Judge: John C. Gastelum, Case: 22-01270692, Date: 2023-08-29 Tentative Ruling
(1) Demurrer to Amended Complaint (2) CMC
Tentative Ruling: (1) The Demurrer to the First Amended Complaint brought by Defendant Rustu Kayhan Soydan is OVERRULED, in its entirety.
Defendant demurs to the First Cause of Action for Breach of Contract, asserting “there are no allegations that Soydan was a party to that agreement or that he made promises within that agreement.” (Demurrer: 5: 25-26.) Defendant demurs to the Second Cause of Action for Breach of the Implied Covenant, on this same basis. (Demurrer: 6:14-24.)
Defendant is correct in asserting there are contradictory and unclear allegations, with respect to the parties to the alleged agreement. For example, the Complaint includes allegation stating both, that Defendant Cloud 9 hired Plaintiff (¶2 of FAC) and that all Defendants, collectively, hired Plaintiff. (¶5 and ¶43 of FAC.) Similarly, the Complaint alternates between alleging Defendant Cloud 9 terminated Plaintiff (¶38 of FAC) and all Defendants terminated Plaintiff. (¶40 and ¶44 of FAC). Most significantly, the Complaint expressly alleges promises for payment made by Defendants Cloud 9 and Ketenci (¶23, ¶25, ¶26, ¶27 and ¶31 of FAC), while later alleging the same promises were made by all Defendants. (¶43 of FAC.)
“Where a pleading includes a general allegation, such as an allegation of an ultimate fact, as well as specific allegations that add details or explanatory facts, it is possible that conflict or inconsistency will exist between the more general allegation and the specific allegations.” (Medical Marijuana, Inc. v. ProjectCBD.com (2016) 6 Cal.App.5th 602, 619). “To handle these contradictions, California courts have adopted the principle that specific allegations in a complaint control over an inconsistent general allegation.” (Ibid.) “Under this principle, it is possible that specific allegations will render a complaint defective when the general allegations, standing alone, might have been sufficient.” (Ibid.)
Given the specific allegations which indicate the promises forming the alleged oral agreement were made by Defendants Cloud 9 and Ketenci, only, (¶23, ¶26 and ¶27 of FAC), the Complaint fails to allege an agreement with Defendant Soydan; however, as noted by Plaintiff, the Complaint includes an allegation of alter ego liability. Specifically, the Complaint alleges that “Defendants Cloud9 Distributors, LLC were the alter egos of Defendant Ketenci and Soydan.” (¶11 of FAC.)
Defendant did not address the allegations of alter ego liability within the initial Demurrer and, instead, raised this argument solely within the reply. “It is elementary that points raised for the first time in a reply brief are not considered by the court.” (Magic Kitchen LLC v. Good Things Intern. Ltd. (2007) 153 Cal.App.4th 1144, 1161.) Regardless, the Court considers the issue and finds Plaintiff has sufficiently alleged alter ego liability.
As explained by the Court in Leek v. Cooper (2011) 194 Cal.App.4th 399, 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.” (Id. at 415.) Moreover, “[t]he allegation that a corporation is the alter ego of the individual stockholders is insufficient to justify the court in disregarding the corporate entity in the absence of allegations of facts from which it appears that justice cannot otherwise be accomplished.” (Meadows v. Emett & Chandler (1950) 99 Cal.App.2d 496, 498-499.)
A Plaintiff need only plead “ultimate rather than evidentiary facts,” to support alter ego liability. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236). “Moreover, the ‘less particularity [of pleading] is required where the defendant may be assumed to possess knowledge of the facts at least equal, if not superior, to that possessed by the plaintiff,’ which certainly is the case here.” (Ibid.)
Here, the Complaint alleges “[t]here exists, and at all times herein mentioned has existed, a unity of interest and ownership between Defendants such that any separateness between them has ceased to exist…” (¶11 of FAC.) Additionally, the Complaint generally alleges that “adherence to the fiction of the separate existence of these entities would, under the particular circumstances, sanction a fraud or promote injustice.” (¶13 of FAC.)
While the bulk of the specific alter ego allegations are directed towards Defendant Ketenci (¶11 and ¶12 of FAC), the Complaint nonetheless alleges that “Rustu Kayhan Soydan and Abdulkadir Ketenci treated the assets of Cloud 9 Distributors, LLC as [their] own or otherwise commingled personal assets with Cloud 9 Distributors, LLC’s assets, and that Cloud 9 Distributors, LLC is a mere shell, instrumentality or conduit for the business of Abdulkadir Ketenci and Rustu Kayhan Soydan.” (¶9 of FAC.)
The above factual allegations, which include Defendant Soydan, are comparable to the allegations found to be sufficient in Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221. (Id. at 235.)
Based on the above, the Court finds the Complaint sufficiently alleges alter ego liability, as between Defendant Soydan and Defendant Cloud 9. Consequently, as the Complaint sufficiently alleges the existence of an agreement with Cloud 9, the Demurrer is OVERRULED.