Case Number: BC691484 Hearing Date: June 18, 2019 Dept: 47

Dorothy Diller v. Barry Weiss, et al.

MOTION TO STRIKE PORTIONS OF SECOND AMENDED COMPLAINT

(OR, IN THE ALTERNATIVE, JUDGMENT ON THE PLEADINGS)

MOVING PARTY: Defendants Kevin Lawrence and Foster & Lawrence Accountancy

RESPONDING PARTY(S): Plaintiff Dorothy Diller

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff alleges that Defendants Barry Weiss and Edmundo Rosenberg have breached the fiduciary duties owed by partners to a partnership agreement and that Defendants Kevin Lawrence and Foster & Lawrence Accountancy have aided and abetted the other Defendants in breaching their fiduciary duties.

Defendants Kevin Lawrence and Foster & Lawrence Accountancy move to strike portions of the second amended complaint (“2AC”) or, in the alternative, for judgment on the pleadings.

TENTATIVE RULING:

Defendants Kevin Lawrence and Foster & Lawrence Accountancy’s motion to strike portions of the amended complaint is DENIED. Defendants’ alternative motion for judgment on the pleadings is DENIED.

Defendants to file an answer within 20 days.

Moving party to give notice, unless waived.

DISCUSSION:

Motion to Strike

Meet and Confer

Although the Declaration of Jeremy B. Freedman in support of the motion did not include any information about any meet and confer efforts, the Declaration of Jeremy B. Freedman submitted with the reply brief does reflect that the meet and confer requirement set forth in CCP § 430.41 was satisfied.

The Court observes that among the most offensive language in Exhibit 10 to Attorney Jeremy Freedman’s declaration is the repeated use of “you’re” when “your” was needed.

Request For Judicial Notice

Defendants request that the Court take judicial notice of the following: (1) Plaintiff’s Complaint filed January 19, 2018; (2) Plaintiff’s First Amended Complaint filed May 9, 2018; (3) Plaintiff’s Doe Amendment naming Kevin Lawrence filed October 4, 2018; (4) Plaintiff’s Doe Amendment naming Foster and Lawrence Accountancy filed October 4, 2018; (5) Plaintiff’s Second Amended Complaint filed January 29, 2019; (6) Declaration of Shelley McMillan in Support of Plaintiff’s Application for Order to Show Cause, Temporary Restraining Order and For a Preliminary and Permanent Injunction Filed October 9, 2019 [sic]; (7) Declaration of Dorothy Diller in Support of Plaintiff’s Application for Order to Show Cause, Temporary Restraining Order and For a Preliminary and Permanent Injunction Filed October 9, 2019 [sic]; (8) Declaration of Arthur Diller in Support of Plaintiff’s Application for Order to Show Cause, Temporary Restraining Order and For a Preliminary and Permanent Injunction Filed October 9, 2019 [sic]; and (9) Declaration of Steven Dorfman in Support of Plaintiff’s Application for Order to Show Cause, Temporary Restraining Order and For a Preliminary and Permanent Injunction Filed October 9, 2019 [sic].

Requests Nos. 1 to 9 are GRANTED Evidence Code § 452(d) (court records). The Court does not, however, take judicial notice of the truth of any statements contained in these documents. “While judicial notice may be taken of court records (Evid. Code, § 452, subd. (d)), the truth of matters asserted in such documents is not subject to judicial notice.” (Board of Pilot Commissioners v. Superior Court (2013) 218 Cal.App.4th 577, 597.)

Notice

The notice of motion does not specify the portions of the Second Amended Complaint to be stricken as required by CRC Rule 3.1322(a). The notice is sufficient as to the Doe Amendments, but it should have specified the particular allegations in the Second Amended Complaint “as to defendants Kevin Lawrence and Foster and Lawrence Accountancy” (Notice, at p. 2) that are to be stricken.

Analysis

1. Doe Amendments

A Doe amendment may be filed once the identity or liability of a defendant is discovered. (Woo v. Superior Court (1999) 75 Cal.App.4th 169, 176.) When substitution is sought, the relevant inquiry is what facts the plaintiff actually knew at the time the original complaint was filed. (General Motors Corp. v. Superior Court (1996) 48 Cal.App.4th 580, 587-88.)

