Preview
Port J. Parker, SBN 179256
Jeffrey S. Einsohn, SBN 260150
2 PARKER LAW GROUP
555 Capitol Mall, Suite 1230
3 Sacramento, CA 95814 Fl LED/Ef^OOBSED
4 Telephone: (916) 996-0400 JAN 1 h 2019
Facsimile: (916) 668-5760
5
Attomeys for Dr. James Longoria Bv:. E. Medina
Deputy Clerk
6
7
8 SUPERIOR COURT OF CALIFORNIA
9 IN AND FOR THE COUNTY OF SACRAMENTO
10
CHARLES SOMERS, individually and as Case No. 34-2018-00229212
ll trustee for the CHARLES SOMERS LIVING
TRUST, REPLY IN SUPPORT OF DEMURRER TO
12
o Plaintiff,
THE FIRST AMENDED COMPLAINT
o E 13
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v.
Date: January 22, 2019
u DR. JAMES LONGORIA, an individual, and Time: 9:00 a.m.
s 14 DOES I-IO, Dept. 54
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Defendants.
I 15 Complaint Filed: 3/16/18
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< First Amended Complaint Filed: 10/9/18
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u BY FAX
S 17 I . INTRODUCTION
18 Although Plaintiff Charles Somers ("Plaintiff or "Somers") submitted a half-hearted, two-
19 and-a-half-page opposition, his lack of response to the majority of the arguments advanced in the
20 Demurrer effectively concedes the First Amended Complaint ("FAC") is defective. Plaintiff filed a
21 motion for leave to further amend his complaint along with his opposition, arguing that the new motion
22 for leave "moots" the Demurrer. It does not. For the reasons explained herein, it is imperative that
23 the Court sustain the Demurrer so that the parties do not end up in the exact same place, advancing the
24 exact same arguments, four or five months from now. Defendant is entitled to a ruling on his
25 Demurrer, which should be sustained, to avoid perpetual amendments. Moreover, Plaintiffs proposed
26 new complaint does not even address most of the issues raised in the Demurrer. Defendant Dr. James
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28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
Longoria ("Dr. Longoria") will respond to the motion for leave at the appropriate time, if necessary",
2 but contends that it is actually the Court's ruling on the instant Demurrer which may moot the motion
3 for leave to amend.
4 Plaintiff vaguely alleges Dr. Longoria made several professed promises to him in connection
5 with his investment in a medical device start-up company. Plaintiff further vaguely alleges Dr.
6 Longoria did not supposedly follow through with those professed promises. Rather than just alleging
7 that Dr. Longoria breached an oral agreement, which he now apparently wants to add to his complaint,
8 in attempt to create improper leverage. Plaintiff asserted fraud claims based on "information and
9 belief that Dr. Longoria did not intend to honor his alleged promises. One of the reasons there are
10 specificity pleading requirements for fraud claims is to prevent exactly what is going on in this case—
11 an attempt to contrive or manufacture fraud claims. The Court should grant the instant Demurrer,
5 12 otherwise the parties will be stuck at the pleading challenge stage for another year.
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1 13 I I . THE DEMURRER SHOULD BE RULED ON REGARDLESS OF ANY PENDING
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i 14 MOTION FOR LEAVE TO AMEND
15 Rather than address the deficiencies in its current complaint. Plaintiff wants to kick the can
i 16 down the road by claiming his new motion for leave to file a second amended complaint "moots" the
17 demurrer. Dr. Longoria strongly disagrees.
18 First, a motion to amend does not render an operative complaint moot, it remains operative
19 until and unless Plaintiff meets his burden to be allowed leave to amend. It's not automatic and
20 Plaintiffs tactics seek to deprive Defendant of a ruling on his Demurrer and would result in perpetual
21 amendments. In short, that Plaintiff filed a motion to amend does not render the Demurrer moot, but
22 in fact is a concession it should be sustained.
23 Next, there are many aspects of the FAC that simply cannot be remedied by further amendment
24 without running afoul of the sham pleading doctrine. For instance, as pointed out in the moving papers.
25 Plaintiff alleges that "Somers and Dr. Longoria also agreed that Somers would have the option of
26 buying additional equity or making loans..." (FAC 1123.) Then, Plaintiff alleges "Dr. Longoria thus
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' Dr. Longoria believes that once the Court rules on the Demurrer, Plaintiffis likely to withdraw his motion for leave to
28 allow him further opportunity to amend his complaint to conform to the Court's order.
MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
2
urged Somers to agree to provide any additional money in the form of loans" (FAC 1126) and "Somers
2 agreed to loan LC significant sums of money. Specifically, between January 2016 and September
3 2017, Somers contributed an additional $3,746,317.89 to LC through 19 payments, and has made
4 additional loans since then." (FAC 1(27.)
5 Nevertheless, Plaintiff asserts his Second Cause of Action for "Promissory Fraud" in direct
6 contradiction to those allegations, that Dr. Longoria committed fraud by not letting him purchase more
7 equity. He simply ignores his earlier allegations that, according to his own story, he and Dr. Longoria
8 had agreed to Somers buying additional equity or making loans. The Second Cause of Action, on its
9 face, is not salvageable. Somers could only state a claim by intentionally omitting a prior admission
10 of fact, which would be a sham.
11 Generally speaking, after an amended pleading is filed, the original pleading is superseded
3 12 (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946), and courts will
13 assume the truth of the factual allegations in the amended pleading for purposes of demurrer. (Owens
14 V. Kings Supermarket {\9SS) 198 Cal.App.3d 379, 383). However, under the sham pleading exception
15 to these rules, "admissions in an original complaint ... remain within the court's cognizance and the
16 alteration of such statements by amendment designed to conceal fundamental vulnerabilities in a
17 plaintiffs case will not be accepted." (Lockton v. O'Rourke (2010) 184 Cal.App.4th 1051, 1061.)
18 Where a plaintiff attempts to avoid the destructive allegations in a prior complaint by omitting them
19 without explanation, or by pleading facts inconsistent with such prior allegations, the court may then
20 examine the prior complaint to ascertain whether the amended complaint is merely a sham. {Vallejo
21 Development Co. v. Beck Development Co., supra, at p. 946.)
22 The need for the Court to sustain the demurrer to that cause of action without leave to amend
23 is further evidenced by Plaintiff s proposed second amended complaint. In the proposed pleading.
24 Plaintiff does some wordsmithing and takes out the allegation that Dr. Longoria "changed course,"
25 but he does not even address the issue of the admission in f 23 that they had an agreement that included
26 Somers making a loan, which agreement (by his own admission) was upheld. The Demurrer should
27 be sustained without leave to amend on that Cause of Action now, otherwise Dr. Longoria will be back
28 here raising the exact same argument to the next version of the complaint in several months. That
MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
3
would be a waste of both judicial and Longoria's time and resources.
2 Plaintiff was given the opportunity to amend his complaint following Dr. Longoria's first
3 demurrer. Rather than fix the defects he merely broke up his fraud claim into multiple fraud claims.
4 He did not, however, actually remedy the defects. Defendant is entitled to a ruling on his Demurrer,
5 which based on Plaintiffs concession, should be sustained. To the extent the Court does grant leave
6 to amend, it will be Plaintiffs new motion for leave to amend that will become "moot."
7 Finally, Dr. Longoria requests a ruling on the Demurrer so that there can be no confusion or
8 argument from Plaintiff later if Dr. Longoria has tofilea demurrer to any further amended complaint
9 that C.C.P. §430.41(e)(l) would not bar yet another amendment after that.
10 III. PLAINTIFF ADMITS HE DOES NOT HAVE FRAUD CLAIMS
11 "[T]he distinction between tort aind contract is well grounded in common law, and divergent
12 objectives underlie the remedies created in the two areas. Whereas contract actions are created to
o
o E 13 enforce the intentions of the parties to the agreement, tort law is primarily designed to vindicate "social
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8 14 policy." {Erlich v. Menezes (1999) 21 Cal.4th 543, 550-551, citations omitted.) Importantly, "[a]n
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I 15 omission to perform a contract obligation is never a tort, unless that omission is also an omission of a
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Qi ° 16 legal duty." (Mat p. 557., quoting Jones v. Kelly (1929) 208 Cal. 251, 255.)
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Q_ Here, Plaintiff now argues that his fraud claims (except the Fourth Cause of Action which he
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apparently plans to withdraw) are all also supposed breach of contract claims. The only difference
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between the currently plead fraud claims and his proposed additional breach of contact claims is that
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"on information and belief Dr. Longoria did not intend to honor the alleged oral agreements.
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Plaintiffs sudden shift in strategy reveals his fraud claims are untenable. Indeed, Plaintiffs strategy
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seems to be taking what he now admits are breach of contract claims and appending boilerplate
22
"information and belief allegations to them to manufacture fraud claims (and entitlement to additional
23
damages). However, at the time these promises were allegedly made. Dr. Longoria owed no special
24
duty to Plaintiff For instance, Somers admits, and attempts to clarify, that the alleged promise to
25
convert the company into an LLC was made before Somers became a shareholder. Plaintiff cannot
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have it both ways. Either the promise was made before he invested, before there was any independent
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legal duty to him, or the alleged promise was made later, in which case he did not rely on it in deciding
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MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
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to invest. Case law is clear that Dr. Longoria's alleged breach of an oral contract cannot be transmuted
2 into a fraud claim.
