Demurrer To Amended Complaint

Demurrer

Cal. Super. - 4th Dist.October 12, 2018

10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Khanjan Nosratabadi Attorneys at Law Reza Khanjan, Esq. (SBN 223404) 20162 SW Birch Street, Suite 375 Newport Beach, CA 92660 Phone (949) 250-8770 Email: reza@kndefense.com Attorneys for Defendants Bel Air Machining and Ali Ossaily SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE - NORTH JUSTICE CENTER RICHARD G. PAGE, an individual; AND X-MACHINE, INC., a California corporation, Plaintiff, VS. HRL ENGINEERING AND MANUFACTURING, DBA BEL AIR MACHINING, a California corporation; ALI OSSAILY, an individual; AND DOES 1-160, inclusive, Defendants. TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that the hearing on the general and special demurrers of Defendants, Bel Air Machining, and Ali Ossaily, hereinafter referred to collectively as “Defendants” will take place on February 4th, Case No.: 30-2018-01025179-CU-CO-NJC NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT The Honorable Craig Griffin Hearing Date: February 24, 2020 Time: 2:00 p.m. Dept.: N-05 Reservation Number: 73193735 2020 at 2:00 p.m., or as soon there after as the matter can be heard in Department N-05 of the above entitled Court, located at 1275 N. Berkeley Avenue, Fullerton, CA. 92832. Defendants will and hereby do move the Court for an order sustaining general and special demurrers to Plaintiff’s Amended Complaint. The moving party has complied NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 1 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 with the meet and confer requirements of the California Code of Civil Procedure §430.41 as shown by the attached declaration. This motion is made pursuant to section 430.10(d) of the California Code of Civil Procedure, on the grounds that Plaintiff’s Third Amended Complaint (TAC) has a defect or misjoinder of parties; pursuant to Cal. Civ. Proc. § 430.10(f) on the grounds that Plaintiff’s Third Amended Complaint is ambiguous, uncertain or unintelligible; and pursuant to Cal. Civ. Proc. § 430.10 (e) on the grounds that the first, second, third, fourth, fifth, sixth and seventh causes of action do not state facts sufficient to constitute a cause of action. Defendants generally and specifically demurrer to Plaintiffs Richard Page and X-Machine Inc (“Plaintiffs”) Third Amended Complaint based on this Notice, the attached Memorandum of Points and Authorities, the Appendix of Authority, the attached declaration of Reza Khanjan regarding compliance with the meet and confer requirements of Cal. Civ. Proc. § 430.41, and all papers and records on file herein, any supplemental pleadings or exhibits submitted in support of said demurrers, and such evidence, both oral and documentary, as may be presented at the hearing on this Demurrer. THE DEMURRERS Pursuant to §430.10 of the California Code of Civil Procedure, Defendants hereby generally and specially demurrer to Plaintiff’s Third Amended Complaint as follows: ALL CAUSES OF ACTION Plaintiffs Third Amended Complaint was filed outside of the statutory filing period and is thus untimely. Cal. Civ. Proc. § 430.10 (a). In addition, Defendants specially demur to All Causes of Action in Plaintift’s Third Amended Complaint on the grounds that parties are misjoined and/or joined defectively. Cal. Civ. Proc. § 430.10 (d). Further, the Third Amended Complaint is uncertain, ambiguous and/or unintelligible. Cal. Civ. Proc. § 430.10 (®. FIRST CAUSE OF ACTION Defendants generally and specially demur to the First Cause of Action for Breach of Contract on the grounds that it fails to state facts sufficient to constitute a cause of action for Breach of Contract as entire copies of all alleged contracts have not been attached or had their material terms reproduced. Cal. Civ. Proc. §430.10 (e),(g). NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 2 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Further, Defendant Ossaily generally demurrers to the First Cause of Action for Breach of Contract on the grounds that it fails to state facts sufficient to constitute a cause of action in that Fiol v. Doellstedt, (1996) 50 Cal. App. 4th 1318 precludes personal liability for employees by holding that as there is only a single actor in law, separate actions cannot be taken by a corporation and its employees. Plaintiffs have failed to plead sufficient alter ego facts apart from mere conclusions, nor have they pleaded alter ego with the required specificity. (Alter ego must be pled specifically, see Neilson v. Union Bank of California, N.A. (2003) 290 F. Supp.2d 1101, 1116; general and conclusory allegations do not suffice, see Serrano v. Priest (1971) 5 Cal.3d 584, 591, noting that, in evaluating a demurrer, a reviewing Court will "treat the Demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusion of fact or law" (emphasis added).) Code Civ. Proc. §§ 430.10(e) and 430.30. SECOND CAUSE OF ACTION Defendants generally demur to the Second Cause of Action for Fraud on the grounds that it fails to state facts sufficient to constitute a cause of action for Fraud as Fraud must be pled with specificity and this cause of action is based on the same exact set of circumstances pled in the First Cause of Action for breach of contract. Cal. Civ. Proc. §430.10 (e). THIRD CAUSE OF ACTION Defendants generally demur to the Third Cause of Action for Accounting on the grounds that it fails to state facts sufficient to constitute a cause of action for Accounting as it fails to state why an Accounting is necessary. Cal. Civ. Proc. §430.10 (e). FOURTH CAUSE OF ACTION Defendants generally demur to the Fourth Cause of Action for Breach of Implied Covenants on the grounds that it fails to state facts sufficient to constitute a cause of action for Breach of Implied Covenants as this cause of action is based on the same exact set of circumstances pled in the First Cause of Action for breach of contract. Cal. Civ. Proc. §430.10 (e). FIFTH CAUSE OF ACTION Defendants generally demur to the Fifth Cause of Action for Unfair Business Practices on the grounds that it fails to state facts sufficient to constitute a cause of action for Unfair Business Practices as Unfair Business Practices must be pled with specificity. Cal. Civ. Proc. §430.10 (e). NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 3 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 SIXTH CAUSE OF ACTION Defendants generally demur to the Sixth Cause of Action for Intentional Interference with Prospective Economic Advantage on the grounds that it fails to state facts sufficient to constitute a cause of action for Intentional Interference with Economic Advantage as Intentional Interference with Economic Advantage must be pled with specificity. Cal. Civ. Proc. §430.10 (e). SEVENTH CAUSE OF ACTION Defendants generally demur to the Seventh Cause of Action for Intentional Interference with Contract on the grounds that it fails to state facts sufficient to constitute a cause of action for Intentional Interference with Contract as an entire copy of the alleged contract has not been attached. Cal. Civ. Proc. §430.10 (e),(g). Dated this 26™ day of December 2019. Je c= Reza Khanjan Esq. NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 4 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES 7 MEMORANDUM OF POINTS AND AUTHORITIES 14 I. Introduction 10 II. Statement of Facts 10 III. Argument 10 A. Legal Basis for Demurrer 10 B. The Demurrer to All Causes of Action Must be Sustained Because Plaintiffs’ Third Amended NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 5 TABLE OF CONTENTS Complaint is Untimely 12 The Demurrer to All Causes of Action Must be Sustained Because Plaintiffs Cannot Properly Join Ali Ossaily as a Party 12 I. There Is No Basis For Alter Ego Liability for Co-Defendant Ossaily 12 ii. ~~ There Is No Unity of Interest