Los Angeles Superior Court Tentative Rulings

Case Number: EC067716 Hearing Date: November 03, 2020 Dept: A

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Chou v Suen

Motion for Summary Judgment;

Motion for Order Permitting Financial Discovery

Calendar:

Case No.:

EC067716

Hearing Date:

November 3, 2020

Action Filed:

January 30, 2018

Trial Date:

Not Set

Motion for Summary Judgment

MP:

Plaintiff Lily Chou

RP:

Defendants Vitus F. Suen; Virginia Suen; Patrick Suen; Jeffrey Suen; Andrew Suen; Yuk Ling Chow; Del Mar Gardens LLC

Motion for Order Permitting Financial Discovery

MP:

Plaintiff Lily Chou

RP:

Defendants Vitus F. Suen; Virginia Suen; Patrick Suen; Jeffrey Suen; Andrew Suen; Yuk Ling Chow; Del Mar Gardens LLC

Material added following October 30, 2020 is in bold underlined.

ALLEGATIONS:

The instant action arises from an alleged investment agreement by Plaintiff Lily Chou (“Plaintiff”) with Defendants Vitus F. Suen (“Vitus”), Virginia Suen (“Virginia”), Patrick Suen (“Patrick”), Andrew Suen (“Andrew”), Jeffrey Suen (“Jeffrey”), Yuk Ling Chow (“Yuk”), and the resulting business Del Mar Gardens, LLC (“DMG”) and collectively the “Defendants”) for the purchase and management of real properties 8356, 8360, 8362, and 8364 Sheffield Road, San Gabriel, CA (the “Properties”). Plaintiff alleges that under the operating agreement, the members were required to make initial capital contributions, where Plaintiff made a $112,500 contribution and held a 12.5% interest in Del Mar. Plaintiff alleges that they bought the Properties and then resold it, but that she was given less than 12.5% of the net sale proceeds.

The original Complaint was filed on January 30, 2018, and the First Amended Complaint (“FAC”) was filed May 09, 2018, alleging causes of action sounding in (1) Breach of Fiduciary Duty; (2) Constructive Fraud; (3) Breach of Contract; (4) Negligence; (5) Tortious Interference with Contract; (6) Defamation; and (7) Accounting.

On June 15, 2018, Cross-Complainants Vitus F. Suen, Virginia Suen, Patrick Suen, Andrew Suen, Jeffrey Suen, Yuk Ling Chow, and Del Mar filed a Cross-Complaint (“XC”) against Cross-Defendants Lily Chou, Angela Yu, Stephen Hu (individually and d/b/a J.J. Stephens Real Estate Professionals), and Shau Tang Chen (the “Cross-Defendants”). The XC alleged causes of action sounding in (1) Breach of Written Contract; (2) Breach of the Covenant of Good Faith and Fair Dealing; (3) Breach of Fiduciary Duty; (4) Fraud; (5) Breach of Oral Contract; (6) Constructive Fraud; (7) Breach of Fiduciary Duty; (8) Constructive Fraud; (9) Conspiracy; and (10) Declaratory Relief. Following a demurrer, where the court overruled the pleading on the First, Third, Fourth, Fifth, Sixth, Ninth and Tenth Causes of Action, and sustained on the Second Cause of Action, Cross-Complainants did not file an amended XC.

PRESENTATION:

Plaintiff filed her motion for summary judgment on November 22, 2019, with the original hearing date set for April 17, 2020. On March 25, 2020, in response to the COVID-19 pandemic and pursuant to the March 17, 2020, Administrative Order of the Presiding Judge, the Court continued the instant motion to May 22, 2020. Counsel for Plaintiff was informed telephonically and directed to give notice.

Plaintiff filed her motion for pretrial discovery of Defendants’ financial condition on April 14, 2020.

On April 22, 2020, and in response to the continuing pandemic conditions, the Court continued the instant matters to June 24, 2020. Counsel for Plaintiff was informed and directed to give notice, and a copy of the minute order was mailed to counsel.

