Ruling
CAROLYN TRACIE LOVE VS LOS ANGELES COUNTY, ET AL.
Jul 12, 2024 |
22STCV33580
Case Number:
22STCV33580
Hearing Date:
July 12, 2024
Dept:
50
CAROLYN TRACIE LOVE, individually and as trustee for Trashawn Tillet
,
Plaintiff,
vs.
LOS ANGELES COUNTY, DEPARTMENT OF THE CORONER
,
et al.
Defendants.
Case No.:
22STCV33580
Hearing Date:
July 12, 2024
Hearing Time:
2:00 p.m.
[TENTATIVE] ORDER RE:
DEFENDANT COUNTY OF LOS ANGELES DEMURRERS TO PLAINTIFFS FOURTH AMENDED COMPLAINT;
DEFENDANT CITY OF LOS ANGELES DEMURRER TO PLAINTIFFS FOURTH AMENDED COMPLAINT
Background
Plaintiff Carolyn Tracie Love,
individually and as trustee for Trashawn Tillett filed this action on October 14, 2022 against Defendants Los Angeles County, Department of the Coroner; Los Angeles City; Los Angeles Police Department; and Los Angeles Fire Department.
On May 23, 2023, Defendant City of Los Angeles filed a notice of removal of the action to federal court.
On November 15, 2023, the United States District Court, Central District of California issued an Order Granting in Part Defendants Motions to Dismiss [DKT Nos. 70, 71] And Remanding Case in the matter
Carolyn Tracie Love v. Los Angeles County
,
et al
., Case No. 2:23-cv-03851-SB-PVC (herein, the Federal Action). The November 15, 2023 Order in the Federal Action provides,
inter alia
, as follows:
After Defendants moved to dismiss her Second Amended Complaint (SAC), Plaintiff, now proceeding pro se, filed an untimely Third Amended Complaint (TAC) nearly two weeks after her opposition deadline had passed. Dkt. No.
65
. The TAC significantly expands on her earlier pleadings, spanning 68 pages and alleging 24 causes of action&including 13 federal claims.
Id
. The Court allowed the filing of the TAC and denied as moot the motions to dismiss the SAC. Dkt. No. 67. The City and County now move to dismiss Plaintiffs TAC for failure to state a claim. Dkt. Nos.
70
,
71
. The Court finds this matter suitable for decision without oral argument and vacates the December 1, 2023 motion hearing.
Fed. R. Civ. P.
78
; L.R.
7-15
. Because Plaintiff has not alleged any plausible federal claims, the Court dismisses her federal causes of action and remands the remaining claims to state court. (November 15, 2023 Order, p. 2.)
The November 15, 2023 Order in the Federal Action concludes that [a]ccordingly, the Court GRANTS IN PART Defendants motions to dismiss, and Plaintiffs federal claims in Counts 7, 11, 14, and 16-25 are DISMISSED on the merits with prejudice. The Court does not reach the rest of Defendants arguments, but instead declines to exercise supplemental jurisdiction over Plaintiffs remaining state-law claims. The case is therefore REMANDED to the state court from which it was removed. (November 15, 2023 Order, p. 8.)
On November 20, 2023, a notice from the United States District Court, Central District of California was filed in this action indicating,
inter alia
, that [p]ursuant to this Courts ORDER OF REMAND issued on 11/15/2023, the above-referenced case is hereby remanded to your jurisdiction.
Defendants County of Los Angeles (the County) and City of Los Angeles (the City) demurred to the Third Amended Complaint for Damages (TAC). As noted in the Countys request for judicial notice in support of the Countys Demurrer to the TAC, filed on December 20, 2023, the subject TAC was filed in the Federal Action on September 28, 2023. (Countys RJN, ¶ 1, Ex. A.)
[1]
The County demurred to the TACs third cause of action for negligent investigation and failure to render aid, fifth cause of action for negligent hiring, sixth cause of action for violation of California constitutional rights, eighth cause of action for intentional and negligent infliction of emotional distress, ninth cause of action (untitled), and tenth cause of action for constructive fraud-intentional misrepresentation concealment. (
See
May 1, 2024 Order; Countys 12/20/2023 RJN, ¶ 1, Ex. A.) On May 1, 2024, the Court issued an Order sustaining the Countys demurrer to the third, fifth, sixth, eighth, ninth, and tenth causes of action of the TAC as to the County and the Department of the Coroner, with leave to amend.
In addition, the City demurred to the TACs first cause of action for failure to conduct a homicide investigation and wellness check, second cause of action for negligent investigation, third cause of action for negligent investigation and failure to render aid, fifth cause of action for negligent hiring, sixth cause of action for violation of California constitutional rights, eighth cause of action for intentional and negligent infliction of emotional distress, ninth cause of action (untitled), tenth cause of action for constructive fraud-intentional misrepresentation concealment, twelfth cause of action for violation of Californias Unruh Civil Rights Act, thirteenth cause of action for violation of Californias Unruh Civil Rights Act, and fifteenth cause of action for violation of
Government Code section 11135
. (
See
May 1, 2024 Order; Countys 12/20/2023 RJN, ¶ 1, Ex. A.) On May 1, 2024, the Court issued an Order sustaining the Citys demurrer to the first, second, third, fifth, sixth, eighth, ninth, tenth, twelfth, and thirteenth causes of action of the TAC, with leave to amend. The Court overruled the Citys demurrer to the fifteenth cause of action of the TAC.
On May 17, 2024, Carolyn Tracie Love, an individual, and on behalf of Trashawn Alton Tillet (Plaintiff) filed a Fourth Amended Complaint (FAC).
[2]
The FAC alleges causes of action for
[3]
(1) failure to conduct a homicide investigation and wellness check, (2) negligent investigation, (3) negligent investigation and failure to render aid, (5) negligent hiring, (6) violation of California constitutional rights, (7) violation of
42 U.S.C. § 1983, (8)
intentional and negligent infliction of emotional distress, (9) [untitled], (10) constructive fraud intentional misrepresentation concealment, (11) negligent investigation and failure to perform welfare check, (13) violation of Californias Unruh Civil Rights Act, (14) 42. U.
S.C. - 1083
Monell Claim failure to train, and (15) violation of
Government Code § 11135
.
[4]
The County now demurs to the third, fifth, sixth, eighth, ninth, and tenth causes of action of the FAC. In addition, the City now demurs to the first, second, third, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, thirteenth, fourteenth, and fifteenth causes of action of the FAC.
Carolyn Tracie Love (herein, Love) opposes both.
[5]
Allegations of the FAC
In the FAC, Plaintiff alleges,
inter alia
, that on October 20, 2021, Plaintiff arrived at the home of her son, Trashawn Alton Tillet (herein, the Decedent). (FAC, ¶ 1.) Plaintiff alleges that the Decedents eyes were closed and that he did not respond to his name. (FAC, ¶ 8.) Plaintiff alleges the Decedent had contusions on the right-side temple above his ear& (FAC, ¶ 10.) Plaintiff alleges that [m]ultiple bottles of alcohol were everywhere in his living room as if there had been a party, and that Plaintiff believes that the alcohol bottles were staged and planted by a violent perpetrator to district attention from a crime and crime scene. (FAC, ¶¶ 5, 14.) Plaintiff alleges that paramedics arrived at the apartment. (FAC, p. 7:5.) Plaintiff alleges that she never observed either paramedic deploy life saving measures. (FAC, ¶ 48.) Plaintiff further alleges that one paramedic said, sorry he been dead for maybe a few days. (FAC, ¶ 56.) Plaintiff further alleges,
inter alia
, that LAPD officers&never thoroughly investigated&whether [the Decedent] was the victim of a homicide. (FAC, ¶ 185.)
In addition, Plaintiff alleges that there is substantial evidence that the coroner mixed up the findings of a different deceased. (FAC, ¶ 322.) Plaintiff further alleges that [it] appears that [the Decedents] body may have been cremated. Upon information and belief, the coroner gave the funeral possession of the wrong body. (FAC, ¶ 386.)
The Countys Demurrer
A.
Legal Standard
A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are
judicially noticeable
. (
Blank v. Kirwan
(1985) 39 Cal.3d 311, 318
.) To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiffs proof need not be alleged. (
C.A. v. William S. Hart Union High School Dist.
(2012) 53 Cal.4th 861, 872
.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all
material facts properly pleaded
. (
Aubry v. Tri-City Hospital Dist.
(1992) 2 Cal.4th 962, 966-967
.) A demurrer does not admit contentions, deductions or conclusions of fact or law. (
Daar v. Yellow Cab Co.
(1967) 67 Cal.2d 695, 713
.)
B.
Third, Fifth, Sixth, Eighth, Ninth, and Tenth Causes of Action as to Plaintiffs Claims on Behalf of the Decedent
The County asserts that the claims that Plaintiff is asserting (presumably) on behalf of Decedent fail because there are no allegations against the County relating to conduct occurring before Decedents death, and Plaintiff, proceeding in pro se, cannot represent the Decedent. (Demurrer at p. 12:9-12.) As set forth above, the FAC alleges,
inter alia
, that Plaintiff CAROLYN TRACIE LOVE, an individual, and on behalf of TRASHAWN ALTON TILLETT, her deceased son by and her attorney alleges as follows against Defendants Los Angeles County Coroners, Los Angeles City Fire Dept, Los Angeles City Police Dept does 1 to 10. (FAC, p. 1.)
The County cites to
People v. Runyan
(2012) 54 Cal.4th 849, 861-862
, where the California Supreme Court noted that
[n]o civil claim can be asserted, on a decedents personal behalf, for injury or damage to the decedent that occurs, or accrues, after the decedent has died. The governing statutes recognize two, and only two, mutually exclusive types of actions that may be brought, or maintained, in consequence of a persons death. First, a cause of action in favor of a person survives the persons death, and may be commenced, or continued, by the decedents personal representative, or, if none, by the decedents successor in interest. However, the damages recoverable in such an action are limited to the loss or damage that the decedent sustained or incurred
before death
& (Internal quotations and citations omitted.)
The County asserts that
[h]ere, the factual basis of the Countys wrongdoing, as alleged in the Fourth Amended Complaint, relates solely to conduct occurring after Decedents death namely, the purported negligent investigation of Decedents cause of death and the mishandling of his remains& (Demurrer at p. 12:17-20, emphasis omitted, citing FAC, ¶¶ 196-208.)
