Judge: Upinder S. Kalra, Case: 23STCV10387, Date: 2024-05-14 Tentative Ruling
Case Number: 23STCV10387 Hearing Date: May 14, 2024 Dept: 51
Tentative Ruling
Judge Upinder S. Kalra, Department 51
HEARING DATE: May
8, 2024
CASE NAME: National Asian American Coalition v.
Faith Bautista, et al.
CASE NO.: 23STCV10387
DEMURRER
WITHOUT MOTION TO STRIKE
MOVING PARTY: Defendants Bing Crosby Bautista and Josefina
Bautista
RESPONDING PARTY(S): Plaintiff National Asian
American Coalition
REQUESTED RELIEF:
1.
An order sustaining the demurrer as to Plaintiff's
first, second, and third cause of action.
2.
An order striking various portions.
TENTATIVE RULING:
1.
Defendant Bing Crosby Bautista’s Demurrer is OVERRULED.
2.
Defendant Josefina Bautista’s Demurrer is OVERRULED.
3.
Defendants are ordered to file their Answers to the Complaint
within 20 days
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
On May 9, 2023, Plaintiff National Asian American Coalition
(“Plaintiff”) filed a Complaint against Defendants Faith Bautista, Josefina
Bautista, Nora Penaflor, Bring Crosby Bautista, Marissa Samaco, and Floradema
LLC (Defendants) for the following causes of action: (1) Breach of Fiduciary
Duty and Adding and Abetting Breach of Fiduciary Duty; (2) Fraud, (3) Deceit; (4)
Constructive Fraud; (5) Receipt of Stolen Property, Treble Damages, and
Attorney’s fees under Penal Code § 496(c); (6) Conversion; and (7) Negligent
Misrepresentation.
The Complaint brings an action to recover damages from an
alleged scheme involving Defendants. The Complaint alleges that Defendants
Faith Bautista was the CEO of NAA, Josefina Bautista was the CFO, and Nora
Penaflor was the Director of Housing and that each breached their fiduciary
duty to the Plaintiff. The Complaint further alleges that Bing Crosby Bautista,
who was married to Josefina Bautista and is the brother of Faith Baustista
assisted in aiding their breach, causing Plaintiff to receive and now owe the
State of California over $12 million.
On April 16, 2024, Defendants Bing Crosby Bautista and
Josefina Bautista separately filed their Demurrer to the Complaint. On May 1,
2024, Plaintiff filed an Opposition to the Demurrers. On May 9, 2024, Defendants
Bing Crosby Bautista and Josefina Bautista filed reply.
LEGAL STANDARD
Demurrer
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.)
Meet and Confer:
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 Declaration
of Defendants’ counsel indicates that the parties did not met and conferred regarding
the demurrer. (Declaration of Nazzer Lim ¶ 6.) The parties were unable to reach
an agreement on DOE 1’s issues, necessitating the instant motion. (Id.)
ANALYSIS:
As an initial matter, the Court notes that both demurrer
Plaintiff’s second and third causes of action, while Defendant Bautista
additionally demurrers the first cause of action for breach of fiduciary duty,
fraud, and deceit under similar arguments. For efficiency, the Court addresses
both motions in this order. Defendants demur all three causes of action on the
grounds that each cause fails to state sufficient facts to have a cause of
action.
A.
Breach of Fiduciary Duty
Bing Crosby contends that Plaintiff has not pled sufficient
facts to support that “he had actual knowledge of which fiduciary duties” his
sister and wife breached to NAAC. (Bing Crosby Bautista Demurrer 8:21-24.)
“The elements of a cause of action for breach of fiduciary
duty are the existence of a fiduciary relationship, breach of fiduciary duty,
and damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811,
820.)
