Edmund Prehoden, Jr. v. Sandbar, et al.
Case No: 18CV04185
Hearing Date: Tue Sep 24, 2019 9:30

Nature of Proceedings: Demurrer to First Amended Complaint/Motion Strike Portions of First Amended Complaint/Motion Leave to Amend Responses to Req. for Admissions

(1) Demurrer of Defendant Old Town Hospitality, Inc., to First Amended Complaint

(2) Motion of Defendant Old Town Hospitality, Inc., to Strike Portions of First Amended Complaint

(3) Motion of Defendants For Leave to Amend Responses to Requests for Admissions

ATTORNEYS: For Plaintiff Edmund Prehoden, Jr.: Derek J. Wilson

For Defendants, Cross-Complainants, and Cross-Defendants Old Town Hospitality, Inc., dba Sand Bar and erroneously sued as Baja Sharkeez Restaurant Group, and Aron Ashland: Edmund G. Farrell III, Vanessa H. Hubert, Murchison & Cumming, LLP

For Defendant Teak Warehouse, Inc.: Danielle Kuck, Wood, Smith, Henning & Berman, LLP

RULING:

(1) For the reasons set forth herein, the demurrer of defendant Old Town Hospitality, Inc., to the first amended complaint of plaintiff Edmund Prehoden, Jr., is overruled.

(2) For the reasons set forth herein, the motion of defendant Old Town Hospitality, Inc., to strike portions of the first amended complaint of plaintiff Edmund Prehoden, Jr., is denied in its entirety. Defendants Old Town Hospitality, Inc., shall file and serve its answer to the first amended complaint on or before October 9, 2019.

(3) As discussed herein, the Court confirms that defendants Old Town Hospitality, Inc., and Aron Ashland may amend their response to plaintiff’s request for admission, set one, No. 8, from a denial to an admission. In all other respects, including opposition requests for attorney fees and costs or the imposition of conditions, the motion is denied.

Background:

On August 22, 2018, plaintiff Edmund Prehoden, Jr., filed his original complaint in this action against defendants “Sandbar” and Aron Ashland asserting causes of action for premises liability and general negligence. The complaint alleges that Prehoden was sitting on a chair at Sandbar, when the chair broke and collapsed, causing Prehoden injury.

On November 2, 2018, defendants Old Town Hospitality, Inc. (OTH) and Ashland filed their answer to the complaint. OTH asserts that it does business as Sand Bar and was erroneously sued as Sandbar. The answer generally denies the allegations of the complaint and asserts 17 affirmative defenses. OTH and Ashland concurrently filed a cross-complaint against cross-defendant Teak Warehouse, Inc., (Teak) asserting claims for indemnity.

On December 7, 2018, Teak filed its answer to the cross-complaint of OTH and Ashland, generally denying the allegations thereof and asserting nine affirmative defenses. Teak concurrently filed a cross-complaint against OTH and Ashland asserting claims for indemnity.

On January 10, 2019, OTH and Ashland filed their answer to the Teak cross-complaint, generally denying the allegations thereof and asserting 11 affirmative defenses.

On June 12, 2019, Prehoden filed a motion seeking leave to file a first amended complaint (FAC). The motion identified the nature of the proposed amendment as naming as defendants Teak and Baja Sharkeez Restaurant Group (Group). The motion was opposed by OTH and Ashland, arguing among other things, that Group is not a legal entity and that the proposed FAC insufficiently alleges a claim for punitive damages.

On July 9, 2019, the Court granted the motion for leave to file the FAC. The Court noted that objections to the pleadings are best addressed by pleading motions.

On July 9, 2019, Prehoden filed his FAC. The particular allegations at issue here are discussed below.

On July 19, 2019, Teak filed a motion to strike the punitive damage allegations and prayer against it in the FAC.

On August 7, 2019, OTH filed this demurrer to the FAC. OTH argues that Group is not a legal entity capable of being sued. OTH concurrently filed a motion to strike the punitive damages allegations and prayer against it in the FAC. The demurrer and motion to strike are opposed by Prehoden.

