Judge Randolph M. Hammock, Case 22STCV27914 2023-03-24 Tentative Ruling

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-Defendant Ryu’s Demurrer to the Fifth, Sixth, and Seventh Causes of Action is SUSTAINED on separate grounds, without leave to amend. The amended Cross-Complaint should not assert the Fifth, Sixth, and Seventh Causes of Action against Cross-Defendant Ryu, as the Complaint in the related case already asserts those identical causes of action on the same facts against that Defendant.

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.)

Cross-Defendants demur to the Fifth Cause of Action for misappropriation of trade secrets, Sixth Cause of Action for interference with contractual relations, and Seventh Cause of Action for injunctive relief.

For context, Plaintiff Salt International Co., LTD (“Salt”), brought this action (21STCV27914) against Defendants Sky Express World Courier, Inc. (“Sky”), Hyoungtae Kim, and Kyoungjin Cho, alleging breach of contract and related causes of action stemming from a shipping contract for goods from China.

Thereafter, Sky filed a Cross-Complaint for breach of contract and related causes of action against Salt, the individual Gyumyeong Chae, and entity One Road USA, Inc. Sky also named as Cross-Defendants the additional individual Cross-Defendants Sooah Chae, Jea Hung Lyoo (aka Jae Hueng Ryu aka Joseph Ryu), Jihyun Seo, and Daeyoung Kim, alleging misappropriation of trade secrets and interference with contractual relations.

There is also a related action, 21STCV16955. There, Sky is the Plaintiff, and brings causes of action against Defendant Jea Hung 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 then 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.

This is the not the first time this court has addressed the issues raised here. The moving parties previously raised these arguments in their motion for sanctions, which came for hearing on October 17, 2022. This court denied the motion for sanctions but advised the moving parties that a demurrer to the Cross-Complaint on one or more grounds enumerated in CCP section 430.10 might be better suited to provide the relief they sought. (See Final Ruling, 10/17/2022.) The instant demurrer followed.

First, Salt contends that the parties named as Defendants in the Cross-Complaint’s Fifth, Sixth, and Seventh Causes of Action—Sooah Chae, Jea Hung Lyoo (aka Jae Hueng Ryu aka Joseph Ryu), Jihyun Seo, Daeyoung Kim, and One Road USA, Inc.—are unrelated to Salt. To be sure, those parties are not named in the first four causes of action related to the alleged breach of contract causes of action between Salt and Sky. Therefore, the grounds for this demurrer would appear to be a defect or misjoinder of parties. (See CCP § 430.10(d).)

Sky alleges in its Cross-Complaint that Cross-Defendants Lyoo, Seo, and Kim “were employed by” Sky, before quitting and then establishing Cross-Defendant One Road USA, Inc. (CC ¶ 43.) Sky alleges that the Cross-Defendants “used and continued to use [Sky’s] trade secret information by contacting [Sky’s] customers and vendors unlawfully and providing

“Permissive joinder of defendants in a civil action is proper where the complaint asserts against them any right to relief arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action.” (Farmers Ins. Exch. v. Adams (1989) 170 Cal. App. 3d 712, 722 [finding trial court properly sustained demurrer based on misjoinder of defendants]; CCP § 379.) The requirement of “same transaction or series of transactions” is construed broadly. (Petersen v. Bank of Am. Corp., 232 Cal. App. 4th 238, 249.) Moreover, “[i]t is not necessary that each defendant be interested as to every cause of action or as to all relief prayed for.” (CCP § 379.)

The only common factual link between all parties in the Cross-Complaint appears to be Defendant One Road USA, Inc. Sky alleges that the new individual parties named in the Fifth, Sixth, and Seventh Causes of action “established cross-Defendant One Road.” (Id. ¶ 43.) As to the Cross-Defendants in the First through Fourth Causes of Action, Sky alleges that Salt, Gyumyeong Chae, and One Road are all alter egos of one another. (Id. ¶ 15.) Sky alleges that Gyemyeong owns a 100% interest in both Salt and One Road. (Id. ¶ 14.) Finally, Sky alleges generally that all Cross-Defendants “were the agents, servants, and/or employees of each of the remaining Cross-defendants, and were at all times herein mentioned, acting within the scope, course and purpose of the agency, and/or employment or concerted activity.” (Id. ¶ 11.)

