Case Name: Charles Wilhelm, et al. v. William Yuan, et al.
Case No.: 18CV336513

This action seemingly arises from a fraudulent loan transaction. Charles Wilhelm and his wife Brenda Wilhelm (collectively, “Plaintiffs”) commenced this action as trustees of the Wilhelm Family Trust. Plaintiffs, for unspecified reasons, promised defendant William Yuan (“Yuan”) that they would wire funds to an escrow account for a loan transaction between defendants nGlobaLink Corporation (“NGLC”) and Monex Assurance Group, Inc. They initially wired $75,000 to an escrow agent, namely defendant Gregory L. Davis (“Davis”). They subsequently wired an additional $175,000, which was deposited with Swiss Monex Global, AG in the Bahamas. They had to take out a home-equity loan to secure the $175,000 payment. By September 2017, Yuan had not returned the $250,000 they fronted for the transaction. In September 2018, Yuan executed a promissory note in favor of Plaintiffs. He never repaid them. And so, Plaintiffs commenced this action.

Plaintiffs assert causes of action against the defendants for: (1) false promise (against Yuan and NGLC); (2) negligent misrepresentation (against Yuan and NGLC); (3) intentional misrepresentation (against Yuan and NGLC); (4) negligent misrepresentation (against Yuan and NGLC); (5) false promise (against Yuan and NGLC); (6) negligent misrepresentation (against Yuan and NGLC); (7) intentional misrepresentation (against Yuan and NGLC); (8) negligent misrepresentation (against Yuan and NGLC); (9) false promise (against Yuan and NGLC); (10) negligent misrepresentation (against Yuan and NGLC); (11) breach of contract (against Yuan); (12) false promise (against Yuan and NGLC); (13) breach of contract (against NGLC); (14) breach of contract (against Davis); (15) breach of fiduciary duty (against Davis); (16) breach of contract (against Monex Assurance Group, Inc.); (17) false promise (against Monex Assurance Group, Inc. and Director James C. Roberts); (18) breach of contract (against Swiss Monex Global, AG); (19) breach of promissory note (against Yuan); and (20) conversion (against Davis and Ambar Barghava).

Currently before the Court is a demurrer by Monex Assurance Group, Inc., Swiss Monex Global, AG, and James C. Roberts (collectively, “Defendants”). For the following reasons, Defendants’ demurrer is OVERRULED.

First, Defendants did not file a demurrer. To demur to a pleading, a party must file a notice of hearing, the demurrer itself, and a supporting memorandum of points and authorities. (Cal. Rules of Court, rule 3.1112(a).) While these three components may be combined into a single document, all three components must be present. (Cal. Rules of Court, rule 3.1112(c).) Defendants filed a notice of hearing and a separate document that, although labeled “demurrer,” actually consists of a memorandum of points and authorities. They failed to file the demurrer itself, either separately or in combination with their other filings. And so, their presentation is incomplete.

Second, the absence of the demurrer is not a mere defect in form; it is a defect in substance as well. “A demurrer shall distinctly specify the grounds upon which any of the objections to the complaint [ ] are taken.” (Code Civ. Proc., § 430.60.) “Unless it does so, it may be disregarded.” (Code Civ. Proc., § 430.60.) “Each ground of demurrer must be in a separate paragraph and must state whether it applies to the entire complaint…or to specified causes of action.” (Cal. Rules of Court, rule 3.1320(a).) Because Defendants did not file a demurrer in the first instance, it necessarily follows that they fail to specify the statutory grounds for their demurrer and the particular causes of action in the complaint, if any, to which the demurrer is made.

Third, Defendants do not otherwise identify a statutory ground for their demurrer. In their notice of hearing, they state the demurrer is on the ground the Court lacks personal jurisdiction. The statutory grounds for demurrer are set forth in Code of Civil Procedure section 430.10. Lack of personal jurisdiction is not one of them. Rather, the proper procedural vehicle for challenging personal jurisdiction is a motion to quash service of summons under Code of Civil Procedure section 418.10. “Failure to make a motion under [Section 418.10] at the time of filing a demurrer or motion to strike constitutes a waiver of the issues of lack of personal jurisdiction, inadequacy of process, inadequacy of service of process, inconvenient forum, and delay in prosecution.” (Code Civ. Proc., § 418.10, subd. (e)(3).)

Defendants also argue the facts alleged are not sufficiently plausible to state a claim upon which relief can be granted. This argument appears to be based on the standard for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), which is inapplicable here. (See Ashcroft v. Iqbal (2009) 556 U.S. 662, 678.) There is a similar ground for demurrer in state court, namely failure to state facts sufficient to constitute a cause of action. (Code Civ. Proc., § 430.10, subd. (e).) But, as stated above, Defendants did not file a demurrer invoking that statutory ground and the scope of their demurrer is unclear.

Finally, as for Defendants’ substantive argument that Plaintiffs are not third-party beneficiaries of agreements between the financial institutions, they rely on both the allegations in the pleading as well as evidence accompanying their demurrer. (Mem. of Pts. & Auth. at p. 12:3–5.) A court may not consider evidence for the purpose of a demurrer. (See Code Civ. Proc., § 430.30, subd. (a).) Thus, Defendants’ reliance thereon is improper.

For all of these reasons, Defendants’ demurrer is OVERRULED.