On August 8, 2019, Ashland filed his answer to the FAC, generally denying the allegations thereof and asserting 14 affirmative defenses. Also on August 8, OTH and Ashland filed a cross-complaint against Teak.

On August 14, 2019, Ashland and OTH filed their motion for leave to amend their responses to plaintiff Prehoden’s requests for admissions, set one, request No. 8. The motion is opposed by Prehoden.

On August 20, 2019, the Court heard and denied Teak’s motion to strike.

Analysis:

(1) Demurrer

“We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed. [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]” (Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6, internal quotation marks omitted.)

(A) Requests for Judicial Notice

In support of its demurrer and motion to strike, OTH requests that the Court take judicial notice of: (exhibit 1) the FAC; (exhibit 2) certain records of the California Secretary of State; and, (exhibit 3) certain records of the Los Angeles County Treasurer and Tax Collector. The Court grants the request for judicial notice of the FAC (Evid. Code, § 452, subd. (d)(1)), although the Court notes that judicial notice is not required of the FAC for the Court to address pleading issues in the FAC.

The Court denies the requests for judicial notice of exhibits 2 and 3. “Although a court may judicially notice a variety of matters [citation], only relevant material may be noticed. ‘But judicial notice, since it is a substitute for proof [citation], is always confined to those matters which are relevant to the issue at hand.’ [Citation.]” (Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063.) Exhibits 2 and 3 are not relevant to these pleading motions because these exhibits do not conclusively establish the facts for which judicial notice is requested, namely, that Group is not a legal entity.

Exhibit 2 appears to be of two printouts from the California Secretary of State’s website showing negative search results for a business search for “Baja Sharkeez Restaurant Group” for a corporation search and for a limited partnership/ limited liability company search. Exhibit 2 is not authenticated and is not self-authenticating as a certified copy of a document from the California Secretary of State. The exhibit is therefore itself insufficient for judicial notice. (See Evid. Code, § 453, subd. (b).) Assuming authenticity, these documents show nothing more than that a search was done on the website and the specific name did not return a result. Even as to California-registered corporations, limited partnerships, and limited liability companies, these records would only prove the non-existence of registration if the search were complete. (Cf. Evid. Code, § 1272, subd. (b).) There is no foundational evidence that the search is complete. The exhibits themselves contain the caveat: “The data provided is not a complete or certified record of an entity.” Moreover, even if the records were complete, the exhibit only shows that Group is not registered in California as one of these three entity types. For example, it could be that an entity with Group’s name is an unregistered out-of-state entity (whether or not registration is required). The absence of the search results does not conclusively imply that Group is not a legal entity. Consequently, exhibit 2 does not conclusively establish any fact and is irrelevant to this pleading motion.

Exhibit 3 appears as a printout from the Los Angeles County Treasurer and Tax Collector’s website showing negative search results for a business license search for “Baja Sharkeez Restaurant Group.” As with exhibit 2, there is no authenticating declaration or evidence of completeness of the search. Additionally, the exhibit itself identifies that it returns results only for the unincorporated areas of Los Angeles County or in the cities of Malibu, Santa Clarita, and Westlake Village. Apart from the potential that Group is an improperly-unlicensed business within unincorporated Los Angeles County, the incidents here are alleged to have taken place in Santa Barbara County, not in Los Angeles County. The absence of a business license for Group in unincorporated Los Angeles County says nothing about Group’s operations, if any, in Santa Barbara County. Consequently, exhibit 3 does not conclusively establish any fact and is irrelevant to this pleading motion.

(B) Legal Entity

OTH generally demurs pursuant to Code of Civil Procedure section 430.10, subdivision (e), to the claims against Group on the grounds that Group is not a legal entity capable of being sued.

“A civil action can be maintained only against a legal person, i.e., a natural person or an artificial or quasi-artificial person; a nonentity is incapable of suing or being sued. [Citations.] Where a suit is brought against an entity which is legally nonexistent, the proceeding is void ab initio and its invalidity can be called to the attention of the court at any stage of the proceeding.” (Oliver v. Swiss Club Tell (1963) 222 Cal.App.2d 528, 537 (Oliver).)

