Judge: Gary Y. Tanaka, Case: 20TRCV00175, Date: 2022-10-05 Tentative Ruling
Case Number: 20TRCV00175 Hearing Date: October 5, 2022 Dept: B
LOS ANGELES SUPERIOR COURT – SOUTHWEST DISTRICT
Honorable Gary Y. Tanaka Wednesday, October 5, 2022
Department B Calendar No. 8
PROCEEDINGS
Tropic Fishery Pvt., Ltd. v. Suriya, LLC, et al.
20TRCV00175
Roshan Jayasinghe and Suriya, LLC’s Demurrer to First Amended Complaint
Roshan Jayasinghe and Suriya, LLC’s Motion to Strike Portions of First Amended Complaint
Tropic Fishery Pvt., Ltd.’s Motion to Strike Suriya, LLC’s Answer and for Sanctions
TENTATIVE RULING
Roshan Jayasinghe’s Demurrer to First Amended Complaint is sustained with 20 days leave to amend.
Roshan Jayasinghe’s Motion to Strike Portions of First Amended Complaint is deemed moot.
Suriya, LLC’s Demurrer to First Amended Complaint and Motion to Strike Portions of First Amended Complaint are hereby stricken.
Tropic Fishery Pvt., Ltd.’s Motion to Strike Suriya, LLC’s Answer and Request for Sanctions is denied. However, the Court on its own motion strikes Defendant Suriya, LLC’s Answer and enters its default.
Background
Plaintiff filed its Complaint on August 10, 2020. Plaintiff filed its First Amended Complaint on October 26, 2021. Plaintiff alleges the following facts. Plaintiff delivered merchandise to Defendants pursuant to an agreement. Defendants failed to pay for the merchandise. Plaintiff alleges the following causes of action: 1. Breach of Oral Promise; 2. Breach of Written Contract; 3. Conversion; 4. Unjust Enrichment; 5. Fraudulent Misrepresentation; 6. Common Counts.
Meet and Confer
Defendants set forth a meet and confer declaration in sufficient compliance with CCP §§ 430.41 and 435.5. (Decl., Sunjay P. Bhatia, ¶ 6.)
Plaintiff did not set forth a meet and confer declaration in sufficient compliance with CCP § 435.5. The declaration of Halil Hasic merely references that declarant notified Defendant of Plaintiff’s intention to file a motion to strike. There is no showing of an adequate meet and confer process prior to the filing of the motion to strike.
Request for Judicial Notice
Plaintiff’s requests for judicial notice are granted pursuant to Evidence Code section 452(h).
Tropic Fishery Pvt., Ltd.’s Motion to Strike
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. CCP § 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. CCP § 436(b). The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. CCP § 436. The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. CCP § 437.
Plaintiff moves for an order striking Defendant Suriya, LLC’s Answer, entering default against this Defendant, and imposing monetary sanctions against Defendant and Defendant’s counsel. This motion is made on the ground that Defendant is a suspended entity and is not in good standing with the California Secretary of State. Therefore, Defendant cannot defend or participate in this action pursuant to California Revenue and Taxation Code Section 19719. Plaintiff also requests sanctions based on Defendant and Defendant’s counsel bad faith conduct under Code of Civil Procedure section 128.5 in pursuing litigation activities knowing that Defendant was a suspended entity.
Based on the inadequate meet and confer process, the Court denies Plaintiff’s motion to strike Answer and request for sanctions. The Court, however, on its own motion, strikes Suriya, LLC’s Answer. Defendant Jayasinghe filed an opposition in which he essentially concedes that Suriya, LLC is a suspended corporation and is no longer represented by counsel for Defendant Jayasinghe.
Suriya, LLC’s Answer is hereby stricken and its default entered.
Demurrer
A demurrer tests the sufficiency of a complaint as a matter of law and raises only questions of law. (Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706.) In testing the sufficiency of the complaint, the court must assume the truth of (1) the properly pleaded factual allegations; (2) facts that can be reasonably inferred from those expressly pleaded; and (3) judicially noticed matters. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The Court may not consider contentions, deductions, or conclusions of fact or law. (Moore v. Conliffe (1994) 7 Cal.App.4th 634, 638.) Because a demurrer tests the legal sufficiency of a complaint, the plaintiff must show that the complaint alleges facts sufficient to establish every element of each cause of action. (Rakestraw v. California Physicians Service (2000) 81 Cal.App.4th 39, 43.) Where the complaint fails to state facts sufficient to constitute a cause of action, courts should sustain the demurrer. (C.C.P., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.App.4th 1112, 1126.)
Sufficient facts are the essential facts of the case "with reasonable precision and with particularity sufficiently specific to acquaint the defendant with the nature, source, and extent of his cause of action.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.) "Whether the plaintiff will be able to prove the pleaded facts is irrelevant to ruling upon the demurrer." (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.) Under Code Civil Procedure § 430.10(f), a demurrer may also be sustained if a complaint is “uncertain.” Uncertainty exists where a complaint’s factual allegations are so confusing they do not sufficiently apprise a defendant of the issues it is being asked to meet. (Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn. 2.)
Defendants demur to the First Amended Complaint and the first through sixth causes of action on the grounds that the causes of action are uncertain and fail to state sufficient facts to constitute a cause of action against Defendants.