3 As courts have warned for many years extending "tort remedies to commercial contracts create
4 the potential of tuming every breach of contract dispute into a punitive damage claim." (Harris v.
5 Atlantic Richfield Co. (1993) 14 Cal.App.4th 70, 81.) That is exactlv what Plaintiff is trying to do
6 here. That is one reason why fraud has heightened pleading standard—a standard Plaintiff has not
7 met.
8 IV. NONE OF THE FRAUD OR MISREPRESENTATION CLAIMS ARE PROPERLY
9 PLEADED
10 A. Plaintiffs Arguments with Respect to the First Cause of Action (Failure to
Q_ , 11 Convert to an LLC) Are Unpersuasive
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i 12 The only Cause of Action Plaintiff actually discusses in his perfunctory opposition is the First.
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Qi i 13 Plaintiff contends that he can generally plead the alleged misrepresentation occurred because of the
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o 8 14 doctrine of less specificity. Plaintiff cites Committee On Children's Television, Inc. v. General Foods
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Qi IU Corp. (1983) 35 Cal.3d 197,217[superseded on other grounds.] But that is clearly not applicable here.
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:^ ? In that case, the allegations were that fraudulent misrepresentations were made on television
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u commercials and cereal boxes. The plaintiff organization did not have the details of the thousands of
S 17 commercials and physical advertisements. (Id.) Under those circumstances, that court held that the
18 defendant was already in possession of a list of when each commercial aired and plaintiff did not have
19 to set out the dates and times of each such advertisement. Conversely here, the alleged
20 misrepresentation was made directly to the Plaintiff. Nevertheless, Plaintiff has not provided any
21 detail about this alleged misrepresentation. The doctrine of less specificity simply does not apply to
22 any of the arguments raised in the Demurrer.
23 "To sufficiently plead the first requirement [of promissory fraud], that the defendant made a
24 promise, the complaint must state ''facts which "show how, when, where, to whom, and by what means
25 the representations were tendered." '" (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039,1060, citations
26 omitted.) In that case, "Beckwith's complaint alleged that on May 25, 2009, Dahl promised him, via
27 e-mail and a telephone call, she would" do the thing allegedly promised. (Id.) The Court held that
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MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
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sufficient. Here, Somers has not come close to providing that minimal level of specificity.
2 With respect to damages. Plaintiff argues that he does not have to allege why not converting
3 LC to an LLC caused him damage because he would not have invested if he knew that Dr. Longoria
4 allegedly never planned to convert the company to an LLC. It is Plaintiff who unfortunately misses
5 the point. Take for example an alleged promise by a defendant to purchase a power ball lottery ticket
6 for a plaintiff with 5 as the power ball number. If the defendant purchases a lottery ticket with 6 as
7 the power ball number and the winner number is 7, the plaintiff is not entitled to damages unless he
8 can articulate a reason why having a losing ticket with 5 on it created independent value for him. He
9 cannot claim tort damages by merely saying he would not have had the plaintiff buy him a lottery
10 ticket if he knew the plaintiff was going to buy him a ticket with a different number. Somers' argument
, 11 is analogous.
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Here, Dr. Longoria's Demurrer even explained what allegations Plaintiff would have to make
Qi I 13 to state a claim based on not converting to an LLC, but Plaintiff failed to acknowledge that (or even
os u to add those allegations to his proposed SAC.) Plaintiff has not stated a claim because he has not
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provided the requisite specificity and alleged what damages he actually suffered as a result of the
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B. Plaintiff Concedes the Second and Third Causes of Action Are Not Properly
K 17
18 Pleaded by Failing to Address the Arguments Raised in the Demurrer
19 As noted above, Somers does not address the discrepancies in his pleading including, for
20 example, the admission in paragraph 23 that Dr. Longoria promised Somers that he would allow him
21 to purchase additional equity or make a loan, or that allowing Somers to purchase unlimited equity
22 would negate the other agreement that he clearly pleaded—that they would be 50/50 partners. He has
23 also failed to address the fact that he has not suffered or adequately alleged damage as a result of
24 making a loan rather than purchasing equity. In fact, he is likely better off because debt is repaid before
25 equity and there is a possibility LC's patent portfolio can be sold to generate a recovery for the
26 corporation.
