Jason M. Booth (SBN 143437)
Transcript of Jason M. Booth (SBN 143437)
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DEMURRER TO FIRST AMENDED COMPLAINT
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Jason M. Booth (SBN 143437) [email protected] Scott G. Greene (SBN 249094) [email protected] BOOTH LLP 11835 W. Olympic Boulevard, Suite 600E Los Angeles, CA 90064 Telephone: (310) 641-1800 Facsimile: (310) 641-1818 Attorneys for Defendant, AMERICAN ENVIRONMENTAL GROUP
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN BERNARDINO
LINDA AYRES, Plaintiff(s), v. STATE FARM GENERAL INSURANCE COMPANY, a Corporation; CONTRACTOR CONNECTION, a Corporation; PAUL DAVIS RESTORATION, INC., a Corporation; SERVPRO INDUSTRIES, INC., a Corporation; AMERICAN ENVIRONMENTAL GROUP, A MCLARENS COMPANY, a Corporation; DOES 1 through 50, inclusive, Defendant(s).
Case No.: CIVSB2106284 Assigned to the Hon. Bryan Foster Dept.S22 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; AND DECLARATION OF SCOTT G. GREENE RE MEET AND CONFER DATE: November 22, 2021 TIME: 9:00 a.m. DEPT.: S22 Action Filed: February 22, 2021 Trial Date: None Set
TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
PLEASE TAKE NOTICE that on November 22, 2021 at 9:00 a.m., or as soon thereafter as
the matter may be heard in Department S22 of the above-entitled court, located at 247 West Third
Street San Bernardino, California, Defendant, AEG HOLDCO, LLC, dba AMERICAN
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ENVIRONMENTAL GROUP (hereinafter, “AEG”) will, and hereby does, demur generally and
specially to the First Amended Complaint [“Complaint”]. This Demurrer is brought per Code of
Civil Procedure section 430.10 and is based on this Notice of Demurrer and Demurrer, the attached
Memorandum of Points and Authorities, the Declaration of Scott G. Greene, the papers and pleadings
on file in this action, and such other papers, pleadings, and arguments as this Court shall admit.
AEG hereby demurs to Plaintiff’s Complaint on the following grounds:
1. The First Cause of Action for Breach of Contract fails to allege facts sufficient to
constitute a cause of action in that it fails to allege any contractual relationship
between AEG and Plaintiff or include the terms of the alleged contract which were
allegedly breached. The Complaint does not sufficiently allege the legal effect of
the express and implied oral contract between Plaintiff and Defendant. (Scolinos v.
Kolts (1995) 37 Cal.App.4th 635, 640.) Code Civ. Proc. § 430.10 (e).
2. The Second Cause of Action for Breach of Good Faith and Fair Dealing fails to allege
facts sufficient to constitute a cause of action in that it fails to allege any contractual
relationship between AEG and Plaintiff or include the terms of the alleged contract
which were allegedly breached. Likewise, the Complaint does not sufficiently
allege the legal effect of the express and implied oral contract between Plaintiff and
State Farm Insurance. (Scolinos v. Kolts (1995) 37 Cal.App.4th 635, 640.)
Code Civ. Proc. § 430.10 (e).
3. The Third Cause of Action for Interference with Contractual; Relations and
Conspiracy fails to allege facts sufficient to constitute a cause of action in that it
fails to allege any contractual relationship between AEG and Plaintiff or include the
terms of the alleged contract which were allegedly breached or interfered with .
Code Civ. Proc. § 430.10 (e).
4. The Fourth Cause of Action for Fraud fails to allege facts sufficient to constitute a
cause of action in that it fails to allege facts regarding AEG’s statements to Plaintiff.
fail to state facts sufficient to constitute a cause of action because (1) Plaintiff has
failed to allege fraud with the requisite specificity; (2) Plaintiff has not and cannot
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allege the requisite element of a duty owing to Plaintiff by AEG; and (3) Plaintiff
has failed to plead the requisite element of reliance on any purported
misrepresentation by AEG. Code Civ. Proc. § 430.10 (e).
5. The Fifth Cause of Action for False Promise fails to allege facts sufficient to constitute
a cause of action in that it fails to allege facts known by AEG and concealed from
Plaintiff. Plaintiff fails to state facts sufficient to constitute a cause of action
because (1) plaintiff has failed to allege fraud with the requisite specificity; (2)
Plaintiff has not and cannot allege the requisite element of a duty owing to Plaintiff
by AEG; and (3) Plaintiff has failed to plead the requisite element of reliance on any
purported misrepresentation by AEG.Code Civ. Proc. § 430.10 (e).
6. The Fifth Cause of Action for Elder Financial Abuse, Emotional Distress and
Discrimination fails to allege facts sufficient to constitute a cause of action or any
acts by AEG which caused harm to Plaintiff. It fails to allege facts sufficient to
constitute a cause of action in that it fails to allege facts sufficient to constitute
“outrageous” conduct on the part of AEG or any corresponding “emotional distress”
of the Plaintiff. Code Civ. Proc. § 430.10 (e).
7. The Sixth Cause of Action for Intentional Misrepresentation fails to allege facts
sufficient to constitute a cause of action in that it fails to allege facts regarding AEG’s
statements to Plaintiff. Code Civ. Proc. § 430.10 (e).
8. The Seventh Causes of Action for Negligence fails to allege facts sufficient to
constitute a cause of action in that it fails to allege facts creating a duty on the part of
AEG to Plaintiff. Code Civ. Proc. § 430.10 (e). Plaintiff has not and cannot allege the
requisite element of a duty owing to Plaintiff by AEG; moreover as a matter of law,
AEG cannot be held liable for negligence in connection with testing services for
persons who were not AEG's clients; and (3) Plaintiff has failed to plead the requisite
causal link between any purported negligence by AEG and the damage purportedly
incurred by Plaintiff.
