Case Number: BC685739 Hearing Date: August 22, 2018 Dept: 78
Superior Court of California
County of Los Angeles
Department 78
DAN YOON;
Plaintiff,
vs.
VINCENT S. KIM, et al.;
Defendants.
Case No.:
BC 685739
Hearing Date:
August 22, 2018
[TENTATIVE] RULING RE:
Defendants Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Motion to Disqualify Counsel
Defendants Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Motion to Disqualify Counsel is DENIED.
.
FACTUAL BACKGROUND
This is an action for fraud and defamation related to control over a business. The First Amended Complaint (“FAC”) alleges as follows. Plaintiff Dan Yoon (“Yoon”) and Defendant John Y.K. Yoon (“John,” no relation to Dan) each owned 50% of the stock of KS Aviation, Inc. (“KS”), a flight school. (FAC ¶ 14, 16.) Dan repeatedly lent KS money for its various business ventures, exceeding $1 million. (FAC ¶ 23.)
Dan’s relationship with John began to wear in January 2014. (FAC ¶ 32.) John filed suit against Dave in Merced County Superior Court to oust him from company leadership. (FAC ¶¶ 34–35.)
While John’s civil case against Dan was pending, he and Defendants Steven Aguilar (“Aguilar”), Josh Daniels (“Daniels”), and Bob Deklinski (“Deklinski”) approached the Merced County District Attorney with false evidence that Dan had forged signatures on company documents and was stealing money from KS. (FAC ¶ 36.) The allegations resulted in a criminal complaint being filed against Dan. (FAC ¶ 36.) The DA notified the IRS, who sent 15 special agents to investigate Dan. (FAC ¶ 37.)
John began to notify Asian airlines that Dan was facing criminal and IRS charges, and the airlines began to withhold tuition payments. (FAC ¶ 39.) John also induced KS’s chief pilot to contact the local Flight Inspection Safety Office to claim that KS’s planes were unsafe. (FAC ¶ 40.)
In August 2016, Aguilar published Dan’s private financial information online. (FAC ¶¶ 43–44.)
In August 2016, John and his lawyer, Defendant Vincent Kim (“Kim”), summoned Dan to the funeral of John’s mother. (FAC ¶ 48.) When Dan arrived, without his attorneys, Kim presented Dan with a settlement agreement which would give John sole control of KS in exchange for dismissal of the civil litigation and help making Dan’s other tax and criminal proceedings go away. (FAC ¶ 48.) Dan signed the agreement. (FAC ¶ 50.)
The IRS tax investigation was terminated in October 2016. (FAC ¶ 51.) Dan pleaded no contest to his criminal charges, which were reduced to misdemeanors. (FAC ¶ 51.)
Dan filed suit against KS seeking repayment of his loans in March 2017. (FAC ¶ 52.) Meanwhile, John falsely told KS employees that Dan was the cause of KS’s recent financial difficulties. (FAC ¶ 53.) John represented to potential buyers of KS that he was sole owner of all KS shares. (FAC ¶ 54.) John demanded that Dan turn over all his KS shares, but Dan refused. (FAC ¶ 54.)
In June, July, and August 2017, John, Daniels, Aguilar, and Deklinski all emailed Dan threatening him that if with implied physical injury and renewed criminal prosecutions if he did not turn over his KS stock. (FAC ¶ 56.)
In August 2017, Defendants turned over additional evidence to the Merced DA that Dan had not turned over his KS stock and that his probation should be terminated. (FAC ¶ 56.) A probation termination hearing was held, but the court denied termination. (FAC ¶ 57.)
Defendants have also asked the DA to initiate a $4.5 million restitution claim against Dan, which is currently pending. (FAC ¶ 58.)
procedural history
Dan filed the Complaint on December 5, 2017. Dan filed the FAC on April 6, 2018, alleging eight causes of action:
Defamation
Fraud
Intentional Infliction of Emotional Distress
Threat and Coercion
Public Disclosure of Private Facts
Conspiracy
Elder Financial Abuse
Injunction
It is unclear when precisely the present Motion to Disqualify was filed. Dan filed an Opposition to the motion on August 8, 2018, and Defendants filed a Reply on August 14, 2018, but no original motion appears in the court’s file. In response to this court’s inquiries, Defendants filed the motion on August 16, 2018. Because the court was afforded with an original copy of the motion within a reasonable time of its inquiry, and because Dan does not appear to have been prejudiced by any irregularity, the court will review the motion.
