Judge: Anne Richardson, Case: 21STCV39151, Date: 2023-03-16 Tentative Ruling
Case Number: 21STCV39151 Hearing Date: March 16, 2023 Dept: 40
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JOHNSON SOLAR CORP., a California Corporation, Plaintiff, v. CHENG WAN, an individual; CONTINENT SOLUTION SYSTEM, INC., a California
Corporation; B.Y. INTERNATIONAL INC., a California Corporation; and DOES 1-10,
inclusive, Defendants. ______________________________________ CONTINENT
SOLUTION SYSTEM INC., California corporation, Cross-Complainant, v. CACBG INC, a corporation; JOHNSON SOLAR CORP., a corporation; WEIPING
JING, an individual; and ROES 1-10 inclusive, Cross-Defendants. |
Case No.: 21STCV39151 Hearing Date: 3/16/23 Trial Date: 10/24/23 [TENTATIVE] RULING RE: Plaintiff/Cross-Defendant
Johnson Solar Corp. and Cross-Defendant Weiping Jing’s Demurrer to Third Amended
Cross-Complaint. |
MOVING PARTY: Plaintiff/Cross-Defendant
Johnson Solar Corp. and Cross-Defendant Weiping Jing.
OPPOSITION: Defendant Continent
Solution System, Inc.
REPLY: Plaintiff/Cross-Defendant
Johnson Solar Corp. and Cross-Defendant Weiping Jing.
Plaintiff/Cross-Defendant Johnson Solar Corp. (“Johnson Solar”)
and Defendant/Cross-Complainant Continent Solution System Inc. (“CSS”) cross sue
one another. Johnson Solar’s Complaint argues that CSS, its owner Cheng Wan, and
another company owned by Mr. Wan (B.Y. International, Inc.) owe Johnson Solar $475,869.79
in fraudulent and duplicative charges related to freight forwarding services supplied
by CSS. In turn, CSS’s Third Amended Cross-Complaint (“TAXC”) alleges that Johnson
Solar, its owner Weiping Jing, and CACBG, Inc. are indebted to CSS for services
rendered by CSS to CACBG, for which Johnson Solar is liable based on a Guarantee
Contract between the parties, where Johnson Solar is indebted to CSS in the
form of generators and/or $100,000 weekly installments until all debts are
cleared. As Cross-Defendants, Johnson Solar and Jing now bring the instant opposed
demurrer against CSS’s TAXC’s second through seventh causes of action—as directed
to Johnson Solar and Ms. Jing, not CACBG—on grounds of insufficiency and uncertainty
in pleading.
According to Johnson Solar’s complaint, in or around June 2020,
a representative of Shandong Kuouantong Supply Chain Management Co., Ltd. (“SDKAT”)—the
freight forwarder for Plaintiff/Cross-Defendant Johnson Solar Corp. (“Johnson Solar”),
a company owned by Cross-Defendant Weiping Jing (“Jing”) in the business of importing
agricultural products, such as greenhouses and container houses—introduced a representative
of Johnson Solar to Defendant Cheng Wan (CSS’s owner), a receiving agent for cargo
containers in the Port of Long Beach, Los Angeles County, California.
After negotiation between the parties, on or about June 4, 2020,
Defendant Wan had his employee Jhonny Coronado email a Power of Attorney to Plaintiff
Johnson Solar to be filed with Department of the Treasury, U.S. Customs Service.
In said Power of Attorney, Plaintiff Johnson Solar appointed BYI to act through
its licensed officers as Johnson Solar’s agent in connection with the importation,
transportation, or exportation of any merchandise shipped or consigned by or to
Johnson Solar, and to receive any merchandise deliverable to Johnson Solar. During
these transactions, Defendant Wan represented to Johnson Solar that Wan owned Defendant
B.Y. International, Inc. (“BYI”), among other companies.
On or about June 30, 2020, Wan wrote to Johnson Solar via social
media messaging application WeChat, representing that Wan owned a trucking company
in California—i.e., Defendant/Cross-Complainant
Continent Solution System Inc. (“CSS”)—and solicited Johnson Solar to transfer
to Wan and CSS all of Plaintiff’s logistical needs in connection with incoming cargo
containers. (Johnson Solar’s Complaint alleges that CSS is the alter ego of Defendant
Wan.) Wan promised that this switch would bring cost reductions the Johnson Solar.
