Judge: David A. Rosen, Case: 22GDCV00652, Date: 2023-02-17 Tentative Ruling
Case Number: 22GDCV00652 Hearing Date: February 17, 2023 Dept: E
Hearing Date: 02/17/2023 – 9:00am
Case No:22GDCV00652
Trial Date: Unset
Case Name:
Complaint
TERRY KIM, indiv; HYUNHEE CHOI, indiv; v. TK
CONSTRUCTION & DESIGN INC., a California corporation; BYUNGJAE KWON, indiv;
DANIEL H. SIM, indiv; NEWGEN HOMEDECO, INC., a California corp; YONG CHEOLL
KIIM, indiv; DHS CONSTRUCTION GROUP, Inc., a California corporation dba REVAMP;
AHYOUNG KIM, inidiv; and DOES 1-50
Cross-Complaint
DANIEL H. SIM, indiv; DHS CONSTRUCTION GROUP,
INC., a California corporation dba REVAMP v. BYUNGJAE KWON, indiv; AHYOUNG KIM,
indiv; TK CONSTRUCTION & DESIGN, INC. a California Corporation, and DOES
1-50
TENTATIVE RULING ON
DEFENDANTS’ DEMURRER & MOTION TO STRIKE
Moving Party: Defendants, Yong Cheoll Kim (Kim) and Newgen
Homedeco, Inc. (Newgen) (collectively Defendants.)
Responding Party: Plaintiffs,
Terry Kim and Hyunhee Choi (Plaintiffs)
Oppo and Reply
Submitted.
Moving Papers:
Demurrer
Opposition Papers:
Opposition
Reply Papers: Reply;
proof of service
RELIEF REQUESTED
Defendants Yong Cheoll
Kim (Kim) and Newgen Homedeco, Inc. (Newgen) demurrer to the second, third,
fourth, and fifth causes of action in Plaintiffs’ Complaint. The grounds for
the demurrer are that the causes of action fail to state facts sufficient to
constitute causes of action, and are otherwise uncertain.
MEET AND CONFER
A party filing a
demurrer “shall meet and confer in person or by telephone with the party who
filed the pleading that is subject to demurrer for the purpose of determining
whether an agreement can be reached that would resolve the objections to be
raised in the demurrer.” (Code Civ.
Proc., §430.41, subd. (a).) “The parties
shall meet and confer at least five days before the date the responsive
pleading is due. If the parties are not able to meet and confer at least five
days prior to the date the responsive pleading is due, the demurring party
shall be granted an automatic 30-day extension of time within which to file a
responsive pleading, by filing and serving, on or before the date on which a
demurrer would be due, a declaration stating under penalty of perjury that a
good faith attempt to meet and confer was made and explaining the reasons why
the parties could not meet and confer.”
(Code Civ. Proc., §430.41, subd. (a)(2).) Failure to sufficiently meet
and confer is not grounds to overrule or sustain a demurrer. (Id., §430.41(a)(4).)
Here,
in the Declaration of Gregory S. Kim, it indicates that Gregory met and
conferred with Plaintiff’s counsel; however, an agreement was not able to be
reached.
BACKGROUND
The
Complaint in this action was filed on 9/30/2022, and it alleges five causes of
action: (1) Breach of Contract, (2) Fraud, (3) Conversion, (4) Fraudulent
Conveyance, and (5) Breach of Promissory Note.
The general allegations in the Complaint stem from
Plaintiffs planning to renovate the subject property, Plaintiffs making
payments to certain Defendant or Defendants, and Defendant or Defendants never
performing the construction and not fully paying Plaintiffs back for the money
that Plaintiffs gave Defendant or Defendants.
A Cross-Complaint was filed on 11/14/2022, but the
Cross-Complaint is not the subject of this demurrer.
LEGAL STANDARD DEMURRER
Demurrer – Sufficiency
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.) The court “treat[s] the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or law ….” (Berkley v. Dowds (2007) 152
Cal.App.4th 518, 525.) In a demurrer proceeding, the defects must be apparent
on the face of the pleading or via proper judicial notice. (Donabedian v.
Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer tests the
pleadings alone and not the evidence or other extrinsic matters; therefore, it
lies only where the defects appear on the face of the pleading or are
judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) 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.)
The general rule is that the plaintiff need only
allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles
(2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter
of pleading … is that his complaint set forth the essential facts of the case
with reasonable precision and with sufficient particularity to acquaint the
defendant with the nature, source and extent of his cause of action.” (Rannard
v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.)
