This case was last updated from Los Angeles County Superior Courts on 09/07/2022 at 19:27:54 (UTC).

PACWEST BANKCORP, A DELAWARE CORPORATION VS DAVID I RAINER

Case Summary

On 12/01/2020 PACWEST BANKCORP, A DELAWARE CORPORATION filed a Contract - Other Contract lawsuit against DAVID I RAINER. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are STEPHEN I. GOORVITCH, RICHARD J. BURDGE JR. and GAIL KILLEFER. The case status is Other.
Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    *******6002

  • Filing Date:

    12/01/2020

  • Case Status:

    Other

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

STEPHEN I. GOORVITCH

RICHARD J. BURDGE JR.

GAIL KILLEFER

 

Party Details

Cross Defendants and Plaintiffs

PACWEST BANKCORP

PACIFIC WESTERN BANK

EGGEMEYER JOHN M.

Defendants and Cross Plaintiffs

RAINER DAVID I.

SOUTHERN CALIFORNIA BANCORP

BANK OF SOUTHERN CALIFORNIA N.A.

HERNANDEZ RICHARD

SMITHSON DIANA REMINGTON

Attorney/Law Firm Details

Plaintiff Attorneys

BAUTE MARK D.

CROCHETIERE DAVID P.

Defendant Attorneys

SKITZKI MADELINE PAIGE

KIM NARY

SMITH ALEXANDER M.

CASLIN BRENT

AVUNJIAN ELIZABETH

Cross Plaintiff Attorney

DEIXLER BERT

Cross Defendant Attorney

ROTH BRYAN DANIEL

 

Court Documents

Request for Dismissal

9/2/2022: Request for Dismissal

Case Management Statement

6/7/2022: Case Management Statement

Case Management Statement

6/7/2022: Case Management Statement

Case Management Statement

6/7/2022: Case Management Statement

Answer

6/16/2022: Answer

Answer

6/16/2022: Answer

Case Management Order

6/22/2022: Case Management Order

Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

6/22/2022: Minute Order - MINUTE ORDER (CASE MANAGEMENT CONFERENCE)

Notice of Posting of Jury Fees

6/23/2022: Notice of Posting of Jury Fees

Stipulation and Order - STIPULATION AND ORDER JOINT STIPULATION AND PROPOSED ORDER CONTINUING HEARING DATES ON SUMMARY JUDGMENT MOTIONS AND VACATING HEARING ON MOTION FOR PROTECTIVE ORDER

8/11/2022: Stipulation and Order - STIPULATION AND ORDER JOINT STIPULATION AND PROPOSED ORDER CONTINUING HEARING DATES ON SUMMARY JUDGMENT MOTIONS AND VACATING HEARING ON MOTION FOR PROTECTIVE ORDER

Minute Order - MINUTE ORDER (COURT ORDER)

10/6/2021: Minute Order - MINUTE ORDER (COURT ORDER)

Stipulation and Order - STIPULATION AND ORDER EXTENDING TIME FOR PLAINTIFFS TO FILE A SECOND AMENDED COMPLAINT

10/6/2021: Stipulation and Order - STIPULATION AND ORDER EXTENDING TIME FOR PLAINTIFFS TO FILE A SECOND AMENDED COMPLAINT

Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 10/06/2021

10/6/2021: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (COURT ORDER) OF 10/06/2021

Motion to Compel Further Discovery Responses

10/12/2021: Motion to Compel Further Discovery Responses

Declaration - DECLARATION OF DAVID P. CROCHETIERE ISO MOTION TO COMPEL FURTHER RESPONSES TO PLAINTIFF'S SPECIAL INTERROGATORIES, SET 1

10/12/2021: Declaration - DECLARATION OF DAVID P. CROCHETIERE ISO MOTION TO COMPEL FURTHER RESPONSES TO PLAINTIFF'S SPECIAL INTERROGATORIES, SET 1

Declaration - DECLARATION OF BRYAN D. ROTH ISO MOTION TO COMPEL FURTHER RESPONSES TO PLAINTIFF'S SPECIAL INTERROGATORIES, SET 1

10/12/2021: Declaration - DECLARATION OF BRYAN D. ROTH ISO MOTION TO COMPEL FURTHER RESPONSES TO PLAINTIFF'S SPECIAL INTERROGATORIES, SET 1

Memorandum of Points & Authorities

10/12/2021: Memorandum of Points & Authorities

Separate Statement - SEPARATE STATEMENT IN SUPPORT OF PACWEST BANCORPS MOTION TO COMPEL FURTHER SUPPLEMENTAL RESPONSES PLAINTIFFS SPECIAL INTERROGATORIES, SET ONE

10/12/2021: Separate Statement - SEPARATE STATEMENT IN SUPPORT OF PACWEST BANCORPS MOTION TO COMPEL FURTHER SUPPLEMENTAL RESPONSES PLAINTIFFS SPECIAL INTERROGATORIES, SET ONE

146 More Documents Available

 

Docket Entries

  • 09/02/2022
  • DocketRequest for Dismissal; Filed by Pacwest Bankcorp (Plaintiff); Pacific Western Bank (Plaintiff)

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  • 08/30/2022
  • Docketat 09:00 AM in Department 39; Hearing on Motion for Protective Order - Not Held - Advanced and Continued - by Court

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  • 08/29/2022
  • Docketat 08:30 AM in Department 37; Post-Mediation Status Conference - Not Held - Vacated by Court

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  • 08/22/2022
  • Docketat 09:00 AM in Department 39; Hearing on Motion for Protective Order - Not Held - Vacated by Court

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  • 08/22/2022
  • Docketat 09:00 AM in Department 39; Hearing on Motion to Compel Further Discovery Responses - Not Held - Rescheduled by Party

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  • 08/18/2022
  • Docketat 09:00 AM in Department 39; Hearing on Motion to Compel Further Discovery Responses - Not Held - Taken Off Calendar by Party

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  • 08/11/2022
  • DocketStipulation and Order (Joint Stipulation and Proposed Order Continuing Hearing Dates on Summary Judgment Motions and Vacating Hearing on Motion for Protective Order); Filed by Richard Hernandez (Defendant); Diana Remington Smithson (Defendant); David I. Rainer (Defendant)

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  • 07/14/2022
  • Docketat 09:00 AM in Department 39; Hearing on Demurrer - without Motion to Strike - Not Held - Advanced and Vacated

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  • 06/23/2022
  • DocketNotice of Posting of Jury Fees; Filed by Richard Hernandez (Defendant); Diana Remington Smithson (Defendant); David I. Rainer (Defendant)

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  • 06/22/2022
  • Docketat 08:30 AM in Department 39, Stephen I. Goorvitch, Presiding; Case Management Conference - Held

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189 More Docket Entries
  • 12/23/2020
  • DocketAnswer; Filed by David I. Rainer (Defendant)

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  • 12/23/2020
  • DocketCross-Complaint; Filed by David I. Rainer (Defendant)

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  • 12/10/2020
  • DocketProof of Personal Service; Filed by Pacwest Bankcorp (Plaintiff)

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  • 12/09/2020
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 12/09/2020
  • DocketOrder to Show Cause Failure to File Proof of Service; Filed by Clerk

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  • 12/02/2020
  • DocketSummons (on Complaint); Filed by Pacwest Bankcorp (Plaintiff)

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  • 12/01/2020
  • DocketNotice of Case Assignment - Unlimited Civil Case; Filed by Clerk

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  • 12/01/2020
  • DocketCivil Case Cover Sheet; Filed by Pacwest Bankcorp (Plaintiff)

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  • 12/01/2020
  • DocketCivil Case Cover Sheet; Filed by Pacwest Bankcorp (Plaintiff)

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  • 12/01/2020
  • DocketComplaint; Filed by Pacwest Bankcorp (Plaintiff)

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Tentative Rulings

Case Number: *******6002 Hearing Date: March 2, 2022 Dept: 37

FROM: Law Cindy Mijangos, ext. 5829

HEARING DATE: March 2, 2022

CASE NUMBER: *******6002

CASE NAME: PacWest Bancorp, a Delaware corporation v. David I. Rainer, et al.

MOVING PARTIES: Defendants, Bank of Southern California, N.A. and Southern California Bancorp

OPPOSING PARTIES: Plaintiffs, PacWest Bancorp and Pacific West Bank

TRIAL DATE: November 15, 2022

PROOF OF SERVICE: OK

MOTION: Defendants’ Demurrer to Second Amended Complaint

OPPOSITION: February 16, 2022

REPLY: February 22, 2022

TENTATIVE: Moving Defendants’ demurrers to the seventh, eighth, ninth, and fifteenth causes of action are sustained. The demurrers are otherwise overruled. Plaintiffs are granted 30 days leave to amend. Moving Defendants are to give notice.

Background

  1. The Complaint

This is a breach of contract action arising out of employment contracts between Defendants David I. Rainer (“Rainer”), Richard Hernandez (“Hernandez”), and Diana Remington Smithson (“Smithson”) (collectively, “Individual Defendants”) and Plaintiff, PacWest Bancorp. (“PacWest”). Pacific Western Bank is also named as a Plaintiff. Plaintiffs allege that PacWest entered into employment agreements with the Individual Defendants. Plaintiffs further allege that the Individual Defendants took positions at a competing banking institution, Bank of Southern California, N.A. (“SoCal Bank”) while they were still bound by their agreements with Plaintiffs. The Individual Defendants also allegedly violated other portions of the agreements, including by causing other employees of PacWest to join SoCal Bank. Defendant, Southern California Bancorp (“Bancorp”) also allegedly assisted the Individual Defendants in their actions to breach the Agreement.

PacWest’s Complaint, filed December 1, 2020 alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing.

On April 9, 2021, Plaintiffs filed the First Amended Complaint. (“FAC”). The FAC alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) intentional interference with prospective economic advantage, (4) intentional interference with prospective economic advantage, (5) negligent interference with prospective economic advantage, (6) breach of fiduciary duty, (7) aiding and abetting breach of fiduciary duty, (8) common law unfair competition and violation of California Business and Professions Code 17200.

On September 7, 2021, SoCal Bank and Bancorp’s demurrer to the third, fourth, seventh, and eighth causes of action was sustained.

In response, Plaintiffs filed the operative Second Amended Complaint (“SAC”) on October 10, 21, 2021. The SAC alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) intentional interference with prospective economic advantage, (4) intentional interference with prospective economic advantage, (5) negligent interference with prospective economic advantage, (6) intentional interference with contractual relations, (7) inducing breach of contract, (8) breach of fiduciary duty, (9) aiding and abetting breach of fiduciary duty, (10) common law unfair competition and violation of California Business and Professions Code 17200, (11) inducing breach of contract, (12) breach of fiduciary duty, (13) breach of fiduciary duty, (14) breach of fiduciary duty, (15) aiding and abetting breach of fiduciary duty, and (16) common law unfair competition and violation of California Business and Professions Code 17200.

