Judge: Stephen P. Pfahler, Case: 23STCV10421, Date: 2025-02-26 Tentative Ruling

Case Number: 23STCV10421    Hearing Date: February 26, 2025    Dept: 68

Dept.
68

Date:
2-26-25

Case:
23STCV10421

Trial
Date: Trial Date: First Trial, 9-15-25 c/f 11-18-24 c/f 10-7-24 c/f 9-9-24 c/f
6-3-24; Second Trial, 11-10-25 c/f 1-6-25 c/f 12-2-24 c/f 9-23-24

STRIKE

MOVING
PARTY: Defendant/Cross-Complainant, Jason Lee

RESPONDING
PARTY: Cross-Defendant, B&K Enterprise, Inc.

RELIEF
REQUESTED

Motion
to Strike Second Amended Cross-Complaint

SUMMARY
OF ACTION

Plaintiff
Kelly Soojin Kim alleges Defendant Jason Lee approached her in “early 2021” to
establish a business relationship, whereby Lee would work with Kim at an
existing establishment owned and operated by Kim, and identified as Star Night.
Kim alleges Defendant proposed the joint venture in order to improve revenue at
Star Night given Lee’s prior operation of a similar restaurant business lost to
a fire. Lee purportedly represented to offer certain proprietary “secret”
recipes and “restaurant management know how” as part of said incentive.

In
March 2021, the parties entered into a shareholder agreement, identified as the
B&K Enterprise, Inc., Agreement between Shareholders. The agreement
provides Kim with a 51% ownership share of the of the B&K Enterprise, Inc.
business entity, and Lee with the remaining 49%. The agreement articulates
certain responsibilities between the owners based on either the first or second
floor location within the premises, and also provided Lee with the right to
open additional OB Bear Restaurant locations outside the state of California
without the consent of majority shareholder Kim.

The
parties’ working relationship was unsuccessful, with multiple accusations of
embezzlement and improper operational management practices. Lee subsequently
requested cessation from the partnership. Kim alleges Lee solicited the
purported business with the intention of either acquiring Star Night for
himself, or to destroy the business and open a new competing business upon
payment on the insurance casualty claim following the business premises fire.
Kim also contends that the failure to ever turn over the alleged secret recipes
constituted a violation of the partnership agreement, and therefore a lack of
consideration. Kim therefore denies any enforceable shareholder agreement,
thereby entitling Lee to any rights as a shareholder.

On
May 9, 2023, Kim filed a verified complaint for Breach of Contract; Breach of
Fiduciary Duty; Fraud [Cal. Civ. Code § 1710(1)]; Unfair Competition [Cal.
B&P Code §§ 17200 Et Seq.]; Rescission of Written Instrument Based Upon
Fraud [Cal. Civ. Code §§ 3399, 1571.73 and 1689(1)]; Declaratory Relief [C.C.P.
§ 1060]; and, Injunctive Relief. On June 26, 2023, Lee answered the complaint
and filed a cross-complaint for Involuntary dissolution of Corporation;
Accounting; Breach of Fiduciary Duty; Breach of Contract; Breach of Implied Covenant
of Good Faith and Fair Dealing; and Constructive Wrongful Discharge. On October
13, 2023, Lee filed a first amended cross-complaint for Involuntary dissolution
of Corporation; Accounting; Breach of Fiduciary Duty; Breach of Contract;
Breach of Implied Covenant of Good Faith and Fair Dealing; Constructive Wrongful
Discharge; Unjust Enrichment; and Theft by False Pretense.

Lee
confirms the represented terms of the deal, but also adds in an agreement for a
50-50 split of profits, with Lee receiving a $4,000/month salary as well. If
operations were successful, Lee would be entitled to a 1% share, thereby
rendering the parties equal shareholders. Lee also concedes to the agreement to
provide certain recipes, which apparently included a popular Korean fried
chicken recipe popular with customers. Lee also maintains tendering a $150,000
check to Kim towards the agreement.

Contrary
to Kim, Lee maintains the recipes were provided. Kim, however, began
interfering with operations. After “two or three months,” Lee sought to
negotiate the termination of the business relationship.

On
October 23, 2023, the court granted Plaintiff’s motion to bifurcate the trial
on the issue of shareholder status of defendant Lee.