On June 23, 2020, the Court continued the matters again to August 7, 2020. Counsel for Plaintiff was telephonically notified, and a copy of the minute order was mailed to counsel.

On August 06, 2020, the Court continued the matters again to October 30, 2020. Counsel for Plaintiff was telephonically notified, and a copy of the minute order was mailed to counsel.

RELIEF REQUESTED:

Plaintiff moves for summary judgment, or in the alternative, adjudication, as to the FAC on the First, Second, Third, Fourth, and Seventh Causes of Action. Additionally, Plaintiff moves for summary judgment, or in the alternative, adjudication, as to the XC, for the First, Third, Fourth, Fifth, Sixth, Ninth, and Tenth Causes of Action.

Plaintiff moves for leave to discover all Defendants’ financial conditions prior to the trial.

DISCUSSION:

Standard of Review – Summary Judgment (Plaintiff) – A party may move for summary judgment in any action or proceeding if it is contended the action has no merit or that there is no defense to the action or proceeding. (Code Civ. Proc., §437c, subd. (a).) To prevail on a motion for summary judgment, the evidence submitted must show there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., §437c, subd. (c).) In other words, the opposing party cannot present contrary admissible evidence to raise a triable factual dispute.

“A plaintiff or cross-complainant has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action. Once the plaintiff or cross-complainant has met that burden, the burden shifts to the defendant or cross-defendant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The defendant or cross-defendant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(1).)

When ruling on a summary judgment motion, the trial court must consider all inferences from the evidence, even those contradicted by the moving party’s evidence. The motion cannot succeed unless the evidence leaves no room for conflicting inferences as to material facts; the court has no power to weigh one inference against another or against other evidence. (Murillo v. Rite Stuff Food Inc. (1998) 65 Cal. App. 4th 833, 841.) In determining whether the facts give rise to a triable issue of material fact, “the facts alleged in the evidence of the party opposing summary judgment and the reasonable inferences there from must be accepted as true.” (Jackson v. County of Los Angeles (1997) 60 Cal. App. 4th 171, 179.)

With a summary judgment motion, a three-step analysis is required of the trial court. (AARTS Productions, Inc. v. Crocker Nat’l Bank (1986) 179 Cal. App. 3d 1061, 1064–65.) First, the trial court must identify the issues framed by the pleadings since it is these allegations to which the motion must respond by establishing a complete defense or otherwise showing there is no factual basis for relief on any theory reasonably contemplated by the opponent’s pleading. (Id.) Secondly, the court must determine whether the moving party’s showing has established facts which negate the opponent’s claim and justify a judgment in movant’s favor. (Id.) When a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue. (Id.) On a plaintiff’s motion for summary judgment, the plaintiff bears the burden of persuasion that each element of the cause of action in question has been proved, and that there is no defense thereto. (Code of Civ. Proc., §437c, subd. (o)(1); Aguilar v. Atlantic Richfield Company, et al. (2001) 25 Cal. 4th 826, 850.)

Evidentiary Objections

Cross-Complainant objects to Exhibit 19 cited in Paragraph 16 of the Declaration of Samuel H. Jones, arguing that the Frank Ong’s email messages are used to prove the truth of the matters referred to in his statements. The Court sustains the instant objection.

Merits – Amended Complaint – First Cause of Action (Breach of Fiduciary Duty) – The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary duty, (2) breach, and (3) damages proximately caused by the breach. (Stanley v. Richmond (1995) 35 Cal. App. 4th 1070, 1086.)

