Case Name: Trinh v. Quan Trinh, LLC, et al.
Case No.: 19CV343388

According to the allegations of the complaint, plaintiff Dennis Trinh (“Plaintiff”) and defendant Ben Toan Quan (“Quan”) are brothers-in-law who formed an oral general partnership agreement in August 2000 to invest and operate a business together with all profits and losses and income and expenses to be shared equally, as each had a 50% interest in this partnership. (See complaint, ¶ 7.) Their first investment was a liquor store, Gene’s Liquors. (Id.) Unbeknownst to Plaintiff, Quan and defendant Annie Trinh (“Annie”) took title to the business in their names only. (Id.) In February 2001, as part of the partnership, Quan and Plaintiff decided to purchase Fu Lam Mum Restaurant. (See complaint, ¶ 8.) Again, however, Quan had taken title to the property in his name only, unbeknownst to Plaintiff. (Id.)

In 2001, as a part of the partnership, Quan and Plaintiff decided to purchase a house in Sunnyvale. (See complaint, ¶ 9.) As with the others, however, Quan had taken title to the property in his name only, unbeknownst to Plaintiff. (Id.) In 2003, as a part of the partnership, Quan and Plaintiff decided to purchase a house in San Jose (“San Jose property”). (See complaint, ¶ 10.) Unbeknownst to Plaintiff, Quan and Annie took title to the property in their names only. (Id.) On May 24, 2004, as a part of the partnership, Quan and Plaintiff agreed to purchase a 2/3 interest in commercial real property on 1160 California Street in Mountain View where they would relocate Fu Lam Mum Restaurant. (See complaint, ¶ 11.) Unbeknownst to Plaintiff, Quan took title in the property in his name alone. (Id.) Quan also established another entity, defendant Quan Trinh, LLC (“QT”). (Id.)

In 2005, as a part of the partnership, Quan and Plaintiff agreed to purchase commercial real property at 147 Castro Street in Mountain View (“Castro Street property”), located next to their newly relocated Fu Lam Mum Restaurant. (See complaint, ¶ 12.) Quan, without Plaintiff’s knowledge, established a second business entity, defendant Trinh Quan LLC (“TQ”). (Id.) In late 2005, as a part of the partnership, Quan and Plaintiff decided to sell the Sunnyvale house and use those funds to purchase a house in Mountain View, which they did, in fact, purchase in June 2006. (See complaint, ¶¶ 13-14.) Again, Quan had taken title to the property in his name only, unbeknownst to Plaintiff. (See complaint, ¶ 14.) On November 16, 2007, Quan prepared for relocation of the Fu Lam Mum Restaurant by selling its inventory for $300,000. (See complaint, ¶ 17.) Also in November 2017, Quan took a $160,000 line of credit from the San Jose property without Plaintiff’s knowledge or consent. (See complaint, ¶ 18.) In October 2009, Quan told Plaintiff to sign a document that Plaintiff was unaware was a grant deed transferring his interest in the Mountain View house to Quan and Annie for “no consideration.” (See complaint, ¶ 16.) On February 19, 2016, Quan and Annie filed a statement of information for TQ, adding the San Jose property to the LLC. (See complaint, ¶ 19.) Plaintiff was unaware of TQ, and the statement of information showed only Quan and Annie as managers. (Id.)

On March 30, 2017, Quan took two equity loans on the Mountain View property, recording a short form deed of trust using Plaintiff’s and Plaintiff’s wife’s forged signatures and fraudulent notarization. (See complaint, ¶ 15.) In May 2017, Plaintiff met with Quan to learn why money was being spent to remodel the Fu Lam Mum Restaurant, and Quan became angry, and told him that he had no ownership interest in any of the partnership properties. (See complaint, ¶ 20.) On September 17, 2017, Quan filed a statement of information for TQ, adding the Castro Street property; again, Plaintiff was unaware of this LLC and that Quan and Annie were adding property to this LLC. (See complaint, ¶ 21.) On December 4, 2018, Quan and Annie recorded a substitution of trustee and full reconveyance of Plaintiff’s interest in the property without Plaintiff’s signature, and on January 28. 2019, Quan and Annie took a $1 million line of credit against the 1160 California Street property. (See complaint, ¶¶ 23-24.) On February 20, 2019, Plaintiff filed a complaint against defendants QT, TQ, Quan and Annie (collectively, “Defendants”), asserting causes of action for:

1) Breach of partnership agreement;
2) Conversion;
3) Breach of fiduciary duty;
4) Fraud;
5) Declaratory relief;
6) Constructive trust;
7) Dissolution; and,
8) Equitable accounting.

