Implausibility Is No Barrier

Marina Pac. Hotel & Suites, LLC v. Fireman’s Fund Ins. Co., No. B316501 (D2d7 Jul. 13, 2022)

An insurance dispute over COVID coverage brought by a Hotel. The policy says, basically, that there is coverage when there’s some kind of physical damage. Hotel claims COVID causes that kind of damage because, basically, the virus can physically affix to the structure of the building and make it unusable. 

That’s not really true under the current science. Maybe it was unclear in July 2020, when Hotel filed is complaint. But by October 2021, when the trial court sustained the Carrier’s demurrer, pretty much everyone agreed that some fresh air, a little time without occupancy, and perhaps a disinfecting wipe down are all that are needed to make a space safe from the virus.

But the Court of Appeal says it does not matter. The complaint alleged facts sufficient to get into the coverage definition. On a demurrer, those facts are deemed true, even if most people would know they were wrong. In reaching that result the Court differentiates pleading practice in California with that in federal court:

[T]he pleading rules in federal court are significantly different from those we apply when evaluating a trial court order sustaining a demurrer. In Ashcroft v. Iqbal (2009) 556 U.S. 662 the Supreme Court held, to survive a motion to dismiss under the Federal Rules of Civil Procedure, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Unlike in federal court, the plausibility of the insureds’ allegations has no role in deciding a demurrer under governing state law standards, which, as discussed, require us to deem as true, “however improbable,” facts alleged in a pleading—specifically here, that the COVID-19 virus alters ordinary physical surfaces transforming them into fomites through physicochemical processes, making them dangerous and unusable for their intended purposes unless decontaminated.

(emphasis added; some citations omitted).

So absent judicially noticeable facts, the Carrier needed to wait till summary judgment.

Reversed.

Why Don't YOU Meet and Confer with Luke Dumas...

Dumas v. L.A. Cnty. Bd. of Supervisors, No. B288554 (D2d4 Feb. 18, 2020) 

This pro se civil rights case got dismissed after plaintiff failed to show for his depo a couple of times. Plaintiff raises a host of issues on appeal. (We know how that ends, right...) There are two procedural ones.

First, Plaintiff tried to disqualify the trial judge by filing a statement of disqualification under Code of Civil Procedure § 170.3. The trial court struck it under § 170.4(b) for being untimely and for failing to state a legally adequate basis for disqualification. A DQ order, however, isn’t appealable from a final judgment. The only way to challenge it is to take a writ, which needs to filed within ten days of the service of the order. Plaintiff here didn’t take a writ. So he can’t challenge the striking on appeal.

Second, prior to the dismissal, Defendant successfully demurred to some of Plaintiff’s claims without conducting a telephonic or in person meet and confer, as required by § 430.41. But § 430.41(a)(4) specifically states that a failure to meet and confer isn’t a basis to grant or deny a demurrer. So while the trial court could have sent the parties back to talk more before it decided the motion, its disinclination to do so has no meaningful effect on the appeal.

Affirmed.

A Hard Road to Ditch a Bum Felon Jacket

Roger v. Cnty of Riverside, No E070776 (D4d2 Jan. 22, 2020)

Plaintiff in this case is a surgeon who got thrown in jail for civil contempt when he refused to produce some patient records. The county running the jail created a record that he had been jailed for a felony conviction. Which isn’t true. Civil contempt is civil—notwithstanding the custody, it’s not even a misdemeanor. The felony rap lead plaintiff to losing work and other difficulties. Plaintiff sued the County for § 1983, defamation, and other claims relate to the false recording of him as a felon.

A bunch of the appeal deals with code claim processing issues that are beyond my coverage. Suffice it to say that an SJ on them gets reversed. But there are three procedural points of note.

First, during the litigation, the County ultimately fixed the plaintiff’s record by manually recording it as a civil confinement in its system. It argued that make the plaintiff’s claims for declaratory relief and writ of mandate moot. But there was no admissible evidence (see #2) that the County had implemented a procedure to ensure it correctly documented civil confinements in the future. Given the immense consequences of a felony rap, that failure was of sufficient public importance to merit an exception from the mootness doctrine on these claims.

