Preview
DOWNEY BRAND LLP
SEAN J. FILIPPINI (Bar No. 232380)
COURTNEY
AVALON J.
L. DANIELS
FITZGERALD
(Bar
(Bar
No.
No.
286453)
288167)
Super
FILEDas one
621 Capitol Mall, 18th Floor
Sacramento, CA 95814-4731]
Telephone: 916.444.1000 AUG 20 201
facsimile: 916.444.2100
sfilippini@downeybrand.com J e Chatters
ecu Officer & Clerk
cdaniels@downeybrand.com Deputy
(dic: Lucatuorto,
afitzgerald@downeybrand.com
NH
Attorneys for Defendants and Cross-Complainants
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FIELD SUPPLY, JONATHAN “BOOMER” FIELD,
and JONATHAN WAYNE FIELD
Co
SUPERIOR COURT OF CALIFORNIA
Oo
10 COUNTY OF PLACER
11 FIELD SUPPLY, LLC, a California limited CASE NO. SCV0040270
liability company; GREEN SOLUTIONS
12 & MORE, INC., a California corporation; MEMORANDUM OF POINTS AND
STEVEN MEHALAKIS, a natural person; AUTHORITIES IN SUPPORT OF
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JOHN MEHALAKIS, a natural person; DEFENDANTS JONATHAN “BOOMER”
and VIRGINIA MEHALAKIS, a natural FIELD AND JONATHAN WAYNE
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person, FIELD’S DEMURRER TO SECOND
AMENDED COMPLAINT
15 Plaintiffs,
Date: September 20, 2018
16
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Vv. Time: 8:30 a.m.
Dept.: 32
17 JONATHAN RYAN FIELD, a.k.a.
BOOMER FIELD, a natural person;
18 JONATHAN WAYNE FIELD, a natural
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person; and DOES 1 to 100, inclusive, BY FAX
Defendants.
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21 AND RELATED CROSS-ACTION.
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1$24747.3 1
MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT
TABLE OF CONTENTS
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A. The Court Strikes the Original Complaint Because Plaintiffs Lack Standing
to Bring Claims on Behalf of Field Suppl y..........c..:0..scecccssesseessecsesssesseseorsreeseersensee
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B. The Mehalakises File Their FAC and the Court Sustains the Fields’
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A. Plaintiffs Lack Standing to Pursue the Claims Alleged in the SAC, ...ccccsccscssesees
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10 1. Field Supply LLC Lacks Standing to Bring Each of Its Causes of
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iv 2. Steven, Virginia, and Green Solutions Lack Standing to Bring the
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B. Each Cause of Action Separately Fails as aMatter of Law, Regardless of
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l. The SAC Fails to Allege Sufficient Facts to State a Claim for
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Fraudulent Misrepresentation..........:sssssscseerrereresssevesceeeenscenseetereeerersens
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3. The SAC Fails to Allege Sufficient Facts to State a Claim for UCL
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4. The SAC Fails to Allege Sufficient Facts to State a Claim for
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5. The SAC Fails to Allege Sufficient Facts to State a Claim for
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT
TABLE OF AUTHORITIES
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT
TABLE OF AUTHORITIES
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO FIRST AMENDED COMPLAINT
I. INTRODUCTION
John, Steven, and Virginia Mehalakis, and their companies Green Solutions & More, Inc.,
and Field Supply LLC (together, “the Mehalakises’’) have now had three separate opportunities to
bring legally viable claims against Jonathan “Boomer” Field and his father, Jonathan Senior
(together, “the Fields”). The Fields have been forced to first move to strike, then demur, and now
again move to strike and demur inresponse to the Mehalakises’ meritless pleadings. Despite the
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Court’s issuance of a clear and detailed 12-page order on June 21, 2018, which sustained the
Fields’ demurrer to ten out of ten causes of action—essentially dismissing the Mehalakises’ entire
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First Amended Complaint (“FAC”), the Mehalakises have filed aSecond Amended Complaint
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10 (“SAC”) which isequally deficient as to every cause of action stated. As a matter of law, none of
11 the causes of action alleged in the SAC state facts sufficient to constitute a cause of action.
12 The Fields therefore respectfully request that the Court sustain their demurrer to the
13 Mehalakises’ entire SAC. The Fields further request that the demurrer be sustained without leave
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14 to amend. The SAC isnow the third opportunity the Mehalakises have had to state viable claims.
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15 Yet they have once again failed to assert a single claim that is viable. Thus, the Mehalakises have
16 unequivocally demonstrated that they cannot cure the deficiencies in their complaint. They do
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17 not have viable claims against the Fields, and never did.
18 II. RELEVANT PROCEDURAL AND FACTUAL BACKGROUND
19 A. The Court Strikes the Original Complaint Because Plaintiffs Lack Standing to Bring
Claims on Behalf of Field Supply.
20
21 On October 24, 2017, the Mehalakises filed a preemptive verified complaint against the
22 Fields, bringing twelve causes of action. (Declaration of Avalon Fitzgerald (“Fitzgerald Decl.”),
23 {|2.) That complaint brought numerous claims on behalf of Field Supply, the corporation. (Jbid.)
