Judge: John J. Kralik, Case: 22BBCV00907, Date: 2023-02-24 Tentative Ruling
Case Number: 22BBCV00907 Hearing Date: February 24, 2023 Dept: NCB
North Central District
franck rouas, Plaintiff, v. richline group, inc., Defendant. |
Case
No.: 22BBCV00907 Hearing Date: February 24, 2023 [TENTATIVE] order RE: demurrer |
BACKGROUND
A.
Allegations
Plaintiff Franck Rouas (“Plaintiff”) alleges that he is the owner of
Solidus Fragrances. Plaintiff alleges that
he entered into a License Agreement with OroAmerica on November 30, 2018 to
provide Defendant Richline Group, Inc. (“Defendant”) an exclusive license to
sell Solidus Fragrances Beverly Hills Gold Perfume fragrances and all other
brands. Defendant is alleged to be a
wholly owned subsidiary of Berkshire Hathaway, Inc. and as such agreed to pay
to Solidus Fragrances owned by Plaintiff a royalty of $784,000. Plaintiff alleges that Defendant breached the
License Agreement on November 30, 2018 by failing to pay the amount.
The complaint, filed November 3, 2022, alleges a single cause of action
for breach of contract.
B.
Demurrer on Calendar
On January 6, 2023, Defendant filed a
demurrer to the complaint and the sole cause of action for breach of contract.
On February 1, 2023, Plaintiff filed an
opposition brief.
On February 16, 2023, Defendant filed a reply brief.
REQUESTS FOR JUDICIAL NOTICE
Defendant requests
judicial notice of Exhibits: (1) Berkshire Hathaway Inc.’s Form 10-K Annual
Report dated February 29, 2008; (2) OroAmerica Inc.’s Form 10-Q Quarterly
Report dated June 13, 2001; (3) OroAmerica Inc.’s Long Form Certificate of Good
Standing from the state of Delaware dated September 23, 2022; (4) OroAmerica
Inc.’s Form 15 Certification and Notice of
Termination of Registration under Section 12(g) of the Securities
Exchange Act of 1934 or Suspension of Duty to File Reports under Sections 13
and 15(d) of the Securities Exchange Act of 1934 dated June 26, 2001; (5) a pdf
of search results from the SEC’s online company search function called EDGAR,,
which identifies “Company Search Results” for “OROMAERICA INC” (taken January
6, 2023); and (6) AE Enterprises LLC’s Long Form Certificate of Good Standing
from the state of Delaware dated January 5, 2023. The Court takes judicial notice of the
existence of the documents (i.e., that they were filed on the dates with the
SEC at that point in time), but not for the truths of the matters stated therein.
DISCUSSION
Defendant demurs to the sole cause of action for breach of contract.
First, Defendant argues that Plaintiff cannot establish a contract
between Plaintiff and Defendant because the alleged License Agreement shows
that the named parties to the agreement are Plaintiff and “Guy Benhamou and
Family Trust Owner at Oroamerica Inc and All Companies” entered into the
agreement and that Mr. Benhamou signed on behalf of entities called
“OroAmerica” and “Aurafin”—not Defendant Richline. Thus, Defendant argues that it is not a party
to the License Agreement.
In the complaint, Plaintiff alleges that Plaintiff entered into the
License Agreement with OroAmerica (Compl., ¶6) and then later alleges that he
entered into the License Agreement with “Defendants” (Compl., ¶10). However, the attached License Agreement only
shows it was entered between Plaintiff and “Guy Benhamou (OROAMERICA), of 443
north varney street, Burbank, California 91423.” (Compl., Ex. A.) It is signed by Guy Benhamou as CEO and also
as “Guy Benhamou And Family Trust Owner At Oroamerica Inc And All Companies
Aurafin.” Defendant Richline is not a
party to the License Agreement and is not mentioned in any portion of the
agreement. “If facts appearing in the
exhibits [attached to the compliant] contradict those alleged, the facts in the
exhibits take precedence.” (Holland v. Morse Diesel Intern., Inc.
(2001) 86 Cal.App.4th 1443, 1447.) Taking the facts presented in the License
Agreement, Plaintiff has not alleged sufficient facts showing that Defendant is
a party to the License Agreement and bound to its terms.
Second, Defendant argues that the Court should disregard Plaintiff’s
allegation that he is owed a royalty because Defendant became a wholly owned
subsidiary of Berkshire Hathaway. Defendant
argues that while Berkshire Hathaway formed Defendant in 2007, it is unclear
how this formation in 2007 could obligate Defendant to Plaintiff on November
30, 2018 for a license agreement between Plaintiff and Mr. Benhamou. Defendant also argues that OroAmerica and
Aurafin were not validly existing legal entities when the License Agreement was
purportedly executed because OroAmerica merged out of existence in 2001 and
Aurafin (changing its name to AE Enterprises LLC) dissolved by 2009. (Def.’s RJN Exs. 3-6.)
The complaint makes cursory allegations that the License Agreement was
entered between Plaintiff and OroAmerica, Plaintiff entered into the License
Agreement to provide Defendant an exclusive license to the perfume, and
Defendant is a wholly owned subsidiary of Berkshire Hathaway and “as such”
agreed to pay to Solidus Fragrances owned by Plaintiff a $784,000 royalty. (Compl., ¶¶6-8.) The complaint does not make a connection showing
how this relationship with Berkshire Hathaway would obligate Defendant to be
liable for breach of the License Agreement for which it was not a signatory or
party. In addition, the relationship
between OroAmerica/Aurafin and Defendant has also not been established in the
complaint. At most, the additional exhibits
in the complaint show that Guy Benhamou may have been the principal of
Defendant and other companies, but this in and of itself is not sufficient to
show how Defendant, a separate corporate entity, is liable to Plaintiff on a
License Agreement that Defendant did not sign and was not a party to.
The Court notes that Plaintiff filed an opposition to the demurrer, but
it appears to be a reiteration of the complaint, as it includes sections for
jurisdiction, statement of facts, and a prayer for relief. The opposition does not address the arguments
raised in the demurrer or show how amendment is possible against Defendant.
The demurrer to the complaint is sustained. As this is the first attempt at the pleading,
the Court will grant leave to amend. However,
Plaintiff should carefully consider whether Defendant Richline is the proper
defendant for this action. The documents
attached to the complaint and the public reports attached by Defendants raise a
strong inference that amendment may not be possible.
CONCLUSION AND ORDER
Defendant Richline Group, Inc.’s demurrer to the 1st cause
of action in the complaint is sustained with 20 days leave to amend.
Defendant shall provide notice of this order.