Judge Thomas D. Long, Case 21STCP04124 2022-09-20 Tentative Ruling

On December 17, 2021, Casa Mexico Enterprises, LLC field this action against Eric Gerardo Leyva-Buccio and Gina Ruccione, and on February 28, 2022, it filed a first amended complaint alleging breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of contract, conversion, conspiracy to commit conversion, and unjust enrichment.

Leyva-Buccio and Ruccione each filed cross-complaints, and on July 12, 2022, they each filed first amended cross-complaints (“FACC”).

On August 15, 2022, Casa Mexico Enterprises LLC, Michael A. Gooch, Robert Crossan, and DV Capital Partners LLC (“DVCP”) (collectively, “Cross-Defendants”) filed a combined demurrer to and motion to strike Ruccione’s FACC. “Motions to strike and demurrers should be filed as separate documents.” (Weil & Brown, Cal. Prac. Guide: Civil Procedure Before Trial (The Rutter Group June 2022 Update) ¶ 7:162.1.)

On August 26, 2022, Cross-Defendants filed a demurrer to Leyva-Buccio’s FACC. On August 30, 2022, Leyva-Buccio and Cross-Defendants stipulated to the filing of a second amended cross-complaint, which Leyva-Buccio field the next day. Accordingly, Cross-Defendants’ demurrer to Leyva-Buccio’s FACC is TAKEN OFF CALENDAR.

Ruccione’s FACC alleges (1) sexual harassment (hostile work environment) in violation of FEHA; (2) quid pro quo sexual harassment in violation of FEHA; (3) sexual battery; (4) gender discrimination in violation of FEHA; (5) retaliation in violation of FEHA; (6) wrongful termination in violation of public policy; (7) negligent infliction of emotional distress; (8) intentional infliction of emotional distress; (9) breach of contract; and (10) fraud.

Cross-Defendants demur to the first, second, fourth, fifth, sixth, ninth, and tenth causes of action.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.” (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)

The Court may, upon a motion or at any time in its discretion: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc., § 436, subds. (a)-(b).)

An employee must file an administrative complaint with DFEH within one year after the alleged unlawful action, and he or she must file suit within one year of a right-to-sue letter. (Govt. Code, §§ 12960, 12965, subd. (b).)

Cross-Defendants move to strike Ruccione’s allegations that she received a right to sue letter from the Department of Fair Employment and Housing (“DFEH”) for her claims against Cross-Defendants. (Notice of Motion at p. 4.) Cross-Defendants contend that these allegations are false because Ruccione’s right-to-sue letter, which was not attached to the FACC, relates only to alleged conduct that took place “on or about January 10, 2022,” but the alleged misconduct took place “from at least August 2019 until November 2021.” (Demurrer at p. 4; see FACC ¶ 80.) Cross-Defendants therefore seek dismissal of the FEHA claims (first, second, fourth, fifth, and sixth causes of action) for failure to exhaust her administrative remedies. (Ibid.)

The DFEH letter submitted by Cross-Defendants is not part of the FACC and is therefore typically outside the scope of a demurrer or motion to strike. However, because the FACC refers to this document (FACC ¶ 5), it is an appropriate matter for judicial notice. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 956, fn. 6.)

Cross-Defendants’ alleged misconduct occurred “from at least August 2019 until November 2021.” (FACC ¶ 80.) Ruccione argues that the right-to-sue referring to events “on or about January 10, 2022” is nevertheless sufficient to encompass the FACC’s claims because the complaint filed with the DFEH must only set forth the date of the most recent alleged act. (Opposition at p. 4.) In arguing this, Ruccione purports to quote Government Code section 12960 as stating that her DFEH complaint must set forth a description of the acts of discrimination, harassment, or retaliation, and “the date of the most recent alleged act thereof.” (Ibid.) This quotation is not in the statute. The statute actually requires that the complaint filed with the DFEH “set forth the particulars” of the unlawful employment practice. (Gov. Code, § 12960, subd. (c).)

California Code of Regulations does describe the requirements for obtaining a right-to-sue letter, including “the date or dates each alleged act of discrimination, harassment or retaliation occurred, including the date of the last or most recent alleged act,” and “for retaliation complaints, the date and type of protected activity in which the complainant engaged.” (Cal. Code Regs., tit. 2, § 10005, subd. (d).) The only date mentioned in Ruccione’s DFEH complaint is January 10, 2022. It does not include any other days for each alleged act of discrimination, harassment, or retaliation. The FACC alleges that wrongful acts occurred in August 2019 through November 2021, and Ruccione’s employment was terminated “days later.” (FACC ¶¶ 68, 80.) Accordingly, Ruccione’s FEHA claims are inherently limited to this time period when she was an employee, and none of the conduct occurred on January 10, 2022.

The demurrer to the first, second, fourth, fifth, and sixth causes of action is sustained and the motion to strike is granted on this ground.