On demurrer, a trial court has an independent duty to
“determine whether or not the … complaint alleges facts sufficient to state a
cause of action under any legal theory.” (Das v. Bank of America, N.A. (2010)
186 Cal.App.4th 727, 734.) Demurrers do not lie as to only parts of causes of
action, where some valid claim is alleged but “must dispose of an entire cause
of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148
Cal.App.4th 97, 119.) “Generally it is an abuse of
discretion to sustain a demurrer without leave to amend if there is any
reasonable possibility that the defect can be cured by amendment.” (Goodman
v. Kennedy (1976) 18 Cal.3d 335, 349.)
Demurrer – Uncertainty
A special demurrer for uncertainty, CCP § 430.10(f), is disfavored and will
only be sustained where the pleading is so bad that defendant cannot reasonably
respond—i.e., cannot reasonably determine what issues must be admitted or
denied, or what counts or claims are directed against him/her. (Khoury
v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover,
even if the pleading is somewhat vague, “ambiguities can be clarified under
modern discovery procedures.” (Id.)
ANALYSIS
Second Cause of Action – Fraud
The
second cause of action for fraud is alleged against Defendants TK, Newgen, and Kwon.
Defendants, Newgen and Yong Cheoll Kim (Kim) filed the
instant demurrer. Here, Defendant Newgen is demurring generally to the fraud
cause of action for failure to state facts sufficient to constitute a cause of
action, and demurring specially as allegations of fraud require specificity of
facts as to when the misrepresentation occurred, who made the representation,
and where the representation was made.
Legal Standard Fraud Intentional
Misrepresentation
“‘The elements of fraud, which gives rise to the
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.’ “ (Small v. Fritz Companies, Inc. (2003)
30Cal.4th 167, 173 citing Lazar v.
Superior Court (1996) 12 Cal.4th 631, 638.)
(1)
Misrepresentation
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.)
Here the instant misrepresentations are located in Paragraph 46 of the
Complaint. There appear to be three misrepresentations which are labeled as [a],
[b], and [c].
The first misrepresentation, [a], is that “since pricing for the
construction materials, including lumbers, was skyrocketing because of the
shortage affected by the COVID pandemic, Plaintiffs should purchase the
construction materials now so that Plaintiffs could save the costs.”
The second misrepresentation, [b] is that “since Defendant Kwon also
owns the wholesale floor material business known as Defendant NEWGEN, Defendant
TK would purchase the construction materials and store them at Defendant Newgen
until the city permit for the project was issued.”
The third misrepresentation, [c] is that “Defendant TK already
purchased certain construction materials for the project and submitted a
Proforma Invoice issued by Shinark Inc.
Plaintiffs do not indicate how these misrepresentations were made.
As to when, Plaintiffs indicate the misrepresentations were made in or
about August 2021, but Plaintiffs do not indicate a date.
Plaintiffs do not indicate where these misrepresentations were made.
Plaintiffs do not indicate by what means these misrepresentations were
made.
Additionally, Newgen, the Defendant demurring to this cause of action,
is a corporate defendant, so the Plaintiffs 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.
As to the names of the persons who made the representations,
Plaintiffs allege as follows, “While the construction plan was submitted for
the city permit, in or about August 2021, Defendant Kwon, for himself and on
behalf of Defendants TK and Newgen, to Plaintiffs…” (Compl. ¶46.”
Therefore, it appears that Kwon made the misrepresentations on behalf of
Newgen. Further, Kwon’s authority to speak on behalf of Defendant Newgen
appears to be based on Paragraph 10 which is incorporated into the second cause
of action and states that Kwon is a shareholder, director, and/or officer of
Newgen.
As to whom the misrepresentations were made, Plaintiffs allege the
misrepresentations were made to “Plaintiffs” in Paragraph 46.
Ultimately, Plaintiffs failed to meet several of the specificity
requirements that this Court identified above, which results in Plaintiffs not
sufficiently alleging the first element of the breach of fraud cause of action.
(2)
Knowledge of falsity
(or “scienter”)
“Plaintiffs are informed and believe and, based thereon, allege that,
when such false and fraudulent representations were made, Defendants, and each
of them, knew them to be false.” (Compl. ¶49.)
Plaintiffs sufficiently alleged this element of the fraud cause of
action.
(3)
Intent to defraud,
i.e., to induce reliance
“Plaintiffs are
informed and believe and, based thereon, allege that, Defendants, and each of
them, made the aforesaid false and fraudulent representations with the specific
intent to defraud Plaintiff.” (Compl. ¶50.)
