Case Number: KC069507 Hearing Date: March 06, 2018 Dept: J

Kai Jie Wang v. Clark Liang, et al. (KC069507)

MOTION FOR JUDGMENT ON PLAINTIFF’S COMPLAINT

Moving Party: Defendant Clark Liang

Respondent: Plaintiff Kai Jie Wang

POS: Moving OK; Opposing OK

Plaintiff is a Chinese national who does not speak or read English; Defendant Clark Liang (“Liang”) is plaintiff’s wife’s cousin. Plaintiff alleges that in or about 5/13, Liang informed plaintiff that Defendant Meitsu Chen (“Chen”) had a profitable bird store for sale. Plaintiff alleges that Liang represented, inter alia, that he and plaintiff would become business partners, that Liang would contribute his pro rata share in the partnership, that he had already been to the business site and reviewed the business’ financial statements, and that Chen would provide two years of assistance after the sale. Plaintiff alleges that the above representations were false and that Liang overstated the profitability of the business. The complaint, filed 8/2/17, asserts causes of action against Defendants Clark Liang, Chen and Does 1-20 for:

1. Fraud

2. Conspiracy to Commit Fraud

3. Conversion

4. Breach of Fiduciary Duty

5. Negligence

6. Constructive Trust

7. Accounting

8. Breach of Contract

The Final Status Conference is set for 10/29/18. A jury trial is set for 11/6/18.

Defendant Clark Liang (“Liang”) moves per CCP § 438 for judgment on the pleadings as to the first through eighth causes of action in Plaintiff Kaie Jie Wang’s (“plaintiff”) complaint.

“Judgment on the pleadings is akin to a demurrer and is properly granted only if the complaint does not state facts sufficient to state a cause of action against that defendant. (Code Civ. Proc., § 438, subd. (c)(1)(B)(ii); Smiley v. Citibank (1995) 11 Cal.4th 138, 146). The grounds for the motion must appear on the face of the complaint, and in any matters subject to judicial notice. (Code Civ. Proc., § 438, subd. (d).) The court accepts as true all material factual allegations, giving them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts. (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 515-516; Long Beach Equities, Inc. v. County of Ventura (1991) 231 Cal.App.3d 1016, 1024.)” Shea Homes Ltd. Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.

FIRST THROUGH THIRD, FIFTH AND EIGHTH CAUSES OF ACTION (i.e., FRAUD, CONSPIRACY TO COMMIT FRAUD, CONVERSION, NEGLIGENCE AND BREACH OF CONTRACT, RESPECTIVELY):

Plaintiff alleges that he took over the operation of the bird business on about 1/1/14. (Complaint, ¶ 23). Plaintiff filed his complaint on 8/2/17. Liang contends that plaintiff’s first through third, fifth and eighth causes of action are time-barred by the two and three year statutes of limitations set forth in CCP §§ 338 and 339.[1]

“Civil actions, without exception, can only be commenced within the periods prescribed in this title, after the cause of action shall have accrued, unless where, in special cases, a different limitation is prescribed by statute.” CCP § 312. “The general rule for defining the accrual of a cause of action sets the date as the time when the cause of action is complete with all of its elements.” Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 389.

An exception to the general rule of accrual is the “discovery rule,” “which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action, until, that is, he at least suspects, or has reason to suspect, a factual basis for its elements.” Id. “In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ (McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 160). In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence;’ ‘conclusory allegations will not withstand demurrer.’ (Ibid.)” Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 (emphasis theirs).

