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20CV368229
Santa Clara — Civil
R. Nguyen
Randall J. Dean, Esq., Bar No. 110441 Electronically Filed
Mark E. DiMaria, Esq., Bar No. 89378 by Superior Court of CA,
CHAPMAN GLUCKSMAN DEAN & ROEB
County of Santa Clara,
A PROFESSIONAL CORPORATION
11900 WEST OLYMPIC BOULEVARD, SUITE 800 on 11/16/2020 11:43 AM
LOS ANGELES, CALIFORNIA 90064-0704 Reviewed By: R. Nguyen
(310) 207-7722 + FAX: (310) 207-6550 Case #20CV368229
Envelope: 5300938
Attorneys for Defendants Spot On Consulting
Group, A Professional Accountancy Corporation,
Jonathan R. Laddy, CPA, and Kelly P. Playle
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SANTA CLARA
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11 PACIFIC OFFICE DESIGNS, INC., a Case No.: 20 CV 368229
California Corporation;
12 Complaint Filed: July 9, 2020
FAC Served: October 9, 2020
13 Plaintiff,
Case Management Judge:
14 Vv. The Honorable Socrates P. Manoukian,
Dept: 20
15 SPOT ON CONSULTING GROUP, a
Professional Accountancy Corporation; NOTICE OF HEARING ON
16 JONATHAN RONALD LADDY; EXEMPLIS, DEMURRERS TO PLAINTIFF’S
LLC, a California Limited Liability Company; FIRST AMENDED COMPLAINT BY
17 PAUL DE VRIES; KELLY PAULINE DEFENDANTS SPOT ON CONSULTING
PLAYLE; NANCY LOPEZ; and DOES 1-150, GROUP, JONATHAN RONALD LADDY,
18 inclusive, AND KELLY PAULINE PLAYLE;
DEMURRERS; MEMORANDUM OF
19 POINTS AND AUTHORITIES; AND
Defendants. DECLARATION OF MARK E, DiMARIA|
20 PURSUANT TO CODE OF CIVIL
PROCEDURE §430.31
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Date: December &X, 2020
22 Time: 9:00 a.m.
Dept.: 20
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Trial Date: None Set
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT
NOTICE OF HEARING ON DEMURRERS
TO PLAINTIFE’S FIRST AMENDED COMPLAINT
BY DEFENDANTS SPOT ON CONSULTING GROUP,
JONATHAN RONALD LADDY, AND KELLY PAULINE PLAYLE
TO ALL INTERESTED PARTIES AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that on Thursday, December 17, 2020, at 9:00 a.m., or as soon
thereafter as the matter may be heard, in Department 20 of the above-captioned Court, located at
161 North First Street, San Jose, CA 95113, defendants Spot On Consulting Group, a Professional
9 Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot On”),
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will, and hereby do, demur to the “First Amended Complaint for Intentional Misrepresentation;
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Negligent Misrepresentation; Breach of Contract; Negligence; Breach of Implied Contract;
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Attorneys Fees re Tort of Another; Breach of Contract; and Negligence: Res Ipsa Loquitor” (the
13 “FAC”) of plaintiff Pacific Office Designs, Inc., a California corporation (“Pacific”), on the
14 grounds that (i) it fails to state facts sufficient to constitute any legally cognizable cause of action,
15 and (ii) it is fatally uncertain, as against Spot On.
16 These Demurrers are made pursuant to Code of Civil Procedure §§ 430.10(e) and (f), and
17 will be based on this Notice of Hearing; the attached Demurrers; the accompanying Memorandum
18 of Points and Authorities; the attached Declaration of Mark E. DiMaria pursuant to Code of Civil
19 Procedure §430.31; the pleadings, records, and files in this action; and such other materials as may
20 be presented to the Court, or judicially noticed, at or before, or in connection with, the hearing on
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these Demurrers.
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DATED: November 9, 2020. CHAPMAN, GLUCKSMAN, DEAN & ROEB,
23 A Professional Corporation
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25 MLL. RANDALL J. DEAN
26 MARK E. DiMARIA
Attorneys for Defendants Spot On Consulting
27 Group, A Professional Accountancy Corporation,
Jonathan R. Laddy, CPA, and Kelly P. Playle
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFFS FIRST AMENDED COMPLAINT
DEMURRERS
Defendants Spot On Consulting Group, a Professional Accountancy Corporation, Jonathan R.
Laddy, CPA, and Kelly P. Playle (collectively “Spot On”), hereby demur to the “First Amended
Complaint for Intentional Misrepresentation; Negligent Misrepresentation; Breach of Contract;
Negligence; Breach of Implied Contract; Attorneys Fees re Tort of Another; Breach of Contract; and
Negligence: Res Ipsa Loquitor” (the “FAC”) of plaintiff Pacific Office Designs, Inc., a California
corporation (“Pacific”) filed herein, on the following separate and distinct grounds:
GENERAL DEMURRER TO FIRST PURPORTED CAUSE OF ACTION
1 The First purported Cause of Action for “Intentional Misrepresentation” set forth in
10 the FAC fails to state facts sufficient to constitute any legally cognizable cause of action against Spot
1 On, in that there is no legally sufficient allegation of any representation of fact by Spot On.
12 SPECIAL DEMURRER TO FIRST PURPORTED CAUSE OF ACTION
13 2 The First purported Cause of Action for “Intentional Misrepresentation” set forth in
14 the FAC is fatally uncertain, at Paragraphs 54 through 61, inclusive (page 13, line 4, through page 14,
15 line 26, inclusive), as against Spot On, in that it is impossible to ascertain therefrom any
16 representation of fact by Spot On.
17 GENERAL DEMURRER TO SECOND PURPORTED CAUSE OF ACTION
18 3 The Second purported Cause of Action for “Negligent Misrepresentation” set forth in
19 the FAC fails to state facts sufficient to constitute any legally cognizable cause of action against Spot
20 On, in that there is no legally sufficient allegation of (a) any representation of fact by Spot On, or (b)
21 any positive assertion by Spot On.
22 SPECIAL DEMURRER TO SECOND PURPORTED CAUSE OF ACTION
23 4. The Second purported Cause of Action for “Negligent Misrepresentation” set forth in
24 the FAC is fatally uncertain, at Paragraphs 62 through 67, inclusive (page 15, line 1, through page 16,
25 line 12, inclusive), as against Spot On, in that it is impossible to ascertain therefrom (a) any
26 representation of fact by Spot On, or (b) any positive assertion by Spot On.
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFE’S FIRST AMENDED COMPLAINT
GENERAL DEMURRER TO SEVENTH PURPORTED CAUSE OF ACTION
5 The Seventh purported Cause of Action for “Tort of Another” set forth in the FAC
fails to state facts sufficient to constitute any legally cognizable cause of action against Spot On, in
that there is no legally sufficient allegation of any attorneys’ fees or other legal expenses incurred in
any principal or underlying case, other than prospectively in the present action.
SPECIAL DEMURRER TO SEVENTH PURPORTED CAUSE OF ACTION
6 The Seventh purported Cause of Action for “Tort of Another” set forth in the FAC is
fatally uncertain, at Paragraphs 98 through 100, inclusive (page 22, line 21, through page 22, line 3,
inclusive), as against Spot.On, in that it is impossible to ascertain therefrom any attorneys’ fees or
10 other legal expenses incurred in any principal or underlying case, other than prospectively in the
11 present action.
12 GENERAL DEMURRER TO NINTH PURPORTED CAUSE OF ACTION
13 7 The Eleventh purported Cause of Action for “Negligence — Res Ipsa Loquitor” [sic]
14 set forth in the FAC fails to state facts sufficient to constitute any legally cognizable cause of action
15 against Spot On, in that (a) res ipsa loquitur is not a cause of action in itself, but rather is a rebuttable
16 presumption applicable in certain cases of alleged negligence; and (b) there is no legally sufficient
17 allegation that the alleged injury is one that could occur only as the result of negligence by Spot On.
18 SPECIAL DEMURRER TO NINTH PURPORTED CAUSE OF ACTION
19 8 The Eleventh purported Cause of Action for “Negligence — Res Ipsa Loquitor” [sic]
20 set forth in the FAC is fatally uncertain, at Paragraphs 105 through 111, inclusive (page 24, line 20,
21 through page 25, line 23, inclusive), as against Spot On, in that it is impossible to ascertain therefrom
22 (a) how the doctrine of res ipsa loquitur, which is a merely rebuttable presumption applicable in
23 certain cases of alleged negligence, could be a cause of action in itself; or (b) any legally sufficient
24 allegation that the alleged injury is one that could occur only as the result of negligence by Spot On.
25 WHEREFORE, Spot On prays that:
26 1 Each of these Demurrers be sustained in its entirety, without leave to amend;
27 2 Pacific take nothing by the First, Second, Seventh, or Ninth purported Causes of
28 Action of its FAC, as against Spot On;
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT
Each of the First, Second, Seventh, and Ninth purported causes of action of the FAC
be stricken and dismissed with prejudice, in its entirety, as against Spot On;
Spot On be awarded their costs of suit incurred herein; and
Such other and further relief be awarded as the Court may deem just and proper.
DATED: November 9, 2020. CHAPMAN, GLUCKSMAN, DEAN & ROEB,
A Professional Corporation
By: ZA:
RANDALL
MARK E. DiMARIA
Attorneys for Defendants Spot On Consulting
Group, A Professional Accountancy Corporation,
10 Jonathan R. Laddy, CPA, and Kelly P. Playle
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT
MEMORANDUM OF POINTS AND AUTHORITIES
I
INTRODUCTION.
