Case Name: Alec W. Kersco, et al. v. FirstPoint Health, Inc., et al.
Case No.: 1-14-CV-263952

Defendants Jorlin E. Moon (“Jorlin”) and Diane Moon (“Diane”) (collectively, “the Moons”) bring (1) a demurrer to each cause of action in the complaint on the ground of failure to allege sufficient facts, and (2) a motion to strike paragraphs 31-34 of the complaint. (See Code Civ. Proc. [“CCP”], §§ 430.10, subd. (e) & 435-436.)

This is an action for (1) declaratory relief, (2) injunction, (3) accounting, (4) breach of covenant of good faith and fair dealing, (5) breach of contract, (6) fraud, (7) negligence, (8) conversion, and (9) trespass. Plaintiffs Alex W. Kersco, Mark Bergstrom, David L. Carlberg, Kinematic Automation, Inc., Meigs & Carlberg, and James Grinnell (collectively, “Plaintiffs”) allege that Jorlin induced them to invest in a business (“Joint Venture”) that would manufacture and sell kiosk machines (“Video Kiosks”), and to assign their patent rights pertaining to the design and manufacture of the Video Kiosks to him, by representing that he would market and sell the Video Kiosks and Plaintiffs would earn profits and receive “good and valuable consideration” for their patents. (Compl., ¶¶ 6-7,10-12, & 19-20.) Jorlin allegedly never performed as agreed or gave “good and valuable consideration” for Plaintiffs’ patents. (Id., ¶¶ 17-22 & 24.)
The Moons’ demurrer to the second cause of action (injunctive relief) is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Since injunctive relief is a remedy, not a cause of action (Shell Oil v. Richter (1942) 52 Cal.App.2d 164, 168), Plaintiffs may amend the complaint to remove the injunctive relief cause of action and instead include it as a remedy for other properly pleaded claims. In light of the foregoing, the Moons’ motion to strike paragraphs 31-34 of the complaint—which set forth allegations in support of the injunctive relief claim—is MOOT.

The Moons’ demurrer to the first and third through ninth causes of action as to Diane is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Plaintiffs allege no facts in support of any cause of action against Diane.

The Moons’ demurrer to the first, fourth, and fifth causes of action (declaratory relief, breach of the implied covenant of good faith and fair dealing, and breach of contract) as to Jorlin is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Alleging the existence of a contract is an essential element for each of these claims. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371 [breach of contract]; Guz v. Bechtel National, Inc. (2000) 24 Cal 4th 317, 349, 350 [breach of the implied covenant of good faith and fair dealing]; CCP, § 1060 [declaratory relief].) Plaintiffs do not allege the terms or legal effect of any contract or attach a copy of a contract to the complaint. (See Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616 [alleging the legal effect of an oral contract is sufficient]; see also Constr. Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-99 [alleging the legal effect of a written contract is sufficient] & Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307 [alleging a verbatim statement of a written contract’s terms or attaching the written contract to the complaint is sufficient].)

The Moons’ demurrer as to the third cause of action (accounting) as to Jorlin is OVERRULED. (See Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179-180 [elements of an accounting claim are (1) a relationship that requires an accounting and (2) a balance due from the defendant that can only be ascertained by an accounting].) Plaintiffs allege that they gave Jorlin money and property to perform certain tasks in furtherance of their Joint Venture, and Jorlin is now obligated to surrender their money and property because he failed to perform. (Compl., ¶¶ 6-7,10-12, & 19-20.) They further allege that Jorlin transferred and/or used their money and property such that the balance due can only be ascertained by an accounting. (Id., ¶¶ 17-24 & 37.)
The Moons’ demurrer to the sixth cause of action (fraud) as to Jorlin is SUSTAINED WITH 10 DAYS’ LEAVE TO AMEND. Plaintiffs do not specifically allege how, when, where, to whom, and by what means the alleged representations were tendered, whether Jorlin knew his statements were false, and whether Jorlin intended to induce reliance. (See Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.)

The Moons’ demurrer to the seventh cause of action (negligence) as to Jorlin is OVERRULED. (See Vescovo v. New Way Enterprises, Ltd. (1976) 60 Cal.App.3d 582, 589 [facts giving rise to a duty (or from which it is inferred) must be pleaded].) Plaintiffs allege that Jorlin owed Plaintiffs a duty to market the Video Kiosks, to watch over their money, and to make the Joint Venture profitable because Jorlin represented to Plaintiffs that he would do so. (Compl., ¶¶ 6-7,10-12, 19-20, & 58.) This is sufficient to allege the existence of a legal duty. (See Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 397 [absent an agreement, the defendant’s duty is determined by balancing various factors, e.g., the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm, the degree of certainty that the plaintiff suffered injury, the connection between the defendant’s conduct and the injury, the moral blame attached to the defendant’s conduct, and the policy of preventing future harm].) Furthermore, “the same wrongful act may constitute both a breach of contract and an invasion of an interest protected by the law of torts.” (See North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 774.)

The Moons’ demurrer to the eighth and ninth causes of action (conversion and trespass) as to Jorlin is OVERRULED. (See Franklin v. Municipal Ct. (1972) 26 Cal.App.3d 884, 901 [elements of a conversion claim are (1) the plaintiff’s ownership of tangible property, (2) the defendant’s conversion, and (3) damages]; see also Jamgotchian v. Slender (2009) 170 Cal.App.4th 1384, 1400-1401 [elements of a trespass to chattels claim are essentially the same as for conversion except that the interference need not be so severe as to require the defendant to compensate the plaintiff for the full value of the property].) Plaintiffs allege that they owned computer programs and equipment; Jorlin deceived them into giving him ownership of that property; and they have been wrongfully deprived of their ownership and/or their property has been harmed. (Compl., ¶ 65 & 67-72.)