Case Name: Tuyet Nguyen v. Binh Nguyen

Case No.: 2019-CV-345300

Demurrer to the Cross-Complaint by Cross-Defendant H2O Deli aka H2O Coffee House

Factual and Procedural Background

On August 26, 2017, cross-complainant Binh Nguyen (“Binh”) purchased four lottery scratcher tickets from cross-defendant H2O Deli (aka H2O Coffee House) (“H2O”). (Cross-Complaint at ¶ 9.) Cross-Defendants Tuyet Nguyen (“Tuyet”) and Thy Vo (“Vo”) were on duty and working at H2O’s premises. (Id. at ¶ 6.) Tuyet asked Binh if she could scratch off the numbers for him for fun. (Id. at ¶ 9.) Tuyet and Vo took turns scratching the numbers off one of the tickets, which was not a winner. (Ibid.) Binh also allowed Vo to scratch off numbers on Ticket No. 1167224-026 which was a winning ticket in the amount of $750,000. (Ibid.) Binh has had the original winning ticket and original claim receipt in his possession at all times since that day. (Ibid.)

Cross-Defendant Vo however wrote Tuyet’s name on the back of the ticket without Binh’s knowledge or consent. (Cross-Complaint at ¶ 9.) But, Tuyet never had physical possession of the winning ticket or the claim receipt. (Id. at ¶ 10.) Nor did she take the ticket to the cashier to have it scanned. (Ibid.) In addition, cross-defendants Tuyet and Vo did not pay Binh for any of the lottery tickets. (Ibid.)

Cross-Complainant Binh thereafter submitted his claim to the California State Lottery for the $750,000 prize with a copy of his claim receipt. (Cross-Complaint at ¶ 11.) On February 27, 2019, a Lottery representative came to Binh’s home and told him he would be receiving a check in the amount of $500,000 after tax deductions. (Ibid.)

Binh later learned that Tuyet presented a claim to the Lottery, claiming she owned the winning ticket. (Cross-Complaint at ¶ 12.) The Lottery rejected Tuyet’s claim on or about March 6, 2019 because the Lottery concluded that Tuyet was not the owner of the winning ticket at the time it determined Binh to be the winner. (Ibid.)

On March 28, 2019, Tuyet filed a lawsuit against Binh and ex parte application for a temporary restraining order and for a preliminary injunction. (Cross-Complaint at ¶ 13.) The complaint alleges causes of action for: (1) quiet title; (2) fraud; (3) negligent misrepresentation; (4) estoppel; (5) injunctive relief; (6) conversion; and (7) constructive trust.

On April 23, 2019, Binh filed the operative cross-complaint alleging causes of action for: (1) fraud; (2) conspiracy to commit fraud; (3) breach of fiduciary duty; (4) conspiracy to commit breach of fiduciary duty; and (5) intentional infliction of emotional distress.

Currently before the Court is a demurrer to the cross-complaint by cross-defendant H2O. Cross-Complainant Binh filed written opposition. H2O filed reply papers.

Demurrer to the Cross-Complaint

Cross-Defendant H2O demurs to each cause of action in the cross-complaint on the ground that they fail to state a valid claim. (Code Civ. Proc., § 430.10, subd. (e).)

Legal Standard

“In reviewing the sufficiency of a complaint against a general demurer, we are guided by long settled rules. ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. We also consider matters which may be judicially noticed.’” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “A demurrer tests only the legal sufficiency of the pleading. It admits the truth of all material factual allegations in the complaint; the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court.” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213–214.)

“The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded. The court does not, however, assume the truth of contentions, deductions or conclusions of law. … [I]t is error for a trial court to sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. And it is an abuse of discretion to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.” (Gregory v. Albertson’s, Inc. (2002) 104 Cal.App.4th 845, 850.)

First Cause of Action: Fraud

The first cause of action is a claim for fraud. “The elements of fraud are (1) misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance on the misrepresentation, (4) justifiable reliance on the misrepresentation, and (5) resulting damages.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

“Fraud must be pleaded with specificity rather than with general and conclusory allegations. The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793, citation and quotation marks omitted.)

In the first cause of action, cross-complainant Binh alleges Tuyet submitted a false and fraudulent claim to the California Lottery claiming she was the winner of Ticket No. 1167224-026. (Cross-Complaint at ¶ 16.) Tuyet falsely presented she was the owner of the lottery ticket and knew that her claim was false. (Ibid.) Binh also alleges that cross-defendant Vo assisted Tuyet in making her false claim to the California Lottery and has provided false testimony in support of Tuyet’s lawsuit. (Id. at ¶ 21.)

