Case Number: GC050360    Hearing Date: September 05, 2014    Dept: B

17. GC050360
CHARLES WANG, et al vs. BENJU Y. BASBA et al
Demurrer to Fourth Amended Complaint

The Fourth Amended Complaint alleges that the Plaintiffs provided money to the Defendants under a promissory note with Defendant, Benju Basba. Under the note, Defendant, Benju Basba agreed to repay $1,000,000. The Defendant failed to repay the money.
Further, the Defendant, Rebecca Basba, is liable because she was married to Benju Basba at the time of the loan. In addition, the Benju Basba made a fraudulent conveyance to Rebecca Basba to avoid paying the debt. Further, the Defendants violated securities laws by selling shares to the Plaintiff.

The causes of action in the Fourth Amended Complaint are for:
1) Money Lent
2) Breach of Promissory Note
3) Account Stated
4) Fraudulent Conveyance
5) Fraud
6) Conspiracy to Defraud

This hearing concerns the demurrer of Defendants, Rebecca Basba and Benju Basba, to each cause of action in the Fourth Amended Complaint. The Defendants made numerous requests for judicial notice of discovery responses and declarations. The Court declines to take judicial notice of these matters because they are not subject to judicial notice, i.e., they are matters in dispute. Further, the Court declines to take judicial notice because they are unnecessary to make a determination on the demurrer.

1. Demurrer to First Cause of Action for Money Lent
The Defendants argue that this cause of action lacks sufficient facts. The Court has already overruled a demurrer on this ground when it overruled the demurrer to the first cause of action in the Third Amended Complaint on December 20, 2013. Defendants may not demurrer to this count again,
The first cause of action for common counts has the following elements:

1) the statement of indebtedness in a certain sum,
2) the consideration, i.e., goods sold, work done, money loaned, and
3) nonpayment.
Allen v. Powell (1967) 248 Cal. App. 2d 502, 510.

Common counts are merely abbreviated and stereotyped claims that the defendant is indebted to the plaintiff for a variety of commonly recurring reasons, e.g., there was an open book account or the parties agreed to the amount owing in an account stated. H. Russell Taylor’s Fire Prevention Service, Inc. v. Coca Cola Bottling Corp. (1979) 99 Cal. App. 3d 711, 717-718. The common counts could be used for the enforcement of express promises if they were such as to create a money debt, as well as for the enforcement of implied promises and quasi contracts. Id. The gist of this kind of action is that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money. Id.
The Plaintiffs allege in paragraphs 45 to 48 that the Defendants become indebted for $1,000,000 under an oral loan agreement and that the loan has not been repaid. The term “Defendants” includes both Defendants, i.e., Benju Basba and Rebecca Du Basba. These allegations are sufficient to plead the common count because they identify the amount in a certain sum, they identify the consideration, i.e., money loaned, and they allege nonpayment. The allegations are assumed true and the ability to prove the allegations is of no concern for the purposes of ruling on the demurrer. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 213-214.

Therefore, the Court overrules the demurrer to the first cause of action.

2. Demurrer to Third Cause of Action for Account Stated
The Defendants argue that this cause of action fails to state sufficient facts. The Court has already overruled a demurrer on this ground when it overruled the demurrer to the third cause of action in the Third Amended Complaint on December 20, 2013. Defendants may not demurrer again to this causes of action.
The third cause of action is a cause of action in common counts. As noted above, it has the following elements:

1) the statement of indebtedness in a certain sum,
2) the consideration, i.e., goods sold, work done, money loaned, and
3) nonpayment.
Allen v. Powell (1967) 248 Cal. App. 2d 502, 510.

The Plaintiffs allege in paragraph 59 that a $1,000,000 amount was owed by the Defendants and that they have failed to repay the amount. This is sufficient to plead a claim in common count because it identifies the certain sum of indebtedness, the consideration, and the nonpayment.
Therefore, the Court overrules the demurrer to the third cause of action.