A defendant aids and abets a tort if he “(a) knows the
other’s conduct constitutes a breach of duty and gives substantial assistance
or encouragement to the other to so act or (b) gives substantial assistance to
the other in accomplishing a tortious result and the person’s own conduct,
separately considered, constitutes a breach of duty to the third person.” (Casey
v. U.S. Bank Nat’l Ass’n, 127 Cal.App.4th 1138, 114 (2005).)
Here, Plaintiff does sufficiently allege a breach of
fiduciary duty. The Complaint alleges that Faith and Josefina owed a fiduciary
duty to the NAAC as officers. (Compl. ¶ 94.) The Complaint goes on to allege
that Faith, Josefina, and Penaflor breached their duty and that the NAAC has
been harmed by each of them engaging in the conduct described in the amount to
be determined at trial. According to the Complaint, Faith Bautista hired Bing Crosby
Bautista through Floradema to provide services for the Plaintiff's benefit. The
Complaint additionally pleads that Crosby gave substantial assistance because
he was paid a per-file fee for basic tasks like filling out forms and
photocopying. (Compl. ¶ 60.) The Complaint specifically alleges that Crosby
Bautista knew he was participating in the conspiracy with his wife and sister
and knew of their fiduciary duties to the Plaintiff. (Id. ¶ 25.) The
allegation that he was paid for services that he was not certified to provide
and paid an exorbitant sum of $100,000 for clerical work approved by his spouse
and sister provides sufficient circumstantial evidence to support the allegations
that he knowingly aided and abetted his family members’ malfeasance. Thus at
the pleadings stage this is sufficient to have a cause of action for aiding and
abetting.
B.
Fraud and Deceit
“The elements of
fraud are (a) a misrepresentation (false representation, concealment, or
nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce
reliance; (d) justifiable reliance; and (e) resulting damage.” (Hinesley v. Oakshade Town Ctr. (2005)
135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be
alleged factually and specifically as to every element of fraud, as the policy
of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Superior Court (1996) 12
Cal.4th 631, 645.) To properly allege fraud against a corporation, the
plaintiffs must plead the names of the persons allegedly making the false
representations, their authority to speak, to whom they spoke, what they said
or wrote, and when it was said or written. (Tarmann
v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.)
The Complaint alleges Bing Crosby’s intentional
misrepresentations and omissions from which he and his wife received
substantial compensation, and his receipt of $100,000 in stolen property.
(Compl. ¶¶ 6, 11, 46, 49, 64, 104.) At the pleadings stage, this would be
enough to allege intent. (Engalla v. Permanente Med. Grp., Inc., (1997) 15
Cal.4th 951, 974.) The Complaint further sufficiently alleges that Josefina
played a substantial role in the scheme and took individual action because she
signed off on multiple counseling sessions that she was not certified and signed
a contract with Floradema to benefit Faith and Bing Crosby. (Id. ¶¶ 11,
46, 61, 118, 49, 57, 60, 62, 64, 66.) Plaintiff correctly notes that Defendant
Crosby Bautista's contention that Plaintiff needed to identify any particular
time when he told someone that he was participating in the fraud either orally
or in writing is not necessary as the Complaint alleges that his intent was
through Bing Crosby’s intentional misrepresentation and omissions of his
certification to provide counseling services. (Compl. ¶ 60, 62.) The Complaint
further alleges causation and damages because the scheme orchestrated by the
Defendants caused Plaintiff to receive and now owe over 12 million in state
funds to the State of California. (Id. ¶¶ 14, 106, 113.)
Thus, Defendants’ argument fails.
Demurrer
is OVERRULED.
CONCLUSION:
For the foregoing reasons, the
Court decides the pending motion as follows:
Demurrers are
OVERRULED. Motion to Strike is DENIED. Defendants Bing Crosby Bautista and
Josefina Bautista is to provide an Answer within 20 days’ notice of this order.
Responding party is to give notice.
IT IS SO ORDERED.
Dated: May 14,
2024 __________________________________ Upinder
S. Kalra
Judge
of the Superior Court