Judge: Peter A. Hernandez, Case: 20PSCV00120, Date: 2022-08-25 Tentative Ruling
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Case Number: 20PSCV00120 Hearing Date: August 25, 2022 Dept: O
Defendants Ailin & Jason C Corporation dba Tstone Logistics’, Nelson Yang’s and Hang Chu’s Demurrer to Plaintiff’s Second Amended Complaint is OVERRULED.
Background
On March 20, 2020, Sinoma filed an “Amendment to Complaint,” correcting the name of “Xingchen Yui” to “Xingchen Yue” (“Yue”).
On November 13, 2020, Sinoma filed a Second Amended Complaint (“SAC”), asserting causes of action against ESI, Yue, SFI, Yi-Hsiang Wu (“Wu”), Tstone, Nelson Yang (“Yang”) Hang Chu, Beyace, Yuwei Wang (“Y. Wang”), Hsinmei Chen, Xiaonuo Wang (“X. Wang”), Hongyu Wang (“H. Wang”), Wenjun Pan (“Pan”), Tianjin Chen Feng (“Feng”), Lijuan Huang (“Huang”), Tiecheng Zhang (“Zhang”), Yimei Xiang (“Xiang”), Nan Cai (“Cai”), Nuoyu, LLC (“Nuoyu”) and Does 1-10 for:
1.
Fraudulent Concealment
2.
Breach of Contract
3.
Aiding and Abetting Fraud
4.
Violations of the Unfair Competition Law
On December 29, 2020, SFI and Wu filed a Second Amended Cross-Complaint (“SACC”), asserting causes of action against ESI, Yue, Tstone, Beyace, Y. Wang, Nuoyu and Roes 1-20 for:
1.
Contractual Indemnification
2.
Indemnification
3.
Partial Equitable Indemnification
4.
Contribution
5.
Declaratory Relief
On January 21, 2021, Beyace’s default was entered on the SAC. On February 2, 2021, Y. Wang’s default was entered on the SAC.
On February 23, 2021, Beyace’s and Y. Wang’s defaults were entered on the SACC. On May 13, 2021, X. Wang’s default was entered on the SAC.
On June 25, 2021, ESI’s, Yue’s and Huang’s defaults were entered on the SAC. On July 16, 2021, H. Wang’s default was entered on the SAC. On December 16, 2021, Nuoyu’s default was entered on the SAC.
On January 13, 2022, Sinoma dismissed Pan, Feng, Zhang, Xiang and Cai, without prejudice. On February 23, 2022, Sinoma dismissed Nuoyu, without prejudice.
On March 4, 2022, Nuoyu’s default was entered on the SACC.
On April 25, 2022, Sinoma dismissed Tstone, Yang, Chu, SFI and Wu from the first cause of action in its SAC, without prejudice.
A Case Management Conference is set for July 21, 2022.
Legal Standard
A demurrer may be made on grounds that the pleading, inter alia, does not state facts sufficient to constitute a cause of action and/or is uncertain. (Code Civ. Proc., § 430.10, subds. (e) and (f).)
When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905 [citations omitted].) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) “[A] demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction placed on an instrument pleaded therein, or facts impossible in law, or allegations contrary to facts of which a court may take judicial knowledge.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [citations omitted].)
Discussion
Tstone, Yang, and Chu demur to the third and fourth causes of action in Sinoma’s SAC, on the basis that that they both fail to state facts sufficient to constitute causes of action and are uncertain.
Meet and Confer
The court determines that counsel have adequately conferred, as per the Declaration of Robin M. Hou filed June 1, 2021.
Merits
1.
Third Cause
of Action (i.e., Aiding and Abetting Fraud)
Liability may be imposed “on one who aids and abets the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person.” (Berger v. Varum (2019) 35 Cal.App.5th 1013, 1025 [internal quotations and citation omitted].)
Here, Sinoma alleges that ESI and Sinoma entered into a series of contracts wherein ESI agreed to locate and purchase 28 new 2019 model-year Mercedes-Benz and Bentley luxury cars that would be shipped to Sinoma in China for a total price of $4,452,570.00 (SAC, ¶ 28); that ESI and Beyace thereafter conspired to purchase 28 used cars in California for the purpose of shipping same to Sinoma in China in ostensible satisfaction of the contracts (Id.); that ESI, Beyace, Tstone and SFI then conspired to ship the 28 used cars to China, notwithstanding that China does not permit used cars to be imported into the country (Id., ¶ 29); that none of the “Primary Defendants” (i.e., which encompasses these demurring defendants) questioned or inquired into the propriety of shipping the 28 used cars to China—even after receiving title documents pertaining to each of them, which “left no doubt” that they were not new cars (Id.); and that, despite the above and also knowing that at least one shipper (i.e. WANHAI), does not ship used cars to China, “Primary Defendants” found a shipper, made arrangements to ship the used cars to China, and generated bills of lading and other relevant documents to induce Sinoma to release funds before realizing what had happened (Id.). (See also, ¶¶ 56 and 59.)
Tstone’s, Yang’s, and Chu’s demurrer to the third cause of action is overruled.
2.
Fourth Cause
of Action (i.e., Violations of Unfair Competition Law)
The elements required to state a cause of action for violation of Business & Professions Code section 17200 are (1) a business practice, (2) that is unfair, unlawful or fraudulent, and (3) an authorized remedy. (Business and Professions Code § 17200). “Because the statute is framed in the disjunctive, a business practice need only meet one of the three criteria to be considered unfair competition.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1471.)
Unlawful acts are “anything that can properly be called a business practice and that at the same time is forbidden by law. A practice is forbidden by law if it violates any law, civil or criminal, statutory or judicially made, federal, state or local.” (Id. at 1474 [internal quotations and citations omitted].) “A business practice is unfair within the meaning of the UCL if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.” (Id. at 1473.) “A fraudulent business practice is one which is likely to deceive the public.” (Id. at 1471).
Tstone, Yang, and Chu concede that Sinoma has alleged that they violated numerous Civil Code statutes (see SAC, ¶ 64(a)). Tstone, Yang, and Chu’s demurrer fails to address any of the foregoing statutes specifically. Their demurrer to the fourth cause of action, then, is overruled on this basis alone.