Sheehan vs. Sheehan

51 Sheehan vs. Sheehan

26-01546405 Demurrer to Complaint

Defendant Carol Sheehan’s Demurrer to Complaint is SUSTAINED IN PART with 20 days leave to amend.

Request for Judicial Notice Defendant requests judicial notice of various exhibits.

The Request for Judicial Notice is DENIED as to the deposition transcript (Ex. 4).

The Request for Judicial Notice is GRANTED as to Exs. 1, 6-10, & 12. “[S]uch notice is limited to the existence of the documents and is not the same as taking notice of the truth of any matters or facts stated therein.” (In re Christian P. (2012) 208 Cal.App.4th 437, 445, fn. 4, abrogated on other grounds in In re R.T. (2017) 3 Cal.5th 622, 628, 637, fn. 6.)

A court may take judicial notice of the existence of each document in a court file, but can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments (Day v. Sharp (1975) 50 Cal.App.3d 904, 914.) A court cannot take judicial notice of hearsay allegations as being true simply because they are part of a court record or file. (Ibid.)

“The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whose truthfulness or proper interpretation are disputable.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113.)

A Demurrer is a Non-Speaking Motion

In addition to the request for judicial notice, the demurrer is also accompanied by the Declaration of Cody M. Leventhal and exhibits attached thereto.

But demurrers are “non-speaking” motions and no other extrinsic evidence can be considered, except for the pleadings at issue and such matters subject to judicial notice. (See, Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) The function of a demurrer is therefore limited to testing the sufficiency of a complaint. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “In reviewing the ruling on a demurrer, a court cannot consider...the substance of declarations, matter not subject to judicial notice, or documents judicially noticed but not accepted for the truth of their contents.” (Ibid.)

Accordingly, the Declaration of Leventhal (except for the meet and confer portion) and exhibits not subject to judicial notice are disregarded.

Whether the Entire Action is Barred by Res Judicata/Claim Preclusion

Defendant contends that all causes of action contained in the Complaint are barred by res judicata or claim preclusion.

“[I]f all of the facts necessary to establish that an action is barred on res judicata grounds appear on the face of the complaint, the complaint is subject to demurrer.” (Brosterhous v. State Bar (1995) 12 Cal.4th 315, 324.) A demurrer can only be used to challenge defects that appear on the face of the pleading or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) No other extrinsic evidence can be considered. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

The doctrine of res judicata has two aspects: claim preclusion and collateral estoppel. (People v. Barragan (2004) 32 Cal.4th 236, 252.) Claim preclusion describes the primary aspect of the res judicata doctrine and issue preclusion encompasses the notion of collateral estoppel. (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 824.) “Claim preclusion ‘prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them.’ [Citation.] Claim preclusion arises if a second suit involves: (1) the same cause of action (2) between the same parties (3) after a final judgment on the merits in the first suit. [Citations.]” (Ibid.) “If claim preclusion is established, it operates to bar relitigation of the claim altogether.” (Ibid.)

Plaintiff’s causes of action in her instant Complaint are (1) Defamation, (2) Intentional Interference with Prospective Economic Advantage, (3) Intentional Interference with Contractual Relations, (4) Negligent Misrepresentation, (5) Intentional Infliction of Emotional Distress, (6) Unfair Competition, and the remedies asserted as causes of action for (7) Injunctive Relief, and (8) Punitive Damages. These causes of action all arise from the same alleged harm, Plaintiff’s alleged economic damages, reputational harm and emotional distress stemming from Defendant’s statements and fraud reports to U.S. Bank.

The Complaint alleges Defendant contacted U.S. Bank on, interalia, May 5, May 10, May 15, June 14, June25, October 14, October 16, October 28, November 12, November 14 of 2024. Defendant initiated these communications repeatedly and persistently over several months. During these communications. Defendant made numerous false statements of fact to U.S. Bank employees accusing Plaintiff of serious financial crimes and misconduct, including but not limited to fraud, embezzlement, wire fraud, forgery, and theft of hundreds of thousands of dollars.

