Case Number: BC527369    Hearing Date: July 15, 2014    Dept: 58

Judge Rolf M. Treu
Department 58
Hearing Date: Tuesday, July 15, 2014
Calendar No.: 7
Case Name: Velarde v. Universal Bank, et al.
Case No.: BC527369
Motion: Demurrer and Motion to Strike
Moving Party: Defendants Universal Bank and Frank Chang
Responding Party: Plaintiff Patricia Velarde
Notice: OK

Tentative Ruling: Demurrer is sustained with 15 days leave to amend. Motion to strike is granted without leave to amend.

Background –
On 11/14/13, Plaintiff Patricia Velarde filed this action against Defendants Universal Bank, Frank Chang, and Mitchell Foon arising out of her employment and termination therefrom. Plaintiff asserts FEHA causes of action for (1) age discrimination, (2) race/national origin discrimination, (3) physical disability/medical condition discrimination, (4) discrimination based on participation in protected conduct, (5) failure to prevent discrimination and harassment, (6) retaliation, (7) harassment, (8) intentional infliction of emotional distress, (9) refusal to accommodate, (10) violation of Article I § 8 of the Constitution, (11) wrongful termination, and (12) unfair competition. All COAs are asserted against Universal Bank. Additionally, the 6th through 8th COAs are asserted against Chang and Foon, and the 12th COA is asserted against Chang.

On 4/23/14, the Court granted a motion to stay filed by Universal Bank and Chang (who requested a stay of 60 days) based on an ongoing federal criminal investigation. In conjunction with the ruling on the motion to stay, the Court continued the hearing on a demurrer filed by Chang and a motion to strike filed by Universal Bank and Chang to 7/15/14.

Factual Allegations of the Complaint –
Plaintiff worked as a customer service representative in Universal Bank’s insurance premium finance department (¶ 10) and Chang was Universal Bank’s CEO and Foon was Plaintiff’s manager and supervisor (¶ 1). On 4/11/11, Foon was hired as department manager. ¶ 11. Plaintiff applied for a department manager assistant position but was not interviewed and a friend of Foon was hired instead. ¶ 13. Foon began completing false performance evaluations of Plaintiff, blocked her access, and surreptitiously read her emails. ¶¶ 14, 19. Plaintiff had filed a workers compensation claim and was terminated while attending a doctor’s appointment for a work-related injury. ¶ 15. Plaintiff complained about disparate treatment and harassment to management. ¶ 16. Plaintiff was terminated on 11/17/11. ¶ 21.

On 4/9/13, Plaintiff and Universal Bank participated in mediation during which Universal Bank demanded that any resolution include Plaintiff’s full cooperation with Universal Bank’s defense of claims brought by state and/or federal governmental entities: Chang ordered mediation to cease, and the next morning federal agents interrogated her concerning an investigation into Universal Bank’s claim of customer fraud. ¶ 30.

Demurrer –
Chang has demurred to the COAs asserted against him.

1. Litigation Privilege
Chang argues that the litigation privilege bars all claims made in connection with the state and/or federal investigation because they arise out of communications intended to prompt investigation or remedy of a wrongdoing by a governmental agency. See, e.g., Hagberg v. Cal. Federal Bank FSB (204) 32 Cal.4th 350, 362. Plaintiff argues that Chang’s demurrer misreads Plaintiff’s claim against him (see Opp’n p. 6:2-6); however, this misconstrues Chang’s demurrer.

The only factual allegations against Chang is based on Chang’s terminating mediation negotiations and encouraging state and/or federal law enforcement investigation into Plaintiff. Complaint ¶ 30. However, Plaintiff’s claim against Chang is based only on conduct taken after mediation was terminated (i.e., communicating with governmental agencies), which is what Chang correctly argues is protected by the litigation privilege.

To the extent Plaintiff argues that the claims against Chang are also based on allegations of retaliation during her employment (Opp’n p. 6:7-13), no factual allegations are alleged as to any retaliatory or harassing conduct by Chang during Plaintiff’s employment. Therefore, the demurrer is sustained as to the 6th through 8th and 12th COAs to the extent asserted against Chang.

2. Retaliation
Chang also demurs to the 6th COA for retaliation on the ground that he is not alleged to be a liable employer. See Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1173-74. Plaintiff argues that an individual such as Chang is included in the definition of employer under FEHA. See Gov’t Code § 12926(d). However, this fails to address the clear holding of Jones which rejected Plaintiff’s interpretation of Gov’t Code § 12926(d). See Jones, 42 Cal.4th at 1163. The demurrer is sustained as to the 6th COA on this additional ground.

3. Harassment
Chang also demurs to the 7th COA on the ground that Plaintiff fails to allege any facts of harassing conduct by Chang while Plaintiff was an employee, an applicant, or independent contractor. Gov’t Code § 12940(j). The Court agrees. The Complaint only alleges conduct by Chang taken after mediation was terminated in April 2013 (i.e., communicating with governmental agencies), which is after Plaintiff was terminated in November 2011. See Complaint ¶ 30. The demurrer is sustained as to the 7th COA on this additional ground.

4. Reply Arguments
Chang also argued that the 7th COA failed to comply with the administrative exhaustion requirement as to Chang (see Romano v. Rockwell Int’l, Inc. (1996) 14 Cal.4th 479, 492) and that there is no liability under the 8th COA for personnel management decisions (Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 79-80). However, these arguments were first raised in the reply and are not considered (see Campos v. Anderson (1997) 57 Cal.App.4th 784, 794 n.3). Even if considered, they are directed at a factual basis for Chang’s liability (i.e., conduct taken during Plaintiff’s employment) which are not alleged in the Complaint. Therefore, these arguments are not directed at the current pleadings and are not considered.

Motion to Strike –
Universal Bank and Chang move to strike Paragraph 30 of the Complaint (pertaining to the alleged encouragement of state and/or federal investigation into Plaintiff) on the basis of the litigation privilege and as to the claims for relief in the 12th COA (Complaint ¶ 186) on the basis that they are not authorized (see Clark v. Superior Court (2010) 50 Cal.4th 605, 610). Plaintiff fails to substantively address these issues. See Opp’n p. 7:15-20. Therefore, the motion to strike is granted without leave to amend.

Leave to Amend –
Plaintiff has requested leave to amend. Because this is the first challenge to the pleadings, the Court will grant leave to amend. However, because Plaintiff does not appear to be able to amend as to the motion to strike, the motion to strike is granted without leave to amend.