Demurrer (Judge John J. Kralik)


Case Number: 18BBCV00098    Hearing Date: July 10, 2020    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

 

KENNETH ADLER, et al.,

Plaintiffs,

v.

 

SHIRLEE LYNN BLISS, et al.,

 

Defendants.

 

 

Case No.:  18BBCV00098

 

Hearing Date:  July 10, 2020

 

 [TENTATIVE] ORDER RE:

DEMURRER

 

BACKGROUND

  1. Allegations of the Operative Complaint

Plaintiff Scott Rosenstiel (“Plaintiff” in pro per) commenced this action for malpractice and accounting as a former client and a successor-in-interest to a former client Marsha Stern (an elder) against attorney Defendant Shirlee Lynn Bliss (“Bliss”).  He also filed this derivative suit against the association Defendant Federal Homeowners Relief Foundation (“Foundation”), which Stern is the managing trustee and Kenneth Adler is her successor.  He alleges that he paid $7,000 to Bliss for legal services and that she caused her clients to lose title to a parcel of residential realty then worth $500,000.00.

            The second amended complaint (“SAC”), filed December 16, 2019, alleges causes of action for: (1) derivative suit; (2) violations of fiduciary duties; (3) damages, double and treble damages and punitive damages for elder abuse violations; and (4) Unfair Business Practices Act (Bus. & Prof. Code, §17200 et seq.), the covenant of good faith and fair dealing, and treble damages (Civ. Code, §3345(b)).

  1. Relevant Background and Demurrer

On November 20, 2019, Plaintiff Rosenstiel attended the CMC, OSC re failure to file proof of service, and OSC re dismissal for lack of prosecution.  At the hearing, Plaintiff Rosenstiel represented that Plaintiff Kenneth Adler no longer wished to pursue the action and so the Court ordered the complaint as to Kenneth Adler dismissed.  The Court then granted Plaintiff Rosenstiel’s request for leave to file the SAC within 20 days, continued the CMC to March 10, 2020, and ordered Plaintiff to give notice.

On December 16, 2019, which is more than 20 days from November 20, 2019, Plaintiff filed the SAC with the Court.  However, it was not until March 9, 2020 that Plaintiff served the SAC on Defendant Shirlee Bliss.  Plaintiff is warned for future compliance and time periods to abide by the Court’s express orders and California statutory and legal authority.

On March 16, 2020, Defendant Bliss filed a demurrer to the SAC.

On April 24, 2020, Plaintiff filed two oppositions briefs, one at 4:23 p.m. and the other at 4:26 p.m.  The Court will consider the later-filed opposition.[1]

DISCUSSION

  1. Derivative Suit (1st cause of action)

“A corporate shareholder or member in a limited liability company may bring a derivative lawsuit on the company’s behalf when the insiders who control the company refuse to do so. The shareholder or member bringing the derivative lawsuit is the plaintiff in name only because the lawsuit seeks redress for injury the company suffered and any recovery belongs to the company. Hence, although the company is named as a nominal defendant based on the insiders’ refusal to bring the lawsuit on the company’s behalf, the company is the true plaintiff.”  (Beachcomber Management Crystal Cove, LLC v. Superior Court (2017) 13 Cal.App.5th 1105, 1118.)

Bliss demurs to the 1st cause of action arguing that because Adler is no longer a party to this lawsuit, the derivative suit is not appropriate and the true party in interest in the Foundation.

However, in the SAC, Plaintiff alleges that he has, since prior to the filing of the original complaint, been a member of the Foundation.  (SAC, ¶9.)  He alleges that Adler was initially a part of this lawsuit but only recently was dismissed and declined to pursue the action.  (Id., ¶10.)  He also alleges that Stern has failing health and is advanced in age and thus she too has refused to bring this action.  (Id.)

“All material allegations of the complaint are accepted as true.”  (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 976.)  Taking the allegations as true, Plaintiff may bring a derivative lawsuit on behalf of Foundation where those who control the company refuse to do so.  In such cases, the Foundation may be named as a nominal defendant (though it is the true plaintiff for which Plaintiff Rosenstiel would be seeking recovery).

