Case Name: Patrick Rivelli, et al. v. Rodo Medical, Inc., et al.

Case No.: 18CV326785

Demurrer of Defendants Rodo Medical, Inc.; Young Seo; Amir Aboltathi; Greg Garfield; Kevin Mosher; and Mike Winzeler’s to Complaint

Defendant Rodo Medical, Inc. (“Rodo”) is a medical device company that develops and produces retention devices for dental implant restorations. (Complaint, ¶19.) Defendants Frank Hemm, Young Seo, Amir Aboltathi, Greg Garfield, Kevin Mosher, and Mike Winzeler (collectively, “Director Defendants”) are Rodo directors. (Complaint, ¶¶5 – 10.)

In September 2010, shortly after Rodo’s formation, plaintiffs Patrick Rivelli and Pinecroft Ventures, LLC (“Pinecroft”) were among several investors who purchased Series A Preferred Stock in Rodo. (Complaint, ¶20.) Plaintiffs’ decision to invest in Rodo was based on representations by Rodo that (1) the Food and Drug Administration’s (“FDA”) approval of Rodo’s dental implant device would be obtained; (2) the Series A shareholders would have the opportunity to sell their holdings (“exit opportunity”) no later than 2014; (3) the Series A shareholders would retain a liquidation preference over common stock holders; (4) Series A shareholders would have their own representative on the Rodo board; (5) the Series A shareholders would have certain preemption and anti-dilution rights; (6) the Series A shareholders would have certain information and inspection rights; and (7) the Series A shareholders would be non-redeemable. (Id.)

Based on these and other representations, plaintiff Rivelli purchased 1,100,110 Series A Preferred shares and plaintiff Pinecroft purchased 330,033 Series A Preferred shares in September 2010. (Complaint, ¶21.) As part of their Stock Purchase Agreement, Series A investors entered into various agreements including a Voting Agreement and an Investor Rights Agreement. (Complaint, ¶22.) The Voting Agreement provides for Series A preferred shareholders, by voting as a separate class, to elect a director to represent their interests on the Rodo board. (Id.) Thereafter, the Series A shareholders elected a board representative, which at various times was plaintiff Rivelli and other times was plaintiff Pinecroft, through its representative, Garrett Roper. (Complaint, ¶23.)

Rodo did not obtain FDA approval for its dental implant device within the promised two years and instead obtained in November 2016. (Complaint, ¶24.) Series A shareholders were not afforded the promised exit opportunities in 2012 or 2014. (Id.) Rodo’s CEO repeatedly told plaintiff Rivelli that after Rodo obtained FDA approval, Rodo would pursue a liquidation event by which Series A preferred shareholders would realize a return on their investment. (Id.) Rodo’s directors were aware that obtaining FDA approval dramatically increases the company’s value and marketability. (Id.) A number of potential acquirers expressed interest in Rodo even prior to FDA approval. (Id.) After Rodo obtained FDA approval, with one exception, Rodo did not pursue any acquisition opportunities and did not retain a qualified investment banking professional to market the company to obtain the highest price or best possible terms for the shareholders. (Id.) Instead, Rodo’s directors caused Rodo to enter into a “sweetheart” transaction with defendant Institut Straumann AG (“Straumann”) benefitting Straumann and Rodo directors to the detriment of plaintiffs and other Series A Preferred shareholders (“Straumann Transaction”). (Id.)

Straumann is headquartered in Switzerland and develops, manufactures, and markets dental implants, instruments, prosthetics, and biomaterial. (Complaint, ¶25.) In 2014, Straumann acquired a 12% interest in Rodo and a seat on Rodo’s board for Straumann’s Executive Vice-President, defendant Frank Hemm (“Hemm”) in 2016. (Complaint, ¶25.)

In 2017, after Rodo obtained FDA approval for its dental implant device, Rodo entered into the Straumann Transaction which increased Straumann’s stake in Rodo from 12% to 30% and gave Straumann rights to distribute Rodo products internationally. (Complaint, ¶26.) Straumann also gained control of Rodo’s acquisitions and financing for the next four to six years, Rodo’s long-term viability and growth, and Straumann’s own call prices at the Majority and Acquisitions Calls. (Id.) The Straumann Transaction also gave Straumann the option to purchase Rodo below market value. (Id.)

