Judge: Maurice A. Leiter, Case: 20STCV07188, Date: 2022-08-03 Tentative Ruling

Case Number: 20STCV07188    Hearing Date: August 3, 2022    Dept: 54

Hearing Date: August 3, 2022

Department 54, Judge Maurice A. Leiter

Motion for Summary Judgment, or in the alternative, Motion for Summary Adjudication

Moving Party: Plaintiff IMMCO Investments, LLC

Responding Party: Defendant Young Choi

T/R:     PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT IS DENIED.

PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION OF THE FOURTH CAUSE OF ACTION FOR ACCOUNTING IS GRANTED.

PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION OF THE REMAINING CAUSES OF ACTION IS DENIED.

PLAINTIFF TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

            The Court considers the moving papers, opposition, and reply.

BACKGROUND

On February 20, 2020, Plaintiff IMMCO Investments LLC sued Defendant Eul Hyung Choi, asserting causes of action for (1) conversion; (2) breach of fiduciary duty; (3) fraudulent concealment; (4) accounting; (5) unjust enrichment; and (6) declaratory relief. Plaintiff alleges that Defendant is the managing member, broker, and fund manager for Wilshire Line Manager LLC and Wilshire Line Fund LLC. Plaintiff invested money in these companies. Plaintiff alleges Defendant used the money for improper purposes and failed to pay the companies’ taxes, allowing the companies to become suspended.

EVIDENCE OBJECTIONS

“In granting or denying a motion for summary judgment or summary adjudication, the court need rule only on those objections to evidence that it deems material to its disposition of the motion.” (CCP § 437c(q).) Plaintiff’s request to strike Defendant’s declaration is DENIED.

ANALYSIS

“In moving for summary judgment, a ‘plaintiff . . . has met’ his ‘burden of showing that there is no defense to a cause of action if’ he ‘has proved each element of the cause of action entitling’ him ‘to judgment on that cause of action.’”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849 (as modified (July 11, 2001).)  The plaintiff “must present evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not—otherwise, he would not be entitled to judgment as a matter of law, but would have to present his evidence to a trier of fact.”  (Id., at 851, original italics.)

Once the plaintiff has met that burden, the burden shifts to the defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.  (CCP § 437c(p)(1).)  “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Aguilar, supra, 25 Cal.4th at 850.)  The defendant “shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.”  (CCP § 437c(p)(1).

A. First Cause of Action for Conversion

To plead a cause of action for conversion, one must allege (1) the plaintiff’s ownership or right to possession of personal property; (2) defendant’s disposition of the property inconsistent with plaintiff’s rights; and (3) resulting damages. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)  

Plaintiff asserts it is entitled to judgment on the cause of action for conversion as a matter of law. Plaintiff represents that it invested $300,000.00 in the Wilshire companies, Defendant used these funds for personal expenses, and has failed to return Plaintiff’s investment. (UMF ¶¶ 19-20, 29-30.) Plaintiff relies on requests for admission that were deemed admitted by Defendant through a motion decided on June 18, 2021. (Decl. Marvisi, Exhs. A-C.) As a result of this order, Defendant admitted he “used investor funds” from the Wilshire Companies “for purposes outside of any agreement, including but not limited to personal debts and living expenses.” (Decl. Marvisi, Exh. A, RFAs 18-19.)

In opposition, Defendant asserts that Plaintiff does not have standing to bring this lawsuit and contests the facts. Defendant disputes that he used the $300,000.00 investment for personal purposes. Instead, Defendant asserts Plaintiff did not make capital investments in the company, and the $300,000.00 identified by Plaintiff was not entrusted to Defendant and was spent by Plaintiff’s managing member, Kevin Jeffers, to solicit investors. (Opp. UMF ¶¶ 28-29.) Plaintiff says Jeffers invested only $500.00 in the Wilshire companies. (Opp. UMF ¶ 5.)

