Judge: Lee W. Tsao, Case: 22NWCV00275, Date: 2023-12-18 Tentative Ruling
Case Number: 22NWCV00275 Hearing Date: January 4, 2024 Dept: C
CARGO EXPRESS GROUP, INC. v.
NEXXGEN ENTERPRISES, INC.
CASE NO.: 22NWCV00275
HEARING: 01/04/24
#1
Defendants MILESTONE EQUIPMENT
COMPANY LLC and MILESTONE CHASSIS COMPANY LLC’s Motion for Judgment on the
Pleadings is GRANTED with 30 days leave to amend.
Moving Party to give Notice.
Defendants MILESTONE EQUIPMENT COMPANY LLC and MILESTONE
CHASSIS COMPANY LLC’s Request for Judicial Notice is GRANTED. (Cal. Ev. Code
§452.)
This unlimited
collections action was filed by Plaintiffs CARGO EXPRESS GROUP, INC. and EAGLE
FREIGHT LLC on April 11, 2022. On
November 22, 2022, the operative First Amended Complaint (“FAC”) was filed.
The FAC alleges the
following relevant facts: “On or about March 20, 2017, Plaintiffs’
predecessor-in-interest Harbor Choice Express, Inc. (‘Harbor Choice’) and
defendant High Line entered into a Standard Industrial/Commercial Single Tenant
Lease – Net (‘the Lease’)…for the Premises located at 200 E. Gardena Boulevard,
Gardena CA 90248.” (FAC ¶15.) “At the time that the Lease was signed and
unbeknownst to plaintiffs, defendant High Line was the alter ego of the other
defendants in its intended use and in its actual use and access of the
Premises. And thereafter, the defendants, and each of them used the Premises
without the consent of plaintiffs.” (FAC ¶16.) “From the date of the Lease
until sometime in 2021, Defendants, and each of them, occupied the Premises and
stored chassis and containers at the Premises that, upon information and
belief, were owned by defendant High Line but were used by all of the defendants
to their benefit and profit.” (FAC ¶17.) “Plaintiff Cargo Express sent monthly
invoices to High Line for the agreed rent of the Premises, as set forth in the
Lease, as well as for chassis storage exceeding the space limitation in the
Lease. Between March 2020 to March 2022, High Line accrued chassis storage
charges in the amount of $1,028,025.00 and two months additional rent of
$57,303.88, for a total of $1,085,328.88.” (FAC ¶18.)
The FAC asserts the
following causes of action:
(1)
Breach
of Written Agreements;
(2)
Open
Book Account;
(3)
Account
Stated;
(4)
Reasonable
Value of Goods and Services Provided;
(5)
Conversion;
(6)
Intentional
Interference with Contractual Relations;
(7)
Intentional
Interference with Prospective Economic Advantage;
(8)
Declaratory
Relief; and
(9)
Rescission
of Contract
Defendants MILESTONE
EQUIPMENT COMPANY LLC and MILESTONE CHASSIS COMPANY LLC (collectively
“Milestone”) move for judgment on the pleadings on the first, second, fourth,
fifth, sixth, seventh, eighth, and ninth causes of action. The third cause of
action is not directed against the Milestone defendants.
A motion for judgment on the pleadings has the same function
as a general demurrer, and the rules governing demurrers apply.
Uncertainty
Milestone argues that the FAC improperly groups multiple
defendants together without apportioning the alleged misconduct.
This argument is not
addressed in Opposition.
“A special demurrer
for uncertainty is not intended to reach the failure to incorporate sufficient
facts in the pleading but is directed at the uncertainty existing in the
allegations actually made.” (Butler v. Sequeira (1950) 100 Cal.App.2d
143, 145-146.) Although demurrers for uncertainty are disfavored, they will be
sustained where the pleading is so bad that the defendant cannot reasonably
respond, i.e., he or she cannot reasonably determine what issues must be admitted
or denied, or what counts or claims are directed against him or her. (Khoury
v. Maly’s of Calif. Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for
uncertainty is strictly construed, even where a complaint is in some respects
uncertain, because ambiguities can be clarified under modern discovery
procedures.” (Ibid.) “[U]nder…liberal pleadings rules, where the
complaint contains substantive factual allegations sufficiently apprising
defendant of the issues it is being asked to meet, a demurrer for uncertainty
should be overruled or plaintiff given leave to amend.” (Williams v.
Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139, fn.2.)
In reviewing the
FAC, it is unclear what allegations are against what defendant. The FAC does
not separate the allegations by defendant, and commingles all of the defendants
together with various allegations. It is uncertain what allegations relate to
what defendant. On this basis, the motion for judgment on the pleadings is
GRANTED with 30 days leave to amend as to the first, second, fourth,
fifth, sixth, seventh, eighth, and ninth causes of action.
Alter Ego
Milestone argues that Plaintiffs do not sufficiently allege
that Milestone is the alter ego of any other defendants.
In Opposition, Plaintiffs argue that they have sufficiently
alleged an alter ego relationship between Milestone and Defendant High Line.
To recover on an alter
ego theory of liability, a plaintiff must allege sufficient facts to “show a
unity of interest and ownership, and inequitable result from treatment of the
corporation as the sole actor.” (Leek v. Cooper (2011) 194 Cal.App.4th
399, 415.) Among the factors to be considered in applying the doctrine are
commingling of funds and other assets of the entities, the holding out by one
entity that is liable for the debts of the other, identical equitable ownership
in the two entities, use of the same offices and employees, and use of one as a
mere shell or conduit for the affairs of the other.” (Sonora Diamond Corp.
v. Sup. Ct (2000) 83 Cal.App.4th 523, 538-539.) Other factors include
inadequate capitalization, disregard of corporate formalities, lack of
segregation of corporate records, and identical directors and officers. (Id.
at 539.)
The FAC fails to
sufficiently allege that the Milestone defendants are the alter egos of
Defendant High Line. Plaintiffs’ boilerplate allegations of alter ego against
Milestone are inadequate. (see FAC ¶¶ 13, 14, 16, and 21.) Plaintiffs have not
alleged any facts showing unity between the companies, such as commingling of
funds, shared offices/employees, use of one entity as a conduit for another,
etc. Only legal conclusions—not facts—are alleged. “To recover on an alter ego
theory, a plaintiff need not use the words ‘alter ego,’ but must allege
sufficient facts to show a unity of interest and ownership, and an unjust
result if the corporation is treated as the sole actor.” (Leek v. Cooper
(2011) 194 Cal.App.4th 399, 415.)
On this additional
basis, the motion for judgment on the pleadings as to the first, second, fourth, fifth, sixth, seventh, eighth,
and ninth causes of action is GRANTED with 30 days leave to amend.