Plaintiff fails to establish its prima facie right to summary relief for breach of fiduciary duty. The existence of a fiduciary duty between Plaintiff and Defendants is not disputed by either party. (Response to SSUMF, ¶ 48; Decl. Chou, ¶¶ 11-16.) Plaintiff establishes that Defendants breached their fiduciary duty when they (1) failed to inform Plaintiff of the sale of the Property until it was already in escrow (Decl. Chou, ¶ 21); (2) misrepresented to Plaintiff that she would receive her claimed profit share from the sale if she signed the escrow documents and subsequently stopped payment on the issued check (Decl. Chou, ¶¶ 27-28; Exhibit 15); (3) refused to pay Plaintiff her claimed share (Decl. Chou, ¶ 29); and (4) and refused to provide an accounting despite Plaintiff’s request to do so. Plaintiff alleges damages in excess of $120,323.41 but does not specifically detail and establish how these damages were calculated. (Decl. Chou, ¶¶ 29.) Plaintiff contends she is owed $221,249.54 in profit share from the Property Sale and allegedly received a payment of $100,578, which suggests a difference of $120,671.54, but this calculation is presented by Plaintiff. (Exhibit 14.)

Even if Plaintiff established its prima facie case, Defendants dispute all four allegations of breach, creating triable and material issues on each allegation. Defendants contend (1) Yuk first notified Chou about the pending property sale in November 2017 before the sale closed. (Decl. Chou, ¶ 9.) Defendants also contend (2) Virginia initiated a stop payment for Plaintiff’s check on December 13, 2017 because she needed additional time to determine who paid contribution toward Del Mark Gardens, LLC after discovering an alleged unauthorized commission payment to broker J.J. Stephens on December 12, 2017. (MSJ Oppo., p. 11, lines 16-23.) Defendants further contend (3) Plaintiff failed to make her full monetary contribution. (MSJ Oppo., p. 5, lines 1-2.) Defendants further dispute that (4) there has been a disputed accounting request. (MSJ Oppo., p. 14, lines 21-22.)

Accordingly, Plaintiff has not met its burden to establish each element of its breach of fiduciary duty claim. The Court will deny summary judgment for the first cause of action.

Second Cause of Action (Constructive Fraud) – “Constructive fraud consists: 1. In any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault, or any one claiming under him, by misleading another to his prejudice, or to the prejudice of any one claiming under him; ¿or, 2. In any such act or omission as the law specially declares to be fraudulent, without respect to actual fraud.” (Civ. Code, § 1573.) “Constructive fraud ‘arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice.’ [Citation.] Actual reliance and causation of injury must be shown. [Citation.]” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131) (quoting Tyler v. Chidlren’s Home Society (1994) 29 Cal.App.4th 511, 548.) The elements of constructive fraud are “(1) a fiduciary or confidential relationship; (2) nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4) reliance and resulting injury (causation).” (Id.)

Plaintiff fails to establish a prima facie right to relief for constructive fraud. As stated above, (1) the existence of a fiduciary duty between Plaintiff and Defendants is not disputed by either party. (Response to SSUMF, ¶ 48; Decl. Chou, ¶¶ 11-16.) Plaintiff also establishes that (2) Defendants failed to inform Plaintiff of the sale of the Property until it was already in escrow (Decl. Chou, ¶ 21) but fails to (3) establish facts supporting Defendants’ intent to deceive. Plaintiff does allege that Defendants falsely claimed an oral settlement is reached in an effort to settle the dispute, but does not contend this allegedly false claim was intended to deceive Plaintiff. (MSJ, p. 13, lines 5-7.)

Accordingly, Plaintiff has not met its burden to establish each element of its constructive fraud claim. The Court will deny summary judgment for the second cause of action.

Third Cause of Action (Breach of Contract) – To plead breach of contract, the Plaintiff must allege (1) the existence of a contract, (2) Plaintiff’s performance or excuse for non-performance, (3) Defendant’s breach, and (4) resulting damage to Plaintiff. (Lortz v. Connell (1969) 273 Cal. App. 2d 286, 290.) Contracts may be written or oral, except when specified by law such as contracts falling under the statute of frauds. Civ. Code §§1622 & 1624.

