Handmade Records LLC v. Goodjohn, et al.

CASE NO.: 25SMCV04462 MOTION: Demurrer and Motion to Strike the Complaint HEARING DATE: 5/21/2025

LEGAL STANDARD 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. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (CCP Sec.Sec. 430.30, 430.70.)

At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A "demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law." (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations omitted.)

Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP Sec. 435(b)(1); Cal. Rules of Court, Rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP Sec.Sec. 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 ["Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded"].)

"Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given." (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) It is an abuse of discretion for the court to deny leave to amend where there is any reasonable possibility that plaintiff can state a good cause of action. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) The burden is on plaintiff to show¿ in what manner ¿plaintiff can amend the complaint, and¿ how ¿that amendment will change the legal effect of the pleading.¿(Id.)

ANALYSIS Defendant Bejamin De Soto demurs to the third cause of action of Plaintiff Handmade Records, LLC's Complaint and moves to strike the allegations supporting the request for punitive damages.

Tortious Interference with Contract To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage. (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.) "Intent" in this context does not refer to specific intent, rather a plaintiff must "plead that the defendant '[knew] that the interference is certain or substantially certain to occur as a result of his action.'" (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1157.)

The Complaint states each element of the interference claim with sufficient factual support. The Complaint explains that Handmade is a record label. (FAC P. 6.) In June 2023, co-Defendant Dior entered into a recording agreement with Handmade (the "Recording Contract") while Dior was still a minor. (Id., P. 8.) Dior was to deliver an EP to Handmade, with an option for a second, and Handmade agreed to pay recording, marketing, promotion, and other costs, including advances, in exchange for, among other things, the right to enter into distribution agreements with third parties. (Id., P. 9.) Handmade paid over $217,000 in furtherance of its obligations under the Recording Contract, as well as $95,000 at Dior's own request after she turned eighteen. (Id., P.P. 10-11.)

De Soto is a mixing engineer and executive producer who provided services to both Dior and Handmade. (FAC P. 7.) De Soto personally received a copy of the Recording Contract from Dior by text message, attended meetings concerning her release schedule, worked as her mixing engineer on music created under the Recording Contract, and communicated regularly with Handmade's executive team about her career, giving him knowledge of the Recording Contract's existence and terms, and of the fact that Dior was a minor when she signed it. (Id., P. 44.)

Starting in April 2025, through July 2025, De Soto made false and disparaging statements about Handmade to Dior, telling her, among other things, that Handmade paid him less than agreed and that Handmade was incompetent, unprofessional, financially unstable, unable to advance her career, and could not be trusted. (Id., P.P. 17, 46.) De Soto repeated the statements to Dior and others. (Id.) De Soto made and spread the statements specifically to induce Dior to disaffirm the Recording Contract, so that she could sign with another label without repaying Handmade for its multi-year investment in her career, and so that Dior and De Soto could make music together at that new label. (Id., P.P. 17, 46-48.)

De Soto knew that spreading the statements to Dior would cause Dior to disaffirm the Recording Contract. (Id., P. 48.) As a result, Dior disaffirmed the contract and Handmade suffered consequential damages of no less than $1,000,000. (Id., P.P. 49-50.) The FAC alleges these acts were done intentionally to harm Handmade for no legitimate reason, and with a conscious disregard of Handmade's rights for his own financial benefit. (Id., P.P. 17, 51.)

The Court recognizes a potential factual contradiction on the record. In the fraud cause of action, Plaintiff alleges that Dior always intended to disaffirm the contract after extracting the maximum financial investment and resources from Handmade. (FAC P.P. 16, 31-35.) On the other hand, in the interference claim, Plaintiff alleges that De Soto caused Dior's breach, in substantial part, via the defamatory statements regarding Plaintiff. (Id., P.P. 46-68.) If Dior always intended to breach, then De Soto could not have substantially contributed to Dior's breach. However, Plaintiff may state these alternative legal and factual theories. Generally, a pleader may state alternative legal theories and make inconsistent allegations in the pleading. (Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402; Rader Co. v. Stone (1986) 178 Cal.App.3d 10, 29.)

If Dior did not fully intend from the outset to disaffirm the recording contract, but rather, as alleged in the third cause of action, De Soto's encouragement/defamatory statements induced Dior in substantial part to disaffirm, then the cause of action against De Soto would be viable. As such, the third cause of action is still well-stated for pleading purposes. These allegations also do not implicate the sham pleading doctrine, which regards inconsistent factual allegations between successive pleadings, not alternative legal theories within the same pleading. (Larson v. UHS of Rancho Springs, Inc., (2014) 230 Cal.App.4th 336, 344.) Accordingly, the demurrer is OVERRULED.

Motion to Strike Punitive Damages "In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. [Citations.] In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. [Citations.] In ruling on a motion to strike, courts do not read allegations in isolation. [Citation.]" (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

"The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. [Citation.] Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim. [Citation.]" (Grieves v. Superior Ct. (1984) 157 Cal.App.3d 159, 166, fn. omitted.) A complaint must set forth the elements as stated in the general punitive damage statute, Civil Code Section 3294. (Coll. Hosp., Inc. v. Superior Court (1994) 8 Cal.4th 704, 721.) These statutory elements include allegations that the defendant has been guilty of oppression, fraud or malice. (Civ. Code Sec. 3294 (a).)

"Malice is defined in the statute as conduct 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." (Coll. Hosp., Inc., supra, 8 Cal. 4th at 725.) Despicable is a powerful term used to describe circumstances that are "base," "vile," or "contemptible." (Id. at 726.) The statute "plainly indicates that absent an intent to injure the plaintiff, "malice" requires more than a "willful and conscious" disregard of the plaintiffs' interests.

The additional component of "despicable conduct" must be found." (Ibid.) "Fraud" means 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. (Civ. Code Sec. 3294(c)(3).)

Punitive damages are a recognized remedy for an intentional interference with contract claim, where the plaintiff establishes the defendant is guilty of oppression, fraud or malice. (Duff v. Engelberg (1965) 237 Cal.App.2d 505, 509.) As discussed, Plaintiff alleges that De Soto made and spread the knowingly false statements to induce Dior to disaffirm the Recording Contract, so that she could sign with another label without repaying Handmade for its multi-year investment in her career, and so that Dior and De Soto could make music together at that new label. (FAC P.P. 17, 46-48.) De Soto allegedly performed such acts with the intent to harm Handmade for his own financial motive. (Id., P.P. 17, 51.) These allegations establish the ultimate facts of malice. Accordingly, the motion is DENIED.

Defendant to file an answer within 20 days.

Case Number: 25SMCV05502 Hearing Date: August 18, 2026 Dept: M CASE NAME: Anfanger v. Ganzberg, et al.