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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
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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
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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.
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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
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this Proof of Service. I caused the my computer to print or maintain a record of the
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which has been retained by Reicker, Pfau, Pyle & McRoy LLP in either hard copy or
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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