Plaintiff establishes a prima facie right to relief for breach of contract by establishing that (1) a contract between Plaintiff and Defendants existed (Decl. Chou, ¶ 13), (2) Plaintiff fully performed her obligation by paying $100,000 to DMG (Id.), (3) Defendants failed to disperse Plaintiff’s claimed profit share (Id. at ¶¶ 28-29), and (4) Plaintiff suffered damages through this conduct (Ibid.)

Defendants dispute that (2) Plaintiff performed its obligation, raising a triable and material issue on this claim. Defendants allege that Plaintiff did not contribute the full $100,000 obligated under their agreement. (Decl. Virginia, ¶ 3.)

Accordingly, Defendants have met their burden to show a triable issue of material fact exists. The Court will deny summary judgment for the third cause of action.

Fourth Cause of Action (Negligence) – A complaint for damages for negligent injury to person or property must allege: (1) defendant’s legal duty of care toward plaintiff; (2) defendant’s breach of duty, i.e., the negligent act or omission; (3) injury to plaintiff as a result of the breach, i.e., proximate or legal cause; and (4) damage to plaintiff. Pultz v. Holgerson (1986) 184 Cal. App. 3d 1110, 1117.

Plaintiff fails to establish a prima facie right to relief for negligence. Plaintiff alleges that “Defendants, as members of DMG, owed Plaintiff a duty of care with respect to her pro-rata share of the Property sale proceeds” but fails to establish facts supporting this allegation. The citation for this allegation points to paragraph 58 of the SSUMF, which only numbers up to paragraph 57 and does not contain a paragraph 58.

Accordingly, Plaintiff has not met its burden to establish each element of its negligence claim. The Court will deny summary judgment for the fourth cause of action.

Seventh Cause of Action (Accounting) – “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.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) “An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” Id.

Plaintiff fails to establish a prima facie right to relief for accounting. Plaintiff fails to establish facts supporting that “some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin, supra, 173 Cal.App.4th at 179.)

Accordingly, Plaintiff has not met its burden to establish each element of its accounting claim. The Court will deny summary judgment for the seventh cause of action.

Standard of Review – Summary Judgment (Cross-Defendant) – A party may move for summary judgment in any action or proceeding if it is contended the action has no merit or that there is no defense to the action or proceeding. (Code Civ. Proc., §437c, subd. (a).) To prevail on a motion for summary judgment, the evidence submitted must show there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., §437c, subd. (c).) In other words, the opposing party cannot present contrary admissible evidence to raise a triable factual dispute.

“A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto. The plaintiff or cross-complainant shall not rely upon the allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)

Merits – Statute of Limitations Affirmative Defense – The statute of limitations concerning fraudulent conduct, breach of contract, and breach of the covenant of good faith and fair dealing is four years each. (Code Civ. Proc., §§ 338, subd. (d), 337; Krieger v. Nick Alexander Imports, Inc. (1991) 234 Cal.App.3d 205, 220.) The statute of limitations for breach of fiduciary duty is three years where arising from fraud, and up to four years otherwise. (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.) The general rule in California is that a “statute of limitations begins to run when a cause of action accrues, even though the plaintiff is ignorant of the cause of action or of the identity of the wrongdoer.” (Community Cause v. Boatwright (1981) 124 Cal. App. 3d 888, 898.) Traditionally at common law, a “cause of action accrues ‘when [it] is complete with all of its elements’—those elements being wrongdoing, harm, and causation.” Pooshs, at p. 797, (quoting Norgart, at p. 397). This is the “last element” accrual rule: ordinarily, the statute of limitations runs from “the occurrence of the last element essential to the cause of action.” (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal. 3d 176, 187; accord, Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal. 4th 809, 815; Buttram v. Owens-Corning Fiberglas Corp. (1997) 16 Cal. 4th 520, 531, fn. 4.)

