Case Number: KC069507 Hearing Date: June 27, 2018 Dept: J

Kai Jie Wang v. Clark Liang, et al. (KC069507)

DEMURRER TO FIRST AMENDED COMPLAINT

Moving Party: Defendant Clark Liang

Respondent: Plaintiff Kai Jie Wang

POS: Moving OK; Opposing OK; Reply served by regular mail contrary to CCP § 1005(c)

Plaintiff is a Chinese national who does not speak or read English; Defendant Clark Liang (“Liang”) is plaintiff’s wife’s cousin. Plaintiff alleges that in or about 5/13, Liang informed plaintiff that Defendant Meitsu Chen (“Chen”) had a profitable bird store for sale. Plaintiff alleges that Liang represented, inter alia, that he and plaintiff would become business partners, that Liang would contribute his pro rata share in the partnership, that he had already been to the business site and reviewed the business’ financial statements, and that Chen would provide two years of assistance after the sale. Plaintiff alleges that the above representations were false and that Liang overstated the profitability of the business.

On 3/6/18, the court granted Defendant Liang’s motion for judgment on the pleadings as to the second, third, fifth, sixth and eighth causes of action (i.e., for Conspiracy to Commit Fraud, Conversion, Negligence, Constructive Trust and Breach of Contract, respectively) in plaintiff’s complaint with leave to amend and denied same as to the first, fourth and seventh causes of action (i.e., for Fraud, Breach of Fiduciary Duty and Accounting, respectively.

The First Amended Complaint, filed 3/21/18, asserts causes of action against Defendants Liang, Chen and Does 1-20 for:

1. Fraud

2. Conspiracy to Commit Fraud

3. Conversion

4. Breach of Fiduciary Duty

5. Negligence

6. Accounting

7. Breach of Contract

The Final Status Conference is set for 10/29/18. A jury trial is set for 11/6/18.

Defendant Clark Liang (“Liang”) demurs, per CCP § 430.10(e)&(f), to the first, second, third, fifth and seventh causes of action in Plaintiff Kai Jie Wang’s (“plaintiff”) First Amended Complaint (“FAC”), on the basis that they each fail to state facts sufficient to constitute causes of action and are uncertain.

SEVENTH CAUSE OF ACTION (i.e., BREACH OF CONTRACT):

Liang contends that plaintiff’s seventh cause of action is time-barred by the two year statute of limitations set forth in CCP §§ 338[1].

Plaintiff has alleged that he and Liang “had an oral agreement in which Plaintiff would initially contribute the deposit and the purchase price and LIANG would repay Plaintiff.” (FAC, ¶ 70). More specifically, he has alleged that “LIANG represented that Plaintiff should initially come up with the purchase price, that LIANG would also pay CHEN, and that LIANG would repay Plaintiff for LIANG’s pro rata 50% share in the partnership.” (Id., ¶ 14). The FAC alleges that the actions leading up to the purchase and the purchase of the store occurred during the time frame of May to November 2013, and that plaintiff took possession of the store on 1/1/14. (Id., ¶¶ 7-15 and 24).

Plaintiff has alleged that [i]n about late November 2013,” Liang represented “that he had paid $20,000.00 to CHEN so LIANG already had approximately 10% ownership interest, and that he would repay Plaintiff to obtain a 50% share in the partnership.” (Id., 22). He has alleged that he discovered a shortfall in revenue from the business “[a]bout a year after taking over,” that he met with Liang “[a]t around this time” to “go over the business’ finances, that he “believed that LIANG had in fact paid $20,000 to CHEN to purchase the bird store and that LIANG was about a 10% owner,” and that Liang “indicated that he did not have the funds to contribute to the bird store or to increase his ownership interest at the time. Consequently, LIANG asked Plaintiff to advance his own funds and LIANG would repay Plaintiff.” (Id., ¶¶ 25-26). Plaintiff has alleged that in about January 2016, he again met with Liang and requested that Liang “contribute funds in order to sustain the business and in order for Liang to increase his pro rata ownership interest.” (Id., ¶ 27). He has alleged that, at that time, he asked Liang whether he had, in fact, paid the $20,000.00 to Chen as he “had previously represented,” and Liang denied ever making such a representation. (Id.). Plaintiff has alleged that Liang reiterated that he was an owner but had no money and “again asked Plaintiff to contribute his own funds first and that he would repay Plaintiff.” (Id., ¶ 28).

