2013-00144063-CU-BT

Dan Arriola vs. Vinculums Services Inc

Nature of Proceeding:      Hearing on Demurrer

Filed By:    Calderon, David R.

Defendant Vinculums Services, Inc.’s demurrer to Plaintiff Dan Arriola’s complaint is
ruled upon as follows.

Plaintiff alleges causes of action for violation of Bus. & Prof. Code § 17200, Fraud, and
Unjust Enrichment based on allegations that Viniculums, a telecommunications
company that bids on projects requiring a California General Contractor’s License,
used his name to qualify it for a license with the Contractors State Licensing Board
(“CSLB”) during such times when he was no longer employed by Viniculums.

First Cause of Action (Violation of Bus. & Prof. Code § 17200)

Viniculums’ demurrer to the first cause of action is sustained with leave to amend for
failure to state facts sufficient to constitute a cause of action.

Plaintiff alleges that Viniculums continued to use his name as the Responsible
Managing Employee [RME] for purposes of qualifying it for a license with the CSLB
during a 20 month period when he was not employed by the company.  He alleges that
this placed his license at risk and while Vinculums benefited from such use, it failed
and refused to compensate him for such use.  (Comp. ¶¶  19-23, 24, 28-30.)  He
alleges these acts constituted unlawful and fraudulent business practices.  His
opposition, which does nothing more than rehash the allegations of the complaint,
without any analysis of how his allegations are sufficient under the law, appears to
argue that he stated facts to show an unlawful business practice.  However,
Viniculums is correct that plaintiff has not identified in the complaint (or even in his
opposition) what law Viniculums violated based on the alleged conduct despite the
authority cited in his opposition recognizing that the unlawful prong borrows “violations
of other laws and treats these violations, when committed pursuant to business
activity, as unlawful practices independently actionable under section 17200 et
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seq…”  (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4   377, 383.)  Plaintiff
has not adequately alleged a claim under the unlawful prong based in the absence of a
predicate violation of some law.  Further while the first cause of action appears to  allege that the conduct also violated the fraudulent prong, a fraudulent business under
§ 17200 is “one that is likely to deceive members of the public.”  (Morgan v. AT&T
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Wireless Services, Inc. (2009) 177 Cal.App.4   1235, 1255.)  Plaintiff, however, has not
alleged that Viniculums’ conduct was likely to deceive the public.  Thus, the demurrer
to the first cause of action is sustained with leave to amend.

The Court, however, rejects the argument that Plaintiff failed to allege standing under §
17204.  One has standing to bring a § 17200 claim if he or she has suffered injury in
fact and lost money or property as a result of the alleged unfair competition.  (Bus. &
Prof. Code § 17204.)  The Court rejects the contention that Plaintiff has not alleged
injury in fact.  Indeed, rather than alleging a “conjectural” or “hypothetical” injury as
argued by Viniculums, he alleged that Viniculumus used his license to its benefit and
failed to compensate him for such use.  (Comp. ¶¶ 23, 24.)  This is “concrete and
particularized,” “actual or imminent” and sufficient to constitute standing under §
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17204.  (Bower v. AT&T Mobility, LLC (2011) 196 Cal.App.4   1545, 1554; see also
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Hall v. Time, Inc. (2008) 158 Cal.App.4   847, 854-855 [listing various types of injury in
fact, including the situation where a plaintiff has been “denied money to which he or
she has a cognizable claim”].) Unpaid earned wage can, for example, be recovered as
restitution under the UCL.
§ 17203;

Further, while Viniculums also appears to suggest that the cause of action is deficient
because Plaintiff himself had some duty to report to the CSLB that he was no longer
affiliated with it and thus has unclean hands, such argument might be relevant to an
affirmative defense but has no bearing on whether a cause of action has been
adequately alleged.

In sum, the demurrer is sustained with leave to amend for the reasons stated above.