Pacific’s FAC represents a misdirected effort to transform what is no more than a simple
negligence claim against Spot On into something more exotic. That effort is transparently untenable
as a matter of law, comprising claims for (a) misrepresentation which lack any alleged representation,
(b) negligent misrepresentation which contain no positive assertion, (c) “tort of another” which
impermissibly seek to recover prospectively attorneys’ fees and legal expenses to be incurred in this
action; and (e) res ipsa loquitur, which is not an independent cause of action in and of itself, merely a
10 rebuttable presumption applicable in certain negligence cases. While the action may proceed on the
11 FAC’s negligence and breach of contract claims against Spot On, the others are fatally deficient and
12 thus subject to general demurrers, each of which should be sustained as a matter of law, without leave
13 to amend.
14 A Procedural History.
15 On July 9, 2020, Pacific filed its initial complaint in this action against its accountants, Spot
16 On Consulting Group, a Professional Accountancy Corporation, and Jonathan R. Laddy, CPA, and
17 their employee, Kelly P. Playle (collectively “Spot On”), along with other defendants. The complaint
18 alleged that Spot On was induced to process and make payments on behalf of Pacific to one of its
19 trade creditors, defendant Exemplis, LLC, which payments instead were fraudulently re-directed and
20 obtained by undisclosed third parties posing as authorized Exemplis personnel. It thus asserted
21 claims against Spot On for negligence, as well as intentional and negligent misrepresentation, breach
22 of contract, tort of another, constructive trust, money had and received, and “res ipsa loquitor” [sic].
23 In response, Spot On’s counsel sent the requisite pre-demurrer letter pursuant to Code of Civil
24 Procedure §430.31 to Pacific’s attorneys, citing various legal deficiencies in that original complaint,
25 and requesting that they be remedied. Consequently, on October 9, 2020, Pacific served its FAC on
26 counsel for Spot On, which deleted the former claims for constructive trust and money had and
27 received, dropped individual defendants Mr. Laddy and Ms. Playle from the claim for breach of
28 contract, dropped Mr. Laddy from the negligent misrepresentation claim, and made other changes
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
(primarily with respect to the FAC’s allegations against the named defendants other than Spot On, to
wit, Exemplis LLC and its personnel, Paul DeVries and Nancy Lopez).
Despite these amendments, the FAC continues to assert purported claims against Spot On
which are legally untenable, for intentional misrepresentation, negligent misrepresentation, “tort of
another,” and “res ipsa loquitor” (sic], respectively. Once more, Spot On’s counsel sent the requisite
pre-demurrer letter pursuant to Code of Civil Procedure §430.31 to Pacific’s attorneys. Despite an
exchange between counsel, those efforts did not resolve the FAC’s defects. Hence, these demurrers.
The three Spot On defendants have not appeared previously in this action, and presently are
not aware of any other hearing, proceeding, or other activity herein to date.
10 II
11 THE FAC FAILS TO ALLEGE FACTS CONSTITUTING ANY LEGALLY
12 COGNIZABLE CAUSE OF ACTION AGAINST SPOT ON FOR INTENTIONAL
13 MISREPRESENTATION, AND IS IMPERMISSIBLY UNCERTAIN.
14 “The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation
15 (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c)
16 intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” 5 Witkin,
17 Summary of California Law, Torts §890 (11 ed. 2020). Moreover, fraud must be specifically
18 alleged or it fails to state a cause of action and is subject to general demurrer. 5 Witkin, California
19 Procedure, Pleading §711 (5" ed. 2020); see, ¢.g., Citizens of Humanity, LLC v. Costco Wholesale
20 Corp., 171 Cal.App.4th 1, 21, 89 Cal. Rptr.3d 455 (2009).
21 Because of the inherent attack upon character in any deceit claim, it is long established that, to
22 state a legally cognizable cause of action, each element thereof must be alleged with particularity, in
23 order to allow the defendant to fully understand the nature of the charge made, and respond thereto.
24 The “rationale for this ‘strict requirement of pleading’ ... is not merely notice to the defendant. The
25 idea seems to be that ... fairness to the defendant demands that he should receive the fullest possible
26 details of the charge in order to prepare his defense.” Stansfield v. Starkey, 220 Cal.App.3d 59, 73,
27 269 Cal.Rptr. 337 (1990). Fundamental fairness requires factual specificity.
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
In that regard, the FAC’s allegations of the purported “representations” by Spot On are fatally
deficient because they glaringly lack the minimum amount of particularity required for any claim of
fraud and deceit. Indeed, there is no allegation of any actual representation at all by Spot On.
As noted above, each element of a fraud claim must be alleged with specificity — particularly
the purported representation upon which that claim is based. As the California Supreme Court states:
“In California, fraud must_be pled specifically; general and conclusory
allegations do not suffice. ... Thus the policy of liberal construction of the pleadings
will not ordinarily be invoked to sustain a pleading defective in any material respect.
... This particularity requirement necessitates pleading facts which show how, when,
10 where, to whom, and by what means the representations were tendered... A
1 plaintiffs burden in asserting a fraud claim against [an entity] is even greater. In
12 such a case, the plaintiff must allege the names of the persons who made the
13 allegedly fraudulent representations, their authority to speak, to whom they spoke,
14 what they said or wrote, and when it was said or written.” Lazar v. Superior Court,
15 12 Cal.4th 631, 645, 49 Cal.Rptr.2d 377 (1996) (italics in original, emphasis added).
16 In this regard, Pacific’s first purported cause of action for fraud is patently deficient, as it
17 plainly contains no sufficient allegation of any actionable representation by Spot On. The supposed
18 representation is set forth in Paragraph 56, at page 13, lines 12-18, of the FAC: “[Spot On] falsely
19 and fraudulently misrepresented to Plaintiff, by their action in paying third-party vendors, including
20 EXEMPLIS, that there were no undisclosed material facts affecting the payments to said third-party
21 on their invoices, such as receiving communications from that third-party vendor of a new bank
22 account and instructions to pay invoices thereto without confirming directly with the alleged entity
23 making those changes, that such information was in fact true and correct before making payment on
24 such outstanding purchase orders.” (Emphasis added.)
25 The one thing that does emerge from this word salad is that the misrepresentation allegedly
26 consisted of “paying third party vendors.” Not a written statement. Not an oral statement. Not an
27 implied term arising from a written or oral statement. But the “action in paying third-party vendors.”
28 Simply put, this is not a representation at all of any fact or anything else, in the sense required
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT
for_a fraud claim. Using the above language quoted from Lazar as a framework, the FAC’s
allegations do not indicate in any way: (1) how any supposedly actionable representation was made —
they do nothing to inform the Court or Spot On as to how any information was actually conveyed; (2)
when any representation was made; (3) where any representation was made — there is no mention of
any location where a representation was conveyed; (4) to whom any representation was made — there
is no indication of any individual(s) to whom any representation was made, either directly or
indirectly; (5) by what specific means or medium any representation was made — e.g., by letter, e-
mail, telephone, face-to-face meeting, etc.; (6) by whom any representation was made — again, no
individual is identified; (7) the authority of any individual to speak on behalf of Spot On; or even (8)
10 ny words that actually were said or written.
11 Above and beyond this, since there is no allegation of any actual representation, the FAC does
12 not (and indeed, cannot) allege, in factual terms, the falsity of any such particular representation.
13 Accordingly, the first purported cause of action obviously fails to state any legally cognizable claim
14 by Pacific against Spot On for fraud or anything else, and thus is subject to general demurrer as a
15 matter of black letter law, since it lacks particularized allegations of any actionable representation.
16 ill
17 THE FAC FAILS TO ALLEGE FACTS CONSTITUTING ANY LEGALLY
18 COGNIZABLE CAUSE OF ACTION AGAINST SPOT ON FOR NEGLIGENT
19 MISREPRESENTATION, AND IS IMPERMISSIBLY UNCERTAIN.
20 In California, “The following elements must be pleaded to state a cause of action for negligent
21 misrepresentation: (1) a false statement of a material fact that the defendant honestly believes to be
22 true, but made without reasonable grounds for such belief, (2) made with the intent to induce reliance,
23 (3) reasonable reliance on the statement, and (4) damages.” Century Surety Co. v. Crosby Insurance,
24 Inc., 124 Cal.App.4th 116, 125, 21 Cal.Rptr.3d 115 (2004).
25 Like intentional misrepresentation or fraud, negligent misrepresentation is a form of deceit.
Civil Code §1710(2). “Causes of action for intentional and negligent misrepresentation sound in
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27 fraud and, therefore, each element must be pleaded with specificity. [Citations.] ‘The specificity
28 requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
means the representations were made, and, in the case of [an entity] defendant, the plaintiff must
allege the names of the persons who made the representations, their authority to speak on behalf of
the corporation, to whom they spoke, what they said or wrote, and when the representation was
made.’ [West v. JPMorgan Chase Bank, N.A., 214 Cal.App.4th 780, 793, 154 Cal.Rptr.3d 285
(2013)].” Daniels v. Select Portfolio Servicing, Inc., 246 Cal.App.4th 1150, 1166-1167, 201
Cal.Rptr.3d 390 (2016) (emphasis added). Such claims sounding in fraud which are not specifically
alleged fail to state a cause of action and thus are subject to general demurrer. See, e.g., Citizens of
Humanity, LLC v. Costco Wholesale Corp., 171 Cal.App.4th 1, 21, 89 Cal.Rptr.3d 455 (2009).