Plaintiffs
sufficiently alleged this element of the fraud cause of action.
(4)
Justifiable reliance
“Plaintiffs believed the aforesaid false and fraudulent
representations made by Defendants, and each of them, to be true and reasonably
relied on the truthfulness of such representations. The reliance by Plaintiffs
was further justified because, when the aforesaid false and fraudulent
representations were made, Plaintiffs had no means to discover any information
which would have negated the truthfulness of them.” (Compl. ¶51.)
“In reasonable reliance upon all of the aforesaid false and fraudulent
representations, Plaintiffs entered into
said agreement and had incurred a substantial sum of money in performing their
obligations under said agreement. Had Plaintiffs known that the aforesaid
representations were false and untrue, they would not have entered into said
agreement nor paid the monies to Defendants.” (Compl. ¶52.)
Plaintiffs sufficiently alleged this element of the fraud cause of
action.
(5)
Resulting damage
“As the actual and proximate result of the aforesaid
false and fraudulent representations, Plaintiffs have been damaged in a sum
of$283,669.71.” (Compl. ¶53.)
Plaintiffs sufficiently alleged this element of the
fraud cause of action.
Tentative Ruling – Second Cause of Action
for Fraud
Defendant’s
– Newgen - demurrer as to the fraud cause of action is sustained because
Plaintiffs did not sufficiently allege the first element of a fraud cause of
action. Plaintiffs are granted 20 days’ leave to amend.
Third Cause of Action – Conversion
Plaintiffs’
third cause of action for conversion is alleged against all Defendants. Here,
Defendants Newgen and Yong Cheoll Kim (Kim) demur to the third cause of action
generally for failure to state facts sufficient to constitute a cause of action
and demur specially on the basis that
the Complaint does not have any factual allegations as to Defendants Newgen and
Kim against any direct acts considered for conversion.
Conversion
As
a preliminary matter, the demurrer as to this cause of action is poorly written
and the Court finds it hard to decipher what arguments Defendants are even
trying to make. Further, the Opposition is written in as equally poor of a
manner as it does not help the Court determine if Plaintiffs sufficiently
alleged a cause of action for conversion.
“Conversion is generally described as the wrongful
exercise of dominion over the personal property of another. The basic elements
of the tort are (1) the plaintiff’s ownership or right to possession of
personal property; (2) the defendant’s disposition of the property in a manner
that is inconsistent with the plaintiff’s property rights; and (3) resulting
damages.” (Regent Alliance Ltd. v. Rabizadeh (2014) 231 Cal.App.4th
1177, 1181.)
Plaintiffs allege as such in their third cause of
action for conversion:
Plaintiffs repeat and
reallege paragraphs 1 through 54, inclusive, of this Complaint and incorporate
by this reference each and every allegation contained therein as though fully
set forth herein. (Compl. ¶55.)
Defendants TK and KWON
received the total sum of$382,869.71 from Plaintiffs since April 23, 2021 for
the construction on the Subject Property. Defendants TK, KWON and AHYOUNG KIM
later paid back the sum of $80,000.00. (Compl. ¶56.)
Plaintiffs are informed
and believe and, based thereon, allege that Defendants TK and KWON had
transferred and wrongfully and unlawfully converted the monies received from
Plaintiffs for the construction on the
Subject Property to themselves and/or other co-Defendants. (Compl. ¶57.)
Plaintiffs have
continuously demanded the immediate return of the converted money, but
Defendants TK and KWON have failed and refused, and continue to fail and
refuse, to return the said money. (Compl.
¶58.)
As a proximate result of Defendants'
conversion, Plaintiffs suffered damages in a sum of $283,669.71. (Compl. ¶59.)
The aforementioned
conduct of Defendants is despicable, malicious, intentional and justifies an
award of exemplary and punitive damages in a sum according to proof at trial.
(Compl. ¶60.)
Here, the Court fails to see where Plaintiffs alleged
the first and second elements for their conversion cause of action.
Further, Defendants argue “Defendants Kim and Newgen
are nowhere involved to be liable for this cause of action. Defendants Kim and
Newgen were not involved in receiving any part of Plaintiffs’ property or funds
and did not commit any wrongful act against Plaintiffs.”
Although it is not entirely clear to the Court, it
appears that Defendants may attempting to be arguing that since there are no
allegations against demurring Defendants Newgen and Kim in this cause of
action, and the allegations are only against TK and Kwon, Plaintiffs cannot allege
a cause of action against Newgen and Kim.
