Demurrer Without Motion To StrikeMotionCal. Super. - 2nd Dist.November 14, 2019Electronically FILED| by Superior Court of California, County of Los Angeles on 04/15/2020 03:50 PM Sherri R. Carter, Executive Officer/Clerk of Court, by J . Gonzalez,Deputy Clerk] 1 ||JAMES W. BATES (143757) LAW OFFICES OF JAMES W. BATES, A PROFESSIONAL CORPORATION 3 [|1055 E. Colorado Blvd., 5th Floor Pasadena, California 91106-2327 411 (818) 248-1911 Attorneys For Defendants 6 || FOREMAX INVESTMENT, LLC, a California limited liability 7 {company and LISA LIAO, an individual SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF LOS ANGELES 10 i UNLIMITED JURISDICTION 12 |INAI CHI HSU also known as Case No. 19PSCV01026 LAWRENCE NAI HSU; (Assigned for all purposes to 13 Judge Peter A. Hernandez - EA ” Plaintiffs, Dept. 0) 15 -Vs- NOTICE OF HEARING ON DEMURRER AND DEMURRER TO FIRST AMENDED 16 [| FOREMAX INVESTEMENT, LLC, a COMPLAINT; MEMORANDUM OF POINTS California limited liability AND AUTHORITIES; DECLARATION OF 7 || company; LISA LIAO, an JAMES W. BATES PURSUANT TO CODE 1g ||individual; and DOES 1 through OF CIVIL PROCEDURE §§ 430.41 500, inclusive, 19 Date: TO BE DETERMINED Defendants. Time: TO BE DETERMINED 20 Dept: O 21 RES ID: TO BE DETERMINED 22 Trial Date: None 2 Motion Cutoff: None 24 Discovery Cutoff: None 25 Complaint filed 11/14/19 26 27 28 1 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS TABLE OF AUTHORITIES NOTICE OF HEARING ON DEMURRER DEMURRER TO FIRST AMENDED COMPLAINT MEMORANDUM OF POINTS AND AUTHORITIES 1. Introduction 2. Plaintiff’s Change To Complaint As Revised By FAC 3. As A Matter Of Law, There Was No “Fiducia ry Relationship” Between Plaintiff And Defendants - Paragraph 11 Is Incorporated By Reference Into Each And Every Cause Of Action, Therefore, Th e Entire FAC Fails To State Facts Sufficient To Constitute A Cause Of Action Against Defendants 4. The First Cause Of Action For Intentional Misrepresentation, Second Cause Of Action For Promise Made Without Intent To Perform Fail, Fifth Cause Of Action For Quiet Title, And Sixth Cause Of Action For Cancellation Of Written Instrument Fail To State Facts Sufficient To Constitute A Cause Of Action Against Defendants And Are Uncertain a. Plaintiff Fails To Allege How, When, Where, And By What Means The Alleged Representations Were Made By Defendants b. Plaintiff Fails To Allege “Justifiable Reliance” On The Alleged Misrepresentations Made By Defendants c. The Fifth Cause Of Action for Quiet Title And Sixth Cause Of Action for Cancellation Of Written Instrument Must Also Fail Because i DEMURRER TO FIRST AMENDED COMPLAINT PAGE NO. iii iv 11 10 11 12 13 14 15 16 17 18 1.9 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS (cont.) 5. The Seventh Cause Of Action For Accounting Fails To State Facts Sufficient To Constitute A Cause Of Action And Is Uncertain 6. The Eighth Cause Of Action For Slander Of Title Fails To State Facts Sufficient To Constitute A Cause Of Action 7. The Ninth Cause Of Action Fails To State Facts Sufficient To Constitute A Cause Of Action For Violation Of Penal Code § 115, California Constitution XV, Civil Code § 2941 (b) and Civil Code § 1943 And Is Uncertain 8. The Eleventh Cause Of Action For Injunctive Relief Is Not A Cause Of Action - There Is No Cause Of Action For Injunctive Relief - Injunctive Relief Is A Remedy 9. The Twelfth Cause Of Action For Common Counts Fails To State Facts Sufficient To Constitute A Cause Of Action Against Defendants DECLARATION OF JAMES W. BATES ii DEMURRER TO FIRST AMENDED COMPLAINT PAGE NO. 11 12 12 13 17 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226 Appollo Capital Fund, LLC v. Roth Capital Pa rtners, LLC (2007) 158 Cal.App.4t 226 Charnay v. Colbert (2006) 145 Cal.App.4th 170 Cheung v. Wells Fargo (2013) 987 F. Supp.2d 972 City Of Hope National Med. V. Genetech, Inc. (2008) 43 Cal.4th 375 Guido v. Koopman (1991) 1 Cal.App.4th 837 Hills Trans. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702 Ivanoff v. Bank Of America (2017) 9 Cal.App.5th 719 Lazar v. Superior Court (1996) 12 Cal.4th 631 McBride v. Boughton (2004) 123 Cal.App.4th 379 Oakland Raiders v. Nat’l Football League (2005) 131 Cal.App. 4th 621 Stansfield v. Starkey (1990) 220 Cal.App.3d 59 Tuck Ins. Exchange v. Bennett (1997) 53 Cal.App.4t 75 Wilhelm v. Pray, Price, Williams & Russell (1986) 185 Cal.App.3d 1324 Wolf wv. Superior Court (2003) 107 Cal.App.4th 25 iii DEMURRER TO FIRST AMENDED COMPLAINT PAGE NO. 10 12 10 13 14 12 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (cont.) Zumbrun v. University Of Southern California (1972) 25 Cal.BApp.3d 1 STATUTES Civil Code § 1943 § 2941 (b) Constitution XV Code Of Civil Procedure § 430.41 (a) (3) (A) § 472 Penal Code § 115 OTHER CACI 1900 1908 iv DEMURRER TO FIRST AMENDED COMPLAINT PAGE NO. 13, 14 2y 12, 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF HEARING ON DEMURRER TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that at TIME TO BE DETERMINED on DATE TO BE DETERMINED in Department EA”0” of the above entitled court, located at 400 Civic Center Plaza, Pomona, California 91766, Defendants FOREMAX INVESTMENT, LLC, a California limited liability company and LISA LIAO, an individual (“Defendants”) will demurrer to the First Amended Complaint filed by Plaintiff NAI CHI HSU also known as LAWRENCE NAI HSU (“Plaintiff”). The Demurrer will be based upon this Notice, the Demurrer, the attached Memorandum Of Points And Authorities, the Declaration Of James W. Bates, and the entire court file herein, and upon such other and further documentary evidence that may be presented at the time of hearing. Dated: April 15, 2020 AMES W. BATES Atforneys For Defendants FOREMAX INVESTMENT, LLC, a California limited liability company and LISA LIAO, an individual v DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEMURRER TO FIRST AMENDED COMPLAINT Defendants FOREMAX INVESTMENT, LLC, a California limited liability company and LISA LIAO, an individual (hereinafter collectively referred to as “Defendants”) hereby demurrer to the First Amended Complaint filed by Plaintiff NAI CHI HSU also kn own as LAWRENCE NAI HSU as follows: 1. The First Cause Of Action for Intentional Misrepresentation fails to state facts sufficient to constit ute a cause of action against Defendants and is uncertain [Code Of Civil Procedure sections 430.10(e) and (f)]; 2. The Second Cause Of Action for Promise Made Without Intent To Perform fails to state facts sufficient to constitute a cau se of action against Defendants and is uncertain [Code Of Civil Procedure sections 430.10(e) and (f)]; 3. The Third Cause Of Action for Breach Of Oral Contract fails to state facts sufficient to constitute a cause of action against Defendants [Code Of Civil Procedure section 430.10(e)]; 4. The Fourth Cause Of Action for Breach Of Implied Covenant Of Good Faith And Fair Dealing fails to state facts sufficient tq constitute a cause of action against Defendants and is uncertai n [Code Of Civil Procedure section 430.10(e); 5. The Fifth Cause Of Action for Quiet Title fails to state facts sufficient to constitute a cause of action against Defe ndants and is uncertain [Code Of Civil Procedure sections 4 30.10 (e) and (£) 6. The Sixth Cause Of Action for Cancellation