24 Boomer, along with the corporation Field Supply, filed aCross-Complaint against the
25 Mehalakises on October 30, 2017. Ud. 93.) Field Supply (the corporation) and Boomer also
26 moved to strike Field Supply as a Plaintiff, since none of the Mehalakises are directors of Field
27 Supply and thus cannot bring litigation on its behalf. (/d. 4.) The Court granted that motion,
28 finding that “[t]he allegations in the complaint do not demonstrate that plaintiffs have standing to
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO FIRST AMENDED COMPLAINT
bring the action on behalf of corporate defendant Field Supply.” (Ud.45.) The Court gave the
Mehalakises leave to file an amended complaint. (/bid.)
B. The Mehalakises File Their FAC and the Court Sustains the Fields’ Demurrer,
Granting the Mehalakises Narrow Leave to Amend.
On February 9, 2018, the Mehalakises filed their FAC. The FAC purported tobring ten
causes of action, brought by the Plaintiffs in various combinations. (Fitzgerald Decl. J 6; Request
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for Judicial Notice (“RJN”), Ex. A.) The Fields demurred to the FAC on numerous grounds.
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(Fitzgerald Decl. { 7.) In response, the Mchalakises acknowledged that many oftheir causes of
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action were legally insufficient, and attempted to lodge a proposed SAC with the Court. (Ud. § 8.)
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10 The Fields opposed this effort, as the Mehalakises’ proposed SAC not only failed to resolve many
11 of the issues contained in the FAC, but also included new parties, requiring the Mehalakises to
12 bring a motion for leave to amend. (/d. 79.) On June 21, 2018, following oral argument, the
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Court issued an order sustaining the demurrer in fulland granting the Mehalakises leave to amend
14 only their causes of action for fraudulent misrepresentation, fraudulent concealment, violations of
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15 California’s unfair competition law (“UCL”), intentional interference with contractual relations,
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16 intentional interference with prospective economic advantage, and conversion. (Jd. J 10, Ex. A.)
17 Cc. The Mehalakises File a Deficient SAC.
18 On June 15, 2018, the Mehalakises filed their SAC. (Fitzgerald Decl. 11.) The SAC
19 contains causes of action for fraudulent misrepresentation, fraudulent concealment, unfair
20 competition, intentional interference with prospective economic advantage, and conversion.
21 These claims are now brought, in varying combinations, by Field Supply LLC, by John
22 Mehalakis in his individual capacity, and by Green Solutions & More, Inc., Steven Mehalakis,
23 and Virginia Mehalakis in their individual capacities “and on behalf of nominal defendant Field
24 Supply [the corporation].”’ (SAC at 1.) The fraudulent misrepresentation cause of action is
25 brought against Boomer by Green Solutions, Steven, and Virginia on their own behalf. (SAC {J
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27 'The Mehalakises have expanded thescope of many oftheirclaims to includenew factualand legalbases, againsta
new defendants,brought by new plaintiffs.These allegationsaretherefore subjectto amotion tostrike,filed
28 concurrently with thisdemurrer.
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT
120-126.) The fraudulent concealment cause of action is brought against Boomer and Jonathan
Senior by Field Supply LLC, John, and Steven, Virginia, and Green Solutions on their own behalf
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and on behalf of Field Supply the corporation. (SAC ff 127-136.) The UCL cause of action is
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brought against Boomer and Jonathan Senior by Field Supply LLC and John, as well as Steven,
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Virginia, and Green Solutions on their own behalf and on behalf of Field Supply the corporation.
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(SAC Ff 137-141.) The cause of action for intentional interference with prospective economic
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advantage is now brought by Green Solutions on its own behalf against Boomer and Jonathan
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Senior. (SAC ff 142-148.) The conversion cause of action isbrought by Green Solutions on its
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own behalf and Steven on his own behalf against Boomer and Jonathan Senior. (SAC ff 149-
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10 159.)
11 As in each prior complaint, the SAC is arant of “factual” allegations that are rambling,
12 conclusory, and contradictory. The SAC, like the FAC and the original verified Complaint,
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claims that Boomer carried out a plan of theft and deceit, directed atthe Mehalakises, during his
14 employment with Green Solutions and then Field Supply. The allegations begin with the
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15 Mehalakises’ alleged interest in starting a company—Field Supply—to serve as a retail yard for
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John’s existing company, Green Solutions. (SAC ff]23-28.) According to the SAC, Boomer’s
17 surreptitious behavior started when he incorporated Field Supply in October 2016, (id. 7 47), and
18 continued through October 2017, (see, e.g., id. 113). At that point, the Mehalakises ousted
19 Boomer from Field Supply, transferred $50,000 into the bank account for a new entity they
20 formed (Field Supply LLC), and continued to operate the business under that new entity. (/d.|
21 114.) Although the SAC acknowledges that the parties disagreed along the way about who
22 owned Field Supply, (id.FJ 89, 93, 115), the SAC nonetheless contends that Boomer incorrectly
23 and impermissibly asserted that he had a right to own at least a portion of the company, (e.g.,id. J
24 115). However, the SAC also attempts to plead, in the alternative, that “Boomer owns a
25 substantial interest, or a 100% interest, in Field Supply, and that he, Jonathan Senior, and [Dan]
26 Shafer are the directors thereof.” (SAC ff 143, 150.) This alternative pleading applies only to
27 the causes of action for conversion and intentional interference with contractual relations. (/bid.)
