Judge Upinder S. Kalra, Case Number: 23STCV06792, Date: 2024-01-03 Tentative Ruling

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1. Demurrer to the First Cause of Action in the FAC for misjoinder of parties and uncertainty;

2. Demurrer to the Second and Third Causes of Action in the FAC for failure to state sufficient facts to constitute a cause of action;

On March 28, 2023, Plaintiff Adrienne Smith (Plaintiff) filed a Complaint against Defendants Lorcan Kelleher and Lightstream Documentaries Nevada, LLC (Defendants) with three causes of action for: (1) Breach of Contract; (2) Breach of Fiduciary Duty; and (3) Fraud by Intentional Misrepresentation.

According to the FAC, in 2022, Plaintiff provided Defendants with an investment loan as part of a budget for Defendants to produce a documentary covering Plaintiff’s record-setting rowing journey from California to Hawaii. The investment loan was memorialized in an Investment Agreement (the Agreement). Plaintiff alleges that Defendants ceased communicating with Plaintiff in August 2022, failed to pay the documentary crew, failed to pursue additional investors, and failed to inform Plaintiff how they spent her funds.

On October 16, 2023, Defendant Lightstream Documentaries Nevada LLC (Lightstream) timely filed the instant Demurrer and Motion to Strike.[2]

As of December 26, 2023, Plaintiff has not filed Proof of Service of Summons. (CRC 3.110(b).) Plaintiff admits to have not yet served Defendant Kelleher. (Opp 2:10.) Defendant Kelleher has not appeared as of December 26, 2023.

Prior to filing a demurrer, the demurring party is required to satisfy their meet and confer obligations pursuant to Code of Civ. Proc. §430.41, and demonstrate that they so satisfied their meet and confer obligation by submitting a declaration pursuant to Code of Civ. Proc. §430.41(a)(2) & (3). ¿The meet and confer requirement also applies to motions to strike. (CCP § 435.5.)¿ Lightstream sent a meet and confer letter to Plaintiff on September 24, 2023 with no response, followed by a telephone conference on an unknown date. (Konvitz Decl. ¶¶ 7 – 9.)

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.)¿

Lightstream contends that joining Defendant Kelleher as a party to the Agreement is misjoinder and creates confusion and uncertainty in the pleading since Defendant Kelleher is not a party to the Agreement. Lightstream provides no authority supporting its position. Plaintiff argues that CCP § 378 permits joining Defendant Kelleher and Lightstream in the same action and does not mandate including Jason Smith as a plaintiff. Plaintiff also argues that Lightstream purports to argue on behalf of Defendant Kelleher.

A demurrer will lie when there is a defect in or misjoinder of parties. (CCP § 430.10(d).) This ground for demurrer is not open to a defendant against whom the action properly lies to object to a misjoinder of other defendants not affecting his or her interests. (Wuest v. Wuest (1942) 53 Cal.App.2d 339, 344; Royal Surplus Lines Insurance Company, Inc. v. Ranger Insurance Company (2002) 100 Cal.App.4th 193, 198.)

As a threshold matter, the court rejects any purported argument on behalf of Defendant Kelleher. Lighstream has made it abundantly clear that this demurrer is to itself only. As such, Lightstream’s misjoinder argument as to Defendant Kelleher fails. The court declines to address whether Jason Smith should be named as a plaintiff to this action because Lightstream did not develop this argument in its moving papers.

Accordingly, the court OVERRULES Lightstream’s demurrer to the First Cause of Action.

Lightstream contends that Plaintiff did not establish that a fiduciary duty exists and the Agreement does not create one. Plaintiff argues that the independent contractor clause does not necessarily preclude a fiduciary relationship and the alleged surrounding circumstances do indicate a fiduciary relationship existed.

The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.” (O'Neal v. Stanislaus County Employees' Retirement Assn. (2017) 8 Cal.App.5th 1184, 1215.)¿¿“A fiduciary relationship is any relation existing between parties to a transaction wherein one of the parties is duty bound to act with the utmost good faith for the benefit of the other party.” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 (Wolf).) A person must “knowingly undertake to act on behalf and for the benefit of another” or “must enter into a relationship which imposes that undertaking as a matter of law.” (City of Hope National Medical Center v. Genentech (2008) 43 Cal.4th 375, 386 (City of Hope) [finding no indication that the defendant entered into the contract “with the view of acting primarily for the benefit” of the plaintiff.]) “Traditional examples of fiduciary relationships in the commercial context include trustee/beneficiary, directors and majority shareholders of a corporation, business partners, joint adventurers, and agent/principal.” (Wolf, supra, at p. 30.)

