Judge Teresa A. Beaudet, Case 22STCV15366 2023-03-08 Tentative Ruling

Plaintiffs Brent Evans (“Evans”) and Style Squared, LLC (“Style Squared”) (jointly, “Plaintiffs”) filed this action on May 9, 2022 against Defendants Sophia Jin (“Jin”) and Colorish, LLC dba Indigo Rose. The Complaint asserts causes of action for (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) breach of contract, and (4) breach of implied covenant of good faith and fair dealing.[1]

Jin and Colorish, LLC (“Colorish”) (jointly, “Defendants”) now demur to each of the causes of action of the Complaint. Defendants also move to strike portions of the Complaint. Plaintiffs oppose the demurrer. No opposition to the motion to strike was filed.

The Court grants Defendants’ request for judicial notice solely as to Exhibit 1 attached to the request.

In the Complaint, Plaintiffs allege that on or about February 19, 2016, Evans and Colorish entered into an employment contract, together with Fashion Life, Inc. (“Fashion Life”) (the “Employment Agreement”). (Compl., ¶ 10.) In addition, on or about February 23, 2016, Style Squared and Colorish entered into a consulting contract, together with Fashion Life (the “Consulting Agreement”). (Compl., ¶ 11.) Plaintiff alleges that Jin is a principal owner of Colorish. (Compl., ¶ 22.)

On or about November 13, 2017, Plaintiffs notified Defendants of several defaults in the Employment Agreement and the Consulting Agreement. (Compl., ¶ 12.) More specifically, Plaintiffs notified Defendants that Colorish was short in payments to Style Squared in excess of $69,000 for the year 2017 in violation of the Consulting Agreement. (Compl., ¶ 13.) Plaintiffs also notified Defendants that Colorish was short paying reimbursement for medical expenses to Evans in excess of $4,000 for 2017 as required by the Employment Agreement. (Compl., ¶ 14.) In addition, Plaintiffs notified Defendants that Colorish had not provided Evans with stock and LLC membership shares certificates as agreed; that Colorish had not provided Evans continuously with a company credit card for business purposes as agreed; and that Colorish had not reimbursed Evans for any approved business expenses Evans had incurred as agreed while performing his duties for the company. (Compl., ¶¶ 15-17.) Plaintiffs notified Defendants that Colorish had not sent Evans trend shopping in Europe three times a year annually at Colorish’s expense as agreed. (Compl., ¶ 20.) Instead, Colorish had instructed Evans to pay out of pocket for one shopping trip to Europe and buy samples for Colorish at his own expense. (Compl., ¶ 20.)

Plaintiffs also notified Defendants that Colorish was believed to have hired additional sales persons for Colorish that did not report to Evans, in violation of the parties’ agreement. (Compl., ¶ 18.) In addition, Plaintiffs notified Defendants that Colorish had not maintained a company office in New York City as contemplated by the Employment Agreement with Evans. (Compl., ¶ 19.)

On November 13, Evans left Colorish and now seeks to recover monies owed under the Employment Agreement. (Compl., ¶ 21.) Style Squared also terminated its contract with Colorish on the same date and seeks to recover monies owed under the Consulting Agreement, as well as damages for Plaintiffs’ alleged breaches. (Compl., ¶ 21.)

First, Defendants assert that the statute of limitations has run on all of Plaintiffs’ causes of action. “Under California law, a four-year statute of limitations applies to actions for breach of contract, account stated, and open book account. (Code Civ. Proc., § 337.) Ordinarily, a cause of action for breach of contract accrues on the failure of the promisor to do the thing contracted for at the time and in the manner contracted.” (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 966 [internal quotations omitted].) Defendants note that pursuant to Cal. Rules of Court, Emergency rule 9, “the statutes of limitations and repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.”

Defendants note that this action was filed on May 9, 2022. Defendants state that four years and 178 days prior to May 9, 2022 is November 12, 2017. Defendants assert that the four-year (and 178 day) statute of limitations period would allow for claims arising on or after November 12, 2017, but that Plaintiffs knew long before such date of the alleged contract breaches.