Second Cause of Action (Fraud)

Viniculums’ demurrer is sustained with leave to amend.  It first argues that Plaintiff only
alleged that it made a false representation to the CSLB when it represented that
Plaintiff was the qualified individual in order to qualify it for a license when Plaintiff was
not employed and thus CSLB would be the aggrieved party.  However, one may be
liable to a third party directly harmed by a fraudulent misrepresentation where the
th
harm is foreseeable.  (Bily v. Arthur Young & Co. (1992) 3 Cal.4   370, 415.)  Here, for
pleading purposes, the Court finds that Plaintiff has adequately alleged such a theory
as he was a third party alleged to be directly harmed by the alleged false
representation to the CSLB.  Again, he alleged that Viniculums’ conduct in using his
name place his own license at risk and also that it benefited from making such
statements to the CSLB and did not compensate him.  (Comp. ¶¶ 22, 23, 31, 40.)
Under the alleged facts, the Court concludes that such harm to Plaintiff was
foreseeable.  Thus the demurrer on the basis that Plaintiff only alleged a
representation to the CSLB is overruled.

Further, to the extent Viniculums argues that Plaintiff failed to allege damage, the
demurrer is overruled.  As just discussed, Plaintiff alleged that Viniculums’ conduct in
using his name placed his own license at risk and that it did not compensate him for
using his name to qualify for a license.  (Comp. ¶¶ 22, 23, 31, 40.)

Finally, Viniculums also contends that the fraud cause of action lacks specificity, and is  “chock full of legal conclusions and opinions regarding falsity, knowledge of falsity,
intent, reliance, foreseeability and causation.”  Indeed, while Plaintiff alleged that
Vinculums “continued to represent” to the CSLB that he was the qualified individual in
order to qualify it for a license when Plaintiff was not employed, he fails to allege facts
with respect to the how, when, where, to whom and by what means these
representations were made and thus has failed to allege fraud with the requisite
specificity against a corporation.  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)
Thus to the extent the demurrer to the second cause of action is based on a lack of
specificity, it is sustained with leave to amend.

Third Cause of Action (Unjust Enrichment)

Viniculums’ demurrer is sustained with leave to amend.  Here, it argues that this cause
of action is merely derivative of the first and second and therefore fails for the same
reasons.  Given that the Court sustained the demurrer to the first and second causes
of action, the demurrer to the third cause of action for unjust enrichment which relies
upon an underlying wrong, is sustained for the same reasons stated above.

The Court notes that Viniculums also demurs on the basis that the cause of action
relies upon “hearsay, conjecture, speculation, and ultimately opinion” and therefore is
insufficient.  This is not a basis for demurrer.

Entire Complaint

Viniculums’ demurrer to the entire complaint on the basis that Plaintiff lacks capacity
and/or standing to sue is overruled.  This argument is a rehash of the arguments
asserted in connection with the above, specifically, that Plaintiff failed to allege the
requisite facts to show standing under Bus. & Prof. Code § 17204 or damages for his
fraud cause of action.  As seen above, the Court rejected those arguments.

Finally, while Viniculums also asserted uncertainty as a basis for its demurrer, the
memorandum of points and authorities fail to discuss how any of the causes of action
are so uncertain that it is unable to respond to the complaint.  Thus the demurrer
based on uncertainty is overruled.

In sum, the demurrer is sustained with leave to amend as to the first, second and third
causes of action as stated above.

As this is the first challenge to the complaint leave to amend is granted.  Plaintiff may
file and serve an amended complaint no later than December 31, 2013.  Defendant
shall file and serve its response within 15 days thereafter, 20 days if the amended
complaint is served by mail.  (Although not required by any statute or rule of court,
Plaintiff is requested to attach a copy of the instant minute order to the amended
complaint to facilitate the filing of the pleading.)

The notice of motion does not provide notice of the Court’s tentative ruling system as
required by CRC Rule 3.1308 and Local Rule 1.06(D).  Defendant’s counsel is directed
to notify Plaintiff’s counsel immediately of the tentative ruling system and to be
available at the hearing, in person, or by telephone, in the event the client appears
without following the procedures set forth in Local Rule 1.06(B).

This minute order is effective immediately.