Hearing DemurrerCal. Super. - 6th Dist.February 11, 2016SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Crispin Cortes et al vs Leticia Sandoval Gonzalez et al Hearing start Time: 9:00 AM 16CV291442 Hearing Type: Hearing: Demurrer Date of Hearing: 07/03/2018 Comments: Heard By: Stoelker, James L Location: Department 13 Courtroom Reporter: - No Record Transcribed Courtroom Clerk: Robert Gutierrez Court Interpreter: Court Investigator: Parties Present: Future Hearings: Thompson, Joseph P. Attorney Exhibits: - No one called to contest the Tentative Ruling. The tentative ruling is adopted. See below for ruling. Case Name: Crispin Calleros Cortes, et al. v. Leticia Ramona Sandoval Gonzalez, et al. Case No.2 16-CV-291442 Currently before the Court is the demurrer by defendant Omnex Group, Inc. dba Giromex ( Omnex ) to the fourth amended complaint ( 4AC ) of plaintiffs Crispin Calleros Cortes ( Cortes ), Floriberto Barraso Escamilla, Dolores Paula Garcia Sanchez, Norberta Guizar, Daniel Serrano Hernandez, Marie Elena Fregoso Pelayo, Socorro Ortega Perez, Jesus D. Roque, Cresencio Roque, Jose Sanchez, Efigenia Florencia Chavez Sanchez, and Gabino Guevara (collectively, Plaintiffs ). Factual and Procedural Background This is an action for fraud and negligence. According to the allegations of the operative 4AC, Plaintiffs allege that defendants Leticia Ramona Sandoval Gonzalez ( Gonzalez ), Daniel Alberto Valdez Sandoval, Juventia Narciso Marquez, Felipe Carrasco Villamares, Alejandra Villamares, and Maria Carmen Arteaga Barajas ( Barajas ) (collectively, Individual Defendants ) were residents of, or conducting their wire transfer agencies business, in Santa Clara County. (4AC, 2.) Omnex, and other corporate defendants, were licensed to do and were doing international money wire transfer business in the County of Santa Clara . (|d., at 3.) Individual Defendants were allegedly agents of Omnex, and the other corporate defendants, and in doing the things hereinafter alleged, [Individual Defendants] were acting within the course and scope of that agency and with the permission and consent of Omnex and the other corporate defendants. (4AC, 6.) Plaintiffs allege that [i]n dealing with [Individual Defendants], [they] were caused by the conduct of [Omnex, Printed: 7/3/20] 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 1 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER and the other corporate defendants,] to believe that [Individual Defendants] had the authority to make international money transfers to themselves, or to their relatives in Mexico or other foreign countries. (|d., at 8.) The conduct of [Omnex, and the other corporate defendants,] that caused [Plaintiffs] to remit money for transfer to relatives in Mexico, and elsewhere, consisted of signs, advertisements, announcements, posters, business card used by [Individual Defendants], bearing the name of [Omnex or the other corporate defendants]. (|bid.) Plaintiffs remitted money to Individual Defendants in good faith and as a result of the advertising, and other conduct of, [Omnex, and the other corporate defendants,] as the corporate defendants placed Individual Defendants in a position whereby the members of the public were induced to tender their money for international money wire transfer business with the [Individual Defendants]. (|bid.) Plaintiffs also allege that the Individual Defendants misrepresented [Gonzalez s] agency to conduct international wire money transfers, and that [Individual Defendants] aided [Gonzalez] in deceiving [them] into tendering their money to her as a licensed agent of one or more of the [corporate defendants], knowing that she was not, but failing to disclose to [Plaintiffs] that [Gonzalez] was using their agencies as a false front for her false international money wire transfer business. (4AC, 9 and 36.) Between 2012 and 2015, Individual Defendants falsely and fraudulently represented to [Plaintiffs] that their international money transfer business was trustworthy and honest and would handle their money in the intended manner, i.e., transfer to relatives in Mexico, or, alternatively, would make them a profit on their money invested with [Individual Defendants]. (|d., at 32.) These representations were false and Individual Defendants did not transfer Plaintiffs money; rather, they kept Plaintiffs money, diverted it to their own use, and concealed the same from Plaintiffs. (|d., at 33-34.) The misrepresentations by the Individual Defendants were made with the intent to defraud Plaintiffs to part with their money. (|d., at 35-36.) [W]hi|e some [Individual Defendants] were licensed agents at the time of payment of [Plaintiffs] money, [Gonzalez] was not, but the [Individual Defendants] never disclosed that [Gonzalez] was not a licensed agent, but [took Plaintiffs] money while holding herself out to be duly authorized to carry on the business of money transfer by wire, or, alternatively, doing so with the aid, assistance and support of [the other Individual Defendants] who were duly authorized agents engaged in the money transfer business. (4AC, 36.) Plaintiffs further allege that the Individual Defendants were unfit and Omnex, and the other corporate defendants, were reckless in employing them. (4AC, 7.) The corporate defendants knew, or in the exercise of reasonable care should have known, that: (1) Individual Defendants were unfit to act in the capacity of agents in