Between Co-Defendant Ossaily and Co-Defendant Bel Air 14 iii. No Inequitable Result Will Occur Should the Corporate Veil Remain Intact 15 The Demurrer to All Causes of Action Must be Sustained Because the Complaint is Uncertain, Ambiguous, and Unintelligible 16 i. The Material Terms of All Relevant Contracts Are Not Stated Within or Attached to The Complaint 17 ii. ~~ Defendant Ossaily is Not a Party to The Contract 18 The Demurrer to The Second Cause of Action Must be Sustained Because it Lacks the Required Specificity 19 I. Allegations of Knowing False Representations are Conclusory, not Factual 19 ii. Allegations of Intent to Deceive are Likewise Conclusory 20 iii. Plaintiffs Did Not Rely on Any Misrepresentations 20 iv. Plaintiffs Have Suffered No Distinct Damages 20 The Demurrer to The Third Cause of Action Must be Sustained Because it Fails to State a Claim 21 The Demurrer to The Fourth Cause of Action Must be Sustained Because it Alleges Nothing More Than a Breach of Contract and Therefore Fails to State a Claim 22 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 I. The Demurrer to The Fifth Cause of Action Must be Sustained Because it Fails to State a Claim and Lacks the Required Specificity 23 J. The Demurrer to The Sixth Cause of Action Must be Sustained Because it Fails to State a Claim on Which Relief May be Granted 24 K. The Demurrer to The Seventh Cause of Action Must be Sustained Because it Fails to State a Claim on Which Relief May be Granted, Lacks the Required Specificity and is Duplicative of the First Claim 25 IV. Conclusion 26 NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 6 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES California Statutes Cal. Code Civ. Proc. § 425.10... cities ete eee e tee ete eevee ete a ees ae atte s esas atte sesae atte sesae sare sasae esse sesaeeenees 10 California Business and Professions Code § 17200 ...........oovieuiiiiieieiiiiie ceive erasers eee e eevee enna srae sane 23, 24 California Civil Code § 3294... coos eerste eet e ete e ete e setae eae e ate s esas atte aensae esas aensae este senses sabe senses sens 23 California Code of Civil Procedure § 430.10.........ccoooieiieieeieeie eesti ese ee este ene stae sree sre ssee sae seee nee nse anes 11, 17 California. Code of Civil Procedure, § 3333... oot eee ste sttesteetee te te e esses stte sree sree esas aes nee sne ese anse esses 21 California Rules of Court RULE 3.132002) cove veers eeeeee esse sees eee sees esse ss sees esse eases esos esos esses sees sees eee sesso esses sess esos ee sess sees esse sess sees sess 12 California Cases A. Teichert & Son, Inc. v. California (1965) 238 Cal.LAPP.2d 736 ....eeeveeeieiieeieeeee creer eee 17 Ankeny v. Lockheed Missiles & Space Co. (1979) 88 Cal.APP.3d 531 .oneiiiiiiieeeeee cece 11 Asahi Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal. App.4th 945 o.oo eee eee es 25 Associated Vendors, Inc., vs. Oakland Meat Company, (1962) 210 Cal App. 2d, 825 ....occvvrieeeeieeieeieeeeeeee 16 Automatic Poultry Feeder Co. v. Wedel, (1963) 213 Cal. App. 2d 509........uoiiiiieieeieeieee cesses 18 Award Metals, Inc. v. Superior Court (1991) 228 Cal. APP.3d 1128 ...eeiieiieeieeieeieeeeee cesses 22 Bayuk v. Edson, (1965) 236 Cal. APP. 2d 309.......c.ccmiiriniiriiiientetctiinieest ete s er ences s ston eset nee bese e seenes 18 Bernstein v. Piller (1950) 98 Cal. APP. 2d 441 .....oooeiieeeee tcetera eens e etter sree ssee ese e ee ens 16 Bionghi v. Metro Water Dist. of S. California (1999) 70 Cal. App. 4th 1358 .....c.oooieiieiieeeie eee 22 C&H Foods v. Hartford Insurance, 163 Cal.APP.3d L055. .....oooiiieiee cetera sears sree es 15 Careau & Co. v. Security Pacific Business Credit (1990) 222 Cal. App.3d 1371 .cceovieiiiiiiiieeeeee cece 22 Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal. 4th 163 .........cccveevvrrvennnnnn. 23 Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197 .....oovvvvivciivviieeeieee e. 19 Coughlin v: Blair, (1953) 41 Cali 2d 587 «cuuvsississsvnsvns svsvmmosnssinssosssmssssvssis sossassss isis so aiss sss v s s ssessisssesvns viasvsmersaes 18 Della Penna v. Toyota Motor Sales, U.S. A., Inc. (1995) 11 Cal. 4th 376.......ccooveviiriieiiieeee cece see 24 NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 7 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Droz v. Pacific National Insurance Co. (1982) 138 Cal.APP.3d 181 ...ocuviiiiiiiiciiecieeee eee see sees 11 Estate.of Archer (1987) 193 Cals APD: 3d 288 issosassussvmsvssosmsvamnssserssssrsssesson messes s sss ys a sis sas ms 10 Fiolv. Doellstedt; (Cal; Ct. App: 1996) 50 Cal. App: 4th 1318 .coniessummssnessmmmmmmsmssusmmmms ms 18, 19 Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal. App.4th 1249 .......cccovvivviiiiniieiieee 25 Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal. APP.Ath 772 ...ccuoeoeeieiieeieeieeeeeeeeeee ns 19 Guz v. Bechtel Nat'l; Ine, (2000) 24 Cal, Hh 31 Tsssessonssssnvvrsssvsssnssovpsrmssssssssmess sss s s sommes v s srs sa enss 22 Hall v. Department of Adoptions (1975) 47 Cal. APP.3d 898... eee ere 19 Hayman v. Shoemdke, (1962) 203 Cal. App. 2d 140 .uvimimisssmssssasimmmsassssssssssmnrmssismmmsssasssrimsytsssmsasris mim 18 Hill vi: Weathers (1958) 158 Cal. APD. 2d 818 veusssusssssssvssissessnssssussvmsssnsssosssnsssmsssssses o sse sns sess Sosa esiosvimssaeines 21 Hirsav. Superior Court (1981) 118 Cal. APP, 3487 .voromisssimssssissimmsmvsasssssmsmsesmnrsssism m s arss simiytsssssesri ims 12 Hokama v. E.F. Hutton & Co., Inc. (C.D. Cal., 1983) 566 F.Supp. 636 ......ccccevveuiimmenirieriiineneneeiiceeee scence 13 Janken v. GM Hughes Electronics (1996) 46 Cal. APP.4th 55... ...ociiiiie eee eee 19 Khoury v. Maly’s of Calif, Inc. (1993) 14 Cal. App.4th 612 .....ccccocviuiiriiiniciiiircineee reece reece eens 23,24 Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134 .....coeiiiiniiiiiiiincie neces 24, 25 Lavine v. Jessup (1958) 161 CalAPDP.2A 59 eerie eee eet eset e e e sabe saae sree sree sree eee 19 Lesperance v. North American Aviation, Inc. (1963) 217 Cal. App. 2d 336 ....ooviviieiieece cece 11 Lippert v. Bailey, (1966) 241 Cal. APP. 2d 370....cueuenieiiiiiiiiniiiciiinieest eects eects sees seen s en eneaaie 18 Love v. Fire Insurance Exchange, (1990) 221 Cal.APP.3d, 1136 ..c.eeevieiieieieeiieieeeeeeee cesses sree s en 22 Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290 ........coeiieieiieiie ieee ee esse eee sree sree sree se s ens 13 Mid-Century Insurance Co. v. Gardener (1992) 9 Cal. App. 4th 1205 .....ccoooiiviieiiieeee cece 13, 14, 16 Moore v. Conliffe (1994) T Cal.Ath 634 ..........ooeioiieeieee eee eee sees estate ease este ente esse ssae sree sseessense anes 11 Neilson v. Union Bank of California, N.A. (2003) 290 F.Supp. 2d. 1101 ..ccccviiviiriiieeeie cece 13, 15, 14 Norins Realty Co. v. Consolidated Abstract & Tile Guaranty Co. (1947) 80 Cal. App.2d 879 ....ccvveivevvvievieiee 15 Otworth v. Southern Pacific Transportation Co. (1985) 166 Cal. App.3d 452 .....covivvieeieiieeieeeeeeee ee 11, 17 People ex rel. Renne v. Servantes (2001) 86 Cal. APP.4th L108 .....cceeevveivieiieceieeieeee teers 23 Reeves v. Hanlon (2004) 33 Cal. 4th 1140 .....cooviiiiiiieeeee eects steers teeta teens este aae esse sre sree sseenseenneenes 25 River Colony Estates General Partnership v. Bayview Financial Trading (S.D. Cal. 2003) 287 F.Supp.2d.............. 13 NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 8 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104 .......oovvieiieiiiiieeeece cesses 19 Rodrigues v. Campbell Industries (1978) 87 Cal.APDP.3A 494 ......oci riers sae sree sree sees 22 Saunders v. Superior Court (1994) 27 Cal APPA 832 cu iumsvmnswssssssomsmmssmsssiss iss esns svsssss sass sss sa s si ssiasaions sos ¥oasisssss 23 Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal. App.4th 1807 ....cceooveviieiiieiieie cece sees 19, 2() Sonora Diamond Corp. v. Superior Court (2008) 83 Cal. App. 4th 523. ..ooiiiiiiie eee 13, 14 South Bay Chevrolet v. GMAC (1999) 72 Cal. APP.Ath BO, uw vvuissvsmmsssmmisismmsminsssnsvasssssmsssvsmssssisaiss is isis 24 Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal. App. 4th 153... orice 11, 20 Tesellew. MeLanughin (2009) 173 Cal, APP. Ath, 196 csressosmsssssmomsmsmesssismmrsesssssismommssss sess ss sass a m 21 Textron Financial Corp. v. National Union Fire Insurance Co. of Pittsburgh (2004) 118 Cal. App.4th 1061............ 