Judge Upinder S. Kalra, Case Number: 23STCV03188, Date: 2023-08-08 Tentative Ruling

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1. Demurrer to the First, Second, and Third Causes of Action in the First Amended Complaint for failure to state sufficient facts[1];

1. Demurrer to the First Cause of Action is OVERRULED as to the March 2019 employment contract;

2. Demurrer to the First Cause of Action is OVERRULED as to the November 25, 2021 Agreement as to Defendant Cohen and SUSTAINED as to Defendant Saxon;

3. Demurrer to the Second and Third Causes of Action is OVERRULED as to Defendant Cohen and SUSTAINED as to Defendant Saxon;

4. Motion to Strike is DENIED as to prayer for punitive damages and prejudgment interest;

On February 14, 2023, Plaintiff Barrye Jacobson (Plaintiff) filed a Complaint against Defendants Adam S. Cohen and Saxon Spencer Capital, Inc. (Defendants) with six causes of action for: (1) Specific Performance or Damages Based Upon Breach of Express Contract, (2) Fraud and Deceit, (3) Negligent Misrepresentation, (4) Intentional Infliction of Emotional Distress, (5) Negligent Infliction of Emotional Distress, and (6) Quantum Meruit.

On August 8, 2023, the court SUSTAINED Defendants’ Demurrer to the Complaint with leave to amend.

On August 28, 2023, Plaintiff filed a First Amended Complaint (FAC) with four causes of action for: (1) Breach of Contract, (2) Fraud and Deceit, (3) Negligent Misrepresentation, and (4) Quantum Meruit.

According to the FAC, Plaintiff began working for Defendants and eventually entered a romantic relationship with Defendant Cohen. Between 2019 and 2022, Plaintiff was hired and fired on three separate occasions. In 2021, Plaintiff was promoted to Chief Financial Officer/Chief Operation Officer for Defendant Saxon. Additionally, Plaintiff was promised a share of profits from an LLC, which would be managed by both Jacobson and Cohen. However, this did not happen, and Plaintiff was fired in April 2022.

On October 17, 2023, Defendants filed a Demurrer and Motion to Strike the FAC set for hearing on February 1, 2024.

On October 27, 2023, the court advanced the hearing from February 1, 2024 to November 9, 2023.

On November 7, 2023, the parties stipulated to continue the hearing from November 9, 2023 to December 14, 2023.

On December 1, 2023, Plaintiff timely filed oppositions. On December 6, 2023, Defendants timely filed replies.

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. (CCP) §430.41 and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to CCP §430.41(a)(2) & (3).¿The meet and confer requirement also applies to motions to strike. (CCP § 435.5.)

Here, the Declaration of Doron F. Eghbali submitted with the demurrer indicates that counsel sent an email on September 12, 2023 attempting to meet and confer. (Eghbali Decl. ¶ 5.) This email requested Plaintiff’s counsel to reach out by October 5, 2023. (Eghbali Decl. ¶ 6.) Plaintiff’s counsel did not respond. (Eghbali Decl. ¶ 7.) One email is not likely enough to satisfy the meet and confer requirement. However, failure to meet and confer is not grounds to overrule or sustain a demurrer, or grant or deny a motion to strike. (Code Civ. Proc., §§ 430.41, subd. (a)(4); 435.5 subd. (a)(4).)

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.¿In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. …. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”¿(Hahn¿147 Cal.App.4th at 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.) Courts also consider exhibits attached to the complaint and incorporated by reference. (See Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94 (Frantz).)

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. (CCP § 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 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.)

Defendants contend that Plaintiff did not sufficiently allege facts necessary to support a breach of contract cause of action, like the contract terms, or show that a contract exists. As to an employment contract, Defendants contend that it can only be an at-will contract. As to an unconditional pledge of financial support, Defendants contend it is also an at-will contract because it lacks express and implied terms. Defendants also contend that the Statute of Frauds bars each alleged agreement because they would not be completed within one year.[2] Plaintiff argues she sufficiently plead breach of the March 2019 and November 25, 2021 agreements.

“To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff. [Citation.]” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98.) “A written contract may be pleaded either by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect. [Citation.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms.’” (Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 993.)

Plaintiff alleges two contracts: March 2019 employment contract[3] and November 25, 2021 Unconditional Pledge of Financial Support Agreement.