Johnson
Solar thereafter agreed to switch all its logistical needs to Wan and his companies.
The parties disagree as to what occurred next.
Johnson Solar’s Complaint alleges that during the period of June
2020 to June of 2021, Johnson Solar paid almost $2,000,000.00 to Wan according to
the invoices issued by Mr. Wan’s trucking company, CSS. However, sometime following
these dates Johnson Solar alleges to have discovered that Defendants Wan and his
trucking company CSS were fraudulently billing numerous times for the same work.
For example, on June 21, 2021, Johnson Solar alleges that Wan
and his trucking company CSS sent Johnson Solar Invoice No. 16368 regarding a container
designated as “COSU6299760430/CLU6973543” (or “Container A”) in the sum of $8,110.00,
which Johnson Solar paid through its Chase bank account on July 19, 2021 with a
note referencing Container A. However, on August 14, 2021, Wan represented to Johnson
Solar that Container A was still unreleased by the carrier and accruing demurrage
charges and further represented that Invoice 16368 remained unpaid. Wan also presented
to Johnson Solar that Johnson Solar owed Wan and CSS $211,817.59 for services related
to Container A and other containers. By August 16, 2021, Johnson Solar—at Wan and
CSS’s insistence—paid the entire sum of $211,817.59 by cash. (Johnson Solar alleges
that this payment was thus a duplicate payment for the release of Container A, as
well as other containers; see infra.) Since this payment, Johnson Solar has repeatedly
requested and Wan has refused to issue a receipt to Johnson Solar for the cash payments
made by on August 16, 2021 under the Defendants’ “August 14, 2021 Statement.” Despite
these two payments, Johnson Solar alleges that Wan and CSS still failed to release
Container A to Johnson Solar, with CSS representing to Johnson Solar on September
3, 2021 that CSS was “waiting from the Co-loader to process their release with the
[shipping] carrier.” By September 15, 2021, Container A incurred additional $18,205.00
terminal demurrage charges and was at risk of being auctioned off to pay for said
charges. Johnson Solar learned that information from a trucking company, and Johnson
Solar paid the carrier $18,205 directly to salvage Container A.
Johnson Solar alleges that similar fact patterns occurred in
relation to the invoicing of Defendant CSS’s services for other containers, including
CSS’s Invoice No. 16306, associated with container “MRKU0019709” (or “Container
B”), for whose release Johnson Solar first paid Wan and CSS $50,000.00 on June 1,
2021, only for Wan and CSS to later charge Johnson Solar the $211,817.59 discussed
ante for the release of Containers A and B, as well as other services, which Johnson
Solar paid on August 16, 2021. Johnson Solar also alleges that CSS: thrice charged
Johnson Solar, in different amounts, for Invoice 14818, in the total amount of $140,184.10;
four times charged Johnson Solar for chassis fees in Invoice 15508, relating to
CSS’s failure to timely remove container chassis from the carrier in a timely manner,
resulting in fees accrued against the containers’ release; and twice charging chassis
fees, in different amounts, for Invoices 13644 and 13816.
Based on these facts, on October 20, 2021, Johnson Solar brought
this action against Wan, CSS, and B.Y. International, Inc., alleging:
(1) Constructive Fraud against, against
Wan, CSS, and B.Y. International, Inc., based on fraudulent duplication of charges
for the same services;
(2) Breach of Written contract, against
Wan, CSS, and B.Y. International, Inc., based on the Defendants’ failure to release
Containers A and B after Johnson Solar had performed all its contractual obligations;
(3) Fraud, against Wan, CSS, and B.Y.
International, Inc., based on the misrepresentations made by the Defendants’ regarding
the cheaper cost of using the Defendants’ services, Wan’s ownership of B.Y. International,
Wan’s experience as a logistical broker, and the promise that the Defendants would
issue receipts for cash payments, on which Johnson Solar relied, resulting in damages
of $332,568.79 when Johnson Solar was induced into paying over $2,000,000.00 for
some duplicate services;
(4) Conversion, against Wan, CSS, and
B.Y. International, Inc., in the amount of $332,568.79, based on the Defendants’
duplicate and fraudulent invoicing for CSS’s services, and the Defendants’ failure
to issue a receipt for a cash payment of $143,301.00, resulting in damages of $475,869.79;
and
(5) Money Had and Received, against
Wan, CSS, and B.Y. International, Inc., in the amount of $475,869.79 (“Johnson Solar
Damages”).
