Judge: Michael Shultz, Case: 22CMCV00144, Date: 2023-01-05 Tentative Ruling
Case Number: 22CMCV00144 Hearing Date: January 5, 2023 Dept: A
22CMCV00144
Amcor Lighting, Inc. dba Jiao Guang USA Group v. Parmida, LLC, et al.
[TENTATIVE]
ORDER OVERRULING DEMURRER TO COMPLAINT
I.
BACKGROUND FACTS
The
complaint filed on May 24, 2022, alleges that Plaintiff contracted with
Defendants to provide custom lighting and fixtures. Defendants failed to pay
the balance due of $684,625.77. Plaintiff alleges claims for breach of
contract, account stated, common counts, open book account and quantum meruit.
II. ARGUMENTS
Defendants,
Hamid Mahrou and Peyman Mahrou, the individual defendants, demurrer to all
causes of action on grounds Plaintiff has not alleged facts to support the
conclusion that Defendant, Parmida, LLC, (the LLC) is the alter ego of the individual
defendants. Defendants contend the allegations are merely “boilerplace
recitations” of the elements without reference to any facts.
Plaintiff
argues that it has alleged sufficient facts to support the two elements necessary
to prevail on an alter ego theory. The allegations should be liberally
construed; Defendants have sufficient notice of the claim asserted against
them.
In
reply, Defendants maintain that the allegations are conclusory, and Plaintiff
has not denied that it lacks a factual basis for its claim.
III. LEGAL
STANDARDS
A demurrer tests the sufficiency of a
complaint as a matter of law and raises only questions of law. Schmidt v. Foundation Health (1995) 35 Cal.App.4th 1702, 1706. The
court must assume the truth of (1) the properly pleaded factual allegations;
(2) facts that can be reasonably inferred from those expressly pleaded; and (3)
judicially noticed matters. Blank v. Kirwan (1985) 39 Cal.3d 311, 318. The court may not consider contentions,
deductions, or conclusions of fact or law. Moore v. Conliffe (1994) 7 Cal.4th 634, 638.
Plaintiff must allege facts sufficient to
establish every element of each cause of action. Rakestraw v. California Physicians
Service (2000)
81 Cal.App.4th 39, 43. Where the complaint fails to state facts sufficient to
constitute a cause of action, courts should sustain the demurrer. Code Civ.
Proc., § 430.10(e); Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126. The
Plaintiff is required to allege facts "with reasonable precision and with
particularity sufficiently specific to acquaint the defendant with the nature,
source, and extent of his cause of action.” Gressley v. Williams (1961) 193 Cal.App.2d 636, 643-644.
Whether the Plaintiff will be able to prove the pleaded facts is irrelevant. Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.
A demurrer may also be sustained if a
complaint is “uncertain.” Uncertainty exists where a complaint’s factual
allegations are so confusing, they do not sufficiently apprise a defendant of
the issues it is being asked to meet. Williams v. Beechnut Nutrition Corp. (1986)
185 Cal.App.3d 135, 139, fn. 2; Code Civ. Proc., § 430.10 subd. (f).
IV. DISCUSSION
To
prevail on an alter ego theory, Plaintiff must allege sufficient facts to show “a
unity of interest and ownership [between an individual and a corporation], and
an unjust result if the corporation is treated as the sole actor. (Vasey v.
California Dance Co. (1977) 70 Cal.App.3d 742, 749, 139 Cal.Rptr. 72.)
An allegation that a person owns all the corporate stock and makes all the
management decisions is insufficient to cause the court to disregard the
corporate entity.” Leek v. Cooper (2011) 194 Cal.App.4th 399, 415.
Allegations
have been held sufficient where the complaint alleged that the corporation was
a mere shell and conduit for an individual defendant’s affairs; that the
corporation was inadequately capitalized; that the corporation failed to abide
by the formalities of corporate existence; that the individual used the
corporation’s assets as her own; and that recognizing the separate existence of
the corporation would promote injustice." Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223
Cal.App.4th 221, 235.
A
number of factors may be considered in applying the theory such as the
unauthorized diversion of corporate funds or assets to other than corporate
uses; the individual’s treatment of the corporate assets as his or her own; the
use of a corporation as a “mere shell, instrumentality or conduit for a single
venture or the business of an individual or another corporation,” the use of
the corporate entity to procure labor, services or merchandise for another
person or entity; the contracting with another with intent to avoid performance
by use of a corporate entity as a shield against personal liability. Leek at 417–418. This is not an exhaustive list but may be considered among other
factors depending on the circumstances of the case. Id. at 418.
The
complaint’s allegations are not “mere recitation” of the theory’s elements. Plaintiff
alleges that that the individuals have singular control over the LLC and its
officers, its business, and property; the individuals used the LLC as a conduit
of their personal business and affairs, and as obligor for personal
obligations; the individuals created the LLC pursuant to a “scheme, plan, and
design” to convert the LLC’s income, revenue, and profits; and therefore, the
individuality and separateness of the LLC ceases to exist. Complaint 2:17-3:13.
Plaintiff
also alleges that adherence to the fiction of separateness will promote
inequity and injustice. While the latter allegation is conclusory, it is
supported by the alleged facts that Plaintiff contracted only with the LLC who
now owes $684,625.77 for goods and services provided by Plaintiff. Complaint ¶
15. Therefore, the logical inference is that without piercing the corporate
veil, the LLC will avoid its obligations while being unjustly enriched with the
goods and services provided by Plaintiff.
Plaintiff
need only allege ultimate rather than evidentiary facts. Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223
Cal.App.4th 221, 236. As Rutherford also
observed when affirming the trial court’s finding that the alter ego
allegations were adequate, “less particularity [of pleading] is required where
the defendant may be assumed to possess knowledge of the facts at least equal,
if not superior, to that possessed by the plaintiff which certainly is the case
here.” Id. [internal quotes omitted].
V. CONCLUSION
Based
on the foregoing, the demurrer to the complaint is OVERRULED. Defendants are
ordered to answer within 10 days.