Demurrer & Motion to Quash Subpoena (Judge Martha K. Gooding)


1) Demurrer to 2nd Amended Complaint — OVERRULED

and

2) Motion to Quash Subpoena – GRANTED

The Demurrer by Defendants Radco Investments, Ray Alvarado, Rachel Alvarado, and Avcogas Propane Cylinder Exchange, Inc. to Plaintiff Robert C. Alvarado?s second amended complaint (?SAC?) is overruled.?Defendants? request for judicial notice is granted.

Defendants? motion to quash is granted.

Demurrer

Uncertainty

Defendants? arguments for uncertainty are not the kind of uncertainty that support a demurrer.? So long as Plaintiff?s allegations are sufficient to permit Defendants to respond to them, they are sufficient.? The rest, to the extent necessary, can be determined through discovery.? Plaintiff?s allegations here are not fatally uncertain.

Judicial Estoppel

Judicial estoppel prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same proceeding or another.? Jackson v. Los Angeles (1997) 60 Cal. App. 4th171, 181 (citations omitted).? The doctrine serves the purpose of protecting the integrity of the judicial process.? Id.? It is invoked to prevent a party who has successfully advocated one position before the court from changing positions for strategic gain.? Judicial estoppel applies when (1) the same party has taken two positions; (2) the positions were taken in a judicial or quasi-judicial proceeding; (3) the party was successful in asserting the first position; (4) the two positions are totally inconsistent; and (5) the first position was not taken as the result of ignorance, fraud or mistake.? Id. at 183.

 

The court has discretion whether to apply judicial estoppel, even when all necessary elements are present.? MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works, Co., Inc. (2005) 36 Cal. 4th 412, 422.? Because of the doctrine?s harsh consequences, courts are to apply the doctrine with caution and only in egregious circumstances to prevent a miscarriage of justice.? Levin v. Ligon (2006) 140 Cal. App. 4th 1456, 1468.? More often, application of the doctrine requires determinations of fact, so is not generally appropriately applied at the pleading stage.? Cloud v. Northrop Grumman Corp. (1998) 67 Cal. app. 4th 995, 1018-19 (and cases cited there).? But where facts pleaded and judicially noticed show as a matter of law the doctrine should be applied, the court may sustain a demurrer on that basis.? Swahn Group, Inc. v. Segal (2010) 183 Cal. App. 4th 831 (reversing trial court?s application of judicial estoppel).

 

In assessing whether application of judicial estoppel is appropriate, courts focus on whether the position was taken intentionally or unintentionally ? that is, strategically as opposed to being done without an attempt to obtain an advantage.? See, e.g., Levin v. Ligon, 140 Cal. App. 4th at 1483.? There is no a clear basis to find that ?inadvertent? must mean something different than by ?mistake? for purposes of judicial estoppel.? Indeed, in at least one published case the court expressly uses the word ?inadvertent? when discussing inconsistencies to which judicial estoppel will not apply.? Cloud v. Northrop Grumman Corp. ?(1998) 67 Cal. App. 4th995, 1018.? Finally, such a parsing of kinds of unintentional conduct is contrary to the purposes for use of the judicial estoppel doctrine.

 

Moreover, putting aside the question of ?inadvertent? versus ?mistake,? the evidence before the court does not incontrovertibly establish that Plaintiff was successful with and because of his inconsistent position.? At the demurrer stage, it is too early to determine that Plaintiff is judicially estopped by his divorce declarations from asserting ownership in the properties at issue.? This is especially true given the drastic result.? Accordingly, to the extent judicial estoppel could be said to apply at this point, the court exercises its discretion not to apply it at this time, but to await a fuller evidentiary record.

 

Sham Pleading Doctrine

The ?sham pleading? doctrine provides that a party will be bound by a prior, unfavorable allegation absent a satisfactory explanation for the change.? See Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 751; State ex rel Metz v. CCC Information Services, Inc. (2007) 149 Cal. App. 4th 402, 412.? Generally, after an amended pleading has been filed, courts will disregard the original pleading.? Berman v. Bromberg, 56 Cal. App. 4th 936, 945 (1997).? But an exception to this rule occurs when an amended complaint attempts to avoid defects set forth in a prior complaint by ignoring them.? Id. at 945-46.? The court may then examine the prior complaint to ascertain whether the amended complaint is merely a sham.?Id. at 946.? The rationale for this rule is that a pleader may not attempt to breathe life into a complaint by omitting relevant facts which made his previous complaint defective.? Id.? Moreover, any inconsistencies with prior pleadings must be explained; if the pleader fails to do so, the court may disregard the inconsistent allegations.