The County asserts that [b]ecause there are no allegations against the County relating to conduct occurring before Decedents death, no claim accrued as to Decedent against the County before his death and each of the claims asserted on his behalf as to the County are properly dismissed. (Demurrer at p. 12:21-24, emphasis omitted.) Love does not appear to dispute this point in the opposition.
[6]
The County also asserts that Plaintiff, who is not an attorney, cannot represent the interests of Decedents estate proceeding pro se. (Demurrer at p. 13:3-4.) The caption page of the FAC lists Carolyn Tracie Love above Attorneys for CAROLYN TRACIE LOVE, (pro per) Individually. (FAC, p. 2.) However, as discussed, the FAC also alleges,
inter alia
, that Plaintiff CAROLYN TRACIE LOVE, an individual,
and on behalf of TRASHAWN ALTON
TILLETT, her deceased son
by and her attorney alleges as follows against Defendants Los Angeles County Coroners, Los Angeles City Fire Dept, Los Angeles City Police Dept does 1 to 10. (FAC, p. 1, emphasis added.) Love does not appear to dispute that she has not obtained an attorney.
The County cites to
Hansen v. Hansen
(2003) 114 Cal.App.4th 618, 621
, where the Court of Appeal noted that
[a] person who is unlicensed to practice law and who represents a decedents estate cannot appear in propria persona on behalf of the estate in matters outside the probate proceedings.
Since the passage of the State Bar Act in 1927, persons may represent their own interests in legal proceedings, but may not represent the interests of another unless they are active members of the State Bar. (Internal citations omitted.)
Accordingly,
in light of the foregoing, the Court sustains the Countys demurrer to the third, fifth, sixth, eighth, ninth, and tenth causes of action of the FAC, to the extent these causes of action are alleged by Plaintiff on behalf of the Decedent.
C.
Third, Fifth, and Eighth Causes of Action
Next, the County asserts that Plaintiffs third, fifth, and eighth causes of action fail to plead the requisite statutory provision imposing a mandatory duty on the County for liability under
California Government Code § 815.6
. (Demurrer at p. 13:6-8.) Plaintiffs third cause of action is for negligent investigation and failure to render aid, the fifth cause of action is for negligent hiring, and the eighth cause of action is for intentional and negligent infliction of emotional distress.
The County notes that
[a] public entity is not liable for an injury, [e]xcept as otherwise provided by statute. (
Gov. Code, § 815.)&
In
other words, direct tort liability of public entities must be based on a specific statute declaring them to be liable, or at least creating some specific duty of care&
(
Eastburn v. Regional Fire Protection Authority
(2003) 31 Cal.4th 1175, 1183
.) In Plaintiffs third and fifth causes of action, she alleges that Defendants owed her a duty pursuant to
Government Code section 815.6&
(FAC, ¶¶ 398, 401.) In the eighth cause of action, Plaintiff alleges that Defendant Los Angeles Coroners Department owed her a duty pursuant to
Government Code section 815.6&
(FAC, ¶ 419.)
Government Code section 815.6
provides that
[w]here a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty.
The County notes that
[a] plaintiff seeking to hold a public entity liable under
Government Code section 815.6
must specifically identify the statute or regulation alleged to create a mandatory duty.
(
In re Groundwater Cases
(2007) 154 Cal.App.4th 659, 689
.) As noted by the County,
Plaintiffs third, fifth, and eighth causes of action do not appear to identify any specific statute, enactment, or provision that Plaintiff claims imposed a mandatory duty on the County.
In light of the foregoing, the Court sustains the Countys demurrer to the
third, fifth, and eighth causes of action of the FAC.
D.
Sixth Cause of Action
The sixth cause of action of the FAC is for violation of California Constitutional rights.
This cause of action alleges that Defendants actions violated, and continue to violate, Plaintiffs rights under
Article I, Sections 1, 2, 3, 7, 13 and 15 of the California Constitution
. (FAC, ¶ 408.) Plaintiff alleges that Defendants violate[d] her due process right to a governmental investigation, violate[d] her due process right to an unbiased governmental investigation, and violate[d] her equal protection and/or due process right not to be singled out for irrational and/or arbitrary discriminatory treatment. (FAC, ¶ 407.)
The County cites to authority supporting its assertion that
Sections 1, 2, and 7 of Article I of the California Constitution
do not provide for a private right of action for damages. The County cites to
Clausing v. San Francisco Unified School Dist.
(1990) 221 Cal.App.3d 1224, 1237, footnote 6
, where the Court of Appeal noted that
article
I, section 1, of the California Constitution
&states: All people are by nature free and independent and have inalienable rights.
Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy. Clearly, although safety and happiness are inalienable rights, this provision of the Constitution does not establish the means whereby they may be enjoyed. No case has ever held that this provision enunciating the inalienable right to obtain safety and happiness is self-executing in the sense that it gives rise, in and of itself, to a private right of action for damages or an affirmative duty on the part of the state to take particular steps to guarantee the enjoyment of safety or happiness by all citizens.
The County also cites to
Degrassi v. Cook
(2002) 29 Cal.4th 333, 342
, where the California Supreme Court
conclude[d] that there is no indication in the language of
article I, section 2(a)
, nor any evidence in the history of that provision, from which we may find, within that provision, an implied right to seek damages for a violation of the free speech right set out therein.
In addition, the County cites to
Katzberg v. Regents of University of California
(2002) 29 Cal.4th 300, 324
, where the California Supreme Court
conclude[d] that there is no indication in the language of
article I, section 7(a)
, nor any evidence in the history of that section, from which we may find, within that provision, an implied right to seek damages for a violation of the due process liberty interest.
The Court notes that Loves opposition to the Countys demurrer does not appear to address this legal authority.
As to
Article I, Sections 3, 13 and 15
, the County asserts that
[n]one of these provisions of the California Constitution provide Plaintiff a due process right to a governmental investigation by the Countys DMEC as to the cause of Decedents death. (Demurrer at p. 15:17-19.) Indeed, as noted by the County,
Section 3
concerns [a]ssembly, petition, open meetings,
Section 13
concerns search and seizure, and
Section 15
concerns safeguards in criminal prosecutions.
(
Cal. Const., art. I, § 3
;
Cal. Const., art. I, § 13
;
Cal. Const., art. I, § 15
.) Thus, the Court does not see how these provisions are relevant to Plaintiffs claims in the FAC.
The County also asserts that
[n]or has Plaintiff alleged any facts to support her allegation that she was singled out for irrational and/or arbitrary discriminatory treatment by the County. (Demurrer at p. 15:19-21;
see
FAC, ¶ 407.) Loves opposition to the Countys demurrer does not appear to address this point.
In light of the foregoing, the Court sustains the Countys demurrer to the sixth cause of action of the FAC.
E.
Ninth Cause of Action
As noted by the County, the ninth cause of action of the FAC is untitled, but alleges that Plaintiff, as DECEDENTS successor in interest, seek [sic] all damages accruing to DECEDENT in a survival action, pursuant to
Code of Civil Procedure section 377.34
. (FAC, ¶ 425.) The County asserts that
there are no recoverable damages on behalf of Decedent against the County given that he was already deceased when the Countys DMEC responded
. (Demurrer at p. 17:15-17.)
As noted by the County,
Code of Civil Procedure section 377.34, subdivision (a)
provides that
[i]n an action or proceeding by a decedents personal representative or successor in interest on the decedents cause of action, the damages recoverable are limited to the loss or damage that the decedent sustained or incurred before death, including any penalties or punitive or exemplary damages that the decedent would have been entitled to recover had the decedent lived, and do not include damages for pain, suffering, or disfigurement.
In the opposition, Love does not appear to address the Countys assertion that there are no recoverable damages under the ninth cause of action given that the Decedent
was already deceased when the Countys DMEC responded. (Demurrer at p. 17:16-17.)
Based on the foregoing, the Court sustains the Countys demurrer to the ninth cause of action of the FAC.
F.
Tenth Cause of Action
Plaintiffs tenth cause of action is for constructive fraud intentional misrepresentation concealment. In the tenth cause of action, Plaintiff alleges,
inter alia
, that Defendants&intentionally misrepresented the status of decedents medical exam and the location of his remains& (FAC, ¶ 427.) The County asserts that the tenth cause of action fails because
Plaintiff fails to identify any statutory basis for imposing direct liability as to the County for this claim. (Demurrer at p. 17:25-26.) As discussed, pursuant to
Government Code section 815
,
[e]xcept as otherwise provided by statute:
(a)
A public entity is not liable for an injury, whether such injury arises out of an act or omission of the public entity or a public employee or any other person&
Indeed, the tenth cause of action does not allege any statutory basis for imposing liability on the County as to this cause of action.
In light of the foregoing, the Court sustains the Countys demurrer to the tenth cause of action of the FAC.
G.
Claims Against the Department of the Coroner
Lastly, the County asserts that [i]n the Fourth Amended Complaint, it is unclear whether Plaintiff is separately naming the Department of the Coroner as a defendant. (Demurrer at p. 18:23-24.) The Court agrees that this is unclear, as the caption page of the FAC lists,
inter alia
, Los Angeles County, Department of the Coroner.
The County asserts that to the extent the Department of Medical Examiner-Coroner is separately named, it should be dismissed as a duplicative defendant. (Demurrer at p. 19:11-12.) The County cites to
City of Tracy v. Cohen
(2016) 3 Cal.App.5th 852, footnote 1
, where the Court of Appeal noted that
[w]e again adjust the appellate title in one of these appeals, putting the official capacity cart (Successor Agency, etc.) back behind the party name horse (City of Tracy), and deleting the Department of Finance as a party, a redundant defendant.
The Countys counsel also states in his supporting declaration that Plaintiff agreed&that she did not intend to separately name the Department of Coroner as a Defendant. (Bustos Decl., ¶ 5.) This does not appear to be disputed by Love in her opposition to the Countys demurrer.
In light of the foregoing, the Court
sustains the Countys demurrer to
the third, fifth, sixth, eighth, ninth, and tenth causes of action of the FAC against the Department of the Coroner, to the extent these causes of action are alleged against any purported separate entity named Department of the Coroner.
The Citys Demurrer
A.
