Douglas W. Gotthard v. Sonatech, LLC, et al.

"Under general rules of civil procedure, an answer must contain '[t]he general or specific denial of the material allegations of the complaint controverted by the Defendant' and '[a] statement of any new matter constituting a defense.' (Code Civ. Proc., Sec. 431.30, subd. (b)(1) & (2).) 'The phrase "new matter" refers to something relied on by a Defendant which is not put in issue by the Plaintiff. [Citation.] Thus, where matters are not responsive to essential allegations of the complaint, they must be raised in the answer as "new matter." ' [Citation.]" (Quantification Settlement Agreement Cases (2011) 201 Cal.App.4th 758, 812.)

"Such 'new matter' is also known as 'an affirmative defense.' [Citation.] Affirmative defenses must not be pled as 'terse legal conclusions,' but 'rather ... as facts "averred as carefully and with as much detail as the facts which constitute the cause of action and are alleged in the complaint."' [Citation.]" (Id. at pp. 812-813.)

"Unlike the usual general demurrer to a complaint the inquiry is not into the statement of a cause of action. Instead, it is whether the answer raises a defense to the Plaintiff's stated cause of action." (Timberidge Enterprises, Inc. v. City of Santa Rosa (1978) 86 Cal.App.3d 873, 879-880.)

"The allegations of the pleading demurred to must be regarded as true [citations]; a demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading [citations], or the construction placed on an instrument pleaded therein [citation], or facts impossible in law [citation], or allegations contrary to facts of which a Court may take judicial knowledge." (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732.)

"There are, however, certain important differences between these two kinds of demurrer. An important difference is that in the case of a demurrer to the answer, as distinguished from a demurrer to the complaint, the defect in question need not appear on the face of the answer. The determination of the sufficiency of the answer requires an examination of the complaint because its adequacy is with reference to the complaint it purports to answer. [Citations.] This requirement, however, does not mean that the allegations of the complaint, if denied, are to be taken as true, the rule being that the demurrer to the answer admits all issuable facts pleaded therein and eliminates all allegations of the complaint denied by the answer. [Citations.]

Another rule, particularly applicable to the case of a demurrer to the answer, is that each so-called defense must be considered separately without regard to any other defense. [Citations.] Accordingly, a 'separately stated defense or counterclaim which is sufficient in form and substance when viewed in isolation does not become insufficient when, upon looking at the answer as a whole, that defense or counterclaim appears inconsistent with or repugnant to other parts of the answer.' [Citations.]" (South Shore Land Co. v.

Petersen, supra, 226 Cal.App.2d at pp. 733-734, fn. omitted.)

Plaintiff demurs to Defendants' second, third, fourth, sixth, eighth, ninth, tenth, eleventh, thirteenth, fourteenth, and twenty-third affirmative defenses.

Defendants' second affirmative defense is: "Plaintiff's claims are barred by the doctrine of unclean hands." (FAA, P. 2.)

"The defense of unclean hands must be raised in the trial Court to be available. Accordingly, it must be pleaded or called to the attention of the trial Court in order that it may pass on the defense and also to permit the person against whom it is sought to be applied the opportunity to present such evidence as might bear on that issue." (Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964) 227 Cal.App.2d 675, 726.)

A party relying upon an equitable defense, such as unclean hands, must plead it with some particularity. (Hayward Lumber & Investment Co. v. Construction Products Corp. (1953) 117 Cal.App.2d 221, 228; see also Swasey v. Adair (1891) 88 Cal. 179, 182 [equitable defenses must be pleaded "with the same fullness and particularity as is required in cases involving like subjects of inquiry in suits in equity"]; Knopf v. Producers Guild of America, Inc. (1974) 40 Cal.App.3d 233, 237, fn. 5 [defense of unclean hands stricken on motion for failure to state facts].)

Defendants have alleged no facts supporting this affirmative defense. Plaintiff's demurrer to the second affirmative defense will be sustained for failure to state facts sufficient to constitute a defense.