Plaintiff is correct that “…a response to a request for admission is unambiguous, and is not subject to different meanings, the matter admitted is conclusively established.”
(Monroy v. City of Los Angeles (20018) 164 Cal.App.4th 248, 260.) Defendant has admitted using “investor funds” for improper purposes. But that does not end the analysis, because the RFAs do not address all the evidence submitted by Defendant in opposition to this motion. Defendant contends that the specific $300,000.00 investment at issue was not entrusted to him and was instead spent by Plaintiff. The RFAs do not identify specific sums or specific investments. This creates a triable issue of fact as to damages.

Plaintiff’s motion for summary judgment is DENIED. Plaintiff’s motion for summary adjudication of the first cause of action is DENIED.

B. Second Cause of Action for Breach of Fiduciary Duty

The elements for a breach of fiduciary duty cause of action are “the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Thomson v. Canyon (2011) 198 Cal.App.4th 594, 604.)  “‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’” (Hasso v. Hapke (2014) 227 Cal.App.4th 107, 140 (quoting Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 221).) “A fiduciary duty under common law may arise ‘when one person enters into a confidential relationship with another.’” (Id.) 

Plaintiff asserts that Defendant breached his fiduciary duties to the Wilshire Companies by failing to pay taxes and fees to the California Franchise Board, and by retaining funds belonging to Plaintiff. (UMF ¶¶ 5, 17-18.) As discussed, Defendant presents evidence that the specific $300,000.00 investment was spent by Plaintiff. (Opp. UMF ¶¶ 28-29.) This creates a triable issue of fact as to damages.

Plaintiff’s motion for summary adjudication of the second cause of action is DENIED.

C. Third Cause of Action for Fraudulent Concealment and Seventh Cause of Action for Unjust Enrichment

“The elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 131.)

Plaintiff contends that Defendant fraudulently concealed the fact that he was not an experienced business consultant or fund manager, Plaintiff would not have gone into business with Defendant had Plaintiff known these facts, and Plaintiff has been damaged in the amount of the $300,000.00 investment plus an uncertain amount of lost profits. (UMF ¶¶ 24-28.) As shown, Defendant disputes Plaintiff’s damages. (Opp. UMF ¶¶ 28-29.) This creates a triable issue of fact.

Plaintiff’s motion for summary adjudication of the third cause of action is DENIED.

D. Fourth Cause of Action for Accounting

“A cause of action for accounting requires a showing of a relationship between the plaintiff and the defendant, such as a fiduciary relationship, that requires an accounting or a showing that the accounts are so complicated they cannot be determined through an ordinary action at law.” (Fleet v. Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413.) “‘An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.’” (Id. (quoting Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179).)  

            Plaintiff asserts it has met both requirements for an accounting. In the RFAs, Defendant has admitted to having a fiduciary relationship with Plaintiff and to denying Plaintiff access to the Wilshire companies’ books and accounts. (UMF ¶¶ 17-18.) Plaintiff represents it is unable to calculate all damages without an accounting. (UMF ¶ 27.) In opposition, Defendant contends that Plaintiff’s managing member has access to the accounts and that Defendant has always provided Defendant with annual tax returns. (Opp. UMF ¶¶ 17-18, 27.) This is insufficient to create a triable fact. The RFAs establish that Defendant has refused access to the accounts, making Plaintiff unable to determine damages. Plaintiff is entitled to an accounting.

            Plaintiff’s motion for summary adjudication of the fourth cause of action is GRANTED.

E. Fifth Cause of Action for Unjust Enrichment

            As discussed, Defendant has shown a triable issue of fact as to damages. This applies to the cause of for unjust enrichment.

            Plaintiff’s motion for summary adjudication of the fifth cause of action is DENIED.

F. Sixth Cause of Action for Declaratory Relief

To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations. (See Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)

            Plaintiff contends it is entitled to declaratory relief in the form of Defendant’s removal as managing member of the Wilshire companies. Plaintiff asserts Defendant should be removed because of Defendant’s misconduct. Plaintiff does not discuss the provisions of the operating agreements or the statutory process for removal of a member.

Plaintiff has not shown the Court has authority to remove Defendant from his member position through declaratory relief at summary judgment.

            Plaintiff’s motion for summary adjudication of the sixth cause of action is DENIED.