Annie demurs to each of the causes of action of the complaint. Quan separately demurs to each of the causes of action of the complaint. QT and TQ also demur to each of the causes of action of the complaint.

QT and TQ’s demurrer

QT and TQ demur to the first cause of action for breach of partnership agreement, arguing that “[t]he mere filing of the Articles of Organization with the Secretary of State does not create any partnership between Plaintiff and Quan Trinh LLC… [and t]here is no allegation of any partnership agreement between Plaintiff and Quan Trinh, LLC… [and t]here is no allegation of any financial transaction between Plaintiff and Quan Trinh, LLC.” (QT and TQ’s memorandum of points and authorities in support of demurrer (“QT’s memo”), p.3:9-15.) QT and TQ’s argument is not articulated well; however, QT and TQ appear to argue that there is no contractual relationship between TQ and Plaintiff or QT and Plaintiff such that QT or TQ would be liable for a breach of contract cause of action. (See Acoustics, Inc. v. Trepte Constr. Co. (1971) 14 Cal.App.3d 887, 913 (requiring the existence of a contract as an element for a breach of contract cause of action).) Here, the complaint has not alleged that Plaintiff is an intended third party beneficiary of a contract between QT or TQ and Quan and/or Annie, or that Quan is the alter ego of QT and TQ. (See Sonora Diamond Corp. v. Super. Ct. (Sonora Union High School Dist.) (2000) 83 Cal.App.4th 523, 538 (stating that, for the alter ego doctrine to be invoked, “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… [and] there must be an inequitable result if the acts in question are treated as those of the corporation alone”).) QT and TQ’s demurrer to the first cause of action is SUSTAINED with 10 days leave to amend after service of this signed order as to the first cause of action for breach of contract.

QT and TQ demur to the second cause of action for conversion, arguing that “Plaintiff did not allege that either Quan Trinh, LLC or Trinh Quan, LLC misappropriated Plaintiff’s share of partnership assets.” (QT’s memo, p.4:2-3.) Indeed, a review of the second cause of action demonstrates that Plaintiff has not alleged that TQ or QT converted any of Plaintiff’s funds; instead it alleges that “Defendant Quan wrongfully misappropriated Plaintiff’s share of partnership assets.” Again, Plaintiff has not alleged that QT and/or TQ is the alter ego of Quan. QT and TQ’s demurrer to the second cause of action is SUSTAINED with 10 days leave to amend after service of this signed order.

QT and TQ demur to the third cause of action for breach of fiduciary duty, asserting that “[t]here is no allegation of any legal relationship between Plaintiff and Quan Trinh, LLC or Trinh Quan, LLC to trigger a fiduciary duty.” (QT’s memo, p.4:18-20.) As with the prior cause of action, the third cause of action does not mention QT or TQ and thus does not allege that QT or TQ is a fiduciary of Plaintiff. (See IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 646 (stating that an element for a breach of fiduciary duty cause of action is the existence of a fiduciary duty).) As with the second cause of action, Plaintiff has not alleged that QT and/or TQ is the alter ego of Quan. QT and TQ’s demurrer to the third cause of action is SUSTAINED with 10 days leave to amend after service of this signed order.

