Salt International Co., LTD. v. Sky Express World Courier, Inc., et al.

MOTION FOR SANCTIONS

 

MOVING PARTY: Cross-Defendants Salt International Co., LTD; Gyumyeong Chae; Sooah Chae; Jea Hung Lyoo; Jihyun Seo; Daeyoung Kim; and One Road USA, Inc.  

RESPONDING PARTY(S): Defendant/Cross-Complainants Sky Express World Courier, Inc.; Defendants Hyoungtae Kim and Kyoungjin Cho

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Salt International Co., LTD (Salt), a Chinese company, brought this action against Defendants Sky Express World Courier, Inc. (Sky), Hyoungtae Kim, and Kyoungjin Cho.  Salt alleges that it entered into an oral agreement with Defendants whereby Salt would ship goods from China with Sky serving as the master consignee in the United States.  Under the agreement, Salt would pay all processing and Customs fees.  Salt alleges that Sky breached the agreement and committed fraud by, among other things, demanding excess fees based on forged Customs documents.

Thereafter, Sky filed a Cross-Complaint against Salt, and added the individual Cross-Defendants.  Sky seeks damages for alleged nonpayment under the shipping agreement.

There is also a related case, 21STCV16955.  There, Sky is the Plaintiff, and brings causes of action against Defendant Jea Jung Lyoo, (wrongly sued as Jae Hung Ryu aka Joseph Ryu.)  Sky alleges Lyoo, a former employee of Sky, has misappropriated Sky’s trade secrets. Lyoo filed a Cross-Complaint against Sky and Hyoungtae Kim for (1) slander per se, (2) violation of Labor Code sections 1050-1054, (3) interference with prospective economic damages, and (4) interference with contractual relationship.

Cross-Defendants now move for sanctions against Sky and its counsel, Dale J. Park, pursuant to CCP sections 128.5 and 128.7.  Sky opposed.

TENTATIVE RULING:

Cross-Defendants’ Motion for Sanctions is DENIED.

DISCUSSION:

Motion for Sanctions

I. Judicial Notice

Pursuant to Cross-Defendants request, the court takes judicial notice of Exhibits 1 and 2. 

Pursuant to Cross-Complainants’ request, the court takes judicial notice of Exhibit A.

The court takes judicial notice of the exhibits without assuming the truth of the assertions contained therein. (Evid. Code, § 452, subd. (h); Seelig v. Infinity Broad. Corp. (2002) 97 Cal. App. 4th 798, 808.)

II. Analysis

The Salt Cross-Defendants move for an order (1) striking portions of the Cross-Complaint and (2) for monetary sanctions of $8,750.00 against Sky and its counsel, Dale J. Park and Law Offices of Dale J. Park, pursuant to California Civil Code of Procedure Sections 128.5 and 128.7.  

The Cross-Defendants argue that Sky’s causes of action in the Cross-Complaint are (1) unrelated to Salt, (2) do not allege any facts against Salt, and (3) are duplicative of the causes of action asserted in the related lead case.  Salt argues that by filing a Cross-Complaint while a Complaint was already pending in the lead case, Sky and its counsel are engaging in tactics that are frivolous or solely intended to cause unnecessary delay.

Salt appears correct that the causes of action for interference with contractual relations, misappropriation of trade secrets, and injunctive relief, asserted in the related case against Ryu are largely identical to those causes of action asserted in the Cross-Complaint in the instant case.  However, whereas the Complaint in the lead case only asserts the causes of action against Defendant Ryu, the Cross-Complaint asserts these causes of action against all Defendants, including Salt.  

Counsel Park for Sky explains that when Sky filed the lead case, Sky was represented by different counsel who failed to “name all wrongdoers as defendants.”  Once Park substituted in as counsel and learned there were additional defendants not named in the lead case, he determined “the most efficient way to address these issues (new claims and additional defendants) would be to combine all of these in a form of a cross-complaint.” (Opp. 3: 12-20.) Accordingly, he “prepared a cross-complaint [in the related case] alleging four (4) causes of action for the claim of $180,000 accounts receivable (breach of contract, common counts for service sold, common counts for account stated, and common counts for open book account) against Salt International and G. Chae, and three (3) causes of action for trade secret claims (misappropriation of trade secret, interference with contractual relations and injunctive relief) against former employees (Lyoo, Jihyun Seo and Daeyoung Kim), Salt International, G. Chae, S. Chae and One Road USA, Inc.”  (Id.)

The Salt Cross-Defendants cite no authority awarding sanctions in a situation remotely resembling the instant one. It appears to this court that Cross-Defendants’ arguments in support of sanctions would have been better suited for a demurrer to the pleading, either in this case or the lead case.   (See CCP § 430.10.)

There is no evidence, however, that Sky filed the Cross-Complaint in bad faith, that it is objectively frivolous, or that it was solely intended to cause unnecessary delay.  Put simply, although Sky’s course of action may prove to be legally unsound for a number of reasons to be addressed at a later time, it does not justify sanctions under either CCP sections 128.5 or 128.7.

Accordingly, Cross-Defendants’ Motion for Sanctions is DENIED.

Moving party to give notice, unless waived.

IT IS SO ORDERED.

Dated:   October 17, 2022 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

FN 1 -   Based on Cross-Defendants’ arguments made in this motion, it would appear a demurrer could be made on any of the following grounds: that “there is another action pending between the same parties on the same cause of action” (§ 430.10(c)), “a defect or misjoinder of parties” (§ 430.10(b)), or failure to “state facts sufficient to constitute a cause of action” (§ 430.10(e)).  This court makes no determinations on whether a hypothetical demurrer (or motion for judgment on the pleadings) would be successful.