Plaintiffs Opposition To Defendants Demurrer To Plaintiffs Third Amended Complaint

Opposition

Cal. Super. - 2nd Dist.February 13, 2014

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Donny E. Brand (SBN 249651) THE BRAND LAW FIRM CORPORATION 2321 E 4th St Ste C-473 Santa Ana, CA 92705 Tel: (714) 769-6485 Fax: (714) 769-6486 Email: donny@brandlawfirm.net Attorney for Plaintiff, CRAIG RICKETTS SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES - CENTRAL DISTRICT CRAIG RICKETTS, Plaintiff, Vv. JOAN B. KNAPP, individually and as trustee of the JOAN BEVERLY KNAPP LIVING TRUST; the JOAN BEVERLY KNAPP LIVING TRUST; STEVEN JOHN KNAPP LIVING TRUST, individually and as trustee of the STEVEN JOHN KNAPP LIVING TRUST; the STEVEN JOHN KNAPP LIVING TRUST; FORWARD SUNSET, INC., d/b/a KELLER WILLIAMS REALTY; BOBBI VOGEL, individually and as agent for FORWARD SUNSET, INC., d/b/a KELLER WILLIAMS REALTY, Defendants. nn 1" nn nn Case No.: BC536360 [Assigned for all purposes to the Honorable Terry A. Green, Department 14] PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT Date: October 14, 2016 Time: 1:30 p.m. Dept.: 14 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION. ...ccoiiiiiiiiiiii cece eee sees sae seen 1 II. STANDARD OF REVIEW Lo... eee seen 2 III. THE FAILURE TO ADD THE OPTION CONTRACT TO THE TAC DOES NOT RENDER THE COMPLAINT FATALLY DEFECTIVE ..........ccccooiiiiiiiiicie 3 IV.PLAINTIFF’S CAUSE OF ACTION FOR INTENTIONAL INTERFERENCE WITH A CONTRACTUAL RELATION STATES FACTS UPON WHICH RELIEF CAN BE GRANTED... eee sae sees 4 a. The Court is Not Bound by its Previous Ruling on the Option COntract...................ccceuueeenne. 5 b. Because the Option Contract is Open to Interpretation, Defendant’s Demurrer Should Bd OPEL Olin 5 sms sens osimsosssmsess 555088 055 S503 AEST ABE AA NB B58 SSF NH 5 SAAR SESH 6 c. The Court Cannot Take Judicial Notice of the Knapp Ruling for Purposes of Establishing thai the Option. Contract 18 Tnaialid as & Matter Of Tas. ssesssssussss seuss sussamss smn i asm sss. amu 8 V. WITH RESPECT TO A CAUSE OF ACTION FOR INTENTIONAL INTERFERENCE WITH A CONTRACTUAL RELATION, PLAINTIFF IS NOT REQUIRED TO SHOW THAT THE ALLEGED INTERFERENCE WAS WRONGFUL, INDEPENDENT OH ITS CHARACTER .....oooiiiiiiii cette see ee se sae 9 VIL.PLAINTIFF HAS ALSO STATED A CLAIM FOR INTENTIONAL INTERFERENCE WITH A PROSPECTIVE BUSINESS RELATION AND HAS ESTABLISHED THAT] DEFENDANT HAS COMMITTED AN INDEPENDENT WRONG............c..cccuvenne.. 10 a. Violation of the California Uniform Trade SeCrets ACE ............cccoveeeeeiieeeeesiiieeeeiieieeeeeinenaens 11 D. COMVETSION. ..... ceceeeeeieie eee eee eee eet e ete sates e atest ee eabt ee eane ee sabeeesabeeesabeeens 13 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VII. DEFENDANTS’ ARGUMENT THAT PLAINTIFF'S SUPPORTING ALLEGATIONS TAKE PLACE AFTER THE OPTION CONTRACT HAD EXPIRED IS IRRELEVANT AND UNAVAILING .......ooooiiiiiiiiiiiiicce cece 14 VIII. PLAINTIFF'S TAC CAN BE CURED IN THE EVENT THE COURT SUSTAINS THE DEFENDANTS’ DEMURRER..........cccooiiiiiiiiiieecececeeee 15 IX CONCLUSION cucumsssmess svunsmmss snes 0055505555565 0505555535 05555555 595934550545 4855 F50593 5055 6938 0FVUH S095 49551005 15 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Cases Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal. App.3d 232 .....coovvevvevrneen. 6 Black v. Department of Mental Health (2000) 83 Cal.App.4th 739 ...ccoeviiiiiiiiieeeeeeeee, 10 Brossues vi. Jarrett (1997) T3 Col ADE 34 BOs sumsssumsss ssssommssssmssss smsims sso stosswsuss sss sss mms 3 Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal. App.3d 1371 ................ 15 City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal. App. 4th 445.3 Columbia Casualty Co. v. Northwestern Nat. Ins. Co. (1991) 231 Cal. App.3d 457 ...ccvvevvveeunenne. 7 Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d. 197 .......... 2 Cottle v. Superior Court (1992) 3 Cal. APP.4th 13607 ...ocoiiiiiiiieeieee cee ev 5 Del E. Webb Corp. v. Structural Materials (1981) 123 Cal. App. 3d 593 ..oiiiiieiieeieeees 2 Della Penna v. Toyota Motor Sales, U.S.A. Inc. (1995) 11 Cal.4™. 376 .....c.cvveveeeeeeeeeee. 9 Edwards v. Arthur Anderson LLP (2008) 44 Cal. 4M 037 ....c.ooovimioeeeeeeeeeeeeeeeeeeeeee 9 Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App.4™ 256 ........ccvovieeeeeeeeeeeeeeeeeeeeenn § Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal. App.4" 97 ....coovivvvviieenn 7 George v. Automobile Club of Southern California (2011) 201 Cal. App.4th 1112.................... 6,7 Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal. App. 4 1 ....o.oooviiiiiiieeenn 6 Hightower v. Roman Catholic Bishop of Sacramento (2006) 142 Cal. App.4th 759..................... 10 Hills Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal. App.2d 702 .........cccoeene.. 