Of Written Instrument fails to state facts sufficient to constitute a cause of action against Defendants and is uncertain [Code Of Civil Proc edure sections 430.10(e) and (ff): 7. The Seventh Cause Of Action for Accounting fails to state vi DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 facts sufficient to constitute a cause of action against Defendants and is uncertain [Code Of Civil Procedure sections 430.10(e) and (£): 8. The Eighth Cause Of Action for Slander Of Title fails to state facts sufficient to constitute a cause of action against Defendants [Code Of Civil Procedure section 430.10 (e); 9. The Ninth Cause Of Action for violation of Penal Code § 115, California Constitution XV, Civil Code § 2941(b) and Civil Code § 1943 fails to state facts sufficient to constitute a cause of action against Defendants [Code Of Civil Procedure section 430.10 (ee); 10. The Tenth Cause Of Action for Declaratory Relief fails to state facts sufficient to constitute a cause of action against Defendants [Code Of Civil Procedure section 430.10 (e); 11. The Eleventh Cause Of Action for Injunctive Relief fails to state facts sufficient to constitute a cause of action against Defendants [Code Of Civil Procedure section 430.10(e); and 12. The Twelfth Cause Of Action for Injunctive Relief fails to state facts sufficient to constitute a cause of action against Defendants [Code Of Civil Procedure section 430.10(e); and Dated: April 15, 2020 JPFMES W. BATES Attgrneys For Defendants FOREMAX INVESTMENT, LLC, a California limited liability company and LISA LIAO, an individual vii DEMURRER TO FIRST AMENDED COMPLAINT 10 i 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITES Defendants FOREMAX INVESTMENT, LLC, a California limited liability company (“FOREMAX”) and LISA LIAO, an individual (“LIAO”) (FOREMAX and LIAO are hereinafter collectively referred to as “Defendants”) hereby demurrer to the First Amended Complaint For: 1. Intentional Misrepresentation 2. Fraud - Promise Without Intent to Perform 3. Breach Of Oral Contract 4. Breach of the Implied Covenant of Good Faith and Fair Dealing 5. Quiet Title 6. Cancellation of Written Instruments 7. Accounting 8. Slander of Title 9. Violation of Statutes 10. Declaratory Relief 11. Injunctive Relief 12. Common Counts (“FAC”) filed by Plaintiff NAI CHI HSU also known as LAWRENCE NAI HSU (“Plaintiff”) as follows: 1. Introduction: This is the second demurrer to the pleading filed by Plaintiff because on March 10, 2020, prior to the March 24, 2020 hearing on Demurrer to Complaint, Plaintiff filed the FAC pursuant to Code Of Civil Procedure § 472. The Demurrer to the FAC should be sustained without leave to amend because: a. As a matter of law, there was no “fiduciary relationship” between Plaintiff and Defendants - Paragraph 11 is incorporated by reference into each and every cause of action, therefore, the entire FAC fails to state facts sufficient to constitute a cause of action against Defendants; b. The First Cause Of Action for Intentional Misrepresentation, Second Cause Of Action for Promise Made Without Intent To Perform Fail, Fifth Cause Of Action for Quiet Title, and Sixth Cause Of Action for Cancellation Of Written Instrument fail to state facts sufficient to constitute a cause of action against Defendants and are uncertain; c. The Seventh Cause Of Action for Accounting Fails To 1 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 State Facts Sufficient To Constitute A Cause Of Action and is uncertain; c. The Eighth Cause Of Action for Slander Of Title fails to state facts sufficient to constitute a cause of action; d. The Ninth Cause Of Action fails to state facts sufficient to constitute a cause of action for Violation Of Penal Code § 115, California Constitution XV, Civil Code § 2941 (b) and Civil Code § 1943 and is uncertain; and e. The Eleventh Cause Of Action for Injunctive Relief is not a cause of action - there is no cause of action for Injunctive Relief - Injunctive Relief is a remedy; and f. The Twelfth Cause Of Action for Common Counts fails to state facts sufficient to constitute a cause of action. 2. Plaintiff’s Changes To The Complaint As Revised By The FAC: The FAC added the following language to the Complaint: “12. Common Counts” [FAC, page 1, line 19]. “Plaintiff is further informed and believes and thereon alleges that at all times mentioned herein, Defendant Liao was the sole member, manager and officer of Defendant Foremax, and Defendant Liao was therefore authorized to speak and act on behalf of Defendant Foremax. When Foremax is alleged to have made a representation or taken some action, such representation was taken by Defendant Liao acting as the authorized representative of Defendant Foremax.” [FAC, 9 3, page 2, lines 3-8]. “As a result of their participation as partners in the Venture, Plaintiff and Defendants owed fiduciary duties to each other.” [FAC, 9 11, page 4, lines 20-21]. “between” [FAC, 1 19, page 6, line 16]. “including without limitation the fiduciary relationship between the parties that existed because of the Venture and the complexities created by Defendants’ apparent secret attempt to 2 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 impose interest that had not been agreed upon,” [FAC, 9 19, page 6, line 16]. “including without limitation the declaration of the default and the recording of the Notice of Default and Trustee Sale Notice,” [FAC, 1 45, page 10, lines 5-8]. “and a private right of action is therefore implied in such statutes.” [FAC, I 50, page 11, lines 4-5]. “TWELFTH CAUSE OF ACTION (Common Counts Against All Defendants) 58. Plaintiff realleges and incorporates by reference paragraphs 1 through 57 of this Complaint as though such paragraphs were fully set forth herein. 59. Plaintiff is informed and believes and thereon alleges that within the last four years at Los Angeles County, California, Defendants became indebted to Plaintiff on an open book account for money due, and/or for money had and received by Defendants for the use and benefit of Plaintiff, and/or for money lent by Plaintiff to Defendant at Defendant’s request, and/or for money paid, laid out, and expended to or for Defendant at Defendant’s request, and/or for money paid, laid out, and expended to or for Defendants or Defendants’ special insistence and request, in the amount of $180,000 or such other sum as may be proven at trial, which amount remains due and unpaid despite Plaintiff’s demand, along with prejudgment interest according to proof at the time of trial. 60. Plaintiff is informed and believes and thereon alleges that no part of such sum has been paid, and there is now due, owing and unpaid to Plaintiff by Defendant the sum of $180,000 or such other amount according to proof at the time of trial.” [FAC, 9 58- 60, page 12, line 17 through page 13, line 3]. On January 29, 2020, Defendants’ counsel sent a meet and confer letter to Plaintiff’s counsel. [Declaration Of James W. 3 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Bates (“Bates Dec.”), 9 3 and Exhibit “1”]. Essentially, the only changes Plaintiff made to FAC that were raised in Defendant’s counsel’s meet and confer letter of January 29, 2020 and the Demurrer to Complaint were that the FAC clarified the name of the person who spoke on behalf of FOREMAX. The First, Second, Fifth and Sixth causes of action still fail to show how, when, where, and by what means the alleged representations were made on behalf of FOREMAX and continues to fail to allege facts sufficient to constitute “justifiable reliance”. Additionally, there are insufficient facts to state a cause of action for an accounting, slander of title and “oppression, fraud and malice”. 