A Gordon Rees Scully Mansukhani San Diego trial team, including Senior Partner Roger Mansukhani, Senior Counsel Amanda Herron, and Associate Collin Cresap, won a series of motions that permanently eliminated the plaintiff’s most critical theories of liability and remedies available at trial. These strategic victories highlight the importance of retaining trusted counsel to navigate pleading standards and develop factual records to eliminate high-value claims and damages theories that plaintiffs use to justify overinflated settlements and fee awards at trial.
The Court Grants GRSM’s First Demurrer and Motion to Strike the Plaintiff’s First Amended Complaint with Leave to Amend in March 2026
In a contested housing discrimination case where the plaintiff sought to recover millions of dollars in punitive damages, GRSM successfully demurred to and moved to strike punitive damages from the First Amended Complaint (FAC), which suggested that separate actions of different defendants could be aggregated in order to satisfy heightened pleading standards for punitive damages and intentional infliction of emotional distress (IIED).
The defendants include a Section 8 housing provider and its individual employees, who denied the plaintiff’s housing application for the stated reasons that he engaged in disrespectful behavior toward the employees during the application process and his application was incomplete due to a lack of documents. The plaintiff’s FAC recharacterizes the defendants’ stated reason for the denial as pretextual, alleging that the housing application was denied because one defendant stated that she did not like Egyptians.
On March 6, 2026, the Court entered an order which sustained GRSM’s first demurrer and granted the motion to strike punitive damages with leave to amend, allowing the plaintiff another opportunity to cure his defective pleading. The order refers to the heightened pleading standards that IIED requires a showing of “extreme and outrageous” misconduct, and punitive damages can only be asserted against an employer upon a showing of clear and convincing evidence suggesting either “the employer had advance knowledge of the unfitness of the employee and … ratified the wrongful conduct … or was personally guilty of oppression, fraud, or malice.” (Code Civ. Proc., § 3294, subd. (b).) The plaintiff’s FAC met neither standard because, according to the Court, none of the defendants’ actions on their own were sufficient, and there was no known authority to support the plaintiff’s position that the separate actions of different defendants can be evaluated jointly in order to satisfy pleading standards.
After the Plaintiff Files a Procedurally Defective Second Amended Complaint, GRSM Files a Second Demurrer and Motion to Strike Punitive Damages in April 2026
By the time the plaintiff filed his Second Amended Complaint (SAC), his counsel had already completed written discovery and fact witness depositions and received the defendants’ production of more than 1,200 documents. Despite having two years of litigation and discovery to develop an adequate factual record, the plaintiff’s SAC included only three different allegations compared to his defective prior complaints, including allegations that defendants’ property manager sent an email which stated only “we’re going to deny him”, which prompted another employee to send a responsive email recommending the property manager meet with the plaintiff to explain that his housing application was being denied due to incomplete documents, and after sending the internal emails, the property manager informed the plaintiff that his housing application was denied because the plaintiff engaged in disrespectful behavior towards the defendants’ employees.
GRSM Senior Counsel Amanda Herron drafted and timely filed a second demurrer to the IIED cause of action and motion to strike punitive damages, arguing arguendo that even if the new allegations in the SAC were true, the allegations would establish at most that the defendants’ management personnel denied the plaintiff’s housing application for the stated reasons that his application was incomplete due to lack of documents and the plaintiff behaved disrespectfully towards staff members, and the parties disagree about the reasons why the application was denied.
Based on the allegations in the SAC, GRSM analogized and asked the Court to apply the rule announced in the Janken case, that “[a] simple pleading of personnel management activity is insufficient to support a claim of intentional infliction of emotional distress, even if improper motivation is alleged.” (Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 79 [affirming order sustaining demurrer to IIED cause of action without leave to amend in FEHA employment case where the plaintiff was a former employee].) Under GRSM’s proposed interpretation, the Janken rule would preclude tort liability for IIED in FEHA housing cases because denying a housing application is an ordinary “personnel management activity”.
However, the Janken case does not address, and no published California appellate decision appears to extend its reasoning to the different context of housing eligibility determinations involving non-employees, which are governed by a different statutory scheme under Government Code section 12955. By asking the Court to treat housing decisions as equivalent to employment personnel management decisions for purposes of limiting tort exposure, GRSM presented a legal question that existing cases did not directly answer, until now.
The Court’s Order on June 11, 2026, Grants GRSM’s Dispositive Pleadings Motions Without Leave to Amend, Dismisses The Plaintiff’s IIED Cause of Action, Eliminates Punitive Damages, And Favorably Resolves a Potential Issue of First Impression
On June 11, 2026, the Court entered an order sustaining defendants’ second demurrer to the IIED cause of action and striking punitive damages from the SAC permanently without leave to amend. The Court’s order limits the causes of action and remedies the plaintiff can recover at trial, and resolves an apparent issue of first impression: whether the Janken rule precluding tort liability for IIED arising from personnel management decisions extends beyond the employment context to shield analogous decision-making from tort liability in a FEHA housing case.
The Court’s order unambiguously resolves the apparent issue of first impression and expressly applies Janken in this FEHA housing discrimination case, holding: “As Janken instructs, the remedy for the plaintiff’s complaint of allegedly improper personnel management decisions like the ones described (in the SAC) is a suit for discrimination, not IIED, because managing personnel activity does not constitute outrageous conduct.” By extending the Janken rule to a housing decision and using it as a basis to eliminate an IIED cause of action, the Court necessarily determined that the rule is not confined to employment relationships and extends to analogous decision-making in the housing context.
Based on the same reasoning that the plaintiff’s SAC failed to meet the “extreme and outrageous” pleading standard for IIED, the Court also determined that the SAC failed to establish that any of the defendants were “personally guilty of oppression, fraud, or malice” to plead punitive damages. Last, the Court accepted GRSM’s arguments for denying leave to amend, finding there was no reasonable possibility the plaintiff could cure his defective pleadings based on his three prior defective complaints, completion of fact discovery and depositions, and proximity to trial. (See e.g., Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967, quoting Banerian v. O’Malley (1974) 42 Cal. App. 3d 604, 610 [denial of leave to amend is justified when it is “probable from the nature of the defects and previous unsuccessful attempts to plead that plaintiff cannot state a cause of action”].)
Takeaways from the Ruling
GRSM’s recent victories illustrate how strategic motion practice can dramatically reduce risk and reshape a case’s trajectory. In this case, the Court’s ruling permanently dismissing the IIED cause of action and eliminating the possibility of a punitive damages award at trial surgically removes the aspects of the case that the plaintiff could have used to inflame the jury, expand discovery disputes, and drive disproportionate case valuations. Plaintiffs’ attorneys often use punitive damages, individual liability, and IIED to leverage overinflated settlement values and fee awards, and strategic motion practice may be necessary to strip opposing counsel of their leverage.
Equally important, the ruling suggests that courts will not allow plaintiffs to transform ordinary business operational decision-making into tort claims through artful pleading or aggregation theories, particularly after full discovery confirms the absence of facts necessary to meet heightened pleading standards.
The practical implications of this case extend beyond the contexts of housing and employment cases. Businesses should consult experienced counsel to discuss strategic motion practice aimed at eliminating high-value claims that plaintiffs often rely on for leverage. If you have any questions about this case or any other legal developments, please contact the author, Amanda Herron, and Gordon Rees Scully Mansukhani’s Employment team for more information.