Judge: Stephen I. Goorvitch, Case: 19STCV43653, Date: 2022-10-03 Tentative Ruling

Case Number: 19STCV43653    Hearing Date: October 3, 2022    Dept: 39

JTX Group, Inc. v. Global Meat Federation, Inc.

Case No. 19STCV43653

Defendant United Properties’ Motion for Summary Judgment

            Plaintiff JTX Group, Inc. (“Plaintiff”) filed this action against Defendant United Properties (“Defendant”), among others, asserting the following causes of action:

            Eleventh Cause of Action – Unfair Competition (Bus. & Prof. Code, § 17200)

            Twelfth Cause of Action – Conversion

            Thirteenth Cause of Action – Violation of Penal Code section 496

Now, Defendant moves for summary judgment or, in the alternative, summary adjudication.  “[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law[.] There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850.)  “[T]he party moving for summary judgment bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact; if he carries his burden of production, he causes a shift, and the opposing party is then subjected to a burden of production of his own to make a prima facie showing of the existence of a triable issue of material fact.”  (Ibid.)  

            In the operative third amended complaint, Plaintiff alleges that Defendant “is liable for the acts of [Jamal] Dawood as one of the instrumentalities he used to commit the torts and acts alleged herein.”  (Third Amended Complaint, ¶ 15.)  California does not recognize “reverse piercing, [which] occurs when a third party outsider seeks to reach corporate assets to satisfy claims against an individual shareholder.”  (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1518.)  Accordingly, Plaintiff cannot seek to hold Defendant liable for claims against Dawood.  In opposition, Plaintiff concedes this point, but argues that Defendant is liable for its own actions.  However, Plaintiff does not allege what Defendant did, other than that Defendant “received a portion of” sums Plaintiff transferred.  (See, e.g., Third Amended Complaint, ¶ 81.)  The pleadings set the outer limits of materiality in a summary judgment proceeding.  (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 382.)  Plaintiff’s allegations that Defendant received funds cannot support Plaintiff’s claims under Business & Professions Code section 17200 or for conversion.

Plaintiff also asserts a claim under Penal Code section 496 against Defendant.  To state a claim under Penal Code section 496, Plaintiff must show that Defendant obtained funds that belonged to Plaintiff via theft.  “[N]ot all commercial or consumer disputes alleging that a defendant obtained money or property through fraud, misrepresentation, or breach of a contractual promise will amount to a theft.”  (Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 361.)  Defendant advances evidence that it drew down funds from its line of credit with TD Capital, Defendant’s lender’s loan servicer, for purposes of bidding on property at auction.  When Defendant did not succeed in obtaining the property at auction, Defendant returned the funds.  (Declaration of Christina Armani Dawood, ¶¶ 7-8.)  Defendant has thus advanced evidence that Defendant did not obtain funds via theft.  Defendant has shifted the burden to Plaintiff to raise triable issues of material fact as to whether Defendant obtained funds that belonged to Plaintiff via theft.  Plaintiff advances no evidence on this point.

Based upon the foregoing, the Court grants Defendant’s motion for summary judgment.  Defendant’s counsel shall provide notice and file proof of such with the Court.