Plaintiff has alleged that “[a]bout a year after taking over the business, Plaintiff realized that the monthly gross revenues were $8,000 – $9,000, as opposed to the $17,000- $20,000 previously represented by LIANG and CHEN.” (Id., ¶ 24). He has further alleged that “[u]pon further request and inquiry from Plaintiff concerning accounting, LIANG continued to promise to contribute his pro rata share in the partnership. LIANG continued to make these promises through 2017.” (Id., ¶ 25; bold added). He has also alleged that “[i]n about June 2017, through review of records, Plaintiff made the following shocking discovery: a. LIANG used Plaintiff’s funds to pay property taxes on behalf of CHEN; b. On July 24, 2013, CHEN incorporated Canary World Exotic Bird Farms, Inc.; c. On or about March 29, 2014, Plaintiff was asked to sign a Statement of Information for Canary World Exotic Bird Farms, Inc., naming himself as the CEO and director, CHEN as the Secretary and director, and LIANG as the CFO. Plaintiff contends that he did not know what the document purported to be when he signed the document. d. On or about May 1, 2014, CHEN purportedly transferred 58,000 shares in Canary World Exotic Bird Farms, Inc. to LIANG for $58,000. e. On about June 30, 2014, LIANG executed a Statement of Information, naming himself as the CEO, Secretary, CFO, and sole director of Canary World Exotic Bird Farms, Inc. (Id., ¶ 26).

The first and eighth causes of action are at least partially premised on Liang’s agreement to contribute his pro rata share in the partnership, which promises were allegedly made through 2017. (Id., ¶¶ 30(e) and 65). These causes of action, then, are not time-barred. Plaintiff, however, has not sufficiently pled delayed discovery with respect to the second, third and fifth causes of action.

Liang’s motion is denied as to the first and eighth causes of action and granted as to the second, third and fifth causes of action.

FOURTH CAUSE OF ACTION (i.e., BREACH OF FIDUCIARY DUTY):

“The elements of a cause of action for breach of fiduciary duty are: 1) the existence of a fiduciary duty; 2) a breach of the fiduciary duty; and 3) resulting damage. (City of Atascadero v. Merill, Lynch, Pierce, Fenner & Smith, Inc. (1999) 68 Cal.App.4th 445, 483).” Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524.

“A fiduciary relationship is ‘”any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent….”’ (Herbert v. Lankershim (1937) 9 Cal.2d 409, 483; In re Marriage of Varner (1997) 55 Cal.App.4th 128, 141…).” Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29. “Traditional examples of fiduciary relationships in the commercial context include trustee/beneficiary, directors and majority shareholders of a corporation, business partners, joint adventurers, and agent/principal.” Id. at 30.

Plaintiff has sufficiently pled the existence of a fiduciary relationship in Liang’s alleged role as plaintiff’s agent, business partner, and/or joint venturer. Liang is also plaintiff’s wife’s cousin. Plaintiff has likewise alleged that Liang made various misrepresentations to him in the aforesaid capacities, and took advantage of his fiduciary status at plaintiff’s expense by naming himself as the business’ CEO, Secretary, CFO, and sole director and by having Chen transfer the stock shares to him.

Liang’s motion is denied as to the fourth cause of action.

SIXTH CAUSE OF ACTION (i.e., CONSTRUCTIVE TRUST):

A claim for constructive trust “is not an independent cause of action but merely a type of remedy for some categories of underlying wrong. (See 5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, § 796, p. 252.).” Glue-Fold, Inc. v. Slautterback Corp. (2000) 82 Cal. App. 4th 1018, 1023 n. 3.

Plaintiff has not opposed Liang’s motion as it pertains to the sixth cause of action. The motion is granted.

SEVENTH CAUSE OF ACTION (i.e., ACCOUNTING):

Liang has moved for judgment on the pleadings as to plaintiff’s seventh cause of action on the basis that it is merely a remedy, not a cause of action. Not so. “A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 460; 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 819, p. 236.).” Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.

Accordingly, the motion is denied as to plaintiff’s seventh cause of action.

The court will hear from counsel for plaintiff as to whether leave to amend the second, third and/or fifth causes of action is requested.

[1] Plaintiff’s negligence cause of action would appear to be governed by the two year statute of limitations set forth in CCP § 335.1 (not referenced in motion).