Judge: John C. Gastelum, Case: 21-01207668, Date: 2022-12-06 Tentative Ruling

(1) Demurrer to First Amended Complaint (FAC) (2) CMC

Tentative Ruling:  Defendant Todd Nelson (“Defendant”) demurs to the FAC of Plaintiff Global Premier Staffing, Inc. on the grounds that the FAC fails to state facts sufficient to constitute a cause of action against him.

Meet and Confer

Counsel for Defendant sent a meet and confer letter on June 13, 2022 and received no response.  (Declaration of Diane L. Mancinelli, ¶ 4.) Though this effort does not satisfy the meet and confer requirements set forth in the Code of Civil Procedure, the Court will exercise its discretion to consider the merits of the Demurrer, as Defendant’s counsel attempted to meet and confer and those attempts were ignored. 

Merits

Defendant argues the sole cause of action for Fraudulent Transfer under the Uniform Voidable Transactions Act fails because Plaintiff does not allege Defendant is a transferee or that he is in possession of property that can be reconveyed back to Plaintiff.  Defendant further argues that even if Plaintiff successfully pleads “alter ego” liability against Defendant, the allegation does not change the fact that the only remedies under the UVTA are “equitable”, and solely against transferees of property.

The relevant allegations of the FAC against Defendant are:

·         He was the CEO of Trend Offset and had, and continues to have, an ownership interest in Trend Offset’s assets (FAC, ¶ 9);

·         He treated, and continues to treat, Trend Offset as his personal business (FAC, ¶ 10);

·         He transferred the assets of Trend Offset without receiving adequate consideration (FAC, ¶ 10);

·         He is personally responsible for the debts of Trend Offset as its alter ego, in that there is a unity of interest between Nelson and Trend Offset; Trend Offset was merely an instrumentality and conduit through which he carried on his own business; he utilized the assets of Trend Offset for his own use; he diverted assets from Trend Offset to himself and preferred himself over the creditors of Trend Offset; Trend Offset disregarded corporate formalities (FAC, ¶ 14); and

·         He directed Lienau to make representations to Plaintiff regarding the terms of the September 2020 agreement (FAC, ¶¶ 20-25).

Here, Defendant’s arguments rest on the fact that Defendant is not alleged to be a transferee.  However, “[t]he UVTA permits a creditor to recover against a transferee or a ‘person for whose benefit the transfer was made.’ ”  (Potter v. Alliance United Ins. Co. (2019) 37 Cal.App.5th 894, 910, citing Civil Code, § 3439.08, subd. (b)(1)(A).)  Defendant has made no argument that he was not a person for whose benefit the alleged transfer was made.  Nor do such facts appear on the face of the FAC.  Plaintiff alleges Defendant had an ownership interest in Trend Offset’s assets and transferred those assets without receiving adequate consideration.  Taking these allegations and all reasonable inferences therefrom as true, the allegations are sufficient to show the alleged transfer was done for Defendant’s benefit and, therefore, that recovery may be had against him.

Defendant cites to case law which holds that a conspiracy theory of liability cannot expand the remedies afforded by the UVTA.  However, there is no conspiracy theory of liability alleged here and this authority does not foreclose an action against Defendant as a person for whose benefit the transfer was made.

Thus, the Demurrer is OVERRULED.

Defendant to file an answer to the FAC within 10 days.

Defendant to give notice.