Legal Standard
A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are
judicially noticeable
. (
Blank v. Kirwan
,
supra
, 39 Cal.3d at p. 318
.) To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiffs proof need not be alleged. (
C.A. v. William S. Hart Union High School Dist.
,
supra
, 53 Cal.4th at p. 872
.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all
material facts properly pleaded
. (
Aubry v.
Tri-City Hospital Dist
.,
supra
, 2 Cal.4th at pp. 966-967
.) A demurrer does not admit contentions, deductions or conclusions of fact or law. (
Daar v. Yellow Cab Co.
,
supra
, 67 Cal.2d at p. 713
.)
B.
First, Second, Third, Fifth, Sixth, Seventh Eighth, Ninth, Tenth, Eleventh, Thirteenth, Fourteenth, and Fifteenth Causes of Action
as to Plaintiffs Claims on Behalf of the Decedent
The City
demurs to the first, second, third, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, thirteenth, fourteenth, and fifteenth causes of action of the FAC. As discussed, the FAC alleges,
inter alia
, that Plaintiff CAROLYN TRACIE LOVE, an individual,
and on behalf of TRASHAWN ALTON TILLETT, her deceased son
by and her attorney alleges as follows against Defendants Los Angeles County Coroners, Los Angeles City Fire Dept, Los Angeles City Police Dept does 1 to 10. (FAC, p. 1, emphasis added.)
The City argues that Plaintiff cannot assert any causes of action or seek any damages on behalf of the Decedent, as Plaintiffs alleged status as a trustee does not alter the fact that Plaintiff is prohibited from bringing these claims as a
pro per
. (Demurrer at p. 9:18-19.) As discussed,
[a] person who is unlicensed to practice law and who represents a decedents estate cannot appear in propria persona on behalf of the estate in matters outside the probate proceedings.
Since the passage of the State Bar Act in 1927, persons may represent their own interests in legal proceedings, but may not represent the interests of another unless they are active members of the State Bar. (
Hansen v.
Hansen
,
supra
, 114 Cal.App.4th at p. 621
[internal citations omitted]
.)
In light of the foregoing, the Court sustains the Citys demurrer to first, second, third, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, thirteenth, fourteenth, and fifteenth causes of action of the FAC, to the extent these causes of action are alleged by Plaintiff on behalf of the Decedent.
C.
Federal Causes of Action
Next, the City asserts that the federal causes of action are barred by res judicata& (Demurrer at p. 10:8-9.) It appears the federal causes of action the City is referring to are the seventh and fourteenth causes of action of the FAC, as the City asserts that [i]n meet and confer communications with Plaintiff, it was informed that the Seventh and Fourteenth causes of action were being withdrawn. (Demurer at p. 10:24-25.) The seventh cause of action of the FAC is for violation of
42 U.S.C. § 1983
. The fourteenth cause of action is for
42 U.S.C
. 1983 Monell Claim Failure to Train.
The City cites to
Mycogen Corp. v. Monsanto Co.
(2002) 28 Cal.4th 888, 896
, where the California Supreme Court notes that
Res judicata describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. The
Mycogen
Court noted that
[a] clear and predictable res judicata doctrine promotes judicial economy. Under this doctrine, all claims based on the same cause of action must be decided in a single suit; if not brought initially, they may not be raised at a later date. Res judicata precludes piecemeal litigation by splitting a single cause of action or relitigation of the same cause of action on a different legal theory or for different relief. (
Id.
at p. 897 [internal quotations omitted]
.)
As set forth above,
the November 15, 2023 Order in the subject Federal Action provides,
inter alia
, as follows:
After Defendants moved to dismiss her Second Amended Complaint (SAC), Plaintiff, now proceeding pro se, filed an untimely Third Amended Complaint (TAC) nearly two weeks after her opposition deadline had passed. Dkt. No.
65
. The TAC significantly expands on her earlier pleadings, spanning 68 pages and alleging 24 causes of action&including 13 federal claims.
Id
.
The Court allowed the filing of the TAC and denied as moot the motions to dismiss the SAC. Dkt. No. 67. The City and County now move to dismiss Plaintiffs TAC for failure to state a claim. Dkt. Nos.
70
,
71
. The Court finds this matter suitable for decision without oral argument and vacates the December 1, 2023 motion hearing.
Fed. R. Civ. P.
78
; L.R.
7-15
. Because Plaintiff has not alleged any plausible federal claims, the Court dismisses her federal causes of action and remands the remaining claims to state court. (November 15, 2023 Order, p. 2.)
As also discussed, the November 15, 2023 Order in the Federal Action concludes that [a]ccordingly, the Court GRANTS IN PART Defendants motions to dismiss, and Plaintiffs federal claims in Counts 7, 11, 14, and 16-25 are DISMISSED on the merits with prejudice... (November 15, 2023 Order, p. 8.) The Court notes that Plaintiffs TAC contained,
inter alia
, a seventh cause of action for violation of
42 U.S.C. § 1983, and a
fourteenth cause of action for
42 U.S.C
. 1983 Monell Claim Failure to Train. (Countys 12/20/23 Request for Judicial Notice, ¶ 1, Ex. A.) In the opposition, Love does not appear to dispute that the seventh and fourteenth causes of action in her FAC are barred.
The Citys counsel also indicates in her supporting declaration that Plaintiff represented that she would be withdrawing/removing federal causes of action and identified the Seventh&and Fourteenth causes of action. (Hunter Decl., ¶ 5.) This does not appear to be disputed by Love in her opposition.
Based on the foregoing, the Court sustains the Citys demurrer to the seventh and fourteenth causes of action of the FAC.
D.
Second, Third, Fifth, and Eighth Causes of Action
Next, the City asserts that the FAC does not allege any statutory authority on which to bring any state law claims against the City, any of its departments or any of its employees. (Demurrer at p. 12:4-5.) As discussed,
[a] public entity is not liable for an injury, [e]xcept as otherwise provided by statute. (
Gov. Code, § 815.)&
In
other words, direct tort liability of public entities must be based on a specific statute declaring them to be liable, or at least creating some specific duty of care&
(
Eastburn v.
Regional Fire Protection Authority
,
supra
, 31 Cal.4th at p. 1183
.)
Plaintiffs second cause of action for negligent investigation, third cause of action for negligent investigation and failure to render aid, and fifth cause of action for negligent hiring allege that Plaintiff&contends that Defendants owed her a duty pursuant to
Government Code section 815.6&
(FAC, ¶¶ 392, 398, 401.) In addition, Plaintiffs eighth cause of action for intentional and negligent infliction of emotional distress alleges that Plaintiff contends that the Defendant Los Angeles Coroners Department owed her a duty pursuant to
Government Code section 815.6&
(FAC, ¶ 419.) As set forth above,
[a] plaintiff seeking to hold a public entity liable under
Government Code section 815.6
must specifically identify the statute or regulation alleged to create a mandatory duty.
(
In re
Groundwater Cases
,
supra
, 154 Cal.App.4th at p. 689
.) Plaintiffs second, third, fifth, and eighth causes of action do not appear to
identify any specific statute or regulation purportedly imposing a mandatory duty on the City.
Based on the foregoing, the Court sustains the Citys demurrer to the second, third, fifth, and eighth causes of action of the FAC.
E.
First and Eleventh Causes of Action
The City also appears to assert that certain causes of action, including the first and eleventh causes of action of the FAC, fail because there is no right to police services, a police investigation or a particular type of investigation under
Section 845
, and because
Section 820.2&affords
immunity for the discretionary manner in which an investigation is conducted. (Demurrer at p. 11:21-23.)
Government Code section
845
provides in part that
[n]either a public entity nor a public employee is liable for failure to establish a police department or otherwise to provide police protection service or, if police protection service is provided, for failure to provide sufficient police protection service.
Government Code section 820.2
provides that
[e]xcept as otherwise provided by statute, a public employee is not liable for an injury resulting from his act or omission where the act or omission was the result of the exercise of the discretion vested in him, whether or not such discretion be abused.
Plaintiffs first cause of action for failure to conduct a homicide investigation and wellness check alleges that Defendants owed her a duty pursuant to
Government Code section 815.6
, and that Defendant breached that duty. (FAC, ¶¶ 388-389.)
[7]
Plaintiffs eleventh cause of action is for negligent investigation and failure to perform welfare check. In this cause of action, Plaintiff alleges that [o]n October 21, 2021, Defendant LAPD breached the mandated duty to perform a competent and thorough welfare check and investigation of the circumstances surroundings Trashawan[s] death. (FAC, ¶ 436.) Plaintiff further alleges that Trashawn was left to die without medical treatment from the defendant during a time of crisis. (FAC, ¶ 438.)
In the opposition, Love does not appear to dispute that her first and eleventh causes of action are barred by
Government Code section 845
or Government Code section 820.2
.
Based on the foregoing, the Court sustains the Citys demurrer to the first and eleventh causes of action of the FAC.
[8]
F.
Sixth Cause of Action
As set forth above, Plaintiffs sixth cause of action alleges that Defendants actions violated, and continue to violate, Plaintiffs rights under
Article I, Sections 1, 2, 3, 7, 13 and 15 of the California Constitution
. (FAC, ¶ 408.) Plaintiff alleges that Defendants violate[d] her due process right to a governmental investigation, violate[d] her due process right to an unbiased governmental investigation, and violate[d] her equal protection and/or due process right not to be singled out for irrational and/or arbitrary discriminatory treatment. (FAC, ¶ 407)
Article I, Section 1 of the California Constitution
provides that
[a]ll people are by nature free and independent and have inalienable rights. Among these are enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursuing and obtaining safety, happiness, and privacy.
(
Cal. Const., art. I § 1
.) The City asserts that
Plaintiff has not pled sufficient facts to support her claim for violation of her state constitutional right to privacy. (Demurrer at p. 16:8-9.) Love does not appear to specifically address this point in her opposition to the Citys demurrer.
The City also cites to
Julian v. Mission Community Hospital
(2017) 11 Cal.App.5th 360, 391
, where the Court of Appeal found that
[t]here is no cause of action for damages for alleged violations of
California Constitution, article I, section 2, subdivision (a)
(freedom of speech),
article I, section 3, subdivision (a)
(right to petition the government)&or
article I, section 7, subdivision (a)
(due process and equal protection), when such an action is not tied to an established common law or statutory action, and
Julian
alleges no such cause of action.
