Judge: Cherol J. Nellon, Case: 22STCV26335, Date: 2023-08-08 Tentative Ruling

Case Number: 22STCV26335    Hearing Date: February 22, 2024    Dept: 14

RS Group APS vs. GWRS Holdings

Case Background

Plaintiff alleges that it loaned money to Defendant GWRS Holdings, LLC (“GWRS”) on favorable terms in exchange for an ownership share in GWRS. Plaintiff claims that GWRS then took their money and transferred it to another entity, which used it to operate a business which ultimately folded. When that business folded, this third-party entity sold off its assets and made a distribution to its individual owners. Plaintiff has yet to see a return on its loan.

            On May 22, 2023 Plaintiff filed its First Amended Complaint (“FAC”) for (1) Breach of Contract, (2) Fraudulent Transfer – Sale Proceeds, (3) Fraudulent Transfer – Loan Proceeds, (4) Intentional Misrepresentation, and (5) Negligent Misrepresentation against Defendants GWRS Holdings, LLC (“GWRS”), SG & AW Holdings LLC (“SG & AW”), Serhat Gumrukcu (“Gumrukcu”), Anderson Wittekind (“Wittekind”), and DOES 1-50.

The first cause of action is asserted against Defendant GWRS only. The second, third, fourth, and fifth causes of action are asserted against Defendants SG & AW, Gumrukcu, and Wittekind only. On August 8, 2023, this court sustained the demurrer of Defendants SG & AW and Wittekind to the second, third, and fifth causes of action, with leave to amend. No amendment has been filed. Therefore, those claims against those defendants have been forfeited.

On August 23, 2023, Defendants SG & AW and Wittekind filed their joint Answer.

On August 25, 2023, Defendant Gumruckcu filed his Answer.

On September 19, 2023, the default of Defendant GWRS was entered.

            Jury Trial is currently set for October 21, 2024.

Instant Motion

Defendant SG & AW now moves this court for judgment on the pleadings, on the grounds that Plaintiff has failed to state a cause of action against it.

Decision

            Defendant SG & AW’s Request for Judicial Notice (“RJN”) is GRANTED.

            Plaintiff’s RJN is GRANTED.

            The motion is GRANTED, with 10 days leave to amend.

Discussion

            Defendant SG & AW is only party to the fourth cause of action for fraud, which survived a prior demurrer. However, Defendant SG & AW now points out, for the first time, that it did not exist as an entity when the alleged fraud occurred. (Compare Defendant’s RJN Exhibit A with FAC ¶ 29). In response, Plaintiff argues that Defendant SG & AW is liable for the behavior of its principal, Defendant Wittekind, on a ratification theory.

            Such a theory might well be viable, but it has not been pled. Therefore, the court is obliged to give Plaintiff a chance to plead it.