BRITE SEMICONDUCTOR USA CORP. v. CLOUDVUE TECH. CORP.

Case No.:  1-14-CV-261671

DATE:  August 21, 2014

TIME:  9:00 a.m.

DEPT.: 3

 

Defendant’s Request for Judicial Notice of three documents (exhibits 1-3) is GRANTED pursuant to Evid. Code §452(d).  Only the Court’s prior order (exhibit 3) is noticed as to the truth of its contents.

 

In ruling on a demurrer or motion to strike the Court considers the pleading under attack as a whole, with all properly pled factual allegations assumed to be true.  Generally, “It is . . . solely a judicial function to interpret a written instrument unless the interpretation turns on the credibility of extrinsic evidence.”  Consolidated Theatres, Inc. v. Theatrical Stage Employees Union (1968) 69 Cal. 2d 713, 724.  If a contract set out in the complaint (or attached as an exhibit) is ambiguous, plaintiff’s interpretation must be accepted as correct in testing the sufficiency of the complaint: “[A] general demurrer to the complaint admits not only the contents of the instrument but also any pleaded meaning to which the instrument is reasonably susceptible.”  Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal App 3d 232, 239.

 

As an initial matter Defendant’s argument that the FAC is a sham pleading is unpersuasive. “Under the sham pleading doctrine, plaintiffs are precluded from amending complaints to omit harmful allegations, without explanation, from previous complaints to avoid attacks raised in demurrers or motions for summary judgment.”  Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425; See also Colapinto v. County of Riverside (1991) 230 Cal.App.3d 147, 151 (“If a party files an amended complaint and attempts to avoid the defects of the original complaint by either omitting facts which made the previous complaint defective or by adding facts inconsistent with those of previous pleadings, the court may take judicial notice of prior pleadings and may disregard any inconsistent allegations.”)  The FAC does not contradict factual allegations in the original complaint; it adds additional details to the factual allegations and these additions are explained by the disclosure in the FAC at 13-14 that the deposition of Defendant’s CEO Mr. Tung took place on May 22, 2014, after the filing of the original Complaint.  Many of the additional allegations, including the alleged repudiation, are expressly based on Mr. Tung’s alleged testimony.

 

Defendant’s demurrer to the FAC’s 1^st cause of action for breach of contract on the ground that it fails to state sufficient facts is OVERRULED.

 

Plaintiff has adequately alleged all elements of the claim and has adequately alleged, based on the purported deposition testimony of Defendant’s CEO, that it is not possible for Plaintiff to further perform its contractual obligations due to Defendant’s inability to complete integration and verification of the design, an obligation allegedly imposed solely on Defendant.  See FAC at 13-16, 22-25.

 

Defendant’s demurrer to the FAC’s 2^nd cause of action, Fraud (False Promises), on the ground that it fails to state sufficient facts is OVERRULED.

 

Contrary to Defendant’s argument it is permissible to base a fraud claim on the same nucleus of facts as a breach of contract claim.  “’Promissory fraud’ is a species of fraud and deceit.  A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.  An action for promissory fraud may lie where a defendant induces the plaintiff to enter into a contract.’”  Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal 4^th 951, 973-974.  See also CACI 1902 (False Promise).  The FAC at 52-62 clearly alleges that Plaintiff entered into the contract in reliance on the false promises of Mr. Tung, in his capacity as Defendant’s President and CEO, that Defendant would perform its obligations under the contract.  The alleged false promises were made on Nov. 7, 2012 to Plaintiff and in particular to Kyle Weng, in his capacity as Sales Director of Brite Hong Kong and Secretary of Plaintiff.  See FAC at 54-56.  Plaintiff’s ability to later prove its allegations is irrelevant on demurrer.

 

Defendant’s argument that the 2^nd cause of action is not pled with sufficient specificity, focusing on paragraph 54 of the FAC, ignores the fact that the 2^nd cause of action incorporates the first 38 paragraphs of the FAC by reference.

 

Defendant’s Motion to Strike all or portions of paragraphs 10-17, 20-24, 28-34, 43-45, 52 and 54 of the FAC on grounds of irrelevance and/or falsity is DENIED.  The relevance in each case is sufficiently clear and Defendant has not established falsity.

 

Defendant’s Motion to Strike all or portions of paragraphs 8, 38, 46, 62 of the FAC and paragraphs 1 and 2 of the FAC’s Prayer is DENIED.  The Complaint read as a whole (including the contract attached as ex. A) adequately states the basis for the request for lost profits as damages.  Any adequately pled fraud claim is a sufficient basis for a request for punitive damages and the FAC specifically identifies Defendant’s CEO as a participant in the alleged fraud.

 

Defendant’s Motion to Strike that portion of paragraph 3 of the FAC’s Prayer that requests an award of attorneys’ fees is GRANTED with 10 days’ leave to amend.  No basis for such an award is stated in the FAC or the attached exhibit, and Plaintiff fails to identify any basis for the request in its opposition to the motion.