Gh Consulting, Inc. vs. Gmrg Group Incorporated

Motion to Strike

Cal. Super. - 4th Dist.April 14, 2017

S H W N O w 3 A N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CUMMINS & WHITE, LLP James R. Wakefield, P.C. (Bar No. 102024) E-mail: jwakefield@cwlawyers.com Samantha N. Lamm (Bar No. 203094) E-mail: slamm@cwlawyers.com 2424 S.E. Bristol Street, Suite 300 Newport Beach, CA 92660-0764 Telephone: (949) 852-1800 Facsimile: (949) 852-8510 Attorneys for Defendants VINCENT CABRERA aka VINCENT P. CABRERA aka FRANCIS V. CABRERA; GMRG GROUP INCORPORATED SUPERIOR COURT OF CALIFORNIA COUNTY OF ORANGE, CENTRAL JUSTICE CENTER GH CONSULTING, INC., a California corporation, Plaintiff, vs. VINCENT CABRERA aka VINCENT P. CABRERA aka FRANCIS V. CABRERA; GMRG GROUP INCORPORATED; and DOES 1 through 50, inclusive, Defendants. N a e ” e a s ” “ a ” “ e a a t ? s e t “ a t s e a r ? “e at s” u s e w “ s a ? “ s t “ e t “ p s t ” w u ’ “s ee r” CASE NO.: 30-2017-00914571-CU-BC-CJC NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFF'S COMPLAINT ASSIGNED FOR ALL PURPOSES TO THE HONORABLE LINDA MARKS, DEPARTMENT: C10 Complaint Filed: April 14, 2017 Hearing Date: August 21, 2017 Time: 10:00 a.m. Dept.: C10 Reservation No.: 72595442 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on August 21, 2017 at 10:00 a.m. or as soon thereafter as the matter may be heard in Department C-10 of the above-entitled Court, located at 700 Civic Center West Drive, Santa Ana, California Defendants VINCENT CABRERA aka aka FRANCIS V. CABRERA and GMRG GROUPVINCENT P. CABRERA INCORPORATED will move the Court for an order striking portions of Plaintiff GH CONSULTING, INC.’s Complaint. -1- NOTICE OF MOTION AND MOTION TO STRIKE [V188]1663428.docx.DOC?) w v R R W N O o 0 3 O N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 This motion is made on the grounds that portions of the Complaint consist ofirrelevant, false and improper matter, and are not drawn in conformity with the laws of this State. (Code Civ. Proc., §§ 435 and 436.) This motion to strike will be based on this notice, the memorandum of points and authorities, upon all pleadings, papers and records on file herein, and upon such other and further oral argument and written documentation as may be presented to the Court at the time of the hearing. Dated: May 24, 2017 CUMMINS & WHITE, LLP By: Samantha N. Lamm Attorneys for Defendants VINCENT CABRERA aka VINCENT P. CABRERA aka FRANCIS V. CABRERA; GMRG GROUP INCORPORATED 2. NOTICE OF MOTION AND MOTION TO STRIKE |V188]1663428.docx.DOC;2| ~ N O N n n A W N o o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MOTION TO STRIKE PORTIONS OF THE COMPLAINT Defendants VINCENT CABRERA aka VINCENT P. CABRERA aka FRANCIS V. CABRERA and GMRG GROUP INCORPORATED hereby move to strike the following portions of Plaintiff GH CONSULTING, INC.’s Complaint: 1. Page 5, Lines 14-15, Paragraph 32, specifically the words: “Plaintiffis entitled to attorney’s fees.” 2. Page 7, Lines 1-2, specifically the words: “Plaintiff has incurred attorney fees” 3. Page 7, Line 7, specifically the words: “For Attorney’s fees.” 4. Page 6, Lines 2-3, specifically the words: “Defendants” aforementioned conduct was willful and oppressive, fraudulent, and malicious. Plaintiff is therefore entitled to punitive damages.” 5. Page 7, Line 5, specifically the word: “punitive.” WHEREFORE, Cross-Defendant prays: 1. That the motion to strike is granted; 2. For such other and furtherrelief as this Court may deem just and proper. Dated: May 24, 2017 CUMMINS & WHITE, LLP By: { Samantha N. Lam Attorneys for Defendants VINCENT CABRERA aka VINCENT P. CABRERA aka FRANCIS V. CABRERA; GMRG GROUP INCORPORATED -3- NOTICE OF MOTION AND MOTION TO STRIKE |V188]1663428.docx.DOC;2| w n W N © 0 1 O n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES L INTRODUCTION Defendants Vincent Cabrera and GMRG Group, Inc. move to strike Plaintiff GH Consulting, Inc.’s prayer for punitive damages and attorney’s fees because Plaintiff failed to allege sufficient facts to support the prayer for relief. On April 14, 2017, Plaintiff filed a Complaint for: (1) breach of contract, (2) intentional misrepresentation, (3) negligent