Judge: Lee W. Tsao, Case: 23NWCV01037, Date: 2024-01-24 Tentative Ruling
Case Number: 23NWCV01037 Hearing Date: January 24, 2024 Dept: C
everytable, pbc v.
mj global enterprise, et al.
CASE NO.: 23NWCV01037
HEARING: 1/24/24 @ 10:30 AM
#5
Defendants’
Demurrer is SUSTAINED in part and OVERRULED in part. MJ Global’s Motion to
Strike is DENIED. Espinosa’s Motion to Strike is GRANTED. Plaintiff is granted
30 days leave to amend.
Moving Party to give NOTICE.
Defendants MJ Global Enterprise, Inc. (MJ
Global) and Juni Espinosa (Espinosa) (collectively Defendants) demur to
Plaintiff Everytable, PBC’s (Plaintiff) First Amended Complaint (FAC) and move
to strike portions of the FAC.
Plaintiff
filed a First Amended Complaint alleging breach of a sublease between Plaintiff
(Sublessee) and Defendant MJ Global (Sublessor) for a portion of real property
commonly known as 3305 East Vernon Avenue, Vernon, CA 90058. Plaintiff alleges
that it was fraudulently charged for common area maintenance expenses,
operating expenses, and utility expenses. (FAC ¶¶ 15-47.) Plaintiff alleges
against MJ Global:
1.
Breach
of Contract
2.
Fraud
3.
Accounting
4.
Declaratory
Relief
5.
Breach
of Contract Failure to Service, Maintain, or Repair
Plaintiff
claims that the CFO of MJ Global, Espinosa, was involved in the fraudulent
charges and alleges fraud against her individually.
Legal
Standard
The party against whom
a complaint has been filed may object to the pleading, by demurrer, on several
grounds, including the ground that the pleading does not state facts sufficient
to constitute a cause of action. (CCP § 430.10(e).) A party may demur to an
entire complaint, or to any causes of action stated therein. (CCP § 430.50(a).)
Motions
to strike are used to reach defects or objections to pleadings which are not
challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.).
(CCP §§ 435, 436 & 437.) A motion to strike lies only where the pleading
has irrelevant, false or improper matter, or has not been drawn or filed in
conformity with laws. (C.C.P. § 436.) The grounds for moving to strike must
appear on the face of the pleading or by way of judicial notice. (C.C.P. §
437.)
Demurrer
Defendants demur to the FAC on the grounds that
the First through Fifth Causes of Action fail to state a claim for relief and
are uncertain and the First and Fifth Causes of Action fail to state the nature
of the contract.
1.
First
and Fifth Causes of Action
As to the First and Fifth Causes of Action, Defendants
argue that Plaintiff failed to attach a copy of the written contract or plead
all material terms of the contract.
Defendants point out that the FAC alleges the Sublease was “subject and
subordinate to the Master Lease” but Plaintiff did not attach the Master Lease
or plead any of its terms. (FAC, ¶ 16.) “Where a party relies upon a contract
in writing, and it affirmatively appears that all terms of the contract are not
set forth in haec verba, nor stated in their legal effect, but that a portion
which may be material has been omitted, the complaint is insufficient.” (Gilmore
v. Lycoming Fire Ins. Co. (1880) 55 Cal. 123, 124.) Here, Plaintiff has
failed to include any terms from the Master Lease which appear to be material
to the Sublease based on the terms of the Sublease included in Paragraph 16 of
the FAC. Thus, Plaintiff has failed to adequately plead its Breach of Contract
Cause of Action.
Accordingly, Defendants’ Demurrer to the First
and Fifth Causes of Action for Breach of Contract is sustained.
2.
Second
Cause of Action
Defendants allege that Plaintiff failed to
plead the Second Cause of Action for Fraud with adequate specificity and that
the FAC fails to adequately allege that Defendants were alter egos of each
other. Plaintiff alleges:
52.From 2019 through 2022, defendants have
charged Everytable common area/operating expenses substantially in excess of
those amounts agreed to within the applicable subleases and addenda.
53. Defendants, both personally and through
employees and/agents, represented to Everytable in various communications that
the amounts being charged for the years 2019, 2020, 2021, and 2022, were being
calculated in accordance with the applicable provisions of the applicable
subleases and addenda.
54. Defendants were not calculating the
operating expenses that Everytable was being charged for the years 2019, 2020,
2021, and 2022 in accordance with the applicable provisions of the applicable
subleases and addenda. Instead, defendants knowingly and intentionally inflated
various numbers and rates in the calculations to improperly and fraudulently
charge Everytable substantially more than the share of expenses it actually
owed under the applicable subleases and addenda in an amount to be proven at trial
but estimated as $750,000.