However, what Defendants seem to forget/ignore is
Paragraph 16 of the Complaint, which is incorporated into the conversion cause
of action, which states, “At all times herein mentioned, each of the Defendants,
including the fictitiously named Defendants, were and are the agents and
employees of each of the remaining Defendants, and were acting within the scope
of such agency and employment while performing the acts complained of herein.”
(Compl. ¶16.)
Therefore, although these allegations weren’t specifically
alleged against moving Defendants, Newgen and Kim, Plaintiffs may still be able
to state a cause of action against Newgen and Kim, because the Complaint
alleges that each of the Defendants were and are the agents of each of the
remaining Defendants.
As stated in Doe v. Roman Catholic Archbishop of
Los Angeles (2016) 247 Cal.App.4th 953, 969:
As pertinent here,
a principal may be liable for the wrongful conduct of its agent, even if that conduct
is criminal, in one of three ways: (1) if the “ ‘principal directly authorizes
... [the tort or] crime to be committed’ ” (People v. Williams (2004)
118 Cal.App.4th 735, 743, 13 Cal.Rptr.3d 569); (2) if the agent commits the
tort “in the scope of his employment and in performing service on behalf of the
principal” (Draper v. Hellman Commercial Trust & Sav. Bank (1928)
203 Cal. 26, 38–39, 263 P. 240; Johnson v. Monson (1920) 183
Cal. 149, 151, 190 P. 635), “regardless of whether the wrong is authorized or
ratified by [the principal]” (Nuffer v. Insurance Co. of North America (1965)
236 Cal.App.2d 349, 355, 45 Cal.Rptr. 918; Hudson v. Nixon (1962)
57 Cal.2d 482, 484, 20 Cal.Rptr. 620, 370 P.2d 324), and even if the wrong is
criminal (Nuffer, at p. 355, 45 Cal.Rptr. 918); see
generally Civ.Code, § 2338; or (3) if the principal ratifies its agent's
conduct “after the fact by ... voluntar[ily] elect[ing] to adopt the [agent's]
conduct ... as its own” (Delfino v. Agilent Technologies, Inc. (2006)
145 Cal.App.4th 790, 810, 52 Cal.Rptr.3d 376; Rakestraw v. Rodrigues (1972)
8 Cal.3d 67, 73, 104 Cal.Rptr. 57, 500 P.2d 1401).
(Doe v. Roman
Catholic Archbishop of Los Angeles (2016) 247 Cal.App.4th 953, 969.)
However, since here it is not clear to the Court how
Plaintiffs alleged a conversion cause of action against any Defendant, the
demurrer as to this cause of action is sustained with leave to amend granted.
Tentative Ruling – Third Cause of Action –
Conversion
Defendants’
demurrer as to the third cause of action for conversion is sustained with 20
days’ leave to amend.
Fourth Cause of Action – Fraudulent
Transfer
Plaintiffs
fourth cause of action for fraudulent transfer is alleged against all
Defendants.
Defendants Newgen and Kim demurrer to the fourth cause
of action for failure to state facts sufficient to constitute a cause of action
and on the grounds that the Complaint does not contain any factual allegations
as to Defendants against any acts considered for fraudulent transfers.
Fraudulent Transfer
As a preliminary matter, both the Defendants and the
Plaintiffs arguments in moving and Opposition papers are incomprehensible.
As
stated in Nautilus, Inc. v. Yang :
A fraudulent
conveyance is “a transfer by the debtor of property to a third person
undertaken with the intent to prevent a creditor from reaching that interest to
satisfy its claim.” (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8,
13, 33 Cal.Rptr.2d 283.) The UFTA makes fraudulent transfers voidable: “(a) A transfer made or obligation incurred by a debtor is
voidable as to a creditor, whether the creditor's claim arose before or after
the transfer was made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation as follows: [¶] (1) With actual intent
to hinder, delay, or defraud any creditor of the
debtor. [¶] (2) Without receiving a reasonably
equivalent value in exchange for the transfer or obligation, and the debtor
either: [¶] (A) Was engaged or was about to engage in a business or a
transaction for which the remaining assets of the debtor were unreasonably
small in relation to the business or transaction. [¶] (B) Intended to incur, or
believed or reasonably should have believed that the debtor would incur, debts
beyond the debtor's ability to pay as they became due.” (§ 3439.04, subd. (a).)
(Nautilus, Inc.
v. Yang (2017) 11 Cal.App.5th 33, 39.)