Cross-Defendant H2O argues there are no facts to support a fraud claim as the conduct alleged pertains primarily to cross-defendant Tuyet. In opposition, Binh argues that cross-defendant H2O can be held liable under a theory of respondeat superior.

“Under the doctrine of respondeat superior, an employer is ordinarily liable for the injuries its employees cause others in the course of their work. Respondeat superior imposes liability whether or not the employer was itself negligent, and whether or not the employer had control of the employee. The doctrine’s animating principle is that a business should absorb the costs its undertaking impose on others.” (Bussard v. Minimed, Inc. (2003) 105 Cal.App.4th 798, 803 (Bussard).) As one appellate court described the doctrine:

“Under the theory of respondeat superior, an employer is vicariously liable for an employee’s torts committed within the scope of employment. [Citations.] This theory is justified as ‘ “a deliberate allocation of a risk. The losses caused by the torts of employees, which as a practical matter are sure to occur in the conduct of the employer’s enterprise, are placed upon that enterprise itself, as a required cost of doing business.” ’ [Citation.] The employer is liable not because the employer has control over the employee or is in some way at fault, but because the employer has control over the employee or is in some way at fault, but because the employer’s enterprise creates inevitable risks as a part of doing business.”

(Bailey v. Filco, Inc. (1996) 48 Cal.App.4th 1552, 1558-1559 (Bailey).)

The doctrine’s application requires that the employee be acting within the course of his or her employment. (Bussard, supra, 105 Cal.App.4th at p. 803.) “In California, the scope of employment has been interpreted broadly under the respondeat superior doctrine.” (Farmers Ins. Group v. County of Santa Clara (1995) 11 Cal.4th 992, 1004.) For example, “[t]he fact that an employee is not engaged in the ultimate object of his employment at the time of his wrongful act does not preclude attribution of liability to an employer.” (Alma W. v. Oakland Unified School Dist. (1981) 123 Cal.App.3d 133, 139.) Thus, acts necessary to the comfort, convenience, health, and welfare of the employee while at work, though strictly personal and not acts of service, do not take the employee outside the scope of employment. (See ibid.) Moreover, “ ‘where the employee is combining his own business with that of his employer, or attending to both at substantially the same time, no nice inquiry will be made as to which business he was actually engaged in at the time of injury, unless it clearly appears that neither directly nor indirectly could he have been serving his employer.’ [Citations.]” (John R. v. Oakland Unified School Dist. (1989) 48 Cal.3d 438, 447 (John R.).) It is also settled that an employer’s vicarious liability may extend to willful and malicious torts of an employee as well as negligence. (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 209 (Mary M.); John R. supra, 48 Cal.3d at p. 447.) Finally, an employee’s tortious act may be within the scope of employment even if it contravenes an express company rule and confers no benefit to the employer. (Mary M., supra, 54 Cal.3d at p. 209; Perez v. Van Groningen & Sons, Inc. (1986) 41 Cal.3d 962, 969-970.)

“Whether a tort was committed within the scope of employment is generally a question of fact.” (Bailey, supra, 48 Cal.App.4th at p. 1558.)

Cross-Complainant Binh here alleges Tuyet was an employee of cross-defendant H2O and that her actions occurred within the course and scope of her employment. (See Cross-Complaint at ¶¶ 5, 18, 15, 22.) In particular, Binh alleges the following:

“Tuyet Nguyen and Thy Vo were acting in the course and scope of their employment with H2O at the time they plotted and created their plan to try to cheat Cross-Complainant out of his lottery winnings. Further, Tuyet Nguyen was acting in the course and scope of her employment with H2O when she presented the false claim to the California Lottery.”

(Id. at ¶ 22.)

As explained in the moving papers, cross-complainant Binh has not stated a valid fraud claim against Tuyet. For example, there are no facts showing that Binh relied on a false representation by Tuyet which caused him to suffer damage. Instead, Tuyet intended for the California Lottery to rely on her claim. (Cross-Complaint at ¶ 17.) Nor has cross-defendant Vo made any false representation relied upon by cross-complainant Binh to establish a cause of action for fraud. Without a valid fraud claim against Tuyet and Vo, there is no liability for respondeat superior against cross-defendant H2O.

Accordingly, the demurrer to the first cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND after service of this signed order for failure to state a claim. (See City of Stockton (2007) 42 Cal.4th 730, 747 [where plaintiff has not had opportunity to amend complaint in response to demurrer, “leave to amend is liberally allowed as a matter of fairness unless the complaint shows on its face that it is incapable of amendment”].)

