CLAUSON v. SUPERIOR COURT

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Docket Number

B122521 (Super. Ct. No. BC164742)

Attorney(S)

Riley Riley and Timothy Charles Riley, Terrance Francis Riley, for Petitioners. No appearance on behalf of Respondent. Buchalter, Nemer, Fields Younger and James H. Turken, Simone M. Bennett; Akre, Bryan Chang and Geoffrey L. Bryan, Konrad L. Trope, Ronald J. Selgrath, Michael L. Stern, Yolanda A. Rodriguez; and Wilson, Elser, Mosokowitz, Edelman Dicker and Steven R. Parminter, Terry L. Higham, Venus E. Griffith, for Real Parties in Interest.

Judges

Paul Arthur Turner

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Smart Summary

Factual and Procedural Background

Plaintiffs James, Yolanda, and Carol Clauson and Michelle Clauson-Esparaza alleged defendants' employees installed eavesdropping devices in Mr. Clauson's office, wiretapped his office and telephone, and tape recorded several hundred telephone conversations between Mr. Clauson and his wife and children involving "confidential communications, including private family matters." Mr. Clauson was employed by defendants. The second amended complaint sought actual damages, emotional distress damages, punitive damages, and statutory penalties under Penal Code section 637.2(a). Defendants moved to strike the punitive damage allegations, arguing plaintiffs could not recover both punitive damages and statutory penalties; the trial court granted the motion on April 8, 1998. Plaintiffs filed a petition for writ of mandate challenging that order. The Court of Appeal granted the petition, set aside the April 8, 1998 order, and directed the trial court to deny the motion to strike.

Legal Issues Presented

Whether plaintiffs may plead and seek both punitive damages under Civil Code section 3294 and statutory penalties under Penal Code section 637.2, subdivision (a) at the pleading stage.

Arguments of the Parties

Plaintiffs' Arguments

Plaintiffs contended their second amended complaint alleged sufficient facts for both common law invasion of privacy and statutory wiretapping violations, and thus they should be permitted to plead punitive damages and statutory penalties together.

Defendants' Arguments

Defendants moved to strike the punitive damage allegations on the ground plaintiffs could not recover both punitive damages and statutory penalties under Penal Code section 637.2(a), relying on Troensgaard v. Silvercrest Industries, Inc.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166	That the ultimate facts showing entitlement to punitive damages must be pled by a plaintiff.	Used as a pleading standard: plaintiffs must allege ultimate facts to survive a motion to strike punitive damage allegations.
Blegen v. Superior Court (1981) 125 Cal.App.3d 959, 962-963	That the ultimate facts showing entitlement to punitive damages must be pled by a plaintiff.	Supported the same pleading requirement alongside Grieves.
Courtesy Ambulance Service v. Superior Court (1992) 8 Cal.App.4th 1504, 1519	Judges read allegations of a pleading as a whole, in context, and assume their truth when ruling on a motion to strike.	Applied as a rule guiding review of the motion to strike; court read the pleading in context and assumed its allegations true.
Dawes v. Superior Court (1980) 111 Cal.App.3d 82, 91	Judges read allegations of a pleading as a whole, in context, and assume their truth.	Invoked to support the method of evaluating the pleading on the motion to strike.
Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6	Courts do not read allegations in isolation when ruling on motions to strike.	Applied to require examining the complaint in its entirety rather than isolated allegations.
Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1223	Orders striking punitive damage allegations are reviewed de novo.	Established the appellate standard of review the court applied in evaluating the trial court's order.
Troensgaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 228	Referenced by defendants; the opinion describes it as a case involving an appeal after trial and later cites it in connection with denying punitive damages.	Defendants relied on it to argue punitive damages and statutory penalties cannot both be recovered; the court rejected that ground as a basis for striking at the pleading stage.
Greeneberg v. Western Turf Ass'n. (1903) 140 Cal. 357, 363	Authority cited for the proposition that plaintiffs may seek both punitive and statutory remedies.	Used to support the conclusion that plaintiffs may plead both punitive damages and statutory Penal Code penalties.
Turnbull Turnbull v. ARA Transportation, Inc. (1990) 219 Cal.App.3d 811, 826	Supports permitting plaintiffs to seek both punitive damages and statutory penalties; also cited for the principle that a statutory remedy may be exclusive of others when the statute creates a new right and provides a remedy.	Relied upon to allow pleading both remedies at the pleading stage and to explain post-verdict election and limitations where statutory remedies may be exclusive.
Marshall v. Brown (1983) 141 Cal.App.3d 408, 419-420	Authority for permitting a plaintiff post-verdict to elect statutory penalties or punitive damages.	Applied to support the court's statement that plaintiffs, if they prevail, must elect between Penal Code section 637.2(a) penalties and punitive damages after verdict.
Troensegaard v. Silvercrest Industries, Inc., supra, 175 Cal.App.3d at p. 228	Referenced in the opinion as denying punitive damages in a comparable context.	Used in discussing the hypothetical issue of punitive damages when recovery is solely on statutory claims; the court did not decide that hypothetical here.

