Judge Daniel M. Crowley, Case Number: 22STCV16970, Date: 2023-08-22 Tentative Ruling

Defendant Berdé Golf, LLC’s demurrer to Plaintiff Autumn Communications’ second amended complaint is overruled as to the 1st and 2nd causes of action, and sustained with 20 days leave to amend as to the 3rd and 4th causes of action.

Defendant Berdé Golf, LLC (“Berdé LLC”) (“Defendant”) demurs to Plaintiff Autumn Communications’ (“Autumn”) (“Plaintiff”) second amended complaint (“SAC”). (Notice of Demurrer, pg. 2, C.C.P. §§430.30, 430.10.) Defendant also moves to strike portions of the SAC. (Notice of MTS, pg. 2.)

Plaintiff’s 8/9/23 request for judicial notice of Plaintiff’s Declaration of Arthur Gaus in Support of Plaintiff’s Application for Service by Publication of Candice Paik, filed on June 20, 2023, is denied, as this Court does not need to take judicial notice of filings in the instant case.

Plaintiff’s 8/9/23 request for judicial notice of a letter from Defendant’s attorney, Ira Katz, on official letterhead and containing his wet signature, dated July 6, 2022, and July 22, 2022, is denied.

Plaintiff’s 8/9/23 request for judicial notice of California Secretary of State document titled “Amendment to Articles of Organization of a Limited Liability Company (LLC) – Name Change Only,” filed on August 27, 2021, is granted. (P-RJN, Exh. D.)

Plaintiff filed its initial Complaint on May 23, 2022, against Non-moving parties Berde Inc. (“Berde Inc.”) and Candice Paik (“Candice”). On November 4, 2022, and November 7, 2022, Plaintiff filed amended complaints that were stricken by this Court on November 9, 2022. Plaintiff filed the operative SAC on January 10, 2023, against Berde LLC, and non-moving parties, Berde Inc., Candice, Paik Family Partnership L.P. (“PFP”), and Paik LLC (“Paik LLC”) (collectively, “Defendants”), containing four causes of action: (1) breach of contract; (2) implied covenant of good faith and fair dealing; (3) negligent misrepresentation; and (4) intentional misrepresentation.

On March 21, 2023, Defendant filed the instant demurrer and motion to strike. On August 9, 2023, Plaintiff filed its joint opposition to the demurrer and motion to strike. On August 16, 2023, Defendant filed its joint reply.

Berdé LLC demurs on the basis that (1) Plaintiff’s four causes of action fail to state facts sufficient to constitute causes of action against Berdé LLC (2) the 3rd and 4th causes of action fail to plead fails to plead specific facts sufficient to put Berdé LLC on notice of its alleged fraudulent actions rendering the causes of action uncertain; and (3) the 1st and 2nd causes of action fail to state any contractual relationship between Plaintiff and Berdé LLC, and therefore fails to state whether the unidentified contract was formed by a writing, by oral agreement, or implied by conduct. (Demurrer, pg. 4; C.C.P. §§430.10(e), (f), (g).)

Berdé LLC’s counsel declares on February 23, 2023, he spoke by telephone with Plaintiff’s counsel regarding Berdé LLC’s demurrer and the issues it raises and the parties could not informally resolve these issues. (Decl. of Katz ¶¶18-19.) Berdé LLC’s counsel’s declaration complies with C.C.P. §430.41(a)(3)(A), and as such, the Court will consider Berdé LLC’s demurrer.

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) 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. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

A cause of action for breach of contract requires the following elements: (1) existence of contract; (2) plaintiffs’ performance or excuse for nonperformance; (3) defendants’ breach (or anticipatory breach); and (4) resulting damage to plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830; Hale v. Sharp Healthcare (2010) 183 Cal.App.4th 1373, 1387.) Although a written contract is usually pleaded by alleging its making and attaching a copy which is incorporated by reference, a written contract can also be pleaded by alleging the making and the substance of the relevant terms. (Construction Protective Services, Inc. v. TIG Specialty Insurance Co. (2002) 29 Cal.4th 189, 198-199; Perry v. Robertson (1988) 201 Cal.App.3d 333, 341.) “An oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words. [Citation.] A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. [Citations.]”.)