Plaintiff is alleging that Liang breached his obligation to make payment for his 50% contribution toward the purchase price as of 1/1/14, and that he repeated his promise approximately in January 2015, and again in January 2016. However, the CCP § 339 two year statute of limitations for breach of oral contract is not extended by the alleged renewed promises in January 2015 and January 2016 pursuant to CCP § 360, which reads: “No acknowledgment or promise is sufficient evidence of a new or continuing contract, by which to take the case out of the operation of this title, unless the same is contained in some writing, signed by the party to be charged thereby, provided that any payment on account of principal or interest due on a promissory note made by the party to be charged shall be deemed a sufficient acknowledgment or promise of a continuing contract to stop, from time to time as any such payment is made, the running of the time within which an action may be commenced upon the principal sum or upon any installment of principal or interest due on such note, and to start the running of a new period of time, but no such payment of itself shall revive a cause of action once barred.”

Plaintiff has not pled any “additional consideration” which would take any new promise out of the scope of § 360.

Accordingly, Liang’s demurrer to the seventh cause of action is sustained.

THIRD AND FIFTH CAUSES OF ACTION (i.e., CONVERSION AND NEGLIGENCE, RESPECTIVELY):

Liang contends that plaintiff’s third and fifth causes of action are time-barred by the two year statute of limitations set forth in and 339[2].

“Civil actions, without exception, can only be commenced within the periods prescribed in this title, after the cause of action shall have accrued, unless where, in special cases, a different limitation is prescribed by statute.” CCP § 312. “The general rule for defining the accrual of a cause of action sets the date as the time when the cause of action is complete with all of its elements.” Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 389.

An exception to the general rule of accrual is the “discovery rule,” “which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action, until, that is, he at least suspects, or has reason to suspect, a factual basis for its elements.” Id. “In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’ (McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 160). In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence;’ ‘conclusory allegations will not withstand demurrer.’ (Ibid.)” Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 (emphasis theirs).

Plaintiff’s claim for conversion is based upon the allegation that the defendants interfered with plaintiff’s ownership interest in the business. (FAC, ¶ 34(d) and 55). Plaintiff’s claim for negligence is based upon Liang’s alleged breach of duty of care towards plaintiff. (Id., ¶¶ 63 & 64).

Plaintiff has alleged that Liang is his wife’s cousin, that he is a Chinese national who does not speak or read English, and that he “did everything based on his trust on LIANG…and given his unfamiliarity with the English language and the business legalities and formalities in the U.S.” (Id., ¶¶ 7 and 20). He has alleged that in November 2013, both Liang and Chen informed him that there was no written agreement concerning the purchase and sale of the bird store. (Id., ¶ 23). Plaintiff has alleged that that in about January 2015, he again asked Liang for “the details of the agreement” and “questioned why there was no written agreement.” (Id., ¶ 29). He has alleged that Liang initially insisted that there was no such further written agreement; however, upon further questioning, Liang indicated that he would “look for it.” (Id.). Plaintiff has alleged that he subsequently approached Chen and demanded a copy of any written agreement, and that Chen, after initially denying the existence of same, advised that her computer had been infected and that she probably could not retrieve any documents. (Id., ¶ 30). He has alleged that Chen finally furnished a written document entitled “Bird Store Transfer Procedure”
on 4/2/16, which he had never seen before. (Id., ¶ 31). Plaintiff has alleged that he subsequently made an inquiry to Liang concerning these details, but that Liang did not provide any meaningful response. (Id., ¶ 32).

Plaintiff, then, has sufficiently pled delayed discovery with respect to these causes of action. Liang’s demurrer to the third and fifth causes of action is overruled.

FIRST AND SECOND CAUSES OF ACTION (i.e., FRAUD AND CONSPIRACY TO COMMIT FRAUD, RESPECTIVELY):

Liang claims the first and second causes of action lack the requisite specificity. The court previously denied Liang’s motion for judgment on the pleadings with respect to the fraud cause of action. The essence of the present fraud claim is identical to that stated previously, except that plaintiff has now included additional facts concerning the delayed discovery. These additional facts sufficiently support a cause of action for conspiracy to commit fraud.

Liang’s demurrer to the first and second causes of action is overruled. He has 10 days to answer the remaining causes of action.

[1] This provision reads, in relevant part, as follows: “Within three years:…(d) An action for relief on the ground of fraud or mistake. The cause of action in that case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud or mistake.”

[2] This provision reads as follows: “Within two years: 1. An action upon a contract, obligation or liability not founded upon an instrument of writing, except as provided in Section 2725 of the Commercial Code or subdivision 2 of Section 337 of this code; or an action founded upon a contract, obligation or liability, evidenced by a certificate, or abstract or guaranty of title of real property, or by a policy of title insurance; provided, that the cause of action upon a contract, obligation or liability evidenced by a certificate, or abstract or guaranty of title of real property or policy of title insurance shall not be deemed to have accrued until the discovery of the loss or damage suffered by the aggrieved party thereunder…”