Judge Salvatore Sirna, Case Number: 23PSCV01299, Date: 2023-09-26 Tentative Ruling

Judge: Salvatore Sirna, Case: 23PSCV01299, Date: 2023-09-26 Tentative Ruling

Case Number: 23PSCV01299 Hearing Date: September 26, 2023 Dept: G

Defendant Cherrie Chen’s Demurrer to Plaintiff’s Complaint

Respondent: NO OPPOSITION (Due 9/7/2023)

TENTATIVE RULING

Defendant Cherrie Chen’s Demurrer to Plaintiff’s Complaint is SUSTAINED with ten (10) days leave to amend.

BACKGROUND

This is a contractual fraud action. In January 2019, Plaintiffs Oscar Zhang and Aveo, Inc. entered into a written and oral agreement with Defendant Suncity Property Management, LLC (Suncity) and Cherrie Chen in which Plaintiffs promised to provide renovation services for a property in Rancho Cucamonga in exchange for $50,000. Plaintiffs began the work in February 2019 and finished on May 15. During Plaintiffs’ work on the project, Plaintiffs also agreed to provide additional services including painting and cabinet installation for an additional $15,260. Subsequently, Plaintiffs allege they only received a payment of $30,000 and are owed an additional $35,260.00 plus interest.

On May 1, 2023, Plaintiffs filed a complaint against Defendants Chen, Queenie Chiang, Far Seng Wu, Yaqiang Gao, Suncity, Eaglecell Group (Eaglecell), and Does 1-50, alleging the following causes of action: (1) breach of written contract, (2) fraud and intentional misrepresentation, (3) breach of fiduciary duties, (4) unjust enrichment, (5) promissory estoppel, (6) breach of implied covenant of good faith and fair dealing, (7) intentional infliction of emotional distress (IIED), and (8) breach of implied contract.

On August 10, 2023, Chen filed the present demurrer. Prior to filing, Chen’s counsel met and conferred telephonically with Plaintiffs’ counsel and was unable to reach a resolution. (Sagheb Decl., Ex. B.) On August 22, 2023, Chiang and Wu filed the present demurrer. Prior to filing, their counsel met and conferred telephonically with Plaintiffs’ counsel and was unable to reach a resolution. (Sagheb Decl., Ex. B.)

A hearing on the two demurrers is set for September 26, 2023. A case management conference is also set for October 9.

ANALYSIS

Chen demurs to Plaintiffs’ entire Complaint. For the following reasons, the court SUSTAINS Chen’s demurrer to Plaintiffs’ entire Complaint with leave to amend.

Legal Standard

A party may demur to a complaint on the grounds that it “does not state facts sufficient to constitute a cause of action.” (Code Civ. Proc., § 430.10, subd. (e).) A demurrer tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747 (Hahn).) When considering demurrers, courts accept all well pleaded facts as true. (Fox v. JAMDAT Mobile, Inc. (2010) 185 Cal.App.4th 1068, 1078.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “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, supra, at p. 747.)

Breach of Written Contract (First Cause of Action)

Chen argues Plaintiffs’ first cause of action for breach of written contract fails to plead sufficient facts to state a claim and is uncertain. The court agrees.

Legal Standard

To state a cause of action for breach of contract, a plaintiff must be able to 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.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.) If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

Discussion

In this case, Chen argues Plaintiffs fail to show the existence of a signed contract. Plaintiffs allege they entered into a written contract with Suncity and Chen. (Complaint, ¶ 22.) But Plaintiffs do not allege how Suncity and Chen entered into the alleged written contract and how they specifically accepted Plaintiffs’ offer. While the court treats properly pleaded facts as true for the purposes of a demurrer, it will not “assume the truth of contentions, deductions or conclusions of law.” (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 967.) Thus, Plaintiffs’ conclusory statement that parties entered into a written contract is insufficient.