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9. The Eighth Cause of Action for “Toxic Exposure” fails to allege facts sufficient to
constitute a cause of action in that it fails to allege facts creating a duty on the part of
AEG to provide a habitable premises to Plaintiffs. Code Civ. Proc. § 430.10 (e).
10. The Fifth Cause of Action for Intentional Infliction of Emotional Distress Code Civ.
Proc. § 430.10 (e).
11. The Ninth Cause of Action for RICO fails to allege facts sufficient to constitute a
cause of action in that it fails to allege a pattern of racketeering activity, a culpable
person with the requisite mens rea, an enterprise, and an effect on interstate
commerce. Code Civ. Proc. § 430.10 (e).
12. All Nine Causes of Action as the damages sought, $10,000,000, are purely
speculative.
Counsel for the parties have not met and conferred regarding the issues raised by this
Demurrer, in spite of AEG’s counsel sending a detailed meet-and-confer letter. Plaintiff flatly refused
to address the pleading issues raised by AEG’s counsel.
This Demurrer is based on this Notice of Demurrer and Demurrer, the attached Memorandum
of Points and Authorities, the Attached Declaration of Scott G. Greene, the records and files in this
action, all facts of which this court may take judicial notice and any further evidence and argument
that this Court will receive at or before the hearing on this Demurrer.
DATED: September 29, 2021 BOOTH LLP By: Scott Greene Jason M. Booth Scott G. Greene
Attorneys for Defendant AMERICAN ENVIRONMENTAL GROUP
5 TABLE OF CONTENTS
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TABLE OF CONTENTS
I. INTRODUCTION AND SUMMARY OF ARGUMENT .................................................... 1
II. STATEMENT OF THE CASE ............................................................................................. 1
III. STANDARD ON DEMURRER ............................................................................................ 3
IV. ARGUMENT ......................................................................................................................... 3
1. Plaintiff’s Contract-Based Causes of Action Lacks Allegations of Terms
Certain Enough To Form A Contract, And Therefore No Breach
Could Be Determined ....................................................................................................... 3
2. Plaintiff’s Fraud-Based Causes Of Action Fails To State Specific Facts
To Satisfy The Heightened Pleading Requirement .......................................................... 6
3. Plaintiffs Fifth Cause Of Action For Emotional Distress Fails To State
Extreme or Outrageous Conduct By AEG or Causation ................................................ 10
4. Plaintiffs Sixth Cause Of Action For Elder Abuse Fails To State Specific
Facts To Satisfy The Pleading Requirement .................................................................. 11
5. Plaintiff’s Seventh Cause Of Action For Negligence Fails Because
No Duty Was Owed to Plaintiff Or Breached By AEG ................................................. 12
6. Plaintiffs Eighth Cause Of Action For Toxic Exposure Fails To State
Specific Facts To Satisfy The Pleading Requirement .................................................... 12
7. Plaintiffs Ninth Cause Of Action For RICO - Racketeering Influenced and
Corrupt Organizations & Conspiracy Fails To State Specific Facts To Satisfy
The Pleading Requirement ............................................................................................. 13
V. CONCLUSION ....................................................................................................................... 14
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TABLE OF AUTHORITIES
Cases
Ahern v. Dillenback
(1991) 1 Cal.App.4th 36 ................................................................................................................... 12
Alva v. Cook
(1975) 49 Cal.App. 3d 899 ............................................................................................................... 12
Aubry v. Tri-City Hospital Dist.
(1992) 2 Cal.4th 962 ............................................................................................................................ 3
Banducci v. Sresovich
52 Cal. App. 637 [199 P. 72] (1921) .................................................................................................. 4
Bily v. Arthur Young
3 Cal.4th 370 ..................................................................................................................................... 10
Bockrath v. Aldrich Chemical Co. Inc.
21 Cal.4th 71 (1999) ......................................................................................................................... 12
Building Permit Consultants, Inc. v. Mazur
122 Cal.App.4th 1400 (2004) ............................................................................................................ 8
Careau & Co. v. Security Pacific Business Credit, Inc.
222 Cal.App.3d 1371 (1990) ......................................................................................................... 5, 6
Committee on Children's Television, Inc. v. General Foods Corp.
35 Cal.3d 197 (1983) .......................................................................................................................... 7
Foley v. Interactive Data Corp.
47 Cal.3d 654 (1988) .......................................................................................................................... 6
Frantz v. Blackwell
189 Cal. App. 3d 91 (1987) ................................................................................................................ 3
Freeman v. San Diego Ass'n of Realtors
(1999) 77 Cal.App.4th 171 ................................................................................................................. 3
Harris v. Rudin, Richman & Appel
74 Cal. App. 4th 299 (2002) ............................................................................................................... 5
Heritage Pacific Financial, LLC v. Monroy
215 Cal.App.4th 972 (2013) .............................................................................................................. 9
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Jones v. ConocoPhillips Co.
198 Cal.App.4th 1187 (2011) ........................................................................................................... 12
Ladas v. California State Automobile Assn.
(1993) 19 Cal.App.4th 761 ................................................................................................................. 3
Lazar v. Superior Court
(1996) 12 Cal.4th 631; 49 Cal.Rptr. 2d 377 ................................................................................. 9, 10
Mason v. Drug, Inc.
31 Cal. App. 2d 697 (1939) ................................................................................................................ 7
Maxwell v. Dolezal
(2014) 231 Cal.App.4th 93 ................................................................................................................. 3
McDonald v. John P. Scripps Newspaper
210 Cal.App.3d 100 (1989) ............................................................................................................... 4
Nagy v. Nagy
210 Cal.App.3d 1262 (1989) .............................................................................................................. 7
Racine v. Laramie, Ltd. v. Department of Parks & Recreation
11 Cal.App.4th 1026 (1992) ............................................................................................................... 5
Reves v. Ernst & Young
507 U.S. ___ (1993) ......................................................................................................................... 13
Scafidi v. Western Loand & Bldg. Co.
