Demurrer to Cross-Complaint
Here, the demurrer identifies the asserted deficiencies concerning uncertainty, lack of legal capacity, and the First through Tenth and Twelfth Causes of Action. (Demurrer, pp. 3–5.) The supporting memorandum, however, substantively addresses only the alter ego allegations and the Eighth, Tenth, and Twelfth Causes of Action; it does not provide legal analysis or supporting authority concerning uncertainty, lack of legal capacity, or the First through Seventh and Ninth Causes of Action. (Demurrer, pp. 6–8.) The Eleventh Cause of Action is not at issue because the demurrer does not separately challenge that claim.
Accordingly, the Court exercises its discretion under rule 3.1113(a) and (b) to deem these grounds waived and declines to consider them.
b. Alter Ego Allegations Against Fernandez – OVERRULED
Cross-Defendants contend that all causes of action against Robert Fernandez individually fail because the Cross-Complaint does not adequately plead an alter ego theory of liability.
Detailed pleading is not required to allege an alter ego theory of liability. Indeed, “[i]t is not even essential, apparently, that . . . the alter ego doctrine always be specifically pleaded in the complaint in order for it to be applied in appropriate circumstances. [¶] . . . [Citation.] . . . [C]ourts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure.
It is essential principally that a showing be made that both requirements, i.e., unity of interest and ownership, and the promotion of injustice by the fiction of corporate separate existence, exist in a given situation.” (First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915, italics omitted; see Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236 [“only ‘ultimate rather than evidentiary facts’” necessary to support alter ego theory].)
The Cross-Complaint alleges that Fernandez was RFC’s responsible managing officer, chief executive officer, and president. (Cross- Complaint, ¶ 4.) It further alleges that Fernandez failed to observe corporate formalities, disregarded the distinction between himself and RFC, operated RFC as a shell and conduit for his personal affairs, and shared a unity of interest and ownership with RFC such that respecting the corporate form would sanction fraud or promote injustice. (Id., ¶ 5.) These allegations state the ultimate facts necessary to support an alter ego theory and provide Fernandez with sufficient notice of the basis on which personal liability is sought.
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Accordingly, the demurrer on this ground is overruled.
c. Eighth Cause of Action for Disgorgement Under Business and Professions Code Section 7031 – OVERRULED
Under Business and Professions Code section 7031, subdivision (b), “a person who utilizes the services of an unlicensed contractor may bring an action . . . to recover all compensation paid to the unlicensed contractor for performance of any act or contract.” The statute generally requires an unlicensed contractor to disgorge all compensation paid by the project owner. Disgorgement is permitted even when the project owner knows that the contractor is unlicensed, the contractor is unlicensed during only part of the work, or the work performed by the unlicensed contractor is free of defects. (Judicial Council of California v. Jacobs Facilities, Inc. (2015) 239 Cal.App.4th 882, 895, 897.)
The Cross-Complaint alleges that RFC, a California corporation operating under California Contractors State License Board license number 677390, was hired to perform home-improvement work. (Cross-Complaint, ¶ 2.) It further alleges, on information and belief, that Cross-Defendants were not duly licensed or bonded, failed to maintain required workers’ compensation insurance, and may have committed additional licensing violations. (Id., ¶¶ 68–71.)
These allegations are sufficient to state a cause of action for disgorgement under section 7031. The existence of a contractor’s license number does not establish that RFC was duly licensed throughout its performance of the work. The Court must accept these allegations as true at the pleading stage. Accordingly, the demurrer is overruled.
d. Tenth Cause of Action for Expungement of Mechanic’s Lien Civil Code § 3118– SUSTAINED
Cross-Defendants contend that the Tenth Cause of Action fails because it seeks to expunge the mechanic’s lien under former Civil Code section 3118, which was repealed effective July 1, 2012.
Although citation to former Civil Code section 3118 is not necessarily fatal, the Cross-Complaint does not adequately identify a current statutory basis for invalidating or releasing the lien or allege facts satisfying the requirements of such a statute. “ ‘ “Mechanics’ liens are entirely of statutory creation, and the statute must be looked to both for the right to the lien and the mode by which it can be enforced. The right to a mechanic’s lien depends upon a compliance with the statute, and in order that a valid lien may arise and be enforced, the claimant must strictly, or at least substantially, observe and comply with the provisions of the statute, none of which may be regarded as unessential.” ’ [Citation.]” (Sukut Construction, Inc. v. Rimrock CA LLC (2011) 199 Cal.App.4th 817, 824.)
