Case Name: Teresa Nguyen v. Hung Duc Pham, et al.
Case No.: 2014-1-CV-266637

I. Background

This lawsuit arises from a dispute over the disposition of real property originally purchased for the purpose of operating a medical marijuana dispensary.

Plaintiff Teresa Nguyen (“Nguyen”) alleges she planned to invest in and start a company with several individuals including defendant Hung Duc Pham (“Pham”), defendants Brando Duong (“Brando”) and his father Jessie Duong (“Jessie”), and nonparty Hua Ma (“Ma”). Although Nguyen and her co-investors never formed the company, they did acquire a parcel of real property located at 2121 10th Street in San Jose, California (the “Property”).

According to Nguyen, she contributed $100,000 to purchase the Property and thus had a “twenty percent (20%) equitable title interest in [it].” (Second Amended Complaint (“SAC”), ¶ 10.) While Nguyen never explicitly alleges she purchased the Property in her own name, she claims she subsequently “conveyed fee title to the Property to Pham” and that Pham took out a loan secured by a deed of trust executed in favor of Wells Fargo Bank, N.A. (“Wells Fargo”) as part of this transfer. (SAC, ¶ 9.) Nguyen maintains she retained her 20-percent interest in the Property. Although not especially clear, she appears to claim Pham should have recognized her 20-percent interest in the Property and given her proceeds from the management of and/or subsequent sale of the Property to defendant 2121 Investments, LLC (“2121 Investments”) — an entity owned and/or controlled by Jessie, Brando, and Pham — in October 2015. Nguyen states she would like to liquidate her interest.

Nguyen asserts causes of action against Pham, Jessie, Brando, and 2121 Investments for: (1) imposition of resulting trust (against Pham, Jessie, and Brando); (2) accounting (against Pham, Jessie, and Brando); (3) declaratory relief (against Pham, Jessie, and Brando); (4) breach of fiduciary duty (against Pham, Jessie, and Brando); (5) partition (against Pham, Jessie, and Brando); (6) set aside fraudulent transfer (against Pham, Jessie, Brando, and 2121 Investments); and (7) conspiracy (against Pham, Jessie, Brando, and 2121 Investments).

Jessie, Brando, and 2121 Investments (collectively, “Defendants”) filed a cross-complaint naming Nguyen as cross-defendant. They allege Nguyen left the parties’ joint venture and/or that the parties’ agreement to invest in the Property may be rescinded. Defendants assert causes of action against Nguyen for: (1) declaratory relief; (2) accounting; (3) rescission; (4) violation of Corporations Code section 16401; (5) violation of Corporations Code section 16601; (6) dissociation; and (7) dissolution.

Currently before the Court is Defendants’ motion for summary judgment or summary adjudication of Nguyen’s SAC and for summary adjudication of the sixth cause of action in their FACC. Nguyen opposes the motion and filed a request for judicial notice in support.

II. Standard of Review

“A party may move for summary judgment in an action or proceeding if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (Code Civ. Proc., § 437c, subd. (a)(1).) Defendants move for summary judgment or summary adjudication of the SAC on the ground the action has no merit and for summary adjudication of the sixth cause of action in the FACC on the ground there is no defense thereto.

A defendant moving for summary judgment “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).) A cross-complainant, on the other hand, “has met his or her burden of showing that there is no defense to a cause of action if that party has proved each element of the cause of action entitling the party to judgment on the cause of action.” (Code Civ. Proc., § 437c, subd. (p)(1).) In either case, the “motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” (Code Civ. Proc., § 437c, subd. (b)(1).)

Once the moving party carries his or her initial burden, “the burden shifts to the [responding party] to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subds. (p)(1)-(2).) The party opposing the motion “must make an independent showing by a proper declaration or by reference to a deposition or another discovery product that there is sufficient proof of the matters alleged to raise a triable question of fact if the moving party’s evidence, standing alone, is sufficient to entitle the party to judgment.” (Wiz Technology, Inc. v. Coopers & Lybrand LLP (2003) 106 Cal.App.4th 1, 10-11; Code Civ. Proc., § 437c, subd. (b)(2).)

Ultimately, “[t]he motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).)

“A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if the party contends that the cause of action has no merit, that there is no affirmative defense to the cause of action, that there is no merit to an affirmative defense as to any cause of action, that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs.” (Code Civ. Proc., § 437c, subd. (f)(1).) The motion “may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment.” (Code Civ. Proc., § 437c, subd. (f)(2).) “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.” (Code Civ. Proc., § 437c, subd. (f)(1).)