On
April 17, 2024, the court sustained the demurrer in part and overruled the
demurrer in part to the first amended cross-complaint. On May 21, 2024, the
court granted leave to file an amended cross-complaint. On May 28, 2024, Lee
filed an 18 cause of action second amended verified cross-complaint Involuntary
dissolution of Corporation; Accounting; Breach of Fiduciary Duty; Breach of Contract;
Breach of Implied Covenant of Good Faith and Fair Dealing; Constructive Wrongful
Discharge;  Restitution; Theft By False
Pretense; Breach Of Implied-In-Fact Contract (Joint Venture/ Partnership);
Breach Of Implied Covenant Of Good Faith And Fair Dealing (Joint Venture/
Partnership); Breach Of Implied-In-Fact Contract (Loan); Breach Of Implied
Covenant Of Good Faith And Fair Dealing (Loan);
Quantum
Meruit/Quantum Valebant/Quasi-Contract; Promissory Estoppel; Promissory Fraud;
Fraud – Intentional Misrepresentation; Fraudulent Transfer; and Common Law
Fraudulent Transfer.

On
July 24, 2024, the court granted cross-complainants ex parte application for
temporary restraining order enjoining any transfer of, sale, liquidation, or
other disposition of property pending the hearing on the motion for preliminary
injunction.

On
July 25, 2024, the court (Department 85) granted the writ of attachment for
$150,000 in favor of Lee and against B&K Enterprises only.

On
October 7, 2024, the court entered the parties stipulation enjoining the
transfer of, sale, liquidation, or other disposition of B&K Enterprise
property. On November 6, 2024, the court reconsidered the October 26, 2023,
order and consolidated the two trial dates.

RULING: Denied.

Plaintiff
Kelly Kim and Cross-Defendants Kim and B & K Enterprise, submit a motion to
strike the second amended cross-complaint, paragraph 27, beginning at page 8,
line 15 to paragraph 33, page 10, line 19. The subject section contains the
alter ego allegations. Cross-Defendant Brandon Kim filed a notice of joinder to
the motion. Cross-Complainant in opposition, Jason Lee, challenges the motion
on grounds of a failure to meet and confer, an untimely motion without
agreement for extension, and sufficiently pled alter ego claims with improper
extrinsic inference relied upon in support of the motion. Moving parties in
reply reiterates the challenge to the “putative” allegations.

The
motion was filed on July 31, 2024—74 days from the May 28, 2204, filing date of
the second amended cross-complaint. The second amended cross-complaint was
electronically served on the same date. Moving parties offer no representation
or proof of any agreement for an extension of time to respond. Cross-Defendants
also deny any such agreement. The motion is therefore untimely. (Code Civ.
Proc., §§ 432.10, 435, subd. (b)(1).) The motion is DENIED on this basis.

On other positions, the lack of any meet and confer
effort will not impact the outcome of the motion. (Code Civ. Proc., § 435.5,
subd. (a)(4) [“A determination by the court that the meet and confer process
was insufficient shall not be grounds to grant or deny the motion to strike”].)

Even considering the merits, the court also denies the
motion. Alter ego liability requires two elements: “‘(1) that there be such
unity of interest and ownership that the separate personalities of the
corporation and the individual no longer exist and (2) that, if the acts are
treated as those of the corporation alone, an inequitable result will follow.’”
(Mesler v. Bragg Management Co.
(1985) 39 Cal.3d 290, 300; Leek v. Cooper
(2011) 194 Cal.App.4th 399, 411.) To allege alter ego, plaintiffs must plead a unity
of interest and ownership such that the separate personalities of the
corporation and individuals do not exist, and that an inequity will result if
the corporate entity is treated as the sole actor. (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269,
1285.) The challenged paragraphs sufficiently articulate the elements for
pleading alter ego liability. The court declines to consider the factual
challenges beyond the properly pled elements. The substantive challenge on the
motion to strike the alter ego allegations is DENIED.

The
motion is therefore DENIED in its entirety.

The
demurrer to the second amended cross-complaint brought by Brandon Kim and
B&K Enterprise, Inc., and joined by Kelly Kim set, for March 10, 2025, was
filed on August 26, 2024—100 days from the from the May 28, 2204, filing date
of the second amended cross-complaint. The second amended cross-complaint was
electronically served on same date. The demurrer is therefore untimely and
taken off-calendar on this basis. In addition to being untimely, a demurrer and
motion to strike must be concurrently filed. (CCP., §
435 subd. (b)(3).) The demurer to the second amended cross-complaint on
March 10, 2025, is therefore also taken off-calendar on this basis. In summary
the demurrer on March 10, 2025, is taken off-calendar due to untimeliness and
improper disjointed filing of the demurrer and motion to strike.

Cross-Defendants
to ANSWER the second amended cross-complaint within 10 days of this order.

Phase one of the bifurcated trial on shareholder
status remains set for September 15, 2025. Moving Defendants to p