27 ///
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MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
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Likewise, Somers does not address the defects in his Third Cause of Action raised in the
Demurrer, such as reliance on Dr. Longoria to unilaterally put him on the board of directors when
Somers could have initiated that himself.
C. Plaintiff Admits There is No Merit to the Fourth Cause of Action (False Promise
to Work to Make the Company a Success)
Not only has Plaintiff failed to address the Fourth Cause of Action, but he is now seeking leave
to amend his complaint to withdraw it.
D. Plaintiff Failed to Address the Fifth Cause of Action for Negligent
Misrepresentation
As set forth in the Demurrer, negligent misrepresentation is a form of fraud, and as such, must
be pleaded with the same particularity as a cause of action for fraud. (Continental Airlines, Inc. v.
o 6 12 McDonnell Douglas Corp. (1989) 216 Cal.App.3d 388, 403^04.) Plaintiff did not amend this cause
Qi E 13 of action when the Court sustained the last demurrer. Instead, he merely relies on his other fraud
o e
u claims. Because those causes of action continue to fail to state a claim, so does the negligent
< i 14
I I 15 misrepresentation cause of action. Demurrer to this cause of action must be sustained again as well.
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Qi s 16 V. CONCLUSION
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Q_ Plaintiff had an opportunity after the Court sustained the last demurrer to the fraud claims to
S 17
reconsider his approach and try to plead sufficient allegations to meet the fraud pleading standard. He
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was on notice. Plaintiff chose instead to just break his fraud claim into four parts but not actually add
19
the substance required by the Court's ruling. Dr. Longoria met and conferred, and while he remained
20
steadfast the claims made against him lacked merit, he nonetheless offered Plaintiff the opportunity to
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amend his complaint. Once again, after considerable delay, Plaintiff did not do so. Dr. Longoria has
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a right to have his Demurrer sustained, irrespective of Plaintiffs desire to now file yet another
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amended complaint. This is extremely important since the purported proposed complaint still does not
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address the issues raised in Dr. Longoria's first, and now second, demurrer. If the Court does not rule
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on this Demurrer now, Dr. Longoria will likely have to bring yet another pleading challenge. Plaintiff
26
seeks to further delay this action and the application of C.C.P. §430.41(e)(1), which would bar yet
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another amendment after that. Therefore, Dr. Longoria respectfully asks the Court to sustain the instant
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MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
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Demurrer now, and to the extent the Court believes leave for further amendment should be granted, if
2 at all, allow Plaintiff to do so on those claims.
3
4 DATED: January 14, 2019
5
6
PORTM. BARKER
7 JEFFREyS. EINSOHN
Attorneys for DR. JAMES LONGORIA
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MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC
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COURT: Superior Court of California, County of Sacramento
2 CASENO.: 34-2018-00229212
CASE NAME .Somers v. Longoria
3
PROOF OF SERVICE
4
5 I am a citizen of the United States, employed in the County of Sacramento. My business
address is 555 Capitol Mall, Suite 1230; Sacramento, California 95814. 1 am over the age of 18 years
6 and not a party to the above-entitled action.
7 I am familiar with PARKER LAW GROUP'S practice whereby each document is placed in
an envelope, the envelope is sealed, the appropriate postage is placed thereon and the sealed envelope
8 is placed in the office mail receptacle. Each day's mail is collected and deposited in a U.S. mailbox
9 at or before the close of each day's business.
10 On the date indicated below, 1 served the within:
11 REPLY IN SUPPORT OF DEMURRER TO THE FIRST AMENDED COMPLAINT
12
OVERNIGHT DELIVERY —
13 on the party(ies) in this action by causing a true copy(ies) thereof to be delivered to Overnight
Delivery in a sealed envelope(s) with receipts affixed thereto promising overnight delivery
14 thereof addressed as follows:
15 William R. Warne
16 Annie S. Amaral
DOWNEY BRAND, LLP
17 621 Capitol Mall, 18"^ Floor
Sacramento, CA 95814
18 Telephone: (916) 444-1000
Facsimile: (916) 444-2100
19 Email: bwarne@downeybrand.com
20 aamara1@downeybrand.com
21 Attorneys for Plainiiff'
22
1 declare under penalty of perjury under the laws of the State of California that the foregoing
23 is true and correct and that this Declaration is executed on January 14, 2019 at Sacramento, California.