On the other hand, CSS—Wan’s trucking company—alleges that beginning
in April or May 2020, CSS began providing forwarding services for ten shipments
on behalf of CACBG and Johnson Solar. During that time, Johnson Solar was also using
CSS for freight forwarding services and represented through Jing to have the authority
to enter binding commitments for services on behalf of CACBG and ensure payment
therefor. Beginning in August 2020 and up through November 18, 2022 (when the TAXC
was filed), CSS repeatedly demanded payment for services from Johnson Solar, leading
to a $343,867.90 deficit for CSS. Johnson Solar later promised CSS to pay for the
amounts owed by CACBG and further promised that if CACBG failed to pay these invoices,
Johnson Solar would be liable to CSS for those services. In or about early 2021,
toward the end of the ten shipments, Johnson Solar made oral and written requests
that invoices addressed to Johnson Solar be sent by CSS to CACBG even though Johnson
Solar requested the services that CSS provided to CACBG and agreed to pay CSS for
outstanding debts from CACBG to CSS. Finally, on June 3, 2021, Johnson Solar put
its promise to pay in a written contract (the “Guarantee Contract”), promising,
inter alia, to pay CSS in generator units of equivalent value to $343,867.90 if
CACBG should fail to pay its outstanding debt to CSS by June 30, 2021, and further
agreeing to pay CSS $100,000 per week for every week that CACBG did not fulfill
its obligation to CSS until all obligations were repaid. (The pleadings are
evidence before the Court do not suggest that Johnson Solar or Jing own CACBG,
but rather, that Johnson Solar and Jing acted on CACBG’s behalf.)
Despite these agreements, CSS failed to receive compensation
for the outstanding debts owed by CACBG. Thus, on January 13, 2022, CSS brought
a Cross-Complaint against Johnson Solar, Jing (Johnson Solar’s owner), and CACBG.
CSS filed a First Amended Cross-Complaint (“FAXC”) on February 18, 2022, alleging
eleven causes of action against Johnson Solar, Jing, and CACBG, including (1)-(2)
two counts of Breach of Contract, (3) Breach of Implied Contract, (4) Negligent
Misrepresentation, (5) Promissory Fraud (False Promise), (6) Fraud in the Inducement,
(7) Concealment, (8) Violation of Bus. & Prof. Code § 17200, (9) Goods and Services
Rendered, (10) Account Stated, and (11) Unjust Enrichment. Johnson Solar filed a
demurrer to the FAXC’s eleven causes of action on April 15, 2022, which the Court
sustained in full on May 24, 2022, without leave to amend as to the second and third
causes of action.
On June 30, 2022, CSS filed a Second Amended Cross-Complaint
(“SAXC”) alleging seven causes of action against Johnson Solar, Jing, and CACBG,
including (1) Breach of Contract, (2) Negligent Misrepresentation, (3) Promissory
Fraud (False Promise), (4) Violation of Bus. & Prof. Code § 17200, (5) Goods
and Services Rendered, (6) Account Stated, and (7) Unjust Enrichment. Johnson Solar
filed a demurrer against the SAXC’s seven causes of action, which the Court sustained
in full on November 8, 2022, with leave to amend as to all claims.
On November 18, 2022, CSS filed its operative Third Amended Cross
Complaint (“TAXC”) alleges eight causes of action:
(1) Breach of Contract, against CACBG and
Roes 1-2, based on its failure to pay $343,867.90 (“CSS Outstanding Debt”) to CSS
for services rendered by CSS to CACBG;
(2) Breach of Contract, against Johnson
Solar and Roes 3-4, for breach of the Guarantee Contract, in failing to, after
June 30, 2021, pay CSS with generators in the equivalent value of $343,867.90, or
the weekly sum of $100,000 until obligations were paid;
(3) Negligent Misrepresentation, against
Jing, Johnson Solar, and Roes 5-7, based on Jing’s and Johnson Solar’s misrepresentations
as to having the authority to negotiate for contracts on behalf of CACBG and bind
CACBG to payments for those services;
(4) Fraudulent Misrepresentation, against
Jing, Johnson Solar, and Roes 5-7, based on Jing’s and Johnson Solar’s misrepresentations
as to having the authority to negotiate for contracts on behalf of CACBG and bind
CACBG to payments for those services;
(5) Violation of Business and Professions
Code § 17200, against all Cross-Defendants, based on the facts underlying the causes
of action discussed ante, including the unlawful, unfair, and fraudulent practice
of ordering services in interstate commerce with no intention on paying for the
services;
(6) Goods and Services Rendered, against
all Cross-Defendants, based on Johnson Solar and Jing requesting CSS’s trucking
services for CACBG, which CSS performed for the benefit of the Cross-Defendants
in the amount of $343,867.90;
(7) Account Stated, against all Cross-Defendants,
in the amount of $343,867.90, based on an account stated in writing by and between
CSS and the Cross-Defendants agreeing to the Cross-Defendants’ liability on this
debt; and
(8) Unjust Enrichment, against CACBG and
Roes 8-10, in the among of $343,867.90, based on the benefit received by CACBG,
at CSS’s expense.