Discussion
MOTION TO DISQUALIFY
Defendants Bob Deklinski, John Yoon, Steve Aguilar, and Josh Daniels move to disqualify Plaintiff Dan Yoon’s attorney, Cyril Lawrence, based on Lawrence’s prior representation of KS Aviation and his associate attorney’s client-consultation with Josh Daniels on an employment matter in which Dan was implicated. (Motion at p. 2.)
Attorneys are forbidden from accepting employment adverse to current or former clients without informed written consent where the attorney, by virtue of his or her current or former representation, “has obtained confidential information material to the employment.” (Cal. Rules of Prof. Conduct, rule 3-310(E).) This rule is designed to “protect the confidential relationship … between attorney and client … which continues after the formal relationship ends.” (Henriksen v. Great American Savings & Loan (“Henriksen”) (1992) 11 Cal.App.4th 109, 113; accord Bus. & Prof. Code, § 6068, subd. (e)(1) [an attorney must “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client”].)
The courts apply a two-pronged test to determine whether the court must conclusively presume that an attorney has knowledge of confidential information about a prior client that requires the court to disqualify the attorney from representing a current client adverse to the prior client. First, there must be a “substantial relationship” between the former representation and the current representation. (See H. F. Ahmanson & Co. v. Salomon Brothers, Inc. (“H.F. Ahmanson”) (1991) 229 Cal.App.3d 1445, 1454.) Second, it must appear that “by virtue of the nature of the former representation or the relationship of the attorney to his [or her] former client” that “confidential information material to the current dispute would normally have been imparted to the attorney.” [Citations.] (Ibid.)
Absent evidence of actual knowledge of material confidential information, both prongs of the test must be satisfied before a Court applies the conclusive presumption of knowledge of such information. (See, e.g., Adams v. Aerojet General Corp. (2001) 86 Cal.App.4th 1324, 1331; In re Marriage of Zimmerman (“Zimmerman”) (1993) 16 Cal.App.4th 556, 563–564.) As the court held in Adams, supra: “When a substantial relationship has been shown to exist between the former representation and the current representation, and when it appears by virtue of the nature of the former representation or the relationship of the attorney to his [or her] former client confidential information material to the current dispute would normally have been imparted to the attorney or to subordinates for whose legal work he was responsible, the attorney’s knowledge of confidential information is presumed.” (86 Cal.App.4th at p. 1331.)
Thus, if both prongs of this test are satisfied, “access to confidential information by the attorney in the course of the first representation (relevant, by definition, to the second representation) is presumed and disqualification of the attorney’s representation of the second client is mandatory[.]” (Jun Ki Kim v. True Church Members of Holy Hill Community Church (“Jun Ki Kim”) (2015) 236 Cal.App.4th 1435, 1454.) Indeed, “if the nature of the representation is such that confidences could have been exchanged between the lawyer and client,” and it would be if it satisfies both prongs of this test, “courts will conclusively presume they were exchanged, and disqualification will be required.” (See City Nat. Bank v. Adams (2002) 96 Cal.App.4th 315, 327.) This presumption, if applicable, is conclusive and is thus, by definition, not rebuttable. (See Shandralina G. v. Homonchuk (2007) 147 Cal.App.4th 395, 409.)
Because of this conclusive presumption, a former client has two means by which to disqualify his or her former attorney from a current representation: the former client may either show that a former attorney representing an adverse party “actually possesses information adverse to the former client” or the former client may show that he or she was represented by the same attorney in a substantially similar representation and that this prior representation was of the nature such that “confidential information material to the current dispute would normally have been imparted to the attorney.” (See H.F. Ahmanson, supra, 229 Cal.App.3d at p. 1452.) Because of the availability of the conclusive presumption, “it is well settled that actual possession of confidential information need not be proved in order to disqualify the former attorney.” (See Ibid.; accord Henriksen v. Great American Savings & Loan (1992) 11 Cal.App.4th 109, 114.)