The Complaint alleges that “[o]n or about November 13, 2017, Plaintiffs notified Defendants of several defaults in the Employment Agreement and the Consulting Agreements.” (Compl., ¶ 12.) The Complaint attaches the November 13, 2017 correspondence (herein, the “November 13, 2017 Letter”). (Compl., ¶ 12, Ex. C.) As set forth in further detail below, the November 13, 2017 Letter was sent by Plaintiffs’ counsel and asserts, inter alia, that Colorish “failed to fulfill its contractual duties and its duties as an employer in numerous respects,” including but not limited to the ways specified in the November 13, 2017 Letter. (Compl., ¶ 12, Ex. C.) Defendants assert that the Complaint does not allege the dates of the various purported breaches of contract, but that they must have arisen and accrued prior to the November 13, 2017 Letter for Plaintiffs’ counsel to have discussed such breaches in the letter. Defendants contend that “[t]he Complaint’s recitation of the contractual terms and times of performance indicate that Plaintiffs knew, or should have known, that the acts complained of occurred more than four years ago and well before they engaged counsel to prepare and send the November 13, 2017 Bowen Letter to Defendants.” (Demurrer at p. 7:12-16.)

The November 13, 2017 Letter asserts, inter alia, that Colorish (defined as the “Company” in the letter) “has failed to fulfill its contractual duties and its duties as an employer in numerous respects, including but not limited to the following:

1. The Company is short in payments to Style Squared in excess of $69,000 for year 2017.

2. The Company is short paying reimbursement for medical expenses to Mr. Evans in excess of $4000 for 2017.

3. The Company has not provided Mr. Evans with stock and LLC membership shares certificates equivalent to 2.5% of the company ownership as required by the employment contract with him.

4. The Company has not provided Mr. Evans continuously with a company credit card for business purposes as agreed.

5. The Company has not reimbursed Mr. Evans for any approved business expenses Mr. Evans has incurred while performing his duties for the Company.

6. The Company is believed to have hired additional sales persons for the company that do not report to Mr. Evans, in violation of the express language of the contract with him. 7. The Company has not maintained a company office in New York City as contemplated by the contract with Mr. Evans, which specifies it is to be Mr. Evans’s principal place of employment.

8. The Company has not sent Mr. Evans trend shopping in Europe three times a year annually, specifically in time each in the spring, fall and holiday seasons at the company expense as specified in the contract with him. Instead, the Company instructed Mr. Evans to pay out of pocket for one shopping trip to Europe and buy samples for the company at his own expense.” (Compl., ¶ 12, Ex. C.)

In support of the the first cause of action for breach of contract, Plaintiffs allege that “Colorish failed to comply with the Employment Agreement in numerous respects, including but not limited to failing to reimburse him for his medical expenses, failing to provide him with an office in New York, and forcing him to incur out of pocket expenses he was not reimbursed for rather than providing a company credit card to Mr. Evans.” (Compl., ¶ 37.) In support of the second cause of action for breach of the implied covenant of good faith and fair dealing, Plaintiffs allege that “Defendant Colorish unfairly interfered with Plaintiff Brent Evans’s rights to receive the benefits of the contract by, inter alia, refusing to give him a company credit card but instead requiring him to incur personal expenses for which he was never reimbursed.” (Compl., ¶ 44.) The foregoing alleged wrongdoings are referenced in the subject November 13, 2017 Letter. (Compl., ¶ 12, Ex. C.)

In support of the third cause of action for breach of contract, Plaintiffs allege that “Colorish failed to comply with the Employment Agreement in numerous respects, including but not limited to failing to pay all consulting fees due under the contract.” (Compl., ¶ 4, p. 7.) More specifically, Plaintiff alleges that “Colorish was short in payments to Style Squared in excess of $69,000 for the year 2017 in violation of the Consulting Agreement.” (Compl., ¶ 13.) In support of the fourth cause of action for breach of implied covenant of good faith and fair dealing, Plaintiffs allege that “Colorish unfairly interfered with Plaintiff Style Squared, LLC’s rights to receive the benefits of the contract by, inter alia, intentionally interfering with its principal, Mr. Evans’s ability to work effectively, by, inter alia, hiring people that interfered with Mr. Evans’s consulting work, in express violation of both Agreements which specified employees were to report to him.” (Compl., ¶ 11, p. 8.) These alleged wrongdoings are also referenced in the November 13, 2017 Letter. (Compl., ¶ 12, Ex. C.)