the international money transfer business because they were dishonest, untrustworthy, and not financially responsible to the customers of [the corporate defendants] businesses ; and (2) Individual Defendants were diverting customers money, intercepting it, or part of it, and transferring the money to their own personal purposes. (|d., at 50.) Specifically, Omnex GIROMEX failed to supervise, control, monitor, and/or regulate [Barajas ] conduct oftheir agency known as INDRA S HAIR SALON, and/or INDRA S HAIR CUT, 7261 Monterey Street, Gilroy, California and as a direct result of said failure to supervise, control, monitor and/or regulate [Barajas] conduct as the [Omnex] agent, the customers remittance transfer records, including those of [Plaintiffs], were removed from the agency store to [Gonzalez s] apartment in Gilroy . (|bid.) The corporate defendants discovered discrepancies in remittances by Individual Defendants and initiated collection actions against them. (|d., at 51-54.) In early 2016, Plaintiffs filed a complaint against Individual Defendants, Omnex, and other corporate defendants. Thereafter, Plaintiffs amended the complaint on multiple occasions. Plaintiffs filed their third amended complaint ( TAC) in August 2017, alleging claims for (1) fraud and (2) negligence. Subsequently, Omnex filed a demurrer to the TAC. On March 1, 2018, the Court sustained Omnex s demurrer to the TAC Printed: 7/3/20] 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 2 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER with leave to amend. A few weeks later, Plaintiffs filed the 4AC against Individual Defendants, Omnex, and other corporate defendants, alleging causes of action for (1) fraud, (2) negligence, and (3) unfair business practices. On May 8, 2018, Omnex filed the instant demurrer to the 4AC. Plaintiffs filed papers in opposition to the demurrer on June 11, 2018. On June 25, 2018, Omnex filed a reply. Discussion Omnex demurs to each and every cause of action of the 4AC on the grounds of uncertainty and failure to allege facts sufficient to constitute a cause of action. (See Code Civ. Proc., 430.10, subds. (e) and (f).) I. Procedural Issues Preliminarily, there are four procedural matters that must be addressed. First, as Omnex persuasively argues, the 4AC improperly includes a new claim for unfair business practices. The Court previously sustained Omnex s demurrer to the TAC, which alleged only causes of action for fraud and negligence. The March 1, 2018 order on Omnex s demurrer did not permit Plaintiffs to amend the pleading to include a new cause of action. Following an order sustaining a demurrer with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court s order. [Citation.] The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend. [Citation.] (Harris v. Wachovia Mortg., FSB (2010) 185 Cal.App.4th 1018, 1023.) As Plaintiffs did not seek permission to include the new claim for unfair business practices, the third cause of action was filed in violation of the requirement of prior leave of court. Accordingly, the Court, on its own motion, strikes the third cause of action as not having been filed in conformity with the law. (See Code Civ. Proc., 436, subd. (b) [a court may, in its discretion, strike new causes of action when they are not drawn in conformity with its prior order]; see also Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528 [ [Section 436] is commonly invoked to challenge pleadings filed in violation of a deadline, court order, or requirement of prior leave of court ].) The demurrer to the third cause of action on the grounds of failure to state sufficient facts to constitute a cause of action and uncertainty is, therefore, MOOT. Second, Plaintiffs opposition does not comply with California Rules of Court, rule 3.1113(f) as it lacks both a table of contents and a table of authorities. (Cal. Rules of Ct., rule 3.1113(f) [ [a] memorandum that exceeds 10 pages must include a table of contents and a table of authorities ].) Additionally, Plaintiffs opposition is procedurally defective because it is 24 pages in length and, thus, greatly exceeds the mandated page limit. (See Cal. Rules of Ct., rule 3.1113(d) [no opening or responding memorandum may exceed 15 pages, except in a summary judgment or adjudication motion].) The Court further notes that the line spacing utilized on several pages is too small (see Cal. Rules of Ct., rule 2.108 [line spacing requirements]; see also Opp n., pp. Printed: 7/3/20] 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 3 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER 5:19-65, 7:1-10:25, 14:1-15:21, 2121-25), and if the opposition had been properly formatted in accordance with the California Rules of Court it would have been even longer than 24 pages. Because the opposition is an oversized memorandum, it is considered in the same manner as a late-filed paper. (Cal. Rules of Ct., rule 3.1113(g).) The Court has discretion to refuse to consider a late-filed paper. (Cal. Rules of Ct., rule 3.1300(d).) Here, Omnex does not appear to have been prejudiced by the filing of the oversized opposition as it filed a substantive reply addressing Plaintiffs arguments. Thus, in deference to the policy that matters should be decided on their merits, the Court, in its discretion, will consider the opposition despite the aforementioned defects. However, Plaintiffs are admonished that failure to abide by