Judge: Barbara M. Scheper, Case: 21STCV31784, Date: 2022-12-08 Tentative Ruling
Case Number: 21STCV31784 Hearing Date: December 8, 2022 Dept: 30
Dept. 30
Calendar No.
Park vs. Gi, et. al., Case No. 21STCV31784
Tentative Ruling re: Cross-defendant’s Demurrer to First Amended
Cross-Complaint
Cross-Defendant
Jung Sam Park (Park) demurs to the first through tenth causes of action in the First
Amended Cross-Complaint (FACC) of 1500 Plaza, LLC, Crocker & Towne
Wholesale Mart, LLC, Daniel Soungman Gi, DS Capital, LLC, and Natvan, Inc.
(collectively, Cross-Complainants). The demurrer is sustained with ten (10)
days leave to amend.
In reviewing the legal sufficiency
of a complaint against a demurrer, a court will treat the demurrer as admitting
all material facts properly pleaded, but not contentions, deductions, or
conclusions of law. (Blank v. Kirwan
(1985) 39 Cal.3d 311, 318 (Blank); C & H Foods Co. v. Hartford Ins. Co.
(1984) 163 Cal.App.3d 1055, 1062.) It is well settled that a “demurrer lies
only for defects appearing on the face of the complaint[.]” (Stevens v. Superior Court (1999) 75 Cal.App.4th
594, 601.) “The rules by which the sufficiency of a complaint is tested against
a general demurrer are well settled. We not only treat the demurrer as
admitting all material facts properly pleaded, but also give the complaint a
reasonable interpretation, reading it as a whole and its parts in their
context.” (Guclimane Co. v. Stewart Title
Guaranty Co. (1998) 19 Cal.4th 26, 38 (internal quotes omitted).) For
purposes of ruling on a demurrer, the complaint must be construed liberally by
drawing reasonable inferences from the facts pleaded. (Wilner v. Sunset Life Ins. Co. (2000) 78 Cal.App.4th 952, 958.)
When ruling on a demurrer, the
Court may only consider the complaint’s allegations or matters which may be
judicially noticed. (Blank, supra, 39
Cal.3d at 318.) The Court may not consider any other extrinsic evidence or
judge the credibility of the allegations plead or the difficulty a plaintiff
may have in proving his allegations. (Ion
Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) A demurrer is
properly sustained only when the complaint, liberally construed, fails to state
facts sufficient to constitute any cause of action. (Kramer v. Intuit Inc. (2004) 121 Cal.App.4th 574, 578.)
Cross-Complainants’
FACC asserts ten causes of action against Park, arising from Park’s alleged misconduct
in connection with his and Cross-Complaint Daniel Soungman Gi’s (Gi) shared
investments into commercial real estate. Gi is a commercial real estate
developer, while Park is a licensed commercial real estate broker employed by
The Quantum Associates, Inc. (Quantum). (FACC ¶¶
15-16.)
The two developed a professional relationship beginning in 2010, in which Park
would solicit Gi to invest into business ventures for the purchase and leasing
of commercial properties, and Park would be responsible for securing tenants
and managing the properties. (FACC ¶
19.)
Park and Quantum received commissions as brokers in the purchase of the
investment properties and for each tenant lease secured for the properties.
(FACC ¶ 20.)
The FACC alleges
that Park made misrepresentations to Gi while soliciting Gi to invest with him
in ventures for the purchase of three real properties. (FACC ¶ 62.)
The first investment that Park solicited Gi for was for undeveloped property
located at 920 Crocker Street, Los Angeles, California, made through the entity
DS Capital, LLC in 2013. (FACC ¶ 30.) Park and Gi
both contributed $1,150,000 to DS Capital, though DS Capital was formed by Gi
without Park’s name on the Statement of Information forms. (FACC ¶ 33.)
The Crocker Street property was later developed by Gi into commercial rental
space for lease. (FACC ¶ 33.)
The second
investment was for the purchase of a leasehold interest in 914 Birch Street/1500
E. Olympic Blvd, made through the entity 1500 Plaza in February 2015. (FACC ¶
43.) 1500 Plaza was jointly formed by Park and Gi, who held respective
interests of 25% and 75%. (FACC ¶ 43.)
The third
investment was for commercial property located at 934 S. Los Angeles, purchased
in 2015 through Crocker & Towne Wholesale Mart, LLC (C&T), an entity
originally formed by Gi and his wife. (FACC ¶¶ 49-50.) Park and
Gi agreed to share in the profits and expenses of operating the 934 S. Los
Angeles property according to their initial investments, resulting in a 25%
interest for Park and 75% for Gi. (FACC ¶ 52.) C&T, as
nominal owner of 934 S. Los Angeles, operated the property under the fictious
business name “Cosmo Plaza” and set up separate accounts and insurance for
Cosmo Plaza. (FACC ¶ 50.)