Defendant Hemm orchestrated the Straumann Transaction as an officer of Straumann and director of Rodo. (Complaint, ¶27.) Defendant Hemm improperly used confidential Rodo information concerning other potential investors to give defendant Straumann a valuable and unfair advantage in negotiating with Rodo. (Id.) The other Rodo director defendants pushed the Straumann Transaction through in order to enrich themselves as owners of Rodo common stock. (Id.)

The Straumann Transaction disadvantaged Series A Preferred shareholders in several ways. One, it eliminated Series A shareholder’s rights including liquidation preference and a seat on the Rodo board. (Complaint, ¶28.) The Straumann Transaction also increased Series A Preferred investors’ holding period another four to six years. (Id.) Defendants obtained shareholder consent to the Straumann Transaction through a series of false and misleading statements and omissions in the Information Statement. (Complaint, ¶¶30 – 34.) Defendants repeatedly rebuffed plaintiff Rivelli’s requests for company information. (Complaint, ¶35.)

On April 18, 2018, plaintiffs Rivelli and Pinecroft filed a complaint against defendants Rodo, Straumann, and the Director Defendants asserting causes of action for:

(1) Fraud
(2) Breach of Fiduciary Duty
(3) Breach of Contract (Voting Agreement)
(4) Violation of Corporations Code §603(d)
(5) Declaratory Relief under Corporations Code §709(c)
(6) Breach of Contract (Investor Rights Agreement)
(7) Violation of Corporations Code §§213, 1600 – 1605
(8) Injunctive Relief

Defendant Straumann is alleged to be a foreign corporation with its primary place of business in Basel, Switzerland. (Complaint, ¶4.)

On June 25, 2018, defendant Straumann filed a motion to quash service of summons.

On September 4, 2018, defendant Rodo and the Director Defendants, with the exception of defendant Hemm (“Moving Defendants”), filed the motion now before the court, a demurrer to the plaintiffs’ complaint.

On October 26, 2018, the court granted defendant Straumann’s motion to quash service of summons.

I. Moving Defendants’ demurrer to the first cause of action [fraud] of plaintiffs’ complaint is SUSTAINED.

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.)

Plaintiffs Rivelli and Pinecroft’s first cause of action is for fraud and asserts that defendants made a series of misrepresentations which were relied upon by shareholders who consented to the Straumann Transaction. The Moving Defendants argue this claim for fraud fails because plaintiffs themselves did not rely on the misrepresentations. On the contrary, plaintiffs allege, “Rivelli objected to the Straumann Transaction” and “voted against the deal.” (Complaint, ¶29.) In other words, the alleged misrepresentations were relied upon by shareholders other than plaintiffs.

In opposition, plaintiffs admit their claim “is not that Plaintiffs relied on the misrepresentations, but that shareholders did.” Plaintiffs apparently concede the allegations are “insufficient to state a direct claim” for fraud, but contend the allegations are sufficient to state a shareholder derivative action for fraud. However, the complaint specifically alleges, “Plaintiffs bring this action on behalf of themselves as owners of Series A Preferred shares, and not on behalf of the Company.” (Complaint, ¶16.)

Accordingly, the Moving Defendants’ demurrer to the first cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for fraud is SUSTAINED with 10 days’ leave to amend.

II. Moving Defendants’ demurrer to the second cause [breach of fiduciary duty] of action of plaintiffs’ complaint is SUSTAINED, in part, and OVERRULED, in part.

A. Rodo’s demurrer to the second cause of action is SUSTAINED.

“The elements of a cause of action for breach of fiduciary duty are: (1) existence of fiduciary duty; (2) the breach of that duty; and (3) damage proximately caused by that breach.” (Mosier v. Southern California Physicians Insurance Exchange (1998) 63 Cal.App.4th 1022, 1044; see also Shopoff & Cavallo LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509—“To establish a cause of action for breach of fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary relationship, breach of that duty and damages.”)

Defendant Rodo argues, separately, that a corporate entity does not owe a fiduciary duty to its shareholders, officers, or directors. It is not clear from the complaint whether the second cause of action is even directed at defendant Rodo. Although the heading of the cause of action states that it is directed at “(All Defendants),” the specific allegations state only, “The Director Defendants owed fiduciary duties…” and “By virtue of their positions as directors of Rodo, the Defendants…”

Plaintiffs do not address this argument by defendant Rodo in their opposition. Accordingly, defendant Rodo’s demurrer to the second cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of fiduciary duty is SUSTAINED with 10 days’ leave to amend.

