Judge: Gary Y. Tanaka, Case: 20TRCV00175, Date: 2023-01-10 Tentative Ruling
Case Number: 20TRCV00175 Hearing Date: January 10, 2023 Dept: B
LOS ANGELES SUPERIOR COURT –
SOUTHWEST DISTRICT
Honorable Gary Y. Tanaka Wednesday, January 10, 2023
Department B Calendar No. 5
PROCEEDINGS
Tropic
Fishery Pvt., Ltd. v. Suriya, LLC, et al.
20TRCV00175
1. Roshan Jayasinghe’s Demurrer to Second Amended
Complaint
2. Roshan Jayasinghe’s Motion to Strike Portions of Second
Amended Complaint
TENTATIVE RULING
Roshan Jayasinghe’s Demurrer to Second Amended
Complaint is sustained with 20 days leave to amend.
Roshan Jayasinghe’s Motion to Strike Portions of Second
Amended Complaint is deemed moot.
Background
Plaintiff filed its Complaint
on August 10, 2020. Plaintiff filed its Second Amended Complaint on October 25,
2022. 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
Defendant set forth a meet and confer declaration in
sufficient compliance with CCP §§ 430.41 and 435.5. (Decl., Sunjay P. Bhatia, ¶
4.)
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.)
Defendant demurs to the Second 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 Defendant.
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 SAC 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’s
allegations to support alter ego simply repeat the fraudulent misrepresentation
allegations and then reiterate conclusions which to fit into certain elements
of alter ego liability such as failure to properly capitalize, failure to
follow corporate formalities, failure to properly keep corporate records, and
commingling of funds. (SAC, ¶¶ 9-18.) However, 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 alleges the following as the specific
misrepresentation: “Defendant Jayasinghe for himself and on behalf of his alter
ego, Defendant Suriya, affirmatively represented to Plaintiff, by telephone and
text messaging services, that Defendant Suriya would compensate Plaintiff for
the continued deliveries of the merchandise as stated herein.” (SAC, ¶ 54.) Plaintiff
has failed to allege specific facts as to whom the representation was made.
Plaintiff simply states that it was made to “Plaintiff” without specifying any
individual agent of Plaintiff – an entity. Plaintiff has failed to allege
specific facts that Defendant knew the representations were false and made the
representations with intent to deceive. Plaintiff has failed to allege specific
facts of justifiable reliance on the part of Plaintiff since the
representation, itself, appears to merely reiterate Defendant Suriya’s alleged
obligation to pay for merchandise which has already been outlined in the breach
of contract allegations.
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.