The FAC’s purported cause of action for negligent misrepresentation, at Paragraph 63, page
10 15, lines 7-8 and 19-21, alleges only that “At various times, [Spot On] made the misrepresentations
11 and concealments alleged herein. ... Therefore, when said defendants made such payment, said
12 defendants impliedly represented to Plaintiff that they were correctly making the payment on said
13 purchase orders to a new bank account purportedly arranged by EXEMPLIS ... .” No new or
14 additional “representation” is alleged beyond that in the first purported cause of action for intentional
15 misrepresentation, although it is now characterized as some sort of “implied” representation. That
16 claim consequently suffers from the very same fundamentally fatal deficiency as the preceding one —
17 to wit, that it completely fails to allege any representation at all.
18 Moreover, it is well-established that a cause of action for negligent misrepresentation
19 cannot be based upon an implied representation. Rather, it requires a “positive assertion,” that is,
20 n express statement of fact: “The tort of negligent misrepresentation requires a ‘positive assertion’
21 and does not apply to implied misrepresentations.” Stockton Mortgage, Inc. v. Tope, 233
22 Cal.App.4th 437, 458-459, 183 Cal.Rptr.3d 186 (2014); accord, Diediker v. Peelle Financial Corp.,
23 60 Cal.App.4th 288, 297-298, 70 Cal.Rptr.2d 442 (1997).
24 Plainly, no representation at all, much less any “positive assertion,” on the part of Spot On has
25 been alleged by the second purported cause of action for negligent misrepresentation. Accordingly, it
26 fails to allege any legally cognizable claim for negligent misrepresentation or for anything else, and it
27 thus is subject to general demurrer, which must be sustained, without further leave to amend.
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
IV
THE FAC’S SEVENTH PURPORTED CAUSE OF ACTION, FOR “TORT OF
ANOTHER,” FAILS TO STATE ANY LEGALLY COGNIZABLE CAUSE OF ACTION
AGAINST SPOT ON, AND IS IMPERMISSIBLY UNCERTAIN.
California generally follows the “American Rule” on the recovery of attorneys’ fees: “Except
as attorney's fees are specifically provided for by statute, the measure and mode of compensation of
attorneys and counselors at law is left to the agreement, express or implied, of the parties ....” Code
of Civil Procedure §1021. However, “A person who through the tort of another has been required to
act in the protection of his interests by bringing or defending an action against a third person is
10 entitled to recover compensation for the reasonably necessary loss of time, attorney's fees, and other
1 expenditures thereby suffered or incurred.” Prentice v. North American Title Guaranty Corp., 59
12 Cal.2d 618, 620, 30 Cal.Rptr. 821 (1963). This is so since such attorneys’ fees and expenses incurred
13 in other prior underlying litigation are “akin to damages,” rather than an expense of prosecuting the
14 current claim. 59 Cal.2d 621. As such, the Courts have made it clear that this “tort of another”
15 doctrine, since codified in Code of Civil Procedure §1021.6, may not be used as a subterfuge to
16 recover fees incurred in suing the tortfeasor itself. See, e.g., Bear Creek Planning Committee y. Title
17 Insurance & Trust Co., 164 Cal.App.3d 1227. 1243-1244, 211 Cal.Rptr. 172 (1985).
18 “The tort of another doctrine does not allow a party to recover the fee:
19 and costs involved in litigating directly with a negligent defendant. [Pederson v.
20 Kennedy, 128 Cal.App.3d 976, 980, 180 Cal.Rptr. 740 (1982).]
21 “[Moreover], the tort of another doctrine does not apply to the situation
22 where a plaintiff has been damaged by the joint negligence of codefendants.
23 [Vacco Industries, Inc. v. Van Den Berg, 5 Cal.App.4th 34, 6 Cal. Rptr.2d 602
24 (1992)], stated at page 57: ‘The rule of Prentice [supra] was not intended to apply to
25 one of several joint tortfeasors in order to justify additional attorney fee damages. If
26 that were the rule there is no reason why it could not be applied in every multiple
27 tortfeasor case with the plaintiff simply choosing the one with the deepest pocket as
28 the “Prentice target.” Such a result would be a total emasculation of Code of Civil
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
Procedure section 1021 in tort cases. on Gorman vy. Tassajara Development Corp.,
178 Cal.App.4th 44, 80, 100 Cal.Rptr.3d 152 (2009). (Emphasis added.)
Pacific’s seventh purported cause of action for “tort of another” is just such a proscribed
attempt to recover attorneys’ fees prospectively to be incurred in litigation directed against an alleged
tortfeasor, Spot On. And the presence of an alleged jointly negligent tortfeasor, Exemplis itself, is
not a basis on which to assert otherwise. As such, this purported claim is barred as a matter of law.
Vv
THE FAC’S NINTH PURPORTED CAUSE OF ACTION FOR “NEGLIGENCE — RES
IPSA LO UITOR” [sic] FAILS TO STATE ANY LEGALLY COGNIZABLE CAUSE OF
10 ACTION AGAINST SPOT ON, AND IS IMPERMISSIBLY UNCERTAIN.
11 Pacific’s fourth purported cause of action against Spot On is for Negligence. Spot On has not
12 demurred to that negligence claim — unlike many other putative causes of action of Pacific’s FAC.
13 Nevertheless, Pacific has asserted, as its purported ninth “cause of action,” a claim for
14 “Negligence Res Ipsa Loquitor” [sic]. It alleges in substance that the same supposed facts set forth in
15 the fourth cause of action give rise to a duplicative claim for negligence, but that “By virtue of the
16 facts and circumstances of the incident as above alleged, the doctrine of res ipsa loquitur is
17 applicable to the claim against [Spot On]. Under that doctrine the burden of proving that the operator
18 of defendants’ security systems were free from all negligence in connection with the incident and the
19 burden of proving freedom from liability in connection with the incident is placed on defendants.”
20 FAC, Paragraph 108, at page 25, lines 7-13.
21 This argument about the applicability of the res ipsa loquitur doctrine to shift burdens of proof
22 with respect to Pacific’s negligence claims does not state a separate cause of action. Res ipsa loquitur
23 does not represent a discrete substantive right whose violation may give rise to a monetary judgment
24 or other form of judicial relief. Rather, it is merely an evidentiary presumption which may give rise
25 to an inference that shifts the burden of presentation at trial:
26 “The judicial doctrine of res ipsa loquitur is a presumption affecting the
27 burden of producing evidence.” Evidence Code §646(b) (emphasis added).
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
Res ipsa loquitur is an evidentiary presumption, not a cause of action. Accordingly, a putative claim
for “negligence ~ res ipsa loquitur,” especially in an action like this where “negligence” already has
been alleged in the FAC, does not, and cannot ever, state any legally cognizable independent cause of
action under any circumstances. It is merely an evidentiary principle which Pacific may or may not
choose to attempt to invoke in presenting its already-alleged negligence claims at trial.
As such, Pacific’s ninth purported cause of action is, at best, surplusage, and Spot On’s
demurrers thereto must be sustained, without leave to amend.
VI
CONCLUSION.
10 Other than Pacific’s third and fourth causes of action for breach of contract and negligence, its
11 purported claims against Spot On uniformly fail, as a matter of law. The first and second purported
12 causes of action for intentional and negligent misrepresentation lack any particularized allegations of
13 a positive assertion or other representation of fact. The seventh purported cause of action for “tort of
14 another” impermissibly seeks to recover prospectively attorneys’ fees and legal expenses to be
15 incurred in this action. And the ninth purported cause of action impermissibly purports to be one for
16 es ipsa loquitur, which is just a rebuttable evidentiary presumption, and not an independent cause of
17 action in and of itself, at all. Accordingly, the Court should sustain Spot On’s Demurrers to each of
18 those putative causes of action, in their entirety, without leave to amend.
19 Respectfully submitted,
20 DATED: November 9, 2020. CHAPMAN, GLUCKSMAN, DEAN & ROEB,
A Professional Corporation
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23 RANDALL J. DEAN
MARK E. DiMARIA
24 Attorneys for Defendants Spot On Consulting
Group, A Professional Accountancy Corporation,
25 Jonathan R. Laddy, CPA, and Kelly P. Playle
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
DECLARATION OF MARK E. DiMARIA
PURSUANT TO CODE OF CIVIL PROCEDURE §430.31
I, MARK E. DiMARIA, declare:
1 The facts in this Declaration are set forth on my personal knowledge and, if called as a
witness, I could and would competently testify thereto under oath.
2. I am an attorney, duly authorized to practice before all courts of the State of
California, and I practice with the law firm of Chapman, Glucksman, Dean & Roeb, A Professional
Corporation, counsel of record in this action for defendants Spot On Consulting Group, a Professional
Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot On”). I
10 submit this Declaration in support of Spot On’s accompanying demurrers to Pacific’s first amended
11 complaint in this action (the “FAC”).
12 3 On October 20, 2020, I sent a letter, a true and complete copy of which is attached
hereto as Exhibit “A,” to Terry J. Mollica, Esq., of Mollica Law, and Glen H. Olives, Esq., of the
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Law Office of Glen H. Olives, counsel of record for Pacific in this action, by e-mail, at their
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15 respective addresses appearing on the face of the FAC. Mr. Mollica is the attorney who signed the
16 FAC, and Mr. Olives is the attorney who served it on our office. A true and compete copy of the e-
17 mail message to which my letter was attached is attached hereto as Exhibit “B.”
4. My letter asked Mr. Mollica and Mr. Olives to meet and confer with me by telephone
18
19 (in person meetings currently are inadvisable, due to the COVID-19 pandemic, and our offices are
20 located at opposite ends of the State), in order to determine whether we could reach an agreement that
21 would resolve the objections that we intended to raise in our demurrers and concurrent motion to
22 strike portions of the FAC. The letter advised that our statutory deadline by which to meet and confer
23 was November 5, 2020, the fifth day before Spot On’s pleading in response to the FAC was due, and
24 asked them to let us know when and how they would like to conduct the meet and confer. It further
25 set forth the legal basis, scope, and legal support for our prospective demurrers.
