Case Name: Corrie Johnson v. Nordstrom, Inc.
Case No: 18CV323923

This is a fraud action brought by Corrie Johnson (“Plaintiff”) against Nordstrom, Inc. (“Defendant”).

According to the allegations of the operative first amended complaint (“FAC”), in 2014, Plaintiff filed suit against Defendant in Georgia (“Georgia Action”), seeking recovery based on theories of quantum meruit and unjust enrichment for providing Defendant an idea forming the basis for its Nordstrom Rack mobile app (the “App”).

In 2015, the court granted Defendant’s motion for summary judgment in the Georgia Action. Plaintiff alleges the court granted Defendant’s motion only because it fraudulently concealed information from Plaintiff preventing her from establishing her claims. For example, Plaintiff alleges Defendant concealed the amount of revenue generated by the App in its response to an interrogatory answer. This allegedly prohibited Plaintiff from evaluating damages for her quantum meruit claim and was a reason Defendant’s motion for summary judgment was granted. Plaintiff additionally alleges Defendant concealed the names of the App’s originators, stating it was “developed through a team of brainstorming sessions and no single individual can be identified as having originated the idea . . .” (FAC, ¶ 60.) This information was also vital to Plaintiff’s claim and allegedly led to Defendant prevailing on summary judgment.

Plaintiff alleges Defendant also presented evidence in support of its motion for summary judgment containing false statements by witnesses Troy Nelson and Catherine Holtan. Both witnesses claimed to have personal knowledge of the App’s early development, which Plaintiff alleges was false.

Plaintiff characterizes Defendant’s conduct as extrinsic fraud and complains judgment was not properly procured because the fraud prevented her from fairly presenting her case. She requests “monetary damages for the value of Georgia’s standards of quantum meruit lost in the underlying judgment on the basis of tort,” exemplary/punitive damages, and other damages as the court deems proper. (FAC, p. 13:13-18.)

Plaintiff asserts one cause of action for extrinsic fraud. Defendant presently demurs to this claim and filed an accompanying request for judicial notice. Plaintiff opposes the demurrer.

I. Preliminary Matters

A. Meet and Confer Requirement & Timing of Demurrer

Plaintiff contends Defendant did not meet and confer with her in good faith and untimely served its declaration for extension of the time to file a responsive pleading. While not explicitly articulated, Plaintiff suggests the demurrer is untimely. She does not specifically request a remedy for these purported deficiencies.
A defendant can demur to a complaint within 30 days after service. (Code Civ. Proc., § 430.40.) Before filing a demurrer, the demurring party must meet and confer with the party who filed the challenged pleading to determine whether an agreement can be reached that would resolve the objections to the pleading. (Code Civ. Proc., § 430.41.) If they are unable to confer at least five days before the responsive pleading is due, the demurring party is granted an automatic 30-day extension to file a responsive pleading if he or she files and serves a declaration on or before the date the responsive pleading is due. (Code Civ. Proc., § 430.41 subd. (a)(2).) If the matter cannot be resolved, the demurring party shall file and serve a declaration with its demurrer stating either (1) the means by which the parties met and conferred and that they did not reach an agreement, or (2) the party who filed the subject pleading failed to respond to the meet and confer request or otherwise failed to meet and confer in good faith. (Code Civ. Proc., § 430.41 subd. (a)(3).)

With respect to the timeliness issue, Plaintiff argues the FAC was served on August 1, 2018; because the extension declaration was filed less than thirty days later on September 5, 2018, she concludes it was untimely. But according to the proof of service Plaintiff filed on August 18, 2018, the FAC was served on August 6. Defendant’s extension declaration was filed exactly thirty days later, and therefore was timely. Accordingly, Defendant’s demurrer filed on September 21, 2018, less than thirty days after the declaration was filed, was also timely.

