 8-9.) Plaintiff’s employment is a factual matter,
which Defendant must raise on an evidentiary motion. Similarly, Defendant argues that Plaintiff’s
declaratory relief claims fail on the merits.
The Court cannot resolve that argument on demurrer. (Farmers Ins. Exchange v. Zerin (1997)
53 Cal.App.4th 445, 446.) Regardless, it
appears that this issue is not moot because it relates to an ongoing lawsuit
between the parties.
The Court has considered
Defendant’s remaining arguments and finds none to have merit. Therefore, the Court orders as follows:
1. Defendant’s
demurrer is overruled.
2. Defendant
shall file an answer within twenty (20) days.
3. Pursuant
to the stipulation of the parties, the Court held the case management
conference before the answer was filed.
The Court set the following dates:
Final Status Conference: _______________
Trial: _______________
4. Defendant’s
counsel shall provide notice and file proof of such with the Court.