Jesse Bailey vs. Arthur Freeman

Defendant now demurrers to all causes of action in the FAC pursuant to CCP section 430.10(e) and 430.10(f) on the grounds that the pleadings fail to state facts sufficient to constitute a cause of action and/or are uncertain. (Notice.)

LEGAL STANDARD

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A defendant may demur to a complaint where the complaint or any cause of action therein 'does not state facts sufficient to constitute a cause of action.' (CCP § 430.10(e).) A demurrer may only challenge defects on the face of the complaint or from matters that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) Consideration of extrinsic facts asserted in the memorandum supporting the demurrer is improper. (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

A demurrer may be sustained only if the complaint lacks any sufficient allegations to entitle the plaintiff to relief. (Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778.) “Less particularity is required in pleading matters of which the defendant has superior knowledge; e.g., allegations as to D's knowledge or notice or intent.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2022) ¶ 6:121.5, citing Foster v. Sexton, 61 Cal.App.5th 998, 1028.)

The complaint will be upheld “so long as it gives notice of the issues sufficient to enable preparation of a defense.” (Doe v. City of Los Angeles (“Doe”) (2007) 42 Cal.4th 531, 549-550.) “Plaintiff need only plead facts showing that he may be entitled to some relief, we are not concerned with plaintiff’s possible inability or difficulty in proving the allegations of the complaint.” (Highlanders, Inc. v. Olsan (1978) 77 Cal.App.3d 690, 696- 97.) “[Courts] are required to construe the complaint liberally to determine whether a cause of action has been stated, given the assumed truth of the facts pleaded.” (Picton v.

Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733, citation omitted.) A demurrer admits the truth of all material facts properly pled and the sole issue raised by a general demurrer is whether the facts pled state a valid cause of action – not whether they are true. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)

Applicable substantive law does not change merely because the case is a class action. (Washington Mut. Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 914.) Indeed, it is 'settled that courts are authorized to weed out legally meritless class action suits prior to certification by demurrer or pretrial motion.' (Tucker v. Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 211 (citing Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 440).)

ANALYSIS

Demurrer

While Defendant’s Notice indicates that he is demurring to each cause of action on the grounds that Plaintiff has failed to state facts sufficient to state a cause of action and the causes of action are uncertain, Defendant’s memorandum only generally argues that Plaintiff has failed to allege facts connecting him to Indoor Restore or establishing alter ego liability. (Notice; Demurrer, pp. 3:11-4:9.) Because Defendant raises, but fails to support any argument for uncertainty, the Court treats it as waived. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 [“When [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and

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citations to authority, we treat it as waived.”].) In any event, demurrers for uncertainty are disfavored and are only granted where the complaint is so muddled that the defendant cannot reasonably respond. The favored approach is to clarify theories in the complaint through discovery. (See Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616; Edmon and Karnow, Cal. Prac. Guide: Civil Procedure Before Trial (Rutter 2024) Ch. 7(I)-A. § 7.85.)

In the absence of specific allegations connecting Defendant to the corporate entities, Defendant assumes that Plaintiff is trying to establish an alter ego theory and argues that his demurrer should be sustained because “Plaintiff has utterly failed to allege facts related to Defendant Fuelling being Plaintiff’s employer, and the first and second prong of the alter-ego theory was not adequately pleaded in Plaintiff’s complaint.” (Demurrer, p. 4:7-9.)

Plaintiff fails to respond to Defendant’s argument regarding the insufficiency of the allegations in the FAC. Instead, without meaningful analysis or application of the facts presented here, Plaintiff asserts that: (1) California Labor Code section 558.1 addresses the liability for wage and hour violations and provides for individual liability for corporate officers or agents involved in such violations (Opp., p. 4:3-20); and (2) alter ego liability provides an additional avenue to hold a corporation’s shareholders personally liable based on their dealings with the corporation (id., p. 4:21-6:2).

