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  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
  • Mark Schaub et al vs Andrew Wyles Waters et alUnlimited Fraud (16) document preview
						
                                

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1 REICKER, PFAU, PYLE & McROY LLP ELECTRONICALLY FILED 1421 State Street, Suite B Superior Court of California 2 Santa Barbara, CA 93101 County of Santa Barbara Tel (805) 966-2440 Darrel E. Parker, Executive Officer 3 Fax (805) 966-3320 Kevin R. Nimmons (State Bar No. 261577) 10/7/2021 1:06 PM 4 knimmons@rppmh.com By: Johnny Aviles, Deputy Cory T. Baker (State Bar No. 315763) 5 cbaker@rppmh.com 6 Attorneys for Defendants Andrew Waters and FCP Private, LLC, 7 and FCP Corporation, Ltd. 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF SANTA BARBARA—ANACAPA DIVISION 11 12 MARK SCHAUB, an individual; TLG LTD., Case No.: 20CV02113 a Hong Kong limited Liability company Assigned to: Hon. Donna D. Geck 13 Plaintiffs, 14 DEFENDANTS ANDREW WATERS, v. FCP PRIVATE, LLC, AND FCP 15 CORPORATION, LTD.'S REPLY ANDREW WYLES WATERS, an individual; 16 FCP CORPORATION LTD., a Hong Kong TO OPPOSITION TO MOTION TO limited liability company; FCP PRIVATE, STRIKE SECOND AMENDED 17 LLC, a California limited liability corporation; COMPLAINT and DOES 1 through 10, inclusive, 18 [Filed concurrently herewith: Reply to Defendants. Opposition to Demurrer to Second Amended 19 Complaint; Memorandum] 20 Date: October 15 2021 Time: 10:00 a.m. 21 Dept.: 4 22 Amended Complaint filed: June 14, 2021 23 24 25 26 27 28 REPLY TO OPPOSITION TO MOTION TO STRIKE SECOND AMENDED COMPLAINT: Page 1 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 I. INTRODUCTION 3 Plaintiffs' Opposition to the Motion to Strike portions of the Second Amended Complaint 4 ("SAC") ("Opposition" or "Opp'n") is based on their belief that their addition of two new causes of 5 action for Breach of Contract are permitted without leave of Court. The SAC also alleges 6 conversion, fraud and unjust enrichment, against which Defendants Waters, FCP Private and FCP 7 Corporate (collectively, "Defendants") have separately demurred, to be heard with this motion to 8 strike. (The demurring party recommends that the Court first review the Demurrer (and the Reply) 9 for a full factual background. The demurrer to the fourth and fifth causes of action will be moot if 10 the Court grants this motion to strike those two causes of action.) As described below, the 11 Opposition's "Factual Background" section contains "facts" that are not set forth in the SAC. (See, 12 Opp'n, 1:12-2:26.) This is entirely improper. 13 Plaintiffs have now improperly added two causes of action for breach of contract, despite the 14 Court not granting them leave to do so. 15 II. THE MOTION TO STRIKE THE FOURTH AND FIFTH CAUSES OF ACTION 16 FOR BREACH OF CONTRACT SHOULD BE SUSTAINED — WITHOUT LEAVE 17 TO AMEND 18 In sustaining Defendants' demurrers to the FAC as to Plaintiffs' Second, Third and Fourth 19 Causes of Action, the Court's June 4, 2020 Order did not permit Plaintiffs leave to add two entirely 20 new causes of action, but instead, granted them leave to amend the second, third and fourth causes 21 of action. The Court's rationale for sustaining the initial Demurrer to the fourth cause of action for 22 unjust enrichment was as follows: 23 "Thus, a party to an express contract can assert a claim for restitution based on unjust enrichment by alleging in that cause of action that the express contract is void or 24 was rescinded. . . . A claim for restitution is permitted even if the party inconsistently pleads a breach of contract claim that alleges the existence of an 25 enforceable agreement.” [Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221 (citations and internal quotes omitted] 26 ¶ Here, plaintiffs have not asserted a contract or implied contract claim. Rather, 27 plaintiffs allege that they transferred funds belonging to them to defendants by mistake and that defendants have refused to return the funds." (June 4, 2020 Order 28 Sustaining Demurrer and Granting Motion to Strike.) REPLY TO OPPOSITION TO MOTION TO STRIKE SECOND AMENDED COMPLAINT: Page 2 1 Here, Plaintiffs were not permitted to amend the FAC to include a breach of contract cause 2 of action. Moreover, the breach of contract cause of action does not allege that an "express contract 3 is void or was rescinded," which Rutherford authorized, as this Court noted in its ruling above. 4 (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221.) So, not only do 5 Plaintiffs' contract causes of action violate the Court's order allowing leave to amend, the contract 6 causes of action do not support an unjust enrichment theory due to a void or rescinded contract; 7 rather, Plaintiffs seek damages for an alleged breach of contract. 