23 Waller v, Truck Iisurarice Exchange, (1995) 11 Cal, 4th 1 coseerimsssmsmsmemsomisassmmmssoremsssmessramsssy ss s sssass ssimgs 22 Wise v. Southern Pacific Co. (1963) 223 Cal. APP. 2d 50...c.uiiuieieeieeie sierra sree sree esters 11 Federal Cases Bell Atlantic Corp. v. Twombly (2007) 550 U.S. 544 ......ooooeieeeeee cetera tetas eae ense esas sree sree snes es 11 In re Currency Conversion Fee Antitrust Litigation (S.D.N.Y. 2003) 265 F.Supp.2d 385 ...ceeeeerierieieeeeeeee 13 Marin Tug & Barge, Inc. v. Westport Petroleum, Inc. (9th Cir. 2001) 271 F.3d 825...cc.coviiiiiviniiiniciiecie sce 25 Treatises 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, § 574 .....c.voovioieoieiee cece eesti eateseaesrae ree ns 19 4 Witkin, California Procedure, § 339, p. 438 (4th €d. 1997)..c..c.civimiiinniiiineenecreriinee steerer seers 10 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 680 ........cc.oooiiriiiiieieeie cies eee e e 21 California Practice Guide, Corporations § 2:51.01 (2005) .....cceecuieueeierieriientietieeeee ter eie eee staestaeeree sree e e ee nae anes 13 Restatement Of AGENCY 3d § 6.01 ....oouiiiiiieiiee eee eect eee esas eras shee sree ea eee eee eee enters anne enne nena 1§ NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 9 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. Introduction Plaintiffs, Richard Page and X-Machine, Inc. (“Plaintiffs”), filed their third amended complaint against Defendants, Bel Air Machining and Ali Ossaily (“Defendants”). The third amended complaint has nine causes of action: (1) Breach of Contract; (2) Fraud and Deceit; (3) Accounting; (4) Breach of the Implied Covenant of Good Faith and Fair Dealing; (5) Unfair Business Practices; (6) Intentional Interference with Prospective Economic Advantage; (7) Intentional Interference with Contract; (8) Claim and Delivery; (9) Conversion. This action arises out of a claim by Plaintiffs that Defendants wrongfully frustrated and breached the distributorship contract between Plaintiffs and U.S. Ordnance-Defense Systems and Manufacturing (“USO”) wherein: USO would place orders for parts and supply raw materials to Plaintiffs; Plaintiffs would pass orders and materials to Defendants; Defendants would produce parts to USO specifications with USO materials and return the finished parts to Plaintiffs; and Plaintiffs would return the completed works to USO. II. Statement of Facts This action arises from the business dealings between Plaintiffs and Defendant Bel-Air Machining, wherein Plaintiffs would obtain and award contracts exclusively for Defendant Bel-Air Machining. (Pl. Exhibit 1.) Plaintiffs would solicit work orders from end-level customers, primarily USO, award that order and material to Defendant Bel-Air Machining who would return the completed orders to Plaintiffs. (Pl. Exhibit 1.) Plaintiffs would then invoice the end-level customer and receive/distribute payment to Defendant Bel-Air Machining. (Pl. Exhibit 1.) Almost immediately, the relationship between Plaintiffs and Defendant Bel-Air Machining began deteriorating due to delays in Plaintiffs distributing funds to Defendant Bel-Air Machining. III. Argument A. Legal Basis for Demurrer It is well settled that a complaint must set forth a “statement of the facts constituting the cause of action, in ordinary and concise language.” Cal. Code Civ. Proc. § 425.10(a). While California pleading requirements are liberal, a complaint must at a minimum “apprise[] the adversary of the factual basis of the claim.” 4 Witkin, California Procedure, § 339, p. 438 (4th ed. 1997); see also Estate of Archer (1987) 193 Cal. App. 3d 238, 245; Bel NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 10 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Atlantic Corp. v. Twombly (2007) 550 U.S. 544 (“Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).”). For purposes of a demurrer, all allegations of the complaint are deemed to be true. Moore v. Conliffe (1994) 7 Cal.4th 634, 638. Nevertheless, these allegations must be of fact and not legal conclusions. Pleading mere legal conclusions is insufficient. Lesperance v. North American Aviation, Inc. (1963) 217 Cal. App. 2d 336, 343 (“It is elementary that a pleading must allege facts and not conclusions . . .”) (quotation omitted); Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal. App. 4th 153, 156 (a demurrer assumes the truth of the material factual allegations in the complaint, but not the contentions, deductions, or conclusions of fact or law alleged therein). Pursuant to California Code of Civil Procedure § 430.10: “The party against whom a complaint or cross- complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds: . . . (d) There is a defect or misjoinder of parties; (¢) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain. As used in this subdivision, “uncertain” includes ambiguous and unintelligible; (g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct.” Mere “recitals, references to, or allegations of material facts, which are left to surmise are subject to special Demurrer for uncertainty.” Ankeny v. Lockheed Missiles & Space Co. (1979) 88 Cal.App.3d 531, 537. Further, actions in contract require the terms of the alleged contract to be set forth either in the complaint or attached and incorporated by reference. Otworth v. Southern Pacific Transportation Co. (1985) 166 Cal. App.3d 452,459. The failure to identify the material terms of a contract renders the cause of action fatally defective. Twaite v. Allstate Ins. Co. (1989) 216 Cal. App. 3d 239, 252- 253; Wise v. Southern Pacific Co. (1963) 223 Cal. App. 2d 50, 59. A demurrer should be sustained without leave to amend if the conduct complained of is not actionable as a matter of law. See, e.g., Droz v. Pacific National Insurance Co. (1982) 138 Cal.App.3d 181, 187 (affirming grant of demurrer without leave to amend where “the allegations of the complaint impose no liability under substantive law”). Here, the demurrers to the Third Amended Complaint and to the first seven causes of action alleged against Defendants must be sustained because they are improperly pled, are fatally uncertain, and/or fail to state a cause of action. NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 11 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Furthermore, while the court’s policy on leave to amend is generous, amendments should not be used to harass the opposing party or delay proceedings. Hirsa v. Superior Court (1981) 118 Cal. App. 3d 487. In the present case, Plaintiff has been granted not one, not two, but three opportunities to amend its complaint, which is still wrought with defects. Such behavior indicates that the deficiencies in the pleading cannot be amended, and it has become burdensome to Defendant to continually parry these unactionable blows. Defendants ask that the court sustain its demurrers without further leave to amend. B. The Demurrer to All Causes of Action Must be Sustained Because Plaintiffs’ Third Amended Complaint is Untimely The 2019 California Rules of Court, Rule 3.1320(g) states that “[f]ollowing a ruling on a demurrer, unless otherwise ordered, leave to answer or amend within 10 days in granted.” In the present case, The Honorable Craig Griffin, in a Minute Order dated October 21, 2019, in which he sustained the demurrer to Plaintiff’s Second Amended Complaint, granted leave of 20 days