  1. The Cross-Complaint

On December 23, 2020, Rainer filed his answer to the Complaint. Rainer also filed a Cross-Complaint against PacWest, alleging the following four causes of action: (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unfair competition and (4) declaratory relief.

On May 6, 2021, Rainer filed a First Amended Cross-Complaint alleging the following five causes of action: (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unfair competition, (4) declaratory relief, and (5) breach of implied warranty of authority.

  1. The Instant Demurrer

SoCal Bank and Bancorp (“Moving Defendants”) now demur to the SAC’s seventh, eighth, ninth, tenth, eleventh, fifteenth, and sixteenth causes of action. Plaintiffs oppose the demurrer.

Request for Judicial Notice

Moving Defendants request that the court take judicial notice of the Notice of Ruling on Demurrer to First Amended Complaint, which was filed by Moving Defendants on September 7, 2021 and which attaches a copy of the court's order sustaining in part Moving Defendants’ demurrer to the First Amended Complaint.

The request is granted, but not as to any hearsay. (Evid. Code 452, subd. (d).)

Discussion[1]

  1. Legal Authority

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

  1. Analysis

  1. Seventh, Eighth, Ninth, and Fifteenth Cause of Action: CUTSA Preemption

The California Uniform Trade Secrets Act (“CUTSA”) is codified in Civil Code sections 3426 through 3426.11 and occupies common law trade secret misappropriation claims. (See K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 954.) Civil Code section 3426.7 concerns displacement and provides that CUTSA “does not affect (1) contractual remedies, whether or not based upon misappropriation of a trade secret, (2) other civil remedies that are not based upon misappropriation of a trade secret, or (3) criminal remedies, whether or not based upon misappropriation of a trade secret.” (Civ. Code, 3426.7(b).) CUTSA thus displaces claims based on the same nucleus of facts as trade secret misappropriation. (See Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 232; K.C. Multimedia, Inc., supra, 171 Cal.App.4th at 962.) CUTSA “does not displace noncontract claims that, although related to a trade secret misappropriation, are independent and based on facts distinct from the facts that support the misappropriation claim.” (Angelica Textile Services, Inc. v. Park (2013) 220 Cal.App.4th 495, 506.)

“[T]he determination of whether a claim is based on trade secret misappropriation is largely factual.” (Id. at 505.)

Under CUTSA, a trade secret has four elements: (1) it must be comprised of “information”; (2) it must not be “generally known”; (3) it must derive “independent economic value” from the fact that it is a secret; and (4) it must be the subject of “reasonable” efforts to “maintain its secrecy.” (Cal. Civ. Code 3426.1(d); see Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1263.) A misappropriation includes disclosure or use of a trade secret of another without consent. (See Civ. Code, 3426.1(b).)

Thus, the Complaint must state facts constituting claims that are independent and distinct from those supporting a trade misappropriation claim. (See Angelica Textile Services, Inc., supra, 220 Cal.App.4th at 506; Silvaco Data Systems, supra, 184 Cal.App.4th at 232; K.C. Multimedia, Inc., supra, 171 Cal.App.4th at 962.)

Moving Defendants argue that the seventh, eighth, ninth, and fifteenth causes of action fail because they are preempted by the CUTSA.

The SAC states that Moving Defendants, by virtue of hiring Rainer as a consultant for Moving Defendants, had access to Plaintiffs’ confidential and proprietary information. (E.g., SAC 123.) In particular, Moving Defendants had access to “salary, benefits, and bonus information or data, and the terms and conditions of the employment relationships between PacWest Bank and its employees and the history of job performance, career goals and aspirations of those employees …” (SAC 126.) Plaintiffs claim that Moving Defendants breached or disrupted the economic relationship between the Raided Employees and Plaintiffs and aided and abetted the Individual Defendants’ breaches of their fiduciary duties to Plaintiffs in order to retain Plaintiffs’ employees and clients as their own. (SAC 121-143 [seventh cause of action for intentional interference with prospective economic advantage, 144-157 [eighth cause of action for intentional interference with prospective economic advantage], 158-169 [ninth cause of action for negligent interference with prospective economic advantage], 215-234 [fifteenth cause of action for aiding and abetting breach of fiduciary duty].)

Plaintiffs’ claims for intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, and aiding and abetting breach of fiduciary duty arise from the same nucleus of facts as trade secret misappropriation. The items of confidential information listed in the SAC constitutes Plaintiffs’ trade secrets, as they are generally unknown information deriving economic value from their confidentiality. (SAC 94-98, 123-125; See Cal. Civ. Code 3426.1(d); Gemini Aluminum Corp. v. California Custom Shapes, Inc. (2002) 95 Cal.App.4th 1249, 1263 [defining trade secret]; See also ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1018 [compensation information may be trade secret when competitor can use information to recruit away employees]; Lab. Code 432.3(b) [“An employer shall not, orally or in writing, personally or through an agent, seek salary history information, including compensation and benefits, about an applicant for employment”].)

Plaintiffs allege that Moving Defendants breached or disrupted the economic relationship between the Raided Employees and Plaintiffs and aided and abetted Individual Defendants’ breaches of their fiduciary duties to Plaintiffs for their own benefit. The SAC does not allege any other facts distinct from a trade secret misappropriation claim that give rise to claims for intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, or aiding and abetting breach of fiduciary duty. Plaintiffs’ opposition does not identify any facts in support of their causes of action that are distinct and independent from a trade secret misappropriation claim. (Opp., 12:4-21.) As alleged, these facts show that Moving Defendants engaged in misconduct by accessing and using Plaintiffs’ confidential information. As such, Moving Defendants’ conduct is dependent on trade secret misappropriation.

Thus, the CUTSA displaces Plaintiffs’ causes of action for claims for intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, and aiding and abetting breach of fiduciary duty.

The demurrer to the seventh, eighth, ninth, and fifteenth causes of action is sustained. Plaintiffs are granted 30 days’ leave to amend.

Given the above ruling, the court does not address the parties’ remaining arguments regarding these causes of action.

  1. Tenth and Eleventh Causes of Action: Intentional Interference with Contractual Relations and Inducing Breach of Contract

To prevail on a cause of action for intentional interference with contractual relations, a plaintiff must plead and prove (1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant's knowledge of that contract; (3) the defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148.)

The elements of an inducing breach of contract cause of action are: (1) plaintiff had a valid, existing contract with a third party; (2) defendant had knowledge of the contract; (3) defendant intended to induce its breach; (4) the contract was in fact breached; (5) the breach was caused by defendant’s unjustified or wrongful conduct (including intentionally interfering with an existing contract); and (6) resulting damages. (Shamblin v. Berge (1985) 166 Cal.App.3d 118, 122.)

Moving Defendants argue that the tenth and eleventh causes of action fail for the following reasons: (1) Moving Defendants hired Rainer after the conclusion of the Restricted Period, (2) the non-solicitation provisions of the Stock Award Agreements are unenforceable because they violate Business and Professions Code section 16600, and (3) Plaintiffs do not sufficiently allege that Moving Defendants were aware of Individual Defendants’ Stock Award Agreements.

The SAC alleges as follows. The Individual Defendants had employment contracts with Plaintiffs. These contracts included restrictive covenants. (E.g., SAC 71, 73-74.) For example, PacWest and Rainer agreed to a five-year payment structure, with a three noncompete period (the “Restricted Period”) and a five-year consulting period. (SAC 23.) The Restricted Period expired on October 20, 2020. (SAC 5.) Before the Restricted Period expired, Rainer “had been communicating with PacWest Bank executives, managers and employees in an attempt to get them to resign their positions with PacWest Bank and take positions at SoCal Bank.” (SAC 74.) Similarly, during their restricted periods, Hernandez and Smithson were recruiting Plaintiffs’ employees to join Moving Defendants. (SAC 70-73.) Though Moving Defendants knew of the Individual Defendants’ contracts and terms therein, Moving Defendants chose to induce a breach or disruption of the contractual relationship between Plaintiffs and each of the Individual Defendants. (SAC 173-177 [tenth cause of action], 183-194 [eleventh cause of action].) Plaintiffs were damaged as a result. (SAC 178-179 [tenth cause of action], 195-196 [eleventh cause of action].). After the restrictive periods expired, Individual Defendants left their employment with Plaintiffs and began their employment with Moving Defendants. (SAC 29, 44, 53.)

Moving Defendants’ arguments are unpersuasive.

First, it appears that Plaintiffs seek relief for Moving Defendants’ purported misconduct during Individual Defendants’ restricted periods, namely Individual Defendants’ alleged recruitment of Plaintiffs’ employees through use of Plaintiffs’ confidential information. (SAC 70-74.)

Second, at the demurrer stage, the court declines to make a finding that the non-solicitation provisions are barred by the Business and Professions Code section 16600.

California Courts have recognized that a party that is bound by a confidentiality agreement may be prohibited from using the confidential information he or she obtained to compete with the party from which he or she obtained that information. (See, e.g., Gordon v. Landau (1958) 49 Cal.2d 690, 694 [“Plaintiffs' preferred customers are a real asset to their business and the foundation upon which its success, and indeed its survival, rests. It thus logically follows that a list of such customers is a valuable trade secret and that plaintiffs were damaged by defendant's unlawful use thereof.”]; Thompson v. Impaxx, Inc. (2003) 113 Cal.App.4th 1425, 1430 (Thompson) [“Section 16600 does not invalidate an employee's agreement not to disclose his former employer's confidential customer lists or other trade secrets or not to solicit those customers.”], emphasis in original; Fowler v. Varian Assocs. (1987) 196 Cal.App.3d 34, 44[“agreements designed to protect an employer's proprietary information do not violate section 16600”]; Rigging Int’l Maint. Co. v. Gwin (1982) 128 Cal.App.3d 594, 606 (Rigging) [“A former employee's use of confidential information obtained from his former employer to compete with his old employer and to solicit the business of his former employer's customers, is regarded as unfair competition.”].)

As explained above, the SAC alleges that Moving Defendants accessed and misused Plaintiffs’ confidential information to recruit Plaintiffs’ employees. (E.g., SAC 121-169, 215-234; See also SAC, Exh. 2, pg. 5, 1-4.) At this stage of the proceedings, these allegations are sufficient to allege a breach of the Stock Awards Agreements.

Third, Plaintiffs have adequately made allegations regarding Moving Defendants’ knowledge. (SAC 173-175, 183-185; see Pridonoff v. Balokovich (1951) 36 Cal.2d 788, 792 [allegations on information and belief are appropriate where the facts are not necessarily within the plaintiff's personal knowledge].) At the demurrer stage, those allegations are sufficient.

The demurrer to the tenth and eleventh causes of action are overruled.

