Judge: Robert B. Broadbelt, Case: 23STCV04548, Date: 2024-01-16 Tentative Ruling

Case Number: 23STCV04548    Hearing Date: January 16, 2024    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:             Defendants Cristina Dam, Liberate Hollywood, Inc., and Liberation, Inc.

RESPONDING PARTIES:    Plaintiffs Tina Vo and Cathy Kay

(1)   Demurrer to First Amended Complaint

(2)   Motion to Strike Portions of First Amended Complaint

The court considered the moving, opposition, and reply papers filed in connection with the demurrer.  The court considered the moving and opposition papers filed in connection with the motion to strike.  No reply papers were filed in connection with the motion to strike.

BACKGROUND

Plaintiffs Tina Vo (“Vo”) and Cathy Kay (“Kay”) (collectively, “Plaintiffs”) filed the operative First Amended Complaint in this action on June 15, 2023, against defendants Cristina Marie Dam (“Dam”), Liberate Hollywood, Inc. (“Liberate Hollywood”), and Liberation Inc. (“Liberation”) (collectively, “Defendants”).  Plaintiffs allege 10 causes of action for (1) breach of contract; (2) breach of implied in fact contract; (3) breach of covenant of good faith and fair dealing; (4) conversion; (5) promissory estoppel; (6) intentional misrepresentation; (7) negligent misrepresentation; (8) unfair business practices; (9) intentional infliction of emotional distress; and (10) intentional misrepresentation.

Defendants now move the court for an order (1) sustaining their demurrer to each cause of action alleged by Plaintiffs, and (2) striking from the First Amended Complaint various allegations as irrelevant and improper.

DEMURRER

The court overrules defendants Dam and Liberation’s demurrer to plaintiff Vo’s first cause of action for breach of contract because it states facts sufficient to constitute a cause of action against those defendants since Vo has alleged (1) that Vo and Dam entered into an agreement on October 1, 2017, which Dam thereafter breached (FAC ¶¶ 39-41; FAC Ex. 4 [agreement signed by Vo and Dam]), and (2) sufficient facts showing that Defendants were all alter egos of the other, such that defendant Liberation may be held liable as Dam’s alter ego (FAC ¶ 6).  (Code Civ. Proc., § 430.10, subd. (e); Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236 [plaintiff is required to allege ultimate, rather than evidentiary, facts to support an alter ego theory].)

The court sustains Defendants’ demurrer to Vo’s second cause of action for breach of implied in fact contract because it does not state facts sufficient to constitute a cause of action since the allegations show that this cause of action is barred by the statute of limitations.  (Code Civ. Proc., §§ 430.10, subd. (e), 339; Raja Development Co., Inc. v. Napa Sanitary District (2022) 85 Cal.App.5th 85, 92 [“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred”] [internal quotations omitted].)

The statute of limitations for an action on a contract not founded upon an instrument in writing is two years.  (Code Civ. Proc., § 339, subd. (1); Barton v. New United Motor Manufacturing, Inc. (1996) 43 Cal.App.4th 1200, 1206 [two-year statute of limitations set forth in Code of Civil Procedure section 339 applies to actions for breach of oral or implied contracts].)  Here, plaintiff Vo has alleged, in support of her second cause of action, that “Defendants breached the implied contract in July 2020, when Defendants ceased making monthly payments toward paying off the loan” (FAC ¶ 50).  Thus, Vo was required to file this action for breach of the implied contract by July 2022, i.e., two years after the breach of the implied contract.  Plaintiffs filed this action on March 2, 2023, after the statute of limitations had expired. 

The court notes that, in opposition, Plaintiffs argue that this cause of action is not barred because the parties agreed to extend the due date on the subject note to January 31, 2023, such that the statute of limitations began to run after Defendants failed to remit payment on that date.  (Opp., p. 6:24-27.)  However, while Plaintiffs alleged that the note “had an original final payment due date of April 30, 2020 [that] was later extended to January 31, 2023” (FAC ¶ 23), Plaintiffs did not allege that Defendants failed to make the final payment on that date, and instead alleged, as set forth above, that the actionable breach occurred in July 2020 (FAC ¶ 50).  Thus, the court finds that, as alleged, the second cause of action for breach of the implied contract is necessarily barred by the statute of limitations.  (Code Civ. Proc., § 339; FAC ¶ 50.)