As noted above, to the extent that both Defendants demurred and moved to strike, the Demurrer and Motion to Strike filed by Suriya, LLC is hereby stricken as this entity is a suspended corporation, its default entered, and Suriya, LLC can no longer participate in these proceedings without its default being set aside. Thus, the Court will proceed to rule on the Demurrer and Motion to Strike as to Defendant Jayasinghe, only.
First Cause of Action for Breach of Oral Promise
Second Cause of Action for Breach of Written Agreement
Third Cause of Action for Conversion
Fourth Cause of Action for Unjust Enrichment
Sixth Cause of Action for Common Counts
Defendant’s demurrer to the first through fourth, and sixth causes of action is sustained with 20 days leave to amend. Plaintiff fails to state sufficient facts to constitute a cause of action and the causes of action are uncertain.
“The elements of a cause of action for breach of contract are: (1) the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to plaintiff.” Coles v. Glaser (2016) 2 Cal.App.5th 384, 391.
Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages....” Hodges v. County of Placer (2019) 41 Cal.App.5th 537, 551.
Unjust Enrichment is not a cause of action. See, Hill v. Roll Int'l Corp. (2011) 195 Cal.App.4th 1295, 1307. The Court may, however, recognize a cause of action based on quasi-contract to obtain the remedy of restitution. See, McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1490. "The elements of an unjust enrichment claim are the receipt of a benefit and [the] unjust retention of the benefit at the expense of another." Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593-94.
“A common count is not a specific cause of action ...; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory.” Avidor v. Sutter's Place, Inc. (2013) 212 Cal.App.4th 1439, 1454 (internal citations and quotations omitted).
“The averment of an indebtedness not by stating the actual ultimate facts in each particular case, but by using one of a series of generalized forms consisting in part of legal conclusions, is directly opposed to a basic principle of code pleading. Nevertheless, when the codes were adopted the familiarity of lawyers with the form, and its simplicity and convenience, were sufficient to overcome this objection. And today in nearly all code states and in the federal practice the common counts are permissible and widely used. In California, it is settled that they are good against special as well as general demurrers.” Interstate Group Administrators, Inc. v. Cravens, Dargan & Co. (1985) 174 Cal.App.3d 700, 707, fn. 2 (internal quotation and citation omitted).
“When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.
Here, there are no facts to indicate that Defendant Jayasinghe personally entered into a contract or contracts with Plaintiff, personally committed conversion, or was personally unjustly enriched. Instead, the causes of action stem from obligations allegedly incurred by Suriya, LLC. In addition, as to the common count cause of action, because the demurrer to the first and second causes of action is sustained, the demurrer to the sixth cause of action, which is based on the same facts, is also sustained.
The Court notes that the FAC is replete with conclusory allegations of alter ego liability.
In California, two conditions must be met before the alter ego doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone.” Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.
Among the factors to be considered in applying the alter ego doctrine are commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other. See, Id. at 538-539. Other factors include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. See, Id. at 539. No one characteristic governs. The courts must look at the totality of the circumstances to determine whether the doctrine should be applied. See, Id.
“It is well recognized that the law permits the incorporation of businesses for the very purpose of isolating liabilities among separate entities. Since society recognizes the benefits of allowing persons and organizations to limit their business risks through incorporation, sound public policy dictates that disregard of those separate corporate entities be approached with caution.” Pacific Landmark Hotel, Ltd. v. Marriott Hotels, Inc. (1993) 19 Cal.App.4th 615, 628 (internal citation omitted). “It is the plaintiff's burden to overcome the presumption of the separate existence of the corporate entity.” Mid-Century Ins. Co. v. Gardner (1992) 9 Cal.App.4th 1205, 1212.
“[P]laintiff may allege on information and belief any matters that are not within his personal knowledge, if he has information leading him to believe that the allegations are true and thus a pleading made on information and belief is insufficient if it merely assert[s] the facts so alleged without alleging such information that lead[s] [the plaintiff] to believe that the allegations are true.” Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1158–1159 (internal citations and quotations are omitted; emphasis in original.)
Here, Plaintiff has not alleged any facts to support the factors for a finding of alter ego liability. Plaintiff has only asserted conclusions. Plaintiff’s allegations are made on information and belief. Plaintiff has failed to plead facts to demonstrate why it believes that the matters set forth under information and belief are true.
Fifth Cause of Action for Fraudulent Misrepresentation
The demurrer to the fifth cause of action is sustained with 20 days leave to amend. Plaintiff fails to state facts sufficient to state a cause of action.
“A complaint for fraud must allege the following elements: (1) a knowingly false representation by the defendant; (2) an intent to deceive or induce reliance; (3) justifiable reliance by the plaintiff; and (4) resulting damages.” Service by Medallion, Inc. v. Clorox Co. (1996) 44 Cal.App.4th 1807, 1816.
“Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157. Plaintiffs must state facts which “show how, when, where, to whom, and by what means the representations were tendered.” Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.
Plaintiff has failed to allege specific facts as to how, when, where, to whom, and by what means the representations were made. Plaintiff has failed to allege specific facts that Defendant knew the representations were false and made the representations with intent to deceive.
Therefore, the demurrer to the fifth cause of action is sustained with 20 days leave to amend.
Motion to Strike
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. CCP § 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. CCP § 436(b). The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. CCP § 436. The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. CCP § 437.
Defendant Jayasinghe’s Motion to Strike is moot upon the sustaining of the demurrer.
Defendant is ordered to give notice of this ruling.