In Oliver, the issue presented was whether the trial court properly granted a summary judgment in favor of an unincorporated association that, it asserted, ceased to exist because it incorporated. (Oliver, supra, 222 Cal.App.2d at pp. 532, 534.) The court noted that the “problem before us is not one of misnomer or of lack of legal capacity due to some legal disability, but whether the defendant sued is an existent person.” (Id. at p. 537.) The court agreed with the plaintiffs that the summary judgment was improper, noting that “the pleadings do not show on their face that defendant is nonexistent” and so the court’s “inquiry [was] directed to whether the issue of the existence or nonexistence of the unincorporated association was properly tendered to the trial court for adjudication.” (Id. at p. 539.) This much from Oliver demonstrates that, unless the nonexistence of the defendant is shown on the face of the pleadings or from judicially noticed matter, the issue cannot be decided on demurrer or on a motion to strike.

As discussed above, the Court denies the requests for judicial notice intended to show that Group is not a legal entity. As that discussion points out, the documents presented are insufficient on many levels to show that Group is not a legal entity. The FAC alleges that Group is a “business organization, form unknown.” In 1963, when Oliver was decided, an unincorporated association could only be sued as a defendant. (Stats. 1907, ch. 371, § 2 [former Code Civ. Proc., § 388].) Now, “[a] partnership or other unincorporated association, whether organized for profit or not, may sue and be sued in the name it has assumed or by which it is known.” (Code Civ. Proc., § 369.5, subd. (a).) Nothing on the face of the complaint eliminates the possibility of Group being a partnership or other unincorporated association, or being an unregistered out-of-state entity. The legal non-existence of Group, even if true factually, cannot be determined on demurrer.

Moreover, procedurally there is a problem with OTH’s argument. A demurrer may only be asserted by the party against whom a complaint has been filed. (See Code Civ. Proc., § 430.10.) A demurrer on the grounds that a pleading fails to state facts sufficient to constitute a cause of action tests whether there is a cause of action stated against the demurring party. (See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 38.) Thus, if Group is, as alleged, an entity separate from OTH, then OTH cannot complain that the FAC fails to state a cause of action against Group; OTH can only assert that the FAC fails to state a cause of action against itself. The proper demurrer by one party asserting that the complaint improperly includes a different party is a special demurrer for misjoinder. (Code Civ. Proc., § 430.10, subd. (d).) No special demurrer was made here and so the point is waived.

However, even if the Court considered the special demurrer, it would be overruled. “ ‘Although the code seems to authorize the sustaining of a demurrer solely on such a technical objection [of misjoinder], the authorities indicate that the defendant is entitled to a favorable ruling only when he can show some prejudice suffered or some interests affected by the misjoinder. In practical effect, this means that such a demurrer can be successfully used only by the persons improperly joined. A proper defendant is seldom injured by the joinder of unnecessary or improper parties plaintiff or defendant, and his demurrer ought to be overruled.’ [Citation.]” (Royal Surplus Lines Ins. Co., Inc. v. Ranger Ins. Co. (2002) 100 Cal.App.4th 193, 198.) If Group is actually not a legal entity, then there is no possibility of prejudice to OTH, and none is shown from the face of the complaint.

But here, OTH has appeared by this demurrer and asserted that it is erroneously sued as Group. To the extent that OTH and Group are the same entity and the Group is merely a fictitious name under which OTH operates, then misnaming OTH as Group does not affect whether a cause of action is stated against OTH, for which there are allegations unchallenged by this demurrer asserting a cause of action against OTH under its own name.

Under any of these theories, OTH’s general demurrer will be overruled.

(2) Motion to Strike

“The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc., § 436.) “Irrelevant matter” includes a “demand for judgment requesting relief not supported by the allegations of the complaint.” (Code Civ. Proc., § 431.10, subds. (b)(3), (c).) “The grounds for a motion to strike shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437, subd. (a).)

OTH, doing business as Sandbar, moves to strike the exemplary damages attachment and the prayer for punitive damages against Sandbar. OTH also argues that punitive damages cannot be asserted against Group because Group is not a legal entity.

