McLemore v. Covenant Living Communities & Services

On Aril 22, 2025, Ms. Perez informed Plaintiff that Defendant was pausing Plaintiff's investigations. (FAC, P. 12.) On April 25, 2025, Plaintiff was terminated. Plaintiff asserts that his termination was retaliation for Plaintiff informing Defendant that it was violating California law and motivated by Plaintiff's time off due to mental health reasons. (Ibid.)

On April 23, 2026, Defendant filed a demurer to the FAC, arguing that four COAs fail to allege facts sufficient to state a COA, including the second COA for violation of Labor Code section 6310, the eleventh COA for negligent infliction of emotional distress, the twelfth COA for breach of the implied covenant, and the thirteenth COA for unlawful business practices. Defendant also filed a motion to strike Plaintiff's prayer for punitive damages. The demurrer and motion to strike are opposed.

Analysis

(1) Standard on Demurrer

"Because the function of a demurrer is to test the sufficiency of a pleading as a matter of law, we ... assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law. [Citation.] It is error for the trial Court to sustain a demurrer if the Plaintiff has stated a cause of action under any possible legal theory, and it is an abuse of discretion for the Court to sustain a demurrer without leave to amend if the Plaintiff has shown there is a reasonable possibility a defect can be cured by amendment." (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242, 247).

"The reviewing Court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded." (Payne v. National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1043.)

"[I]n ruling on a demurrer the trial Court may take into account in addition to the complaint itself any matter that may be properly considered under the doctrine of judicial notice." (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1133-1134.)

(2) Second COA for Violation of Labor Code Section 6310

"No person shall discharge or in any manner discriminate against any employee because the employee has done any of the following: [P.] (1) Made any oral or written complaint to the division, other governmental agencies having statutory responsibility for or assisting the division with reference to employee safety or health, their employer, or their representative. [P.] (2) Instituted or caused to be instituted any proceeding under or relating to their rights or has testified or is about to testify in the proceeding or because of the exercise by the employee on behalf of themselves, or others of any rights afforded to them. [P.] (3) Participated in an occupational health and safety committee established pursuant to Section 6401.7. [P.] (4) Reported a work-related fatality, injury, or illness, requested access to occupational injury or illness reports and records that are made or maintained pursuant to Subchapter 1 (commencing with Section 14000) of Chapter 1 of Division 1 of Title 8 of the California Code of Regulations, or exercised any other rights protected by the federal Occupational Safety and Health Act (29 U.S.C.

Sec. 651 et seq.), except in cases where the employee alleges they have been retaliated against because they have filed or made known their intention to file a workers' compensation claim pursuant to Section 132a, which is under the exclusive jurisdiction of the Workers' Compensation Appeals Board." (Lab. Code, Sec. 6310, subd. (a).)

"Any employee who is discharged, threatened with discharge, demoted, suspended, or in any other manner discriminated against in the terms and conditions of employment by their employer because the employee has made a bona fide oral or written complaint to the division, other governmental agencies having statutory responsibility for or assisting the division with reference to employee safety or health, their employer, or their representative, of unsafe working conditions, or work practices, in their employment or place of employment, or has participated in an employer-employee occupational health and safety committee, shall be entitled to reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer." (Lab. Code, Sec. 6310, subd. (b).)

Defendant argues the FAC alleges no facts to support the second COA. Plaintiff argues in opposition that "he believed that his investigation regarding bullying and an unsafe work environment revealed multiple workplace safety issues that Defendant needed to address." (Opp., p. 4., ll. 10-12; see FAC, P.P. 8, 10.)

The Court agrees with Defendant. The FAC does not allege that Plaintiff reported a work-related injury or illness. The FAC does not specify rights that Plaintiff was exercising under the federal Occupational Safety and Health Act or Chapter 1 of Division 1 of Title 8 of the California Code of Regulations. The FAC does not otherwise allege facts demonstrating that he engaged in activity protected by Labor Code section 6310. The Court will sustain the demurrer to the second COA with leave to amend.

(3) Eleventh COA for NEID

The Court agrees with Defendant that, unlike certain intentional torts or intentional discrimination, "injuries caused by employer negligence ... are compensated at the normal rate under the workers' compensation system ... [and] [t]hese injuries are subject to workers' compensation exclusivity." (Arendell v. Auto Parts Club, Inc. (1994) 29 Cal.App.4th 1261, 1264.) NEID is not an independent tort but is treated as the tort of negligence. (Klein v. Children's Hospital Medical Center (1996) 46 Cal.App.4th 889, 894 (Klien).)