“Under the ‘delayed discovery rule,’ . . . the accrual date of a cause of action is delayed until the plaintiff is aware of his or her injury and its cause. The plaintiff is charged with this awareness as of the date he or she suspects or should suspect that the injury was caused by someone’s wrongful act. The period of limitations, therefore, will begin to run when the plaintiff has a ‘suspicion of wrongdoing’; in other words, when he or she has notice of information of circumstances to put a reasonable person on inquiry.” (Brandon G. v. Gray (2003) 111 Cal. App. 4th 29, 35.)

Plaintiff (here, “Cross-Defendant”) has met its burden to establish an affirmative defense to each of Defendants’ (here, “Cross-Complainants”) claims through the statute of limitations by establishing that Cross-Complainants either suspected or were put on inquiry notice as to the wrongdoing alleged in their claim in either 2004 or 2006. Cross-Defendant establishes that: (1) Cross-Complainants received a copy of the closing statement, purchase agreement, and commission agreement with J. J. Stephens, and so were aware of all documentation regarding the DMG transaction in 2004 (Decl. Chou, ¶ 16); and (2) Virginia began managing the accounts of DMG in 2006, thus putting Cross-Complainants on notice of any financial irregularities from that date (Decl. Chou, ¶ 31). Cross-Defendant additionally alleges that Andrew Suen and Frank Ong were aware of the amount of the loan taken out, but cites the Declaration of Chou, paragraph 13, which does not support the allegation presented. Cross-Defendant contends that the statute of limitations for all actions in the XC are barred whether inquiry notice began in 2004 or 2006, as the applicable statute of limitations range from three to four years and the XC was filed in 2018. Thus, the burden shifts to Cross-Complainants to show a triable issue of material fact exists as to the statute of limitations defense.

Cross-Complainants set forth that Virginia discovered Cross-Defendant’s alleged wrongdoing in December of 2017 through documents discovered in the instant suit. (Decl. Virginia, ¶ 3.) They argue Virginia, acting as a reasonable investor, would only review title documents, the Property Profile, and purchase history on the property at the time of sale. They contend Virginia only discovered the alleged fraud underlying the XC on review of the Property Profile in preparation for sale on November of 2017. (Decl. Virginia, ¶ 27.)

Accordingly, Cross-Complainants have met their burden in demonstrating the existence of a material, triable issue as to the statute of limitations affirmative defense.

First and Fifth Causes of Action (Breach of Written and Oral Contract) – To plead breach of contract, the Plaintiff must allege (1) the existence of a contract, (2) Plaintiff’s performance or excuse for non-performance, (3) Defendant’s breach, and (4) resulting damage to Plaintiff. (Lortz v. Connell (1969) 273 Cal. App. 2d 286, 290.) As for the first element, alleging the existence of a contract has its own additional pleading and proof requirements, or elements. These are (1) parties capable of contracting, (2) their consent, (3) a lawful object, and (4) sufficient cause or consideration. Civ. Code §1550; O’Byrne v. Santa Monica-UCLA Medical Center (2001) 94 Cal. App. 4th 797, 806-807. Contracts may be written or oral, except when specified by law, such as contracts falling under the statute of frauds. Civ. Code §§ 1622 & 1624.

Cross-Defendant argues that no breach of contract occurred because no contract was yet formed at the time of alleged breach (XC, ¶¶ 15-19, 23), and Cross-Complainants suffered no damages (Decl. Jones, ¶ 16, Ex. 19). Cross-Defendant also argues that Cross-Complainants fail to show that Cross-Defendant breached the contract in failing to contribute the requisite 12.5% payment to the Property. In support of this contention, Cross-Defendant cites Frank Ong’s statement and Chow’s deposition. (Decl. Jones, ¶ 16, Ex. 19; ¶ 11, Ex. 8.)

Regarding the failure to show breach argument, Exhibit 19 is subject to a sustained objection, but in Exhibit 8, Chow stated he did not know which parties put what amounts of money into the LLC. (Decl. Jones, ¶ 11, Ex. 8, 17:2-6.) Cross-Defendant thus fulfills her burden to show that Cross-Complainants fail to support their breach of contract claim, and the burden shifts to Cross-Complainants.