III. Request for Judicial Notice

Nguyen requests judicial notice of the Court’s 2015 order denying Pham’s motion for summary judgment or summary adjudication. When a court takes judicial notice, it recognizes and accepts “the existence of a matter of law or fact that is relevant to an issue in the action without requiring formal proof of the matter.” (Poseidon Development, Inc. v. Woodland Lane Estates, LLC (2007) 152 Cal.App.4th 1106, 1117 [internal quotation marks and citation omitted].) A court may take judicial notice of relevant court records. (Evid. Code, § 452, subd. (d).) Although the previous order is a court record, it is not relevant to the motion for summary judgment or summary adjudication. Consequently, the order is not a proper subject of judicial notice. Nguyen’s request for judicial notice is therefore DENIED.

IV. Merits of Motion

Defendants advance a central argument in support of their motion with respect to both the SAC and FACC in addition to individually addressing the claims asserted therein. Their central argument is addressed first before the arguments about individual causes of action.

A. Central Argument

Defendants’ central argument is that Nguyen dissociated from the parties’ joint venture. But Defendants do not explain or provide legal authority to demonstrate how or that this argument supports the conclusion that Nguyen’s claims lack merit and there is no defense to the sixth cause of action in the FACC. Thus, Defendants’ dissociation argument does not justify granting their motion.

Even assuming Defendants demonstrated dissociation provided a defense to Nguyen’s claims and precluded any defense to the sixth cause of action in the FACC, their argument does not justify granting the motion because they do not substantiate it.

For context, “[a] joint venture exists where there is an ‘agreement between the parties under which they have a community of interest, that is, joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control.’ [Citation.]” (Bank of California v. Connolly (“Connolly”) (1973) 36 Cal.App.3d 350, 364.) “Although a partnership ordinarily involves a continuing business, whereas a joint venture is usually formed for a specific transaction or a single series of transactions, the incidents of both relationships are the same in all essential respects.” (Ibid.) Accordingly, the “‘rights and liabilities of joint adventurers, as between themselves, are governed by the same rules which apply to partnerships.’ [Citation.]” (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 525.) For example, “[s]tatutory provisions governing the rights of partners upon dissolution of a partnership are applicable to joint venturers.” (Connolly, supra, 36 Cal.App.3d at pp. 371-72.)

Here, the evidence reflects Nguyen purchased the Property from Wells Fargo in September 2013 for the price of $1,000,000. (Jessie Decl., Ex. C [final closing statement].) The closing statement prepared by Chicago Title Company confirms Pham, Ma, and Jessie (on behalf of his son Brando) contributed funds toward the purchase of the Property and Nguyen obtained a loan of $500,000 from private lender Quang Luong to cover the balance of the purchase price. (Jessie Decl., ¶¶ 3-4 & Ex. C; Nguyen Decl., ¶¶ 2-3.)

The parties needed to pay back Quang Luong within three months, and so they obtained another loan to pay off this original loan. (Jessie Decl., ¶ 4; Nguyen Decl., ¶ 3.) Nguyen states she did not want to take out a second mortgage on a different property she owned and Pham otherwise had the best credit, and so she transferred title to the Property to him to obtain a mortgage in December 2013, the proceeds of which were used to pay Quang Luong. (Nguyen Decl., ¶¶ 4-5; Borger Decl., Ex. D, Pham Dep. at p. 14:10-15.) In connection with this transfer, Nguyen and Pham executed a “Memorandum of Understanding” setting forth the contributions originally made by the parties to purchase the Property. (Borger Decl., Ex. A, Nguyen Dep. at pp. 32-34.)

The evidence reflects that in December 2013, Nguyen realized she no longer wanted to participate in the joint venture and raised this issue with Pham and Jessie. (Borger Decl., Ex. A, Nguyen Dep. at pp. 23-24; Borger Decl., Ex. D, Pham Dep. at pp. 23-24.) Nguyen thereafter asked Pham and Jessie to buy out her interest or to give “[her] money back” in January or February 2014. (Borger Decl., Ex. A, Nguyen Dep. at pp. 35-36; Jessie Decl., ¶ 8.) Nguyen asked for the $100,000 she invested plus an additional $35,000 because an appraisal conducted in December 2013 reflected the Property was worth roughly $1,160,000, which was more than the original purchase price. (Borger Decl., Ex. A, Nguyen Dep. at pp. 36:12-37:8.) But the parties did not agree to buy out Nguyen’s interest. (Jessie Decl., ¶ 8; Borger Decl., Ex. D, Pham Dep. at pp. 23:24-24:24.)

