Memorandum Points and Authorities

Cal. Super. - 6th Dist.March 30, 2021

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 CV381 444 Santa Clara - Civil Christopher K. Karic (SBN - 184765) Corey M. Timpson (SBN - 328929) SELLAR HAZARD & LUCIA A Professional Law Corporation 201 North Civic Drive, Suite 145 Walnut Creek, CA 94596 Telephone: (925) 938- 1430 Facsimile: (925) 256-7508 Email: Attorneys for Defendant: ADVOQUE Electronically Filed by Superior Court of CA, County of Santa Clara, on 7/30/2021 2:54 PM Reviewed By: L. Quach-Marcella Case #21 CV381444 ckaric@sellarlaw.com; ctimpson@sellarlaw.com EHVeIOPe: 6964433 SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA PAPER 360, INC., a California corporation Plaintiff. VS. ADVOQUE, a California corporation; and DOES 1-10, inclusive, Case No.2 21CV381444 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT Hearing Date: TBD Time: TBD Location: TBD Action Filed: March 30, 2021 Trial Date: None Set MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT na 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES Defendant ADVOQUE (“Defendant” or “Advoque”) hereby submits its memorandum of points and authorities in support 0f its demurrer t0 PlaintiffPAPER 360, INC.’s (“Plaintiff”) Complaint filed March 30, 2021 herein. I. STATEMENT OF FACTS Plaintiff contends that Advoque advertised its masks as either certified by the National Institute for Occupational Safety and Health (“NIOSH”), the federal agency that sets the standards 0r recommendations for the prevention 0f work-related disease and injury, or pre-NIOSH-approved, meaning that they have not yet received NIOSH certification, but manufactured by the same equipment and process that produced NIOSH-approved masks. (Plaintiff’s Complaint at 1N 11, 13, 14) Plaintiff contends that it expressed to Advoque its intention to purchase NIOSH-approved or pre- approved masks, and that Advoque offered pre-approved masks t0 Plaintiff. (Id. at 1] 17) Plaintiff alleges that it placed an order for 1,944 Advoque masks (“Masks”) for $229,392.00. (Id. at 1] 20) Plaintiff contends that Advoque sent, and it received the Masks. (Id. at 1122) Plaintiff alleges that it became aware that Defendant had lost its NIOSH certification, and that Defendant’s loss of certification resulted in an inability to sell the Masks to its customers. (Id. at 1H] 24-27) Plaintiff then brought this action against Defendant for breach of contract, breach 0f the warranty of merchantability, fraud, rescission based 0n fraud, and unfair business practices related to the sale of the Masks. (See Complaint) Despite Plaintiff’s allegations, the Purchase Order, Which seems t0 be the only purported contract between the parties, clearly states that the masks were non-Niosh. (Declaration of Corey M. Timpson (“Timpson Decl.”) 1] 6, Exhibit B) While Advoque disagrees With Plaintiff’s allegations, the purpose of a demurrer is to test the sufficiency of the pleadings and determine Whether or not the facts, as alleged, constitute a cause of action against the Defendant. For the reasons set forth below, Advoque contends that the Complaint, 0n its face, does not sufficiently allege any facts Which would constitute any cause 0f action against it. On June 15, 2021, Advoque, through its counsel, requested an extension 0f time to respond to Plaintiff’s Complaint due to recently receiving the file. (Timpson Decl. fl 2) Plaintiff’s counsel -2- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 responded 0n June 16, 2021 granting an extension t0 file a responsive pleading until July 2, 2021. (Timpson Decl. 1] 3) On June 30, 2021, Advoque, through its counsel, sent a meet and confer t0 Plaintiff regarding the deficiencies in its Complaint and requested that Plaintiff either amend or dismiss the causes of actions. (Timpson Decl. 1] 4) To date, Plaintiff has not responded to the meet and confer. (Timpson Decl. 1] 5) II. LEGAL STANDARD Demurrer is appropriate in several instances, including Where: (1) the complaint does not state facts sufficient to constitute a cause of action (Code Civ. Proc. § 430.10(e)); and (2) the complaint is uncertain, i.e., ambiguous and unintelligible (Code Civ. Proc. § 430.10(f)). Because a demurrer tests the legal sufficiency of a pleading, t0 survive a demurrer the plaintiff must show that the complaint alleges facts sufficient to establish every element 0f each cause of action, and that there is n0 clear defense or bar to the plaintiffs recovery. Rakestraw v. Cal. Physicians’ Sew, 81 Ca1.App.4th 39, 43 (2000); Gentry v. eBay, Ina, 99 Cal.App.4th 816, 825 (2002); Lee v. Escrow Consultants, Ina, 210 Ca1.App.3d 915, 917 (1989). If the complaint is defective and there is no reasonable possibility that the defect can be cured, the demurrers should be sustained Without leave t0 amend. C & H Foods C0. v. Hartford Ins. C0., 163 Cal. App. 3d 1055, 1062 (1984) (emphasis added) (“[W]here ‘it appears from the complaint that under applicable substantive law there is no reasonable probability that the defect can be cured by amendment,’ it is proper to sustain a demurrer Without leave to amend”); Live Oak Pub]. C0. v. Cohagan, 234 Cal. App. 3d 1277, 1283 (1991) ("If there can be no liability as a matter of law the demurrer should be