And while Plaintiffs attempted to support this legal contention by providing a copy of what appears to be a project quote addressed to Suncity and Chen, the quote was not signed by either defendant. (Complaint, Ex. 1.) Generally, “where the parties intend to reduce their agreement to writing there is no binding agreement between the parties until a written contract is signed.” (C.L. Smith Co. v. Roger Ducharme, Inc. (1977) 65 Cal.App.3d 735, 742.) Thus, this exhibit is insufficient to fix the pleading deficiencies in Plaintiffs’ first cause of action.

Accordingly, because Plaintiffs failed to adequately allege the existence of a contract, Chen’s demurrer to Plaintiffs’ first cause of action is SUSTAINED with leave to amend.

Fraud and Intentional Misrepresentation (Second Cause of Action)

Chen contends Plaintiffs’ second cause of action for fraud and intentional misrepresentation is barred by the applicable statute of limitations, fails to plead sufficient facts to state a claim, and is uncertain. The court agrees.

Legal Standard

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403 (Marshall).) The statute of limitations for a fraud action is three years. (Code Civ. Proc., § 338, subd. (d).) It does not begin to accrue “until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc., § 338, subd. (d).)

Discussion

In this case, Chen contends Plaintiffs’ cause of action accrued in August 2019 which is more than three years before this action was filed on May 1, 2023. In June 2019, Plaintiffs allege Chen promised the remaining balance “in a couple of months.” (Complaint, ¶ 33.) After the two months, Plaintiffs allege they “knew that [Defendants’] promises were false because they failed to pay the remaining balance of money owed.” (Complaint, ¶ 34, 50.) Thus, based on these allegations, Plaintiffs’ cause of action for fraud and misrepresentation accrued in August 2019, which is more than three years and eight months before Plaintiffs filed the present action.

Accordingly, Chen’s demurrer to Plaintiffs’ second cause of action is SUSTAINED with leave to amend.

Breach of Fiduciary Duties (Third Cause of Action)

Chen maintains Plaintiffs’ third cause of action for breach of fiduciary duties fails to plead sufficient facts to state a claim and is uncertain. The court agrees.

Legal Standard

The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)

Discussion

In this case, Chen maintains there can be no breach of fiduciary duty because Plaintiffs have failed to establish the existence of a fiduciary relationship. In Plaintiffs’ Complaint, it appears they allege a fiduciary relationship arising out of their renovation contract. (Complaint, ¶ 58-59.) Because Plaintiffs have failed to adequately allege the existence of a written agreement in the first place, this cause of action necessarily fails as well.

Accordingly, Chen’s demurrer to Plaintiffs’ third cause of action is SUSTAINED with leave to amend.

Unjust Enrichment (Fourth Cause of Action)

Chen argues Plaintiffs’ fourth cause of action for unjust enrichment fails to plead sufficient facts to state a claim and is uncertain. The court agrees.

Legal Standard

Unjust enrichment is established by the “receipt of a benefit and unjust retention of the benefit at the expense of another.” (Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.) It “requires one who acquires a benefit which may not justly be retained, to return either the thing or its equivalent to the aggrieved party so as not to be unjustly enriched.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 460.)

Discussion

In this case, Chen argues Plaintiffs failed to allege Chen personally benefited from Plaintiffs’ services. While Plaintiffs allege “Defendants were enriched at the expense of Plaintiffs,” Plaintiffs failed to demonstrate how Chen was enriched. (Complaint, ¶ 66.) It is also unclear whether Plaintiffs’ work was done for Suncity or for all defendants. (Complaint, ¶ 24.) And Plaintiffs have failed to allege Suncity is Chen’s alter ego.

“Two requirements must be met to invoke the alter ego doctrine: (1) ‘[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist’; and (2) ‘there must be an inequitable result if the acts in question are treated as those of the corporation alone.’” (Turman v. Superior Court of Orange County (2017) 17 Cal.App.5th 969, 980-981, quoting Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) Here, Plaintiffs have failed to allege facts meeting these requirements.

Accordingly, because Plaintiffs have failed to allege how Chen benefited from Plaintiffs’ work, Chen’s demurrer to Plaintiffs’ fourth cause of action is SUSTAINED with leave to amend.