4 Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024.......cuoviieeeeee cee eee ee 13 Le Francois v. Goel (2005), 35 Cal.d™ 1094 .........coimimeeeeeeeeeeeeeeeeeeeeeeeeeeee s s 5 Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal. App.4T394 ....cocooviviveeeeceeeeen. . Otworth v. Southern Pacific Transp. Co. (1985) 166 Cal.App.3d 452.....cceveiiiiiiieeieeieeeeen, 3 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33 ........cc.cceuveennne. 6,7 Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118.......cccvvieeviiecieernn, 5 Payne v. Elliot (1880) 54 Cal.339.....ccoeiieeieeeee cesses etter sree saree saves saves 13 Plummer v. Day/Eisenberg, LLP (2010) 184 Cal. App.4th 38 ......cooiiiiiieeieeeeieee eee, 13 Quelamine Co v. Stewart Title Guaranty Co. (1998) 19 Cal.4™ 26........coooeeeeeeeeeeeeeeeee. 9 Rose v. Royal Ins. Co. (1991) 2 Cal. App. 4th 709 ......ooiiiiiiieie eects eee 2 San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal. App.4th 1528 .....ccccevivriierieenenne. 10 Serrano v. Priest (1971) 5 Cal. 3d 584 ......oooeeiie ee ee eee eee eee eee 2 Shopoff & Cavallo LLP v Hyon (2008) 167 Cal App.4T 1489 ......ovvviiieeeeeeeeeeeeeeeeeeeeeens 14 Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 CAL APPA 1215. eeee eee eee 9 Twaite v. Allstate Ins. Co. (1989) 216 Cal APp.3d 23 cusses sssmmessmmomnssusesssmmmnes ssssmss 3 Wise v. Southern Pacific Co. (1963) 223 Cal.LAPP.2d 50 ....ooeeiiiiiiieeie cece 3 Youst v. Longo (1987) 43 Cal.3d 04 ........ooouvieeeeeieeee eee eee eee eee rasers eres sees eves eas 10 Statutes CIVIL COE § 3426... eters see see e sbeebs seen 11 Code Civ. Proc. § 128(2)(8) ..cvuieeerieieiieeeiie eects cesta seas eae e sate eesaae ee eaae ee stae ee snae essen 5 Code CIV. PTOC. § 473 ooo eee ceases eee eateeeetae ee setae esate ee etae ee saae ee eenas 5 EVIAENCE COE § A52(C) uuiiuiiiiiiieeiiie eects eee ete e tessa tesserae et ae eta ae eases sansa esaas essere ee saae ee ennes 8 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff Craig Ricketts (“Plaintiff”) submits his Opposition to Defendants’ Demurrer to Plaintiff’s Third Amended Complaint (“TAC”) as follows: L INTRODUCTION This action arises out of an option contract to purchase real property located at 3700 La Paz Lane, Malibu, California (the “Property”’) between Plaintiff and Joan and Steven Knapp (“Option Contract”) executed on November 5, 2013. (Complaint at 46). The Option Contract called for a purchase price of $2,600,00.00, should Plaintiff provide notification of his intent to purchase the Property on or before February 3,2014 (Complaint at 9 13). After months of diligent research using his experience as a real estate developer, including but not limited to development of a business plan, a land easement survey map, an executive summary description, and advertising material, Plaintiff decided the best and most profitable use of the Property would be to cater to an onsite medical service, a surgery center, and a senior care facility (“Work Product”). (Complaint qq at 22-24, 64). To that end, Plaintiff secured a formal letter of intent from Dr. Richard Jacobson (“Dr. Jacobson) to lease 100% of the medical space of the proposed development. (Complaint 99 at 23, 28). Plaintiff alleges that he timely exercised his right to purchase the Property under the Option Contract, but that on January 30, 2014, the Knapps breached the Option Contract by executing a land purchase agreement with Defendant Forward Sunset, Inc. d/b/a Keller Williams Realty’s (“KW”) client, Michelle Yao (“Yao Agreement”) so that the Knapps could sell the Property for a higher value than what they had previously bargained for and contracted with Plaintiff. (Complaint qq at 9, 18). Plaintiff alleges that the Defendants intentionally interfered with Plaintiff’s Option Contract by wrongfully inducing the Knapps to breach the Option Contract with Plaintiff and PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 utilize their services to market and sell the Property. Defendants determined that the Property was worth more than $2,600,00.00 based on Plaintiffs Work Product, which would result in a hefty commission from the Property’s sale (Complaint 9 18, 21-24, 35). Plaintiff further alleges that the Yao Agreement was a sham perpetrated by KW Associate Bobbi Vogel (“Vogel”) to hinder and obstruct Plaintiff’s ability to exercise his rights under the Option Contract, allowing Vogel more time to secure a bonafide purchaser for the Property, and in the process, permanently depriving Plaintiff of his right to purchase the Property pursuant to the Option Contract. (Complaint at 99, 16,38-40). Plaintiff alleges that the Defendants interfered with his contractual relationship with Dr. Jacobson by contacting Dr. Jacobson, soliciting his business, and from the information obtained, ultimately securing Eric Kroh, Dr. Jacobson’s landlord, to purchase the