2014-00157155-CU-FR

Miriah Mining Co., Inc. vs. Richard Barnard

Nature of Proceeding: Hearing on Demurrer
Nature of Proceeding: Hearing on Demurrer

Filed By: Brimmer, Andrew F.

Defendants’ Demurrer to the Complaint is sustained/overrruled as follows:

Plaintiff alleges that Richard Barnard, who was an officer of plaintiff Miriah Mining
Company agreed to sell stock on behalf of Miriah Mining to investors. Barnard and his
company Gold River Mining LLC are alleged to have sold stock to third parties Jackie
Xiong, Zihan Yan, Jina Wang and Allen Yue for $175,000 but that defendants kept the
money and did not return it to plaintiff pursuant to the agreement. The Complaint
alleges causes of action for Intentional Fraud, Intentional Misrepresentation,
Conversion and Breach of Fiduciary Duty.

Defendants demurrer both on the ground of another action pending (plea in
abatement) and on the ground that none of the causes of action states facts sufficient
to constitute a cause of action, and on the ground that the cause of action for
conversion is uncertain.

The demurrer on the ground another action is pending is overruled. The Court takes
judicial notice of the two other superior court actions filed by the investors against
Mariah Mining Co. Mariah Mining Company cross-complained for indemnity against
Richard Barnard and Gold River Mining LLC in each of those cases. (Case No. 2012-
129044 and Case No. 2013-138570.)

A plea in abatement requires that the prior filed actions be between the same parties
on the same cause of action. The identity of the causes of action is determined by a
comparison of the facts alleged in each complaint. To be the same cause of action,
each complaint must allege invasion of the same primary right. Bush v Superior Court
(1992) 10 Cal.App.4th 1374, 1384; Plant Insulation Co v Fibreboard Corp (1990) 224
Cal.App.3d 781, 787. See Weil & Brown, Civil Procedure Before Trial, section 7:75 et
seq. A claim for indemnity does not involve the same primary right as a claim for
conversion, breach of fiduciary duty, and fraud, and a judgment in Mariah’s favor for
indemnity related to the damages caused to the investors would not preclude the
causes of action asserted herein.

Intentional Fraud and Intentional Misrepresentation: Sustained with leave to
amend for failure to state facts sufficient to constitute a cause of action. In California,
fraud must be pled specifically; general and conclusory allegations do not suffice. Thus
the policy of liberal construction of the pleadings will not ordinarily be invoked to
sustain a pleading defective in any material respect Although plaintiff has adequately
alleged the date of the misrepresentation, August of 2010, plaintiff has not alleged
sufficient specificity who on behalf of plaintiff was mislead by the defendants.

The elements of a claim for fraud are (I) misrepresentation of a material fact; (2)
knowledge of falsity or lack of a reasonable ground for belief in the truth of the
representation; (3) intent to induce reliance; (4) actual and justifiable reliance by the
plaintiff; and (5) resulting damage. (Orient Handel v. United States Fid. & Guar. Co.
(1987) 192 Cal.App.3d 684, 693.) It is hornbook law that fraud-based claims are
subject to a stricter pleading standard then that governing most California causes of
action. To advance a cognizable fraud claim, “every element of the cause of action . . .
must be alleged in full, factually and specifically, and the policy of liberal construction
of pleading will not usually be invoked to sustain a fraud claim deficient in any material
respect.” (Wilhelm v. Pray, Price,Williams & Russell (1986) 186 Cal.App.3d 1324,
1331.) The heightened particularity requirement necessitates pleading facts that “show
how, when, where, to whom, and by what means the representations were tendered.” (
Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) When fraud is alleged against a
corporate defendant, the plaintiff must specifically allege the names of the persons
who allegedly made the representation, their authority to speak, to whom they spoke,
what they said or wrote, and when it was said or written. ( Tarmann v. State Farm
Mutual Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.)

Plaintiff is given leave to amend to allege more specificity as to the person to whom
the misrepresentation was made as well as the actual statements made to plaintiff and
when.

3rd cause of action Conversion: Overruled. Conversion is the wrongful exercise of
dominion over the property of another. The elements of a conversion claim are: (1) the
plaintiff’s ownership or right to possession of the property; (2) the defendant’s
conversion by a wrongful act or disposition of property rights; and (3) damages.
Burlesci v. Petersen (1998) 68 Cal. App. 4th 1062, 1066. The allegations are sufficient
to allege that defendants converted the sum of $175,000 that they, as agent for Miriah
Mining, had obtained for the benefit of plaintiff, were holding on behalf of plaintiff, and
were obligated to turn over to plaintiff.

4th cause of action Breach of Fiduciary Duty: Overruled. Defendant Richard
Bernard is alleged to have been an officer of plaintiff Miriah Mining Co., therefore
owing a fiduciary duty to the plaintiff. See, e.g. Bancroft-Whitney Co. v. Glen (1966) 64
Cal. 2d 327.

Plaintiff may file and serve a First Amended Complaint on or before June 19, 2014.
Response to be filed and served within 20 days of service of the amended complaint,
25 days if served by mail.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.