Marshall Sperbeck vs. Capital Christian Center

The original Complaint also provided a general outline of the factual allegations of Plaintiffs’ wrongful termination and other related claims. (See Complaint, ¶ 40-48.) Plaintiffs alleged that they met with Defendants’ new Head of School, Tim Wong, and that during those meetings Mr.

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Wong “focused on the personal backgrounds of Plaintiffs and the other members on the team asking inappropriate questions and focusing on racial stereotypes.” (Complaint, ¶ 40.) Plaintiffs also learned that Mr. Wong’s prior employer had informed Defendants that during Mr. Wong’s prior employment he had exceeded his authority and attempted to terminate staff and replace them with his family members and also took actions to benefit his personal financial interest over that of his employer’s. Plaintiffs alleged that before Mr.

Wong was formally hired, Defendants assured Plaintiffs that their jobs were secure. Mr. Wong was ultimately hired in January 2020, although he was not set to begin work until the next school year that fall. Despite this, Mr. Wong was present on campus beginning in January 2020 and “continued to question Plaintiffs inappropriately on matters including but not limited to their race, ethnic background, and questioning their religious beliefs.” (Complaint, ¶ 44.) Plaintiffs alleged that Mr. Wong then terminated each of them, despite Plaintiffs having years of stellar performance reviews, and replaced them with “his friends, close family members and/or people that aligned with his racial, ethnic, and religious beliefs.” (Complaint, ¶ 45.)

Plaintiffs alleged that their replacements performed the same functions and were paid at a higher rate despite Defendants claiming that they lost funding due to COVID-19.

On May 26, 2023, Plaintiffs filed an Ex Parte Application for Order Shortening Time Re: Stipulation to Permit Plaintiffs to Amend Complaint and to Vacate MSC and Trial Dates. The application included a stipulation to continue the MSC and trial dates that included the following recitals: “WHEREAS, the parties have met and conferred regarding Plaintiffs’ request to amend the Complaint in order to allege their damages claims; and [¶] WHEREAS, Defendants have agreed that Plaintiffs may amend their Complaint in order to avoid delay and the necessity for two separate trials; however, Defendants expressly reserve their right to assert any and all available defenses to said claims.” (Plaintiffs’ RJN, Attachment 2, Exh. A, p. 2:15:19.) On June 1, 2023, the Court granted Plaintiffs’ application. Plaintiffs then filed the FAC on March 11, 2024.

The FAC contains many of the same allegations of the original Complaint but restates them as additional causes of action. The FAC contains a total of eight causes of action: (1) declaratory relief; (2) fraud on behalf of Sperbeck; (3) breach of contract on behalf of Sperbeck; (4) fraud on behalf of Armbrust, Lepisi, Garza, and Sorgea; (5) whistleblower retaliation on behalf of Armrust, Lepisi, Garza, and Sorgea; (6) violation of Labor Code section 2810.8 on behalf of Sperbeck, Armbrust, Lepisi, Garza, and Sorgea; (7) wrongful termination on behalf of Navolio; and (8) whistleblower retaliation on behalf of Navolio.

Defendants demur to the FAC on multiple grounds. First, Defendants contend that the claims of Sperbeck, Lepisi, Armbrust, Sorgea, and Garza are barred by the ministerial exception. Second, Defendants contend that all of the new causes of action are barred by the statute of limitations because they do not relate back to the original Complaint. Third, Defendants demur to each new cause of action individually on the grounds that they fail to state a cause of action.

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Discussion

Legal Standard

The function of a demurrer is to test the sufficiency of the pleading it challenges by raising questions of law. (Salimi v. State Comp. Ins. Fund (1997) 54 Cal.App.4th 216, 219; Nordlinger v. Lynch (1990) 225 Cal.App.3d 1259, 1271.) A demurrer “tests the pleadings alone and not the evidence or other extrinsic matters.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) The purpose of a demurrer is to test the legal sufficiency of a claim. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)

For the purpose of determining the effect of a complaint, its allegations are liberally construed, with a view toward substantial justice. (Code Civ. Proc. § 452; Amarel v. Connell (1988) 202 Cal.App.3d 137, 140-141; Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 43, fn. 7.) In this respect, the Court treats the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law, and considers matters which may be judicially noticed. (Blank v.

Kirwan (1985) 39 Cal.3d 311, 318; Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1111-1112.) A general demurrer does not admit contentions, deductions, or conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, William S. Hart Union High School Dist. v. Regional Planning Com. (1991) 226 Cal.App.3d 1612, 1616, fn. 2.)