As this is the only ground upon which Bliss demurs upon, the Court overrules the demurrer to the 1st cause of action.

  1. Violations of Fiduciary Duties (2nd cause of action)

Bliss demurs to the 2nd cause of action arguing that the cause of action is uncertain and vague, fails to show how Plaintiff lost any interest in the property as the Foundation was the purported owner of the property and Stern was the trustee, and Plaintiff has not alleged that has standing to bring this action.

As pointed out by Bliss, the allegations of the 2nd cause of action are somewhat confusing and vague.  Plaintiff makes allegations from pages 5 to 24, which includes a narrative that is not particularly relevant to this action.  In the SAC, he alleges that Bliss became a fiduciary to Plaintiff, Stern and the Foundation when she accepted them as her clients on August 17, 2017.  (SAC, ¶¶4, 45.)  He alleges that Bliss put her own personal financial interest in her clients’ fees ahead of her clients’ interest in securing unencumbered ownership of the subject property, and failed to apprise her clients of court dates.  (Id., ¶49.)  As a result of Bliss’s violation of fiduciary duties, Plaintiff alleges that he, Stern, and Foundation lost title to and possession of the property and that they had paid her $7,000 in connection with a bankruptcy proceeding.  (Id., ¶59.)

Though a large portion of the allegations are superfluous and unnecessary, Plaintiff has alleged some facts that support a breach of fiduciary duty cause of action regarding the attorney-client relationship.  However, Plaintiff has not alleged how Bliss violated her duties regarding the property.

As there is a viable basis for the 2nd cause of action to go forward, the Court will overrule the demurrer.  A demurrer cannot rightfully be sustained to part of a cause of action or to a particular type of damage or remedy.  (Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal. App. 4th 1028, 1047.)

  1. Elder Abuse (3rd cause of action)

Bliss demurs to the 3rd cause of action for elder abuse arguing that Plaintiff lacks standing to bring this cause of action.

The 3rd cause of action appears to be brought by Plaintiff on behalf of Stern, who is his grandmother and advanced in age.  (SAC, ¶62.)

The Court agrees with Bliss’s argument in demurrer that Plaintiff lacks standing to assert this cause of action for elder abuse.  Accordingly, the demurrer to the 3rd cause of action is sustained without leave to amend.

  1. Unfair Business Practices (4th cause of action)

Bliss demurs to the 4th cause of action arguing that Plaintiff has not alleged facts showing any business practice (whether by unlawful, unfair, or fraudulent business practice, false advertising, or otherwise) that harmed the public.

In the 4th cause of action, Plaintiff alleges that Bliss lost the client’s property and that she caused them to pay her to engage in malpractice.  (SAC, ¶71.)  He alleges that her actions were “unlawful, unfair, and fraudulent” (id.), but fails to allege the cause of action with any specificity as to what actions constituted unlawful, unfair, and/or fraudulent business practices.

As such, the demurrer to the 4th cause of action is sustained with 20 days leave to amend.

CONCLUSION AND ORDER

The demurrer of Defendant Shirlee Bliss is overruled as to the 1st cause of action.

The demurrer to the 2nd cause of action is overruled.

The demurrer to the 3rd cause of action is sustained without leave to amend.

The demurrer to the 4th cause of action is sustained with 20 days leave to amend.

Upon amendment, Plaintiff should draft the pleading in a manner that complies with CCP §425.10(a)(1), which states that a complaint shall contain a statement of facts constituting a cause of action “in ordinary and concise language.”

To the extent that courtesy copies of the papers have not been filed, the parties shall provide courtesy copies of all papers prior to the hearing.

Bliss shall give notice of this order.

[1] Plaintiff and counsel are directed to the California Rules of Court regarding font size and line spacing for papers filed with the Court.  Papers filed must be prepared using a font size not smaller than 12 points and the lines on each page must be one and one-half spaced or double spaced and numbered consecutively.  (CRC Rule 2.104, 2.108(1).)  Doing so will aid the parties and the Court to more easily read the arguments in Plaintiff’s papers.