Defendants present the following evidence of Lawrence’s conflicts. Lawrence previously represented Dan in an action against KS Aviation in a complaint filed on March 2, 2017, and also represented Dan at the hearing for modification or termination of his probation on August 18, 2017. (Abbot Decl. Exh. A, E.) Lawrence also represented KS Aviation in defending a derivative suit brought by John in June 2015, evidently regarding allegations of improper loans. (Abbot Decl. Exh. B, H at p. 4.) Lawrence later sued KS himself, apparently to obtain attorneys’ fees for this prior representation. (Abbot Decl. Exh. D.) In Dan’s action against KS, the trial court found that Lawrence’s representation of KS in its defense against John was substantially related to Dan’s later action against KS — the court found that “[t]he claims asserted in [the prior case] included allegations of improper corporate loans that the present lawsuit seeks to enforce” (Abbot Decl. Exh. H at p. 3) — but declined to disqualify Lawrence because of KS’s unreasonable delay in bringing the motion to disqualify. (Abbot Decl. Exh. H at pp. 3–4.) Defendants finally note that Lawrence attended a Special Meeting of KS’s Board of Directors on March 2, 2016 (as Dan’s attorney) and another on July 21, 2016, also as Dan’s attorney but also serving as Temporary Recording Secretary. (Abbot Decl. Exh. F.)
Defendants have also submitted the declaration of Defendant Joshua Daniels, who testifies that In August 2015, while employed with KS, he met with Lawrence’s co-counsel Eric S. Beiswanger for a consultation on potential workplace assault charges against Dan. (Daniels Decl. ¶¶ 3–11.)
The court notes as an initial matter that Defendants have presented no evidence that Lawrence ever represented any of them in an individual capacity. Although the FAC names KS Aviation as a defendant in its caption, Dan has filed a Notice of Errata stating that this was a typo and that KS remains a non-party to this action. (See 5/15/2018 Notice of Errata.)
An attorney-client relationship likely did exist, however, between Beiswanger and Daniels. “An attorney-client relationship exists for purposes of the privilege whenever a person consults an attorney for the purpose of obtaining the attorney’s legal service or advice.” (Kerner v. Superior Court (2012) 206 Cal.App.4th 84, 116–17.) Daniels’s consultation with Beiswanger regarding potential assault claims against Dan created an attorney-client relationship under this definition.
However, Daniels’s declaration does not show that the information obtained by Beiswanger during this consultation is at all relevant to the present case. The assault allegations are not mentioned in the FAC, and Defendants have offered no argument as to why these allegations are relevant to the present dispute. Accordingly, this consultation furnishes no basis for disqualification here.
Defendants argue that, even though none of them were clients of Lawrence in his previous representations for and against KS, that they may nonetheless obtain disqualification. (Motion at pp. 9–10.) Defendants are correct that the lack of a prior attorney-client relationship does not necessarily preclude a party’s motion to disqualify counsel:
[W]hile federal courts generally limit standing to bring disqualification motions to clients or former clients, in California where the ethical breach is manifest and glaring and so infects the litigation in which disqualification is sought that it impacts the moving party’s interest in a just and lawful determination of his or her claims, a non-client might meet the standing requirements to bring a motion to disqualify based upon a third party conflict of interest or other ethical violation.
(Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197, 1204, internal quotation marks, alterations, and citations omitted.) “[W]here an attorney’s continued representation threatens an opposing litigant with cognizable injury or would undermine the integrity of the judicial process, the trial court may grant a motion for disqualification, regardless of whether a motion is brought by a present or former client of recused counsel.” (Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197, 1205.) The question here is whether defendants have demonstrated that Lawrence’s continued representation in this matter is a “manifest and glaring” ethical breach that threatens them with “cognizable injury” or which might “undermine the integrity of the judicial process.”
Defendants have not satisfied this burden. They have not demonstrated that Lawrence actually obtained material confidential information by virtue of his previous representation of KS, nor have they demonstrated that Lawrence’s prior representation of KS is substantially related to the present case by virtue of its underlying facts. Their motion and their exhibits provide no information regarding the facts of this prior representation, and no analysis of how those facts apply to the present action. Moreover, Lawrence’s appearances at KS board meetings do little on their own to implicate confidentiality concerns for the individual defendants here, as both appearances shown here were in the capacity of Dan’s attorney. (Abbott Decl. Exh. F.) Defendants have presented no argument as to how the information obtained in those meetings is confidential to them or material to the present action.
Defendants point this court to the December 19, 2017 order in Merced County Superior Court, which, although it denied the motion to disqualify, found that Lawrence’s representation of Dan against KS Aviation in that matter was substantially related to Lawrence’s representation of KS in a previous matter. (Reply at p. 2.) This order, which turned on the similarity of the facts underlying the two actions, has little bearing on the present case, when Defendants have not shown any substantial overlap in the facts underlying the FAC.
Defendants’ Motion to Disqualify is therefore DENIED.