On December 20, 2022, Johnson Solar and Jing made the instant
Demurrer to CSS’s TAXC on grounds of insufficiency and uncertainty in pleading as
to the second through seventh causes of action stated therein. CSS filed an opposition
to the demurrer on March 3, 2023, against which Johnson Solar and Jing filed a reply
on March 9, 2023.
Sufficiency Standard [Code Civ. Proc. § 430.10, subd. (e)]
A demurrer for sufficiency tests whether the complaint states
a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code
Civ. Proc., § 430.10, subd. (e).) This device can be used only to challenge defects
that appear on the face of the pleading under attack or from matters outside the
pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d
311, 318.) “To survive a [general] demurrer, the complaint need only allege facts
sufficient to state a cause of action; each evidentiary fact that might eventually
form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S.
Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) In testing the sufficiency
of the cause of action, the demurrer admits the truth of all material facts properly
pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-67.)
A demurrer, however, “does not admit contentions, deductions or conclusions of fact
or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) When considering
demurrers, courts read the allegations liberally and in context. (Taylor v. City
of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228, disapproved
on other grounds, Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th
1158, 1162.) The face of the complaint includes exhibits
attached to the complaint. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91,
94.) If facts appearing in the exhibits contradict those alleged, the facts
in the exhibits take precedence. (Holland v. Morse Diesel Intern., Inc. (2001)
86 Cal.App.4th 1443, 1447.)
Uncertainty Standard [Code Civ. Proc. § 430.10, subd. (f)]
A demurrer to a pleading lies where the pleading is uncertain,
ambiguous, or unintelligible. (Code Civ. Proc. § 430.10, subd. (f).) “A demurrer
for uncertainty is strictly construed, even where a complaint is in some respects
uncertain, because ambiguities can be clarified under modern discovery procedures.”
(Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) As
a result, a special demurrer for uncertainty is not intended to reach failure to
incorporate sufficient facts in the pleading but is directed only at uncertainty
existing in the allegations already made. (People v. Taliaferro (1957) 149
Cal.App.2d 822, 825.) Where complaint is sufficient to state a cause of action and
to apprise defendant of issues he is to meet, it is not properly subject to a special
demurrer for uncertainty. (See ibid.; see also Gressley v. Williams
(1961) 193 Cal.App.2d 636, 643 [“[a] special demurrer [for uncertainty] should be
overruled where the allegations of the complaint are sufficiently clear to apprise
the defendant of the issues which he is to meet”].)
Second Cause of Action, Breach of Contract (Count II):
OVERRULED.
“A contract is a voluntary and lawful agreement, by competent
parties, for a good consideration, to do or not to do a specified thing.” (Robinson
v. Magee (1858) 9 Cal. 81, 83.) “To prevail on a cause of action for breach
of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance
of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4)
the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th
1182, 1186.)
CSS alleges Breach of Contract against Johnson Solar and Roes
3-4 on the grounds that Johnson Solar breached the Guarantee Contract by failing
to, following CACBG’s nonpayment of the CSS Outstanding Debt on June 30, 2021, pay
CSS with generators in the equivalent value of $343,867.90, or the weekly sum of
$100,000 until all outstanding balances were cleared, causing damages of at least
$343,867.90. (TAXC, ¶¶ 43-52.)