FEHA applies to employers, including “any person regularly employing five or more persons.” (Gov. Code, §§ 12926, subd. (d), 12940.)

Cross-Defendants argue that the FACC fails to allege that Casa Mexico is an employer within the meaning of FEHA. (Demurrer at pp. 5-6.) The FACC alleges that Casa Mexico “regularly employs five or more persons at any given time.” (FACC ¶ 8.) This is sufficient.

Cross-Defendants demur to the FEHA causes of action (first, second, fourth, fifth, and sixth causes of action) on the grounds that Gooch, Crossan, and DVCP are not Ruccione’s employers. (Demurrer at p. 6.) “[I]ndividuals who do not themselves qualify as employers may not be sued under the FEHA . . . .” (Reno v. Baird (1998) 18 Cal.4th 640, 663.)

The FACC alleges that Gooch is an investor, chairman of Casa Mexico, CEO of Casa Mexico, and owner of DVCP. (FACC ¶ 9.) Crossan was a member of Casa Mexico. (FACC ¶ 10.) DVCP was a lender to Casa Mexico and a member on the board of directors of Casa Mexico. (FACC ¶ 11.)

Because there is no allegation that these defendants were Ruccione’s employers, the demurrer to the first, second, fourth, fifth, and sixth causes of action is sustained as to Gooch, Crossan, and DVCP.

Cross-Defendants argue that the FACC does not allege a sufficiently definite contract. (Demurrer at p. 8.) The standard elements of a claim for breach of contract are (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) Terms of an oral contract may be pleaded generally as to its effect because it is rarely possible to allege the exact words. (Scolinos v. Kolts (1995) 37 Cal. App. 4th 635, 640.) The FACC alleges that Ruccione negotiated the financial terms of her employment agreement with Casa Mexico through Gooch and Crossan, which included a 2.5 percent stake in Casa Mexico. (FACC ¶¶ 162, 164.) Ruccione accepted the offer, but the equity stake was not part of the signed employment agreement, and Crossan promised that it would be memorialized in a separate document. (FACC ¶¶ 165-169.) It was never presented in a written agreement and Cross-Defendants failed to provide the promised 2.5 equity stake. (FACC ¶¶ 170-172.) This sufficiently alleges the terms of the oral contract and the breach thereof. The demurrer is overruled on this ground.

Cross-Defendants argue that “the purported oral promise of a 2.5% stake is not part of the parties’ agreement and cannot be the basis for a claim of breach” because the written employment agreement that followed the negotiations did not contain this term. (Demurrer at p. 8.) This determination cannot be made on demurrer, especially when the employment agreement is not attached to the FACC to show, for example, whether the written agreement contained an integration clause and how the parol evidence rule may apply here. The demurrer is overruled on this ground.

Cross-Defendants also argue that the alleged breach would have accrued in January 2020 and therefore is barred by the statute of limitations. (Demurrer at p. 8.) “‘In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.’” (Geneva Towers Ltd. Partnership v. City of San Francisco (2003) 29 Cal.4th 769, 781.) The statute of limitations for an action upon a contract is two years. (Code Civ. Proc., § 339.)

The FACC alleges that the oral contract contained a term for Ruccione to receive a 2.5 percent stake in Casa Mexico, and when the employment agreement omitted this term, Crossan promised that a separate document would memorialize this provision. (FACC ¶¶ 164-167.) Crossan never presented a written agreement memorializing the equity stake, and until Ruccione’s employment was terminated, she never received the equity stake. (FACC ¶¶ 167-171.) Cross-Defendants argue that the breach of contract “would have accrued in or around January 2020 when it was reduced to writing without the purported 2.5% stake.” (Demurrer at p. 8.) But as Ruccione notes (Opposition at p. 7), the breach would not have occurred until Cross-Defendants failed to provide the equity stake. The demurrer is overruled on this ground.

Cross-Defendants argue that the FACC fails to allege specific facts to state a claim for fraud. “The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage.” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230-231.) Fraud must be pleaded with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

Ruccione alleges that she negotiated the financial terms of her employment agreement with Cross-Defendants, and they offered her a 2.5 percent stake in Casa Mexico. (FACC ¶¶ 175-176.) This was a false offer of an equity stake made to induce Ruccione to join the company as an employee with no intention of fulfilling the promise. (FACC ¶¶ 184-185.) Ruccione relied on the false statement and accepted the employment offer. (FACC ¶ 186.) As a result, Ruccione suffered damages due to the financial loss of her equity stake in Casa Mexico. (FACC ¶ 187.) These are sufficiently specific facts at the pleading stage.

The demurrer to the first, second, fourth, fifth, and sixth causes of action is SUSTAINED. Because Ruccione has not shown how she can remedy the deficiencies regarding administrative exhaustion, no leave to amend is granted.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court