Second, it arguing mootness, the County put in a declaration stating that based upon the declarant’s understanding, the court system had fixed the way it documented civil contempts. But a declarant’s “understanding” is not personal knowledge. It is instead a form of information and belief. It thus is not competent summary judgment evidence under Code of Civil Procedure § 437c(d), which requires declarations on personal knowledge. 

Third, the Court reverses a demurrer on a § 1983 Monell claim, where plaintiff had alleged that the County knew it didn’t have any procedure to accurately book inmates for civil contempt and thus that the way it trained its employees was deliberately indifferent to inmates civil rights. The Court of Appeal finds that, notwithstanding the relatively high level of generality, that allegation was an adequate statement of “ultimate facts” to satisfy the fact pleading standard. As the court explains, the standard is contextual—plaintiffs are under a lesser obligation of specificity when the facts address issues within the knowledge of the defendant.

Reversed.

Can't Sneak in a Brand New Claim Like That

LeMere v. L.A. Unified Sch. Dist., No. B281843 (D2d8 May 14, 2019)

A demurrer was granted with leave to amend. When plaintiff amended, she also added a brand new cause of action. But she didn’t have leave to do that. So the trial court dismissed. Moreover, it had been more than a year since the original complaint had been filed. Plaintiff didn’t have any good reason why the new claim couldn’t have been alleged all along. And the claim was nonetheless legally defective. So the trial court was not required to afford her leave.

Affirmed.

Reply Evidence Can Respond if No New Issues

Savea v. YRC Inc., No. 152379 (D1d3 Apr. 10, 2019)

A demurring defendant asked for judicial notice of a document in its reply brief. New evidence on reply is generally not ok. But when it doesn’t raise new theories or arguments and simply responds to points raised in an opposition, a court has discretion to consider it nonetheless.

Affirmed.

Blown Demurrer Opp. Counts as a "Dismissal" for Mandatory § 473(b) Relief

Pagnini v. Union Bank, N.A., No. A151390 (D1d5 Oct. 17, 2018)

Plaintiff’s attorney tried to file an amended complaint as a response to a demurrer. But the attorney didn’t know that Code of Civil Procedure § 472—the statute that permits an amendment as a response to a demurrer—had recently been amended to change the timing. Although the prior version let you moot a demurrer by filing an amendment before the demurrer hearing, the current version required the amended complaint to be filed before the opposition is due. This resulted in the clerk rejecting the amended pleading. The trial court ultimately granted the demurrer as unopposed and entered judgment for Defendant.

Several months later, Plaintiff filed a motion for mandatory relief under § 473(b). His motion was accompanied by a declaration from his attorney, attesting to the mistake that led to the dismissal. But the trial court denied the motion nonetheless. 

That was error. The mandatory relief provision in § 473(b) applies to both defaults and dismissals that are caused by the neglect (even the inexcusable neglect) of a party’s attorneys. At some point, the Legislature added dismissals to provide parity between mistakes by both plaintiffs and defense lawyers. Dismissals include failures to respond to “dismissal motions.” And while there does not appear to be a prior case that says it, the court finds that a failure to respond to a demurrer to the whole complaint readily fits into that category, given that if granted without leave to amend, a demurrer lead to a dismissal under § 581(f)(1). Which is what happened here after the attorney whiffed on the deadline.

Reversed.

Not Sticking Together

Jensen v. The Home Depot, Inc., No. E067002 (D5 May 31, 2018)

Home Depot gets sued by two employees. Their claims are based on similar disability discrimination theories. But it’s clear they don’t arise from the same transaction or occurrence.  Home Depot specially demurred under Code of Civil Procedure § 430.10(d) for misjoinder of plaintiffs, which the trial court granted, with leave. Then an amendment that leaves both Plaintiffs in and another demurrer, which Plaintiffs maybe didn’t oppose. And then another demurrer is granted without leave and a dismissal with prejudice is entered. Which seems kind of crazy, as it’s unclear why joining disparate plaintiffs, while inappropriate, means everyone should lose, effectively on the merits. Plaintiffs appeal.

Then one Plaintiff dismisses. That obviates the misjoinder. There is some debate is over whether the Court of Appeal should be a remand so that the now flying-solo plaintiff can just pursue her case alone or whether the appeal should just be dismissed as moot, leaving the judgment intact. The court takes the former approach, which makes sense.

Reversed.

