2013-00142341-CU-BC

Castle-Breckenridge Management, Inc. vs. J.D. Allman, Inc.

Nature of Proceeding: Hearing on Demurrer

Filed By: Kalra, Gaurav Bobby

Defendants J.D. Allman Inc., DBA Total HR Solutions and Omegacomp, Inc.’s
Demurrer to the Complaint is overruled.

Plaintiff alleges claims for Breach of Contract, Fraud, and related claims arising out of
Plaintiff’s retention of J.D. Allman Inc. and Omegacomp, Inc. to provide payroll
services, human resources, risk management and to procure workers compensation
coverage. Omegacomp, Inc. is alleged to be an agent or to be affiliated with J.D.
Allman, Inc. Omegacomp, Inc. is advertised to be a “product” of Total HR Solutions,
which is the dba of J.D. Allman Inc. (Complaint ¶s 3-4)

Plaintiffs allege that defendants were charging plaintiffs tax rates in excess of Plaintiffs’
State and Federal liability (and pocketing the difference) because they did not reduce
the tax rate as required after the salary caps were reached. Defendants explained that
the agreement was to charge a flat service rate, not a tax rate, however plaintiffs
contend that defendants had promised that the Final Cost of the services would reflect
actual tax rates, that there would be no charge for the payroll service, and that there
would be no additional fees beyond a specified service fee.(Complaint ¶ 16) Plaintiffs
allege that they were overcharged $239,509 between November 1, 2008 and
November 30, 2011.

1st cause of action Breach of Contract: Overruled.
Defendants allege that the allegations of the Complaint contradict the language of the
contracts attached to the Complaint with respect to the named plaintiffs and named
defendants alleged to be the parties to those contracts. Defendants contend that both
defendants are not parties to both contracts. Defendants also contend that the
contracts do not list all plaintiffs as parties to the contracts.

However, the Court will not make a factual determination as to who the parties to the
contracts are by interpreting the exhibits. The Court understands that the Court may
take notice of exhibits attached to the complaint, and that if facts appearing in the
exhibits contradict those alleged in the complaint, the facts in the exhibits take
precedence. (Mead v. Sanwa Bank California (1998) 61 Cal.App.4th 561, 567-568)
However, a hearing on a demurrer cannot be turned into a contested evidentiary
hearing through the guise of having the court take judicial notice of documents whose
truthfulness or proper interpretation are disputable. ( Unruh-Haxton v. Regents of Univ.
of Cal. (2008) 162 Cal.App.4th 343, 365.) The Court notes that while Exhibit A purports
to be a contract with only Omegacomp, Inc., Omegacomp is identified on that
document as a “Total HR Solutions Product.” The document purports to be
copyrighted by J.D. Allman Corp. and the name Total HR Solutions (J.D. Allman’
Corp’s dba( appears on the bottom of the document. (See Ex A.) There are clearly
disputed issues of fact as to the agency/affiliation relationship of the defendants within
the four corners of this exhibit.

Courts will not accept as true allegations of fact that are inconsistent either with
attached documents or specific allegations set forth in other areas of the pleading.
” [Facts appearing in exhibits attached to the complaint will also be accepted as true
and, if contrary to the allegations in the pleading, will be given precedence.” Dodd v.
Citizens Bank (1990) 222 Cal.App.3d 1624, 1627, emphasis added.
However, the exhibits are not inconsistent with the allegations of the Complaint.

2nd cause of action Fraud: Overruled. The allegations are sufficient in that J.D.
Allman, Inc.’s alleged agent, Omegacomp, Inc., through a named employee, made
misrepresentations about the service charges and the amount of taxes that would be
collected and charged to plaintiffs. (Complaint ¶ 28)

3rd cause of action Negligent Misrepresentation: Overruled. The allegations are
sufficient in that J.D. Allman, Inc.’s alleged agent, Omegacomp, Inc., through a named
employee, made misrepresentations about the service charges and the amount of
taxes that would be collected and charged to plaintiffs.

4th cause of action Breach of Fiduciary Duty: Overruled. The allegations are
sufficient to allege a fiduciary relationship because the facts alleged are that
defendants acted as insurance brokers in obtaining workers compensation insurance
for the plaintiffs.

5th cause of action Violation of Business & Professions Code section 17200, 6th
cause of action Violation of Business & Professions Code section 17500:
Overruled. The challenge to these causes of action relies on the purported
inconsistency between the allegations of the contract and the attached exhibits. The
Court has found that the attachments raise disputed issues of fact that will not be
determined at the demurrer stage.

7th cause of action Common Counts: Overruled. The challenge to these causes of
action relies on the purported inconsistency between the allegations of the contract
and the attached exhibits. The Court has found that the attachments raise disputed
issues of fact that will not be determined at the demurrer stage.

Answer to be filed and served on or before October 2, 2013.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.