3. As A Matter Of Law, There Was No “Fiduciary Relationship” Between Plaintiff And Defendants - Paragraph 11 Is Incorporated By Reference Into Each And Every Cause Of Action, Therefore, The Entire FAC Fails To State Facts Sufficient To Constitute A Cause Of Action Against Defendants: Plaintiff attempts to justify his claims against Defendants by alleging a “fiduciary relationship” in paragraph 11 that: “11. In or around the summer of 2016, Plaintiff and Defendants jointly invested funds in a venture promoted by a Libertarian national named Lester Tarr involving the retrieval of merchandise that had been confiscated by U.S. Customs (‘Venture’). Plaintiff and Defendants expected the Venture to be profitable and agreed to split any profits derived from the Venture pro rata according to the amount of funds contributed by each of them. As a result of their participation as partners in the Venture, Plaintiff and Defendants owed fiduciary duties to each other.” (underlining added for emphasis) [FAC, 9 11, page 4, lines 15-21]. 4 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiff’s claim of a “fiduciary relationship” between Plaintiff and Defendants must fail as a matter of law. “In order to plead a cause of action for breach of fiduciary duty, a plaintiff must show the existence of a fiduciary relationship, its breach, and damage caused by the breach.” [Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 244]. “Before a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.” [City of Hope National Med. Ctr. v. Genetech, Inc. (2008) 43 Cal.4th 375, 386]. “Fiduciary relationships” have been found in the following types of relationships: (1) principal and agent, including real estate broker/agent and client; (2) attorney and client; (3) partners; (4) joint venturers; (5) corporate officers and directors on the one hand, and the corporation and its shareholders on the other; (6) husband and wife, with respect to the couple's community property; (7) controlling shareholders and minority shareholders; (8) trustee and trust beneficiary; (9) guardian and ward; (10) pension fund trustee and pensioner beneficiary; and (11) executor and decedent's estate. [Oakland Raiders v. Nat'l Football League (2005) 131 Cal.App.4th 621, 632~633]. “Either a relationship is fiduciary in character or it is not. 5 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Whether the parties are fiduciaries is governed by the nature of the relationship . . . .” [Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 32-33]. In this instance, Plaintiff attempts to buoy his claims for fiduciary duty by alleging that Plaintiff and Defendants entered into a “joint venture” “promoted” by Lester Tarr. However, there are no facts that would establish that this described “joint venture” was anything more than a debtor creditor relationship. What were the specific terms of the joint venture? What was the structure of the joint venture? Was it a partnership? Was it a corporation? Was it a limited liability company? What were the obligations of Plaintiff to Defendants and vice versa? Plaintiff does not allege such facts. Plaintiff’s allegations of a “joint venture” are a mere legal conclusion. The allegation of “joint venture” set forth in Paragraph 11 is incorporated by reference into each and every cause of action of the FAC [FAC, 9 17, page, 6, lines 5-7; 19 23, page 7, lines 3-5; 1 28, page 7, lines 19-22; 1 33, page 8, lines 14-16; 1 38, page 9, lines 3-5; 1 40, page 9, lines 13-14; 9 42, page 9, lines 21-22; 1 44, page 10, lines 3-4; 1 49, page 10, lines 23-24; 9 53, page 11, lines 19-20; 9 56, page 12, lines 3-4; 9 58, page 12, lines 19-20]. As a result of Plaintiff's failure to allege specific facts that establish a “fiduciary relationship” between Plaintiff and Defendants, each and every cause of action of the FAC must fail. 4. The First Cause Of Action For Intentional Misrepresentation, Second Cause Of Action For Promise Made Without Intent To Perform Fail, Fifth Cause Of Action For Quiet Title, And Sixth Cause Of Action For Cancellation Of Written Instrument Fail To State Facts Sufficient To Constitute A Cause Of Action Against Defendants And Are Uncertain: To plead a cause of action for fraud, a plaintiff must plead 6 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 facts showing: (1) misrepresentation, (2) knowledge of falsity, (3) intent to defraud, (4) justifiable reliance, and (5) resulting damage. [Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184]. a. Plaintiff Fails To Allege How, When, Where, And By What Means The Alleged Representations Were Made By Defendants: Fraud must be alleged with specificity. [Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73]. The requirement that the elements of fraud be pled with specificity “necessitates pleading facts which ‘show how, when, where, and to whom and by what means the representations were tendered.’” [Id.; see also Hills Trans. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 707]. In Stansfield v. Starkey, the appellate court upheld the lower court’s granting of defendant’s demurrer without leave to amend. The lower court ruled that “it must be alleged what act was performed by what person and when and where, i.e., who said what to whom and when and where.” [Stansfield, supra at 65, fn 3]. Likewise, in Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707, the court upheld a demurrer on grounds that: “No specific facts were pleaded to show how, when, where, to whom, and by what means the representations were tendered, from what data the falsity of Southwest’s intentions could be inferred, or how, when, where, through whom, and in what circumstances Hills became justified in relying upon these representations.” [Id. at 707]. In this instance, the allegations of fraud are: “11. In or around the summer of 2016, Plaintiff and Defendants jointly invested funds in a venture promoted by a Libertarian national named Lester Tarr involving the retrieval of merchandise that had been confiscated by U.S. Customs (‘Venture’). Plaintiff and Defendants expected the Venture to be profitable and agreed to 7 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 split any profits derived from the Venture pro rata according to the amount of funds contributed by each of them. As a result of their participation as partners in the Venture, Plaintiff and Defendants owed fiduciary duties to each other. 12. The Venture failed, Lester Tarr was eventually convicted of various crimes in North Carolina, and the capital invested by Plaintiff and Defendants appeared to have been lost. 13. Although under no legal obligation to do so, Plaintiff volunteered to reimburse Defendants for a portion of their investment from his own funds. Defendants accepted Plaintiff's gratuitous offer, and Plaintiff began making a series of payments to Defendants. 