Here, Loves opposition to the Citys demurrer does not appear to demonstrate how she may allege a cause of action for damages for a violation of
Article I, Sections 2, 3
, or 7 of the California Constitution.
As to
Article I, Sections 13 and 15 of the California Constitution
, the City asserts that these sections are not applicable to the facts of this case. Indeed, as discussed,
Section 13
concerns search and seizure, and
Section 15
concerns safeguards in criminal prosecutions.
(
Cal. Const., art. I, § 13
;
Cal. Const., art. I, § 15
.)
In light of the foregoing, the Court sustains the Citys demurrer to the sixth cause of action of the FAC.
G.
Ninth Cause of Action
As discussed, the ninth cause of action of the FAC is untitled, but alleges that Plaintiff, as DECEDENTS successor in interest, seek [sic] all damages accruing to DECEDENT in a survival action, pursuant to
Code of Civil Procedure section 377.34
. (FAC, ¶ 425.)
In the demurrer, the City asserts that
Plaintiffs Ninth claim for damages fails as a matter of law, as it is essentially a survival action, which is a claim personal to Tillet and not to Plaintiff. Plaintiff, who is pro per, cannot bring any claims on behalf of Tillet, and there is no legally cognizable right to bring this claim. (Demurrer at p. iii:3-6.)
As discussed, the caption page of the FAC states Carolyn Tracie Love above
Attorneys for CAROLYN TRACIE LOVE, (pro per). (FAC, p. 1.)
Plaintiff does not appear to state that she obtained counsel.
As set forth above, [a
] person who is unlicensed to practice law and who represents a decedents estate cannot appear in propria persona on behalf of the estate in matters outside the probate proceedings.
Since the passage of the State Bar Act in 1927, persons may represent their own interests in legal proceedings, but may not represent the interests of another unless they are active members of the State Bar. (
Hansen v.
Hansen
,
supra
, 114 Cal.App.4th at p. 621
[internal citations omitted]
.)
In light of the foregoing, the Court sustains the Citys demurrer to the ninth cause of action of the FAC.
H.
Tenth Cause of Action
Plaintiffs tenth cause of action is for constructive fraud intentional misrepresentation concealment. In the tenth cause of action, Plaintiff alleges,
inter alia
, that Defendants&intentionally misrepresented the status of decedents medical exam and the location of his remains& (FAC, ¶ 427.) Plaintiff further alleges that
Defendants&knowingly failed to disclose to Plaintiff important fact(s) known to them about DECEDENT to with the [sic] fact that DECEDENTS records were misidentified with those of Lance Edward Williams& (FAC, ¶ 428.)
In the demurrer, the City asserts that the tenth cause of action
appears to be directed to conduct allegedly committed by the County defendants. (Demurrer at p. 17:26.) The City asserts that [t]here are no factual allegations as to anything that the City, its departments or its employees did or did not do. As such, this claim is uncertain and fails as to the City defendants. (Demurrer at pp. 17:27-18:2.) Love does not appear to respond to or dispute this point in the opposition. Indeed, the tenth cause of action does not appear to reference the City specifically.
In light of the foregoing, the Court sustains the Citys demurrer to the tenth cause of action of the FAC.
I.
Thirteenth Cause of Action
The City also asserts that Plaintiffs Unruh Civil Rights Act cause of action fails as a matter of law. (Demurrer at p. 14:20.)
Plaintiffs thirteenth cause of action for violation of Californias Unruh Civil Rights Act alleges,
inter alia
, that
Trashawn is a gay black man with HIV which constitutes a disability that limits a major life activity. (FAC, ¶ 444.) Plaintiff alleges that Defendants conduct violated the Unruh Civil Rights Act by denying (or aiding or inciting the denial of) Trashawns rights to full and equal use of the accommodations, advantages, facilities, privileges, or services Defendants [sic] offers to patients by denying Trashawn adequate care based on his disability. (FAC, ¶ 445.)
In the demurrer, the City asserts,
inter alia
, that [t]he allegations in this claim also are conclusory at best, which does not satisfy the specific pleading standard as to public entities and public employees. (Demurrer at p. 14:23-25.)
Indeed, Plaintiff does not appear to specify in the thirteenth cause of action how the City allegedly
[denied] Trashawn adequate care based on his disability. (FAC, ¶ 445.) In
Gates v. Superior Court
(1995) 32 Cal.App.4th 481, 493-494
, cited by the City, the Court of Appeal noted that
because under the Tort Claims Act all governmental tort liability is based on statute, the general rule that statutory causes of action must be pleaded with particularity is applicable. Thus, to state a cause of action against a public entity, every fact material to the existence of its statutory liability must be pleaded with particularity. (
Internal quotations omitted
.) Love does not appear to respond to this point in the opposition.
In light of the foregoing, the Court sustains the Citys demurrer to the thirteenth cause of action of the FAC.
J.
Fifteenth Cause of Action
Plaintiffs fifteenth cause of action is for violation of
Government Code section 11135
.
Government Code section
11135, subdivision (a)
provides that
[n]o person in the State of California shall, on the basis of sex, race, color, religion, ancestry, national origin, ethnic group identification, age, mental disability, physical disability, medical condition, genetic information, marital status, or sexual orientation, be unlawfully denied full and equal access to the benefits of, or be unlawfully subjected to discrimination under, any program or activity that is conducted, operated, or administered by the state or by any state agency, is funded directly by the state, or receives any financial assistance from the state. Notwithstanding
Section 11000
, this section applies to the California State University.
In the FAC, Plaintiff alleges that
Defendants conduct denied Trashawn full and equal access to the services, programs, and activities offered by Defendant to patients at Defendants [sic] in violation of
Cal. Govt Code Section 11135
. (FAC, ¶ 456.) Plaintiff further alleges that Defendants conduct also denied Carolyn, who is associated with Trashawn under the meaning of the statute by virtue of the fact that she is the mother of Trashawn, a qualified individual with a disability within the meaning of
Section 11135(c)(1)
, full and equal access to the services, programs, and activities offered by Defendant in violation of
Section 11135
. (FAC, ¶ 457.)
In the demurrer,
the City notes that
[t]his claim contains no factual allegations as to which state funded programs and services Plaintiff was denied access or how she was denied access by virtue of Defendant Citys alleged conduct in this incident.
(Demurrer at p. 18:11-13.) Loves does not appear to respond to or dispute this point in the opposition.
The City also notes that
Government Code section 11135
is contained within Chapter 1 concerning State Agencies. The City asserts that
Section 11135
accordingly does not pertain to the City. Love also does not appear to respond to this point in the opposition.
Based on the foregoing, the Court sustains the Citys demurrer to the fifteenth cause of action of the FAC.
Conclusion
Based on the foregoing, the Court
sustains the Countys demurrer to the third, fifth, sixth, eighth, ninth, and tenth causes of action of the FAC as to the County and the Department of the Coroner, without leave to amend. As discussed, the Court sustained the Countys previous demurrer to the TAC in its entirety. (
See
May 1, 2024 Order.)
In addition, Love has not
proffered any basis for any amendment to
cure
the foregoing deficiencies. Accordingly, the Court finds that it is appropriate to sustain the Countys instant demurrer without leave to amend.¿
In addition, based on the foregoing, the Court sustains the Citys demurrer to the first, second, third, fifth, sixth, seventh, eighth, ninth, tenth, eleventh, thirteenth, fourteenth, and fifteenth causes of action of the FAC. As discussed, the Court sustained the Citys previous demurrer to the TAC, except for the Citys demurrer to the fifteenth cause of action of the TAC. (
See
May 1, 2024 Order.)
In addition, Love has not
proffered any basis for any amendment to
cure
the foregoing deficiencies. Accordingly, the Court finds that it is appropriate to sustain the Citys instant demurrer without leave to amend.¿
In light of the foregoing, t
he Court orders the City to file and serve a proposed judgment of dismissal within 30 days of the date of this order. (¿
Donald
v. Cafe Royale, Inc
. (1990) 218 Cal.App.3d 168, 186
[An order sustaining a demurrer without leave to amend is not a final judgment; a judgment of dismissal follows such an order as a matter of course.]¿.)¿¿
As to the County, the Court notes that the seventh cause of action of the FAC is alleged against all Defendants. However, the County did not demur to this cause of action. In his supporting declaration, the Countys counsel states that
[d]uring the meet and confer, Plaintiff agreed to the dismissal of the Seventh Cause of Action& (Bustos Decl., ¶ 5.) However, it does not appear that any request for dismissal has been filed as to the seventh cause of action of the FAC. The Court also notes that the first, thirteenth, and fifteenth causes of action of the FAC do not appear to specify which defendant(s) such causes of action are alleged against. The County does not demur to these causes of action, and the Countys demurrer does not appear to discuss them.
In light of the foregoing, the Court orders the County to
file and serve its answer to the FAC within 10 days of the date of this Order.¿¿
The City is ordered to give notice of this Order.
DATED:
July 12, 2024
________________________________
Hon. Teresa A. Beaudet
Judge, Los Angeles Superior Court
[1]
On May 1, 2024, the Court issued an Order pertaining to the Countys and the Citys respective demurrers to the TAC. The Courts May 1, 2024 Order provides,
inter alia
, that the Court grants the Countys request for judicial notice filed in support of the Countys demurrer.
[2]
The Court notes that on June 20, 2024, a Fifth Amended Complaint was submitted in this action. The Fifth Amended Complaint was electronically received on such date but was not filed. The docket for this action does not show that Plaintiff was authorized to file any Fifth Amended Complaint.
[3]
The FAC does not appear to allege any fourth or twelfth causes of action.
[4]
The Court notes that the first, thirteenth, and fifteenth causes of action do not appear to specify which defendant(s) such causes of action are alleged against. The second cause of action is alleged against LAPD. The third cause of action is alleged against the Los Angeles Police Department, Los Angeles Fire Department, County of Los Angeles, Department of Coroner. The fifth cause of action is alleged against County of Los Angeles, Department of Coroner, City of Los Angeles Police Department, Los Angeles Fire Department. The sixth, seventh, eighth, ninth, and tenth causes of action are alleged against All Defendants. The eleventh cause of action is alleged against Police Department. The fourteenth cause of action is alleged against Los Angeles City Police Department, Los Angeles Fire Department, Los Angeles Fire department EMT.
