Judge: Christian R. Gullon, Case: 24PSCV02476, Date: 2025-02-26 Tentative Ruling
Case Number: 24PSCV02476 Hearing Date: February 26, 2025 Dept: O
Tentative Ruling
DEFENDANTS SIQUN LIU AND JC AGENCY LLC’S
DEMURRER AND DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT is CONTINUED
for Plaintiff Counsel’s failure to meet and confer in good faith; the
failure to meet and confer for any scheduled demurrers/future demurrers will
result in a continuation of the motion.
Background
This case arises from a business dispute. Plaintiff DAVID
WEIJUN XU, individually and derivatively on behalf of MY HAPPI GIFT, LLC
alleges the following against Defendants MARK TRAN, an individual; YAYI GUO, an
individual; SIQUN LIU, an individual; CASSIE OLSON, an individual; CHRISTINA
LI, an individual; JC AGENCY LLC: Plaintiff is well-known in the merchandising
industry, who is familiar with merchandise sourcing and has a reputation for
finding reliable manufacturers overseas. (First Amended Complaint (FAC) ¶31.) In
January 2020, one of Plaintiff’s friends referred Defendant Yayi Guo (“Guo”) to
contact Plaintiff regarding a business proposal of wholesaling gifts to
casinos, so, Plaintiff and Defendant Guo had a meeting. (¶32.) After the
meeting, Defendant Guo wanted Plaintiff to meet her business partner, Defendant
Mark Tran. (¶33.) (Plaintiff believes that basis Tran and Guo have a romantic
relationship. ¶34.) Defendant Guo and Defendant Tran persuaded Plaintiff to
join the lucrative business opportunities of casino gifting business
arrangement and cooperation. (¶34.) Plaintiff informed Defendant Tran and
Defendant Guo that after they formed a company and became partners, Defendant
Tran and Defendant Guo would gain access to Plaintiff’s trade secrets,
including but not limited to various product design specifications, the
identity of Plaintiff’s customers, vendors, suppliers, their contact
information, the identity of each company’s decision makers, their preferences,
needs, purchase histories, custom pricing, the pricing information of each
supplier and customer preference, and the cost and pricing of Plaintiff, in
connection to the gifting products (hereinafter “Trade Secrets”). (¶40.) Thus,
on July 6, 2021, Plaintiff and Defendant Tran formed the Company, My Happi
Gift, LLC (“MHG” or “the Company”) wherein both were 50/50 partners. (¶¶44,
46.) Plaintiff held the position of Purchasing and Handling Manager; Defendant
Tran held the position of CEO and Sales Manager; and Defendant Guo held the
position of Assistant Sales Manager. (¶¶49-51.) The company was successful; for
example, in June 2023, Thunder Valley Casino, Agua Caliente Casino, Pechanga
Casino, and Fantasy Spring Casino, all selected the Company as the designated
vendor for both 2024 and 2025 program. (¶62.) In 2023, the Company had the
sales income from Thunder Valley Casino alone close to $6,000,000 and the sales
incomes from Agua Caliente Casino, Pechanga Casino, and Fantasy Spring Casino
between $500,000 to $1,000,000. (¶63.) But in September 2023, things changed
when Defendant Tran approached Plaintiff and informed him that he retained an
attorney with a proposal to restructure the Company wherein Plaintiff would
retain 40% interest, Tran 10%, and Guo 50%. (¶64.) Plaintiff said no which then
ensued the scheme to divert orders, income, and revenue from the Company to
Defendant JC Agency (¶66), an entity incorporated in 2019 by Defendant Liu,
Guo’s mother. (¶¶67, 72.) (In October 2023, Defendant Tran became a member of
JC Agency. (¶74).) This included Defendants changing the logo and used the
exact same manufacturer to produce the exact same product to sell to the exact
same customers. (¶87.) Defendant Tran also started to request Defendant Olson,
the Sales Officer of the Company, and Defendant Li, the Product Packaging
Designer of the Company, to assist in bringing the Company trade secrets to
those companies that Defendant Tran owns and operations, including Defendant JC
Agency and Defendant DOE 1. (¶¶79-83.) Moreover, Plaintiff later found out that
Defendants disabled the Company’s website and migrated everything to Defendant
JC Agency’s website. (¶98.)
On August 1, 2024, Plaintiff filed suit.
On October 18, 2024, Mark Tran filed a cross-complaint
(CC) against DAVID WEIJUN XU, an individual; LIHUA MARY HE, an individual; LONG
XU, an individual; AL RAPIDO LOGISTICS LLC, a California Limited Liability
Company; TUNG WING WHOLESALE, INC., a California corporation; TUNG WING
CONTRUCTION, INC. for:
1. Breach
Of Fiduciary Duty
2. Aiding
And Abetting Breach Of Fiduciary Duty
3. Conversion
4. Aiding
And Abetting Conversion
5. Theft
– Penal Code § 496
6. Fraud
– Misrepresentation
7. Intentional
Interference With Contractual Relations
8. Intentional
Interference With Prospective Economic Advantage
9. Accounting
On November 1, 2024, Defendant Tran filed a demurrer to
the complaint; Guo filed a demurrer to the complaint; Olson filed a demurrer to
the complaint; JC Agency filed a demurrer to the complaint.
