Judge Upinder S. Kalra, Case Number: 24STCV06927, Date: 2025-05-29 Tentative Ruling

1. Demurrer to the entire First Amended Complaint as barred by CCP §§ 426.30(a) and 430.10(c) [compulsory cross-complaint].

On March 19, 2024, Plaintiffs Wang Jun Han a/k/a Gustavo Han and Diamante Team, LLC (Plaintiffs) filed a Complaint against Defendant Angel Delgado Miguel with five causes of action for: (1) Conversion; (2) Intentional Interference with Prospective Economic Advantage; (3) Negligent Interference with Prospective Economic Advantage; (4) Unfair Business Practices; and (5) Violation of False Advertising Law.

On May 24, 2024, Defendant filed a Motion to Quash Service of Summons which the court GRANTED.

On January 13, 2025, Plaintiffs filed the operative First Amended Complaint (FAC) with six causes of action for: (1) Conversion; (2) Intentional Interference with Prospective Economic Advantage; (3) Negligent Interference with Prospective Economic Advantage; (4) Unfair Business Practices; (5) Violation of False Advertising Law; and (6) Breach of Contract.

According to the FAC, Plaintiffs hired Defendant to create websites and Spanish companies. Plaintiffs allege that they revoked Defendant’s access to those sites but Defendant kept using the websites and Plaintiff Han’s personal information for Defendant’s own benefit and has taken several sites down/prevented Plaintiff Han’s access.

On March 7, 2025, Defendant filed the instant demurrer. On May 16, 2025, Plaintiffs filed an opposition. On May 23, 2025, Defendant filed a reply.

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.)

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). Here, the parties met and conferred telephonically on February 24, 2025. (Jacobs Decl. ¶ 8.)

The court GRANTS Defendant’s and Plaintiffs’ request for judicial notice. (Evid. Code § 452(d), (h); See Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23,37.) However, the court only takes judicial notice of the foregoing documents only as to “the existence, content and authenticity of public records and other specified documents”; it does not take judicial notice of the truth of the factual matters asserted in those documents. (Dominguez v. Bonta (2022) 87 Cal. App. 5th 389, 400.)¿

Defendant contends that Plaintiff’s FAC is entirely barred because they did not include it as a compulsory cross-complaint in a 2020 lawsuit, Los Angeles County Superior Court Case No. 20STCV35775 (the 2020 Lawsuit). Defendant further contends that the FAC is logically related to the 2020 Lawsuit as the breakdown of the parties’ business relationship and the causes of action in the FAC existed at the time Plaintiffs served their answer in 2021 and their amended answer in 2022.

Plaintiff argues that Defendant’s interpretation of logically related is so broad that it renders virtually all disputes as compulsory cross-complaints, that Plaintiff Han did not learn of the unlawful conduct alleged in the FAC until after April 2021, that Plaintiff Han was not granted leave to amend his cross-complaint when he amended his answer in August 2022, and that they can further amend the FAC to allege facts showing discovery after the 2021 answer.

Defendant replies that the FAC inescapably alleges claims concerning the same software development, the same code, and the same web applications as the 2020 Lawsuit. Defendant further replies that Plaintiffs’ allegations were indisputably available to Plaintiffs well before April 2021 and that adding any “new” facts does not cure this fact. Finally, Defendant replies that Plaintiffs’ attempt to add post-trial misconduct to circumvent the compulsory cross-complaint statute is gamesmanship.

C.C.P. §426.30(a) provides, as follows: “Except as otherwise provided by statute, if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.”

“As used in the compulsory cross-complaint statute, the term ‘complaint’ includes both a complaint and cross-complaint [Citation], and the term ‘plaintiff’ includes both a plaintiff and cross-complainant [Citation]. And the phrase ‘related cause of action’ in section 426.30 is defined as ‘a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.’ [Citation] Because of the liberal construction given to the statute to accomplish its purpose of avoiding a multiplicity of actions, ‘transaction’ is construed broadly; it is ‘not confined to a single, isolated act or occurrence…but may embrace a series of acts or occurrences logically interrelated [citations].’ [Citations]” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 959-960.)

“In addition, section 426.30 includes a timing element. The related cause of action must be one that was in existence at the time of service of the answer [Citation]; otherwise, the failure to assert it in prior litigation is not a bar under the statute. [Citation]” (Id. at 960.)

A demurrer can be sustained when the claims alleged in a complaint are barred under the compulsory cross-complaint statute. (Id. at 960-971.)

Upon reviewing the FAC, the court agrees that they are barred by the compulsory cross-complaint statute. To start, the claims are “logically related.” In ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd., the Court of Appeal discussed “logically related” in the context of differentiating between a permissive and a compulsory cross-complaint. ((2016) 5 Cal.App.5th 69, 81-84 (ZF Micro).) The Court of Appeal found that the alleged conduct was not logically related because they did not involve “the same relationship” or “the operation of the same enterprise.” (Id. at p. 83.) In contrast, here, the FAC and the 2020 Lawsuit concern identical parties and stem from “a series of transactions” of the underlying app/website development relationship. (Compare, FAC ¶¶ 6, 8, 9, 10 with Defendant’s RJN, Exhibit A ¶¶ 10, 12, 15, 16, 21, 24, 27, 28, 43.) Indeed, the FAC at issue is plead as an extension of the 2020 Lawsuit. Specifically, the “new” conduct is Plaintiff Han’s eventual revocation of consent for Defendant to use Soon Technology’s servers, Defendant’s unauthorized use, and Defendant’s blocking of access to those domains/servers that Plaintiff Han hired Defendant to build and/or maintain.[1] (FAC ¶¶ 11, 12, 13, 14.) Next, the causes of action alleged in the FAC existed at the time of service of the amended answer.[2] Defendant provided evidence that Plaintiff Han was aware of Defendant’s wrongful conduct at the time he sought leave to amend his answer. (Defendant’s RJN, Exhibit H, Han Deposition Transcript excerpt attached as Exhibit 1 [“The only think I wanted from him was to get my password back. And then he asked me if . . . he could keep or continue working . . .so I told him, ‘Okay. Give me the passwords, and we’ll keep working.” “Q: And as we sit here today, on February 25th, I think, are you able to use your websites? A: No.”]) Thus, the causes of action at issue in the FAC existed at the time of the Amended Answer in August 2022.

Accordingly, the court SUSTAINS Defendant’s demurrer to the FAC 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, Plaintiffs requested leave to amend. While the tentative is to grant leave, the court will entertain oral argument as to how Plaintiffs could cure the aforementioned defects.

[1] The court rejects Plaintiffs’ interpretation of “logically related” as too narrow and improperly considering irrelevant factors (such as different legal theories). (See Align Technology, Inc., supra 179 Cal.App.4th at pp. 959-960.)

[2] The statute states that the timing element pertains to the time the answer is served. This court has not found authority, and neither party provided such authority to the court, that prevents applying the timing requirement to an amended answer. It is particularly applicable to this case since Plaintiffs in the 2020 Lawsuit sought leave to amend their answer, which was granted, and the amended answer became the operative pleading. This court does not believe the Legislature intended a bar on compulsory cross-complaints only to the extent they applied to an initial filing because parties could knowingly skirt the rule by filing a boilerplate pleading to stop their claims clock, seek and obtain leave to file an amended pleading that protects their interests in a pending lawsuit, and then file a new lawsuit should the pending lawsuit resolve against them.