Case Name: Crispin Calleros Cortes, et al. v. Leticia Ramona Sandoval Gonzalez, et al.
Case No.: 16-CV-291442

Currently before the Court is the demurrer by defendant Omnex Group, Inc. dba Giromex (“Omnex”) to the third amended complaint (“TAC”) of plaintiffs Crispin Calleros Cortes (“Cortes”), Floriberto Barraso Escamilla, Dolores Paula Garcia Sanchez, Norberta Guizar, Daniel Serrano Hernandez, Marie Elena Fregoso Pelayo, Socorro Ortega Perez, Jesus D. Roque, Cresencio Roque, Jose Sanchez, and Efigenia Florencia Chavez Sanchez (collectively, “Plaintiffs”).

Factual and Procedural Background

This is an action for fraud and negligence. Plaintiffs allege that defendants Leticia Ramona Sandoval Gonzalez (“Gonzalez”), Daniel Alberto Valdez Sandoval, Juventia Narciso Marquez, Felipe Carrasco Villamares, Alejandra Villamares, and Maria Carmen Arteaga Barajas (“Barajas”) (collectively, “Individual Defendants”) “were residents of, or conducting their wire transfer agencies business, in Santa Clara County.” (TAC, ¶ 2.) Omnex, and other corporate defendants, “were licensed to do and were doing international money wire transfer business in the County of Santa Clara ….” (Id., at ¶ 3.)

Individual Defendants were allegedly the agents of Omnex, and the other corporate defendants, “and in doing the things hereinafter alleged, [Individual Defendants] were acting within the course and scope of that agency and with the permission and consent of” Omnex and the other corporate defendants. (TAC, ¶ 6.) Plaintiffs allege that “[i]n dealing with [Individual Defendants], [they] were caused by the conduct of [Omnex, and the other corporate defendants,] to believe that [Individual Defendants] had the authority to make international money transfers to themselves, or to their relatives in Mexico or other foreign countries.” (Id., at ¶ 8.) “The conduct of [Omnex, and the other corporate defendants,] that caused [Plaintiffs] to remit money for transfer to relatives in Mexico, and elsewhere, consisted of signs, advertisements, announcements, posters, business card used by [Individual Defendants], bearing the name of [Omnex or the other corporate defendants].” (Ibid.) Plaintiffs remitted money to Individual Defendants “in good faith and as a result of the advertising, and other conduct of, [Omnex, and the other corporate defendants,] as the corporate defendants placed Individual Defendants “in a position whereby the members of the public were induced to tender their money for international money wire transfer business with the [Individual Defendants].” (Id., at 8 and 37.)

Plaintiffs also allege that the Individual Defendants “misrepresented [Gonzalez’s] agency to conduct international wire money transfers, and that [Individual Defendants] aided [Gonzalez] in deceiving [them] into tendering their money to her as a licensed agent of one or more of the [corporate defendants], knowing that she was not, but failing to disclose to [Plaintiffs] that [Gonzalez] was using their agencies as a false front for her false international money wire transfer business.” (TAC, ¶ 9.) Between 2012 and 2015, Individual Defendants “falsely and fraudulently represented to [Plaintiffs] that their international money transfer business was trustworthy and honest and would handle their money in the intended manner, i.e., transfer to relatives in Mexico, or, alternatively, would make them a profit on their money invested with [Individual Defendants].” (Id., at ¶ 20.) These representations were false and Individual Defendants did not transfer Plaintiffs’ money; rather, they kept Plaintiffs’ money, diverted it to their own use, and concealed the same from Plaintiffs. (Id., at ¶ 22.) The misrepresentations by the Individual Defendants were made with the intent to defraud Plaintiffs to part with their money. (Id., at ¶ 24.) “[W]hile some [Individual Defendants] were licensed agents at the time of payment of [Plaintiffs’] money, [Gonzalez] was not, but the [Individual Defendants] never disclosed that [Gonzalez] was not a licensed agent, but was taking [Plaintiffs’] money while holding herself out to be duly authorized to carry on the business of money transfer by wire, or, alternatively, doing so with the aid, assistance and support of [the other Individual Defendants] who were duly authorized agents engaged in the money transfer business.” (Ibid.) Eventually, Gonzalez was criminally prosecuted and convicted of grand theft. (Id., at ¶¶ 10 and 15.)

Plaintiffs further allege that the Individual Defendants “were unfit” and Omnex, and the other corporate defendants, were reckless in employing them. (TAC, ¶ 7.) The corporate defendants knew, or in the exercise of reasonable care should have known, that: (1) Individual Defendants “were unfit to act in the capacity of agents in the international money transfer business because they were dishonest, untrustworthy, and not financially responsible to the customers of [the corporate defendants’] businesses”; and (2) Individual Defendants “were diverting customers’ money, intercepting it, or part of it, and transferring the money to their own personal purposes.” (Id., at ¶ 38.) In fact, the corporate defendants discovered discrepancies in remittances by Individual Defendants and initiated collection actions against them. (Id., at ¶¶ 39-42.)

Based on the foregoing, Plaintiffs filed the operative TAC against Individual Defendants, Omnex, and other corporate defendants on August 30, 2017, alleging causes of action for (1) fraud and (2) negligence.