Defendant falsely claimed that checks written to vendors were fraudulent, accused Plaintiff of paying "friends" improperly, disputed legitimate business expenses, and asserted that Plaintiff was secretly draining business accounts. Defendant further falsely asserted that Plaintiff continued to engage in fraudulent billing activity months after Plaintiff had been locked out of business operations and had no access to the accounts in question. (See, Complaint, p. 3.)

U.S. Bank froze all of Plaintiff’s accounts and eventually terminated its banking relationship with Plaintiff entirely. Plaintiff was denied access to her funds for approximately two to three weeks and during that time, Plaintiff lost a long-standing and significant business client, Gullwing Motorcars, and suffered substantial interruption to her business operations. The loss of Gullwing Motorcars as a client materially impaired Plaintiff’s ability to operate and grow her business during its formative stage. Plaintiff suffered reputational harm with financial institutions as a result of Defendant’s acts. (See, Complaint, pp. 4-5.)

Plaintiff’s Verified FAC in the Colleen Sheehan v. Michael Sheehan matter consists of eighteen (18) causes of action against Michael Sheehan (Plaintiff’s father), Prancing Skunk Automotive and Ferraris Online. (RJN, Ex. 1.) The FAC contains multiple employment related causes of action and multiple causes of action against Michael relating to converting Plaintiff’s personal property and breaching a contract with regard to rental real properties.

As relevant here, the FAC also contains causes of action against Michael for defamation (the 15th cause of action), intentional interference with prospective economic advantage (16th cause of action), negligent interference with prospective economic advantage (17th cause of action); intentional interference with contractual relations (18th cause of action).

The FAC alleges Plaintiff had existing economic relationships likely to result in economic benefit to her. Namely, her relationships with clients and/or automobile dealers at Gullwing Motorcars, Dugan Enterprises, Silver Arrow, CJ Motorsports, and Trading Horses. Defendant Michael knew of Plaintiff’s economic relationships. Michael engaged in wrongful conduct, specifically, Michael has advised these third parties that Colleen had locked him out of his own computer databases, was attempting to take over his business and “push” him out, and that Colleen stole $130,000.00 from him. Michael advised these third parties to not trust Colleen and to not do business with her. Michael intended to disrupt the relationships or knew that disruption of the relationships was certain or substantially certain to occur. Plaintiff was harmed by Michael’s conduct.

Judgment was entered in the Original Matter on 12/3/25. (RJN, Ex. 9). The Court granted Defendant’s motion for nonsuit as to Plaintiff’s cause of action for defamation (15th cause of action) and the claim was dismissed with prejudice. (Id. at p. 3.) As for Plaintiff’s claims for intentional interference with prospective economic advantage (16th cause of action), negligent interference with prospective economic advantage (17th cause of action); and intentional interference with contractual relations (18th cause of action), the jury found for Plaintiff and against Defendant Michael. (Id. at p. 3.) The jury awarded Plaintiff Lost Profits of $14,500, emotional distress damages of $20,000 and while the jury found that Michael acted with malice, fraud, or oppression towards Colleen, it awarded $0 for punitive damages. (Id. at p. 6.)

Here, the first three causes of action are identical to three causes of action brought by Plaintiff in the Original Matter. Punitive damages are also sought in both actions. The Original Matter resulted in a final judgment on the merits. Defendant contends the remaining causes of action for Negligent Misrepresentation, Intentional Infliction of Emotional Distress, Unfair Competition, Injunctive Relief were not brought in the Original Matter but should have been brought and are also precluded.

However, the facts giving rise to these two actions are not the same. As previously stated, in the Original Matter, Plaintiff alleges that Michael advised these third parties that Colleen had locked him out of his own computer databases, was attempting to take over his business and “push” him out, and that Colleen stole $130,000.00 from him. Michael advised these third parties to not trust Colleen and to not do business with her. In this action, Plaintiff alleges that Defendant made multiple statements to U.S.

Bank employees accusing Plaintiff of serious financial crimes and misconduct, including but not limited to fraud, embezzlement, wire fraud, forgery, and theft of hundreds of thousands of dollars. Defendant falsely claimed that checks written to vendors were fraudulent, accused Plaintiff of paying "friends" improperly, disputed legitimate business expenses, and asserted that Plaintiff was secretly draining business accounts. Defendant further falsely asserted that Plaintiff continued to engage in fraudulent billing activity months after Plaintiff had been locked out of business operations and had no access to the accounts in question.

