Judge Randolph M. Hammock, Case Number: 22STCV02356, Date: 2023-08-22 Tentative Ruling

Judge: Randolph M. Hammock, Case: 22STCV02356, Date: 2023-08-22 Tentative Ruling

This is a dispute among present and/or former officers of Harrah Logistics Group, Inc. Plaintiff Randall Harrah served as President and a shareholder of the Company. Plaintiff alleges that Defendants, who are also officers of the Company, wrongfully removed him from his position and falsely accused him of misappropriating Company funds. Plaintiff now brings this action for (1) Enforcement of Right of Inspection; (2) Breach of Fiduciary Duty; (3) Accounting; (4) Breach of Contract; (5) Injunctive Relief; (6) Breach of Implied Covenant of Good Faith and Fair Dealing; (7) Conversion; (8) Unjust Enrichment; (9) Declaratory Relief; (10) Fraud; and (11) Defamation.

Defendants Grossman and Verayo have filed a First Amended Cross-Complaint against Plaintiff for (1) breach of implied-in-fact contract; (2) promissory estoppel; (3) money had and received; (4) unjust enrichment; (5) assault; and (6) intentional infliction of emotional distress.

Pursuant to Cross-Complainants’ request, the court takes judicial notice of Exhibits 1, 2, and 3. The court takes judicial notice of the exhibits without assuming the truth of the assertions contained therein. (See Seelig v. Infinity Broad. Corp. (2002) 97 Cal. App. 4th 798, 808

The function of a motion for summary judgment or adjudication is to allow a determination as to whether an opposing party cannot show evidentiary support for a pleading or claim and to enable an order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) In analyzing motions for summary judgment, courts must apply a three-step analysis: “(1) identify the issues framed by the pleadings; (2) determine whether the moving party has negated the opponent's claims; and (3) determine whether the opposition has demonstrated the existence of a triable, material factual issue.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294). Thus, summary judgment is granted when, after the Court’s consideration of the evidence set forth in the papers and all reasonable inferences accordingly, no triable issues of fact exist and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc. § 437c(c); Villa v. McFarren (1995) 35 Cal.App.4th 733, 741.)

Where a plaintiff or cross-complainant moves for summary judgment, the burden is to produce admissible evidence on each element of a “cause of action” entitling him or her to judgment. (CCP § 437c(p)(1); see Hunter v. Pacific Mechanical Corp. (1995) 37 CA4th 1282, 1287, 44 CR2d 335, 337 (citing text) (disapproved on other grounds by Aguilar v. Atlantic Richfield Co. (2001) 25 C4th 826, 107 CR2d 841)). This means that plaintiffs who bear the burden of proof at trial by a preponderance of evidence must produce evidence that would require a reasonable trier of fact to find any underlying material fact more likely than not. At that point, the burden shifts to defendant “to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (CCP § 437c(p)(1)).

First, the court must “identify the issues framed by the pleadings.” (Hinesley v. Oakshade Town Center (2005) 135 Cal.App.4th 289, 294.) The cross-complaint is based on Cross-Defendant Randall Harrah’s alleged misappropriation of funds and other wrongdoings while President of HLG. (FACC ¶¶ 7, 10.) This allegedly included, among other things, depositing customer funds into a personal bank account, use of company funds on personal travel, and the creation of false vendor invoices which he then had HLG pay to himself or his wife, Andrea. (Id.)

To establish a breach of contract, Cross-Complainants must show “(1) the existence of the contract, (2) [cross-complainants’] performance or excuse for nonperformance, (3) [cross-defendant’s] breach, and (4) the resulting damages to the [cross-complainants].” (D'Arrigo Bros. of California v. United Farmworkers of Am. (2014) 224 Cal. App. 4th 790, 800.) “The essential elements of an implied-in-fact contract and an express contract are the same, namely, mutual assent and consideration.” (Chandler v. Roach (1957) 156 Cal. App. 2d 435, 440.)

In support of the First Cause of Action for breach of implied agreement, Cross-Complainants allege that Cross-Defendant entered into a “implied-in-fact” contract with HLG to “act in the best interests of HLG and not for his personal benefit, to act as a fiduciary owing due care and loyalty to HLG, to comply with the duties of a corporation’s officer under the Texas Business Organization Code [“Texas BOC”], not to misappropriate HLG funds to his own benefit, not to create phony invoices and then have HLG pay those phony invoices for the benefit of Randall and his wife Andrea, and not to obtain without authority and then use HLG credit cards issued to HLG for use by Randall and his wife Andrea for his and Andrea’s personal travel, dining and other personal items.” (Id. ¶ 10.)

“The essential elements of an action for money ... had and received are: (1) a statement of indebtedness of a certain sum, (2) the consideration made by the plaintiff, and (3) nonpayment of the debt. [Citation.]” (First Interstate Bank v. State of California (1987) 197 Cal.App.3d 627, 635.)

In support of the Third Cause of Action for money had and received, Cross-Complainants allege that “Cross-Defendant became indebted to HLG in an amount not less than $170,000.00…for money had and received by Randall for the use and benefit of HLG.” (Id. ¶ 20.) Cross-Complainants allege none of the sum has been repaid. (Id. ¶ 21.)

“The elements of an unjust enrichment claim are the ‘receipt of a benefit and [the] unjust retention of the benefit at the expense of another.’” (Peterson v. Cellco P'ship (2008) 164 Cal. App. 4th 1583, 1593.)

In support of the Fourth Cause of Action for unjust enrichment, Cross-Complainants allege that Cross-Defendant has “been unjustly enriched, at the expense of HLG in a sum not less than $170,000.00, according to proof, and by retention of the corporate property of HLG wrongfully detained by Cross-Defendant. (FACC ¶ 23.)

Here, Cross-Complainants have presented evidence that Harrah served as President of HLG from November 28, 2018, to October 25, 2021. (SSUMF 4.) Cross-Complainants present further evidence that while serving as President, Harrah obtained applied for and received a Capital One credit card ending in number 7459. He used the card for personal use, but then paid it off using transfers from HLG’s bank account. (SSUMF 12-16.) In total, Harrah transferred $102,394.33 from HLG to the credit card account (SSUMF 22.) Harrah has not paid back any of this amount to HLF. (SSUMF 24.)

Cross-Complainants also present evidence that Harrah obtained possession of Well Worn USA, LLC, check no. 27466 in the sum of $64,795.00. (SSUMF 17.) He deposited that check in a Chase Bank account on November 9, 2021, and withdrew the funds that same day before closing the account. (SSUMF 19, 20.) Harrah has not paid this sum back to HLG. (SSUMF 25.)

Considering the above evidence, Cross-complainants have produced prima facie evidence to establish each element of their First, Third, and Fourth causes of action by a preponderance of the evidence. This includes damages in the amount of $167,189.33 ($102.394.33 plus $64,795.00.)