Property for use as an elderly care facility based on Plaintiff’s Work Product (Complaint at § 23, 25-27, 29, 43-50). II. STANDARD OF REVIEW When ruling on a demurrer to a complaint, a court must accept as true every material fact properly pleaded. Serrano v. Priest (1971) 5 Cal. 3d 584, 591. The court may “assume the truth of all material facts properly pleaded, as well as facts that may be implied or inferred from those expressly alleged.” Rose v. Royal Ins. Co. (1991) 2 Cal. App. 4th 709, 716. Even if Plaintiff’s claims seem unlikely or improbable, the facts must be accepted as true for purposes of ruling on the demurrer. Del E. Webb Corp. v. Structural Materials (1981) 123 Cal. App. 3d 593, 604. Furthermore, Plaintiff’s ability to prove the allegation is also irrelevant. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal. 3d. 197, 213-4. If a complaint contains allegations of the facts essential to state a cause of action, regardless of mistaken theory or imperfects of form, the court must overrule the demurrer. Brossaeu v. Jarrett (1997) 73 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT -2 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal.App.3d 864, 870. Furthermore, additional facts may be implied or inferred from those facts expressly set forth in a complaint. City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal. App. 4th 445, 459. III. THE FAILURE TO ADD THE OPTION CONTRACT TO THE TAC DOES NOT RENDER THE COMPLAINT FATALLY DEFECTIVE Defendants cite Twaite v. Allstate Ins. Co. (1989) 216 Cal.App.3d 239 (“Twaite”), Otworth v. Southern Pacific Transp. Co. (1985) 166 Cal. App.3d 452 (“Otworth”) and Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50 for the proposition that Plaintiffs’ failure to attach the Option Contract” is a “blunder that should render Plaintiff’s entire cause of action fatally defective” because “ [t]he failure to identify the material terms of a contract renders the cause of action fatally defective.” Nowhere in Twaite does that case refer to “material terms” or “fatally defective.” Rather, Twaite says that “[t]o state a cause of action for breach of contract, it is absolutely essential to plead the terms of the contract either in haec verba or according to legal effect.” Id. at 252 (emphasis supplied). Here, Plaintiff does not state a cause of action for breach of contract. Therefore, Twaite does not apply. However, even if the Court were to determine that Twaite does apply in this case, the Plaintiff has clearly pled the legal effect of the Option Contract. Furthermore, Otworth and Wise, a 1963 case and a 1989 case, respectively, are clearly overruled with respect to the contention that the terms of a contract must be set out verbatim if the cause of action is based on an alleged breach of contract. “The Otworth court did not offer any analysis to support that proposition. Instead, it simply cites [Wise]. [...]. It is readily apparent that the Orworth court read more into that statement than is actually there. The Wise court was simply stating one available method of pleading the contract-it was not specifying the exclusive PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 means of pleading a contract. The correct rule is that “a plaintiff may plead the legal effect of the contract rather than its precise language.” Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal. App.4" 394, 401-402 (Emphasis supplied). Defendants allege that because Plaintiff did not attach a copy of the Option Contract to his TAC, he is unable to rely upon the exhibits attached to his Second Amended Complaint, which then renders his complaint “fatally defective.” This contention is, as a matter of law, incorrect (See, e.g., Hills Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal. App.2d 702 (“Hills”) (“A court may take judicial notice of all verified and unverified pleadings in a particular case and their history, including early superseded pleadings and exhibits incorporated therein, when exercising its judicial discretion in determining whether a defective pleading is susceptible of amendment to state a recognizable legal claim”). Defendants recognize Hills in the very next paragraph, referencing a request seeking judicial notice of the exhibits attached to the Plaintiff’s Second Amended Complaint. IV. PLAINTIFE’S CAUSE OF ACTION FOR INTENTIONAL INTERFERENCE WITH A CONTRACTUAL RELATION STATES FACTS UPON WHICH RELIEF CAN BE GRANTED Plaintiff’s sole remaining cause of action in this case is “Tortious Interference with Business Relationship.” This cause of action is also known as “Intentional Interference with a Contractual Relation.” “The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 4 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 the contractual relationship; and (5) resulting damage.” Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126 (internal citations omitted.) The thrust of Defendants’ Demurrer to Plaintiff’s TAC is that the Option Contract (i.e., the underlying contract) is invalid. The Defendants support this contention by alleging that on November 24, 2014 (“Knapp Hearing”), the Knapp defendants successfully argued that the Options Agreement was invalid because (a) Plaintiff failed to open escrow in time; and (b) Plaintiff failed to allege facts that he deposited the non-refundable $200,000 deposit into escrow, which lead the Court to sustain Knapp’s demurrer to Plaintiff’s Second Amended Complaint (“Knapp Ruling”). Defendants contend that the Court should take judicial notice of the Knapp Ruling. a. The Court is Not Bound by its Previous Ruling on the Option Contract Defendants allege that the Court’s Knapp Ruling establishes that, as a matter of law, the Option Contract is invalid and unenforceable. Assuming, arguendo, that the Defendants’ characterization of the Knapp Ruling is correct, this Court can reverse its prior ruling based on mistake, inadvertence, surprise or excusable neglect. Code Civ. Proc. § 473. “According to Code of Civil Procedure section 128, subdivision (a)(8), every court shall have the power “to amend and control its process and orders so as to make them conform to law and justice.” Cottle v. Superior Court (1992) 3 Cal.App.4th 1367, 1376. Even when the Code of Civil Procedure precludes a party from moving for reconsideration, a trial court has inherent authority to correct an erroneous ruling on its own motion. See Le Francois v. Goel (2005), 35 Cal.4™ 1094. I" I" 11 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 b. Because the Option Contract is Open to Interpretation, Defendant’s Demurrer Should Be Overruled “The fact that the terms of an instrument appear clear to a judge does not preclude the possibility that the parties chose the language of the instrument to express different terms.” Pacific Gas, supra 69 Cal.2d 33. When the terms of a contract are open to reasonable interpretation, for purposes of determining the sufficiency of a complaint, the Court must accept as correct plaintiff's allegations as to the meaning of the agreement. Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal. App.3d 232, 239 (“‘[s]o long as the pleading does not place a clearly erroneous construction upon the provisions of the contract, in passing upon the sufficiency of the complaint, we must accept as correct plaintiff's allegations as to the meaning of the agreement.””) Furthermore, “parol evidence may be admitted to explain the meaning of a writing when the meaning urged is one to which the written contract term is reasonably susceptible or when the contract is ambiguous. Hayter Trucking, Inc. v. Shell Western E&P, Inc. (1993) 18 Cal. App.4" I, 15. “[T]he California Supreme Court liberalized the traditional rule by rejecting the ‘plain meaning rule.” Hence, extrinsic evidence relevant to interpretation can no longer be barred simply because of a judicial determination that a writing appears to have only one interpretation. [Citations.] Parol evidence is now admissible to show mutually shared meanings of words used irrespective of their ordinary meaning. [Citation.] Most importantly, parol evidence of custom and usage is similarly admissible to interpret the written words.” (Hayter Trucking, supra, 18 Cal.App.4th at p. 20.) (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1125-1126 PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 “The proper interpretation of a contract is disputable if the contract is susceptible of more than one reasonable interpretation, that is, if the contract is ambiguous. An ambiguity may appear on the face of a contract, or extrinsic evidence may reveal a latent ambiguity [Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37-39]. “A court cannot determine based on only the four corners of a document, without provisionally considering any extrinsic evidence offered by the parties, that the meaning of the document is clear and unambiguous. [Citation.] Instead, a court must provisionally consider extrinsic evidence offered by the parties in the manner we have stated.