In addition, the required elements of NEID have not been alleged. "Negligent infliction of emotional distress is not an independent tort in California, but is regarded simply as the tort of negligence. [Citations.] Whether Plaintiffs can recover damages for NIED is dependent upon traditional tort analysis, and the elements of duty, breach of duty, causation and damages must exist to support the cause of action. [Citations.] NIED claims to date fall generally into three categories: 'exposure' claims, 'bystander' claims and 'direct victim' claims." (Klein, supra, 46 at p. 894.)

" 'Exposure' cases are [typically] wherein Plaintiffs who have not suffered any physical injury claim emotional distress from fear of contracting a disease because of their exposure thereto due to the Defendant's misconduct. In such cases Plaintiffs cannot recover unless they demonstrate that it is more likely than not they will contract the disease." (Klein, supra, 46 Cal.App.4th at p. 894.)

" 'Bystander' claims involve emotional distress caused by witnessing an injury to another ... and are limited to close family members." (Ibid.)

"The 'direct victim' label is a misnomer, since it literally describes all Plaintiffs who have been injured from the breach of a duty owed them by another.... However, '[f]oreseeability ... alone is not a useful 'guideline' or a meaningful restriction on the scope of [an action for [NIED].]' [Citation.] [P.] ... [A] cause of action to recover damages for [NIED] will lie, notwithstanding the criteria imposed upon recovery by bystanders, in cases where a duty arising from a preexisting relationship is negligently breached [such as a doctor-patient relationship]." (Klein, supra, 46 Cal.App.4th at pp. 894-895.)

" The existence of a duty is a question of law, and that duty must be one that the Defendant has assumed, has been imposed upon the Defendant as a matter of law, or arises out of the Defendant's preexisting relationship with the Plaintiff." (Id. at p. 895.)

Here, Plaintiff has not alleged a negligence claim based on an exposure, bystander, or direct victim theory. The SAC does not allege facts that constitute a COA for NEID. The Court will sustain the demurrer to the eleventh COA with leave to amend.

(3) Twelfth COA for Breach of the Implied Covenant

"The implied covenant of good faith and fair dealing rests upon the existence of some specific contractual obligation. [Citation.] 'The covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purpose.' [Citations.] 'In essence, the covenant is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract.' " (Racine & Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026, 1031-1032.)

"The covenant thus cannot 'be endowed with an existence independent of its contractual underpinnings.' [Citation.] It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement." (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 349-350 (Guz).)

Here, the SAC does not allege a contract between Plaintiff and Defendant. The offer letter attached to SAC states in part, "[y]our employment with [Defendant] will be on an at-will basis, which means you and the company are free to terminate the employment relationship at any time for any reason. This letter is not a contract or guarantee of employment for a definite amount of time." (SAC, Ex. A.)

"The mere existence of an employment relationship affords no expectation, protectible by law, that employment will continue, or will end only on certain conditions, unless the parties have actually adopted such terms. Thus if the employer's termination decisions, however arbitrary, do not breach such a substantive contract provision, they are not precluded by the covenant." (Guz, supra, 24 Cal.4th at p. 350.)

Plaintiff does not allege the terms of a contract or the legal effect of a contract. Without alleged facts establishing a contractual relationship distinct from an at will employment relationship, there can be no violation of the implied covenant in this context. (See Guz, supra, 24 Cal.4th at p. 349-353.) Accordingly, the Court will sustain the demurrer to the twelfth COA with leave to amend.

(4) Thirteenth COA for Unlawful Business Practices

"Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any Court of competent jurisdiction. The Court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition. Any person may pursue representative claims or relief on behalf of others only if the claimant meets the standing requirements of Section 17204 ...." (Bus. & Prof. Code, Sec. 17203.)

"Actions for relief pursuant to this chapter shall be prosecuted exclusively in a Court of competent jurisdiction by ... by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition." (Bus. & Prof. Code, Sec. 17204.)

The SAC alleges that Defendant's "failure to provide meal and rest periods, actively deleting earned meal and rest period premiums, and further failure to remit all wages due and owing at termination, among other things, constitutes an unfair, unlawful and deceptive business practice." (FAC, P. 103.)

"[A]n order that a business pay to an employee wages unlawfully withheld is consistent with the legislative intent underlying the authorization in section 17203 for orders necessary to restore to a person in interest money or property acquired by means of an unfair business practice." (Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 178.)