B. Defendants Seo, Aboltathi, Garfield, Mosher, and Winzeler’s demurrer to the second cause of action is OVERRULED.

In demurring, defendants Seo, Aboltathi, Garfield, Mosher, and Winzeler argue that the second cause of action for breach of fiduciary duty is a shareholder derivative claim which belongs to the corporation, Rodo, and cannot be pursued directly by plaintiffs.

An action is derivative if “ ‘the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets.’ ” (Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 106 [81 Cal. Rptr. 592, 460 P.2d 464].) Shareholders may bring a derivative suit to, for example, enjoin or recover damages for breaches of fiduciary duty directors and officers owe the corporation. (Friedman, Cal. Practice Guide: Corporations, supra, ¶ 6:604, p. 6-128.2.) An individual cause of action exists only if damages to the shareholders were not incidental to damages to the corporation. (Jones v. H. F. Ahmanson & Co., supra, at p. 107.) Examples of direct shareholder actions include suits brought to compel the declaration of a dividend, or the payment of lawfully declared or mandatory dividends, or to enjoin a threatened ultra vires act or enforce shareholder voting rights. (Friedman, supra, ¶ 6:601, p. 6-128.)

(Schuster v. Gardner (2005) 127 Cal.App.4th 305, 313.)

“ ‘It is a general rule that a corporation which suffers damages through wrongdoing by its officers and directors must itself bring the action to recover the losses thereby occasioned, or if the corporation fails to bring the action, suit may be filed by a stockholder acting derivatively on behalf of the corporation. An individual [stockholder] may not maintain an action in his own right against the directors for destruction of or diminution in the value of the stock….’ ” (Rankin v. Frebank Co., supra, 47 Cal.App.3d at p. 95.)

Nelson contends that she suffered injury as an individual, and even if there were injury to the corporation, a derivative action was not her exclusive remedy. She points out that the same facts might give rise to two causes of action, one in favor of the corporation, another in favor of one or more individual shareholders. (See Sutter v. General Petroleum Corp. (1946) 28 Cal.2d 525, 530 [170 P.2d 898, 167 A.L.R. 271].) Her cause of action was individual, she argues, because she suffered injury to her reputation and emotional distress, and lost her out-of pocket expenses, as well as other employment opportunities. [Footnote.]

The test is not whether Nelson’s damages were unique, as Nelson’s argument suggests; an individual cause of action exists only if the damages were not incidental to an injury to the corporation. (See Jones v. H. F. Ahmanson & Co., supra, 1 Cal.3d at p. 107.) The cause of action is individual, not derivative, only “ ‘where it appears that the injury resulted from the violation of some special duty owed the stockholder by the wrongdoer and having its origin in circumstances independent of the plaintiff’s status as a shareholder.’ ” (Rankin v. Frebank Co., supra, 47 Cal.App.3d at p. 95, italics omitted.)

In other words, it is the gravamen of the wrong alleged in the pleadings, not simply the resulting injury, which determines whether an individual action lies.

(Nelson v. Anderson (1999) 72 Cal.App.4th 111, 124.)

“[A]n action is ‘derivative’ if ‘the gravamen of the complaint is injury to the corporation, or to the whole body of its stock or property without any severance or distribution among individual holders, or if it seeks to recover assets for the corporation or to prevent the dissipation of its assets.’” (Friedman, CAL. PRAC. GUIDE: CORPORATIONS (The Rutter Group 2007) ¶6:603, pp. 6-130 to 6-131 citing Vega, supra, 121 Cal.App.4th at p. 297; Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 106 – 107.)