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal. App.4™ 97, 114, fn. omitted, italics added; see id. at p. 115 [holding that a court ruling on a demurrer cannot take judicial notice of the proper interpretation of a document submitted in support of the demurrer].) (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1126. “The motion for judgment on the pleadings can be granted only if the instrument incorporated by reference conclusively negates the express allegation in the pleading, and except in the extraordinary case, conclusive negation is unlikely because of the inevitable prospect that parol evidence may lead to an interpretation of the contract consistent with the pleading's express allegation.” Columbia Casualty Co. v. Northwestern Nat. Ins. Co. (1991) 231 Cal. App.3d 457, 470. Assuming that the Defendants have properly characterized the Court’s reasoning behind the Knapp Ruling, this Court can reverse its prior ruling based on the fact that the Plaintiff has pled facts in his TAC that that establish that Plaintiff and the Knapps intended the Option Contract to give notice on or before February 4, 2013, that he intended on purchasing the Property, and PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 that the Knapps breached prior to that date, on January 30, 2014 by entering into the Yao Agreement. c. The Court Cannot Take Judicial Notice of the Knapp Ruling for Purposes of Establishing that the Option Contract is Invalid as a Matter of Law Furthermore, the written Order entered by the Court concerning the Knapp Ruling makes no mention of the Court’s reasoning - either in law or in fact - as to why the Court ruled the way it did. While Evidence Code § 452(c) allows the Court, in its discretion, to take judicial notice of “Records of ... any court of this state,” the Evidence Code contains no such proclamation as to oral arguments - especially oral arguments that were not, to the best of Plaintiff’s counsel’s knowledge, transcribed by a court reporter. Or, to the best of Plaintiff’s counsel’s knowledge, where Defendants did not request that the Court provide a “settled statement” detailing a narrative summary of the oral proceeding pursuant to Cal. Rule of Court 8.137. While the Court can take judicial notice of the Knapp Ruling itself, it cannot take judicial notice of the factual and legal reasoning that led to the Order. Defendants were entitled to request a Court Reporter at the Knapp Hearing and, to the best of Plaintiff’s counsel’s knowledge, failed to do so. Furthermore, the Defendants were entitled to request a “settled statement” from the Court, and to the best of Plaintiff's counsel’s knowledge, failed to do so. While Defendants will likely argue that a trial court is permitted to take judicial notice of the legal effects of documents (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal. App.4™ 256, 265), this is only the case “when that effect is clear from its face.” Id. Without more than a simple Order sustaining a demurrer without leave to amend that contains no reasoning by the Court’s ruling, Plaintiff’s counsel is left in the dark. A party relying on oral arguments as PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a basis to seek judicial notice, who failed to procure a court reporter or a “settled statement” at the hearing, should not be allowed to benefit from the ambiguity he creates. In his Third Amended Complaint, Plaintiff sufficiently pleads all facts necessary to sustain a cause of action for Intentional Interference with a Contractual Relation. The Defendants argument that Plaintiff’s claim fails because the Option Contract is invalid is unavailing. V. WITH RESPECT TO A CAUSE OF ACTION FOR INTENTIONAL INTERFERENCE WITH A CONTRACTUAL RELATION, PLAINTIFF IS NOT REQUIRED TO SHOW THAT THE ALLEGED INTERFERENCE WAS WRONGFUL, INDEPENDENT OF ITS CHARACTER Defendants assert that for its cause of action for intentional interference with contractual a relation, Plaintiff is required to prove that the interference was wrongful, independent of its interfering character.” Defendants are wrong. The Supreme Court of California has stated “[b]ecause interference with an existing contract receives greater solicitude than does interference with prospective economic advantage, it is not necessary that the defendant’s conduct be wrongful apart from the interference with the contract.” Quelamine Co v. Stewart Title Guaranty Co. (1998) 19 Cal.4™ 26, 55 (“Quelamine”). Defendants’ citations to Edwards v. Arthur Anderson LLP (2008) 44 Cal.4" 937, Stevenson Real Estate Services, Inc. v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4" 1215, and Della Penna v. Toyota Motor Sales, U.S.A. Inc. (1995) 11 Cal.4™. 376 are all inapposite because each of those cases, where the court required a showing of an independent wrong, involved causes of action for intentional interference with prospective economic advantage. However, as clearly stated in Quelamine, a cause of action for intentional interference with a contractual relation does not require the showing of an independent wrong. PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT -9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VI. PLAINTIFF HAS ALSO STATED A CLAIM FOR INTENTIONAL INTERFERENCE WITH A PROSPECTIVE BUSINESS RELATION AND HAS ESTABLISHED THAT DEFENDANT HAS COMMITTED AN INDEPENDENT WRONG In addition to asserting a cause of action for intentional interference with a contractual relation, the Plaintiff, in his TAC, although not labeled, has also clearly pled a cause of action