Case Name: Ramamurthy v. Cisco Systems, Inc., et al.
Case No.: 1-13-CV-246926

Cross-complainant Ascent Technologies, Inc. (“Ascent”) alleges that it hired plaintiff and cross-defendant Balaji Ramamurthy (“Plaintiff”) in 2010 and “provided him” to cross-defendant and cross-complainant IDC Technologies, Inc. (“IDC”), who placed him with cross-defendant and defendant Cisco Systems, Inc. (“Cisco”) to work at Cisco’s premises at the direction of IDC. (See First Amended Cross-Complaint by Ascent Technologies, Inc. (“FACC”), 8 and 9.) Plaintiff resigned when he was not paid, and Ascent alleges that IDC still owes it $54,162 for Plaintiff’s services. (See FACC, 19.) Plaintiff filed the underlying action for nonpayment of wages and related claims against Ascent, IDC, Tata Consultancy Services Limited (“Tata”), and Cisco on May 24, 2013. (FACC, 20.) IDC, Tata, and Cisco settled with Plaintiff and Plaintiff dismissed all of the defendants from the underlying action. (FACC, 21 and 22.) Then, IDC cross-complained against Ascent for indemnity, breach of contract, and declaratory relief, although it had not tendered defense of the underlying action to Ascent or demanded indemnity from Ascent prior to settling with Plaintiff without Ascent’s knowledge. (See FACC, 21, 23, 24, and 25.) Ascent alleges that the settlement with Plaintiff was based on time sheets that were manipulated to inflate the hours actually worked, and IDC’s cross-complaint is an attempt to harass Ascent and to avoid paying the $54,162 in invoices it owes to Ascent for Plaintiff’s services. (See FACC, 28, 29, and 32.)

Currently before the Court are IDC’s demurrer to and motion to strike portions of the FACC. Tata joins in both motions and Cisco joins in the motion to strike.

IDC’s demurrer to the third and fourth causes of action for intentional and negligent interference with prospective economic relations is SUSTAINED without leave to amend given that Ascent has failed to allege any actions by IDC that interfered with its relationship with Plaintiff. Ascent does not allege that IDC’s failure to pay the invoices prevented it from paying Plaintiff and retaining him as an employee. To the contrary, it alleges that it did pay Plaintiff for at least two of the months of employment at issue, and that any complications with paying Plaintiff were due to Plaintiff’s failure to provide time sheets, not IDC’s failure to pay invoices that were not even issued until after Plaintiff resigned. (See SACC, 14, 15, and 19.)

Further, how Ascent’s settlement of the underlying action with Plaintiff or unspecified Business and Professions Code section 17200 violation would have impacted Plaintiff’s employment with Ascent is entirely unclear. Ascent addresses IDC’s demurrer to these claims merely by quoting the allegations of the FACC and does not indicate how it could amend these causes of action to state a claim, and it does not otherwise appear that Ascent could accomplish such an amendment. The demurrer is thus sustained without leave to amend. (See Camsi IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525, 1542 [“absent an effective request for leave to amend in specified ways,” it is an abuse of discretion to deny leave to amend “only if a potentially effective amendment were both apparent and consistent with the plaintiff’s theory of the case”]; Goodman v. Kennedy (1976) 18 Cal. 3d 335, 349 [“Plaintiff must show in what manner he can amend his complaint and how that amendment will change the legal effect of his pleading”], quoting Cooper v. Leslie Salt Co. (1969) 70 Cal. 2d 627, 636; Hendy v. Losse (1991) 54 Cal. 3d 723, 742 [“the burden is on the plaintiff… to demonstrate the manner in which the complaint might be amended”].)

The demurrer to the fifth cause of action is SUSTAINED with 10 days’ leave to amend as to IDC and SUSTAINED without leave to amend as to Tata. As discussed herein, Ascent fails to state a claim for any underlying tort. Consequently, Ascent also fails to allege a claim for conspiracy. (See Applied Equip. Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-11 [“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. … It must be activated by the commission of an actual tort.”].) The demurrer is sustained without leave to amend as to Tata given that there is no indication that Tata was involved in any of the actions complained of by Ascent other than the settlement, which does not reasonably appear to support any tort claim.

The demurrer to the sixth cause of action for fraud is SUSTAINED with 10 days’ leave to amend as to IDC and SUSTAINED without leave to amend as to Tata. In support of the sixth cause of action, Ascent alleges in vague terms that it was induced to enter into its agreement with IDC “with the representations that Plaintiff (sic) [presumably Ascent itself] would benefit from this agreement,” and that cross-defendants “concealed or suppressed their intention to appropriate to themselves and convert Ascent’s interest for themselves.” (SACC, 79 and 82.) These allegations are wholly inadequate to state a claim for fraud. (See Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 [every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made]; see also Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185, fn. 14 [fraud and negligent misrepresentation must be pleaded with particularity and by facts that show how, when, where, to whom, and by what means the representations were tendered].) In its opposition, Ascent contends that it need not plead the sixth cause of action with specificity because the facts supporting its claim are more within cross-defendants’ knowledge, but the FACC and opposition are devoid of any explanation as to why this would be. Ascent further argues that a promise to perform a contract without any intention of doing so is actionable fraud, but FACC fails to set forth any facts supporting the conclusion that IDC did not intend to perform its agreement with Ascent at the time it was entered. The demurrer is sustained without leave to amend as to Tata given that there is no indication Tata was in any way involved with the agreement between Ascent and IDC that Ascent contends supports its fraud claim.

