Judge: Joel L. Lofton, Case: 23AHCV01667, Date: 2024-02-22 Tentative Ruling
Case Number: 23AHCV01667 Hearing Date: February 22, 2024 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: February 22, 2024 TRIAL
DATE: No date set.
CASE: CANER LI a/ka/ JUN
LI, v. UIG INVESTMENT INC., OPTIMUS PRICE INC., DECHO DEVELOP INC., LIMAN KIANG
a/k/a CECILIA JIANG AND JIE SHA.
CASE NO.: 23AHCV011667
DEMURRER
MOVING PARTY: Defendants Optimus Price, Inc.,
Decho Develop Inc., and Jie Sha; UIG Investment, Inc. and Liman Jiang
RESPONDING PARTY: Plaintiff
Caner Li
SERVICE: Filed November 14, 2023 and December 5,
2023
OPPOSITION: Filed February 7, 2024
REPLY: Filed February 13 and 14, 2024
RELIEF
REQUESTED
Defendants separately demurrer to
each of Plaintiff’s causes of action.
BACKGROUND
This case arises out of Plaintiff Caner Li’s
(“Plaintiff”) claim that he was misled into investing $432,955 into a
fraudulent E-2 visa sponsorship investment scheme. Plaintiff filed a first
amended complaint on October 18, 2023, alleging seven causes of action for (1)
fraud, (2) conversion, (3) breach of contract, (4) breach of fiduciary duty,
(5) aiding and abetting breach of fiduciary duty, (6) breach of statutory
books-and-records obligation, and (7) unjust enrichment.
TENTATIVE RULING
Defendants’ demurrers are OVERRULED.
LEGAL STANDARD
A general
demurrer may be taken to a complaint where “[t]he pleading does not state facts sufficient to
constitute a cause of action.” (Code of Civ. Proc. § 430.10(e).) A demurrer for sufficiency tests whether the
complaint states a cause of action. (Hahn
v. Mirda (2007) 147 Cal. App. 4th 740, 747.) In a demurrer proceeding, the
defects must be apparent on the face of the pleading or by proper judicial
notice. (Code Civ. Proc. section
430.30(a).) A demurrer tests the pleadings alone and not the evidence or
other extrinsic matters. (SKF Farms v. Superior Court (1984) 153
Cal. App. 3d 902, 905.) The only issue involved in a demurrer hearing is
whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action. (Hahn v.
Mirda, supra, 147 Cal.App.4th 740, 747.)
Additionally, a
special demurrer to a complaint may be brought on the ground the pleading is
uncertain, ambiguous, or unintelligible. Code Civ. Proc section 430.10(f); Beresford Neighborhood Assn. v. City of
San Mateo (1989) 207 Cal.App.3d 1180, 1191.) A demurrer based
on uncertainty is disfavored and will be strictly construed even when the
pleading is uncertain in some respects. (Khoury v. Maly's of California, Inc. (1993) 14
Cal.App.4th 612, 616.) A demurrers based on uncertainty are “granted only if
the pleading is so incomprehensible that a defendant cannot reasonably
respond.” (Lickiss v. Financial Industry Regulatory Authority (2012) 208
Cal.App.4th 1125, 1135.)
DISCUSSION
The present case involves two separate demurrers filed by Optimus Price,
Inc., Decho Develop Inc., and Jie Sha (“Optimus Defendants”) and UIG
Investment, Inc. and Liman Jiang (“UIG Defendants”).
First
Cause of Action for Fraud
All Defendants demurrer to
Plaintiff’s first cause of action for fraud. Defendants primarily argue that
Plaintiff failed to allege facts with the required specificity.
“The elements of fraud, which give
rise to the tort action for deceit, are (a) misrepresentation (false
representation, concealment, or nondisclosure); (b) knowledge of falsity (or
‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable
reliance; and (e) resulting damage.” (Beckwith v. Dahl (2012) 205
Cal.App.4th 1039, 1060, citations omitted.