The court overrules Defendants’ demurrer to Vo’s third cause of action for breach of the covenant of good faith and fair dealing because it states facts sufficient to constitute a cause of action since (1) plaintiff Vo has alleged conduct distinguishable from the causes of action for breach of contract (e.g., by alleging that Defendants frustrated Vo’s ability to benefit from the note by, inter alia, changing their position to claim that the note is invalid), and (2) Defendants have not shown that this cause of action is barred by the two-year statute of limitations set forth in section 339 because, while Plaintiffs have alleged that the subject note is an implied-in-fact contract in connection with the second cause of action, it appears that Plaintiffs have alternatively alleged that it is a written contract, such that section 339 would not necessarily bar this claim upon a finding that the written agreement is valid.  (Code Civ. Proc., § 430.10, subd. (e); Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244 [covenant of good faith and fair dealing prevents a contracting party from frustrating the other party’s rights to the benefits of the contract]; Raja Development Co., Inc., supra, 85 Cal.App.5th at p. 92; FAC ¶¶ 22, 39, 45; FAC Ex. 4 [written note signed by plaintiff Vo and defendant Dam].)

The court overrules Defendants’ demurrer to Vo’s fourth cause of action for conversion because it states facts sufficient to constitute a cause of action since (1) plaintiff Vo has alleged that she loaned $250,000 to Defendants with the understanding that it was to be paid back with interest, and thus has alleged her right to possess those funds at the time of conversion (i.e., the date on which Defendants did not make the required payment) (FAC ¶¶ 61, 25), and (2) Defendants have not shown that this cause of action is necessarily barred by the statute of limitations because Plaintiffs filed this action on March 2, 2023, within three years of the alleged date of conversion (which the court has interpreted to be alleged as July 2020 since that is the date on which Defendants are alleged to have stopped making payments on the note (FAC ¶ 25)).  (Code Civ. Proc., §§ 430.10, subd. (e), 338 [three-year statute of limitations for actions “for taking, detaining, or injuring goods”]; Lee v. Hanley (2015) 61 Cal.4th 1225, 1240 [elements of claim for conversion]; Raja Development Co., Inc., supra, 85 Cal.App.5th at p. 92.)

The court overrules Defendants’ demurrer to the fifth cause of action for promissory estoppel because it states facts sufficient to constitute a cause of action since (1) Vo is permitted to plead alternative, inconsistent theories of relief; (2) Plaintiffs have sufficiently alleged that all Defendants were the alter egos of each other, and that Dam created the corporate defendants in order to further the fraudulent scheme alleged in the complaint (FAC ¶ 6, subd. (g)), such that all Defendants are liable; and (3) Defendants have not shown that this cause of action is necessarily barred by the applicable three-year statute of limitations because Plaintiffs have alleged that      (i) Defendants failed to act pursuant to their promises by failing to make the payments starting in July 2020 (FAC ¶¶ 71, 25), and (ii) Plaintiffs filed this action on March 2, 2023, within three years of July 2020.  (Code Civ. Proc., §§ 430.10, subd. (e), 338, subd. (d) [three-year statute of limitations for “An action for relief on the ground of fraud or mistake”]; Dubin v. Robert Newhall Chesebrough Trust (2002) 96 Cal.App.4th 465, 477; Jones v. Wachovia Bank (2014) 230 Cal.App.4th 935, 945 [elements of claim for promissory estoppel]; Raja Development Co., Inc., supra, 85 Cal.App.5th at p. 92.)

The court overrules Defendants’ demurrer to Vo’s sixth cause of action for intentional misrepresentation because it states facts sufficient to constitute a cause of action since Vo has alleged, with sufficient particularity, that (1) on October 1, 2017, Defendants made a representation to Plaintiff, in writing, that (i) the $250,000 investment would be turned into a loan, and (ii) the loan would be paid back in good faith when the business was able to (FAC ¶ 76; FAC Ex. 4); (2) the representation was false (FAC ¶ 78); (3) Defendants knew that the representations were false (FAC ¶ 80); (4) Defendants intended that Vo rely on the representation (FAC ¶ 81); (5) in reliance on the representation and believing it to be true, Vo agreed to sign the promissory note (FAC ¶ 83); and (6) Vo has been harmed in the amount of $290,113.49 (FAC ¶ 84).  (Code Civ. Proc., § 430.10, subd. (e); Lauckhart v. El Macero Homeowners Assn. (2023) 92 Cal.App.5th 889, 903 [elements of cause of action for deceit based on intentional misrepresentation]; Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 242 [“‘ “Pleading facts in ordinary and concise language is as permissible in fraud cases as in any others, and liberal construction of the pleading is as much a duty of the court in these as in other cases” ’”].)