QT and TQ demur to the fourth cause of action for fraud and misrepresentation, arguing that “[t]he Complaint simply has no allegation of any representation… made by either defendant Quan Trinh, LLC or Trinh Quan, LLC to the Plaintiff.” (QT’s memo, p.5:16-21.) The complaint does not allege that QT or TQ made any representation to Plaintiff. (See Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal.4th 631, 638 (stating that a misrepresentation is an element for a fraud cause of action), 645 (stating that “[i]n California, fraud must be pled specifically; general and conclusory allegations do not suffice… [t]his particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered”).) As with the other causes of action, Plaintiff has not alleged that QT and/or TQ is the alter ego of Quan. QT and TQ’s demurrer to the fourth cause of action is SUSTAINED with 10 days leave to amend after service of this signed order.

QT and TQ demur to the fifth cause of action for declaratory relief, asserting that “the Complaint did not allege the existence of any actual controversy between plaintiff and defendant Quan Trinh, LLC or Trinh Quan, LLC.” (QT’s memo, p.6:4-6.) Here, the Complaint does allege that “[a]n actual controversy has arisen and now exists between Plaintiff and Defendants concerning their respective concerning [sic] their respective rights and duties, in that Plaintiff contends as follows: (a) that he is an equal partner and owner of Quan Trinh LLC; (b) that he is entitled to a one third interest in the sale proceeds of the 1160 California Street, Mountain View, California property; and, (c) that he is otherwise entitled to an equal share in the remaining partnership assets.” (Complaint, ¶ 57.) Here, although the Complaint does not adequately allege facts supporting a contract between any of these demurring defendants and Plaintiff, the Complaint does allege facts supporting the existence of an actual controversy. QT and TQ’s demurrer to the fifth cause of action for declaratory relief is OVERRULED.

The parties agree that the sixth cause of action for constructive trust is dependent on the fourth cause of action for fraud. In light of the above ruling regarding the fourth cause of action, QT and TQ’s demurrer to the sixth cause of action is SUSTAINED with 10 days leave to amend after service of this signed order.

The seventh cause of action for dissolution and eighth cause of action for equitable accounting incorporates all prior allegations. QT and TQ demur to both of these causes of action, arguing that Plaintiff’s seeking of dissolution is improper because the filing of the Articles of Incorporation to form limited liability companies does not create any partnership agreement between Plaintiff and defendant Quan Trinh, LLC or Trinh Quan, LLC. (QT’s memo, p.6:19-24.) QT and TQ do not make any specific argument regarding the eighth cause of action. While the Court agrees with QT and TQ that the mere filing of the Articles of Incorporation does not create a partnership agreement, the complaint does allege that Plaintiff is an equal partner and owner of QT LLC. QT and TQ do not make any argument regarding this allegation. “[A] general demurrer admits the truth of all material factual allegations in the complaint… that the question of plaintiff’s ability to prove these allegations, or the possible difficulty in making such proof does not concern the reviewing court….” (Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496.) QT and TQ’s demurrer to the seventh and eighth causes of action is OVERRULED.

Annie’s demurrer

Annie’s arguments with respect to the first through fourth causes of action are similar to those made in QT and TQ’s demurrer: the complaint does not allege any contractual or fiduciary relationship between Annie and Plaintiff, and does not allege that Annie made any misrepresentation to Plaintiff or misappropriated any of Plaintiff’s property. Indeed, the complaint does not allege any of these necessary elements for the first through fourth causes of action. Annie’s demurrer to the first through fourth causes of action is SUSTAINED with 10 days leave to amend after service of this signed order.

