Case Name: Chau Nguyen, et al. v. Vince Nguyen, et al.

Case No.: 2013-1-CV-248916

Demurrer by defendants Vince Nguyen, Teri Ha Nguyen, and Chuan Ha

In 1985, plaintiffs Chau Nguyen and Giang Nguyen (collectively, “Plaintiffs”) purchased real property located at 4537 Lincoln Avenue in Oakland (“Property”). (Second Amended Complaint (“SAC”), ¶3.) On December 4, 1998, Plaintiffs refinanced the Property with the services of defendant Teri Ha Nguyen. (Id.) In 2003 and again on October 1, 2006, Plaintiffs refinanced the Property with defendant Teri Ha Nguyen’s services. (Id.) In the last refinance, Plaintiffs executed a promissory note in the amount of $1,000,000 in favor of First Financial Lender (“FFL”) and a first deed of trust securing the promissory note. (Id.) Plaintiffs also executed a second promissory note in the amount of $75,000 in favor of FFL and a second deed of trust securing the promissory note. (Id.) In December 2006, defendant Teri Ha Nguyen, through her company FFL, assigned the $1,000,000 promissory note and first deed of trust to Aurora Loan Services LLP (“Aurora”) and assigned the $75,000 promissory note and second deed of trust to CitiMortgage. (Id.)

In late 2010, Plaintiffs defaulted in repayment of the $1,000,000 promissory note. (SAC, ¶4.) On December 21, 2010, Plaintiffs filed a complaint in Alameda County Superior Court against Aurora, FFL, and others seeking injunctive relief to prevent foreclosure and seeking loan modification. (Id.) Defendant Teri Ha Nguyen informed Plaintiffs that she could reassign the $1,000,000 promissory note and deed of trust to Chase Merritt Fund I, LLC (“Chase”) in order to obtain a loan modification even though defendant Teri Ha Nguyen knew the promissory note/ deed of trust had been sold to Aurora in December 2006. (Id.)

At defendant Teri Ha Nguyen’s recommendation, Plaintiffs consulted with defendant Vince Nguyen (Teri Ha Nguyen’s husband), regarding their pending lawsuit. (SAC, ¶5.) Defendant Vince Nguyen showed Plaintiffs an Assignment of Deed of Trust, dated August 1, 2011, purportedly assigning the $1,000,000 promissory note and deed of trust from FFL to Chase. (Id.) On defendant Vince Nguyen’s advice, Plaintiffs entered into a settlement agreement on November 11, 2011 which stated that the $1,000,000 promissory note and deed of trust in favor of FFL had been assigned to Chase. (Id.) The settlement agreement obligated Plaintiffs to pay $206,000 to Chase, which Plaintiffs paid. (Id.) Unbeknownst to Plaintiffs, the recitals in the agreement which stated that Chase was the assignee or owner of the foregoing promissory notes were false. (Id.) Thus, the requirement that Plaintiffs pay $206,000 to Chase was a sham and a fact which defendant Vince Nguyen knew or should have known had he acted with the requisite diligence and standard of care. (Id.)

On April 19, 2012, on the advice of defendant Vince Nguyen, Plaintiffs conveyed by grant deed the legal ownership of the Property to their daughter, Cecilia Nguyen (“Cecilia”), while retaining an equitable interest therein. (SAC, ¶6.) Plaintiffs advised Defendant that they would continue to be equitable owners with the obligation to make all payments as Cecilia, a student, had no ability to do so. (Id.) On May 8, 2012, on the advice of defendant Vince Nguyen, Cecilia conveyed a 50% interest in the Property to Hong Ha, and by grant deed dated May 8, 2012, Cecilia and Hong Ha became the legal owners of the Property as tenants in common in exchange for a $240,000 loan that Hong Ha made to Plaintiffs so that the settlement agreement with Chase could be and was accomplished. (SAC, ¶7.)

Although Hong Ha and Cecilia appear as owners of the Property, they hold legal title only, with the equitable interest retained by Plaintiffs, who continue to be responsible for all monetary obligations on the Property. (SAC, ¶8.) On June 18, 2012, in order to obtain a temporary restraining order preventing foreclosure of the Property, defendant Vince Nguyen filed a complaint on behalf of Cecilia and Hong Ha in Alameda County Superior Court. (Id.) The complaint was drafted by defendant Vince Nguyen under the name of attorney David Sternberg and signed for him without his consent and without him having an opportunity to review it. (Id.) On July 6, 2012, Defendant dismissed the complaint. (Id.)

Plaintiffs allege defendants committed professional negligence by: failing to use the requisite due diligence to determine that Chase was not the owner of the notes prior to drafting the settlement agreement; filing a complaint without the consent of David Sternberg and then dismissing the same; and by recommending that Plaintiffs transfer title to Cecilia and Hong Ha. (SAC, ¶9.)