Aside from the alleged conclusory link of all Defendants to Defendant One Road, causes of action One through Four involve a different transaction or occurrence and different questions of fact than those in causes of action Five through Seven. Moreover, the Cross-Complaint alleges that Defendant Gyemyeong owns a 100% interest in One Road, then alleges later that that the individual parties named in the Fifth, Sixth, and Seventh Causes of action “established cross-Defendant One Road.” (Id. ¶¶ 14, 43.) This would appear contradictory, or at best ambiguous.

This court is aware of its duty to accept all well pleaded allegations in the Cross-Complaint as true for purposes of the demurrer. It does not, however, “admit contentions, deductions or conclusions of fact or law alleged in the pleading.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 [internal citations omitted].) Aside from conclusory allegations, there is nothing to suggest that the relief sought against the moving Cross-Defendants arises from the same transaction, occurrence, or series of transactions or occurrences involving the other named Cross-Defendants. Nor is there any question of law or fact common to all Cross-Defendants.

In so finding, it must be noted that “it may be possible to join certain of the [defendants] upon more specific factual allegations.” (Farmers Ins. Exch., supra, 170 Cal. App. 3d at 722.) But as currently pled, the allegations are insufficient to join the moving Cross-Defendants with seemingly unrelated Defendants.

Accordingly, Cross-Defendants’ Demurrer to the Fifth, Sixth, and Seventh Causes of Action is SUSTAINED, with leave to amend. When amending, Cross-Complainant must allege facts to support joinder of the named Cross-Defendants.

Second, moving Cross-Defendants correctly argue that the Cross-Complaint’s Fifth, Sixth, and Seventh Causes of Action as asserted against Cross-Defendant Ryu are identical to those causes of action asserted against Ryu in the Complaint in the related case. Thus, the moving parties argue that “Cross-complainant is maintaining two separate - but same actions – against” Jea Hung Lyoo (aka Jae Hueng Ryu aka Joseph Ryu). (Dem. 7: 1-3.) The grounds for this demurrer, at least as to Ryu, would be that another action is pending between the same parties on the same cause of action. (See CCP § 430.10(c).)

In opposition, Sky notes that the only overlapping party is Ryu. Sky continues that “[i]f we separate [Ryu], it will be awkward in that only partial adjudication will be made as to [Ryu].” (Opp. 3: 2-4.)

Be that as it may, it appears settled that Ryu is currently defending identical causes of action in each case, those being for misappropriation of trade secrets, interference with contractual relations, and injunctive relief—in the instant case (21STCV27914) as a Cross-Defendant, and in the related case (21STCV16955) as the Defendant. These causes of action are based on identical underlying facts. Therefore, as to Ryu, there is another action pending on the same causes of action. (CCP § 430.10(c).) For this reason, Defendant Ryu’s demurrer to the cause of action is well taken.

Accordingly, Defendant Ryu’s Demurrer to the Fifth, Sixth, and Seventh Causes of Action is SUSTAINED on these separate grounds, without leave to amend. The amended Cross-Complaint should not assert the Fifth, Sixth, and Seventh Causes of Action against Cross-Defendant Ryu, as the Complaint in the related case already asserts those identical causes of action on the same facts against that Defendant.

Having considered these actions, this court submits that the proper and most economical course would have been for Sky to seek to amend its Complaint in the related and (and first filed) case (21STCV16955) to simply add the new Defendants/Cross-Defendants it now includes in its Cross-Complaint in this case (21STCV27914).

The parties undoubtedly understand these cases, their facts, and the relationships between the parties better than this court does. This court has only the pleadings to go by.

It would appear that further unnecessary motion practice can be avoided, and judicial resources conserved, if the parties simply make the necessary stipulations to dismiss one of the actions and allow each side to file an amended pleading in the remaining case so that all claims against all parties—assuming there is a common basis in law and fact for doing so—can be adjudicated together.

This Court suggests: Start all over, communicate, and be reasonable. This Court orders: If there is to be another demurrer: Have a meaningful meet and confer, as required by law.

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.