(1946) 72 Cla.App.2d 550 ................................................................................................................ 10
Sedima, S. P. R. L. v. Imrex Co.
473 U.S. 479 (1985) ......................................................................................................................... 13
Seeger v. Odell
(1941) 18 Cal.2d 409 ........................................................................................................................ 10
Stansfield v. Starkey
(1990) 220 Cal.App.3d 59 ............................................................................................................ 7, 10
The McCaffrey Group, Inc. v. Superior Court
224 Cal.App.4th 1330 (2014) ............................................................................................................. 5
Vasquez v. Franklin Management Real Estate Fund, Inc.
(2013) 222 Cal.App.4th 819 ............................................................................................................. 11
Wallis v. Superior Court
160 Cal.App.3d 1109 (1984) .......................................................................................................... 5, 6
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Weirum v. RKO Gen., Inc.
(1975) 15 Cal.3d 40. ......................................................................................................................... 12
Wilhelm v. Pray, Price, Williams & Russell
(1986) 186 Cal.App.3d 1324 .............................................................................................................. 8
Statutes
CCP § 430.30(a) ..................................................................................................................................... 3
CCP §430.10(e) .................................................................................................................................. 1, 3
Civil Code §1709 ............................................................................................................................... 6, 7
Code of Civil Procedure § 430.10(e) ................................................................................................. 1, 2
Other Authorities
15 U.S.C. §15 ....................................................................................................................................... 14
18 U.S.C. §1964(c). ............................................................................................................................. 14
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION AND SUMMARY OF ARGUMENT
Plaintiff alleges in her Complaint and later in her First Amended Complaint [“FAC”] that her
house “suffered a sudden roof loss,” on or about February 2, 2019. [FAC ¶11.] She contacted her
insurer State Farm Insurance and the claims process was begun. Moving party AEG Holdco LLC
[“AEG”] was allegedly hired by State Farm General Insurance for “environmental testing.” [FAC
¶29.] . Plaintiff’s Complaint is 56 pages long, runs over 136 paragraphs, the Prayer lists 17 items
(including sum of $10,000,000), and purports to allege 12 causes of action against all 10 defendants.
Plaintiff does not allege specific facts of AEG’s conduct which could establish the elements
of any cause of action based on fraud, including the essence of a cause of action for Fraud—the
intent to deceive. Plaintiff fails to meet basic pleading requirements under CCP §430.10(e), as well
as California’s heightened pleading standard for Fraud and fraud-based claims (Causes of Action
3,4, 5, 6,and 9).
The FAC also lacks the requisite factual allegations to support any claim that a contractual
relationship existed between AEG and Plaintiff (Cause of Action 1). The FAC also lacks the
necessary factual allegations that a duty was owed by AEG to Plaintiff which would support any
negligence-based cause of action (Cause of Action 7). The FAC lacks the necessary factual
allegations that any obligation was owed by AEG to Plaintiff, or relationship was created, which
support any statutory cause of action such as Elder Abuse (Causes of Action 5). The relationships
alleged by Plaintiff are as insurer/insured. AEG was retained by the insurer State Farm, not the
Plaintiff. There is no connective tissue between AEG and the Plaintiff, who is unable to allege the
necessary contract terms to support any cognizable contract cause of action against AEG.
Accordingly, the Court should sustain AEG’s Demurrer as to the FAC and the causes of action
against AEG.
II. STATEMENT OF THE CASE
This lawsuit is about the allegedly improper claims handling by an insurer with respect to a
roof loss at a single-family home. Plaintiff alleges in her First Amended Complaint (FAC), that her
home “[after it] suffered a sudden roof loss… It was willfully and intentionally destroyed by the
DEFENDANTS, individually and collectively causing extreme damage.” [FAC ¶11]. Plaintiff is
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seeking $10,000,000 in her FAC, which includes a cause of action regarding the Racketeer
Influenced and Corrupt Organizations Act (RICO), the federal law designed to combat organized
crime in the United States.
Plaintiff alleges that AEG collected air samples on two occasions. “American Environmental
Group was dispatched to the house [date unknown] by STATE FARM adjuster for environmental
testing.” [FAC ¶29]. “In March 2019, … STATE FARM claims office then contacted, negotiated,
dispatched and paid for an environmental inspection by American Environmental Group… All
negotiations and directions were handled between AEG and the claims office.” [FAC¶ 34]. It
appears that this is the same initial visit as mentioned in FAC ¶29.
The allegations regarding AEG appear to be that the March 2019 environmental report
requested by State Farm, prepared approximately one month after the roof loss and based upon three
air samples, “provid[ed] a false clearance to build back.” [FAC ¶ 34]. Plaintiff reasons that the
March 2019 report included “false results” because of “multiple subsequent tests, paid for by
PLAINTIFF, in the following months.” [FAC ¶34]. One of those “subsequent tests” was allegedly
performed by AEG. [FAC ¶34]. Presumably the claim against AEG is that the air samples collected
within a few weeks of the loss did not reveal unacceptable levels, but the “subsequent test” by AEG
months after the loss did reveal unacceptable levels, thereby establishing the fraud of the initial AEG
report. The FAC goes in great detail about the roof loss, the unacceptable tarp efforts and in short the
exposure of the interior of the home to the elements for months. It is not surprising to any lay person
that an environmental test of an exposed house for that period of time might result in identifying
unacceptable levels.
