Judge Barbara M. Scheper, Case 22STCV27276 2022-12-16 Tentative Ruling

Judge: Barbara M. Scheper, Case: 22STCV27276, Date: 2022-12-16 Tentative Ruling

Case Number: 22STCV27276 Hearing Date: December 16, 2022 Dept: 30

Dept. 30

Calendar No.

Manifest Destiny Transport Co., et. al. vs. South Bay Freight Systems, LLC, et. al., Case No. 22STCV27276

Tentative Ruling re: Defendant’s Demurrer and Motion to Stay

Defendants South Bay Freight System, LLC (South Bay) and James Lin (Lin) demur to the Complaint of Plaintiff Manifest Destiny Transport Corp. (Plaintiff), and, in the alternative, move to stay this action. The Court stays proceedings pending resolution of the appeal in the related case, BC661231.

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 p. 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.)

In the related case, Manifest Destiny Transport Corporation, et al. v. South Bay Freight Systems, LLC, et al. (BC661231) (MDTC I), the Court entered judgment in favor of Plaintiff and against South Bay in the amount of $760,378.82 on March 10, 2022. South Bay filed a Notice of Appeal on May 6, 2022 appealing from the judgment. That appeal is currently pending.

In this action, Plaintiff has brought claims against South Bay, James Lin, and Unis Company, Inc. to enforce the judgment rendered in MDTC I. Plaintiff alleges that, shortly after the commencement of MDTC I in May 2017, South Bay dissolved and transferred its business assets to Unis Company, leaving Plaintiff unable to collect on the judgment. (Comp. ¶ 1.) Plaintiff alleges that Unis Company possesses property of South Bay as its alter ego and successor, and on that basis seeks to hold Unis Company liable on the judgment entered against South Bay, pursuant to Code Civ. Proc. § 708.210. (Comp. ¶¶ 27-30.) Plaintiff also asserts a cause of action for creditor’s suit against Lin personally to satisfy the MDTC I Judgment, on the basis that Lin “took over [South Bay’s] business relationships through [Unis Company],” such that Lin “is in control of SB Freight’s business relationships, which have been transferred to Unis Company.” (Comp. ¶ 35.)

Automatic stay provision (CCP § 916)

Defendants first move to stay this action pursuant to the automatic stay provision of Code Civ. Proc. § 916, subd. (a).

Under that subdivision, “Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby . . . but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc. § 916, subd. (a).) “The purpose of the automatic stay provision . . . ‘is to protect the appellate court's jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.’” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189.) “[W]hether a matter is ‘embraced’ in or ‘affected’ by a judgment [or order] within the meaning of [section 916] depends on whether postjudgment [or postorder] proceedings on the matter would have any effect on the ‘effectiveness' of the appeal. [Citation.] If so, the proceedings are stayed; if not, the proceedings are permitted.” (Ibid.)

This matter is clearly “embraced” or “affected” by South Bay’s appeal of the judgment in MDTC I; Defendants’ alleged liability is wholly premised on the judgment rendered in MDTC I. (Comp. ¶¶ 29-31, 35-36.) Plaintiff does not dispute this, but suggests that the automatic stay provision does not apply because Defendants’ requested stay is subject to the bond requirement under Code Civ. Proc. § 917.1.

Under Section 917.1, “[u]nless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for . . . (1) Money or the payment of money…” (Code Civ. Proc. § 917.1, subd. (a).)

Section 917.1 does not apply here. A stay of this action would not stay “enforcement of the judgment or order for . . . [m]oney or the payment of money,” because no judgment has been rendered in this action. (Code Civ. Proc., § 917.1, subd. (a).) Plaintiff shows no support for the proposition that the bond requirement applies in the current circumstances. It is apparent from the statute’s text and purpose that Section 917.1 applies when there is an appeal of the “judgment or order in the trial court” in the action that is the subject of the requested stay, and not when the stay is based on the pending appeal of the judgment in a separate action. (See Leung v. Verdugo Hills Hospital (2008) 168 Cal.App.4th 205, 211–212 [“The purpose of the undertaking requirement is ‘to protect the judgment won in the trial court from becoming uncollectible while the judgment is subjected to appellate review”]; County of Los Angeles v. Surety Ins. Co. (1989) 207 Cal.App.3d 1126, 1131 [finding that bondsman’s appeal from order denying motion to vacate summary judgment “was not from a money judgment or an order directing payment of monies within the meaning of [§ 917.1]”].)

Because Plaintiff’s claims are embraced by the pending appeal of the judgment in MDTC I, the automatic stay provision under Code Civ. Proc. § 916 applies. Accordingly, the Court stays proceedings in this action pending resolution of the appeal in MDTC I.