5 On October 30, 2020, I received a letter in reply by e-mail from Mr. Mollica, in which
26
27 he disagreed with our positions on the demurrers. After reading Mr. Mollica’s letter and considering
28 the positions he expressed, I sent him and Mr. Olives another letter by e-mail on November 2, 2020,
14
NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT
in which I advised them that we continued to believe that our positions were strongly grounded in
law, that demurrers on those grounds were both appropriate and necessary to ensure that neither the
parties nor the Court devoted significant resources to litigating claims that were not legally tenable,
and that it remained our intention to proceed with our demurrers. Later that day, I received an e-mail
message from Mr. Olives to the effect that they might be able to “respond more thoroughly to [my]
input and requests” after they had met and conferred with counsel for the other defendants.
6 As of the execution of this Declaration, I have not heard anything further of substance
from Mr. Olives or Mr. Mollica with respect to the substance of our contemplated Demurrers.
I declare, under penalty of perjury under the laws of the State of California, that the foregoing
10 is true and correct, and that this Declaration was executed on November 9, 2020, at Los Angeles,
11 California.
12 LP),
4
cee
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MARK E. DiMARIA
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NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT
EXHIBIT A
CHAPMAN GLUCKSMAN
DEAN & ROEB
A PROFESSIONAL CORPORATION
Mark E. DIMARIA
ATTORNEYS AT LAW
11900 WEST OLYMPIC BOULEVARD, SUITE 800
LOS ANGELES, CALIFORNIA 90064-0704.
TELEPHONE: (310) 207-7722
TELECOPIER: (310) 207-6560
WEBSITE: Wwwicgdriaw.com
E-MAIL: mdimaria@cgdrlaw.com
October 20, 2020
BY E-MAIL
Terry J. Mollica, Esq. Glen H. Olives, Esq.
Mollica Law Law Office of Glen H. Olives
560 First Street, Suite B201 4701 Soquel Drive, Suite E
Benicia, CA 94510 Soquel, CA 95073
tim@caattnys.com gho57942@gmail.com
Re: Pacific Office Designs, Inc., etc, v. Spot On Consulting Group, etc., et al.,
Santa Clara County Superior Court Case No. 20 CV 368229;
Qur File No.:_2.0782,763
Dear Mr. Mollica and Mr. Olives:
As you know, our firm represents defendants Spot On Consulting Group, a Professional
Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot
On”), in the above-referenced action filed by your offices on behalf of plaintiff Pacific Office
Designs, Inc. (“Pacific”);
You will recall that, following service of Pacific’s original complaint, we wrote to you in
anticipation of filing demurrers and a motion to strike portions of that pleading, in an effort to
resolve those issues without the necessity of judicial intervention. Consequently, we received
your client’s first amended complaint (the “FAC”) electronically on October 9, 2020.
While the FAC has dropped several of its predecessor’s defective claims and allegations
against one or more of our clients, many of the other issues remain. Accordingly, this letter is
provided pursuant to Code of Civil Procedure §430.41 and §435.5, with respect to Pacific’s
FAC. Please be advised that it is our intention to file on behalf of Spot On: (i) general and
special demurrers to the first, second, seventh, and ninth purported causes of action of the FAC,
on the grounds that they fail to state facts sufficient to constitute any legally cognizable cause of
action against Spot On, and are impermissibly uncertain; and (ii) a motion to strike from the
FAC all references to the recovery of punitive damages, special damages, equitable relief, and
attorneys’ fees from Spot On, on the grounds that such references are improper matter which is
not drawn or filed in conformity with the laws of this State.
We wish to determine whether an agreement can be reached, which would resolve the
objections to be raised on our demurrers and motion to strike, without judicial intervention.
Toward that end, we propose that your clients obviate the necessity for any such motion practice
by entering into a stipulation for the entry of an order to: (A) dismiss with prejudice, as against
Los ANGELES - ORANGE COUNTY - BAY AREA
oh
CGDR
Terry J. Mollica, Esq.
Glen H. Olives, Esq.
Re. Pacific Office Designs, Inc., etc. v. Spot On Consulting Group, etc., et al.
Santa Clara County Superior Court Case No. 20 CV 368229
October 20, 2020
Page 2
Spot On, each of (i) the first purported cause of action for “intentional misrepresentation,” (ii)
the second purported cause of action for “negligent misrepresentation,” (iii) the seventh
purported cause of action for “tort of another,” and (iv) the ninth purported cause of action for
“negligence res ipsa loquitor” [sic], of the FAC; and (B) strike from the FAC, as to Spot On,
specifically each of (i) Paragraph 61, at page 14, lines 20-25, (ii) Paragraph 67, at page 16, lines
6-11, (iii) Paragraphs 2 and 3 of the Prayer for Relief on the First Cause of Action, at page 25.
lines 27-28, (iv) Paragraph 2 of the Prayer for Relief on the Second Cause of Action, at page 26
line 6, (iv) Paragraph 2 of the Prayer for Relief on the Third Cause of Action, at page 26, line 12
and (vii) Paragraphs 1, 2, 3, 4, and 6 of the Prayer for Relief on the Seventh and Ninth Causes of
Action, at page 26, line 21-page 27, line 4, and lines 7-8. Such a stipulation and order would
leave in place the FAC’s third and fourth causes of actions for “beach of contract” and
“negligence” against Spot On, to the extent that they seek general compensatory damages.
The primary bases for our anticipated demurrers, and their legal support, are essentially
(1) the FAC’s first purported cause of action for “intentional misrepresentation” fails to allege
any representation of fact by Spot On with requisite particularity (see, e.g., Lazar_v. Superior
Court, 12 Cal.4th 631, 645, 49 Cal.Rptr.2d 377 (1996)); (2) the FAC’s second purported cause of
action for “negligent misrepresentation” fails to allege any positive assertion by Spot On (see.
e.g, Stockton Mortgage, Inc, v. Tope, 233 Cal.App.4th 437, 458-459, 183 Cal.Rptr.3d 186
(2014)); (3) the FAC’s seventh purported cause of action for “tort of another” fails to allege any
attorneys’ fees or other legal expenses incurred by Pacific other than prospectively in the present
action (see,_e.g., Gorman vy. Tassajara Development Corp., 178 Cal.App.4th 44, 80, 100
Cal.Rptr.3d 152 (2009)); and (4) the FAC’s ninth purported cause of action for “negligence — res
ipsa loquitor” [sic] is duplicative of the fourth cause of action for negligence, while the judicial
doctrine of res ipsa loquitur is merely a presumption affecting the burden of producing evidence,
and not a cause of action itself (see, ¢.g., Evidence Code §646(b)).
The primary bases for our anticipated motion to strike, and their legal support, are
essentially that: (1) the FAC contains no sufficiently particularized allegations of any malice.
fraud, or oppression on the part of Spot On to support the recovery of punitive damages from
them ( g., Smith v. Superior Court, 10 Cal.App.4th 1033, 1041-1042, 13 Cal.Rptr.2d 133
(1992), citing Brousseau _v. Jarrett, 73 Cal.App.3d 864, 872, 141 Cal.Rptr. 200 (1977); Civil
Code §3294) and indeed, punitive damages cannot be recovered for negligent misrepresentation
(see,_e.g., Alliance Mortgage Co. v. Rothwell, 10 Cal.4th 1226, 1241, 44 Cal.Rptr.2d 352
(1995)); (2) the FAC contains no allegations of any agreement between Pacific and Spot On that
expressly provides for the payment or recovery of attorneys’ fees, and attorneys’ fees are not
recoverable in actions for negligence, intentional or negligent misrepresentation, or other civil
torts (see, e.g., Code of Civil Procedure §1021, Bezaire v. Fidelity and Deposit Company of
Maryland, 12 Cal.App.3d 888, 892, 91 Cal.Rptr. 142 (1970)); (3) the FAC contains no
sufficiently particularized allegations of any special damages, either in amount or in kind, in
violation of, ¢.g., Pridonoff v. Balokovich, 36 Cal.2d 788, 791-792, 228 P.2d 6 (1951), 5 Witkin,
Los ANGELES - ORANGE COUNTY ~ BAY AREA
se ed
CGDR
Terry J. Mollica, Esq.
Glen H. Olives, Esq.
Re: Pacific Office Designs, Inc., etc. v. Spot On Consulting Group, etc., et al.,
Santa Clara County Superior Court Case No, 20 CV 368229
October 20, 2020
Page 3
California Procedure, Pleading §934 (Sth ed. 2020); and (4) there are no allegations of any cause
of action supporting the issuance of any equitable relief against Spot On.
Code of Civil Procedure §430.41 and §435.5 require us to meet and confer, in person or
by telephone, no later than five days before our responsive pleadings to the FAC are due. Please
let us know when and how you would like to conduct the meet and confer. Based upon our
understanding described above, our responsive pleadings are due by November 10 at the earliest,
and thus if you wish to meet and confer, we must do so by Thursday, November 5, 2020.
Thank you in advance for your anticipated careful consideration of these issues.
