Judge: Stephen I. Goorvitch, Case: 23STCV06559, Date: 2024-02-27 Tentative Ruling
Case Number: 23STCV06559 Hearing Date: February 27, 2024 Dept: 39
Wildflower Brands,
Inc. v. Maria Camaco, et al.
Case No.
23STCV06559
Order #1 of 3
Wildflower’s
Demurrer to Wilton’s Cross-Complaint
Wildflower’s
Motion to Strike Wilton’s Cross-Complaint
Wildflower’s
Demurrer to Maria Camaco’s Cross-Complaint
BACKGROUND
Plaintiff
Wildflower Brands Inc. (“Wildflower” or “Plaintiff”) filed this action against
Maria Camaco and Juan Camaco and 6200 S. Wilton Place, LLC (“Wilton”)
(collectively, “Defendants”). Maria
Camaco filed a cross-complaint against Wildflower on November 3, 2023. Wilton filed a cross-complaint against
Wildflower and Ernst & Young Inc. (“E&Y”) as receiver for Wildflower on
December 5, 2023. Now, Wildflower demurs
to Wilton’s cross-complaint and moves to strike the remedy of specific
performance. The demurrer is overruled.
LEGAL STANDARD
“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.)
DISCUSSION
A. The Canadian Bankruptcy Order
Wildflower
requests that this Court take judicial notice of an order from the Supreme
Court of British Columbia in Bankruptcy and Insolvency, dated March 10,
2023. The Court grants the request per
Evidence Code section 452(f) and (h).
The order states that Wildflower is in bankruptcy and E&Y has been
appointed as receiver and manager. The
order authorizes E&Y to initiate, manage and direct legal proceedings on
behalf of the debtor. (See Request for
Judicial Notice, Exh. A, ¶ 5(j).) The
order also states:
-
“No proceeding or enforcement process in any
court or tribunal . . . shall be commenced or continued against the Receiver
except with the written consent with the Receiver or with leave of this
Court.” (Id., ¶ 11.)
-
“No proceeding against or in respect of the
Debtor or the Property shall be commenced or continued except with the written
consent of the Receiver or with leave of the Court and any and all Proceedings
currently under way against or in respect of the Debtor or the Property are
stayed and suspended pending further Order of this Court . . . .” (Id., ¶ 12.)
Wildflower argues that this order requires the
cross-complaints to be dismissed.
Wildflower’s counsel is incorrect because he ignores that the order authorizes
the filing of “a claim that might otherwise become barred by statute or an
existing agreement if such Proceeding is not commenced before the expiration of
the stay . . . provided that no further step shall be taken in respect of the
Proceeding except for service of the initiating documentation on the Debtor and
the Receiver.” (Ibid.) The Court does not interpret Wilton’s
opposition to Wildflower’s demurrer as violating this provision, as Wilton did
not initiate the motion. Therefore, even
assuming this order applies, Wilton is entitled to file the instant
cross-complaint, and the Court will resolve the instant motion since it was
filed by Wildflower and merely addresses the pleadings. Instead, the dispositive issue is whether the
Court should stay future proceedings—i.e., discovery—until the Court determines
whether this order applies to the instant case.
One party has reserved a hearing date for a motion to stay on May 13,
2024, so the Court will address the issue at that time.
The
cross-complainants argue that Wildflower did not have authority to institute
this action because there is no written consent from E&Y or the Canadian
bankruptcy court. As an initial matter,
Wildflower presumably has authority to institute this action because E&Y is
managing all affairs of Wildflower.
Regardless, the order does not clearly require that because the
reference at issue—no proceeding “against or in respect to the Debtor” may be
commenced without consent—is beneath the heading “No Proceeding Against the
Debor or the Property.” Therefore, it
appears this applies only to those seeking to sue Wildflower, not the
converse. Regardless, the
cross-complainants did not demur to the complaint, so this issue is not
properly before the Court.
B. Res Judicata and Collateral Estoppel
Wildflower
argues that the instant claim is barred by the principles of res judicata and
collateral estoppel based upon the prior arbitration award. “Under the doctrine of res judicata, if a
plaintiff prevails in an action, the cause is merged into the judgment and may
not be asserted in a subsequent lawsuit; a judgment for the defendant serves as
a bar to further litigation of the same cause of action.” (Mycogen Corp. v. Monsanto Co. (2002)
28 Cal.4th 888, 896-897.) In Case Number
19STCV23522, the Court (Recana, J.) entered a judgment on the arbitration award
that Wilton will recover $527,653.05 from Wildflower. Wilton’s cross-complaint seeks damages
“incurred after the arbitration, from November 12, 2020, to the present . . .
.” (See Amended Cross-Complaint, ¶ 32.) If Wilton seeks damages after the
arbitration, the Court cannot conclude the cross-complaint necessarily is
barred by the principles of res judicata or collateral estoppel. This issue must be resolved on summary
judgment.
