Superior Court of California

County of Los Angeles

Department 26

GEORGE KAI,

Plaintiff,

vs.

HAMID KALHOR; MOJTABA SHAHRAM TAAT; ACCESS LIQUOR, INC.; DNA LIQUOR, INC.; DNA LIQUOR TOO, INC.; JEFFERSON ANDREWS LLC; et al.,

Defendants.

Case No.: 23STCV10158

Hearing Date: February 5, 2024

[TENTATIVE] order RE:

DEFENDANTs ACCESS LIQUOR, INC., DNA LIQUOR, INC., DNA LIQUOR TOO, INC., AND JEFFERSON ANDREWS LLC’s Demurrer to THE complaint

Procedural Background

On May 5, 2023, Plaintiff George Kai (“Plaintiff”) filed the instant action against Defendants Hamid Kalhor, Mojtaba Sharam Taat, Access Liquor, Inc., DNA Liquor, Inc., DNA Liquor Too, Inc., and Jefferson Andrews LLC (collectively “Defendants”). The complaint asserts five causes of action for (1) Breach of Partnership Agreement, (2) Declaratory Relief, (3) Accounting of Partnership Funds, (4) Declaratory Relief, and (5) Breach of Agreement to Split Profits and Losses.

On May 5, 2023, Defendants Access Liquor, Inc., DNA Liquor, Inc., DNA Liquor Too, Inc., and Jefferson Andrews LLC (collectively “Entity Defendants”) filed the instant demurrer to the complaint. On January 23, 2024, Plaintiff filed an opposition. On January 29, 2024, Entity Defendants filed a reply.

Allegations of the Operative Complaint

The Complaint alleges that:

In late 2017, Plaintiff and Defendants Hamid Kalhor and Mojtaba Sharam Taat (jointly “Individual Defendants”) entered into an oral partnership agreement to buy and operate five liquor stores. (Complaint ¶¶ 12-13.) Pursuant to the partnership agreement, (1) Plaintiff would recommend the store to buy and hire business brokers to help find five liquor stores to buy, (2) each would contribute approximately 1/3 of all costs for the store and receive ownership and profits/losses based on the ownership percentage, (3) Plaintiff would oversee construction of improvements and set up the stores to begin operation, and (4) Plaintiff would manage the stores for $2,500.00 per month. (Id. ¶ 13.)

On December 22, 2017, pursuant to the partnership agreement, Plaintiff and Individual Defendants purchased the liquor store located at 247 E. Manchester Avenue, Los Angeles, CA 90002 (the “Manchester Store”) through Access Liquor, Inc. (Id. ¶ 14.) Plaintiff and Individual Defendants agreed to own and split profits/losses for the Manchester Store with Plaintiff at 30%, Hamid Kalhor at 30%, and Mojtaba Sharam Taat at 40%. (Id. ¶ 14.) Plaintiff and Individual Defendants contributed a significant amount to purchasing, improving, and maintaining the Manchester Store. (Id. ¶¶ 15-16.) Plaintiff and Individual Defendants acted pursuant to the partnership agreement, splitting profits and loses according to ownership, and Plaintiff oversaw the Manchester Store’s operations. (Id. ¶¶ 17-20.)

In March 2018, pursuant to the partnership agreement, Plaintiff and Individual Defendants purchased the liquor store located at 8303 South Main Street, Los Angeles, CA 90003 (the “Main Street Store”) through DNA Liquor, Inc. with the real property purchased in the name of Jefferson Andrews LLC. (Id. ¶¶ 21-22.) Plaintiff and Individual Defendants agreed to own and split profits/losses for the Main Street Store with Plaintiff at 30%, Hamid Kalhor at 30%, and Mojtaba Sharam Taat at 40%. (Id. ¶ 21.) Plaintiff and Individual Defendants contributed a significant amount to purchasing, improving, and maintaining the Manchester Store. (Id. ¶¶ 23-24.) Plaintiff and Individual Defendants acted pursuant to the partnership agreement splitting profits and loses according to ownership and Plaintiff oversaw the Main Street Store’s operation. (Id. ¶¶ 25-26.)

