Judge: Peter A. Hernandez, Case: 22PSCV00446, Date: 2022-09-15 Tentative Ruling
Case Number: 22PSCV00446 Hearing Date: September 15, 2022 Dept: O
1. Defendants
Yanlin Li’s, Fiorano Motorsport LLC’s and Bianco Corsa Motorsport, Inc.’s Demurrer
to Plaintiff’s Complaint is OVERRULED in part (i.e., as to the fifth and sixth causes
of action against Li) and SUSTAINED in part (i.e., as to the first through
fourth causes of action against all Defendants and as to the fifth and sixth
causes of action against Fiorano and Bianco). The court will hear from counsel
for Plaintiff as to whether leave to amend is requested, and as to which
cause(s) of action, and will require an offer of proof if so.
2. Defendants
Yanlin Li’s, Fiorano Motorsport LLC’s and Bianco Corsa Motorsport, Inc.’s Motion
to Strike Portions of Plaintiff’s Complaint is DENIED.
Background
In August 2021, Plaintiff and Yanlin Li (“Li”) decided to
enter into a business arrangement to operate a vehicle dealership called
Fiorano Motorsports. Li, Fiorano Motorsport LLC (“Fiorano”) and Bianco Corsa Motorsport,
Inc. (“Bianco”) (collectively, Defendants”) were given authorization to operate
this dealership and to purchase a number of high-end vehicles. The parties also
agreed that Plaintiff would be used to purchase Li’s vehicle dealership
license. Plaintiff wired $6,683,000.00 to Fiorano’s bank account during the
August 25, 2021-January 12, 2022 time period for the above-stated purposes. Li
transferred all of Fiorano’s operating funds into his personal account and thereafter
used said funds to purchase vehicles (which he claimed belonged to him
personally) and to pay off his mortgage. Also, while Li paid off one year’s
worth of lease payments for the leased dealership location, he failed to pay
Common Area Maintenance fees, which caused a default on their lease and
subjected the company to eviction.
On May 10, 2022, Plaintiff filed a complaint, asserting causes of action against Li, Fiorano, Bianco and Does 1-50 for:
1.
Fraud
2.
Breach of Fiduciary Duty
3.
Breach of Oral Contract
4.
Common Counts
5.
Conversion
6.
Accounting
A Case Management Conference is set for September 15, 2022.
1. Demurrer
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
Defendants demur, pursuant to Code of Civil Procedure § 430.10, subdivisions (e) and (f), to the first through sixth causes of action in Plaintiff’s complaint, on the basis that they each fail to state facts sufficient to constitute causes of action and are uncertain.
First Cause of Action (i.e., Fraud)
“The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage.” (Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109.) “Fraud must be pleaded with specificity…[t]o withstand a demurrer, the facts constituting every element of the fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782 [emphasis in original].) “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73 (emphasis in original), quoting Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707.)
Plaintiff has failed to allege facts showing how, when (aside from a general “August 2021 to January 2022” time frame), where, to whom, and by what means any purported misrepresentations were made.
Defendants’ demurrer to the first cause of action is sustained.
Second Cause of Action (i.e., Breach of Fiduciary Duty)
“The elements of a cause of action for
breach of fiduciary duty are: 1) the existence of a fiduciary duty; 2) a breach
of the fiduciary duty; and 3) resulting damage.” (Pellegrini v. Weiss (2008)
Plaintiff has failed to allege the existence of a fiduciary duty. Plaintiff alleges, without more, that “Defendants were Plaintiff’s corporate officer and business partner” (Complaint, ¶ 37). Plaintiff’s preceding allegations make no reference to any of Defendants acting as Plaintiff’s corporate officers (and, indeed, two of the defendants are entities). Additionally, Plaintiff previously alleged that Plaintiff and Li entered into a “business arrangement,” the terms of which are unclear. Defendants’ demurrer to the second cause of action is sustained.
Third Cause of Action (i.e., Breach of Oral Contract)
“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
“An oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words.” (Scolinos v. Kolts (1995) 37 Cal.App.4th 635, 640.) Pleading a contract by legal effect involves alleging the substance of its relevant terms. (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)
Plaintiff alleges that “Plaintiff and Defendants entered into an oral contract for Defendants to operate a vehicle dealership and for the purchase of a vehicle dealership license.” (Complaint, ¶ 45.) Plaintiff has failed to identify the parties to the contract (and the identity of the individual who contracted on Plaintiff’s behalf and on behalf of the entity Defendants), the time of performance, the duration of the contract, consideration, etc.
