Judge: David A. Hoffer, Case: 30-2022-1250772, Date: 2022-08-29 Tentative Ruling

Defendants mMAX Communications, Inc. (“mMAX” individually); Hong Peow Ong (“Ong” individually); Christine Tan (“Tan” individually); and mMAX Communications (PTE. Ltd.) (“Defendants” together) demurrer to plaintiff Hot Pepper, Inc.’s (“Plaintiff”) Complaint is CONTINUED to 10/31/22 for further briefing. 

Defendants have raised a valid question regarding the fraud causes of action (“COA”) as pled for COA Nos. 2 through 5, which each have as elements some sort of misrepresentation (false representation, concealment, or nondisclosure) or promise and justifiable/reasonable reliance on the part of Plaintiff.  However, Ong and Tan were alleged to be the CEO and manager of Plaintiff at the time the acts were allegedly perpetrated.  As such, how and/or to whom were these misrepresentations made as one cannot misrepresent to oneself, nor can a corporation communicate or act on its own behalf without direction of its managers.  It appears Plaintiff is attempting to plead communication with Plaintiff’s majority shareholder/Hong Kong owner as a basis for at least some of these COAs, however that entity is not a party to this lawsuit, nor has there been any sort of COA pled that might support that entity being able to sue Defendants in this action as a non-party.

The court continues the hearing for additional briefing on the fraud COAs by both parties.  First, though Defendants have raised a valid question, they cited to no statute or case law in support of that question (specifically, a company not being able to hold its former CEO and manager liable under the various fraud COAs as the CEO and manager cannot communicate with themselves and the CEO and manager are the individuals who direct the company).  Further, how can there be justifiable reliance on the part of the company when the CEO and manager are the ones making decisions on behalf of the company.  Finally, are the correct parties present in this lawsuit or should other entities, such as the majority shareholder/Hong Kong business, be brought in as additional plaintiffs/defendants.

The hearing is continued to 10/31/22.  With regard to the questions noted above, the parties are ordered to file simultaneous briefs of no more than 6 pages, exclusive of supplemental declarations, by 10/10/22.

The court will hold any ruling on the other non-fraud COAs and on the Motion to Strike until the 10/31/22 hearing date.

The court will give notice.