Appellate Switcharoo OK when a Demurrer Is the Question

Gutierrez v. Carmax Auto Superstores Cal., No. F073215 (D5 Jan. 30, 2018)

The trial court granted a demurrer in a UCL and CLRA claim about used car warranties. In claiming that a warranty claim was sufficient, Plaintiff advances a new theory that wasn’t raised in the trial court. But that doesn’t preclude a reversal. 

Although failure to raise an issue before the trial court generally precludes its consideration on appeal, that rule is subject to exceptions. One of them is that in reviewing a demurrer, an appellate court looks de novo at whether the complaint states facts sufficient to sustain a cause of action on any possible legal theory. According to the Court here, the Supreme Court cases that states that rule—see e.g., City of Dinuba v. County of Tulare, 41 Cal. 4th 859, 870 (2007)—don’t limit their review to theories raised in the trial court. Some earlier Court of Appeal cases bear that out.

Justice Poochigian dissents, but only on the merits of a CLRA issue.

Reversed in part.

Rescission Switcharoo . . . .

Guan v. Hu, No. B276546 (D2d1, on rehearing Feb. 7, 2018)

Told you this one was weird. 

You Have the Right to Demur

Butenschoen v. Flacker, No. BV 310862 (L.A. Super. App. Div. Oct. 16, 2017)

The trial court in a unlawful detainer case denied Tenant’s motion to quash service and ordered her to “file and serve an answer only” within five days. Instead of an answer, Tenant demurred. That led to a default, presumably for failure to answer. Tenant appealed, and the LA Superior Appellate Division reverses.

UD practice has some procedures that are particular to it. Their defining characteristic is very short deadlines. If a defendant moves to quash service and the motion is denied, she gets only five calendar days to file a responsive pleading. But one way in which UD is like ordinary civil procedure is that appropriate responsive pleadings include both an answer and a demurrer. So the trial court couldn’t effectively order Tenant to forego a demurrer, just because the motion to quash was denied. So the default’s no good.

Reversed.

Repose Never Goes

PGA W. Residential Assoc. v. Hulven Int’l, Inc., No. E064270 (D5 Aug. 23, 2017)

Debt collection action where the Debtor alleges that a fraudulent transfer claim is time-barred under the Uniform Fraudulent Transfer Act. But while Debtor raised the issue on a demurrer, he did not address it at trial. According to the Court, that doesn’t matter. 

As the substantive discussion in the case explains, the UTFA doesn’t just have a statute of limitations; it has a statute of repose. Once the period has run, any unfiled cause of action ceases to exist. As such it isn’t subject to tolling. Moreover, although it’s a question of first impression in California, the Court follows the majority rule to hold that the benefits of a statute of repose can’t be forfeited. So the failure to raise the defense at trial doesn’t preclude the court from holding that the trial court erred by not granting Debtor’s demurrer on timeliness grounds.

Reversed.

Ref Don't Matter if the Decision Was Right

Stella v. Asset Management Consultants, Inc., No. B269207 (D2d7 Feb 6, 2017)

A limited partnership agreement for a real estate investment contains a provision that subjects any dispute arising from or related to it to judicial reference under Code of Civil Procedure § 638. A motion for reference was granted, and the referee subsequently granted a demurrer based on the statute of limitations. The plaintiff appeals both the reference order and the demurrer.*

Taking an interesting tack, the Court of Appeal affirms the sustained demurrer. Then, since the court addressed de novo the merits of the dismissal in exactly the same fashion as it would had the order been by a superior court judge, it finds any error in granting the reference harmless. It thus declines to reach the merits of that decision.

*A § 638 reference is somewhat like an arbitration, but it is subject to the ordinary rules of civil procedure. In the case of a consensual general reference, the referee’s ruling essentially gets entered as a decision of the court, from which a judgment can be entered and then subject to appeal like any civil judgment. See § 644(a).

“Somewhere Along the Line, Litigation Must Cease.”

Gillies v. JPMorgan Chase Bank, N.A., No. B272427 (D2d6 Jan. 24, 2107)

Plaintiff in this case has successfully used serial litigation to delay foreclosure on his mortgage, which he stopped paying in 2009. He has already lost two state court cases (and appeals), a federal case (and appeal), and a case in bankruptcy court. The court here is not amused. It dutifully walks through and sustains the trial court's demurrer on each cause of action. It then (perhaps sua sponte) drops some knowledge on the import of res judiciata in a section called “The Sanctity and Integrity of Final Judgment.” The Court calls out plaintiff (an attorney) for treating “adverse final judgments as mere suggestions which allow him to perpetually file new lawsuits on new theories.” Explaining that “[h]e is wrong,” the Court of Appeal specifically points out that the doctrine will also bar any future claim brought by Plaintiff addressed to foreclosure on his house. 