Plaintiff alleges on December 2, 2021, it entered into the contract with Berde Inc. (SAC ¶25.) Plaintiff alleges the Contract had an effective date of January 1, 2022. (SAC ¶25.) Plaintiff alleges pursuant to the Contract, it agreed to

perform certain public relations services on behalf of Berde Inc. in exchange for payment of $12,000 per month, plus reimbursement of out-of-pocket expenses incurred on Berde Inc.’s behalf. (SAC ¶25.) Plaintiff alleges the Contract’s term is six (6) months following the Effective Date. (SAC ¶25.) Plaintiff alleges Berde Inc. communicated exclusively with Plaintiff through Candice, who executed the

Plaintiff alleges Section 5.1 of the Contract provides: “In consideration of the provision of the Services by Autumn and the rights granted to [Berde] under this Agreement, [Berde] shall pay Autumn a monthly fee in the amount of $12,000, due within thirty (30) days of any respective invoice. Payments shall be made to the order of Autumn Communications Inc. and mailed to: Autumn Communications Inc. c/o Christine Prost, 8322 Beverly Blvd, Suite 201, Los Angeles, CA 90048.” (SAC ¶26.) Plaintiff alleges Section 5.2 of the Contract provides, in pertinent part, that for “any out-of-pocket expenses required in connection with the Services in excess of $250, [Berde] shall be responsible for the direct payment thereof.” (SAC ¶27.) Plaintiff alleges Section 19 of the Contract provides, in pertinent part, that “[t]he prevailing party shall be entitled to recover its attorneys’ fees.” (SAC ¶28.)

Plaintiff alleges the specific scope of work Plaintiff agreed to perform on Berde’s behalf is attached to the Contract and expressly incorporated by reference therein. (SAC ¶29.) Plaintiff alleges among other things, it agreed to: (i) prepare a six (6) month strategy within the first two to three (2-3) weeks of partnership; (ii) oversee all proactive and reactive press opportunities in the earned media space on Berde Inc.’s behalf; and (iii) cultivate an engaged influencer community on behalf of Berde to generated third party endorsement of Berde Inc.’s products. (SAC ¶29.) Plaintiff alleges the Contract commenced as of January 1, 2022, and was to continue for a period of six (6) months. (SAC ¶30.) Plaintiff alleges almost immediately, however, Berde Inc. failed to pay for services as required under the terms of the Contract. (SAC ¶31.) Plaintiff alleges while it duly performed its obligations under the Contract through January and February, Berde Inc. and Candice failed to make the requisite payments for January and February 2022, totaling $24,000. (SAC ¶32.) Plaintiff alleges it also advanced expenses totaling $59,136.08 on Berde Inc.’s behalf, including $58,000 for expenses in connection with Berde, Inc.’s presence at the Genesis Invitational Event and $1,236.08 for other out-of-pocket expenses incurred by Plaintiff on Berde Inc.’s behalf. (SAC ¶33.) Plaintiff alleges of the $58,000 which Plaintiff advanced on Berde’s behalf, Berde remitted payment for only $33,250. (SAC ¶34.) Plaintiff alleges to date, Berde Inc. has never paid for any of Plaintiff’s monthly invoices. (SAC ¶34.)