misrepresentation, and (4) violation of Business and Professions Code section 17200. In bringing the Complaint, Plaintiff alleges that in July 2014, Mr. Cabrera offered to sell to Gordon Heller, Plaintiff’s principal, a residential cleaning franchise called The Cleaning Authority. Plaintiff alleges that Mr. Cabrera owned and operated The Cleaning Authority through his wholly owned corporation GMRG Group Incorporated. (See Complaint, q 8.) Plaintiff alleges that on September 24, 2014, the parties entered into an agreement to purchase The Cleaning Authority’s assets for $215,000. (See Complaint, 99 9-10.) Plaintiff alleges that Defendants had a duty to disclose all material facts related to The Cleaning Authority’s financial condition and its assets under the agreement. (See Complaint, q 11.) Plaintiff alleges that in Section 4.10 of the agreement, Mr. Cabrera represented that he had no knowledge of any pending litigation, action, proceeding or investigation relating to the purchased assets or the business. (See Complaint, § 16.) Plaintiff alleges that Defendants failed to disclose The Cleaning Authority’s pending worker’s compensation claims, which Defendants allegedly knew would increase Plaintiff's worker’s compensation premiums. (See Complaint, 99 17-20.) However, these allegations are not sufficient to support a claim for punitive damages or attorney’s fees. IL. STANDARD OF REVIEW Code of Civil Procedure section 436 authorizes the court to strike out any irrelevant, false or improper matter in any pleading and allows the court to strike the whole and any part of a pleading that is not drawn in conformity with California law, court rule or order of the court. Code of Civil Procedure section 431.10(b) defines an immaterial allegation in a pleading as one which (1) is not essential to the statement of a claim; (2) an allegation that is neither -4- NOTICE OF MOTION AND MOTION TO STRIKE [V188]1663428.docx. DOC:2| H w N O 0 3 O N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 pertinent to nor supported by an otherwise sufficient claim; or (3) a demand for judgment requesting relief not supported by the allegations of the complaint. Section 431.10(c) further defines an “immaterial allegation” to mean an “‘irrelevant matter’ as that term is used in Section 436.” Thus, the portions of the complaint which are either not essential, not pertinent, not supported by an otherwise sufficient claim, or demand for judgment not supported by allegations of the complaint must be stricken as irrelevant. III. PLAINTIFF FAILS TO ALLEGE SUFFICIENT FACTS TO SUPPORT A PRAYER FOR PUNITIVE DAMAGES A. Plaintiff Is Not Entitled to Recover Punitive Damages As a Matter of Law A motion to strike is properly utilized to strike claims which are not legally recoverable. (Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211.) Punitive damages are not recoverable in actions for breach of contract, even if defendant’s conduct was willful, oppressive or malicious. (Myers Building Industries, LTD v. Interface Technology, Inc. (1993) 13 Cal. App.4™ 949, 960.) In Foley v. Interactive Datacorp (1988) 47 Cal.3d. 654, the California Supreme Court held that where relationships are “fundamentally contractual,” contract and not tort claims are the appropriate remedy. The Supreme Court affirmed this rule in Hunter v. Upright Com, Inc. (1993) 6 Cal. 4™ 1174, stating: “We noted in Foley that “distinction between tort and contract is well grounded in common law and divergent objectives underlie the remedies created in the two areas. Whereas contract actions are created to enforce the intentions of the parties to the agreement, tort laws primarily design to vindicate social policy ... Therefore tort damages are unavailable in this case.”