In opposition, Cross-Complainants argue that Cross-Defendant breached the operating agreement but presents no evidence in support. (Oppo., 19:15-20, 20:19-24.) Cross-Complainants thus fail to meet their burden, and the Court will grant summary judgment as to the first and fifth causes of action.

Third Cause of Action (Breach of Fiduciary Duty) – The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary duty, (2) breach, and (3) damages proximately caused by the breach. (Stanley v. Richmond (1995) 35 Cal. App. 4th 1070, 1086.)

Cross-Defendant argues she had no fiduciary duty to Cross-Complainants at the time of the alleged breach, as the parties’ only relationship then were as investors, citing paragraphs 3-13 of the Declaration of Chou. This argument does not address Cross-Complainants’ allegations that Cross-Defendant received kickbacks from an undisclosed commission relating to DMG’s purchase of real property and channeled DMG monies to Angie Yu, both allegedly occurring after the formation of DMG. (XC, ¶ 31.)

Accordingly, the Court will deny summary adjudication as to the third cause of action.

Fourth and Sixth Causes of Action (Fraud/Constructive Fraud) – Causes of action for ‘fraud’ ‘concealment’ and ‘intentional misrepresentation’ are all causes of action sounding in “deceit based on intentional misrepresentation.” (Manderville v. PCG&S Group (2007) 146 Cal. App. 4th 1486, 1498, fn. 4.) As such, “[t]o establish a claim for deceit based on intentional misrepresentation, the plaintiff must prove seven essential elements: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff’s reliance on the defendant’s representation was a substantial factor in causing that harm to the plaintiff.” Id. at 1498. Fraud must also be specifically pled, which means that the allegations in such an action need not be liberally construed, general pleading of the legal conclusion of fraud is insufficient, and every element of the cause of action for fraud must be alleged fully, factually and specifically. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal. App. 3d 1324, 1331; see also Quelimane Co., Inc. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47) (Specific to fraud is the rule of particularity in pleading; fraud is the only remaining cause of action in which specific pleading is required to enable the court to determine, on the basis of the pleadings alone, whether a foundation exists for the cause.).

The Civil Code specifies several different varieties of fraud, including “[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact.” (Civ. Code §1710.) “The elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.” (Boschma v. Home Loan Center, Inc. (2011) 198 Cal.App.4th 230, 248 (internal quotes omitted); see also Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1185–1186, as modified on denial of reh’g (Aug. 13, 2014), review denied (Nov. 25, 2014)) (“the necessary elements of a concealment/suppression claim consist of (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud (i.e., to induce reliance); (4) justifiable reliance; and (5) resulting damage.”).

Cross-Defendant argues Cross-Complainants cannot show that it failed to make its required capital contribution (Decl. Jones, ¶ 11, Ex. 8) or tricked Cross-Complainants into believing that she was a Kotai real estate broker (Decl. Jones, ¶ 6, Ex. 3). On the misrepresentation issue, Cross-Defendant further argues that she gave her business card, which identified her association Kotai Timex Finance and Investment, Inc. and did not identify her as a broker, to Cross-Complainants, and so their belief that she was a broker with Kotai Realty, Inc. was not reasonable. (Decl. Jones, ¶ 6, Ex. 3.) Cross-Defendant thus fulfills her burden to show that the concealment element of the real estate broker fraud claim, and the damages element of the failure to contribute fraud claim, cannot be established.

In opposition, Cross-Complainants argue their fraud claims but present no evidence to support their arguments, and so fail to bear their burden to show that a triable issue of material fact exists as to each claim. The Court will thus grant summary judgment as to the fourth and sixth causes of action.