for intentional interference with a prospective business relation!, which does require an independent wrong. “An act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” San Jose Construction, Inc. v. S.B.C.C., Inc. (2007) 155 Cal.App.4th 1528, 1544-1545 (internal citations omitted.) Apart from establishing an independent wrong, “[t]he five elements for intentional interference with prospective economic advantage are: (1) [a]n 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.” (Youst v. Longo (1987) 43 Cal.3d 64, 71, fn. 6 [233 Cal.Rptr. 294, 729 P.2d 728].) I “Regardless of the label attached to the cause of action, we must examine thg complaint's factual allegations to determine whether they state a cause of action on any available legal theory.” Hightower v. Roman Catholic Bishop of Sacramento (2006) 142 Cal. App.4th 759, 764-765 quoting Black v. Department of Mental Health (2000) 83 Cal. App.4th 739, 745. PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 10 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Here, it is clear that Plaintiff has established the requisite elements of a cause of action for intentional interference with prospective economic advantage. Plaintiff’s complaint clearly sets forth that he had established an economic relationship both with Dr. Jacobson (by entering into a letter of intent with him to lease the Property) and the Knapps (by entering into the Option Contract). For purposes of this demurrer, Plaintiff has sufficiently pled that such relationships would have probably resulted in future economic benefit to Plaintiff, that he suffered a loss, that the Defendants acted with the intention of disruption the relationships, that the relationships were in fact disrupted, and that the Defendants were the proximate cause of Plaintiff’s economic harm. Therefore, the only question remaining is whether or not Defendants committed an independent wrong. Plaintiff has properly pled two (2) independent wrongs. a. Violation of the California Uniform Trade Secrets Act Civil Code §§ 3426 to 3426.11, also known as the California Uniform Trade Secrets Act (“CUTSA”), prohibits misappropriation of trade secrets and allows an aggrieved party to, inter alia, recover compensatory damages for actual loss caused by the misappropriation, and for unjust enrichment. In certain situations, the recovery of punitive damages, attorney fees, and royalties are allowable. Id. “’Trade Secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that (1) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Civil Code § 3426.1. Plaintiff’s complaint alleges that Plaintiff’s Work Product “was not subject to the general public’s knowledge and was only made known to the KW Defendants in an attempt by PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 11 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff to notify the KW Defendants of the Option Contract to ultimately purchase and develop the Subject Property.” (Complaint 9 at 59). Plaintiff asserts a violation of the CUTSA as follows: e “The intent of the KW Defendants was to use Plaintiff’s work product and financial and marketing proforma statements (transmitted to the KW Defendants by the seller) and sell the Subject Property at a higher value than bargained for ad contracted with Plaintiff.” (Complaint q at 18); e “[The] KW Defendants intended to cause the seller to breach the Option Contract because they knew that with Plaintiff’s proprietary work product, they could sell the Subject Property at a higher price but knew that Plaintiff would not agree to amend the Option Contract to reflect a higher purchase price.” (Complaint § at 21). e “Dr. Jacobson responded via email to Plaintiff the day of my discovery stating: “Wow. Unbelievable. They ripped a hole right through you. They stole our Jewel and plagiarized your ideas and plans. Incredible. RLJ” (Complaint q at 29). eo “[] Defendant Keller Williams and their group of agents actively and continually violated Plaintiff’s seasoned private and personal relationships.” (Complaint 9 at 31). eo “What is evidence is that Vogel and Daffara [...] shared information concerning [...] Plaintiff’s development plans for the subject property [...].” (Complaint 9 at 32). eo “Plaintiff is informed and believes and based thereon alleges that his private and confidential information was openly distributed throughout the Keller Williams network in a collective conspiracy to defraud him. [...] It is also clear is [sic] that Keller Williams had been intently researching Plaintiff’s past relationships that he had or that Dr. Richard Jacobson had to explore and locate a buyer using all of this private and confidential information.” (Complaint 9 at 34). eo “[...] Keller Williams, as an entity and via the acts of their various agents, utilized his proprietary work product in order to secure this recent