Defendants' third affirmative defense is: "The acts of the other named Defendants of which Plaintiff complaints were all undertaken outside the scope of their agency and/or employment with this answering Defendants and without the knowledge or consent of these answering Defendants and these answering Defendants may not be held liable therefore." (FAA, P. 3.)

Plaintiff argues that this cause of action fails to state facts sufficient to constitute a defense because it fails to allege what specific acts fell outside of the scope of agency or employment. This affirmative defense addresses the potential liability of a Defendant as principal based upon actions or omissions of another Defendant as agent.

"[T]he scope of an agency relationship is a question of fact, and the burden of proof rests on the party asserting the relationship." (Oswald Machine & Equipment, Inc. v. Yip (1992) 10 Cal.App.4th 1238, 1247.) For the same reason, the pleading obligation is on the Plaintiff who relies upon the agency for vicarious liability. (See Kiseskey v. Carpenters' Trust for So. California (1983) 144 Cal.App.3d 222, 230.)

"A plea controverting the original cause of action and tendering no new issue is a mere traverse and cannot be properly described as a plea setting up new matter." (Rancho Santa Margarita v. Vail (1938) 11 Cal.2d 501, 543.) By its terms, this defense merely provides a legal characterization of Plaintiff's own allegations and does not constitute, as such, an affirmative defense because the issues raised by Defendants do not require Defendants to prove any facts different from those addressed in the complaint.

A party may by answer allege facts as new matter or in denial of contrary allegations of the complaint. In the context of an allegation of an affirmative defense, these allegations, if not constituting new matter, may provide additional, alternative, or more specific denials than in the body of the answer. (See Edger v. Foster (1941) 48 Cal.App.2d 580, 583 ["[T]he fact that Defendant in the instant case denied certain material allegations of the complaint in his answer and subsequently in an affirmative defense alleged the same material allegations of the complaint as true, did not constitute an admission of the truth of the allegations in the complaint. He was merely pleading inconsistent defenses."]; Park City Services, Inc. v. Ford Motor Co., Inc. (2006) 144 Cal.App.4th 295, 309 [a party may allege alternative, inconsistent defenses].)

For that reason, allegations in an answer are not improper merely because those allegations do not by themselves constitute affirmative defenses. Construing the third affirmative defense as alternative, more specific denials to the allegations of the complaint, the demurrer to the third affirmative defense will be overruled.

Defendants' fourth affirmative defense is: "To the extent Plaintiff suffered any symptoms of mental or emotional distress or injury, they were the result of a pre-existing psychological disorder or alternative concurrent cause, and not the result of any act or omission of Defendants." (FAA, P. 4.)

As with the third affirmative defense, this defense is an alternative specific denial of Plaintiff's own allegations, in this instance, allegations of causation by the act or omission of Defendants. As such, it is not improper as pleaded. The demurrer to the fourth affirmative defense will be overruled.

Defendants' sixth affirmative defense is: "Plaintiff's causes of action are barred by the Statute of Frauds pursuant to California Civil Code section 1624, specifically Plaintiff's contract related actions, including but not limited to Plaintiff's alleged contract regarding year-end 401(K) contributions for 2025." (FAA, P. 6.)

"A general denial in an answer is sufficient to preserve a statute of frauds objection [citation] ...." (Secrest v. Security National Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 552.) Consequently, like the third affirmative defense, is an alternative, specific denial of Plaintiff's own allegations and is not improper. The demurrer to the sixth cause of action will be overruled.

Defendants' eighth affirmative defense is: "Plaintiff's claims are barred on the ground that as to each and every oral, implied, or other contractual relationship alleged therein, there was a failure of consideration." (FAA, P. 8.)