Plaintiffs allege in their Complaint:
Plaintiffs repeat
and reallege paragraphs 1 through 60, inclusive, of this Complaint and
incorporate by this reference each and every allegation contained therein as
though fully set forth herein. (Compl. ¶61)
Plaintiffs are
informed and believe and, based thereon, allege that, in anticipation of
Plaintiffs' legal claim for conversion, in order to avoid legal liabilities
resulting therefrom and in order to hide their assets so as to be able to seek
government assistance, Defendants TK and KWON, without the consent of
Plaintiffs and without receiving any consideration, transferred the monies to
co-Defendants named herein. (Compl. ¶62.)
Plaintiffs are
informed and believe and, based thereon, allege that the alleged transfer was
made with an actual intent to defraud Plaintiffs. Further, the alleged transfer
was made without Plaintiffs' consent, approval and knowledge and therefore is
void and invalid. (Compl. ¶63.)
(Compl. ¶¶61-63.)
A transfer made or obligation incurred by
a debtor is voidable as to a creditor, whether the creditor's claim arose
before or after the transfer was made or the obligation was incurred, if the
debtor made the transfer or incurred the obligation as follows:
(1) With actual intent to hinder delay, or
defraud any creditor of the debtor.
(2) Without receiving a reasonably
equivalent value in exchange for the transfer or obligation, and the debtor
either:
(A)
Was engaged or was about to engage in a business or a transaction for which the
remaining assets of the debtor were unreasonably small in relation to the
business or transaction.
(B)
) Intended to incur, or believed or reasonably should have believed that the
debtor would incur, debts beyond the debtor's ability to pay as they became
due.”
As to element (1), Plaintiffs appeared to allege this
element by stating, “Plaintiffs are informed and believe and, based thereon,
allege that the alleged transfer was made with an actual intent to defraud
Plaintiffs.” (Compl. ¶63.) Therefore element (1) is met.
As to element (2), Plaintiffs appeared to allege this
element by stating, “without receiving consideration, transferred the monies to
co-Defendants named herein” (Compl. ¶62.) Therefore element (2) is met if
Plaintiffs also allege one of either (2)(A) or (2)(B).
As to element (2)(A) and (2)(B), the Court fails to
see how Plaintiffs alleged one of the two.
TENTATIVE RULING – Fourth Cause of Action
– Fraudulent Transfer
Defendants’
demurrer as to the fourth cause of action for fraudulent transfer is sustained
with 20 days’ leave to amend.
Fifth Cause of Action – Breach of Promissory
Note
The
fifth cause of action for breach of promissory note is alleged against
Defendants Kwon, TK, and Newgen.
Defendant
Newgen generally demur to the fifth cause of action for failure to state facts
sufficient to constitute a cause of action and specially demur on grounds that Newgen
did not execute the Secured Promissory Note stated in the Complaint and there
is no privity as to Newgen and thus Newgen cannot be bound by the agreement.
To state a cause of action for breach of contract, Plaintiff
must allege “(1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) resulting damages to
the plaintiff.” (Oasis West Realty,
LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
A cause of action for breach of contract is subject to demurrer if “it
cannot be ascertained from the pleading whether the contract is written, is
oral, or is implied by conduct.” (Code
Civ. Proc., §430.10(g).) A written contract must be pled verbatim in the body
of the complaint, be attached to the complaint and incorporated by reference,
or be pled according to its legal effect.
(Bowden v. Robinson (1977) 67 Cal.App.3d 705, 718.) An allegation of an oral agreement must
“set[] forth the substance of its relative terms.” (Gautier v. General Tel. Co. (1965)
234 Cal.App.2d 302, 305.)
Plaintiffs allege as such, “On August 18, 2022, Plaintiffs
and Defendant KWON executed the Secured Promissory Note, wherein he promised to
pay back $283,669.71 with a payment plan and promised to provide the UCC lien
against Defendants TK and NEWGEN. A true and correct copy of the Secured
Promissory Note is attached hereto as Exhibit 8 and is incorporated by this
reference as though fully set forth herein. Defendant KWON failed to pay the
first installment payment of $150,000.00, which was due on September 15, 2022.”
(Compl. ¶36)
Paragraph 36 of the Complaint is incorporated into the fifth
cause of action via Paragraph 64 of the Complaint.
Therefore, although Plaintiffs did not explicitly state they
were suing on a written contract, it is apparent from the Exhibit that the
contract is a written contract. Further, the Court notes that the Promissory
Note that is attached to the Complaint is Exhibit 9 and not Exhibit 8, even
though the Complaint lists the Promissory note as Exhibit 8.