[at pp. 1180, 1186.] In the present action, Plaintiff essentially alleges that Defendants breached the agreement by failing to disclose the pending worker’s compensation claims before the sale of the business. (See Complaint, qf 11-17 & 30.) Since this conduct arises from an alleged contractual obligation, Plaintiff’s allegations do not support a prayer for punitive damages. B. The Complaint Contains No Specific Factual Allegations of Oppression, Malice, or Fraud by Defendants In the second cause ofaction for intentional misrepresentation, Plaintiff simply alleges that Defendants made false misrepresentations regarding The Cleaning Authority’s pending -5- NOTICE OF MOTION AND MOTION TO STRIKE [V188]1663428.docx.DOC;2| ® w ~ ~ O N w n B A \ O 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 worker’s compensation claims. (See Complaint, 4] 16-17 & 34.) However, Plaintiff fails to allege any specific allegations of malice, oppression or fraud by Defendants. (See Complaint, 37.) To recover punitive damages, a plaintiff must plead facts sufficient to show that a defendant acted with oppression, fraud or malice pursuant to Civil Code section 3294. In pleading those facts, a plaintiff must identify and allege specific facts and not mere conclusions. (Roth v. Shell Oil Co. (1960) 185 Cal.App.2d 676, disapproved on other grounds in Templeton Feed & Grain v. Ralston Purina Co. (1968) 69 Cal.2d 461, 471.) In G.D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, the court explained where punitive damages are alleged, fairness requires that defendant be given notice of the conduct charged: Notwithstanding relaxed pleading criteria, certain tortious injuries demand firm allegations... When nondeliberate injury is charged, allegations that the defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice. [Citation omitted]. When a defendant must produce evidence in defense of an exemplary damage claim; fairness demands that he receive adequate notice of the kind of conduct charged against him. Id. at 29. Therefore, where punitive damages are requested, a plaintiff must specifically plead ultimate facts that would support such an award. This requirement is not satisfied by vaguely and generally alleging mere conclusions of law. In Blegen v. Superior Court (1981) 125 Cal.App.3d 959, the court stated that conclusory language such as the statutory description of conduct entitling a plaintiff to punitive damages may not be pleaded as a substitute for specific facts apprising a defendant of the basis upon which relief is sought. Further, allegations which simply parrot a portion of Civil Code § 3294 are insufficient to properly lay a foundation for a claim of punitive damages as set forth in Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166, which stated: The mere allegation [that] an intentional tort was committed is not sufficient to warrant an award of punitive damages. [Citation omitted.] Not only must there be circumstances of oppression, fraud or malice, but facts must be alleged in the pleading to support such a claim. [Citation omitted.) In Blegen, the court articulated the pleading requirements to support punitive damages allegations as follows: . -6- NOTICE OF MOTION AND MOTION TO STRIKE [V188]1663428.docx.DOC;2| N O 0 N d 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 It is by now well established that a conscious disregard for the safety of others may constitute the malice required to sustain a claim for punitive damages. [Citations omitted.] “In order to justify an award of punitive damages on this basis, the plaintiff must establish that the defendant was aware of the probable dangerous consequences of his conduct, and he wilfully and deliberately failed to avoid those consequences [citation omitted].” To do so the plaintiff must plead the ultimate facts which give rise to liability... The terms “wilfull,” “fraudulent,” “malicious,” and “oppressive” are the statutory description of the type of conduct which can sustain a cause of action for punitive damages. Civ. Code § 3294. Pleading in the language of the statute is acceptable provided that sufficient facts are pleaded to support the allegation. In the present case, Plaintiff fails to allege specific facts demonstrating intentional, malicious, fraudulent, oppressive, or despicable conduct that is carried with a willful disregard of Plaintiff’s rights by Defendants. Plaintiff essentially alleges that Defendants failed to disclose The Cleaning Authority’s pending worker’s compensation claims prior to the sale. (See Complaint, 4 16-17.) However, this conclusory allegation is