With respect to issue of whether Defendant met and conferred in good faith, Defendant declares it initially called Plaintiff on August 31, 2018 to discuss the FAC but was unable to reach her. Plaintiff contends she did not receive this call, and Defendant itself does not indicate that a message was actually left. Defendant further declares it called Plaintiff again on September 5, 2018, when its responsive pleading was due, to request an extension to file its responsive pleading but was unable to reach Plaintiff. Plaintiff acknowledges receiving this call, but maintains Defendant only called to request an extension, not to discuss any objections to the FAC. There is no record of Defendant engaging in any additional efforts to meet and confer after obtaining the thirty-day extension to file a responsive pleading. The apparent purpose of the statute permitting an extension is to allow the parties more time to meet and confer. Since there is no indication Defendant did so, Plaintiff legitimately complains about Defendant’s efforts. With that said, a court may not overrule a demurrer based on inadequate meet and confer efforts. (Code Civ. Proc., § 430.41, subd. (a)(4).)

For these reasons, the Court will reach the merits of the demurrer.

B. Request for Judicial Notice

“Judicial notice is the recognition and acceptance by the court . . . of the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Unruh-Haxton v. Regents of the University of California (2008) 162 Cal.App.4th 343, 364, internal quotation marks and citations omitted.)

In support of its demurrer, Defendant requests judicial notice of the following court records from the Georgia Action: Plaintiff’s Complaint filed June 23, 2014; Plaintiff’s Opposition to Defendant’s Motion for Summary Judgment; Order Granting Defendant Nordstrom, Inc.’s Motion for Summary; Plaintiff’s Motion to Vacate/Set Aside Judgment filed August 1, 2016; February 23, 2017 Order denying Plaintiff’s Motions to Vacate/Set Aside Judgment, Plaintiff Motion/Amended Motion for Default Judgment/Sanction, and Motion to Amend Pleading.

In addition, Defendant requests judicial notice of two documents from an appellate case pertaining to the Georgia Action, particularly the Order Denying Discretionary Appeal and Order Denying Corrie Johnson’s Motion for Reconsideration, Motion for Discretionary Stay of Proceedings, and Motion to Set Order Aside.

Because these documents are court records, they are generally proper subjects for judicial notice under Evidence Code section 452, subdivision (d), which states the court may take judicial notice of court records. In addition, they are relevant in that Defendant relies on them to arguments raised by the demurrer. The documents are therefore judicially noticeable.

Accordingly, Defendant’s request for judicial notice is GRANTED.

II. Merits of the Demurrer

Defendant demurs to Plaintiff’s “extrinsic fraud” cause of action on the ground of failure to state sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

Defendant raises two arguments in support of its demurrer. First, it contends Plaintiff has not alleged extrinsic fraud as required to set aside a judgment. Second, it argues Plaintiff fails to plead an essential element of a claim for fraud. These arguments reflect Defendant is apparently uncertain as to the nature of Plaintiff’s claim since the first argument pertains to an action in equity to vacate a judgment while the latter concerns a tort claim for fraud. The Court understands the lack of clarity given the allegations on the pleading. For example, Plaintiff repeatedly alleges “extrinsic fraud” and complaints she was prevented from having a fair trial in the Georgia Action, which align with an action to collaterally attack a judgment based on extrinsic fraud. On the other hand, Plaintiff affirmatively states she is suing in tort for damages and seeking monetary relief. Given this dichotomy, the Court will evaluate the action and demurrer thereto as though she is attempting to proceed on both theories.

A. Setting Aside the Judgment Based on Extrinsic Fraud

To the extent Plaintiff intended to collaterally attack the Georgia Action judgment and effectively set it aside, her fraud claim fails because she has only alleged intrinsic fraud.

“The final judgment of a court having jurisdiction over persons and subject matter can be attacked in equity after the time for appeal or other direct attack has expired only if the alleged fraud or mistake is extrinsic rather than intrinsic.” (Westphal v. Westphal (1942) 20 Cal.2d 393, 397.) Fraud is extrinsic when the unsuccessful party was deprived of the opportunity to present his or her case to the court. (Caldwell v. Taylor (1933) 218 Cal. 471, 477; Pico v. Cohn (1891) 91 Cal. 129, 134.) Examples include “[k]eeping the unsuccessful party away from the court by a false promise of a compromise, or purposely keeping him in ignorance of the suit; or, where an attorney fraudulently pretends to represent a party, and connives at his defeat or, being regularly employed, corruptly sells out his client’s interest.” (Pico v. Cohn, supra, 91 Cal. 129, 133–34.) Fraud is intrinsic when “[a] party who has been given proper notice of an action . . . and who has not been prevented from full participation therein, has had an opportunity to present his case to the court and to protect himself from any fraud attempted by his adversary.” (Westphal v. Westphal, supra, 20 Cal.2d 393, 397.) “California cases uniformly hold that the introduction of perjured testimony or false documents in a fully litigated case constitutes intrinsic rather than extrinsic fraud.” (Kachig v. Boothe (1971) 22 Cal.App.3d 626, 634.)