Fifth, Sixth, Seventh, and Eighth Causes of Action

Chen contends Plaintiffs’ fifth cause of action for promissory estoppel, sixth cause of action for breach of the implied covenant of good faith and fair dealing, seventh cause of action for IIED, and eighth cause of action for breach of implied contract are barred by the applicable statute of limitations, fail to plead sufficient facts to state a claim, and are uncertain. The court agrees.

Legal Standard

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Marshall, supra, 37 Cal.App.4th at p. 1403.) The statute of limitations for “[a]n action upon a contract, obligation or liability not founded upon an instrument of writing” is two years. (Code Civ. Proc., § 339, subd. (1).) The same term also applies to personal injury actions. (Code Civ. Proc., § 335.1.)

Discussion

In this case, Chen contends the statute of limitations began to run in August 2019 when Defendants allegedly failed to make promised payments. (Complaint, ¶ 33, 34, 50.) This failure serves as the basis for Plaintiff’s promissory estoppel, breached of implied covenants, IIED, and breached of implied contract causes of action. Because Plaintiffs did not file the present action until more than three years and eight months later, these causes of action are untimely brought.

Accordingly, Chen’s demurrer to Plaintiffs’ fifth, sixth, seventh, and eighth causes of action is SUSTAINED with leave to amend.

CONCLUSION

Based on the foregoing, Chen’s demurrer to Plaintiffs’ Complaint is SUSTAINED in its entirety with 10 days’ leave given to amend as to all causes of action.

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Defendants Queenie Chiang and Far Seng Wu’s Demurrer to Plaintiff’s Complaint

Respondent: NO OPPOSITION

TENTATIVE RULING

Defendants Queenie Chiang and Far Seng Wu’s Demurrer to Plaintiff’s Complaint is SUSTAINED with ten (10) days leave to amend.

ANALYSIS

Chiang and Wu demur to Plaintiffs’ entire Complaint. For the following reasons, the court SUSTAINS Chiang and Wu’s demurrer in its entirety with ten (10) days leave to amend.

Legal Standard

Breach of Written Contract (First Cause of Action)

Chiang and Wu argue Plaintiffs’ first cause of action for breach of written contract fails to plead sufficient facts to state a claim and is uncertain. The court agrees.

Legal Standard

Discussion

In this case, Chiang and Wu argue Plaintiffs fail to show the existence of a signed contract. Plaintiffs allege they entered into a written contract with Suncity and Chen. (Complaint, ¶ 22.) But Plaintiffs fail to allege how Chiang or Wu were parties to this contract. Although Plaintiffs do allege Suncity is Wu’s alter ego, they fail to properly plead this allegation. (Complaint, ¶ 13.)

“Two requirements must be met to invoke the alter ego doctrine: (1) ‘[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist’; and (2) ‘there must be an inequitable result if the acts in question are treated as those of the corporation alone.’” (Turman v. Superior Court of Orange County (2017) 17 Cal.App.5th 969, 980-981, quoting Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) When making alter ego allegations, pleading with particularity is not required as a Plaintiff need only allege “ultimate rather than evidentiary facts.” (Rutherford Holdings, LLC v. Plaza del Rey (2014) 223 Cal.App.4th 221, 236, quoting Burks v. Poppy Construction Co. (1962) 57 Cal.2d 463, 474.)

Here, Plaintiffs fail to meet these requires. Accordingly, because Plaintiffs failed to adequately allege the existence of a contract, Chiang and Wu’s demurrer to Plaintiffs’ first cause of action is SUSTAINED with leave to amend.

Fraud and Intentional Misrepresentation (Second Cause of Action)

Chiang and Wu contend Plaintiffs’ second cause of action for fraud and intentional misrepresentation is barred by the applicable statute of limitations, fails to plead sufficient facts to state a claim, and is uncertain. The court agrees.

