Judge: Teresa A. Beaudet, Case: 21STCV04269, Date: 2022-09-19 Tentative Ruling

Case Number: 21STCV04269    Hearing Date: September 19, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff 290 Beowawie LLC (“Plaintiff”) filed this action on February 2, 2021. On July 19, 2021, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants Indinero Inc. (“Indinero”), Jessica Mah (“Mah”), Andy Su aka Andrew Su aka Dizhe Su (“Su”), Employees First Advocates LLC, and Pry Financials Inc., asserting causes of action for (1) breach of contract, (2) relief against avoidable transfers and/or obligations, (3) breach of fiduciary duty, (4) quia timet, and (5) unjust enrichment.

Indinero, Mah, and Su (collectively, “Defendants”) demurred to each cause of action of the FAC. On February 14, 2022, the Court issued an Order overruling Defendants’ demurrer to the FAC in its entirety. The Court ordered Defendants to file and serve an answer to the FAC within 30 days of the date of the February 14, 2022 Order.

On March 10, 2022, Defendants filed a joint answer to the FAC. On March 21, 2022, Plaintiff filed a demurrer to Defendants’ answer to the FAC. On May 31, 2022, Defendants filed a joint First Amended Answer to the FAC.

Plaintiff now demurs to the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, and “additional affirmative defenses” set forth in Defendants’ First Amended Answer to the FAC. Defendants oppose.

Request for Judicial Notice

The Court grants Plaintiff’s request for judicial notice. 

Discussion

“A party against whom an answer has been filed may object, by demurrer as provided in Section 430.30, to the answer upon any one or more of the following grounds: (a) The answer does not state facts sufficient to constitute a defense. (b) The answer is uncertain. As used in this subdivision, ‘uncertain’ includes ambiguous and unintelligible. (c) Where the answer pleads a contract, it cannot be ascertained from the answer whether the contract is written or oral.” ((Code Civ. Proc., § 430.20.) Every affirmative defense “shall be separately stated, and the several defenses shall refer to the causes of action which they are intended to answer, in a manner by which they may be intelligibly distinguished.” ((Id., § 431.30, subd. (g).)

“Demurring to an answer is a commonly recognized practice. Unlike the usual general demurrer to a complaint the inquiry is not into the statement of a cause of action. Instead it is whether the answer raises a defense to the plaintiff’s stated cause of action. A general demurrer raises the objection that the answer does not state facts sufficient to constitute a defense . . . .” ((Timberidge Enterprises, Inc. v. City of Santa Rosa (1978) 86 Cal.App.3d 873, 879-880 [internal citations and quotations omitted; emphasis in original].) As a general rule, defendants must allege facts in support of affirmative defenses. ((FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384 [affirmative defenses “proffered in the form of terse legal conclusions, rather than as facts ‘averred as carefully and with as much detail as the facts which constitute the cause of action and are alleged in the complaint’” are not well pled and cannot survive a demurrer].)

As an initial matter, Defendants assert that the demurrer is untimely. Pursuant to Code of Civil Procedure section 430.40, subdivision (b), “[a] party who has filed a complaint or cross-complaint may, within 10 days after service of the answer to his pleading, demur to the answer.”

Here, Defendants’ First Amended Answer to the FAC was filed on May 31, 2022, and the proof of service attached to the First Amended Answer indicates that it was served by e-service on May 31, 2022. Plaintiff filed the instant demurrer 36 days later, on July 6, 2022.

            Plaintiff counters that the filing delay was the result of excusable neglect[1], and that the demurrer was timely served. The proof of service attached to the demurrer indicates that it was served by mail and electronic service on June 13, 2022. In light of the fact that the demurrer was timely served, and because Defendants filed a substantive opposition that addresses the arguments made in the demurrer, the Court elects to exercise its discretion to consider the untimely filed demurrer.¿(California Rules of Court, rule 3.1300. (d).)¿

            Plaintiff demurs to the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth, fifteenth, and “additional affirmative defenses” set forth in Defendants’ First Amended Answer to the FAC.

            Defendants’ second affirmative defense alleges that “the FAC, and each and every purported cause of action alleged therein, is barred in whole or in part by the applicable statute of limitations, including, but not limited to, those provided by Code of Civil Procedure sections 337.” (First Amended Answer, ¶ 2.) Pursuant to Code of Civil Procedure section 458, “[i]n pleading the statute of limitations it is not necessary to state the facts showing the defense, but it may be stated generally that the cause of action is barred by the provisions of section  (giving the number of the section and subdivision thereof, if it is so divided, relied upon) of the Code of Civil Procedure; and if such allegation be controverted, the party pleading must establish, on the trial, the facts showing that the cause of action is so barred.” (Emphasis added.) Here, the second affirmative defense cites to Code of Civil Procedure section 337, but this statute has multiple subdivisions. Defendants fail to identify the subdivision(s) of Code of Civil Procedure section 337 upon which the defense is based. Thus, the Court sustains the demurrer to the second affirmative defense, with leave to amend.