28 The SAC also alleges that Boomer committed a litany of improper acts. Jonathan Senior’s sole
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT
involvement is that he “aided and abetted” Boomer in committing these acts. (E.g., id. J] 48, 57.)
D. Meet and Confer Efforts.
Counsel engaged in extensive meet-and-confer efforts prior to filing this demurrer, but
could not resolve the Fields’ objections to the SAC. (Fitzgerald Decl., J 12-15 & Exs. B, C.)
Ff
Ill. LEGAL ANALYSIS
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A demurrer tests the sufficiency of a pleading by raising questions of law. (Salimi v. State
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Compensation Insurance Fund (1997) 54 Cal.App.4th 216, 219.) The party against whom a
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complaint has been filed may object by demurrer on the ground that the pleading does not state
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facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Pleadings
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10 must contain “a statement of thefacts constituting the cause of action, in ordinary and concise
11 language.” (Id. § 425.10, subd. (a)(1), emphasis added.) Further, a demurrer may be taken to all
12 or part of a pleading. (Ud. § 430.50.) Because a demurrer teststhe legal sufficiency of the
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complaint, a plaintiff must show that it alleges facts sufficient to establish each and every element
14 of each cause of action to survive the motion. (Rakestraw v, Cal. Physicians’ Serv. (2000) 81
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15 Cal.App.4th 39, 42-43.) When itwould be futile or impossible to cure the defect by amendment,
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16 the Court should sustain the demurrer without leave to amend. (Schifando v. City of Los Angeles
17 (2003) 31 Cal.4th 1074, 1081.)
18 A. Plaintiffs Lack Standing to Pursue the Claims Alleged in the SAC.
19 “Standing is the threshold element required to state a cause of action[.]” (Martin v.
20 Bridgeport Cmty. Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.) Standing requires that the
21 plaintiff “(has] a real interest in the ultimate adjudication because [he] has . .. suffered .. .any
22 injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be
23 adequately presented.” (/bid.) Moreover, “[e]very action must be prosecuted in the name of the
24 real party in interest,” (Code Civ. Proc., § 367), which is the party with “an actual and substantial
25 interest in the subject matter of the action and who would be benefited or injured by the judgment
26 in the action,” (Martin, 173 Cal.App.4th at 1031-1032, quotation and citation omitted.)
27 1. Field Supply LLC Lacks Standing to Bring Each of Its Causes of Action.
28 As with the FAC, Field Supply LLC lacks standing to bring itsclaims for fraudulent
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT
concealment and violations of the UCL against the Fields. These claims arise from, among other
things, Boomer allegedly filing the supposedly false statement of information, making an
issuance of Field Supply’s stock, stealing from Field Supply, refusing to cooperate with the
forensic accountant hired to inspect Field Supply’s books, and telling customers the “retail yard”
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was going to shut down. (SAC ff 128, 140.) Field Supply LLC did not even existwhen the
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majority of these actions allegedly took place, since Field Supply LLC was not formed until
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September 7, 2017. (SAC § 2.) Moreover, according to the SAC, the Mehalakises did not
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transfer Field Supply’s to Field Supply LLC until sometime between October 12 and October 17,
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2017. Ud. Ff 112-115.) Any action that allegedly occurred prior to Field Supply LLC’s
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10 formation necessarily cannot have harmed it,and the actions taking place after its formation were
11 directed at Field Supply the corporation, not at FieldSupply LLC. Thus, to the extent the Fields’
12 alleged actions harmed anyone, they harmed Field Supply the corporation, not Field Supply LLC,
13 and Field Supply LLC lacks standing to bring these claims.
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on Steven, Virginia, and Green Solutions Lack Standing to Bring the UCL Cause
of Action.
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To have standing to bring a claim under the UCL (Cal. Bus. & Prof. Code, § 17200 et
17 seq.), a plaintiff must “have lost money or property ... .”” (Kwikset Corp. v.Superior Court
18 (2011) 51 Cal.4th 310, 323, quotation omitted.) A plaintiff “must demonstrate some form of
19 economic injury.” (Jbid.) The Mehalakises allege that Boomer violated the UCL by (1) listing
20 his home address as Field Supply’s office on the articles of incorporation, (2) filing an allegedly
21 false statement of information, (3) “pressing for the New Retail Facility to use the convoluted
22 Point of Rental system,” (4) hiring an attorney, (5) holding a “fake” board meeting, (6) refusing to
23 sign dissolution documents, (7) wearing sweatpants to work, (8) insubordination, (9) refusing to
24 cooperate with a forensic accountant; (10) the alleged assault and battery, (11) temporarily
25 locking the Point of Rental System, (12) telling employees there were problems with the business;
26 and (13) contemplating filing another Statement of Information.
