Judge: Joseph Lipner, Case: 20STCV45192, Date: 2023-08-24 Tentative Ruling
Case Number: 20STCV45192 Hearing Date: April 9, 2024 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
JEFFREY QIUHONG YANG, Plaintiff, v. Global Win CAPITAL CORPORATION, et
al., Defendants. |
Case No:
20STCV45192 Hearing Date: April 9, 2024 Calendar Number: 1 |
Plaintiff and Cross-Defendant Jeffrey Qiuhong Yang
(“Plaintiff”) moves for summary adjudication of 29 separate issues against
Defendant and Cross-Complainant Global Win Capital Corporation (“Global Win”).
The Court DENIES the motion for summary adjudication.
Plaintiff is Global Win’s former Chief Financial Officer.
Plaintiff alleges that he was terminated in retaliation for his whistleblower
complaints. Defendant alleges that it terminated Plaintiff for incurring
unapproved unreasonable business expenses.
On November 24, 2020, Plaintiff filed this lawsuit against Global
Win Xiaobei Ellis Liu, Shanying International Holdings Corporation Limited
(“Shanying”), and Kevin Yulin Jiang, stating claims for whistleblower
retaliation and wrongful termination. The operative complaint is now the Second
Amended Complaint (“SAC”).
On January 15, 2021, Global Win filed a Cross-Complaint
against Plaintiff and Liu. The operative cross-complaint is now the First
Amended Cross-Complaint (“FACC”), which raises claims for (1) intentional
misrepresentation; (2) fraudulent concealment; (3) negligent misrepresentation;
(4) constructive fraud; (5) breach of fiduciary duty; (6) conversion; (7)
breach of contract; (8) breach of the covenant of good faith and fair dealing;
(9) misappropriation of trade secrets; (10) violation of Penal Code, section
496; and (11) rescission based on fraudulent inducement.
On
May 4, 2023, Plaintiff moved for summary judgment, or, in the alternative,
summary adjudication. On August 24, 2023, the Court denied both motions. The
Court found that there were triable issues of facts precluding summary
judgment. The Court also found that that Yang had failed to file a
code-compliant separate statement as to the motion for summary adjudication,
and therefore did not consider the motion for summary adjudication on the
merits.
On
January 24, 2024, Plaintiff again moved for summary adjudication. Defendant
filed an opposition and Plaintiff filed a reply.
The Court sustains Global Win’s first evidentiary objection.
In hearing the previous motion for summary judgment, the Court sustained Global
Win’s objection to identical evidence. The Court reaffirms its previous ruling.
The Court overrules Plaintiff’s objections to the
declarations of Melanie Walker, Peng Shen, Kevin Yulin Jiang, and Frederick
Yihong Liu.
The purpose of a motion for
summary judgment or summary adjudication “is to provide courts with a mechanism
to cut through the parties’ pleadings in order to determine whether, despite
their allegations, trial is in fact necessary to resolve their dispute.” (Aguilar
v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 843.) “Code of
Civil Procedure section 437c, subdivision (c), requires the trial judge to
grant summary judgment if all the evidence submitted, and ‘all inferences
reasonably deducible from the evidence’ and uncontradicted by other inferences
or evidence, show that there is no triable issue as to any material fact and
that the moving party is entitled to judgment as a matter of law.” (Adler v.
Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.)
“In ruling on the motion,
the court must consider all of the evidence and all of the inferences
reasonably drawn therefrom [citation] and must view such evidence [citations]
and such inferences [citations] in the light most favorable to the opposing
party.” (Aguilar, supra, at pp. 844-845 [quotation marks
omitted].)
“On a motion for summary
judgment, the initial burden is always on the moving party to make a prima
facie
showing that there are no triable issues of material fact.” (Scalf v. D. B.
Log Homes, Inc. (2005) 128 Cal.App.4th 1510, 1519.) A defendant moving for
summary judgment or summary adjudication “has met his or her burden of showing
that a cause of action has no merit if the party has shown that one or more
elements of the cause of action . . . cannot be established, or that there is a
complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd.
(p)(2).)
“Once the defendant . . .
has met that burden, the burden shifts to the plaintiff . . . to show that a
triable issue of one or more material facts exists as to the cause of action or
a defense thereto.” (Ibid.) To establish a triable issue of material
fact, the party opposing the motion must produce substantial responsive
evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.) “If the plaintiff cannot do
so, summary judgment should be granted.” (Avivi v. Centro Medico Urgente
Medical Center (2008) 159 Cal.App.4th 463, 467.)
Plaintiff
moves for summary adjudication of 29 issues in the FACC. For its own
convenience, the Court lists them here, broken down by the causes of action
with which they are associated.
