Case Number:?BC693226????Hearing Date:?October 29, 2018????Dept:?24
Plaintiffs? Demurrer to the Answer to the First Amended Complaint filed by Defendants Babak Vahdat, Ev Management, LLC and OPX Logistics, Inc. is OVERRULED as to the 1st ? 14th causes of action and SUSTAINED with leave to amend as to 15th ? 19th causes of action.
Background:
On February 7, 2018, Behnam Heshejin (?Heshejin?); The Heshfam Trust (the ?Trust?); David Enzmann, Trustee (?Enzmann? or ?Trustee?); and Eric Anvari (?Anvari?) (collectively, ?Plaintiffs?) filed this action against numerous individuals and business entities, including Defendants Babak Vahdat (?Vahdat?); Ev Management, LLC (?EML?); and OPX Logistics, Inc. (?OPX?) (collectively, ?Defendants?). The operative first amended complaint (?FAC?) was filed March 22, 2018, and alleges 13 causes of action. Defendants filed their answer to the FAC on June 15, 2018. In their answer, Defendants raised 19 affirmative defenses in addition to asserting a general denial. On October 15, 2018, the Court sustained a demurrer filed by Rostami, American Investment Group, LLC, and Avalon Cold Storage, LLC as to the 1st-3rd and 5th-6th causes of action with 20 days leave to amend.
Plaintiffs presently seek an order sustaining their demurrer to each affirmative defense on the grounds that they fail to state facts sufficient to constitute a defense and are uncertain.
General Demurrer
- Legal Standard
A plaintiff may demur to an answer on the ground of insufficient pleading of defenses. CCP ? 430.20(a). ?Unlike the usual general?demurrer to a complaint the inquiry is not into the statement of a?cause of action. Instead it is whether the answer raises a?defense?to the plaintiff’s stated cause of action. [Citations.] ?A general demurrer raises the objection that ‘the answer does not state facts sufficient to constitute a defense . . . .? [Citation.]??Timberidge Enterprises, Inc. v. City of Santa Rosa?(1978) 86 Cal.App.3d 873, 879?880 (emphasis in original).
?Generally speaking, the determination whether an answer states a defense is governed by the same principles which are applicable in determining if a complaint states a cause of action.?
South Shore Land Co. v. Petersen?(1964) 226 Cal.App.2d 725, 732. Those principles include courts accept as true all material facts properly pleaded, but not contentions, deductions, or conclusions of fact or law.?Rakestraw v. California Physicians’ Service?(2000) 81 Cal.App.4th 39, 43. Courts also accept as true the contents of a written contract set out in full as well as any pleaded meaning to which the contract is reasonably susceptible.?Aragon-Haas v. Family Security Ins. Services, Inc.?(1991) 231 Cal.App.3d 232, 239. Matters which may be judicially noticed are also considered.?Serrano v. Priest?(1971) 5 Cal.3d 584, 591. Extrinsic evidence may not be considered.?Ion Equipment Corp. v. Nelson?(1980) 110 Cal.App.3d 868, 881.
- Discussion
?Under Code of Civil Procedure section 431.30, subdivision (b)(2), the answer to a complaint must include ?[a] statement of any new matter constituting a defense.? The phrase ?new matter? refers to something relied on by a defendant which is not put in issue by the plaintiff. (Citation.) Thus, where matters are not responsive to essential allegations of the complaint, they must be raised in the answer as ?new matter? (Citation.)??State Farm Mut. Auto. Ins. Co. v. Superior Court?(1991) 228 Cal.App.3d 721, 725.??[N]ew matter constituting a special defense must be specially pleaded in the answer??Houk v. Williams Bros.?(1943) 58 Cal.App.2d 573, 582.??Where, however, the answer sets forth facts showing some essential allegation of the complaint is not true, such facts are not ?new matter,? ? but only contradicts the allegation.?State Farm Mut. Auto. Ins. Co., supra,?228 Cal.App.3d at 725.?Such matters are in issue under a general denial and need not be specially pleaded in the answer.?Civ. Proc. Before Trial,?supra,?? 6:437.