“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. [Citations.] In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. [Citations.] In ruling on a motion to strike, courts do not read allegations in isolation.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

With respect to the argument that Group is not a legal entity, the same analysis and result applies as discussed above with respect to the demurrer.

OTH argues that Prehoden has not met his pleading burden as to punitive damages. In the exemplary damages attachment to the FAC, Prehoden alleges:

“This case is a textbook example of companies showing a conscious indifference and disregard for the probable harm to others. Sandbar, Teak, and Sharkeez acted with a conscious disregard of the safety of others by failing to repair or replace the newly purchased chairs that were breaking, despite knowing that faulty furniture could cause harm to patrons (through common sense, numerous prior patrons falling out of the chairs as they broke, and the danger being admitted in emails amongst these parties). Further, Teak acted with conscious disregard for thesafety of others by failing to change the design of their furniture orrecall the furniture it knew was breaking with regularityat Sandbar even after it was made aware that the furniture was breaking. Sandbar had a higher-end Bianca chair with much thicker legs but never mentioned this chair as a substitute. Each of these entities acted recklessly to preserve profit – either from keeping hazardous seats in use or for refusing to replace unfit furniture that would destroy all profit made from a large furniture sale – at the expense of safety for patrons of a busy restaurant. These actions are offensive to a reasonable person.” (FAC, exemplary damages attachment, ¶ Ex-2, p. 7.)

Under Civil Code section 3294, subdivision (a), punitive damages are recoverable only where it is shown that the defendant acted with malice, oppression, or fraud. Fraud is not alleged in the FAC. “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. (Civ. Code, § 3294, subd. (c)(1).) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (Civ. Code, § 3294, subd. (c)(2).)

A claim for punitive damages cannot be pled generally. Rather, where malice is alleged, specific factual allegations of an intent to harm or despicable conduct are required. As the California Supreme Court held in College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725:

“By adding the word ‘willful’ to the ‘conscious-disregard’ prong of malice, the Legislature has arguably conformed the literal words of the statute to existing case law formulations. [Citation.] However, the statute’s reference to ‘despicable’ conduct seems to represent a new substantive limitation on punitive damage awards. Used in its ordinary sense, the adjective ‘despicable’ is a powerful term that refers to circumstances that are ‘base,’ ‘vile,’ or contemptible.’ [Citation.] As amended to include this word, the statute plainly indicates that absent an intent to injure the plaintiff, ‘malice’ requires more than a ‘willful and conscious’ disregard of the plaintiffs’ interests. The additional component of ‘despicable conduct’ must be found.”

The allegations here that Sandbar knew that the faulty furniture could cause harm because of numerous prior instances are sufficient to allege despicable conduct which is carried on by the defendant with a willful and conscious disregard of the safety of others.

OTH also argues that Prehoden has failed to allege ratification. “An employer shall not be liable for damages pursuant to subdivision (a), based upon acts of an employee of the employer, unless the employer had advance knowledge of the unfitness of the employee and employed him or her with a conscious disregard of the rights or safety of others or authorized or ratified the wrongful conduct for which the damages are awarded or was personally guilty of oppression, fraud, or malice. With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification or act of oppression, fraud, or malice must be on the part of an officer, director, or managing agent of the corporation.” (Civ. Code, § 3294, subd. (b).)

The allegation that Sandbar had admitted knowledge of the danger and that numerous prior patrons fell out of broken chairs is sufficient to allege ratification. (See NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64, 79 [“A principal’s failure to promptly disaffirm an agent’s conduct on her behalf constitutes a ratification.”].) Consequently, the allegations are sufficient for pleading purposes to assert a punitive damages claim against Sandbar.

Accordingly, the motion to strike will be denied.

(3) Motion for Leave to Amend Responses to Requests for Admission

On January 15, 2019, Prehoden served his requests for admissions, set one, (RFA) to defendants OTH and Ashland. (Hubert decl., ¶ 3 & exhibits B, C.) RFA No. 8 is, identically to both responding parties:

“Admit that prior to the INCIDENT YOU were aware the type of chair that collapsed with PLAINTIFF in it during the INCIDENT had failed at YOUR premises prior to the INCIDENT.” (Hubert decl., exhibits B, p. 3, C, p. 3.)

