Judge: Colin Leis, Case: 22AHCV00123, Date: 2022-08-22 Tentative Ruling

Case Number: 22AHCV00123    Hearing Date: August 22, 2022    Dept: 3

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES – NORTHEAST DISTRICT

DEPARTMENT 3

MOVING PARTY:                Defendants Vanessa Guo, Gosdom, Inc., and Yao Guo, Trustee of the Guo Protection Trust

RESPONDING PARTY:       Plaintiffs Xueyun Zou and DL Trucking, Inc.

Defendants’ Demurrer

The court considered the moving papers, opposition, and reply papers filed in connection with this motion.

BACKGROUND

            Plaintiffs Xueyun Zou (“Zou”) and DL Trucking, Inc. (“DL Trucking”) filed this action on March 4, 2022 against Defendants Yao Guo, aka Vanessa Guo (“Guo”), Gosdom, Inc. (“Gosdom”), and Yao Guo, Trustee of the Guo Protection Trust. The complaint asserts causes of action for (1) fraud in the inducement, (2) financial elder abuse, (3) conversion, (4) breach of contract, (5) money due on promissory note, and (6) constructive fraudulent transfer.

Defendants demur to all causes of action on the basis that each fails to state facts sufficient to constitute a cause of action.

LEGAL STANDARD

A demurrer 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 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.) For the purpose of 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, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

DISCUSSION

Allegations of the Complaint

On or about December 6, 2019, Guo represented orally and in writing to Zou, who was 80 years old at the time, that she was a producer of a motion picture entitled Wally’s Wonderland. Based on Guo’s representations that this would be a good investment, that Zou would be paid pack on April 6, 2020 with 6% interest, and that Zou would be granted a 1% interest in the film’s net revenues, Zou loaned Guo $300,000 for the purpose of financing the production of the movie. Guo’s representations were false, and Zou has not been paid back her entire $300,000 investment and has not received 1% of the net revenues of the film. To date, Zou has been paid only $30,000. (Compl., ¶ 18.) The agreement was memorialized in a Loan & Security Agreement (the “Wally’s Wonderland Contract”).[1] (Compl., ¶ 36.)

On or about December 22, 2019, Guo approached Zou again, this time to invest in Fast & Furious 9, another movie. Again, Guo represented that she was a producer on the movie, and that Zou’s investment would be used to finance the production of the movie. Guo represented that Zou would be paid back on April 13, 2020, with 9% interest. Zou loaned $100,000 to Guo based on these representations, and has not been repaid. (Compl., ¶ 20.) This agreement was memorialized in a Secured Promissory Note (the “Fast & Furious 9 Note”).[2] (Compl., ¶ 42.

Standing

Defendants contend that Zou does not have standing to assert any of the causes of action. This is so because Zou is not a party to either the Wally’s Wonderland Contract or the Fast & Furious 9 Note.[3] The named lender for both is DL Trucking (and the named borrower for both is Gosdom). Therefore, Zou cannot state a cause of action for breach of contract or money due on promissory note. As to the tort claims (conversion, elder abuse, fraud, and fraudulent conveyance), Defendants argue that because the only damages alleged are the amounts due and owing under the two agreements, Zou cannot plead or prove that she suffered any damages as a result of the failure to repay the loans. The court agrees. Although Plaintiffs allege that the “real parties in interest” to the agreements are Zou and Guo (instead of DL trucking and Gosdom) (Compl., ¶ 37), this allegation is inconsistent with the attached exhibits and may be disregarded. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) 

Conversion

The conversion claim is based on the $400,000 total loan. (Compl., ¶ 23.) But as correctly argued by Defendants, a conversion claim does not lie for “the simple failure to pay money owed.” (Voris v. Lampert (2019) 7 Cal.5th 1141, 1151-52.) Therefore, the demurrer is sustained.

Elder Abuse

Financial elder abuse occurs when a person takes or assists in taking the property of an elder for a wrongful use or with intent to defraud or by undue influence. (See Welf. & Inst. Code, § 15610.30, subd. (a).) A person is deemed to have taken the property when he or she has deprived an elder of “any property right.” (See Welf. & Inst. Code, § 15610.30, subd. (c).) “A person . . . shall be deemed to have taken . . . property for a wrongful use if . . . the person  . . . takes  . . . the property and the person . . . knew or should have known that this conduct is likely to be harmful to the elder . . . .” (Welf. & Inst. Code, § 15610.30, subd. (b).)

Here, as discussed above, the Complaint reveals that the money at issue was loaned by DL Trucking and not by Zou in her personal capacity. Therefore, the court finds that Plaintiffs have failed to allege that Zou was “deprived of any property right.” The demurrer is sustained.

Fraud

Defendants contend that the fraud claim lacks specificity, namely, that Plaintiffs fail to allege the how, when, where, to whom, and by what means the misrepresentations were tendered. The court finds that the fraud claim is sufficiently stated—the misrepresentations are alleged to have been made on or about December 6, 2019 and December 22, 2019 by Guo to Zou, orally and in writing, and at Zou’s home. (Compl., ¶¶ 18, 20, 50.) The demurrer is thus overruled.

CONCLUSION

Based on the foregoing, the court sustains in part and overrules in part Defendants’ demurrer. The court sustains the demurrer to all causes of action as to Zou, with leave to amend. The court sustains the demurrer to the conversion cause of action and the elder abuse cause of action as to DL Trucking with leave to amend. The court overrules the demurrer to the fraud cause of action as to DL Trucking.

The court orders Plaintiffs to file and serve an amended complaint, if any, within 20 days of the date of this order. If no amended complaint is filed within 20 days, the court orders Defendants to file and serve their answer to the complaint within 30 days of the date of this order.

Defendants are ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  August 22, 2022

_____________________________

Colin Leis

Judge of the Superior Court