On January 16, 2018, Omnex filed the instant demurrer to the TAC. Plaintiffs filed papers in opposition to the demurrer on February 6, 2018. On February 22, 2018, Omnex filed a reply.

Discussion

Omnex demurs to the first and second causes of action of the TAC on the ground of failure to allege facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

I. Request for Judicial Notice

In connection with their opposition papers, Plaintiffs ask the Court to take judicial notice of: several police reports; an affidavit in support of search warrant, a statement of probable case, a search warrant, a return to search warrant, the felony complaint, the first amended felony complaint, a report of probation officer, a sentencing brief, a probation, sentencing, and restitution order, and an order authoring inspection and copying of documents filed in the criminal case against Gonzalez; a judgment denying discharge filed in Gonzalez’s bankruptcy case; a news article; and a press release.

As an initial matter, the police reports, news article, and press release are not proper subjects of judicial notice under Evidence Code sections 452 and 453. (See Evid. Code, §§ 452, 453.)

Next, the various court records are generally proper subjects of judicial notice under Evidence Code section 452, subdivision (d). Evidence Code section 452, subdivision (d) states that the court may take judicial notice of “[r]ecords of any court of this state.” That provision permits the trial court to “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.” (People v. Woodell (1998) 17 Cal.4th 448, 455.) Consequently, Court will only take judicial notice of the existence of the court records filed in Gonzalez’s criminal case and bankruptcy case and the truth of the results reached in orders and judgments. The Court will not take judicial notice of the truth of hearsay statements in those documents.

Accordingly, Plaintiff’s request for judicial notice is DENIED IN PART and GRANTED IN PART. The request is DENIED as to the police reports, news article, and press release. The request is GRANTED as to the existence of the subject court records filed in Gonzalez’s criminal case and bankruptcy case and the truth of the results reached in orders and judgments.

II. Legal Standard

The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see Code Civ. Proc., § 430.30, subd. (a).) “It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) However, while “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions or conclusions of law or fact.” (George v. Automobile Club of Southern California (2011) 201 Cal.App.4th 1112, 1120.)

III. First Cause of Action

Omnex argues that the first cause of action fails to allege facts sufficient to constitute a claim for fraud because: (1) Plaintiffs do not “allege facts which show how, when, where, to whom, and by what means the representations were tendered”; and (2) Plaintiffs fail to “allege there was any false representation or concealment [of] any material fact made by [Omnex], with knowledge of its falsity, with the intent to induce the person to whom it is made to act on it, an act by that person in justifiable reliance on the representation, and to that person’s damage.” (Mem. Ps. & As., p. 2:13-20.)

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 638.) Furthermore, allegations of fraud must be pleaded with particularity. “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Id., at pp. 644-45, original italics [internal quotation marks and citation omitted].) “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th at 153, 157.)

Omnex’s argument regarding the lack of specificity is well-taken. Although Plaintiffs allege that Gonzalez and the other Individual Defendants, who allegedly acted as Omnex’s agents, made various misrepresentations regarding wire transfers and Gonzalez’s status as a licensed agent (see e.g., TAC, ¶¶ 19-24), Plaintiffs fails to allege sufficient facts showing how, where, and by what means the alleged misrepresentations were tendered. In their opposition, Plaintiffs highlight allegations regarding Cortes’ interaction with Gonzalez at the Omnex office allegedly owned by Barajas. (See Opp’n., p. 11:2-18; see also TAC, ¶ 16(a).) However, the allegations pertaining to Cortes do not demonstrate that Gonzalez, Barajas, or any alleged agent of Omnex made any representation whatsoever to Cortes. Rather, the allegations merely provide that Cortes gave Gonzalez money to purchase pesos and send to a relative in Mexico. (TAC, ¶ 16(a).) These allegations are insufficient to support a claim for fraud.

Accordingly, the demurrer to the first cause of action is SUSTAINED, with 10 days’ leave to amend.

IV. Second Cause of Action

Omnex argues that the second cause of action fails to allege facts sufficient to constitute a claim for negligence because Plaintiffs fail “to allege facts showing duty, breach, causation, and damages.” (Mem. Ps. & As., pp. 2:21-22 and 8:10-11.)

“An action in negligence requires a showing that the defendant owed the plaintiff a legal duty, that the defendant breached the duty, and that the breach was a proximate or legal cause of injuries suffered by the plaintiff.” (Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 673.)

As Omnex persuasively argues, the second cause of action, as currently pleaded, does not allege that Omnex owed a duty to Plaintiffs. Furthermore, the claim does not allege facts showing that Omnex breached any alleged duty to Plaintiffs or that said breach was the cause of Plaintiffs’ injuries. Rather, the second cause of action merely states that the corporate defendants, such as Omnex, knew, or in the exercise of reasonable care should have known, that: (1) Individual Defendants “were unfit to act in the capacity of agents in the international money transfer business because they were dishonest, untrustworthy, and not financially responsible to the customers of [the corporate defendants’] businesses”; and (2) Individual Defendants “were diverting customers’ money, intercepting it, or part of it, and transferring the money to their own personal purposes.” (Id., at ¶¶ 38-39.) These allegations are insufficient to state a claim for negligence.

Accordingly, the demurrer to the second cause of action is SUSTAINED, with 10 days’ leave to amend.