The court overrules Defendants’ demurrer to Vo’s seventh cause of action for negligent misrepresentation on the ground that it is uncertain because this cause of action is not ambiguous or unintelligible.  (Code Civ. Proc., § 430.10, subd. (f).) 

The court sustains Defendants’ demurrer to Vo’s seventh cause of action for negligent misrepresentation on the ground that it does not state facts sufficient to constitute a cause of action because Vo has not alleged sufficient facts establishing that Defendants had no reasonable grounds for believing the representation that they would fully repay the amount specified in the note was true.  (Code Civ. Proc., § 430.10, subd. (e); National Union Fire Ins. Co. of Pittsburg, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50 [elements of cause of action for negligent misrepresentation]; Foster v. Sexton (2021) 61 Cal.App.5th 998, 1028 [“For policy reasons, some causes of action, such as fraud and negligent misrepresentation, must be pleaded with particularity”].)

The court overrules Defendants’ demurrer to Vo’s eighth cause of action for unfair business practices because it states facts sufficient to constitute a cause of action since Vo has sufficiently alleged, for the reasons set forth above, that she was fraudulently induced to enter into the subject note and therefore has alleged that “‘she was motivated to act or refrain from action based on the truth or falsity of [Defendants’] statement” in support of her claim for unfair competition under the fraudulent prong.  (Code Civ. Proc., § 430.10, subd. (e); Adhav v. Midway Rent a Car, Inc. (2019) 37 Cal.App.5th 954, 970.)

The court sustains Defendants’ demurrer to Vo’s ninth cause of action for intentional infliction of emotional distress because it does not state facts sufficient to constitute a cause of action since Vo has not alleged facts establishing that Defendants’ conduct was “so extreme as to exceed all bounds of that usually tolerated in a civilized community” and therefore has not alleged the element of extreme and outrageous conduct by Defendants.  (Code Civ. Proc., § 430.10, subd. (e); Hughes v. Pair (2009) 46 Cal.4th 1036, 1050-1051 [internal quotations omitted].)

The court sustains Defendants’ demurrer to Kay’s 10th cause of action for intentional misrepresentation because it does not state facts sufficient to constitute a cause of action since Kay has not alleged all the elements of intentional misrepresentation with the particularity required by law.  (Code Civ. Proc., § 430.10, subd. (e); Lauckhart, supra, 92 Cal.App.5th at p. 903 [“Fraud must be pleaded with particularity”].)  The court acknowledges that, although Kay has alleged some facts regarding the alleged misrepresentation made by Defendants—that Kay would be a co-owner of Liberate Hollywood (FAC ¶¶ 19, 112, 115)—those allegations do not include facts showing when and by what means such representations were made to Kay.  (Lauckhart, supra, 92 Cal.App.5th at p. 903.)

MOTION TO STRIKE

Defendants move the court for an order striking from the First Amended Complaint the allegations set forth in (1) portions of paragraphs 14, 18, 19, 56, and 57, and (2) paragraphs 29-32, in their entirety.

The court denies Defendants’ motion to strike the (1) the portions of paragraphs 14, 18, 19, 56, and 57, and (2) paragraphs 29-32 in their entirety because Defendants have not shown that those allegations are irrelevant or improper.  (Code Civ. Proc., § 436, subd. (a); PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1683 [motions to strike should not be used as “a procedural ‘line item veto’ for the civil defendant”].)

ORDER

The court sustains defendants Cristina Dam, Liberate Hollywood Inc., and Liberation, Inc.’s demurrer to the second, seventh, ninth, and 10th causes of action alleged in plaintiffs Tina Vo and Cathy Kay’s First Amended Complaint.

The court denies defendants Cristina Dam, Liberate Hollywood Inc., and Liberation, Inc.’s motion to strike portions of First Amended Complaint.

The court grants plaintiffs Tina Vo and Cathy Kay 20 days leave to file a Second Amended Complaint that cures the deficiencies with the second, seventh, ninth, and 10th causes of action set forth in this order.

The court orders defendants Cristina Dam, Liberate Hollywood Inc., and Liberation, Inc. to give notice of this ruling.

IT IS SO ORDERED.

DATED:  January 16, 2024

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court