Intentional Misrepresentation (First Cause of Action)
1. Executive Employment Agreement
2. Stock Appreciation Rights Plan
3. Relocation Fee
4. Housing Subsidy
5. Business Reimbursement
Fraudulent Concealment (Second Cause of Action)
6. Executive Employment Agreement
7. Stock Appreciation Rights Plan
8. Relocation Fee
9. Housing Subsidy
10. Business Reimbursement
Negligent Misrepresentation (Third Cause of Action)
11. Executive Employment Agreement
12. Stock Appreciation Rights Plan
13. Relocation Fee
14. Housing Subsidy
15. Business Reimbursement
Constructive Fraud (Fourth Cause of Action)
16. Executive Employment Agreement
17. Stock Appreciation Rights
18. Relocation Fee
19. Housing Subsidy
20. Business Reimbursement
Breach of Fiduciary Duty (Fifth Cause of Action)
21. Entire claim
Conversion (Sixth Cause of Action)
22. Entire claim
Breach of Contract (Seventh Cause of Action)
23. Breach of Executive Employment Agreement
24. Breach of Stock Appreciation Plan
25. Breach of Proprietary Information and Inventions
Agreements
Breach of the Covenant of Good Faith and Fair Dealing
(Eighth Cause of Action)
26. Entire claim
Misappropriation of Trade Secrets (Ninth Cause of Action)
27. Entire claim
Violation of Penal Code, Section 496 (Tenth Cause of
Action)
28. Entire claim
Punitive Damages
29. Punitive damages
Code of Civil Procedure, section 473c, subd. (f)(2) provides
that a party may not move for summary judgment on grounds asserted in a
previously denied motion for summary adjudication unless the party establishes
new facts or law supporting the reasserted issues.
Global Win argues that Plaintiff’s present motion is
procedurally improper because it reasserts many issues raised in the prior
motion for summary adjudication. The Court did not reach the merits of most of
the issues in that motion due to Plaintiff’s improper separate statement filed
in connection with that motion. Plaintiff’s motion for summary adjudication is
thus, prima facie, proper.
Legislative intent is that an issue presented for summary
adjudication shall be worded so as to dispose of an entire cause of action or
defense. (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 249.)
However, “where separate causes of action are commingled into one, court[s] may
grant summary adjudication of the individual claims.” (Dominguez v. Washington Mutual Bank
(2008) 168 Cal. App. 4th 714, 727.) Furthermore, “a party may present a motion
for summary adjudication challenging a separate and distinct wrongful act even
though combined with other wrongful acts alleged in the same cause of
action.” (Edward Fineman Co. v. Sup.
Ct. (1998) 66 Cal. App. 4th 1110, 1118.)
“The elements of a cause of action for intentional
misrepresentation are (1) a misrepresentation, (2) with knowledge of its
falsity, (3) with the intent to induce another’s reliance on the
misrepresentation, (4) actual and justifiable reliance, and (5) resulting
damage.” (Daniels v. Select Portfolio
Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1166.) The facts constituting
the alleged fraud must be alleged factually and specifically as to every
element of fraud, as the policy of “liberal construction” of the pleadings will
not ordinarily be invoked. (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud
against a corporation, the plaintiffs must plead the names of the persons
allegedly making the false representations, their authority to speak, to whom
they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co.
(1991) 2 Cal.App.4th 153, 157.)
Plaintiff argues that there is no triable issue of fact as
to the existence of a misrepresentation, knowledge of falsity, or resulting
damage.
In ruling on the motion for summary judgment, the Court
found that Global Win had established a triable issue of fact that Plaintiff
made a misrepresentation to Global Win regarding his executive employment
agreement. The Court found that Plaintiff had not eliminated a triable issue of
fact on the element of knowledge of falsity. Here, Plaintiff has not advanced
beyond the conclusory assertions of the summary judgment motion that he had no
knowledge of falsity. The Court additionally found that Global Win had
established a triable issue of fact as to damages.
Plaintiff has not provided additional analysis here on why
the Court should rule differently than it did on the summary judgment motion.
Thus, for the reasons outlined in the summary judgment motion, the Court finds
that there are triable issues of fact as to the issues that Plaintiff raises
and denies the motion on this issue.
Plaintiff argues that he did not make a false representation
and that there is no evidence of damages.
Global Win has provided evidence that, in negotiating his
stock appreciation rights plan, Plaintiff represented the fair market value of
Global Win to be 60% of the value of its subsidiary, Phoenix Paper, the value
of which Plaintiff stated was $18 million. (UMF 32, RUMF 34.) Global Win has
provided evidence that Yang had received a report from a third-party firm that
concluded that the fair market value of Phoenix Paper was actually $135
million. (RUMF 34.) Global Win has demonstrated a triable issue that Plaintiff
made a misrepresentation.