not sufficient to support a prayer for punitive damages against Defendants. Thus, the Court should strike Plaintiff’s prayer for punitive damages against Defendants. C. The Complaint Contains No Specific Factual Allegations of Authorization or Ratification by GMRG Group Inc. Further, where a defendant is a corporation Civil Code section 3294(b) specifically requires that the acts be ratified by an officer, director, or managing agent of the corporation. Section 3294(b) states in pertinent part: With respect to a corporate employer, the advanced knowledge and conscious disregard, authorization, ratification or act of oppression, fraud or malice, must be on the part of an officer, director, or managing agent of the corporation. In Scannell v. County ofRiverside (1984) 152 Cal.App.3d 596, the court held that the plaintiff seeking exemplary damages in a malicious prosecution action failed to allege corporate ratification of specific acts of defendant's employees. (Id. at 614.) Therefore, the court granted the defendant’s motion to strike allegations of exemplary damages. (Id. at 617.) Similarly, Plaintiff's Complaint is devoid of any allegations that any of Defendant GMRG Group Inc.’s (“GMRG”) officer, director, or managing agent had advanced knowledge or ratified any alleged acts of oppression, fraud or malice. Further, there are no allegations -7- NOTICE OF MOTION AND MOTION TO STRIKE [V188]1663428.docx.DOC:2] B s O O 0 3 O N W n 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 contained in the Complaint that Defendant’s agents or employees acted within the course and scope of their employment with GMRG’s authorization or that GMRG ratified the alleged wrongdoing. (Kiseskey v. Carpenters’ Trust (1983) 144 Cal.App.3d 222, 235.) Therefore, Plaintiff’s prayer for punitive damages should bestricken. IV. PLAINTIFF FAILS TO ALLEGE FACTS SHOWING THAT IT IS ENTITLED TO RECOVER ATTORNEY'S FEES Under the American Rule, each party must pay its own attorney’s fees. Gray v. Don Miller & Assoc., Inc. (1984) 35 Cal.3d 498, 504. This concept was codified in section 1021 of the Code of Civil Procedure, which provides that each party is to bear its own attorney’s fees unless a statute or other agreement between the parties provide otherwise. (/d.) Code of Civil Procedure section 1033.5(a)(10) also provides that attorney’s fees may be awarded to the prevailing party only when authorized by a contract, statute, or law. (Pederson v. Kennedy (1982) 128 Cal.App.3d 976, 979 [stating that “each party is responsible for his or her own attorney’s fees in the absence of an agreement between the parties for fees or as statute specifically authorizing fees.”].) As such, to be entitled to an order for attorney’s fees, Plaintiff must plead a basis for such an award. (Wisley v. Rhodes (1990) 223 Cal.App.3d 1470, 1474.) In the present action, Plaintiff prays for the recovery of attorneys’ fees pursuant to Section 11.8 of the agreement. (See Complaint, § 32.) However, Plaintiff failed to attach a copy of the agreement to the Complaint. To state a cause of action for breach of contract, “the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 459.) Thus, Plaintiff fails to plead the essential facts necessary to show a statutory or contractual basis to support the recovery of attorney’s fees. Attorney’s fees are not recoverable absent such a basis. (Civ. Code § 1021.) Thus, there is no basis to support Plaintiff’s prayer for attorney’s fees against Defendants. V. CONCLUSION In conclusion, Defendants respectfully request that the Court grant this motion to strike Plaintiff’s prayer for punitive damages and attorney’s fees as there is no basis to support their -8- NOTICE OF MOTION AND MOTION TO STRIKE [V188]1663428.docx.DOC;2| N O N n L A W N o o 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 prayer for relief. Dated: May 24, 2017 |V188]1663428.docx. DOC;2| CUMMINS & WHITE, LLP By:foe Samantha N. m Attorneys for Defendants VINCENT CABRERA aka VINCENT P. CABRERA aka FRANCIS V. CABRERA; GMRG GROUP INCORPORATED 9. NOTICE OF MOTION AND MOTION TO STRIKE N O N O Y 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE (Declaration) (C.C.P. §§1013(a) and 