Case Name: Balwant Birla, et al. v. Raj Bhanot, et al.
Case No.: 17-CV-313096

I. Background

According to the allegations in the complaint, “[t]his is a dispute over control of Hindu Temple Southbay, a California nonprofit religious corporation, and its property.” (Compl., ¶ 1.)

Plaintiffs Hindu Temple Southbay (the “Temple”) and its director Balwant Birla (“Birla”) (collectively, “Plaintiffs”) commenced this action against defendants Raj Bhanot (“Bhanot”) and Rajinder K. Sharma (“Sharma”) to determine the validity of their service and conduct as members of the Temple’s Board of Directors (the “Board”). (Compl., ¶ 2.)

For context, nonparty Naranji Patel, Bhanot, and Birla founded the Temple in 1992 and served on the Board. (Compl., ¶¶ 10-11.) At some point in time, Naranji Patel passed away and someone else took his place as a director. (Compl., ¶ 11.) Plaintiffs allege the Board currently consists of Birla and Bhanot as well as Ashwin Patel, Sanjay Agarwal, Hitesh Patel, and Surajit Sengupta. (Compl., ¶ 3.)

Plaintiffs allege Bhanot, as Treasurer, transferred Temple funds to separate accounts in his exclusive control without the permission of the Board. (Compl., ¶¶ 19-21.) To do so, he purportedly filed documents with the California Secretary of State misrepresenting that he was Chief Financial Officer of the Temple. (Compl., ¶¶ 21-22.) In concert with Bhanot, Sharma misrepresented that he was Chief Executive Officer of the Temple and a member of the Board. (Compl., ¶¶ 22-24.)

Plaintiffs assert causes of action against Bhanot and Sharma for: (1) determination of validity of appointment or election of directors; (2) breach of fiduciary duty; (3) accounting; (4) constructive trust; (5) injunctive relief; and (6) declaratory relief.

Sharma thereafter filed a cross-complaint naming Birla and other members of the Board — Ashwin Patel, Sanjay Agarwal, Hitesh Patel, and Surajit Sengupta — as cross-defendants. According to the allegations in the first amended cross-complaint (“FACC”), Birla and these other directors held meetings without notifying all members of the Board in order to accomplish business without Sharma’s involvement and Birla assumed the position of President without the consent of the Board. (FACC, ¶¶ 22-27.) Sharma asserts causes of action against Birla, Ashwin Patel, Sanjay Agarwal, Hitesh Patel, and Surajit Sengupta (collectively, “Cross-Defendants”) for: (1) determination of the validity of appointment or election of directors; (2) breach of fiduciary duty; (3) declaratory relief; and (4) accounting.

Currently before the Court is Cross-Defendants’ demurrer to the FACC.
II. Preliminary Procedural Matters

There are many procedural and substantive problems with Cross-Defendants’ demurrer. The Court first addresses several procedural issues before turning to the merits.

A. Materials Filed in Support of Demurrer

For purposes of a demurrer, the pleading defect must be apparent from the face of the pleading or matters subject to judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A court cannot consider evidence. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315.)

Cross-Defendants filed a request for judicial notice and an index of exhibits in support of their demurrer. In their memorandum of points and authorities, they include a section entitled “admissibility of evidence” in which they assert the Court must consider judicially noticeable matters. (Mem. of Pts. & Auth. at p. 5:1.) Cross-Defendants’ submission of an index of exhibits and discussion of “admissibility of evidence,” along with the substance of their request for judicial notice, indicate they perhaps do not fully understand judicial notice, the purpose of a demurrer, and the matters a court may consider. Thus, it is necessary to first provide some clarification before evaluating their request for judicial notice and specifying which exhibits, if any, may be considered by the Court.

First and foremost, although judicial notice is governed by the Evidence Code, it is not a means for requesting admission of evidence. (See Sosinky v. Grant (1992) 6 Cal.App.4th 1548, 1563-64.) Judicial notice is a substitute for formal proof. (Id. at p. 1564.) If a matter is subject to judicial notice, a court may accept it as true and need not admit evidence to prove its truth. (Ibid.) Thus, by definition, a matter subject to judicial notice is not evidence. (Ibid.)