Plaintiff to provide notice.
DATED: August 22, 2018 ________________________________
Hon. Robert S. Draper
Judge of the Superior Court
Case Number: BC685739B Hearing Date: August 22, 2018 Dept: 78
Superior Court of California
County of Los Angeles
Department 78
DAN YOON;
Plaintiff,
vs.
VINCENT S. KIM, et al.;
Defendants.
Case No.:
BC 685739
Hearing Date:
August 22, 2018
RULING RE:
Defendants Vincent S. Kim, Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Demurrer and motion to strike portions of the First Amended Complaint
Defendants Vincent S. Kim, Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Demurrer to the First Amended Complaint is SUSTAINED, without leave to amend, as to the Second and Seventh Causes of Action, and OVERRULED as to all other causes of action.
Defendants Vincent S. Kim, Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Motion to Strike Portions of the First Amended Complaint is DENIED.
FACTUAL BACKGROUND
This is an action for fraud and defamation related to control over a business. The First Amended Complaint (“FAC”) alleges as follows. Plaintiff Dan Yoon (“Yoon”) and Defendant John Y.K. Yoon (“John,” no relation to Dan) each owned 50% of the stock of KS Aviation, Inc. (“KS”), a flight school. (FAC ¶ 14, 16.) Dan repeatedly lent KS money for its various business ventures, exceeding $1 million. (FAC ¶ 23.)
Dan’s relationship with John began to wear in January 2014. (FAC ¶ 32.) John filed suit against Dave in Merced County Superior Court to oust him from company leadership. (FAC ¶¶ 34–35.)
While John’s civil case against Dan was pending, he and Defendants Steven Aguilar (“Aguilar”), Josh Daniels (“Daniels”), and Bob Deklinski (“Deklinski”) approached the Merced County District Attorney with false evidence that Dan had forged signatures on company documents and was stealing money from KS. (FAC ¶ 36.) The allegations resulted in a criminal complaint being filed against Dan. (FAC ¶ 36.) The DA notified the IRS, who sent 15 special agents to investigate Dan. (FAC ¶ 37.)
John began to notify Asian airlines that Dan was facing criminal and IRS charges, and the airlines began to withhold tuition payments. (FAC ¶ 39.) John also induced KS’s chief pilot to contact the local Flight Inspection Safety Office to claim that KS’s planes were unsafe. (FAC ¶ 40.)
In August 2016, Aguilar published Dan’s private financial information online. (FAC ¶¶ 43–44.)
In August 2016, John and his lawyer, Defendant Vincent Kim (“Kim”), summoned Dan to the funeral of John’s mother. (FAC ¶ 48.) When Dan arrived, without his attorneys, Kim presented Dan with a settlement agreement which would give John sole control of KS in exchange for dismissal of the civil litigation and help making Dan’s other tax and criminal proceedings go away. (FAC ¶ 48.) Dan signed the agreement. (FAC ¶ 50.)
The IRS tax investigation was terminated in October 2016. (FAC ¶ 51.) Dan pleaded no contest to his criminal charges, which were reduced to misdemeanors. (FAC ¶ 51.)
Dan filed suit against KS seeking repayment of his loans in March 2017. (FAC ¶ 52.) Meanwhile, John falsely told KS employees that Dan was the cause of KS’s recent financial difficulties. (FAC ¶ 53.) John represented to potential buyers of KS that he was sole owner of all KS shares. (FAC ¶ 54.) John demanded that Dan turn over all his KS shares, but Dan refused. (FAC ¶ 54.)
In June, July, and August 2017, John, Daniels, Aguilar, and Deklinski all emailed Dan threatening him that if with implied physical injury and renewed criminal prosecutions if he did not turn over his KS stock. (FAC ¶ 56.)
In August 2017, Defendants turned over additional evidence to the Merced DA that Dan had not turned over his KS stock and that his probation should be terminated. (FAC ¶ 56.) A probation termination hearing was held, but the court denied termination. (FAC ¶ 57.)
Defendants have also asked the DA to initiate a $4.5 million restitution claim against Dan, which is currently pending. (FAC ¶ 58.)
procedural history
Dan filed the Complaint on December 5, 2017. Dan filed the FAC on April 6, 2018, alleging eight causes of action:
Defamation
Fraud
Intentional Infliction of Emotional Distress
Threat and Coercion
Public Disclosure of Private Facts
Conspiracy
Elder Financial Abuse
Injunction
Kim filed the present Demurrer and Motion to Strike on May 3, 2018.
