Demurrer & Motion to Strike (Judge Maureen A. Folan)


Case Name: ??? William Gilbert, et al. v. Ravinderpal Singh, et al.

Case No.:??????? 2015-1-CV-276408

Currently before the Court are the following motions: (1) defendants Saini Bros. Trucking, Inc. (?SBT?), Ravinderpal Singh (?Singh?), and Surinder Banwait?s (?Banwait?) (collectively, the ?SBT Defendants?) demurrer to the first amended complaint (?FAC?) of plaintiffs William Gilbert and Douglas Gilbert (collectively, ?Plaintiffs?); (2) the SBT Defendants? motion to strike portions of the FAC; (3) defendants Saini Trucking, Inc. (?Saini?), Parminder Tambar, and Iqbal Tambar?s (collectively, the ?Tambar Defendants?) demurrer to the FAC; and (4) the Tambar Defendants? motion to strike portions of the FAC.

  1. Factual and Procedural Background

This is a personal injury action. As relevant here, Plaintiffs allege the following in the operative FAC: On July 10, 2014, Singh, an employee of Saini and SBT, was driving a commercial truck/trailer northbound on Highway 17 when he lost control of the vehicle and collided with plaintiff William Gilbert?s vehicle, causing him to suffer severe injuries. (Compl., ? 21.) On the day of the incident, Iqbal Tambar instructed Singh to use Highway 17 to avoid a truck inspection on Highway 101. (Compl., ? 25.) The collision was caused by the visibly defective condition of the truck?s brakes, which the defendants failed to inspect, maintain, and service. (Compl., ?? 24, 27.) In addition, the defendants? failure to comply with California and Federal safety laws and regulations enabled them to compete unfairly with other motor carriers for hire who do comply with these laws and regulations. (Compl., ?? 51-52.) The FAC asserts five causes of action for: (1) negligence, (2) respondeat superior, (3) negligent hiring, supervision, and retention, (4) negligent infliction of emotional distress, and (5) violation of the unfair competition law (the ?UCL?).

On April 1, 2016, the SBT Defendants filed their demurrer and motion to strike. The Tambar Defendants filed their demurrer and motion to strike on April 20, 2016. On May 24, 2016, Plaintiffs filed their oppositions. The SBT Defendants and Tambar Defendants filed their reply briefs on June 2, 2016.

  1. Requests for Judicial Notice

In support of their demurrer and motion to strike, the SBT Defendants ask the Court to take judicial notice of the FAC and two reports located on the California Department of Transportation website. The request is GRANTED. (See Evid. Code, ? 452, subd. (d) [permitting judicial notice of court records]; Trinity Park, L.P. v. City of Sunnyvale (2011) 193 Cal.App.4th 1014, 1027 [stating that a court may take judicial notice reports of a public entity], disapproved on other grounds in Sterling Park, L.P. v. City of Palo Alto (2013) 57 Cal.4th 1193; Shaw v. People ex rel. Chiang (2009) 175 Cal.App.4th 577, 606 [taking judicial notice of portions of? the California Department of Transportation website].)

In support of their demurrer and motion to strike, the Tambar Defendants request judicial notice of the FAC. The request is GRANTED. (See Evid. Code, ? 452, subd. (d).)

III. Demurrers to the FAC

Both the SBT Defendants and the Tambar Defendants demur to the fifth cause of action for violation of the UCL on the ground of failure to state sufficient facts to constitute a cause of action. (See Code Civ. Proc., ? 430.10, subd. (e).)

  1. The SBT Defendants? Demurrer

The SBT Defendants contend that Plaintiffs lack standing to assert a cause of action for violation of the UCL.

 

Under Business and Professions Code section 17204, the attorney general, a district attorney, county counsel, city attorney or ?a person who has suffered injury in fact and has lost money or property as a result of [] unfair competition? has standing to bring a cause of action for violation of the UCL. In Kwikset Corp. v. Sup. Ct. (2011) 51 Cal.4th 310, 322, the Supreme Court explained that the plain language of the statute suggested a simple test for determining if a party meets this standing requirement. To demonstrate standing, ?a party must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.? (Ibid.)

 

Here, the SBT Defendants do not contend that Plaintiffs fail to allege an economic injury or that this injury was caused by an unfair business practice. Instead, they argue that since the purpose of Business and Professions Code section 17204 is ?to curtail the prior practice of filing suits on behalf of clients who have not used the defendant?s product or service, viewed the defendant?s advertising, or had any other business dealing with the defendant…? (Kwikset Corp., supra, 51 Cal.4th at p. 321), the Court should insert into the statute an additional requirement, namely, that only a consumer or a competitor of the defendant has standing to bring an action for violation of the UCL. This argument is not well-taken.