  1. Sixteenth Cause of Action: Violation of California Business and Professions Code 17200

Business and Professions Code section 17200 (“UCL”) prohibits “unfair competition,” which is defined to include “any unlawful, unfair or fraudulent business act or practice” and “unfair, deceptive, untrue or misleading advertising” and any act prohibited by business and professions code section 17500. A cause of action under the UCL must be stated with “reasonable particularity.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261.)

A business practice is unfair when it offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers." (Community Assisting Recovery, Inc. v. Aegis Security Ins. Co. (2001) 92 Cal.App.4th 886.) A business practice is unlawful if it violates another law. (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1554.) A business practice is fraudulent if “members of the public are likely to be deceived." (Wang v. Massey Chevrolet (2002) 97 Cal. App. 4th 856, 871.)

“While the scope of conduct covered by the UCL is broad, its remedies are limited. [Citation.] A UCL action is equitable in nature; damages cannot be recovered. [Citation.] [The Supreme Court has] stated that under the UCL, ‘[p]revailing plaintiffs are generally limited to injunctive relief and restitution.’” (Korea Supply Co. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144.) UCL actions based on “unlawful” conduct may be based on violations of other statutes. (See Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.)

Moving Defendants contend that the sixteenth cause of action is insufficiently pled because the SAC does not allege how their conduct amounted to unfair competition or constituted a violation of any other laws. Additionally, Moving Defendants contend that this cause of action is insufficiently pled because the SAC fails to allege how Plaintiffs are entitled to restitution or an injunction.

Under this cause of action, Plaintiffs allege that Moving Defendants wrongfully used Plaintiffs’ confidential information to interfere with Plaintiffs’ relationship with their employees and clients. (SAC 235-239.) As such, Plaintiffs allege that Moving Defendants’ conduct constitutes unlawful and/or unfair business acts or practices in violation of Business and Professions Code section 17200, et seq. (SAC 238.) Further, Plaintiffs allege that as a result of Moving Defendants’ violations of section 17200, et seq., they have suffered economic injury and are entitled to an injunction to prevent further damage. (SAC 238-239.)

Plaintiffs’ allegations are sufficient to withstand demurrer. Moving Defendants’ alleged use of Plaintiffs’ confidential information satisfies the definition of an unfair business practice, and Plaintiffs’ allegations support their request for an injunction.

The demurrer as to the sixteenth cause of action is overruled.

Conclusion

Moving Defendants’ demurrers to the seventh, eighth, ninth, and fifteenth causes of action are sustained. The demurrers are otherwise overruled. Plaintiffs are granted 30 days leave to amend. Moving Defendants are to give notice.


[1] Moving Defendants submit a declaration from their counsel, Alexander M. Smith (“Smith”) to demonstrate compliance with statutory meet and confer requirements. Smith attests that on November 17, 2021, the parties met and conferred by telephone regarding the arguments raised in the instant demurrer but were unable to come to an agreement. (Smith Decl. 2.) The Smith Declaration is sufficient for purposes of Code of Civil Procedure section 430.41.



b'

Case Number: *******6002 Hearing Date: November 19, 2021 Dept: 37

HEARING DATE: November 19, 2021

CASE NUMBER: *******6002

CASE NAME: PacWest Bancorp et al. v. David I. Rainer et al.

MOVING PARTY: Plaintiff and Cross-Defendant PacWest Bancorp

OPPOSING PARTY: Defendant and Cross-Complainant David I. Rainer

TRIAL DATE: November 15, 2022

PROOF OF SERVICE: OK

PROCEEDING: Motion to Compel Further Supplemental Responses to Plaintiff’s Special Interrogatories, Set One

OPPOSITION: November 5, 2021

REPLY: November 12, 2021

TENTATIVE: Plaintiff PacWest’s Motion to compel Further Supplemental Responses to Plaintiff’s Special Interrogatories, Set One, is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED with respect to Interrogatories numbers 1 and 7; GRANTED IN PART as to Interrogatories numbers 3-4, 8, and 20-21; and DENIED as to Interrogatories 2 and 14-15.

Background

PacWest Bancorp commenced this suit against David I. Rainer on December 1, 2020, asserting two causes of action for breach of contract and breach of the covenant of good faith and fair dealing. PacWest Bancorp then filed, pursuant to the court’s granting of its motion for leave to amend complaint, its First Amended Complaint. The First Amended Complaint added Pacific Western Bank as a plaintiff and added Bank of Southern California, N.A. and Southern California Bancorp as defendants.

Plaintiffs PacWest Bancorp and Pacific Western Bank filed their operative Second Amended Complaint on October 21, 2021. Plaintiffs assert the following ten causes of action against David Rainer, Bank of Southern California N.A., Southern California Bancorp, Richard Hernandez, and Diana Remington Smithson:

  1. Breach of Contract;

  2. Breach of the Covenant of Good Faith and Fair Dealing;

  3. Intentional Interference with Prospective Economic Advantage;

  4. Intentional Interference with Prospective Economic Advantage;

  5. Negligent Interference with Prospective Economic Advantage;

  6. Intentional Interference with Contractual Relations;

  7. Inducing Breach of Contract;

  8. Breach of Fiduciary Duty;

  9. Aiding and Abetting Breach of Fiduciary Duty; and

  10. Common Law Unfair Competition and Violation of California Business and Professions Code.

PacWest alleges that David I. Rainer, a former executive of CU Bancorp, which was acquired by PacWest, orchestrated an illegal raiding plan to support Bank of Southern California and Southern California Bancorp, which led to 30 PacWest Bank employees – including key executives and client relationship personnel – to leave PacWest and join David Rainer at the Bank of Southern California. (SAC ¶ 1.)

On May 6, 2021, Rainer filed his operative First Amended Cross-Complaint against PacWest Bancorp and John M. Eggemeyer.

Plaintiff PacWest Bancorp (hereafter referred to as “Plaintiff”) filed the instant Motion to Compel defendant David I. Rainer’s Further Supplemental Responses to Plaintiff’s Special Interrogatories, Set One, and Request for Sanctions in the Amount of $8,160.00.

Discussion

I. Legal Standard

In California, any party may obtain discovery “regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action.” (Code Civ. Pro. ; 2017.010.) The matter must either be “itself admissible in evidence” or “appear reasonably calculated to lead to the discovery of admissible evidence.” (Id.) “Discovery may relate to the claim or defense of the party seeking discovery or of any other party to the action.” (Id.)

California Rules of Court, Rule 3.1345 requires that motions to compel further responses to interrogatories and demands for inspection be accompanied by a separate statement. (Cal. Rules of Court, rule 3.1345(a).) Motions to Compel Further Responses must also be accompanied by a meet and confer declaration. (Code Civ. Pro. ;; 2030.300(b)(1), 2031.310(b)(2).) These motions must be made within 45 days of the service of the verified response, or the propounding party waives any right to compel further responses. (Code Civ. Pro. ;; 2030.300(c), 2031.310(c).)

Code of Civil Procedure section 2030.300 states in pertinent part: (a) On receipt of a response to interrogatories, the propounding party may move for an order compelling a further response if the propounding party deems that any of the following apply: (1) An answer to a particular interrogatory is evasive or incomplete; (2) An exercise of the option to produce documents … is unwarranted or the required specification of those documents is inadequate; (3) An objection to an interrogatory is without merit or too general.

The court shall impose a monetary sanction under Chapter Seven of the Code of Civil Procedure (commencing with section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion to compel further response to interrogatories, a demand for inspection, or requests for admission, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of a sanction unjust. (Code Civ. Pro. ;; 2030.300(d); 2031.310(h); 2033.290(d).)

II. Discussion

Plaintiff moves the court to issue an order compelling Defendant to provide further responses to Special Interrogatories numbered 1-4, 7-8, 14-15, and 20-21. Defendant opposes.

A. Relevant Allegations

Plaintiff alleges the following pertinent facts in its operative Second Amended Complaint (“SAC”).

Plaintiff alleges that David I. Rainer (hereafter “Defendant”) orchestrated an illegal raiding of the employees and clients of Plaintiff. Defendant is a former executive of CU Bancorp, which Plaintiff acquired in 2017. (SAC ¶ 1.) Defendant was aided and abetted in the alleged wholesale assault on Plaintiff by his new employer and Plaintiff’s competitor, defendant Bank of Southern California, N.A. (“Bank of SoCal”), its holding company, Southern California Bancorp (“SoCal Bancorp”), Plaintiff’s former Executive Vice President, defendant Richard Hernandez, and Plaintiff’s former Senior Vice President, defendant Diana Remington Smithson. (Id.)

As part of CU Bancorp’s merger with Plaintiff in 2017, Defendant and Plaintiff entered into a consulting agreement, which was later amended and restated on May 25, 2017. (SAC ¶ 2.) In exchange for an annual fee of $550,000, to be paid in monthly increments, Plaintiff agreed to serve as consultant to Plaintiff and its subsidiaries. (Id.) For the first three years of the agreement, Defendant was prohibited from soliciting any of Plaintiff’s employees, or the employees of its subsidiaries, to resign or apply for, or accept employment with any competitive enterprise. (Id.) Defendant was also required to, through May of 2022, grow Plaintiff’s business, attract and retain new clients, and preserve business and employee relationships and retain key personnel. (Id.)

On November 5, 2020, while still bound by the terms of the parties’ agreement and while receiving monthly payments for his consulting services, Defendant announced that he had taken a position as Executive Chairman of the Board of Directors for Bank of SoCal, one of Plaintiff’s competitors. (SAC ¶ 4.) Four days later, on November 9, 2020, many of Plaintiff’s employees tendered their resignations. (Id.) Defendant planned to breach the agreement in advance, waiting until the restricted period in the agreement expired on October 20, 2020, to announce his position with Bank of SoCal. (SAC ¶ 5.) Defendant began the unlawful recruiting practice before November 5, 2020. (Id.)

This suit followed.

B. Discovery Efforts and Meet and Confer

Plaintiff propounded its Special Interrogatories, Set One (hereafter referred to as “Interrogatories”) on Defendant on March 9, 2021. (Roth Decl., Ex. A.) Defense counsel asked for and received two extensions, both of which were granted by counsel for Plaintiff. (Roth Decl., ¶¶ 6-7.)

Defendant served his initial responses on May 10, 2021. (Roth Decl., Ex. B.) The parties engaged in discussions relating to these responses. (Roth Decl., ¶¶ 9-10.)

On July 19, 2021, Defendant served a set of supplemental responses. (Roth Decl., Ex. C.) Defendant did not provide any information relating to certain oral communications, and upon meeting and conferring, defense counsel confirmed that Defendant would serve supplemental responses to those Interrogatories. (Roth Decl., ¶¶ 4, 14-16.)

Defendant served a second set of supplemental responses to the Interrogatories on September 27, 2021. (Roth Decl., Ex. D.) Counsel for Plaintiff made a final effort to meet and confer regarding the Interrogatories subject to this motion. (Roth Decl., ¶ 19.) Defense counsel stated that Defendant would not agree to provide any further information. (Roth Decl., ¶ 20.) Thereafter, Plaintiff timely filed the pending motion.