Director Defendants point the court to the prayer for relief which seeks, among other things, “rescission of the Straumann Transaction,” which the Director Defendants contend is per se derivative relief. This request for relief is not dispositive. In the body of the complaint, plaintiffs allege the Director Defendants “engaged in self-dealing and obtained for themselves personal benefits, including personal financial benefits, not shared equally by Plaintiffs or other Class A stockholders.” (Complaint, ¶46.) The complaint also alleges the Straumann Transaction “disadvantaged the Series A Preferred shareholders in several ways. First, it eliminated the Series A shareholders’ valuable and bargained-for rights, including their liquidation preference; their preemption and anti-dilution rights; and their Series A board seat. The Straumann Transaction also increased the Series A investors’ holding period for another four to six years, i.e., lengthening the horizon to more than 11 years, in contrast to the original two-year projection.” (Complaint, ¶28.)

In this court’s reading of the above allegations from the complaint, the gravamen of the injury is to Series A Preferred shareholders, not to the company as a whole. Accordingly, defendants Seo, Aboltathi, Garfield, Mosher, and Winzeler’s demurrer to the second cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of fiduciary duty is OVERRULED.

III. Moving Defendants’ demurrer to the third cause of action [breach of contract] of plaintiffs’ complaint is SUSTAINED, in part, and OVERRULED, in part.

“A complaint for the breach of contract must include the following: (1) the existence of a contract, (2) plaintiff’s performance or excuse for non-performance, (3) defendant’s breach, and (4) damages to plaintiff therefrom.” (Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913.)

Plaintiffs’ third cause of action alleges a breach of section 1.3 of the first amendment to the Voting Agreement. “Defendants breached the Voting Agreement by purporting to eliminate the Series A board seat, and to remove Rivelli from the board, in violation of the Voting Agreement.” (Complaint, ¶50.)

Moving Defendants argue first that this claim fails because plaintiffs and the Director Defendants are not alleged to be parties to the Voting Agreement. Moving Defendants point to the “First Amendment of Rodo Medical, Inc. Voting Agreement” which is attached as Exhibit A to the complaint. Section 1 of that document refers to an original “Voting Agreement, dated September 16, 2010, by and between the Company [earlier defined to be Rodo] and certain of the Company’s shareholders.” The document is signed by defendants Seo and Winzeler on behalf of the “Investors.” The signature block also includes a space for Rivelli’s signature on behalf of the Investors, but the document does not actually bear Rivelli’s signature. Moving Defendants acknowledge the allegation at paragraph 22 of the complaint which states, “As part of their Stock Purchase Agreement, the Series A investors entered into various agreements, including a Voting Agreement and an Investor Rights Agreement, true and correct copies of which are attached hereto as Exhibits A and B.”

The Director Defendants are not parties to the Voting Agreement. “Breach of contract cannot be made the basis of an action for damages against defendants who did not execute it and who did nothing to assume its obligations.” (Gold v. Gibbons (1960) 178 Cal.App.2d 517, 519; followed by Clemens v. American Warranty Corp. (1987) 193 Cal.App.3d 444, 452—“Under California law, only a signatory to a contract may be liable for any breach.”) Consequently, the Director Defendants’ demurrer to the third cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of contract is SUSTAINED with 10 days’ leave to amend. [To avoid further confusion, the court suggests plaintiffs comply with California Rules of Court, rule 2.112 which states, “Each separately stated cause of action … must specifically state … [t]he party asserting it if more than one party is represented on the pleading (e.g., ‘by plaintiff Jones’); and [t]he party or parties to whom it is directed (e.g., ‘against defendant Smith’).”]

The court is of the opinion that paragraph 22 sufficiently alleges that the Series A investors entered into the Voting Agreement and plaintiffs Rivelli and Pinecroft are alleged to be Series A investors. (See Complaint, ¶¶20 – 21.) For purposes of demurrer, the court accepts this allegation to be true. The lack of signatures by Rivelli or Pinecroft on Exhibit A is not enough to overcome the allegations found at paragraphs 20 – 22 of the complaint.

Moving Defendants argue further that the cause of action fails because “there are no allegations concerning when or how the agreement was breached.” Moving Defendants contend the allegation found at paragraph 50 lacks details. However, unlike fraud, there is no specificity requirement for pleading a breach of contract.

Accordingly, defendant Rodo’s demurrer to the third cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of contract is OVERRULED.

IV. Moving Defendants’ demurrer to the fourth cause of action [violation of Corp. Code §603(d)] of plaintiffs’ complaint is OVERRULED.