As to the March 2019 employment contract, Plaintiff has sufficiently alleged a cause of action for breach of contract. First, Plaintiff alleges the verbatim terms of the oral contract: entered into on or about March of 2019, full time position as a Wholesale Account Executive for Saxon Spencer with a base salary of approximately $3,600 to $4,000 along with performance-based commission if she permanently terminated her employment with 71 Above.[4] (FAC ¶¶ 17.) Second, Plaintiff alleges she performed under the contract by working full time for Saxon Spencer.[5] (FAC ¶ 18.) Third, Plaintiff alleges that Defendants breached the March 2019 employment contract by failing to pay her for several payment cycles and creating a hostile work environment. (FAC ¶¶ 19, 20.)[6] Plaintiff also alleges Defendants improperly terminated her employment. (FAC ¶¶ 10, 11, 12, 13, and 14.) Fourth, Plaintiff alleges damages in deprivation of past income. (FAC ¶ 21.)

As to the November 25, 2021 Agreement, Plaintiff has sufficiently alleged a cause of action for breach of contract against Defendant Cohen, but not against Defendant Saxon.[7] First, Plaintiff attached a copy of the contract to the FAC. (FAC Exhibit 3.) Second, Plaintiff alleges she performed under the November 25, 2021 Agreement because she continued to perform work for Defendant Cohen. (FAC ¶ 22.) Third, Plaintiff alleges that Defendants breached because Cohen never conveyed title, ownership, income, salary, or financial statements to Plaintiff. (Ibid.) Fourth, Plaintiff implies damages because the business to which she would receive 10% ownership and prorated share of profits did not happen. (Ibid.)

Accordingly, the court OVERRULES Defendants’ demurrer to the First Cause of Action for the March 2019 employment contract as to both defendants, OVERRULES the demurrer to the First Cause of Action for the November 25, 2021 Agreement as to Defendant Cohen, and SUSTAINS the demurrer to the First Cause of Action for the November 25, 2021 Agreement as to Defendant Saxon.

Defendants contend that Plaintiff cannot recover for breach of promise to marry or fraud stemming from previous romantic involvement with Defendant Cohen under California law, that Plaintiff has not pled fraud with particularity, and that the alleged contracts were terminable at will. Plaintiff argues she sufficiently plead fraud with particularity.

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or 'scienter'); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court¿(1996) 12 Cal.4th 631, 638.)

“In California, fraud must be pled specifically; general and conclusory allegations do not suffice…this particularity requirements necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tenders.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469; Perlas v. GMAC Mort., LLC (2010) 187 Cal.App.4th 429, 434 [requiring plaintiffs who claim fraud against a corporation to allege the names of the persons who made the misrepresentations, their authority to speak for the corporation, to whom they spoke, what they said or wrote, and when it was said or written.]) Fraud allegations need not be liberally construed, general pleading of the legal conclusion of fraud is insufficient, and every element of the cause of action for fraud must be alleged fully, factually and specifically. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal. App. 3d 1324, 1331.)

Plaintiff pleads two main instances of fraud: the March 2019 employment contract and the November 25, 2021 Agreement.[8]

The court agrees, in part, that Plaintiff sufficiently pled facts supporting her claim for fraud. However, this extends to her claims against Defendant Cohen, not to claims against Defendant Saxon. First, Plaintiff sufficiently alleged the misrepresentations because she alleges that in March of 2019, Defendant Cohen encouraged Plaintiff to quit her job and join him at his company where she would earn more money and have a better opportunity for growth and professional development by misrepresenting giving Plaintiff “a stale $4,000 monthly salary with performance-based commissions, a stable work schedule and promise of actual work, and a safe and professional work-life with the opportunity for professional development” with Defendants. (FAC ¶ 25.) Plaintiff additionally alleges that Defendant Cohen “promised to take care of the rent” for an apartment that Plaintiff told him she could not afford. (FAC ¶ 28.) Finally, Defendant Cohen prepared the November 25, 2021 Agreement setting out various terms providing Plaintiff with 10% ownership interest in Defendant Cohen’s future businesses.[9] (FAC ¶ 29.) Second, Plaintiff alleges Defendant Cohen knew these statements were false because he “did not intend to hire [Plaintiff] as a legitimate employee, but instead, intended to ostensibly hire [Plaintiff] so that he could assume a position of power and control” over her “to form and exploit a romantic relationship” and that the November 25, 2021 Agreement was intended to placate Plaintiff for Defendants’ failure to provide wages. (FAC ¶¶ 26, 30.) Third, Plaintiff alleges Defendant Cohen intended to reduce her reliance on these statements so she would quit her job and start working for him, and that she would continue working for them despite being owed substantial back pay. (FAC ¶¶ 26, 27, 30.) Fourth, Plaintiff alleges to justifiably rely on these misrepresentations because she did quit her job to pursue the promised opportunity with Defendants and continued working for Defendants despite being owed back pay.[10] (FAC ¶¶ 27, 30.) Fifth, Plaintiff alleged she was damaged because she was deprived of income and incurred undue debts. (FAC ¶¶ 29, 33, 34.)