Where the nonmoving party fails to oppose a ground for a motion “it is assumed that [nonmoving party] concedes” that ground. (D.I. Chadbourne, Inc. v. Super. Ct. (1964) 60 Cal.2d 723, 728, fn. 4.) Moreover, “[w]hen [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat it as waived.” (Badie, supra, 67 Cal.App.4th at pp. 784-785.)

Here, the FAC alleges that “Defendants, [NVC], a Nevada Corporation doing business in California as [IRES], and ZACHARY FUELLING (herein after collectively referred to as “Defendants”) are doing business in the County of Los Angeles and Sacramento, State of California.” (FAC, ¶ 2.) The FAC additionally alleges that “ZACHARY FUELLING is being substituted for the fictitious Doe defendant 1.” (Id., ¶ 3.) Regarding the relationship between the Defendants, Plaintiff alleges “each of the Defendants, including the Doe Defendants, are the agents, employees, representatives, or co-conspirators of each of the other Defendants, and in engaging in the conduct alleged herein, did so in furtherance of such relationship.” (Id., ¶ 3.)

The Court is not persuaded these allegations are sufficient. In fact, having reviewed the entire complaint, it does not appear that Plaintiff has sufficiently alleged an employment relationship at all. For example, Plaintiff alleges that he “performed the work that is the subject of this Complaint,” and “is a member of the class he represents” but does not allege that he was an employee of any Defendant. (See FAC, ¶¶ 1, 7.) Even the class definition – “all current and former inspectors-repair personnel in the state of California within the applicable statute of limitations” – fails to establish or define an employment relationship with any named Defendant. (Id., ¶ 8.)

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Even if Plaintiff is correct that Defendant can be held individually liable as a corporate officer or agent involved with the alleged violations pursuant to section 558.1, Plaintiff’s complaint does not cite to section 558.1 and, in any event, fails to allege any facts supporting that theory. For example, the FAC does not explain what Defendant’s role is or how the corporate entities are related. Plaintiff is not aided by the cases cited in his opposition. Those cases do not concern pleading challenges and offer no persuasive authority regarding the sufficiency of Plaintiff’s allegations. (See Espinoza v. Hepta Run, Inc. (2022) 74 Cal.App.5th 44, 57-60 [summary adjudication]; Attempa v. Pedrazzani (2018) 27 Cal.App.5th 809, 816-824 [bench trial].)

Similarly, while Plaintiff maintains that Defendant used NVC as a “safe haven for his operations” and “uses layers of ‘protection’ such as [NVC] and IRES to do business in California” (Opp., pp. 3:26, 6:5-6), the FAC is silent on the issue of alter ego liability. To establish alter ego liability, a plaintiff must show that the following conditions exist: “(1) such a unity of interest and ownership between the corporation and the equitable owner that no separation actually exists, and (2) an inequitable result if the acts in question are treated as those of the corporation alone.” (Leek v.

Cooper Pleek (2011) 194 Cal.App.4th 399, 417.) Plaintiff fails to allege any facts demonstrating unity of interest and ownership, an inequitable result if the corporate veil is not pierced, or any abuse of the corporate structure, such as the factors identified in Plaintiff’s Opposition. (See FAC; Opp., pp. 5:16-6:1; citing Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838–840.)

Finally, Plaintiff is not aided by his presentation of extrinsic evidence allegedly demonstrating the corporate relationship and Defendant Fuelling’s role. (Opp., pp. 3:18-4:2, 6:3-6.) California law is clear that on demurrer, no other evidence extrinsic to the pleading can be considered, except matters properly the subject of judicial notice. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994; Cravens v.

Coghlan (1957) 154 Cal.App.2d 215, 217 [“It cannot, properly, be addressed to or based upon evidence or other extrinsic matters.”].) “The purpose of a demurrer is to test the legal sufficiency of a pleading, not to test the evidence or other extrinsic matters.” (McHugh v. Howard (1958) 165 Cal.App.2d 169, 173-174.) Here, Plaintiff does not ask the Court to take judicial notice of any records. Nonetheless, Plaintiff relies on extrinsic evidence attached to his Counsel’s declaration and essentially asks the Court to accept Plaintiff’s interpretation of those records and the corporate relationships as true.