Court's Reasoning and Analysis

The court first stated the governing pleading and review standards: punitive damage pleadings must allege ultimate facts showing entitlement (Grieves; Blegen), allegations are read as a whole and assumed true on a motion to strike (Courtesy Ambulance; Dawes), allegations are not read in isolation (Perkins), and orders striking punitive damage allegations are reviewed de novo (Angie M.). Applying those standards to the second amended complaint, the court found the complaint alleged sufficient facts (installation of eavesdropping devices, wiretapping, tape recording of confidential family communications, and requested remedies) to permit plaintiffs to proceed past the pleading stage with punitive damage allegations. The court rejected defendants' asserted ground for the motion to strike — that both punitive damages and Penal Code section 637.2(a) penalties may not be sought simultaneously — concluding that plaintiffs may plead both remedies. The court nevertheless clarified that if plaintiffs prevail at trial on both the common law invasion of privacy theory and the statutory wiretapping theory, they must elect post-verdict between punitive damages and the statutory penalties (citing Turnbull Turnbull and Marshall). The court limited its ruling to the pleading-stage challenge and did not decide whether punitive damages would be available if plaintiffs recover only on statutory claims.

Holding and Implications

Petition for writ of mandate granted; the trial court's April 8, 1998 order striking the punitive damage allegations is set aside and the trial court is directed to deny the motion to strike.

Consequences: The trial court must issue a new order denying the motion to strike punitive damage allegations in the first cause of action and paragraph 5 of the prayer for relief. Plaintiffs may plead both punitive damages under Civil Code section 3294 and statutory penalties under Penal Code section 637.2(a). If plaintiffs prevail at trial on both the common law invasion of privacy claim and the statutory wiretapping claim, they must thereafter elect between punitive damages and the Penal Code section 637.2(a) statutory penalties. The court's ruling is expressly limited to the pleading stage and does not resolve the hypothetical availability of punitive damages where recovery is solely on statutory claims. Plaintiffs were awarded costs of the writ proceedings to be recovered jointly and severally from the named defendants.

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JAMES CLAUSON et al., Petitioners, v. LOS ANGELES COUNTY SUPERIOR COURT, Respondent. PEDUS SERVICES, INC. et al., Real Parties in Interest.

TURNER, P.J.

Plaintiffs, James, Yolanda, and Carol Clauson and Michelle Clauson-Esparaza, have filed a mandate petition challenging an order filed April 8, 1998, striking punitive damage allegations in their second amended complaint for a violation of Penal Code provisions relating to unlawful wiretapping and common law invasion of privacy. We conclude that plaintiffs stated sufficient facts to permit them to proceed past the pleading stage with their punitive damage allegations and issue our peremptory writ of mandate setting aside the April 8, 1998, order granting the motion to strike. However, based on well established authority, we agree with defendants, Pedus Security Services, Inc., Pedus Services, Inc., Pedus Building Services, Inc., Pedus Food Services, Inc., Irving and Mark Singer, and Brian Blomberg, that plaintiffs must after trial make a choice between punitive damages and the statutory Penal Code section 637.2, subdivision (a) penalties if they prevail on both the common law violation of privacy and statutory wiretapping theories.

In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff. ( Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166; Blegen v. Superior Court (1981) 125 Cal.App.3d 959, 962-963.) In passing on the correctness of a ruling on a motion to strike, judges read allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth. ( Courtesy Ambulance Service v. Superior Court (1992) 8 Cal.App.4th 1504, 1519; Dawes v. Superior Court (1980) 111 Cal.App.3d 82, 91; see California Judges Benchbook, Civil Proceedings Before Trial (1995) § 12.94, p. 611.) In ruling on a motion to strike, courts do not read allegations in isolation. ( Perkins v. Superior Court (1981) 117 Cal.App.3d 1, 6.) We review an order striking punitive damage allegations de novo. ( Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1223.)