Defendants assert that by expressing this desire to withdraw her investment and cease participation in the development project, Nguyen dissociated from the joint venture. It is true that a partner, and thus a joint venturer, may dissociate by communicating his or her “express will to withdraw. . . .” (Corp. Code, § 16601, subd. (1); see, e.g., Corrales v. Corrales (2011) 198 Cal.App.4th 221, 226-27.) With that said, Defendants do not provide case law or legal analysis to support the conclusion that Nguyen communicated her express will to withdraw within the meaning of the Corporations Code.

Additionally, although the parties to the joint venture “must buy out the dissociated [party]’s interest in the [venture]” (Corrales, supra, 198 Cal.App.4th at pp. 226-27, citing Corp. Code, § 16701), it is undisputed there was no buyout of Nguyen’s interest here. To this point, Defendants state “whether the parties agreed on a [buyout] price has nothing to do with whether [Nguyen dissociated].” (Mem. of Pts. & Auth. at p. 7:23-24.) But they provide no authority or logical explanation to support such a conclusion. “‘Where a point is merely asserted [ ] without any argument of or authority for its proposition, it is deemed to be without foundation and requires no discussion.’ [Citation.]” (People v. Dougherty (1982) 138 Cal.App.3d 278, 282; Cal. Rules of Court, rule 3.1113(b); see also Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-85.) Here, given there was no buyout and in the absence of supporting analysis or authority from Defendants about the dissociation process as a general matter, it is not apparent Nguyen completely and effectively dissociated. In others words, Defendants do not substantiate their dissociation argument.

For all of these reasons, Defendants’ dissociation argument does not justify granting their motion for summary judgment or summary adjudication.

B. Arguments Directed to Individual Claims in the SAC

1. First Cause of Action

The first cause of action is identified as a claim for “imposition of a resulting trust.” (SAC at p. 4:12-13.) As relevant to this claim, “[a] joint venturer holding the property for the joint venture is a trustee for his [or her] coventurer and this is so though he [or she] purchased the property with his [or her] own funds.” (Sadugor v. Holstein (1962) 199 Cal.App.2d 477, 483.) Joint venturers “have the status of fiduciaries and neither [has] a right, while the joint venture exist[s], to acquire the [venture’s] property to the exclusion of the other.” (Ibid.) Nguyen alleges that, although Pham held title to the Property, she still had an interest therein as a joint venturer such that he should not have sold the Property to 2121 Investments “without any regard to, or protection of, [her] interest in it.” (SAC, ¶¶ 19-20.)

Defendants first argue this cause of action lacks merit because Nguyen alleges the Property was held solely in Pham’s name and he transferred title to 2121 Investments. But the allegations and evidence presented by both parties reflect Pham held title to the Property on behalf of the joint venture. Thus, to the extent Defendants are asserting the Property was exclusively owned by Pham, their argument is not supported. More significantly, Defendants do not provide any legal analysis or evidence to substantiate their argument or illuminate its significance.

Defendants also make several disjointed assertions that do not clearly reflect the first cause of action lacks merit.

First, Defendants state a resulting trust is a remedy, not a cause of action. Although Defendants cite no authority for this proposition, some courts have described a resulting trust as a remedy and not a cause of action. (See, e.g., Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 76.) But to be more precise, “[a] resulting trust arises by operation of law from a transfer of property under circumstances showing that the transferee was not intended to take the beneficial interest.” (Estate of Yool (2007) 151 Cal.App.4th 867, 874 [internal citation and quotation marks omitted].) “In other words, the relationship between resulting trustee and beneficiary arises where one, in good faith, acquires title to property belonging to another.” (Ibid., original italics.) “The law implies an obligation on the part of the one in whom title has vested to hold the property for the owner’s benefit and eventually convey it to the owner.” (Ibid.) With this definition in mind, it is unclear how Defendants’ point is pertinent to the issue of whether the first cause of action lacks merit.

Defendants also state “[t]here must be some finding that [Jessie and Brando] committed a wrong. . . [b]ut no such finding can be made.” (Mem. of Pts. & Auth. at p. 9:11-13.) Defendants do not present any evidence or legal analysis to support this assertion, which assertion suffers from a lack of clarity as a general matter.

