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: 01/10/2019 Comments: Heard By: Stoelker, James L Location: Department 13 Courtroom Reporter: - No Court Reporter Courtroom Clerk: Robert Gutierrez Court Interpreter: Court Investigator: Parties Present: Future Hearings: Henein, Samy Saad Attorney Thompson, Joseph P. Attorney Exhibits: - The tentative ruling is contested by Defendant. Motion is argued. The Tentative Ruling is adopted. See below. Case Name: Crispin Calleros Cortes, et al. v. Leticia Ramona Sandoval Gonzalez, et al. Case No.: 16-CV-291442 Currently before the Court is the demurrer by defendant Omnex Group, Inc. dba Giromex ( Omnex ) to the fifth amended complaint ( SAC ) 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 SAC, 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. (SAC, 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 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. (SAC, 6.) Barajas, in particular, was an authorized representative and agent of Omnex. (|d., at 14.) Barajas owned Indra s Hair Salon, a Printed: 1/10/2019 01/10/2019 Healing: Demurrer - 16CV291442 Page 1 ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Omnex store, and a payroll account, which Barajas allowed Gonzalez to use as if it was her own. (|d., at 11 & 14.) Plaintiffs allege that [i]n dealing with [Individual Defendants], [they] were caused by the conduct of [Omnex, 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. (SAC, 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. (SAC, 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]hile 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. (SAC, 36.) Plaintiffs further allege that the Individual Defendants were unfit and the corporate defendants were reckless in employing them. (SAC, 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 55.) Additionally, Omnex failed to supervise, control, monitor, and/or regulate [Barajas] conduct of [her] agency known as INDRA S HAIR SALON 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 . (SAC, 55 & 69.) Furthermore, Omnex s alleged failure to supervise Barajas allowed Barajas and Gonzalez to defraud Printed: 1/10/2019 01/10/2019 Healing: Demurrer - 16CV291442 PageZ ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Plaintiffs. (|d., at 56.) Lastly, Omnex allegedly failed to fulfill various duties under federal regulations and its agent agreement with Barajas. (SAC, 48-53 & 57-71.) Omnex s failure to adhere to the requirements of the federal regulations[] and to the terms and obligations of the [agent agreement] caused Plaintiffs to sustain monetary losses. (|d., at 70 & 71.) 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 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. Subsequently, Omnex demurred to the 4AC. On July 3, 2018, the Court issued an order, striking the third cause of action, overruling the demurrer to the second cause of action, and sustaining the demurrer to the first cause of action with leave to amend. On July 11, 2018, Plaintiffs filed the operative 5AC against Individual Defendants, Omnex, and other corporate defendants, alleging causes of action for (1) fraud and (2) negligence. Omnex filed the instant demurrer to the SAC on October 1, 2018. On November 26, 2018, Plaintiffs filed papers in opposition to the demurrer. Omnex filed a reply on December 6, 2018. Discussion Omnex demurs to the second cause of action of the SAC on the ground of failure to allege facts sufficient to constitute a cause of action. (Omnex s Dem., p. 1:25-27; Omnex s Mem. Ps. & As., pp. 1:20-22 & 223-7; see Code Civ. Proc., 430.10, subd. (e).) I. Request forJudicial Notice In connection with their opposition, Plaintiffs ask the Court to take judicial notice of: (1) police reports; (2) documents and orders filed in Gonzalez s criminal case; (3) a schedule of creditors and a judgment denying discharge filed in Gonzalez s bankruptcy case; (4) a news article; (5) a press release; (6) a separate statement filed in this case in connection with a discovery motion; and (7) a declaration by Cortes filed in this case in connection with Omnex s earlier demurrer to the TAC. As an initial matter, the police reports, news article, and press release are not proper subjects ofjudicial notice under Evidence Code sections 452 and 453. (See Evid. Code, 452, 453.) Printed: 1/10/2019 01/10/2019 Healing: Demurrer - 16CV291442 PageS ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER Next, the various court records are generally proper subjects ofjudicial notice under Evidence Code section 452, subdivision (d). Evidence Code section 452, subdivision (d) states that the court may take judicial notice of [r]ecords of any court of this state. That provision permits the trial court to take judicial notice of the existence ofjudicial opinions and court documents, along with the truth of the results reached in the documents such as orders, statements of decision, and judgments but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact. (People v. Woodell (1998) 17 Cal.4th 448, 455.) Consequently, Court will only take judicial notice of the existence of the court records filed in this case, Gonzalez s criminal case, and Gonzalez s bankruptcy case, as well as the truth of the results reached in orders and judgments. The Court will not take judicial notice of the truth of hearsay statements in those documents. Accordingly, Plaintiffs request forjudicial notice is DENIED IN PART and GRANTED IN PART. The request is DENIED as to the police reports, news article, and press release. The request is GRANTED as to the existence of the subject court records and the truth of the results reached in orders and judgments. ||. 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.App.3d 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 Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see Code Civ. Proc., 430.30, subd. (a).) |t is not the ordinary function of a demurrer to test the truth of the [ ] allegations [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 a|| 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.) |||. Failure to Allege Sufficient Facts Omnex argues that the second cause of action for negligence fails because, among other things, Plaintiffs do not allege sufficient facts establishing the element of damages. (See Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 62 [the elements of negligence are duty, breach, causation, and damages].) Specifically, Omnex states that Plaintiffs only allege economic injuries, Plaintiffs do not allege that they are in privity with Omnex, and the only kinds of damages caused by negligence which may be recovered from a defendant not in privity with the plaintiff are for bodily injury and physical damage. (See Anthony v. Kelsey Hayes Co. (1972) 25 Cal.App.3d 442, 446 47 [ Negligence: In California, the only kinds of damages caused by negligence which may be recovered from a defendant not in privity with plaintiff are for bodily injury and physical damage. ]; see also San Francisco Unified Sch. Dist. v. W.R. Grace & Co. (1995) 37 Cal.App.4th 1318, 1327 [ Until physical injury occurs until damage rises above the level of mere economic loss a plaintiff cannot state a cause of action for negligence ]; County of Santa Clara v. Atlantic Richfield Co. (2006) 137 Cal.App.4th 292, 318 [same].) Printed: 1/10/2019 01/10/2019 Healing: Demurrer - 16CV291442 Page4 ofS SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA MINUTE ORDER In opposition, Plaintiffs appear to concede the argument based on the economic loss rule as they fail to address it in their opposition. Plaintiffs have not advanced any argument why the economic loss doctrine does not bar their claim for negligence. They have also not identified any injury not purely economic in nature, or any other special relationship or situation which would warrant an exception to the economic loss rule. Accordingly, the demurrer to the second cause of action is SUSTAINED with 10 days leave to amend. Printed: 1/10/2019 01/10/2019 Healing: Demurrer - 16CV291442 Page 5 ofS