Additionally, it is improper to use judicial notice to get a court to consider matters “that aren’t appropriate for judicial notice, like emails between the parties’ counsel.” (Hsu v. Puma Biotechnology, Inc. (C.D.Cal. 2016) 213 F.Supp.3d 1275, 1277.) “The hearing on demurrer may not be turned into a contested evidentiary hearing through the guise of having the court take judicial notice. . . .” (Fremont Indemnity Co. v. Fremont General Corp. (“Fremont”) (2007) 148 Cal.App.4th 97, 114.) This is because the purpose of a demurrer is to test the legal sufficiency of the pleading not the truth of the facts alleged. (Id. at pp. 113-14.) The latter may be tested at trial. (See Kilroy v. State (2004) 119 Cal.App.4th 140, 146-47.)

With this clarification in mind, the Court considers the propriety of the index of exhibits and request for judicial notice.

1. Index of Exhibits

Three of the six exhibits in the index are meet and confer correspondence. (Index, Exs. A-C.) The Court considers these exhibits solely for purposes of determining that Cross-Defendants met and conferred before filing their demurrer. (See Code Civ. Proc., § 430.41.) The other three exhibits in the index are materials of which Cross-Defendants request judicial notice, namely minutes from a meeting of the Board, the Temple’s bylaws, and an order for provisional relief issued by the Court (Hon. Williams). (Index, Exs. D-F.) Accordingly, the Court does not consider these exhibits independently and will consider them solely in connection with Cross-Defendants’ request for judicial notice. (See Cal. Rules of Court, rule 3.1306(c).)

2. Request for Judicial Notice

First, Cross-Defendants request judicial notice of the underlying complaint, the FACC, and the fact that certain causes of action are asserted in each pleading. It is unnecessary to take judicial notice of the FACC and the fact that Sharma asserts certain causes of action because, as the pleading under review, the FACC must necessarily be considered by the Court. (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1091, fn. 1.) Turning to the underlying complaint, a court may take judicial notice that a plaintiff alleges certain facts or asserts particular causes of action but may not take judicial notice of the truth of the allegations in the pleading. (Sosinsky, supra, 6 Cal.App.4th at pp. 1564-67, citing Evid. Code, § 452, subd. (d).) With this limitation in mind, the complaint and the fact of the causes of action asserted therein are proper subjects of judicial notice.

Second, Cross-Defendants request judicial notice of the Board’s meeting minutes, testimony by Sharma, and two versions of the Temple’s bylaws, which they state were submitted as evidence in connection with an evidentiary hearing before the Court (Hon. Williams) in July 2017. Cross-Defendants do not identify any statutory basis for taking judicial notice of these matters or provide any explanation to support their request. Thus, there is no basis for concluding these matters are proper subjects of judicial notice. To be sure, to the extent Cross-Defendants intended to rely on Evidence Code section 452, subdivision (d), which authorizes judicial notice of court records, their reliance is misplaced. A court cannot take judicial notice of facts simply because they appear in documents that a party submitted to the court at some point in time. (Sosinsky, supra, 6 Cal.App.4th at p. 1567.) Accordingly, the meeting minutes, testimony, and bylaws are not proper subjects of judicial notice.

Finally, Cross-Defendants request judicial notice of the truth of the finding by the Court (Hon. Williams) that the Board consists of Birla, Bhanot, Ashwin Patel, Sanjay Agarwal, Hitesh Patel, and Surajit Sengupta and that the finding was made after consideration of whether Birla could serve on the Board at a hearing in July 2017. Cross-Defendants do not cite any statute or other legal authority to support their request, and it is not otherwise obvious to the Court that these matters are proper subjects of judicial notice. Significantly, Cross-Defendants do not request judicial notice of the fact that a finding was made, which is a proper subject of judicial notice. (Sosinsky, supra, 6 Cal.App.4th at p. 1568.) Cross-Defendants request judicial notice of the truth of the finding of fact, which is not. (Id. at pp. 1568-69.) Under these circumstances, it follows that it is not necessary or helpful to take judicial notice of the date of or issues considered at the hearing. (See Jordache Enterprises, Inc. v. Brobeck, Phleger & Harrison (1998) 18 Cal.4th 739, 748, fn. 6.) Thus, these matters are not proper subjects of judicial notice.

Based on the foregoing, Cross-Defendants’ request for judicial notice of the underlying complaint is GRANTED and the balance of their request is DENIED.

B. Grounds for Demurrer

The statutory grounds for demurrer are listed in Code of Civil Procedure section 430.10. “A demurrer shall distinctly specify the [statutory] grounds upon which any of the objections to the [pleading] are taken.” (Code Civ. Proc., § 430.60; see also Cal. Rules of Court, rule 3.1320(a).)