On December 9, 2024, Plaintiff filed a demurrer to the
Mark Tran’s CC.
On December 27, 2024, Plaintiff filed a verified FAC for
direct and member derivative claims for:
1. Breach
of Contract
2. Breach
of Implied Covenant of Good Faith and Fair Dealing
3. Breach
of Fiduciary Duty
4. Aiding
and Abetting Breach of Fiduciary Duties
5. Fraud
– Intentional Misrepresentation
6. Negligent
Misrepresentation
7. Fraudulent
Inducement
8. Conversion
9. Usurpation
of Corporate Opportunity
10. Unjust
Enrichment
11. Imposition
of Construction Trust
12. Unfair
Competition in Violation of Business and Profession Code Section 17200
13. Declaratory
Relief
14. Court
Supervision of Winding Up Pursuant to Corporate Code § 17707
15. Wrongful
Dissolution
16. Intentional
Interference with Prospective Economic Advantage
17. Negligent
Interference with Prospective Economic Advantage
18. Misappropriation
of Trade Secrets – Civil Code § 3426 et seq.
19. Injunctive
Relief
On January 3, 2025, Plaintiff filed a First amended CC (FACC)
for:
1. Breach
of fiduciary duty
2. Aiding
and abetting breach of fiduciary duty
3. Conversion
4. Aiding
and abetting conversion
5. Theft
– penal code § 496
6. Fraud
– misrepresentation
7. Intentional
interference with contractual relations
8. Intentional
interference with prospective economic advantage
9. Accounting
On January 27, 2025, Liu and JC Agency filed the instant
demurrer.
On January 28, 2025, Plaintiff filed a demurrer to the
FACC.
On February 7, 2025, Defendant Tran filed a demurrer to
the FAC and a motion to strike (MTS) certain paragraphs of the FAC. That same
day, Olson and Guo filed respective demurrers to the FAC.
On February 11, 2025, Plaintiff filed his opposition to
the instant demurrer.
On February 19, 2025, Defendants Liu and JC Agency filed
their reply.
That same day, Tran filed his opposition to Plaintiff’s
demurrer to Tran’s FACC. Also, on that day, Plaintiff filed an amendment to the
complaint naming S2E Logix LLC was named as Doe One.
Discussion
Under Code of Civil Procedure
(CCP) section 430.41, the demurring party must meet and confer with the party who
filed the challenged pleading “in person or by telephone” to determine if
the demurring party's
objections can be resolved by agreement. (§
430.41, subd. (a)(1).) Trial
courts are not required to ignore defects in the
meet and confer process. (Dumas v. Los Angeles County Bd. of
Supervisors (2020) 45 Cal.App.5th 348, 355, fn. 3.) If “no meet and
confer has taken place, or concludes further conferences between counsel
would likely be productive, it retains discretion to order counsel to
meaningfully discuss the pleadings with an eye toward reducing the number of
issues or eliminating the need for a demurrer, and to continue the hearing date
to facilitate that effort.” (Ibid; See also § 430.41, subd. (c) [“Nothing in this
section [§ 430.41] prohibits the court from
ordering a conference own motion at any time or
prevents a party from requesting that the court order a conference to be held” (italics added)].) And parties are not just
to meet and confer, but to do in good faith. When the
parties meet and confer (in person, by
telephone, or by videoconference), the demurring party must identify the specific
causes of action it believes are subject to demurrer, the basis for its position, and the legal
support for its position. (CCP
§ 430.41(a)(1).) The party whose pleading is subject to
demurrer must then either (1) provide legal support for its position that the
pleading is legally sufficient or (2) explain how an amendment can cure any
legal insufficiency. (Id.)
Here,
Defense Counsel attempted to meet and confer with Plaintiff’s on a couple of
occasions about the legal authorities or specific reasons that support each
cause of action (COA). However,
to each attempt, Plaintiff’s Counsel merely responded that he “stands by [the]
legal complaint.” (Vu Decl., ¶3.) The opposition does not contend or
dispute otherwise. That is not a good faith effort meet and confer. Considering
the number of demurrers on file in this case, the court orders to meet and
confer in good faith.
Should the
declarations provide an indicium of an insufficient meet and confer, the court
will continue the hearing. If the parties met and conferred via email,
then the demurrer should contain a declaration with such correspondence. If the
parties telephonically met and conferred (or met in person), the demurring
party is to attach a declaration setting forth the legal arguments and
authorities discussed.
Conclusion
Based on the foregoing, this demurrer is continued.