Accordingly, the demurrer to the Tenth Cause of Action is sustained with leave to amend.
e. Twelfth Cause of Action for Financial Elder Abuse – SUSTAINED
“The Legislature enacted the [Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code, § 15600 et seq.)] to protect elders by providing enhanced remedies to encourage private civil enforcement of laws against elder abuse and neglect. [Citation.] . . . [Citation.] The proscribed conduct includes financial abuse. The financial abuse provisions are, in part, premised on the Legislature’s belief that in addition to being subject to the general rules of contract, financial agreements entered into by elders should be subject to special scrutiny.” (Bounds v.
Superior Court (2014) 229 Cal.App.4th 468, 478.) The elements of financial elder abuse are: (1) “[t]ak[ing], secret[ing], appropriat[ing], obtain[ing], or retain[ing];” or “[a]ssist[ing] in taking, secreting, appropriating, obtaining, or retaining;” (2) “real or personal property;” (3) “of an elder or dependent adult;” and (4) “for a wrongful use or with intent to defraud, or both.” (Welf. & Inst. Code, § 15610.30, subd. (a)(1)–(3).)
The Cross-Complaint alleges that David is 94 years old and resides at the property under a rental agreement; that Cross-Defendants knew the property was being renovated for his benefit; and that they retained payments for the project with intent to defraud while failing to provide the promised labor and materials in a workmanlike manner. (Cross- Complaint, ¶¶ 91–95.) The Cross-Complaint fails to sufficiently allege the taking or retention of property belonging to David. The payments allegedly retained belonged to Scott or the Bruin Trust, not David.
Although an elder’s property may include a leasehold or other right to possess and use property, the Cross- Complaint does not allege that David was displaced, denied occupancy, prevented from using the property, or otherwise deprived of a specific right under his rental agreement. Allegations that Cross-Defendants knew an elder resided at the property and that defective work caused him harm do not, without more, establish financial elder abuse.
Accordingly, the demurrer to the Twelfth Cause of Action is sustained with leave to amend.
Should Cross-Complainants desire to file an amended complaint that addresses the issues in this ruling, Cross-Complainants must file and serve it within 15 days of service of notice of ruling.
Moving parties to give notice.
53 Duran vs. Starbucks Corporation
25-01495343 Motion to Strike Portions Of Complaint
Defendant Starbucks Corporation’s motion to strike is DENIED.
Defendant Starbucks Corporation (Starbucks) moves to strike the punitive-damages allegations and prayer in the First Amended Complaint (FAC) filed by Plaintiffs Cesar Duran (Cesar) and Monica Duran (Monica).
* Because Plaintiffs share the same last name, the court refers to them by their first names. No disrespect is intended.
A motion to strike is the proper vehicle to challenge a claim for punitive damages. (Code Civ. Proc., §§ 435-436; Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63.) “In order to state a prima facie claim for punitive damages, a complaint must set forth the elements as stated in the general punitive damage statute, Civil Code section 3294. [Citation.] These statutory elements include allegations that the defendant has been guilty of oppression, fraud or malice. (Civ. Code, § 3294, subd. (a).)” (Turman v. Turning Point of Central California, Inc., supra, 191 Cal.App.4th at p. 63.)
Civil Code section 3294 establishes the requirements for imposing punitive damages on an employer or principal based on the acts of an employee or agent. In addition to showing that the employee acted within the scope of employment, the plaintiff must allege and prove that: (1) the employer had advance knowledge of the employee’s unfitness and employed the employee with conscious disregard for the rights or safety of others; (2) the employer authorized or ratified the employee’s oppressive, fraudulent, or malicious conduct; or (3) the employer was personally guilty of oppression, fraud, or malice. (Civ. Code, § 3294, subd. (b); CACI Nos. 3943–3948; Samantha B. v. Aurora Vista Del Mar, LLC (2022) 77 Cal.App.5th 85, 106; CRST, Inc. v. Superior Court (2017) 11 Cal.App.5th 1255, 1262.)
The FAC alleges sufficient facts to support Plaintiffs’ request for punitive damages. Read as a whole and accepted as true, the FAC supports a reasonable inference that Starbucks knew of recurring lid failures and serious burn risks but failed to redesign its lids, lower its serving temperature, or adequately warn customers. (FAC ¶¶ 15–20, 34, 50.) The alleged company-wide serving-temperature policy, repeated complaints, and notice of similar incidents also reasonably support an inference, at the pleading stage, that the challenged conduct reflected corporate policy established, maintained, or ratified by a Starbucks officer, director, or managing agent. (FAC ¶¶ 17–20, 35, 51.)
Accordingly, the motion to strike is DENIED. Defendant shall file and serve its answer within 15 days of service of notice of this ruling. Plaintiffs to give notice.