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PROOFOFSERVICE
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Preview
Port J. Parker, SBN 179256 Jeffrey S. Einsohn, SBN 260150 2 PARKER LAW GROUP 555 Capitol Mall, Suite 1230 3 Sacramento, CA 95814 Fl LED/Ef^OOBSED 4 Telephone: (916) 996-0400 JAN 1 h 2019 Facsimile: (916) 668-5760 5 Attomeys for Dr. James Longoria Bv:. E. Medina Deputy Clerk 6 7 8 SUPERIOR COURT OF CALIFORNIA 9 IN AND FOR THE COUNTY OF SACRAMENTO 10 CHARLES SOMERS, individually and as Case No. 34-2018-00229212 ll trustee for the CHARLES SOMERS LIVING TRUST, REPLY IN SUPPORT OF DEMURRER TO 12 o Plaintiff, THE FIRST AMENDED COMPLAINT o E 13 e v. Date: January 22, 2019 u DR. JAMES LONGORIA, an individual, and Time: 9:00 a.m. s 14 DOES I-IO, Dept. 54 CN LU 0) Defendants. I 15 Complaint Filed: 3/16/18 Ck:: i < First Amended Complaint Filed: 10/9/18 Q_ ° 16 a o u BY FAX S 17 I . INTRODUCTION 18 Although Plaintiff Charles Somers ("Plaintiff or "Somers") submitted a half-hearted, two- 19 and-a-half-page opposition, his lack of response to the majority of the arguments advanced in the 20 Demurrer effectively concedes the First Amended Complaint ("FAC") is defective. Plaintiff filed a 21 motion for leave to further amend his complaint along with his opposition, arguing that the new motion 22 for leave "moots" the Demurrer. It does not. For the reasons explained herein, it is imperative that 23 the Court sustain the Demurrer so that the parties do not end up in the exact same place, advancing the 24 exact same arguments, four or five months from now. Defendant is entitled to a ruling on his 25 Demurrer, which should be sustained, to avoid perpetual amendments. Moreover, Plaintiffs proposed 26 new complaint does not even address most of the issues raised in the Demurrer. Defendant Dr. James 27 28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC Longoria ("Dr. Longoria") will respond to the motion for leave at the appropriate time, if necessary", 2 but contends that it is actually the Court's ruling on the instant Demurrer which may moot the motion 3 for leave to amend. 4 Plaintiff vaguely alleges Dr. Longoria made several professed promises to him in connection 5 with his investment in a medical device start-up company. Plaintiff further vaguely alleges Dr. 6 Longoria did not supposedly follow through with those professed promises. Rather than just alleging 7 that Dr. Longoria breached an oral agreement, which he now apparently wants to add to his complaint, 8 in attempt to create improper leverage. Plaintiff asserted fraud claims based on "information and 9 belief that Dr. Longoria did not intend to honor his alleged promises. One of the reasons there are 10 specificity pleading requirements for fraud claims is to prevent exactly what is going on in this case— 11 an attempt to contrive or manufacture fraud claims. The Court should grant the instant Demurrer, 5 12 otherwise the parties will be stuck at the pleading challenge stage for another year. o' 1 13 I I . THE DEMURRER SHOULD BE RULED ON REGARDLESS OF ANY PENDING g i 14 MOTION FOR LEAVE TO AMEND 15 Rather than address the deficiencies in its current complaint. Plaintiff wants to kick the can i 16 down the road by claiming his new motion for leave to file a second amended complaint "moots" the 17 demurrer. Dr. Longoria strongly disagrees. 18 First, a motion to amend does not render an operative complaint moot, it remains operative 19 until and unless Plaintiff meets his burden to be allowed leave to amend. It's not automatic and 20 Plaintiffs tactics seek to deprive Defendant of a ruling on his Demurrer and would result in perpetual 21 amendments. In short, that Plaintiff filed a motion to amend does not render the Demurrer moot, but 22 in fact is a concession it should be sustained. 23 Next, there are many aspects of the FAC that simply cannot be remedied by further amendment 24 without running afoul of the sham pleading doctrine. For instance, as pointed out in the moving papers. 25 Plaintiff alleges that "Somers and Dr. Longoria also agreed that Somers would have the option of 26 buying additional equity or making loans..." (FAC 1123.) Then, Plaintiff alleges "Dr. Longoria thus 27 ' Dr. Longoria believes that once the Court rules on the Demurrer, Plaintiffis likely to withdraw his motion for leave to 28 allow him further opportunity to amend his complaint to conform to the Court's order. MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 2 urged Somers to agree to provide any additional money in the form of loans" (FAC 1126) and "Somers 2 agreed to loan LC significant sums of money. Specifically, between January 2016 and September 3 2017, Somers contributed an additional $3,746,317.89 to LC through 19 payments, and has made 4 additional loans since then." (FAC 1(27.) 