Extrinsic evidence may not properly be considered on demurrer. (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881; Hibernia Savings & Loan Soc. v. Thornton (1897) 117 Cal. 481, 482.)

A demurrer may be sustained only if the complaint lacks any sufficient allegations to entitle the plaintiff to relief. (Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778.) “Plaintiff need only plead facts showing that he may be entitled to some relief, we are not concerned with plaintiff’s possible inability or difficulty in proving the allegations of the complaint.” (Highlanders, Inc. v. Olsan (1978) 77 Cal.App.3d 690, 696-697.) “[Courts] are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v.

Anderson Union High School Dist. (1996) 50 Cal.App.4th 726.) A demurrer admits the truth of all material facts properly pled and the sole issue raised by a general demurrer is whether the facts pled state a valid cause of action – not whether they are true. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)

Ministerial Exception

“The ministerial exception, which is grounded in the religion clause of the First Amendment, operates to preclude application of employment discrimination laws to certain claims arising out of the employment relationship between a religious institution and its ministers. [Citation.] Under this rule, ‘courts are bound to stay out of employment disputes involving those holding certain important positions with churches and other religious institutions.’ [Citation.] As stated

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by the United States Supreme Court, the rationale for the exception is that ‘members of a religious group put their faith in the hands of their ministers,’ and thus, ‘[r]equiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so depriv[es] the church of control over the selection of those who will personify its beliefs.’”

(Atkins v. St. Cecilia Catholic School (2023) 90 Cal.App.5th 1328, 1337.)

Whether an employee is a “minister” for the purposes of the ministerial exception depends on a variety of factors. (Our Lady of Guadalupe Sch. v. Morrissey-Berru (2020) 591 U.S. 732, 751.) “What matters, at bottom, is what an employee does.” (Id. at p. 753.) In making this determination, courts must not follow a rigid formula but must instead “take all relevant circumstances into account and determine whether each particular position implicate[s] the fundamental purpose of the exception.” (Id. at pp. 757-758.) While the employee’s job title may be relevant, it is not determinative, and holding the title of “minister” is neither necessary nor sufficient. (Id. at pp. 758-759.)

Here, Defendants contend the ministerial exception applies based solely on Plaintiffs’ alleged job titles and their roles on the “Executive Team.” (FAC, ¶ 10.) According to the FAC, Sperbeck was employed as “Director of Advancement”; Lepisi as “Communications Director”; Armburst as “Director of Admissions – All Campuses and ISP/PSP Director”; Sorgea as “Dean of Students”; and Garza as “Vice Principal and Administrator.” (FAC, ¶¶ 1-5.)

Based on the authorities cited above, the Court cannot determine at this stage that Plaintiffs’ claims are barred by the ministerial exception. Defendants essentially ask the Court to assume that Plaintiffs personified the beliefs of Defendants as religious institutions based solely on Plaintiffs’ job titles. Defendants emphasize that these Plaintiffs were on the “Executive Team,” but simply holding a high-ranking position within the organization does not automatically trigger the ministerial exception. As Plaintiffs point out, because the question of whether the exception applies to the employees requires consideration of a variety of factors and a determination of what the employee actually does, it is inappropriate to make that determination in this case at the demurrer stage. Accordingly, Defendants’ demurrer is OVERRULED on this ground.

Relation Back

“Under the doctrine of relation back, a court deems an amended complaint to have been filed at the time of an earlier complaint.” (Hutcheson v. Superior Court (2022) 74 Cal.App.5th 932, 940.) “The relation-back doctrine requires that the amended complaint must (1) rest on the same general set of facts, (2) involve the same injury, and (3) refer to the same instrumentality, as the original one.” (Nogart v. Upjohn Co. (1999) 21 Cal.4th 383, 408-409, italics in original.)

“An amended complaint relates back to the original complaint even if the plaintiff alleges a new legal theory or cause of action, so long as the amended complaint is based on the same general

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set of facts. [Citation.] To determine whether an amended complaint rests on the same general set of facts for purposes of the statute of limitations, the most important consideration is whether the original pleading gave the defendant adequate notice of the claim.”

(Hutcheson, supra, 74 Cal.App.5th at p. 940.)