In the opposition, Plaintiffs do not appear to dispute Defendants’ assertion that the subject November 13, 2017 Letter discusses prior breaches which occurred before November 12, 2017. Rather, Plaintiffs argue that “Plaintiff’s claims are not time-barred as they did not accrue until employment was terminated under controlling case law.” (Opp’n at p. 5:19-20.) The subject November 13, 2017 Letter also states, inter alia, that “[t]his office represents Brent Evans (‘Mr. Evans’) with respect to his employment at Colorish, LLC (the ‘Company’) and Style Squared, LLC (‘Style Squared’) with respect to its contracts with the Company. I write to advise you that as you have breached your contracts with both Mr. Evans and Style Squared, LLC (collectively, the ‘Damaged Parties’), the Damages [sic] Parties consider those contracts breached and terminated…Furthermore, your failure to reimburse Mr. Evans for expenses or pay him as agreed constitutes constructive termination under California and/or New York law. As of today’s date, Mr. Evans will not be returning to the Company to provide services in an employment or consulting capacity or in any other capacity.” (Compl., ¶ 12, Ex. C.)

Plaintiffs argue that “the statute did not begin to run until Mr. Evans elected to declare the contract breached and elect to declare termination.” (Opp’n at p. 7:6-8.) In support of this assertion, Plaintiffs cite to Mullins v. Rockwell Internat. Corp. (1997) 15 Cal.4th 731, 733, where the Court of Appeal “consider[ed] whether the statute of limitations in a breach of contract action based upon an alleged constructive termination of employment begins to run when the alleged intolerable working conditions occur, or instead when employment actually is terminated.” The Mullins Court “conclude[d] that the statute of limitations runs from the date of actual termination of employment in any contract action for wrongful termination, whether or not constructive discharge is alleged.” (Id. at p. 734.)

The Court agrees with Defendants that Plaintiffs’ reliance on Mullins is misplaced. The Complaint in the instant action does not allege any cause of action for wrongful termination of employment. None of the four causes of action reference constructive discharge or any alleged wrongful termination.

In Mullins, the plaintiff’s complaint “alleged (1) wrongful termination, (2) wrongful termination based upon a breach of the covenant of good faith and fair dealing, and (3) breach of an oral employment contract. Mullins alleged he was forced to resign because Rockwell was going to demote him and reduce his pay and benefit level when he returned from sick leave…In addition, he alleged the existence of an oral contract of employment arising from his long service, his promotions, his bonuses, his stock rights, the praise given him, and Rockwell’s practices and policies, which impliedly prohibited termination of employment except for good cause.” (Mullins v. Rockwell Internat. Corp., supra, 15 Cal.4th at p. 735.) The Mullins Court “determine[d] only the issue of when the statute of limitations begins to run in a contract action based upon constructive discharge from employment.” (Id. at p. 737.) The Mullins Court found that “[b]ecause (1) constructive discharge is an employer-directed termination of employment, (2) termination normally is the breach alleged, and (3) the employee may elect to overlook earlier adverse actions of the employer in the hope of conciliation, we conclude that the statute of limitations does not begin to run until actual termination. An employee is not barred from bringing his or her claim on the basis of the statute of limitations as long as the claim is brought in a timely manner after the actual termination of employment.” (Id. at p. 743.) As Defendants note, the Complaint here does not allege that Defendants breached the Employment Agreement (or the Consulting Agreement) by constructively terminating Plaintiff.

Plaintiffs appear to assert that each of the causes of action of the Complaint are not time-barred under Mullins. (See Opp’n at p. 5:19-20). As discussed above, the Court is not convinced by such argument. Based on the foregoing, the Court sustains Plaintiffs’ demurrer to the first, second, third, and fourth causes of action. The Court accordingly need not and does not address Plaintiffs’ remaining arguments.

A court may strike any “irrelevant, false, or improper matter inserted in any pleading” or all or any part of a pleading “not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436.)

Defendants move to strike certain allegations from the Complaint. As set forth above, the Court sustains Defendants demurrer to each of the causes of action of the Complaint. Accordingly, the Court denies the motion to strike as moot.

For the foregoing reasons, the Court sustains Defendants’ demurrer in its entirety, with leave to amend. The Court denies the motion to strike as moot.

[1]The first and second causes of action are alleged by Evans against Defendants, and the third and fourth causes of action are alleged by Style Squared against Defendants.

BRENT EVANS, et al., Plaintiffs, vs. SOPHIA JIN, et al., Defendants.	Case No.:	22STCV15366
	Hearing Date:	March 8, 2023
	Hearing Time:	8:30 a.m.
	[TENTATIVE] ORDER RE: DEFENDANTS COLORISH, LLC AND SOPHIA JIN’S DEMURRER TO PLAINTIFFS’ VERIFIED COMPLAINT DEFENDANTS COLORISH, LLC AND SOPHIA JIN’S MOTION TO STRIKE PORTIONS OF PLAINTIFFS’ VERIFIED COMPLAINT

Superior Court of California

County of Los Angeles

Department 50