Defendants’ demurrer to the third cause of action is sustained.
Fourth Cause of Action (i.e., Common Counts)
The elements of a common count cause of action are “(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.” (Farmers Inc. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.)
“When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” (McBride v. Boughton (2004) 123 Cal.App.4th 379. 394.)
Defendants’ demurrer to the fourth cause of action is sustained.
Fifth Cause of Action (i.e., Conversion)
Plaintiff has sufficiently alleged this cause of action as to Li, in ¶¶ 9, 10, 14, 15 and 59-62.
Li’s demurrer to the fifth cause of action is overruled. Fiorano’s and Bianco’s demurrer to the
fifth cause of
action is sustained.
Sixth Cause of Action (i.e., Accounting)
Defendants contend that “it is unknown as to under what authority Plaintiff has a right to an accounting” and that “[t]he complaint fails to allege any provisions of any agreement which provide for this cause of action.” (Demurrer, 8:3-5.) “A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) The right to an accounting, then, need not be set forth in a contractual “provision.” Here, Plaintiff has alleged that Li and Plaintiff had entered into a “business arrangement” for the operation of a vehicle dealership and for the purchase of vehicles, that Plaintiff contributed monies for the aforesaid purposes, and that Li utilized same for his own personal devices.
Defendants further contend, without any citation to authority, that Plaintiff “fails to allege proper standing.” (Demurrer, 8:6). This contention is disregarded.
Li’s demurrer to the fifth cause of action is overruled. Fiorano’s and Bianco’s demurrer to the fifth cause of action is sustained.
2. Motion to Strike
Legal Standard
Pursuant to Code of Civil Procedure section 436, “the court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” The grounds for a motion to strike must “appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 437.)
Discussion
Defendants move to strike out the following portions of Plaintiff’s complaint:
1.
Paragraph 34, 5:23-25 (i.e., “Defendant's acts and
omissions as alleged herein were knowing, intentional, willful, malicious and
oppressive, as they were done with the full knowledge, or substantial
certainty, that their conduct would cause and were causing severe mental
distress and physical hardship”);
2.
Paragraph 42, 6:15-17 (i.e., “Defendant's acts and
omissions as alleged herein were knowing, intentional, willful, malicious and
oppressive, as they were done with the full knowledge, or substantial
certainty, that their conduct would cause and were causing severe mental
distress and physical hardship”);
3.
Paragraph 50, 7:9-11 (i.e., “Defendant's acts and
omissions as alleged herein were
knowing, intentional, willful,
malicious and oppressive, as they were done with the full knowledge, or
substantial certainty, that their conduct would cause and were causing severe
mental distress and physical hardship”);
4.
Paragraph 64, 8:24-26 (i.e., “Defendant's acts and
omissions as alleged herein were knowing, intentional, willful, malicious and
oppressive, as they were done with the full knowledge, or substantial
certainty, that their conduct would cause and were causing severe mental
distress and physical hardship”); and
5.
Prayer, 10:7 (i.e., “3. Exemplary and Punitive
Damages”).
The motion is denied as moot in part (i.e., in full as to Fiorano and Bianco in full and Paragraphs 34, 42, and 50 as to Li), based on the ruling made on the demurrer.
The motion is otherwise denied (i.e., as to Paragraph 64 and Paragraph 3 of the prayer as to Li). Punitive damages may be awarded upon clear and convincing evidence that a defendant has been guilty of oppression, fraud, or malice. (Civ. Code § 3294, subd. (a).) “Malice” is defined as “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” “Oppression” is defined as “despicable conduct that subject a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code §3294, subd. (b).) “Fraud” is defined as “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code §3294, subd. (c).)
A “conclusory characterization of defendant’s conduct as intentional, willful and fraudulent is a patently insufficient statement of ‘oppression, fraud, or malice. . .’” (Brousseau v. Jarrett (1977) 73 Cal.App.3d 864, 872.) “The mere allegation an intentional tort was committed is not sufficient to warrant an award of punitive damages. Not only must there be circumstances of oppression, fraud, or malice, but facts must be alleged in the pleading to support such a claim.” (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 166.)
Here, Plaintiff has alleged that Li absconded with monies Plaintiff had wired for use in the operation of a vehicle dealership, which included the purchase of a number of high-end vehicles, and used said monies for her own purposes to purchase vehicles identified in Paragraph 15, which he subsequently represented to Plaintiff belonged to him only. The court determines that Plaintiff has sufficiently pled entitlement to punitive damages as against Li.