Judge: Michael Shultz, Case: 23CMCV00858, Date: 2023-09-26 Tentative Ruling
Case Number: 23CMCV00858 Hearing Date: September 26, 2023 Dept: A
23CMCV00858 Simplified Labor Staffing
Solutions, Inc. v. Tricap Int’l, et al.
[TENTATIVE] ORDER SUSTAINING DEMURRER
TO PLAINTIFF’S COMPLAINT WITH 30 DAYS LEAVE TO AMEND
The complaint alleges that on May 14,
2021, Plaintiff obtained a judgment for breach of contract against Defendant,
Tricap International (“Tricap”), for $1,910,337.59. Defendant has not paid
anything on the judgment despite Plaintiff’s efforts to enforce judgment. Plaintiff
alleges Tricap has undertaken efforts to conceal its assets by commingling assets
with other entities, transferring assets to Defendants, Caryn Blanc and Allan
Parker, and that Defendant, ADP Express, LLC (“ADP”) is Tricap’s alter ego.
Plaintiff alleges claims for actual and constructive fraudulent conveyance, for
an order setting aside a void encumbrance or lien and for civil conspiracy.
All Defendants demur to the first and
second causes of action on grounds Plaintiff fails to allege facts to support
each element of the claim. The third cause of action is not a cognizable claim,
and the alter ego allegations are inadequately alleged. The fifth cause of
action for conspiracy is not a separate tort and is barred by the two-year statute
of limitations.
Plaintiff argues it can file a separate
action to pursue a judgment against an alter ego of a judgment debtor. All
claims are adequately alleged and are not barred by the statute of limitations.
Defendants did not file a reply brief by
September 18, 2023 (five court days before the hearing).
III.
LEGAL STANDARDS
The bases for demurrer are limited by
statute and may be sustained for reasons including failure to state facts
sufficient to state a cause of action and uncertainty. (Code
Civ. Proc., § 430.10.) 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.)
IV.
DISCUSSION
The
Court grants Defendants’ request for judicial notice of court records in
Plaintiff’s underlying action bearing Case No. 20CMCV00014 entitled Simplified
Labor Staffing Solutions, Inc. v. Tricap International, LLC. Evid. Code, §
452(d) [permits judicial notice of Court records.].)
A. First
and second causes of action for actual and constructive fraudulent conveyance
Under the Uniform Fraudulent Transfer Act
(“UFTA”), a transfer is voidable if it is made "with actual intent to
hinder, delay, or defraud any creditor of the debtor.” (Civ. Code, § 3439.04, subd.
(a).) A “constructive” fraudulent conveyance is one made without actual
fraudulent intent but where the debtor did not receive “a reasonably equivalent
value in exchange for the transfer” and “the debtor was insolvent at that time
or the debtor became insolvent as a result of the transfer or obligation.” (Civ. Code, § 3439.05; Mejia v. Reed (2003) 31
Cal.4th 657, 664.)
Plaintiff alleges that Defendant, Caryn
Blanc (“Blanc”), transferred her interests in Tricap to Defendant, Allan Parker
(“Parker”). (Complaint, ¶ 15.) Both are
managers of Tricap. (Complaint, ¶ 14.) Parker is also a manager/member of ADP
Express, LLC (“ADP”). (Complaint, ¶ 18.) Both Defendants allegedly control
Tricap and ADP. (Complaint, ¶22.)
Plaintiff appears to allege that
Defendants transferred assets from Tricap to ADP or other related entities with
knowledge that Tricap would be made insolvent. (Complaint ¶¶ 30-32.) A transfer
by a debtor is fraudulent as to creditors whose claims arose before the
transfer “if the debtor made the transfer (1) without receiving reasonably
equivalent value in exchange, and (2) either (a) was insolvent at the time of
the transfer, or (b) became insolvent as a result of the transfer." (Hasso v. Hapke (2014) 227 Cal.App.4th 107, 122.)
