Judge Lee W. Tsao, Case Number: 22NWCV00857, Date: 2023-12-07 Tentative Ruling

Judge: Lee W. Tsao, Case: 22NWCV00857, Date: 2023-12-07 Tentative Ruling

Case Number: 22NWCV00857 Hearing Date: December 7, 2023 Dept: C

VESTAR CALIFORNIA XXVI, LLC, v. ALONDRA'S PICO, LLC, et al.

CASE NO.: 22NWCV00857

HEARING: 12/7/23

TENTATIVE ORDER

Cross-Defendants’ Demurrer is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.

Moving Party to give notice.

JUDICIAL NOTICE is taken of Defendant’s exhibits. (Ev. Code 452.) The Court notes that while it takes judicial notice of the existence of findings of fact made in the other action, any order is not binding on this Court or control this case.

Procedural History

On September 20, 2022, Plaintiff Vestar California XXVI, LLc filed an action for breach of lease and breach of guaranty against Defendants Alondra’s Pico, LLC and Mark Markarian.

On December 27, 2022, Defendant and Cross-Complainant Mark Markarian (“Cross-Complainant”) filed a cross-complaint against Cross-Defendant Alondra’s Pico, LLC for breach of contract and express indemnity. On April 19, 2023, Cross-Complainant filed a first amended cross-complaint alleging the same causes of action, but added additional cross-defendants, including Cross-Defendants Randall S. Teffeteller and West Coast Resources & Consulting, Inc. (“Cross-Defendants”), who are the moving parties to this demurrer.

On July 20, 2023, Cross-Defendants filed the instant demurrer. On November 27, 2023, Cross-Defendant filed an opposition. On November 30, 2023, Cross-Defendants replied.

Merits

Although Cross-Defendant filed the opposition one day late, the Court, in its discretion, will consider the merits of its argument, since there is no apparent showing of prejudice.

Alter Ego

“The essence of the alter ego doctrine is that justice be done. ‘What the formula comes down to, once shorn of verbiage abound control, instrumentality, agency, and corporate entity, is that liability is imposed to reach an equitable result.’ ” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301.) “ ‘It is the law in California as elsewhere that, although a corporation is usually regarded as an entity separate and distinct from its stockholders, both law and equity will, when necessary to circumvent fraud, protect the rights of third persons and accomplish justice, disregard this distinct existence and treat them as identical.’” (Kohn v. Kohn (1950) 95 Cal.App.2d 708, 718.)

In Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235-36, the court of appeal held that the following alter ego allegations were sufficient to survive a demurrer: that the individual defendant dominated and controlled the entity defendant; that a unity of interest and ownership existed between the individual defendant and entity defendant; that the entity defendant was a mere shell and conduit for the individual defendant’s affairs; that the entity defendant was inadequately capitalized; that the entity defendant failed to abide by corporate formalities; that the individual defendant used the entity defendant’s assets as her own; and that recognizing the separate existence of the entity defendant would promote injustice.

The Court finds the existing allegations to be sufficient to allege an alter ego theory of liability against Cross-Defendants.

Sufficiency: Breach of Contract and Express Indemnity

“To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff. [Citation.]” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98.) “The elements of a breach of oral contract are the same as those for breach of a written contract. [Citations.]” (Stockton Mortgage, Inc. v. Tope (2014) 223 Cal.App.4th 437, 453.)

“A written contract may be pleaded either by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect. [Citations.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

Cross-Defendants argue that Cross-Complainant has failed to properly plead the existence of the Contract. The Cross-Complaint alleges the existence of the Contract as a written contract. However, the Cross-Complaint neither attaches a copy of the written instrument to the Cross-Complaint, nor does the Cross-Complaint set out the relevant terms verbatim in the body of the Cross-Complaint. Cross-Complainant fails to address this in its opposition.

The Court agrees with Cross-Defendants in that the Cross-Complaint fails to allege the material terms of the contract or provide a copy of the written instrument. Because all material terms are not clearly alleged, it is unclear how Cross-Defendants’ alleged actions (e.g., failure to perform all covenants required under the lease, such as upholding their duty to defend and indemnify Cross-Complainant in underlying action pursuant to the contract) are a breach of the parties’ agreement(s) or that Cross-Complainant is entitled to damages thereunder. Cross-Complainant’s statement that Cross-Defendants breached the parties written and oral agreement is a legal conclusion, not a factual allegation, and thus is insufficient.

Given the liberal policy in favor of granting leave to amend to cure form and substantive defects, the Demurrer is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.