Ninth Cause of Action (Conspiracy) – In order to establish liability for an act based on a civil conspiracy theory a plaintiff must plead that the alleged conspirators (1) formed and operated a conspiracy to harm plaintiff, (2) committed a specific wrongful act or acts done pursuant to the conspiracy, and (3) plaintiff suffered damage resulting from such act or acts. See Bartley v. California Association of Realtors (1980) 115 Cal.App.3d 930, 934.

While the Court notes that a “conspiracy ‘may be inferred from the nature of the acts done, the relations of the parties, the interests of the alleged conspirators, and other circumstances,’” there need to be some allegations that the co-conspirers had an agreement, and acted with scienter in taking the acts that furthered the conspiracy. Bartley, supra, 115 Cal.App.3d at 934; and Schick v. Lerner (1987) 193 Cal. App. 3d 1321, 1328 (“In order to maintain an action against [defendant] on a theory of vicarious liability arising out of his joining an already formed conspiracy, the alleged facts must show either expressly or by reasonable inference that he had knowledge of the object and purpose of the conspiracy, that there was an agreement to injure the plaintiff, that there was a meeting of the minds on the objective and course of action, and that as a result one of the defendants committed an act that resulted in the injury.”).

Cross-Defendant argues Cross-Complainants fail to create a triable issue of fact as to the elements of conspiracy because they do not provide evidence showing Cross-Defendant failed to make her capital contribution (Depo. Chow, 14:5-20), received and concealed a kickback from DMG’s property purchase (Decl. Jones, Ex. 33), or entered into a conspiracy with anyone (Decl. Chou, ¶ 16). Cross-Defendant further argues that Cross-Complainants fail to show how they were damaged. (Decl. Jones, Ex. 19.) As to the damages argument, Exhibit 19 was subject to a sustained objection. As to the kickback argument, Exhibit 33 is a copy of the 2017 Escrow Closing Documents in which most of the accounting is illegible. The legible portion of the evidence states that a check amounting to $1,769,996.28, a closing statement, a rent statement, and a copy of a paid water bill was sent to Virginia by Jade Escrow, Inc. This evidence is not sufficient to support her argument that she did not receive a kickback from the property purchase. As to the conspiracy argument, paragraph 16 of the Declaration of Chou states only that all parties received a copy of the purchase documents and there was no concealment of such documents; Cross-Defendant does not sufficiently explain how these evidence supports her contention that she did not conspire with anyone else. As to the capital contribution argument, regarding the Deposition of Chow, the Court cannot locate a separate Deposition of Chow filing, and the Exhibit 8 deposition previously cited by Cross-Defendant does not contain a page 14. Based on earlier arguments, the Court will assume that Cross-Defendant meant to cite Exhibit 8, lines 17:2-6. (Decl. Jones, ¶ 11, Ex. 8, 17:2-6.) Despite this evidence, the conspiracy claim alleges an undisclosed commission paid to Cross-Defendant by J.J. Stephens, and so Cross-Defendant fails to bear her burden to show that one or more elements of the conspiracy claim are not met.

The Court will thus deny summary judgment as to the ninth cause of action.

Tenth Cause of Action (Declaratory Relief) – An action for declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties under a contract and requests that the rights and duties be adjudged. City Of Tiburon v. Northwestern Pac. R.R. Co. (1970) 4 Cal. App. 3d 160, 170; see Code of Civ. Proc. §1060 (identifying the remedy of declaratory relief). If these requirements are met, the Court must declare the rights of the parties whether or not the facts alleged establish that the plaintiff is entitled to a favorable declaration. Declaratory relief is a broad remedy, and the rule that a complaint is to be liberally construed is particularly applicable to one for declaratory relief. The object of declaratory relief “is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.” (See Hood v. Superior Court (1995) 33 Cal.App.4th 319, 324) (quoting General of America Ins. Co. v. Lilly (1968) 258 Cal. App. 2d 465, 470.)

Cross-Defendant argues declaratory relief is improper as the issues invoked are also invoked in other causes of action. On review of the XC, the tenth cause of action makes no new allegations, and Cross-Complainants do not dispute this argument.