However, none of the facts raised in opposition are contained in the complaint, nor can they reasonably be inferred from the allegations contained therein. Simply put, on demurrer, the Court is concerned with the sufficiency of Plaintiff’s allegations, not with the evidence Plaintiff relies on to support his arguments in opposition.

Accordingly, Defendant’s demurrer to each cause of action is SUSTAINED insofar as Plaintiff fails to allege facts sufficient to demonstrate liability as to Defendant.

Leave to Amend

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Leave to amend is fairly granted. (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.) 'If the plaintiff has not had an opportunity to amend the complaint in response to the demurrer, leave to amend is liberally allowed as a matter of fairness, unless the complaint shows on its face that it is incapable of amendment.' (City of Stockton v. Superior Court (2007) 42 Cal.4th 730, 747.) The burden is on Plaintiff to show in what manner he can amend the pleading and how that amendment will change the legal effect of the pleading. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

Here, Plaintiff seeks leave to amend. (Opp., p. 6:7-13.) While Plaintiff fails to articulate how he can amend the pleading and how that amendment will change the legal effect of the pleading, this is the first pleading challenge and it does not appear that the FAC is incapable of amendment. This is especially true in light of Plaintiff’s factual arguments, including that Plaintiff was hired to work for IRES; that NVC was actually the company that issued payments to Plaintiff; and that Defendant is the sole corporate officer of NVC and continues to manage and control business operations. (See Opp., pp. 3:18-4:2, 6:3-6) Accordingly, leave to amend is GRANTED.

DISPOSITION

For the forgoing reasons, Defendant’s demurrer to each cause of action is SUSTAINED, WITH LEAVE TO AMEND.

Plaintiff may file an amended complaint no later than August 19, 2024. Defendant may file and serve a response within 30 days of service of the amended complaint, 35 days if served by mail.

To request oral argument on this matter, you must call Department 22 at (916) 874-5762 by 4:00 p.m., the court day before this hearing and notification of oral argument must be made to the opposing party/counsel. If no call is made, the tentative ruling becomes the order of the court. (Local Rule 1.06.)

Parties requesting services of a court reporter may arrange for private court reporter services at their own expense, pursuant to Government code §68086 and California Rules of Court, Rule 2.956. Requirements for requesting a court reporter are listed in the Policy for Official Reporter Pro Tempore available on the Sacramento Superior Court website at https://www.saccourt.ca.gov/court-reporters/docs/crtrp-6a.pdf. The list of Court Approved Official Reporters Pro Tempore is available at https://www.saccourt.ca.gov/courtreporters/docs/crtrp-13.Pdf.

If you are not using a reporter from the Court’s Approved Official Reporter Pro Tempore list, a Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) must be signed by

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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each party, the private court reporter, and the Judge. The signed form must be filed with the clerk prior to the hearing.

If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211). The form must be filed with the clerk at least 10 days prior to the hearing or at the time the hearing is scheduled if less than 10 days away. Once approved, the clerk will forward the form to the Court Reporter’s Office and an official reporter will be provided.

If oral argument is requested, the Parties are encouraged to appear via Zoom with the links below:

To join by Zoom link - https://saccourt-ca-gov.zoomgov.com/my/sscdept22 To join by phone dial (833) 568-8864 ID 16184738886

Counsel for Defendant is directed to notice all parties of this order.

Please note that the Complex Civil Case Department now provides information to assist you in managing your complex case on the Court website at https://www.saccourt.ca.gov/civil/complex-civil-cases.aspx. The Court strongly encourages parties to review this website regularly to stay abreast of the most recent complex civil case procedures. Please refer to the website before directly contacting the Court Clerk for information.