Defendant contends that although Plaintiff labeled her cause of action as extrinsic fraud, the basis for her complaint is intrinsic fraud. It states the “underlying ‘fraud’ alleged by Plaintiff related to alleged perjured testimony and suppression of evidence, which California courts uniformly hold constitutes intrinsic fraud.” (Memo., p. 7:26-28.) The Court agrees. Plaintiff alleges Defendant fraudulently concealed information during discovery and presented false testimony. As supported by the legal authorities cited above, these alleged acts constitute intrinsic fraud. Indeed, Plaintiff pleads that Defendant “used extrinsic fraud by way of intrinsic fraud” to procure a favorable judgment. (FAC, ¶ 25, emphasis added.)

Plaintiff’s contention that her fraud claim was not fully litigated in the Georgia Action such that it is not barred by res judicata is entirely off point as Defendant does not raise a res judicata defense in the first instance. Plaintiff does not otherwise raise advance any arguments supporting the proposition that the alleged fraud was extrinsic.

Thus, to the extent Plaintiff intends by this action to set aside the judgment from the Georgia Action, no cause of action has been stated.

B. Tort Claim for Fraud

As previously indicated, Defendant contends Plaintiff’s fraud claim fails because the element of reliance is not adequately plead.
An essential element of a claim for fraud, be it based on false representation or concealment, is justifiable reliance. (Hoffman v. 162 N. Wolfe LLC (2014) 228 Cal.App.4th 1178, 1185–86.) “Reliance can be proved in a fraudulent omission case by establishing that had the omitted information been disclosed, [the plaintiff] would have been aware of it and behaved differently.” (Ibid, internal citation and quotations omitted.) Each element of fraud “must be alleged with particularity.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060.)

Defendant argues that Plaintiff alleges reliance on its discovery responses in the Georgia Action without factual support showing what actual acts she undertook on the “alleged misrepresentation” or why such actions were justifiable. Defendant adds that the facts alleged merely show the trial court was induced to rule a certain way, not that Plaintiff was induced to act in reliance. The Court disagrees.

As an initial matter, Defendant’s argument is flawed because Plaintiff’s fraud claim is not predicated on a misrepresentation, but rather on the concealment of information. Accordingly, Plaintiff must establish how she would have behaved differently had she been aware of the omitted information. In the FAC, Plaintiff alleges that if she had been aware of the amount of revenue the App generated, “she would not have underwent an amateur investigation toward value” and would have submitted it to the court. (FAC, ¶¶ 40, 44.) Further, Plaintiff alleges that if she had been aware of the names of the App’s originators, “she would not have acted on only Troy Nelson and Catherine Holtan’s testimonies alone.” (FAC, ¶ 75.) Given that this claim is fraud by omission, these allegations are sufficient to show how Plaintiff would have behaved differently had she been aware of the information concealed by Defendant. Accordingly, Plaintiff has properly plead the element of reliance for fraudulent concealment.

Thus, there’s no basis for concluding that Plaintiff failed to adequately allege the element of reliance.

C. Conclusion

In sum, the pleading is deficient to the extent Plaintiff intended to bring a claim in equity to vacate a judgment, but not relative to a tort claim for damages. The law is well established that a demurrer does not lie to a part of a cause of action. (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778; see also PH II, Inc. v. Superior Court (Ibershof) (1995) 33 Cal.App.4th 1680, 1682.) ¬Therefore, Defendant’s demurrer is OVERRULED.