U.S. Bank froze all of Plaintiff’s accounts and eventually terminated its banking relationship with Plaintiff entirely. Plaintiff was denied access to her funds for approximately two to three weeks which resulted in the loss of a long-standing and significant business client, Gullwing Motorcars, and suffered substantial interruption to her business operations. The loss of Gullwing Motorcars as a client materially impaired Plaintiff’s ability to operate and grow her business during its formative stage.

Plaintiff suffered reputational harm with financial institutions as a result of Defendant’s acts. Moreover, the requested relief sought in this case is also different as Plaintiff seeks an injunction to prevent recurrence of Carol’s conduct.

Based upon the foregoing, res judicata does not bar the instant claims in this action because they do not involve the same set of facts that was litigated in the prior proceeding.

Furthermore, Plaintiff brought claims against her father, Michael, in the Original Matter and the causes of action in this action are against Carol, Plaintiff’s mother-in-law and wife of Michael. Defendant asserts these claims are barred because the husband-wife relationship establishes privity for purposes of claim preclusion.

Privity refers to a mutual or successive relationship to the same rights of property, or to such an identification in interest of one person with another as to represent the same legal rights, as well as to a relationship between the party to be estopped and the unsuccessful party in the prior litigation which is sufficiently close so as to justify application of the doctrine of res judicata (Villarroel v. Recology, Inc. (2023) 97 Cal.App.5th 762, 782.) Whether someone is in privity with the actual parties requires close examination of the circumstances of each case, and the circumstances must also have been such that the nonparty should reasonably have expected to be bound by the prior adjudication (Ibid.)

Privity between spouses is not automatic simply by virtue of the marital relationship. Spouses are in privity with each other where the cause of action in the prior litigation was community in nature and the proceeds of any judgment that might have been recovered would have belonged to both husband and wife as community property (Mueller v. J. C. Penney Co. (1985) 173 Cal.App.3d 713, 724, citing Zaragosa v. Craven (“Zaragosa”) (1949) 33 Cal.2d 315, 321.) Defendant asserts (1) Plaintiff sought vicarious liability against Michael Sheehan based on a theory that Carol Sheehan was acting as Michael Sheehan’s agent, and Michael Sheehan represented the “community” of himself and Carol Sheehan, and (2) because the cost of the judgement against Michael Sheehan in the Original Matter was borne by both husband and wife as community property.

But neither the allegations of the Complaint nor the documents subject to judicial notice support these arguments.

Defendant also argues the primary right theory. As discussed, claim preclusion applies only to the relitigation of the same cause of action between the same parties or those in privity with them. Whether the two lawsuits involve the same primary right is beside the point. Claim preclusion does not bar Plaintiff from suing Carol because it cannot be determined via demurrer that Carol is “the same party” or in privity with Michael. (See, DKN Holdings LLC v. Faerber, supra, 61 Cal.4th at 825.)

Based upon the foregoing, the Demurrer is OVERRULED on this ground.

Whether the Entire Action is Barred by Collateral Estoppel/Issue Preclusion

Issue preclusion prohibits the relitigation of issues argued and decided in a previous case, even if the second suit raises different causes of action. (DKN Holdings LLC v. Faerber, supra, 61 Cal.4th at 824.) Under issue preclusion, the prior judgment conclusively resolves an issue actually litigated and determined in the first action. (Ibid.) There is a limit to the reach of issue preclusion, however. In accordance with due process, it can be asserted only against a party to the first lawsuit, or one in privity with a party. (Ibid.)

Issue preclusion differs from claim preclusion in two ways. (DKN Holdings LLC v. Faerber, supra, 61 Cal.4th at 824.) First, issue preclusion does not bar entire causes of action. Instead, it prevents relitigation of previously decided issues. Second, unlike claim preclusion, issue preclusion can be raised by one who was not a party or privy in the first suit. (Id. at 824-825.) Only the party against whom the doctrine is invoked must be bound by the prior proceeding. (Ibid.) In summary, issue preclusion applies: (1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party. (Ibid.)

