Case Number: KC070382 Hearing Date: October 17, 2018 Dept: J

Re: AA Meat products, Inc. v. Nino Jefferson Miave Lim, et al. (KC070382)

DEMURRER TO COMPLAINT

Moving Parties: Defendants Nino Jefferson Miave Lim and Abacus Business Capital

Respondent: Plaintiff AA Meat Products, Inc
POS: Moving OK; Opposing filed just 7 court days prior to the hearing in violation of CCP § 1005(b) and unaccompanied by proof of service; Reply OK

Plaintiff is a supplier of meat to many grocery chains throughout Southern California. Plaintiff alleges that, beginning around June 2017 through February 2018, defendants purchased wholesale meat products which plaintiff delivered to defendants’ at defendants’ request. Plaintiff claims that each defendant has failed to pay it in full. The complaint, filed 6/19/18, asserts causes of action against Defendants Nino Jefferson Miave Lim, Abacus Business Capital, Inc., Azusa Supermarket, Inc. dba Phihouse Azusa Supermarket, Canoga Supermarket, Inc. dba Phihouse Canoga Supermarket, Fresno Supermarket, Inc. dba Phihouse Fresno, Island Pacific Chila Vista, Inc. dba Phihouse Chula Vista, Island Pacific Oxnard, Inc. dba Phihouse IP Oxnard, Island Pacific Pittsburg, Inc. dba Phihouse IP Pittsburg, Island Pacific Rancho, Inc. dba Phihouse Rancho Cucamonga, Island Pacific Supermarkets, Inc. dba Island Pacific Supermarket—City of Industry & Island Pacific Supermarket—West Covina, Island Pacific Vegas, Inc. dba Phihouse IP LV Tropicana, Long Beach Seafood Market, Inc. dba Island Pacific Long Beach Phihouse, Puregold Supermarket, Inc. dba Puregold Supermarket Phihouse, Island Pacific Distribution, Inc., Island Pacific Hayward, Inc., Island Pacific BBQ Production, Island Pacific Vallejo Phihouse, Phihouse IP Sta Clarita, Phihouse Panorama City, Phihouse San Jose, Phihouse Vellejo-Sonoma, B&L Seafood, Inc. and Does 1-50 for:

1. Breach of Contract

2. Common Counts—Open Book Account

3. Common Counts—Goods Sold and Delivered

4. Common Counts—Account Stated

A Case Management Conference is set for 11/14/18.

Defendants Nino Jefferson Miave Lim (“Lim”) and Abacus Business Capital (“Abacus”) demur, per CCP § 430.10(e)&(f), to the first through fourth causes of action in Plaintiff AA Meat Products, Inc.’s (“plaintiff”) complaint, on the basis that they each fail to state facts sufficient to constitute causes of action and are uncertain.

REQUEST FOR JUDICIAL NOTICE:

At the outset, Lim’s and Abacus’ request for judicial notice (“RJN”) is ruled on as follows: Denied as to Exhibit “1” (i.e., pages 1, 12 and 13 of the complaint filed 3/15/18 in case styled Green Island Produce, Inc., et al. v. Azusa Supermarket, Inc., et al., Case No. 2:18-cv-2196); Denied as to Exhibit “2” (i.e., 4/4/18 article entitled “Island Pacific Supermarkets to Close Six Select Stores” located on https://www.prnewswire.com); Granted as to Exhibit “3” (i.e., “Statements of Information” for Island Pacific Chula Vista Inc., Island Pacific Oxford, Inc. and Island Pacific Hayward Inc. filed with the California Secretary of State on 3/12/16, 5/2/13 and 3/12/16, respectively); Granted as to Exhibit “4” (i.e., “Statements of Information” for Island Pacific Rancho, Inc., Island Pacific Pittsburg, Inc., and Island Pacific Distribution, Inc. filed with the California Secretary of State on 5/2/13, 11/30/17 and 5/2/13, respectively); Granted as to Exhibit “5” (i.e., face page of “Articles of Incorporation of Abacus Business Capital, Inc.,” and two “Statements of Information” for Abacus filed 3/26/18, 4/16/18 and 5/15/18, respectively, with the California Secretary of State); Denied as to Exhibit “6” (i.e., PAGES 1, 25 AND 26 of the complaint filed 6/14/18 in case styled Tokyo Century (USA) Inc. v. Island Pacific Chula Vista Inc., et al., Case No. 2:18-cv-05258-R-KS); Denied as to Exhibit “7” (i.e., 10/8/15 article entitled “Rich Uncles purchases Island Pacific Supermarket $3.7MM” located on https://www.blaujournal.com); Denied as to Exhibit “8” (i.e., 8/18/16 article entitled “Krista Ranillo gives birth to her fourth child” located on https://www.pep.ph); Denied as to Exhibit “9” (i.e., Tagalog translation) and Denied as to Exhibit “10” (i.e., screenshots taken 9/24/18 and 10/3/18 of the following websites: https://www.zoominfo.com/c/island-pacific-supermarket-inc/61736921 and https://www.zoominfo.com/pic/island-pacific-supermarket-inc/61736921).