Here, Plaintiff alleges transfers of
undefined assets generally. Defendants are correct that Plaintiff has not
alleged facts to infer that Defendants had an actual intent to hide or conceal
assets. The transfer of assets alone is
not enough, Plaintiff must allege “with particularity” the existence of “badges
of fraud.” (Aghaian v. Minassian (2020) 59 Cal.App.5th 447, 456.) Examples of ‘badges of
fraud” include evidence that the (1) "the debtor made the transfer to an ‘insider’;
(2) the debtor retained possession or control of the property after the
transfer; (3) the debtor had been sued before making the transfer; (4) the
debtor removed or concealed assets; (5) the value of the consideration received
by the debtor was reasonably equivalent to the value of the asset transferred;
and (6) the transfer occurred shortly before or shortly after a substantial
debt was incurred. (§ 3439.04, subd. (b).) None of these factors is
determinative, and no minimum or maximum number of factors is required.” (Id.)
Additionally,
all allegations are made on information and belief.
Plaintiff must allege the information that “lead[s] [the plaintiff] to believe
that the allegations are true.” (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App.4th 1149, 1158–1159.)
Both the first and second causes of
action fail for the same reasons – Plaintiff has failed to allege with specificity
badges of fraud.
B. Third
cause of action to set aside void encumbrance or lien
Plaintiff concedes that this claim is
“mislabeled” but does not explain what cause of action Plaintiff is attempting
to allege. (Opp. 4:7.) Plaintiff alleges that Blanc has a lien against Tricap
made without consideration and that the lien was devised to avoid collection
and detection by creditors. (Complaint ¶ 46.) The claim alleges a remedy for an
undefined tort and is uncertain as alleged.
C. Fourth
cause of action for alter ego
Liability based on an alter ego theory is
not itself a claim for substantive relief, but rather a procedural claim “to
disregard the corporate entity as a distinct defendant and to hold the alter
ego individuals liable on the obligations of the corporation where the
corporate form is being used by the individuals to escape personal liability,
sanction a fraud, or promote injustice." (Hennessey's
Tavern, Inc. v. American Air Filter Co. (1988)
204 Cal.App.3d 1351, 1359.” Where it is asserted as a
basis for affirmative relief, and the Court is asked to take action at the
pleading stage, the claim must be supported by facts to support two elements: “a
unity of interest and ownership, 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.)
Plaintiff’s allegations conclusory allegations are not supported by any facts.
The second element is not alleged.
D. Fifth
cause of action for civil conspiracy
While conspiracy is not a cause of action,
it is a legal doctrine that imposes liability on persons who did not actually
commit a tort but acted in concert with another tortfeasor. To support
this claim, Plaintiff must allege "1) the formation and operation of the
conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3)
damages arising from the wrongful conduct.” (AREI II Cases (2013) 216
Cal.App.4th 1004, 1022.) As Plaintiff’s case authority confirms, a
conspiracy “must be activated by the commission of an actual tort." (Applied Equipment Corp. v. Litton
Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511.) Plaintiff
has not adequately alleged a viable tort claim.
Defendants argue that this claim is barred
by the two-year statute of limitations of limitations. As there is no tort
claim for conspiracy, the statute of limitations is determined by the nature of
the cause of action on which it is based. (Agnew v. Parks (1959) 172
Cal.App.2d 756, 765.)
Contrary to Defendants’ argument, the
statute of limitations on a fraudulent transfer based on an actual intent to
hinder or defraud is no later than four years after the transfer was made or
the obligation was incurred, or if later, no later than one year have the
transfer or obligation was or could have been discovered. (Civ. Code,
§ 3439.09.) The statute of limitations on a claim for constructive fraudulent
conveyance is four years after the transfer was made or the obligation was
incurred. (Id.)
For the court to sustain demurrer to the complaint based on the statute
of limitations, “the defect must clearly and affirmatively appear on the face
of the complaint. A demurrer will not lie where the action may be but is not
necessarily barred.” (Citizens for a Responsible Caltrans
Decision v. Department of Transportation (2020) 46 Cal.App.5th 1103, 1117.) Plaintiff obtained judgment against
Defendants on May 14, 2021. The complaint was filed on June 7, 2023, and is not
clearly barred.
V.
CONCLUSION
For
the foregoing reasons, Defendants’ demurrer to all causes of action is
SUSTAINED. As the defects are curable and Plaintiff has not had an opportunity
to amend, the Court grants 30 days leave to amend. (Colvig v. RKO General, Inc. (1965)
232 Cal.App.2d 56, 69–70.)