to amend - a 100% extension in time. Assuming calendar days, that puts the deadline at November 10, 2019. Assuming business days, that deadline extends to November 18, 2019. Plaintiff’s Third Amended Complaint is dated December 2, 2019. Despite the court generously doubling the amount of time to respond, Plaintiffs still could not submit a timely amendment. Defendants kindly ask the Court not to overlook this lapse. C. The Demurrer to All Causes of Action Must be Sustained Because Plaintiffs Cannot Properly Join Ali Ossaily as a Party Defendants do not deny the existence of Bel Air Machining as a California Corporation. However, all contact Plaintiffs had with Ali Ossaily in regards to this complaint were in his role as an agent for the Corporation. Plaintiffs state that “at all relevant times mentioned herein...Ossaily [was] an officer, director, and shareholder of Bel Air.” [TAC 910] In no instance is Mr. Ossaily identified as a personal guarantor for any transaction named in the complaint. i. There Is No Basis For Alter Ego Liability for Co-Defendant Ossaily In order for a corporation to be considered the alter ego of an individual, Plaintiff must allege that: (1) there is such a unity of interest in ownership between a corporation and the individual that the separateness of the NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 12 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 corporation and the individual does not exist and (2) recognizing the corporate form would lead to an inequitable result. Sonora Diamond Corp. v. Superior Court (2008) 83 Cal. App. 4th 523, 538. However, it is not enough to simply parrot requisite elements. Rather, the alleging party “must allege both the elements of alter ego liability, as well as facts supporting each.” Neilson v. Union Bank of California, N.A. (2003) 290 F.Supp. 2d. 1101, 1116, applying California law. Further, in establishing that an inequitable result will occur, it is not enough to merely allege the inability of the corporation to pay a debt: some element of bad faith on the part of the individual must be alleged. Id. at 837; see also Mid-Century Insurance Co. v. Gardener (1992) 9 Cal. App. 4th 1205, 1213. It is well-settled that alter ego allegations must be pled with specificity. A party must allege specifically both of the elements of alter ego liability, as well as facts supporting each (In re Currency Conversion Fee Antitrust Litigation (S.D.N.Y. 2003) 265 F.Supp.2d 385, 426): “These purely conclusory allegations cannot suffice to state a claim based on veil-piercing or alter-ego liability, even under the liberal notice pleading standard”; Hokama v. E.F. Hutton & Co., Inc. (C.D. Cal., 1983) 566 F.Supp. 636, 647: “Conclusory allegations of alter ego status such as those made in the present complaint are not sufficient”). To overcome the presumption of separateness afforded to corporation, the pleading party must allege specific facts supporting its claims. Nielson, 290 F.Supp.2d at 116. In Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, the California Supreme Court observed that the essence of the alter ego doctrine is that justice be done. What the formula comes down to, once shorn of verbiage about control, instrumentality, agency, and corporate entity, is that liability is imposed to reach an equitable result. Thus, the corporate form will be disregarded only in narrowly defined circumstances and only when the ends of justice requires. /d. at 301 (emphasis added). Stated differently, imposition of alter ego liability is highly disfavored: Courts regard the alter ego doctrine has a drastic remedy and disregard the corporate form only reluctantly and cautiously. “This is because alter ego liability is fundamentally at odds with the general rule that a de jure corporate is a legal entity separate from its founders and owners...and the law specifically permits owners to incorporate a business for the very purposes of shielding them from its liabilities.” California Practice Guide, Corporations § 2:51.1 (2005) (emphasis added); see also River Colony Estates General Partnership v. Bayview Financial Trading (S.D. Cal. 2003) 287 F.Supp.2d applying California law. (“Courts recognize a public policy disfavoring the treatment of companies owned by the same individuals as a single or unitary enterprise. ..”) NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 13 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 In California, a corporation is entitled to a presumption that it is a separate entity from its owners. Mid-Century Ins. Co., 9 Cal. App.4th at 1212-13. Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. Sonora Diamond, 83 Cal. App.4th at 538. Alter ego is an extreme remedy, sparingly used. Id. Therefore, the corporate identity may be disregarded, and the veil pierced, only where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation accountable for the corporation’s actions. /d. In the instant case, as in Sonora Diamond, at least one of the two essential elements of the alter ego doctrine are not sufficiently pled. There are no allegations of evidence of any wrongdoing by Defendant Ossaily, nor allegations that lead to the inference of injustice flowing from the recognition of Bel Air’s separate corporate identity. Therefore, the alter ego doctrine cannot be invoked. /d. Further, no claim has been made that Bel Air is unable to pay Plaintiff now nor meet some speculative, future judgment. Plaintiff does not claim that Defendants are incapable of paying them, merely that they have not. The alter ego doctrine does not guard every unsatisfied creditor of a corporation, but instead, affords protection where some conduct amounting to bad faith renders it inequitable for the corporate owner to hide behind the corporate form. Difficulty in enforcing a judgment or collecting a debt does not satisfy this standard. /d. at 539. It is with these rules and guidelines in mind that Plaintiff’s allegations must be tested and evaluated. ii. There Is No Unity of Interest Between Co-Defendant Ossaily and Co-Defendant Bel Air Plaintiff’s “unity of interest” allegations against Defendants Ossaily and Bel Air are severely lacking. Plaintiffs state that: “At all times relevant hereto, on information and belief, Defendant Bel Air was the alter ego of Ossaily, and there exists, and at all times herein mentioned has existed, a unity of interest and ownership between Bel Air and Ossaily such that any separateness between them has ceased to exist in that Ossaily completely controlled, dominated, managed, and operated the Bel Air to suit his convenience. Ossaily (1) controlled the business and affairs of Bel Air; (2) commingled the funds and assets of the corporate entities, and diverted corporate funds and assets for his own personal use; (3) disregarded legal formalities and failed to maintain arm’s length relationships among the corporate entities; (4) inadequately capitalized Bel Air; (5) used the same office or business location for personal use; (6) held himself out as personally liable for the debts of Bel Air; (7) used Bel Air as a mere shell, instrumentality or conduit for himself; (8) used Bel Air to procure labor, services or merchandise for himself; (9) manipulated the assets and liabilities of Bel Air and himself so as to concentrate the assets in one and the liabilities in another; (10) used Bel Air to conceal personal business activities; and/or (11) used the corporate entities to shield against personal NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 14 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 obligations.” [TAC q 8] Plaintiffs go on to allege that “At all times...Bel Air was not only influenced and governed by Defendant Ossaily, but there was such a unity of interest and ownership that the individuality, or separateness, of Ossaily and Bel Air has ceased...such that an