Judge: Theodore R. Howard, Case: 12-553004, Date: 2022-08-25 Tentative Ruling

Demurrer to Second Amended Cross Complaint

Plaintiff and cross-defendant Carlos Padilla III demurs generally to all eleven causes of action in the second amended cross-complaint.  He also asks for judicial notice of twelve documents that have been filed with various courts. 

Moving cross-defendant demurred to all ten causes of action in the first amended cross-complaint and the Court overruled all except the demurrer to the tenth cause of action.  In sustaining the demurrer to the tenth caused of action in the FACC, the Court gave leave to amend.

Cross-complainants timely filed a second amended cross-complaint containing the same causes of action and adding a new eleventh cause of action for fraud and deceit. 

As with the demurrer to the FACC, moving cross-defendant starts out with the argument that the SACC was improper because the initial cross-complaint was filed without leave of Court.  The Court rejected the argument because leave was not required.  Cross-complainants filed the initial cross-complaint when they filed their answer to the plaintiff’s fourth amended complaint. 

In that the Court has previously overruled demurrers to the first nine causes of action and moving cross-defendant is repeating many of the same arguments that he already made.

Tenth cause of action for breach of confidentiality agreement.  In sustaining the demurrer to this cause of action in the FACC, the Court noted that it failed to identify the parties to the agreement or attach it as an exhibit to the FACC.

In amending, cross-complainants now allege in the tenth cause of action that the agreement was between moving cross-defendant and WeCosign, Inc., and concerned the confidential nature of WeCosign’s business and financial information.  (SACC, ¶ 145.)  It alleges that cross-defendant breached this non-disclosure agreement by self-dealing with Milton Ault, III, failing to exercise reasonable care and diligence by disclosing trade secrets, and breaking into the desk of cross-complainant Tara Jakubaitis and stealing the cross-defendants’ information.  (SACC, ¶ 148.) 

The tenth cause of action alleges that the cross-defendant’s conduct was intentional and resulted in harm to WeCosign and its shareholders and employees.  (SACC, ¶ 150.)  It alleges that cross-complainants sustained damages of at least $510,000 as a result of this breach.  (SACC, ¶ 151.) 

In his demurrer to this cause of action, moving cross-defendant contends that the alleged injury is to WeCosign rather than the cross-complainants and therefore the claim belongs to it (and not them).  This argument is meritorious.

Eleventh cause of action for fraud and deceit.  The caption of the SACC indicates that the eleventh cause of action, which is new, is for fraud and deceit, but the title given to this cause of action in the body of the SACC indicates that it is for “fraudulent breach of contract.” 

Not only does this cause of action appear to allege injury to WeCosign, but it does not sound in fraud or set forth the elements of a fraud claim. 

The general demurrers of cross-defendant Carlos Padilla III to the first nine causes of action in the second amended complaint of Frank and Tara Jakubaitis are OVERRULED (Again).  The general demurrers to the tenth and eleventh causes of action are SUSTAINED without leave to amend.

Cross-defendant is to file an answer to the SACC within 15 days.

Motion to Strike

The motion of plaintiff and cross-defendant Carlos Padilla III to strike the second amended cross-complaint is DENIED.