Corporations Code section 603 states, in relevant part:

(a) Unless otherwise provided in the articles, any action that may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, as specified in Section 195, setting forth the action so taken, shall be provided by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take that action at a meeting at which all shares entitled to vote thereon were present and voted.
…
(d) Notwithstanding subdivision (a), directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors; provided that the shareholders may elect a director to fill a vacancy, other than a vacancy created by removal, by the written consent of a majority of the outstanding shares entitled to vote.

According to the complaint, “Defendants violated [section 603, subdivision (d)] by purporting to remove Rivelli from the board, and elect Guillaume Daniellot in his place, without the written consent of all shares entitled to vote for the election of directors.”

Moving Defendants argue this fourth cause of action is defective because it is unclear whether Rivelli is still a director or whether he was removed and if removed, what date he was removed and by what particular board action. Plaintiffs contend Moving Defendants have not cited any legal authority which would require such specificity. Although not cited, the court applies “the general rule that statutory causes of action must be pleaded with particularity.” (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) “[Where] recovery is based on a statutory cause of action, the plaintiff must set forth facts in his [or her] complaint sufficiently detailed and specific to support an inference that each of the statutory elements of liability is satisfied. General allegations are regarded as inadequate. [Citations.]” (Mittenhuber v. City of Redondo Beach (1983) 142 Cal.App.3d 1, 5.)

Even if this general rule were to apply, the court is not convinced that plaintiffs must plead the factual detail that Moving Defendants demand. Here, the complaint alleges Rivelli was removed and Daniellot was elected with something less than the consent required by Corporations Code section 603. The court does not find the allegations to be inconsistent with paragraph 28 of the complaint which alleges an “elimination” of the Series A board seat or with paragraph 33 which alleges an amendment to Rodo’s Articles of Incorporation. The court does not find the allegations to be mutually exclusive.

Finally, Moving Defendants contend plaintiffs lack standing to assert a violation of Corporations Code section 603 because this would be a derivative claim. As discussed below with regard to the fifth cause of action, the court disagrees that this fourth cause of action is derivative in nature.

Accordingly, the Moving Defendants’ demurrer to the fourth cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for violation of Corporations Code section 603, subdivision (d), is OVERRULED.

V. Moving Defendants’ demurrer to the fifth cause of action [declaratory relief under Corp. Code §709(c)] of plaintiffs’ complaint is OVERRULED.

Corporations Code section 709 states:

(a) Upon the filing of an action therefor by any shareholder or by any person who claims to have been denied the right to vote, the superior court of the proper county shall try and determine the validity of any election or appointment of any director of any domestic corporation, or of any foreign corporation if the election was held or the appointment was made in this state. In the case of a foreign corporation the action may be brought at the option of the plaintiff in the county in which the corporation has its principal office in this state or in the county in which the election was held or the appointment was made.
…
(c) The court may determine the person entitled to the office of director or may order a new election to be held or appointment to be made, may determine the validity, effectiveness and construction of voting agreements and voting trusts, the validity of the issuance of shares and the right of persons to vote and may direct such other relief as may be just and proper.

Moving Defendants contend the claim fails because, as highlighted above, there are no allegations that plaintiffs have been denied the right to vote. The court does not read the language to require an allegation that plaintiffs have been denied the right to vote. As this court views the statutory language, the emphasis is on the disjunctive: “any shareholder or by any person who claims to have been denied the right to vote.” (See also Haah v. Kim (2009) 175 Cal.App.4th 45, 54.) Plaintiffs are Rodo shareholders and entitled to pursue an action under Corporations Code section 709.

Accordingly, the Moving Defendants’ demurrer to the fifth cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for declaratory relief under Corporations Code section 709, subdivision (c), is OVERRULED.

VI. Moving Defendants’ demurrer to the sixth cause of action [breach of contract] of plaintiffs’ complaint is SUSTAINED.

For the same reason discussed above with regard to the third cause of action, the Director Defendants are not parties to the Investor Rights Agreement. “Breach of contract cannot be made the basis of an action for damages against defendants who did not execute it and who did nothing to assume its obligations.” (Gold v. Gibbons (1960) 178 Cal.App.2d 517, 519; followed by Clemens v. American Warranty Corp. (1987) 193 Cal.App.3d 444, 452—“Under California law, only a signatory to a contract may be liable for any breach.”) Consequently, the Director Defendants’ demurrer to the sixth cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of contract is SUSTAINED with 10 days’ leave to amend.