Defendants Deklinski, Yoon, Aguilar, and Daniels filed a joinder on May 25, 2018.
Dan filed an Opposition on August 8, 2018.
Discussion
DEMURRER
A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) A court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 (“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.”))
“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)
“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)
A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)
Defendants argue that the every cause of action in the FAC must fail because they rest on conduct protected by the litigation privilege. (Demurrer at p. 7.) Defendants also argue that Dan’s claims for Fraud, Intentional Infliction of Emotional Distress (“IIED”), and Elder Financial Abuse are uncertain. (Demurrer at p. 6.)
The court agrees with Defendants that the litigation privilege applies to most of Dan’s claims.
[Civil Code] Section 47 establishes a privilege that bars liability in tort for the making of certain statements. Pursuant to section 47(b), the privilege bars a civil action for damages for communications made ‘[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to [statutes governing writs of mandate]’ . . . . The privilege established by this subdivision often is referred to as an ‘absolute’ privilege, and it bars all tort causes of action except a claim for malicious prosecution. [Citation.]
(Hagberg v. California Federal Bank FSB (“Hagberg”) (2004) 32 Cal.4th 350, 360.)
The litigation privilege has been held to apply to statements made in the course of settlement negotiations. (See Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 844 [holding that fraud claim based on misrepresentations during settlement negotiations could not proceed].) The litigation privilege also may apply to statements to third parties concerning litigation. (See Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1259–60 [holding that company’s letter to clients advising them to “have no further dealings” with plaintiff because of pending litigation were privileged].) Finally, “[t]he “official proceeding” privilege has been interpreted broadly to protect communications to or from governmental officials which may precede the initiation of formal proceedings.” (Slaughter v. Friedman (1982) 32 Cal.3d 149, 156.)
It is plain from the face of the FAC that a substantial number of Dan’s claims fall within the privilege, although not each claim and not in all respects. First, Dan’s defamation claim, to the extent it relies upon statements made to prosecutors regarding Dan’s alleged crimes, or to KS’s client airlines concerning the pendency of the claims against Dan, is precluded. However, statements alleged to have been made internally to KS employees not regarding any pending litigation (see FAC ¶ 53) are not necessarily privileged according to this rule. Therefore, the Demurrer to the First Cause of Action for Defamation is OVERRULED.
The litigation privilege does, however, preclude Dan from bringing his fraud claim. This is because the Second Cause of Action for fraud is based entirely upon (1) Defendants’ representations to certain district attorneys in the hopes of initiating criminal charges against Dan, and (2) Kim’s representations to Dan during settlement negotiations. (FAC ¶ 71.) The conduct underlying these claims is absolutely privileged, per the authority above. The Demurrer is therefore SUSTAINED, without leave to amend, as to the Second Cause of Action for Fraud.
Because the same allegations of Kim’s conduct regarding settlement negotiations forms the basis for Dan’s Seventh Cause of Action for Elder Abuse, the Demurrer is likewise SUSTAINED as to this cause of action, without leave to amend.
Dan’s Third Cause of Action for IIED, on the other hand, does not facially implicate or rely upon any litigation-related activity, and may derive from defamatory statements not necessarily privileged. (See FAC ¶¶ 77–84.) It is probable that this claim derives from the same conduct underlying the Fourth Cause of Action for Threat and Coercion, which appears to arise from Defendants’ emails to Dan in the summer of 2017, urging him to turn over his stock lest further evidence of his alleged crimes would be revealed. (See FAC ¶¶ 56, 85–93.) Defendants have not made an adequate case for why such threatening emails would be protected by the litigation privilege. The Demurrer is therefore OVERRULED as to the Third and Fourth Causes of Action.
The FAC’s Fifth Cause of Action for Public Disclosure of Private Facts plainly relates to Aguilar’s alleged posting of private financial information on the internet, and has no plausible relation to any litigation, at least as alleged in the FAC. The Demurrer to the Fifth Cause of Action is therefore OVERRULED.
Dan’s Sixth Cause of Action for Conspiracy rests on allegations that Defendants attempted to inhibit Dan from obtaining payment on loans to KS and to hinder him from redeeming his stock. (FAC ¶¶ 103–107.) Because this claim may be construed as a conspiracy to engage in the defamatory and threatening conduct that forms the basis for Dan’s defamation, IIED, and coercion claims, demurrer on this claim is likewise improper at this time. The Demurrer to the Sixth Cause of Action for Conspiracy is OVERRULED.[1]
Defendants also argue that Dan’s claims of Elder Abuse and Fraud are not pleaded with sufficient specificity. (Demurrer at p. 6.) Because the Demurrer to these claims have been sustained on other grounds, the court need not address these arguments.