Plaintiffs' second amended complaint, in the first cause of action, alleged certain of defendants' employees had installed eavesdropping devices in Mr. Clauson's office. Further, it was alleged defendants had wiretapped Mr. Clauson's private office and telephone. Mr. Clauson had been employed by defendants. Mr. Clauson engaged in several hundred telephone conversations with his wife and children, who are the other plaintiffs. These telephone conversations between Mr. Clauson and his family were tape recorded. The conversations that were tape recorded involved "confidential communications, including private family matters . . . ." The second amended complaint sought: actual damages; emotional distress damages; punitive damages; and statutory penalties pursuant Penal Code section 637.2, subdivision (a).

Defendants moved to strike the punitive damage allegations. Defendants argued that plaintiffs could not recover both the statutory penalties and punitive damages. They relied on Troensgaard v. Silvercrest Industries, Inc. (1985) 175 Cal.App.3d 218, 228, a case involving an appeal after a trial. On April 8, 1998, the respondent court granted the motion to strike and the present petition was filed. The express ground for granting the motion to strike was that both punitive damages and statutory penalties pursuant to Penal Code section 637.2, subdivision. (a) may not be sought simultaneously.

At issue in this extraordinary writ proceeding is whether plaintiffs may seek at the pleading stage to recover both punitive damages as permitted by Civil Code section 3294 and statutory penalties for unlawful wiretapping pursuant to Penal Code section 637.2, subdivision (a) which states: "Any person who has been injured by a violation of this chapter may bring an action against the person who committed the violation for the greater of the following amounts: [¶] (1) Five thousand dollars ($5,000). [¶] (2) Three times the amount of actual damages, if any, sustained by the plaintiff." The second amended complaint alleges sufficient facts for both common law invasion of privacy and a statutory wiretapping violations.

We agree with plaintiffs that they are entitled to seek in their second amended complaint both punitive damages for invasion of privacy and statutory wiretapping and eavesdropping penalties. ( Greeneberg v. Western Turf Ass'n. (1903) 140 Cal. 357, 363; Turnbull Turnbull v. ARA Transportation, Inc. (1990) 219 Cal.App.3d 811, 826; 6 Witkin, Summary of Cal. Law (9th ed. 1988) § 1334, p. 792.) Hence, the motion to strike should not have been granted on the ground asserted by defendants. Once the verdict is returned, plaintiffs, if they prevail, may then elect whether to accept the Penal Code section 637.2, subdivision (a) statutory penalties or the punitive damage award. ( Ibid.; Turnbull Turnbull v. ARA Transportation, Inc., supra, 219 Cal.App.3d at pp. 826-827; Marshall v. Brown (1983) 141 Cal.App.3d 408, 419-420.)

We do not address the hypothetical issue of whether punitive damages would be recoverable in the event that plaintiffs recover on their statutory claims but not on their common law invasion of privacy theory. ( Turnbull Turnbull v. ARA Transportation, Inc., supra, 219 Cal.App.3d at pp. 826-827, denying punitive damages. ["But when a new right, not existing at common law, is created by statute and a statutory remedy for the infringement thereof is provided, such remedy is exclusive of all others unless the statutory remedy is inadequate."]; cf. Troensegaard v. Silvercrest Industries, Inc., supra, 175 Cal.App.3d at p. 228.) We emphasize our ruling is limited to a challenge of the pleading stage of the punitive damages allegation on the grounds utilized by the respondent court in response to defendant's motion to strike.

The petition for writ of mandate is granted. The respondent court is directed to set aside the order of April 8, 1998, striking the punitive damage allegations in the first cause of action and paragraph 5 of the prayer for relief in the second amended complaint and issue a new order denying the motion. Plaintiffs, James, Yolanda, and Carol Clauson, and Michelle Clauson-Esparaza, shall recover their costs incurred in connection with these extraordinary writ proceedings jointly and severally from defendants, Pedus Security Services, Inc., Pedus Services, Inc., Pedus Building Services, Inc., Pedus Food Services, Inc., Irving and Mark Singer, and Brian Blomberg.

ARMSTRONG, J., and GODOY PEREZ, J., concurring.