Johnson Solar and Jing argue that the second cause of action
is defective (1) for failure to plead consideration for the Guarantee Contract and
(2) because the TAXC contradicts the SAXC on various grounds—sham pleading—including,
e.g., allegations related to Exhibit B attached to the SAXC and TAXC and the allegations
that Johnson Solar breached the Guarantee Contract by failing to deliver to CSS
generator units in the amount of $343,867.90 rather than “equivalent to the amount
due,” as per the Guarantee Contract attached at Exhibit C to the TAXC. (Demurrer,
11:19-14:10, 14:11-16:10.)
In opposition, CSS argues that (1) the second cause of
action adequately alleges consideration in paragraph 28 by stating that “[i]n consideration
for the [Guarantee] Contract, (a) … Johnson Solar and … CSS agreed to continue to
do business and maintain their business relationship on incoming shipments, including,
without limitation, shipments not connected with Cross-Defendant CACBG,” “(b) …
Johnson Solar would inform its manufacturers in China that Cross-… Johnson Solar
would continue to use … CSS as a freight forwarder for such manufacturers’ shipments,
and (c) payments for these manufacturers’ shipments would be settled on shipment-by-shipment
bases with no impact from the aforesaid outstanding balance due [to CSS]” and (2)
the second cause of action is well stated and does not contradict the SAXC. (Opp’n,
4:24-6:2, 6:3-7:15.)
In reply, Johnson Solar and Jing reiterate their points in the
motion as to (1) lack of consideration and (2) sham pleading. (Reply, 2:17-3:13,
3:14-4:3.)
The Court finds that the second cause of action is sufficiently
stated.
Briefly, the Court notes that the May 24, 2022 order finding
lack of consideration as to the Guarantee Contract in the FAXC is not binding on
this Court’s determination as to the same pleadings in the TAXC. “Except in circumstances governed by Code of
Civil Procedure section 1008, if an action is transferred from one department
to another, the latter may issue a ruling inconsistent with a prior
interlocutory order made in the first department.” (Emerald Bay Community Assn. v. Golden Eagle
Ins. Corp. (2005) 130 Cal.App.4th 1078, 1086, citation omitted.)
Moving to consideration, the Court finds that adequate consideration
is pleaded in the TAXC for the purposes of the Guarantee Contract at paragraph 28.
Consideration is defined as any lawful benefit conferred or detriment suffered.
(Civ. Code, §1605.) CSS’s suffered detriment in entering the Guarantee Contract,
as pleaded in the TAXC, is the sufferance to continue doing business with Johnson
Solar and CACBG despite CACBG owing CSS $343,867.90 and CSS’s agreement to handle
payments on a shipment-by-shipment basis. Johnson Solar and Jing’s demurrer as grounded
in consideration arguments therefore fails.
As to sham pleading, the Court does not find that the pleadings
in the TAXC contradict those of prior pleadings. While the Court recognizes that
the grounds for breach of contract against Johnson Solar have changed from ‘failure
to pay $343,867.90 due to CSS’ to ‘failure to deliver generators in the amount of
$343,867.90 to CSS’ (compare SAXC, ¶ 43(a), with TAXC, ¶ 48), such a change in pleadings
simply responds to this Court’s conclusion on November 8, 2022 that the attached
Guarantee Contract to the SAXC as Exhibit C—also attached as Exhibit C to the TAXC—contradicted
pleadings that Johnson Solar breached contract by failure to pay $343,867.90 rather
than by failing to turn over generators of that value over to CSS. (11/8/22 Minutes,
pp. 2-3.) Further, there is nothing sham about the TAXC stating that Johnson Solar
breached the Guarantee Contract by failing to turn over generators amounting to
a value of $343,867.90 rather than stating Johnson Solar should have turned
over “Generator units equivalent to the amount due” (see TAXC, Ex. C [quoted language])
because, per the pleadings, the amount due to CSS as a result of CACBG failing to
pay the CSS Outstanding Debt is $343,867.90. (Compare TAXC, ¶¶ 22, 27 [background],
43 [incorporation], 48 [breach of contract], with TAXC, Ex. C.)
Johnson Solar and Jing’s demurrer to the second cause of action
is thus OVERRULED.
Third and Fourth Causes of Action, Negligent and Fraudulent
Misrepresentation: SUSTAINED, With Leave to Amend.