sustained without leave to amend"). III. LEGAL ARGUMENT A. All Causes of Action Fail T0 State Facts Sufficient T0 Constitute A Cause 0f Action [Code Civ. Proc. §430.10(e)]. i. Plaintiff Fails t0 Allege Sufficient Facts t0 Support a Breach 0f Contract. A demurrer to a breach of contract claim may be sustained Where the allegations are merely general conclusory allegations. See Baldwin v. AAA Northern California, Nevada & Utah Ins. Exchange (2016) 1 Cal.App.5th 545, 55 1. Plaintiff alleges against Advoque that it breached its contract related to the sale of the Masks When it sent them products that did not meet the standards required for -3- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NIOSH certification. However, no facts are alleged to establish that NIOSH approval or pre-approval was a condition of the contract between Plaintiff and Defendant. Plaintiff presents n0 evidence that the contract specified that NIOSH approval or pre-approval was a term that the parties agreed upon in executing the contract. In fact, the Purchase Order specifies non-Niosh masks. Furthermore, Plaintiff fails t0 even allege Whether the purported contract is oral 0r written. Defendant contends that the contract specifically contemplated the sale ofnon-NIOSH products, and its invoice, dated June 10, 2020, specifies the products to be sold to Plaintiff as “Disposable Face Mask - Non-NIOSH - Headband.” Plaintiff cannot point to any part of its purported contract (the single Purchase order P20168) With Defendant to show that the products Defendant tendered were non-conforming. Plaintiff alleges that the “Parties understand that the Products under the P20168 are not the non-Niosh masks, but are either Niosh-approved masks or pre-Niosh masks.” (Complaint at 1] 21) If the “parties” truly intended this to be true, the Purchase Order would not have specifically stated that the mask were non- Niosh. Overall, the Complaint alleges general conclusory statements that the parties entered into a contract for Niosh-approved masks, non-Niosh masks were delivered and Advoque breached the contract causing Plaintiff damages. Complaint at 1W 3 1-35. Thus, the Complaint on its face fails t0 allege facts sufficient t0 constitute a cause of action against Advoque and therefore the demurrer should be sustained Without leave to amend. ii. Plaintiff Fails t0 Allege Sufficient Facts t0 Support a Breach 0f Implied Warranty 0f Merchantability Plaintiff similarly fails to allege any facts t0 demonstrate that Advoque breached the warranty of merchantability. Plaintiff has not alleged With the requisite specificity that Defendant represented or warranted that the Masks would be NIOSH-approved or pre-approved, 0r that Defendant knew that Plaintiff would market the Masks as such when they were resold. Plaintiffs have not shown that the Masks, as non-NIOSH-approved, would not (1) pass Without objection in the trade under the contract description, (2) [be] fit for the ordinary purposes for Which such goods are used, (3) [would be] adequately contained, packaged, and labeled, and (4) conform t0 the promises or affirmations 0f fact made 0n the container or label. California Civil Code §1791.1(a). In a claim for breach of warranty of -4- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 merchantability, there is no requirement that the products sold be fit for a particular purpose, but rather that the products be fit for the ordinary purpose. See CACI Jury Instruction 123 1. Here, Plaintiff has not alleged facts that the masks are unable to be used for their ordinary purpose (i.e., as a face covering), but rather that the masks are not fit for the particular purpose of serving as Niosh-approved COVID-19 masks. However, under the Federal Emergency Use Authorization, even non-Niosh approved masks were still fit for the ordinary use of providing face coverings. Furthermore, the invoice for the Masks indicates that Defendant in fact made affirmative statements to the contrary, that the masks were specifically non-Niosh. Therefore, the facts alleged by Plaintiff are insufficient to constitute a cause of action for breach of the implied warranty 0f merchantability. iii. Plaintiff Fails t0 Allege Sufficient Facts, With the Requisite Specificity, t0 Support a Fraud Claim Plaintiff fails t0 allege facts to indicate that Defendant acted fraudulently When entering into the alleged contract. Claims involving fraud must be pled With specificity. General pleadings of a legal conclusion of fraud are insufficient; the facts constituting the fraud must be alleged, and every element of fraud must be alleged factually and specifically. Hills Trans. C0. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702. The specificity requirement includes showing “how, when, to whom, and by What means the representations were tendered, from what data the falsity. . .could be inferred, or how, When, Where, through Whom, and in What circumstances a party became justified in relying upon these representations.” Id. at 707. The specificity requirement is further heightened when the Plaintiff alleges that the fraud was perpetrated by a corporation. See Tarman v. State Farm Mut. Auto Ins. C0. (1991) 2 Cal.App.4th 153) Where a corporation allegedly engaged in fraud, plaintiffs must “allege the names of the persons Who made the allegedly fraudulent representations, their authority to speak, t0 Whom they spoke, What they said or wrote, and When it was said 0r written.” Id. at 157. In Tarmann, the court upheld the lower court’s decision to sustain the Defendant’s demurrer t0 the fraud cause 0f action because While the Plaintiff alleged that an authorized representative, Whose name was unknown, had made the specific representations at issue, the court found that this was insufficient t0 allow for a cause of action for fraud against a corporation. Id. at 157-58. -5- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Here, Plaintiff s Complaint contains none of the required information; it merely includes general and conclusory assertions that Defendant knew its representations regarding NIOSH certification or pre-certification were false, and that Plaintiff relied on these statements causing damages. There are n0 facts alleged as to Who made the allegedly false representations, When the alleged representations were made, how the alleged representations were made to Plaintiff or even what the specific contents 0f the alleged representations were. There are also no facts alleged as to how Advoque knew 0r should have known that the alleged representations were false. Furthermore, the Complaint doesn’t even allege that an authorized representative ofAdvoque made the allegedly fraudulent statements, but that the corporation in general did, Which is significantly less than the allegations in Tarmann wherein the Plaintiff at least alleged that an authorized representative had made the alleged representations. Plaintiff s Complaint clearly falls below the specificity required in Hills and Tarmann to uphold this cause 0f action. The remaining allegations are equally conclusory and therefore this court must sustain the demurrer as to the fraud cause of action Without leave t0 amend. iv. Plaintiff Fails to Allege Sufficient Facts t0 Support Recission Plaintiff s cause of action for recission is based 0n the fraud allegedly perpetrated by Advoque. As the Complaint fails to plead fraud with the requisite specificity, there can be n0 cause of action for recission based 0n fraud. As such, this cause 0f action must also fail. v. Plaintiff Fails to Allege Sufficient Facts t0 Support a Claim for Unfair Business Practices Plaintiff’ s claim of unfair business practice is based on assertions that Defendant engaged in unlawful, unfair 0r fraudulent business acts 0r practice and unfair, deceptive, untrue or misleading advertising. However, Plaintiff has not demonstrated that Defendant had made any untrue or misleading statement, 0r Which is known, 0r Which by the exercise 0f reasonable care should be known, t0 be untrue 0r misleading, 0r for any person, firm, or corporation t0 so make 0r disseminate or cause t0 be so made or disseminated any such statement as part of a plan 0r scheme With the intent not t0 sell that personal property 0r those services, professional 0r otherwise, so advertised at the price stated therein, or as so advertised. California Business and Professions Code § 17500. Plaintiff has -6- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 failed to show that Defendant knew or should have known that its statements were untrue or misleading, or made as part 0f a plan 0r scheme t0 sell these products at such a price. Defendants specifically communicated t0 Plaintiffs that the Masks were non-NIOSH-certified, and as such, did not provide any false statements, knowingly or unknowingly t0 Plaintiff. As a result, Plaintiff s claims in this cause of action fail. B. Plaintiff’s Causes 0f Action Are Ambiguous and Unintelligible [Code Civ. Proc. § 430100)]. Plaintiff s Complaint is ambiguous as t0 the all of causes 0f action against Advoque. The Complaint does not point t0 any specific portions 0f the contract that required Defendant t0 provide NIOSH-approved or pre-approved masks t0 Plaintiff. Plaintiff does not allege any particular conduct that showed that Defendant knew the Masks did not or would not approve NIOSH-certification, and that they deliberately misrepresented this fact t0 Plaintiff in entering into the contract. Plaintiff alleges Defendant made statements that the Masks were NIOSH-approved 0r pre-approved, Without any evidence t0 verify these statements, or that they were made knowingly 0r beyond mere mistaken belief. There is simply no way for Defendant t0 respond to this cause 0f action as it does not allege specific conduct by Defendant, or any specific person authorized to represent 0n behalf 0f Defendant, With regard to the claims 0f fraud or unfair business practices. Thus, Defendant’s demurrer must be sustained Without leave t0 amend. IV. CONCLUSION For the foregoing reasons, Defendant prays that these demurrers be sustained without leave t0 amend as t0 all causes 0f action, that Plaintiff take nothing by its complaint, that Defendant has judgment for its costs, and for all other proper relief. DATED: July 2, 2021 SELLAR HAZARD LUCIA CHRISTOPHER K. KARIC COREY M. TIMPSON Attorneys for Defendant ADVOQUE -7- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT ADVOQUE’S DEMURRER TO PLAINTIFF PAPER 360, INC.’S COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28