14. By July of 2017, Plaintiff had made payments to Defendants amounting to all but just under $180,000.00 of the Defendants’ original contribution to the Venture. At that time, Defendants asked that Plaintiff secure the remaining unreimbursed amount with a deed of trust encumbering the Property. Defendants told Plaintiff that if he were willing to do so, Defendants would feel safe and would allow Plaintiff to reimburse the remaining amount at will whenever he was able (‘Representation’). Accepting Defendants’ proposal and believing Defendants’ representations to be true, Plaintiff caused to be recorded on August 23, 2017 a deed of trust against the Property stating a principal amount of $180,000 in favor of Defendants as beneficiaries as Instrument No. 20170958227, Official Records of Los Angeles County (‘Deed of Trust’). 19. . . . Plaintiff relied on Defendants’ honesty, and such reliance was reasonable because of the fiduciary relationship of the parties in connection with the Venture. 24. Defendants induced Plaintiff to record the Deed of Trust by their promise regarding further payment. When Defendants made the promise, they had no intent to perform as they had promised. 8 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Instead, their intent was to induce Plaintiff to execute and record the Deed of Trust, and then subsequently ignore their promise and attempt to foreclose on the Deed of Trust contrary to the false promise they had made. Plaintiff relief on Defendants’ honesty, and such reliance was reasonable because of the relationship of the parties in connection with the Venture. . . .” (underlining added for emphasis). In this instance, the Complaint does not sufficiently show how, when, where, and by what means the alleged representations were made by Defendants. b. Plaintiff Fails To Allege “Justifiable Reliance” On The Alleged Misrepresentations Made By Defendants: Also, this cause of action fails to allege “justifiable reliance”. Plaintiff is required to plead justifiable reliance to support his cause of action for fraud. [Wilhelm v. Pray, Price, Williams & Russell (1986) 185 Cal.App.3d 1324, 1331]. CACI 1900 requires: “ [Name of plaintiff] claims that [name of defendant] made a false representation that harmed [him/her/it]. To establish this claim, [name of plaintiff] must prove all of the following: 4. That [name of defendant] intended that [name of plaintiff] rely onthe representation; 5. That [name of plaintiff] reasonably relied on [name of defendant] ’s representation; 6. That [name of plaintiff] was harmed; and 7. That [name of plaintiff]’s reliance on [name of defendant] ’'s representation was a substantial factor in causing [his/her/its] harm.” “Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff’s conduct which altered his 9 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 or her legal relations, and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction. ‘Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether the plaintiff’s reliance is reasonable is a question of fact.’” [Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239]. Civil Jury Instruction 1908 also requires that Plaintiffs’ reliance be “reasonable” as follows: “In determining whether [Plaintiff]’s reliance on the [false promise] was reasonable, [Plaintiffs] must first prove that the matter was material. A matter is material if a reasonable person would find it important in determining his or her choice of action. If you decide that the matter is material, you must then decide whether it was reasonable for [Plaintiff] to rely on the [false promise]. In making this decision, take into consideration [Plaintiff] ’s intelligence, knowledge, education, and experience. .” [CACI 1908]. With regard to reasonable reliance, the court in Guido v. Koopman (1991) 1 Cal.App.4th 837, 843-44, stated: “[Plaintiff]’'s deposition testimony on which appellants rely also reveals that she is a practicing attorney and uses releases in her practice. In essence, she is asking this court to rule that a practicing attorney can rely on the advice of an equestrian instructor as to the validity of a written release of liability that she executed without reading. In determining whether one can reasonable or justifiably rely on an alleged misrepresentation, the knowledge, education and experience of the person claiming reliance must be considered. Under these circumstances, we conclude as a matter of law that any such reliance was not reasonable.” 10 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 1.7 18 19 20 21 22 23 24 25 26 27 28 Clearly, there are insufficient facts to establish “justifiable reliance”. Plaintiff alleges his reliance was “reasonable” because of Plaintiffs’ relationship with Defendants “in connection with the Venture.” [Complaint, q 19]. Essentially, Plaintiff induces Defendants to invest in the Venture, the Venture fails, Plaintiff alleges he voluntarily agreed to reimburse Defendants and now, as a result, Plaintiff claims his reliance on Defendants’ alleged misrepresentations regarding Plaintiff’s promise to pay back Defendants’ failed investment secured by a Deed of Trust was “reasonable” because of his “fiduciary relationship” with Defendants in the alleged “joint venture”. This makes no sense! c. The Fifth Cause Of Action for Quiet Title And Sixth Cause Of Action for Cancellation Of Written Instrument Must Also Fail Because They Incorporate By Reference The First Cause Of Action For Intentional Misrepresentation And Second Cause Of Action for Promise Made Without Intent To Perform: The Fifth Case Of Action for Quiet Title and Sixth Cause Of Action for Cancellation Of Written Instrument incorporates the fraud causes of action of the First Cause Of Action For Intentional Misrepresentation and Second Cause Of Action for Promises Made Without Intent To Perform [FAC, 9 38, page 9, lines 3-5 and 1 40, page 9, lines 13-14]. As a result, if the court finds that Plaintiff has failed to allege facts sufficient to constitute the First and Second Causes of Action, the Fifth and Sixth Causes of Action must also fail. 5. The Seventh Cause Of Action For Accounting Fails To State Facts Sufficient To Constitute A Cause Of Action And Is Uncertain: To plead a cause of action for an accounting, a plaintiff must 11 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 1.2 18 19 20 21 22 23 24 25 26 27 28 plead: a breach of fiduciary duty, fraud or that the accounts are complicated and there is a dispute as to whether the money is owed. [Cheung v. Wells Fargo Bank (2013) 987 F.Supp.2d 972, 981]. In this instance, Plaintiff has not pled facts sufficient to establish a fiduciary duty between Plaintiff and Defendants. Likewise, for the very same reasons that the First, Second, Fifth and Sixth Cause Of Action fail to state facts sufficient to constitute a cause of action for fraud so does the Seventh Cause Of Action for Accounting. 