Negligent misrepresentation involves (1) an assertion, as a fact,
of that which is not true, (2) by one who has no reasonable ground for believing
it to be true, (3) made with intent to induce the recipient to alter his position
to his injury or his risk, (4) with justifiable reliance on the representation,
and (5) resulting damage. (B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th
823, 834.) Intentional misrepresentation involves (1) a knowingly false (2) representation
by the defendant, (3) made with an intent to deceive or induce reliance, (4) justifiable
reliance by the plaintiff, and (5) resulting damages.” (Service by Medallion,
Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.)
Allegations of fraud “must be pled with more detail than other
causes of action.” (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC
(2007) 158 Cal.App.4th 226, 240.) “Every element of the cause of action for fraud
must be alleged . . . 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. [Citations.]” (Committee on Children’s Television, Inc.
v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) Accordingly, a plaintiff
pleading fraud must plead facts showing “how, when, where, to whom, and by what
means” the allegedly fraudulent representations were tendered. (Lazar v. Superior
Court (1996) 12 Cal.4th 631, 645.)
The third and fourth causes of action alleged Negligent and Fraudulent
Misrepresentation against Jing, Johnson Solar, and Roes 5-7, based on Jing’s and
Johnson Solar’s misrepresentations as to having the authority to negotiate for contracts
on behalf of CACBG and ensure payment from CACBG for those services. (TAXC, ¶¶ 54,
61.)
In relevant part, the demurrer by Johnson Solar and Jing argues
that these claims “once again fail to state facts sufficient to constitute a cause
of action because [CSS] fails to allege negligent [and intentional] misrepresentation
with the requisite specificity” and because these claims are duplicative of the
breach of contract claim. (Demurrer, 17:24-26, 18:10-14; see Demurrer, 16:11-18:24
generally.)
In opposition, CSS argues that (1) its fraud claims are not duplicates
of the second cause of action because they focus on the harm to CSS through misrepresentations
by CSS rather than harm through breach of the Guarantee Contract (Opp’n, 7:17-8:7)
and (2) the fraud claims are pleaded with sufficient particularity because they
sufficiently indicate that Jing made representations on behalf of Johnson Solar,
either orally or through WeChat, as to their authority to bind CACBG to contracts
and ensure payment by CACBG (Opp’n, 8:8-9:4).
In reply, Johnson Solar and Jing reiterate their points on demurrer,
focusing on the duplicative nature of the fraud claims and the lack of specificity
in their pleadings. (Reply, 4:4-27.)
The Court notes that the fraud claims are not duplicative of
the second cause of action because the claims deal with different primary rights,
i.e., plaintiff’s right to be free from the particular injury suffered. (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888,
896.) The harm alleged in the second cause of action involves CSS’s right to be
free from Johnson Solar’s failure to, after June 30, 2021, turn over generators
amounting to a value of $343,867.90 or pay $100,000 to CSS for every week that CACBG
failed to pay the CSS Outstanding Debt until all balances were cleared. (TAXC, ¶¶
48-49, 51-52.) The harms involved in the fraud claims involve CSS’s right to be
free from inducement to enter a contract by Johnson Solar and Jing where Jing and
Johnson Solar knew the terms in the contract were not going to be performed. (TAXC,
¶¶ 56-59, 63-66.)
However, the fraud claims are not sufficiently stated as to misrepresentation.
The misrepresentations relied on for these claims are identical: Johnson Solar through
Jing “orally and by WeChat in writing, from April/May 2020 to the present, made
representations of material facts to … CSS in that … Jing and Johnson Solar had
the authority on behalf of … CACBG to negotiate the terms of the Services as well
as retain [CSS] to undertake the Services and bind … CACBG to a commitment to pay
for the Services as well as ensure that … CACBG will timely and fully pay for the
Services.” (TAXC, ¶¶ 54, 61.) From the allegations in the TAXC and the copy of the
Guarantee Contract, it is clear that the pleadings show Jing and Johnson Solar as
having the authority to negotiate terms for services for CACBG, hire CSS on behalf
of CACBG, and bind CACBG to a commitment to pay for those services because the entire
existence of ten shipments’ worth of freight forwarding services from CSS to CACBG
and Johnson Solar and debts incurred therethrough flow from Johnson Solar and Jing
acting to bind CACBG. (TAXC, ¶ 18 [CSS provides freight forwarding services on behalf
of Johnson Solar and CACBG with Johnson Solar acting as CACBG’s agent or representative].)