Accordingly, the court OVERRULES Defendants’ demurrer to the Second Cause of Action as to Defendant Cohen but SUSTAINS the demurrer as to Defendant Saxon.

Defendants contend that the FAC fails to allege specific misrepresentations made by Defendants, that Defendants were not aware of the falsity of the representations at the time of making them, that the alleged misrepresentations pertained to future, not past, events, and Plaintiff otherwise failed to plead “how” “when” and “where” of the alleged statements. Plaintiff argues she sufficiently pled negligent misrepresentation with particularity. Defendants reply that Plaintiff did not properly allege the elements for negligent misrepresentation.

The elements of a cause of action for negligent misrepresentation are: (1) the defendant must have made a representation as to a past or existing material fact; (2) the representation must have been untrue; (3) regardless of the defendant’s actual belief, the defendant must have made the representation without any reasonable ground for believing it to be true; (4) the representation must have been made with the intent to induce the plaintiff to rely on it; (5) the plaintiff must have been unaware of the falsity of the representation and must have acted in justifiable reliance on the truth of the representation; and (6) as a result of reliance on the truth of the representation, the plaintiff must have sustained damage. (Continental Airlines, Inc. v. McDonnell Douglas Corp. (1989) 216 Cal.App.3d 388, 402 (reh’g denied and opinion modified on Jan. 5, 1990).)

Upon reviewing the FAC, and based on the analysis above, Plaintiff sufficiently alleged facts supporting her claim for negligent misrepresentation against Defendant Cohen, but not against Defendant Saxon.

Accordingly, the court OVERRULES Defendants’ demurrer to the Third Cause of Action as to Defendant Cohen but SUSTAINS the demurrer as to Defendant Saxon.

Defendants contend that Plaintiff has not sufficiently alleged facts supporting a claim for punitive damages. Plaintiff filed an opposition, but the opposition does not address this argument.

To obtain punitive damages, a plaintiff must plead sufficient facts in support of punitive damages.¿ (See¿Hilliard v. A.H. Robins Co.¿(1983) 148 Cal.App.3d 374, 391-92.)¿ In addition,¿punitive damages are allowed only where “it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.”¿ (Civ. Code, § 3294,¿subd. (a).)¿ Courts have viewed despicable conduct as conduct “so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people. (Scott v. Phoenix Schools, Inc., (2009) 175 Cal.App.4th 702, 715.)¿¿

Further, Civil Code § 3294(c) provides the definition of malice, oppression, and fraud. Malice is “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.” Oppression is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” Fraud is “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.”¿

As indicated above, the court overruled the demurrer as to Defendant Cohen to the Second and Third Causes of Action but sustained the demurrer as to Defendant Saxon. Thus, Plaintiff sufficiently pled facts warranting punitive damages due to fraud.

Accordingly, Defendants’ motion to strike is GRANTED as to Defendant Saxon but DENIED as to Defendant Cohen.[12]

Defendants contend that Plaintiff’s claim for prejudgment interest fails because her damages are uncertain. Plaintiff filed an opposition, but the opposition does not address this argument.

“A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt.” (Civ. Code § 3287(a).) “Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.” (Civ. Code § 3287(b).) “In an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud or malice, interest may be given in the discretion of the jury.” (Civ. Code § 3288.) The test for determining “certainty” is whether defendant actually knows the amount owed or could have computed the amount from reasonably available information. (Children’s Hosp. and Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 774.) “Thus, where the amount of damages cannot be resolved except by verdict or judgment, prejudgment interest is not appropriate.” (Ibid.)