[5]
In the opposition, Love states that she is proceeding solely as Carolyn Love, an individual. (Oppn at p. 2:8.)
[6]
The Court also notes that Loves opposition asserts,
inter alia
, that Plaintiffs Fifth Amended Complaint contains detailed factual allegations that, if proven true, constitute valid causes of action against Defendants. (Oppn at p. 23:12-13.) However, as discussed, the Fourth Amended Complaint is the operative pleading in this case. Plaintiffs Fifth Amended Complaint was not filed, and the Court did not authorize Plaintiff to file a Fifth Amended Complaint.
[7]
As discussed,
Government Code section 815.6
provides that
[w]here a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty.
Plaintiffs first cause of action also does not appear to
identify any specific statute or regulation purportedly imposing a mandatory duty on the City.
[8]
The City also asserts that [t]he Eleventh claim is an added claim which also violates the Courts previous order not to add any additional claims. (Demurrer at p. 11:25-26.) Indeed, the TAC does not appear to specifically allege a cause of action for negligent investigation and failure to perform welfare check. (Countys 12/20/23 RJN, ¶ 1, Ex. A.) The Court notes that
[f]ollowing an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the courts order.¿The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the
scope of the
order granting leave to amend. (
Harris v. Wachovia Mortgage, FSB
(2010) 185 Cal.App.4th 1018, 1023,
[internal citation omitted].) The Courts May 1, 2024 Order did not authorize Plaintiff to allege an additional cause of action for
negligent investigation and failure to perform welfare check. The Court finds that this is an additional ground to sustain the Citys demurrer to the eleventh cause of action of the FAC.
Ruling
HERIBERTO AGUILAR, ET AL. VS FORD MOTOR COMPANY, ET AL.
Jul 16, 2024 |
24PSCV01414
Case Number:
24PSCV01414
Hearing Date:
July 16, 2024
Dept:
6
CASE NAME:
Heriberto Aguilar, et al. v. Ford Motor Company, et al.
Defendants Ford Motor Company and WC Performance Fords Demurrer to the Complaint
TENTATIVE RULING
The Court OVERRULES the demurrer to the Fifth Cause of Action and SUSTAINS the demurrer to the Sixth Cause of Action with 20 days leave to amend.
Defendants are ordered to give notice of the Courts ruling within five calendar days of this order.
BACKGROUND
This is a lemon law case. On May 2, 2024, plaintiffs Heriberto Aguilar and Jennifer Aguilar (collectively, Plaintiffs) filed this action against defendants Ford Motor Company (Ford) and WC Performance Ford (erroneously sued as Performance Ford) (Performance) (collectively, Defendants) and Does 1 through 10, alleging causes of action for violation of subdivision (d) of Civil Code section 1793.2, violation of subdivision (b) of Civil Code section 1793.2, violation of subdivision (a)(3), breach of the implied warranty of merchantability, fraudulent inducement concealment, and negligent repair.
On June 6, 2024, Defendants demurred to the complaint. On July 1, 2024, Plaintiffs opposed the demurrer. On July 9, 2024, Defendants replied.
LEGAL STANDARD Demurrer
A demurrer is a pleading used to test the legal sufficiency of other pleadings. It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer or cross-complaint). (
Code Civ. Proc.,
§ 422.10; see
Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994.) It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of ruling on the demurrer, all facts pleaded in the complaint are assumed to be true. (
Id.
)
A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (
Blank v. Kirwan
(1985) 39 Cal.3d 311, 318;
Donabedian
,
supra
, 116 Cal.App.4th at p. 994.) No other extrinsic evidence can be considered. (
Ion Equip. Corp. v. Nelson
(1980) 110 Cal.App.3d 868, 881 [error for court to consider facts asserted in memorandum supporting demurrer]; see also
Afuso
v. United States Fid. & Guar. Co.
(1985) 169 Cal.App.3d 859, 862, disapproved on other grounds in
Moradi-Shalal v. Firemans Fund Ins. Cos
. (1988) 46 Cal.3d 287 [error to consider contents of release not part of court record].)
A demurrer can be utilized where the face of the complaint itself is incomplete or discloses some defense that would bar recovery. (
Guardian North Bay, Inc. v. Superior Court
(2001) 94 Cal.App.4th 963, 971-972.) The face of the complaint includes material contained in attached exhibits that are incorporated by reference into the
complaint,
or in a superseded complaint in the same action. (
Frantz v. Blackwell
(1987) 189 Cal.App.3d 91, 94; see also
Barnett v. Firemans Fund Ins. Co.
(2001) 90 Cal.App.4th 500, 505 [[W]e
rely
on and accept as true the contents of the exhibits and treat as surplusage the pleaders allegations as to the legal effect of the exhibits.])
A demurrer can only be sustained when it disposes of an entire cause of action. (
Poizner v. Fremont General Corp.
(2007) 148 Cal.App.4th 97, 119;
Kong v. City of Hawaiian Gardens
Redev
. Agency
(2003) 108 Cal.App.4th 1028, 1046.)
DISCUSSION
Meet and Confer
Per Code of Civil Procedure section 430.41, subdivision (a), Defendants were required to meet and confer in person, by telephone, or by video conference before bringing this demurrer. (Code Civ. Proc., § 430.41, subd. (a).) The Court finds Defendants meet-and-confer efforts satisfactory. (Liu Decl., ¶ 3.)
Fifth Cause of Action Fraudulent Inducement-Concealment
To plead a cause of action for fraudulent concealment, the plaintiff must allege facts demonstrating, (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact. [Citation.] (
Hambrick v. Healthcare Partners Med. Grp., Inc.
(2015) 238 Cal.App.4th 124, 162.) There are four circumstances in which nondisclosure or concealment may constitute actionable fraud: (1) when the defendant is in a fiduciary relationship with the plaintiff; (2) when the defendant had exclusive knowledge of material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations but also suppresses some material facts. [Citation.] [Citation.] (
LiMandri v. Judkins
(1997) 52 Cal.App.4th 326, 336.)
Defendants demur to the Fifth Cause of Action for fraudulent inducement-concealment on the grounds that the complaint fails to state a cause of action and on the grounds that it is barred by the economic loss rule. Defendants contend Plaintiffs fail to plead the defect that Defendant Ford allegedly concealed. Defendants contend Plaintiffs fail to allege a duty to disclose, such as a direct transactional relationship, Fords exclusive knowledge, active concealment, or that Ford made partial representations while suppressing material facts.
Defendants further contend this cause of action is barred by the economic loss rule. Defendants argue the complaint does not contain any allegations that Ford did not intend to honor its contractual promises when Plaintiffs entered into the warranty agreement, and that Plaintiffs fraud claim is the same as their warranty claims.
In opposition, Plaintiffs contend that the heightened pleading standard for fraud claims is relaxed in cases of fraudulent concealment. Plaintiffs contend they have alleged sufficient facts to comply with
Dhital v. Nissan North America, Inc.
(2022) 84 Cal.App.5th 828 for purposes of a fraudulent concealment claim. Plaintiffs contend a direct transactional relationship is not required for the manufacturer to have a duty to disclose. Plaintiffs also argue that the transmission defect is a material fact, that the transmission defect poses safety risks, and that the transmission defect arose during the warranty period. Plaintiffs further contend that the economic loss rule does not bar a fraudulent concealment claim because the duty of fair dealing is independent of the contract and because the tortious conduct occurs before contract formation.
The Court finds that Plaintiffs have alleged sufficient facts to state a cause of action for fraudulent concealment. First, the heightened pleading standard for fraud claims is relaxed for fraudulent concealment claims. (See
Alfaro v. Community Housing Improvement System Planning Assn.
(2009) 171 Cal.App.4th 1356, 1384.) Either way, the complaint alleges fraudulent concealment with sufficient specificity. The complaint identifies the material defects and facts that Ford allegedly knew and withheld from Plaintiffs before they bought the subject vehicle. (Compl., ¶¶ 72-85.) The complaint alleges facts showing that Ford had superior knowledge of the facts and how such knowledge was obtained, (Compl., ¶¶ 39-50, 72-85); the safety risks posed by the transmission defect, (Compl., ¶¶ 13, 49, 74-78); the materiality of that information, (Compl., ¶ 80); that Plaintiffs were unaware of the concealed defect and that they would not have purchased the subject vehicle had they known of the concealed defect, (Compl., ¶¶ 49, 76, 78, 80); and that Ford intended to defraud Plaintiffs by selling the subject vehicle to Plaintiffs with its known transmission defects without disclosing them to Plaintiffs, resulting in damages to Plaintiffs, (Compl., ¶¶ 79, 84-85).
Second, with respect to a relationship imposing a duty to disclose, the Court finds the complaint adequately alleges the existence of a transactional relationship. (See
LiMandri v. Judkins, supra,
52 Cal.App.4th at p. 336.) The complaint alleges that Plaintiffs and Ford entered into a warranty agreement for the subject vehicle. (Compl., ¶¶ 7-8, Ex. A.) As noted above, the complaint alleges that Ford was aware of the transmission defect before the subject vehicle was sold to Plaintiffs but did not disclose that knowledge to Plaintiffs. (Compl., ¶¶ 49, 76-80.) The Court also finds that
OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp.
(2007) 157 Cal.App.4th 835 stands for the proposition that a manufacturer has a duty to disclose material facts to subsequent purchasers when the manufacturer has reason to expect that the item will be resold, which the Court finds applicable in the context of a manufacturer selling vehicles through a dealership. (See
Id.
, at p. 851.)
Third, the Court finds that the economic loss rule does not bar this cause of action either, as the economic loss rule does not bar intentional misrepresentation claims. (See
Robinson Helicopter Co., Inc. v. Dana Corp.