55. Defendants presented such charges to
Everytable representing that they were calculating the charges correctly and
that the charges were supported by invoices and other documentation. In some
cases, defendants knowingly and falsely claimed that Everytable personnel had
agreed to deviations from the terms of the applicable written instruments.
Defendants, and all of them, knew their representations to be false and
intended Everytable to rely upon such intentional misrepresentations.
57. Everytable is informed and believes that
defendants disproportionately charged Everytable for 100% of the Option One
Plumbing Invoice #111459 dated 7/31/21 in the amount of $18,456. There was no
oral agreement by Everytable for this deviation from the Sublease.
58. Everytable is informed and believes that
defendants disproportionately charged Everytable for 100% of the MDH Burner and
Boiler Co Inc invoice #19367 dated 11/26/21 in the amount of $18,144.38 in the
amount of $18,456 [sic]. There was no oral agreement by Everytable for this
deviation from the Sublease.
Thus, Plaintiff has adequately alleged its
cause of action for fraud against Defendant MJ Global. However, Plaintiff has failed
to adequately allege fraud against Defendant Espinosa individually. “To recover
on an alter ego theory, a plaintiff … 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.) Plaintiff points to allegation of Espinosa’s involvement as the CFO of Defendant
MJ Global, however, those facts do not support the requisite unity of interest
and ownership. Thus, Plaintiff has failed to adequately establish its theory of
alter ego liability.
Accordingly, Defendant MJ Global’s Demurrer to
the Second Cause of Action for Fraud is OVERRULED and Defendant Espinosa’s
Demurrer is SUSTAINED.
3) Third
Cause of Action
MJ Global argues that Plaintiff’s Third Cause
of Action for Accounting fails because the FAC does not allege why an
accounting is necessary and why damages cannot be calculated. An accounting requires the existence of a
relationship requiring accounting and some unliquidated and unascertained
balance is owed. (St. James Church of Christ Holiness v. Superior Court
(1955) 135 Cal.App.2d 352, 359.) Here, Plaintiff has alleged that there was a
relationship between MJ Global and Plaintiff and that it is unable to determine
the amount due because it lacks the necessary information. Thus, Plaintiff has
adequately pled a cause of action for accounting.
Accordingly, MJ Global’s Demurrer to the Third
Cause of Action for Accounting is OVERRULED.
4) Fourth
Cause of Action
MJ Global argues that Plaintiff’s Fourth Cause
of Action for Declaratory Relief fails because it concerns only past rights.
“[T]here is no basis for declaratory relief where only past wrongs are
involved.” (Osseous Technologies of
America, Inc. v. Discoveryortho Partners LLC (2010) 191 Cal.App.4th 357,
366). However, the FAC alleges that “Plaintiff seeks an adjudication of the
Court and a declaration of … the proper manner of calculation and the amounts
actually due under the applicable written instruments during the years 2023
through the expiration of the relationship set forth within the applicable
written instruments.” (FAC ¶ 89.) Thus, Plaintiff’s Declaratory Relief claim
seeks adjudication of future rights.
Accordingly, MJ Global’s Demurrer to the Fourth
of Action for Declaratory Relief is OVERRULED.
Motion to Strike
Defendants move to strike two portions of the
FAC relating to punitive damages:
1.
Page 18, ¶ 82: “Defendants personally and
through their officers, directors and/or managing agents, performed, authorized
and/or ratified the misrepresentations set forth supra. These actions were
undertaken with malice and constituted both oppression and fraud and entitle
Everytable to the recovery of punitive damages in an amount to be determined at
trial.”
2.
Page
20, ¶ 4 of the Prayer: “Punitive damages as set forth in the second cause of
action;”
As stated above, Plaintiff has adequately
alleged fraud in the FAC, however, it failed to adequately allege a theory of
alter ego liability. Thus, Paragraph 82 and Paragraph 4 of the Prayer are
stricken as to Espinosa, but not as to MJ Global.
Accordingly, Espinosa’s Motion to Strike is GRANTED
and MJ Global’s Motion to Strike is DENIED.
Leave to Amend
Plaintiff requests leave to amend. Leave to
amend must be allowed where there is a reasonable possibility of successfully
stating a cause of action. (Schulz v. Neovi Data Corp. (2007) 152 Cal.
App. 4th 86, 92.) Thus, leave to amend is granted.
In sum, Defendants’
Demurrer is SUSTAINED in part and OVERRULED in part as set forth above. MJ
Global’s Motion to Strike is DENIED. Espinosa’s Motion to Strike is GRANTED.
Plaintiff is granted 30 days leave to amend.