Plaintiffs argue that each of the 19 affirmative defenses alleged in Defendants? answer fail to state any facts whatsoever that support any of the stated affirmative defenses. However, Plaintiffs make this blanket assertion without conducting an analysis of each affirmative defense to determine if they in fact raise new matter that must be specifically pleaded in the answer. Not all of them do.
1st-13th causes of action for failure to state a cause of action: Defendants assert this affirmative defense to each of the 13 causes of action of the FAC. An objection that a cause of action does not state facts sufficient to constitute a cause of action is an objection that may be raised by demurrer?or answer. See CCP ? 430.80(a);?Bracker v. American National Food?(1955) 133 Cal.App.2d 338, 340 (acknowledging that failure to state a cause of action is an affirmative defense that has the same force as a general demurrer). The affirmative defense clearly does not raise new matter but merely challenges the sufficiency of Plaintiff?s complaint. As such, there are no facts that Defendants can plead in support of this claim. Therefore, the general demurrer to the 1st-13th affirmative defense is OVERRULED.
14th affirmative defense for statute of limitations: In pleading the statute of limitations, ?it is not necessary to state the facts showing the defense but it may be stated generally that the cause of action is barred by the provisions of Section __ (giving the number of the section and subdivision thereof, if it is so divided, relied upon) of the Code of Civil Procedure.? CCP ? 458. Accordingly, a pleading that fails to specify both the applicable statute and subdivision ?raises[s] no issue and present[s] no defense.??Davenport v. Stratton(1944) 24 Cal.2d 232, 246-47.
Here, Defendants 14th affirmative defense states that Plaintiff?s 12th and 13th causes of action are ?barred by the applicable statute of limitations, including but not limited to?Code of Civil Procedure?secs. 338, 339(1), and 3426.6 [sic].? (Answ. ? 14.) Defendants have stated at least one applicable statute and subdivision (339(1)), which is sufficient to withstand demurrer. (See?Daniels v. Select Portfolio Servicing, Inc.?(2016) 246 Cal.App.4th 1150, 1167 [general demurrer may not be sustained to a portion of a cause of action].) Therefore, the general demurrer to the 14th affirmative defense is OVERRULED.
15th affirmative defenses for comparative fault: In order to establish comparative fault, Plaintiffs level of fault for their own damages must be shown. CACI 3960. A review of the FAC shows that Plaintiffs did not put their level of fault at issue in the FAC given that they allege that all of their damages were caused by Defendants. Therefore, the comparative fault defense is new matter that must be specially pleaded in the answer. See (Kenny v. Kennedy?(1908) 9 Cal.App. 350, 351; 5 Witkin, Cal. Proc. 5th Plead ? 1103 (2008); Weil & Brown, Cal. Prac. Guide Civ. Pro. Before Trial (The Rutter Group 2018) ? 6:436, p. Ch. 6-C (stating that comparative fault raises new matter).
Here, the answer only alleges that ?if in fact Plaintiffs and/or ALI, or any of them, have been damaged, said damages are the proximate result of the failure of Plaintiffs and ALI to exercise reasonable and ordinary care for the preservation of its allege property and to avoid the losses alleged.? (Answ. ? 15.) This conclusory allegation is devoid of facts showing how Plaintiffs failed to exercise reasonable and ordinary care. Thus, the general demurrer to the 15th cause of action is SUSTAINED with leave to amend.
16th affirmative defenses for failure to mitigate: To prevail on a failure to mitigate defense, Defendants must prove Plaintiffs could have avoided incurring damages caused by Defendants with reasonable efforts and expenditures. See CACI 358. A review of the FAC shows that Plaintiffs did not put in issue whether they could have avoided their damages with reasonable efforts and expenditures. Thus, failure to mitigate raises new matter that must be specifically pleaded in the answer. See?Vitagraph v. Liberty Theatres Co. of Calif.?(1925) 197 Cal. 694, 699;?Danelian v. McLoney?(1954) 124 Cal.App.2d 435, 443; 5 Witkin, Cal. Proc. 5th Plead ? 1106 (2008).