Some of the grounds identified in Cross-Defendants’ demurrer are statutory grounds, namely the existence of another action pending, a defect or misjoinder of parties, uncertainty, and failure to state facts sufficient to constitute a cause of action. (See Code Civ. Proc., § 430.10, subds. (c)-(f).)

But Cross-Defendants also identify the statute of limitations as a ground in their demurrer and identify a lack of standing as a ground in their notice of hearing. These are not statutory grounds. (See Code Civ. Proc., § 430.10.) They are supporting arguments. (See Fremont, supra, 148 Cal.App.4th at p. 111 [“The grounds for a demurrer differ from the reasons for sustaining a demurrer on a particular ground.”].) These arguments may be advanced in support of a demurrer on the ground of failure to state sufficient facts, which Cross-Defendants otherwise raise. (Id. at pp. 111-12.) Accordingly, the Court will consider these arguments in evaluating Cross-Defendants’ demurrer on that particular statutory ground.

Additionally, a party must clearly state whether a ground for demurrer applies to the entire pleading or specific causes of action therein. (Cal. Rules of Court, rule 3.1320(a).) Cross-Defendants state their demurrer on the ground of failure to state sufficient facts is to the “entire complaint” but, immediately thereafter, state there is a defect with respect to “all of the claims.” (Dem. at p. 2:1-7.) Thus, it is unclear whether the demurrer on this ground is to individual causes of action or the FACC as a whole. Cross-Defendants generically and collectively refer to “claims” in their memorandum of points and authorities, which thus does not clarify the matter. The scope of the demurrer is significant because a demurrer “attacking the complaint as a whole, can be [sustained] only if no count of the complaint states facts sufficient to entitle [the pleader] to relief on any theory.” (Warren v. Atchison, R. & S.F. Ry. Co. (1971) 19 Cal.App.3d 24, 29.) Due to the nature of the arguments advanced by Cross-Defendants in support of their demurrer, namely a lack of standing and the expiration of the statute of limitations, the Court treats the demurrer as being directed to each individual cause of action and not the FACC as a whole.

Based on the foregoing, the Courts treats the demurrer as being made as follows. First, Cross-Defendants demur to the first and third causes of action on the ground of another action pending. (Code Civ. Proc., § 430.10, subd. (c).) Second, Cross-Defendants demur to the FACC as a whole on the grounds of a defect or misjoinder of parties and uncertainty. (Code Civ. Proc., § 430.10, subds. (d), (f).) Finally, Cross-Defendants demur to the first, second, third, and fourth causes of action on the ground of failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).)

III. Discussion

A. Another Action Pending

Cross-Defendants demur to the first and third causes of action on the ground “[t]here is another action pending between the same parties on the same cause of action.” (Code Civ. Proc., § 430.10, subd. (c).)

Cross-Defendants argue the demurrer is sustainable because the complaint and the FACC contain two of the same causes of action, namely for determination of the validity of election or appointment of directors and declaratory relief. Put differently, Cross-Defendants’ position is that the Court should sustain the demurrer because two causes of action are duplicative and/or “redundan[t].” (Mem. of Pts. & Auth. at p. 7:15.) Cross-Defendants do not provide any analysis or legal authority to support their argument. Although their reasoning is entirely unclear, the conclusion they reach is clearly incorrect.

A demurrer on the ground there is another action pending is also known as a plea in abatement. (County of Santa Clara v. Escobar (2016) 244 Cal.App.4th 555, 564.) “To ‘abate’ a right of action is to suspend its prosecution due to some impediment that, without defeating the underlying cause of action, prevents the present maintenance of a suit.” (Ibid., original italics.) Thus, a demurrer on this particular statutory ground is a request to suspend or stay a lawsuit based on the pendency of another lawsuit. (Ibid.; see also Childs v. Eltinge (1973) 29 Cal.App.3d 843, 855-56.)

But Cross-Defendants do not argue there is some other lawsuit that requires suspension of the present lawsuit. Instead, Cross-Defendants appear to interpret Code of Civil Procedure section 430.10, subdivision (c) as authorizing abatement of individual causes of action within the same lawsuit. This interpretation of the law is unreasonable, and Cross-Defendants’ assertion of this particular statutory ground is therefore inapt.