2015.5) STATE OF CALIFORNIA ) ) Ss. COUNTY OF ORANGE ) I, the undersigned, declare: I am employed in the County of Orange, State of California. I am over the age of 18 and not a party to the within action. My business address is 2424 S.E. Bristol Street, Suite 300, Newport Beach, CA 92660-0764. On May 24, 2017, I served the following document(s) NOTICE OF MOTION AND MOTION TO STRIKE PORTIONS OF PLAINTIFF'S COMPLAINT on the interested parties in this action by placing a true and correct copy of each documentthereof, enclosed in a sealed envelope, addressed as follows: Melissa J. Fox The Fox Firm 14252 Culver Drive, Suite A248 Irvine, CA 92604 (949) 683-8855 (949) 714) 389-4974 melissa@melissafoxlaw.com M By Mail: [ am readily familiar with Cummins & White, LLP’s business practice for collection and processing of correspondence for mailing with the United States Postal Service. I know that the correspondence is deposited with the United States Postal Service on the same day this declaration was executed in the ordinary course of business at Newport Beach, California O By Electronic Service: I electronically served the above document(s) by transmitting a PDF format copy through One Legal to each person at the e-mail address(es) listed on the service list from dvillamar@cwlawyers.com O By Personal Service: I caused the above document(s) to be hand delivered to the above address(es). [0 By Overnight Courier: I caused the above-referenced document(s) to be delivered to an overnight courier service (GSO) for delivery to the above address(es). Executed on May 24, 2017, at Newport Beach, California. ¥] (State) I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Delfina F, Villamar -10- NOTICE OF MOTION AND MOTION TO STRIKE [V188|1663428.docx.DOC;2| Delfina Villamar a. I From: donotreply@occourts.org Sent: Wednesday, May 24, 2017 2:48 PM To: Delfina Villamar Subject: Superior Court of Orange County - Motion Reservation Request - CONFIRMATION Superior Court of California, County of Orange Your reservation request has been CONFIRMED by the Superior Court, The hearing date and time below has been reserved. You will be asked to provide your reservation number to the court at a later date. MOVING PAPERS MUST BE E-FILED WITHIN 24 HOURS AFTER COMPLETING THE ON-LINE RESERVATION. Failure to submit your moving papers within 24 hours will result in the automatic CANCELLATION of the reservation. NOTE: To EXPEDITE your MOTION filing place the appropriate Court Reservation number (e.g. 7XXXXXXX) on each Motion being submitted. Please do not reply to this email. Reservation Number: 72505442 Hearing Date: August 21, 2017 Hearing Time: 10:00 AM Department: C10 Motion Type: Motion to Strike Portions Of Complaint Case Number: 30-2017-00814571-CU-BC-CIC Case Title: GH Consulting, Inc. vs. GMRG Group Incorporated Judicial Officer: Hon. Linda Marks Email: dvillamar@cwlawyers.com Date of Request: May 24, 2017 Time of Request: 2:46 PM Transaction Number: 497224604 wart of Caltfornta « Lxnnty of Sram Delfina Villamar From: donotreply@occourts.org Sent: Wednesday, May 24, 2017 2:46 PM To: Delfina Villamar Subject: Superior Court of Orange County - Motion Reservation Request - ACTION REQUIRED ATS IeY gL E Superior Court of California, County of Orange Your reservation request has been RECEIVED by the Superior Court, The hearing date and time is NOT reserved at this point. To complete the reservation process, please click the confirmation link below. MOVING PAPERS MUST BE E-FILED WITHIN 24 HOURS AFTER COMPLETING THE ON-LINE RESERVATION. Failure to submit your moving papers within 24 hours will result in the automatic CANCELLATION of the reservation. Please do not reply to this email. Confirmation: Click here to confirm your reservation request. Date of Request: May 24, 2017 Time of Request: 2:46 PM Transaction Number: 497224604 Email: dvillamar@cwlawyers.com Case Number: 30-2017-00914571-CU-BC-CIC Case Title: GH Consulting, Inc. vs, GMRG Group Incorporated Judicial Officer: Hon. Linda Marks Motion Type: Motion to Strike Portions Of Complaint Hearing Date: August 21, 2017 Hearing Time: 10:00 AM Department: C10 Hapesios Caoet of California « County of Drange