California Rules of Court in the future may result in the Court s refusal to consider their papers. Third, Plaintiffs state in their opposition that they incorporate their previously filed Requests for Judicial Notice, Nos. 1-18. Plaintiffs do not cite any legal authority, and the Court is unaware of none, allowing a party to incorporate by reference the contents of documents filed in connection with other matters in a case. Furthermore, to the extent Plaintiffs intended this statement in their opposition to serve as a request for judicial notice it is improper because it was not made in a separate document. (Cal. Rules of Ct., rule 3.1113(1) [a request for judicial notice must be made in a separate documents listing the specific items for which notice is requested].) Therefore, to the extent Plaintiffs request judicial notice of various items filed in connection with other matters in this case, their request is DENIED. Fourth, in their opposition, Plaintiffs refer to a separate statement filed in connection with a discovery motion and a declaration by Cortes filed in connection with Plaintiffs opposition to Omnex s demurrer to the TAC. Plaintiffs purport to incorporate these documents into their opposition by reference. Plaintiffs do not cite any legal authority, and the Court is unaware of none, allowing a party to incorporate by reference the contents of briefs and documents filed in connection with other matters in a case. Moreover, Plaintiffs reliance on these documents is improper. A demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice. (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (South Shore), internal citations and quotations omitted; see Code Civ. Proc., 430.30, subd. (a).) These documents are not part of the 4AC and Plaintiffs have not requested judicial notice of the documents. Consequently, the Court declines to consider the subject documents and Plaintiffs arguments based on the same. ||. Legal Standard on Demurrer The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App3d 617, 621.) Consequently, [a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine ofjudicial notice. (South Shore, supra, 226 Cal.App.2d at p. 732, internal citations and quotations omitted; see Code Civ. Proc., 430.30, subd. (a).) It is not the ordinary function of a demurrer to test the truth of the []a|legations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant s conduct. [ ] Thus, [] the facts alleged in the pleading are deemed to be true, however improbable they may be. (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while [a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact. (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120) |||. Uncertainty Printed: 7/3/201 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 4 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Omnex demurs to the first and second causes of action of the 4AC on the ground of uncertainty. But Omnex s arguments pertain to Plaintiffs purported failure to allege sufficient facts to state a claim and do not identify a particular allegation in the 4AC that is uncertain, ambiguous, and/or unintelligible. It appears that Omnex misunderstands the nature of uncertainty as a ground for demurrer. The law is settled that [a] special demurrer for uncertainty is not intended to reach the failure to incorporate sufficient facts in the pleading but is directed at the uncertainty existing in the allegations already made. (Butler v. Sequiera (1950) 100 Cal.App.2d 143, 145-146.) Thus, Omnex s demurrer on the ground of uncertainty is not well-taken. Accordingly, the demurrer on the ground of uncertainty is OVERRU LED. IV. Failure to Allege Sufficient Facts A. First Cause of Action Omnex initially argues that the first cause of action for fraud fails because it is based on misrepresentations allegedly made by Gonzalez, Gonzalez was not its actual agent, and Plaintiffs do not allege sufficient facts showing that Gonzalez was its ostensible agent. Omnex also argues that the fraud claim is not pleaded with the requisite specificity. Omnex s argument regarding agency is well-taken. In California agency is either actual or ostensible. (Civ. Code, 2298.) An agency is actual when the agent is really employed by the principal. (Civ. Code, 2299.) An agency is ostensible when a principal causes a third person to believe another to be his agent, who is really not employed by him. (Civ. Code, 2300.) [] An agent has the authority that the principal, actually or ostensibly, confers upon him. (Civ. Code, 2315.) Actual authority is the authority the principal intentionally confers upon the agent or allows the agent to believe that he possesses. (Civ. Code, 2316.) Ostensible authority, on the other hand, is the authority of the agent which the principal causes or allows a third person to believe that the agent possesses. (Civ. Code, 2317.) (Van Den Eikhof v. Hocker (1978) 87 Cal.App.3d 900, 905.) Here, neither actual nor ostensible agency exists given the allegations of the 4AC. With respect to actual agency, Plaintiffs expressly allege that Gonzalez was not a licensed agent of Omnex. (4AC, 9 and 36.) Additionally, there are no allegations in the 4AC showing that Omnex intentionally conferred any authority on Gonzalez. Thus, there is no showing of actual agency. Regarding ostensible agency, there are no allegations in the 4AC showing that Omnex took any act or made any representation or