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Lemma v. United Independent Taxi Drivers, Inc.

Court of Appeal of California
Sep 16, 2008
B195240 (Cal. Ct. App. Sep. 16, 2008)

Opinion

B195240

9-16-2008

DANIEL LEMMA et al., Plaintiffs and Appellants, v. UNITED INDEPENDENT TAXI DRIVERS, INC., Defendant and Respondent.

Law Office of D. Joshua Staub, D. Joshua Staub; Law Offices of Haig Ashikian and Haig P. Ashikian for Plaintiffs and Appellants. Law Offices of Neil C. Evans and Neil C. Evans for Defendant and Respondent.

Not to be Published


Taxi drivers Daniel Lemma, Robert Noravian, Ibrahim Teremzawi, Tateri M. Abebi and Mebratu Denekew Gesetse appeal from a dismissal after a demurrer was sustained without leave to amend in favor of United Independent Taxi Drivers, Inc. Appellants allege that they relied upon misrepresentations made by respondent with respect to the assessment of membership fees. We conclude that the plain meaning of the bylaws permits respondent to assess membership fees as it did; the trial court properly sustained the demurrer without leave to amend. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants are employees and independent contractors of the group, Respondent United Independent Taxi Drivers, Inc. (UITD). UITD, governed by internal bylaws and managed by a Board of Directors, has two classes of members/stockholders: driving-member owners and investor-member owners. Pursuant to the bylaws, a driving-member owner has the right to own up to three shares of stock; each share represents one taxi. Section 2.04(b) of the UITD bylaws states that "[m]onthly membership assessments shall be made of each member, in reasonable accordance with costs of operation of the Corporation, but only after approval in amount by 2/3 of the Board of Directors."

Appellants allege that the UITD Board of Directors falsely and fraudulently represented to them that the Board, pursuant to the terms of the bylaws, assessed the membership fee per each vehicle owned, and not on a per member basis. In 2003 and 2005, appellant confronted the president of the Board, Martin Shatakhyan, who confirmed that it was the decision of the Board to make assessments on a per vehicle basis, and that their actions were proper and in accordance with UITDs bylaws. Appellants claim that these representations were false, but that in reliance upon these representations they paid their monthly membership assessments on a per-taxicab basis.

Appellants filed a complaint alleging causes of action for intentional misrepresentation, negligent misrepresentation, and money had and received. Respondent demurred. Appellants then filed a first amended complaint alleging the same causes of action, to which respondent again demurred. The court sustained the demurrer in its entirety with 10 days leave to amend. Appellants filed a second amended complaint alleging, in addition to the initial causes of action, unjust enrichment and breach of membership agreement. In this complaint, appellants allege that the UITD Board of Directors knew that section 2.04(b) of the bylaws required that UITD assess membership fees or dues equally by member, without respect to the number of vehicles owned by a member. Respondent again demurred.

The court tentatively ruled to sustain the demurrer without leave to amend, but deferred its ruling to another hearing, and ordered counsel to meet and confer face-to-face. The court determined that the only issue with respect to the interpretation of the bylaws was whether or not there was a proper two-thirds vote by the Board to approve the assessments made on a per-taxi basis, and ordered respondent to provide appellant with the minutes of the Board demonstrating that the Board actually held the two-thirds vote. Respondent provided the documentation and appellant acknowledged that all assessments were approved by a two-thirds vote. The trial court sustained the demurrer to appellants second amended complaint without leave to amend, but stated that appellant could make a motion to reconsider the final order if it could present evidence to support an amendment. Appellants failed to file a motion for reconsideration and the trial court dismissed the case. Appellants timely appealed.

DISCUSSION

The trial court found that "the plain meaning of the bylaw provision in question is not consistent with the plaintiffs [appellants] theory of the case." The court held that the plain meaning of section 2.04(b) of the bylaws allows the board to assess each member in any manner within its discretion, as long as the total amount is in reasonable accord with the costs of the operation of the corporation. Appellants argue that the language, "assessments shall be made of each member," requires that the assessment must be identical for each member, but do not contend that the Boards assessment per taxicab owned is not reasonably related to the costs of the operation of UITD. The trial court held that the bylaws do not preclude an assessment based on the number of taxies owned, finding appellants claims to be based upon a misreading of section 2.04(b).

