Judge: Jon R. Takasugi, Case: 24STCV03098, Date: 2024-05-06 Tentative Ruling

Case Number: 24STCV03098    Hearing Date: May 6, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

CHW Parties’ demurrer is OVERRULED. Defendant’s motion to strike is DENIED.

            On 2/6/2024, Plaintiff Jiangxi Dacheng Electromechnical Equipment Import and Export Co. Ltd. filed suit against CHW Trading, Inc., Chundi Liu aka Chun Di Liu, Catwalk to Sidewalk Inc., and Kyong Won Kang, alleging: (1) fraud/misrepresentation; (2) breach of contract; and (3) breach of implied covenant of good faith and fair dealing.

            Now, Defendants CHW Trading, Inc. (CHW) and Chundi Liu aka Chun Di Liu (Liu) (collectively, Defendants or CHW Parties) demur to the first cause of action. Defendants also move to strike portions of Plaintiff’s Complaint.

Discussion

            Defendants argue that Plaintiff’s fraud claim is barred by the statute of limitations and fails to allege sufficient facts to state a claim as to Defendants.

            As to the first contention, the statute of limitations for a fraud claim in California is three years from the date of injury. (CCP § 338, subd. (d).) The “discovery rule” may sometimes postpone accrual of a fraud cause of action until the plaintiff discovers, or has reason to discover, the cause of action. (Fox v. Ethicon EndoSurgery, Inc. (2005) 35 Cal.4th 797, 806.)

            Here, the events upon which Plaintiff’s first cause of action is based on events which are alleged to have begun in June 2019, when the first Sales Contract was executed. However, Plaintiff alleges that from 2020 to 2022, Plaintiff began urging the Defendants to pay the outstanding balance allegedly owed but that the parties “used various excuses and refused to make the payment.” (Complaint ¶ 29.) Accordingly, accepted as true at the pleading stage, Plaintiff has alleged facts which could show that it did not have reason to discover the fraud until 2022 when emails “between the parties and the phone conversation with Kang show[ed] that CHW Trading and Catwalk to Sidewalk had fraudulent intentions not to pay the outstanding balance and that they had no intention to pay for the goods when they entered into the agreements with Dacheng.” (Complaint ¶ 30.) While Defendants may dispute that this was the first opportunity for discovery, that is a factual determination not properly decided at this stage.

            As for the second contention, fraud’s “particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” Id. at 645. Fraud “must be pleaded in specific language descriptive of the acts which are relied upon to constitute fraud. It is not sufficient to allege it in general terms, or in terms which amount to mere conclusions.” (Fallbrook Pub. Util. Dist. v. Martin (1957) 151 Cal. App.2d 84, 94.) 

Here, Plaintiff’s alleges “Defendants made a false representation to Plaintiff in entering these three agreements because Defendants intended to first induce Plaintiff to ship the goods without paying Plaintiff in full at the time when a such promise was made and then induce Plaintiff in believing that Defendants would pay for the goods in full. As such, and induced by this false promise, Plaintiff shipped the goods to Defendants under the impression that Defendants would pay the goods in full pursuant to the three agreements.” (Complaint ¶ 35.)

In its demurrer, Defendants argue that these allegations are insufficient because Plaintiff alleges that it entered into agreements with Catwalk, not the CHW parties. However, Plaintiff clearly alleges that it negotiated to enter into the agreement with CHW, and “[a]s CHW Trading did not have sufficient credit line to sign a $500,000 worth of contract, it informed Dacheng that it asked Catwalk to Sidewalk to sign the contract on its behalf. Catwalk to Sidewalk had sufficient credit line to sign a $500,000 worth of contract.” (Complaint ¶ 23.)

While CHW may dispute this as true, the Court accepts well-pled allegations as true at the pleadings stage. Accepted as true, Plaintiff alleges that CHW knowingly induced Plaintiff to enter into an agreement with Catwalk acting on its behalf, CHW had no intention to perform under the agreement, accepted goods pursuant to the agreement, and then refused to pay.  This is sufficiently specific at the pleadings stage to state a claim for fraud. 

Based on the foregoing, CHW Parties’ demurrer is overruled.  Given this conclusion, Plaintiff has alleged sufficient facts to show fraud, malice, or oppression. (Civil Code § 3294.) Accordingly, Defendant’s motion to strike is denied.

It is so ordered.

Dated:  May    , 2024

   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.  For more information, please contact the court clerk at (213) 633-0517.