Affirmed.

Class Has So Little in Common that Demurrer Gets Upheld

Schermer v. Tatum, No. D067807 (Mar. 18, 2016)

Generally, its pretty tough to get class allegations dismissed at the pleading stage, and even harder getting that type of dismissal to stand up on appeal. But it happens sometimes. This is one of those cases.

The case is a class action brought on behalf of residents at eighteen different mobile home parks. The complaint alleged violations of the UCL, breaches of the covenants of quiet enjoyment and good faith and fair dealing and fraud. The allegations raised various and sundry abusive landlord-tenant practices, including forcing the residents to enter into unconscionable leases, although not all of the leases were the same, and the unconscionability was to be shown by some mix of eleven different factors set out in the complaint. Factors like “failing to provide all documents related to the lease until after expiration of the statutory review period.” On top of that, the parks had somewhat different ownership structures. 

If that doesn’t sound to you like the kind of stuff that is amenable to class-wide resolution, you aren’t alone. The trial court sustained a demurrer to the class allegations. When plaintiffs tried to fix the amended complaint, they did so by including twenty-one different subclasses, and claiming that defendants had a “uniform policy and procedure” to use some or all of the eleven factors in every least transaction. The trial court sustained another demurrer, explaining that the similarities in lease terms might show some commonality, but not enough to make class-wide litigation a superior vehicle. Plaintiff appealed under the death-knell doctrine.

The court of appeal notes that class allegations can be struck if the complaint fails to state facts sufficiently to show that class treatment is appropriate. But the court won’t credit contentions, deductions, or factual conclusion. Which is what the court thinks of the uniform class-wide “policy” allegation. It’s pretty clear from the actual facts that even assuming the parks employed some or all of the eleven factors, how those would affect the unconscionability analysis would depend on individualized interactions during the leasing process. So the fact that the parks had a “policy” of using certain shady tactics wasn’t common enough to merit class treatment.

Going through on a claim by claim basis, the court agrees that each cause of action can’t be brought as a class action. Plaintiff’s demand for restitution of excess rents under the UCL pretty clearly required individual treatment. The eighteen parks were in sixteen different cities, some of which have rent control and others of which to not. There was no feasible way to measure restitution on a class-wide basis. The covenant claims deal with individualized interactions  between the tenants and the parks. And the common law fraud claim requires individualized proof of reliance. So in sum, there wasn’t even enough commonality to meet that element of the standard. The court didn’t even need to get to typicality or the superiority of proceeding on a class basis.

Affirmed.

Demurrer:Poorly Pleaded Breach of Contract::Certiorari:Almendarez-Torres Was Wrongly Decided

Miles v. Deutsche Bank Nat’l Trust Co., No. G050294 (D4d3 Apr. 29, 2015)

Another mortgage case. The details don’t really matter, but it addresses two procedural rules.

First, if a demurrer is sustained with leave to amend, and plaintiff declines to amend within the allotted time, the case gets dismissed and judgment entered for defendant. But plaintiff’s failure to amend does not waive his right to appeal. That's pretty obvious.

The second deals with demurring to a breach of written contract claim. One would think that either the contract needs neither to be attached as an exhibit or its relevant terms stated literally in the complaint. Nope. Venerable California precedent says that a contract can be plead “according to its legal effect[.]”  Stoddard v. Treadwell, 26 Cal. 294, 303 (1864) (“A contract may be declared on according to its legal effect or in hæc verba.”). Which basically means that the plaintiff can get away with pleading a bunch of conclusory stuff that might or might not be supported by the text of the contract and make the defendant suck it up till summary judgement. Unless, that is, the defendant convinces the court to take notice of the documents.

Reversed.

Lost Demurrer Saves the Day

Gallup v. Superior Court of Nevada County, No. C073452 (D3 Mar. 30, 2015)

Not much to see here, decidin’-wise. But it’s pretty rare to see a court reverse the denial of a demurrer when a case has subsequently made it all the way through trial and ended in a plaintiff verdict.