5 Nevertheless, Plaintiff asserts his Second Cause of Action for "Promissory Fraud" in direct 6 contradiction to those allegations, that Dr. Longoria committed fraud by not letting him purchase more 7 equity. He simply ignores his earlier allegations that, according to his own story, he and Dr. Longoria 8 had agreed to Somers buying additional equity or making loans. The Second Cause of Action, on its 9 face, is not salvageable. Somers could only state a claim by intentionally omitting a prior admission 10 of fact, which would be a sham. 11 Generally speaking, after an amended pleading is filed, the original pleading is superseded 3 12 (Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 946), and courts will 13 assume the truth of the factual allegations in the amended pleading for purposes of demurrer. (Owens 14 V. Kings Supermarket {\9SS) 198 Cal.App.3d 379, 383). However, under the sham pleading exception 15 to these rules, "admissions in an original complaint ... remain within the court's cognizance and the 16 alteration of such statements by amendment designed to conceal fundamental vulnerabilities in a 17 plaintiffs case will not be accepted." (Lockton v. O'Rourke (2010) 184 Cal.App.4th 1051, 1061.) 18 Where a plaintiff attempts to avoid the destructive allegations in a prior complaint by omitting them 19 without explanation, or by pleading facts inconsistent with such prior allegations, the court may then 20 examine the prior complaint to ascertain whether the amended complaint is merely a sham. {Vallejo 21 Development Co. v. Beck Development Co., supra, at p. 946.) 22 The need for the Court to sustain the demurrer to that cause of action without leave to amend 23 is further evidenced by Plaintiff s proposed second amended complaint. In the proposed pleading. 24 Plaintiff does some wordsmithing and takes out the allegation that Dr. Longoria "changed course," 25 but he does not even address the issue of the admission in f 23 that they had an agreement that included 26 Somers making a loan, which agreement (by his own admission) was upheld. The Demurrer should 27 be sustained without leave to amend on that Cause of Action now, otherwise Dr. Longoria will be back 28 here raising the exact same argument to the next version of the complaint in several months. That MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 3 would be a waste of both judicial and Longoria's time and resources. 2 Plaintiff was given the opportunity to amend his complaint following Dr. Longoria's first 3 demurrer. Rather than fix the defects he merely broke up his fraud claim into multiple fraud claims. 4 He did not, however, actually remedy the defects. Defendant is entitled to a ruling on his Demurrer, 5 which based on Plaintiffs concession, should be sustained. To the extent the Court does grant leave 6 to amend, it will be Plaintiffs new motion for leave to amend that will become "moot." 7 Finally, Dr. Longoria requests a ruling on the Demurrer so that there can be no confusion or 8 argument from Plaintiff later if Dr. Longoria has tofilea demurrer to any further amended complaint 9 that C.C.P. §430.41(e)(l) would not bar yet another amendment after that. 10 III. PLAINTIFF ADMITS HE DOES NOT HAVE FRAUD CLAIMS 11 "[T]he distinction between tort aind contract is well grounded in common law, and divergent 12 objectives underlie the remedies created in the two areas. Whereas contract actions are created to o o E 13 enforce the intentions of the parties to the agreement, tort law is primarily designed to vindicate "social B u 8 14 policy." {Erlich v. Menezes (1999) 21 Cal.4th 543, 550-551, citations omitted.) Importantly, "[a]n CN I 15 omission to perform a contract obligation is never a tort, unless that omission is also an omission of a LU ? Qi ° 16 legal duty." (Mat p. 557., quoting Jones v. Kelly (1929) 208 Cal. 251, 255.) a < uo Q_ Here, Plaintiff now argues that his fraud claims (except the Fourth Cause of Action which he s 17 apparently plans to withdraw) are all also supposed breach of contract claims. The only difference 18 between the currently plead fraud claims and his proposed additional breach of contact claims is that 19 "on information and belief Dr. Longoria did not intend to honor the alleged oral agreements. 20 Plaintiffs sudden shift in strategy reveals his fraud claims are untenable. Indeed, Plaintiffs strategy 21 seems to be taking what he now admits are breach of contract claims and appending boilerplate 22 "information and belief allegations to them to manufacture fraud claims (and entitlement to additional 23 damages). However, at the time these promises were allegedly made. Dr. Longoria owed no special 24 duty to Plaintiff For instance, Somers admits, and attempts to clarify, that the alleged promise to 25 convert the company into an LLC was made before Somers became a shareholder. Plaintiff cannot 26 have it both ways. Either the promise was made before he invested, before there was any independent 27 legal duty to him, or the alleged promise was made later, in which case he did not rely on it in deciding 28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 4 to invest. Case law is clear that Dr. Longoria's alleged breach of an oral contract cannot be transmuted 2 into a fraud claim. 