“The policy behind statutes of limitations is to put defendants on notice of the need to defend against a claim in time to prepare a fair defense on the merits. This policy is satisfied when recovery under an amended complaint is sought on the same basic set of facts as the original pleading.” (Garrison v. Board of Directors (1995) 36 Cal.App.4th 1670, 1678.) “Additionally, in applying the relation-back analysis, courts should consider the ‘strong policy in this state that cases should be decided on their merits.’” (Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 277.)

Defendants contend that the original Complaint did not include the ultimate facts to support Plaintiffs’ new causes of action for breach of contract, fraud, or retaliation, such as facts regarding the nature of any alleged contract, Defendants’ intent to defraud Plaintiffs (or any other elements of fraud), or any protected activity engaged in by Plaintiffs to support a retaliation claim. Defendants further contend that the original Complaint sought only a declaration regarding the validity of the Agreement, so the new causes of action do not involve the same injury. Finally, Defendants contend that the original Complaint is based solely on the Agreement, which has nothing to do with Plaintiffs’ new claims, so the new claims are not based on the same instrumentality.

In opposition, Plaintiffs contend that Defendants should be estopped from asserting that the FAC does not relate back, because Defendants have stipulated to permit Plaintiffs to amend the Complaint to assert their damages claims. Plaintiffs also contend that the FAC relates back to the original Complaint because the original Complaint included the essential factual elements to support Plaintiffs’ new causes of action. Plaintiffs further contend that Defendants were sufficiently on notice of Plaintiffs’ damages claims, since they are identified in the original Complaint, and because the declaration sought in the original Complaint was a prerequisite for the damages claims.

“The requirement that the complaint allege ultimate facts forming the basis for the plaintiff’s cause of action is central to the relation-back doctrine and the determination whether an amended complaint should be deemed filed as of the date of the original pleading.” (Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 415.)

The Court finds that Plaintiffs’ second (fraud as to Sperbeck), third (breach of contract as to Sperbeck), and fourth causes of action (fraud as to Armbrust, Lepisi, Garza, and Sorgea) sufficiently relate back to the original Complaint. As described above, the original Complaint contained allegations that Defendants assured Plaintiffs that their jobs were secure despite the

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hiring of Mr. Wong, but that Plaintiffs were terminated by Wong shortly thereafter. (See Complaint, ¶¶ 40-49.) These same general facts form the basis of Plaintiffs’ second, third, and fourth causes of action. Accordingly, Defendants’ demurrer is OVERRULED as to the second, third, and fourth causes of action.

As for the fifth cause of action (whistleblower retaliation as to Armbrust, Lepisi, Garza, and Sorgea), the Court finds that this cause of action does not relate back to the original Complaint. This cause of action is based on allegations that Plaintiffs had communicated concerns about Mr. Wong to Mr. Cole prior to Mr. Wong’s hiring, and that Mr. Wong later found out about this and terminated Plaintiffs in retaliation. (See FAC, ¶¶ 139-144.) While the original Complaint alleged Plaintiffs had met with Mr.

Cole to discuss Mr. Wong, there are no allegations that Mr. Wong learned of these conversations between Plaintiffs and Mr. Cole. Further, the original Complaint contains no indication that Plaintiffs intended to bring retaliation claims of any kind. While Plaintiffs alleged in the original Complaint that they had “claims for Labor Code violations,” this is insufficient to put Defendants on notice of a whistleblower retaliation claim under Labor Code section 1102.5, because there are no other facts in the original Complaint to support such a claim.

Accordingly, Defendants’ demurrer is SUSTAINED as to the fifth cause of action.

As to the sixth cause of action (violation of Labor Code section 2810.8 as to Sperbeck, Armbrust, Lepisi, Garza, and Sorgea), the Court finds that this claim sufficiently relates back to the original Complaint. Labor Code section 2810.8 requires employers who laid off employees due to the Covid-19 pandemic to offer the laid off employees “all job positions that become available after the effective date of this section for which the laid-off employees are qualified.” (Lab. Code § 2810.8(b)(1).) In the original Complaint, Plaintiffs alleged that Defendants told them their termination was “due to a restructuring of their position or lack of funding because of COVID-19, .” (Complaint, ¶ 46.)

Plaintiffs further alleged that under the Paycheck Protection Program, which Defendants applied for and received funds from, Defendants were required to rehire employees laid off due to lack of funding, but Defendants did not rehire Plaintiffs and instead replaced them with Mr. Wong’s preferred candidates at a higher rate of pay. (Complaint, ¶¶ 47-48.) These allegations sufficiently put Defendants on notice of a potential claim under Labor Code section 2810.8. Accordingly, Defendants’ demurrer is OVERRULED as to the sixth cause of action on this ground.