Very truly yours,
CHAPMAN GLUCKSMAN DEAN & ROEB
A Professional Corporation
fe
MARK E. DiMARIA
Los ANGELES - ORANGE COUNTY BAY AREA
EXHIBIT B
DiMaria, Mark LL Ls
From: DiMaria, Mark
Sent: Tuesday, October 20, 2020 3:02 PM
To: Terry Mollica; howard olives'
Ce: Dean, Randall
Subject: Pacific Office v. Spot On
Attachments: COUNSEL (FAC Demurrer Meet & Confer) 10-20-20.pdf
Tracking: Recipient Read
Terry Mollica
‘howard olives'
Dean, Randall Read: 10/20/2020 3:32 PM
Hi Terry and Glen:
Attac
Preview
20CV368229 Santa Clara — Civil R. Nguyen Randall J. Dean, Esq., Bar No. 110441 Electronically Filed Mark E. DiMaria, Esq., Bar No. 89378 by Superior Court of CA, CHAPMAN GLUCKSMAN DEAN & ROEB County of Santa Clara, A PROFESSIONAL CORPORATION 11900 WEST OLYMPIC BOULEVARD, SUITE 800 on 11/16/2020 11:43 AM LOS ANGELES, CALIFORNIA 90064-0704 Reviewed By: R. Nguyen (310) 207-7722 + FAX: (310) 207-6550 Case #20CV368229 Envelope: 5300938 Attorneys for Defendants Spot On Consulting Group, A Professional Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA CLARA 10 11 PACIFIC OFFICE DESIGNS, INC., a Case No.: 20 CV 368229 California Corporation; 12 Complaint Filed: July 9, 2020 FAC Served: October 9, 2020 13 Plaintiff, Case Management Judge: 14 Vv. The Honorable Socrates P. Manoukian, Dept: 20 15 SPOT ON CONSULTING GROUP, a Professional Accountancy Corporation; NOTICE OF HEARING ON 16 JONATHAN RONALD LADDY; EXEMPLIS, DEMURRERS TO PLAINTIFF’S LLC, a California Limited Liability Company; FIRST AMENDED COMPLAINT BY 17 PAUL DE VRIES; KELLY PAULINE DEFENDANTS SPOT ON CONSULTING PLAYLE; NANCY LOPEZ; and DOES 1-150, GROUP, JONATHAN RONALD LADDY, 18 inclusive, AND KELLY PAULINE PLAYLE; DEMURRERS; MEMORANDUM OF 19 POINTS AND AUTHORITIES; AND Defendants. DECLARATION OF MARK E, DiMARIA| 20 PURSUANT TO CODE OF CIVIL PROCEDURE §430.31 21 15 Date: December &X, 2020 22 Time: 9:00 a.m. Dept.: 20 23 Trial Date: None Set 24 25 26 27 28 1 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT NOTICE OF HEARING ON DEMURRERS TO PLAINTIFE’S FIRST AMENDED COMPLAINT BY DEFENDANTS SPOT ON CONSULTING GROUP, JONATHAN RONALD LADDY, AND KELLY PAULINE PLAYLE TO ALL INTERESTED PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on Thursday, December 17, 2020, at 9:00 a.m., or as soon thereafter as the matter may be heard, in Department 20 of the above-captioned Court, located at 161 North First Street, San Jose, CA 95113, defendants Spot On Consulting Group, a Professional 9 Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot On”), 10 will, and hereby do, demur to the “First Amended Complaint for Intentional Misrepresentation; 11 Negligent Misrepresentation; Breach of Contract; Negligence; Breach of Implied Contract; 12 Attorneys Fees re Tort of Another; Breach of Contract; and Negligence: Res Ipsa Loquitor” (the 13 “FAC”) of plaintiff Pacific Office Designs, Inc., a California corporation (“Pacific”), on the 14 grounds that (i) it fails to state facts sufficient to constitute any legally cognizable cause of action, 15 and (ii) it is fatally uncertain, as against Spot On. 16 These Demurrers are made pursuant to Code of Civil Procedure §§ 430.10(e) and (f), and 17 will be based on this Notice of Hearing; the attached Demurrers; the accompanying Memorandum 18 of Points and Authorities; the attached Declaration of Mark E. DiMaria pursuant to Code of Civil 19 Procedure §430.31; the pleadings, records, and files in this action; and such other materials as may 20 be presented to the Court, or judicially noticed, at or before, or in connection with, the hearing on 21 these Demurrers. 22 DATED: November 9, 2020. CHAPMAN, GLUCKSMAN, DEAN & ROEB, 23 A Professional Corporation 24 25 MLL. RANDALL J. DEAN 26 MARK E. DiMARIA Attorneys for Defendants Spot On Consulting 27 Group, A Professional Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle 28 2 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFFS FIRST AMENDED COMPLAINT DEMURRERS Defendants Spot On Consulting Group, a Professional Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot On”), hereby demur to the “First Amended Complaint for Intentional Misrepresentation; Negligent Misrepresentation; Breach of Contract; Negligence; Breach of Implied Contract; Attorneys Fees re Tort of Another; Breach of Contract; and Negligence: Res Ipsa Loquitor” (the “FAC”) of plaintiff Pacific Office Designs, Inc., a California corporation (“Pacific”) filed herein, on the following separate and distinct grounds: GENERAL DEMURRER TO FIRST PURPORTED CAUSE OF ACTION 1 The First purported Cause of Action for “Intentional Misrepresentation” set forth in 10 the FAC fails to state facts sufficient to constitute any legally cognizable cause of action against Spot 1 On, in that there is no legally sufficient allegation of any representation of fact by Spot On. 12 SPECIAL DEMURRER TO FIRST PURPORTED CAUSE OF ACTION 13 2 The First purported Cause of Action for “Intentional Misrepresentation” set forth in 14 the FAC is fatally uncertain, at Paragraphs 54 through 61, inclusive (page 13, line 4, through page 14, 15 line 26, inclusive), as against Spot On, in that it is impossible to ascertain therefrom any 16 representation of fact by Spot On. 17 GENERAL DEMURRER TO SECOND PURPORTED CAUSE OF ACTION 18 3 The Second purported Cause of Action for “Negligent Misrepresentation” set forth in 19 the FAC fails to state facts sufficient to constitute any legally cognizable cause of action against Spot 20 On, in that there is no legally sufficient allegation of (a) any representation of fact by Spot On, or (b) 21 any positive assertion by Spot On. 22 SPECIAL DEMURRER TO SECOND PURPORTED CAUSE OF ACTION 23 4. The Second purported Cause of Action for “Negligent Misrepresentation” set forth in 24 the FAC is fatally uncertain, at Paragraphs 62 through 67, inclusive (page 15, line 1, through page 16, 25 line 12, inclusive), as against Spot On, in that it is impossible to ascertain therefrom (a) any 26 representation of fact by Spot On, or (b) any positive assertion by Spot On. 27 28 3 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFE’S FIRST AMENDED COMPLAINT GENERAL DEMURRER TO SEVENTH PURPORTED CAUSE OF ACTION 5 The Seventh purported Cause of Action for “Tort of Another” set forth in the FAC fails to state facts sufficient to constitute any legally cognizable cause of action against Spot On, in that there is no legally sufficient allegation of any attorneys’ fees or other legal expenses incurred in any principal or underlying case, other than prospectively in the present action. SPECIAL DEMURRER TO SEVENTH PURPORTED CAUSE OF ACTION 6 The Seventh purported Cause of Action for “Tort of Another” set forth in the FAC is fatally uncertain, at Paragraphs 98 through 100, inclusive (page 22, line 21, through page 22, line 3, inclusive), as against Spot.On, in that it is impossible to ascertain therefrom any attorneys’ fees or 10 other legal expenses incurred in any principal or underlying case, other than prospectively in the 11 present action. 12 GENERAL DEMURRER TO NINTH PURPORTED CAUSE OF ACTION 13 7 The Eleventh purported Cause of Action for “Negligence — Res Ipsa Loquitor” [sic] 14 set forth in the FAC fails to state facts sufficient to constitute any legally cognizable cause of action 15 against Spot On, in that (a) res ipsa loquitur is not a cause of action in itself, but rather is a rebuttable 16 presumption applicable in certain cases of alleged negligence; and (b) there is no legally sufficient 17 allegation that the alleged injury is one that could occur only as the result of negligence by Spot On. 18 SPECIAL DEMURRER TO NINTH PURPORTED CAUSE OF ACTION 19 8 The Eleventh purported Cause of Action for “Negligence — Res Ipsa Loquitor” [sic] 20 set forth in the FAC is fatally uncertain, at Paragraphs 105 through 111, inclusive (page 24, line 20, 21 through page 25, line 23, inclusive), as against Spot On, in that it is impossible to ascertain therefrom 22 (a) how the doctrine of res ipsa loquitur, which is a merely rebuttable presumption applicable in 23 certain cases of alleged negligence, could be a cause of action in itself; or (b) any legally sufficient 24 allegation that the alleged injury is one that could occur only as the result of negligence by Spot On. 25 WHEREFORE, Spot On prays that: 26 1 Each of these Demurrers be sustained in its entirety, without leave to amend; 27 2 Pacific take nothing by the First, Second, Seventh, or Ninth purported Causes of 28 Action of its FAC, as against Spot On; 4 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT Each of the First, Second, Seventh, and Ninth purported causes of action of the FAC be stricken and dismissed with prejudice, in its entirety, as against Spot On; Spot On be awarded their costs of suit incurred herein; and Such other and further relief be awarded as the Court may deem just and proper. DATED: November 9, 2020. CHAPMAN, GLUCKSMAN, DEAN & ROEB, A Professional Corporation By: ZA: RANDALL MARK E. DiMARIA Attorneys for Defendants Spot On Consulting Group, A Professional Accountancy Corporation, 10 Jonathan R. Laddy, CPA, and Kelly P. Playle 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT MEMORANDUM OF POINTS AND AUTHORITIES I INTRODUCTION. Pacific’s FAC represents a misdirected effort to transform what is no more than a simple negligence claim against Spot On into something more exotic. That effort is transparently untenable as a matter of law, comprising claims for (a) misrepresentation which lack any alleged representation, (b) negligent misrepresentation which contain no positive assertion, (c) “tort of another” which impermissibly seek to recover prospectively attorneys’ fees and legal expenses to be incurred in this action; and (e) res ipsa loquitur, which is not an independent cause of action in and of itself, merely a 10 rebuttable presumption applicable in certain negligence cases. While the action may proceed on the 11 FAC’s negligence and breach of contract claims against Spot On, the others are fatally deficient and 12 thus subject to general demurrers, each of which should be sustained as a matter of law, without leave 13 to amend. 