adherence to the fiction of the separate existence of these entities would...sanction a fraud or promote injustice.” [TAC q 9]. They further claim that “Defendant Bel Air...was grossly undercapitalized, heavily indebted to various creditors, was lacking assets and working capital with which to do business, [and that Defendant] Ossaily used the corporate form to perpetrate a fraud on Plaintiffs.” [TAC Yq 9, 11, 12] However, Plaintiffs fail to allege or articulate specific facts in support of these mere conclusions, thus missing the mark. “The allegations that a corporation is the alter ego of the individual stockholders is insufficient to justify the court in disregarding the corporate identity in the absence of allegations of facts from which it appears justice cannot otherwise be accomplished.” Norins Realty Co. v. Consolidated Abstract & Tile Guaranty Co. (1947) 80 Cal.App.2d 879, 883; see C&H Foods v. Hartford Insurance, 163 Cal.App.3d 1055, 1062 (1984) (“conclusions of fact disregarded for purposes of demurrer”). These general and conclusory boilerplate allegations are thereafter incorporated into each and every cause of action. Accordingly, Plaintiff has failed to plead any specific facts with regard to the unity of interest or alter ego allegations against Defendant Ossaily; he has stated only presumptive conclusions, which are insufficient for a finding of unity of interest. iii. No Inequitable Result Will Occur Should the Corporate Veil Remain Intact Furthermore, Plaintiff does not allege that an inequitable result would occur in absence of alter ego liability. Specifically, Plaintiffs allegation that Bel Air is or would be financially unable to pay any judgment Plaintiffs might obtain is baseless and conclusory, as they have not alleged any facts regarding an inequitable result related to the fiction of a separate existence. See Neilson 290 F.Supp.2d at 1116 (noting that “[c]onclusory allegations of ‘alter ego’ status are insufficient to state a claim”; rather a party must allege facts supporting each element.) Indeed, it is difficult to envision what other inequitable result Plaintiff could allege aside from Bel Air’s inability to pay any ensuing alleged judgment. Plaintiffs are upset because they believe they are owed money; Plaintiff is a creditor. “It is not sufficient to merely show that a creditor will remain unsatisfied if the corporate veil NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 15 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 is not pierced, and thus set up such an unhappy circumstance as proof of an "inequitable result." In almost every instance where a plaintiff has attempted to invoke the doctrine he is an unsatisfied creditor. The purpose of the doctrine is not to protect every unsatisfied creditor, but rather to afford him protection, where some conduct amounting to bad faith makes it inequitable, under the applicable rule above cited, for the equitable owner of a corporation to hide behind its corporate veil.” Associated Vendors, Inc., vs. Oakland Meat Company, (1962) 210 Cal App. 2d, 825, 842. Additionally, California courts generally require some evidence of bad faith conduct on the part of the corporation before concluding that an inequitable result justifies an alter ego finding. Mid-Century Ins. Co., 9 Cal.App.4th at 1213. Plaintiffs only allegations of Defendant Ossaily’s bad faith conduct are conclusory and do not refer to Defendant Ossaily in his individual capacity. Thus, Plaintiff's allegation would still be insufficient even if hd had alleged facts supporting “injustice” or “inequitable” results. See Neilson 290 F.Supp.2d at 1117 (sustaining Defendant’s demurrer because Plaintiff failed to allege bad faith conduct). Plaintiff’s TAC is quite simply devoid of any factual allegation to support conclusory alter ego allegations. Accordingly, the alter ego allegations do not support Plaintiff’s claims against Defendant Ossaily. It follows that Plaintiffs cannot breach Defendant’s corporate veil. As such, the only appropriate defendant in this case is Bel Air Machining and not Ali Ossaily, as listed. Thus, the Complaint is improperly pled and this Demurrer must be sustained. Plaintiffs have had the opportunity to correct this deficiency and failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. D. The Demurrer to All Causes of Action Must be Sustained Because the Complaint is Uncertain, Ambiguous, and Unintelligible The Complaint should additionally be dismissed because each of the allegations are fatally uncertain. In its Complaint, Plaintiffs were required to state “the essential facts upon which a determination of the controversy depends” with “clearness and precision so that nothing is left to surmise.” Bernstein v. Piller (1950) 98 Cal. App. 2d 441, 443. “Mere recital, references to or allegations of material facts which are left to surmise are subject to a special demurrer for uncertainty.” Id. at 443-444. As his Honor advised Plaintiffs in the minute order dated October 21, 2019, “who is making each claim as to whom and why is unclear. All of the causes of action are asserted against NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 16 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 both Mr. Ossaily and Bel Air...intermittently... without articulating the basis for doing so. Nor does the SAC articulate the basis for Richard Page’s individual claims, as opposed to those of XMI.” Plaintiffs have not successfully solved either of these points of confusion. As both of these create the potential for misidentification, the TAC is insufficiently specific with respect to the identity of persons who made the alleged misrepresentations, their authority to speak and bind Defendants, to whom the alleged misrepresentations were made, and the manner in which such alleged misrepresentations were made. Plaintiffs have had multiple opportunities to correct these deficiencies and failed to do so. Defendants must assume that such corrections are impossible, and ask that leave to amend not be granted. E. The Demurrer To The First Cause Of Action Must Be Sustained Because It Lacks The Specificity Required i. The Material Terms of All Relevant Contracts Are Not Stated Within or Attached to The Complaint When there is an allegation that a contract is written, “the terms of a contract must be set forth verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” Otworth, 166 Cal. App.3d at 459; see also A. Teichert & Son, Inc. v. California (1965) 238 Cal.App.2d 736, 748, disapproved on other grounds, 65 Cal. 2d 787, 792 (“[i]f writings form a necessary link in a cause of action, they should be quoted in the complaint, set out in haec verba or incorporated by reference”). Failure to do so is ground for a special demurrer. Cal. Civ. Proc. Code § 430.10(g). This is a complex cause of action due to the multiple contracts referenced by Plaintiffs. Many are pled with specificity. However, Plaintiffs state that “In or about early June of 2017, as a separate but related agreement, Ossaily, for himself and on behalf of Bel Air, as an officer, director and shareholder, orally represented that Bel Air would machine an increased number of parts if he had certain tooling purchased for their use. Based upon this representation, RICK arranged for tooling money to be paid to XMI to be then given to Bel Air to purchase a specific set of tools in order to machine an increased number of parts for USO.” [TAC q 48] The agreement is described as oral in the next paragraph, and “memorialized in a tooling PO.” [TAC 9 49, Pl. Exhibit 2]. But the NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 17 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 material terms of this agreement are not specified. It is unclear what Defendants were meant to provide USO in exchange for these tools, or what quantity they were meant to provide it