3 As courts have warned for many years extending "tort remedies to commercial contracts create 4 the potential of tuming every breach of contract dispute into a punitive damage claim." (Harris v. 5 Atlantic Richfield Co. (1993) 14 Cal.App.4th 70, 81.) That is exactlv what Plaintiff is trying to do 6 here. That is one reason why fraud has heightened pleading standard—a standard Plaintiff has not 7 met. 8 IV. NONE OF THE FRAUD OR MISREPRESENTATION CLAIMS ARE PROPERLY 9 PLEADED 10 A. Plaintiffs Arguments with Respect to the First Cause of Action (Failure to Q_ , 11 Convert to an LLC) Are Unpersuasive ZD i 12 The only Cause of Action Plaintiff actually discusses in his perfunctory opposition is the First. o Qi i 13 Plaintiff contends that he can generally plead the alleged misrepresentation occurred because of the s o 8 14 doctrine of less specificity. Plaintiff cites Committee On Children's Television, Inc. v. General Foods (N Qi IU Corp. (1983) 35 Cal.3d 197,217[superseded on other grounds.] But that is clearly not applicable here. LU 3 15 :^ ? In that case, the allegations were that fraudulent misrepresentations were made on television Q2: < sa 16 QL. o u commercials and cereal boxes. The plaintiff organization did not have the details of the thousands of S 17 commercials and physical advertisements. (Id.) Under those circumstances, that court held that the 18 defendant was already in possession of a list of when each commercial aired and plaintiff did not have 19 to set out the dates and times of each such advertisement. Conversely here, the alleged 20 misrepresentation was made directly to the Plaintiff. Nevertheless, Plaintiff has not provided any 21 detail about this alleged misrepresentation. The doctrine of less specificity simply does not apply to 22 any of the arguments raised in the Demurrer. 23 "To sufficiently plead the first requirement [of promissory fraud], that the defendant made a 24 promise, the complaint must state ''facts which "show how, when, where, to whom, and by what means 25 the representations were tendered." '" (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039,1060, citations 26 omitted.) In that case, "Beckwith's complaint alleged that on May 25, 2009, Dahl promised him, via 27 e-mail and a telephone call, she would" do the thing allegedly promised. (Id.) The Court held that 28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 5 sufficient. Here, Somers has not come close to providing that minimal level of specificity. 2 With respect to damages. Plaintiff argues that he does not have to allege why not converting 3 LC to an LLC caused him damage because he would not have invested if he knew that Dr. Longoria 4 allegedly never planned to convert the company to an LLC. It is Plaintiff who unfortunately misses 5 the point. Take for example an alleged promise by a defendant to purchase a power ball lottery ticket 6 for a plaintiff with 5 as the power ball number. If the defendant purchases a lottery ticket with 6 as 7 the power ball number and the winner number is 7, the plaintiff is not entitled to damages unless he 8 can articulate a reason why having a losing ticket with 5 on it created independent value for him. He 9 cannot claim tort damages by merely saying he would not have had the plaintiff buy him a lottery 10 ticket if he knew the plaintiff was going to buy him a ticket with a different number. Somers' argument , 11 is analogous. CO Vl o 6 12 o Here, Dr. Longoria's Demurrer even explained what allegations Plaintiff would have to make Qi I 13 to state a claim based on not converting to an LLC, but Plaintiff failed to acknowledge that (or even os u to add those allegations to his proposed SAC.) Plaintiff has not stated a claim because he has not S 14 Qi tN a> provided the requisite specificity and alleged what damages he actually suffered as a result of the LU % 15 allegedly false promise. Indeed, Somers would be in the exact same position he is in now even if the Qi < I Q_ i 16 company was converted into an LLC! Q. O U B. Plaintiff Concedes the Second and Third Causes of Action Are Not Properly K 17 18 Pleaded by Failing to Address the Arguments Raised in the Demurrer 19 As noted above, Somers does not address the discrepancies in his pleading including, for 20 example, the admission in paragraph 23 that Dr. Longoria promised Somers that he would allow him 21 to purchase additional equity or make a loan, or that allowing Somers to purchase unlimited equity 22 would negate the other agreement that he clearly pleaded—that they would be 50/50 partners. He has 23 also failed to address the fact that he has not suffered or adequately alleged damage as a result of 24 making a loan rather than purchasing equity. In fact, he is likely better off because debt is repaid before 25 equity and there is a possibility LC's patent portfolio can be sold to generate a recovery for the 26 corporation. 