Judge Thomas D. Long, Case Number: 23STCV17641, Date: 2025-02-20 Tentative Ruling

On May 9, 2024, Plaintiffs Sarah Woo and Sam S. Jung filed a first amended complaint (“FAC”) against Defendants Joon W. Kim, Mal Ye Kim, Sang H. Cho, and CKR Enterprise Inc. The FAC alleges (1) fraudulent conveyance; (2) conspiracy to defraud; (3) action on the judgment; (4) civil recovery of stolen property; and (5) declaratory relief.

On September 25, 2024, Joon W. Kim and Mal Ye Kim (“Defendants”) filed a demurrer to the FAC.

Plaintiffs’ opposition was due by February 5, 2025. (Code Civ. Proc., § 1005, subd. (b) [opposition due nine court days before the hearing].) Plaintiffs did not file their opposition until February 6, 2025 at 5:59 p.m. According to Defendants, Plaintiffs did not electronically serve the opposition until February 10, 2025 at 5:47 p.m. (Rios Reply Decl. ¶ 3 & Ex. A.) Defendants ask the Court to strike the late-filed opposition because they were prejudiced by receiving it only one day before the reply was due. (Reply at pp. 3-4.)

The Court will not strike the opposition because Defendants’ reply still addresses the opposition on the merits. However, if Defendants do require additional time to respond, they may raise this at the hearing and the Court may continue the hearing for an amended reply.

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context, accepting the alleged facts as true. (Nolte v. Cedars-Sinai Medical Center (2015) 236 Cal.App.4th 1401, 1406.) A special demurrer for uncertainty under Code of Civil Procedure section 430.10, subdivision (f) is disfavored and will only be sustained where the pleading is so bad that defendant or plaintiff cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her. (Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) “Because a demurrer challenges defects on the face of the complaint, it can only refer to matters outside the pleading that are subject to judicial notice.” (Arce ex rel. Arce v. Kaiser Found. Health Plan, Inc. (2010) 181 Cal.App.4th 471, 556.)

This action arises from an underlying lawsuit between the parties (Case No. BC687833) and Plaintiffs’ attempts to collect that 2018 judgment. (See FAC ¶¶ 18-26 & Exs. 2-3.)

Plaintiffs allege that prior to that judgment, Defendants looted all assets belonging to C4 Capital, leaving it insolvent. (FAC ¶¶ 30-32, 35-36, 48-49.)

Plaintiffs also allege that they acquired a judgment lien on Defendants’ Montebello Property when they recorded their abstract of judgment. (FAC ¶¶ 62-63.) On October 21, 2021, Defendants placed the property for sale. (See FAC ¶¶ 65-69.) Plaintiffs allege that Joon Kim conveyed his interest in the property as a gift to Mal Ye Kim through a 2021 Grant Deed to evade Plaintiffs’ judgment lien. (FAC ¶¶ 68, 70.)

B. Plaintiffs Allege Fraudulent Conveyance With Specificity (First Cause of Action).

Defendants contend, with little argument, that the FAC lacks specific allegations about the fraudulent conveyance. (Demurrer at pp. 9-10.) Plaintiffs argue that “the heightened pleading standard of fraud is not required when there is no fraudulent representation being alleged” as part of the claim. (Opposition at p. 7.)

A fraudulent transfer occurs when the transfer was made with actual intent to hinder, delay, or defraud any creditor of the debtor. (Civ. Code, § 3439.04, subd. (a).) The supporting allegations must meet the heightened pleading standards for fraud. (See Opperman v. Path, Inc. (N.D. Cal. 2014) 87 F.Supp.3d 1018, 1066.) Fraud must be pleaded with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “‘This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.’ [Citation.]” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Plaintiffs allege that Joon Kim transferred the Montebello Property through the November 9, 2021 Grant Deed with intent to hinder, delay, or defraud Plaintiffs, and Mal Ye Kim aided and abetted the transfer. (FAC ¶¶ 68, 70, 73, 76.) This sufficiently alleges the date, manner, and facts about the allegedly fraudulent conduct. (See FAC, Ex. 7.)

