Case Name: Dyer v. Cummings, et al.
Case No.: 2016-1-CV-304132

This is an action for breach of contract on a promissory note. On December 22, 2008, defendant Roger D. Cummings (“Cummings”) as president of defendant Network Funding Associates, Inc. (“NFA”), signed a promissory note in the amount of $150,000 plus interest to plaintiff Marie-Jeanne Dyer (“Plaintiff”). (See complaint, exh. A.) Defendant NFA failed to pay Plaintiff as promised (see complaint, ¶ BC-2), and on December 16, 2016, Plaintiff filed a complaint against Cummings and NFA (collectively, “Defendants”), asserting causes of action for breach of contract and common counts. The agreement is attached to the complaint. Defendant Cummings demurs to each cause of action of the complaint on the ground that he is not a party to the contract.

Indeed, the contract is between NFA and Plaintiff, and “[c]ontract law exists to enforce legally binding agreements between parties….” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514.) Plaintiff contends that she alleges that she entered into a contract with Cummings, and thus, she has properly alleged a breach of contract cause of action against him. (See Pl.’s opposition to demurrer, p.3:18-21.) However, although on demurrer, the court admits all material facts properly pleaded by Plaintiff, “[i]f facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence.” (Holland v. Morse Diesel International, Inc. (2001) 86 Cal.App.4th 1443, 1447, citing Mead v. Sanwa Bank Cal. (1998) 61 Cal.App.4th 561, 567-568.) As Plaintiff has attached the contract to her complaint, the facts appearing in the contract take precedence.

As stated previously, the contract is between NFA and Plaintiff. Plaintiff has not alleged that NFA is the alter ego of Cummings, or facts supporting such a theory of liability. (See Sonora Diamond Corp. v. Super. Ct. (Sonora Union High School Dist.) (2000) 83 Cal.App.4th 523, 538-539 (stating that “[o]rdinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations… [a] corporate identity may be disregarded—the ‘corporate veil’ pierced—where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation… [u]nder the alter ego doctrine, then, when the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporation’s acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners… [t]he alter ego doctrine prevents individuals or other corporations from misusing the corporate laws by the device of a sham corporate entity formed for the purpose of committing fraud or other misdeeds”; also stating that “[i]n California, two conditions must be met before the alter ego doctrine will be invoked… [f]irst, 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… [s]econd, there must be an inequitable result if the acts in question are treated as those of the corporation alone… [a]mong the factors to be considered in applying the doctrine are commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other… [o]ther factors which have been described in the case law include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers”).) Accordingly, Cummings’ demurrer to the complaint is SUSTAINED with 10 days leave to amend.

The Court shall prepare the Order.