in. Further, Plaintiffs tack on a claim of debt owed to them for Damages Merchandise Returns in the amount of $8,069.06 and state that they overpaid Bel Air by $4,382.40. [TAC § 52] The curious thing about these sums is that they appear out of context. There is no contractual or other likely basis for them; nothing in the referenced contracts mentions anything about Damages Merchandise Returns. And, the overpayment of invoices has no basis in breach of contract; it’s a minor billing problem. ii. Defendant Ossaily is Not a Party to The Contract As explained in section II1.C., supra, the Plaintiffs have failed to adequately pierce Defendant Bel Air’s corporate veil; they have not shown a unity of interest between Bel Air and Ossaily such that both parties must be named in order to avoid an inequitable result. With the failure of the alter ego theory, Defendant Ossaily is an agent of Bel Air. In general, under California law, an agent acting on behalf of a disclosed principal cannot be held personally liable on the contract. See Lippert v. Bailey, (1966) 241 Cal. App. 2d 376, 382-83. A principal is considered "disclosed" "when the party has notice that an agent is acting for a principal and has notice of the principal's identity." Restatement of Agency 3d § 6.01 cmt(a) (2006). Thus, an "agent will not be liable in an action based on contract brought by a third person where both the fact of agency and the name of the principal are disclosed." Bayuk v. Edson, (1965) 236 Cal. App. 2d 309, 319 (citing Automatic Poultry Feeder Co. v. Wedel, (1963) 213 Cal. App. 2d 509, 518; Hayman v. Shoemake, (1962) 203 Cal. App. 2d 140, 159; accord Coughlin v. Blair, (1953) 41 Cal. 2d 587, 594. Plaintiffs are ardent in their alter ego contentions, noting that “Ossaily, for himself and on behalf of, and as an officer, director and shareholder of Bel Air” contracted with the Plaintiffs on several occasions. Plaintiffs do not, however, allege facts showing how Ossaily received a separate benefit from these bargains, or that Ossaily held himself out in a separate capacity from Bel Air as a personal guarantor. Rather, Defendant Ossaily was only ever acting in his capacity as an agent of Bel Air. In Fiol v. Doellstedt, the Court held that “[a] corporation can only act through its employees; thus, an employee acting on behalf of its employer cannot be acting in concert with the employer, as there is in law only a single actor.” Fiol v. Doellstedt, (Cal. Ct. App. 1996) 50 Cal. App. 4th 1318, citing Janken v. GM Hughes Electronics (1996) 46 NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 18 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal. App.4th 55, 77-79 “Similarly, under the agent’s immunity rule, an agent is not liable for conspiring with the principal when the agent is acting in an official capacity on behalf of the principal.” Fiol, 50 Cal. App.4th at 1326. Plaintiffs have had multiple opportunities to correct the deficiencies in their pleadings and have failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. F. The Demurrer to The Second Cause of Action Must be Sustained Because it Lacks the Required Specificity Fraud must be specifically pleaded. “The effect of this rule is twofold: (a) General pleading of the legal conclusion of 'fraud' is insufficient and the facts constituting the fraud must be alleged; (b) Every element of the cause of action for fraud must be alleged in the proper manner (i.e., factually and specifically), and the policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material] respect.” Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d 197, 216, superseded on other grounds, (citing 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, § 574; see Hall v. Department of Adoptions (1975) 47 Cal. App.3d 898, 904; Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109; Lavine v. Jessup (1958) 161 Cal.App.2d 59, 69.) Thus, a plaintiff alleging fraud must state what was said, by whom, in what manner (i.e., oral or in writing), when, and, in the case of a corporate defendant, under what authority to bind the corporation. See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal. App.4th 772, 782. “A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages. Every element must be specifically pleaded.” Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal. App.4th 1807, 1816. i. Allegations of Knowing False Representations are Conclusory, not Factual Plaintiffs allege the following representations by Defendants to be false in their third amended complaint: 1) that Defendants would have no direct contact with USO, and that any communications with USO by Defendants would be through Plaintiffs (or by CCing Plaintiffs); 2) that Plaintiffs would receive a 10% commission on USO contracts; 3) that deadlines were understood to be critical to USO and thus to Plaintiffs; 4) that Defendants would NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 19 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 not seek to remove Plaintiffs from the supply chain, 5) that if provided with certain equipment, Defendants would increase production for USO, and 6) that after a reduction in commission, Plaintiffs would be paid the remainder at 4 later date. [TAC 9 57-63] These allegations, however, do not constitute actionable representation, as they fail to state facts conveying the falsity of Defendants’ representations beyond a failure of Defendants to carry out their stated intentions. As such these statements are conclusory rather than factual, and insufficient to show falsity at the time they were made. ii. Allegations of Intent to Deceive are Likewise Conclusory California courts have declined to create a cause of action based on negligent false promises: “making a promise with an honest but unreasonable intent to perform is wholly different from making one with no intent to perform and, therefore, does not constitute a false promise.” Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal. App.4th 153, 159 (Cal. Ct. App. 1991). Although Plaintiffs allege Defendants acted with intent to deceive, they offer no facts to suggest that Defendants did not simply overpromise, terminate their agreement, or change their minds. Plaintiffs even note that Defendants “told Rick [they were] not sure if Bel Air wanted to continue machining parts for XMI and USO.” [TAC 9 28]. Plaintiffs paint this as an attempt to stall while Defendants negotiated privately with USO, but again offer no factual basis for this allegation. Without proof, Defendants were making a business decision and had the grace to inform their vendor so he could find another supplier. iii. Plaintiffs Did Not Rely on Any Misrepresentations Here again, Plaintiffs state that they relied upon the representations made by Defendants without providing a factual basis for these claims. In the minute order dated October 21, 2019, the Honorable Craig Griffin noted that this cause of action failed to specifically allege, among other things “facts as to alleged reliance on the part of one or both Plaintiffs.” Plaintiffs have not fixed this defect, merely stating that they “justifiable relied on the false representations. ..and have suffered damages as a result.” [TAC § 60]. Furthermore, Plaintiffs received the benefit of their contract with Defendants for several months. In Medallion, 44 Cal.App.4th at 1818, the Court held that it was the termination of the relationship and not any misrepresentations that resulted in the alleged harm. Likewise, Defendants performed under their contractual obligations; it was only when they chose to end their relationship with Plaintiffs that any damage occurred. iv. Plaintiffs Have Suffered No Distinct Damages NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 20 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 In order to recover for fraud, as in any other tort, the plaintiff must plead and prove the "detriment proximately caused" by the defendant's tortious conduct. Cal. Civ. Code, § 3333. Deception without resulting loss is not actionable fraud. Hill v. Wrather, (1958) 158 Cal.App.2d 818, 825. "Whatever form it takes, the injury or damage must not only be distinctly alleged but its causal connection with the reliance on the representations must be shown." 