Legal Standard

Discussion

In this case, Chiang and Wu contend Plaintiffs’ cause of action accrued in August 2019 which is more than three years before this action was filed on May 1, 2023. In June 2019, Plaintiffs allege Chen promised the remaining balance “in a couple of months.” (Complaint, ¶ 33.) After the two months, Plaintiffs allege they “knew that [Defendants’] promises were false because they failed to pay the remaining balance of money owed.” (Complaint, ¶ 34, 50.) Thus, based on these allegations, Plaintiffs’ cause of action for fraud and misrepresentation accrued in August 2019, which is more than three years and eight months before Plaintiffs filed the present action.

Accordingly, Chiang and Wu’s demurrer to Plaintiffs’ second cause of action is SUSTAINED with leave to amend.

Breach of Fiduciary Duties (Third Cause of Action)

Chiang and Wu maintain Plaintiffs’ third cause of action for breach of fiduciary duties fails to plead sufficient facts to state a claim and is uncertain. The court agrees.

Legal Standard

Discussion

In this case, Chiang and Wu maintain there can be no breach of fiduciary duty because Plaintiffs have failed to establish the existence of a fiduciary relationship. In Plaintiffs’ Complaint, it appears they allege a fiduciary relationship arising out of their renovation contract. (Complaint, ¶ 58-59.) Because Plaintiffs have failed to adequately allege the existence of a written agreement in the first place, this cause of action necessarily fails as well.

Accordingly, Chiang and Wu’s demurrer to Plaintiffs’ third cause of action is SUSTAINED with leave to amend.

Unjust Enrichment (Fourth Cause of Action)

Chiang and Wu argue Plaintiffs’ fourth cause of action for unjust enrichment fails to plead sufficient facts to state a claim and is uncertain. The court agrees.

Legal Standard

Discussion

In this case, Chiang and Wu argue Plaintiffs failed to allege Chiang and Wu personally benefited from Plaintiffs’ services. While Plaintiffs allege “Defendants were enriched at the expense of Plaintiffs,” Plaintiffs failed to demonstrate how Chiang and Wu were enriched. (Complaint, ¶ 66.) It is also unclear whether Plaintiffs’ work was done for Suncity or for all defendants. (Complaint, ¶ 24.) And as noted above with regards to the first cause of action, Plaintiffs have failed to allege Suncity is Wu’s alter ego.

Accordingly, because Plaintiffs have failed to allege how Chiang and Wu benefited from Plaintiffs’ work, their demurrer to Plaintiffs’ fourth cause of action is SUSTAINED with leave to amend.

Fifth, Sixth, Seventh, and Eighth Causes of Action

Chiang and Wu contend Plaintiffs’ fifth cause of action for promissory estoppel, sixth cause of action for breach of the implied covenant of good faith and fair dealing, seventh cause of action for IIED, and eighth cause of action for breach of implied contract are barred by the applicable statute of limitations, fail to plead sufficient facts to state a claim, and are uncertain. The court agrees.

Legal Standard

“A demurrer based on a statute of limitations will not lie where the action may be, but is not necessarily, barred. [Citation.] In order for the bar of the statute of limitations to be raised by demurrer, the defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows that the action may be barred.” (Marshall, supra, 37 Cal.App.4th at p. 1403.) The statute of limitations for “[a]n action upon a contract, obligation or liability not founded upon an instrument of writing” is two years. (Code Civ. Proc., § 339, subd. (1).) The same term also applies to personal injury actions. (Code Civ. Proc., § 335.1.)

Discussion

In this case, Chiang and Wu contend the statute of limitations began to run in August 2019 when Defendants allegedly failed to make promised payments. (Complaint, ¶ 33, 34, 50.) This failure serves as the basis for Plaintiffs’ promissory estoppel, breached of implied covenants, IIED, and breached of implied contract causes of action. Because Plaintiffs did not file the present action until more than three years and eight months later, these causes of action are untimely brought.

Accordingly, Chiang and Wu’s demurrer to Plaintiffs’ fifth, sixth, seventh, and eighth causes of action is SUSTAINED with leave to amend.

CONCLUSION

Based on the foregoing, Chiang and Wu’s demurrer to Plaintiffs’ Complaint is SUSTAINED in its entirety with ten (10) days leave to amend as to all causes of action.