Judge: Stephen P. Pfahler, Case: 24STCV13927, Date: 2025-04-01 Tentative Ruling


Case Number: 24STCV13927    Hearing Date: April 1, 2025    Dept: 68

Dept. 68

Date: 4-1-25

Case: 24STCV13927

Trial Date: Not Set/Not At Issue

 

DEMURRER

 

MOVING PARTY: Defendants, Brian’s Shave Ice Three, Inc., et al.

RESPONDING PARTY: Plaintiff, Lee Family Group, LLC

 

RELIEF REQUESTED

Demurrer to the Complaint

·         1st Cause of Action: Breach of Contract

·         2nd Cause of Action: Contractual Indemnity

·         3rd Cause of Action: Equitable Indemnity

·         4th Cause of Action: Declaratory Relief

 

SUMMARY OF ACTION

On August 23, 2017, third party Choong Ja Lee entered into an agreement with Defendant Brian Shave Ice Three, Inc. (BSI 3) for the purchase of all furniture, fixtures, equipment, goodwill, tradename, leasehold, and improvements and interest in a business entity located at 14425½ Ventura Blvd., Sherman Oaks. The total contract price was $95,000. Plaintiff maintains BSI 3 was controlled entirely by Defendant Brian Kim.

 

According to Plaintiff, the agreement includes use of the “tradename” “Brian’s Shave Ice,” and no competing business within a five mile radius of the identified location within for the first five years of the agreement. Lee subsequently assigned the agreement to Plaintiff Lee Family Group, LLC. Plaintiff subsequently also subsequently obtained a trademark registration on the name “Brian’s Shave Ice & Boba” from the United States Patent and Trademark Office dated February 11, 2020.

 

On February 10, 2024, third party entity ColeNaBoy, Inc. filed a Petition for Cancellation of the Brian’s Shave Ice & Boba trademark. The petition alleges that in December 2016, it bought an entity from Defendant Kim identified as Brian’s Shave Ice Two, Inc. (BSI 2), which included the “tradename” and other terms as the BSI 3 agreement.

 

On August 20, 2024, Plaintiff filed a complaint Breach of Contract, Contractual Indemnity, Equitable Indemnity, and Declaratory Relief. Plaintiff both contends a breach of the contract regarding the “tradename,” and seeks indemnity from costs in responding to the petition of ColeNaBoy. Plaintiff also seeks a declaration of rights regarding the tradename itself.

 

RULING: Sustained with Leave to Amend in Part/Overruled in Part.

Request for Judicial Notice: Granted in Part/ Denied in Part.

·         The court takes judicial notice of the certificate issued by the Director the United Patent and Trademark Office. (Evid. Code, 452, subd. (c), (d); Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1484; Elmore v. Oak Valley Hospital Dist. (1988) 204 Cal.App.3d 716, 721.)

·         The court denies the request as to the picture and the applications.

 

Defendants Brian Kim and Brian’s Shave Ice Three, Inc. (BSI 3), submit a demurrer to the complaint for breach of contract and common counts. Defendants contend the breach of contract cause of action is barred by the statute of limitations, and lacks sufficient facts, while the second, third and fourth causes of action fail as a matter of law. Plaintiff Lee Family Group, LLC, in opposition first characterizes the demurrer as demonstrating a “complete lack of understanding” on trade name and good will business sales, as well as a “misunderstanding” on the trademark process. Plaintiff additionally denies any statute of limitations bar, and all causes of action are properly pled. The court electronic filing system shows no reply on file at the time of the tentative ruling publication cutoff.

 

The court notes that the business appears in the Van Nuys Superior Court district. Nevertheless, given the contractual basis of the claim, Plaintiff may file in Central District. (See Code Civ. Proc., § 395, subd. (b); Los Angeles Superior Court Local Rule 2.3, subd. (a)(1)(B).)

 

The court also notes that the complaint specifically alleges the execution of the agreement by Lee, and all purchased assets and rights to the BSI 3, including the “tradename” of said entity were subsequently transferred by Lee to Plaintiff. [Comp., ¶ 16.] Notwithstanding, in a preceding paragraph Plaintiff also alleges alter ego liability allegations between BSI 3 and Defendant Kim. [Comp., ¶ 6.] The court assumes that while Lee purchased all “assets,” including the “tradename,” the BSI 3 name and/or perhaps some form of existing entity possibly remains unsold and therefore exists as a separate defendant under control of Kim and represented by Defense counsel.

 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

 

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

 

1st Cause of Action: Breach of Contract

“To state a cause of action for breach of contract, [a plaintiff] must plead the contract, his performance of the contract or excuse for nonperformance, [defendant’s] breach and the resulting damage. (Citation.) Further, the complaint must indicate on its face whether the contract is written, oral, or implied by conduct. (Citation.)” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458–59.) In examining a breach of contract claim, the court is required to examine the terms, or at least the legal effect of the contract. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318 [“we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context”].)

 

The complaint alleges the existence of the “Business Sale Agreement” with BSI 3. [Comp., ¶10.] While the complaint lacks specific indication as to the basis—written or oral or implied—Plaintiff alleges Kim “signed” documents, which indicates the existence of a written agreement. [Comp., ¶11.]. The material terms are sufficiently pled as well, including additional escrow instructions and a bill of sale. [Comp., ¶¶ 10, 12-15.] The court finds the breach of contract claim sufficiently pled.