8 Plaintiffs contend that Patrick v. Alacer Corp. (2008) 167 Cal.App.4th 995, 1015 permits 9 them to add a new cause of action because it "directly responds to the court's reasoning for 10 sustaining the earlier demurrer." Plaintiffs argue that their breach of contract claim for $1,940,000 11 should be allowed because it responds to the Court's issue in its June 4, 2021 Minute Order that 12 "plaintiffs have not asserted a contract or implied contract claim." (Opp'n, 4:2-4.) Plaintiffs' broad 13 reading of the holding in Patrick is not only incorrect, but inapplicable here. 14 In Patrick, a shareholder derivative action, the trial court sustained demurrers, with leave to 15 amend, for the plaintiff's failure to properly allege standing as a beneficial shareholder to bring a 16 derivative claim. (Patrick, 167 Cal.App.4th at 1015.) In response, the plaintiff added a new cause of 17 action for declaratory relief in her amended complaint seeking a declaration that she had a 18 community property interest in defendant's shares, and therefore, sufficient standing. (Id. at 999- 19 1000, 1015.) While the defendant argued that the trial court's order did not grant the plaintiff leave 20 to add a new claim, the Court of Appeal held that the addition of this claim was permissible because 21 it "directly responds to the court's reason for sustaining the earlier demurrer" – namely, the lack of 22 standing. (Id. at 1015.) 23 In permitting the addition of the new claim, the Court of Appeal recognized the well- 24 established rule that when a court sustains a demurrer to a complaint with leave to amend, a plaintiff 25 may only amend as authorized by the Court's order. (Id.; see also Harris v. Wachovia Mortg., FSB 26 (2010) 185 Cal.App.4th 1018, 1023 ("[f]ollowing an order sustaining a demurrer…the plaintiff may 27 amend his or her complaint only as authorized by the court's order. The plaintiff may not amend the 28 complaint to add a new cause of action without having obtained permission to do so, unless the new REPLY TO OPPOSITION TO MOTION TO STRIKE SECOND AMENDED COMPLAINT: Page 3 1 cause of action is within the scope of the order granting leave to amend."). The Court of Appeal 2 held this rule inapplicable to the facts in Patrick, however, because it found that the new declaratory 3 relief claim, which established the plaintiff's standing, was clearly within the scope of the trial 4 court's order permitting leave to amend to assert the plaintiff's standing. (Patrick, 167 Cal.App.4th 5 at 1015.) The trial court permitted the plaintiff leave to establish standing, and her new claim did so. 6 Patrick, supra, does not assist Plaintiffs. The breach of contract causes of action are entirely 7 improper. 8 III. THE MOTION TO STRIKE THE SIXTH CAUSE OF ACTION FOR UNJUST 9 ENRICHMENT SHOULD BE SUSTAINED WITHOUT LEAVE TO AMEND. 10 Plaintiffs rely upon the case of Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 11 Cal.App.4th 221 to attempt to plead around the well-established law in California that there is no 12 cause of action in California for unjust enrichment. Rutherford Holdings, LLC v. Plaza Del Rey, 13 supra, does not apply to the facts and legal theories alleged here, and the court in that case 14 explained when unjust enrichment can be construed as a claim for restitution. 15 "Thus, a party to an express contract can assert a claim for restitution based on unjust enrichment by alleging in that cause of action that the express contract is void or 16 was rescinded. [Citation.] A claim for restitution is permitted even if the party inconsistently pleads a breach of contract claim that alleges the existence of an 17 enforceable agreement." [Citation.] (Id. at 231 [citations and quotations omitted; bold added].) 18 19 The court in the Rutherford case then went on to explain why the facts alleged and legal 20 theories in that case allowed the unjust enrichment claim to remain: 21 "[W]e conclude that Rutherford stated a quasi-contract claim for restitution based on unjust enrichment. In particular, we conclude Rutherford adequately alleged a 22 reasonable interpretation of the purchase agreement under which section 1.2 is void to the extent it permits PDR to retain the deposit when Rutherford has not breached, 23 and that PDR has been unjustly enriched by retaining the deposit. Accordingly, we conclude the trial court erred in sustaining the demurrer as to the claim for restitution 24 based on unjust enrichment. (Id. at 232.) 