MOTION TO STRIKE
Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)
The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)
Defendants move to strike the prayer for punitive damages. (Motion at pp. 4–5.)
Punitive damages are allowed in non-contract cases when a defendant is guilty of “oppression, fraud, or malice . . . .” (Civ. Code § 3294.) The terms are defined as:
“Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.
“Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.
“Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.
Something more than the mere commission of a tort is always required for punitive damages. (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Proof of negligence, gross negligence, or recklessness is insufficient to warrant an award of punitive damages. (Dawes v. Sup.Ct. (Mardian) (1980) 111 Cal.App.3d 82, 88–89.) Punitive damages may be recovered in an action for negligence or other non-intentional torts if the plaintiff pleads and proves that the defendant acted with the state of mind described as “conscious disregard” of the potential dangers to others. (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) When malice is based on a defendant’s conscious disregard of Plaintiff’s rights, the conduct must be both despicable and willful. (College Hospital v. Superior Court (1994) 8 Cal.4th 794, 713 (“College Hospital”).)
The FAC adequately alleges entitlement to punitive damages. It alleges that Defendants threatened Dan’s financial and physical safety in the hopes of getting him to turn over his shares of stock, and that each defendant knew that the statements would cause Dan emotional distress. (FAC ¶ 88.) Dan further alleges that Defendant Aguilar published his private financial information on the internet (FAC ¶¶ 43–44) and that Defendants defamed Dan to other KS employees, stating that he was the cause of KS’s financial troubles and the reason the company could not make payroll. (FAC ¶ 53.) The court concludes that these allegations could support an award of punitive damages.
The Motion to Strike is DENIED.
Defendant to provide notice.
DATED: August 22, 2018 ________________________________
Hon. Robert S. Draper
Judge of the Superior Court
[1] Because the Eighth Cause of Action for Injunction seeks only a remedy rather than a substantive claim, the demurrer will not be sustained as to the Eighth Cause of Action.
Case Number: BC685739C Hearing Date: August 22, 2018 Dept: 78
Superior Court of California
County of Los Angeles
Department 78
DAN YOON;
Plaintiff,
vs.
VINCENT S. KIM, et al.;
Defendants.
Case No.:
BC 685739
Hearing Date:
August 22, 2018
RULING RE:
Defendants Vincent S. Kim, Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Demurrer and motion to strike portions of the First Amended Complaint
Defendants Vincent S. Kim, Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Demurrer to the First Amended Complaint is SUSTAINED, without leave to amend, as to the Second and Seventh Causes of Action, and OVERRULED as to all other causes of action.
Defendants Vincent S. Kim, Bob Delinski, John Y.K. Yoon, Steve Aguilar, and Josh Daniels’s Motion to Strike Portions of the First Amended Complaint is DENIED.
FACTUAL BACKGROUND
This is an action for fraud and defamation related to control over a business. The First Amended Complaint (“FAC”) alleges as follows. Plaintiff Dan Yoon (“Yoon”) and Defendant John Y.K. Yoon (“John,” no relation to Dan) each owned 50% of the stock of KS Aviation, Inc. (“KS”), a flight school. (FAC ¶ 14, 16.) Dan repeatedly lent KS money for its various business ventures, exceeding $1 million. (FAC ¶ 23.)
Dan’s relationship with John began to wear in January 2014. (FAC ¶ 32.) John filed suit against Dave in Merced County Superior Court to oust him from company leadership. (FAC ¶¶ 34–35.)
While John’s civil case against Dan was pending, he and Defendants Steven Aguilar (“Aguilar”), Josh Daniels (“Daniels”), and Bob Deklinski (“Deklinski”) approached the Merced County District Attorney with false evidence that Dan had forged signatures on company documents and was stealing money from KS. (FAC ¶ 36.) The allegations resulted in a criminal complaint being filed against Dan. (FAC ¶ 36.) The DA notified the IRS, who sent 15 special agents to investigate Dan. (FAC ¶ 37.)
John began to notify Asian airlines that Dan was facing criminal and IRS charges, and the airlines began to withhold tuition payments. (FAC ¶ 39.) John also induced KS’s chief pilot to contact the local Flight Inspection Safety Office to claim that KS’s planes were unsafe. (FAC ¶ 40.)