That is the extent of AEG’s conduct as alleged in those 136 paragraphs. Plaintiff does not
allege specific facts of AEG’s conduct which would establish the elements of any cause of action
based on fraud, including the essence of a cause of action for Fraud—an intent to deceive. Plaintiff
fails to meet basic pleading requirements under CCP § 430.10(e), as well as California’s heightened
pleading standard for Fraud and fraud-based claims (Causes of Action 4, 5, and 6). The FAC lacks
the necessary factual allegations that any contractual obligation was owed by AEG to the Plaintiff
(First Cause of Action) or that a relationship was created (Fifth Cause of Action), which would
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support any Elder-based causes of action. The relationships alleged by Plaintiff are as
insurer/insured. Plaintiff specifically alleges that State Farm hired AEG to test the
contained/remediated areas in the property. There is no connective tissue between AEG and the
Plaintiff, who is unable to allege the necessary facts to support ANY cognizable cause of action
against AEG.
III. STANDARD ON DEMURRER
A complaint is susceptible to demurrer where “[t]he pleading does not state facts sufficient to
constitute a cause of action.” CCP §430.10(e). “When any ground for objection to a complaint . . .
appears on the face thereof, or from any matter of which the court is required to or may take judicial
notice, the objection on that ground may be taken by a demurrer to the pleading.” CCP § 430.30(a).
The face of the complaint includes information and facts contained in the exhibits attached to the
complaint. 1 The Complaint is subject to demurrer based on the factual allegations therein and on the
attached exhibits. “The court does not, however, assume the truth of contentions, deductions or
conclusions of law.” 2 To avoid demurrer, a complaint must allege facts in support of each element
of a cause of action; mere conclusions are insufficient. 3
IV. ARGUMENT
1. Plaintiff’s Contract-Based Causes Of Action Lacks Allegations Of Terms Certain Enough To Form A Contract, And Therefore No Breach Could Be Determined.
To establish breach of contract, each plaintiff must prove (1) the existence of the contract, (2)
the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4)
resulting damages to the plaintiff.4 Further, to be enforceable, a promise must be definite enough that
a court can determine the scope of the duty and the limits of performance must be sufficiently defined
to provide a rational basis for the assessment of damages.”5 Alleged promises that are too vague and
indefinite do not give rise to an enforceable contractual duty. (Id.) Here Plaintiff only specifically
1 Frantz v. Blackwell (1987) 189 Cal. App. 3d 91, 94. 2 Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967 3 Freeman v. San Diego Ass'n of Realtors (1999) 77 Cal.App.4th 171, 189. 4 Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 98. 5 Ladas v. California State Automobile Assn. (1993) 19 Cal.App.4th 761, 770.
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alleges a contract with her insurer State Farm, presumably the governing insurance policy under
which the claimed damage was covered. AEG is not alleged to be a party to that contract.
To state a cause of action for breach of contract, it is required that there be a pleading of the
contract, Plaintiffs' performance (or excuse for nonperformance), Defendant's breach, and damage to
Plaintiff therefrom.6 The allegations contained in the FAC do not set out the actual terms of the
contract, either in haec verba or in legal effect. If a plaintiff is ignorant as to whether the contract is
written or oral, the law nonetheless requires that there be an allegation of such verbal agreement by
setting forth the substance of its relative terms. The FAC fails to comply with any of these
requirements and the pleading neglects to state facts which assertedly constitute AEG’s breach. Thus,
no facts are pleaded which set forth in what respect defendant's asserted statement to certain persons
that plaintiffs' telephone was disconnected constituted a breach of the contract in suit. Too, not only
must the facts constituting the defendant's breach be stated with certainty, but there must also be an
allegation that the damage to plaintiffs resulting therefrom is legally actionable.
¶29 of the FAC states that AEG “was dispatched to the house by State Farm.” Plaintiff was
not a party to any purported contract between AEG and State Farm. The FAC contains no specifics as
to the purported contract and the terms it contains. ¶34 of the FAC states that State Farm “contacted,
negotiated, dispatched and paid for an environmental inspection by [AEG].” Again, the purported
contact was between State Farm and AEG. ¶51 of the FAC states: AEG breached it’s contract with PLAINTIFF through the STATE FARM Premier Service Contractor Services Program in February & March 2019, and it’s contract with the PLAINTIFF in August 2019 by failing to provide promised usual, customary and competent environmental testing for the weeks of unabated water intrusion and consequent water and microbial damage sustained by PLAINTIFF, STATE FARM authorized build back based on documents provided by American Environmental Group that proved false, and PLAINTIFF sustained additional subsequent damages.
No copy or verbatim language is included in the FAC re the February contract, the March
contract or the August contract. A breach of contract claim requires allegations showing that there
was a contract.7 The FAC does not allege facts showing that there was an implied contact between
the parties. All which is alleged is the conclusory statement that there was an implied contract. In
6 Banducci v. Sresovich, (1921) 52 Cal. App. 637 [199 P. 72]. 7 See, e.g. McDonald v. John P. Scripps Newspaper (1989) 210 Cal.App.3d 100,104.
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addition, if the alleged contract was written then Plaintiff must include allegations of the material
terms of the contract, but Plaintiff has not done so here. (See, Harris v. Rudin, Richman & Appel, 74
Cal. App. 4th 299, 307(2002) [must attach a copy of the written contract or allege the terms
verbatim].
The contract causes of action are clearly directed towards Plaintiff’s insurer, State Farm, and
the purported insurance contract she has with it. An action for breach of the implied covenant of good
faith and fair dealing requires an underlying agreement of some sort (contract, letter of intent,
preliminary agreement to use best efforts to agree, etc.).8 The precise nature and extent of the duty
imposed depends on the contractual purposes.9 “A ‘breach of the implied covenant of good faith and
fair dealing involves something beyond breach of the contractual duty itself’ and it has been held that
‘[b]ad faith implies unfair dealing rather than mistaken judgment….” 10“If the allegations do not go
beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the
same damages or other relief already claimed in a companion contract cause of action, they may be
disregarded as superfluous as no additional claim is actually stated.” Id. at 1395.
Case law demonstrates that the breach of implied covenant has been available in insurance
cases where the courts have found a ‘special relationship’ between the insurer and the insured, which
is characterized by elements of public interest, adhesion and fiduciary responsibility. Id. The court
mentioned how problematic that would be in noninsurance cases. Here, AEG is not the insurer.