“Each element of a fraud claim must be pleaded with
specificity. [Citation.] ‘The specificity requirement means a plaintiff must
allege facts showing how, when, where, to whom, and by what means the
representations were made, and, in the case of a corporate defendant, the
plaintiff must allege the names of the persons who made the representations,
their authority to speak on behalf of the corporation, to whom they spoke, what
they said or wrote, and when the representation was made.’ ” (Orcilla v. Big
Sur, Inc. (2016) 244 Cal.App.4th 982, 1008.)
Plaintiff
alleges that he was solicited to invest in a joint venture entity but was
provided false documents and information. (FAC ¶¶ 92-93.) Plaintiff alleges that Jiangxia Hu
(“Hu”), a representative of UIG, recommended Plaintiff invest in a “Decho”
project. (Id. ¶¶28-30.) Plaintiff alleges that he was
provided with various information regarding the project’s financial documents,
fleet of vehicles, experience, and profits but that the documents were false or
misleading. (Id. ¶¶ 33-41.) Plaintiff alleges
that after he made his capital investments, Jie Sha stated that she received
less than the full amount provided by Plaintiff. (Id. ¶¶52-55.)
Plaintiff alleges that Hu sent Plaintiff photos of “Decho’s logistic fleet” but
alleges that the vehicles were not owned by Decho or Optimus. (Id. ¶¶
58-60.)
Plaintiff’s allegations are sufficient to allege that
Defendants engaged in fraudulent conduct to state a claim. Defendants’
demurrers to Plaintiff’s first cause of action for fraud are overruled.
Second
Cause of Action for Conversion
The
UIG Defendants demurrer to Plaintiff’s second cause of action for conversion.
“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.” (Welco Electronics , Inc.
v. Mora (2014) 223 Cal.App.4th 202, 208.) “Money cannot be the subject of a cause of action for conversion unless
there is a specific, identifiable sum involved, such as where an agent accepts
a sum of money to be paid to another and fails to make the payment.” (PCO,
Inc. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007)
150 Cal.App.4th 384, 395.)
Plaintiff alleges he has a property
interest in his $432,955 invest funds transferred to UIG. (FAC ¶ 107.) Plaintiff alleges that UIG refused to
return the funds after Plaintiff’s demand. (Id. ¶ 108.) Plaintiff also
alleges damages. (Id. ¶ 112.) Plaintiff has alleged facts sufficient to
state a claim for conversion. UIG Defendants’ demurrer to Plaintiff’s second
cause of action is overruled.
Fourth
Cause of Action for Breach of Contract
The Optimus Defendants demurrer to Plaintiff’s “third” cause of
action for breach of contract. As a preliminary note, although Plaintiff’s
caption and Defendants’ demurrer states that Plaintiff’s third cause of action
is for breach of contract, the body of Plaintiff’s FAC provides that both
Plaintiff’s third and fourth causes of action seek to allege a claim for breach
of contract. The demurrer objects to Plaintiff's fourth cause of action.
The
essential elements of a breach of contract are: (1) the contract, (2)
plaintiff’s performance or excuse for nonperformance, (3) the defendant’s
breach, and (4) the resulting damages to the plaintiff. (Green Valley
Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th. 425, 433.)
Plaintiff alleges that he entered into an agreement with Decho for
an E2 Sponsorship Agreement. (FAC ¶ 131.)
Plaintiff alleges that Decho breached the agreement by failing to distribute
first-year dividends as required by the agreement. (Id. ¶¶ 132-133.)
Plaintiff alleges he performed under the contract and was harmed by Defendants’
breach. (Id. ¶¶ 134-135.) Plaintiff has alleged facts sufficient to
state a claim for breach of contract. Dechos’ demurrer to Plaintiff’s fourth
cause of action is overruled.
Fifth
Cause of Action for Breach of Fiduciary Duty
The Optimus Defendants demurrer
to Plaintiff’s fourth cause of action for breach of fiduciary duty.