Defendants argue that Plaintiff’s Doe Amendments violated CCP § 474 because they are a sham. The problem with this argument is that, as with a demurrer, the grounds for a motion to strike must appear on the face of the pleading or from matters judicially noticed. (CCP § 437.) As with the Defendants’ previous demurrer, it does not appear that the propriety of the Doe Amendment procedure under CCP § 474 can be challenged by way of a motion to strike, as it depends upon evidence of the plaintiff’s actual good faith ignorance, which is an evidentiary matter extrinsic to the complaint. Plaintiff’s previous pleadings demonstrate that she was aware of the identities of the Defendants, but they do not demonstrate, on their face, that Plaintiff was aware of their liability.

The motion to strike the Doe Amendments is OVERRULED.

2. Statute of Limitations

Defendants argue that Plaintiff’s claims against them are barred by the three-year statute of limitations for fraud and the two-year statute of limitations for breach of fiduciary duty.

However, when the statute of limitations began to run, i.e., when Plaintiff knew or reasonably should have known of the mismanagement under the circumstances, is a question of fact outside the scope of this demurrer.

“Resolution of the statute of limitations issue is normally a question of fact.” (Fox, supra, 35 Cal.4th at p. 810.) More specifically, as to accrual, “once properly pleaded, belated discovery is a question of fact.” (Bastian v. County of San Luis Obispo, supra, 199 Cal.App.3d at p. 527.) As our state’s high court has observed: “There are no hard and fast rules for determining what facts or circumstances will compel inquiry by the injured party and render him chargeable with knowledge. [Citation.] It is a question for the trier of fact.” (United States Lab. Ins. Co. v. Hai dinger-Hayes, Inc., supra, 1 Cal.3d at p. 597 [reversing judgment after demurrer].) “However, whenever reasonable minds can draw only one conclusion from the evidence, the question becomes one of law.” (Snow v. A. H. Robins Co. (1985) 165 Cal.App.3d 120, 128 [211 Cal.Rptr. 271] [reversing summary judgment].) Thus, when an appeal is taken from a judgment of dismissal following the sustention of a demurrer, “the issue is whether the trial court could determine as a matter of law that failure to discover was due to failure to investigate or to act without diligence.” (Bastian v. County of San Luis Obispo, at p. 527.)

(E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1320.)

Moreover, ongoing mismanagement which occurred during the limitations period may be actionable under the continuous accrual doctrine:

To align the actual application of the limitations defense more closely with the policy goals animating it, the courts and the Legislature have over time developed a handful of equitable exceptions to and modifications of the usual rules governing limitations periods. These doctrines may alter the rules governing either the initial accrual of a claim, the subsequent running of the limitations period, or both. The “most important” of these doctrines, the discovery rule, where applicable, “postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Nougat v. Upjohn Co., supra, 21 Cal.4th at p. 397; accord, Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 807.) . . . The doctrine of fraudulent concealment tolls the statute of limitations where a defendant, through deceptive conduct, has caused a claim to grow stale. (Regents of University of California v. Superior Court (1999) 20 Cal.4th 509, 533 [85 Cal. Rapt. 2d 257, 976 P.2d 808].) . . . Finally, under the theory of continuous accrual, a series of wrongs or injuries may be viewed as each triggering its own limitations period, such that a suit for relief may be partially time-barred as to older events but timely as to those within the applicable limitations period. (Howard Jarvis Taxpayers Assn. v. City of La Habra, supra, 25 Cal.4th at pp. 818–822.) n3

(Arya v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191-92.)

Accordingly, the motion to strike on the basis of the statute of limitations is OVERRULED.

3. Judgment on the Pleadings

In general, a motion for judgment on the pleadings serves the same function as a demurrer. (Templo v. State of Calif. (2018) 24 Cal.App.5th 730, 735.) Defendants’ arguments here are not any more appropriate in the context of a motion for judgment on the pleadings than they were in Defendants’ unsuccessful demurrer to the First Amended Complaint. Defendants’ alternative motion for judgment on the pleadings is DENIED.

Defendants to file an answer within 20 days.

Moving Party to give notice, unless waived.

IT IS SO ORDERED.

Dated: June 18, 2019 ___________________________________

Randolph M. Hammock

Judge of the Superior Court