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DOWNEY BRAND LLP SEAN J. FILIPPINI (Bar No. 232380) COURTNEY AVALON J. L. DANIELS FITZGERALD (Bar (Bar No. No. 286453) 288167) Super FILEDas one 621 Capitol Mall, 18th Floor Sacramento, CA 95814-4731] Telephone: 916.444.1000 AUG 20 201 facsimile: 916.444.2100 sfilippini@downeybrand.com J e Chatters ecu Officer & Clerk cdaniels@downeybrand.com Deputy (dic: Lucatuorto, afitzgerald@downeybrand.com NH Attorneys for Defendants and Cross-Complainants ww FIELD SUPPLY, JONATHAN “BOOMER” FIELD, and JONATHAN WAYNE FIELD Co SUPERIOR COURT OF CALIFORNIA Oo 10 COUNTY OF PLACER 11 FIELD SUPPLY, LLC, a California limited CASE NO. SCV0040270 liability company; GREEN SOLUTIONS 12 & MORE, INC., a California corporation; MEMORANDUM OF POINTS AND STEVEN MEHALAKIS, a natural person; AUTHORITIES IN SUPPORT OF 13 LLP JOHN MEHALAKIS, a natural person; DEFENDANTS JONATHAN “BOOMER” and VIRGINIA MEHALAKIS, a natural FIELD AND JONATHAN WAYNE 14 BRAND person, FIELD’S DEMURRER TO SECOND AMENDED COMPLAINT 15 Plaintiffs, Date: September 20, 2018 16 DOWNEY Vv. Time: 8:30 a.m. Dept.: 32 17 JONATHAN RYAN FIELD, a.k.a. BOOMER FIELD, a natural person; 18 JONATHAN WAYNE FIELD, a natural 19 person; and DOES 1 to 100, inclusive, BY FAX Defendants. 20 21 AND RELATED CROSS-ACTION. 22 23 24 25 26 27 28 1$24747.3 1 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT TABLE OF CONTENTS > A. The Court Strikes the Original Complaint Because Plaintiffs Lack Standing to Bring Claims on Behalf of Field Suppl y..........c..:0..scecccssesseessecsesssesseseorsreeseersensee 5 AN B. The Mehalakises File Their FAC and the Court Sustains the Fields’ HD Demurrer, Granting the Mehalakises Narrow Leave to Amend. .......,.....::::e00e00000 6 Cc. The Mehalakises File a Deficient SAC. ......:cscscssesesseeseseescesssesseseessenseceneeneaneatsensoes 6 4S D. Meet amd Contitr EStitts...sciesecsscsrsccnmmncemonemcrniceconnamicaivaacnrinnnninaesees 8 SS HE: LEGAL ANAL YSIS wisscovecncecececnserstco oncom nore oon nn iieisicusiccenaariinniiieieenston 8 uo A. Plaintiffs Lack Standing to Pursue the Claims Alleged in the SAC, ...ccccsccscssesees 8 10 1. Field Supply LLC Lacks Standing to Bring Each of Its Causes of PDB OD. xcccccncesnvssxevevensseuivenevenesspsavsnsesecenesenevectonnepsisnvanesusiesisicesvape vusceaveceekoeseoiae 8 iv 2. Steven, Virginia, and Green Solutions Lack Standing to Bring the LICL, Cort OF AER os 5ecoceccavcersancevcacccssavenseqecarpspesrpesvenvteanurasvensenvinverceioves 9 12 B. Each Cause of Action Separately Fails as aMatter of Law, Regardless of 13 EUR cessne cesen nsncnstopnrcocsnctceconsecereneconres af ceaneecpcaeme rrmeneeesatacereneineeee day ris tiaehrectie® 10 LLP l. The SAC Fails to Allege Sufficient Facts to State a Claim for 14 BRAND Fraudulent Misrepresentation..........:sssssscseerrereresssevesceeeenscenseetereeerersens 10 15 2. The SAC Fails to Allege Sufficient Facts to State a Claim for Fraudulent Concealment. ..........::csscssseeseeseeeeseeeescetscereseecesseestereseserescerees 12 16 DOWNEY 3. The SAC Fails to Allege Sufficient Facts to State a Claim for UCL ar URNNLL ree renew epee 14 17 4. The SAC Fails to Allege Sufficient Facts to State a Claim for 18 Interference with Prospective Economic Advantage. ..........:sss:ssseereesess 16 5. The SAC Fails to Allege Sufficient Facts to State a Claim for 19 COmVerSIOM, 5; jsiscsisssudiicescccaslakasciancioustotetelbence talesatelerciarovetasisuvussessuverabeadetes 18 20 C. The Court Should Dismiss the SAC Without Leave to Amend..............::.::0100000 19 TV CORR CAT oa cscccca cas ccsc aaans acca acai a di da als a aaa 19 21 22 23 24 25 26 27 28 1524747,3 2 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT TABLE OF AUTHORITIES Page Wb Ww State Court Cases Cansino v. Bank of Am. (2014) 224 Cal App.4th C462 scccccsvesssscsvsssacctesatenssatsinisastasbabatesesivasuuascataaasandanmitnascunssecs ateasecass 12 & Cel-Tech Comms., Inc. v. L.A. Cellular Telephone Co. WGN (1999) 20 Cal Athy163 wcsccsssevesocevcavesteaausbvnsetsisetereaatecoasiarauaacobsasbbitivesnssavanvtiia vespassnbubbecasacedea 15, 16 Cohen v. S & S Constr. Co. DH (1983) 151 Cal Aprpi3d 941 ccccsccccisccasanccicsatsseiniossannssnssoteistooniites sbsuasnipncanthiscvuchecdsebskecdseslslesssebes 13 Comm. on Children’s Television, Inv. v. Gen. Foods Corp. SN CLIBZISE-CalDG 197 ssssscxsssssswnonssoosnonrcarevaskecessnsnececacectnovonssaaaneasasssussshananabanbsesesusiaceadasvonsnnlbiailts 