C. Plaintiffs Sufficiently Allege Conspiracy to Defraud (Second Cause of Action).

Defendants argue that the FAC lacks specific allegations demonstrating the required elements of conspiracy to defraud and “merely provides general and conclusory allegations about Defendants’ involvement, which are insufficient to demonstrate the formation and operation of a conspiracy or the specific wrongful acts committed in furtherance of such a conspiracy.” (Demurrer at pp. 10-11.)

The elements of an action for civil conspiracy are the formation and operation of the conspiracy and damage to plaintiff from an act or acts done in furtherance of the common tort. (Doctors’ Co. v. Superior Court (1989) 49 Cal.3d 39, 44.) A conspiracy renders each participant in the wrongful act responsible as a joint tortfeasor for all damages. (Ibid.) “Because transferring funds in order to evade creditors constitutes an intentional tort, it logically follows that California common law should recognize liability for aiding and abetting a fraudulent transfer.” (Berger v. Varum (2019) 35 Cal.App.5th 1013, 1025 (Berger).)

Plaintiffs allege that Joon Kim misappropriated Plaintiffs’ investment in C4 Capital with the intent to deceive and defraud Plaintiffs, aided by and conspiring with co-Defendants Sang Cho and CKR Enterprise. (FAC ¶¶ 82-84.) The FAC contains facts about the dates and manner of the transfers and commingled funds, as well as each Defendant’s role in the fraud. (FAC ¶¶ 29-45 & Exs. 2-5.) This sufficiently alleges the conspiracy to defraud. (See Berger, supra, 35 Cal.App.5th at p. 1026.)

D. Plaintiffs Cannot Use This Action to Amend a Different Judgment (Third Cause of Action).

In the third cause of action, Plaintiffs allege that CKR Enterprise and C4 Capital are the alter egos of Joon Kim, and they seek to amend the judgment in Case No. BC687833 to reflect that CKR Enterprise is an additional judgment debtor. (FAC ¶¶ 90-94.)

The Court cannot in this action amend the judgment in a different action. The demurrer to the third cause of action is sustained without leave to amend.

E. Plaintiffs Cannot Allege Recovery of Stolen Property (Fourth Cause of Action).

Defendants argue that Penal Code section 496 does not apply to general allegations of theft or fraud. (Demurrer at pp. 12-13.)

A plaintiff may bring an action for damages caused by person who buys or receives any property that has been stolen and knows that the property was stolen. (Pen. Code, § 496, subds. (a), (c).)

Plaintiffs allege that Joon Kim’s default in Case No. BC687833 admitted that he embezzled Plaintiffs’ funds and received those stolen funds. (FAC ¶¶ 99-100.) Plaintiffs do not allege that Defendants knowingly received any property; rather, they allege that Joon Kim himself stole the funds. A person cannot be liable for both receiving stolen property and the theft of the same property. (See Pen. Code, § 496, subd. (a); see also People v. Magallanes (2009) 173 Cal.App.4th 529, 535-536.) Additionally, this appears to be a second attempt to recover the same damages admitted in Case No. BC687833 and included in that judgment.

F. Plaintiffs Sufficiently Allege Declaratory Relief (Fifth Cause of Action).

Defendants argue that the underlying claims fail, so the claim for declaratory relief must also fail. (Demurrer at p. 13.) The Court overrules the demurrer to the first and second causes of action, and thus the demurrer to this cause of action is overruled on this ground.

Defendants also argue that this claim improperly seeks to redress past wrongs. (Demurrer at p. 13.) “Declaratory relief generally operates prospectively to declare future rights, rather than to redress past wrongs. [Citations.] It serves to set controversies at rest before they lead to repudiation of obligations, invasion of rights or commission of wrongs. In short, the remedy is to be used in the interests of preventive justice, to declare rights rather than execute them.” (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) Plaintiffs seek a judicial determination that the 2021 Grant Deed is a voided fraudulent transfer or that the fraudulent conveyance should be disregarded so that Plaintiffs can levy on their judgment. This seeks a determination of the parties’ current and future interests in the property. The demurrer is overruled on this ground.

The demurrer to the third and fourth causes of action is SUSTAINED without leave to amend. The demurrer is otherwise OVERRULED.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court