Judge: Daniel S. Murphy, Case: 23STC21282, Date: 2024-11-25 Tentative Ruling

Case Number: 23STC21282    Hearing Date: November 25, 2024    Dept: 32

BACKGROUND

            On September 5, 2023, Plaintiff and Cross-Defendant VISM Studio filed this action against Defendants and Cross-Complainants Woo-Jin Choi and Eunmi Song, alleging breach of contract. The complaint alleges that Choi and Song breached their employment contracts by abandoning their positions at VISM’s tattoo studio, causing lost profits. 

            Choi and Song have cross-complained against VISM, with the operative Second Amended Cross-Complaint (SACC) filed on June 5, 2024. The SACC asserts causes of action for (1) breach of the implied covenant of good faith and fair dealing, (2) intentional misrepresentation, (3) negligent misrepresentation, (4) unfair business practices, and (5) common count – goods and services rendered. The SACC alleges that Choi and Song were induced into working for VISM through false promises. VISM also allegedly required Choi and Song to pay VISM’s staff for overtime and allegedly instructed Choi and Song to stop working before May 15, 2023 to prevent them from receiving certain commissions for the month of April 2023.

            On October 29, 2024, VISM filed the instant demurrer to the SACC. Song and Choi filed their opposition on November 7, 2024. VISM filed its reply on November 12, 2024.  

LEGAL STANDARD

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, supra, 147 Cal.App.4th at 747.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court notes that VISM has complied with the meet and confer requirement. (See Satnick Decl.)

DISCUSSION

            VISM demurs to the first, fourth, and fifth causes of action. In response, Choi and Song concede the first and fifth causes of action. Thus, the only issue is the fourth cause of action for unfair business practices.

            Business and Professions Code section 17200 prohibits unlawful, unfair, or fraudulent business acts or practices. Each of the three prongs is an independent basis for relief. (Smith v. State Farm Mutual Automobile Insurance Co. (2001) 93 Cal.App.4th 700, 718.) Unlawful conduct is defined as any practice forbidden by law. (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383.) UCL actions alleging unlawful conduct “borrow” from other statutes or common law causes of action outside Section 17200. (Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1383.)    A UCL claim may be maintained “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.)

VISM argues that because it was not obligated to pay Choi and Song commission for April 2023, Choi and Song suffered no injury in fact. However, the UCL claim incorporates all prior allegations (SACC ¶ 52), and VISM does not challenge the fraud claims. The conduct underlying the fraud claims sufficiently caused harm for standing under the UCL.

VISM argues that the fraud allegations are insufficient because “fraud” under the UCL means conduct that is likely to deceive the public. (See Committee on Children's Television v. General Foods Corp. (1983) 35 Cal.3d 197, 211.) VISM argues that the fraud alleged here only involves itself and Choi/Song. However, the alleged fraud may constitute “unlawful” conduct. Common law torts may be considered unlawful under the UCL. (Klein, supra, 202 Cal.App.4th at p. 1383.)   

Lastly, VISM argues that because the UCL only permits equitable remedies, Choi and Song must allege the inadequacy of legal remedies. The cited authority does not stand for this proposition. The court in Bush v. California Conservation Corps (1982) 136 Cal.App.3d 194, 204 held that “[s]ince the administrative remedies were nonexistent and/or constitutionally inadequate, there was no obligation on plaintiffs' part to exhaust them prior to bringing the action.” This has nothing to do with legal or equitable remedies, and the case does not mention the UCL at all. In reality, the UCL expressly states that “the remedies or penalties provided by this chapter are cumulative to each other and to the remedies or penalties available under all other laws of this state.” (Bus. & Prof. Code, § 17205.)

Thus, the SACC adequately alleges a UCL claim.

CONCLUSION

            VISM’s demurrer is SUSTAINED without leave to amend as to the first and fifth causes of action and OVERRULED as to the fourth cause of action.