In opposition, Defendant takes issue with Plaintiff’s refusal to participate in an Informal Discovery Conference, arguing that Defendant was agreeable to such. In Reply, Plaintiff argues that an Informal Discovery Conference is not mandatory, and a court order is necessary in order to compel Defendant’s compliance.

While an Informal Discovery Conference would have been useful to determine these issues, the court does not find that Plaintiff’s failure to request such a conference renders the meet and confer process insufficient. Plaintiff’s assertion that a court order would be necessary to schedule an IDC is incorrect. All the parties needed to do was to call the court staff for an appointment. Nevertheless, the court finds that the parties engaged in meaningful meet and confer discussions regarding Defendant’s supplemental responses to the Interrogatories. The court discusses the merits of Plaintiff’s motion below.

C. Special Interrogatories 1 and 2

The language of Special Interrogatory 1 is as follows:

1. Identify all communications during the period from April 25, 2017 to the present between [Defendant] and Bank of SoCal and/or Southern California Bancorp relating to or referring to [his] being hired by Bank of SoCal or Southern California Bancorp for any job position.

As used herein, “IDENTIFY” as to a communication shall refer to and mean the date of the communication, the identity of all persons participating therein, and a description of the content of the communication.

Defendant’s operative responses to Interrogatory 1 includes objections that this request is overbroad and burdensome. Defendant stated that this Interrogatory “calls for an exhaustive list identifying all oral communications by [Defendant] with any of the many employees and representatives of a large banking institution.” (Def. Sep. Statement, 4:19-21.) In opposition, Defendant maintains that Interrogatory 1 is overbroad, because it seeks the identification of every oral communication related to his current job at SoCal Bank, and every communication relating to the hiring for that position.

In reply, Plaintiff contends that Interrogatory 1 does not seek information relating to Defendant’s current job, but rather relates to his hiring. Plaintiff also takes issue with the federal cases cited by Defendant in opposition.

The court will order a supplemental response. Interrogatory 1 requests Defendant identify all communications “relating to or referring to [Defendant’s] being hired by Bank of SoCal or Southern California Bancorp for any job position.” This is narrowly tailored to request information relating to Defendant’s hiring, and should not require information relating to “every single undocumented oral communicated related to [his] current job” as Defendant suggests. However, it is somewhat ambiguous, in that numerous post hiring communication undoubtedly relate to his having been hired. This action was initiated based on Plaintiff’s allegations that Defendant breached the parties’ non-compete clause and actions taken by and with his current codefendant employers which breached the parties’ consulting agreement. Consequently, the court interprets the interrogatory to be limited to communications prior to his hiring. Plaintiff is entitled to an order compelling further responses to this Interrogatory. Plaintiff’s motion to compel further responses to Interrogatory 1 is granted.

The language of Special Interrogatory 2 is as follows:

2. Identify all communications during the period from April 25, 2017 to the present between [Defendant] and Bank of SoCal and/or Southern California Bancorp relating to or referring to the Consulting Agreement or any of [Defendant’s] obligations or duties or restrictions under the Consulting Agreement.

While Defendant objected to this Interrogatory for many of the same reasons described above, Defendant’s further supplemental response includes the following response:

[Defendant] recalls that he had oral communications about the PacWest Consulting Agreement (i) periodically with David Volk beginning in or around July 2020 to the present day; (ii) with Nathan Rogge beginning in or around July 2020 to in or around July 2021; (iii) with the Board of Directors of the Bank of Southern California in or around September 2020; and (iv) with the Board of Directors and/or individual Directors of the Bank of Southern California after Responding Party joined the Bank of Southern California in November 2020.

Defendant contends in opposition that Defendant’s response is sufficient, as he identified the subject of the communications (the Consulting Agreement); the speakers or groups of speakers involved; and the approximate date range. Plaintiff contends that Defendant has the duty to respond as completely and straightforwardly as possible. Under the Code of Civil Procedure, “[e]ach answer in a response to interrogatories shall be as complete and straightforward as the information reasonably available to the responding party permits.” (Code Civ. Pro. ; 2030.220(a).) Plaintiff takes issue with Defendant’s failure to provide “any information about the substance of any of these conversations” or the names of who Defendant spoke to (aside from Rogge and Volk), instead limiting his response to generalities.

The court finds that further responses are not warranted. The court does not find problematic Defendant’s statement that the subject of the communications was the Consulting Agreement, as that is the subject about which Plaintiff inquired. To the extent that Plaintiff has specific follow-up questions regarding the particulars of these conversations, Plaintiff may expand on those during the discovery. Plaintiff’s motion to compel further responses to Interrogatory 2 is denied.

  1. Special Interrogatories 3 and 4

The language of Interrogatory number 3 is as follows:

3. Identify all communications during the period from January 1, 2020 to the present between [Defendant] and Bank of SoCal and/or Southern California Bancorp relating to or referring to any PacWest Bank Client.

Defendant again argues that this Interrogatory would require Defendant to identify all communications relating to Plaintiff’s clients as oral conversations relating to clientele occur on a near-daily basis. Plaintiff argues that this Interrogatory is limited to conversations regarding Plaintiff’s clients, and not clients generally. Further, Plaintiff states that defendant Bank of SoCal has identified approximately 60 of Plaintiff’s clients that have transferred their business to it since Defendant began working for Bank of SoCal.

Defendant states in opposition that he is agreeable to “provide his reasonable recollection of oral communications in response to a modified version of this interrogatory (e.g., one asking for general recollections” regarding attempts to transfer Plaintiff’s clients to Bank of SoCal. (Opp., 12:21-24.) Plaintiff, in reply, states that it is unclear what Defendant means by “general recollections,” but that it is clear that Defendant recalls oral communications with others regarding Plaintiff’s clients and Defendant must be ordered to supplement his answers.

The court finds that Plaintiff is entitled to an order compelling further responses from Defendant, though not to the extent requested. There is no question that this information is directly relevant to Plaintiff’s allegations that Defendant orchestrated an illegal raid of Plaintiff’s clients. (SAC ¶ 1.) While Defendant appears to argue that Plaintiff seeks “all” communications regarding clients generally, the Interrogatory is limited to the conversations relating to Plaintiff’s clients. However, the court agrees that this Interrogatory, as worded, is overbroad and could relate to conversations regarding Plaintiff’s former clients that are unrelated to the scope of this litigation. Plaintiff’s motion to compel further responses to Interrogatory 3 is granted in part. The court orders Defendant to provide supplemental responses to Plaintiff, identifying all communications during the period of January 1, 2020 to the present between Defendant and Bank of SoCal and/or Southern California Bancorp relating to attempts, both successful and unsuccessful, to transfer Plaintiff’s clients from Plaintiff to Defendant’s current employers.

4. Identify all communications during the period from January 1, 2020 to the present between [Defendant] and Bank of SoCal and/or Southern California Bancorp relating to or referring to any PacWest Bank employee.

Defendant echoes his complaints regarding Interrogatory 3 in his discussion relating to this Interrogatory. Defendant contends that this Interrogatory would require him to identify all oral conversations he has had pertaining to anything about Plaintiff’s employees. Defendant states that he is agreeable to producing information relating to attempts to transfer Plaintiff’s employees to the Bank of SoCal, but reiterates that this Interrogatory is overbroad. As to this statement, Plaintiff, in reply, argues that this demonstrates that Defendant clearly understands the focus of this Interrogatory and should be ordered to provide further responses.

The court again finds that Plaintiff is entitled to Defendant’s responses, but not to the extent requested. As explained above, as written, “all” communications relating to any of Plaintiff’s employees would require the identification of irrelevant communications unrelated to the scope of this litigation. For example, a mere reference to a former colleague of Defendant’s, unrelated to Defendant’s allegedly unlawful recruiting scheme, would be identified but would be irrelevant. Plaintiff’s motion to compel further responses to Interrogatory 4 is granted in part. The court orders Defendant to provide supplemental responses to Plaintiff, identifying all communications during the period of January 1, 2020 to the present between Defendant and Bank of SoCal and/or Southern California Bancorp relating to attempts, both successful and unsuccessful, to transfer Plaintiff’s employees from Plaintiff to Defendant’s current employers.

  1. Special Interrogatories 7 and 8

7. Identify each PacWest Bank Client with whom [Defendant], or someone at [Defendant’s] direction, have communicated during the period from January 1, 2020 to the date of [Defendant’s] response to this interrogatory regarding or referring to Bank of SoCal.

8. Identify all communications between [Defendant], or someone at [Defendant’s] direction, and any PacWest Bank Client during the period from January 1, 2020 to the date of [Defendant’s] response to this interrogatory regarding or referring to Bank of SoCal.

Defendant argues that the issue with Interrogatories 7 and 8 concerns the language “at Defendant’s direction” which, in essence, requests information relating to oral communications by other people. Defendant contends that to respond to these Interrogatories, Defendant would have to ascertain “from essentially every employee of the Bank of Southern California all information about all oral conversations with current or former clients of [Plaintiff].” (Opp., 14:8-9.) Defendant proposes a modification of the Interrogatories to be limited to those recollections of communications that Defendant personally had with Plaintiff’s current or former clients about transferring their businesses to Bank of SoCal. Plaintiff argues that this argument is “lawyer-created nonsense” because Defendant knows which Bank of SoCal employees would have access to information about Plaintiff’s clients based on their being former relationship managers for Plaintiff.

First, the parties and court agree that Defendant must provide information relating to the communications that Defendant personally had with former or current clients of Plaintiff’s relating to the transfer of their business from Plaintiff to Defendant’s employer. That is Interrogatory 3.

Regarding Interrogatory 7, as to the clause “at [Defendant’s] direction,” the court finds Defendant can identify clients he directed others to contact. So interpreted, unlike Interrogatory 8, this Interrogatory appears to only request the names of the clients Defendant spoke to or directed another to speak to; Defendant would, then, have knowledge of this information without ascertaining any further information from other employees, because Defendant himself would have spoken to those clients or directed others to speak to those clients. Plaintiff’s motion to compel further responses to Interrogatory 7 is granted to that extent.

For Interrogatory 8, as to the clause “at [Defendant’s] direction,” the court finds Defendant’s arguments persuasive. The Interrogatories contemplate Defendant’s knowledge of the employees who would have had the communications with Plaintiff’s clients, as the communications would have occurred “at Defendant’s direction.” However, the Interrogatories appear to request the substance of each of those communications, which would require Defendant to ask third parties about those communications. Plaintiff did not solely request the identification of clients contacted by others at Defendant’s directions, but the substance of those requests. Plaintiff’s motion to compel further responses to Interrogatory 8 is granted in part. Defendant is ordered to identify all communications between Defendant and any PacWest Bank Client during the period from January 1, 2020 to the date of [Defendant’s] response to this interrogatory regarding or referring to Bank of SoCal.

