18-CIV-01456 ETI LEVI-BARKAI VS. LEWIS BREAD COMPANY, LLC, ET AL.

ETI LEVI-BARKAI LEWIS BREAD COMPANY, LLC
HEE J. KIM RAVIV NETZAH

DEFENDANTS’ DEMURRER TENTATIVE RULING:

Defendants Lewis Bread Company, LLC, Micha Lewis, and Dalit Lewis’s Demurrer to Plaintiff Eti Levi-Barkai’s 3-22-18 Complaint is ruled upon as set forth below.

The Demurrer to the Fourth Cause of Action for breach of fiduciary duty is SUSTAINED WITH LEAVE TO AMEND. Plaintiff cites authority stating that partners, joint venturers, and shareholders owe fiduciary duties, as do corporate officers/directors, to shareholders. See, generally, CACI 4100. The Complaint here alleges, in a conclusory manner, that Micha and Dalit Lewis owed fiduciary duties to Plaintiff as “majority and controlling shareholders, business partners, principals, joint venturers, or corporate officers or directors.” This conclusory allegation, however, does not appear supported by the underlying factual allegations. Specifically, the Complaint alleges that although the individual parties were partners/joint venturers at one point in time, the partnership ended and was superseded by a written Employment Agreement between Plaintiff and the LLC. Although the Employment Agreement gave Plaintiff the right to purchase an interest in the business, as alleged, Plaintiff never did, because the individual defendants allegedly refused to allow Plaintiff to perform a due diligence analysis of the LLC’s records. Thus, as alleged, Plaintiff never became a shareholder/owner of the business. The Employment Agreement refers to Plaintiff as an employee, which generally, without more, does not give rise to a fiduciary relationship. The Complaint does not appear to allege the existence of shareholder relationship, a partnership, an agency relationship, or any other relationship giving rise to fiduciary duties. CACI 4100.

The Demurrer to the Fifth Cause of Action for “fraud-false promise” is OVERRULED. Plaintiff notes the general rule that corporate directors/officers may be held liable for tortious conduct. PMC, Inc. v. Kadisha (2000) 78 Cal.App.4th 1368, 1379-80. The Complaint alleges that after Micha and Dalit Lewis breached the parties’ oral partnership agreement, they spoke with Plaintiff and made false promises with respect to Plaintiff’s options going forward in terms of retaining an interest in the business, including a false promise that Plaintiff would be able to later purchase an ownership interest in the business. Plaintiff alleges that in reliance on these misrepresentations, she agreed to enter into an Employment Agreement with the LLC, through which Plaintiff forfeited her “vested equity interest” in the business in exchange for the promised right to purchase an interest in the future. Plaintiff alleges these representations were made without any intention of ever actually allowing Plaintiff to purchase an ownership interest. At the pleading stage, this cause of action is sufficiently plead.

The Demurrer to the Sixth Cause of Action for “intentional interference with contractual relations” is SUSTAINED WITH LEAVE TO AMEND. This cause of action applies to third parties to a contract who intentionally interfere with a party’s performance. Pac. Gas & Elec. Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1125. It does not apply to parties to a contract, or their agents. Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514; Shoemaker v. Myers, 52 Cal.3d 1, 24 (1990) (corporate agents and employees acting for and on behalf of a corporation cannot be held liable for inducing a breach of the corporation’s contract; Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 72–73). Neither party here, in their briefing, discusses the extent to which this cause of action applies in the context of a limited liability company. The Lewis’s argue that, as alleged in the Complaint, when they purportedly caused the LLC to breach Plaintiff’s Employment Agreement, they were acting solely as agents of the LLC, and thus cannot be deemed to be third parties who tortiously interfered with that agreement. See Shoemaker, supra, 52 Cal.3d at 24. To the extent the Lewis’s were allegedly acting in a capacity other than as the LLC’s agent(s), that allegation should be made clear.

If the tentative ruling is uncontested, it shall become the order of the Court, pursuant to CRC Rule 3.1308(a)(1), adopted by Local Rule 3.10. If the tentative ruling is uncontested, DEMURRING PARTY is directed to prepare, circulate, and submit a written order reflecting this Court’s ruling verbatim for the Court’s signature, consistent with the requirements of CRC Rule 3.1312. The proposed order is to be submitted directly to Judge Richard H. DuBois, Department 16.