Plaintiff alleges Berdé LLC is the agent of Berde Inc. and Candice. (SAC ¶56.) Plaintiff alleges upon information and belief that Berde Inc. and Candice transmitted funds to Berdé LLC via Candice permitting Berde Inc. to maintain a veneer of operational solvency while being undercapitalized. (SAC ¶56.) Plaintiff alleges Berdé LLC acted as agent of Berde Inc. and Candice by sending and receiving funds in furtherance of Berde Inc.’s breach of its contract with Plaintiff. (SAC ¶57.) Plaintiff alleges all transactions between Defendants were facilitated at the direction of Candice and carried out by and through Candice. (SAC ¶57.) Plaintiff alleges on information and belief, due to their agency relationship, Berdé LLC is responsible for the conduct of Berde Inc. and Candice. (FAC ¶58.) Plaintiff alleges on information and belief that Berde Inc. and Candice moved money between and through Berdé LLC at the direction of Candice, thereby establishing an agency relationship through their conduct. (SAC ¶59.)

Plaintiff alleges at all relevant times Candice used Berdé LLC as her exclusive instrument in breaching the parties’ agreement by commingling her personal funds with Berde Inc. and Berdé LLC in order to maintain a pretextual veneer of insolvency. (SAC ¶72.)

Plaintiff sufficiently alleges the making of and substance of the relevant terms of the Contract, despite appearing to fail to attach the contract to the SAC.[1] Plaintiff sufficiently alleges Berdé LLC is the alter ego of Berde Inc. and Candice. (SAC ¶¶56-59, 72.)

Accordingly, Berdé LLC’s demurrer to Plaintiff’s 1st cause of action is overruled.

A cause of action for breach of implied covenant of good faith and fair dealing requires the following elements: (1) the parties entered into a contract (contractual relationship); (2) plaintiff fulfilled his/her contractual obligations; (3) any conditions precedent to defendant’s performance occurred; (4) defendant unfairly interfered with plaintiff’s right to receive the benefits of the contract; and (5) plaintiff was harmed by defendant’s conduct. (CACI 325.)

Every contract imposes upon each party a duty of good faith and fair dealing in the performance of the contract such that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. (Waller v. Truck Insurance Exchange, Inc. (1995) 11 Cal.4th 1, 36.) The implied covenant “is designed to effectuate the intentions and reasonable expectations of parties reflected by mutual promises within the contract.” (Nein v. HostPro, Inc. (2009) 174 Cal.App.4th 833, 852.) The covenant mandates that neither party do anything which will deprive the other of the benefits of the agreement. (Wolf v. Walt Disney Pictures and Television (2008) 162 Cal.App.4th 1107, 1120.) In addition, the covenant implies a promise to give any necessary cooperation to accomplish the purpose of the contract. (Pasadena Live, LLC v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1093.)

Berdé LLC demurs to Plaintiff’s 2nd cause of action on the same basis as its demurrer to Plaintiff’s 1st cause of action, namely that no contract exists between Plaintiff and Berdé LLC. However, for the same reasons stated for the 1st cause of action, Plaintiff sufficiently alleges a contract between it and Berdé LLC. (SAC ¶¶56-59, 72.)

Accordingly, Berdé LLC’s demurrer to Plaintiff’s 2nd cause of action is overruled.

A cause of action for negligent misrepresentation requires the following elements: (1) assertion of an untrue fact; (2) honestly made in the belief it is true; (3) but without a reasonable ground for such belief; (4) defendant’s intent to induce plaintiff’s reliance upon the representation; (5) plaintiff’s justifiable reliance upon the representation; and (6) resulting damage. (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 182.)

Plaintiff alleges Berdé Inc. through Candice represented to Plaintiff’s representative, Ashley Carone that (1) Berde Inc. had the means to compensate Plaintiff the full amount owed under the Contract and (2) Berde Inc.’s funds were independent from Paik when it entered into the Contract with Defendant. (SAC ¶86.) Plaintiff alleges by signing the Contract, Berde Inc. and Candice represented that they had the capacity and were willing to be bound by the terms of the Contract, including specific representations that Berde Inc. and Candice separately and independently had the means to pay Berde Inc.’s obligations under the Contract. (SAC ¶86.)

