Judge Theresa M. Traber, Case 22STCV21527 2023-01-24 Tentative Ruling

Judge: Theresa M. Traber, Case: 22STCV21527, Date: 2023-01-24 Tentative Ruling

Case Number: 22STCV21527 Hearing Date: January 24, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: January 24, 2023 TRIAL DATE: NOT SET

CASE: STP Inc. v. City National Bank

CASE NO.: 22STCV21527

MOTION TO STRIKE

MOVING PARTY: Defendant City National Bank

RESPONDING PARTY(S): Plaintiff STP Inc.

CASE HISTORY:

· 07/01/22: Complaint filed.

· 10/07/22: First Amended Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is a tort case. Plaintiff alleges that Defendant knowingly cashed a check from Plaintiff to the IRS that was intercepted and forged to direct payment to a third party.

Defendant moves to strike Plaintiff’s allegations related to punitive damages and to strike Plaintiff’s request for treble damages pursuant to Penal Code section 496.

TENTATIVE RULING:

Defendant’s Motion to Strike is GRANTED as to page 3, paragraph 14, lines 8 through 11 of the First Amended Complaint, and as to paragraphs 3 and 6 of the prayer for relief in the First Amended Complaint, and otherwise DENIED.

Plaintiff shall have thirty days leave from the date of this order to amend the complaint.

DISCUSSION:

Defendant moves to strike Plaintiff’s allegations related to punitive damages and to strike Plaintiff’s request for treble damages pursuant to Penal Code section 496.

Legal Standard

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. Code Civ. Proc., § 436(a). The court may also strike 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. Id., § 436(b). The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. Id.§ 436. The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. Id.§ 437. “When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.” Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768. A motion to strike can be used where the complaint or other pleading has not been drawn or filed in conformity with applicable rules or court orders. Code Civ. Proc., § 436(b). This provision is for "the striking of a pleading due to improprieties in its form or in the procedures pursuant to which it was filed." Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528 (emphasis in original).

Meet and Confer

Before filing a motion to strike, the moving party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the motion to strike and file a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 435.5(a).) However, an insufficient meet and confer process is not grounds to grant or deny a motion to strike. (Code Civ. Proc., § 435.5(a)(4).)

The Declaration of Michael Coleman filed in support of the motion states that the parties have been meeting and conferring for “several weeks” in an effort to resolve the dispute at issue in this motion. (Declaration of Michael Coleman ISO Mot. ¶ 2.) The declaration does not set out what specific efforts have been made, or for how long this process has been ongoing. However, as Plaintiff does not dispute that a sufficient meet and confer process occurred, the Court finds that Defendant has satisfied its statutory obligations in this respect.

Request for Judicial Notice

Defendant requests that the Court take judicial notice of the original Complaint in this action. Defendant’s request is GRANTED pursuant to Evidence Code section 452(d) (court records).

Punitive Damages

Defendants contend that Plaintiffs have not properly set forth facts supporting a claim for punitive damages.

Generally, punitive damages may be awarded only when the trier of fact finds, by clear and convincing evidence, that the defendant acted with malice, fraud, or oppression. (Civ. Code, § 3294, subd. (a).) As nonintentional torts support punitive damages when the defendant's conduct “involves conscious disregard of the rights or safety of others,” our focus is on malice and oppression. (Gawara v. United States Brass Corp. (1998) 63 Cal.App.4th 1341, 1361 [74 Cal. Rptr. 2d 663].) As defined in the punitive damages statute, “[m]alice” encompasses “despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights and safety of others,” and “[o]ppression” means “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” (Civ. Code, § 3294, subd. (c)(1), (2).) The term “‘despicable,’” though not defined in the statute, is applicable to “circumstances that are ‘base,’ ‘vile,’ or ‘contemptible.’ ” (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 [34 Cal. Rptr. 2d 898, 882 P.2d 894], quoting 4 Oxford English Dict. (2d ed. 1989) p. 529.)

Under the statute, “malice does not require actual intent to harm. [Citation.] Conscious disregard for the safety of another may be sufficient where the defendant is aware of the probable dangerous consequences of his or her conduct and he or she willfully fails to avoid such consequences. [Citation.] Malice may be proved either expressly through direct evidence or by implication through indirect evidence from which the jury draws inferences. [Citation.]” (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1228 [44 Cal. Rptr. 2d 197].)

(Pfeifer v. John Crane, Inc., (2013) 220 Cal.App.4th 1270, 1299 (bold emphasis added).)

Civil Code § 3294(a) provides:

In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

Civil Code § 3294(c) defines malice, oppression and fraud:

(1) ‘Malice’ means 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.

(2) ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.

(3) ‘Fraud’ means 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.

(Bold emphasis added.)