No Last Minute Jersey RICO Puzzle for Overstock.com

Overstock.com v. Goldman Sachs, No. A135682 (D1d1, as modified Nov. 25, 2014)

As discussed in my last post, this case involves allegations that Goldman Sachs and Merrill Lynch engaged in illegal naked short selling of shares of Overstock.com. The bulk of the opinion addresses merits arguments related to the trial court’s granting of summary judgment in favor of the defendants.
There is, however, one procedural point of note. 

Very late in the case, defendants stipulated to allow plaintiffs to amend their complaint to add a claim under New Jersey’s RICO act, subject to defendants’ demurrer. The trial court sustained a demurrer to the claim, finding it to be too vaguely pleaded to state a claim that sounds in fraud. The court upholds this ruling. In doing so, it notes that the complaint was defective because the count simply referred to “the actions described above” without assigning any particular act that constituted fraud in the offering, sale or purchase of securities—a key element of the claim. The decision can be fairly read as a rejection what is sometimes derisively called “puzzle pleading”—where the body of the complaint sets out a broad array of alleged acts which the counts incorporate wholesale, without any explanation as to which acts or statements satisfy the actual elements of the claim. Federal courts have caught on to this game, but California state courts, less so. See, e.g., In re Level 3 Commc'ns, Inc. Sec. Litig., 667 F.3d 1331, 1339 n.8 (10th Cir. 2012).

The trial court further denied plaintiffs leave to amend to fix the pleading issues. In affirming, the court explains some important principles. First, the fact that the plaintiff might be able to cure defects in a pleading does not automatically entitle it to amend. An opportunity to amend is “always of grace, not of right” and the trial court maintains significant discretion in affording or denying leave. 
 In addition to futility, the court can consider prejudice, the number of prior amendments, and the timing of the amendment is connection with the progress of the litigation.  Here, plaintiffs’ proposed amendment was based on “a fundamentally different and highly complex claim that could not fairly be injected into the case only two months before summary judgment motions were due and only six months before the already re-scheduled trial date.”  Under the circumstances, the trial court did not abuse its discretion in denying leave. 

Affirmed in part and reversed in part.

Let's Stop Rewarding Demurrer Sandbagging

Connerly v. California, No. C073753 (D3 Sept. 3, 2014)

So Ward Connerly and his crew at the Pacific Legal Foundation are peeved about some vague pro-diversity language in the statutory procedures governing the selection of the California Citizens Redistricting Commission. The relevant statute—Government Code § 8252—provides that six of the commissioners should be “chosen to ensure the commission reflect this state’s diversity, including, but not limited to, racial, ethnic, geographic, and gender diversity.” Connerly sued, claiming that the statute violates Prop. 209.

Demurrer, Amendment, Demurrer, Answer

Carlton v. Dr. Pepper Snapple Corp., No. E056566 (D5 Aug. 14, 2014)

The issue here concerns the timeliness of a demurrer after a prior demurrer is granted with leave to amend. As is typical in California, a Rule of Court and the Code of Civil Procedure are not too clear and seem to conflict. Rule of Court 3.1320(j) says that the defendant needs to respond to the “remaining causes of action” in a pleading within ten days if: (1) a demurrer is overruled, (2) it is sustained with leave to amend and no amendment follows; or (3) the demurrer is sustained without leave as to other causes of action. But Code of Civil Procedure § 471.5 affords thirty days to respond to an amended complaint.  The court here sensibly harmonizes the two rules: Rule of Court 3.1320(j) applies when a plaintiff does not file an amended complaint, while § 471.5 applies when he does.

Celotex:Aguilar::Twombly:Prakashpalan?

Prakashpalan v. Engstrom, Lipscomb & Lack, No. B244236 (D2d1, as modified Feb. 26, 2014)

The court of appeal affirms in part and reverses in part a trial court’s order sustaining a law firm’s demurrer to a bunch of claims brought by a former client. It holds that certain of plaintiff’s claims are subject to a statute of limitations that applies to fiduciaries, and accordingly, that those claims are not barred due to the statute’s generous tolling rule. But as to plaintiffs’ claims for failure to disclose a conflict of interest and failure to maintain confidentiality, the court affirms dismissal because the complaint did not explain how these failures resulted in the harm allegedly suffered by the plaintiffs