 

?To determine legislative intent, a court begins with the words of the statute, because they generally provide the most reliable indicator of legislative intent. If it is clear and unambiguous our inquiry ends. There is no need for judicial construction and a court may not indulge in it. If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.? (Diamond Multimedia Systems, Inc. v. Sup. Ct. (1999) 19 Cal.4th 1036, 1047.) In Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 176, fn. 9, the Court of Appeal explained the policy behind this rule as follows: ?Identification of the laudable purpose of a statute alone is insufficient to construe the language of the statute. To reason from the evils against which the statute is aimed in order to determine the scope of the statute while ignoring the language itself of the statute is to elevate substance over necessary form. The language in which the statute is cast confines and channels its purpose. Without due attention to the statutory terms, the statute becomes an open charter, a hunting license to be used where any prosecutor, plaintiff and judge sees an evil encompassed by the statutes? purpose. To the contrary, statutory interpretation must start with the words that define and cabin its laudable purposes.? (Cortez, supra, 23 Cal.4th at p. 176, fn. 9.)

Here, the Business and Professions Code section 17204 unambiguously states that any ?person who has suffered injury in fact and has lost money or property as a result of [] unfair competition? has standing to bring a cause of action for violation of the UCL. Given the lack of ambiguity, the Court may not insert an additional language into the statute. (See People v. United States Fire Ins. Co. (2012) 210 Cal.App.4th 1423, 1427 [stating that ?[w]hen interpreting statutory language, the court may neither insert language that has been omitted nor ignore language that has been inserted?]; Cortez, supra, 23 Cal.4th at p. 179 [refusing to judicially construe provision of the UCL because the language was clear and unambiguous].)

 

Next, the SBT Defendants contend that at least two courts, Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115 (?Linear?) and Dillon v. NBCUniversal Media LLC (C.D. Cal., June 18, 2013, No. CV 12-09728 SJO AJWX) 2013 WL 3581938 (?Dillon?), have recognized that only a competitor or a consumer may allege a cause of action for violation of the UCL. This argument is not persuasive. In Linear, the Court of Appeal stated that the ?UCL was enacted to protect both consumers and competitors by promoting fair competition in commercial markets for goods and consumers? and noted that the plaintiff in that action was neither a competitor nor a powerless unwary consumer. (Linear, supra, 152 Cal.App.4th at p. 135.) However, it ultimately upheld the demurrer to the plaintiff?s complaint on the ground that ?where a UCL action is based on contracts not involving either the public in general or individual consumers who are parties to the contract, a corporate plaintiff may not rely on the UCL for the relief it seeks.? (Ibid.) Here, the instant action does not concern a private contract involving a corporate plaintiff. Accordingly, Linear Technology Corp. is inapplicable.

 

The SBT Defendant?s reliance on Dillon in similarly misplaced. In that case, the federal district court merely cited the dicta in Linear without any further analysis. (Dillon v. NBCUniversal Media LLC (C.D. Cal., June 18, 2013, No. CV 12-09728 SJO AJWX) 2013 WL 3581938, at *7.) Given the lack of any substantive analysis, the Court finds Dillon to be unpersuasive. (See Landmark Screens, LLC v. Morgan, Lewis & Bockius, LLP (2010) 183 Cal.App.4th 238, 251, fn. 6 [stating that unpublished federal cases are not binding on California courts].)

 

In light of the foregoing, the SBT Defendants fail to demonstrate that Plaintiffs must allege that they are consumers or competitors to have standing to bring a cause of action for the violation of the UCL. Accordingly, their demurrer to the fifth cause of action is OVERRULED.

  1. The Tambar Defendants? Demurrer

 

The Tambar Defendants argue that the fifth cause of action fails on the same basis advanced by the SBT Defendants, namely, that Plaintiffs fail to allege that they are competitors or consumers. This argument fails for the same reasons the Court articulated in connection with the SBT Defendants? demurrer. Accordingly, the fifth cause of action is not subject to demurrer on this basis.