C. Impossibility
Wildflower
demurs to the breach of contract claim by arguing that specific performance is
not available. Wildflower cannot demur
to a remedy. (Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1561-1562.) Regardless, Wilton seeks additional remedies,
so the inapplicability of one remedy does not render the claim defective. This is not a basis to dismiss the first
cause of action.
D. Unclean
Hands
Wildflower demurs by arguing that
Wilton has unclean hands. The Court
cannot resolve that issue or other affirmative defenses on demurrer. Rather, the issue must be resolved on summary
judgment.
E. Declaratory
Relief
Wilton
asserts a declaratory relief action “declaring that this action is improper and
a violation of the order of the Canadian bankruptcy court. The Court shall exercise its discretion at
this stage to consider the declaratory relief claim, though the Court assumes
Wilton (or another party) will file a motion for judgment on the pleadings on
this issue long before trial.
F. Motion to Strike
Finally,
Wildflower moves to strike the prayer for specific performance. Whether Wilton has an adequate remedy at law
is an evidentiary issue, which the Court cannot resolve on a motion to strike. Rather, this issue must be resolved on
summary judgment.
CONCLUSION AND ORDER
Based upon
the foregoing, the Court orders as follows:
1. Wildflower’s demurrer to Wilton’s
cross-complaint is overruled.
2. Wildflower’s motion to strike is
denied.
3. Wildflower shall file an answer within
thirty (30) days.
4. The case is stayed pending a decision
on the motion to stay.
5. The Court continues the case management
conference to May 13, 2024, at 8:30 a.m.
6. Wildflower shall provide notice and
file proof of such with the Court.
Order #2 of 3
Wildflower’s
Motion to Strike Affirmative Defenses in Wilton’s Answer
Plaintiff Wildflower Brands Inc.
(“Wildflower” or “Plaintiff”) filed this action against Maria Camaco and Juan
Camaco and 6200 S. Wilton Place, LLC (“Wilton”) (collectively,
“Defendants”). Wilton filed an answer,
and Wildflower moves to strike the affirmative defenses in the answer arguing
that they fail for the same reasons raised in the demurrer. This is not a proper basis for a motion to
strike. (Baral v. Schnitt (2016)
1 Cal.5th 376, 393-394.) Wildflower
should have demurred to the affirmative defenses instead. Regardless, to the extent the Court construes
the motion to strike as a demurrer, it overrules the demurrer for the same
reasons it overrules Wildflower’s demurrer to the cross-complaint.
Based upon the foregoing, the Court
orders as follows:
1. Wildflower’s
motion to strike the affirmative defenses in Wilton’s answer to the complaint
is denied.
2. Wildflower
shall provide notice and file proof of such with the Court.
Order #3 of 3
Wildflower’s
Motion to Recover Costs of Service
Plaintiff Wildflower Brands Inc.
(“Wildflower” or “Plaintiff”) filed this action against Maria Camaco and Juan
Camaco and 6200 S. Wilton Place, LLC (“Wilton”) (collectively,
“Defendants”). Now, Wildflower seeks to
recover the costs of service. If a plaintiff serves the defendant by notice
and acknowledgement of receipt and the defendant fails to sign and return the acknowledgment
within 20 days after it is mailed, the defendant becomes liable for whatever
costs the plaintiff incurs in effecting service by other methods. (Code Civ. Proc., § 415.30, subd. (d).)
The
Court must grant the plaintiff’s request for reimbursement of costs “except for
good cause shown.” (Ibid.)
Plaintiff served notice and acknowledgement of receipt
on Defendants via mail and email on March 30, 2023. (Declaration of Peter J. Most, Exhibit
C.) Plaintiff followed up with
Defendants by email on April 13, 2023, April 19, 2023, July 23, 2023, and
August 8, 2023. (Declaration of Peter J.
Most, Exhibits D-G.) However,
Plaintiff’s evidence fails to show that it
complied with the requirements for service by notice and acknowledgement
of receipt. To serve Defendants by
notice and acknowledgement of receipt, Plaintiff was required mail a copy of
the summons and complaint to Defendants along with two copies of the notice and
acknowledgement of receipt, with a return envelope with postage prepaid,
addressed to Plaintiff. (Code Civ.
Proc., § 415.30, subd. (b).) Although
Plaintiff advances an invoice from its service provider demonstrating that
Defendants were served via mail, Plaintiff advances no evidence demonstrating
that it included two copies of the notice and acknowledgement of receipt, as
well as the return envelope.
(Declaration of Peter J. Most, Exhibit H.)
Based on the foregoing, the Court denies the
motion. Plaintiff’s counsel shall
provide notice and file proof of such with the Court.