Judge: Jon R. Takasugi, Case: 24STCV26918, Date: 2025-05-19 Tentative Ruling

Case Number: 24STCV26918    Hearing Date: May 19, 2025    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ demurrer is SUSTAINED IN PART, OVERRULED IN PART:

-           Defendants’ demurrer is SUSTAINED, WITH 20 DAYS LEAVE TO AMEND, as to the first, second, third, fourth, and seventh causes of action;

-          Defendants’ demurrer is SUSTAINED, WITHOUT LEAVE TO AMEND, as to the fifth cause of action; and

-          Defendants’ demurrer is OVERRULED as to the sixth cause of action.

Defendants’ motion to strike is GRANTED IN PART, MOOT IN PART. Defendants’ motion to strike is GRANTED, WITH 20 DAYS LEAVE TO AMEND, as to the attorney fees issue. Defendants’ motion to strike is MOOT as to the punitive damages prayer.

            On 10/15/2024, Plaintiffs 3160 8^th LLC, Los Angeles Korean 1^st Presbyterian Church Corporation, John Suh, and David Suh (collectively, Plaintiffs) filed suit against Hwa Chong Kang, Solomon Ko, Jung Sook Ko, Han Jiun Shin, and Kathleen Herrera dba Western Fidelity Trustees (collectively, Defendants), alleging: (1) breach of contract; (2) fraud and deceit; (3) breach of the implied covenant of good faith and fair dealing; (4) improper foreclosure; (5) declaratory relief; (6) accounting; and (7) unfair business practices.

            On 4/22/2025, Defendant Hwa Chong Kang (Defendant or Defendant Kang) demurred to Plaintiff’s Complaint.

            The motion is unopposed.

Discussion

            Defendant argues that each of Plaintiffs claims are insufficiently pled.

            After review, the Court agrees in part.

            As for the first cause of action, Plaintiffs allege that Defendants “breached the agreements entered into between the parties by failing to provide the required disclosure statements and an accurate accounting of the Loan balance, as specified in the terms of the Loan.” (Complaint ¶ 19.) However, other portions of the Complaint allege that only Plaintiff LA Korean Presbyterian Church entered into the agreement, not all Plaintiffs. As such, there is uncertainty as who the parties were to the underlying contract. Clearly, if individual Plaintiffs were not a party to the contract, they do not have standing to assert a claim for breach of contact. Moreover, it is uncertain whether all Defendants were parties to the contract. Moreover, Plaintiffs do not allege their own performance or excuse. (Armstrong Petroleum v. Tri-Valley (2004) 116 Cal.App.4th 1375, 1391 n.6.) However, leave to amend will be awarded to address these uncertainties and deficiencies.

As for the second cause of action, the complaint alleges that Defendant Kang initially represented to the Church that the $4¿million loan would be secured only by the Church property, but that at the last minute Defendants demanded adding the Hotel property as additional collateral (Compl. ¶¶ 36, 37). However, these allegations are similarly uncertain as it refers generally to Defendants and Plaintiffs without specificity. Did each Defendant make a specific representation to each of the Plaintiffs? If so, were these representations made orally or in writing? Fraud is subject to a heightened pleading standard. Fraud must be plead with specificity rather than with ‘“‘general and conclusory allegations.’”’ (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made, and, in the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 793.) Leave to amend will be awarded to address these uncertainties and deficiencies.

As for the third cause of action, Plaintiffs base their implied covenant claim on the same alleged conduct as the breach of contract claim. While the Court disagrees that this claim is inherently duplicative, the Court found above that the breach of contract claim was insufficiently pled. Thus, for the same reasons, the Court finds this claim to be insufficiently pled.

As for the fourth cause of action, Plaintiffs allege improper foreclosure.  Plaintiff alleges that the Defendants’ Notice contained technical defects by “misstating the amount of the delinquency in the NODs, failing to provide an accurate accounting, and attempting to foreclose on Plaintiffs' properties based on incorrect and inflated delinquency amounts.” (Compl. ¶ 48.)

Defendants argue that Plaintiff cannot state a claim but they don’t allege tender. However, there are exceptions to the tender rule, including where the underlying loan was deemed unconscionable. (Lona v. Citibank (2011) 202 Cal.App.4th 89, 112-113.) Here, Plaintiffs allege fraud and breach of contract related to the underlying loans. While the Court found those claims insufficiently pled, it is possible that Plaintiff will be able to sufficiently allege these claims. As such, it would be premature to conclude here that Plaintiffs cannot state a claim for wrongful foreclosure based on a failure to tender. As such, the Court grants leave to amend as to both claims.

As for the fifth cause of action for declaratory judgment, this claim seeks a judicial determination that the foreclosure sales “are unlawful” and should be stayed. This is duplicative of the fourth cause of action, and thus the Court sustains Defendants’ demurrer to this cause of action without leave to amend. 

As for the sixth cause of action, two conditions typically justify an accounting: (1) a fiduciary or trust relationship (or some other relationship where the defendant was managing money or property for the plaintiff), or (2) complex financial matters making it impractical to ascertain the amounts due without an equitable accounting. (See Kritzer v. Lancaster (1950) 96 Cal.App.2d 1, 6–7, quoting Whann v. Doell (1923) 192 Cal. 680, 684: a complaint for accounting must show a relationship requiring an accounting and that some balance is due to the plaintiff that is unknown to them.

Here, Plaintiff alleges that Defendants was in possession of Plaintiffs’ property, and that an accounting is necessary “to determine the true amounts owed under the Loan agreements; including—any delinquency amounts and fees, and to allow Plaintiffs to cure any alleged defaults.” (Compl. ¶ 56.) These allegations are sufficient at the pleadings stage to state a claim.

As for the seventh cause of action, this claim for unfair competition is based on the underlying claims alleged here for which the Court sustained Defendants’ demurrer. Thus, this claim necessarily fails as well. 

Based on the foregoing, Defendants’ demurrer is sustained in part, overruled in part. Defendants’ demurrer is sustained, with 20 days leave to amend, as to the first, second, third, fourth, and seventh causes of action. Defendants’ demurrer is sustained, without leave to amend, as to the fifth cause of action. Defendants’ demurrer is overruled as to the sixth cause of action.

Motion to Strike

            Defendants argue that Plaintiff has not sufficiently pled a prayer for punitive damages or attorney fees.

            As for punitive damages, the Court sustained Defendants’ demurrer as to Plaintiffs’ fraud cause of action. Accordingly, the motion is moot as to this contention.

            As for attorney fees, the Court agrees that Plaintiffs’ Complaint does not allege the contractual or statutory basis for the recovery of fees.

            Based on the foregoing, Defendants’ motion to strike is granted in part, moot in part. Defendants’ motion to strike is granted, with 20 days leave to amend, as to the attorney fees issue. Defendants’ motion to strike is moot as to the punitive damages prayer.

It is so ordered.

Dated:  May    , 2025

   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.