  1. Special Interrogatories 14 and 15

14. Identify all communications between [Defendant] and Matthew P. Wagner relating to or referring to the Consulting Agreement.

15. Identify all communications between [Defendant] and any other representative of PacWest Bank or PacWest Bancorp relating to or referring to the Consulting Agreement.

Defendant objected to Interrogatories 14 and 15 on the ground that they are overly broad and unduly oppressive and burdensome. As to Interrogatory 14, Defendant argues that to identify each communication with Mr. Wagner – the President of Plaintiff – would be an extreme burden, because Defendant has had hundreds, if not more, oral conversations with Mr. Wagner. All of those conversations, Defendant contends, were related to the Consulting Agreement, either directly or indirectly. Interrogatory 15 is an even larger burden, as it requests the identification of such communications with every one of Plaintiff’s employees.

Plaintiff argues in reply that the Interrogatories refer to communications relating only to the Agreement, not Defendant’s performance or day-to-day activities. In Plaintiff’s moving papers, Plaintiff states that these Interrogatories have been propounded because “[n]ot only are the terms and interpretation of the Agreement critical issues in this case, but [Defendant] has asserted a claim against [Plaintiff’s] Chairman of the Board John Eggemeyer for breach of a warrant of authority based on conversations [Defendant] alleges he had with Eggemeyer about the Agreement.”

The court finds that the Interrogatories, as worded, are plainly overbroad. While Plaintiff’s justifications are sound – requesting information relating to the terms and interpretation of the Agreement and conversations relating to Defendant’s claim against Plaintiff’s Chairman – Plaintiff’s Interrogatories are broadly worded and could refer to any topics expressed in the Agreement. This could include terms of compensation or job duties. Plaintiff does not make clear how all conversations relating to the Agreement – which could feasibly include topics regarding the day-to-day duties of Defendant – are relevant. To the extent that Plaintiff requests the identification of communications relating to specific terms of the Consulting Agreement, Plaintiff should propound discovery relating to those terms. Plaintiff’s motion to compel further responses to Interrogatories 14 and 15 are denied in full.

  1. Special Interrogatories 20 and 21

20. Identify all communications between [Defendant] and David Volk [who serves on the Board of the Bank of SoCal] during the period from January 1, 2020 to the present regarding or referring to Bank of SoCal or Southern California Bancorp, or [Defendant’s] possible employment with those entities.

21. Identify all communications between [Defendant] and any other person employed by or otherwise associated with Castle Creek Capital [an investor in SoCal Bank] during the period from January 1, 2020 to the present regarding or referring to Bank of SoCal or Southern California Bancorp or [Defendant’s] possible employment with those entities.

Defendant contends that these Interrogatories seek identification of all communications between Defendant and Mr. Volk regarding the business or board operations of Bank of SoCal, which is improper and overbroad. Defendant also suggests that this request, coming from Plaintiff, a direct competitor of Bank of SoCal, is designed to elicit improper confidential information. Plaintiff takes issue with this in reply, stating that the parties have entered into a protective order to protect potential trade secret or other sensitive information.

The court finds that further responses to these Interrogatories are warranted, but not to the extent requested. Each Interrogatory requests information relating to communications “regarding or referring to Bank of SoCal or Southern California Bancorp or [Defendant’s] possible employment with those entities.” As with Interrogatory 1, the court finds that the information relating to Defendant’s employment and his non-compete obligations are directly relevant to this action. To the extent that Plaintiff is requesting information relating to Defendant’s claims against Eggemeyer, Plaintiff must tailor the Interrogatory to request such information; as written, the Interrogatories are overbroad. Plaintiff’s motion to compel further responses to Interrogatories 20 and 21 is granted in part. The court orders Defendant’s to provide responses to Interrogatories 20 and 21 as they relate to information and communications regarding Defendant’s possible employment with those entities.

  1. Sanctions

Plaintiff requests sanctions in the amount of $8,160.00 in connection with this motion. Under Code of Civil Procedure section 2030.300, subdivision (d), courts shall impose monetary sanctions against any party or attorney who unsuccessfully makes or opposes a motion to compel further responses to interrogatories, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make imposition of the sanction unjust.

The court has not granted Plaintiff’s motion in full, and has found it appropriate to modify the Interrogatories in some circumstances and deny Plaintiff’s motion regarding others. The court therefore does not find it appropriate to impose sanctions against Defendant. Sanctions are denied.

Conclusion

Plaintiff PacWest’s Motion to compel Further Supplemental Responses to Plaintiff’s Special Interrogatories, Set One, is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED with respect to Interrogatories numbers 1 and 7; GRANTED IN PART as to Interrogatories numbers 3-4, 8, and 20-21; and DENIED as to Interrogatories 2 and 14-15.

All responses are due within 30 days of the date of this hearing.

Sanctions are denied.

'


b'

Case Number: *******6002 Hearing Date: September 13, 2021 Dept: 37

HEARING DATE: September 13, 2021

CASE NUMBER: *******6002

CASE NAME: PacWest Bancorp, a Delaware corporation v. David I. Rainer, et al.

MOVING PARTIES: Cross-Defendants, Pacwest Bancorp and John Eggemeyer

OPPOSING PARTY: Cross-Complainant, David I. Rainer

TRIAL DATE: November 15, 2022

PROOF OF SERVICE: OK

MOTION: Defendants’ Demurrer to First Amended Cross-Complaint

OPPOSITION: August 30, 2021

REPLY: September 3, 2021

TENTATIVE: Cross-Defendants’ demurrer is overruled. Rainer is to give notice.

Background

This is a breach of contract action arising out of a contract between Defendant, David I. Rainer (“Rainer”) and Plaintiff, PacWest Bancorp. (“PacWest”) (the “Agreement”) Pacific Western Bank is also named as a Plaintiff. Plaintiffs allege that PacWest entered into a consulting agreement with Rainer on April 25, 2017 which named Rainer as a consultant to PacWest and its subsidiaries and required Rainer to perform a list of services as set forth in the Agreement. In return for Rainer performing these services, Rainer would be paid a yearly fee of $550,000. According to the Complaint, Rainer took a position at a competition banking institution, Bank of Southern California, N.A. (“SoCal Bank”) while he was still bound by the Agreement and receiving compensation for PacWest. Rainer also allegedly planned to breach the Agreement in advance and violated other portions of the Agreement, including by causing other employees of PacWest to join SoCal Bank. Defendant, Southern California Bancorp (“Bancorp”) also allegedly assisted Rainer in his actions to breach the Agreement.

PacWest’s Complaint, filed December 1, 2020 alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing.

On December 23, 2020, Rainer filed his answer to the Complaint. Rainer also filed a Cross-Complaint against PacWest and John Eggemeyer (“Eggemeyer”), alleging the following four causes of action: (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unfair competition and (4) declaratory relief.

On May 6, 2021, Rainer filed the operative First Amended Cross-Complaint. (“FACC”) The FACC alleges the following causes of action: (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing against PacWest (3) unfair competition against PacWest, (4) declaratory relief against PacWest and (5) breach of implied warranty of authority against Eggemeyer.

PacWest and Eggemeyer (“Cross-Defendants”) now demur to the second, third, fourth and fifth causes of action of the FACC. Rainer opposes the demurrer.

Request for Judicial Notice

Moving Defendants request that the court take judicial notice of the following in support of their demurrer:

  1. Rainer’s FACC in this matter. (Exh. A)

Cross-Defendants’ request is granted. The existence and legal significance of this document is a proper matter for judicial notice. (Evidence Code ; 452, subds. (d), (h).)

Discussion[1]

  1. Legal Authority

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., ; 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., ; 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

  1. Analysis

  1. Second Cause of Action: Breach of Implied Warranty of Good Faith

A breach of the implied covenant of good faith and fair dealing requires something more than breach of the contractual duty itself. (Careau & Co v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394 (Careau).) “Thus, allegations which assert such a claim must show that the conduct of the defendant, whether or not it also constitutes a breach of a consensual contract term, demonstrates a failure or refusal to discharge contractual responsibilities, prompted not by an honest mistake, bad judgment or negligence but rather by a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party thereby depriving that party of the benefits of the agreement.” (Id. at 1395.)

Cross-Defendants contend that Rainer’s second cause of action is entirely duplicative of his first cause of action and should thus be dismissed as superfluous. (Demurrer, 14-15.) In opposition, Rainer contends that this cause of action is not superfluous because the FACC alleges that PacWest did many things which frustrated Rainer’s rights to the benefit of the contract. (Opposition, 15.)

Here, the FACC alleges that Rainer and PacWest are parties to the Agreement and implied in the Agreement is a covenant of good faith and fair dealing. (FACC ¶¶ 56-57.) According to the FACC, PacWest has “wrongfully deprived, impaired, and injured” Rainer’s enjoyment of the benefits of the Agreement, including by “unilaterally re-write Mr. Rainer’s non-compete obligations,” “effectively treating the Agreement as though it had been terminated” and “attempting to obstruct Mr. Rainer’s performance of the Agreement” by “falsely stating that Mr. Rainer was in breach of the Agreement.” (FACC ¶ 60.) Additionally, Eggemeyer “impliedly and expressly assented” to Rainer tanking on a potential role with Bank of Southern California during an August 18, 2020 meeting. (FACC ¶ 41.) Rainer allegedly relied on this assent in “making his career plans for the period after the end of the Restricted Period” and in taking on a new position with Bank of Southern California. (FACC ¶ 41.)

The court finds the second cause of action is sufficiently pled. Contrary to Cross-Defendants’ arguments, the second cause of action is not duplicative of the first cause of action. The second cause of action alleges that Cross-Defendants engaged in wrongful actions more than breach of the contract itself, such as the allegation that PacWest unilaterally re-wrote Rainer’s non-compete obligations. This is sufficient.

For these reasons, Cross-Defendants’ demurrer to this cause of action is overruled.

  1. Third Cause of Action: Unfair Competition

Business and Professions Code section 17200 (“UCL”) prohibits “unfair competition,” which is defined to include “any unlawful, unfair or fraudulent business act or practice” and “unfair, deceptive, untrue or misleading advertising” and any act prohibited by business and professions code section 17500. A cause of action under the UCL must be stated with “reasonable particularity.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261.)

“While the scope of conduct covered by the UCL is broad, its remedies are limited. [Citation.] A UCL action is equitable in nature; damages cannot be recovered. [Citation.] [The Supreme Court has] stated that under the UCL, ‘[p]revailing plaintiffs are generally limited to injunctive relief and restitution.’” (Korea Supply Co. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144.) UCL actions based on “unlawful” conduct may be based on violations of other statutes. ; (See ;Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.)