The demurrer as to issue preclusion fails for the same reasons stated above. “The ‘identical issue’ requirement addresses whether identical factual allegations are at stake in the two proceedings, not whether the ultimate issues or dispositions are the same.” (Lucido v. Superior Court (1990) 51 Cal.3d 335, 342.) The issues previously litigated and necessarily decided in the first suit are not identical to the issues in this lawsuit, as they do not involve the same factual allegations. Furthermore, privity has not been shown at this time.

Accordingly, the demurrer on this ground is OVERRULED.

1st Cause of Action for Defamation

Defamation claims are subject to a one-year statute of limitations. (Code Civ. Proc. § 340 (c).) Generally, the limitations period runs from the date of publication of the purportedly defamatory statement(s). (Shively v. Bozanich (2003) 31 Cal.4th 1230, 1247.)

In certain circumstances it may be appropriate to apply the discovery rule to delay the accrual of a cause of action for defamation or to impose an equitable estoppel against defendants who assert the defense after the limitations period has expired. (Id. at 1248-1249.) That rule has been applied when the defamatory statement is hidden from view as, for example, in a personnel file that generally cannot be inspected by the plaintiff. The rationales offered in support of the application of the discovery rule to defamation cases are equitable in nature.

The cases turn upon the circumstances in which the defamatory statement is made and frequently involve a defamatory writing that has been kept in a place to which the plaintiff has no access or cause to seek access. The plaintiff’s inability to discover the libel when it first was “published” and placed in a confidential file would render unjust any holding that the cause of action accrued and the period of limitations commenced when the writing was placed in the file. (Id. at 1249.)

“California law recognizes a general, rebuttable presumption, that plaintiffs have ‘knowledge of the wrongful cause of an injury.’ ” (Grisham v. Philip Morris U.S.A., Inc. (2007) 40 Cal.4th 623, 638 (Grisham).) The delayed discovery rule rebuts that presumption and tolls the statute of limitations. (Ibid.; See also Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 803.)

“In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)

Plaintiff alleges the defamatory statements were published by Defendant between 05/05/24, and 11/14/24. The Complaint in this action was filed on 2/10/26, which is more than one year after the alleged publication. Defendant is correct that this cause of action appears barred from the face of the Complaint as it was filed more than one year after the alleged publication and the Complaint fails to state any facts to support delay discovery.

Accordingly, the demurrer to the first cause of action for defamation is SUSTAINED.

4th Cause of Action for Negligent Misrepresentation

The elements of negligent misrepresentation are well-established. The elements of a claim for negligent misrepresentation are “(1) the misrepresentation of a past or existing material fact, (2) without reasonable ground for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage. (Apollo Capital Fund LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.) The representations must be made to plaintiff or relied upon by her. (Security Officers Service, Inc. v. State Compensation Ins. Fund (1993) 17 Cal.App.4th 887, 899.)

Here, the Complaint alleges that Defendant made misrepresentations to third party, U.S. Bank, not Plaintiff, with the intent to trigger bank action.

Accordingly, the demurrer as to this cause of action is SUSTAINED.

Plaintiff has 20 days from notice of this ruling to file an amended complaint.

Moving party to give notice.

53 Rebuyon vs. Serra Sol Memory Care

26-01561508 Motion to Compel Arbitration

Defendant SJC-Operations, LP dba Serra Sol’s (Erroneously sued as Serra Sol Memory Care) (“Defendant”) unopposed Motion to Compel Arbitration is GRANTED.

Preliminarily, both the Federal Arbitration Act (“FAA”) and the California Arbitration Act require the existence of a valid Arbitration Agreement, before arbitration can be compelled. (See 9 U.S.C. §2 and Code of Civ. Proc. §1281.2). “If a party to a civil action asks the court to compel arbitration of the pending claim, the court must determine in a summary proceeding whether an ‘agreement to arbitrate the controversy exist.’” (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 754.) “Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.

If the party opposing the petition raises a defense to enforcement...that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. (Little v. Pullman (2013) 219 Cal.App.4th 558, 565.) The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. (Id.) In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. (Id.)