2019-00254125-CU-FR

Michael Balasa vs. Ulla Elena Norlie

Nature of Proceeding: Hearing on Demurrer

Filed By: Harris, Kevin W.

Defendants Christian Warren Esparza and Scott Esparza & Co. Bail Bonds, Inc.’s demurrer to Plaintiff Michael Balasa dba Bullseye Bail Bonds’ complaint is ruled upon as follows.

Defendants’ unopposed request for judicial notice of documents filed with the California Department of Insurance (e.g. Action Notice Statement of Employing Bail Agent or Permitee) is denied. First, the Court would note that there is no declaration from anyone, much less a custodian of records, etc. attempting to authenticate the documents. “[W]e cannot take judicial notice of these documents [because]…no proper evidentiary foundation was laid.” (Pastoria v. Nationwide Insurance (2003) 112 Cal.App.4th 1490, 1495, n.4.) The request for judicial notice is denied on this basis alone. Moreover, Defendants are seeking to have the Court take judicial notice not just of the existence of certain documents, but the truth of the matters therein. Taking judicial notice of documents is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.) “When judicial notice is taken of a document, however, the truthfulness and proper interpretation are disputable.” (Id.) Judicial notice may be taken of official acts of a governmental entity, but this does not mean that judicial notice may be taken of the truth of factual matters set forth therein “since

in many instances what is being noticed, and thereby established, is no more than the existence of such acts and not, without supporting evidence, what might factually associated with or flow therefrom.” (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1134 [while judicial notice could be taken of government practice of mailing notice of rejection, inappropriate to resolve on demurrer the disputed fact as to whether the practice had been followed in the specific instance].) “A court cannot determine based on only the four corners or a document, without provisionally considering any extrinsic evidence offered by the parties, that the meaning of a document is clear and unambiguous.” (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114.) “For a court to take judicial notice of the meaning of a document submitted by a demurring party based on the document alone, without allowing the parties an opportunity to present extrinsic evidence of the meaning of the document, would be improper. A court ruling on a demurrer therefore cannot take judicial notice of the proper interpretation of a document submitted in support of the demurrer.” (Id. at 114-115.) A hearing on a demurrer cannot be turned into a contested evidentiary hearing through the guise of having the court take judicial notice of documents whose truthfulness or proper interpretation are disputable. ( Unruh-Haxton v. Regents of Univ. of Cal. (2008) 162 Cal.App.4th 343, 365.)

The standards applicable to demurrers is well-familiar to the court and counsel.

Pleadings in California are construed liberally. The only issue that can be raised by
demurrer is whether the facts, as pled, state a valid cause of action – not whether the
allegations are true. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) “A demurrer tests
the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies

only where the defects appear on the face of the pleading or are judicially
noticed.” (Code Civ. Proc, §§ 430.30, 430.70.) The only issue involved in a demurrer
hearing is whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action.” (McKenney v. Purepac Pharm. Co. (2008) 162 Cal.App.4th
72, 79; Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) For the purpose of ruling on
demurrers, courts read the allegations liberally and in context. (McKenney, supra, 167
Cal.App.4th at 77; Taylor v. City of L.A. Dep’t of Water and Power (2006) 144
Cal.App.4th 1216,1228.) A court must overrule a demurrer if the allegations of the
complaint adequately state a cause of action under any legal theory. (Cellular Plus v.
Superior Court (1979) 14 Cal.App.4th 1224,1231.) However, a demurrer to an alleged
cause of action must be sustained where “[the pleading does not state facts sufficient
to constitute a cause of action”, (C.CP. § 430.10, subd. (e)), or is “uncertain,” i.e.,
ambiguous or unintelligible. (C.CP. § 430.10, subs, (f).) Only well-pled facts suffice to
state a cause of action under California law, and conclusory assertions are
disregarded in ruling on a demurrer. (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)
While the Court must accept as true all material allegations properly pled in the
complaint in evaluating a demurrer, the Court need not accept legal conclusions,
contentions or deductions. (Buller v. Sutter Health (2008) 160 Cal. App. 4th 951, 986
(on demurrer, “[we do not assume the truth of contentions, the deductions or
conclusions of fact or law.”) [internal quotations marks omitted]. See also Freeman v.
San Diego Ass ‘n of Realtors (1999) 77 Cal.App.4th 171, 144, fn.11; Aubry v. Tri-City
Hospital (1992) 2 Cal.4th 962, 966-67.) Plaintiff bears the burden of pleading facts

sufficient to state a claim; courts will not supply essential elements of a claim that were
not initially pled. (See Richards v. Harper (9th Cir. 1988) 864 F.2d 85, 88.)

In this action Plaintiff alleges causes of action against demurring Defendants for conversion, fraud and interference with economic relationship. The other causes of action in the complaint are alleged against non-demurring Defendant Ulla Elena Norie.

Neither Defendants nor Plaintiff summarized the complaint in their papers. As best the Court can tell the claims against Defendants arise from allegations that Plaintiff entered an oral agreement with Ms. Norie in 2012 whereby she agreed to work on collection of past due accounts and that Plaintiff appointed her as a bail agent with his surety company in August 2014. (Comp. ¶¶ 11-13.) Ms. Norlie allegedly introduced Plaintiff to Adam Van Hulten, a process server, in July 2014 and suggested that Plaintiff hire him as a bail agent. Plaintiff allegedly hired Mr. Van Hulten as a bail and collection agent and it was agreed that Mr. Van Hulten and Ms. Norlie would work as a team writing bail and collecting past due accounts and that they would split commissions evenly. (Id. ¶¶ 14-15.)