Cross-Defendants contend that the third cause of action is insufficiently pled for the following reasons: (1) the UCL does not govern a private dispute between private parties when the rights and responsibilities of the parties are delineated (2) an effort to enforce a non-compete clause does not support a UCL claim, and (3) Rainer cannot allege a basis for the UCL remedies because the breach of contract claim will be fully adjudicated in this case and there can be no further conduct that would be subject to an injunction. (Demurrer, 10-14.) Cross-Defendants cite cases, including Khoury v. Maly’s of California, Inc. (1993) 14 Cal. App. 4th 612, 619 (Khoury) in support of their first argument. Cross-Defendants cite Loral Corp. v. Moyes (1985) 174 Cal. App. 3d, 268 (Moyes) in support of their second argument.

Cross-Defendants’ reliance on Khoury is misplaced, as Khoury does not support Cross-Defendants’ first argument. In Khoury, the Court of Appeal held that a demurrer to a UCL cause of action was properly sustained because the UCL claim was not plead with reasonable particularity, as the Complaint does not allege “the manner of misleading appellant’s customers” or the manner in which “respondent’s practice is “unlawful.”” (Id. at 619.) Khoury did not stand for the proposition that an UCL claim is not available in certain instances.

Cross-Defendants’ reliance on Moyes is also misplaced. Moyes did not discuss the UCL, but rather whether a contract constituted a contract in restraint of trade as defined in Business and Professions Code section 16600.

In opposition, Rainer contends that the UCL applies to private disputes. (Opposition, 12.) Additionally, Rainer contends that Cross-Defendants’ reliance on Moyes is misplaced and that the third cause of action sufficiently alleges illegal and unfair conduct which continues to cause harm to Rainer. (Opposition, 13-14.)

Here, the FACC alleges that PacWest has engaged in unfair competition by “purporting to hold and exercise a right to enforce non-compete provisions in its agreement past the expiration of such provisions.” (FACC ¶ 64.) This constitutes a business practice because it violates Business and Professions Code section 16600. (FACC ¶ 65.) Rainer has suffered harm as a result of this conduct, including the loss of ability to “freely contract for and accept employment” and he will “continue to suffer great and irreparable harm.” (FACC ¶ 67.)

Liberally construing the allegations of the FACC in favor of Rainer, the court finds the third cause of action sufficiently pled. UCL actions based on “unlawful” conduct may be based on violations of other statutes. ; (See ;Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.) Additionally, the FACC alleges that Rainer has suffered harm as a result of PacWest’s conduct and will continue to do so. This is sufficient to state a cause of action for purposes of demurrer.

For these reasons, Cross-Defendants’ demurrer to this cause of action is overruled.

  1. Fourth Cause of Action: Declaratory Relief

California Courts have recognized that “[t]he existence of an ‘actual controversy relating to the legal rights and duties of the respective parties,’ suffices to maintain an action for declaratory relief.” ; (Ludgate Ins. Co. v. Lockheed Martin Corp. ;(2000) 82 Cal.App.4th 592, 605 (Ludgate).) ; “Any person interested under a written instrument, ... or under a contract, or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property, ; ... may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action or cross-complaint in the superior court ... for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument or contract." ; (Ibid., quoting Code Civ. Proc., ; 1060.) ; ; ;

Cross-Defendants contend that the fourth cause of action should be dismissed because it is duplicative of the breach of contract claim. (Demurrer, 14-15.) According to Cross-Defendants, all issues alleged in connection with this cause of action will be resolved as part of the breach of contract claim. (Id.)

In opposition, Rainer contends that the fourth cause of action is properly pled because accepting the FACC as true, there is “some possibility” for declaratory relief. (Opposition, 19-20.)

The court agrees with Rainer. The court found that Rainer’s second and third causes of action are sufficiently pled. Thus, this constitutes the existence of an “actual controversy” sufficient to support the fourth cause of action for declaratory relief.

For these reasons, Cross-Defendants’ demurrer to this cause of action is overruled.

  1. Fifth Cause of Action: Breach of Implied Warranty of Authority

The tort of breach of the implied warranty of authority occurs “only when the agent acts without authority or in excess of his authority.” (Tri-Delta Engineering, Inc. v. Insurance Co. of North America (1978) 80 Cal. App. 3d 752, 760.) “[T]he measure of damages is the compensation plaintiff would have received had such authority existed.” (Id.)

Cross-Defendants contend that the fifth cause of action is insufficiently pled because Rainer could not have had a reasonable belief that Eggemeyer was acting as an agent of PacWest during the August 18 meeting. (Demurrer, 16-18.) Cross-Defendants cite to Yoakum v. Tarver (1967) 256 Cal. App. 2d 202, 205 (Yoakum) for the argument that if a Plaintiff is aware of the limits of an agent’s authority, the agent has not warranted themselves as having authority to act for the principal. Cross-Defendants also argue that Rainer has failed to plead causation between Eggemeyer’s conduct and his damages. (Demurrer, 19.)

In Yoakum, judgment was entered in favor of defendant on an action to recover a real estate commission and Plaintiff appealed. (Yoakum, 256 Cal.App.2d at 203.) The Court of Appeal concluded that the judgment should be affirmed because the facts and circumstances demonstrated that Plaintiff was informed of the limits on Defendant’s authority at the inception of the parties’ real estate transaction. (Id. at 203-209.) Yoakum included no discussion on a cause of action for breach of the implied warranty of authority.

In opposition, Rainer contends that the fifth cause of action is properly pled because whether or not Rainer believed that Eggemeyer had authority is a question of fact not to be resolved on demurrer. (Opposition, 17.) Rainer additionally argues that the FACC sufficiently pleads causation because it alleges that Rainer relied on Eggemeyer’s assent to his taking a new job. (Opposition, 18.)

Here, the FACC alleges that on August 18, 2020, Eggemeyer, “who was then serving as Chairman of PacWest” met with Rainer. (FACC ¶ 73.) At this meeting, Rainer allegedly discussed his potential interest in taking a position with Bank of Southern California and Eggemeyer allegedly “did not take issue and “expressed his approval” for Rainer’s plan. (Id.) Rainer relied on Eggemeyer’s representations. (FACC ¶ 74.) Eggemeyer was acting with “actual authority to act on behalf of PacWest.” (FACC ¶¶ 75, 78.) Rainer alleges that he is entitled to damages, including past and future consulting fees due under the Agreement. (FACC ¶¶ 81-82.)

The court finds the fifth cause of action sufficiently pled. The fifth cause of action alleges that Eggemeyer was the then Chairman of PacWest, represented his assent to Rainer taking a new position with Bank of Southern California, and that Rainer relied on these statements in taking the position and suffering damages. This is sufficient for purposes of demurrer.

Conclusion

Cross-Defendants’ demurrer is overruled. Rainer is to give notice.


[1] Cross Defendants submit a declaration from their counsel, Bryan D. Roth (“Roth”) to demonstrate compliance with statutory meet and confer requirements. Roth attests that on June 17, 2021, he sent a meet and confer letter to Rainer’s counsel regarding the arguments raised in the instant demurrer and also met and conferred by telephone. (Roth Decl. ¶¶ 2-3, Exh. A.) The parties were unable to reach an agreement. (Roth Decl. ¶ 3.) The Roth Declaration is sufficient for purposes of Code of Civil Procedure section 430.41.

'


b"

Case Number: *******6002 Hearing Date: September 7, 2021 Dept: 37

HEARING DATE: September 7, 2021

CASE NUMBER: *******6002

CASE NAME: PacWest Bancorp, a Delaware corporation v. David I. Rainer, et al.

MOVING PARTIES: Defendants, Bank of Southern California, N.A. and Southern California Bancorp

OPPOSING PARTIES: Plaintiffs, PacWest Bancorp and Pacific West Bank

TRIAL DATE: November 15, 2022

PROOF OF SERVICE: OK

MOTION: Defendants’ Demurrer to First Amended Complaint

OPPOSITION: August 24, 2021

REPLY: August 30, 2021

TENTATIVE: Moving Defendants’ demurrer to the seventh and eighth causes of action is sustained. The demurrer is otherwise overruled. Plaintiffs are granted 30 days leave to amend. Moving Defendants are to give notice.

Background

This is a breach of contract action arising out of a contract between Defendant, David I. Rainer (“Rainer”) and Plaintiff, PacWest Bancorp. (“PacWest”) (the “Agreement”) Pacific Western Bank is also named as a Plaintiff. Plaintiffs allege that PacWest entered into a consulting agreement with Rainer on April 25, 2017 which named Rainer as a consultant to PacWest and its subsidiaries and required Rainer to perform a list of services as set forth in the Agreement. In return for Rainer performing these services, Rainer would be paid a yearly fee of $550,000. According to the Complaint, Rainer took a position at a competition banking institution, Bank of Southern California, N.A. (“SoCal Bank”) while he was still bound by the Agreement and receiving compensation for PacWest. Rainer also allegedly planned to breach the Agreement in advance and violated other portions of the Agreement, including by causing other employees of PacWest to join SoCal Bank. Defendant, Southern California Bancorp (“Bancorp”) also allegedly assisted Rainer in his actions to breach the Agreement.

PacWest’s Complaint, filed December 1, 2020 alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing.

On December 23, 2020, Rainer filed his answer to the Complaint. Rainer also filed a Cross-Complaint against PacWest, alleging the following four causes of action: (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unfair competition and (4) declaratory relief.

On April 9, 2021, Plaintiffs filed the operative First Amended Complaint. (“FAC”) The FAC alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) intentional interference with prospective economic advantage, (4) intentional interference with prospective economic advantage, (5) negligent interference with prospective economic advantage, (6) breach of fiduciary duty, (7) aiding and abetting breach of fiduciary duty, (8) common law unfair competition and violation of California Business and Professions Code ; 17200.

SoCal Bank and Bancorp (“Moving Defendants”) now demur to the FAC’s third, fourth, fifth, seventh and eighth causes of action. Plaintiffs oppose the demurrer.

Discussion[1]

  1. Legal Authority

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., ; 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., ; 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3, citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

  1. Analysis

  1. Third and Fourth Causes of Action: Intentional Interference with Prospective Economic Advantage

A cause of action for intentional interference with economic relationship (“IIER”) requires proof of (a) a valid and existing contract, (b) knowledge of the contract and intent to induce breach, (c) breach of contract, (d) breach caused by defendant’s unjustified or wrongful conduct, and (e) damages. (Dryden v. Tri-Valley Growers (1977) 65 Cal.App.3d 990, 995 (Dryden).) “While a plaintiff may satisfy the intent requirement for [IIER] by pleading specific intent, i.e., that the defendant desired to interfere with the plaintiff’s prospective economic advantage, a plaintiff may alternately plead that the defendant knew that the interference was certain or substantially certain to occur as a result of its action.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1154, 1157 (Korea Supply).) “While intentionally interfering with an existing contract is ‘a wrong in and of itself’ [citation], intentionally interfering with a plaintiff’s prospective economic advantage is not. To establish a claim for interference with prospective economic advantage, therefore, a plaintiff must plead that the defendant engaged in an independently wrongful act. [Citation.]” (Id., at p. 1158.)