sale to Mr. Kroh. Plaintiff’s institutional-quality proformas and his business plan formula coupled with Dr. Jacobson’s lease with Mr. Kroh would be extremely valuable documentation to use in order to entice Mr. Kroh to purchase the property and develop it as a senior housing facility. Moreover, KW agents Bobbi Vogel, Felicia Daffara and Barrie Livingston shared and utilized Plaintiff’s proprietary information for KW website advertising without his consent in order to close this deal with Mr. Kroh at a higher sales price than my contract with the Knapp sellers. (Complaint 9] at 35). eo “[...] [U]tilizing Plaintiff’s preforms and work product, the KW Defendants began their efforts to breach the Option Contract [...].” (Complaint § at 41). e [W]hile bound by the Yao Agreement, Seller Knapp shared Plaintiff’s confidential work product with the KW Defendants.” (Complaint 9 at 58). e “[T]his confidential business information gives an economic advantage to the person with knowledge of it. Furthermore, the information affords those with knowledge of it a PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 12 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 competitive advantage by virtue of the fact that it is secret. It required this unique expertise, lease and financing experience, and relationships, to create. (Complaint q at 60). e [P]laintiff took careful measure to ensure that the information was not in the public domain and also to maintain its secrecy and stated as such on every email to the KW Defendants.” (Complaint § 61). e “The KW Defendants caused a breach in disclosing said information, as well as by naming Plaintiff’s private and personal equity financial partner and inappropriately permitting their clients to contact this person directly.” (Complaint q at 62). e “Plaintiff notes that the KW Defendants have misappropriated his work-product, including, but not limited to: - Use of Plaintiff’s land easement survey map in web advertising; - Use of Plaintiff's executive summary description of the Subject Property as a “Trophy Property” and “the Heart of Malibu” in web advertising; - Specific mention of the possibility of “Senior Housing in web advertising.” (Complaint 9 at 64). e “[] Seller Knapp transmitted Plaintiff’s proforma statement(s) in email correspondence to Defendant Vogel, subjecting it to wide circulation among other Keller Williams agents and/or brokers. (Complaint 9 at 65). oe “[] KW Defendants have caused damage to Plaintiff in the form of loss of trade secrets, loss of confidential business work product [...].” (Complaint 9] at 66). These allegations in Plaintiffs TAC clearly allege that Defendants committed an independent wrong in the form of a violation of the CUTSA. b. Conversion Even if the Defendants argue that CUTSA cannot be a basis for an independent wrong on the basis of preemption (which Plaintiff would disagree with), Plaintiff has properly alleged an independent wrong in the form of conversion. “[A]ny act of dominion wrongfully exerted over the personal property of another inconsistent with the owner’s rights thereto constitutes conversion.” Plummer v. Day/Eisenberg, LLP (2010) 184 Cal. App.4th 38, 50. “[C]ourts routinely apply the tort to intangibles [...]. [...] Were it necessary to settle the issue once and for all, we would toe the line of Payne and hold that conversion is “a remedy for the conversion of every species of personal property.” Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024 quoting Payne v. Elliot (1880) 54 Cal.339, 341. PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The elements of conversion “are the plaintiff’s ownership or right to possession of the property at the time of conversion; the defendant’s conversion by a wrongful act or disposition of property rights; and damages.” Shopoff & Cavallo LLP v Hyon (2008) 167 Cal. App.4™ 1489, 1507. For the reasons delineated in subparagraph (a), supra, and the TAC, Plaintiff has more than adequately pled that he owned his Work Product, that the Defendants intentionally converted his Work Product to gain an unfair advantage and interfere in Plaintiff’s contractual rights as well as his prospective economic advantages, and as a result, Plaintiff suffered damages. VII. DEFENDANTS’ ARGUMENT THAT PLAINTIFF'S SUPPORTING ALLEGATIONS TAKE PLACE AFTER THE OPTION CONTRACT HAD EXPIRED IS IRRELEVANT AND UNAVAILING Defendants pontificate “if it is somehow a crime to sell real property that is no longer the subjection of an Option Contract.” In doing so, they reveal their attempt to shift the standard of review from a demurrer to a motion for summary judgment - as if it is somehow improper to allege facts that occurred after the alleged interference in support of Plaintiff’s claim. Defendants have cited no case law to support their novel assertion that facts or allegations taking place after the Option Contract had allegedly expired are, as a matter of law, irrelevant and insufficient to support Plaintiff’s claim. Defendants improperly attempt to weigh the merit of Plaintiff’s factual allegations by asserting that they are “utterly irrelevant,” or that Plaintiff is placing “undue emphasis” on them. It bears repeating that this is not a motion for summary judgment.” 