Upon reviewing the FAC, Plaintiff has sufficiently alleged facts supporting a claim for prejudgment interest. Plaintiff’s Fourth Cause of Action for Quantum Meruit calculates the reasonable value of her services at $42,000.00 in unpaid wages.[13] (FAC ¶ 39.) Defendant did not otherwise argue that Plaintiff’s damages claims were uncertain and unascertainable. Needless to say, it remains to be seen whether the Court will award prejudgment interest.

Accordingly, the court DENIES Defendants’ motion to strike the FAC prayer for prejudgment interest.

Upon reviewing the moving papers, Defendants did not make an argument in their moving papers specific to attorney’s fees and the court will not entertain new argument in reply. Plaintiff filed an opposition, but the opposition does not address this argument.

Parties cannot recover attorney’s fees unless expressly authorized by a statute or contract. (Hom v. Petrou (2021) 67 Cal.App.5th 459, 464.)

Accordingly, the court GRANTS Defendants’ motion to strike the FAC prayer for attorney’s fees.

1.Demurrer to the First Cause of Action is OVERRULED as to the March 2019 employment contract;

2.Demurrer to the First Cause of Action is OVERRULED as to the November 25, 2021 Agreement as to Defendant Cohen and SUSTAINED as to Defendant Saxon;

3.Demurrer to the Second and Third Causes of Action is OVERRULED as to Defendant Cohen and SUSTAINED as to Defendant Saxon;

4.Motion to Strike is DENIED as to prayer for punitive damages and prejudgment interest;

[1] Defendants did not raise the Fourth Cause of Action until their reply brief. Accordingly, the court disregards those arguments.

[2] The court rejects Defendants’ arguments to strike Plaintiff’s exhibits to the FAC.

[3] The court notes that, as alleged, the March 2019 employment contract is broken into several blocks. For example, Plaintiff’s Exhibit 1 indicates an October 4, 2021 Independent Contractor Agreement and Fee Agreement that Plaintiff claims is substantially identical to the original March 2019 contract. However, this agreement is unsigned.

[4] Defendants’ Statute of Frauds argument is not persuasive because, and as Defendants admit, an at will contract may be completed within one year. Indeed, the contracts were not completed within one year because, as alleged, Defendants terminated Plaintiff’s employment multiple times within a one-year period. (FAC ¶¶ 11, 12, 13, and 14.) As such, the Statute of Frauds would not apply.

[5] It’s implied that Plaintiff quit her job at 71 Above.

[6]The Court will note that the statute of limitations for an oral contract is two years. While Defendants have not raised this issue in this Demurrer, the Court wonders how Plaintiff will survive any future challenge on this ground.

[7] The court rejects Defendants’ arguments that the Statute of Frauds applies and that this agreement is terminable at will: first, Plaintiff’s Exhibit 3 indicates a writing signed by the party to be charged; second, the clause Defendants quoted indicates the contract terminates at either party’s death, which, hopefully, is not an at will event. The parties did not brief whether this contract applied to Defendant Saxon.

[8] Upon reviewing the FAC, the allegations about the apartment seem appropriately grouped with the March 2019 employment contract allegations.

[9] The court rejects Defendants’ arguments that the November 25, 2021 Agreement concerns breach of contract to marry or fraudulent promise to marry. As alleged, it is in exchange for Plaintiff to waive her right to owed back pay.

[10] It does not appear that Plaintiff’s reliance was unreasonable. And, if it were, that would be an appropriate question for summary judgment, not at the pleading stage.

[11] Defendants make no argument as to why the court should strike this paragraph of factual allegations. As such, the court will not address it below.

[12]The Court declines to go through the complaint and strike all paragraphs as it relates to punitive damages. It was Defendant’s obligation to identify the offending lines and paragraphs. (See Rule of Court 3.1322.) Instead, the Court will strike the prayer for punitive damages as it applies to Defendant Saxon.

[13] Plaintiff also seeks $100,000.00 in compensatory damages. (FAC Prayer ¶ 1.) However, this request does not render the damages uncertain because it is an alternative method to calculate certain damages. (See Bonta, supra, at p. 774.)