Based on the foregoing, Defendants do not substantiate any argument to support the conclusion that the first cause of action lacks merit.

2. Second Cause of Action

Although not clearly articulated by Defendants, their argument about the second cause of action for an accounting appears to concern the sufficiency of the allegations therein.

Because the pleading delimits the issues for purposes of a motion for summary judgment or summary adjudication, such a motion necessarily tests the sufficiency of the pleading. (Hansra v. Super. Ct. (1992) 7 Cal.App.4th 630, 638-39.) “Where a complaint does not state a cognizable claim, it is not necessary to [consider the defendant’s evidence], since a defendant has no obligation to present evidence to negate a legally inadequate claim.” (Ibid.; accord Leek v. Cooper (2011) 194 Cal.App.4th 399, 412.)

Here, Defendants do not demonstrate the allegations in the second cause of action are insufficient. Defendants state, without more, Nguyen’s allegations are directed to Pham and not them. Contrary to Defendants’ assertion, the second cause of action is not directed exclusively to Pham. Although Pham is mentioned in the second cause of action, Nguyen actually seeks an accounting of the finances of the joint venture in which Jessie and Brando participated. Nguyen’s claim is consistent with the very nature and definition of an action for an accounting, which “may be brought to compel the defendant to account to the plaintiff for money or property [ ] where a fiduciary relationship exists between the parties,” such as the relationship between partners or the parties to a joint venture. (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 910; see also Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179-80.) Because Nguyen seeks an accounting of the finances of the joint venture in which Jessie and Brando participated and, indeed, identifies them as defendants in the second cause of action, their argument is not persuasive.

3. Third Cause of Action

In the third cause of action for declaratory relief, Nguyen seeks a determination of the “rights, duties, obligations, responsibilities[,] and interests of [the parties] with respect to their co-ownership of the Property.” (SAC, ¶ 32.)

Code of Civil Procedure section 1060 authorizes an action for declaratory relief “in cases of actual controversy relating to the legal rights and duties of the respective parties. . . .” “A cause of action for declaratory relief may adjudicate future rights and liability between parties who have a relationship, either contractual or otherwise.” (Centex Homes v. St. Paul Fire & Marine Insurance Co. (2015) 237 Cal.App.4th 23, 29.)

Defendants’ primary argument is that “[s]ince there is no continuing relationship between the parties, there is no basis for declaratory relief.” (Mem. of Pts. & Auth. at p. 11:2-3.) But because Defendants fail to demonstrate Nguyen dissociated from the joint venture, there is no basis for concluding the parties no longer have any relationship. Incidentally, there does appear to be an actual dispute over the buyout of Nguyen’s interest and joint ownership of the Property. Accordingly, Defendants’ argument is not persuasive.

Defendants also state there is no basis for seeking declaratory relief relative to them because they were not parties to the Memorandum of Understanding signed by Nguyen and Pham when title was transferred. It is not particularly clear in the first instance how this argument demonstrates there is no dispute over the parties’ interests in the Property or that the claim otherwise lacks merit. Notably, although Defendants do not appear to have signed the Memorandum of Understanding, it does purport to establish their respective contributions and interests in the Property. Ultimately, Defendants do not provide any explanation or authority to support their position, and so it does not justify the conclusion that the third cause of action lacks merit.

4. Fourth Cause of Action

In the fourth cause of action for breach of fiduciary duty, Nguyen alleges Pham, Jessie, and Brando breached their fiduciary duties to her by mismanaging the Property, failing to account for activities with respect to the Property, and selling the Property to 2121 Investments without accounting for her interest therein. (SAC, ¶¶ 33-37, 57-60.) Defendants’ argument is essentially that Nguyen solely alleges a breach of fiduciary duty by Pham and not by either Jessie or Brando such that she fails to state a claim against them. But the primary breach alleged is the sale of the Property held by Pham on behalf of the joint venture and its participants, including Jessie and Brando, to a company owned by Pham, Jessie, and Brando. Thus, Defendants’ argument is not supported by the allegations in the pleading and does not justify the conclusion that the fourth cause of action is not properly pleaded or lacks merit.