The elements of a cause of action
for breach of fiduciary duty are: (1) the existence of a fiduciary duty; (2)
the breach of that duty; (3) damage proximately caused by that breach.” (IIG
Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 646.) “[A] fiduciary
relationship is ‘ “any relation existing between parties to a transaction
wherein one of the parties is in duty bound to act with the utmost good faith
for the benefit of the other party.” ’ " (Cleveland v. Johnson (2012)
209 Cal.App.4th 1315, 1338.)
Plaintiff alleges that Liman Jiang and Jie Sha breached a
fiduciary duty owed to him by failing to allocate and invest Plaintiff’s
investment funds according to the investment agreement, failing to provide any
information as to unaccounted funds, and failing to provide documentations.
(FAC ¶¶ 148-149.) Defendants argue that Plaintiff fails to allege facts
sufficient to state that Jie Sha owes Plaintiff a fiduciary duty. However,
Plaintiff allege that Jie Sha is the Chief Executive Officer of Optimus and Decho
and that Plaintiff is a shareholder of Optimus. (FAC ¶¶ 18 and 52.) At the
pleading stage, Plaintiff’s allegations are sufficient to allege that Sha owed
him a fiduciary duty. Defendants’ demurrer is overruled.
Sixth
Cause of Action for Aiding and Abetting Breach of Fiduciary Duty
The Optimus Defendants demurrer to Plaintiff’s fifth cause of
action for aiding and abetting breach of fiduciary duty.
“The elements of a claim for aiding
and abetting a breach of fiduciary duty are: (1) a third party's breach of
fiduciary duties owed to plaintiff; (2) defendant's actual knowledge of that
breach of fiduciary duties; (3) substantial assistance or encouragement by
defendant to the third party's breach; and (4) defendant's conduct was a
substantial factor in causing harm to plaintiff.” (Nasrawi v. Buck
Consultants LLC (2014) 231 Cal.App.4th 328, 343.)
Plaintiff alleges that Hie Sha
assisted Defendant Liman Jiang breach a fiduciary duty owed to Plaintiff. (FAC ¶ 149.) Plaintiff also alleges that Jiang
assisted Sha breach a fiduciary duty owed to Plaintiff. (Id. ¶ 150.)
Plaintiff specifically alleges that Sha assisted Jiang by stating that only
$200,000 was received from Plaintiff’s investment despite initially stating
that the full amount was received. (Id. ¶¶ 54-55.) At the pleading
stage, Plaintiff’s allegations are sufficient to state a claim. Defendants’
demurrer to Plaintiff’s sixth cause of action is overruled.
Seventh
Cause of Action for Breach of Statutory
Books-And-Records Obligations
The Optimus Defendants demurrer to Plaintiff’s sixth cause of
action for breach of statutory books-and-records obligations. Plaintiff alleges
that Optimus failed to provide access to its records pursuant to Corporations
Code section 1600 and 1601, subdivision (a). (FAC ¶
155.) Defendants argue that Plaintiff is not a shareholder of Optimus. However,
Plaintiff alleges that he is a holder of 510 shares. (Id. ¶ 52.) At the
pleading stage, Plaintiff’s allegations are sufficient. Defendants’ demurrer to
Plaintiff’s seventh cause of action is overruled.
Eighth
Unjust Enrichment/Restitution
The UIG Defendants demurrer to Plaintiff’s seventh cause of action
for unjust enrichment and restitution. “The elements for a claim of unjust enrichment are ‘receipt of a benefit
and unjust retention of the benefit at the expense of another.’ ” (Lyles v.
Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769.) Plaintiff alleges that UIG
was unjust enriched when it received Plaintiff’s $432,955 and failed to
allocate the money according to the agreement. (FAC ¶¶ 161-162.) UIG’s demurrer to Plaintiff’s
eighth cause of action is overruled.
CONCLUSION
Defendants’ demurrers are OVERRULED.
Moving
Parties to give notice.
Dated: February 22,
2024 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court