Judge: John J. Kralik, Case: 22BBCV00907, Date: 2023-05-19 Tentative Ruling

Case Number: 22BBCV00907    Hearing Date: August 4, 2023    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

 

 

franck rouas,

                        Plaintiff,

            v.

 

richline group, inc.,

 

                        Defendant.

 

  Case No.:  22BBCV00907

 

  Hearing Date: August 4, 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 Guy Benhamou of 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.  Plaintiff alleges that Benhamou is the branch manager and key principal of Defendant.  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 second amended complaint (“SAC”), filed April 25, 2023, alleges a single cause of action for breach of contract.

 

B.     Demurrer on Calendar

On May 26, 2023, Defendant filed a demurrer to the SAC and the sole cause of action for breach of contract.

The Court is not in receipt of an opposition brief.  On July 28, 2023, Defendant filed a Notice of Plaintiff’s Non-Opposition to the demurrer, stating that Defendant was not in receipt of an opposition brief from Plaintiff by the opposition deadline.

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 Mr. Benhamou of OroAmerica and that this was done by Mr. Benhamou on behalf of OroAmerica and all companies including Defendant.  (SAC, ¶¶5, 9.) However, the attached License Agreement only shows it was entered between Plaintiff and “Guy Benhamou (OROAMERICA), of 443 north varney street, Burbank, California 91423.”  (SAC, 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.  Section 18 “Signatories” states that the agreement shall be signed on behalf of Solidus fragrances by Plaintiff/CEO and on behalf of Oroamerica inc. and all companies by Guy Benhamou, CEO.  (Id.)  However, Plaintiff has not established any connection between Mr. Benhamou or OroAmerica and Defendant Richline Group, Inc. or shown that Mr. Benhamou had authority to sign any license agreements on behalf of Defendant.  At most, Plaintiff alleges that Mr. Benhamou is the branch manager and key principal of Defendant, but Mr. Benhamou did not sign the License Agreement on behalf of Defendant, but instead only signed the agreement on behalf of OroAmerica and possible Aurafin.  “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 valid 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 re Dem. to Compl., Exs. 3-6.) 

The SAC makes cursory allegations that the License Agreement was entered between Plaintiff and Mr. Benhamou of 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.  (SAC, ¶¶5-7.)  The SAC 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 SAC.  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, was not a party to, and was not of beneficiary of.

The demurrer to the SAC is sustained.  The Court previously sustained with leave to amend the demurrer to the initial complaint and the Court commented in its written order that Plaintiff should consider whether Defendant Richline was the proper defendant for this action and that the exhibits and judicially noticeable documents raised a strong inference that amendment may not be possible.  Plaintiff then filed the FAC.  Defendant demurred to the FAC, but Plaintiff filed the SAC, which the Court accepted as the operative pleading, rendering the demurrer to the FAC moot.  Plaintiff has had multiple attempts to amend the pleading.  In addition, Plaintiff has not filed an opposition to the demurrer to the SAC and, thus, has not shown how, upon amendment, he would be able to present additional facts to cure the defects in the complaint.  The Court is inclined to sustain the demurrer to the SAC without leave to amend as no significant changes to the complaint have been made and the same defects persist. 

Plaintiff should also determine whether he wishes to pursue Guy Benhamou and/or whatever remnant OROAMERICA on which he was acting. Perhaps discovery will show that there is indeed a connection between the entity that signed the contract and Berkshire Hathaway or its subsidiary Richline. But even establishing that the signing entity was a subsidiary of Berkshire Hathaway or Richline does not by itself establish that the parent company is directly responsible for transactions of the subsidiary. It is evident that at present the Plaintiff does not have the facts necessary to allege legal responsibility of these parent companies, even if they are truly parent companies of OROAMERICA. 

CONCLUSION AND ORDER

Defendant Richline Group, Inc.’s demurrer to the 1st cause of action in the SAC is sustained without leave to amend. Therefore, this case is dismissed with prejudice.

Defendant shall provide notice of this order.