As for the seventh and eighth causes of action (wrongful termination and whistleblower retaliation as to Navolio), the Court finds these claims do not relate back. These causes of action are based on allegations that Navolio submitted a request for a reasonable accommodation to work remotely due to a medical condition. Plaintiffs allege that the accommodation was granted but later unilaterally rescinded. Plaintiffs also allege that Navolio later contracted Covid-19 and worked remotely, and during this time she was terminated for pretextual reasons. Navolio’s request for accommodation forms the basis of her whistleblower retaliation claim as well. The original Complaint does not contain any allegations consistent with these causes of action. Indeed, there are very little allegations in the Complaint related to Navolio. While Plaintiffs

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alleged in the original Complaint that “Plaintiffs, and each of them, believe and thereon allege that they were each wrongfully terminated between March 2020 and October 2020,” (Complaint, ¶ 9), there are no specific facts alleged about Navolio’s termination as it is alleged in the FAC. The only facts relate to the conversations with Mr. Cole and Mr. Wong and Mr. Wong’s decision to terminate the other Plaintiffs. (Complaint, ¶¶ 40-48.) Based on the allegations in the FAC, there is no indication that Mr. Wong had anything to do with Navolio’s termination. Accordingly, Defendants’ demurrer is SUSTAINED as to the seventh and eighth causes of action.

Failure to State a Claim

At the outset, the Court notes that Defendants restate their statute of limitations and ministerial exception arguments within this section of their brief. The Court does not re-address these arguments below but instead refers to its conclusions in the preceding sections.

1. Plaintiffs’ Fraud Claims (Second and Fourth Causes of Action)

“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. [Citations.] Fraud in the inducement is a subset of the tort of fraud. It ‘occurs when “‘the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable.’”’” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294- 295.)

Defendants contend that Plaintiffs fail to allege any causal connection between the alleged representations of Mr. Cole that Plaintiffs jobs were secure and Mr. Wong’s decision to terminate them. The Court agrees. There are no allegations that link Mr. Cole’s representations to Mr. Wong’s decision to terminate Plaintiffs, and there are no allegations that Mr. Cole made his representations with knowledge of their falsity or that the representations were actually false when made. Accordingly, Defendants’ demurrer is SUSTAINED as to the second and fourth causes of action on these grounds.

2. Sperbeck’s Breach of Contract Claim (Third Cause of Action)

“The elements of a breach of oral contract claim are the same as those for a breach of written contract: a contract; its performance or excuse for nonperformance; breach; and damages.” (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 454.)

Defendants’ only argument as to this cause of action, other than the ministerial exception and statute of limitations arguments, is as follows:

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“Furthermore, the Plaintiff’s claim of breach of written contract claim fails to state a claim as there are no facts alleged indicating there existed any written contract stating he would be employed for a five-year term. Indeed, the allegations of the FAC imply otherwise. In Paragraph 105, Plaintiff alleges that his five-year term was ‘re-affirmed orally’ and that his written contract ‘would’ be revised to reflect this, but there is no allegation that it actually was.”

(Defendants’ MPA, p. 12:4-8.)

This argument is rejected. That Plaintiffs allege that Defendants orally reaffirmed that Sperbeck would be employed for a five-year term does not mean that the employment agreement does not include such a term. Indeed, Plaintiffs allege that Sperbeck “agreed to accept [Defendants]’ terms for employment that included a guaranteed five year contract term.” (FAC, ¶ 104.) Plaintiffs also allege additional terms of the agreement. This is sufficient to state a breach of contract claim. Accordingly, Defendants’ demurrer is OVERRULED as to the third cause of action on this ground.

3. Plaintiffs’ Whistleblower Retaliation Claims (Fifth and Eighth Causes of Action)

Plaintiffs’ whistleblower retaliation claims are brought pursuant to Labor Code section 1102.5(b), which provides:

“An employer, or any person acting on behalf of the employer, shall not retaliate against an employee for disclosing information, or because the employer believes that the employee disclosed or may disclose information, to a government or law enforcement agency, to a person with authority over the employee or another employee who has the authority to investigate, discover, or correct the violation or noncompliance, or for providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee’s job duties.”