As to the allegations listed in the fifth cause of action,
Plaintiffs allege:
On August 18, 2022, Plaintiffs and Defendant KWON executed
the Secured Promissory Note (the ''Note"), wherein Defendant KWON agreed
to make payments totaling $283,669.71 and to provide UCC liens against
Defendants TK and NEWGEN. (Compl. ¶65.)
Said Defendants, and each of them, have breached said
agreement with Plaintiffs by failing to pay the first installment payment
of$150,000.00, which was due on September 15, 2022. (Compl. ¶66.)
As a direct result of said Defendants' breach of said
agreement as aforesaid, Plaintiffs have
been damaged in the sum of$283,669.71. (Compl. ¶67.)
Plaintiffs have made a number of demands upon said
Defendants, and each of them, for the payment of said sum, but said Defendants,
and each of them, have failed and refused, and continue to fail and refuse, to
pay said sum, and the whole thereof remains due, owing and unpaid. (Compl.
¶68.)
Plaintiffs are entitled to their attorneys under the Note,
along with the late fees. (Compl. ¶69.)
Here, the Court does not see where in Plaintiffs’ allegation
that Plaintiffs alleged the second element of a breach of contract claim, namely,
plaintiffs’ performance or excuse for nonperformance.
Moreover, Defendant Newgen argues that this claim fails
because the promissory note is executed only between Plaintiffs as Lender, and
Defendant Kwon as Borrower. Therefore, Defendant Newgen argues, this document
has nothing to do with Newgen and provides no basis for allegations as to
Defendant Newgen. Nevertheless, agency as the Complaint alleges that each
Defendant is the agent of the other, may cure this defect, but the pleading
remains ambiguous on this point.
Tentative Ruling – Fifth Cause of Action – Breach of
Promissory Note
Plaintiffs failed to allege all elements of a breach of
contract claim. Defendant’s demurrer is sustained with 20 days’ leave to amend as
to the fifth cause of action.
MOTION TO STRIKE
Moving Party: Defendants, Newgen and Kim
Responding Party: Plaintiffs
Proof of Service
Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok
RELIEF REQUESTED
Defendants
move to strike the following portions of Plaintiffs’ Complaint:
3. “Plaintiffs are informed and believe
and, based thereon, alleged that transfer was made with an actual intent to
defraud Plaintiffs.” ¶ 63, under the Fourth Cause of Action
5. “For attorney’s fees and costs incurred
herein;” Complaint pg. 15, line 24, under Plaintiffs’ Prayer
6. “Award exemplary and punitive in a sum
according to proof at trial.” Complaint pg. 16, line 3, under Plaintiffs’
Prayer
Meet and Confer
Before
filing a motion to strike pursuant to this chapter, the moving party shall meet
and confer in person or by telephone with the party who filed the pleading that
is subject to the motion to strike for the purpose of determining if an
agreement can be reached that resolves the objections to be raised in the
motion to strike. If an amended pleading is filed, the responding party shall
meet and confer again with the party who filed the amended pleading before
filing a motion to strike the amended pleading. (CCP §435.5(a).)
The moving party shall file and serve with
the motion to strike a declaration stating either of the following:
(A) The means by which the moving
party met and conferred with the party who filed the pleading subject to the
motion to strike, and that the parties did not reach an agreement resolving the
objections raised by the motion to strike.
(B) That the party who filed the
pleading subject to the motion to strike failed to respond to the meet and
confer request of the moving party or otherwise failed to meet and confer in
good faith.
(4) A determination by the court that
the meet and confer process was insufficient shall not be grounds to grant or
deny the motion to strike.
(CCP §435.5 (a)(3)-(4).)
Here, moving counsel did not file a
declaration stating that it met and conferred with respect to the motion to
strike.
MOTION TO STRIKE LEGAL STANDARD
The court may, upon a motion, or at any time in its
discretion, and upon terms it deems proper, strike any irrelevant, false, or
improper matter inserted in any pleading. (Code Civ. Proc. § 436(a).) The court
may also strike all or any part of any pleading not drawn or filed in
conformity with the laws of this state, a court rule, or an order of the court.
(Code Civ. Proc. § 436(b).) A motion to strike cannot be based upon the
grounds that a complaint fails to state facts sufficient to constitute a cause
of action, but instead is properly based on grounds of superfluous or abusive
allegations, or improprieties in form or procedure. (Ferraro
v. Camarlinghi (2008) 161 Cal.App.4th 509,
528-29.)