The demurrer to the seventh cause of action for unjust enrichment is SUSTAINED without leave to amend as to both IDC and Tata. IDC (joined by Tata) contends that unjust enrichment is not a cause of action. Unjust enrichment is a general principle that underlies various legal doctrines and remedies, and is most often described as the result of a party’s failure to make restitution. (See McBride v. Boughton (2004) 123 Cal.App.4th 379, 387.) While it is not a cause of action per se, the court ignores “[e]rroneous or confusing labels … if the complaint pleads facts which would entitle the plaintiff to the relief.” (Id. at p. 387.) The Court thus construes Ascent’s seventh cause of action as an attempt to plead a cause of action giving rise to a right of restitution.

To obtain restitution, Ascent must, at a minimum, identify the benefit it seeks to disgorge from cross-defendants. (See Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726 [the elements of unjust enrichment are: (1) receipt of a benefit; and (2) unjust retention of the benefit at another’s expense].) However, all but one of the actions complained of by Ascent in support of this claim did not result in any benefit to the cross-defendants and consequently cannot support a claim for restitution. (See FACC, 89 [cross-defendants “settled [Plaintiff’s] claim at a very high amount in bad faith without ASCENT’S knowledge; … made claims against ASCENT to pay settlement amount by conspiring together and intentionally or recklessly causing ASCENT harm, took advantage of ASCENT’S ignorance of settlement, and recklessly caused ASCENT to incur litigation cost”].) The only allegation that could conceivably support such a claim is Ascent’s allegation that the cross-defendants “manipulated the work hours of [Plaintiff] to get more money.” (FACC, 89.) However, it is entirely unclear how this alleged manipulation would have resulted in overpayments to IDC or Tata that should be disgorged to Ascent, given that Ascent does not allege it paid any of the cross-defendants for Plaintiff’s time other than Plaintiff himself. Again, Ascent simply quotes from the FACC in its opposition and does not indicate how it could amend the seventh cause of action to state a claim.

The demurrer to the eighth cause of action for declaratory relief is SUSTAINED without leave to amend as to both IDC and Tata. In light of the fact that all of Ascent’s requests for declaratory relief pertain to aspects of IDC’s claim for indemnity or Ascent’s own claim for breach of contract, the Court finds that declaratory relief would not be “necessary or proper at the time under all the circumstances.” (See Code Civ. Proc., § 1061; Cal. Ins. Guar. Ass’n v. Super. Ct. (Jakes at the Shore, Inc.) (1991) 231 Cal.App.3d 1617, 1624 [the object of the declaratory relief statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues]; Cardellini v. Casey (1986) 181 Cal.App.3d 389, 396 [claim for declaratory relief inappropriate where the rights of the complaining party “have crystallized into a cause of action for past wrongs” and “no continuing relationship exists to justify a declaration of future rights”]; Otay Land Co. v. Royal Indem. Co. (2008) 169 Cal.App.4th 556, 562563 [on demurrer, courts will evaluate whether the factual allegations of a complaint for declaratory relief reveal that an actual controversy exists between the parties; determination that declaratory relief is not necessary or proper under the circumstances is discretionary].)

The motion to strike is DENIED as to the allegations in paragraphs 38, 48, and 95, given that the Court must presume that IDC was contractually obligated to tender its defense based on the allegations of the FACC. (See FACC, 38.)

The motion to strike is GRANTED without leave to amend as to the allegations in paragraphs 45 and 52. California law does not authorize the award of punitive damages for breach of a contract (see Harris v. Atlantic Richfield Co. (1993) 14 Cal.App.4th 70, 77), and punitive damages are not recoverable for the breach of the implied covenant of good faith and fair dealing in cases that do not involve insurance policies (see Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 61).

In light of the recommendations presented above, the motion to strike is deemed MOOT with respect to the allegations in paragraphs 76, 87, and 91 as to IDC and Tata. The motion is GRANTED without leave to amend as to Cisco with respect to these allegations given that Ascent pleads no facts supporting the conclusion that Cisco has acted with oppression, fraud, or malice and there is no indication that Cisco was involved in the actions complained of by Ascent, other than the settlement of the underlying action, which does not support a tort claim. (See Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872 [specific factual allegations are required to support a punitive damage claim].)

Accordingly, paragraphs 45 and 52 are hereby stricken from the FACC in their entirety as to IDC, Tata and Cisco. Paragraphs 87 and 91 are stricken as to Cisco, along with the following language from paragraph 76:

-“ASCENT further alleges that a least a portion, if not all, of Cross-Defendants IDC, TATA, CISCO, and RAMAMURTHY and MOES 1 through 100’S act and omissions as described above, were done with malice, fraud, and oppression, and to such extent, Ascent should recover, in addition to actual damages, damages to make an example of, and to punish such Cross-Defendants.” (FACC, 76, ll. 23-28.)

The Court will prepare the order.