16 Crown Imports, LLC v. Superior Court (2014) 223 Cal App Ath 1395 sisssssoscassaspacececcccceceoosnssvecsteasasuspadsicitoasssgectaddenecsioteasiacersdeseussobeséocs 17 Durell v.Sharp Healthcare (2OTD) TSS Cah A AY 13ST sececisesovrivvensnesissicecssesncecenceysvonuveesnnosnn bcccecevsccsattaspretesbineeteaeeiretiies 15 Edwards v. Arthur Andersen LLP 10 (2008) 44 Cah 4th O87 cssuscccsssvcecvssieasscisyececcnncnncaaananseateenneesssbhbsssbvensavsdestsseaspalevenetétecevacedeveasevens 16 Hahn vy.Mirda 11 (2007) 147 Cab Ap. AG 740 ., .ssnssoisiivoncccaasnnncassancasanavevseveiserskssncssenavavensssvesestiessinceteteestarsiansoneas 13 Jones v. H.F. Ahmanson & Co. 12 CSCS) TD Cat Sd FS. sssvisssvwessscuopaecuononacccassensepssnnenenspnsesanannanccciececeseasensvassishetepeavneecsaeneansesesea 10 Kasparian v. County of Los Angeles 13 LLP ETOOS SE Cal Fa A BAS cecssesceesostnccucesivusesinsnsinvessyponswssennnnsnossiacacactentkceaskncaaaiaiauaiiengeasiienveaies 17 Kwikset Corp. v.Superior Court 14 BRAND COTTE eg BD sccsrvccescnsvncsnscesnssatevnnatinresa aposassdiassodsansireiiins Vet cageu (eauvetscsvansenvisevereensoont 9, 14 Lazar v.Superior Court 15 OO Ue A Go ecornccncrnscxaccscesvessepesyopepenrsavnrvepenenppsnusesqeacanesssssssensen Sexaentepena rane tapeuecencedavats 10 Linear Tech. Corp. v. Applied Materials, Inc. 16 DOWNEY CE LE Ai Ee A. nenencsnnrsnresecensseresenvacgecedenasoneoeunapanaspavenye neon svicatsaxesssanlereneseeer 12, 13 Martin v. Bridgeport Cmty. Assn., Inc. 17 (2009) 173 Cal. App.4th 1024 .....scscccsssscssssecssucssssneesssecsanscssssessursesuecsnpansaguanansnesenavesssavecsnevereneves 8 Oakland Raiders v.Nat’! Football League 18 (2005) 131 Cal. App.4th 621 ......ccccssssssssssnssessrsnsneeesesssesensnassennegsaessecseserssetensneneneusnenenseenenenaves 19 Oddone v. Superior Court 19 (2009) 179 Cal App.4th 813 .....cssseseseeecrsrerererersrarsssrasenstasensneatesensessesessneseenseaesensensnaeeenesnes 19 Pac. Gas & Elec. Co. v. Bear Stearns & Co. 20 Pkt eT Ce EG TI f BORE Re eienephoonesn-tptres rence oO OTC OR Os OT 1 17 PCO, Inc. v.Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP 21 (2007) 150 Cal App Adin384 iiisiicissciiiiiisdiscsedscssscivcconssssajeleualetelevstedaiakesdlessauscccvesssesseuevsecsoceess 18 Rakestraw v. Cal. Physicians’ Serv. 22 (2D) BY Cat agp AM BO sisi acacs ckicatt cecececa acca adc Labcnnathnea eeabeh ciao 8 Reeves v. Hanlon 23 CRO) BS Cam Atl LAO assis cect saieebccese ncaa a seaeca Shan beac hus UhsaéStalhaanetbectecedasaiinanscize 17 Salimi v. State Compensation Insurance Fund 24 LEGO Sh Coal App May 2 acacia case ccccaeeaae sae satiea ocawacccenscacwenectseddeescabluseccaddituccutiassiticcvinsswsbees 8 Sanowicz v.Bacal 25 (2015) 234 Cal App 4th LOQT sciccsccisisccciissicseetivevetitboccveevettdcecesvevevesesisbveséetesscsssaasaazscsaasabsaksaagsoa 18 Schifando v. City of Los Angeles 26 C2008 ) FL Cabal VOT isccctssiccccccccccccencov cates iesei cs ccccenoveavenecuvcuvcccccctcvecsteweeisa abivaanabbaseapslausisdeds 8 Small v. Fritz Companies, Inc. 27 Q2DOS) SO) Cea 1G ai ciscsasiccccccsciiccccn stiscesee Ritesh st shRttcnssasvattannavaadaussacseeecswsbesssbbesssidtas tesciuGads 13 Software Design & Application, Ltd. v. Hoefer & Arnett, Inc. 28 1524747.3 3 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT TABLE OF AUTHORITIES (continued) Page (1996) 49 Cal A tp. 4fB 4°72:.cs.soscsevesareyevessnaverenenanaeusnccavsnnnagavcaaainnccenonenonesient tasesaa cieteiavevasdocsiséeee 19 ies) Sole Energy Co. v.Petrominerals Corp. (20064) 125 Cal App Ath 212. cccrscisccsessrnsronneecnicsniiesnimnnccmmnnononnoasansaun 14 Westside Ctr. Assocs. v. Safeway Stores 23, Inc. a (1996) 42 Cal. App. tltS07. .cccssceacesssosavsvnsesssescvanacsuaeavsnvavvaceavsadvanguesnaassessvevevesebenesenenesdeestenseass 17 Vu v. Cal. Commerce Club, Inc. HA CLOD7} SS Cab AppSE 22D... ccccsccaresnsnesvesescvvenesansasansnansteaanaterevesersasvareecqapevorstevercavectccscenennssth 19 —~ State Statutory Authorities Bas. & Prof. Cade, 9)17200 ccccssercccevevessstocaveassvornessnvessssscsncspsssecsscsssssvvvesvasanwereavqcteecetessieesoes 9, 14,15 Cite Cove Pri. F357. cnr ncernscvexcseavvvccercevcocscoccccceccuvsusvanvoversesieisivvetcisssnsansanagcepveeseicidavccenssustoswnspeoes 8 Code’ Crve Proc: $430. 