Case Number: BC653209

SANTA MONICA KOREAN CHURCH OF CHRIST ET AL VS JAE SUNG KWAK

Filing
Date: 03/10/2017

Case Type: Defamation (Slander/Libel)

03/27/2018

Conference-Case Management

OSC Re: Corporate Status

Demurrer to Second Amended Complaint

TENTATIVE RULING

As there is no evidence of revivor or payment of taxes by Santa
Monica Korean Church of Christ, a California Corporation, this Plaintiff is
dismissed from the action with prejudice.

Tai Hi Choi, Hung Wood Choi, Hi Jung Choi, Jin Sun Choi, Ji Eun
Choi, Jung Sook Choi, and Michael Lees’ demurrers to the Second Amended
Complaint are SUSTAINED WITHOUT LEAVE TO AMEND as to Santa Monica Korean Church
of Christ, is SUSTAINED WITH 10 DAYS LEAVE TO AMEND AS TO all causes of action
by “Members of Santa Monica Korean Church of Christ”, is OVERRULED as to
the 3rd Cause of Action for Breach of Fiduciary Duty and the 7th
Cause of Action for Accounting; and is SUSTAINED WITH 10 DAYS LEAVE TO AMEND as
to the 6th Cause of action for Quiet Title based upon lack of a
verification signed by Plaintiffs.

See Discussion

DISCUSSION

On
11/9/17, Plaintiffs (“Ps”) filed their SAC for (1) Declaratory Judgment; (2)
Conversion; (3) Breach of Fiduciary Duties; (4) Fraud-Concealment; (5) To
Impress a Resulting Trust; (6) Quiet Title; and (7) Accounting against Ds Tai
Hi Choi, Hung Woon Choi, Hi Jung Choi, Jin Sun Choi, Ji Eun Choi, and Jung Sook
Choi (hereinafter collectively, “Choi Family”); Michael Lee (hereinafter “Lee”)
and DOES 1-50.

Santa
Monica Korean Church of Christ

No proof of
payment of taxes or certificate of revivor having been offered to this court.

“Under
California law, a corporation ordinarily has the capacity to sue. (See Corp. Code,
§ 207 [corporation generally has “all of the powers of a natural person in
carrying out its business activities”]; Color–Vue, Inc. v. Abrams (1996)
44 Cal.App.4th 1599, 1603–1605, 52 Cal.Rptr.2d 443 (Color–Vue).) But a
corporation that has had its powers suspended “lacks legal capacity to
prosecute or defend a civil action during its suspension.” (Sade Shoe Co. v.
Oschin & Snyder (1990) 217 Cal.App.3d 1509, 1512, 266 Cal.Rptr. 619 (Sade).)
On the other hand, a suspended corporation may be sued and a default judgment
may be entered upon its failure to respond. (Grell v. Laci Le Beau Corp.
(1999) 73 Cal.App.4th 1300, 1306, 87 Cal.Rptr.2d 358.).” Tabarrejo v.
Superior Court (2014) 232 C.A.4th 849, 861-862.

““The
‘corporate powers, rights and privileges’ of any domestic corporate taxpayer
may be suspended for failure to pay certain taxes and penalties. (Rev. &
Tax.Code, § 23301.) This means the suspended corporation cannot sell, transfer
or exchange real property in California, and contracts entered into during the
time of suspension are voidable … through legal action. [Citation.] … Nor,
during the period of suspension, may the corporation prosecute or defend an
action, seek a writ of mandate, appeal from an adverse judgment, or renew a
judgment obtained before suspension. [Citation.]” (Center for
Self–Improvement & Community Development v. Lennar Corporation (2009)
173 Cal.App.4th 1543, 1552, 94 Cal.Rptr.3d 74 (Center).) “The purpose of
Revenue and Taxation Code section 23301 is to ‘ “prohibit the delinquent
corporation from enjoying the ordinary privileges of a going concern,” ’ in
order to pressure it into paying its taxes. (Peacock Hill Assn. v. Peacock
Lagoon Constr. Co. (1972) 8 Cal.3d 369, 371, 105 Cal.Rptr. 29, 503 P.2d 285….[
(Peacock Hill) ] ) That purpose, in turn, ‘is satisfied by a rule which
views a corporation’s tax delinquencies, after correction, as mere
irregularities.’ ” (Center, at p. 1552, 94 Cal.Rptr.3d 74.).” Id.
at 862.

P
Santa Monica Church of Christ aka Santa Monica Korean Church of Christ
(hereinafter “Church”) is a suspended corporation and therefore without
capacity to sue. (RJN Exhibit 1).

Any claims
which the other Plaintiffs have in their individual capacity rather than on
behalf of the Church may go forward.

Statute
of Limitations

A statute
of limitations defense must appear on the face of the pleading in order for a
demurrer to lie. See Smith v. Hall (1861) 19 C. 85, 86; E-Fab, Inc. v. Accountants,
Inc. Services (2007) 153 C.A.4th 1308, 1316. Ds point to assertions by P Jae
Sung Kwak (hereinafter “Kwak”) in the related case that he knew about some of
the subject financial transactions when they were done. (RJN Exhibit 2).
However, the truth of those contentions is not judicially noticeable. Lockley
v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 C.A.4th
875, 882. Moreover, it is not clear that P Kwak is asserting that he knew the
transactions were wrongful when conducted. (RJN Exhibit 2). Nor may P Kwak’s
knowledge be automatically imputed to toll the statute of limitations against
all Plaintiffs. Defendants’ statute of limitations defense is properly the
subject of a summary judgment motion, not a demurrer.