5 Witkin, Cal. Procedure (3d ed. 1985) Pleading, § 680, p. 131. Clearly, Plaintiffs’ claims rest on the exact same circumstances as those in the first cause of action for breach of contract; no distinct injury is alleged. As the Plaintiffs did not suffer a harm from fraudulent conduct, but from the termination of their contract with Defendants, they cannot recover under this cause of action. Plaintiffs have had ample opportunity to correct this deficiency and failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. G. The Demurrer to The Third Cause of Action Must be Sustained Because it Fails to State a Claim The third cause of action seeks an Accounting against Defendants. [TAC 9 68-70] A cause of action for an accounting requires a showing that (1) a relationship exists between Plaintiffs and Defendants that requires an accounting, and (2) that some balance is due Plaintiffs that can only be ascertained by an accounting. Teselle v. McLaughin (2009) 173 Cal. App. 4th 156, 179. In previous versions of their complaint, Plaintiffs were quite sure of the amounts owed to them, a fatal flaw in their request for an accounting. Plaintiffs are clearly in possession of all the documents necessary to determine what sum is owed to them - they have copies of purchase orders, tooling orders, and invoices. While Plaintiffs also argue that they are entitled to a disgorgement, they fail to provide adequate grounds for such an argument. Even assuming Plaintiffs were to prove that point, the amount owed could be determined by asking USO what it paid, by calculating sales by price, or through other unobtrusive methods. An accounting is only called for when the balance due is otherwise unascertainable, which is not the case here. Id. Plaintiffs have had the opportunity to correct this deficiency and failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 21 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 H. The Demurrer to The Fourth Cause of Action Must be Sustained Because it Alleges Nothing More Than a Breach of Contract and Therefore Fails to State a Claim Under California law, the implied covenant of good faith and fair dealing requires that neither party to a contract do anything that will frustrate the rights of the other party to receive the benefits of the contract. Waller v. Truck Insurance Exchange, (1995) 11 Cal. 4th 1, 36; Love v. Fire Insurance Exchange, (1990) 221 Cal. App.3d, 1136, 1153. A breach of the implied covenant of good faith and fair dealing involves something beyond the breach of the contractual duty itself. Careau & Co. v. Security Pacific Business Credit (1990) 222 Cal. App.3d 1371, 1394. “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” Id at 1395, see also Guz v. Bechtel Nat'l, Inc. (2000) 24 Cal. 4th 317, 327, 352-53 (“[W]here breach of an actual term is alleged, a separate implied covenant claim, based on the same breach, is superfluous.”); Bionghi v. Metro Water Dist. of S. California (1999) 70 Cal. App. 4th 1358, 1370 (because the “claim of breach of the implied covenant relies on the same acts, and seeks the same damages, as its claim for breach of contract[,]” the cause of action for breach of the implied covenant was superfluous and was properly disregarded.). In the instant action, Plaintiffs’ allegations regarding the purported breach of contract are virtually identical to those in the claim for breach of the implied covenant of good faith and fair dealing. [TAC 99 14-37, 38-53, 54-67, 68-70, 71-78]. Because the fourth cause of action for Breach of Implied Covenant alleges nothing more than a breach of contract, it fails to state a claim for breach of covenant. ! Plaintiffs have had the opportunity to correct this deficiency and failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. !' A demurrer should be sustained to a duplicative cause of action where it merely repeats similar allegations adding nothing by way, of fact or theory. Award Metals, Inc. v. Superior Court (1991) 228 Cal. App.3d 1128, 1135. Merely attaching a different label to ar] allegation does not save a duplicative cause of action. /d. It is proper to sustain a demurrer to a duplicative cause of action withou leave to amend. Careau & Co. v. Security Pacific Business Credit, Inc., supra; see also Rodrigues v. Campbell Industries (1978 87 Cal. App.3d 494, 501. NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 22 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 I. The Demurrer to The Fifth Cause of Action Must be Sustained Because it Fails to State a Claim and Lacks the Required Specificity The main purpose of California Business and Professions Code § 17200 et seq. (“Unfair Competition Law” or “UCL”) is the “preservation of fair business competition.” Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20 Cal. 4th 163, 180. The UCL authorizes civil suits for “unfair competition” which it defines in relevant part, to “include any unlawful, unfair or fraudulent business act or practice.” Bus. & Prof. Code, §17200. Plaintiff’s cause of action for unfair competition fails for a number of reasons. First, the cause of action fails to allege any purportedly “unlawful” business practices with the required specificity. The “unlawful” practices prohibited by the UCL are “any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory or court-made.” Saunders v. Superior Court (1994) 27 Cal. App.4th 832, 838-9. If a business practice is alleged to be “unlawful” under the unfair competition law, the plaintiff must allege the specific law that was purportedly violated. Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal. App.4th 612, 616 (sustaining demurrer to Section 17200 claim without leave to amend because plaintiff did not identify which section of the law had been violated and merely alleged that “defendants breached [Section 17200] by refusing to sell [the products] to plaintiff for the purpose of ruining and interfering with his beauty supply business, with the effect of misleading plaintiff’s customers.”). Here, Plaintiffs fail to identify which law - whether, civil or criminal, federal, state, or municipal, statutory, regulatory or court-made - was violated by the Defendants. While Plaintiffs identify California Civil Code § 3294, this is improper for two reasons. First, because it is not a law violable of itself, but rather a rule on when exemplary damages may be granted; second, because the particular code section applies only to actions not arising out of breach of contract. As this is an action in breach of contract, the code section does not apply. Second, the cause of action fails to allege any purportedly “unfair” business practices with the required specificity. “Unfair” practices prohibited by the UCL have been interpreted broadly (see, e.g., People ex rel. Renne v. Servantes (2001) 86 Cal. App.4th 1081, 1095), but cannot be based upon general common law principles. Textron Financial Corp. v. National Union Fire Insurance Co. of Pittsburgh (2004) 118 Cal.App.4th 1061, 1072 (“reliance on general common law principles to support a cause of action for unfair competition is unavailing”). Plaintiffs merely restate prior allegations [TAC, 99 79-84], none of which specify the “unfair competition” upon which the claim is based. NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 23 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff’s failure to plead the particular unfair competition underlying the cause of action is particularly inadequate in this case, because if the basis for the Plaintiff’s unfair competition claim is a cause of action that cannot be maintained (because it is either improperly pled or pre-empted, etc.), the unfair competition claim cannot be maintained either. Khoury, 14 Cal. App.4th at 619 (finding that dismissal of the claim upon which an unfair competition claim is based results in dismissal of unfair competition claim as well). Third, the cause of action fails to allege any purportedly “fraudulent” business practices with the required specificity. The “fraudulent” practices prohibited by the UCL do not refer to the common law tort of fraud. Rather, this prong of the statute requires a showing that members of the public are likely to be deceived by the practices. South Bay Chevrolet v. GMAC (1999) 72 Cal. App.4th 861, 888. None of Defendants’ alleged conduct is likely to deceive the public, and, indeed, no allegation of likely public deceit are made. Plaintiffs have had the opportunity to correct this deficiency and failed to do so. In the October 21 Minute Order, his Honor noted this deficiency, giving Plaintiffs ample warning. