Judge: Jon R. Takasugi, Case: 21STCV20431, Date: 2023-02-27 Tentative Ruling

Case Number: 21STCV20431    Hearing Date: February 27, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ motion for a judgment on the pleadings is GRANTED, WITH 15 DAYS LEAVE TO AMEND.

            On 6/1/2021, Plaintiff Eian Beron, Jr. (Plaintiff) filed suit against Gas Media Group, LLA, Keaton Keller, and Oombrella Enterprises (collectively, Defendants), alleging: (1) breach of contract: breach of the implied covenant of good faith and fair dealing; (2) declaratory relief; (3) fraud; (4) breach of fiduciary duty; and (5) accounting.

Now, Defendants move for a motion for judgment on the pleadings.  

Factual Background

Plaintiff’s action concerns allegations that he holds a 40% interest in Gas Media Group (GMG).  In turn, Defendants allege that while this was contemplated, such an agreement was ultimately abandoned, due, in part, to Plaintiff’s outstanding tax liabilities. 

Discussion

I.                   Breach of Contract: Breach of Implied Covenant of Good Faith and Fair Dealing

Defendants argue that Plaintiff cannot state a claim for breach of implied covenant because Plaintiff has not alleged facts which could show an enforceable contract was formed. Moreover, to the extent Plaintiff intended to allege that Defendant breached the contract by denying him an ownership interest in Gas Media, this would be an express breach of contract, not a breach of the implied covenant.

      The Court agrees.

            “A contract to be binding must be definite and certain. [citation] A contract will not be enforced unless it is complete and certain.” (Colorado Corp. v. Smith (1953)121 Cal. App. 2d 374, 376.) “[W]here any of the essential elements of a promise are reserved for the future agreement of both parties, no legal obligation arises …” (Copeland v. Baskin Robbins U.S.A. (2002) 96 Cal. App. 4th 1251, 1256.) 

Moreover, “facts which appear in attached exhibits control over contradictory allegations in the operative complaint.” (Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 38-39, citing Holland v. Morse Diesel Intern, Inc. (2001) 86 Cal.App.4th 1443, 1447.)

      Here, Plaintiff alleges that “[o]n or about November 2, 2018, Plaintiff and Defendants entered into an Equity Agreement memorialized in the email attached hereto as Exhibit 1 (“Equity Agreement”).” (Complaint ¶ 19.) In its entirety the email reads:

                  Shane,

                  40% KKMG

                  20% Undecided/Equity left TBD

                  40% Cursor (Eian’s company)

As we’re creating a new entity and less a joint-venture, wouldn’t it make sense to list the member’s equity instead? I personally vow for what we have listed, but have experienced the issue with not being about to denounce a company as “owners” of an LLC.

                  Let me know your thoughts.

Complaint, Exh.1.)

The response email reads:

We will need all the information for Eian and all the documents pertaining to Cursor. Once received, we can write it up and you can review the format how it looks.

            (Complaint, Exh.1.)

            Without any additional factual allegations, this email, on its own, falls short of showing a binding and enforceable agreement. The email here merely lists an equity split but provides none of the other essential terms. Moreover, importantly, the email does not say that the interest was to go to Plaintiff, Eian Beron, personally. Yet, Beron is the Plaintiff in this action, not Cursor. As such, there is a serious question as to whether or not Plaintiff here has standing to pursue this claim in his personal capacity.

            The Court finds leave to amend is appropriate here, keeping in the mind the sham pleadings doctrine. (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425.) As part of this leave, Plaintiff must allege facts which could show that he has standing to pursue this claim and which could show that an enforceable agreement was formed. On its own, this email falls short of showing an enforceable agreement because it lacks essential terms and is vague and uncertain as to what exactly the parties are agreeing to. (Copeland, supra, Cal. App. 4th at p. 1256.)

Based on the foregoing, Defendants’ motion for judgment on the pleadings is granted, with 15 days leave to amend, as to the first cause of action.

II.               Declaratory Relief

Here, Plaintiff’s declaratory relief cause of action seeks a judgment of his rights and remedies under the “contract identified more fully herein” (Complaint ¶ 27.) As set forth above, Plaintiff has not alleged sufficient facts which could show a contract exists under which Plaintiff has any rights. 

Based on the foregoing, Defendants’ motion for judgment on the pleadings is granted, with 15 days leave to amend, as to the second cause of action.