Accordingly, the Court will grant summary adjudication as to the tenth cause of action.

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Motion for Order Permitting Financial Discovery

Standard of Review – Financial Discovery – Civ. Code §3295 protects parties from having to reveal financial information to others unless and until the plaintiff “established that there is a substantial probability that the plaintiff will prevail on the claim.” Civ. Code §3295(c). “In this context, we interpret the words ‘substantial probability’ to mean ‘very likely’ or ‘a strong likelihood’ just as their plain meaning suggests. We note that the Legislature did not use the term ‘reasonable probability’ or simply ‘probability,’ which would imply a lower threshold of ‘more likely than not.’” Jabro v. Superior Court (2002) 95 Cal. App. 4th 754, 758. Moreover, the code “allows the trial court, ‘at any time,’ to enter an order permitting the discovery of a defendant’s profits and/or financial condition… [s]o long as the trial court allows the defendant sufficient time, following a determination of liability, to collect his or her financial records for presentation on the issue of the amount of such damages to be awarded, there is nothing prejudicial or unfair about using such a process to try the issue of the amount of punitive damages.” Mike Davidov Co. v. Issod (2000) 78 Cal. App. 4th 597, 609.

Merits – On review of the evidence and arguments made on motion, the Court concludes that Plaintiff has failed to establish a prima facie of success basis for her punitive damages claim. Plaintiff’s discussions on a laches affirmative defense and contention that Defendants violated a fiduciary duty toward Plaintiff are insufficient to support “a strong likelihood” that Defendants acted willfully and maliciously on this state. Other issues where Defendants have presented competing declaration and testimony include (1) precise accounting figures for the property purchase, the capital contribution of each investor, and the loan amount taken out by DMG, as each of these figures are disputed between the parties, while Defendants’ opposition brief presents even a range of figures in their own accounting; (2) what amount of capital contribution Plaintiff contributed, if any; (3) when exactly Virginia could reasonably access the documents required to put her on notice of what Defendants allege to be Plaintiff’s failure to contribute; (4) whether Defendants acted willfully, maliciously, or fraudulently when Virginia Chen placed the stop payment on Plaintiff’s check; (5) the purchase price of the Property itself and the financing amount required to purchase the Property; and (6) whether an oral agreement existed between Virginia and Plaintiff for Plaintiff to accept a reduced payment in lieu of her original claimed profit share.

Further, the Court notes that even if it were to consider Plaintiff’s argument sufficient to establish “a strong likelihood” of success, Civ. Code § 3295(c) is not a mandatory provision that obligates the Court to grant the relief requested, but a discretionary provision. As such, the Court considers that the discovery of the financial condition of Defendants should be set after a determination of liability is reached by the factfinder. Customarily this is done by giving a notice to produce on a timely basis to defendant, seeking financial records; the records are maintained in the courtroom until the underlying antecedent for punitive damages is found by the finder of fact, and then utilized for the second phase of the trial.

Accordingly, the Court will deny the motion.

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RULING: below,

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Plaintiff Lily Chou’s Motion for Summary Judgment or Adjudication, and Motion for Leave to Discover Defendants’ Financial Condition came on regularly for hearing on October 30, 2020, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE MOTION FOR SUMMARY JUDGMENT AS TO THE COMPLAINT IS DENIED.

THE MOTION FOR SUMMARY JUDGMENT AS TO THE CROSS-COMPLAINT IS DENIED AS TO THE FIRST, THIRD, FOURTH, FIFTH, SIXTH, AND NINTH CAUSES OF ACTION; THE MOTION IS GRANTED AS TO THE TENTH CAUSE OF ACTION.

THE MOTION FOR LEAVE TO DISCOVER DEFENDANTS’ FINANCIAL CONDITION IS DENIED.

DATE: _______________ _______________________________

JUDGE

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Category Archives: Los Angeles Superior Court Tentative Rulings

LILY CHOU VS. VITUS F SUEN