Plaintiffs filed their initial complaint on July 3, 2013. The FAC was filed on August 16, 2013, asserting claims for (1) Professional Negligence and (2) Breach of Fiduciary Duty. Following a substitution of counsel on August 19, 2015, Plaintiffs sought and obtained leave to file a SAC which Plaintiffs filed on October 23, 2015. The SAC added defendants Teri Ha Nguyen, Chuan Ha, Paul Nguyen, and Gary Harre. The SAC now asserts causes of action for:

(1) Professional Negligence [versus defendants Vince Nguyen and Newton Law Group]
(2) Breach of Fiduciary Duty [versus defendants Vince Nguyen, Newton Law Group, and Teri Ha Nguyen]
(3) Financial Elder Abuse – Fraud [versus all defendants]
(4) Financial Elder Abuse – Wrongful Taking & Retention [versus all defendants]
(5) Unfair Competition [versus all defendants]

On December 28, 2015, defendant Vince Nguyen dba Newton Law Group filed an answer to the SAC.

I. Defendant Teri Ha Nguyen’s demurrer to the second cause of action [Breach of Fiduciary Duty] is OVERRULED.

“In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. The absence of any one of these elements is fatal to the cause of action.” (Brown v. California Pension Administrators & Consultants, Inc. (1996) 45 Cal.App.4th 333, 347 – 348.)

The SAC alleges that defendant Teri Ha Nguyen is a licensed real estate broker and mortgage originator who advised Plaintiffs with respect to their home financing and re-financing over the course of many years. (SAC, ¶¶1(c) and 4.) The SAC also alleges that defendant Teri Ha Nguyen is an officer and director of FFL. (SAC, ¶1(d).)

Defendant Teri Ha Nguyen demurs, initially, by arguing that to the extent she took any action on behalf of FFL, she is not personally liable for any actions taken on behalf of the corporate entity. The argument fails because the SAC alleges personal conduct by defendant Teri Ha Nguyen. For instance, at paragraph 4, the SAC alleges, “TERI HA-NGUYEN informed Plaintiffs that she could reassign the $1,000,000 Promissory Note and the Deed of Trust securing said Note to Chase Merritt Fund I, LLC, in order to obtain a loan modification, although TERI HA-NGUYEN (as well as ATTORNEY NGUYEN) knew that said Note had previously been sold to Aurora in December, 2006.” In other words, Plaintiffs allege defendant Teri Ha Nguyen made an intentional and/or negligent misrepresentation in her capacity as Plaintiffs’ real estate broker/ mortgage originator.

Defendant Teri Ha Nguyen argues next that she did not owe Plaintiffs a fiduciary duty. “While breach of fiduciary duty is a question of fact, the existence of legal duty in the first instance and its scope are questions of law.” (Kirschner Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d 784, 790; internal citations omitted.) More specifically, defendant Teri Ha Nguyen argues that, while she performed refinancing for Plaintiffs in 1998, 2003, and 2006, she did not owe Plaintiffs a duty in 2011 when the subject dispute occurred. Defendant Teri Ha Nguyen’s second argument fails because the SAC alleges she falsely advised Plaintiffs at some unspecified time between December 21, 2010 and June 7, 2011. (See SAC, ¶4.) The SAC adequately alleges defendant Teri Ha Nguyen is advising Plaintiffs as a licensed real estate broker during the relevant time frame.

Finally, defendant Teri Ha Nguyen demurs by arguing that the second cause of action against her is barred by either a three year or four year statute of limitations. Defendant acknowledges a four year statute of limitations for a breach of fiduciary duty cause of action unless the breach is grounded in fraud, in which case the statute of limitations is three years. (William L. Lyon & Associates, Inc. v. Superior Court (2012) 204 Cal.App.4th 1294, 1312.) According to defendant Teri Ha Nguyen, the cause of action accrued no later than June 18, 2012, the date Plaintiffs allege that defendant Vince Nguyen filed a complaint to stop the foreclosure. (See SAC, ¶8.)

“Where the dates alleged in the complaint show the action is barred by the statute of limitations, a general demurrer lies.” (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PROC. BEFORE TRIAL (The Rutter Group 2015) ¶7:50, p. 7(I)-30 citing Iverson, Yoakum, Papiano & Hatch v. Berwald (1999) 76 Cal.App.4th 990, 995.) “The running of the statute must appear ‘clearly and affirmatively’ from the dates alleged. It is not enough that the complaint might be barred.” (Id. citing Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 324 – 325.)