6. The Eighth Cause Of Action For Slander Of Title Fails To State Facts Sufficient To Constitute A Cause Of Action: The elements of the tort of slander of title are (1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss. [Truck Ins. Exchange v. Bennett (1997) 53 Cal.App.4th 75, 84]. In this instance, the FAC: “14. . . . Plaintiff caused to be recorded on August 23, 2017 a deed of trust against the Property stating a principal amount of $118,000 in favor of Defendants as beneficiaries as Instrument No. 20170958277, Official Records of Los Angeles County (‘Deed of Trust’) .” Paragraph 14 is incorporated by reference into the Eighth Cause Of Action by paragraph 44. It was “Plaintiff” that published the Deed of Trust, not Defendants. Absent publication by Defendants, there can be no cause of action for slander of title. 7. The Ninth Cause Of Action Fails To State Facts Sufficient To Constitute A Cause Of Action For Violation Of Penal Code § 115, California Constitution XV, Civil Code § 2941 (b) and Civil Code § 1943 And Is Uncertain: Plaintiff alleges causes of action for violation of Penal Code § 115, California Constitution XV, Civil Code § 2941 (b) and Civil Code § 1943. None of these statutes provide for a civil cause of 12 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 le 17 18 19 20 21 22 23 24 25 26 27 28 action. In fact, Civil Code § 1943 does not have anything to do with “failure to timey provide an accurate payoff demand statement” as you have alleged. 8. The Eleventh Cause Of Action For Injunctive Relief Is Not A Cause Of Action -- There Is No Cause Of Action For Injunctive Relief - Injunctive Relief Is A Remedy: The Complaint alleges an eleventh cause of action for injunctive relief. There is no legally valid cause of action for injunctive relief, it is a remedy. In Ivanoff v. Bank Of America, N.A. (2017) 9 Cal.App.5th 719, 734, the court wrote: “ Injunctive relief is a remedy, not a cause of action. [Citations.] A cause of action must exist before a court may grant a request for injunctive relief.’ (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 65, 183 Cal.Rptr.3d 654; accord, City of South Pasadena v. Department of Transportation (1994) 29 Cal.App.4th 1280, 1293, 35 Cal.Rptr.2d 113 [‘"”A permanent injunction is merely a remedy for a proven cause of action. It may not be issued if the underlying cause of action is not established.”’]; see Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 618, 129 Cal.Rptr.2d 546; McDowell v. Watson (1997) 59 Cal.App.4th 1155, 1159, 69 Cal .Rptr.2d 692.) Because none of Ivanoff's other causes of action may be maintained, her request for injunctive relief necessarily fails as well.” [Id.]. 9. The Twelfth Cause Of Action For Common Counts Fails To State Facts Sufficient To Constitute A Cause Of Action Against Defendants: The new Twelfth Cause Of Action for Common Count fails to state facts sufficient to constitute a cause of action. In Zumbrun v. University Of Southern California (1972) 25 Cal.App.3d 1, 14, the court wrote: “This count is subject to the rule that ‘if plaintiff is not entitled to recover under one count 13 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 in a complaint wherein all the facts upon which his demand is based are specifically pleaded, it is proper to sustain a demurrer to a common count set forth in the complaint, the recovery under which is obviously based on the set of facts specifically pleaded in the other count.’ (Hays v. Temple (1937) 23 Cal.App.2d 690, 695, 73 P.2d 1248, 1250; accord, e.g., Orloff v. Metropolitan Trust Co., Supra (1941) 17 Cal.2d 484, 489, 110 P.2d 396.)". Also, in McBride v. Boughton (2004) 123 Cal.App.4th 379, 394- 395, the court held: “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable. (See Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 459-460, 61 Cal.Rptr.2d 707; Zumbrun v. University of Southern California, supra, 25 Cal.App.3d at p. 14, 101 Cal.Rptr. 499; see 4 Witkin, Cal. Procedure, supra, Pleading, § 529, pp. 616-617.) Thus, in the present case, McBride's common count must stand or fall with his first cause of action, and we therefore uphold its dismissal for the same reasons.” The Twelfth Cause Of Action must fail because it incorporates by reference all prior causes of action including the Second Cause Of Action for Breach Of Oral Contract. As a result, it is not a cause of action for common count. For the very same reasons the prior causes of action fail, so must the Twelfth Cause Of Action for Common Count. \ \ \ \ \ \ \ P E ~~ s s s s 14 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: April 15, 2020 JAMES W. BATES Attprneys For Defendants FOREMAX INVESTMENT, LLC, a California limited liability company and LISA LIAO, an individual 15 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF JAMES W. BATES PURSUANT TO CODE OF CIVIL PROCEDURE § 430.41 (a) (3) (a) James W. Bates declares: 1. I am an attorney duly admitted to practice before all the courts of the State of California. I am the attorney representing Defendants FOREMAX INVESTMENT, LLC, a California limited liability company (“FOREMAX”) and LISA LIAO, an individual (“LIAO”) (FOREMAX and LIAO are hereinafter collectively referred to as “Defendants”) in this action. I have personal knowledge of the following facts and would competently testify thereto if required to do so. 2. This declaration is made pursuant to Code Of Civil Procedure § 430.41 (a) (3) (A). 3. On January 29, 2020, in an attempt to meet and confer with Plaintiff’s counsel before filing of a demurrer pursuant to Code Of Civil Procedure §§ 430.41 by Defendants, I sent a meet and confer letter to Plaintiff’s counsel. A true copy of my letter is attached hereto as Exhibit “1” and made a part hereof. 4. On February 24, 2020, Defendants filed their Demurrer to Complaint in this action which was scheduled to be heard on March 24, 2020. 5. On March 10, 2020, prior to the March 24, 2020 hearing on Demurrer to Complaint, Plaintiff filed the First Amended Complaint For: 1. Intentional Misrepresentation 2. Fraud - Promise Without Intent to Perform 3. Breach Of Oral Contract 4. Breach of the Implied Covenant of Good Faith and Fair Dealing 5. Quiet Title 6. Cancellation of Written Instruments 7. Accounting 8. Slander of Title 9. Violation of Statutes 10. Declaratory Relief 11. Injunctive Relief 12. Common Counts (“FAC”) pursuant to Code Of Civil Procedure § 472. 6. Essentially, the only change Plaintiff made to the issues presented by my letter of January 29, 2020 and the Demurrer to 16 DEMURRER TO FIRST AMENDED COMPLAINT 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Complaint was that the FAC clarified the name of the person who spoke on behalf of FOREMAX. The First, Second, Fifth and Sixth causes of action still fail to show how, when, where, and by what means the alleged representations were made on behalf of FOREMAX and continues to fail to allege facts sufficient to constitute “justifiable reliance”. Also, despite the clear ruling in Ivanoff v. Bank Of America, N.A. (2017) 9 Cal.App.5th 719, 734, Plaintiff continued to plead a cause of action for declaratory relief in violation of California law. Finally, the new Twelfth Cause Of Action for Common Count incorporates by reference paragraphs 1 through 57 of the FAC. [FAC, 9 58, page 12, lines 19-20]. 7.0n April 10, 2020, in an attempt to meet and confer with Plaintiff’s counsel before filing of a demurrer to the FAC pursuant to Code Of Civil Procedure §§ 430.41 by Defendants, I sent a meet and confer letter to Plaintiff’s counsel. A true copy of my letter is attached hereto as Exhibit “2” and made a part hereof. 