14 A Procedural History. 15 On July 9, 2020, Pacific filed its initial complaint in this action against its accountants, Spot 16 On Consulting Group, a Professional Accountancy Corporation, and Jonathan R. Laddy, CPA, and 17 their employee, Kelly P. Playle (collectively “Spot On”), along with other defendants. The complaint 18 alleged that Spot On was induced to process and make payments on behalf of Pacific to one of its 19 trade creditors, defendant Exemplis, LLC, which payments instead were fraudulently re-directed and 20 obtained by undisclosed third parties posing as authorized Exemplis personnel. It thus asserted 21 claims against Spot On for negligence, as well as intentional and negligent misrepresentation, breach 22 of contract, tort of another, constructive trust, money had and received, and “res ipsa loquitor” [sic]. 23 In response, Spot On’s counsel sent the requisite pre-demurrer letter pursuant to Code of Civil 24 Procedure §430.31 to Pacific’s attorneys, citing various legal deficiencies in that original complaint, 25 and requesting that they be remedied. Consequently, on October 9, 2020, Pacific served its FAC on 26 counsel for Spot On, which deleted the former claims for constructive trust and money had and 27 received, dropped individual defendants Mr. Laddy and Ms. Playle from the claim for breach of 28 contract, dropped Mr. Laddy from the negligent misrepresentation claim, and made other changes 6 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT (primarily with respect to the FAC’s allegations against the named defendants other than Spot On, to wit, Exemplis LLC and its personnel, Paul DeVries and Nancy Lopez). Despite these amendments, the FAC continues to assert purported claims against Spot On which are legally untenable, for intentional misrepresentation, negligent misrepresentation, “tort of another,” and “res ipsa loquitor” (sic], respectively. Once more, Spot On’s counsel sent the requisite pre-demurrer letter pursuant to Code of Civil Procedure §430.31 to Pacific’s attorneys. Despite an exchange between counsel, those efforts did not resolve the FAC’s defects. Hence, these demurrers. The three Spot On defendants have not appeared previously in this action, and presently are not aware of any other hearing, proceeding, or other activity herein to date. 10 II 11 THE FAC FAILS TO ALLEGE FACTS CONSTITUTING ANY LEGALLY 12 COGNIZABLE CAUSE OF ACTION AGAINST SPOT ON FOR INTENTIONAL 13 MISREPRESENTATION, AND IS IMPERMISSIBLY UNCERTAIN. 14 “The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation 15 (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c) 16 intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” 5 Witkin, 17 Summary of California Law, Torts §890 (11 ed. 2020). Moreover, fraud must be specifically 18 alleged or it fails to state a cause of action and is subject to general demurrer. 5 Witkin, California 19 Procedure, Pleading §711 (5" ed. 2020); see, ¢.g., Citizens of Humanity, LLC v. Costco Wholesale 20 Corp., 171 Cal.App.4th 1, 21, 89 Cal. Rptr.3d 455 (2009). 21 Because of the inherent attack upon character in any deceit claim, it is long established that, to 22 state a legally cognizable cause of action, each element thereof must be alleged with particularity, in 23 order to allow the defendant to fully understand the nature of the charge made, and respond thereto. 24 The “rationale for this ‘strict requirement of pleading’ ... is not merely notice to the defendant. The 25 idea seems to be that ... fairness to the defendant demands that he should receive the fullest possible 26 details of the charge in order to prepare his defense.” Stansfield v. Starkey, 220 Cal.App.3d 59, 73, 27 269 Cal.Rptr. 337 (1990). Fundamental fairness requires factual specificity. 28 7 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT In that regard, the FAC’s allegations of the purported “representations” by Spot On are fatally deficient because they glaringly lack the minimum amount of particularity required for any claim of fraud and deceit. Indeed, there is no allegation of any actual representation at all by Spot On. As noted above, each element of a fraud claim must be alleged with specificity — particularly the purported representation upon which that claim is based. As the California Supreme Court states: “In California, fraud must_be pled specifically; general and conclusory allegations do not suffice. ... Thus the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect. ... This particularity requirement necessitates pleading facts which show how, when, 10 where, to whom, and by what means the representations were tendered... A 1 plaintiffs burden in asserting a fraud claim against [an entity] is even greater. In 12 such a case, the plaintiff must allege the names of the persons who made the 13 allegedly fraudulent representations, their authority to speak, to whom they spoke, 14 what they said or wrote, and when it was said or written.” Lazar v. Superior Court, 15 12 Cal.4th 631, 645, 49 Cal.Rptr.2d 377 (1996) (italics in original, emphasis added). 16 In this regard, Pacific’s first purported cause of action for fraud is patently deficient, as it 17 plainly contains no sufficient allegation of any actionable representation by Spot On. The supposed 18 representation is set forth in Paragraph 56, at page 13, lines 12-18, of the FAC: “[Spot On] falsely 19 and fraudulently misrepresented to Plaintiff, by their action in paying third-party vendors, including 20 EXEMPLIS, that there were no undisclosed material facts affecting the payments to said third-party 21 on their invoices, such as receiving communications from that third-party vendor of a new bank 22 account and instructions to pay invoices thereto without confirming directly with the alleged entity 23 making those changes, that such information was in fact true and correct before making payment on 24 such outstanding purchase orders.” (Emphasis added.) 25 The one thing that does emerge from this word salad is that the misrepresentation allegedly 26 consisted of “paying third party vendors.” Not a written statement. Not an oral statement. Not an 27 implied term arising from a written or oral statement. But the “action in paying third-party vendors.” 28 Simply put, this is not a representation at all of any fact or anything else, in the sense required 8 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT for_a fraud claim. Using the above language quoted from Lazar as a framework, the FAC’s allegations do not indicate in any way: (1) how any supposedly actionable representation was made — they do nothing to inform the Court or Spot On as to how any information was actually conveyed; (2) when any representation was made; (3) where any representation was made — there is no mention of any location where a representation was conveyed; (4) to whom any representation was made — there is no indication of any individual(s) to whom any representation was made, either directly or indirectly; (5) by what specific means or medium any representation was made — e.g., by letter, e- mail, telephone, face-to-face meeting, etc.; (6) by whom any representation was made — again, no individual is identified; (7) the authority of any individual to speak on behalf of Spot On; or even (8) 10 ny words that actually were said or written. 11 Above and beyond this, since there is no allegation of any actual representation, the FAC does 12 not (and indeed, cannot) allege, in factual terms, the falsity of any such particular representation. 13 Accordingly, the first purported cause of action obviously fails to state any legally cognizable claim 14 by Pacific against Spot On for fraud or anything else, and thus is subject to general demurrer as a 15 matter of black letter law, since it lacks particularized allegations of any actionable representation. 16 ill 17 THE FAC FAILS TO ALLEGE FACTS CONSTITUTING ANY LEGALLY 18 COGNIZABLE CAUSE OF ACTION AGAINST SPOT ON FOR NEGLIGENT 19 MISREPRESENTATION, AND IS IMPERMISSIBLY UNCERTAIN. 20 In California, “The following elements must be pleaded to state a cause of action for negligent 21 misrepresentation: (1) a false statement of a material fact that the defendant honestly believes to be 22 true, but made without reasonable grounds for such belief, (2) made with the intent to induce reliance, 23 (3) reasonable reliance on the statement, and (4) damages.” Century Surety Co. v. Crosby Insurance, 24 Inc., 124 Cal.App.4th 116, 125, 21 Cal.Rptr.3d 115 (2004). 25 Like intentional misrepresentation or fraud, negligent misrepresentation is a form of deceit. Civil Code §1710(2). “Causes of action for intentional and negligent misrepresentation sound in 26 27 fraud and, therefore, each element must be pleaded with specificity. [Citations.] ‘The specificity 28 requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what 9 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT means the representations were made, and, in the case of [an entity] defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.’ [West v. JPMorgan Chase Bank, N.A., 214 Cal.App.4th 780, 793, 154 Cal.Rptr.3d 285 (2013)].” Daniels v. Select Portfolio Servicing, Inc., 246 Cal.App.4th 1150, 1166-1167, 201 Cal.Rptr.3d 390 (2016) (emphasis added). Such claims sounding in fraud which are not specifically alleged fail to state a cause of action and thus are subject to general demurrer. See, e.g., Citizens of Humanity, LLC v. Costco Wholesale Corp., 171 Cal.App.4th 1, 21, 89 Cal.Rptr.3d 455 (2009). The FAC’s purported cause of action for negligent misrepresentation, at Paragraph 63, page 10 15, lines 7-8 and 19-21, alleges only that “At various times, [Spot On] made the misrepresentations 11 and concealments alleged herein. ... Therefore, when said defendants made such payment, said 12 defendants impliedly represented to Plaintiff that they were correctly making the payment on said 13 purchase orders to a new bank account purportedly arranged by EXEMPLIS ... .” No new or 14 additional “representation” is alleged beyond that in the first purported cause of action for intentional 15 misrepresentation, although it is now characterized as some sort of “implied” representation. That 16 claim consequently suffers from the very same fundamentally fatal deficiency as the preceding one — 17 to wit, that it completely fails to allege any representation at all. 18 Moreover, it is well-established that a cause of action for negligent misrepresentation 19 cannot be based upon an implied representation. Rather, it requires a “positive assertion,” that is, 20 n express statement of fact: “The tort of negligent misrepresentation requires a ‘positive assertion’ 21 and does not apply to implied misrepresentations.” Stockton Mortgage, Inc. v. Tope, 233 22 Cal.App.4th 437, 458-459, 183 Cal.Rptr.3d 186 (2014); accord, Diediker v. Peelle Financial Corp., 23 60 Cal.App.4th 288, 297-298, 70 Cal.Rptr.2d 442 (1997). 24 Plainly, no representation at all, much less any “positive assertion,” on the part of Spot On has 25 been alleged by the second purported cause of action for negligent misrepresentation. Accordingly, it 26 fails to allege any legally cognizable claim for negligent misrepresentation or for anything else, and it 27 thus is subject to general demurrer, which must be sustained, without further leave to amend. 28 10 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT IV THE FAC’S SEVENTH PURPORTED CAUSE OF ACTION, FOR “TORT OF ANOTHER,” FAILS TO STATE ANY LEGALLY COGNIZABLE CAUSE OF ACTION AGAINST SPOT ON, AND IS IMPERMISSIBLY UNCERTAIN. California generally follows the “American Rule” on the recovery of attorneys’ fees: “Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties ....” Code of Civil Procedure §1021. However, “A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is 10 entitled to recover compensation for the reasonably necessary loss of time, attorney's fees, and other 1 expenditures thereby suffered or incurred.” Prentice v. North American Title Guaranty Corp., 59 12 Cal.2d 618, 620, 30 Cal.Rptr. 821 (1963). This is so since such attorneys’ fees and expenses incurred 13 in other prior underlying litigation are “akin to damages,” rather than an expense of prosecuting the 14 current claim. 59 Cal.2d 621. As such, the Courts have made it clear that this “tort of another” 15 doctrine, since codified in Code of Civil Procedure §1021.6, may not be used as a subterfuge to 16 recover fees incurred in suing the tortfeasor itself. See, e.g., Bear Creek Planning Committee y. Title 17 Insurance & Trust Co., 164 Cal.App.3d 1227. 1243-1244, 211 Cal.Rptr. 172 (1985). 18 “The tort of another doctrine does not allow a party to recover the fee: 19 and costs involved in litigating directly with a negligent defendant. [Pederson v. 20 Kennedy, 128 Cal.App.3d 976, 980, 180 Cal.Rptr. 740 (1982).] 21 “[Moreover], the tort of another doctrine does not apply to the situation 22 where a plaintiff has been damaged by the joint negligence of codefendants. 23 [Vacco Industries, Inc. v. Van Den Berg, 5 Cal.App.4th 34, 6 Cal. Rptr.2d 602 24 (1992)], stated at page 57: ‘The rule of Prentice [supra] was not intended to apply to 25 one of several joint tortfeasors in order to justify additional attorney fee damages. If 26 that were the rule there is no reason why it could not be applied in every multiple 27 tortfeasor case with the plaintiff simply choosing the one with the deepest pocket as 28 the “Prentice target.” Such a result would be a total emasculation of Code of Civil 11 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT Procedure section 1021 in tort cases. on Gorman vy. Tassajara Development Corp., 178 Cal.App.4th 44, 80, 100 Cal.Rptr.3d 152 (2009). (Emphasis added.) Pacific’s seventh purported cause of action for “tort of another” is just such a proscribed attempt to recover attorneys’ fees prospectively to be incurred in litigation directed against an alleged tortfeasor, Spot On. And the presence of an alleged jointly negligent tortfeasor, Exemplis itself, is not a basis on which to assert otherwise. As such, this purported claim is barred as a matter of law. Vv THE FAC’S NINTH PURPORTED CAUSE OF ACTION FOR “NEGLIGENCE — RES IPSA LO UITOR” [sic] FAILS TO STATE ANY LEGALLY COGNIZABLE CAUSE OF 10 ACTION AGAINST SPOT ON, AND IS IMPERMISSIBLY UNCERTAIN. 11 Pacific’s fourth purported cause of action against Spot On is for Negligence. Spot On has not 12 demurred to that negligence claim — unlike many other putative causes of action of Pacific’s FAC. 13 Nevertheless, Pacific has asserted, as its purported ninth “cause of action,” a claim for 14 “Negligence Res Ipsa Loquitor” [sic]. It alleges in substance that the same supposed facts set forth in 15 the fourth cause of action give rise to a duplicative claim for negligence, but that “By virtue of the 16 facts and circumstances of the incident as above alleged, the doctrine of res ipsa loquitur is 17 applicable to the claim against [Spot On]. Under that doctrine the burden of proving that the operator 18 of defendants’ security systems were free from all negligence in connection with the incident and the 19 burden of proving freedom from liability in connection with the incident is placed on defendants.” 20 FAC, Paragraph 108, at page 25, lines 7-13. 21 This argument about the applicability of the res ipsa loquitur doctrine to shift burdens of proof 22 with respect to Pacific’s negligence claims does not state a separate cause of action. Res ipsa loquitur 23 does not represent a discrete substantive right whose violation may give rise to a monetary judgment 24 or other form of judicial relief. Rather, it is merely an evidentiary presumption which may give rise 25 to an inference that shifts the burden of presentation at trial: 26 “The judicial doctrine of res ipsa loquitur is a presumption affecting the 27 burden of producing evidence.” Evidence Code §646(b) (emphasis added). 28 12 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT Res ipsa loquitur is an evidentiary presumption, not a cause of action. Accordingly, a putative claim for “negligence ~ res ipsa loquitur,” especially in an action like this where “negligence” already has been alleged in the FAC, does not, and cannot ever, state any legally cognizable independent cause of action under any circumstances. It is merely an evidentiary principle which Pacific may or may not choose to attempt to invoke in presenting its already-alleged negligence claims at trial. As such, Pacific’s ninth purported cause of action is, at best, surplusage, and Spot On’s demurrers thereto must be sustained, without leave to amend. VI CONCLUSION. 10 Other than Pacific’s third and fourth causes of action for breach of contract and negligence, its 11 purported claims against Spot On uniformly fail, as a matter of law. The first and second purported 12 causes of action for intentional and negligent misrepresentation lack any particularized allegations of 13 a positive assertion or other representation of fact. The seventh purported cause of action for “tort of 14 another” impermissibly seeks to recover prospectively attorneys’ fees and legal expenses to be 15 incurred in this action. And the ninth purported cause of action impermissibly purports to be one for 16 es ipsa loquitur, which is just a rebuttable evidentiary presumption, and not an independent cause of 17 action in and of itself, at all. Accordingly, the Court should sustain Spot On’s Demurrers to each of 18 those putative causes of action, in their entirety, without leave to amend. 19 Respectfully submitted, 20 DATED: November 9, 2020. CHAPMAN, GLUCKSMAN, DEAN & ROEB, A Professional Corporation 21 22 23 RANDALL J. DEAN MARK E. DiMARIA 24 Attorneys for Defendants Spot On Consulting Group, A Professional Accountancy Corporation, 25 Jonathan R. Laddy, CPA, and Kelly P. Playle 26 27 28 13 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT DECLARATION OF MARK E. DiMARIA PURSUANT TO CODE OF CIVIL PROCEDURE §430.31 I, MARK E. DiMARIA, declare: 1 The facts in this Declaration are set forth on my personal knowledge and, if called as a witness, I could and would competently testify thereto under oath. 2. I am an attorney, duly authorized to practice before all courts of the State of California, and I practice with the law firm of Chapman, Glucksman, Dean & Roeb, A Professional Corporation, counsel of record in this action for defendants Spot On Consulting Group, a Professional Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot On”). I 10 submit this Declaration in support of Spot On’s accompanying demurrers to Pacific’s first amended 11 complaint in this action (the “FAC”). 12 3 On October 20, 2020, I sent a letter, a true and complete copy of which is attached hereto as Exhibit “A,” to Terry J. Mollica, Esq., of Mollica Law, and Glen H. Olives, Esq., of the 13 Law Office of Glen H. Olives, counsel of record for Pacific in this action, by e-mail, at their 14 15 respective addresses appearing on the face of the FAC. Mr. Mollica is the attorney who signed the 16 FAC, and Mr. Olives is the attorney who served it on our office. A true and compete copy of the e- 17 mail message to which my letter was attached is attached hereto as Exhibit “B.” 4. My letter asked Mr. Mollica and Mr. Olives to meet and confer with me by telephone 18 19 (in person meetings currently are inadvisable, due to the COVID-19 pandemic, and our offices are 20 located at opposite ends of the State), in order to determine whether we could reach an agreement that 21 would resolve the objections that we intended to raise in our demurrers and concurrent motion to 22 strike portions of the FAC. The letter advised that our statutory deadline by which to meet and confer 23 was November 5, 2020, the fifth day before Spot On’s pleading in response to the FAC was due, and 24 asked them to let us know when and how they would like to conduct the meet and confer. It further 25 set forth the legal basis, scope, and legal support for our prospective demurrers. 