To withstand a motion to strike punitive damages allegations, the complaint must set forth facts supporting a claim for punitive damages:

The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. (Citation omitted.) Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim.

(Grieves v. Superior Court (Fox) (1984) 157 Cal.App.3d 159, 166 (emphasis added).)

Defendant contends that the punitive damage allegations are conclusory and do not set forth any facts which satisfy the standards for malice, oppression, or fraud. Plaintiff, in opposition, contends that the allegations are sufficiently pled to meet this standard.

First, Plaintiff contends that it adequately alleged fraud when it alleged that Defendant did not provide an account statement until September 7, 2022, thereby—according to Plaintiff—alleging that Defendant fraudulently concealed that it had negotiated a forged check. However, even drawing all inferences in favor of Plaintiff and setting aside that Plaintiff has not directly alleged the elements of fraudulent concealment, the Court is not persuaded by Plaintiff’s argument. Reviewing the check attached to the original Complaint as Exhibit 2, since the First Amended Complaint appears to have omitted that exhibit despite making references to it, there is nothing on the face of the document that could plausibly give rise to a belief that the check was forged. (See Complaint Exh. 2.) Plaintiff does not identify, either in the pleadings or in the opposition, how Defendant could have known in advance that the check was forged so as to intentionally conceal any facts. Further, Plaintiff has not alleged any duty to disclose any facts, nor any conduct that was induced as a result of the failure to disclose, as is required to allege fraudulent concealment (See Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248.)

Plaintiff also argues that it adequately alleged malice and oppression because it alleged that Defendant acted to consciously disregard Plaintiff’s rights. Specifically, Plaintiff again contends that Defendant knew or should have known from the face of the check, the amount of the check, and Plaintiff’s pattern of sending checks to the IRS from that account that the check was forged. In the first place, this argument fails for the same reason as Plaintiff’s fraud argument insofar as a conclusory assertion that Defendant had reason to hold the check “considering the clear forgery, the amount and Plaintiff’s pattern and practice of sending large checks to the IRS” is not sufficient to establish conscious disregard of Plaintiff’s rights. (FAC ¶ 10.) Plaintiff alleges no facts which would establish how an undescribed pattern of sending checks to the IRS would give rise to a suspicion that a large check to a different person was fraudulent, nor how Defendant would have reason to suspect fraud merely from the name on the check. Further, the face of the check itself does not offer any apparent indication that it is fraudulent, and Plaintiff does not set out any basis for that conclusion. Second, Plaintiff’s conclusory assertions that Defendant’s conduct was despicable, base, vile, or contemptible are not sufficient to establish malice or oppression.

Defendant also claims that Plaintiff’s request for punitive damages is barred by Commercial Code section 4406(f). That section provides that “a customer who does not within one year after the statement or items are made available to the customer discover and report the customer’s unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration.” (Comm. Code § 4406(f).) This appears to be an argument against the merits of Plaintiff’s claims in general, not whether Plaintiff has adequately pled punitive damages. In the Court’s view, this is an argument that is more properly raised by demurrer, motion for judgment on the pleadings, or motion for summary judgment, not via the pending motion to strike. This argument is not sufficient to establish that the punitive damages allegations should be stricken.

However, as the Court has concluded that Plaintiff has not adequately alleged malice, fraud, or oppression, the Court agrees that the punitive damages allegations should be stricken.

Treble Damages Pursuant to Penal Code Section 496

Defendant moves to strike Plaintiff’s request for treble damages pursuant to Penal Code section 496. Penal Code section 496(c) authorizes treble damages plus attorney’s fees as a civil remedy for violation of Penal Code section 496(a). Defendant seeks to attack the merits of Plaintiff’s second cause of action by striking the prayer for treble damages. In the Court’s view, this is an argument that is more properly raised by demurrer, motion for judgment on the pleadings, or motion for summary judgment. The Court declines to strike the prayer for relief on the third cause of action on this basis.

Leave to Amend

Plaintiff, in opposition, requests leave to amend the pleadings if the Court grants the motion to strike.

"Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question." (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.)

Here, Plaintiff has not clearly set out how the defects in the First Amended Complaint are curable. Since the defects arise from insufficiently detailed allegations, however, the manner in which the pleading might be cured is readily apparent to the Court. The Court will therefore exercise its discretion to grant leave to amend.

CONCLUSION:

Accordingly, Defendant’s Motion to Strike is GRANTED as to page 3, paragraph 14, lines 8 through 11 of the First Amended Complaint, and as to paragraphs 3 and 6 of the prayer for relief in the First Amended Complaint, and otherwise DENIED.

Plaintiff shall have thirty days leave from the date of this order to amend the complaint.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: January 24, 2023 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.