The grounds for moving to strike must appear on the
face of the pleading or by way of judicial notice. (Code. Civ. Proc. §
437; Turman v. Turning Point of Central California, Inc. (2010) 191
Cal.App.4th 53, 63 [“judges read allegations of a pleading subject to a motion
to strike as a whole, all parts in their context, and assume their
truth”].)
ANALYSIS
1. “exemplary damages should be awarded
against Defendants, and each of them, in favor of Plaintiffs in a sum according
to proof at trial” ¶ 54, under the Second Cause of Action
Defendants moved to strike portion 1 listed above from
the Complaint.
Punitive Damages
California
Civil Code section 3294 authorizes the recovery of punitive damages in
non-contract cases where “the defendant has been guilty of oppression, fraud,
or malice . . . ” (Civ. Code § 3294(a).) Punitive damages thus require
more than the mere commission of a tort. (See Taylor v. Superior Court (1979)
24 Cal.3d 890, 894-95.) “‘Malice’ means conduct which is intended by the
defendant to cause injury to the plaintiff or despicable conduct which is
carried on by the defendant with a willful and conscious disregard of the
rights or safety of others.” (CCP § 3294(c)(1).) “‘Oppression’ means
despicable conduct that subjects a person to cruel and unjust hardship in
conscious disregard of that person’s rights.” (Id.,§ 3294(c)(2).) “‘Fraud’
means an intentional misrepresentation, deceit, or concealment of a material
fact known to the defendant with the intention on the part of the defendant of
thereby depriving a person of property or legal rights or otherwise causing
injury.” (Id., § 3294(c)(3).) Specific facts must be pleaded
in support of punitive damages. (See Hillard v. A.H. Robins Co. (1983)
148 Cal.App.3d 374, 391-92.)
Tentative Ruling – Motion to strike
Portion 1
The
second cause of action for fraud was alleged against TK, Newgen, and Kwon.
Defendant Newgen was the only Defendant that demurred to the fraud cause of
action, and as stated in the ruling on Motion 1 with respect to the fraud cause
of action, the demurrer was sustained. At first glance, it appears as if the
instant portion should not be stricken because the allegations of the fraud
cause of action could potentially still exist as to the Defendants that did not
demur, TK and Kwon. However, based on the Court’s analysis of how fraud was not
alleged against Newgen, Plaintiffs would not have successfully alleged a fraud
cause of action against any Defendant.
Therefore, motion to strike portion 1 is
granted. 20 days’ Leave to amend is granted. Velez v. Smith (2006) 142
Cal. App. 4th 1154.
2. “The aforementioned conduct of Defendants is despicable,
malicious, intentional and justifies an award of exemplary and punitive damages
in a sum according to proof at trial.” ¶ 60, under the Third Cause of Action
Tentative Ruling on motion to strike portion 2
The third cause of action for conversion was alleged against
all Defendants. Moving Defendants, Kim and Newgen, move to strike portion 2
from the Complaint.
As a preliminary matter, the Court fails to see that moving
Defendants have provided as an adequate basis to strike the portion in
Paragraph 60 that alleges, “The aforementioned conduct of Defendants is
despicable, malicious, intentional.”
Therefore, the Court does not strike the portion of request
2 in Paragraph 60 that says, “The aforementioned conduct of Defendants is
despicable, malicious, intentional.”
However, as to the portion of Paragraph 60 that says,
“justifies an award of exemplary and punitive damages in a sum according to
proof at trial,” the Court strikes this portion. At first glance, it appears as
if the instant portion should not be stricken because the allegations of the conversion
cause of action could potentially still exist as to the Defendants that did not
demur. However, based on the Court’s analysis of how conversion was not alleged
against Newgen and Kim, Plaintiffs would not have successfully alleged a conversion
cause of action against any Defendant.
Motion to strike portion 2 is granted in part and denied in
part. The portion in Paragraph 60 that states, “The aforementioned conduct of
Defendants is despicable, malicious, intentional,” is not stricken, and the
motion as to that portion is denied. The portion in Paragraph 60 that states, “justifies an award of exemplary and
punitive damages in a sum according to proof at trial,” is stricken, and the
motion as to that portion is granted. 20 days’ leave to amend is granted.
3. “Plaintiffs are informed and believe
and, based thereon, alleged that transfer was made with an actual intent to
defraud Plaintiffs.” ¶ 63, under the Fourth Cause of Action
Tentative Ruling on motion to strike
portion 3
The
Court fails to see why the instant request should be stricken. Moving
Defendants provide no legal explanation as to why this portion should be
stricken. Motion to strike portion 3 is denied.