(2004) 34 Cal.4th 979, 988.) The California Supreme Court in
Robinson Helicopter
stated that part of the reason for reaching this conclusion was that, the duty that gives rise to tort liability is either completely independent of the contract
or arises from conduct which is both intentional and intended to harm
. (
Id.
at p. 990, internal citations omitted.) Here, the economic loss rule does not apply because Plaintiffs have alleged a cause of action for fraudulent concealment, which is an intentional misrepresentation claim. (See
Hambrick, supra,
238 Cal.App.4th at p. 162 [element of intent required].)[1]
The Court notes that Plaintiffs relied extensively on
Dhital v. Nissan North America
(2022) 84 Cal.App.5th 828 in their opposition. The Court declines to rely on
Dhital
given it is currently pending review before the California Supreme Court and is therefore not binding authority. (See
Dhital v. Nissan North America
(2023) 523 P.3d 392; Cal. Rules of Court, rule 8.1115, subd. (e)(1).)
Based on the foregoing, the Court OVERRULES the demurrer to the Fifth Cause of Action.
Sixth Cause of Action Negligent Repair
To state a cause of action for negligence, the plaintiff must allege facts demonstrating the existence of a duty, breach of that duty, causation, and damages. (
Seo v. All-Makes Overhead Doors
(2002) 97 Cal.App.4th 1193, 1202.)
Defendants demur to the Sixth Cause of Action for negligent repair on the grounds that it fails to allege sufficient facts to state a cause of action and is barred by the economic loss rule. Defendants contend the economic loss rule bars this cause of action because it arises from and is not independent of the warranty contract. Defendants contend the complaint does not allege intentional conduct by Performance or any physical damage to property or personal injury, but instead only seeks damages for the cost of the repair to the subject vehicle. Defendants also contend the economic loss rule applies to service contracts. Defendants contend the complaint does not allege facts evidencing damages or that Plaintiffs paid out-of-pocket for any repairs performed by Defendant Performance.
In opposition, Plaintiffs contend the complaint alleges sufficient facts to state a cause of action for negligent repair, such as delivering the subject vehicle to Defendant Performance for repairs, who breached its duty to use the proper skills. Plaintiffs contend whether Plaintiffs paid out-of-pocket for the work is irrelevant and that they do not need to plead facts necessarily in the control of Performance. Plaintiffs further contend the economic loss rule does not bar their negligence claim, contending that, based on federal district court cases in California, the economic loss rule does not apply to negligent repair claims where subcomponents of a vehicle cause damage to a larger component or where the component causes damage to the vehicle in which it was incorporated.
The Court finds the complaint fails to allege sufficient facts to state a cause of action for negligent repair. The complaint alleges in a conclusory manner that Performance owed Plaintiffs a duty of care, that it breached that duty, and that the breach damaged Plaintiffs. (Compl., ¶¶ 87-90.) The complaint does not allege facts showing that Performance owed Plaintiffs a duty of care independent of the warranty agreement. (Compl., ¶ 11; see also
Seo v. All-Makes Overhead Doors
(2002) 97 Cal.App.4th 1193, 1202 [
Any duty of the repairer arises out of its contract with the owner to repair the equipment for a specified fee and no justification exists to extend that contractual duty beyond the intent of the contracting parties. That the repairer has superior knowledge and may recognize the design defect is not sufficient in and of itself to create a duty to third parties.]) The complaint alleges that Performance did not cause the transmission defect. (Compl., ¶¶ 42-48.) The complaint also does not allege facts demonstrating any damages different than that sought under the lemon law statutory violations. (See Compl., ¶¶ 87-90.)
The Court also agrees with Defendants that this cause of action would be barred by the economic loss rule. Not all tort claims for monetary losses between contractual parties are barred by the economic loss rule. But such claims are barred when they arise from or are not independent of the parties underlying contracts. [Citation.] (
Sheen v. Wells Fargo Bank, N.A.
(2022) 12 Cal.5th 905, 923.) As noted above, the complaint does not allege Performance owed Plaintiffs a duty independent of the warranty agreement. (Compl., ¶ 11.) In fact, the complaint expressly alleges that Plaintiffs causes of action are predicated upon those warranty obligations. (
Id.
) Therefore, the complaint fails to state a cause of action for negligent repair.
Based on the foregoing, the Court SUSTAINS the demurrer to the Sixth Cause of Action with leave to amend.
CONCLUSION
The Court OVERRULES the demurrer to the Fifth Cause of Action and SUSTAINS the demurrer to the Sixth Cause of Action with 20 days leave to amend.
Defendants are ordered to give notice of the Courts ruling within five calendar days of this order.
[1]
The Court notes that Plaintiffs negligent repair claim is by definition not an intentional tort, (see
Seo, supra,
97 Cal.App.4th at p. 1202 [absence of intent element]),
and therefore does not fall under the intentional misrepresentation exception set forth in
Robinson Helicopter,
(see 34 Cal.4th at p. 988).
Preview
FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER --------------------------------------------------------------------------X CUBE CAPITAL GROUP LLC, Index No.: 62219/2017 Plaintiff, -against- IVY SPORTS MEDICINE LLC, IVY REALTY XXX III LLC, STRYKER CORP., ROBERT W. PANGIA, DENNIS W. O’DOWD, KLAUS HUG, GERARD CARLOZZI, THOMAS AFZAL, RUSSELL F. WARREN, Defendants. --------------------------------------------------------------------------X MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS PLAINTIFF’S COMPLAINT KAUFMAN DOLOWICH & VOLUCK, LLP Kevin M. Mattessich George F. Meierhofer Rina Bersohn Attorneys for Defendants 40 Exchange Place, 20th Floor New York, New York 10005 (212) 485-9600 kmattessich@kdvlaw.com 1 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Table of Contents Preliminary Statement..................................................................................................................... 7 Overview Of Delaware LLC Law................................................................................................... 9 Factual Background ...................................................................................................................... 10 Argument ...................................................................................................................................... 13 I. This Court Lacks Personal Jurisdiction Over The Claims Alleged In The Complaint ...... 13 II. The Claims Asserted In The Complaint Are Subject To Exclusive Jurisdiction In The Courts Of Delaware............................................................................................................ 15 III. The Complaint Must Be Dismissed As Against The Individual Defendants Because Plaintiff Has Failed To Properly Effectuate Service Of Process, Thereby Depriving The Court Of Personal Jurisdiction Over Them ........................................................................ 16 IV. Plaintiff’s Allegations Are Utterly Refuted By Docmentary Evidence, And As Such, Should Be Dismissed Pursuant To Cplr 3211(A)(1)...................................................... 18 V. Plaintiff’s Claims Nonetheless Fail To State Any Claim Upon Which Relief May Be Granted. .............................................................................................................................. 22 A. Plaintiff Has Not Stated A Claim For Breach Of Contract, As The Entity Defendants’ Actions Were Authorized By The Llc Agreement. .......................................................... 23 B. Plaintiff’s Common Law Claims For Breach Of Fiduciary Duty, Aiding And Abetting Breach Of Fiduciary Duty, Negligence, Fraud, Intentional Interference With Economic Advantage, And Unjust Enrichment Must Be Dismissed................................................. 25 C. Plaintiff’s Fraud Claim Must Be Dismissed On The Separate Ground That It Does Not Comply With The Heightened Pleading Standards Required Under New York Law For Fraud. ................................................................................................................................ 27 D. Plaintiff’s Claim For Intentional Interference With Prospective Economic Advantage Must Be Dismissed On The Separate Ground That Plaintiff Failed To Identify A Business Opportunity With A Third Party........................................................................ 28 Conclusion .................................................................................................................................... 29 1 2 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Table of Authorities Cases 150 Broadway N.Y. Assocs. v. Bodner, 14 AD3d 1, 5 [1st Dep’t 2004] ................................................................................................................... 20 Bank Hapoalim, B.M. v. Kotten Machine Co., 151 AD2d 374, 376 [1st Dep’t 1989] ......................................................................................................... 17 Board of Managers of Beacon Tower Condominium v. 85 Adams St., LLC, 136 AD3d 680, 684 [2d Dep’t 2016])......................................................................................................... 25 Browning v. Data Access Systems, 2011 Del Super LEXIS 611, at *9 [Del. Super. January 31, 2011] ............................................................ 28 Constructamax, Inc. v. Dodge Chamberlin Luzine Weber, Assoc. Architects, LLP, 109 AD3d 574, 575-576 [2d Dep’t 2013]................................................................................................... 18 Daimler AG v. Bauman, 134 S Ct 746, 758 [2014]............................................................................................................................ 14 Daly v. Kochanowicz, 67 AD3d 78, 90 [2d Dep’t 2009] ................................................................................................................ 27 Data Ctrs. LLC v 1743 Holdings LLC, 2015 Del Super LEXIS 561, at *24-25 [Del. Super. October 27, 2015]..................................................... 28 Dee v. Rakower, 112 AD3d 204, 208-209 [2d Dep’t 2013]................................................................................................... 24 Edelstein v Goldstein, 2011 Del Super LEXIS 86, at *23 [Del. Super. March 1, 2011] ................................................................ 25 Entertainment Partners Group v. Davis, 198 AD2d 63, 64 [1st Dep’t 1993] ............................................................................................................. 28 Euell v. Inc. Village of Hempstead, 57 AD3d 837 [2d Dep’t 2008] .................................................................................................................... 22 Facchina v. Malley, 2006 Del. Ch. LEXIS 142, at *9 [Del. Ch. August 1, 2006] ...................................................................... 23 Fisk Ventures LLC v. Segal, 2008 Del. Ch. LEXIS 158, at *29 [Del. Ch. May 7, 2008]......................................................................... 24 Goodyear Dunlop Tire Operations, S.A. v. Brown, 564 US 915, 919 [2011].............................................................................................................................. 14 2 3 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002] ........................................................................................................................... 18 Grunstein v. Silva, 2008 Del. Ch. LEXIS 206, at *17-19 [2008] .............................................................................................. 25 International Shoe Co. v. Washington 326 US 310, 316 [1945].............................................................................................................................. 13 Keeton v. Hustler Magazine, Inc., 465 US 770, 775 [1984].............................................................................................................................. 