 

Here, Defendant seek to apply the sham pleading to hold Plaintiff to his prior allegation that he ?inadvertently? took an inconsistent position in the divorce proceedings rather than did so through ignorance or by mistake.? For the reasons discussed above, the court finds the difference in wording is not so meaningful or contradictory as to trigger the sham pleading doctrine.

 

Fourteenth Cause of Action for Conversion

Where a court grants leave to amend after sustaining a demurrer, the scope of permissible amendment is limited to the causes of action to which the demurrer has been sustained.? Harris v. Wachovia Mortgage, FSB (2010) 185 Cal. App. 4th 1018, 1023 (ruling that adding new cause of action after demurrer is improper); People v. Clausen (1967) 248 Cal. App. 2d 770, 785-86 (finding that adding new party after demurrer is improper).? To the extent new causes of action are logical outgrowths from the plaintiff?s pre-existing allegations and prior court rulings, they may nevertheless be proper.? It has been held that addition of a new cause of action may be proper where the new cause of action ?directly responds to the court?s reason for sustaining the earlier demurrer.??Patrick v. Alacer Corp. (2008) 167 Cal. App. 4th 995, 1015.

 

Previously, the Court sustained Defendants? demurrer to Plaintiff?s constructive trust ?cause of action? on the ground it is a remedy, not a cause of action.? A conversion claim is a proper basis for the remedy of constructive trust.? Burlesci v. Petersen (1998) 68 Cal. App. 4th 1062, 1069.? The addition of a conversion claim is a reasonable response to the court?s ruling on the constructive trust ?cause of action? and is a logical outgrowth of Plaintiff?s pre-existing allegations.

 

Motion to Quash

Records maintained by a bank ?pertaining to? an individual [or partnership of five or fewer persons, or association or trust] who ?has transacted business with, or has used the services of? the bank as the individual?s ?agent or fiduciary,? are consumer records governed by Code Civ. Proc. ? 1985.3.? Code Civ. Proc. ? 1985.3(a)(1) and (2).? Where consumer records are subpoenaed from a third party, notice must be served on the consumer 5 days before the subpoena is served on the custodian of records and at least 10 days before the production date.? Code Civ. Proc. ? 1985.3(b)(3).? Proof of service on the ?consumer? must accompany the depo subpoena served on the records custodian.? Code Civ. Proc. ?? 2020.410(d), 2020.510(c).? Failure to comply with any of these requirements by itself invalidates the service, so that the custodian is under no duty to produce the records sought by the subpoena. ?Code Civ. Proc. ? 1985.3(k).

 

Here, Plaintiff has subpoenaed records from Radco?s accounts and loans with the banks.? While the banks subpoenaed by Plaintiff may incidentally have possession of financial records for Ray and his wife, Radco is the account holder/borrower.? On this record, then, it is Radco only who has transacted business with each bank, with the bank as an agent or fiduciary.? Ray and his wife are not consumers under the statute; therefore the records are not consumer records and no notice of consumer was required.? Code Civ. Proc. ? 1985.3(a)(2).

 

A deposition subpoena that commands production of business records for copying ?shall designate the business records to be produced either byspecifically describing each individual item or by reasonably particularizingeach category of item, and shall specify the form in which any electronically stored information is to be produced, if a particular form is desired.?? Code Civ. Proc. ? 2020.410(a) (emphasis added).) Generalized demands are not permitted. Calcor Space Facility, Inc. v. Superior Court(1997) 53 Cal. App. 4th 216, 218, 221.

 

The categories of documents described in the subpoenas are very broad and without any limits that tailor the requests to the issues of this case.? The subpoenas seek sweeping categories of financial documents, providing some limited specificity as to what is sought, but not particularity as to what could conceivably be relevant to the case by time period, parcel of property, business, or other issue raised by Plaintiff?s complaint.

 

Moving Parties to give notice.

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3) Case Management Conference ? PARTIES TO APPEAR