4. “Plaintiffs are entitled to their
attorneys under the Note, along with the late fees.” ¶ 69, under the Fifth
Cause of Action
The fifth cause of action is alleged
against Kwon, TK, and Newgen. Therefore, the only moving Defendant relevant to
this portion to strike would be Defendant Newgen.
As a preliminary matter, technically Paragraph 69 doesn’t
request attorney fees, as indicated in the quote above. Presumably Plaintiffs
accidentally left out the word “fees” after the word “attorneys.”
Legal Standard – Attorney’s Fees
“Except
as attorney’s fees are specifically provided for by statute, the measure and
mode of compensation of attorneys and counselors at law is left to the
agreement, express or implied, of the parties; but parties to actions or
proceedings are entitled to their costs, as hereinafter provided.” (CCP §1021.)
The following items are allowable as costs under Section 1032: attorney’s fees,
when authorized by contract. (CCP §1033.5(a)(10)(A).) An award of costs shall
be subject to attorney’s fees awarded pursuant to Section 1717 of the Civil
Code are allowable as costs under Section 1031 as authorized by subparagraph
(A) of paragraph (10) of subdivision (a). (CCP §1033.5(c)(5)(B).)
“In any action on a contract, where the contract
specifically provides that attorney’s fees and costs, which are incurred to
enforce that contract, shall be awarded either to one of the parties or to the
prevailing party, then the party who is determined to be the party prevailing
on the contract, whether he or she is the party specified in the contract or
not, shall be entitled to reasonable attorney’s fees in addition to other
costs.” (CCP §1717(a).)
Tentative Ruling Option 1 on Motion to
Strike Portion 4
The
motion to strike portion 4 is granted because Paragraph 69 is incomprehensible
and thus the Court finds the allegation improper. 20 days’ leave to amend is
granted.
Tentative Ruling Option 2 on Motion to
Strike Portion 4
The
fifth cause of action for breach of promissory note was alleged against Kwon,
TK, and Newgen. Therefore, the only moving Defendant relevant to this portion
is Defendant Newgen.
As a preliminary matter, Plaintiffs did not
sufficiently allege the breach of promissory note against any Defendant. If Plaintiffs had successfully alleged a
cause of action against any Defendant, then presumably Plaintiffs are
requesting attorney fees based on the provision in the promissory note that
states:
12. ATTORNEYS'
FEES AND COSTS. Borrower shall pay all costs incurred by Lender in collecting
sums due under this Note after a default, including reasonable attorneys' fees.
If Lender or Borrower sues to enforce this Note or to obtain a declaration of
its rights hereunder, the prevailing party in any such proceeding shall be
entitled to recover its reasonable attorneys' fees and costs incurred in the
proceeding (including those incurred in any bankruptcy proceeding or appeal)
from the non-prevailing party.
(Compl. Ex. 9, ¶12.)
Moving party alleges that Newgen could not
be liable for this cause of action because it was not a party to the
contract/promissory note; therefore, Newgen could not be liable for attorney’s
fees. However, whether moving party’s argument is legally accurate or not, is
immaterial because Plaintiffs did not successfully allege an action for breach
of promissory note against any Defendant. Therefore, the attorney fee
provision in the breach of promissory note doesn’t apply to any Defendant.
Motion to strike portion 4 is granted. 20
days’ leave to amend is granted.
5. “For attorney’s fees and costs incurred herein;” Complaint pg. 15, line 24,
under Plaintiffs’ Prayer
The instant prayer appears to be directed against all
Defendants. Moving Defendants here are Newgen and Kim.
Tentative Ruling motion to strike portion
5
Motion to strike portion 5 is granted for the same
reasons as indicated in the Court’s tentative as to striking portion 4. 20
days’ eave to amend is granted.
6. “Award exemplary and punitive in a sum
according to proof at trial.” Complaint pg. 16, line 3, under Plaintiffs’
Prayer
As a preliminary matter, in the Complaint, this request
is under a section titled “ADDITIONALLY, ON THE SECOND, THIRD AND FOURTH CAUSE
OF ACTION.”
Tentative ruling motion to strike portion
6
Since the Court sustained the demurrers as to the
second, third, and fourth causes of action for failure to statute sufficient
facts to constitute a cause of action, this request is also stricken based on
the reasoning in the Court’s tentative for striking portions 1, 2, and 3.
Motion to strike portion 6 is granted. 20 days leave to amend is granted.