0 cssrevesexccovovevssiieeircetiverersssesseapnaenedevesassssedeuss pevevuvesecuwacsetscsvserstesnasaypevey 8, 10 BE IB, BE |cs ssevsrsncvensannerceccavencorscarsecssccuvesveccsssyshiohopeniohshedevevebe hated savyeuvsdceatéivaséubianasvnapyyessyGes 15 Peta TOS 1ES,vovesecoarasrveyncernyaxasssssn cssoccccsosentoiccepen cd npenrnnnbensnepnhexonin isu seKiics sane Wve vs Ceeeecevesiseneteees 15 10 Additional Authorities 11 Wiseman & Reese, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter GPUS GeRLESBcovatcvrcercune cnercngrcucsnpereemuara nierrerereenemmaensne rereaniannaeranreactencperertseenEnTerancrees ta ES TTeTFLISTING 15 12 13 LLP 14 BRAND 15 16 DOWNEY 17 18 19 20 21 22 23 24 25 26 27 28 1524747.3 4 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO FIRST AMENDED COMPLAINT I. INTRODUCTION John, Steven, and Virginia Mehalakis, and their companies Green Solutions & More, Inc., and Field Supply LLC (together, “the Mehalakises’’) have now had three separate opportunities to bring legally viable claims against Jonathan “Boomer” Field and his father, Jonathan Senior (together, “the Fields”). The Fields have been forced to first move to strike, then demur, and now again move to strike and demur inresponse to the Mehalakises’ meritless pleadings. Despite the SD Court’s issuance of a clear and detailed 12-page order on June 21, 2018, which sustained the Fields’ demurrer to ten out of ten causes of action—essentially dismissing the Mehalakises’ entire CO First Amended Complaint (“FAC”), the Mehalakises have filed aSecond Amended Complaint oO 10 (“SAC”) which isequally deficient as to every cause of action stated. As a matter of law, none of 11 the causes of action alleged in the SAC state facts sufficient to constitute a cause of action. 12 The Fields therefore respectfully request that the Court sustain their demurrer to the 13 Mehalakises’ entire SAC. The Fields further request that the demurrer be sustained without leave LLP 14 to amend. The SAC isnow the third opportunity the Mehalakises have had to state viable claims. BRAND 15 Yet they have once again failed to assert a single claim that is viable. Thus, the Mehalakises have 16 unequivocally demonstrated that they cannot cure the deficiencies in their complaint. They do DOWNEY 17 not have viable claims against the Fields, and never did. 18 II. RELEVANT PROCEDURAL AND FACTUAL BACKGROUND 19 A. The Court Strikes the Original Complaint Because Plaintiffs Lack Standing to Bring Claims on Behalf of Field Supply. 20 21 On October 24, 2017, the Mehalakises filed a preemptive verified complaint against the 22 Fields, bringing twelve causes of action. (Declaration of Avalon Fitzgerald (“Fitzgerald Decl.”), 23 {|2.) That complaint brought numerous claims on behalf of Field Supply, the corporation. (Jbid.) 24 Boomer, along with the corporation Field Supply, filed aCross-Complaint against the 25 Mehalakises on October 30, 2017. Ud. 93.) Field Supply (the corporation) and Boomer also 26 moved to strike Field Supply as a Plaintiff, since none of the Mehalakises are directors of Field 27 Supply and thus cannot bring litigation on its behalf. (/d. 4.) The Court granted that motion, 28 finding that “[t]he allegations in the complaint do not demonstrate that plaintiffs have standing to 1$24747.3 5 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO FIRST AMENDED COMPLAINT bring the action on behalf of corporate defendant Field Supply.” (Ud.45.) The Court gave the Mehalakises leave to file an amended complaint. (/bid.) B. The Mehalakises File Their FAC and the Court Sustains the Fields’ Demurrer, Granting the Mehalakises Narrow Leave to Amend. On February 9, 2018, the Mehalakises filed their FAC. The FAC purported tobring ten causes of action, brought by the Plaintiffs in various combinations. (Fitzgerald Decl. J 6; Request DW for Judicial Notice (“RJN”), Ex. A.) The Fields demurred to the FAC on numerous grounds. I (Fitzgerald Decl. { 7.) In response, the Mchalakises acknowledged that many oftheir causes of So action were legally insufficient, and attempted to lodge a proposed SAC with the Court. (Ud. § 8.) mo 10 The Fields opposed this effort, as the Mehalakises’ proposed SAC not only failed to resolve many 11 of the issues contained in the FAC, but also included new parties, requiring the Mehalakises to 12 bring a motion for leave to amend. (/d. 79.) On June 21, 2018, following oral argument, the 13 LLP Court issued an order sustaining the demurrer in fulland granting the Mehalakises leave to amend 14 only their causes of action for fraudulent misrepresentation, fraudulent concealment, violations of BRAND 15 California’s unfair competition law (“UCL”), intentional interference with contractual relations, DOWNEY 16 intentional interference with prospective economic advantage, and conversion. (Jd. J 10, Ex. A.) 17 Cc. The Mehalakises File a Deficient SAC. 18 On June 15, 2018, the Mehalakises filed their SAC. (Fitzgerald Decl. 11.) The SAC 19 contains causes of action for fraudulent misrepresentation, fraudulent concealment, unfair 20 competition, intentional interference with prospective economic advantage, and conversion. 