Here, Defendants? answer only alleges ?if in fact Plaintiffs, or any of them, have been damaged, Plaintiffs and ALI, and each of them failed to exercise reasonable care to mitigate the damages alleged.? This conclusory allegation is devoid of facts showing how Plaintiffs? failed to exercise reasonable care.??Thus, the general demurrer to the 16th cause of action is SUSTAINED with leave to amend.
17th, 18th, 19th affirmative defenses for no trade secrets converted, Plaintiffs? lack of a viable business entity through which they claim, lack of solicitation, respectively
These affirmative defenses seem to be similarly related to conversion of possible trade secrets. In the 17th affirmative defense, Defendants allege: ?To the extent that Plaintiffs claim the?conversion of materials alleged to be trade secrets?to which they and/or ALI were entitled, such as customer lists and employees, etc., said matters did not constitute trade secrets in that said matters were readily disclosed to the public in general by the nature of Plaintiffs? and ALI?s operations and were readily available through proper means to these answering Defendants and to all competitors of Plaintiffs and ALI.? (Answ. ? 17 [emphasis added].)
In the 18th affirmative defense, Defendants allege: ?Although denying that these answering Defendants?converted any alleged trade secrets, if in fact Defendants did?come into possession of trade secrets?the former property of the Plaintiffs and/or ALI, at said time ALI had terminated its business operations and were neither able to continue to service its customers nor offer continued employment to its employees and had abandoned all such customers and employees. All relations between ALI and its former customers and employees had been effectively cut-off and ALI was no longer able to service its customers nor employ its former employees. (Answ. ? 18 [emphasis added].)
In the 19th affirmative defense, Defendants allege: ?Although denying that these answering Defendants?converted any alleged trade secrets, if in fact Defendants?did come into possession of trade secrets?the former property of the Plaintiffs and/or ALI, in the form of customer lists, employees, or otherwise, these answering Defendants solicited none. Any and all customers solicited the services of these answering Defendants and any and all former employees of ALI solicited employment with these answering Defendants after a time when ALI had terminated its business, had abandoned its customers and terminated its employees.? (Answ. ? 19 [emphasis added].)
These affirmative defenses appear to set up defenses to Plaintiffs? 12th cause of action against these Defendants for conversion wherein Plaintiffs allege that Vahdat, EVM and OPX-Inc had access to and control over ALI?s funds, assets, accounting, customer lists, vendor lists, and other things and they conspired to divest ALI (and to ultimately divest Mazkat and Plaintiffs) of these assets and take them for their own use. (FAC, ?? 118-120.)
A review of the FAC shows that Plaintiffs did not put any of these matters in issue in the FAC including that Plaintiffs do not allege any of the assets converted were trade secrets. Thus, Defendants? 17th, 18th, and 19th causes of action relating to conversion of trade secrets raise new matter that must be specifically pleaded in the answer. Defendants failed to do so. Therefore, the general demurrer to the 17th, 18th, and 19th causes of action is SUSTAINED with leave to amend.
Special Demurrer
- Legal Standard
A plaintiff may also demur to an answer on the ground the answer is uncertain. CCP ? 430.20(a).
A demurrer based on uncertainty is disfavored and will be strictly construed even when the pleading is uncertain in some respects. (Khoury v. Maly?s of California, Inc.?(1993) 14 Cal.App.4th 612, 616.)
- Discussion
Plaintiffs argue that the 1st ? 13th affirmative defenses are uncertain because ?failure to state a cause of action? refers to unrelated concepts that could never be a basis for any new matter and because this affirmative defense is a disguised general demurrer to the complaint. However, as discussed in detail above ?failure to state a cause of action? may be raised in a demurrer or in the answer. (See CCP ? 430.80(a).) Therefore, the special demurrer to the 1st ? 13th affirmative defenses is OVERRULED.
Moving party is ordered to give notice.