In August 2016, Aguilar published Dan’s private financial information online. (FAC ¶¶ 43–44.)
In August 2016, John and his lawyer, Defendant Vincent Kim (“Kim”), summoned Dan to the funeral of John’s mother. (FAC ¶ 48.) When Dan arrived, without his attorneys, Kim presented Dan with a settlement agreement which would give John sole control of KS in exchange for dismissal of the civil litigation and help making Dan’s other tax and criminal proceedings go away. (FAC ¶ 48.) Dan signed the agreement. (FAC ¶ 50.)
The IRS tax investigation was terminated in October 2016. (FAC ¶ 51.) Dan pleaded no contest to his criminal charges, which were reduced to misdemeanors. (FAC ¶ 51.)
Dan filed suit against KS seeking repayment of his loans in March 2017. (FAC ¶ 52.) Meanwhile, John falsely told KS employees that Dan was the cause of KS’s recent financial difficulties. (FAC ¶ 53.) John represented to potential buyers of KS that he was sole owner of all KS shares. (FAC ¶ 54.) John demanded that Dan turn over all his KS shares, but Dan refused. (FAC ¶ 54.)
In June, July, and August 2017, John, Daniels, Aguilar, and Deklinski all emailed Dan threatening him that if with implied physical injury and renewed criminal prosecutions if he did not turn over his KS stock. (FAC ¶ 56.)
In August 2017, Defendants turned over additional evidence to the Merced DA that Dan had not turned over his KS stock and that his probation should be terminated. (FAC ¶ 56.) A probation termination hearing was held, but the court denied termination. (FAC ¶ 57.)
Defendants have also asked the DA to initiate a $4.5 million restitution claim against Dan, which is currently pending. (FAC ¶ 58.)
procedural history
Dan filed the Complaint on December 5, 2017. Dan filed the FAC on April 6, 2018, alleging eight causes of action:
Defamation
Fraud
Intentional Infliction of Emotional Distress
Threat and Coercion
Public Disclosure of Private Facts
Conspiracy
Elder Financial Abuse
Injunction
Kim filed the present Demurrer and Motion to Strike on May 3, 2018.
Defendants Deklinski, Yoon, Aguilar, and Daniels filed a joinder on May 25, 2018.
Dan filed an Opposition on August 8, 2018.
Discussion
DEMURRER
A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) A court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 (“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.”))
“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)
“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)
A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)
Defendants argue that the every cause of action in the FAC must fail because they rest on conduct protected by the litigation privilege. (Demurrer at p. 7.) Defendants also argue that Dan’s claims for Fraud, Intentional Infliction of Emotional Distress (“IIED”), and Elder Financial Abuse are uncertain. (Demurrer at p. 6.)
The court agrees with Defendants that the litigation privilege applies to most of Dan’s claims.
[Civil Code] Section 47 establishes a privilege that bars liability in tort for the making of certain statements. Pursuant to section 47(b), the privilege bars a civil action for damages for communications made ‘[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to [statutes governing writs of mandate]’ . . . . The privilege established by this subdivision often is referred to as an ‘absolute’ privilege, and it bars all tort causes of action except a claim for malicious prosecution. [Citation.]
(Hagberg v. California Federal Bank FSB (“Hagberg”) (2004) 32 Cal.4th 350, 360.)
The litigation privilege has been held to apply to statements made in the course of settlement negotiations. (See Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 844 [holding that fraud claim based on misrepresentations during settlement negotiations could not proceed].) The litigation privilege also may apply to statements to third parties concerning litigation. (See Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1259–60 [holding that company’s letter to clients advising them to “have no further dealings” with plaintiff because of pending litigation were privileged].) Finally, “[t]he “official proceeding” privilege has been interpreted broadly to protect communications to or from governmental officials which may precede the initiation of formal proceedings.” (Slaughter v. Friedman (1982) 32 Cal.3d 149, 156.)
It is plain from the face of the FAC that a substantial number of Dan’s claims fall within the privilege, although not each claim and not in all respects. First, Dan’s defamation claim, to the extent it relies upon statements made to prosecutors regarding Dan’s alleged crimes, or to KS’s client airlines concerning the pendency of the claims against Dan, is precluded. However, statements alleged to have been made internally to KS employees not regarding any pending litigation (see FAC ¶ 53) are not necessarily privileged according to this rule. Therefore, the Demurrer to the First Cause of Action for Defamation is OVERRULED.