For each property,
Park, through Quantum, was made responsible for property management, securing
tenants, and tenant interface on behalf of the respective owner. (FACC ¶¶
34, 45, 55.) It is alleged that Park possessed an ulterior motive to enrich
himself at the expense of Gi and their shared investments, and that to this end
Park, beginning in 2017, stopped making capital contributions necessary to
operate and finance the properties, while simultaneously forming his own solely
owned corporation, SPNP, Inc. (SPNP) to engage in competing commercial real
estate operations. (FACC ¶ 25.)
Park also “engaged
in self-dealing with tenants of the investment properties and diverted income
and business opportunities away from the investment properties in favor of
himself and SPNP, interfered with the economic interests of Dan Gi and the
investment properties by refusing to collect rents, and otherwise acted in his
own self-interest to the substantial financial harm of Dan Gi and the several
investment properties.” (FACC ¶¶ 25-26.) In May 2020,
Park asked Gi to solicit buyers for Park’s interests in the investment
properties, and then sold his interests to those buyers. (FACC ¶ 27.)
Statute of
Limitations
Park demurs to the
first through fifth and seventh causes of action on the basis that the claims
are time-barred. The Court agrees.
“Generally speaking, a cause of action
accrues at ‘the time when the cause of action is complete with all of its
elements.’ [Citation.] An important exception to the general rule of accrual is
the ‘discovery rule,’ which postpones accrual of a cause of action until the
plaintiff discovers, or has reason to discover, the cause of action.
[Citations.] A plaintiff has reason to discover a cause of action when he or
she ‘has reason at least to suspect a factual basis for its elements.’
[Citations.] Under the discovery rule, suspicion of one or more of the elements
of a cause of action, coupled with knowledge of any remaining elements, will
generally trigger the statute of limitations period.” (Fox v. Ethicon
Endo–Surgery, Inc. (2005) 35 Cal.4th 797, 806–807.)
In applying the
discovery rule, “[t]he limitations period begins once the plaintiff has notice
or information of circumstances to put a reasonable person on inquiry. [Citation.]
Subjective suspicion is not required. If a person becomes aware of facts which
would make a reasonably prudent person suspicious, he or she has a duty to
investigate further and is charged with knowledge of matters which would have
been revealed by such an investigation. [Citations.]” (Mangini v.
Aerojet-General Corp. (1991) 230 Cal.App.3d 1125, 1150.)
“[T]o overcome an apparent limitations bar, the plaintiff claiming
delayed discovery of the facts constituting the cause of action has the burden
of setting forth pleaded facts to show ‘(1) the time and manner of discovery
and (2) the inability to have made earlier discovery despite reasonable
diligence. The burden is on the plaintiff to show diligence, and conclusory
allegations will not withstand demurrer.’ ” (Czajkowski v. Haskell & White, LLP (2012) 208 Cal.App.4th 166, 175.)
The Court agrees
with Park that Cross-Complainants have not alleged facts showing the time and
manner in which they discovered Park’s alleged wrongdoing. Cross-Complainants
seek to rely on the allegation that they first learned of Park’s formation of
and employment with SPNP on July 25, 2022, through discovery in the current
litigation. (FACC ¶ 73.) However, the causes of action at
issue are not premised on the mere fact that Park formed SPNP, but rather the
allegations that Park formed SPNP to compete with the shared ventures, while
also engaging in self-dealing, wrongful diversion of rent payments, and usurpation
of business opportunities. (FACC ¶¶
68, 79.) There are no factual allegations showing Cross-Complainants’ delayed
discovery of that misconduct. Absent the pleading of specific facts, the allegations that Cross-Complainants had not previously
discovered and were preventing from discovering Park’s harm are conclusory, and
so unavailing. (FACC ¶¶ 13-14; Anderson v.
Brouwer (1979) 99 Cal.App.3d 176, 182 [“Formal averments or general
conclusions to the effect that the facts were not discovered until a stated
date, and that plaintiff could not reasonably have made an earlier discovery,
are useless”].) The Court thus finds that Cross-Complainants have failed to
allege facts supporting application for the discovery rule.
The FACC generally lacks facts regarding the
dates of Park’s alleged misconduct. It is alleged that Park made
misrepresentations in 2013 while soliciting Gi to invest in the properties at
issue. (FACC ¶¶ 76, 82,
88, 95, 101.) Additionally, in 2017, Park misrepresented to Gi that he was
unable to make contributions to the entities for the purpose of diverting
capital and business opportunities to SPNP, leading Gi to make contributions on
Park’s behalf, which Park also falsely promised to pay back. (FACC ¶¶
68, 97.)
