Judge: Lee W. Tsao, Case: 22NWCV00369, Date: 2023-02-14 Tentative Ruling

Case Number: 22NWCV00369    Hearing Date: February 14, 2023    Dept: C

NATIONAL COMMERCIAL RECOVERY, INC. v. L.A. GRAND CLOTHING, INC.

CASE NO.:  22NWCV00639

HEARING:  2/14/23 @ 9:30 and 10:30 AM

#1

TENTATIVE RULING

Defendants L.A. Grand Clothing, Inc., SSS Apparel, Inc., Guilbert Tex, Inc., SM Clothing, Inc., and Siamak Okhovat’s demurrers to first amended complaint (x5) are OVERRULED.  Defendants are ORDERED to file and serve their Answers within 10 days.

Opposing Party to give NOTICE.

Defendants L.A. Grand Clothing, Inc., SSS Apparel, Inc., Guilbert Tex, Inc., SM Clothing, Inc., and Siamak Okhovat demur to the 1^st – 3^rd causes of action on the grounds that they fail to state facts sufficient to constitute a cause of action and are uncertain.

The First Amended Complaint (“FAC”) alleges common counts claims in the sum of $215,357.89.  Each of the corporate Defendants were doing business as “Angel Kiss.”  (FAC, ¶¶ 3-6.)  Defendants are alter egos and agents of each other.  (Id., ¶¶ 9-10.)  J. Label (Plaintiff’s assignor) received orders from “Angel Kiss” and all invoices were billed to Defendant SM Clothing, Inc. J. Label received payment checks from Defendants L.A. Grand Clothing, Inc. and SSS Apparel, Inc..  J. Label dealt with Defendant Siamak Okhovat in respect to the subject transactions.  The FAC asserts causes of action for:

1.    Open Book Account

2.    Goods Sold and Delivered

3.    Account Stated

Defendants’ request for judicial notice is DENIED.  Although the RJN refers to Exhibits 1-2, no such exhibits are attached.  Even if properly attached, a trademark license does not establish that these Defendants did not operate under the name, “Angel Kiss,” in violation of the trademark license.

UNCERTAINTY

“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.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616.)  A demurrer for uncertainty will be sustained only where the complaint is so bad that a defendant cannot reasonably respond. (Ibid.)

As demonstrated by Defendants’ demurrers, Defendants are on notice of the claims pled.  The court finds that the FAC is not so uncertain that Defendants cannot reasonably respond.  Accordingly, the demurrers based on uncertainty are OVERRULED.

1^st CAUSE OF ACTION

OPEN BOOK ACCOUNT:   The elements are:  1) detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation; 2) shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made; 3) entered in the regular course of business as conducted by such creditor or fiduciary; 4) kept in a reasonably permanent form and manner;  and 5) in a bound book, on a sheet or sheets fastened in a book or to backing but detachable therefrom, on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner.  (CCP §337a; Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal. App. 4th 1334, 1343.)

¶ 11 alleges that beginning on or about December 19, 2017, and continuing through October 19, 2018, Defendants purchased wholesale fabric from J. Label (Plaintiff’s assignor) which was delivered to Defendants on an open book account, whereby Defendants became indebted to J. Label in the sum of $215,357.89.  The court finds the allegations sufficiently allege an open book account.

¶ 9 alleges that each of the four defendant corporations are mere shells that have not been adequately capitalized, and that defendant Siamak Okhovat has formed these various entities for the sole purpose of evading creditors.  Defendant Guilbert Tex, Inc. has the same business address and is engaged in the same type of business as the other defendants.  Like the other corporate defendants, Defendant Guilbert Tex, Inc. lists Defendant Siamak Okhovat as the sole officer and director of the corporation.  The evidence of commingling between these entities shows that Defendant Siamak Okhovat treats all four corporations as a single enterprise, and plaintiff contends that all of the defendants should therefore be held jointly liable for the subject debt under the “single enterpris theory of alter ego liability.  Contrary to Defendants assertions, the court finds that the alter ego and agency allegations are properly pled at ¶¶ 9-10.

Further, the statute of limitations does not bar the claim.  An action on an open book account is subject to a four-year statute of limitations pursuant to CCP § 337.  The last entry on the account occurred on October 19, 2018, and this action was filed on July 26, 2022, which is within the statute of limitations.

Accordingly, the demurrer is OVERRULED.

2^nd CAUSE OF ACTION

GOODS SOLD AND DELIVERED:  To establish a claim for the reasonable value of goods sold and delivered, Plaintiff must demonstrate (1) Defendant requested, by words or conduct, Plaintiff deliver goods for the benefit of Defendant; (2) Plaintiff delivered the goods as requested; (3) Defendant has not paid Plaintiff for the goods; and (4) The reasonable value of the goods that were provided.  (State Comp. Ins. Fund v. ReadyLink (2020) 50 Cal. App. 5th 422, 449; Ochs v. PacifiCare of California (2004) 115 Cal. App. 4^th 782, 794.)

¶ 15 alleges that beginning on or about December 19, 2017, and continuing through October 19, 2018, Defendants, and each of them, became indebted to Plaintiff’s assignor in the sum of $215,357.89 for fabric sold and delivered to Defendants.

Contrary to Defendants assertions, the court finds that the alter ego and agency allegations are properly pled at ¶¶ 9-10.

Further, the statute of limitations does not bar the claim.  Plaintiff’s goods sold and delivered cause of action is based on an account, which is subject to a four-year statute of limitations pursuant to CCP § 337.  The last entry on the account occurred on October 19, 2018, and this action was filed on July 26, 2022, which is within the statute of limitations.

Accordingly, the demurrer is OVERRULED.

3^rd CAUSE OF ACTION

ACCOUNT STATED:  The elements are: 1) specified time; 2) place; 3) account stated between plaintiff and defendant; 4) addressing balance of specified or agreed sum due.  (E.g., 4 Witkin, Cal. Pro. Pleading (4^th ed. 1997) §526 citing Tringala v. Vest (1951) 106 Cal.App.2d 720-21.) 

¶ 17 alleges that an account stated was entered into by Defendants and Plaintiff’s assignor wherein it was agreed that Defendants were indebted in the sum of $215,357.89. 

Contrary to Defendants assertions, the court finds that the alter ego and agency allegations are properly pled at ¶¶ 9-10.

Further, the statute of limitations does not bar the claim.  An action on an account stated is subject to a four-year statute of limitations pursuant to CCP § 337.  The last entry on the account occurred on October 19, 2018, and this action was filed on July 26, 2022, which is within the statute of limitations.

Accordingly, the demurrer is OVERRULED.