 

Next, the Tambar Defendants claim that the fifth cause of action fails because it does not allege facts showing that Plaintiffs are entitled to an equitable remedy under the UCL. (See Flannery v. VW Credit, Inc. (2014) 232 Cal.App.4th 606, 617 [stating that ?under the UCL a private plaintiff?s remedies are generally limited to injunctive relief and restitution?]; Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 445 [upholding a dismissal of UCL cause of action at the pleading stage based on the failure to allege entitlement to restitution or injunctive relief].) In particular, they contend that Plaintiffs are not entitled to injunctive relief because the FAC does not allege facts indicating that the allegedly wrongful conduct will continue.[1] This argument is well-taken.

 

The UCL ?has not altered the nature of injunctive relief, which requires a threat that the misconduct to be enjoined is likely to be repeated in the future.? (Madrid v. Perot Systems Corp. (2005) 130 Cal.App.4th 440, 465; see also Colgan v. Leatherman Tool Group, Inc. (2006) 135 Cal.App.4th 663, 702 [stating that ?[a]though the Unfair Competition Law imposes liability for past acts, in order to grant injunctive relief under section 17204 ?, there must be a threat that the wrongful conduct will continue?].) A plaintiff must allege facts rather than conclusions establishing a continuing threat of misconduct. (Madrid, supra, 130 Cal.App.4th at p. 462; see also E.H. Renzel Co. v. Warehousemen?s Union I.L.A. 38-44 (1940) 16 Cal.2d 369, 373 [stating that ?[a] complaint for an injunction which alleges only general conclusions, not warranted by any pleading of facts, does not state a cause of action to enjoin the acts complained of?].)

 

Here, the fifth cause of action alleges no facts establishing the threat that the Tambar Defendants? unfair business practices will continue. (See FAC, ? 54 [merely stating in a conclusory fashion that ?various deficiencies in the defendants? business practices have been brought to the defendants? attention but the deficiencies have continued requiring injunctive relief?].) Therefore, the FAC fails to allege sufficient facts to constitute a cause of action for violation of the UCL. Accordingly, the Tambar Defendants? demurrer to the fifth cause of action is SUSTAINED WITH 10 DAYS? LEAVE TO AMEND.

 

 

  1. Motions to Strike Portions of the FAC

 

Both the SBT Defendants and the Tambar Defendants move to strike portions of the FAC on the ground that it is not drawn in conformity with the laws of this state. (See Code Civ. Proc., ? 436, subd. (b).)

 

  1. The SBT Defendants? Motion

 

The SBT Defendants move to strike Plaintiffs? requests for punitive damages and injunctive relief.

 

  1. Punitive Damages

 

The SBT Defendants contend that the FAC complaint fails to allege facts sufficient to support a request for punitive damages because it merely states that they were negligent in operating and maintaining the truck in question.

 

To recover punitive damages, a plaintiff must plead facts sufficient to show that the defendant is guilty of oppression, fraud, or malice. (Civ. Code, ? 3294.) ??Malice? means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights and safety of others.? (Civ. Code, ? 3294, subd. (c)(1).) ?To establish conscious disregard, the plaintiff must show ?that the defendant was aware of the probable consequences of his conduct and that he wilfully and deliberately failed to avoid the consequences.? [Citation.]? (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1055; see also Peterson v. Sup. Ct. (1982) 31 Cal.3d 147, 158 [stating that ?[n]onintentional conduct comes within the definition of malicious acts punishable by the assessment of punitive damages when a party intentionally performs an act from which he knows, or should know, it is highly probable that harm will result?].) A plaintiff must plead specific facts from which the conscious disregard of probable injury to others may reasonably be inferred. (Dawes v. Sup. Ct. (1980) 111 Cal.App.3d 82, 90.) Mere carelessness or negligence does not justify the imposition of punitive damages. (Tomaselli, supra, 25 Cal.App.4th at p. 1287; see also Woolstrum, supra, 141 Cal.App.3d Supp. at p. 10 [stating that ?[c]onduct which may be characterized as unreasonable, negligent, grossly negligent, or reckless does not satisfy the highly culpable state of mind warranting punitive damages?].) Allegations that the defendant violated the Vehicle Code by speeding, driving with defective equipment or running a stop sign, without more, are insufficient to allege a claim for punitive damages. (Dawes, supra, 111 Cal.App.3d at p. 90; see also Taylor v. Sup. Ct. (1979) 24 Cal.3d 890, 899-900 [stating that ?ordinarily, routine negligent or even reckless disobedience of traffic laws would not justify an award of punitive damages?].)