The litigation privilege does, however, preclude Dan from bringing his fraud claim. This is because the Second Cause of Action for fraud is based entirely upon (1) Defendants’ representations to certain district attorneys in the hopes of initiating criminal charges against Dan, and (2) Kim’s representations to Dan during settlement negotiations. (FAC ¶ 71.) The conduct underlying these claims is absolutely privileged, per the authority above. The Demurrer is therefore SUSTAINED, without leave to amend, as to the Second Cause of Action for Fraud.
Because the same allegations of Kim’s conduct regarding settlement negotiations forms the basis for Dan’s Seventh Cause of Action for Elder Abuse, the Demurrer is likewise SUSTAINED as to this cause of action, without leave to amend.
Dan’s Third Cause of Action for IIED, on the other hand, does not facially implicate or rely upon any litigation-related activity, and may derive from defamatory statements not necessarily privileged. (See FAC ¶¶ 77–84.) It is probable that this claim derives from the same conduct underlying the Fourth Cause of Action for Threat and Coercion, which appears to arise from Defendants’ emails to Dan in the summer of 2017, urging him to turn over his stock lest further evidence of his alleged crimes would be revealed. (See FAC ¶¶ 56, 85–93.) Defendants have not made an adequate case for why such threatening emails would be protected by the litigation privilege. The Demurrer is therefore OVERRULED as to the Third and Fourth Causes of Action.
The FAC’s Fifth Cause of Action for Public Disclosure of Private Facts plainly relates to Aguilar’s alleged posting of private financial information on the internet, and has no plausible relation to any litigation, at least as alleged in the FAC. The Demurrer to the Fifth Cause of Action is therefore OVERRULED.
Dan’s Sixth Cause of Action for Conspiracy rests on allegations that Defendants attempted to inhibit Dan from obtaining payment on loans to KS and to hinder him from redeeming his stock. (FAC ¶¶ 103–107.) Because this claim may be construed as a conspiracy to engage in the defamatory and threatening conduct that forms the basis for Dan’s defamation, IIED, and coercion claims, demurrer on this claim is likewise improper at this time. The Demurrer to the Sixth Cause of Action for Conspiracy is OVERRULED.[1]
Defendants also argue that Dan’s claims of Elder Abuse and Fraud are not pleaded with sufficient specificity. (Demurrer at p. 6.) Because the Demurrer to these claims have been sustained on other grounds, the court need not address these arguments.
MOTION TO STRIKE
Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court Rule 3.1322.)
The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)
Defendants move to strike the prayer for punitive damages. (Motion at pp. 4–5.)
Punitive damages are allowed in non-contract cases when a defendant is guilty of “oppression, fraud, or malice . . . .” (Civ. Code § 3294.) The terms are defined as:
“Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.
“Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.
“Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.
Something more than the mere commission of a tort is always required for punitive damages. (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Proof of negligence, gross negligence, or recklessness is insufficient to warrant an award of punitive damages. (Dawes v. Sup.Ct. (Mardian) (1980) 111 Cal.App.3d 82, 88–89.) Punitive damages may be recovered in an action for negligence or other non-intentional torts if the plaintiff pleads and proves that the defendant acted with the state of mind described as “conscious disregard” of the potential dangers to others. (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) When malice is based on a defendant’s conscious disregard of Plaintiff’s rights, the conduct must be both despicable and willful. (College Hospital v. Superior Court (1994) 8 Cal.4th 794, 713 (“College Hospital”).)
The FAC adequately alleges entitlement to punitive damages. It alleges that Defendants threatened Dan’s financial and physical safety in the hopes of getting him to turn over his shares of stock, and that each defendant knew that the statements would cause Dan emotional distress. (FAC ¶ 88.) Dan further alleges that Defendant Aguilar published his private financial information on the internet (FAC ¶¶ 43–44) and that Defendants defamed Dan to other KS employees, stating that he was the cause of KS’s financial troubles and the reason the company could not make payroll. (FAC ¶ 53.) The court concludes that these allegations could support an award of punitive damages.
The Motion to Strike is DENIED.
Defendant to provide notice.
DATED: August 22, 2018 ________________________________
Hon. Robert S. Draper
Judge of the Superior Court
[1] Because the Eighth Cause of Action for Injunction seeks only a remedy rather than a substantive claim, the demurrer will not be sustained as to the Eighth Cause of Action.
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