Second Cause of Action: Conspiracy to Commit Fraud

The second cause of action is a conspiracy to commit fraud. “Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. [Citation.] By participation in a civil conspiracy, a coconspirator effectively adopts as his or her own the torts of other coconspirators within the ambit of the conspiracy. [Citation.] In this way, a coconspirator incurs tort liability co-equal with the immediate tortfeasors.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511.)

“The elements of a civil conspiracy are (1) the formation and operation of the conspiracy; (2) the wrongful act or acts done pursuant thereto; and (3) the damage resulting.” (Mosier v. Southern California Physicians Ins. Exchange (1998) 63 Cal.App.4th 1022, 1048.) “A complaint for civil conspiracy states a cause of action only when it alleges the commission of a civil wrong that causes damage. Though conspiracy may render additional parties liable for the wrong, the conspiracy itself is not actionable without a wrong.” (Okun v. Super. Ct. (1981) 29 Cal.3d 442, 454.)

As stated above, there is no claim stated for fraud against cross-defendant H2O. Therefore, there is no viable cause of action for conspiracy to commit fraud.

Consequently, the demurrer to the second cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND after service of this signed order for failure to state a claim.

Third Cause of Action: Breach of Fiduciary Duty

The third cause of action is a claim for breach of fiduciary duty. Fiduciary duties arise as a matter of law in certain technical, legal relationships. (Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 632.) Such relationships include attorney and client, stockbroker and customer, and trustee and beneficiary. (Id. at pp. 632-633.)

“The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.” (Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1405.) “In order to plead a cause of action for breach of fiduciary duty, there must be an adequate showing of each of these elements” (City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483.)

The allegations for breach of fiduciary duty are set forth in paragraph 29 of the Cross-Complaint which provides:

“Cross-Defendants alleges that by selling the winning lottery ticket to Cross-Complainant, by having its employees assist or participate in scratching off the numbers, by having their cashier scan the winning ticket, and by giving Cross-Complainant the claim form for the winning ticket, Cross-Defendant H2O and its participating employees assumed fiduciary duties and responsibilities to Cross-Complainant. Cross-Complainant placed his trust in Cross-Defendants that they would follow the Lottery’s rules and regulations and not try to steal his money.”

(Cross-Complaint at ¶ 29.)

Cross-Defendant H2O persuasively argues there are no facts establishing a fiduciary relationship between Binh and H2O as a matter of law to state a claim for breach of fiduciary duty. Nor has Binh cited any legal authority in opposition to support the existence of any fiduciary relationship in the third cause of action.

Accordingly, the demurrer to the third cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND after service of this signed order for failure to state a claim.

Fourth Second Cause of Action: Conspiracy to Commit Breach of Fiduciary Duty

The fourth cause of action is a claim for conspiracy to commit breach of fiduciary duty. As stated above, there is no claim stated for breach of fiduciary duty. Therefore, there is no viable cause of action for conspiracy to commit breach of fiduciary duty.

Consequently, the demurrer to the fourth cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND after service of this signed order for failure to state a claim.

Fifth Cause of Action: Intentional Infliction of Emotional Distress

The fifth cause of action is a claim for intentional infliction of emotional distress.

A cause of action for intentional infliction of emotional distress exists when there is (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct. (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050.)

“An essential element of a cause of action for intentional infliction of emotional distress is ‘extreme and outrageous conduct by the defendant.’ [Citation.]” (Yurick v. Super. Ct. (1989) 209 Cal.App.3d 1116, 1123.) “[T]he standard for judging outrageous conduct does not provide a ‘bright line’ rigidly separating that which is actionable from that which is not. Indeed, its generality hazards a case-by-case appraisal of conduct filtered through the prism of the appraiser’s values, sensitivity threshold, and standards of civility.” (Id. at p. 1128.) “[I]t is generally held that there can be no recovery for mere profanity, obscenity, or abuse, without circumstances of aggravation, or for insults, indignities, or threats which are considered to amount to nothing more than mere annoyances. The plaintiff cannot recover merely because of hurt feelings.” (Ibid.) Thus, “[c]onduct to be outrageous must be so extreme as to exceed all bounds of that usually tolerated in a civilized community.” (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 1001.)

The outrageous conduct alleged in the fifth cause of action arises from the prior claims for fraud and breach of fiduciary duty. (See Cross-Complaint at ¶ 34.) As stated above, cross-complainant Binh has not alleged valid claims for fraud or breach of fiduciary duty. As a consequence, there are no facts of extreme and outrageous conduct to state a claim for intentional infliction of emotional distress.

Accordingly, the demurrer to the fifth cause of action is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND after service of this signed order for failure to state a claim.

The Court will prepare the Order.