Defendant Rodo argues additionally that the cause of action fails for lack of specificity and on the basis that plaintiffs have not alleged their performance. On this latter point, the court agrees. Plaintiff’s performance is indeed an element of a breach of contract claim. (Acoustics, Inc. v. Trepte Construction Co. (1971) 14 Cal.App.3d 887, 913.) “The plaintiff cannot enforce the defendant’s obligation unless the plaintiff has performed the conditions precedent imposed on him. [Citation.] Accordingly, the allegation of performance is an essential part of his cause of action. [Citation.]” (4 Witkin, California Procedure (4th ed. 1997) Pleading, §491, pp. 581 – 582.) “But the foregoing requirement is reduced to a mere formality by [Code Civ. Proc., §457] which makes it unnecessary to set forth the facts of such performance: The plaintiff may allege, in general terms, that he has ‘duly performed all the conditions on his part.’” (Id. at p. 582.) Code Civ. Proc., §457 states, “In pleading the performance of conditions precedent in a contract, it is not necessary to state the facts showing such performance, but it may be stated generally that the party duly performed all the conditions on his part, and if such allegation be controverted, the party pleading must establish, on the trial, the facts showing such performance.” Here, however, plaintiffs have not even alleged that they duly performed all the conditions on their part.

Accordingly, defendant Rodo’s demurrer to the sixth cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for breach of contract is SUSTAINED with 10 days’ leave to amend.

VII. Moving Defendants’ demurrer to the seventh cause of action [violation of Corp. Code §§213, 1600-1605] of plaintiffs’ complaint is OVERRULED.

Moving Defendants contend plaintiffs have not alleged enough facts to support a violation of any of the particular Corporations Code statutes cited in the seventh cause of action. For example, Corporations Code section 1602 states, in part, “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign.”

Moving Defendants contend plaintiffs have not alleged that when they were directors or that the requests for information were made when they were directors. Although the general rule, as stated above, requires statutory causes of action to be pleaded with particularity, the court finds the allegations here to be sufficient. Plaintiff Rivelli has alleged that he was a director at various times (Complaint, ¶23). Any further specificity can be obtained by the defendants through discovery.

Moving Defendants also take issue with the other statutory theories relied upon by plaintiffs. However, since plaintiffs have at least set forth a valid cause of action under Corporations Code section 1602, the court need not adjudicate the merits of each statutory theory. A defendant cannot demur to a portion of a cause of action. (See Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 778—“[A] defendant cannot demur generally to part of a cause of action;” see also PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682—“A demurrer does not lie to a portion of a cause of action;” Pointe San Diego Residential Community, L.P. v. Procopio, Cory, Hargreaves & Savitch, LLP (2011) 195 Cal.App.4th 265, 274—“ A demurrer challenges a cause of action and cannot be used to attack a portion of a cause of action.”)

Accordingly, the Moving Defendants’ demurrer to the seventh cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for violation of Corporations Code is OVERRULED.

VIII. Moving Defendants’ demurrer to the eighth cause of action [injunctive relief] of plaintiffs’ complaint is OVERRULED.

In demurring to the eighth cause of action, Moving Defendants argue, “Injunctive relief is a remedy, not a cause of action.” (City of South Pasadena v. Dept. of Transportation (1994) 29 Cal.App.4th 1280, 1293.) “To qualify for a permanent injunction, the plaintiff must prove (1) the elements of a cause of action involving the wrongful act sought to be enjoined and (2) the grounds for equitable relief, such as, inadequacy of the remedy at law.” (Id. at p. 1293; see also 5 Witkin, California Procedure (4th ed. 1997) Pleading, §779, p. 236.) “Injunctive relief is a remedy and not, in itself, a cause of action, and a cause of action must exist before injunctive relief may be granted.” (Shell Oil v. Richter (1942) 52 Cal.App.2d 164, 168.)

Moving Defendants contend there are no allegations of an inadequate remedy, irreparable harm, etc. However, plaintiffs have made such allegations at paragraphs 72 – 73 of the complaint.

Accordingly, the Moving Defendants’ demurrer to the eighth cause of action in plaintiffs’ complaint on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for injunctive relief is OVERRULED.