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. J. The Demurrer to The Sixth Cause of Action Must be Sustained Because it Fails to State a Claim on Which Relief May be Granted The elements of an intentional interference claim with prospective economic or business advantage are as follows: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant. Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1153. The California Supreme Court has stated that while intentionally interfering with an existing contract is a wrong] in and of itself, intentionally interfering with a plaintiff’s prospective economic advantage is not. To establish a claim for interference with prospective economic advantage, therefore, a plaintiff must plead that the defendant engaged in an independently wrongful act. Id. at 1158; see also Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal. 4th 376, 393; Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal. App.4th NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 24 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 1249, 116; Reeves v. Hanlon (2004) 33 Cal. 4th 1140. This is because “[t]he tort of intentional interference with prospective economic advantage is not intended to punish individuals or commercial entities for their choice of commercial relationships or their pursuit of commercial objectives, unless their interference amounts to independently actionable conduct.” Id. at 1159 (citing Marin Tug & Barge, Inc. v. Westport Petroleum, Inc. (9th Cir) 2001) 271 F.3d 825, 832.) The California Supreme Court went on to define an “independently wrongful act” as one that is “unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” Korea Supply Co., 29 Cal. 4th at 1159. Here, Plaintiff has failed to plead that Defendants engaged in any independently wrongful acts under this claim, as none of its incorporated allegations refer to independently wrongful (i.e. unlawful) acts. For example, Plaintiff alleges that Defendants, “began contacting USO directly in an attempt to subvert the Agreement and steal RICK’s business.” [TAC § 89] Resultantly, Plaintiffs allege that “USO further stopped giving RICK and XMI machining work...due to Ossaily and Bel Air’s conduct.” [TAC q 91] However, none of this alleged conduct rises to the required level of an independently wrongful act as defined by the California Supreme Court in Korea Supply Co., 29 Cal. 4th at 1159. The sixth cause of action fails to state a claim for intentional interference with prospective economic advantage and the demurrer on this claim should be sustained. Plaintiffs have had the opportunity to correct this deficiency and failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. K. The Demurrer to The Seventh Cause of Action Must be Sustained Because it Fails to State a Claim on Which Relief May be Granted, Lacks the Required Specificity and is Duplicative of the First Claim The basis of any intentional interference in contract claim is the underlying contract. In the present case, Plaintiffs base their claim on a requirements contract between Plaintiffs and Defendants, for the benefit of USO. However, “[A] contracting party cannot be held liable in tort for conspiracy to interfere with its own contract.” Asahi Kasei Pharma Corp. v. Actelion Ltd. (2013) 222 Cal.App.4th 945, 961 (original italics). The only contracts referenced with specificity in the TAC are those between Plaintiff and Defendant; under Asahi Kasei, Defendant, as NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 25 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 a party, cannot be liable for interfering in any of those. While the interference Plaintiffs are referring to may be regarding the contract between themselves and USO, they have failed to attach a copy of the full and complete contract, nor do they state the terms of it verbatim. Without a copy of the contract, only Plaintiff’s word serves to bolster its position that it has been wronged. In addition, intentional interference requires a different set of facts than simple breach. Here, Plaintiffs set out the same essential set of facts in this cause of action as in the first cause of action for breach, making it duplicative (see footnote 1, supra). The seventh cause of action fails to state a claim for intentional interference with contract, and the demurrer on this claim should be sustained. Plaintiffs have had the opportunity to correct this deficiency and failed to do so. Defendants must assume that such a correction is impossible, and ask that leave to amend not be granted. Iv. Conclusion For the foregoing reasons, Defendants respectfully request that the Court grant its Demurrers as to the Plaintiffs’ Third Amended Complaint. Dated this 26" day of December 2019. T= =o Reza Khanjan Esq. NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 26 10 11 12 13 14 LS 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE STATE OF CALIFORNIA ORANGE COUNTY I am employed in the County of San Diego, State of California. I am over the age of 18 and not a party to the within action. My business address is 380 S. Melrose Drive Suite 362, Vista, Ca. 92081. My email is: frank@fdaughertyatlaw.com My facsimile number is (562) 758-1367. DEFENDANTS’ REPLY MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER TO PLAINTIFF'S THIRD AMENDED COMPLAINT, DECLARATION OF DEMURRING PARTY REGARDING MEET AND CONFER, PROPOSED ORDER The Guerin Law Firm Regis A. Guerin (SBN 215170) 4667 MacArthurr Boulevard, #300 Newport Beach, CA 92660 regis@querinlawyers.com [ 1 By placing a true copy thereof enclosed in a sealed envelope addressed as follows. [ ] Deposited such envelope in the mail at Vista, California. The envelope was mailed with postage thereon fully prepaid. [ ] Tam “readily familiar” with the firm’s practice of collection and processing correspondence for mailing. Under that practice, it would be deposited with U.S. Postal service on that same day with postage thereon fully prepaid at Vista, California, in the ordinary course of business. I am aware that that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposited for mailing in affidavit. [X] (BY ELECTRONIC TRANSMISSION) By transmitting a true and correct copy electronically to the attorney(s) of record for at the email address referenced in the service list. The transmission was completed without error. I declare, under penalty of perjury, under the laws of the State of California, that the foregoing is true and correct. Executed on the 26th of December 2019, at Vista, California == Frank Daugherty NOTICE OF DEMURRER AND DEMURRER; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEMURRER OF DEFENDANTS BEL AIR MACHINING AND ALI OSSAILY TO PLAINTIFF RICHARD PAGE AND X-MACHINE INC.’S THIRD AMENDED COMPLAINT - 27