As to the fifth cause of action for declaratory relief, the complaint does allege that unbeknownst to Plaintiff, Annie was listed as an owner of partnership property, and that there is an actual controversy with regards to the ownership rights of that property. As with QT and TQ’s demurrer to the fifth cause of action, the fifth cause of action does allege an actual controversy. Annie also argues that the declaratory relief cause of action is not available since Plaintiff can pursue Annie for damages through other causes of action such as fraud. “A complaint for declaratory relief is legally 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 written instrument and requests that these rights and duties be adjudged by the court.” (Leonard Carder, LLP v. Patten, Faith & Sandford (2010) 189 Cal.App.4th 92, 97.) “If these facts show the existence of an actual controversy between appellants and respondents, appellants have ‘stated a legally sufficient complaint’ for declaratory relief and it [would be] an abuse of discretion to dismiss the action.” (See Californians for Native Salmon etc. Assn. v. Department of Forestry (1990) 221 Cal.App.3d 1419, 1426; see also Alameda County Land Use Assn. v. City of Hayward (1995) 38 Cal.App.4th 1716, 1722 (stating that the “demurrer admits the truth of all material factual allegations of appellants’ complaint… [i]f those facts reveal an actual controversy exists between the parties, the complaint is legally sufficient for declaratory relief… [s]ustaining a demurrer when the complaint reveals such a controversy constitutes error”).) Annie’s demurrer to the fifth cause of action is OVERRULED.

As with QT and TQ’s demurrer, here, the parties agree that the sixth cause of action for constructive trust is dependent on the fourth cause of action for fraud. In light of the above ruling, Annie’s demurrer to the sixth cause of action for constructive trust is SUSTAINED with 10 days leave to amend after service of this signed order.

Annie argues that the seventh cause of action for dissolution of partnership is not viable because there is no allegation of a partnership agreement between Annie and Plaintiff. However, Annie is alleged to be the listed owner of partnership property. In that event, Annie is a necessary party to the dissolution of the purported partnership, even though there is no such partnership agreement. Annie’s demurrer to the seventh cause of action is OVERRULED.

As to Annie’s demurrer to the eighth cause of action, Annie blithely argues that “there is no basis to seek equitable accounting from defendant ANNIE TRINH.” (Annie’s memorandum of points and authorities in support of demurrer, p.5:24-25.) Here, it is unclear as to why Annie believes that there is no basis for the eighth cause of action. The complaint does allege that Annie was, unbeknownst to Plaintiff, listed as the owner of partnership property, and that the amount of the money due Plaintiff cannot be ascertained without an accounting of receipts and disbursements of certain transactions. Annie’s demurrer to the eighth cause of action is OVERRULED.

Quan’s demurrer

Quan first argues that the complaint is time-barred because the alleged transactions “occurred over ten years ago… the applicable statutes of limitations would apply to bar all of Plaintiff’s claim[s]… [and t]he Complaint has no allegation regarding Plaintiff’s diligent investigation of his injury or why Plaintiff could not have reasonably discovered facts nearly 20 years later.” (Quan’s memorandum of points and authorities in support of demurrer (“Quan’s memo”), pp.3:10-26, 4:1-27, 5:1-4.) However, the complaint alleges that Quan hid the facts regarding transfer of ownership of partnership properties, and that it was not until Plaintiff was frozen out of the properties and Quan told Plaintiff that he had no ownership interest anymore on May 21, 2017, when Plaintiff discovered a potential for injury. Quan’s demurrer to the complaint on the ground that it is time-barred is OVERRULED.

Quan demurs to the first cause of action on the ground that “[t]he mere filing of the Articles of Organization with the Secretary of State does not create any partnership as a matter of law.” (Quan’s memo, p.5:19-20.) Apparently, the confusion is that the first cause of action references the Articles of Organization as “[t]he Quan Trinh, LLC general partnership agreement.” (Complaint, ¶ 31.) However, Plaintiff notes that the complaint specifically alleges that Plaintiff and Quan “formed an oral general partnership agreement… to invest in and operate a business together.” (Complaint, ¶ 7.) The Court agrees that the allegations of the first cause of action as to the identification of the subject agreement is unclear. Quan’s demurrer to the first cause of action is SUSTAINED with 10 days leave to amend after service of this signed order.

Quan demurs to the second cause of action for conversion, arguing again that “the formation of a limited liability company, as a matter of law, does not create any partnership… [and t]he mere filing [of] the Articles of Organization does not constitute conversion of properties.” (Quan’s memo, p.6:7-11.) Again, the confusion stems from Plaintiff’s conflicting identifications as to the agreement that is the subject of the cause of action. As it is unclear, Quan’s demurrer to the second cause of action is likewise SUSTAINED with 10 days leave to amend after service of this signed order.

