Judge Gail Killefer, Case Number: 23STCV12105, Date: 2025-02-24 Tentative Ruling

MOVING PARTY: Cross-Defendants Justin Toobi, Joseph Isaac Perez, and Negar Sara Sarshar

TENTATIVE: Cross-Defendants’ demurrer is overruled and the request for a plea in abatement is denied. Cross-Defendants must file an Answer within 10 days. An OSC Re: Answers is set for March 13, 2025, at 8:30 a.m.

On May 30, 2023, Joe Perez and Justin Toobi (“Plaintiffs”) filed a Complaint against Jody Leverett, DYRY LLC, RYDY Corporation (collectively “Defendants”), and Does 1 to 100.

The operative Second Amended Complaint (“SAC”) alleges six causes of action for (1) Bad Faith Retention of Security Deposit (Civ. Code, § 1950.5); (2) Breach of Contract; (3) Violations of Bus. & Prof. Code §§ 17200 et seq.; (4) Breach of Covenant of Quiet Enjoyment, (5) Violation of West Hollywood Municipal Code § 17.32.020; and (6) Cancelation of Voidable Contracts and Restitution Revenue & Tax Code §§ 23304.1, 23305A, et seq.

On August 30, 2024, Defendants DYRY, LLC and RYDY Corporation filed a Cross-Complaint against Joseph Isaac Perez, Cindy Borges Corriea De Mello; Justin Toobi, Negar Sara Sarshar; and Roes 1 to 10.

The operative First Amended Cross-Complaint (“FACC”) alleges four causes of action: (1) Breach of Written Agreement; (2) Common Counts; (3) Breach of Written Agreement; and (4) Common Counts.

Cross-Defendants Justin Toobi, Joseph Isaac Perez, and Negar Sara Sarshar (hereinafter “Cross-Defendants”) demur to the FACC. Cross-Complainants DYRY, LLC and RYDY Corporation oppose the demurrer. The matter is now before the court.

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) “Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)

Exhibit A: California Secretary of State the Corporate Status, Certificate of Status, of RYDY Corporation as of December 23, 2024.

Demurrer[1]

Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.¿ (CCP, § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In evaluating a demurrer, the court accepts the complainant’s properly pled facts as true and ignores contentions, deductions, and conclusory statements. (Daar v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971) 5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff will be able to prove the allegations or the possible difficulty in making such proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

Cross-Defendants demurrer to the FACC on the basis that Cross-Complainant RYDY Corporation (“RYDY”) is a foreign entity not registered with the California Secretary of State and lacks the capacity to sue for failing to comply with Corp. Code §§ 2203(c).

California restricts foreign corporations from transacting intrastate business in California without first obtaining a certificate of qualification from the California Secretary of State. (Corp. Code, § 2105.) A foreign corporation conducting intrastate business that does not register with the California Secretary of State is prohibited from maintaining any action or proceeding based upon any intrastate business it conducted in the state before becoming compliant with section 2105. (Corp. Code, § 2203(c).)

As the party seeking to challenge Cross-Complainant RYDY’s standing under California Corp. Code § 2203, Cross-Defendants bear the burden of proving (1) the action arose out of RYDY’s transaction of intrastate business and 2) the action was commenced prior to RYDY qualifying to transact intrastate business. (See United Medical Management Ltd. v. Gatto (1996) 49 Cal.App.4th 1732, 1740; United Systems of Arkansas, Inc. v. Stamison (1998) 63 Cal.App.4th 1001, 1007.) However, for Corporation Code §§ 2105 and 2203 to apply, Cross-Defendants must offer evidence that RYDY engaged in intrastate business and was required to obtain a certificate of qualification under section 2015 prior to filing this action. Cross-Defendants fail to meet this burden.

California Corporations Code § 191 defines “transact intrastate business” as “entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce.”¿(Corp. Code, § 191, subd. (a).)¿ The FACC arises out of a single interstate transaction, a 2020 Lease entered by the Parties on August 28, 2020 for the lease of a residential property located in West Hollywood, CA. (FACC, ¶¶ 8-12, Ex. A.) Cross-Defendants fail to show that RYDY engaged in intrastate commerce. Accordingly, Corp. Code § 2203 does not apply. (See Charlton Silk Co. v. Jones (1923) 190 Cal. 341, 342.)

As Cross-Defendants have failed to show that RYDY engaged in “repeated and successive transactions” of intrastate commerce rather than interstate commerce, RYDY was not required to obtain a certificate of qualification to conduct intrastate business. (Corp. Code,§§ 191(a).)

Cross-Defendants’ demurrer is overruled and the request for a plea in abatement is denied. Cross-Defendants must file an Answer within 10 days. An OSC Re: Answers is set for March 13, 2025, at 8:30 a.m.

[1] Cross-Defendants assert they met and conferred with Cross-Complainants on September 12, 2024, but the FACC was not filed until November 20, 2024. (Toobi Decl., ¶ 2.) Therefore, Cross-Defendants have failed to show that met and conferred with Cross-Complainants in good faith. (Seañez Decl., ¶¶ 2-58.) “Any determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” (CCP § 430.41(a)(4).) As the failure to meet and confer does not constitute grounds to overrule a demurrer, the court continues to the merits.