25 Here, Rutherford does not apply because Plaintiffs do not allege a void contract. Plaintiffs 26 seek contract damages. In fact, as set forth in Defendants' concurrently filed Reply to Plaintiffs' 27 Opposition to the Demurrer to the SAC, each breach of contract cause of action fails for other 28 reasons and cannot be the basis for unjust enrichment. REPLY TO OPPOSITION TO MOTION TO STRIKE SECOND AMENDED COMPLAINT: Page 4 1 The demurrer to the sixth cause of action for unjust enrichment should be sustained without 2 leave to amend because there is no separate cause of action in California for unjust enrichment. 3 (Levine v. Blue Shield of Calif. (2010) 189 Cal.App.4th 1117, 1138; see also, Melchior v. New Line 4 Productions, Inc. (2003) 106 Cal.App.4th 779, 793 ["there is no cause of action in California for 5 unjust enrichment"]; Hill v. Roll Intern. Corp. (2011) 195 Cal.App.4th 1295, 1307) ["California 6 does not recognize a stand-alone cause of action for unjust enrichment."].) 7 Even if the Court permits Plaintiffs' Fourth Cause of Action for Breach of Contract and Fifth 8 Cause of Action for Breach of Contract (which it should not), those causes of action are only 9 against Defendants Waters and FCP Corporate. While the Sixth Cause of Action for Unjust 10 Enrichment is asserted "Against All Defendants," the Unjust Enrichment Cause of Action cannot be 11 made against Defendant FCP Private where there are no associated Breach of Contract causes of 12 action against it. 13 Finally, there is no allegation in the Fifth Cause of Action for Breach of Contract that 14 Plaintiff Schaub performed the terms of the alleged oral agreement or was excused from performing 15 them. (See, CACI No. 303. Breach of Contract - Essential Factual Elements.) Therefore, the breach 16 of contract cause of action fails to state sufficient facts to constitute a cause of action. 17 IV. CONCLUSION 18 Accordingly, the Court should sustain Defendants' motion to strike the above referenced 19 portions of Plaintiffs' SAC. 20 21 Dated: October 7, 2021 REICKER, PFAU, PYLE AND McROY LLP 22 23 By ___________________________________ 24 Kevin R. Nimmons Cory T. Baker 25 Attorneys for Defendants 26 27 28 REPLY TO OPPOSITION TO MOTION TO STRIKE SECOND AMENDED COMPLAINT: Page 5 1 PROOF OF SERVICE 2 I, the undersigned, say that I am a citizen of the United States, over 18 years of age, and not a party to the within action. I am employed by the law firm of Reicker, Pfau, Pyle & McRoy 3 LLP, 1421 State Street, Ste. B, Santa Barbara, California 93101. 4 On October 7, 2021, I served the within: DEFENDANTS ANDREW WATERS, 5 FCP PRIVATE, LLC, AND FCP CORPORATION, LTD.'S REPLY TO OPPOSITION TO MOTION TO STRIKE SECOND AMENDED COMPLAINT [Filed concurrently 6 herewith: Reply to Opposition to Demurrer to Second Amended Complaint; Memorandum] 7 on the interested parties listed below, as follows: 8 Matthew Donald Umhofer Diane H. Bang 9 SPERTUS, LANDES & UMHOFER, LLP 1990 South Bundy Dr., Suite 705 10 Los Angeles, California 90025 Telephone: (310) 826-4700 11 Facsimile: (310) 826-4711 Email: matthew@spertuslaw.com 12 Email: diane@spertuslaw.com 13 ( ) (By Mail) I caused such document to be mailed in a sealed envelope, by first-class mail, 14 postage fully prepaid. I am “readily familiar” with this firm’s practice of collection and processing correspondence for mailing. It is deposited with the U.S. postal service on 15 that same day in the ordinary course of business. I am aware that on motion of party served, service is presumed invalid if the postal cancellation date or postage meter date is 16 more than one (1) day after the date of deposit for mailing as stated in this declaration. 17 ( ) (By Personal Service) I caused such document to be delivered by hand. 18 ( ) (By FAX) I caused such document to be sent via facsimile transmission to the above- listed addressee(s) and FAX number(s). This transmission was reported as complete and 19 without error. 20 (X) ((By E-MAIL [CCP § 1010.6(a)(2)) On the date indicated on this Proof of Service, at the time indicated on in the header of my electronic mail, I transmitted the foregoing 21 document(s) by electronic mail to one or more of the recipients at each firm indicated on this Proof of Service. I caused the my computer to print or maintain a record of the 22 electronic mail to the recipients named in this Proof of Service, a true and correct copy of which has been retained by Reicker, Pfau, Pyle & McRoy LLP in either hard copy or 23 electronic format in the ordinary course of business and is available for inspection if necessary. 24 (X) (State) I declare under penalty of perjury pursuant to the laws of the State of California 25 that the foregoing is true and correct. 26 Executed October 7, 2021, at Santa Barbara, California. 27 ____________________________ 28 Susie Hernandez PROOF OF SERVICE