Case Name: Phung Kim Nguyen v. Madhu Sridhar, et al.
Case No.: 18CV337760

This action arises from the foreclosure of a mortgage used to secure financing for the purchase of commercial real estate at 826 North Winchester Boulevard in San Jose, California (the “Property”).
According to the allegations in the first amended complaint (“FAC”), plaintiff Phung Kim Nguyen (“Plaintiff”) acquired the Property in May 2017 from “a corporation listed as 826 N. Winchester Office, serviced by Carol Santos…” for $3,825,000. (FAC, ¶ 12.) She financed a portion of the purchase price—particularly $2,562,000—with a loan and seems to allege defendants Madhu Sridhar and Sridhar Equities, Inc. (collectively, “Sridhar”) as well as defendant Xchange Solutions, Inc. (“Xchange”) were somehow involved with the financing. (FAC, ¶¶ 9, 13–14.) Xchange “filed a Commercial Loan deed of trust granting the deed to Xchange and Madhu Sridhar.” (FAC, ¶ 16.) “The loan was sold by 826 N. Winchester to [Plaintiff] through a commercial loan listed as Xchange Solutions.” (FAC, ¶ 17.) Loan payments were to be directed to defendant CJ Investment Services, Inc. (“CJ”). (FAC, ¶ 15.) Plaintiff apparently fell behind on payments, and so CJ started the foreclosure process. (FAC, ¶¶ 19–22.) A bank acquired the Property at auction on October 17, 2018. (FAC, ¶ 23.) Plaintiff alleges the defendants never should have engaged in business dealings with her because they knew she lacked sufficient sophistication and business acumen to engage in the transaction. (FAC, ¶¶ 24, 26, 30, 36.) She alleges the defendants sold the Property to her knowing she would default so they could reclaim the Property. (FAC, ¶ 36.)

Plaintiff asserts causes of action against Sridhar, Xchange , and CJ for: (1) breach of fiduciary duty; (2) constructive fraud; (3) fraud; (4) declaratory relief; (5) promissory estoppel; (6) specific performance; (7) violation of California’s Unfair Competition Law (the “UCL”); (8) breach of the implied covenant of good faith and fair dealing; (9) breach of implied contract; (10) quiet title ; (11) wrongful foreclosure; and (12) unjust enrichment.

Currently before the Court is a demurrer by Sridhar and CJ (collectively, “Defendants”) to each cause of action asserted on the grounds of uncertainty and failure to state facts sufficient to constitute a cause of action. Plaintiff opposes the demurrer.

A demurrer on the ground of uncertainty tests whether the pleading is ambiguous, uncertain, or unintelligible. (Code Civ. Proc., § 430.10, subd. (f).) A demurrer on this ground is sustainable “if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Lickiss v. Financial Industry Reg. Authority (2012) 208 Cal.App.4th 1125, 1135.) Here, all of Plaintiff’s causes of action are based on the same body of allegations in the prefatory portion of the pleading. (FAC at p. 2:24.) These allegations, some of which are quoted above, are ambiguous, uncertain, and unintelligible. Plaintiff uses legal terminology in incongruous and ungrammatical ways thereby obfuscating what allegedly occurred. (See, e.g., FAC, ¶¶ 12–14, 16–17, 28.) At times she alleges Defendants sold her the Property, but at other times she alleges they were somehow involved in the financing and that another entity was the seller. The Court cannot ascertain how the transaction was structured, what role each of the defendants had in the transaction, and what exactly occurred. For all of these reasons, the demurrer on the ground of uncertainty to each cause of action is SUSTAINED with 10 days’ leave to amend. In light of this conclusion, the demurrer on the ground of failure to state facts sufficient to constitute a cause of action is MOOT; the Court is not able to evaluate whether the facts pleaded are sufficient at this time.