Case Name: Dennis Alen Lempert v. Sung My Ly, et al.
Case No.: 2015-1-CV-278870

Currently before the Court are the demurrer and motion to strike by defendant Thuy Trong Le (“Le”).

Factual and Procedural Background

This is a personal injury action brought by plaintiff Dennis Alen Lempert (“Plaintiff”) against Le and defendants Sung My Ly (“Ly”) dba ProfessioNAIL, Tsu Cam Luu (“Luu”), Ngoc Diep Thi Vo (“Vo”), and Hong Lee Wilbanks (“Wilbanks”) (collectively, “Defendants”).

According to the allegations of the operative third amended complaint (“TAC”), Luu, an employee of ProfessioNAIL, inadvertently injured Plaintiff’s right index finger while giving him a manicure. (TAC, ¶¶ 2.1 and 5.) Luu accidentally cut into Plaintiff’s finger with her cuticle cutters, causing the finger to bleed. (Ibid.) Luu then placed Plaintiff’s cut finger back into a basin of used and unsanitized water instead of anesthetizing or bandaging the wound. (Ibid.)

As a result of the injury, Plaintiff’s finger became infected and worsened until he was required to seek emergency medical care five days later. (TAC, ¶ 6.) Emergency physicians and an infectious disease specialist evaluated and diagnosed Plaintiff with cellulitis with lymphangitis. (Id. at ¶ 7.) His course of treatment included a long-term hospital stay, surgery, antibiotics, and physical therapy. (Ibid.) Plaintiff’s finger has since healed from infection, but the damage to his tendon is a permanent and progressively degenerating condition affecting his range of motion, grip strength, flexibility, and dexterity. (Id. at ¶ 8.)

At the time of the injury, ProfessioNAIL was owned and operated by Ly. (TAC, ¶¶ 2, 2.1, and 21.) Le also had an ownership interest in the business and/or co-operated the business. (Id. at ¶¶ 2.3 and 22.) Plaintiff also alleges that Ly and Le conspired to transfer their ownership interest of ProfessioNAIL to Ly’s wife, Vo, and his daughter, Wilbanks, in order to unlawfully avoid satisfaction of judgment in this action. (Id. at ¶¶ 2.3 and 23.) Vo and Wilbanks are now the current owners and/or operators of the ProfessioNAIL business. (Id. at ¶ 2.2.)

Based on the foregoing, Plaintiff alleges the following causes of action against Defendants: (1) negligence; (2) negligence per se; and (3) fraudulent transfer.

On October 12, 2017, Le filed the instant demurrer and motion to strike. Plaintiff filed papers in opposition to the demurrer on January 3, 2018.

Discussion

I. Demurrer

Le demurs to the third cause of action for fraudulent transfer on the ground of failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subd. (e).)

A. Legal Standard

The function of a demurrer is to test the legal sufficiency of a pleading. (Trs. Of Capital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621.) Consequently, “[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.” (South Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (South Shore), internal citations and quotations omitted; see also Code Civ. Proc., § 430.30, subd. (a).) “It is not the ordinary function of a demurrer to test the truth of the [ ] allegations [in the challenged pleading] or the accuracy with which [the plaintiff] describes the defendant’s conduct. [ ] Thus, [ ] the facts alleged in the pleading are deemed to be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.)

B. Third Cause of Action

Le argues that the third cause of action for fraudulent transfer fails to allege facts sufficient to state a claim because: (1) “Plaintiff has failed to allege whether he made a claim to, sued or threatened to sue [Le] specifically or personally before [Le transferred the nail salon business] on November 1, 2013 (when the sublease expired, in the normal course of business transactions …)”; and (2) “there is more than adequate insurance coverage for Plaintiff’s loss.” (Mem. Ps. & As., p. 4:17.) With respect to his first argument, Le contends that Ly, Vo, and Luu operated the nail salon under a sublease at the time of the alleged incident. Le asserts that the sublease expired on October 31, 2013, and when the lease was renewed the business was transferred to Vo and Wilbanks. Regarding his second argument, Le contends that the nail salon carried a liability insurance policy in the amount of $1,000,000.

Le’s arguments are not well-taken. Le’s first argument is predicated on facts that are not alleged in the TAC and have not been judicially noticed. Specifically, Le’s argument is based on his contentions that Ly, Vo, and Luu operated the nail salon under a sublease at the time of the alleged incident; the sublease expired on October 31, 2013; and the sublease was renewed on November 1, 2013. As these facts have not been judicially noticed and appear nowhere in the TAC, they may not be properly considered on demurrer. (See South Shore, supra, 226 Cal.App.2d at p. 732 [“[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.”].) Moreover, Le cites no legal authority providing that Plaintiff was required to make a claim prior to the alleged transfer of the business. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 (Badie); see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 (Schaffer) [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Notably, “[a] transfer of assets made by a debtor is fraudulent as to a creditor, whether the creditor’s claim arose before or after the transfer, if the debtor made the transfer (1) with an actual intent to hinder, delay or defraud any creditor, or (2) without receiving reasonably equivalent value in return, and either (a) was engaged in or about to engage in a business or transaction for which the debtor’s assets were unreasonably small, or (b) intended to, or reasonably believed, or reasonably should have believed, that he or she would incur debts beyond his or her ability to pay as they became due.” (Cortez v. Vogt (1997) 52 Cal.App.4th 917, 928, italics added and citations omitted.) Thus, Plaintiff does not need to show that his claim arose before the alleged transfer in order to state a claim for fraudulent transfer.

Le’s second argument is also predicated on facts that are not alleged in the TAC and have not been judicially noticed. Specifically, Le’s argument is based on his contention that the nail salon carried a liability insurance policy in the amount of $1,000,000. As this fact has not been judicially noticed and appears nowhere in the TAC, it may not be properly considered on demurrer. (See South Shore, supra, 226 Cal.App.2d at p. 732 [“[a] demurrer reaches only to the contents of the pleading and such matters as may be considered under the doctrine of judicial notice.”].) Moreover, Le fails to adequately explain why the existence of insurance coverage for Plaintiff’s alleged loss means that Plaintiff cannot state a claim for fraudulent transfer. (See Badie, supra, 67 Cal.App.4th at pp.784-785; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].)

For these reasons, the demurrer to the third cause of action is OVERRULED.

II. Motion to Strike
Le moves to strike Plaintiff’s request for punitive damages from the TAC. (See Code Civ. Proc., §§ 435 and 436.) Plaintiff did not file any papers in opposition to Le’s motion. Because Plaintiff does not oppose the motion, Le’s motion to strike the request for punitive damages from the TAC is GRANTED with 10 days’ leave to amend.