Plaintiff alleges Berde Inc. and Candice intended for Plaintiff to rely upon its representations concerning its financial condition and separate character of Berde Inc. and Candice’s finances. (SAC ¶87.) Plaintiff alleges it did reasonably rely on Berde Inc. and Candice’s representations when it entered into the agreement and performed under the Contract. (SAC ¶87.) Plaintiff alleges Berde Inc. did not have the financial means to pay Plaintiff the full amount owed under the Contract. (SAC ¶88.) Plaintiff alleges Berde Inc. and Candice’s inability to pay their obligations was due in part to the improper commingling of funds between Berde Inc. and Candice as well as the commingling of funds with Berdé LLC, Paik Family Trust LP, and Paik LLC. (SAC ¶88.)

Plaintiff alleges Berde Inc.’s failure to pay the $71,940 in monthly fees and $25,986.08 in out-of-pocket expenses harmed Plaintiff. (SAC ¶89.) Plaintiff alleges its reliance on Berde Inc. and Candice’s misrepresentations were substantial factors in causing Plaintiff’s harm. (SAC ¶90.)

Plaintiff fails to plead with particularity how, when, where, to whom, and by what means the alleged representations that induced Plaintiff’s reliance were tendered. (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 185 n.14 [requiring pleading particularity with facts that show how, when, where, to whom, and by what means the representations were tendered]; Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519 [requiring pleading specificity]; B.L.M. v. Sabo & Deitsch (1997) 55 Cal.App.4th 823, 834-836 [relevant intent is to induce reliance, not to deceive]; Byrum v. Brand (1990) 219 Cal.App.3d 926, 940 [rejecting a cause of action for negligent misrepresentation based on unintentional omission or concealment].)

Accordingly, Berdé LLC’s demurrer to Plaintiff’s 3rd cause of action for negligent misrepresentation is sustained with 20 days leave to amend.

“The elements of fraud that will give rise to a tort action for deceit are: ‘(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.) “[A] cause of action for misrepresentation requires an affirmative statement, not an implied assertion.” (RSB Vineyards, LLC v. Orsi (2017) 15 Cal.App.5th 1089, 1102.) “[F]alse representations made recklessly and without regard for their truth in order to induce action by another are the equivalent of misrepresentations knowingly and intentionally uttered.” (Engalla, 15 Cal.4th at pg. 974, quoting Yellow Creek Logging Corp. v. Dare (1963) 216 Cal.App.2d 50, 55.)

Fraud actions are subject to strict requirements of particularity in pleading. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.)

For the same reasons stated in Berdé LLC’s demurrer to the 4th cause of action, Plaintiff fails to allege intentional misrepresentation with specificity. (Lazar, 12 Cal.4th at pg. 645; West, 214 Cal.App.4th at pg. 793.)

Accordingly, Berdé LLC’s demurrer to Plaintiff’s 4th cause of action for intentional misrepresentation is sustained with 20 days leave to amend.

A demurrer for uncertainty will be sustained only where the complaint is so bad that defendant cannot reasonably respond—i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

If the complaint contains enough facts to apprise defendant of the issues it is being asked to meet, failure to label each cause of action is not ground for demurrer: “Although inconvenient, annoying and inconsiderate, the lack of labels . . . does not substantially impair [defendant’s] ability to understand the complaint.” (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 n.2.)

Where a demurrer is made upon this ground, it must distinctly specify exactly how or why the pleading is uncertain, and where such uncertainty appears (by reference to page and line numbers of the complaint). (See Fenton v. Groveland Community Services District (1982) 135 Cal.App.3d 797, 809.)

Berdé LLC fails to specify where the uncertainty appears by reference to page line and numbers in the SAC. (See id.)

Berdé LLC’s demurrer to Plaintiffs’ SAC is overruled as to the 1st and 2nd causes of action, and sustained with 20 days leave to amend as to the 3rd and 4th causes of action.

In light of the Court’s ruling on the demurrer, Berdé LLC’s motion to strike is denied as moot.

Hon. Daniel M. Crowley

Judge of the Superior Court

[1] Paragraph 25 of the SAC indicates that it intends to attach an Exhibit A to the SAC; however, no such attachment is included.