The Court finds that the third affirmative defense (failure to mitigate damages) fails to allege sufficient facts to constitute a defense. No facts are set forth to support the allegation that “Plaintiff failed to take responsible steps, if any, to mitigate its damages.” (First Amended Answer, ¶ 3.) Similarly, the Court finds that fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, and thirteenth affirmative defenses are in the form of terse legal conclusions and thus fail to state facts sufficient to constitute a defense. Thus, the Court sustains the demurrer to the foregoing affirmative defenses, with leave to amend.

In the fourteenth affirmative defense (speculative damages), Defendants allege that “…all or a portion of the damages alleged by Plaintiff are speculative and uncertain and not caused by an action or omission on Defendant’s part.” (First Amended Answer, ¶ 14.) Plaintiff argues that the “legal conclusions” pleaded in this affirmative defense do not constitute “new matter” within the meaning of Code of Civil Procedure section 431.30. (Demurrer at p. 7:5-7.) Pursuant to Code of Civil Procedure section 431.30, subdivision (b), “[t]he answer to a complaint shall contain: (1) The general or specific denial of the material allegations of the complaint controverted by the defendant. (2) A statement of any new matter constituting a defense.” In support of the assertion that the fourteenth affirmative defense “is not stated,” Plaintiff cites to Walsh v. West Valley Mission Community College Dist. (1998) 66 Cal.App.4th 1532, 1546, where the Court of Appeal noted that affirmative defenses are “also known as new matters” and that “[t]he phrase new matter refers to something relied on by a defendant which is not put in issue by the plaintiff. Thus, where matters are not responsive to essential allegations of the complaint, they must be raised in the answer as new matter.” (Internal quotations, citations, and emphasis omitted.) However, Walsh does not discuss the affirmative defense of “speculative damages,” and the Court does not see how this case supports Plaintiff’s assertion that the fourteenth affirmative defense must fail. Thus, the Court overrules the demurrer to the fourteenth affirmative defense. 

Defendants’ fifteenth affirmative defense concerns “Impermissible Punitive Damages.” (First Amended Answer, ¶ 15.) Plaintiff asserts that the demurrer should be sustained as to this affirmative defense because “[t]he legal argument posited as an affirmative defense has no place in an answer to a complaint.” (Demurrer at p. 7:13-14.) In support of this assertion, Plaintiff cites to California Academy of Sciences v. County of Fresno (1987) 192 Cal.App.3d 1436, 1442, but in that case, the Court of Appeal indicated that, “[w]e…reject appellant’s waiver and estoppel arguments because the County failed to raise them as affirmative defenses in its answer. A party who fails to plead affirmative defenses waives them.” Thus, the Court does not see how California Academy of Sciences supports Plaintiff’s assertion that the fifteenth affirmative defense must fail. Thus, the Court overrules the demurrer to the fifteenth affirmative defense.

 Lastly, Defendants allege that “there may be additional affirmative defenses to Plaintiff’s alleged causes of action which are currently unknown to Defendant. Defendant reserves the right to amend this Answer to allege additional affirmative defenses in the event discovery of other information indicates they are appropriate.” (First Amended Answer, ¶ 16, “Additional Affirmative Defenses.”) Plaintiff argues that “[t]he ‘right’ to amend an answer expires ten days after it is filed - Leave of court is thereafter required…Where in the world of pleading and practice did this ‘affirmative defense’ ever come from?” (Demurrer at p. 7:20-23.) However, Plaintiff fails to cite to any legal authority indicating that Defendants may not allege that they reserve the right to amend their Answer to allege additional affirmative defenses. Thus, the Court overrules the demurrer to the “additional affirmative defenses.” (First Amended Answer, ¶ 16.)

Conclusion

For the reasons set forth above, Plaintiff’s demurrer to the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, twelfth, and thirteenth affirmative defenses is sustained, with leave to amend. Plaintiff’s demurrer to the fourteenth, fifteenth, and “additional affirmative defenses” is overruled.  

The Court orders Defendants to file and serve an amended answer, if any, within 20 days of the date of service of this Order.

Plaintiff is ordered to give notice of this Order.

DATED:  September 19, 2022                       ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court