21 These claims are now brought, in varying combinations, by Field Supply LLC, by John 22 Mehalakis in his individual capacity, and by Green Solutions & More, Inc., Steven Mehalakis, 23 and Virginia Mehalakis in their individual capacities “and on behalf of nominal defendant Field 24 Supply [the corporation].”’ (SAC at 1.) The fraudulent misrepresentation cause of action is 25 brought against Boomer by Green Solutions, Steven, and Virginia on their own behalf. (SAC {J 26 27 'The Mehalakises have expanded thescope of many oftheirclaims to includenew factualand legalbases, againsta new defendants,brought by new plaintiffs.These allegationsaretherefore subjectto amotion tostrike,filed 28 concurrently with thisdemurrer. 1824747.3 6 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT 120-126.) The fraudulent concealment cause of action is brought against Boomer and Jonathan Senior by Field Supply LLC, John, and Steven, Virginia, and Green Solutions on their own behalf WN and on behalf of Field Supply the corporation. (SAC ff 127-136.) The UCL cause of action is WY brought against Boomer and Jonathan Senior by Field Supply LLC and John, as well as Steven, & Virginia, and Green Solutions on their own behalf and on behalf of Field Supply the corporation. WA (SAC Ff 137-141.) The cause of action for intentional interference with prospective economic HA advantage is now brought by Green Solutions on its own behalf against Boomer and Jonathan ~~ Senior. (SAC ff 142-148.) The conversion cause of action isbrought by Green Solutions on its CO own behalf and Steven on his own behalf against Boomer and Jonathan Senior. (SAC ff 149- oO 10 159.) 11 As in each prior complaint, the SAC is arant of “factual” allegations that are rambling, 12 conclusory, and contradictory. The SAC, like the FAC and the original verified Complaint, 13 LLP claims that Boomer carried out a plan of theft and deceit, directed atthe Mehalakises, during his 14 employment with Green Solutions and then Field Supply. The allegations begin with the BRAND 15 Mehalakises’ alleged interest in starting a company—Field Supply—to serve as a retail yard for 16 DOWNEY John’s existing company, Green Solutions. (SAC ff]23-28.) According to the SAC, Boomer’s 17 surreptitious behavior started when he incorporated Field Supply in October 2016, (id. 7 47), and 18 continued through October 2017, (see, e.g., id. 113). At that point, the Mehalakises ousted 19 Boomer from Field Supply, transferred $50,000 into the bank account for a new entity they 20 formed (Field Supply LLC), and continued to operate the business under that new entity. (/d.| 21 114.) Although the SAC acknowledges that the parties disagreed along the way about who 22 owned Field Supply, (id.FJ 89, 93, 115), the SAC nonetheless contends that Boomer incorrectly 23 and impermissibly asserted that he had a right to own at least a portion of the company, (e.g.,id. J 24 115). However, the SAC also attempts to plead, in the alternative, that “Boomer owns a 25 substantial interest, or a 100% interest, in Field Supply, and that he, Jonathan Senior, and [Dan] 26 Shafer are the directors thereof.” (SAC ff 143, 150.) This alternative pleading applies only to 27 the causes of action for conversion and intentional interference with contractual relations. (/bid.) 28 The SAC also alleges that Boomer committed a litany of improper acts. Jonathan Senior’s sole 15247473 7 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT involvement is that he “aided and abetted” Boomer in committing these acts. (E.g., id. J] 48, 57.) D. Meet and Confer Efforts. Counsel engaged in extensive meet-and-confer efforts prior to filing this demurrer, but could not resolve the Fields’ objections to the SAC. (Fitzgerald Decl., J 12-15 & Exs. B, C.) Ff Ill. LEGAL ANALYSIS WN A demurrer tests the sufficiency of a pleading by raising questions of law. (Salimi v. State DH