Again, in March 2018, pursuant to the partnership agreement, Plaintiff and Individual Defendants purchased the liquor store located at 1016 West Compton, Los Angeles, CA 90220 (the “Compton Store”)through DNA Liquor Too, Inc. (Id. ¶ 27.) Plaintiff and Individual Defendants agreed to own and split profits/losses for the Compton Store with Plaintiff at 30%, Hamid Kalhor at 30%, and Mojtaba Sharam Taat at 40%. (Id. ¶ 27.) Plaintiff and Individual Defendants contributed a significant amount to purchasing, improving, and maintaining the Manchester Store. (Id. ¶¶ 28-30.) Plaintiff and Individual Defendants acted pursuant to the partnership agreement splitting profits and loses according to ownership and Plaintiff oversaw the Compton Store’s operation. (Id. ¶¶ 31-32.)

In February 2019, pursuant to the partnership agreement, Plaintiff and Individual Defendants purchased the liquor store located at 300 W. Victoria St., Carson CA 90746 (the “Gardena Store”) through DNA Liquor, Inc. with the real property purchased in the name of Jefferson Andrews LLC. (Id. ¶ 33.) Plaintiff and Individual Defendants agreed to own and split profits/losses for the Main Street Store with Plaintiff at 33 1/3%, Hamid Kalhor at 33 1/3%, and Mojtaba Sharam Taat at 33 1/3%. (Id. ¶ 33.) Plaintiff and Individual Defendants contributed a significant amount to purchasing, improving, and maintaining the Gardena Store. (Id. ¶¶ 34-35.) Plaintiff and Individual Defendants acted pursuant to the partnership agreement splitting profits and loses according to ownership and Plaintiff oversaw the Gardena Store’s operation. (Id. ¶¶ 37-38.)

In mid-2019, Plaintiff and Individual Defendants began making loans to a third party, Douglas. (Id. ¶¶ 39-41.)

In December 2019, Plaintiff and Individual Defendants agreed to use Jefferson Andrews LLC to help purchase a house for Plaintiff as he could not qualify for a mortgage due to low credit rating. (Id. ¶ 45.) Pursuant to the agreement, the house and mortgage was in Jefferson Andrews LLC’s name, but Plaintiff would make all payments, which the parties proceeded with. (Id. ¶¶ 45-49.)

Disputes arose between Plaintiff and Individual Defendants. (Id. ¶¶ 42-44, 50-53.) By June 9, 2020, Plaintiff stopped working at the stores but continued to take calls when problems occurred. (Id. ¶ 54.) Plaintiff and Individual Defendants had a final falling out. (Id. ¶ 55-57.) Since June 9, 2020, the Individual Defendants have breached the partnership agreement by failing to pay profits and Plaintiff’s management fees. (Id. ¶ 61.)

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.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

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 Dep’t of Water & Power (2006) 144 Cal. App. 4th 1216, 1228.) 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.” (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.) “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 Requirement

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party 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.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension. (CCP § 430.41(a)(2).) The demurring party must also file and serve a declaration detailing the meet and confer efforts. (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading. (Id.¿at (a).)

Entity Defendants have satisfied the meet and confer requirement. (Krause-Leemon Decl. ¶ 2.)

Discussion

Fourth Cause of Action: Declaratory Relief

Entity Defendants contend that the single claim against them for declaratory relief fails because (1) there is no alleged controversy with the Entity Defendants, (2) the declaratory relief only seeks to redress past wrongs, and (3) the declaration of duties sought is too vague.

The elements of declaratory relief are “‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to [Plaintiff’s] rights or obligations.... [Citation.]’” (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582.) Declaratory relief is proper “in cases of actual controversy relating to the legal rights and duties of the respective parties[.]” (CCP § 1060.) However, “[t]he court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” (CCP § 1061.) “The broad discretionary power of the trial court to deny declaratory relief may be invoked by general demurrer.” (General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 471.)