omission that led Plaintiffs to reasonably believe that Gonzalez was Omnex s agent. (See Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal.App.4th 741, 747 [the elements of ostensible agency include a representation or omission by the principal leading the plaintiff reasonably to believe the third person was the principal s agent]; see also Emery v. Visa Internat. Service Assn. (2002) 95 Cal.App.4th 952, 961 [stating that ostensible authority must be based on the acts or declarations of the principal and not solely upon the agent s conduct ]; J.L. v. Children s Institute, Inc. (2009) 177 Cal.App.4th 388, 404.) |n the 4AC, Plaintiffs allege that [t]he conduct of [Omnex] that caused [them] to remit money for Printed: 7/3/201 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 5 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER transfer to relatives in Mexico, and elsewhere, consisted of signs, advertisements, announcements, posters, business card used by [Individual Defendants], bearing the name of [Omnex or the other corporate defendants]. This conclusory allegation is insufficient to establish ostensible agency. The mere fact that Gonzalez allegedly possessed and used signs, advertisements, announcements, posters, and business cards bearing Omnex s name does not demonstrate that Omnex itself made any representation to Plaintiffs regarding Gonzalez. Notably, the 4AC does not allege: any facts showing how the Individual Defendants, including Gonzalez, obtained the subject materials; any additional facts regarding the contents of the signs, advertisements, announcements, posters, or business cards; or facts demonstrating that Omnex created, distributed, or posted such materials. Thus, it cannot be said that the subject signs, advertisements, announcements, posters, or business cards constitute representations by Omnex that would reasonably lead Plaintiffs to believe that Gonzalez was Omnex s agent. |n the 4AC, Plaintiffs also allege that Omnex neglected to supervise, control, monitor, and/or regulate the conduct of its licensed agent, Barajas, and her operation of Indra s Hair Salon. (4AC, 50.) However, there is no allegation in the 4AC that this neglect by Omnex caused Plaintiffs to reasonably believe that Gonzalez was its agent. Rather, Plaintiffs merely allege that as a direct result of said failure to supervise, control, monitor and/or regulate [Barajas ] conduct as the [Omnex] agent, the customers remittance transfer records, including those of [Plaintiffs], were removed from the agency store to [Gonzalez s] apartment in Gilroy . (|bid.) For these reasons, there is no showing of ostensible agency. Consequently, to the extent the fraud claim is based on alleged misrepresentations made by Gonzalez, it is not adequately pleaded. Additionally, Omnex s argument regarding specificity is also well-taken. Allegations of fraud must be pleaded with particularity. This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered. (|d., at pp. 644-45, original italics [internal quotation marks and citation omitted].) The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th at 153, 157.) Although Plaintiffs allege that Individual Defendants, besides Gonzalez, acted as Omnex s agents and made various misrepresentations about wire transfers and Gonzalez s status as a licensed agent (see e.g., TAC, 19-24), Plaintiffs fail to allege sufficient facts showing how, where, and by what means those misrepresentations were tendered. Therefore, to the extent the fraud claim is based on alleged misrepresentations made by Individual Defendants other than Gonzalez, it is not adequately pleaded. Accordingly, the demurrer to the first cause of action is SUSTAINED, with 10 days leave to amend. B. Second Cause of Action Omnex argues that the second cause of action for negligence fails because Plaintiffs do not plead facts demonstrating that Gonzalez was its agent. Omnex further argues that the claim fails because a principal is only responsible to third parties for the negligence of his or her agent in the transaction of business of the agency and the second cause of action is based on conduct which was not part of the transaction of the business of the alleged agency. (Mem. Ps. & As., pp. 322-5 and 5:22-6:10.) Omnex s arguments lack merit because the entirety of the second cause of action is not predicated on Printed: 7/3/20] 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 6 of 7 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER agency allegations. (See PHII, Inc. v. Super. Ct. (1995) 33 Cal.App.4th 1680, 1682 [a demurrer does not lie to only a portion of a claim].) As currently pleaded, the negligence claim is based, in part, on allegations that Omnex itself failed to supervise, control, monitor, and/or regulate the conduct of its licensed agent, Barajas, and her operation of Indra s Hair Salon. (4AC, 50.) To the extent the claim is based on these allegations, it is not based on the actions of Gonzalez or Barajas. Rather, the claim arises out of Omnex s allegedly negligent conduct. Thus, Omnex s arguments fail to dispose of the claim as a whole. Because Omnex does not proffer any additional arguments with respect to the second cause of action, it does not demonstrate that the second cause of action fails to state a claim. Accordingly, the demurrer to the second cause of action is OVERRU LED. Printed: 7/3/20] 8 07/03/201 8 Healing: Demurrer - 16CV291442 Page 7 of 7