As discussed above, the Court found that Global Win had demonstrated
a triable issue that Plaintiff improperly retained money resulting from his
alleged misrepresentations. This is sufficient to establish the existence of a
triable issue of fact on the intentional misrepresentation claim. The Court
denies the motion on this issue.
The Court concluded in the summary judgment order that
Global Win had demonstrated a triable issue that Plaintiff had misrepresented
that he was entitled to a relocation fee when he had not moved. The Court found
that the fact that Plaintiff knew he had not moved created a triable issue of
falsity and intent to deceive. The Court found that there was a triable issue
as to damages because Plaintiff retained some of the fee. Plaintiff has not
shown that these findings should be altered. The Court denies the motion on
this issue.
The Court found in the summary judgment order that Global
Win had created a triable issue that Plaintiff had misrepresented that he was
entitled to a housing subsidy. The Court found triable issues that Plaintiff
knew he was not entitled to the subsidy and intended to deceive Global Win and
that Global Win relied on Plaintiff’s representations. The Court found that
there was a triable issue as to damages because Plaintiff retained some of the housing
subsidy. Plaintiff has not shown that these findings should be altered. The
Court denies the motion on this issue.
The Court found in the summary judgment order that there was
a triable issue that Plaintiff had incurred unreasonable business for his own
benefit. Plaintiff argues that there is no triable issue of damages because
Plaintiff returned the $1,319.52 iPad he purchased to Global Win, which
Plaintiff argues was the only unreasonable expense. However, returning the iPad
that Plaintiff allegedly improperly purchased is not the same as damages or
restitution – Global Win could not necessarily sell the iPad to recover the
money lost, nor would a business necessarily have a productive use for an iPad
that would justify the expense. There is a triable issue of damages. The Court
denies the motion on this issue.
“[T]he elements of an action for fraud and deceit based on
concealment are: (1) the defendant must have concealed or suppressed a material
fact, (2) the defendant must have been under a duty to disclose the fact to the
plaintiff, (3) the defendant must have intentionally concealed or suppressed
the fact with the intent to defraud the plaintiff, (4) the plaintiff must have
been unaware of the fact and would not have acted as he did if he had known of
the concealed or suppressed fact, and (5) as a result of the concealment or
suppression of the fact, the plaintiff must have sustained damage.” (Lovejoy
v. AT&T Corp. (2004) 119 Cal.App.4th 151, 157–158.)
Yang does not deal with each wrongful act individually. The
Court will not do so either.
Yang argues that there is no evidence of misrepresentations.
For the reasons discussed above and in the summary judgment order, the Court
disagrees.
Yang argues that he had no obligation to disclose the truth.
However, Yang does not dispute that he owed fiduciary duties to Global Win, and
the undisputed evidence shows that Yang was Global Win’s CFO, was expressly
named as an officer in Global Win’s bylaws, and was a key member of management
throughout his employment at Global Win. (UMF 2, 6; RUMF 20, AUMF 25.)
The Court denies the motion with respect to all issues on
this claim.
The elements of a cause of action for negligent
misrepresentation include “[m]isrepresentation of a past or existing material
fact, without reasonable ground for believing it to be true, and with intent to
induce another’s reliance on the fact misrepresented; ignorance of the truth
and justifiable reliance on the misrepresentation by the party to whom it was
directed; and resulting damage.” (Hydro-Mill
Co., Inc. v. Hayward, Tilton & Rolapp Ins. Associates, Inc. (2004) 115
Cal.App.4th 1145, 1154, quotation marks omitted.) The facts constituting the
alleged fraud must be alleged factually and specifically as to every element of
fraud, as the policy of “liberal construction” of the pleadings will not
ordinarily be invoked. (Lazar v. Superior
Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a
corporation, the plaintiff must plead the names of the persons allegedly making
the false representations, their authority to speak, to whom they spoke, what
they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153,
157.)
Yang does not deal with each wrongful act individually. The
Court will not do so either.
Yang argues that he did not make a misrepresentation, that
there is no evidence his representations were made without reasonable ground,
there is no evidence of reliance, there is no evidence of intent to deceive,
and there is no evidence of damages.
As discussed above, there is evidence that Yang knew his
representations were false. Accordingly, there is evidence that he made the
representations without reasonable ground.
The Court disposes of the remaining bases for summary
adjudication in the above causes of action.
The Court denies the motion with respect to all issues on this
claim.
“Constructive fraud is a unique species of fraud applicable
only to a fiduciary or confidential relationship.” (Prakashpalan v.
Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131 [citation
and quotation marks omitted].) “Constructive fraud arises on a breach of duty
by one in a confidential or fiduciary relationship to another which induces
justifiable reliance by the latter to his prejudice.” (Ibid. [citation
and quotation marks omitted].) “Constructive fraud exists in cases in which
conduct, although not actually fraudulent, ought to be so treated—that is, in
which such conduct is a constructive or quasi fraud, having all the actual
consequences and all the legal effects of actual fraud.” (Ibid.
[citation and quotation marks omitted].)
The elements of a constructive fraud cause of action are (1)
a fiduciary duty or confidential relationship, (2) nondisclosure (breach of
fiduciary duty); (3) intent to deceive, and (4) reliance resulting in injury. (Younan
v. Equifax Inc. (1980) 111 Cal.App.3d 498, 516, fn. 14.)
Plaintiff makes no new arguments on this claim, but instead
states that he incorporates his arguments made against the intentional
misrepresentation claim. The Court will not repeat its analysis here. For the
reasons discussed under the intentional misrepresentation claim, the Court
denies summary adjudication on all issues in this claim.
“The elements of a
cause of action for breach of fiduciary duty are the existence of a fiduciary
relationship, breach of fiduciary duty, and damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)
Plaintiff makes no new arguments on this claim, but instead
states that he incorporates his arguments made against the previous claims and
the trade secrets claim. The Court will not repeat its analysis here. For the
reasons discussed elsewhere in this order, the Court denies summary
adjudication on this claim.
Plaintiff argues that he had no intent to convert the money
he received from Global Win and exercise ownership over it.
“The act [of conversion] must be knowingly or intentionally
done, but a wrongful intent is not necessary.” (Taylor v. Forte Hotels
International (1991) 235 Cal.App.3d 1119, 1124, as modified on denial of
reh'g (Nov. 20, 1991).) Insofar as Plaintiff argues that he had no wrongful
intent, his argument is not legally cognizable. Insofar as Plaintiff argues he
had no intent to exercise dominion over Global Win’s money at all, his
argument is not factually supported, because Global Win has demonstrated a
triable issue that Plaintiff kept at least some of the money paid to him under
the housing and relocation policies.
The Court denies the motion on this claim.
Global Win has voluntarily dismissed this claim. (Opposition
at p. 8:25-26.) The Court denies the motion as moot on this claim.
Global Win has voluntarily dismissed this claim. (Opposition
at p. 8:25-26.) The Court denies the motion as moot on this claim.
Global Win has voluntarily dismissed this claim. (Opposition
at p. 8:25-26.) The Court denies the motion as moot on this claim.
Penal Code, section 496 provides that to sustain a
conviction for receiving stolen property, the plaintiff must prove (1) the
property was stolen; (2) the defendant knew the property was stolen; and (3)
the defendant had possession of the stolen property. (People v. Land (1994)
30 Cal.App.4th 220, 223; Penal Code, § 496.)
Plaintiff incorporates his arguments made in the other
sections on this claim. For the reasons discussed above, Plaintiff has created
a triable issue of fact that Plaintiff knew that takin reimbursements that he
was not entitled to was theft. The Court denies the motion on this issue.
Punitive damages are appropriate when a defendant acted with
malice, oppression, or fraud. (Civ. Code, § 3294, subd. (a).) “Malice” is
defined as conduct intended to cause injury to a person or despicable conduct
carried on with a willful and conscious disregard for the rights or safety of
others. (Turman v. Turning Point of Cent.
Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable
conduct subjecting a person to cruel and unjust hardship, in conscious
disregard of the person’s rights. (Ibid.)
“Fraud” is an intentional misrepresentation, deceit, or concealment of a
material fact known by defendant, with intent to deprive a person of property,
rights or otherwise cause injury. (Ibid.)
A
claim for punitive damages must be proved with clear and convincing evidence at
trial. (Aquino v. Superior Court (1993) 21 Cal. App. 4th 847, 855
(1993).
Global
Win has demonstrated a triable issue that Plaintiff acted with intent to
defraud Global Win. Global Win has provided evidence that Plaintiff
misrepresented the company’s value by nearly an order of magnitude to obtain a
favorable stock benefit plan. Global Win has provided evidence that Plaintiff
improperly received and kept relocation and housing reimbursements. The Court
also found in the summary judgment motion that Global Win provided evidence
that Plaintiff had withheld from Global Win the advice of Global Win’s own counsel
that a one-year salary severance plan was the industry standard in order to
obtain a three-year salary plan for himself.
A reasonable jury could find that Plaintiff acted with
malice, oppression, or fraud. The Court denies summary adjudication on this
issue.