However, as Defendant notes, Plaintiff cannot assert a claim for unfair business practices unless Plaintiff alleges facts that Plaintiff himself "suffered injury in fact and has lost money or property as a result of the unfair competition." (Bus. & Prof. Code, Sec.Sec. 17203, 17204.) The SAC does not allege that Defendant withheld wages owed to Plaintiff. Accordingly, the Court will sustain the demurrer to the twelfth COA with leave to amend.

(5) Motion to Strike

"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 ...." (Code Civ. Proc., Sec. 435, subd. (b)(1).)

"The Court may, upon a motion made pursuant to [s]ection 435, or at any time in its discretion, and upon terms it deems proper: [P.] ... [s]trike out any irrelevant, false, or improper matter inserted in any pleading." (Code Civ. Proc., Sec. 436, subd. (a).)

"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." (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255 (Clauson).)

Defendant's motion seeks to strike the prayer for punitive damages in paragraphs 22 (first COA under Labor Code section 1102.5), 30 (second COA under Labor Code section 6310), 37 (third COA Labor Code under section 98.6), 53 (sixth COA for intentional disability discrimination under FEHA), 54 (same), 60 (seventh COA for retaliation under FEHA), 75 (eighth COA for failure to prevent discrimination under FEHA), 82 (ninth COA for wrongful termination under public policy), 87 (tenth COA for IIED), 91 (same), and item 5 of the prayer for relief.

"In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the Defendant has been guilty of oppression, fraud, or malice, the Plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the Defendant." (Civ. Code, Sec. 3294, subd. (a).)

"Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim." (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166.)

" 'Malice' means conduct which is intended by the Defendant to cause injury to the Plaintiff ...." (Civ. Code, Sec. 3294, subd. (c)(1).)

"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." (Clauson, supra, 67 Cal.App.4th at p. 1255.)

"An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation." (Code Civ. Proc., Sec. 3294, subd. (b).)

"Civil Code section 3294, subdivision (b) does not authorize an award of punitive damages against an employer for [its] employee's wrongful conduct. It authorizes an award of punitive damages against an employer for the employer's own wrongful conduct. Liability under subdivision (b) is vicarious only to the extent that the employer is liable for the actions of its officer, director or managing agent in hiring or controlling the offending employee, in ratifying the offense or in acting with oppression, fraud or malice." (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1154-1155.)

"It is a generally accepted rule ...'[i]n order to state a cause of action against Defendant for a wrong committed by his servant, the ultimate fact necessary to be alleged is that the wrongful act was in legal effect committed by Defendant. This may be alleged either by alleging that Defendant by his servant committed the act, or, without noticing the servant, by alleging that Defendant committed the act.' [Citations]." (C.R. v. Tenet Healthcare Corp. (2009) 169 Cal.App.4th 1094, 1112.)

"In determining whether a complaint states facts sufficient to sustain punitive damages, the challenged allegations must be read in context with the other facts alleged in the complaint. Further, even though certain language pleads ultimate facts or conclusions of law, such language when read in context with the facts alleged as to Defendants' conduct may adequately plead the evil motive requisite to recovery of punitive damages." (Monge v. Superior Court (1986) 176 Cal.App.3d 503, 510 (Monge).)

In Monge, supra, 176 Cal.App.3d at page 507, a demand for punitive damages was permitted where it was alleged that the Defendant employer's officers "engaged upon a systematic course of retaliation by 'creat[ing] an intimidating, hostile and offensive working environment ... in retaliation against the [p]laintiffs for their complaints regarding sexual harassment.' As a result of Defendants' conduct, [a Plaintiff], who was pregnant, was hospitalized for tension and emotional distress. [Another Plaintiff] ... suffered emotional distress and, eventually, [Plaintiffs] were 'forced to resign' because of the retaliatory actions by Defendants." (Ibid.)

The FAC alleges intent to injure Plaintiff as to first, third, and sixth through tenth COAs based on the theory of intentional retaliation and disability discrimination. Plaintiff alleges facts that he was terminated because he disclosed illegal Labor Code wage practices as part of his work duties and because he requested a day off from work because of a significant health issue. Plaintiff alleges facts that this intentional misconduct was authorized or ratified by Defendant's regional and national directors of human resources. (FAC, P.P. 9-13.) This is sufficient to allege malice at the pleading stage. (Civ. Code, Sec. 3294, subd. (c)(1); see Monge, 176 Cal.App.3d at p. 507.)

The motion to strike as to allegations in the second COA for violation of Labor Code section 6310 is moot since the demurrer is sustained as to this COA. Accordingly, the Court will deny the motion to strike.

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