The court in Wallis v. Superior Court (1984) 160 Cal.App.3d 1109 announced a five part
description of the characteristics of the ‘special relationship’ which must be present in a noninsurance
contractual dispute in order to justify tort recovery for a breach of the implied covenant: (1) the
contract must be such that the parties are in inherently unequal bargaining positions; (2) the
motivation for entering the contract must be a nonprofit motivation, i.e., to secure peace of mind,
security, future protection; (3) ordinary contract damages are not adequate, because (1) they do not
require the party in the superior position to account for its action, and (b) they do not make the
inferior party ‘whole’; (4) one part is especially vulnerable because of the type of harm it may suffer
8 Racine v. Laramie, Ltd. v. Department of Parks & Recreation (1992) 11 Cal.App.4th 1026. 9 The McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330. 10 Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394.
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and of necessity places trust in the other party to perform; and (5) the other party is aware of this
vulnerability. Id. at 1398.
The Supreme Court in Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654 suggested that
any extension of tort remedies to noninsurance cases is not justified given (1) the limited purpose and
scope of contract damages, (2) the strong need in our commercial system for predictability of the cost
of contractual relationships and (3) the difficulty of formulating a workable test for distinguishing
between a simple breach of contract and a ‘tortious’ breach of the implied covenant.” Careau & Co.,
supra., (1990) 222 Cal.App.3d at 1398. The Foley court noted the obvious: to claim that tort damages
are appropriate by simply alleging ‘bad faith’ does nothing to limit the cause of action or differentiate
between a run-of-the-mill breach of contract case. Id. at 1399.
With respect to the pleading of the cause of action for Intentional Interference with Contractual
Relations, presumably this contractual cause of action alleges that AEG interfered with Plaintiff’s
contractual relationship with her insurer, State Farm, which caused her economic harm. Plaintiff
asserts that AEG’s conduct prevented performance of the State Farm contract or made it more
difficult or expensive. Moreover, Plaintiff must establish that AEG intended to disrupt the
performance of the State Farm contract and AEG’s conduct was a substantial factor in causing her
harm. The facts alleged in our FAC must be more than merely a recitation of the corresponding jury
instruction as well as having no differentiation between the “Defendants.” This cause of action
suffers from the same defects as the previous two in that no specific contract or provisions are cited,
making it impossible to ascertain the alleged “interference.” Plaintiff does not plead any language
from any alleged AEG agreement with her or language from her insurance policy which would
implicate AEG. Accordingly, Plaintiff’s contract-based causes of action for Breach of Contract,
Breach of Duty of Good Faith and Fair Dealing and Intentional Interference with Contractual
Relations fail and the demurrer should therefore be sustained. 2. Plaintiff’s Fraud-Based Causes Of Action Fails To State Specific Facts To Satisfy The
Heightened Pleading Requirement
Fraud occurs when a party “willfully deceives another with the intent to induce him to alter
his position to his injury or risk. Civil Code §1709. In order to adequately plead a cause of action for
fraud, the Plaintiff must show that Defendant AEG made a (1) misrepresentation of (2) material fact,
7 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
DEMURRER TO FIRST AMENDED COMPLAINT
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with the (3) knowledge of its falsity, (4) intent to induce reliance, such reliance being (5) justifiable
reliance that (6) causes damages to the victim. Plaintiffs have not and cannot satisfactorily allege
their sixth causes of action for fraud with the requisite particularity.
This cause of action is based on allegations to the effect that defendant AEG through its
agents and employees told Plaintiff that her “house was being properly remediated and that the
contamination was being eliminated.” FAC ¶94. No such allegation against AEG is in the FAC. The
identity of the agent or employee is not disclosed; nor is there any allegation concerning the time and
place of the asserted misrepresentation. The FAC continues in ¶95 that AEG “concealed from
PLAINTIFF that her home was contaminated with mold. They tried to cover up the contamination
with the intention of depriving PLAINTIFF of the value of her home and the ability to live in her
home.” However this is in direct contradiction with the alleged facts in your FAC and the testing
results by AEG.
Fraud is never presumed. "So in the instant case, if the plaintiff would charge the defendant
corporation with making fraudulent misrepresentations it was necessary for him to allege the name of
the person who spoke, his authority to speak, to whom he spoke, what he said or wrote, and when it
was said or written. But the amended complaint is wholly wanting in such allegations. Therefore it
did not state facts sufficient to charge the corporate defendants." 11Fraud occurs when a party
“willfully deceives another with the intent to induce him to alter his position to his injury or risk.
Civil Code §1709. Allegations of fraud must be pled with specificity; general and conclusory
allegations do not suffice.12 As stated by our Supreme Court: “Accordingly, the rule is everywhere
followed that fraud must be specifically pleaded.” 13 “The effect of this rule is twofold: (a) General
pleading of the legal conclusion of fraud is insufficient; the facts constituting the fraud must be
alleged, (b) Every element of the cause of action for fraud must be alleged in the proper manner (i. e.,
factually and specifically), and the policy of liberal construction of the pleadings ... will not ordinarily
be invoked to sustain a pleading defective in any material respect.” Id.
11 (Mason v. Drug, Inc., (1939) 31 Cal. App. 2d 697, 703 [88 P.2d 929].) 12 Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 74; Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268. 13 Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.
8 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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Plaintiff alleges only two representations made by AEG – each of the two lab reports. The
balance of the FAC is littered with legal conclusions and based upon “information and belief” as to
what the Plaintiff understood the Defendants were aware of. The FAC contains no allegation of any
representation made by AEG to the Plaintiff upon which she relied to her detriment. The Court in
Wilhelm v. Pray et al rejected the same types of generic allegations.14 There too, the plaintiff alleged
that the defendant knowingly made misrepresentations with the intent to defraud plaintiff. Id. at 1331.