First Cause of Action (Conversion)

Defendants’ demurrer is sustained with leave to amend for failure to state facts sufficient to constitute a cause of action. Defendants argue that the conversion claim is untimely. The statute of limitations for a conversion claim is three years. (CCP § 338(c); Strasburg v. Odyssey Group (1996) 51 Cal.App.4th 906, 915.) Plaintiff alleges that Defendants converted files and money in June 2015. The instant complaint was not filed until April 10, 2019, more than the three years later. As pled, the claim is untimely. Plaintiff does not address this argument in opposition.

Second Cause of Action (Fraud)

Defendants’ demurrer is sustained with leave to amend for failure to state facts sufficient to constitute a cause of action. Defendants argue that the fraud cause of action is untimely. A fraud claim is governed by a three year statute of limitations. (CCP § 338(d).) The statute provides that a fraud cause of action does not accrue until the discovery by the aggrieved party of the facts constituting the fraud or mistake. The statute begins to run when the plaintiff “obtains knowledge of facts sufficient to make a reasonably prudent suspicious of fraud. The action therefore accrues when a plaintiff has notice or information of circumstances sufficient to put a reasonable person on inquiry: i.e., when ‘the plaintiff’ suspects or should suspect that her injury was caused by wrongdoing.” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1110; see also Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) Plaintiff alleges that Defendants engaged in various concealments and representations between April and June 2015 regarding Defendants secretly employing Ms. Norlie and Mr. Van Hulten which ultimately allowed Defendant to obtain certain bail referrals without having to pay Plaintiff any commissions. Plaintiff specifically alleges that he became aware that something was wrong in July 2015 when Defendants refused to pay or acknowledge his right to the commissions. (Comp. ¶ 52.) The complaint was not filed until April 2019, more than three years later and the fraud claim is untimely. Plaintiff does not address this argument in the opposition.

Fourth Cause of Action (Interference With Economic Advantage)

Defendants’ demurrer is sustained with leave to amend for failure to state facts sufficient to constitute a cause of action. Defendants first argue that the cause of action is barred by the statute of limitations. The two year statute of limitations in CCP § 339(1) governs claims for tortious interference with a person’s business. (Guess, Inc. v. Superior Court (1986) 176 Cal.App.3d 473, 478; Knoell v. Petrovich (1999) 76 Cal.App.4th 164, 168.) Plaintiff alleges that Defendants interfered with the relationship it had with Ms. Norlie and Mr. Van Hulten in August 2015. Plaintiff alleges that

Defendant secretly lured Ms. Norlie and Mr. Van Hulten into employment and pocketed the commissions for referrals processed by them when such commissions should have been paid to Plaintiff. The complaint was not filed until over three and a half years later in April 2019 and the interference claim is untimely. This clearly appears on the face of the complaint. The Court understands that resolution of a statute of limitations issue is normally a question of fact. (Fox v. Ethicon Endo-Surgery, Inc., supra, at p. 810.) To that end, “[a] demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint, as it does here.

In opposition Plaintiff argues that it alleged in the body of the cause of action that Defendants’ conduct constituted an unfair trade practice in Bus. & Prof. Code § 17200 and that such claims are governed by a four year statute of limitations. (Comp. ¶ 66; Bus. & Prof. Code § 17208.) While the interference cause of action refers to § 17200 in a passing reference, as pled, it is not labeled as such and seeks damages which are not available is a § 17200 claim. Plaintiff implicitly acknowledges that he has not set forth a §17200 claim as he requests leave to state a separate cause of action under Bus. & Prof. Code § 17200. If the Fourth Cause of Action is truly one under § 17200, such a request would not be necessary. As a result, the demurrer is sustained on the basis that the cause of action is untimely. Plaintiff may have leave to amend, including leave to state a separate cause of action under § 17200 and conspiracy to induce a breach of contract as requested in opposition.

Defendants also argue that Plaintiff has failed to plead the elements of the claim of intentional interference. In order to state a claim for intentional interference with prospective economic advantage, Plaintiff was required to allege (1) an economic relationship between himself and some third party, with the probability of future economic benefit; (2) defendant’s knowledge of the relationship; (3) intentional acts on the part of defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm. (Edwards v. Arthur Andersen, LLP (2008) 44 Cal.4th 937, 944.) In addition, the alleged interference must be independently wrongful by some legal measure other than the fact of the interference itself. Defendants argue that no wrongful conduct is alleged because Defendant Norile entered into an employment agreement with Defendants in August 2015, prior to the alleged oral contract between her and Plaintiff on August 17, 2015. (Comp. ¶ 62.) However, that appears to be a typographical error because in the preliminary allegations it is alleged that Ms. Norile was appointed as Plaintiff’s bail agent in August 2014. (Comp. ¶ 13.) Plaintiff acknowledges the error in the demurrer and requests leave to amend to correct it. In any event, Defendants’ argument that their own contract with Ms. Norile predates Plaintiff’s alleged oral contract relies upon the request for judicial notice which was denied. The demurrer on this basis is overruled.

As a result, the demurrer to the first, second and fourth causes of action is sustained with leave to amend as set forth above. Leave to amend is granted as this is the first challenge to the complaint. In addition, Plaintiff is given leave to amend to allege separate causes of action for violation of Business & Professions Code § 17200 and conspiracy to induce a breach of contract as requested in the opposition. While Defendants appear to argue in reply that Plaintiff would not be able to plead a Business & Professions Code § 17200 cause of action, the Court will not evaluate the potential merits of any such cause of action at this point which has not yet been pled.

Plaintiff may file and serve an amended complaint no later than October 15, 2019. Defendants shall file and serve their responses within 30 days thereafter, 35 days if the amended complaint is served by mail as modified by the CCP 430.41 extension if necessary.

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.