On March 15, 2019, OTH and Ashland served their responses to the RFA. (Hubert decl., ¶ 5 & exhibits D, E.) OTH’s response to RFA No. 8 is:

“Sandbar objects that this request is vague and ambiguous as to the terms ‘type’, ‘collapsed’ and ‘failed.’ Without waiving these objections, and to the extent it understands this request, Sandbar responds: Deny as to the particular type of chair that Plaintiff was sitting in at the time to the incident (Bianca outdoor rope dining chair).”

(Hubert decl., exhibits D, p. 4.)

Ashland’s response to RFA No. 8 is identical.

By this motion, OTH and Ashland move for leave to amend their response to admit RFA No. 8. (Motion, p. 7.) The motion is opposed by Prehoden on the grounds that OTH and Ashland have not shown that their response was the result of mistake, inadvertence, or excusable neglect, and that Prehoden will not be substantially prejudiced.

There is a fundamental misapprehension of both parties in this motion and its opposition. The motion is based upon Code of Civil Procedure section 2033.300, which provides:

“(a) A party may withdraw or amend an admission made in response to a request for admission only on leave of court granted after notice to all parties.

“(b) The court may permit withdrawal or amendment of an admission only if it determines that the admission was the result of mistake, inadvertence, or excusable neglect, and that the party who obtained the admission will not be substantially prejudiced in maintaining that party’s action or defense on the merits.

“(c) The court may impose conditions on the granting of the motion that are just, including, but not limited to, the following:

“(1) An order that the party who obtained the admission be permitted to pursue additional discovery related to the matter involved in the withdrawn or amended admission.

“(2) An order that the costs of any additional discovery be borne in whole or in part by the party withdrawing or amending the admission.”

A response to a request for admission is defined as follows:

“Each answer shall:

“(1) Admit so much of the matter involved in the request as is true, either as expressed in the request itself or as reasonably and clearly qualified by the responding party.

“(2) Deny so much of the matter involved in the request as is untrue.

“(3) Specify so much of the matter involved in the request as to the truth of which the responding party lacks sufficient information or knowledge.” (Code Civ. Proc., § 2033.220, subd. (b).)

Thus, responses to requests for admission are admissions, affirmative denials, or denials based upon a lack of information or knowledge. The limitation of Code of Civil Procedure section 2033.300 on withdrawal or amendment of a response is limited to “an admission made in response to a request for admission ….” (Code Civ. Proc., § 2033.300, subd. (a).) The responses to RFA No. 8 of OTH and Ashland are denials; the responses to RFA No. 8 are not admissions. Consequently section 2033.300 does not require leave of court to amend a denial to make it an admission.

The premise of the motion and the opposition is, of course, absurd. “Most of the other discovery procedures are aimed primarily at assisting counsel to prepare for trial. Requests for admissions, on the other hand, are primarily aimed at setting at rest a triable issue so that it will not have to be tried. Thus, such requests, in a most definite manner, are aimed at expediting the trial.” (Cembrook v. Superior Court (1961) 56 Cal.2d 423, 429; accord, City of Glendale v. Marcus Cable Associates, LLC (2015) 235 Cal.App.4th 344, 353.) Prehoden requested OTH and Ashland to admit RFA No. 8. Initially OTH and Ashland failed to do so. Now OTH and Ashland want to admit that fact. Admitting the fact will take one issue away from trial. Prehoden, by opposing the motion, inexplicably seeks to extend trial and to require that he himself prove at trial a fact that is now not disputed. The opposition to the motion puts the entire request for admissions procedure on its head.

A different issue is posed by the question of whether—post-trial—there may be sanctions imposed for the defendants’ earlier denial. That issue is not before the Court in this motion. What is before the Court is a request to permit the responding parties to do what the plaintiff originally wanted: to admit the truth of a requested fact. This OTH and Ashland are permitted to do without seeking leave from the court. To avoid any misunderstanding, the Court will confirm their right to do so.