Compensation Insurance Fund (1997) 54 Cal.App.4th 216, 219.) The party against whom a IN complaint has been filed may object by demurrer on the ground that the pleading does not state OH facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) Pleadings Oo 10 must contain “a statement of thefacts constituting the cause of action, in ordinary and concise 11 language.” (Id. § 425.10, subd. (a)(1), emphasis added.) Further, a demurrer may be taken to all 12 or part of a pleading. (Ud. § 430.50.) Because a demurrer teststhe legal sufficiency of the 13 LLP complaint, a plaintiff must show that it alleges facts sufficient to establish each and every element 14 of each cause of action to survive the motion. (Rakestraw v, Cal. Physicians’ Serv. (2000) 81 BRAND 15 Cal.App.4th 39, 42-43.) When itwould be futile or impossible to cure the defect by amendment, DOWNEY 16 the Court should sustain the demurrer without leave to amend. (Schifando v. City of Los Angeles 17 (2003) 31 Cal.4th 1074, 1081.) 18 A. Plaintiffs Lack Standing to Pursue the Claims Alleged in the SAC. 19 “Standing is the threshold element required to state a cause of action[.]” (Martin v. 20 Bridgeport Cmty. Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031.) Standing requires that the 21 plaintiff “(has] a real interest in the ultimate adjudication because [he] has . .. suffered .. .any 22 injury of sufficient magnitude reasonably to assure that all of the relevant facts and issues will be 23 adequately presented.” (/bid.) Moreover, “[e]very action must be prosecuted in the name of the 24 real party in interest,” (Code Civ. Proc., § 367), which is the party with “an actual and substantial 25 interest in the subject matter of the action and who would be benefited or injured by the judgment 26 in the action,” (Martin, 173 Cal.App.4th at 1031-1032, quotation and citation omitted.) 27 1. Field Supply LLC Lacks Standing to Bring Each of Its Causes of Action. 28 As with the FAC, Field Supply LLC lacks standing to bring itsclaims for fraudulent 1524747.3 8 MEMORANDUM OF POINTS AND AUTHORITIES ISO DEMURRER TO SECOND AMENDED COMPLAINT concealment and violations of the UCL against the Fields. These claims arise from, among other things, Boomer allegedly filing the supposedly false statement of information, making an issuance of Field Supply’s stock, stealing from Field Supply, refusing to cooperate with the forensic accountant hired to inspect Field Supply’s books, and telling customers the “retail yard” > was going to shut down. (SAC ff 128, 140.) Field Supply LLC did not even existwhen the WN majority of these actions allegedly took place, since Field Supply LLC was not formed until DW September 7, 2017. (SAC § 2.) Moreover, according to the SAC, the Mehalakises did not I transfer Field Supply’s to Field Supply LLC until sometime between October 12 and October 17, co 2017. Ud. Ff 112-115.) Any action that allegedly occurred prior to Field Supply LLC’s oO 10 formation necessarily cannot have harmed it,and the actions taking place after its formation were 11 directed at Field Supply the corporation, not at FieldSupply LLC. Thus, to the extent the Fields’ 12 alleged actions harmed anyone, they harmed Field Supply the corporation, not Field Supply LLC, 13 and Field Supply LLC lacks standing to bring these claims. LLP 14 BRAND on Steven, Virginia, and Green Solutions Lack Standing to Bring the UCL Cause of Action. 15 16 DOWNEY To have standing to bring a claim under the UCL (Cal. Bus. & Prof. Code, § 17200 et 17 seq.), a plaintiff must “have lost money or property ... .”” (Kwikset Corp. v.Superior Court 18 (2011) 51 Cal.4th 310, 323, quotation omitted.) A plaintiff “must demonstrate some form of 19 economic injury.” (Jbid.) The Mehalakises allege that Boomer violated the UCL by (1) listing 20 his home address as Field Supply’s office on the articles of incorporation, (2) filing an allegedly 21 false statement of information, (3) “pressing for the New Retail Facility to use the convoluted 22 Point of Rental system,” (4) hiring an attorney, (5) holding a “fake” board meeting, (6) refusing to 23 sign dissolution documents, (7) wearing sweatpants to work, (8) insubordination, (9) refusing to 24 cooperate with a forensic accountant; (10) the alleged assault and battery, (11) temporarily 25 locking the Point of Rental System, (12) telling employees there were problems with the business; 26 and (13) contemplating filing another Statement of Information.