"Failure of consideration is the failure to execute a promise, the performance of which has been exchanged for performance by the other party. Among other situations, the failure may arise from the wilful breach of the promise. And in a bilateral contract, such failure of consideration is a defense to an action for a breach of the contract inasmuch as it is contemplated that the performance of the unilateral promises shall be in exchange for each other, the performance being considered as equivalent in value." (Bliss v. California Co-op. Producers (1947) 30 Cal.2d 240, 248.)

The defense of failure of consideration requires allegation of facts supporting the defense rather than mere legal conclusions. (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 384.) Defendants have alleged only conclusions in this defense. The demurrer to the eighth affirmative defense will be sustained.

Defendants' ninth affirmative defense is: "Plaintiff's claims are barred on the ground that, as to each and every oral, implied, or other contractual relationship alleged therein, Plaintiff failed to fulfill conditions precedent to the enforcement of any said contract. Including but not limited to the vesting requirements relating to the Defendants 401(k) contribution plan." (FAA, P. 9.)

Fulfillment of conditions precedent is an element of Plaintiff's action for breach of contract. (Civ. Code, Sec. 1439; Code Civ. Proc., Sec. 457.) As with the first affirmative defense, this affirmative defense is merely a more specific, alternative denial and is not improper. The demurrer to the ninth affirmative defense will be overruled.

Defendants' tenth affirmative defense is: "Plaintiff's claims are barred on the ground that, as to each and every oral, implied, or other contractual relationship alleged therein, Plaintiff's fraudulent conduct voided the contract." (FAA, P. 10.)

It is somewhat unclear precisely what legal theory this affirmative defense asserts, but an assertion of avoiding one or more contracts on the grounds of fraud appears to be in the nature of rescission. In any event, an affirmative defense based on fraud requires the pleading of facts supporting the defense. (McCall v. Superior Court (1934) 1 Cal.2d 527, 538 [rescission as defense]; FPI Development, Inc. v. Nakashima, supra, 231 Cal.App.3d at p. 384 [fraud in the inducement].) Defendants have alleged only conclusions in this defense. The demurrer to the tenth affirmative defense will be sustained.

Defendants' eleventh affirmative defense is: "Plaintiff's claims are barred on the ground that as to each and every contract, covenant or warranty alleged therein, Plaintiff committed a prior breach thereof, excusing any duty of further performance by Defendants. Plaintiff's breaches include but are not limited to cessation of employment prior to the vesting schedule in Defendants 401(K) contribution plan." (FAA, P. 11.)

The eleventh affirmative defense is a variant of the same issue raised in the ninth affirmative defense as to performance of conditions. For the same reasons, the demurrer will be overruled to the eleventh affirmative defense.

Defendants' thirteenth affirmative defense is: "The alleged acts of which Plaintiff complains were based on reasonable factors other than Plaintiff's alleged protected activities."

In opposition to the demurrer, Defendants argue that this affirmative defense is intended to preserve Defendants' right to assert its defense of lawful, independent reasons for adverse employment actions under Labor Code section 1102.6.

"In a civil action or administrative proceeding brought pursuant to Section 1102.5, once it has been demonstrated by a preponderance of the evidence that an activity proscribed by Section 1102.5 was a contributing factor in the alleged prohibited action against the employee, the employer shall have the burden of proof to demonstrate by clear and convincing evidence that the alleged action would have occurred for legitimate, independent reasons even if the employee had not engaged in activities protected by Section 1102.5." (Lab. Code, Sec. 1102.6.)

"Because the burden is on a Defendant to make a same-decision showing, it should plead this defense. In other words, if an employer wishes to assert the defense, it should plead that if it is found that its actions were motivated by both discriminatory and nondiscriminatory reasons, the nondiscriminatory reasons alone would have induced it to make the same decision." (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240 (Harris).)

In Harris, the California Supreme Court considered the following pleading of this affirmative defense: " '[A]ny alleged adverse employment actions of which Plaintiff complains ... were not based on Plaintiff's gender and/or sex, pregnancy or any other alleged discriminatory practice, but instead were based on one or more legitimate nondiscriminatory reasons. Nor were any of the employment actions of Defendant taken under pretext.' " (Harris, supra, 56 Cal.4th at p. 240.)