Here, Plaintiff has not sufficiently alleged a fiduciary duty existed.[4] First, Plaintiff alleges that Lightstream owed fiduciary duties to the Project and to Plaintiff as an investor in the project. (FAC ¶ 32.[5]) This is conclusion, not fact. There are no facts that Lightstream “knowingly under[took] to act on behalf and for the benefit” of Plaintiff. (City of Hope, supra, at p. 386.) Second, Plaintiff’s alleged “trust and confidence” in Lightstream (FAC ¶ 34) is not enough to give rise to a fiduciary duty. (Wolf, supra, at p. 31 [rejecting the notion that placing trust and confidence in a party to perform their contractual obligations creates a fiduciary duty because “every contract contains an implied covenant of good faith and fair dealing.”]) Finally, as alleged by the FAC, the Agreement at issue is a loan agreement. (FAC Exhibit A.) “A debt is not a trust and does not create a fiduciary relationship.” (Wolf, supra, at p. 31 [internal citations omitted].)

Accordingly, the court SUSTAINS Lighstream’s demurrer to the Second Cause of Action.

Lightstream contends that Plaintiff failed to plead fraud with the required specificity as to Lightstream. Plaintiff argues that the FAC specifically alleges Defendant Kelleher’s misrepresentations in detail, alleges a connection between Defendant Kelleher and Lighstream, and otherwise comports with California law.

“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.)

Upon reviewing the FAC, Plaintiff has not sufficiently alleged fraud by Lightstream. Notably, the allegations in the FAC concern representations made by Defendant Kelleher. (FAC ¶ 39.) There are no allegations that Lightstream adopted Defendant Kelleher’s alleged misrepresentations.

Accordingly, the court SUSTAINS Lightstream’s demurrer to the Third Cause of Action.

· Paragraph 41 of the FAC which states: “In reasonable reliance upon the material misrepresentation and omissions, as alleged above, the Albins were induced by fraud to enter into the subsequent agreements.”

· Paragraph 43 of the FAC which states: “In performing the acts herein alleged, Defendants, and each of them, acted with oppression, fraud and malice or alternatively, they acted in such conscious disregard of the Albin’s rights that as a direct and proximate and legal result of that misconduct, the Albins are entitled to punitive damages sufficient to punish and make an example of Defendants, and each of them, and to deter such conduct in the future, in an amount to be determined at trial.”; and

· Prayer for Relief Paragraph 3: “For punitive damages in an amount to be determined according to proof at trial.”

Lightstream argues the above-referenced items should be stricken from the FAC because reference to the “Albins” is irrelevant and the Agreement included in the FAC bars punitive damages. Lightstream cites no authority supporting these arguments. Plaintiff argues these sections of the FAC are integral to her claims.[6] Lighstream replies that Plaintiff cannot assert a claim for punitive damages on behalf of a non-party, the Albins.

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(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.” (Ibid.) Oppression is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.” (Ibid.) 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.”¿(Ibid.)

Upon reviewing the FAC, Plaintiff has not stated sufficient facts warranting punitive damages.[7] The FAC concludes that Defendants “acted with oppression, fraud and malice” which is not fact. (FAC ¶ 43.) The FAC otherwise alleges that Defendants did not pay the crew and did not timely communicate updates to Plaintiff. (FAC ¶ 40.) Plaintiff has not cited authority indicating either of these rise to the level warranting punitive damages.

Accordingly, the court GRANTS Lightstream’s motion to strike in its entirety.

Leave to amend should be liberally granted if there is a reasonable possibility an amendment could cure the defect.¿ (County of Santa Clara v. Superior Court (2022) 77 Cal.App.5th 1018,1035.)¿ The Plaintiff has the burden of demonstrating that leave to amend should be granted, and that the defects can be cured by amendment. (“Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading.” Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) Here, it is unlikely that Plaintiff will be able to cure the defects with the Second Cause of Action because it is essentially a debt. However, Plaintiff is likely able to cure the defects with the Third Cause of Action. If the Third Cause of Action is cured, then Plaintiff may seek punitive damages.

Accordingly, the court GRANTS Plaintiff leave to amend as to the Third Cause of Action and request for punitive damages only.

7. Demurrer to the Third Cause of Action is SUSTAINED with 20 days leave to amend;

[1] Plaintiff served the FAC via electronic service on Defendant Lightstream’s counsel on August 21, 2023.

[2] The parties agreed to extend Lightstream’s responsive pleading deadline. (Konvitz Decl. ¶ 6.)

[3] The opposition signature line is dated December 19, 2023, which would be timely, but it is also unsigned. There is no proof of service attached to the opposition. The Declaration of Fulgencio submitted with the opposition is signed and served on December 19, 2023.

[4] The court is not persuaded by either party’s independent contractor argument. As such, the court declines to address it here.

[5] Plaintiff additionally alleges that Lightstream, as a producer, owed fiduciary duties to the Project’s crew. (FAC ¶ 34.) It is unclear how Plaintiff is damaged by Lighstream’s breach of duty to the crew.

[6] Plaintiff does not address reference to the Albins. Plaintiff also does not cite authority aside from the motion to strike standard. Finally, Plaintiff’s opposition to the motion to strike is included in her opposition to demurrer in violation of

[7] The court is not persuaded by Lightstream’s argument that Plaintiff is seeking relief on behalf of a third party. Rather, the court infers that refers to the Albins is a clerical oversight that Plaintiff can easily remedy.