Ozuna Electric Company Inc. v. Integrated Process Control Engineering
30-2015-00827749
DEMURRER
The court sustains Cross-Defendants Ozuna Electric Company, Inc., Maria Ozuna, and Arthuro Hernandez?s demurrer as to the fraud and set-off causes of action in the First Amended Cross-Complaint (?FACC?). The demurrer is overruled as to the slander per se and breach of contract causes of action. ?Cross-Complainant Integrated Process Control Engineering, Inc. (?Integrated?) has 15 days leave to amend its fraud claim.
First Cause of Action for Breach of Contract
The FACC sufficiently alleges a breach of contract cause of action. ?The FACC alleges that the Company?s work was sub-par requiring another contractor to fix/finish the job.? The FACC also alleges the Company did not complete the work in a timely manner.? The demurrer as to the first cause of action is overruled.
Second Cause of Action for Fraud
The elements for fraud are:? (1) misrepresentation; (2) knowledge of falsity; (3) intent to defraud (that is, to induce reliance on the representation); (4) justifiable reliance and (5) resulting damage. (Cicone v. URS Corp (1986) 183 Cal.App.3d 194, 200.)? Every element of fraud must be pleaded with specificity.? The particularity requirement for fraud requires the pleading of facts showing how, when, where, to whom, and by what means the representations were made.? (Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 73.)? This is to provide the defendant with notice and to give the court enough information to assess whether there is a foundation for the charge of fraud.? (Committee on Children?s Television, Inc. v. General Foods Corp.(1983) 35 Cal. 3d 197, 216.)? Nonetheless, ?[l]ess specificity is required when it appears from the nature of the allegations that the defendant must necessarily possess full information concerning the facts of the controversy.?? (Id. [citation and internal quote marks omitted].)
Cross-Complainant alleges that ?prior to and after the Agreement was signed,? these misrepresentations were made. This does not meet the specificity requirements.? In the Opposition, Cross-Complainant adds facts by pinpointing the timeframe .? The FACC, however, does not allege such facts. Furthermore, the FACC must allege with specificity whether the alleged misrepresentations were oral, written, and/or implied. The demurrer as to the second cause of action is sustained with 15 days leave to amend.
Third Cause of Action for Trade Libel
Libel is ?per se? if the statement is defamatory on its face and nothing needs to be added to make its defamatory meaning understood.? (Civ. Code, ? 45a; Wong v. Tai Jing (2010) 189 Cal.App.4th 1354, 1369.)? Slander is per se if it charges any of the following: (1) criminal activity; (2) contagious, infectious or loathsome disease; (3) unethical or incompetent business conduct; or (4) impotence or unchastity.? (Civ. Code, ? 46.)? With respect to slander involving unethical or incompetent business conduct under Civil Code section 46, subdivision (3), most cases in this category ?involve statements that reflect on the integrity and competence of the plaintiff, the clearest being allegations of unethical activity or incompetence? that are ?particularly relevant to the victim?s occupation.?? (Regalia v. Nethercutt Collection (2009) 172 Cal.App.4th 361, 369.)
The FACC sufficiently alleges slander per se.? Although labeled trade libel, a demurrer looks to whether any cause of action is stated and is not bound by labels.? General damages are presumed in a libel of a business person, while this is not so in action for trade libel. (Wong v. Tai Jing (2010) 189 Cal.App.4th 1354, 1369.)? Accordingly, the demurrer is overruled as to the third cause of action.
Fourth Cause of Action for Set-Off Under Code of Civil Procedure Section 666
A plea of setoff in an answer is an affirmative defense in the nature of a cross-action, limited by the amount of the plaintiff’s recovery. (Space Properties, Inc. v. Tool Research Co. (1962) 203 Cal.App.2d 819, 827 [?defense in the nature of unjust enrichment or setoff is clearly an affirmative one?]; R.M. Sherman Co. v. W.R. Thomason, Inc. (1987) 191 Cal.App.3d 559, 563 [?The general rule is that a setoff must rest on a claim enforceable in its own right?].)
A defendant may not obtain an award of affirmative relief against a plaintiff by way of a setoff against a demand for money. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal. 4th 189, 198.) Code of Civil Procedure section 666 provides for an offset when conflicting claims are successful. It does not create a cause of action.? Accordingly, the demurrer as to the fourth cause of action is sustained without leave to amend.
MOTION TO STRIKE
The court denies Cross-Defendants? Motion to Strike.
Integrated acknowledges that it added Hernandez as a party without leave of court. Hernandez, however, makes no substantive argument and cites no law as to why striking him as a party could not be remedied by the Doe Amendment procedure (i.e. statute of limitations or relation-back issues).
The alter ego allegations sufficient for purposes of the pleadings.? Two essential elements must be established. For unity of interest, it must appear that the corporation was influenced and governed by the persons sought to be held liable for its conduct.? And, there must be such ?unity of interest? and ownership that the individuality or separateness of the corporation has ceased to exist (or never existed in the first place). (Automotriz del Golfo de California v. Resnick (1957) 47 Cal.2d 792, 796.)? Also, the facts of the case must be such that adherence to the ?fiction? of the corporation’s ?separate existence? would sanction a fraud or promote injustice. (Ibid.)? Here, the FACC has alleged there was complete dominance of control by Ozuna of the corporation and a unity of interest so as to render the Company a mere shell and that Ozuna committed fraud.
As to general damages for the breach of contract claim, if the liquidated damages clause is valid, Integrated would ?ultimately not be able to get those damages and general damages.? However, for pleading purposes, the court will permit the allegation in the alternative.
As to the slander claim, Cross-Defendants argue that malice, fraud, or oppression has not been alleged as to slander per se. Punitive damages can be awarded at the discretion of the jury.? (Finney v. Lockhart(1950) 35 Cal.2d 161, 163-164.) Here, Integrated argues that Cross-Defendants slandered it in the industry because they were attempting to deflect from their own poor-workmanship and bad conduct.? The FACC alleges that the slander was done with malice and an intent to injure Integrated.? The allegations are sufficient to allege punitive damages.
Cross-Defendants shall give notice of the ruling.