To be sure, a demurrer on the ground of another action pending is only sustainable if the demurring party shows: “‘(1) That both suits are predicated upon the same cause of action; (2) that both suits are pending in the same jurisdiction; and (3) that both suits are contested by the same parties.’ [Citation].” (Conservatorship of Pacheco (1990) 224 Cal.App.3d 171, 176.) Cross-Defendants do not address these prerequisites as necessary to substantiate their demurrer. Furthermore, where, as here, the parties do not stand in the same relative positions (e.g. when the plaintiff in one lawsuit is a defendant in the other) a demurrer is not sustainable on the ground there is another action pending. (See Mobil Oil Corp v. Super. Ct. (1978) 79 Cal.App.3d 486, 493-94.)

For these reasons, the demurrer to the first and third causes of action on the ground there is another action pending is OVERRULED.

B. Defect or Misjoinder of Parties

Code of Civil Procedure section 430.10, subdivision (d) authorizes a demurrer on the ground “[t]here is a defect or misjoinder of parties.” A party may demur on this ground if an indispensable party is absent from the litigation. (Majd v. Bank of America, N.A. (2015) 243 Cal.App.4th 1293, 1308-09, citing Code Civ. Proc., § 389; see also Simonelli v. City of Carmel-By-The-Sea (2015) 240 Cal.App.4th 480, 484.)

Cross-Defendants argue the demurrer is sustainable because Bhanot is not named as a cross-defendant. But Bhanot is named as a defendant in the underlying complaint, and so it is unclear how he could be considered absent from this litigation. It follows that, although not articulated by Cross-Defendants, their argument is based on the assumption that the failure to name a party in one pleading constitutes a failure to join him or her in the litigation. But Cross-Defendants do not provide any explanation or authority to support this assumption. Consequently, Cross-Defendants do not demonstrate there is any merit to their argument.

In conclusion, Cross-Defendants’ demurrer on the ground of a defect or misjoinder of parties is OVERRULED.

C. Uncertainty

Cross-Defendants demur to the FACC on the ground of uncertainty.

A party may demur on the ground of uncertainty to challenge a pleading as uncertain, ambiguous, or unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Financial Industry Reg. Authority (2012) 208 Cal.App.4th 1125, 1135.)

Cross-Defendants argue the demurrer is sustainable because there are inconsistent allegations in the pleading. More specifically, Cross-Defendants state: “The FACC fails to reconcile how Mr. Sharma can claim that the current version of the bylaws (i.e., the Amended and Restated Bylaws dated March 1, 2012) are in effect and govern [the Temple] when he has also inconsistently pled that any actions taken after 1998 were unauthorized in violation of [the Temple] bylaws.” (Mem. of Pts. & Auth. at p. 8:12-15.) Cross-Defendants’ argument is not particularly clear. Furthermore, even accepting there is some inconsistency, it is unclear how this renders the pleading so incomprehensible they cannot reasonably respond. Consequently, Cross-Defendants do not substantiate their demurrer.

The demurrer on the ground of uncertainty is therefore OVERRULED.

D. Failure to State Sufficient Facts

Cross-Defendants demur to each of the four causes of action in the FACC on the ground of failure to state facts sufficient to constitute a cause of action. In support of their demurrer, they argue Sharma lacks standing and the statute of limitations expired. (See E-Fab, supra, 153 Cal.App.4th at pp. 1315-16 [statute of limitations may be raised on demurrer]; Tarr v. Merco Constr. Engineers, Inc. (1978) 84 Cal.App.3d 707, 713 [lack of standing may be raised on demurrer].) But Cross-Defendants do not cite any legal authority or provide any analysis to support their arguments. Furthermore, in presenting these arguments, Cross-Defendants do not distinguish between or separately analyze each cause of action in the FACC. “‘Where a point is merely asserted by counsel without any argument of or authority for its proposition, it is deemed to be without foundation and requires no discussion.’ [Citation.]” (People v. Dougherty (1982) 138 Cal.App.3d 278, 282; Cal. Rules of Court, rule 3.1113(b) [required contents of supporting memorandum]; see also Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-85.) Accordingly, Cross-Defendants’ standing and statute-of-limitations arguments are without foundation and need not be discussed by the Court.

Because Cross-Defendants do not substantiate either of the arguments advanced in support of their demurrer on the ground of failure to state sufficient facts, the demurrer is OVERRULED.