“Labor Code section 1102.5 is a whistleblower statute, the purpose of which is to ‘encourag[e] workplace whistle-blowers to report unlawful acts without fearing retaliation.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 287.) To establish a claim under section 1102.5, an employee must “establish, by a preponderance of the evidence, that retaliation for an employee’s protected activities was a contributing factor in a contested employment action.” (Lawson v. PPG Architectural Finishes, Inc. (2022) 12 Cal.5th 703, 718.)

Defendants contend that neither of these causes of action contain allegations that Plaintiffs engaged in any whistleblowing activity. The Court agrees. The FAC lacks any allegations that Plaintiffs engaged in protected whistleblowing activity as described in Labor Code section 1102.5(b). There are no allegations that Plaintiffs disclosed any information reasonably believed

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to involve illegal activity to government or law enforcement, to another employee with supervisory authority of Plaintiffs or with the authority to investigate or correct the illegal activity. Regarding Plaintiffs’ fifth cause of action brought by Sperbeck, Ambrust, Lepisi, Garza, and Sorgea, the alleged disclosure appears to be the information about Mr. Wong’s previous employer that was disclosed to Defendants. However, the FAC alleges this information came from Mr. Wong’s previous employer, not from them. (FAC, ¶ 139.)

Thus, any adverse employment decision Plaintiffs suffered thereafter is not causally linked to this disclosure. As for Plaintiffs’ eighth cause of action brought by Navolio, the alleged disclosure appears to be Navolio’s claim for a reasonable accommodation for her medical condition. (See FAC, ¶ 192.) This is not a disclosure of an illegal activity. Accordingly, Defendants’ demurrer is SUSTAINED as to the fifth and eighth causes of action on these grounds.

4. Labor Code Section 2810.8 Claim (Sixth Cause of Action)

Defendants contend that there is no private right of action under this statute. The Court agrees. Labor Code section 2810.8(d) provides: “The Division of Labor Standard Enforcement shall have exclusive jurisdiction to enforce this section.” Plaintiffs do not address this cause of action in their opposition and thus appear to concede on this issue. Accordingly, Defendants’ demurrer is SUSTAINED as to the sixth cause of action on this ground.

5. Navolio’s Wrongful Termination Claim (Seventh Cause of Action)

Defendants contend that the public policies on which this claim is based derive from FEHA and that FEHA does not apply to Defendants under Government Code section 12926(d). While the Court agrees that religious entities are exempt from FEHA, Defendants have not established that they are “a religious association or corporation not organized for private profit” as described in section 12926(d). The Court has denied Defendants’ request for judicial notice, which included documents that Defendants presumably contend establish that they are religious entities. Accordingly, Defendants’ demurrer is OVERRULED as to the seventh cause of action on this ground.

Disposition

Pursuant to the above discussion, Defendants’ demurrer is SUSTAINED in part and OVERRULED in part.

Where the demurrer is sustained, leave to amend is GRANTED, as this is the first challenge to the pleading.

Plaintiffs shall file and serve the Second Amended Complaint by no later than September 19, 2024.

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This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. § 1019.5; Cal. Rules of Court, rule 3.1312.)

NOTICE:

Consistent with Local Rule 1.06(B), any party requesting oral argument on any matter on this calendar must comply with the following procedure:

To request limited oral argument, on any matter on this calendar, you must call the Law and Motion Oral Argument Request Line at (916) 874-2615 by 4:00 p.m. the Court day before the hearing and advise opposing counsel. At the time of requesting oral argument, the requesting party shall leave a voice mail message: a) identifying themselves as the party requesting oral argument; b) indicating the specific matter/motion for which they are requesting oral argument; and c) confirming that it has notified the opposing party of its intention to appear and that opposing party may appear via Zoom using the Zoom link and Meeting ID indicated below. If no request for oral argument is made, the tentative ruling becomes the final order of the Court.

Unless ordered to appear in person by the Court, parties may appear remotely either telephonically or by video conference via the Zoom video/audio conference platform with notice to the Court and all other parties in accordance with Code of Civil Procedure §367.75. Although remote participation is not required, the Court will presume all parties are appearing remotely for non-evidentiary civil hearings. The Department 53/54 Zoom Link is https://saccourt-cagov.zoomgov.com/my/sscdept53.54 and the Zoom Meeting ID is 161 4650 6749. To appear on Zoom telephonically, call (833) 568-8864 and enter the Zoom Meeting ID referenced above. NO COURTCALL APPEARANCES WILL BE ACCEPTED.

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A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with

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a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will forward the form to the Court Reporter’s Office and an official reporter will be provided.