 

Nevertheless, Kim challenges the existence of any contract in that Kim is not an identified party to the agreement. Plaintiff offers extensive authority on the propriety of pleading breach of contract, without any apparent address of the position regarding Kim as an unidentified party to said agreement. While the court finds the complaint sufficiently pleads breach of contract against BSI 3 (notwithstanding the allegation of Lee’s transfer of ownership to Plaintiff contrasted with the alter ego allegation regarding Kim as to BSI 3, thereby perhaps rendering the entity a nominal defendant), the absence of any address as to Kim and the court’s own review renders the demurrer sustained with leave to amend as to Kim. The court will grant leave for Plaintiff to either address or omit Kim as a party to the contract but will not consider the position further based on extrinsic inference not presented in the operative pleading. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784–785 [“When [a party] fails to raise a point or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived”].)

 

On the statute of limitations, Defendants allege the complaint was untimely filed more than four years after the purported 2017 entry into the agreement. Plaintiff counters that the delayed discovery rule in the alleged wrongful conduct, which Plaintiff only discovered upon the petition for cancellation of the trademark rendered the contract claim accrued.

 

For purposes of the demurrer, the court finds no damages from the alleged breach manifested until third party ColeNaBoy, Inc. filed a Petition for Cancellation on August 20, 2024, thereby requiring Plaintiff to protect its property rights. (April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 832-833.) The court declines to make any legal conclusions based on extrinsic inference or fact. (See Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.) The demurrer is overruled on this basis.

 

2nd Cause of Action: Contractual Indemnity

Defendants challenges the contractual indemnity on two grounds: Kim is not an identified party to any contract, and denial of any responsibility for the trademark dispute brought by ColeNaBoy, Inc. Plaintiff in opposition maintains the complaint clearly and unequivocally alleges liability on the basis of the trademark challenge.

 

The complaint alleges the existence of an “attorneys’ fees provision and indemnity provision.” [Comp., ¶ 14.] “A clause which contains the words ‘indemnify’ and ‘hold harmless’ is an indemnity clause which generally obligates the indemnitor to reimburse the indemnitee for any damages the indemnitee becomes obligated to pay third persons. (Citation].) Indemnification agreements ordinarily relate to third party claims.” (Myers Building Industries, Ltd. v. Interface Technology, Inc. (1993) 13 Cal.App.4th 949, 969.) The mere existence of the phrase “indemnity provision” insufficiently articulates the actual factual basis for said indemnity clause. While Plaintiff may allege damages as a result of the breach of the contract, including expended attorney fees and costs in defending the action, the court still requires a pled basis for the separate requirements of indemnity. Plaintiff otherwise offers no address of Kim as a party to the agreement, thereby somehow alleging a claim against Kim. The demurrer is sustained, with leave to amend.

 

3rd Cause of Action: Equitable Indemnity

Defendants challenge the subject cause of action on grounds of no underlying basis of tort liability. Plaintiff counters that the subject claim is pled as an alternative to express contractual indemnity in the form of implied contractual indemnity. No basis of tort liability is required under this basis.

 

“It is well-settled in California that equitable indemnity is only available among tortfeasors who are jointly and severally liable for the plaintiff's injury.” (Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1040.) The court appreciates Plaintiff’s proposed alternative basis but can only go by the title of the cause of action rather than the later described foundation. Given the lack of sufficient facts regarding the express contractual basis, the court also finds a lack of any implied basis. (Garlock Sealing Techs., LLC v. NAK Sealing Techs. Corp. (2007) 148 Cal.App.4th 937, 973.) The demurrer is sustained. Plaintiff will be granted leave to amend the title of the cause of action, if preferred.

 

4th Cause of Action: Declaratory Relief

Defendants challenge the subject cause of action on grounds of failure to state a claim to the extent Plaintiff relies on an indemnity basis. Plaintiff in opposition counters that the complaint both alleges declaratory relief, and Kim remains liable under alter ego doctrine.

 

Declaratory relief under Code of Civil Procedure section 1060 requires “two essential elements: “‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.’” (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.) The complaint sufficiently articulates a basis of declaratory relief based on the relied upon contact claim as to BSI 3. [Comp., ¶¶ 38-40.] The court also agrees that alter ego liability may render Kim liable for damages, but as addressed above, it remains unclear how alter ego doctrine renders Kim an effective party to the contract for purposes of pleading breach of contract. (First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915-916.) The demurrer is overruled as to BSI 3, and sustained as to Kim.

 

In summary, the demurrer is OVERRULED as to the breach of contract and Declaratory Relief causes of action as to BSI 3 only. The demurrer is sustained with leave to amend as to Kim on all causes of action, and on both indemnity causes of action pled against BSI 3. The court grants Plaintiff 30 days leave to amend.

 

Plaintiff may NOT add any new causes of action but may substitute the title of the “equitable indemnity” cause of action for “implied contractual indemnity.” Plaintiff may also address the status of BSI 3 as an entity allegedly owned and controlled by Kim notwithstanding the purchase of all assets and “tradename,” if deemed appropriate. Plaintiff may otherwise ONLY add facts in support of successfully challenged causes of action. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) Any other new causes of action added without leave of court may be subject to a motion to strike. Material changes to the operative complaint seeking to alter the material terms of any purported agreements or representation may also be subject to a demurrer under the sham pleading standard. Any potential demurrer by BSI 3 to the overruled causes of action in the first amended complaint will only be allowed if Plaintiff in any way substantively alters the two overruled causes of action as to render the character of the claim vulnerable to change, and the alterations are not under the sham pleading standard.

 

The court will concurrently conduct a Case Management Conference and OSC re: Proof of Service.

 

Defendants to give notice.