These representations can therefore not be grounds for fraud, as pleaded, because
Johnson Solar and Jing followed through on such representations.
The only place where Johnson Solar and Jing seemingly misrepresented
their powers was in representing to CSS that they had the ability to ensure CACBG
would timely for services rendered by CSS. It is unclear on what grounds this representation
was made as the TAXC merely alleges that Johnson Solar was an agent or representative
of CACBG (TAXC, ¶ 18) or that CACBG is a client of Johnson Solar’s (TAXC, ¶¶ 57,
64). (See also TAXC, Ex. A [WeChat messages between Jing and CSS tying CACBG to
a “Mr. Peng” but not clarifying relationship between Jing, Johnson Solar, and CACBG].)
At the heart of it, the third and fourth causes of action rely on oral and written
WeChat representations made by Johnson Solar and Jing to CSS. (TAXC, ¶¶ 54, 61.)
However, a review of the WeChat conversations at Exhibit A fails to show Jing ever
represented the ability to ensure CACBG would pay CSS for services rendered,
individually or on behalf of Johnson Solar. (See TAXC, Ex. A.) The body of the TAXC
merely pleads Johnson Solar and Jing made such representations but do not properly
explain the “how, when, where, to whom, and by what means.” (Lazar v. Superior
Court, supra, 12 Cal.4th at p. 645].) For this reason, both claims fail
as challenged.
The demurrer is thus SUSTAINED to the third and fourth causes
of action, With Leave to Amend.
Fifth Cause of Action, Violation of Cal. Bus. & Prof.
Code §§ 17200, et seq.: OVERRULED, as to Johnson Solar; SUSTAINED, With Leave
to Amend, as to Jing.
Unfair competition is any unlawful, unfair, or fraudulent business
practice or act and unfair, deceptive, untrue, or misleading advertising. (Bus.
& Prof. Code, § 17200.) “An unlawful business practice or act within the meaning
of the [Unfair Competition Law (“UCL”)] is an act or practice, committed pursuant
to business activity, that is at the same time forbidden by law.” (Bernardo v.
Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 351 [internal
quotations omitted].) A plaintiff needs to identify statutory, regulatory, or decisional
law that the defendant has violated. (Id. at 352.) Unfair competition “borrows”
violations of other laws and authorizes a separate action pursuant to unfair competition.
(See Farmers Ins. Exch. v. Superior Court (1992) 2 Cal.4th 377, 383.) Unfair
conduct in unfair competition actions must be violative of public policy and “tethered
to specific constitutional, statutory, or regulatory provisions.” (Scripps Clinic
v. Superior Court (2003) 108 Cal.App.4th 917, 940.)
The fifth cause of action alleges violation of section 17200
on the grounds that the practice by Johnson Solar, Jing, and CACBG “of ordering
… [s]ervices in interstate commerce with no intention on paying for the [s]ervices”
is unlawful, unfair, or fraudulent practice. (TAXC, ¶ 69.)
Johnson Solar and Jing demur to this claim on the grounds that
this claim fails because the breach of contract and fraud claims fail on demurrer.
(Demurrer, 18:25-11.)
In opposition, CSS argues the breach of contract and fraud claims
are properly stated and thus properly support this claim. (Opp’n, 9:5-14.)
In reply, Johnson Solar and Jing reiterate their points in the
motion. (Reply, 5:1-6.)
The Court finds that the fifth cause of action survives demurrer
as to Johnson Solar because the second cause of action survived demurrer, where
the unfair conduct by Johnson Solar involves their Contractual Guarantee promise
and failure to either compensate CSS in generators in the equivalent amount of $343,867.90
or pay CSS $100,000 weekly until all debts were cleared. (TAXC, ¶¶ 44-51, Ex. C;
see Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471,
490 [“A breach of contract in turn may form the predicate for a UCL claim, “‘provided
it also constitutes conduct that is “unlawful, or unfair, or fraudulent.”’” (citations
omitted)].)
However, because the second cause of action is only directed
at Johnson Solar, and because the fraud claims directed at Johnson Solar and Jing
failed on demurrer, Jing does not have underlying violations that could advance
an unfair competition claim against her, for which reason the demurrer is SUSTAINED
as to Weiping Jing, With Leave to Amend.