Lim and Abacus contend that plaintiff has failed to state a viable claim for relief against them. Plaintiff, in turn, claims that it has sufficiently pled alter ego as to Lim and successor liability as against Abacus.

“A corporate identity may be disregarded—the ‘corporate veil’ pierced—where an abuse of the corporate privilege justifies holding the equitable ownership or a corporation liable for the actions of the corporation. (Citation omitted.) Under 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. (Citations omitted). The 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. (Citation omitted).” Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.

“In order to prevail in a cause of action against individual defendants based upon disregard of the corporate form, the plaintiff must plead and prove such a unity of interest and ownership that the separate personalities of the corporation and the individuals do not exist, and that an inequity will result if the corporate entity is treated as the sole actor.” Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749. “Among the factors relevant to determining an alter ego relationship are comingling 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.” Roman Catholic Archbishop v. Superior Court (1971) 15 Cal.App.3d 405, 411. “Other 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.” Sonora Diamond, supra, 83 Cal.App.4th at 539 (citations omitted). “The allegation that a corporation is the alter ego of the individual stockholders is insufficient to justify the court in disregarding corporate entity in the absence of allegations of facts from which it appears that justice cannot otherwise be accomplished.” Norins Realty Co. v. Consolidated Abstract & Title Guaranty Co. (1947) 80 Cal.App.2d 879, 883.

Under alter ego, plaintiff alleges that, “[u]pon information and belief, at all times herein mentioned, [LIM] is the sole principal, director, and officer of all Defendants except ABACUS and B&L (hereinafter ‘ISLAND PACIFIC BUSINESSES’). Plaintiff is informed and believes that there exists and, at all times herein mentioned, existed a unity of interest and ownership between [LIM] and the ISLAND PACIFIC BUSINESSES such that any individuality and separateness between them have ceased, and [LIM] is the alter ego of the ISLAND PACIFIC BUSINESSES in that [LIM] owns, controls, and dominates the ISLAND PACIFIC BUSINESSES. Plaintiff further alleges upon information and belief that the ISLAND PACIFIC BUSINESSES is and at all times herein mentioned, was a mere shell, instrument, and conduit through which [LIM] carried on his business, exercising complete control and dominance of such business to such an extent that any individuality or separateness of the ISLAND PACIFIC BUSINESSES does not and, at all times herein mentioned, did not exist.” (Complaint, ¶ 2).

Plaintiff’s allegations are conclusory and constitute an insufficient basis to invoke the doctrine of alter ego as against Lim.

Plaintiff has likewise failed to adequately plead successor liability as against Abacus. “The general rule is ‘where one corporation sells or transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the former unless (1) the purchaser expressly or impliedly agrees to such assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is merely a continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape liability for debts. [Citations].’” McClellen v. Northridge Park Townhome Owners Ass’n, Inc. (2001) 89 Cal.App.4th 746, 753-754, citing Ortiz v. South Bend Lathe (1975) 46 Cal.App.3d 842, 846.

Plaintiff merely alleges that “[b]ased on information and belief, ABACUS appeared to purchase the ISLAND PACIFIC BUSINESSES including its assets and debts.” (Complaint, ¶ 4). Here, there are no factual allegations showing that Abacus either expressly or impliedly agreed to an assumption of the debts and liabilities of the other business entities identified in the complaint, nor are there any factual allegations showing why Abacus should be held liable for the debts of these entities.

The demurrer, then, is sustained. Leave to amend is presently denied. However, if during discovery plaintiff uncovers additional facts that may give rise to alter ego and /or successor liability theories of recovery, plaintiff may file a motion to amend to reinstitute those theories.