Here, the second cause of action against defendant Teri Ha Nguyen is based upon her alleged fraudulent or negligent misrepresentation and, consequently, a three year statute of limitations would apply. Code of Civil Procedure section 338, subdivision (d) specifies a three year statute of limitations for actions grounded in fraud or mistake. Code of Civil Procedure section 338, subdivision (d) also specifically states, “The cause of action … is not to be deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.” (Code Civ. Proc. §338, subd. (d).)

Here, the allegations of the SAC do not disclose when Plaintiffs discovered the facts constituting fraud. The allegation that defendant Vince Nguyen filed a complaint to stop foreclosure on June 18, 2012 does not establish Plaintiffs’ knowledge, actual or otherwise, of the alleged misrepresentations particularly in view of the allegation that defendant Vince Nguyen filed said complaint on behalf of another attorney without that attorney’s consent. These allegations do not clearly and affirmatively disclose, on the face of the complaint, that the cause of action is barred by the statute of limitations.

For the above stated reasons, defendant Teri Ha Nguyen’s demurrer to the second cause of action in Plaintiffs’ SAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of fiduciary duty is OVERRULED.

II. Defendants Vince Nguyen, Teri Ha Nguyen, and Chuan Ha’s demurrer to plaintiff Giang Nguyen’s third and fourth causes of action [Financial Elder Abuse] is OVERRULED. Defendant Chuan Ha’s demurrer to the third and fourth causes of action is SUSTAINED.

Financial elder abuse is defined by Welfare and Institutions Code section 15610.30, subdivision (a) as follows:

“Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following:
(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.
(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 1575 of the Civil Code.

Defendants Vince Nguyen, Teri Ha Nguyen, and Chuan Ha demur to plaintiff Giang Nguyen’s third and fourth causes of action on the basis that plaintiff Giang Nguyen does not qualify as an elder during the relevant time period. “Elder” means any person residing in this state, 65 years of age or older. (Welf. & Inst. Code, §15610.27.) The SAC alleges that plaintiff Giang Nguyen “at all times relevant to this action after September 2, 2012 has been and continues to be an ‘elder’ within the meaning of” the Elder Abuse Act. (SAC, ¶ 16.)

Defendants contend the cause of action by plaintiff Giang Nguyen fails because the alleged misconduct occurred before plaintiff Giang Nguyen qualified as an elder. In opposition, plaintiff contends the misconduct continued after plaintiff Giang Nguyen turned 65 in that defendants continue to wrongfully retain plaintiff Giang Nguyen’s property (money). (See also SAC, ¶16—alleging defendants’ conduct occurred or continued after plaintiff Giang Nguyen turned 65.)

The court agrees with plaintiff Giang Nguyen that, as currently pleaded, the SAC includes allegations of misconduct occurring at a time when plaintiff Giang Nguyen qualifies as an “elder” under the Elder Abuse Act.

Defendant Chuan Ha demurs additionally by arguing, as defendant Teri Ha Nguyen argued above, that he is not personally liable for any actions taken on behalf of the corporate entity, Chase, of which he is alleged to be an officer. (SAC, ¶1(e).) The SAC alleges Chase committed elder abuse by “execut[ing] a document purporting to grant Plaintiffs a settlement agreement/ mortgage modification; and negotiat[ing] Plaintiffs’ checks, thereby representing that Plaintiffs were paying monthly payment required for a mortgage modification.” (SAC, ¶23(d).)

In opposition, Plaintiffs point to the allegation that Chuan Ha is an officer of Chase, which is a “revoked Nevada LLC.” (SAC, ¶1(e).) Plaintiffs then acknowledge that Chase “received the (yet to be refunded) monthly payments central to plaintiffs’ claim.” Plaintiffs contend simply that a nonexistent sham entity cannot shield its purported principal from liability.

Presumably, Plaintiffs are relying upon their alter ego allegations to hold defendant Chuan Ha vicariously liable for Chase’s misconduct. However, the alter ego allegations found at paragraph 44 of the SAC do not suffice. “The alter ego doctrine arises when a plaintiff comes into court claiming that an opposing party is using the corporate form unjustly and in derogation of the plaintiff’s interests.” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300.) “[T]wo conditions must be met before the alter ego doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone.” (Tucker Land Co. v. State of California (2001) 94 Cal.App.4th 1191, 1202.)

Accordingly, defendants Vince Nguyen, Teri Ha Nguyen, and Chuan Ha’s demurrer to the third and fourth causes of action of the SAC by plaintiff Giang Nguyen on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for financial elder abuse is OVERRULED. Defendant Chuan Ha’s demurrer to the third and fourth causes of action in Plaintiffs’ SAC on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for financial elder abuse is SUSTAINED with 10 days’ leave to amend.