“Even though the relationship between an employer and his employee is an advantageous one, no actionable wrong is committed by a competitor who solicits his competitor's employees or who hires away one or more of his competitor's employees who are not under contract, so long as the inducement to leave is not accompanied by unlawful action.” (Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 255.)

Moving Defendants contend that the third and fourth causes of action are insufficiently pled because the FAC does not allege that Moving Defendants engaged in any independently wrongful conduct. (Demurrer, 12-16.) Specifically, Moving Defendants contend that Rainer being persuaded to work for them cannot constitute an independently wrongful act because it is not wrongful to solicit a competitor’s employees. (Id.) Additionally, the FAC’s allegations at paragraphs 93 and 100 that Moving Defendants “improperly used confidential and proprietary information” is insufficiently specific to satisfy this requirement. (Id.) Moving Defendants contend that these causes of action are also insufficiently pled because it does not allege how Moving Defendants allegedly used this information to interfere in the relationship between PacWest and its former employees. (Id.)

In opposition, Plaintiffs contend that the third and fourth causes of action are sufficiently pled because the allegation that Moving Defendants improperly used “confidential and proprietary information” is sufficient to allege that Moving Defendants engaged in an independent wrongful act. (Opposition, 8-12.)

In reply, Moving Defendants contend that the FAC’s allegations of “improperly used confidential and proprietary information” are insufficient to rescue its third and fourth causes of action because the CUTSA preempts common law claims for misappropriation of trade secrets. (Reply, 8-9.)

Here, the FAC alleges that Rainer solicited various employees from PacWest to join SoCal Bank, (the “Raided Employees”) and that the Raided Employees had an “economic relationship with PacWest that probably would have resulted in a future economic benefit to PacWest.” (FAC ¶ 75.) Rainer allegedly engaged in “intentional acts designed to induce a breach or disruption of the economic relationship” between each of the Raided Employees and PacWest,” and as a result of these actions, there was an actual breach of the economic relationship between the Raided Employees and PacWest. (FAC ¶¶ 77-78.) In engaging in these actions, Moving Defendants allegedly “improperly used confidential and proprietary information” belonging to PacWest.” (FAC ¶ 93.)

The court finds Plaintiffs’ third and fourth causes of action insufficiently pled. Specifically, Plaintiffs have not alleged any connection between Moving Defendants’ alleged use of “confidential and proprietary information” and Moving Defendants causing the Raided Employees to leave PacWest. Instead, the FAC merely alleges that Moving Defendants disrupted the Raided Employees’ relationships with PacWest and that they also improperly used “confidential and proprietary information” while doing so. Pursuant to Dryden, Plaintiffs were required to allege such a nexus between Moving Defendants’ alleged wrongful acts and the disruption of the Raided Employees’ relationship with PacWest.

For these reasons, Moving Defendants’ demurrer to the third and fourth causes of action is sustained.

  1. Fifth Cause of action: Negligent Interference with Prospective Economic Advantage

““ ‘The tort of negligent interference with economic relationship arises only when the defendant owes the plaintiff a duty of care.’” (Lange v. TIGS Ins. Co. (1998) 68 Cal.App.4th 1179, 1187.) “[A]mong the criteria for establishing a duty of care is the “blameworthiness” of the defendant's conduct.” (Id.) “For negligent interference, a defendant's conduct is blameworthy only if it was independently wrongful apart from the interference itself.” (Id.)

Moving Defendants contend that Plaintiffs’ fifth cause of action is insufficiently pled because the FAC does not plead that Moving Defendants had a duty of care to Plaintiffs, as Moving Defendants and Plaintiffs are competitors and do not owe each other a duty of care. (Demurrer, 16.) Moving Defendants cite to Quelimane Co. v. Stewart Title Guar. Co. (1998), 19 Cal. 4th 26, 58 (Quelimane) for this argument.

Moving Defendants’ reliance on Quelimane is misplaced, as this case does not discuss the standard for a claim for negligent interference with prospective economic advantage. Instead Quelimane only analyzed the standard for intentional interference with contractual relations. (Id. at 55-57.)

In opposition, Plaintiffs contend that the fifth cause of action is sufficiently pled because the FAC alleges that moral blame should attach to Defendants’ actions towards Plaintiffs and that Defendants’ actions intended to and did affect Plaintiffs. (Opposition, 12-14.) According to Plaintiffs, the FAC is sufficiently pled because the FAC alleges that the Raided Employees had economic relationships with PacWest and that Defendants’ actions caused an actual breach of the relationship between these employees and PacWest. (Id.)

Here, the FAC alleges that each of the Raided Employees had an economic relationship with PacWest that “probably would have resulted in economic benefit” to PacWest. (FAC ¶ 96.) Moving Defendants, through Rainer, knew or should have known of these economic relationships. (FAC ¶ 97.) Moreover, Moving Defendants knew that a breach or disruption of the economic relationship was certain or substantially certain to occur. (FAC ¶ 98.) Moving Defendants failed to act with reasonable care and improperly used “confidential and proprietary information belonging to PacWest.” (FAC ¶¶ 99-100.) As a result, there was a breach in the economic relationship each of the Raided Employees had with PacWest, resulting in damage to PacWest. (FAC ¶¶ 101-102.)

Liberally construing the allegations of the FAC in favor of Plaintiffs, the court finds the fifth cause of action sufficiently pled. As discussed above, the court finds that the FAC’s allegations about Moving Defendants improperly using “confidential and proprietary information” sufficient for purposes of demurrer to state an independent wrongful act to support a claim for IIER. Pursuant to TIGS, a claim for negligent interference with prospective economic advantage requires a duty of care, and whether a defendant’s actions are independently wrongful is a consideration in determining whether the defendant had a duty of care. Thus, because Plaintiffs have sufficiently pled that Moving Defendants engaged in an independently wrongful action, Plaintiffs have also sufficiently pled a claim for negligent interference with economic advantage.

For these reasons, Moving Defendants’ demurrer to this cause of action is overruled.

  1. Seventh Cause of Action: Aiding and Abetting Breach of Fiduciary Duty

“[T]he elements of a claim for aiding and abetting a breach of fiduciary duty are: (1) a third party's breach of fiduciary duties owed to plaintiff; (2) defendant's actual knowledge of that breach of fiduciary duties; (3) substantial assistance or encouragement by defendant to the third party's breach; and (4) defendant's conduct was a substantial factor in causing harm to plaintiff.” (Nasrawi v. Buck Consultants LLC (2014) 231 Cal.App.4th 328, 343.)

“‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’” (Hasso v. Hapke (2014) 227 Cal.App.4th 107, 140 (quoting Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 221).) “A fiduciary duty under common law may arise ‘when one person enters into a confidential relationship with another.’” (Id.)

Moving Defendants contend that the seventh cause of action is insufficiently pled because the FAC insufficiently alleges that Rainer breached any fiduciary duty. (Demurrer, 17-18.) Additionally, Moving Defendants contend that the seventh cause of action is insufficiently pled because the FAC insufficiently alleges that Moving Defendants assisted in any breach of fiduciary duty. (Demurrer, 18-19.) According to Moving Defendants, the Agreement is insufficient to state a claim for breach of fiduciary duty because it only alleges that Rainer had a fiduciary duty as to confidential information, not a generalized fiduciary duty. (Id. at 17-19.) According to Moving Defendants, when an agreement only imposes specific duties then a breach of fiduciary duty claim was required to allege that Defendants breached to specific duties. Moving Defendants cite to Southern Pacific Thrift & Loan Assn. v. Savings Assn. Mortgage Co. (1999) 70 Cal.App.4th 634 (Southern Pacific) in support of this argument.

In Southern Pacific, the Court of Appeal found that defendant did not owe a contractual or common law fiduciary duty, in part because the agreement expressly stated that the parties were not in a partnership and that the defendant’s role was that of an independent contractor. (Id.)

In opposition, Plaintiffs contend that the seventh cause of action is sufficiently pled because the FAC alleges that Rainer owed Plaintiffs a fiduciary duty under the Agreement and that Moving Defendants participated in Rainer’s alleged scheme to breach his fiduciary duties to Plaintiffs. (Opposition, 14-18.) According to Plaintiffs, the Agreement’s provisions about fiduciary duties with respect to confidential information, the obligations in Exhibit A, and the “trust placed by Plaintiffs in Rainer” “created fiduciary obligations on his part.” (Id.)

In reply, Moving Defendants contend that the seventh cause of action is insufficiently pled because the Amended Consulting Agreement does not impose a generalized duty of loyalty on Rainer. (Reply, 12-13.) According to Moving Defendants, Plaintiffs’ remaining allegations about breaching obligations set forth in the Amended Consulting Agreement constitute allegations about breach of contractual duties, not fiduciary ones. (Id.)

Here, the Agreement provides in pertinent part as follows:

  1. Purpose of Engagement

Upon the terms and subject to the conditions of this letter, you agree to serve as a consultant to Parent and its subsidiaries.

  1. Confidentiality

During the Term and thereafter, you will hold in a fiduciary capacity for the benefit of Parent all trade secrets and confidential information, knowledge or data relating to Parent and its subsidiaries (including the Company) and their businesses and investments, which will have been obtained by you during your employment with the Company prior to the Effective Date and during your consulting with Parents after the Effective Date and which are not generally available public knowledge (other than by acts by you in violation of this agreement).

7. Independent Contractor

Nothing in this letter will be deemed to constitute a partnership or joint venture between Parent and you, nor will anything in this letter be deemed to constitute Parent or you as the agent of the other.

(FAC, Exh. A.) Additionally, the FAC alleges that Moving Defendants knew that Rainer was engaging in or intended to engage in “acts which breached his duty of loyalty” to Plaintiffs. (FAC ¶ 110.) Moving Defendants “gave substantial assistance or encouragement” to Rainer in his breaching of his duty of loyalty by working with Rainer to solicit the Raided Employees. (FAC ¶¶ 111-113.)

Based on guidance from Southern Pacific, the court finds the seventh cause of action is insufficiently pled. As with Southern Pacific, the Agreement here alleges that Moving Defendant had specific fiduciary duties only with respect to confidential information from Plaintiffs. The Agreement explicitly states that there was no agency relationship but rather that Rainer would serve as a consultant. However, the FAC alleges that Moving Defendants assisted Rainer in breaching his general duty of loyalty to Plaintiffs. Because the FAC fails to allege that Rainer had a general duty of loyalty to Plaintiffs, the seventh cause of action for aiding and abetting breach of fiduciary duty is insufficiently pled.

For these reasons, Moving Defendants’ demurrer to the seventh cause of action is insufficiently pled.

