Judge Randolph M. Hammock, Case Number: 22STCV11781, Date: 2023-12-13 Tentative Ruling

Plaintiff Kyung Mi Ha owns a 45% membership interest in First A&A Capital, LLC. Defendant Jaekyong Han owns a 10% membership interest in the Company. In 2017, the Company obtained a loan from Bank of the West for $8.1 million secured by the Company’s only asset, the real property at 12410 Amargosa Road, Victorville, CA 92329.

In order to pay off the loan, Plaintiff and Defendant agreed to advance additional sums of the money to the Company. In 2022, Plaintiff agreed to advance the sum of $6.075 million and Defendant agreed to advance the sum of $675,000. The parties agreed in writing that if the Company was unable to obtain a loan from a conventional financial institution by September 30, 2022, Defendant would lend an additional $2.7 million to the Company which would be used to repay a portion of Plaintiff’s $6.075 million loan.

After each party advanced their respective sums, the Company was unable to obtain a loan from a conventional financial institution as of September 30, 2022. Therefore, Defendant owed Plaintiff 2.7 million as of this date. Defendant did not make the payment. On or before that date, Plaintiff advised Defendant that once she received the $2.7 million loan repayment, she was going to transfer this money to Korea.

In late November of 2022, Defendant represented to Plaintiff by text message that the $2.7 million payment to Plaintiff would be based on the US. dollar – Korean won exchange rate as of October 3, 2022.

The property was sold on December 2, 2022, and the loans made by Plaintiff and Defendant were paid in full. Plaintiff alleges that as of October 3, 2022, the U.S. dollar to Korean won exchange rate was 1433.34 won per USD. In comparison, on December 2, 2022, i.e., the date of close of escrow on the sale of the Property, the exchange rate was 1,300.80 won per USD. Based on those exchange rates, Plaintiff maintains that she has sustained a loss of 357,858,000 Korean won, which is approximately $274,890.00 based on the conversion rate as of April 13, 2023. Plaintiff now asserts a single cause of action for breach of written contract.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (CCP § 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, 147 Cal.App.4th at 747.)

Defendant Jaekyong Han demurrers to the First Amended Complaint on the grounds it fails to state facts sufficient to constitute a cause of action or is uncertain. Defendant argues that Plaintiff’s damages are speculative because “neither party contemplated losses due to fluctuating currency rates in the currency market as constituting foreseeable damages at the time of entering into the Agreement.” (Dem. 7: 6-7.) Defendant further contend that “[t]his is evidenced by the fact that the Agreement does not contain any provision providing for recovery of losses due to currency rate fluctuations in the currency markets.” (Id. 7: 8-9.)

In the First Amended Complaint, Plaintiff Kyung Mi Ha alleges she owns a 45% membership interest in First A&A Capital, LLC. (FAC ¶ 6.) Defendant Jaekyong Han owns a 10% membership interest in the Company. (Id.) In 2017, the Company obtained a loan from Bank of the West for $8.1 million secured by the Company’s only asset, the real property at 12410 Amargosa Road, Victorville, CA 92329. (Id. ¶ 7.) Sometime after March 28, 2017, the Bank informed the Company it would not be renewing the loan. (Id. ¶ 8.)

In order to pay off the loan, Plaintiff alleges that Plaintiff and Defendant agreed to advance additional sums of the money to the Company. (Id. ¶ 9.) In 2022, Plaintiff agreed to advance the sum of $6.075 million and Defendant agreed to advance the sum of $675,000. (Id.) The parties agreed in writing that if the Company was unable to obtain a loan from a conventional financial institution by September 30, 2022, Defendant would lend an additional $2.7 million to the Company which would be used to repay a portion of Plaintiff’s $6.075 million loan. (Id.)

After each party advanced their respective sums, the Company was unable to obtain a loan from a conventional financial institution as of September 30, 2022. (Id. ¶ 11.) Defendant owed Plaintiff $2.7 million as of this date. Defendant did not make the payment. (Id.) On or before that date, Plaintiff advised Defendant that once she received the $2.7 million loan repayment, she was going to transfer this money to Korea. (Id. ¶ 12.)

Plaintiff alleges that in late November of 2022, Defendant represented to Plaintiff by text message that the $2.7 million payment to Plaintiff would be based on the US. dollar – Korean won exchange rate as of October 3, 2022. (Id. ¶ 13.)

The property was sold on December 2, 2022, and the loans made by Plaintiff and Defendant were paid in full. (Id. ¶ 14.) Plaintiff alleges that as of October 3, 2022, the U.S. dollar to Korean won exchange rate was 1433.34 won per USD. (Id. ¶ 15.) In comparison, on December 2, 2022, i.e., the date of close of escrow on the sale of the Property, the exchange rate was 1,300.80 won per USD. (Id.) Based on those exchange rates, Plaintiff maintains that she has sustained a loss of 357,858,000 Korean won, which is approximately $274,890.00 based on the conversion rate as of April 13, 2023. (Id.) Plaintiff now asserts a single cause of action for breach of written contract.

Thus, to summarize the allegations as this court understands them: Despite Defendant’s breach on September 30, 2022, Plaintiff was not repaid for her investment until December 2, 2022, when the exchange rate was not as favorable. Thus, although Plaintiff was eventually repaid in full, she effectively lost money due to the delay.

To prevail on a breach of contract claim, Plaintiff must establish “(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.” (D'Arrigo Bros. of California v. United Farmworkers of Am. (2014) 224 Cal. App. 4th 790, 800.)

Considering the allegations, Plaintiff has alleged facts to support each element of her claim, including damages. (See Ash v. North American Title Co. (2014) 223 Cal.App.4th 1258, 1268 [“[t]he determinations of whether there was a breach of contract and whether the contract damages were foreseeable are questions of fact”].)

Defendant also argues that Plaintiff’s reliance on the November 2020 text as Defendant purportedly recognizing the currency fluctuation is an improper attempt to amend the Agreement.

The court need not determine at this time whether the alleged text message(s) between the parties discussing the exchange rates are valid or binding. Again, this question effectively goes to the proper measure of Plaintiff’s damages.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.