The Court's tentative ruling is to sustain the Defendants' demurrer to Plaintiff's second amended complaint with leave to amend as to Plaintiff's fraud claim and to overrule the demurrer in all other respects.

Defendants' primary argument is that Plaintiff's exercise of the option in the Operating Agreement governing the parties' real estate venture to sell its share of Defendant Dorchester Properties, LLC for fair market value extinguished Plaintiff's membership in Dorchester.  As a result, Defendants say, Plaintiff was from that date forward no longer entitled to its share of LLC  profits or to an accounting of the LLC's finances, even though  Defendants never have consummated the buy out due to a dispute over the fair market value of Plaintiff's share in Dorchester.   According to Defendant, the elimination of Plaintiff's membership in Dorchester due to the exercise of the option vitiates Plaintiff's claims, all of which are premised on Plaintiff's continued membership in Dorchester.   To support this argument, Defendants rely on Petrolink, Inc. v. Lantel Enterprises (2018) 21 Cal.App.5^th 375.  Petrolink involved an option contract that granted a lessee the right to purchase the property it was leasing from the property owner at fair market value.  The Court held that the lessee's exercise of the option extinguishes the lease.  

In the Court's view, Petrolink does not govern here.  The Court is unaware of precedent that would support the notion that LLC's members shares (or partners' shares in a partnership for that matter) automatically terminate upon the exercise of an option to buy or sell the shares thereby barring the member from receiving profits that otherwise would be due prior to the consummation of the buy out.  Thus, Defendants' demurrer is overruled to the extent that it rests on Petrolink.  

Defendants also argue that even if Plaintiff's membership in Dorchester was not extinguished by dint of the exercise of the option to sell its share of Dorchester, the Second Amended Complaint contains insufficient allegations to support a fraud claim.  The Court agrees.  For one, reliance on misrepresentations is an essential element of a fraud claim, but yet, Plaintiff concedes that it did not rely on Defendants' representations.  Additionally, the allegedly fraudulent conduct is said to have commenced in 2016.  The statute of limitations on fraud is three years.   Plaintiff filed suit in 2022.  Its fraud claim thus is time-barred.  For these reasons, the Court is sustaining Defendants' demurrer as to Plaintiff's fraud claim, albeit with leave to amend.  Plaintiff will be given 21 days to file a Third Amended Complaint.