Relying on the rule that “every element of the cause of action for fraud must be alleged in full,
factually and specifically”, the Wilhelm court held that the complaint was defective based on
plaintiffs failure to plead facts showing how defendant “knew” the alleged representations to plaintiff
were false. Id.
“‘To maintain an action for deceit based on a false promise, one must specifically allege and prove,
among other things, that the promisor did not intend to perform at the time he or she made the
promise and that it was intended to deceive or induce the promisee to do or not do a particular thing.’
[Citation.]” 15There are no allegations that AEG induced Plaintiff to enter into any agreement or that
AEG had no intention of performing. The FAC has not pled these fraud causes of action with the
required particularity. The FAC does not allege representations made by AEG. The FAC merely
references representations and actions made by others. Also, the FAC fails to allege facts to support a
claim for punitive damages. Often a plaintiff argues that less is required when it appears that a
defendant has superior knowledge of the facts, so long as the pleadings give notice of the issues
sufficient to enable preparation of the defense. (citation.) Many a plaintiff will contend that the
defendants, as perpetrators of the fraud, logically had superior knowledge to the plaintiff and believes
it has provided enough information for the defendants to respond. (citation.)
The “particularity requirement necessitates pleading facts which 'show how, when, where, to
whom, and by what means the representations were tendered.’ [Citation.]” A plaintiff's burden in
asserting a fraud claim against a corporate employer is even greater. In such a case, the plaintiff must
‘allege the names of the persons who made the allegedly fraudulent representations, their authority to
speak, to whom they spoke, what they said or wrote, and when it was said or written.’ [Citation.]”
14 Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324. 15 (Building Permit Consultants, Inc. v. Mazur (2004) 122 Cal.App.4th 1400, 1414.)
9 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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(Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Here, Plaintiff has not alleged these causes of
action with the required particularity. The misrepresentations alleged are essentially the promises the
Defendants agreed to perform under the agreements. Plaintiff basically alleges Defendants failed to
perform the promises in the agreements. Plaintiff alleges no other misrepresentations and the FAC
fails to allege facts sufficient to constitute a cause of action.
T]he policy of liberal construction of the pleadings does not apply to fraud causes of action.
‘In California, fraud must be pled specifically; general and conclusory allegations do not
suffice.’[Citation.]” This requirement serves two purposes. First, it gives the defendant notice of the
definite charges to be met. Second, the allegations “should be sufficiently specific that the court can
weed out nonmeritorious actions on the basis of the pleadings. Thus the pleading should be sufficient
‘to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at
least, for the charge of fraud.’ [Citations.]” 16
Plaintiffs are required to allege sufficiently specific facts to allow defendants the opportunity
to defend themselves. Not only has Plaintiff failed to allege specific facts as to AEG, she relies on
such ambiguous and subjective terms that AEG can only speculate as to what they have been accused
of saying. Allegations of fraud involve a serious attack on character, and fairness to the defendant’s
demands that they should receive the fullest possible details in order to prepare their defense.17
Nowhere in the specious and conclusory language of the 136+ paragraph FAC can the necessary
elements of fraud be found. A cause of action for fraud must adhere to a more stringent pleading
standard.18
The pleading of fraud, however, is also the last remaining habitat of the common law notion that a complaint should be sufficiently specific that the court can weed out nonmeritorious actions on the basis of the pleadings. Thus the pleading should be sufficient “to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud.” Id. at 216.
16 Heritage Pacific Financial, LLC v. Monroy (2013) 215 Cal.App.4th 972, 989, internal quotation marks omitted.) 17 Committee, supra, 35 Cal.3d at 216. 18 Committee, supra, 35 Cal.3d at 216.
10 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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Moreover, in pleadings, the facts and circumstances constituting fraud must be set out clearly,
concisely and with sufficient particularity to inform the opposing party of what must be answered. 19
“This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom
and by what means the representations were tendered.” 20 There is no discernible representation by
AEG in the FAC, without which no other elements may lie. The FAC lacks any allegations with
which any plaintiff could establish reliance, intent, or the knowledge of falsity at least by AEG.
Accordingly, Plaintiff’s fraud causes of action are patently defective and the demurrer should be
sustained with respect to Fraud, False Promise and Intentional Misrepresentation.
Reliance that is manifestly unreasonable in light of a plaintiff’s own intelligence or own information
is not justifiable.21
Nevertheless, the FAC includes the clear allegation that AEG was retained by State Farm (not
Plaintiff). Moreover, AEG owed Plaintiff no duty of care with respect to the alleged testing services
and alleged wrongs at issue in this case.22 Further, Plaintiff does not even attempt to plead facts to
support claims for negligent supervision or negligent management against AEG; AEG has not been
alleged to have supervised or managed any of the other defendants. Accordingly, Plaintiff cannot
establish the requisite element of duty, for whatever negligence-based claim she is pursuing, and as
such, Plaintiff’s negligence cause(s) of action must fail as a matter of law. The demurrer should be
sustained.
3. Plaintiffs Fifth Cause Of Action For Emotional Distress Fails To State Extreme or Outrageous Conduct By AEG or Causation
The elements of an IIED claim are: (1) extreme and outrageous conduct by the defendant with
the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the
plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of
the emotional distress by the defendant’s outrageous conduct. The conduct must be so extreme as to
be beyond all bounds of decency tolerated by society. In order to avoid a demurrer, the plaintiff must
19 Scafidi v. Western Loand & Bldg. Co. (1946) 72 Cla.App.2d 550, 558. 20 Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73. See also Lazar v. Superior Court 12 Cal.4th 631, 638; 49
Cal.Rptr. 2d 377 (1996). 21 Seeger v. Odell (1941) 18 Cal.2d 409,414-415. 22 Bily v. Arthur Young, supra, 3 Cal.4th 370, 401-402.