27 /// 28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 6 Likewise, Somers does not address the defects in his Third Cause of Action raised in the Demurrer, such as reliance on Dr. Longoria to unilaterally put him on the board of directors when Somers could have initiated that himself. C. Plaintiff Admits There is No Merit to the Fourth Cause of Action (False Promise to Work to Make the Company a Success) Not only has Plaintiff failed to address the Fourth Cause of Action, but he is now seeking leave to amend his complaint to withdraw it. D. Plaintiff Failed to Address the Fifth Cause of Action for Negligent Misrepresentation As set forth in the Demurrer, negligent misrepresentation is a form of fraud, and as such, must be pleaded with the same particularity as a cause of action for fraud. (Continental Airlines, Inc. v. o 6 12 McDonnell Douglas Corp. (1989) 216 Cal.App.3d 388, 403^04.) Plaintiff did not amend this cause Qi E 13 of action when the Court sustained the last demurrer. Instead, he merely relies on his other fraud o e u claims. Because those causes of action continue to fail to state a claim, so does the negligent < i 14 I I 15 misrepresentation cause of action. Demurrer to this cause of action must be sustained again as well. Qi UJ Qi s 16 V. CONCLUSION 'a o < U Q_ Plaintiff had an opportunity after the Court sustained the last demurrer to the fraud claims to S 17 reconsider his approach and try to plead sufficient allegations to meet the fraud pleading standard. He 18 was on notice. Plaintiff chose instead to just break his fraud claim into four parts but not actually add 19 the substance required by the Court's ruling. Dr. Longoria met and conferred, and while he remained 20 steadfast the claims made against him lacked merit, he nonetheless offered Plaintiff the opportunity to 21 amend his complaint. Once again, after considerable delay, Plaintiff did not do so. Dr. Longoria has 22 a right to have his Demurrer sustained, irrespective of Plaintiffs desire to now file yet another 23 amended complaint. This is extremely important since the purported proposed complaint still does not 24 address the issues raised in Dr. Longoria's first, and now second, demurrer. If the Court does not rule 25 on this Demurrer now, Dr. Longoria will likely have to bring yet another pleading challenge. Plaintiff 26 seeks to further delay this action and the application of C.C.P. §430.41(e)(1), which would bar yet 27 another amendment after that. Therefore, Dr. Longoria respectfully asks the Court to sustain the instant 28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 7 Demurrer now, and to the extent the Court believes leave for further amendment should be granted, if 2 at all, allow Plaintiff to do so on those claims. 3 4 DATED: January 14, 2019 5 6 PORTM. BARKER 7 JEFFREyS. EINSOHN Attorneys for DR. JAMES LONGORIA 8 9 10 I Q_ 11 :=) 12 13 lO 14 15 i< 16 ! I iQi 17 ILU ; ^ 18 i< 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES ISO OF DEMURRER TO THE FAC 8 COURT: Superior Court of California, County of Sacramento 2 CASENO.: 34-2018-00229212 CASE NAME .Somers v. Longoria 3 PROOF OF SERVICE 4 5 I am a citizen of the United States, employed in the County of Sacramento. My business address is 555 Capitol Mall, Suite 1230; Sacramento, California 95814. 1 am over the age of 18 years 6 and not a party to the above-entitled action. 7 I am familiar with PARKER LAW GROUP'S practice whereby each document is placed in an envelope, the envelope is sealed, the appropriate postage is placed thereon and the sealed envelope 8 is placed in the office mail receptacle. Each day's mail is collected and deposited in a U.S. mailbox 9 at or before the close of each day's business. 10 On the date indicated below, 1 served the within: 11 REPLY IN SUPPORT OF DEMURRER TO THE FIRST AMENDED COMPLAINT 12 OVERNIGHT DELIVERY — 13 on the party(ies) in this action by causing a true copy(ies) thereof to be delivered to Overnight Delivery in a sealed envelope(s) with receipts affixed thereto promising overnight delivery 14 thereof addressed as follows: 15 William R. Warne 16 Annie S. Amaral DOWNEY BRAND, LLP 17 621 Capitol Mall, 18"^ Floor Sacramento, CA 95814 18 Telephone: (916) 444-1000 Facsimile: (916) 444-2100 19 Email: bwarne@downeybrand.com 20 aamara1@downeybrand.com 21 Attorneys for Plainiiff' 22 1 declare under penalty of perjury under the laws of the State of California that the foregoing 23 is true and correct and that this Declaration is executed on January 14, 2019 at Sacramento, California. 24 25 26 27 28 PROOFOFSERVICE I