Judge: H. Jay Ford, III, Case: 24SMCV02041, Date: 2025-03-13 Tentative Ruling

Case Number: 24SMCV02041    Hearing Date: March 13, 2025    Dept: O

 Case Name:  Skyview Capital, LLC v. EAM Delaware, LLC et al.

SUBJECT:                 DEMURRER WITHOUT MOTION TO STRIKE

MOVING PARTY:   Defendants EAM Delaware, LLC and Eric Mitchell

RESP. PARTY:         Plaintiff Skyview Capital, LLC

TENTATIVE RULING

            Defendants EAM Delaware, LLC and Eric Mitchells’ Demurrer to the Second Cause of Action for Replevin in Plaintiff Skyview Capital, LLC’s First Amended Complaint is SUSTAINED with 20 days leave to amend. Plaintiff alleges the cause of action for replevin commenced within the 3 years Statute of Limitations, however, Plaintiff does not plead the necessary Replevin cause of action elements of demand of possession and refusal to deliver.

            Defendants RJN is GRANTED as to the existence of articles, court documents, and the administrative ruling documents, but not to the “truth of the hearsay statements in the documents.” (In re Vicks (2013) 56 Cal.4th 274, 314.)

REASONING

As a general matter, 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 pleading alone, and not the evidence or facts alleged.” (E428.50Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Id.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)

Where a demurrer is sustained, 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 plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, “[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245).

Plaintiff is only required to allege ultimate facts, not evidentiary facts. (See Committee on Children's Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 212 [“the complaint should set forth the ultimate facts constituting the cause of action, not the evidence by which plaintiff proposes to prove those facts”); 1 Cal. Affirmative Def. § 10:2 (2d ed.) [allegations of agency, course and scope of employment, etc. qualify as ultimate facts].) Plaintiff’s allegations must be accepted as true on demurrer. (See Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 924 [“For purposes of reviewing a demurrer, we accept the truth of material facts properly pleaded in the operative complaint”].)

I.                Demurrer to the 2^nd cause of action for Replevin—SUSTAINED with 20 days leave to amend.

To plead a cause of action for Replevin a complaint must allege “[1] title in plaintiff to the property demanded; [2] right to possession thereof when the action was begun, [3] actual possession of the property . . ., [4] demand for possession and refusal to deliver.” (Stockton Morris Plan Co. v. Mariposa County (1950) 99 Cal.App.2d 210, 213.)

“The ultimate fact which must be pleaded in an action for [replevin] is, that plaintiff was at the time the action was commenced the owner of * * * the chattel, coupled with a right to the immediate possession thereof, and that the property was at that time wrongfully in the possession of defendant.” (Stockton Morris Plan Co. v. Mariposa County (1950) 99 Cal.App.2d 210, 213.) “In an action in replevin or claim and delivery, being an action for the recovery of specific personal property, in order to sustain a judgment for the plaintiff, it must be shown that possession was in the defendant at the time of the beginning of the action or that he had the power to make delivery of the personal property for the recovery of which the action is prosecuted.” (Id., at p. 215.)

The statute of limitations to bring a replevin claim is three years, with the statute of limitations commencing “upon the occurrence of the last element essential to the cause of action.” (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 186; see also Code. Civ. Proc., § 338, subd. (c)(1).)

“[T]he statute of limitations for conversion is triggered by the act of wrongfully taking property.” (Bono v. Clark (2002) 103 Cal.App.4th 1409, 1433; see also Strasberg v. Odyssey Group, Inc. (1996) 51 Cal.App.4th 906, 915–916 [“it is the act of wrongfully taking the property which triggers the statute of limitations”], citing Coy v. E.F. Hutton & Co. (1941) 44 Cal.App.2d 386, 390; First National Bk. v. Thompson (1943) 60 Cal.App.2d 79.)

Defendants EAM Delaware, LLC and Eric Mitchell (collectively “Defendants”) argue that the statute of limitations (“SOL”) for Replevin bars the cause of action because the FAC demonstrates that any claim for Replevin “accrued no later than October 29, 2020, and at the latest by November 26, 2020, when the Service Availability Fees expired.” (Demurrer, p. 4:20–26; FAC ¶¶ 11, 13–15, 27.) Defendants argue that at the point of the fee expiration, latest 11-26-20, Skyview had the right to immediate possession of the collateral, and therefore the FAC was filed outside the three year SOL, and is barred. 

The Court does not find this argument persuasive. The FAC pleads that after the maturity date of the Secured Note, Defendants made multiple promises and assurances that the Secured Note would be paid. (See FAC, ¶ 14) The FAC further pleads that payments were made by Defendants totaling $125,000 through December 2021. (Ibid.) Finally, the FAC pleads that it was not until after December 2021, that Defendants repudiated their obligations under the Agreement and made no further payments to Plaintiff. (Ibid.) According to the allegations in the FAC, the cause of action for Replevin began to accrue or commence in December 2021 when Defendants stopped making payments to Plaintiff, and repudiated their obligations under the Agreement. The last element of the Replevin cause of action is that the property must be known to be in wrongful possession of the defendant, and thus the moment that Defendant stopped making payments and repudiated the agreement in December 2021 is the plead moment when  the property was in wrongful possession, thus commencing the SOL. Skyview filed their claim on 4-30-24, within three years from December 2021. Thus, because the Court must accept all properly plead allegations as true at this stage, Skyview has properly plead a replevin claim within the requisite SOL.

Additionally, Defendants argue that Skyview’s FAC does not allege that Defendants had possession of the collateral, here the pledge shares, or the ability to deliver the pledged shares at the time the action was filed on 4-30-24, and thus Skyview fails to state a cause of action replevin. Skyview does allege that Defendants were in possession of the share certificates. (FAC, ¶ 27.) Skyview also attaches the Stock pledge agreement to the FAC. (FAC, ¶ 11, Ex. 1.) However, Skyview does not allege that Defendants had the power to deliver the shared stocks, nor that Skyview demanded delivery and Defendants refused to deliver. (See FAC, ¶¶ 26–27; see (Stockton Morris Plan Co., supra, 99 Cal.App.2d at p. 213.)

Thus, Defendant’s Demurrer to 2^nd cause of action for replevin in the FAC is SUSTAINED with 20 days leave to amend.