5 On October 30, 2020, I received a letter in reply by e-mail from Mr. Mollica, in which 26 27 he disagreed with our positions on the demurrers. After reading Mr. Mollica’s letter and considering 28 the positions he expressed, I sent him and Mr. Olives another letter by e-mail on November 2, 2020, 14 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF'S FIRST AMENDED COMPLAINT in which I advised them that we continued to believe that our positions were strongly grounded in law, that demurrers on those grounds were both appropriate and necessary to ensure that neither the parties nor the Court devoted significant resources to litigating claims that were not legally tenable, and that it remained our intention to proceed with our demurrers. Later that day, I received an e-mail message from Mr. Olives to the effect that they might be able to “respond more thoroughly to [my] input and requests” after they had met and conferred with counsel for the other defendants. 6 As of the execution of this Declaration, I have not heard anything further of substance from Mr. Olives or Mr. Mollica with respect to the substance of our contemplated Demurrers. I declare, under penalty of perjury under the laws of the State of California, that the foregoing 10 is true and correct, and that this Declaration was executed on November 9, 2020, at Los Angeles, 11 California. 12 LP), 4 cee 13 MARK E. DiMARIA 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 NOTICE OF HEARING ON DEMURRERS BY SPOT ON DEFENDANTS TO PLAINTIFF’S FIRST AMENDED COMPLAINT EXHIBIT A CHAPMAN GLUCKSMAN DEAN & ROEB A PROFESSIONAL CORPORATION Mark E. DIMARIA ATTORNEYS AT LAW 11900 WEST OLYMPIC BOULEVARD, SUITE 800 LOS ANGELES, CALIFORNIA 90064-0704. TELEPHONE: (310) 207-7722 TELECOPIER: (310) 207-6560 WEBSITE: Wwwicgdriaw.com E-MAIL: mdimaria@cgdrlaw.com October 20, 2020 BY E-MAIL Terry J. Mollica, Esq. Glen H. Olives, Esq. Mollica Law Law Office of Glen H. Olives 560 First Street, Suite B201 4701 Soquel Drive, Suite E Benicia, CA 94510 Soquel, CA 95073 tim@caattnys.com gho57942@gmail.com Re: Pacific Office Designs, Inc., etc, v. Spot On Consulting Group, etc., et al., Santa Clara County Superior Court Case No. 20 CV 368229; Qur File No.:_2.0782,763 Dear Mr. Mollica and Mr. Olives: As you know, our firm represents defendants Spot On Consulting Group, a Professional Accountancy Corporation, Jonathan R. Laddy, CPA, and Kelly P. Playle (collectively “Spot On”), in the above-referenced action filed by your offices on behalf of plaintiff Pacific Office Designs, Inc. (“Pacific”); You will recall that, following service of Pacific’s original complaint, we wrote to you in anticipation of filing demurrers and a motion to strike portions of that pleading, in an effort to resolve those issues without the necessity of judicial intervention. Consequently, we received your client’s first amended complaint (the “FAC”) electronically on October 9, 2020. While the FAC has dropped several of its predecessor’s defective claims and allegations against one or more of our clients, many of the other issues remain. Accordingly, this letter is provided pursuant to Code of Civil Procedure §430.41 and §435.5, with respect to Pacific’s FAC. Please be advised that it is our intention to file on behalf of Spot On: (i) general and special demurrers to the first, second, seventh, and ninth purported causes of action of the FAC, on the grounds that they fail to state facts sufficient to constitute any legally cognizable cause of action against Spot On, and are impermissibly uncertain; and (ii) a motion to strike from the FAC all references to the recovery of punitive damages, special damages, equitable relief, and attorneys’ fees from Spot On, on the grounds that such references are improper matter which is not drawn or filed in conformity with the laws of this State. We wish to determine whether an agreement can be reached, which would resolve the objections to be raised on our demurrers and motion to strike, without judicial intervention. Toward that end, we propose that your clients obviate the necessity for any such motion practice by entering into a stipulation for the entry of an order to: (A) dismiss with prejudice, as against Los ANGELES - ORANGE COUNTY - BAY AREA oh CGDR Terry J. Mollica, Esq. Glen H. Olives, Esq. Re. Pacific Office Designs, Inc., etc. v. Spot On Consulting Group, etc., et al. Santa Clara County Superior Court Case No. 20 CV 368229 October 20, 2020 Page 2 Spot On, each of (i) the first purported cause of action for “intentional misrepresentation,” (ii) the second purported cause of action for “negligent misrepresentation,” (iii) the seventh purported cause of action for “tort of another,” and (iv) the ninth purported cause of action for “negligence res ipsa loquitor” [sic], of the FAC; and (B) strike from the FAC, as to Spot On, specifically each of (i) Paragraph 61, at page 14, lines 20-25, (ii) Paragraph 67, at page 16, lines 6-11, (iii) Paragraphs 2 and 3 of the Prayer for Relief on the First Cause of Action, at page 25. lines 27-28, (iv) Paragraph 2 of the Prayer for Relief on the Second Cause of Action, at page 26 line 6, (iv) Paragraph 2 of the Prayer for Relief on the Third Cause of Action, at page 26, line 12 and (vii) Paragraphs 1, 2, 3, 4, and 6 of the Prayer for Relief on the Seventh and Ninth Causes of Action, at page 26, line 21-page 27, line 4, and lines 7-8. Such a stipulation and order would leave in place the FAC’s third and fourth causes of actions for “beach of contract” and “negligence” against Spot On, to the extent that they seek general compensatory damages. The primary bases for our anticipated demurrers, and their legal support, are essentially (1) the FAC’s first purported cause of action for “intentional misrepresentation” fails to allege any representation of fact by Spot On with requisite particularity (see, e.g., Lazar_v. Superior Court, 12 Cal.4th 631, 645, 49 Cal.Rptr.2d 377 (1996)); (2) the FAC’s second purported cause of action for “negligent misrepresentation” fails to allege any positive assertion by Spot On (see. e.g, Stockton Mortgage, Inc, v. Tope, 233 Cal.App.4th 437, 458-459, 183 Cal.Rptr.3d 186 (2014)); (3) the FAC’s seventh purported cause of action for “tort of another” fails to allege any attorneys’ fees or other legal expenses incurred by Pacific other than prospectively in the present action (see,_e.g., Gorman vy. Tassajara Development Corp., 178 Cal.App.4th 44, 80, 100 Cal.Rptr.3d 152 (2009)); and (4) the FAC’s ninth purported cause of action for “negligence — res ipsa loquitor” [sic] is duplicative of the fourth cause of action for negligence, while the judicial doctrine of res ipsa loquitur is merely a presumption affecting the burden of producing evidence, and not a cause of action itself (see, ¢.g., Evidence Code §646(b)). The primary bases for our anticipated motion to strike, and their legal support, are essentially that: (1) the FAC contains no sufficiently particularized allegations of any malice. fraud, or oppression on the part of Spot On to support the recovery of punitive damages from them ( g., Smith v. Superior Court, 10 Cal.App.4th 1033, 1041-1042, 13 Cal.Rptr.2d 133 (1992), citing Brousseau _v. Jarrett, 73 Cal.App.3d 864, 872, 141 Cal.Rptr. 200 (1977); Civil Code §3294) and indeed, punitive damages cannot be recovered for negligent misrepresentation (see,_e.g., Alliance Mortgage Co. v. Rothwell, 10 Cal.4th 1226, 1241, 44 Cal.Rptr.2d 352 (1995)); (2) the FAC contains no allegations of any agreement between Pacific and Spot On that expressly provides for the payment or recovery of attorneys’ fees, and attorneys’ fees are not recoverable in actions for negligence, intentional or negligent misrepresentation, or other civil torts (see, e.g., Code of Civil Procedure §1021, Bezaire v. Fidelity and Deposit Company of Maryland, 12 Cal.App.3d 888, 892, 91 Cal.Rptr. 142 (1970)); (3) the FAC contains no sufficiently particularized allegations of any special damages, either in amount or in kind, in violation of, ¢.g., Pridonoff v. Balokovich, 36 Cal.2d 788, 791-792, 228 P.2d 6 (1951), 5 Witkin, Los ANGELES - ORANGE COUNTY ~ BAY AREA se ed CGDR Terry J. Mollica, Esq. Glen H. Olives, Esq. Re: Pacific Office Designs, Inc., etc. v. Spot On Consulting Group, etc., et al., Santa Clara County Superior Court Case No, 20 CV 368229 October 20, 2020 Page 3 California Procedure, Pleading §934 (Sth ed. 2020); and (4) there are no allegations of any cause of action supporting the issuance of any equitable relief against Spot On. Code of Civil Procedure §430.41 and §435.5 require us to meet and confer, in person or by telephone, no later than five days before our responsive pleadings to the FAC are due. Please let us know when and how you would like to conduct the meet and confer. Based upon our understanding described above, our responsive pleadings are due by November 10 at the earliest, and thus if you wish to meet and confer, we must do so by Thursday, November 5, 2020. Thank you in advance for your anticipated careful consideration of these issues. Very truly yours, CHAPMAN GLUCKSMAN DEAN & ROEB A Professional Corporation fe MARK E. DiMARIA Los ANGELES - ORANGE COUNTY BAY AREA EXHIBIT B DiMaria, Mark LL Ls From: DiMaria, Mark Sent: Tuesday, October 20, 2020 3:02 PM To: Terry Mollica; howard olives' Ce: Dean, Randall Subject: Pacific Office v. Spot On Attachments: COUNSEL (FAC Demurrer Meet & Confer) 10-20-20.pdf Tracking: Recipient Read Terry Mollica ‘howard olives' Dean, Randall Read: 10/20/2020 3:32 PM Hi Terry and Glen: Attac