  1. Eighth Cause of Action: Violation of California Business and Professions Code ; 17200

Business and Professions Code section 17200 (“UCL”) prohibits “unfair competition,” which is defined to include “any unlawful, unfair or fraudulent business act or practice” and “unfair, deceptive, untrue or misleading advertising” and any act prohibited by business and professions code section 17500. A cause of action under the UCL must be stated with “reasonable particularity.” (Gutierrez v. Carmax Auto Superstores California (2018) 19 Cal.App.5th 1234, 1261.)

“While the scope of conduct covered by the UCL is broad, its remedies are limited. [Citation.] A UCL action is equitable in nature; damages cannot be recovered. [Citation.] [The Supreme Court has] stated that under the UCL, ‘[p]revailing plaintiffs are generally limited to injunctive relief and restitution.’” (Korea Supply Co. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1144.) UCL actions based on “unlawful” conduct may be based on violations of other statutes. ; (See ;Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.)

Moving Defendants contend that the eighth cause of action is insufficiently pled because the FAC does not allege how their conduct amounted to unfair competition, or constituted a violation of any other laws. (Demurrer, 20-22.) Additionally, Moving Defendants contend that this cause of action is insufficiently pled because the FAC fails to allege how Plaintiffs are entitled to restitution or an injunction. (Id.)

In opposition, Plaintiffs contend that the eighth cause of action is sufficiently pled because the FAC alleges that Defendants engaged in unlawful conduct by improperly using confidential and proprietary information. (Opposition, 17-19.) Plaintiffs additionally contend that Defendants’ argument about failure to allege an injunction or restitution must fail because whether an injunction or restitution is warranted is a factual determination that cannot be made at this stage. (Id.)

The court finds the eighth cause of action insufficiently pled because Plaintiffs have not pled how they are entitled to restitution or an injunction from Moving Defendants. As Plaintiffs concede, the FAC alleges that Plaintiffs are entitled to restitution of monies paid to Rainer. While the ultimate determination of whether Plaintiffs should receive either a restitution or injunction is a factual determination, the FAC fails to plead any facts in support of Plaintiffs’ claim that it should receive either remedy. Such allegations are insufficient to state a claim for breach of the UCL.

For these reasons, Moving Defendants’ demurrer to the eighth cause of action is sustained.

Conclusion

Moving Defendants’ demurrer to the seventh and eighth causes of action is sustained. The demurrer is otherwise overruled. Plaintiffs are granted 30 days leave to amend. Moving Defendants are to give notice.


[1] Moving Defendants submit a declaration from their counsel, Alexander M. Smith (“Smith”) to demonstrate compliance with statutory meet and confer requirements. Smith attests that on May 25, 2021, the parties met and conferred by telephone regarding the arguments raised in the instant demurrer but were unable to come to an agreement. (Smith Decl. ¶ 2.) The Smith Declaration is sufficient for purposes of Code of Civil Procedure section 430.41.

"


Case Number: *******6002    Hearing Date: April 9, 2021    Dept: 37

HEARING DATE: April 9, 2021

CASE NUMBER: *******6002

CASE NAME: PacWest Bancorp, a Delaware corporation v. David I. Rainer, et al.

MOVING PARTY: Plaintiff, PacWest Bancorp

OPPOSING PARTY: Defendant, David I. Rainer

TRIAL DATE: None

PROOF OF SERVICE: OK

MOTION: Plaintiffs’ Motion for Leave to File First Amended Complaint

OPPOSITION: None, Notice of Non-Opposition March 26, 2021

REPLY: No opposition filed.

TENTATIVE: Plaintiff’s motion is granted. Plaintiff is to file and serve the proposed FAC within ten days. Plaintiff is to give notice.

Background

This is a breach of contract action arising out of a contract between Defendant, David I. Rainer (“Defendant”) and Plaintiff, PacWest Bancorp. (“Plaintiff”) (the “Agreement”) Plaintiff alleges that it entered into a consulting agreement with Defendant on April 25, 2017 which named Defendant as a consultant to Plaintiff and its subsidiaries and required Defendant to perform a list of services as set forth in the Agreement. In return for Defendant performing these services, Defendant would be paid a yearly fee of $550,000. According to the Complaint, Defendant took a position at a competition banking institution, Bank of Southern California, while he was still bound by the Agreement and receiving compensation for Plaintiff. Defendant also allegedly planned to breach the Agreement in advance and violated other portions of the Agreement, including by causing other employees of Plaintiff to join Bank of Southern California.

Plaintiff’s Complaint, filed December 1, 2020 alleges the following causes of action: (1) breach of contract, (2) breach of the covenant of good faith and fair dealing.

On December 23, 2020, Defendant filed his answer to the Complaint. Defendant also filed a Cross-Complaint against Plaintiff, alleging the following four causes of action: (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unfair competition and (4) declaratory relief.

On January 26, 2021, Plaintiff filed a demurrer to the Cross-Complaint, which remains pending.

Plaintiff now moves for leave to file a First Amended Complaint. (“FAC”). The motion is unopposed.

Discussion

I. Legal Standard 

California law holds that leave to amend is to be granted liberally, to accomplish substantial justice for both parties.  (Code Civ. Proc., ; 473, subd. (a); Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 488-489 (Hirsa)) “Assuming proper notice, the trial court has wide discretion in determining whether to allow the amendment, but the appropriate exercise of that discretion requires the trial court to consider a number of factors: ‘including the conduct of the moving party and the belated presentation of the amendment.   

The law is well settled that a long-deferred presentation of the proposed amendment without a showing of excuse for the delay is itself a significant factor to uphold the trial court's denial of the amendment.”  (Leader v. Health Ind. of America, Inc. (2001) 89 Cal.App.4th 603, 613.)  “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….”  (Morgan v. Sup. Ct. (1959) 172 Cal.App.2d 527, 530.)  Prejudice includes “delay in trial, loss of critical evidence, or added costs of preparation.”  (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1448.)  “The power to permit amendments is interpreted very liberally as long as the plaintiff does not attempt to state facts which give rise to a wholly distinct and different legal obligation against the defendant.”  (Herrera v. Superior Court (1984) 158 Cal.App.3d 255, 259.)  The court, however, has the discretion to deny an amendment that fails to state a cause of action or defense.  (Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 230.) 

II. Analysis

A. Procedural Considerations 

A party requesting leave to amend must comply with California Rules of Court, rule 3.1324.  A motion to amend a pleading before trial must state which allegations were deleted from and which allegations were added to the previous pleading and identify the changes “by page, paragraph, and line number.”  (Cal. Rules of Court, rule 3.1324(a).)  

Plaintiff moves to file a FAC to “keep pace” with recent developments in the parties’ dealings. (Motion, 6-7.) Specifically, Plaintiff contends that since December 1, a total of 23 of Plaintiff’s employees have now left to join Bank of Southern California, all allegedly due to Defendant’s influence. (Id.) The motion also describes all of the allegations to be added or deleted in the proposed FAC. (Motion, 9-11.) Plaintiff has demonstrated compliance with the requirements of California Rules of Court, Rule 3.1324, subdivision (a).

Additionally, “[a] separate declaration must accompany the motion and must specify: (1) The effect of the amendment; (2) Why the amendment is necessary and proper; (3) When the facts giving rise to the amended allegations were discovered; and (4) The reasons why the request for amendment was not made earlier.”  (Cal. Rules of Court, rule 3.1324(b).)  

Plaintiff submits the declaration of its counsel, David P. Crochetiere (“Crochetiere”) in support of its motion.

Crochetiere attests that the proposed FAC adds Pacific Western Bank as an additional Plaintiff and Bank of Southern California and Southern California Bancorp as an additional defendant for their roles in this action. (Crochetiere Decl. ¶ 7.) Pacific western Bank is allegedly the “target of interference.” (Id.) Additionally, the FAC adds claims for intentional and negligent interference with economic advantage, breach of fiduciary duty and unfair competition. (Crochetiere Decl. ¶ 7, Exhs. A-B.)

According to Crochetiere, the amendment is necessary and proper because employees and clients have continued departing Plaintiff in favor of Bank of Southern California since the action was filed and as such, justice requires that Plaintiff “be permitted to bring into this case the institutions that are working with Rainer in this assault on PacWest Bank and directly benefitting from these illegal activities.” (Crochetiere Decl. ¶¶ 8-9.) According to Crochetiere, Plaintiff did not delay in seeking leave to amend because the original Complaint was filed less than a month after Rainer announced his departure from Plaintiff and since then, additional employees have followed him in departing. (Crochetiere Decl. ¶¶ 9-10.)

The Crochetiere Declaration is sufficient for purposes of California Rules of Court, rule 3.1324, subdivision (b).

B. Substantive Considerations ;

Generally, motions for leave to amend will be granted unless the party seeking to amend has been dilatory in bringing the proposed amendment before the court and the delay in seeking leave to amend will cause prejudice to the opposing party. ; (See ;Atkinson v. Elk Corp. ;(2003) ;109 Cal.App.4th 739, 761 [“ ‘[I]t is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.’ [Citations.] ; Furthermore, ‘it is irrelevant that new legal theories are introduced as long as the proposed amendments “relate to the same general set of facts.” [Citation.]’ ”]; ;Hirsa, ;supra, ;118 Cal.App.3d at p. 490.) ; Indeed, “courts are much more critical of proposed amendments ... when offered after long unexplained delay or on the eve of trial [citations], or where there is a lack of diligence, or there is prejudice to the other party [citations].” ; (Permalab-Metalab ;Equipment Corp. v. Maryland ;Cas. Co. ;(1972) 25 Cal.App.3d 465, 472.) ; ; ;

Plaintiff contends that leave to amend must be granted because it has become apparent since the Complaint was filed that additional employees continue to leave Plaintiff in favor of Bank of Southern California and as such, justice requires that Plaintiff be permitted to bring into this case “institutions that are working with Rainer in this assault on PacWest Bank and directly benefitting from these illegal activities,” as well as add appropriate claims against these entities. (Motion, 12-13.) Additionally, Plaintiff contends that leave to amend must be granted because Defendant will not be prejudiced by amendment, as the case is four months old as of the filing of this motion and the proposed amendment is based on the same core facts. (Motion, 12-14.)

Plaintiff’s motion is unopposed and Defendant filed a statement of non-opposition.

There is no trial date in this action. The court has reviewed Plaintiff’s proposed FAC and finds that the new allegations relate to the same general set of facts as the original Complaint. Additionally, as there is no trial date in this action, Defendants will not be prejudiced by Plaintiff filing the proposed FAC.

For these reasons, Plaintiff’s motion is granted. Plaintiff is to file and serve the proposed FAC within ten days.

Conclusion

Plaintiff’s motion is granted. Plaintiff is to file and serve the proposed FAC within ten days. Plaintiff is to give notice.



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