A. Standard of Review

On appeal, a dismissal entered after an order sustaining a demurrer is reviewed de novo, testing the legal sufficiency of the complaint. (City of Morgan Hill v. Bay Area Air Quality Management Dist. (2004) 118 Cal.App.4th 861, 869.) To assess whether a cause of action is stated as a matter of law, independent judgment is exercised; we read the petition as a whole, with its parts viewed in context. (Ibid.) We must deem true material facts properly pled, and accept as true all facts implied or reasonably inferred from those expressly alleged. (Ibid.) If a cause of action is stated under any possible legal theory, the demurrer is overruled, but if no liability exists as a matter of law, the trial courts order sustaining the demurrer is affirmed. (Id. at p. 870)

We review the issue of whether leave to amend should be granted under an abuse of discretion standard. (Ellenberger v. Espinosa (1994) 30 Cal.App.4th 943, 947.) If a reasonable possibility that the pleading can be cured by amendment exists, the trial courts ruling is reversed. (Ibid.) The burden is on the plaintiff to demonstrate the manner in which the complaint could be amended. (Hendy v. Losse (1991) 54 Cal.3d 723, 742.)

B. The Plain Language Interpretation of the Bylaws

A court ascertains the intention of the parties in a contract by determining what the parties meant by the words that they used. (Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co. (1968) 69 Cal.2d 33, 38.) Because the meaning of words or groups of words varies with their surrounding circumstances and verbal context, the meaning of a writing can only be ascertained in light of all the circumstances that reveal the sense in which the writer used the words. (Id. at p. 39) The exclusion of relevant extrinsic evidence is justified if it is feasible to determine the meaning the parties gave to the words from the instrument alone. (Id. at p. 38)

When the meaning of words used in a contract is disputed, the trial court must, however, provisionally receive any proffered extrinsic evidence that is relevant to show whether the contract is reasonably susceptible of a particular meaning. (Wolf v. Superior Court (2004) 114 Cal.App.4th 1343, 1350.) If, in light of the extrinsic evidence, the court decides the language is reasonably susceptible to the interpretation urged, the extrinsic evidence is admitted to aid in interpreting the contract. (Id. at p. 1351.) The trial courts determination of whether an ambiguity exists is a question of law, subject to independent review on appeal. (Ibid.)

The essence of appellants theory is that membership assessments based on the number of taxis, instead of per member, is in violation of Section 2.04(b) of the bylaws, and that respondent misled appellants by stating that the assessments were levied in accordance with the bylaws. However, the plain meaning of the bylaw language, "monthly membership assessments shall be made of each member, in reasonable accordance with costs of operation of the Corporation, but only after approval in amount by 2/3 of the Board of Directors," does not indicate that membership fees must be identical for each member. Rather, it states that the UITD board will determine the membership fees, which are valid if two thirds of the board approves and the fees are rationally related to the costs of the corporation. There is a rational relationship between a larger fee assessment and the ownership of multiple taxis, corresponding to the greater use of UITDs services by multiple owners than by members who own only a single taxi. An assessment based upon use of services is in accord with the costs of the operation of the corporation as set forth in the bylaws.

The trial court gave appellants the opportunity to submit extrinsic evidence, but none was submitted by appellant. Accordingly, the trial court properly relied on the plain meaning of the documents.

C. Misrepresentation, Unjust Enrichment, and Breach of Membership Agreement

All of appellants alleged causes of action hinge upon the interpretation of the meaning of the bylaws. The plain language of the bylaws simply does not mean what appellants assert. Because membership assessments can vary per member at the discretion of the Board, there was no misrepresentation or breach of the membership agreement by UITD. The demurrer was sustained because the bylaws expressly permit the board to assess each member based on ownership of taxis.

C. Leave to Amend Complaint

The general rule is that it is an abuse of discretion to sustain a demurrer without leave to amend unless the complaint shows that it is incapable of amendment. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.) However, where the nature of the plaintiffs claim is clear, but under substantive law no liability exists, leave to amend should be denied because an amendment could not change the result. (Ibid.)

Appellants argue that they can amend the first cause of action for intentional misrepresentation by adding to the second amended complaint a statement that the appellants representative believed that the president of UITD, Mr. Shatakyan, had the authority to speak for UITD, and did so. Adding this to the second amended complaint, however, will not create a valid cause of action. All of appellants claims are based upon a misreading of the plain meaning of section 2.04(b). Adding the statement that the president had the authority to speak for UITD and did so does not change the plain meaning of the bylaws. Appellant has not shown that the complaint can be amended to cure the underlying defect. The demurrer was properly sustained without leave to amend.

DISPOSITION

The judgment is affirmed. Respondent is to recover its costs on appeal.

We concur:

PERLUSS, P. J.

JACKSON, J.


Summaries of

Lemma v. United Independent Taxi Drivers, Inc.

Court of Appeal of California
Sep 16, 2008
B195240 (Cal. Ct. App. Sep. 16, 2008)
Case details for

Lemma v. United Independent Taxi Drivers, Inc.

Case Details

Full title:DANIEL LEMMA et al., Plaintiffs and Appellants, v. UNITED INDEPENDENT TAXI…

Court:Court of Appeal of California

Date published: Sep 16, 2008

Citations

B195240 (Cal. Ct. App. Sep. 16, 2008)