Judge: Kevin C. Brazile, Case: 22STCP02299, Date: 2022-11-21 Tentative Ruling

Hearing Date: November 21, 2022

Case Name: Qian, et al. v. Zheng, et al.

Case No.: 21STCV43571

Matter: Demurrer

Moving Party: Defendants Antonio Wu Zheng, Yi Min, Wing Yin Keung, Chi On Chan, 

Haocheng Xu, The Woww Group LLC, Woww Group, Inc., Woww Group, Inc. (Delaware), and Bao Xing Long, Inc.

Responding Party: Plaintiffs Xuecheng Qian, Zhou Li, and Suhua Deng

Notice: OK

Ruling: The Demurrer is sustained in part, without leave to amend.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On June 27, 2022, Plaintiffs Xuecheng Qian, Zhou Li, and Suhua Deng filed the operative Second Amended Complaint (“SAC”) for (1) breach of oral partnership agreement, (2) breach of the implied covenant of good faith and fair dealing, (3) breach of fiduciary duty, (4) conversion, (5) fraud, (6) accounting, (7) declaratory relief, (8)-(12) violations of the Labor Code, and (13) violations of the UCL.  The primary allegations of the SAC are as follows.  Plaintiffs entered into an oral partnership agreement with the Defendants to create a grocery delivery company.  Plaintiffs agreed to contribute labor and money to obtain shares of the partnership.  Despite providing labor and money, Plaintiffs never received anything.  

Defendants Antonio Wu Zheng, Yi Min, Wing Yin Keung, Chi On Chan, Haocheng Xu, The Woww Group LLC, Woww Group, Inc., Woww Group, Inc. (Delaware), and Bao Xing Long, Inc. demur to the first through fifth causes of action for failure to state sufficient facts.

When considering demurrers, courts read the allegations liberally and in context, and “treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)  “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.)  It is error “to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.”  (Aubry v. Tri-City Hospital Dist.¿(1992) 2 Cal.4th 962, 967.)

Previously, the Court overruled Defendants’ demurrer, except with respect to the corporate Defendants, as to causes of action 1-3 and 5, and Defendant Min, as to causes of action 1-3.  The Court granted leave to amend.  The Court will not now review arguments for causes of action as to which the prior demurrer was overruled.  The Court will also not review arguments that could have been, but were not, raised before.  Therefore, the Demurrer of Defendants Zheng, Chan, Xu, and Keung is again overruled. 

The Court will simply review the SAC to determine if the prior deficiencies have been resolved.  Specifically, with respect to Min, the Court previously found, “The involvement of Min . . . is not explained, except to say that he is friends with the other individual Defendants and that he engaged in fraudulent misrepresentations.  The FAC does not explain how Min could be liable for claims arising from the oral partnership agreement.”  With respect to the corporate Defendants, the Court ruled, “the FAC fails to explain the role of the corporate Defendants.  It is alleged that the individual Defendants are the directors, officers, co-founders, managers, etc. of the corporate Defendants.  It is further alleged that ‘Defendant businesses were formed in an effort to create a shell game and to deprive Plaintiffs of their partnership interests and ownership as agreed.’  (FAC ¶ 18.)  At the same time, it is apparently alleged that all of the corporate Defendants are ‘The Company’ that Plaintiffs were partners in.  (See FAC ¶ 17.)  This, however, conflicts with the allegation that they formed a partnership.  The basis for liability is not apparent.”

The SAC now sufficiently clarifies that Min was also a partner in the subject business, such that Min’s Demurrer is overruled.  (See, e.g, SAC ¶ 43.)  The conflict in allegations as to whether Min became a partner in April or September of 2020 is not determinative for the purposes of the Demurrer.  

On the other hand, the Court again finds the allegations against the corporate Defendants to be deficient for the first through third causes of action.  The SAC fails to properly allege that the corporate Defendants were actually partners in the subject business or that they otherwise owed contractual or fiduciary duties.    

However, the fifth cause of action is properly alleged against the corporate Defendants to the extent they are alleged to have conspired with the individual Defendants by stealing corporate assets.  

In sum, the Demurrer of the corporate Defendants is sustained as to the first through third causes of action, without leave to amend.  The Demurrer is otherwise overruled.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.