Quan demurs to the third cause of action for breach of fiduciary duty, again arguing that “the filing of the Articles of Organization of Quan Trinh LLC… is insufficient to create a partnership.” (Quan’s memo, p.7:1-3.) As with the prior causes of action, the confusion stems from Plaintiff’s conflicting identifications as to the agreement that is the subject of the cause of action. As it is unclear, Quan’s demurrer to the third cause of action is likewise SUSTAINED with 10 days leave to amend after service of this signed order.

Quan demurs to the fourth cause of action, asserting that “[t]he Complaint simply has no allegation of any representation made by defendant Quan… [t]he filing Articles of Organization for the Quan Trinh, LLC and Trinh Quan, LLC does not constitute fraud or misrepresentation… [t]o inflate his claim for damages to $1,000,000, Plaintiff strings together a series of property purchases made by defendant Quan from 2001-2006 with his own equity line of credit.” (Quan’s memo, p.8:1-6.) Unlike the other causes of action, the fourth cause of action alleges specifically that Quan made certain misrepresentations, as “a misrepresentation… includes a concealment or nondisclosure….” (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4th 513, 519.) The “series of property purchases” are among some of the material facts that is alleged to have been concealed from Plaintiff. Additionally, the complaint disputes Quan’s characterization that the purchases were made with “his own” equity line of credit, since the allegations allege that Plaintiff has interest in that equity line of credit. The alleged misrepresentations are pled with sufficient particularity as against Quan. Quan’s demurrer to the fourth cause of action is OVERRULED.

Quan demurs to the fifth cause of action for declaratory relief, arguing that “the Complaint did not allege the existence of any actual controversy between plaintiff and defendant” and that “[d]eclaratory relief is not available when Plaintiff can pursue defendant Quan for damages through other causes of action such as breach of contract.” This argument lacks merit. As stated with regards to Annie’s demurrer to the fifth cause of action, “[a] complaint for declaratory relief is legally 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 written instrument and requests that these rights and duties be adjudged by the court.” (Leonard Carder, LLP v. Patten, Faith & Sandford (2010) 189 Cal.App.4th 92, 97.) “If these facts show the existence of an actual controversy between appellants and respondents, appellants have ‘stated a legally sufficient complaint’ for declaratory relief and it [would be] an abuse of discretion to dismiss the action.” (See Californians for Native Salmon etc. Assn. v. Department of Forestry (1990) 221 Cal.App.3d 1419, 1426; see also Alameda County Land Use Assn. v. City of Hayward (1995) 38 Cal.App.4th 1716, 1722 (stating that the “demurrer admits the truth of all material factual allegations of appellants’ complaint… [i]f those facts reveal an actual controversy exists between the parties, the complaint is legally sufficient for declaratory relief… [s]ustaining a demurrer when the complaint reveals such a controversy constitutes error”).) The complaint alleges that Plaintiff is entitled to certain properties and is an equal owner in QT. This qualifies as an actual controversy. Quan’s demurrer to the fifth cause of action is OVERRULED.

Quan demurs to the sixth cause of action for constructive trust, asserting that it is dependent on the fourth cause of action for fraud. However, in light of the above ruling, Quan’s demurrer to the sixth cause of action is OVERRULED.

Quan demurs to the seventh and eighth causes of action, arguing that “the filing of the Articles of Organization to form limited liability companies does not create the partnership Agreement alleged by Plaintiff… [and t]here is [no] claim for dissolution of partnership or accounting until plaintiff can cure the defects of the Complaint.” (Quan’s memo, p.9:16-21.) Although the fifth cause of action has alleged that Plaintiff is an equal owner in Quan Trinh LLC and has an interest in certain monies as a result of the sale of 1160 California Street, as Plaintiff’s conflicting identifications as to the agreement creates confusion and a lack of clarity as to the basis for causes of action, Quan’s demurrer to the seventh and eighth causes of action is SUSTAINED with 10 days leave to amend after service of this signed order.

The Court will prepare the Order.