14 Kuroda v. SPJS Holdings, 971 A2d 872, 886-887 [Del. Ch. 2009] ...................................................................................................... 28 Lama Holding Co. v Smith Barney Inc., 88 NY2d 413, 421 [1996] ........................................................................................................................... 27 Lord v. Souder, 748 A2d 393 [Del. 1999] ............................................................................................................................ 27 Ludmer v. Hasan, 33 A.D.3d 594, 662 [2d Dep’t 2006] .......................................................................................................... 17 M/S Bremen v Zapata Off-Shore Co., 407 US 1, 15 [1972].................................................................................................................................... 16 Moore Bus. Forms v Cordant Holding Corp., 1995 Del. Ch. LEXIS 134, at *19 [Del. Ch. November 2, 1995] ............................................................... 24 Munoz v. Reyes, 40 A.D.3d 1059, 1059 [2d Dep’t 2007] ...................................................................................................... 17 Nat'l Indus. Group (Holding) v Carlyle Inv. Mgmt., 67 A3d 373, 381 [Del. 2013] ...................................................................................................................... 16 Nisari v. Ramjohn, 85 AD3d 987, 989 [2d Dep’t 2011] ............................................................................................................ 18 Simons v Cogan, 549 A2d 300, 304 [Del. 1988] .................................................................................................................... 27 Universal Enter. Group, L.P. v. Duncan Petroleum Corp., 2013 Del. Ch. LEXIS 162, at *52 [Del. Ch. July 1, 2013] ......................................................................... 24 Unocal Corp. v. Mesa Petroleum Co., 493 A2d 946, 955 [Del. 1985] .................................................................................................................... 26 Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 NY3d 470, 475 [2004] ............................................................................................................................. 20 3 4 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Walden v. Fiore, 134 S Ct 1115, 1121 [2014] ........................................................................................................................ 14 Westpac LLC v. JPR Snowmass LLC, 2010 Del. Ch. LEXIS 158, at *26 [2010] ................................................................................................... 25 Wilson v. Poughkeepsie City Sch. Dist., 147 AD3d 1112, 1113 [2d Dep’t February 22, 2017]................................................................................. 18 Wilson v. Poughkeepsie City Sch. Dist., 147 AD3d at 1114....................................................................................................................................... 20 World Energy Ventures LLC v. Northwind Gulf Coast LLC, 2015 Del Super LEXIS 588, at *23 [Del. Super. November 2, 2015]....................................................... 28 4 5 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Statutes CPLR § 3016 (b)......................................................................................................................................... 27 CPLR § 302................................................................................................................................................. 15 CPLR § 308(2)............................................................................................................................................ 17 CPLR § 3211(a)(1) ..................................................................................................................................... 21 CPLR § 3211(a)(1) and (7) ......................................................................................................................... 29 CPLR § 3211(a)(8) ..................................................................................................................................... 16 CPLR §§ 3211(a)(1) ..................................................................................................................................... 6 CPLR §§ 3211(a)(7) ................................................................................................................................... 23 5 6 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Defendants Stryker Corporation, Ivy Sports Medicine LLC, and Ivy Realty XXX III LLC (hereinafter the “Entity Defendants”) and Individual Defendants Robert W. Pangia, Dennis W. O’Dowd, Klaus Hug, Gerard Carlozzi, Thomas Afzal, Russell F. Warren, and Gerard Carlozzi hereby move to dismiss each cause of action in the Complaint filed by Plaintiff Cube Capital Group LLC (hereinafter “Plaintiff”) pursuant to CPLR §§ 3211(a)(1), 3211(a)(7), and 3211(a)(8) on the grounds that: (1) this Court lacks personal jurisdiction over the Entity Defendants pursuant to recent United States Supreme Court case law, (2) the terms of the Ivy Sports Medicine, LLC (“Ivy Sports”) limited liability company agreement (the “LLC Agreement”) make clear that this dispute is subject to exclusive jurisdiction in the courts of Delaware, (3) pursuant to the LLC Agreement, Ivy Sports’s members and affiliates did not owe Plaintiff any fiduciary duty; therefore, each of Plaintiff’s claims premised upon an alleged breach of a fiduciary duty is utterly refuted by documentary evidence, i.e., the LLC Agreement; (4) the LLC Agreement permitted Ivy Sports to complete the transaction without Plaintiff’s approval; (5) neither Stryker Corporation nor Ivy Realty has ever had any relationship with Plaintiff that would give rise to any duties; and (6) Plaintiff otherwise fails to state a cognizable claim upon which relief may be granted under either Delaware or New York law. Individual Defendants Robert W. Pangia, Dennis W. O’Dowd, Klaus Hug, Thomas Afzal, and Russell F. Warren also move to dismiss the Complaint pursuant to CPLR § 3211(a)(8) as a result of Plaintiff’s failure to effectuate service upon them. Individual Defendant Gerald Carlozzi moves for dismissal pursuant to CPLR § 3211(a)(7) on the grounds that his obituary makes it clear that he passed away years before the merger at issue was consummated. 6 7 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 PRELIMINARY STATEMENT On August 31, 2016, Ivy Sports was acquired by and merged into Inspire Merger Sub, Inc., an entity formed by Defendant Stryker Corporation (“Stryker”), a Michigan corporation (the “Merger”), pursuant to an Agreement and Plan of Merger Among Stryker, Inspire Merger Sub, Inc., Ivy Sports and Ivy Realty, as Members’ Representative, dated as of August 23, 2016 (the “Merger Agreement”), a true and complete copy of which is annexed to the Affirmation of Kevin M. Mattessich, dated November 30, 2017 (“Mattessich Aff.”), as Exhibit “A.” Plaintiff was, prior to consummation of the Merger, a member of Defendant Ivy Sports, which is a Delaware limited liability company. Plaintiff was not, and has never been, a member or shareholder of any other Entity Defendant. The operation of Ivy Sports and the rights of its members are governed by the LLC Agreement, a complete and accurate copy of which is annexed to the Mattessich Aff. as Exhibit “B.” Plaintiff filed its Complaint in this matter on August 14, 2017, a true and accurate copy of which is annexed to the Mattessich Aff. as Exhibit “C.” In the Complaint, Plaintiff asserts claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, breach of contract, negligence, fraud, intentional interference with prospective economic advantage, and unjust enrichment, each of which is premised upon near-identical allegations of the existence of a fiduciary duty running from Defendants in favor of Plaintiff. For the reasons discussed herein, each of Plaintiff’s claims fails as a matter of law. Before the Court even addresses the merits of this case, Plaintiff must first establish that the Court can exercise personal jurisdiction over the named Defendants. Ivy Sports is a Delaware limited liability company with its primary offices, prior to the Merger, in New Jersey. Stryker is a Michigan corporation with its primary offices in Michigan. The transaction in 7 8 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 question lacks the necessary “significant contacts” to New York to establish personal jurisdiction because the Entity Defendants are not “at home” here, and the Complaint fails to allege sufficient suit-related conduct. In addition, the LLC Agreement makes clear that any disputes involving the LLC Agreement are subject to exclusive jurisdiction in Delaware. The Court need go no further to dismiss the Complaint. The Complaint also fails to plead a cognizable cause of action. Plaintiff’s primary contention is that he purportedly did not receive “notice” of a proposed business combination involving the Entity Defendants, and as a result, he suffered unspecified damages. Plaintiff’s contentions fail as a matter of law. First, under the LLC Agreement, Defendants expressly owed Plaintiff no fiduciary duty, which limitation is permitted under Delaware law. Second, although the Complaint argues for the existence of an alleged “notice requirement” owed to Plaintiff, this contention is likewise refuted by documentary evidence and controlling law. Consistent with controlling Delaware law, the LLC Agreement did not require the provision of notice, and the transaction could be approved, as here, by obtaining written approval from a requisite portion of the members. Plaintiff further lacks standing to assert any claims against Stryker, which is the surviving entity that acquired Ivy Sports, as Plaintiff was never a shareholder of Stryker and was thus never owed any duties by Stryker’s board of directors. In addition, Plaintiff lacks standing to assert claims against Ivy Realty, as Plaintiff did not have any relationship with this entity that might give rise to any duties owed to Plaintiff by Ivy Realty. Finally, Defendant Carlozzi passed away years before the merger at issue was consummated. Accordingly, the Complaint should be dismissed in its entirety and with prejudice. 8 9 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 OVERVIEW OF DELAWARE LLC LAW Ivy Sports is a Delaware limited liability company, and pursuant to a Delaware choice of law clause in its LLC Agreement, Delaware’s Limited Liability Company (“LLC”) law applies to this dispute. See Mattessich Aff., Exhibit “B,” LLC Agreement, ¶ 15.13 at p. 31. Section 18- 1101(c) of the Delaware Limited Liability Company Act (“Delaware LLC Act”) grants express permission for entities contractually to abrogate duties to members that might otherwise exist at common law, including fiduciary duties. Indeed, the LLC Agreement here expressly eliminates all such fiduciary duties (see Mattessich Aff., Exhibit “B,” LLC Agreement, ¶ 14(c) at p. 29), and as such, all of Plaintiff’s claims relating to an alleged breach of a fiduciary duty are utterly refuted by the LLC Agreement, which governs the relationship between Plaintiff on the one hand, and Ivy Sports and it Members and Affiliates on the other hand, and establishes the scope of the parties’ obligations to one another. Section 18-302(d) of the Delaware LLC Act also provides that members of an LLC may approve an action without a meeting, without prior notice, and without a vote, so long as: (a) the governing LLC agreement does not prohibit this; and (b) such action is consented to in writing by LLC members that have the minimum number of votes necessary to authorize such an action. Section 4.2(c) of the LLC Agreement provides that a merger of the company must be approved by “a majority in interest of the Members.” Section 4.4(g) of the LLC Agreement provides that any action that could be taken at a meeting can also be taken by way of written consent, as was done in connection with the Merger Agreement. Furthermore, the governing LLC Agreement, which Plaintiff signed, specifically abrogated any fiduciary duties that might otherwise be owed by members of Ivy Sports to one another, including any duty to provide notice of such a transaction (see Mattessich Aff., Exhibit “B,” LLC Agreement, ¶ 14(c) at p. 9 10 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 29). As