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allege with “‘great[ ] specificity’ the acts which he or she believes are so extreme as to exceed all
bounds of that usually tolerated in a civilized community.” 23
There are no allegations that AEG was aware that the Plaintiff were “vulnerable to injuries
through mental distress,” nor any facts to support it. As discussed above, no specific acts or
omissions by AEG are identified with the requisite specificity to constitute “extreme and outrageous
conduct,” or really, any conduct at all. We are unaware of any legal support to allege that AEG’s
behavior – accurately testing certain designated areas for mold, which results were reported to
Plaintiff- may be considered improper or tortious, let alone outrageous. Moreover, to support an IIED
claim, the conduct must be directed at the Plaintiff, or occur in the presence of the Plaintiff of whom
AEG is aware. The FAC does not allege the triggering acts nor does it identify any of the affected
Plaintiffs. Also missing is any allegation of the allegedly corresponding injuries or their intensity,
duration, or impact. This cause of action is insufficiently pled as to every element, and is fatally
vague. Therefore, the demurrer should be sustained.
4. Plaintiffs Sixth Cause Of Action For Elder Abuse Fails To State Specific Facts To Satisfy The Pleading Requirement
The cause of action for elder abuse under Welfare and Institutions (Code Section 15610.30)
fails to state facts sufficient to constitute a cause of action because (1) Code Section 15610.30 does
not in and of itself create an independent cause of action; and (2) there are no facts pleaded that AEG
directly engaged in any purported fraudulent conduct or “financial abuse” towards Plaintiff.
Assuming arguendo that an independent cause of action can be pleaded, the allegations of the FAC
do not state a proper claim for elder abuse against AEG. First, the allegations fail to establish that
AEG directly engage in financial abuse. Section 15610.30 provides that financial abuse occurs when
an entity “takes, secretes, appropriates, or retains real and personal property of an elder...to a
wrongful use or with intent to defraud, or both.” Second, the allegations fail to establish that AEG
assisted in financial abuse by a third party. Section 15610.30 provides that financial abuse occurs
when an entity “assists in taking, secreting, appropriating, or retaining real or personal property of an
elder...to a wrongful use or with intent to defraud.”
23 Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832.
12 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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5. Plaintiff’s Seventh Cause Of Action For Negligence Fails Because No Duty Was Owed to Plaintiff Or Breached By AEG
Plaintiff next alleges a cause of action against Defendant AEG for negligence. A negligence
action requires that there be a (1) legal duty to use due care, (2) a breach of that duty, (3) a reasonably
close causal relationship between the breach and any resulting injury, and (4) actual loss or damage to
the plaintiff.24 A legal duty of care requires the use of ordinary care to prevent injury to others and is
determined on a case-by-case basis.25 That duty is breached when a person could have reasonably
foreseen that an act or omission could result in harm to another from the time of that act or
omission.26
6. Plaintiffs Eighth Cause Of Action For Toxic Exposure Fails To State Specific Facts To Satisfy The Pleading Requirement
In Bockrath v. Aldrich Chemical Co., Inc. (1999) 21 Cal.4th 71, 80, the California Supreme
Court detailed the pleading requirements for a long-term toxic exposure action. Bockrath involved a
worker who allegedly contracted cancer from his exposure to chemicals while working at an aircraft
company. (Id. at 77.) The Court outlined the requirements as follows: “(1) Plaintiff must allege that
he was exposed to each of the toxic materials claimed to have caused a specific illness. An allegation
that he was exposed to ‘most and perhaps all’ of the substances listed is adequate. [fn. omitted] (2)
He must identify each product that allegedly caused the injury. It is insufficient to allege that the
toxins in defendants’ products caused it. (3) He must allege that as a result of the exposure, the toxins
entered his body. (4) He must allege that he suffers from a specific illness, and that each toxin that
entered [their] body was a substantial factor in bringing about, prolonging, or aggravating that illness.
(5) Finally . . . he must allege that each toxin he absorbed was manufactured or supplied by a named
defendant.” (Id. at 80.) “[P]laintiffs may, and should, allege the foregoing facts succinctly, and may
do so in a conclusory fashion if their knowledge of the precise cause of injury is limited. [Citations.]”
(Ibid.)
Subsequently, the court in Jones v. ConocoPhillips Co. (2011) 198 Cal.App.4th 1187, guided
by Bockrath, evaluated the pleading requirements for a fraudulent concealment claim based on long-
24 Ahern v. Dillenback, 1 Cal.App.4th 36 (1991). 25 Weirum v. RKO Gen., Inc., 15 Cal.3d 40 (1975). 26 Alva v. Cook, 49 Cal.App. 3d 899 (1975).
13 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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term exposure to toxins. Jones involved family members of a deceased worker who died from
diseases of the heart, liver, and kidneys that his family attributed to his exposure to chemicals during
his employment with a tire manufacturer. (Id. at 1191.) The basic elements of a fraudulent
concealment cause of action are: “ ‘(1) the defendant must have concealed or suppressed a material
fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the
defendant must have intentionally concealed or suppressed the fact with the intent to defraud
plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as [they] did
if [they] had known of the concealed or suppressed fact, and (5) as a result of the concealment or
suppression of the fact, the plaintiff must have sustained damage.’ [Citation.]” (Jones, supra, 198
Cal.App.4th at 1198.) In short, the FAC fails to satisfy these pleading requirements and more
importantly establishes that AEG had no involvement in the decisions made by insurer State Farm or
the other contractors with respect to where stayed during the repairs stayed and for how long.