5. Fifth Cause of Action

Defendants assert, without more, the fifth cause of action for partition lacks merit because the sale of the Property to 2121 Investments was not fraudulent. It is unclear how the existence or nonexistence of fraud is relevant to this partition claim. Furthermore, Defendants do not provide evidentiary or legal support for their argument. Defendants thus, do not demonstrate the fifth cause of action lacks merit.

6. Sixth Cause of Action

Defendants assert the sixth cause of action to set aside a fraudulent transfer fails because “neither Jessie nor Brando Duong ever had the [ ] Property in their name and, thus, did not transfer it or receive it.” (Mem. of Pts. & Auth. at p. 13:1-3.) It is not apparent, as a matter of logical or legal reasoning, how this statement supports the conclusion that the sixth cause of action lacks merit. Additionally, it is unclear how this argument demonstrates the sixth cause of action lacks merit because the Property, although held in Nguyen’s name and later Pham’s name, was held in trust for or on behalf of the joint venture in which Jessie and Brando participated. Ultimately, Defendants provide no legal authority or analysis to support their position. Consequently, they fail to carry their initial burden of demonstrating the sixth cause of action lacks merit.

7. Seventh Cause of Action

Defendants assert the seventh cause of action for conspiracy lacks merit because it is a “baseless attempt to pierce the corporate veil.” (Mem. of Pts. & Auth. at p. 13:9.) In other words, Defendants argue Plaintiff cannot establish they are liable based on the alter ego doctrine. This argument is perplexing.

“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers[,] and directors, with separate and distinct liabilities and obligations.” (Sonora Diamond Corp. v. Super. Ct. (2000) 83 Cal.App.4th 523, 538.) “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.” (Ibid.) The alter ego doctrine is separate and distinct from the doctrine of conspiracy, which “is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 823 [internal quotation marks and citations omitted].) To establish liability based on a civil conspiracy, a plaintiff must prove “the defendant had knowledge of and agreed to both the objective and the course of action that resulted in the injury, that there was a wrongful act committed pursuant to that agreement, and that there was resulting damage.” (Ibid.)

Because Nguyen relies on the doctrine of conspiracy, it is not obvious how Defendants’ argument about the alter ego doctrine is pertinent. Although Nguyen does state 2121 Investments is a “straw” company (SAC, ¶ 57), it is not apparent this allegation is intended as an allegation that Pham, Jessie, and Brando were alter egos of 2121 Investments. Thus, Defendants’ argument about the alter ego doctrine is misdirected. Additionally, Defendants do not actually substantiate their argument that Nguyen cannot establish alter ego liability. Ultimately, Defendants do not address the theory actually pleaded, namely the conspiracy theory of liability. Defendants, thus, do not demonstrate the seventh cause of action lacks merit.

C. Arguments Directed to Individual Claims in the FACC

Defendants also seek summary adjudication of their sixth cause of action in the FACC, which is identified as a claim for dissociation. Therein, Defendants allege: “Assuming arguendo that the Court does not rescind the joint venture agreement, [Defendants] claim that [Nguyen dissociated herself] from the joint venture by giving notice of [her] express will to withdraw as a partner.” (FACC, ¶ 25.)

As a preliminary matter, it is not apparent the sixth cause of action is a recognized claim that is capable of summary adjudication. Instead, the claim appears to be a request for a determination of a single legal issue. In any event, Defendants do not carry their initial burden of demonstrating there is no defense to this cause of action because they provide no legal authority or analysis to support the conclusion that the evidence establishes all of the essential elements thereof. A court has “no obligation to undertake its own search of the record ‘backwards and forwards to try to figure out how the law applies to the facts’ of the case. [Citation.]” (Quantum Cooking Concepts, Inc. v. LV Associates, Inc. (2011) 197 Cal.App.4th 927, 934; see also Varshock v. Cal. Dept. of Forestry and Fire Protection (2011) 194 Cal.App.4th 635, 652-53.) Accordingly, Defendants do not demonstrate they are entitled to summary adjudication of this claim.

D. Conclusion

For the reasons set forth above, Defendants do not carry their initial burden of demonstrating Nguyen’s claims lack merit and there is no defense to the sixth cause of action in their FACC. Consequently, they are not entitled to either summary judgment or summary adjudication with respect to Nguyen’s action or their cross-action. Defendants’ motion is therefore DENIED in its entirety. In light of this conclusion, it is unnecessary to rule on the objections to portions of Nguyen’s evidence presented by Defendants in connection with their reply. (See Code Civ. Proc., § 437c, subd. (q).)