 

Here, the FAC alleges facts from which it can be inferred that the SBT Defendants knew or should have known that the brakes were defective and they wilfully and deliberately failed to fix them. In this respect, the FAC states that the defects should have been discovered based on a cursory visual inspection of the vehicle and the SBT Defendants? conduct in advising Singh to avoid a vehicle inspection creates the inference that they knew that the vehicle was defective. (FAC, ?? 25, 27; see also Roby v. McKesson Corp. (2009) 47 Cal.4th 686 [indicating that a defendant?s willful blindness could support a finding of malice], (conc. opn. of Moreno, J.) That being said, the FAC does not allege specific facts indicating that the SBT Defendants knew that harm was ?highly probable? due to their failure to maintain the brakes. (See Peterson, supra, 31 Cal.3d at p. 158.) Therefore, as currently alleged, the complaint fails to state facts indicating that the actions of the SBT Defendants constituted something more than mere negligence. Accordingly, the SBT Defendants? motion to strike Plaintiffs? request for punitive damages is GRANTED WITH 10 DAYS? LEAVE TO AMEND.

 

  1. Injunctive Relief

 

The SBT Defendants argue that the request for injunctive relief in connection with the fifth cause of action for violation of the UCL should be stricken because Plaintiffs fail to allege that they were injured in their capacities as consumers or competitors. This argument fails for the same reasons the Court articulated in connection with the SBT Defendants? demurrer. Accordingly, the SBT Defendants? motion to strike the request for injunctive relief is DENIED.

 

  1. The Tambar Defendants? Motion

 

The Tambar Defendants move to strike: (1) the request for injunctive relief under the UCL; (2) the request for punitive damages; and (3) allegations concerning the alter ego doctrine.

 

  1. Injunctive Relief

 

Since the Tambar Defendants? demurrer to the fifth cause of action is sustained, their motion to strike Plaintiffs? request for injunctive relief is DENIED as moot.

 

  1. Punitive Damages

 

The Tambar Defendants contend that the FAC fails to allege facts sufficient to support a request for punitive damages because it merely states that they were negligent in operating and maintaining their vehicle. This argument is well-taken. As previously discussed in connection with the SBT Defendants? motion to strike Plaintiffs? request for punitive damages, the FAC does not allege specific facts indicating that the SBT Defendants knew that harm was ?highly probable? based on their failure to maintain the brakes. (See Peterson, supra, 31 Cal.3d at p. 158.) Therefore, as currently alleged, the complaint fails to state facts indicating that the actions of the Tambar Defendants constituted something more than mere negligence. Accordingly, the Tambar Defendants? motion to strike Plaintiffs? request for punitive damages is GRANTED WITH 10 DAYS? LEAVE TO AMEND.

 

  1. Alter Ego Allegations

 

The Tambar Defendants contend that Plaintiffs fail to allege sufficient facts to establish that Saini and SBT are the alter egos of Banwait, Parminder Tambar, and Iqbal Tambar.

 

In order to prevail on a cause of action against individual defendants based upon disregard of the corporate form, the plaintiff must plead and prove such a unity of interest and ownership that the separate personalities of the corporation and the individuals do not exist, and that an inequity will result if the corporate entity is treated as the sole actor.? (Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749.) In applying the doctrine, courts consider whether an individual or organization dominated and controlled the entity, the controlling party used the entity?s assets as his or her own, the entity served as a mere shell and conduit for the controlling party, the entity was undercapitalized, and the entity failed to abide by the formalities of corporate existence. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235.) ??Courts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure.? (First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915.) Therefore, a party is only required to allege ultimate rather than evidentiary facts in support of an alter ego theory. (Rutherford Holdings, LLC, supra, 223 Cal.App.4th at p. 236.)

 

Here, Plaintiffs allege ultimate facts indicating that Banwait, Parminder Tambar, and Iqbal Tambar dominated and controlled SBT and Saini, these individuals used corporate funds, assets, labor and material as their own, and SBT and Saini failed to observe the requisite formalities such as issuing stock, maintaining corporate minutes, or providing corporate accountings. (FAC, ?? 17-19.) In addition, they allege that adherence to the fiction of separate corporate existence would sanction fraud and promote injustice. (FAC, ? 20.) Therefore, since they allege facts indicating a unity of interest between these defendants and inequity if the fiction of separate corporate existence is maintained, Plaintiffs adequately allege that SBT and Saini are the alter egos of the individual defendants. Accordingly, the Tambar Defendants? motion to strike these allegations is DENIED.

[1] It is undisputed that Plaintiffs do not seek restitution.