Judge: Holly J. Fujie, Case: 21STCV12788, Date: 2023-06-30 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Case Number: 21STCV12788    Hearing Date: December 14, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

AND RELATED CROSS-ACTION

MOVING PARTY: Plaintiffs/Cross-Defendants Patience and Fortitude, Inc. (“PFI”) and Wander and Ponder (“WP”); Cross-Defendants Kalie Caldwell (“Caldwell”) and Harold Hildebrand (“Hildebrand”) (collectively, “Moving Cross-Defendants”)

RESPONDING PARTY: Defendant/Cross-Complainant Move Sales, Inc. (“MSI”)

The Court has considered the moving and opposition papers.  No reply papers were filed.  Any reply papers were required to have been filed and served at least five court days before the hearing under California Code of Civil Procedure (“CCP”) section 1005, subdivision (b).

BACKGROUND

This action, which was initiated on April 2, 2021, arises out of a business relationship.  The currently operative first amended cross-complaint (the “FAXC”) alleges: (1) breach of contract; (2) breach of contract; (3) account stated; and (4) goods and services rendered. 

On November 9, 2023, Moving Cross-Defendants filed a demurrer (the “Demurrer”) on the ground that the FAXC fails to state facts sufficient to constitute a cause of action.

DISCUSSION

Meet and Confer

The meet and confer requirement has been met.  

Legal Standard

A demurrer tests the sufficiency of a complaint as a matter of law.  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)  The court accepts as true all material factual allegations and affords them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.  (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.)  With respect to a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.  (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)  A demurrer will be sustained without leave to amend if there exists no reasonable possibility that the defect can be cured by amendment.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

When a complaint shows on its face or on the basis of judicially noticed facts that the cause of action alleged therein is barred by the statute of limitations, the plaintiff must plead facts which show an excuse, tolling, or some other basis for avoiding the statutory bar.  (Ponderosa Homes, Inc. v. City of San Ramon (1994) 23 Cal.App.4th 1761, 1768.)  To invoke the delayed discovery doctrine in order to stop the accrual of the statute of limitations, a plaintiff must plead: (1) facts showing reasonable diligence; and (2) the time and manner of discovery.  (WA Southwest 2, LLC v. First American Title Ins. Co. (2015) 240 Cal.App.4th 140, 156-57.)  The delayed discovery doctrine only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action.  (Id.)  In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to show diligence; conclusory allegations will not withstand demurrer.  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808.)

            As a preliminary matter, although PFI and WP filed an answer to the initial cross-complaint (the “XC”), the Court will consider their Demurrer to the FAXC because the FAXC supplants the XC and it, standing alone, contains all of MSI’s allegations and requests for relief.  (See Foster v. Sexton (2021) 61 Cal.App.5th 998, 1035.)

Timeliness of XC/Alter-Ego Liability

The relation back doctrine tolls the statute of limitations on cross claims filed against a plaintiff, but the doctrine does not apply to cross-actions against codefendants or new parties.  (See Boyer v. Jensen (2005) 129 Cal.App.4th 62, 70.)

Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.)  The corporate form will be disregarded only in narrowly defined circumstances and only when the ends of justice so require. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301.)  To invoke an alter ego theory of liability, there must be: (1) 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; and (2) an inequitable result if the acts in question are treated as those of the corporation alone.  (Sonora Diamond Corp. v. Superior Court, supra, 83 Cal.App.4th at 538.)  To recover on an alter ego theory, a plaintiff must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.  (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 696.)  A claim based upon an alter ego theory is not itself a claim for substantive relief.  (Leek v. Cooper (2011) 194 Cal.App.4th 399, 418.)  It is a procedural device by which courts will disregard the corporate entity in order to hold the alter ego individual liable on the obligations of the corporation.  (Id. at 419.)

The Demurrer argues that the claims against Caldwell and Hildebrand fail because they are time-barred and do not allege a basis for imposing alter-ego liability.  The FAXC is based in alleged contractual breaches that occurred in 2017 and 2018 and the claims are therefore time-barred unless the claims against Caldwell and Hildebrand relate back to the date that Plaintiffs initiated the action under an alter ego theory.  The Court finds that the FAXC includes sufficient information regarding the lack of corporate formalities to allege a unity of interest to support alter-ego allegations against Caldwell and Hildebrand with respect to PFI and WP.  (See FAXC ¶¶ 8-14, 20-30.)  As the Demurrer’s arguments regarding the first, second, and fourth causes of action concern whether the allegations may relate back to the filing of Plaintiffs’ initial Complaint based on the inclusion of Caldwell and Hildebrand, the Court OVERRULES the Demurrer to these causes of action.

Account Stated

An account stated is an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing.  (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.)  To be an account stated, it must appear that at the time of the statement an indebtedness from one party to the other existed, that a balance was then struck and agreed to be the correct sum owing from the debtor to the creditor, and that the debtor expressly or impliedly promised to pay to the creditor the amount thus determined to be owing.  (Id.)  The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due.  (Id.)

Here, while the FAXC alleges that MSI provided Moving Cross-Defendants with a statement of indebtedness, there are no allegations that Moving Cross-Defendants separately agreed to pay an amount owed based on past transactions.  (See FAXC ¶¶ 19-20.)  The Court therefore SUSTAINS the Demurrer to the third cause of action with 20 days leave to amend.

Moving party is ordered to give notice of this ruling.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

    Dated this 14th day of December 2023