such, Ivy Sports’s actions in obtaining written approval of the merger by a majority of Ivy Sports’s members, without providing prior notice of the transaction to Plaintiff, was in full compliance with both the Delaware LLC Act and the terms of the LLC Agreement. Further, as noted above, Stryker owed no disclosure duty to Plaintiff, as Plaintiff was never a shareholder of Stryker. FACTUAL BACKGROUND Ivy Sports, a Delaware limited liability company, was originally formed in 2011 by Ivy Healthcare Capital II, LLP as a vehicle to purchase out of bankruptcy the assets of ReGen Biologics, Inc. with the intention of creating a sports medicine company with a broad portfolio of products. Compl., ¶¶ 5–8. The LLC Agreement provides for the issuance of the following classes of units: Class A, Class A-1, Class B, and Class C units. See Mattessich Aff., Exhibit “B,” LLC Agreement, ¶ 1 at pp 2-3. Plaintiff alleges that between December 5, 2013 and June 7, 2016, Plaintiff purchased 80,300 units of Ivy Sports (Compl., pg. 8, ¶ 10), and that as of August 16, 2016, Plaintiff held 180,600 Class A and A-1 units. Compl., pg. 8, First Bolded Section Heading. On or about August 23, 2016, Ivy Sports entered into the Merger Agreement with, among others, Stryker, a manufacturer of medical devices and equipment. Ivy Realty served as the representative of the sellers under the Merger Agreement for limited specified purposes following the consummation of the Merger. See Mattessich Aff., Exhibit “A,” p. 25, ¶ 2.10. Contrary to Plaintiff’s allegations, the Merger Agreement indicates that at the time of the merger, Plaintiff held 180,300 Class A units, but no A-1 units or other units.1 See Mattessich Aff., Exhibit “A,” Schedule I: Consideration Schedule. According to the Merger Consideration 1 It appears that Plaintiff’s statement that he held 180,600 units instead of 180,300 units may be a typographical error. 10 11 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 Schedule, the entire Closing Payment was to be allocated to holders of A-1 units. Additional sums were to be allocated first to holders of Class A-1 units, then to those participating in the Management Incentive Plan, and finally to Class A and Class A-1 units to the extent that any additional funds were received. Id. While Plaintiff did not receive any cash proceeds at closing, the Merger Agreement provides for contingent consideration later to be paid to the Sellers, including holders of Class A units such as Plaintiff, and the Management Incentive Plan Recipients upon the achievement of First, Second, Third, and Fourth Sales Milestones. In particular, $20,000,000 is to be paid to these parties before December 31, 2023, upon the achievement of all four of these sales milestones.2 See Mattessich Aff., Exhibit “A,” ¶ 2.1 at pp. 28-29; see also Exhibit “A,” Schedule I: Consideration Schedule. - Plaintiff alleges that the Merger was undertaken at the request of certain unnamed unit holders who sought to enter into a transaction that would trigger their liquidation preference and allow them to divest themselves of their holdings in Ivy Sports. See Compl., ¶ 4. Plaintiff contends that he did not receive timely a “Letter of Transmittal” or have sufficient time in which to consider the letter, the Merger Agreement, or other transaction-related documents or to consult with an attorney or financial advisor regarding them. Compl., ¶ 12. However, irrespective of Plaintiff’s contention, 39,806,207 Ivy Sports units, or eighty-four percent (84%) of the units entitled to vote, consented to the Merger as compared with the approximately 180,000 Ivy Shares units that Plaintiff held. See Affidavit of Russell F. Warren, Jr., ¶ 4, as well as Exhibit “A” to Affidavit of Russell F. Warren, Jr. Plaintiff further contends that the interests of preferred 2 The First Sales Milestone is the time when the cumulative Net Sales of the Products by the Milestone Parties following the Closing Date shall equal or exceed $10,000,000; the Second Sales Milestone is the time when the cumulative Net Sales of the Products by the Milestone Parties following the Closing Date shall equal or exceed $20,000,000; the Third Sales Milestone is the time when the cumulative Net Sales of the Products by the Milestone Parties following the Closing Date shall equal or exceed $30,000,000; the Fourth Sales Milestone is the time when the cumulative Net Sales of the Products by the Milestone Parties following the Closing Date shall equal or exceed $40,000,000. See Mattessich Aff., Exhibit “A,” pp. 7-18, ¶ 1.1. 11 12 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 stockholders and other stockholders were not aligned with regard to the issue of whether to pursue a sale of Ivy Sports or to continue to operate it without pursuing a merger at that time. Compl., ¶ 20. Plaintiff additionally alleges that the Merger triggered a liquidation preference for the individual defendants named in this action while Plaintiff and other unit holders who held Class A units did not receive consideration for the Merger. Compl., ¶ 21, 26. However, as noted above, Plaintiff and other unit holders are eligible for contingent consideration payments. See Mattessich Aff., Exhibit “A,” pp. 28-29, ¶ 2.1. Plaintiff speculatively alleges that unit holders who were similarly situated would have been able to receive consideration for their shares at some point in the future had this particular merger not taken place. Compl., ¶ 25.3 Plaintiff alleges that this inference is supported by its allegations that Ivy Sports’s performance had improved and that it could secure additional capital through debt financing. Compl., ¶ 26. Plaintiff contends that the interests of the Class B and C preferred unit holders, who did not receive any consideration for the Merger, diverged from those of the Class A unit holders with respect to whether or not to pursue the Merger. Compl., ¶ 31. Plaintiff further contends that where the interests of common stockholders diverge from those of preferred stockholders, it is possible that a director could breach his or her duty by improperly favoring the interests of the preferred stockholders over those of the common stockholders. See Compl., ¶ 30 (italics in original). As will be discussed in further detail below, Ivy Sports is a limited liability company and not a corporation, and as such, its managing members owe vastly different duties to its unit holders than do directors of a corporation to a corporation’s shareholders. In fact, under Delaware law and the LLC Agreement, no fiduciary duties were owed to Plaintiff. 3 However, pursuant to the terms of the Merger Agreement, Class A unit holders are entitledto receive some payment as a result of release of funds from the escrow account, milestone payments, return of the member’s representative reserve or the adjusted closing payment. 12 13 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 On or about August 24, 2017, Plaintiff purported to effectuate service of its Complaint upon the Individual Defendants, named in their individual capacities, by serving the Summons and Complaint upon the Corporation Trust Company. See Affidavits of Service, collectively annexed to the Mattessich Aff. as “Exhibit “D.” As established through the affidavits of the Individual Defendants submitted herewith as Exhibits “E” through “I,” the Corporation Trust Company is not a duly appointed registered agent for any of the Individual Defendants, and as a result, Plaintiff’s efforts are wholly insufficient to either effectuate proper service or acquire personal jurisdiction over the Individual Defendants. ARGUMENT I. THIS COURT LACKS PERSONAL JURISDICTION OVER THE CLAIMS ALLEGED IN THE COMPLAINT As noted above, Ivy Sports is a Delaware limited liability company whose primary offices, prior to the Merger, were in New Jersey. Stryker is a Michigan corporation with its primary offices in Michigan. With the exception of Robert Pangia, all of the individual defendants reside outside of the state of New York. The Supreme Court has held that a transaction such as the one at issue in this litigation lacks the necessary “significant contacts” to New York to establish either general or specific personal jurisdiction over the Entity Defendants. In International Shoe Co. v. Washington (326 US 310, 316 [1945]), the Supreme Court held that a state court may exercise jurisdiction over an out-of-state defendant where the defendant has “certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” Subsequent Supreme Court decisions have distinguished between the exercise of general jurisdiction over an out-of- state defendant where the defendant’s contacts with a particular state are so “continuous and systematic” as to render the defendant essentially at home in the forum state, and specific 13 14 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 jurisdiction, which is dependent on a connection between the forum state and the underlying controversy (Goodyear Dunlop Tire Operations, S.A. v Brown, 564 US 915, 919 [2011] (citing von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1144-1163 [1966]). In Goodyear, the Supreme Court noted that since International Shoe, specific jurisdiction “has become the centerpiece of modern jurisdiction theory, while general jurisdiction [has played] a reduced role” (Id. at 755; see also Daimler AG v. Bauman, 134 S Ct 746, 758 [2014]). In Daimler, the Supreme Court clarified that where a corporation is not incorporated in a particular state, its principal place of business is not in that state, and itdoes business in many states, the corporation cannot be deemed to be “at home” in that particular state such that the exercise of general jurisdiction over the corporation would be appropriate. (134 S Ct at 762). An individual is deemed to be “at home” in the state in which he or she is domiciled. (134 S Ct at 760). In order for a court to exercise specific jurisdiction over a non-resident defendant, there must be certain “minimum contacts” between the defendant and the forum state (see International Shoe, 320 US at 316). In particular, the minimum contacts inquiry focuses on the connection between the defendant, the forum state, and the litigation (Walden v. Fiore, 134 S Ct 1115, 1121 [2014], quoting Keeton v. Hustler Magazine, Inc., 465 US 770, 775 [1984] [citations omitted]). The relationship between the three must arise from contacts that the defendant creates with the forum state and not with people who reside in that state (see Walden, 134 S Ct at 1122). A defendant’s relationship with a plaintiff or a third party, without more, is an insufficient basis for the assertion of jurisdiction. (Id. at 1123). Indeed, a plaintiff’s contacts with the forum state and with the defendant should not drive the jurisdictional analysis (Id. at 1124). In the case at bar, Plaintiff does not contend that Defendants engaged in any conduct in New York that is 14 15 of 30 FILED: WESTCHESTER COUNTY CLERK 11/30/2017 07:23 PM INDEX NO. 62219/2017 NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 11/30/2017 related to the instant litigation other than, at most, failing to give notice of the Merger to Plaintiff in New York, as Plaintiff purports to be a New York limited liability company. As such, since the Complaint contains no allegation that any of the Defendants (other than Robert W. Pangia) had any jurisdictionally relevant contacts with New York, Plaintiff has not met the “minimum contacts” test for the assertion of specific jurisdiction over these entities, and the Complaint should be dismissed. Furthermore, Plaintiff Cube Capital Group, LLC does not appear to have any relevant connections to the state of New York. Contrary to Plaintiff’s contention that it is a New York limited liability company (see Compl., p. 3, ¶ 1), Plaintiff is not an entity that is registered to do business in New York. See Mattessich Aff., ¶ 3. CPLR § 302 provides that New York will have jurisdiction over a dispute where a defendant transacts business or commits a tortious act within the state or commits a tortious act outside the state that causes injury within the state. As Plaintiff is not an entity registered with the state of New York, Plaintiff cannot argue that defendants took any actions within the state of New York or engaged in out of state conduct that resulted in an injury in New York. As such, for this additional reason, this court lacks jurisdiction to hear this dispute. II. THE CLAIMS ASSERTED IN THE COMPLAIN