Case Number: KC066573 Hearing Date: April 17, 2014 Dept: J

Re: DN Construction, Inc. v. Diana Tran, etc., et al. (KC066573)

DEMURRER TO CROSS-COMPLAINT

Moving Party: Cross-Defendant Danny Nguyen

Respondents: Cross-Complainants Diana Tran and Annie Tran

In this breach of contract action, Plaintiff (a construction company) alleges that Defendants (homeowners) failed to pay for labor, services, equipment and materials for a construction and improvement work performed on their property. The Complaint, filed on 12/19/13, asserts a cause of action for:

1. Breach of Contract
2. Breach of the Implied Covenant of Good Faith and Fair Dealing
3. Mechanics’ Lien Foreclosure

On 1/22/14, Defendants filed a cross-complaint against Plaintiff and its principal Danny Nguyen alleging that Cross-Defendants failed to complete and construct the work of improvement according to the contract, and the construction done was sub-standard. The Cross-Complaint, filed on 1/22/14, asserts a single cause of action for Breach of Contract.

The Case Management Conference is set for 5/21/14.

Cross-Defendant Danny Nguyen (“Cross-Defendant”) demurs to the Cross-Complaint on the ground that the Cross-Complaint fails to adequately allege facts to support a cause of action against Cross-Defendant.

The elements of a breach of contract cause of action are: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s breach (or anticipatory breach); and (4) resulting damage. (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

To allege alter ego, plaintiffs must plead a unity of interest and ownership such that the separate personalities of the corporation and individuals do not exist, and that an inequity will result if the corporate entity is treated as the sole actor. (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1285.) “To recover on an alter ego theory, a plaintiff need not use the words ‘alter ego,’ but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 415 – noting a complete absence of such allegations.)

The Cross-Complaint alleges that in or about May 19, 2012, Cross-Complainants entered into a written agreement with Cross-Defendants whereby Cross-Defendants agreed to construct a work of improvement on the subject property per architectural plans and specification provided by Cross-Complainants (Cross-Complaint ¶ 9); Cross-Complainants’ performance or excuse for nonperformance (Id. ¶¶ 10-11); Cross-Defendants’ breach (Id. ¶ 12); and resulting damages (Id. ¶¶ 13-14). The Cross-Complaint also alleges an alter ego relationship between the Cross-Defendants, including failing to observe corporate formalities and the co-mingling of money. (Id. ¶ 4.)

The Cross-Complaint alleges adequate facts to support a cause of action for breach of contact against Cross-Defendant. While Cross-Defendant contends that the Cross-Complainants fail to demonstrate that Cross-Defendant is an alter ego of DN Construction, Inc., the allegations are sufficient to support a finding of alter ego if proved at the time of trial. Thus, the demurrer is overruled.

Cross-Defendant has 10 days to answer.