The Harris Court held both that this was a failure to plead the same-decision defense and that the defense actually pleaded was sufficient for the Defendant to raise that defense at trial. (Ibid.) The procedural difference between the Harris circumstances and the present is that the Court in Harris addressed the trial consequences of the pleading and not a challenge to the pleading. As a challenge to the pleading, Harris found the conclusory statement insufficient as a matter of pleading even if that failure may later be excused at trial. As this is a challenge to the pleading, the demurrer to the thirteenth affirmative defense will be sustained.

Defendants' fourteenth affirmative defense is: "Even if Plaintiff's alleged protected activity was a contributing factor in the alleged adverse employment actions including Plaintiff's termination (which Defendants denies), Plaintiff would have suffered those same adverse employment actions, including termination, anyway, even if Plaintiff had not engaged in the alleged protected activity." (FAA, P. 14.)

This affirmative defense is a variation on the thirteenth affirmative defense and will be sustained for the same reasons.

Defendants' twenty-third affirmative defense is: "Plaintiff's request for equitable relief is barred and/or improper to the extent that Plaintiff has an adequate remedy at law in that Plaintiff also requests monetary damages, interest and an award of attorneys' fees and costs." (FAA, P. 23.)

Plaintiff ordinarily has the burden to show that the remedy at law is inadequate in order to obtain an equitable remedy. (Porporato v. Devincenzi (1968) 261 Cal.App.2d 670, 674.) Consequently, as in the discussion with prior affirmative defenses, this affirmative defense is an alternative, more specific denial and is not improper. The demurrer will be overruled to this affirmative defense.

This is the first answer to which the Court has sustained a demurrer. Defendants will be given leave to amend.

(2) Motion to Strike "The Court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading." (Code Civ. Proc., Sec. 436.)

"The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the Court is required to take judicial notice." (Code Civ. Proc., Sec. 437, subd. (a).)

In addition to the demurrer, Plaintiff also moves to strike the twenty-fifth and twenty-sixth affirmative defenses.

Defendants' twenty-fifth affirmative defense is: "Plaintiff's complaint fails to state facts sufficient to constitute a cause of action against Defendants that would support an award of punitive damages." (FAA, P. 25.)

Defendants do not oppose striking the twenty-fifth affirmative defense. (Opposition, at p. 3.) The motion will therefore be granted.

Defendants' twenty-sixth affirmative defense is: "Plaintiff is not entitled to recover punitive or exemplary damages from Defendants on the grounds that any award of punitive or exemplary damages would violate Defendants' constitutional rights under the Due Process Clauses of the Fifth and Fourteenth Amendments of the United States Constitution." (FAA, P. 26.)

Plaintiff argues that this affirmative defense cannot be evaluated until after a verdict is returned, that this issue is irrelevant at the pleading stage, and that Defendants' right to argue this issue is otherwise fully preserved. (Motion, at p. 5.) Defendants argue that it raises a legitimate issue and is not improper.

The fact that an issue of damages cannot be determined until and unless there is such an award does not make an affirmative defense irrelevant. As Plaintiff concedes, Defendants have the right to make the arguments suggested by this affirmative defense at an appropriate time regardless of whether this affirmative defense is pleaded. The inclusion of the affirmative defense thus at most is superfluous. But the affirmative defense has the benefit of creating a record of Defendants' assertion of these issues while not, in fact, burdening the record except by adding a few extra lines to the FAA. The motion to strike this affirmative defense will be denied.

Tentative Ruling: Global Assets Liens & Foreclosures, LLC, v. Shambala Healing Center, Inc. Tentative Ruling: Global Assets Liens & Foreclosures, LLC, v. Shambala Healing Center, Inc.