The causes of action at issue here are for Breach of
Fiduciary Duty, Conversion, Violation of Penal Code 496 (i.e., civil theft),
Fraudulent Inducement, Misrepresentation, and Intentional Interference with
Contract. The limitations periods
for these causes of action range from two to three years. (Code Civ. Proc. §§
338, subds. (c)-(d) [three years for conversion, civil theft, fraud]; 339 [two
years for actions on contract]; American Master
Lease LLC v. Idanta Partners, Ltd. (2014) 225
Cal.App.4th 1451, 1479 [stating that statute of limitations for breach of fiduciary duty is three years
if gravamen of claim is actual or constructive fraud, otherwise four years].) Because
the claims in the FACC
“arise
out of the same transaction, occurrence, or series of transactions or occurrences
as the cause of action which the plaintiff alleges in his complaint,” they
relate back to the filing of Plaintiff’s original complaint on August 27, 2021,
around four years after the latest date of alleged misconduct. (Trindade
v. Superior Court (1973) 29 Cal.App.3d 857, 860; Code Civ. Proc. § 426.10.)
The statutes of limitations on the first through fifth and seventh causes of
action expired before this action was commenced, and so those claims are
time-barred.
Sixth Cause of
Action for Conspiracy
The
sixth cause of action alleges that Park and SPNP conspired to deprive Gi and
his entities of income and business properties arising from the Investment
Properties. (FACC ¶
110.) “A conspiracy cannot be alleged as a tort separate from the
underlying wrong it is organized to achieve.” (Stansfield v. Starkey
(1990) 220 Cal.App.3d 59, 76.) Because the demurrer is sustained as to the
underlying causes of action, the demurrer must also be sustained as to the
cause of action for conspiracy.
Eighth Cause of Action
for Open Book Account
“In
the common law action of general assumpsit, it is customary to plead an
indebtedness using ‘common counts.’ In California, it has long been settled the
allegation of claims using common counts is good against special or general
demurrers. The only essential allegations of a common count are ‘(1) the
statement of indebtedness in a certain sum, (2) the consideration, i.e., goods
sold, work done, etc., and (3) nonpayment.’” (Farmers Ins. Exchange v.
Zerin (1997) 53 Cal.App.4th 445, 460 [internal citations omitted].)
“A common count is not a speci¿c cause of action, . . .
rather, it is a simpli¿ed form of pleading normally used to aver the existence
of various forms of monetary indebtedness, including that arising from an
alleged duty to make restitution under an assumpsit theory. When a common count
is used as an alternative way of seeking the same recovery demanded in a
speci¿c cause of action, and is based on the same facts, the common count is
demurrable if the cause of action is demurrable.” (McBride v. Boughton
(2004) 123 Cal.App.4th 379, 394 [internal citations omitted].)
Cross-Complainants’ claim for Open Book Account alleges that
Park owes Gi $1,498,409 based on Gi’s contributions to DS Capital on Park’s
behalf and Park’s 50% membership interest in DS Capital. (FACC ¶¶ 121-124.)
This cause of action seeks the same recovery demanded under the time-barred
causes of action for fraudulent inducement, and misrepresentation. (FACC ¶¶ 98,
104.) Because the demurrer is sustained as to those causes of action, the
demurrer is also sustained as to the claim for open book account.
Ninth Cause of
Action for Accounting
A cause of action for an accounting requires a showing that
a relationship exists between the plaintiff and defendant that requires an
accounting and that some balance is due to the plaintiff that can only be
ascertained by an accounting. (Teselle v. McLoughlin (2009) 173
Cal.App.4th 156, 179.)
“Equitable
principles govern, and the plaintiff must show the legal remedy is
inadequate.... Generally, an underlying fiduciary relationship, such as a
partnership, will support an accounting, but the action does not lie merely
because the books and records are complex. Some underlying misconduct on the
part of the defendant must be shown to invoke the right to this equitable
remedy.” (Green Valley Landowners Assn. v. City of Vallejo (2015) 241
Cal.App.4th 425, 442.)
Cross-Complainants’ ninth cause of
action seeks an account of funds that Park and SPNP received from tenants of
the properties in dispute and any other properties held by Gi or separately
held by C&T, any commissions earned on leases obtained for those
properties, . (FACC ¶ 132.) As discussed above,
Cross-Complainants have failed to allege underlying misconduct by Park
justifying an accounting, and so the demurrer is sustained as to this cause of
action.
Tenth Cause of
Action for Constructive Trust
A constructive trust is an involuntary equitable trust
created by operation of law as a remedy to compel the transfer of property from
the person wrongfully holding it to the rightful owner.” (Communist Party v.
522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 990.) “A constructive trust is not a true trust but an equitable
remedy available to a plaintiff seeking the recovery of specific property in a
number of widely differing situations. The cause of action is not based on the
establishment of a trust, but consists of the fraud, breach of fiduciary duty,
or other act that entitles the plaintiff to some relief.” (5 Witkin, Cal. Proc.
(6th ed. 2022) Pleading, § 836.)
Cross-Complainants’ tenth cause of action for constructive
trust fails because a constructive trust is an equitable remedy, not a cause of
action, and the FACC does not allege sufficient facts regarding the Park’s
misconduct justifying the relief.