Judge: Joseph Lipner, Case: 20STCV16234, Date: 2025-05-02 Tentative Ruling

Case Number: 20STCV16234    Hearing Date: May 2, 2025    Dept: 72

Superior Court of the STATE OF California

FOR THE County of Los Angeles

            The Court held the trial of this matter on April 8, 9 and 10, 2024.  The parties appeared for closing arguments and to discuss this proposed statement of decision on May 2, 2025.  Lyle R. Mink represented Plaintiff Avant Plastic Surgery, Inc. (“Avant”).  Felix Thomas Woo represented Defendant A.H.N.L. MD, Inc. (“AHNL”).   

            After considering the evidence and argument, the Court makes the following rulings.[1]

            1.         The Court awards Avant $173,585.70 on its breach of contract claim.  The Court awards AHNL $36,952.83 on its breach of contract claim.  These awards net out against one another such that AHNL owes Avant $136,632.87. 

            2.         The Court rules in favor of AHNL and against Avant on Avant’s claim for money had and received.

            3.         The Court rules in favor of Avant and against AHNL on AHNL’s cross-claims for breach of the implied covenant of good faith and fair dealing, declaratory relief, and fraud and deceit. 

            Judgment shall issue in accordance with the Court’s rulings.  Avant shall prepare the judgment.  The Court sets an OSC re entry of judgment for June 4, 2025 at 8:30 a.m. in Department 72.  The OSC will go off calendar if a judgment is entered before that date.

I.                   BACKGROUND FACTS

On February 15, 2019, Avant and AHNL entered into a service agreement (the “Agreement”).  (Stipulated Fact (“SF”) 1.)  The Court admitted the Agreement as Exhibit 2. 

Among other provisions of the Agreement were the following terms:

·        “AHNL shall be responsible for  providing the following, all at AHNL’s sole cost except as otherwise provided in this Agreement: (a) Renovating and building out the Second Floor Premises, with input from [Avant]; (b) Making available to [Avant] sufficient space in the Second Floor Premises for [Avant’s] provision of Professional Services under this Agreement.”  (Agreement ¶ 6.2.)

·        Avant would make a deposit to AHNL of $100,000.  (Agreement ¶12.)  This deposit would be returned to Avant at the end of the term.  (Ibid.)

·        Avant was to compensate AHNL for the use of the Second Floor Premises through a percentage of the monies received for services Avant provided.  (Agreement ¶ 10.2 & Ex. B.)

·        “Either party may terminate this Agreement effective at any time by giving not less than sixty (60) days’ prior written notice to the other party.” (Agreement ¶ 13.2.)

·        Each of the parties agreed to indemnify the other for claims that arise out of or relate to any provision of the Agreement. (Agreement ¶ 20.)

·        “This Agreement supersedes any and all other agreements, either oral or in writing, between the parties hereto with respect to the subject matter hereof, and contains the entire agreement between the parties relating to such subject matter.  This Agreement may not be modified except by an instrument in writing executed by the parties hereto.”  (Agreement ¶ 21.3.)

It is undisputed that Avant paid $75,000 to AHNL with regards to paragraph 12 of the Agreement.  (SF 11.)  It is also undisputed that AHNL received from Avant medical products worth $39,428.  (See SF 13-19.)  AHNL has not returned the deposit or paid for the products.

The parties also agree that Avant owes AHNL $10,748 for referrals of AHNL patients to Avant under the Agreement.  (Avant’s Post-trial Brief at 6:1-4.)

Avant terminated the Agreement on November 27, 2019. 

II.         BREACH OF CONTRACT CLAIMS

A claim for breach of contract “requires proof of the following elements:  (1) existence of the contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff as a result of the breach.”  (CDF Firefighters v. Maldonado (2008) 158 Cal.App.4th 1226, 1239.)  The primary issues on the parties’ respective breach of contract claims are breach and the amount of damages.

A.        Undisputed Amounts

In one sense, there is no dispute that the parties are liable to one another on the breach of contract claim.  The following are the Court’s calculations of the undisputed amounts due between the parties.  This is based on the calculations, also undisputed, submitted by the parties in the post-trial briefing:

·        AHNL owes Avant for the return of the deposit $75,000 plus interest of $38,774.10 for a total of $113,774.10.

·        AHNL owes Avant for the medical products it received $39,428 plus interest of $20,383.60 for a total of $59,811.60

·        Avant owes AHNL for referrals $10,748 plus interest of $5,374 for a total of $16,122.

