Judge: Stephen I. Goorvitch, Case: 22STCV32094, Date: 2023-05-03 Tentative Ruling

Case Number: 22STCV32094    Hearing Date: May 3, 2023    Dept: 39

Yuehua Guo v. AWA Forged Composites, LLC, et al.

Case No. 22STCV32094

Demurrer to Cross-Complaint

BACKGROUND

            Plaintiff Yuehua Guo (“Plaintiff”) filed this action against several defendants, including AWA Forged Composites, LLC (“AWA”).  AWA filed a cross-complaint against Yuehua “Allen” Guo, Aaron Tin Guo, and Brennan Lieu (collectively, the “cross-defendants”) asserting causes of action for fraud, breach of oral contract, breach of contract, intentional interference with contractual relations, and tortious interference with contractual relations.  The cross-defendants demur to every cause of action.  The Court sustains the demurrer to the fifth cause of action without leave to amend and overrules the demurrer to the remaining causes of action.

LEGAL STANDARD

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.”  (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  In ruling on a demurrer, the court must “liberally construe[]” the allegations of the complaint.  (Code Civ. Proc., § 452.)  “This rule of liberal construction means that the reviewing court draws inferences favorable to the Cross-Complainant, not the defendant.”  (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

DISCUSSION

            A.        First Cause of Action

            AWA’s first cause of action is for fraud against Allen Guo.  Fraud must be alleged with particularity.  “This means: (1) general pleading of the legal conclusion of fraud is insufficient; and (2) every element of the cause of action for fraud must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect.”  (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1331.)  To state a claim for promissory fraud, Plaintiff must allege specific factual circumstances beyond contract breach, which reflect Defendant’s contemporaneous intent not to perform.  (Hills Transportation Co. v. Southwest Forest Ind., Inc. (1968) 266 Cal.App.2d 702, 707.)  AWA alleges that Allen Guo “wanted to make an equity investment of $500,000 in AWA in order to allow AWA to grow and develop further patents.”  (Cross-Complaint, ¶ 57.)  AWA alleges that “Allen Guo represented that he could take the money out of Northwest—which is knew was on the verge of bankruptcy—to provide the equity investment as well as a possible line of credit.”  (Cross-Complaint, ¶ 58.)  AWA alleges that Allen Guo was in a position to know that he could not pay the money from Northwest because he was “the President and CFO of the Northwest Group, LLC . . . .”  (Cross-Complaint, ¶ 19.)  These allegations are sufficient to allege that Allen Guo did not intend to invest the promised $500,000 when he made the promise to do so.  Accordingly, the Court overrules the demurrer to the first cause of action.    

            B.        Second Cause of Action

AWA’s second cause of action is for breach of oral contract against Allen Guo.  The statute of frauds provides that a contract that falls under it is invalid unless memorialized in writing, and signed by the party against whom the contract is to be enforced.  (Civ. Code, § 1624.)  AWA alleges Allen Guo agreed to invest more than $500,000 in equity in AWA’s business.  Such an agreement is subject to the statute of frauds.  (See Kaneko v. Okuda (1961) 195 Cal.App.2d 217, 230.)  However, AWA alleges that Allen “followed up with an e-mail and spreadsheet confirming the terms of the oral contract within five business days of agreeing to the oral contract.”  (Cross-Complaint, ¶ 68.)  This is sufficient for pleading purposes, because informal writings may satisfy the statute of frauds.  (See Brewer v. Horst-Lachmund Co. (1900) 127 Cal. 643, 646.)  Accordingly, the Court overrules the demurrer to the second cause of action. 

            C.        Third Cause of Action

AWA’s third cause of action is for breach of contract against Aaron Guo and Brennan Lieu.  AWA alleges that these defendants breached certain non-disclosure and confidentiality agreements.  (See Cross-Complaint, ¶¶ 76-80.)  These allegations are sufficient for pleading purposes because claims for breach of contract may be pleaded in general terms.  (See Ochs v. PacifiCare of Cal. (2004) 115 Cal.App.4th 782, 795.)  The cross-defendants may obtain further information regarding Cross-Complainant’s claims in discovery.  (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.)  Accordingly, the Court overrules the demurrer to the third cause of action.

D.        Fourth and Fifth Causes of Action

AWA’s fourth cause of action is for “intentional interference with contractual relations”  against Allen Guo, and AWA’s fifth cause of action is for “tortious interference with contract” against Allen Guo.  Both claims are predicated upon allegations that Aaron Guo and Brennan Lieu breached the non-disclosure and confidentiality agreements at the behest of Allen Guo.  The Court finds that there are sufficient allegations of an underlying contract and overrules the demurrer on this basis.  However, the Court finds that these causes of action are duplicative.  AWA’s counsel opposes the demurer to the fourth cause of action but does not do so with respect to the fifth cause of action.  Therefore, the Court overrules the demurrer to the fourth cause of action and sustains the demurrer to the fifth cause of action.   

CONCLUSION AND ORDER

            Based upon the foregoing, the Court orders as follows:

            1.         The Court overrules the demurrer to the first, second, third, and fourth causes of action.

            2.         The Court sustains the demurrer to the fifth cause of action without leave to amend.

            3.         Counsel for the cross-defendants shall provide notice and file proof of such with the Court.