2 To the extent Defendants attempt to improperly weigh the probative value and credibility of Plaintiffs allegations in their demurrer to Plaintiff’s TAC, it must be noted that the Defendants refuse to comply with valid discovery requests from the Plaintiff, including but not limited to the Deposit Receipt and Dual Agency Agreement. PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 14 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VIII. PLAINTIFF'S TAC CAN BE CURED IN THE EVENT THE COURT SUSTAINS THE DEFENDANTS’ DEMURRER In the event this court is inclined to sustain Defendants’ demurrer, the Plaintiff should be granted leave to amend his complaint. Counsel for Plaintiff believes that there are other, relevant causes of action, which have not yet been ruled upon, that could withstand a demurrer by defendants. For instance, Plaintiff can assert independent cause of action for, inter alia, (1) intentional interference with a prospective business relation; (2) violation of the California Uniform Trade Secrets Act; and (3) conversion. Although this is Plaintiff’s fourth iteration of his complaint, based on the introduction of new counsel, there is a reasonable probability that the defect can be cured by amendment. “An order sustaining a demurrer without leave to amend will constitute an abuse of discretion if there is any reasonable possibility that the defect can be cured by an amendment.” Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal. App.3d 1371, 1387. IX. CONCLUSION Plaintiff respectfully requests that the Court overrule Defendants’ Demurrer. To the extent the Court dismisses any claim or allegation, Plaintiff requests the opportunity to amend the TAC to cure the deficiency. Dated: September 30, 2016 THE BRAND LAW FIRM CORPORATION 2 By: oes oo als Donny E. Brand Attorney for Plaintiff, CRAIG RICKETTS PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF’S THIRD AMENDED COMPLAINT - 15 POS-030 ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State Bar number, and address): FOR COURT USE ONLY Donny E. Brand (SBN 249651) THE BRAND LAW FIRM CORPORATION 2321 E 4th St Ste C-473 Santa Ana, CA 92705 TELEPHONE NO: 714-769-6485 FAX NO. (optional): 714-769-6486 E-MAIL ADDRESS (0ptona):donny(@brandlawfirm.net ATTORNEY FOR (vame): Plaintiff. SUPERIOR COURT OF CALIFORNIA, COUNTY OF Los Angeles street abpress: 1 11 N Hill Street mang AbDREss: 1 11 N Hill Street cry anp ze cone: Los Angeles 90012 srancH nave: Central District - Stanley Mosk PETITIONER/PLAINTIFF: Craig Ricketts RESPONDENT/DEFENDANT:Joan B Knapp et al. CASE NUMBER: PROOF OF SERVICE BY FIRST-CLASS MAIL-CIVIL BC536360 (Do not use this Proof of Service to show service of a Summons and Complaint.) 1. lam over 18 years of age and not a party to this action. | am a resident of or employed in the county where the mailing took place. 2. My residence or business address is: 2321 E 4th St Ste C-473, Santa Ana, CA 92705 3. On (date):9/30/2016 I mailed from (city and state): Irvine, CA the following documents (specify): PLAINTIFF’S OPPOSTION TO DEFENDANTS’ DEMURRER TO PLAINTIFF'S THIRD AMENDED COMPLAINT [1 The documents are listed in the Attachment to Proof f Service by First-Class Mail- Civil (Documents Served) (form POS-030(D)). 4. | served the documents by enclosing them in an envelope and (check one): a. [_] depositing the sealed envelope with the United States Postal Service with the postage fully prepaid. b. [/] placing the envelope for collection and mailing following our ordinary business practices. | am readily familiar with this business’s practice for collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service in a sealed envelope with postage fully prepaid. 5. The envelope was addressed and mailed as follows: a. Name of person served: Ryan Cadry, Esq. b. Address of person served: Spile, Leff & Goor, LLP 16501 Ventura Boulevard, Suite 610 Encino, CA 91436 [1 The name and address of each person to whom | mailed the documents is listed in the Attachment to Proof f Service by First-Class Mail- Civil (Persons Served) (POS-030(P)). | declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Date: September 30, 2016 Po BY oa aie £ Donny E. Brand ) = Z . (TYPE OR PRINT NAME OF PERSON COMPLETING THIS FORM) (SIGNATURE OF PERSON COMPLETING THIS FORM) Fe AE Cire Lhe PROOF OF SERVICE BY FIRST-CLASS MAIL-CIVIL Code of Civ Procedure §§ 1013, 1013a Judicial Council of California www.courtinfo.ca.gov POS-030 [New January 1, 2005] (Proof of Service)