B.        AHNL’s Claim for Corrective Treatment

The Court found credible the testimony of Patrice Wang of AHNL that two patients were extremely dissatisfied with the medical care received by Dr. Perry Liu of Avant.  The Court also found credible that AHNL had to perform corrective treatments on these patients.  The Court concludes that, under the indemnification provision of the Agreement, Avant is liable for the cost of the corrective treatment.

Thus, Avant owes AHNL $13,781.50 plus interest of $7,049.33 for a total of $20,830.83.

C.        AHNL’s Claim for Half the Rent

AHNL claims that AHNL and Avant orally agreed that starting in August 2019 Avant would pay half the rent.  The Court does not accept AHNL’s claim.

As an initial matter, such an agreement would violate the Agreement’s integration term, paragraph 21.3.  The Agreement provided a specific formula for the payment of rent, which was not due until Avant started working.  Any change to this provision was required to be in writing under paragraph 21.3.

Putting the integration clause aside, the Court does not find that AHNL has established the existence of this oral agreement by a preponderance of the evidence. (See Aton Center, Inc. v. United Healthcare Ins. Co. (2023) 93 Cal.App.5th 1214, 1230 [existence of oral agreement is one of elements of claim].)  Patrice Wang and Perry Liu offered diametrically opposing testimony on this point, and the Court finds no reason to believe Ms. Wang’s testimony over Dr. Liu’s.  Moreover, there is no writing confirming this agreement.  While AHNL sent invoices, Avant never paid them.

III.       AVANT’S CLAIM FOR MONEY HAD AND RECEIVED

The Court is inclined to agree with AHNL that Avant should not be held to have prevailed on its claim for money had and received because such a claim can be handled on the basis of a specific written contract regarding the subject matter.  (See Klein v. Chevron U.S.A., Inc.  (2012) 202 Cal.App.4th 1342, 1388 [quasi contract claim cannot proceed when there is express contract].)  In any event, given that Avant prevailed on its breach of contract claim, the claim for monies had and received is moot.

IV.       AHNL’S BREACH OF COVENANT AND DECLARATORY RELIEF
CLAIMS

AHNL has not presented any evidence that makes the Court conclude that Avant breached the covenant of good faith and fair dealing or that AHNL is entitled to declaratory relief.  Accordingly, the Court rules for Avant on these claims.

V.        AHNL’S FRAUD CLAIM

AHNL asserts as an affirmative claim, and as a defense to Avantis’s breach of contract claim, that Avantis committed fraud by making a misrepresentation to AHNL.  The elements of fraud are (1) a misrepresentation, (2) made with knowledge of its falsity, (3) intent to deceive, (4) detrimental reliance, and (5) resulting damages.  (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211.)  AHNL claims that Ms. Wang asked Dr. Liu whether he had any malpractice claims pending against him and Dr. Liu falsely stated he did not.

The Court finds that AHNL has not met its burden to show that this conversation took place.  First, Ms. Wang and Dr. Liu gave opposing testimony on this point and the Court has no reason to credit Ms. Wang’s over Dr. Liu’s.

Moreover, there are certain facts that cast doubt as to whether such a conversation and asserted misrepresentation actually took place in the manner related by Ms. Wang.  In a declaration signed October 3, 2021, Ms. Wang testified as to a meeting she had with Dr. Liu prior to signing the agreement.  In it, she wrote:  “During the meeting, by which [AHNL’s] owner Dr. Martin was also present, we specifically asked Dr. Liu whether [Avantis] or he were the subjects of any disciplinary actions or investigations by the Medical Board that could threaten his license.  During the same meeting, we also asked Dr. [Liu] whether he was aware of any threatened or pending malpractice claims against him or his practice.”  (Ex. 36 ¶ 3, emphasis added.)  However, she testified at trial that Dr. Martin was not present for this key conversation.  Dr. Martin also testified he was not present.  This significant discrepancy casts some doubt as to whether this question was posed to Dr. Liu.

Moreover, Dr. Martin (AHNL’s owner) testified that when he asked Ms. Wang to discuss the issue of Dr. Liu’s record with Dr. Liu, he asked her to be very careful not to insult Dr. Liu.  The Court interprets this as an indication that Ms. Wang was not to ask direct, blunt questions.  It is even possible that Ms. Wang believed that she asked Dr. Liu about his record but she posed the question in a manner that did not lead Dr. Liu to understand that she was asking about malpractice claims.

In addition, Dr. Martin testified he never heard a report from Ms. Wang about the conversation with Dr. Liu.  Thus, Dr. Martin’s testimony did not corroborate Ms. Wang’s account of the conversation.

For all these reasons, the Court concludes that AHNL did not meet its burden on this claim.

DATED:         May 4, 2025

                                                            ________________________________________

                                                                             Joseph Lipner

                                                            JUDGE OF THE SUPERIOR COURT