Proper
Plaintiffs

One
of the named Plaintiffs is “Members of Santa Monica Korean Church of Christ.” Defendants
argue that it is not a properly named plaintiff. Plaintiffs argue that it is an
unincorporated association with standing to sue on behalf of its members.
Unincorporated associations do have standing to sue on behalf of their members.
Salton City etc. Owners Assn. v. M. Penn Phillips Co. (1977) 75 C.A.3d
184, 188. However, any such suit is in the nature of a class action and subject
to class action requirements. Id. at 188-191. The class action
requirements are not shown, so the demurrer as to this Plaintiff is sustained
with 10 days leave to amend.

3rd COA: Fraud—Concealment

“[T]he elements of an action for fraud and
deceit based on concealment are: (1) the defendant must have concealed or
suppressed a material fact, (2) the defendant must have been under a duty to
disclose the fact to the plaintiff, (3) the defendant must have intentionally
concealed or suppressed the
fact with the intent to defraud the plaintiff, (4) the plaintiff must have been
unaware of the fact and would not have acted as he did if he had known of the
concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact,
the plaintiff must have sustained damage.” Lovejoy v. AT & T Corp.
(2004) 119 C.A.4th 151, 157-158, quoting Marketing West, Inc. v.
Sanyo Fisher (USA) Corp. (1992) 6 C.A.4th 603, 612-613.

Fraud must be specifically pled,
and the particularity requirement necessitates the pleading of facts that “show
how, when, where, to whom, and by what means the representations were
tendered.” Stansfield v. Starkey (1990) 220 C.A.3d 59, 73.

Plaintiffs have pled in relevant
part as follows:

“62. TAI and JI EUN willfully, intentionally
and maliciously concealed the fact that they misappropriated and/or converted
the funds and the properties of the CHURCH to the plaintiffs—including but not
limited to withdrawing, misappropriating and converting the funds of the CHURCH
and/or purchasing MANHATTAN under JI EUN’s name. TAI and JI EUN’s concealment
of the facts relating to misappropriation and/or conversion of the funds and
properties of the CHURCH were material and were made with the intent to induce
the plaintiffs’ reliance and were made with the intent to deceive the
plaintiffs. Plaintiffs did not know of the concealed facts and have reasonably
and justifiably relied upon TAI and JI EUN’s concealment and deception.

63. Plaintiffs would have excommunicated TAI
and JI EUN and removed them from their respective positions earlier, if
Plaintiffs had known of TAI and JI EUN’s misappropriation and conversion of
CHURCH’s funds and properties. Plaintiffs would have re-established control of
CHURCH’s management had the true facts been known.

64. Plaintiff was harmed as a result of TAI and
JI EUN’s fraudulent actions, and their conduct was a proximate and substantial
factor in causing Plaintiffs harm. TAI and JI EUN’s wrongful conduct(s) were
substantial factors in causing harm to the plaintiff.” (FAC ¶¶ 62-64).

Plaintiffs
have now properly pled reliance. They have pled that Defendants concealment of
the transactions at issue induced Plaintiffs to retain Defendants in their
position, rather than protect themselves from further harm by changing
leadership. As such, Plaintiffs have properly pled a cause of action for
fraudulent concealment.

Demurrer
to the 3rd Cause of Action is therefore OVERRULED.

6th COA: Quiet Title

CCP § 761.020 requires that a quiet
title complaint be verified. The SAC is not verified. However, this defect can
be cured if Plaintiff promptly file a verification before the continued
demurrer date.

7th
COA: Accounting

“A
cause of action for an accounting requires a showing that a relationship exists
between the plaintiff and defendant that requires an accounting, and that some
balance is due the plaintiff that can only be ascertained by an accounting. (Brea
v. McGlashan (1934) 3 C.A.2d 454, 460; 5 Witkin, Cal. Procedure (5th ed.
2008) Pleading, § 819, p. 236.). An action for accounting is not available
where the plaintiff alleges the right to recover a sum certain or a sum that
can be made certain by calculation. (St. James Church of Christ Holiness v.
Superior Court (1955) 135 C.A.2d 352, 359). A plaintiff need not state
facts that are peculiarly within the knowledge of the opposing party. (Brea
v. McGlashan, supra, 3 C.A.2d at p. 460).” Teselle v. McLoughlin
(2009) 173 C.A.4th 156, 179.

“[A]
fiduciary relationship between the parties is not required to state a cause of
action for accounting. All that is required is that some relationship exists
that requires an accounting. (Kritzer v. Lancaster (1950) 96 C.A.2d 1,
7). The right to an accounting can arise from the possession by the defendant
of money or property which, because of the defendant’s
relationship with the plaintiff, the defendant is obliged to surrender. (1A
Corpus Juris Secundum (2005) Accounting, § 6, p. 7.).” Id. at 179-180.

“The right to an accounting is
derivative and depends on the validity of a plaintiff’s underlying claims.” Duggal
v. G.E. Capital Communications Services, Inc. (2000) 81 C.A.4th
81, 95.

Defendants base their argument on the
derivative nature of the Accounting claim. Since it is not at all clear whether
the other causes of action fail, this cause of action does not fail.

Demurrer to the 7th cause of
action is therefore OVERRULED.

IT IS SO
ORDERED:

___________________________

Frederick C. Shaller, Judge