Sixth and Seventh Causes of Action, Goods and Services Rendered
and Account Stated: SUSTAINED, With Leave to Amend, as to Sixth Cause of
Action; OVERRULED, as to Seventh Cause of Action, re: Johnson Solar; SUSTAINED,
With Leave to Amend, as to Seventh Cause of Action, re: Weiping Jing.
“‘As Witkin states in his text, “[a] common count is proper whenever
the plaintiff claims a sum of money due, either as an indebtedness in a sum certain
[Account Stated], or for the reasonable value of services, goods, etc., furnished
[Goods and Service Rendered]. It makes no difference in such a case that the proof
shows the original transaction to be an express contract, a contract implied in
fact, or a quasi-contract.”’” (Utility Audit Co., Inc. v. City of Los
Angeles (2003) 112 Cal.App.4th 950, 958 [internal citations omitted].)
Otherwise stated, the essential elements of any common count are: (1) that defendant
is indebted to plaintiff in a certain sum; (2) for some consideration from plaintiff
(i.e., goods sold, work done, money paid); and (3) defendant’s nonpayment. (Farmers
Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.)
Generally, a complaint that pleads a common count is not subject
to demurrer for not alleging sufficient facts to state a cause of action. (Ibid.)
This general rule does not apply, however, where the common count claim is based
on the same facts asserted in a specific cause of action and the specific cause
of action is defective. (Draper v. Patterson (1958) 156 Cal.App.2d 606, 609.)
In that situation, the specific count and the common count are both subject to demurrer.
(Ibid. [“When common counts are based on the same cause as the specific count,
and the specific count is defective, the entire complaint is demurrable”].)
The sixth cause of action is premised on the grounds that CSS
performed services in favor of Johnson Solar, Jing, and CACBG, for which it has
not been compensated in the amount of $343,867.90. (TAXC, ¶¶ 73-78.)
The seventh cause of action is premised on grounds that
Johnson Solar, Jing, and CACBG are indebted to CSS because the Guarantee
Contract provided that these cross-defendants are indebted to CSS, where CSS
seeks to recover the value of the debt in the amount of $343,867.90. (TAXC,
79-81.)
In their demurrer, Johnson Solar and Jing argue that these claims
fail because they fall with the second cause of action and because “‘nowhere in
Exhibit C does Cross-Defendant agree to pay $343,867.90 on behalf of CACBG, Inc.’”
(Demurrer, 19:24-20:4.)
In opposition, CSS argues that these claims should survive the
demurrer because they are sufficiently pleaded. (Opp’n, 9:15-28.)
In reply, Johnson Solar and Jing reiterate their argument that
the sixth and seventh causes of action fall with the second. (Reply, 5:14-18.)
The Court finds that the sixth cause of action is not
sufficiently stated. Simply, CSS directed allegations at Johnson Solar, Jing,
and CACBG that are more properly stated only against CACBG insofar as the sixth
cause of action alleges that as a result of services rendered by CSS, these
cross-defendants are indebted to CSS in the amount of $343,867.90 where the
TAXC’s pleadings make clear such debt is owed by CACBG. (TAXC, ¶¶ 22, 27, Ex.
C.)
Johnson Solar and Jing’s demurrer is thus SUSTAINED as to
the sixth cause of action, With Leave to Amend.
However, the seventh cause of action is properly stated
against Johnson Solar. The seventh cause of action merely acknowledges an
indebtedness to CSS by Johnson Solar, Jing, and CACBG in the amount of $343,867.90.
Such an indebtedness by Johnson Solar to CSS is demonstrated by the Guarantee
Contract and its term that Johnson Solar would compensate CSS in the amount of
$100,000 every week following June 30, 2021 if CACBG failed to pay its $343,867.90
debt to CSS. (TAXC, ¶ 27, Ex. C.)
However, because the face of the complaint includes exhibits
attached to the complaint (Frantz v. Blackwell, supra, 189 Cal.App.3d
at p. 94) and because facts in the exhibits take precedence (Holland v. Morse
Diesel Intern., Inc., supra, 86 Cal.App.4th at p. 1447), the Court
finds that Jing’s non-inclusion in the Guarantee Contract properly place her
outside of its terms and liabilities, for which the seventh cause of action is
not pleaded adequately against her.
Johnson Solar and Jing’s demurrer is thus OVERRULED as to
the seventh cause of action, as to Johnson Solar only, but SUSTAINED with Leave
to Amend as to Weiping Jing.