7. Plaintiffs Ninth Cause Of Action For RICO - Racketeering Influenced and Corrupt Organizations & Conspiracy Fails To State Specific Facts To Satisfy The Pleading Requirement
Admittedly this cause of action is the most perplexing. RICO was enacted as a chapter of the
Organized Crime Control Act of 1970, and sprang from a concern over the infiltration of legitimate
business by organized crime. 27Prohibited activities under RICO are contained in title 18, United
States Code section 1962. Subsection (a) prohibits using income derived from a pattern of
racketeering activity to invest in, establish, or operate an enterprise which is engaged in or affects
interstate commerce. Subsection (b) prohibits using a pattern of racketeering activity to acquire or
maintain an interest in or control of such an enterprise. Subsection (c) prohibits using a pattern of
racketeering activity in the conduct of such an enterprise’s affairs. Subsection (d) prohibits conspiring
to violate the previous three subsections. For an act or omission to qualify as racketeering activity, it
must be included in the list of activities set forth in title 18 United States Code section 1961(1). None
of those are pled in the FAC to satisfy this prong. A common element of all actions included in the
list is a requirement that the action be criminal in nature, that is, that it be chargeable, indictable, or
punishable as a crime. That too is missing.
27 (Reves v. Ernst & Young (1993) 507 U.S. ___ [122 L.Ed.2d 525, 532, 113 S.Ct. 1163]; Sedima, S. P. R. L. v. Imrex Co. (1985) 473 U.S. 479, 499-500 [87 L.Ed.2d 346, 360-361, 105 S.Ct. 3275].)
14 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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RICO is concerned with racketeering activity in connection with an enterprise that engages in
or affects interstate commerce. To support a claim under RICO, it is not enough that the defendant
engaged in a racketeering activity; rather, the plaintiff must also establish a pattern of racketeering
activity. RICO does not purport to provide redress for any and all injuries that may be attributed to
a violation, rather, it is limited to injury to a person's business or property. (18 U.S.C. § 1964(c).)
Courts have held that RICO does not require some sort of special “racketeering injury”; rather it is
sufficient that the defendant engaged in a pattern of racketeering activity in a manner forbidden under
RICO and the activities injured the plaintiff in his business or property. The Holmes court held that
a compensable RICO injury must do more than meet a “but for” test of causation; it must also meet a
test of proximate cause similar to that for recovery of antitrust damages under section 4 of the
Clayton Act (15 U.S.C. § 15), which requires that the injury be the direct result of the wrong. Suffice
it to say the FAC falls far short of sufficiently pleading any RICO claim against AEG.
V. CONCLUSION
Despite the Complaint’s detailed statement of facts, or its sheer bulk (56 pages; 136+
paragraphs and $10,000,000 prayer), Plaintiff has utterly failed to successfully plead a single claim
against AEG. The demurrer is warranted and should be sustained as to all the causes of action pled
against AEG as they are all patently deficient.
DATED: September 29, 2021 BOOTH LLP
By: Scott Greene Jason M. Booth Scott G. Greene Attorneys for Defendant, AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP
15 AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S
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DECLARATION OF SCOTT G. GREENE
I, Scott G. Greene, declare as follows:
1. I am an attorney duly licensed to practice law in the State of California. I am an
associate with the law firm of Booth LLP, counsel of record for Defendant AEG Holdco LLC this
matter. I have personal knowledge of the facts set forth in this declaration and, if called as a witness,
I could and would testify competently thereto.
2. I make this declaration in support of Defendant’s demurrer (“Demurrer”) to the
Complaint in this matter. I make this declaration pursuant to CCP §430.41, et seq.
5. On August 31, 2021, I emailed Plaintiff a meet-and-confer letter addressing each of
the causes of action in her First Amended Complaint. Attached as Exhibit 1 is a true and correct
copy of that email.
6. In subsequent emails with Plaintiff, many of which she also sent to all defendants and
their respective counsel, Plaintiff acknowledged receipt of the AEG meet-and-confer letter but never
addressed it, instead focused on the meet-and-confer issues with respect to the first Case
Management Conference.
7.
I declare, under penalty of perjury of the laws of the State of California, that the foregoing is
true and correct. Executed on September 29, 2021, at Los Angeles, California.
Scott Greene Scott G. Greene
PROOF OF SERVICE
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PROOF OF SERVICE
STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES )
I am employed in the County of Los Angeles, State of California. I am over the age of 18 and not a party to the within action; my business address is 11835 West Olympic Boulevard, Suite 600-East, Los Angeles, California 90064.
On the date set forth below, I served the foregoing document(s) described as follows:
AEG HOLDCO, LLC, dba AMERICAN ENVIRONMENTAL GROUP’S NOTICE OF DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF; AND DECLARATION OF SCOTT G. GREENE RE MEET AND CONFER on the interested parties in this action by serving a true copy thereof as follows:
Linda Ayres P.O. Box 835 Yucca Valley, CA 92286 E: [email protected]; [email protected]
Plaintiff in pro per
Dominique M.W. Tomaino Michael McGuire Pacific Law Partners 15615 Alton Parkway, Suite 240 Irvine, CA 92618 (949) 242-2441 (tel) (949) 922-5410 (cell) (949) 242-2446 (fax) E: [email protected]; [email protected];
Attorneys for State Farm
[ X ] BY MAIL: a copy of the document was placed in an envelope, addressed and deposited
in the mail at Los Angeles, California. I am readily familiar with the firm's practice of collection and processing of correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid at Los Angeles, California, in the ordinary course of business.
[ X ] BY ELECTRONIC TRANSMISSION: Pursuant to California Rules of Court
Emergency Rule 12 the above referenced documents are being e served to the email addresses listed on the attached Service List.
[ ] BY FEDERAL EXPRESS: I am readily familiar with Booth LLP’s business practices
of collecting and processing items for pickup and next business day delivery by Federal Express. I placed such sealed envelope(s) for delivery by Federal Express to the offices of the addressee(s) as indicated on the attached mailing list on the date hereof following ordinary business practices.
PROOF OF SERVICE
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[ X ] STATE: I declare under penalty of perjury that the foregoing is true and correct.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed on September 29, 2021at Los Angeles, California.
C. Easton C. Easton