“ ‘ “The purpose of a declaratory judgment is to ‘serve some practical end in quieting or stabilizing an uncertain or disputed jural relation.’ ” [Citation.] “Another purpose is to liquidate doubts with respect to uncertainties or controversies which might otherwise result in subsequent litigation [citation].” [Citation.]' [Citation.] ‘ “One test of the right to institute proceedings for declaratory judgment is the necessity of present adjudication as a guide for plaintiff’s future conduct in order to preserve his legal rights.” ’ ” (Meyer v. Sprint Spectrum L.P. (2009) 45 Cal.4th 634, 647.) “ ‘Declaratory relief operates prospectively, serving to set controversies at rest. If there is a controversy that calls for a declaration of rights, it is no objection that past wrongs are also to be redressed; but there is no basis for declaratory relief where only past wrongs are involved. Hence, where there is an accrued cause of action for an actual breach of contract or other wrongful act, declaratory relief may be denied.’ [Citation.]” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 366.)

Here, the complaint alleges that there is a dispute between Plaintiff and Defendants over whether Plaintiff has an ownership interest in the Entity Defendants. (Complaint ¶¶ 73-75.) “[Plaintiff] is in doubt about his status and rights, and he submits that there is a bona fide, actual, and present need for a declaration whether he is an owner of ACCESS LIQUOR, INC., DNA LIQUOR, INC., and DNA LIQUOR TOO, INC., [Jefferson Andrews LLC], as alleged, or similar thereto.” (Id. ¶ 76.)

The complaint clearly alleges a dispute between the parties – namely that all defendants including Entity Defendants dispute that Plaintiff is an owner of Entity Defendants. (Complaint ¶¶ 73, 75.) Moreover, Entity Defendants do not concede that Plaintiff is an owner. Accordingly, there is a clear dispute between Plaintiff and Entity Defendants.

The relief sought is prospective and not merely based on past wrongs. An ownership interest in the Entity Defendants would entitle Plaintiff to various rights in the Entity Defendants and their operation going forward. Thus, the relief sought is prospective.

Finally, while the complaint is somewhat unclear as to the percentage of ownership interest claimed, the factual allegations set up a clear basis for determining said interest amount. Namely, Entity Defendants were used to purchase liquor stores pursuant to the partnership agreement and with money contributed by Plaintiff pursuant to the partnership agreement. (Complaint ¶¶ 12-38.) Thus, the ownership interest sought in the various Entity Defendants would be pursuant to the contributed amount for the liquor stores under the partnership agreement. While an eventual declaratory judgment must be specific, (See e.g., Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1403 [“‘The judgment must decree, not suggest, what the parties may or may not do.’”]), Entity Defendants fail to cite any authority requiring that the pleading contain every specific detail of the declaratory relief sought. California follows a notice pleading standard, (See e.g., Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 305, Fn. 14), and the pleadings are generally liberally construed. (CCP § 452, [“In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.”].) Given the notice pleading standard, the complaint clearly gives notice of the declaratory relief sought. The possible specifics that may or may not be applicable are not necessary for purposes of pleading.

Accordingly, Entity Defendants’ demurrer to the fourth cause of action is OVERRULED.

CONCLUSIONS AND ORDER

Based on the foregoing, Defendants Access Liquor, Inc., DNA Liquor, Inc., DNA Liquor Too, Inc., and Jefferson Andrews LLC’s demurrer to the complaint is OVERRULED.

Entity Defendants are to file their respective answers within thirty (30) days of the date of this order.

The case management conference is continued to March 12, 2024 at 8:30 am.

Moving Parties are to give notice and file proof of service of such.

DATED: February ___, 2024 ___________________________

Elaine Lu

Judge of the Superior Court