III.            Fraud

Defendants argue that Plaintiff has failed to allege fraud with the requisite specificity.

All fraud claims must be pled with specificity. (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 645.) A plaintiff is required to specifically allege who made the promise, what was said, when it was said, and what the plaintiff did in detrimental reliance. (Lazar, supra, 12 Cal. 4th at p. 645.)

      Here, Plaintiff has only vaguely alleged: “Defendants, and each of them, represented to Plaintiff EIAN BERON, JR. that they would treat him fairly, and would not do anything, or take any action for the purpose of depriving him of any benefits of his equity interest in GMG.” (Complaint ¶ 29.) This falls short of the specificity required to state a claim for fraud.

      Moreover, it is uncertain from Plaintiff’s allegations what Plaintiff did in reliance on the representations. As noted by Defendants:

Plaintiff vaguely says that if he had known Defendants did not intend to abide by their promises, then he “would not have entered into any agreement with Defendants, nor would he have gone into business with them.” Comp. ¶ 30. It is not clear what Plaintiff means by entering into an agreement with Defendants. He cannot be talking about the purported email contract attached as Exhibit 1 to the Complaint because that agreement was not with either of the entity Defendants. If he contends he entered into some other agreement with entity Defendants, he must specifically plead it. Moreover, to the extent his detrimental reliance was entering into the equity agreement (see Comp. ¶ 33), then any representations made after November 2018 could not have induced that reliance. Thus, the vague allegation that Defendants made representations continuing through August 23, 2019, does not square with an allegation of reliance entered into by the business relationship in 2018.

(Motion, 16:21-17:4.)

      Leave will be afforded for Plaintiff to address these deficiencies.

Based on the foregoing, Defendants’ motion for judgment on the pleadings is granted, with 15 days leave to amend, as to the third cause of action.

IV.            Breach of Fiduciary Duty

Defendants argue that Plaintiff cannot state a claim for breach of fiduciary duty because Plaintiff has not alleged facts to show any conduct by Defendants which would breach their duty of loyalty.

The Corporations Code specifies that a member’s duty of loyalty to other members “is limited to the following:

(1) To account to the limited liability company and hold as trustee for it any property, profit, or benefit derived by the member in the conduct and winding up of the activities of a limited liability company or derived from a use by the member of a limited liability company property, including the appropriation of a limited liability company opportunity.

(2) To refrain from dealing with the limited liability company in the conduct or winding up of the activities of the limited liability company as or on behalf of a person having an interest adverse to the limited liability company.

(3) To refrain from competing with the limited liability company in the conduct or winding up of the activities of the limited liability company.

(Corp. C. § 17704.09(b).)

            Here, Plaintiff has alleged that Defendants violated the duty to refrain from taking actions designed to harm a minority member and engaged in conduct designed to benefit themselves. (Comp. ¶¶ 43, 45.) However, these allegations are conclusory and must be supported by facts which could how that Defendants engaged in conduct which harmed Plaintiff as a minority member, beyond breaching its contractual obligation to give him a 40% interest in GMG under the Agreement. “A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.” (Stop Loss Ins. Brokers, Inc. v. Brown & Toland Med. Grp. (2006) 143 Cal. App. 4th 1036, 1041 citing Aas v. Superior Court (2000) 24 Cal. 4th 627, 643.)

Based on the foregoing, Defendants’ motion for judgment on the pleadings is granted, with 15 days leave to amend, as to the fourth cause of action.

V.                Accounting

Defendants argue that Plaintiff cannot state a claim for accounting because he has not alleged sufficient facts.

The Court agrees.

The elements of an accounting cause of action are: (1) a fiduciary relationship, (2) losses in an amount that cannot be ascertained, and (3) misconduct. Kritzer v. Lancaster, 96 Cal. App. 2d 1, 6-7 (1950) 

Here, Plaintiff does not allege that he has suffered any losses that cannot be ascertained without an accounting. Indeed, his requested accounting does not seem to be directed at determining the amount of a suffered loss and instead seems to just be a request for a general accounting of all records just for informational purposes. This is not the purpose of an accounting claim, and Plaintiff must allege facts beyond a prayer for relief.

Based on the foregoing, Defendants’ motion for judgment on the pleadings is granted, with 15 days leave to amend, as to the fifth cause of action.

It is so ordered.

Dated:  February    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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