3. Demurrer to Fifth Cause of Action for Fraud
The Defendants argue that this cause of action fails to plead the particular facts needed to plead a fraud claim. The fraud cause of action was added after the Court granted the Plaintiffs’ motion for leave to file a Fourth Amended Complaint.
The elements of a fraud cause of action are the following:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

Facts constituting each element of fraud must be alleged with particularity; the claim cannot be saved by referring to the policy favoring liberal construction of pleadings. Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216. Since fraud must be pleaded with particularity, the complaint must allege facts showing how, when, where, to whom, and by what means the representations were tendered. Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.

a. Defendant, Rebecca Basba
The Defendant argues that the cause of action lacks particular facts regarding the element of a false representation and the element of damages resulting from her alleged fraud.
The Plaintiffs allege in paragraph 83 that in November of 2008, Rebecca Du Basba assured Anita Wang that Plaintiffs would be repaid. There are no allegations identify how, where, or by what means the representation was tendered. This is insufficient to plead the element of a false representation.
The Plaintiffs allege in paragraph 91 that they have been damaged as a result of Benju Basba’s false promises. There are no particular allegations identifying the damages that resulting from Rebecca Du Basba’s alleged fraud. This is insufficient to plead the element of a false representation.

Therefore, the Court sustains the demurrer of Defendant, Rebecca Du Basba, to the fifth cause of action in the Fourth Amended Complaint.

California law imposes the burden on the Plaintiffs to demonstrate the manner in which they can amend their pleadings to state the fraud claim against the Defendant, Rebecca Du Basba. Goodman v. Kennedy (1976) 18 Cal.3d 335, 349. The Plaintiffs do not meet this burden because they do not offer any basis to find that they are able to correct these defects by amendment. Accordingly, the Court does not grant leave to amend.

b. Defendant, Benju Basba
The Defendant argues that the fraud cause of action does not plead the element of damages and is uncertain against Benju Basba.
In paragraph 91, the Plaintiff alleges that they had suffered damages because they were induced to loan money to Benju Basba by his fraudulent statements. The Plaintiffs allege that their damages are $1,000,000. This is sufficient to plead the element of damages. Accordingly, the Defendant does not identify any grounds for a demurrer based on the failure to state sufficient facts.

A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. Khoury v. Maly’s of California Inc. (1993) 14 Cal.App.4th 612, 616. A demurrer for uncertainty will be sustained only when the complaint is so unintelligible that the defendant cannot reasonably respond because the defendant cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against the defendant. Id.
A review of the fifth cause of action reveals that the Defendant can reasonably determine that it is a fraud claim based on the claim that he made false promises in order to induce the Plaintiffs to loan him money. The Defendant can reasonably determine whether to admit or deny these issues, e.g., that he made false promises. Since the Defendant can reasonably respond to the claim, there are no grounds for a demurrer based on uncertainty.

Therefore, the Court overrules the demurrer to the fifth cause of action.

4. Demurrer to Sixth Cause of Action for Conspiracy
The Defendants argue that the sixth cause of action lacks sufficient facts. Under California law, conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 784. Since conspiracy is not a cause of action, there are grounds for a demurrer.

Therefore, the Court sustains the demurrer to the sixth cause of action because conspiracy is not a cause of action. Further, the Court does not grant leave to amend because it is not possible to correct this defect by amendment. Instead, any allegations of conspiracy must be in the cause of action that identifies the wrongful conduct for which the Defendants are liable under the theory of conspiracy.

5. Motion to Strike
CCP section 436 permits the Court to strike any portions of a pleading that are improper. A motion to strike should be applied cautiously and sparingly because it is used to strike substantive defects. PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682-1683. A party cannot use a motion to strike as a “line item veto.” Id.

The Defendants request that the Court strike twenty portions from the Fourth Amended Complaint. The Cross-Defendants identify no substantive defect in these pleadings. Further, a review of each portion reveals that none concern an improper remedy or improper request for damages. Instead, they are allegations concerning the circumstances of the parties’ relationship and relating to the Plaintiffs’ claims.
For example, the Defendants request that the Court strike allegations in paragraph 26 and 27 that the Defendants concealed their divorce and obtained it for the purpose of defrauding creditors. However, these allegations support the claim in the fourth cause of action that the Defendants used a marital settlement agreement and a divorce to engage in a fraudulent transfer to avoid their creditors. Since these allegations are related to the fourth cause of action, there are no grounds to strike them.
Another example is the Defendants’ request that the Court strike allegation in paragraph 45 that the Defendants became indebted for $1,000,000. This allegation supports the claim in the first cause of action for money lent. Since the allegations supports the cause of action, there are no grounds to strike it.

Therefore, the Court denies the motion to strike in its entirety because it does not identify any substantive defects in the pleadings that should be stricken.