8. I did not receive a response from Plaintiff’s counsel. 9. As a result, Plaintiff’s counsel and I have been unable to resolve the issues presented by the demurrer. 17 DEMURRER TO FIRST AMENDED COMPLAINT EXHIBIT “1” LAW OFFICES OF JAMES W. BATES, A PROFESSIONAL CORPORATION 1055 E. Colorado Blvd., 5" Floor Pasadena, California 91106-2327 Tel: (818) 248-1911 Fax: (818) 279-0513 jbates@jbateslaw.com www.jbateslaw.com VIA ELECTRONIC AND U.S. MAIL January 29, 2020 James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel 1601 E. Orangewood Avenue, Suite 105 Anaheim, California 92805-6810 Re: Nai Chi Hsu aka Lawrence Nai Hsu v. Foremax Investment LLC and Lisa Liao, etc. Los Angeles Superior Court, Case Number 19PSCV01026 (“Action”) Dear Counsel: This letter shall constitute an attempt to meet and confer with you pursuant to Code Of Civil Procedure § 430.41 prior to the filing of a demurrer and pursuant to Code Of Civil Procedure § 435.5 prior to filing a motion to strike by my clients Foremax Investment, LLC (“Foremax™) and Lisa Liao (“Liao”) (Foremax and Liao are hereinafter collectively referred to as “Defendants™) to the Complaint For: 1. Intentional Misrepresentation 2. Fraud - Promise Without Intent to Perform 3. Breach Of Oral Contract 4. Breach of the Implied Covenant of Good Faith and Fair Dealing 5. Quiet Title 6. Cancellation of Written Instruments 7. Accounting 8. Slander of Title 9. Violation of Statutes 10. Declaratory Relief 11. Injunctive Relief (“Complaint”) filed by your client Plaintiff Nai Chi Husa aka Lawrence Nai Hsu (“Plaintiff”) pursuant to Code Of Civil Procedure § 430.10(e) and (f) and § 436. 1. The First Cause Of Action For Intentional Misrepresentation, Second Cause Of Action For Promise Made Without Intent To Perform Fail, Fifth Cause Of Action For Quiet Title, And Sixth Cause Of Action For Cancellation Of Written Instrument Fail To State Facts Sufficient To Constitute A Cause Of Action Against Defendants And Are Uncertain: To plead a cause of action for fraud, a plaintiff must plead facts showing: (1) misrepresentation, (2) knowledge of falsity, (3) intent to defraud, (4) justifiable reliance, and (5) resulting damage. [Charnay v. Cobert (2006) 145 Cal. App.4th 170, 184]. James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 2 Fraud must be alleged with specificity. [Lazar v. Superior Court (1996) 12 Cal.4th 631, 645; Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73]. The requirement that the elements of fraud be pled with specificity “necessitates pleading facts which ‘show how, when, where, and to whom and by what means the representations were tendered.”” [Id.; see also Hills Trans. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 707]. In Stansfield v. Starkey, the appellate court upheld the lower court’s granting of defendant’s demurrer without leave to amend. The lower court ruled that “it must be alleged what act was performed by what person and when and where, i.e., who said what to whom and when and where.” [Stansfield, supra at 65, fn 3]. Likewise, in Hills Trans. Co. v. Southwest (1968) 266 Cal.App.2d 702, 707, the court upheld a demurrer on grounds that: “No specific facts were pleaded to show how, when, where, to whom, and by what means the representations were tendered, from what data the falsity of Southwest’s intentions could be inferred, or how, when, where, through whom, and in what circumstances Hills became justified in relying upon these representations.” [Id. at 707]. A plaintiff who wishes to charge a corporate defendant with making a fraudulent misrepresentation must allege the name of the person who spoke, his authority to speak, to whom he spoke, what he said, and when it was said. [Archuleta v. Grand Lodge Machinists (1968) 262 Cal.App.2d 202, 208-09; Gautier v. General Tel. Co. (1965) 234 Cal.App.2d 302, 308]. In this instance, the allegations of fraud are: “11. In or around the summer of 2016, Plaintiff and Defendants jointly invested funds in a venture promoted by a Libertarian national named Lester Tarr involving the retrieval of merchandise that had been confiscated by U.S. Customs (‘Venture’). Plaintiff and Defendants expected the Venture to be profitable and agreed to split any profits derived from the Venture pro rata according to the amount of funds contributed by each of them. 12. The Venture failed, Lester Tarr was eventually convicted of various crimes in North Carolina, and the capital invested by Plaintiff and Defendants appeared to have been lost. James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 3 13. Although under no legal obligation to do so, Plaintiff volunteered to reimburse Defendants for a portion of their investment form his own funds. Defendants accepted Plaintiff’s gratuitous offer, and Plaintiff began making a series of payment to Defendants. 14. By July of 2017, Plaintiff had made payments to Defendants amounting to all but just under $180,000.00 of the Defendants’ original contribution to the Venture. At that time, Defendants asked that Plaintiff secure the remaining unreimbursed amount with a deed of trust encumbering the Property. Defendants told Plaintiff that if he were willing to do so, Defendants would feel safe and would allow Plaintiff to reimburse the remaining amount at will whenever he was able (‘Representation”). Accepting Defendants’ proposal and believing Defendants’ representations to be true, Plaintiff caused to be recorded on August 23, 2017 a deed of trust against the Property stating a principal amount of $180,000 in favor of Defendants as beneficiaries as Instrument No. 20170958227, Official Records of Los Angeles County (‘Deed of Trust’)... . 19. ... Plaintiff relied on Defendants’ honesty, and such reliance was reasonable because of the relationship of the parties in connection with the Venture. ... 24. Defendants induced Plaintiff to record the Deed of Trust by their promise regarding further payment. When Defendants made the promise, they had no intent to perform as they had promised. Instead, their intent was to induce Plaintiff to execute and record the Deed of Trust, and then subsequently ignore their promise and attempt to foreclose on the Deed of Trust contrary to the false promise they had made. Plaintiff relief on Defendants’ honesty, and such reliance was reasonable because of the relationship of the parties in connection with the Venture. ...” In this instance, the Complaint does not sufficiently show how, when, where, and by what means the alleged representations and who spoke the misrepresentations on behalf of Foremax. Likewise, the Complaint does not allege the name of the person who spoke on behalf of Foremax, that person’s authority to speak and when the person spoke the words on behalf of Foremax. Also, this cause of action fails to allege “justifiable reliance”. Plaintiffs is required to plead justifiable reliance to support his cause of action for fraud. [Wilhelm v. Pray, Price, James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 4 Williams & Russell (1986) 185 Cal.App.3d 1324, 1331; see also CACI 1903, 1900]. In order to establish reliance, Plaintiff must prove: “[Plaintiff] relied on [defendant]’s [false promise] if: 1. The [false promise] substantially influenced [Plaintiff] to [record the deed of trust]; and 2. [Plaintiffs] would probably not have [recorded the deed of trust] without the [false promise].” “Reliance exists when the misrepresentation or nondisclosure was an immediate cause of the plaintiff’s conduct which altered his or her legal relations, and when without such misrepresentation or nondisclosure he or she would not, in all reasonable probability, have entered into the contract or other transaction. ‘Except in the rare case where the undisputed facts leave no room for a reasonable difference of opinion, the question of whether the plaintiff's reliance is reasonable is a question of fact.”” [Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239]. Civil Jury Instruction 1908 also requires that Plaintiffs’ reliance be “reasonable” as follows: “In determining whether [Plaintiff]’s reliance on the [false promise] was reasonable, [Plaintiffs] must first prove that the matter was material. A matter is material if a reasonable person would find it important in determining his or her choice of action. If you decide that the matter is material, you must then decide whether it was reasonable for [Plaintiff] to rely on the [false promise]. In making this decision, take into consideration [Plaintiff]’s intelligence, knowledge, education, and experience. . . ” [CACI 1908]. With regard to reasonable reliance, the court in Guido v. Koopman (1991) 1 Cal.App.4th 837, 843-44, stated: “[Plaintiff]’s deposition testimony on which appellants rely also reveals that she is a practicing attorney and uses releases in her practice. In essence, she is asking this court to rule that a practicing attorney can rely on the advice of an equestrian instructor as to the validity of a written release of liability that she executed without reading. In determining whether one can reasonable or justifiably rely on an alleged misrepresentation, the knowledge, education and experience of the person claiming reliance must be considered. Under these circumstances, we conclude as a matter of law that any such reliance was not reasonable.” James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 5 Clearly, there are insufficient facts to establish “justifiable reliance”. Plaintiff alleges his reliance was “reasonable” because of Plaintiffs’ relationship with Defendants “in connection with he Venture.” Essentially, Plaintiff induces Defendant to invest in the Venture, the Venture fails and now Plaintiff claims his reliance to pay back Defendants’ failed investment secured by a Deed of Trust was “reasonable” because of his relationship with Defendants’ in the venture. This makes no sense. The Fifth Cause Of Action for Quiet Title and Sixth Cause Of Action for Cancellation Of Written Instrument incorporate by reference the First Cause Of Action For Intentional Misrepresentation and Second Cause Of Action for Promise Made Without Intent To Perform. As a result, they also fail to state facts sufficient to constitute fraud. As a result, the First, Second, Fifth and Sixth Causes Of Action fail to state any facts sufficient to constitute a cause of action for intentional misrepresentation or promise made without intent to perform against Defendants and is uncertain. Please let me know if you will dismiss the First, Second, Fifth and Sixth causes of action. 2. The Seventh Cause Of Action For Accounting Fails To State Facts Sufficient To Constitute A Cause Of Action And Is Uncertain: To plead a cause of action for an accounting, a please must plead: a breach of fiduciary duty, fraud or that the accounts are complicated and there is a dispute as to whether the money is owed. [Cheung v. Wells Fargo Bank (2013) 987 F.Supp.2d 972, 981]. In this instance, Plaintiff has not pled a fiduciary duty between Plaintiff and Defendants. Likewise, for the very same reasons that the First, Second, Fifth and Sixth Cause Of Action fail to state facts sufficient to constitute a cause of action for fraud so does the Seventh Cause Of Action for Accounting. 3. The Eighth Cause Of Action For Slander Of Title Fails To State Facts Sufficient To Constitute A Cause Of Action: The elements of the tort of slander of title are (1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss. [Truck Ins. Exchange v. Bennett (1997) 53 Cal.App.4th 75, 84]. James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 6 In this instance, the Complaint alleges: “14. . . . Plaintiff caused to be recorded on August 23, 2017 a deed of trust against the Property stating a principal amount of $118,000 in favor of Defendants as beneficiaries as Instrument No. 20170958277, Official Records of Los Angeles County (‘Deed of Trust’).” Paragraph 14 is incorporated by reference into the Eighth Cause Of Action by paragraph 44. It was “Plaintiff” that published the Deed of Trust, not Defendants. Please let me know if you will dismiss the Eighth Cause Of Action for Slander Of Title. 4. The Ninth Cause Of Action Fails To State Facts Sufficient To Constitute A Cause Of Action And Is Uncertain: Plaintiff alleges causes of action for violation of Penal Code § 115, California Constitution XV, Civil Code § 2941(b) and Civil Code § 1943. None of these statutes provide for a civil cause of action. In fact, Civil Code § 1943 does not have anything to do with “failure to timey provide an accurate payoff demand statement” as you have alleged. 5. The Eleventh Cause Of Action For Injunctive Relief Is Not A Cause Of Action - There Is No Cause Of Action For Injunctive Relief - Injunctive Relief Is A Remedy: The Complaint alleges an eleventh cause of action for injunctive relief. There is no legally valid cause of action for injunctive relief, it is a remedy. In vanoff'v. Bank Of America, N.A. (2017) 9 Cal. App.5th 719, 734, the court wrote: “’Injunctive relief is a remedy, not a cause of action. [Citations.] A cause of action must exist before a court may grant a request for injunctive relief.” (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 65, 183 Cal.Rptr.3d 654; accord, City of South Pasadena v. Department of Transportation (1994) 29 Cal. App.4th 1280, 1293, 35 Cal.Rptr.2d 113 [*”A permanent injunction is merely a remedy for a proven cause of action. It may not be issued if the underlying cause of action is not established.”’]; see Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 618, 129 Cal.Rptr.2d 546; McDowell v. Watson (1997) 59 Cal. App.4th 1155, 1159, 69 Cal.Rptr.2d 692.) Because none of Ivanoff's other causes of action may be maintained, her request for injunctive relief necessarily fails as well.” [1d.]. As a result, we request that you dismiss the eleventh cause of action for injunctive relief. James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 7 6. There Are No Facts Which Would Establish “Oppression, Fraud Or Malice” On The Part Of Defendants: In paragraphs 22, 27, 48, 52 and paragraph 2 of the prayer to the first, second, fourth, eighth, and ninth causes of action, Plaintiff seeks punitive damages against “Defendants”. Civil Code section 3294 provides in pertinent part as follows: “(a) In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. . .. (c) As used in this section, the following definitions shall apply: (1) ‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. 2) ‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights. A) ‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” However, to support exemplary damages, a complaint must allege ultimate facts of a defendant’s oppression, fraud or malice. [Cyrus v. Haveson (1976) 65 Cal.App.3d 306, 316-17; Civil Code § 3294]. In judging the sufficiency of a plaintiff's allegations, it is important to note that the law does not favor imposition of punitive damages: “They are not a favorite of the law and the granting of them should be done with the greatest caution. They are only allowed in the clearest of cases.” [Gambos v. Ashe (1958) 158 Cal.App.2d 517, 526 (cited with approval in Nolin v. National Convenience Stores (1979) 95 Cal.App.3d 279, 285]. Moreover, a claim for punitive damages cannot be pled generally. Allegations that the defendant acted with “oppression, fraud, or malice” are merely legal conclusions. Specific factual allegations are required to support a punitive damages claim. [Brouseau James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel January 29, 2020 Page 8 v. Jarrett (1977) 73 Cal.App.3d 864]. For example, in Ebaugh v. Rabkin (1972) 22 Cal.App.3d 891, 894, the court stated: “[I]n order to warrant the allowance of punitive damages the act complained of must not only be willful in the sense intentional, but it must also be accompanied by some aggravating circumstances, amounting to malice. Malice implies an act conceived in a spirit of mischief or with criminal indifference towards the obligations of others. There must be an intent to vex, annoy or injure.” [Id.]. In this instance, Plaintiff’s allegations of “oppression, fraud and malice” are legal conclusions without any supporting facts against Defendants. The last day for Defendants to file their Demurrer and Motion To Strike to the Complaint is Monday February 3, 2020. I am generally available between now and June 18, 2018 to discuss this matter with you. Of course, I am willing to provide you with additional time to consider this letter and its contents prior to our telephonic meet and confer. Please let me know when you are available to discuss this matter. I look forward to speaking with you. AMES W. BATES Enclosure cc: Foremax Investment, LLC and Lisa Liao (by email only) EXHIBIT “2” LAW OFFICES OF JAMES W. BATES, A PROFESSIONAL CORPORATION 1055 E. Colorado Blvd., 5" Floor Pasadena, California 91106-2327 Tel: (818) 248-1911 Fax: (818) 279-0513 jbates@jbateslaw.com www. jbateslaw.com VIA ELECTRONIC AND U.S. MAIL April 10, 2020 James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel 1601 E. Orangewood Avenue, Suite 105 Anaheim, California 92805-6810 Re: Nai Chi Hsu aka Lawrence Nai Hsu v. Foremax Investment LLC and Lisa Liao, etc. Los Angeles Superior Court, Case Number 19PSCV01026 (“Action”) Dear Counsel: This letter shall constitute an attempt to meet and confer pursuant to Code Of Civil Procedure § 430.41 prior to the filing of a demurrer and pursuant to Code Of Civil Procedure § 435.5 prior to filing a motion to strike by my clients Foremax Investment, LLC (“Foremax™) and Lisa Liao (“Liao”) (Foremax and Liao are hereinafter collectively referred to as “Defendants™) to the First Amended Complaint For: 1. Intentional Misrepresentation 2. Fraud - Promise Without Intent to Perform 3. Breach Of Oral Contract 4. Breach of the Implied Covenant of Good Faith and Fair Dealing 5. Quiet Title 6. Cancellation of Written Instruments 7. Accounting 8. Slander of Title 9. Violation of Statutes 10. Declaratory Relief 11. Injunctive Relief 12. Common Counts (“FAC”) filed by your client Plaintiff Nai Chi Husa aka Lawrence Nai Hsu (“Plaintiff”) pursuant to Code Of Civil Procedure § 430.10(e) and (f) and § 436. 1. Plaintiff's Amendment To Complaint: The FAC added the following language to the Complaint: “12. Common Counts” [FAC, page 1, line 19]. “Plaintiff is further informed and believes and thereon alleges that at all times mentioned herein, Defendant Liao was the sole member, manager and officer of Defendant Foremax, and Defendant Liao was therefore authorized to speak and act on behalf of Defendant Foremax. When Foremax is alleged to have made a James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel April 10, 2020 Page 2 representation or taken some action, such representation was taken by Defendant Liao acting as the authorized representative of Defendant Foremax.” [FAC, 9 3, page 2, lines 3-8]. “As a result of their participation as partners in the Venture, Plaintiff and Defendants owed fiduciary duties to each other.” [FAC, § 11, page 4, lines 20-21]. “between” [FAC, q 19, page 6, line 16]. “including without limitation the fiduciary relationship between the parties that existed because of the Venture and the complexities created by Defendants’ apparent secret attempt to impose interest that had not been agreed upon,” [FAC, 19, page 6, line 16]. “including without limitation the declaration of the default and the recording of the Notice of Default and Trustee Sale Notice,” [FAC, § 45, page 10, lines 5-8]. “and a private right of action is therefore implied in such statutes.” [FAC, § 50, page 11, lines 4-5]. “TWELFTH CAUSE OF ACTION (Common Counts Against All Defendants) 58. Plaintiff realleges and incorporates by reference paragraphs 1 through 57 of this Complaint as though such paragraphs were fully set forth herein. 59. Plaintiff is informed and believes and thereon alleges that within the last four years at Los Angeles County, California, Defendants became indebted to Plaintiff on an open book account for money due, and/or for money had and received by Defendants for the use and benefit of Plaintiff, and/or for money lent by Plaintiff to Defendant at Defendant’s request, and/or for money paid, laid out, and expended to or for Defendant at Defendant’s request, and/or for money paid, laid out, and expended to or for Defendants or Defendants’ special insistence and request, in the amount of $180,000 or such other sum as may be proven at trial, which amount remains due and unpaid despite PlaintifPs demand, along with prejudgment interest according to proof at the time of trial. 60. Plaintiff is informed and believes and thereon alleges that no part of such sum has been paid, and there is now due, owing and unpaid to Plaintiff by James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel April 10, 2020 Page 3 Defendant the sum of $180,000 or such other amount according to proof at the time of trial.” [FAC, 1 58-60, page 12, line 17 through page 13, line 3}. Essentially, the only change Plaintiff made to the issue presented by my letter of January 29, 2020 and the Demurrer to Complaint was that the FAC clarified the name of the person who spoke on behalf of Foremax. The First, Second, Fifth and Sixth causes of action still fail to show how, when, where, and by what means the alleged representations were made on behalf of Foremax and continues to fail to allege facts sufficient to constitute “justifiable reliance”. Additionally, there are insufficient facts to state a cause of action for an accounting, slander of title and “oppression, fraud and malice”. Finally, despite the clear ruling in Ivanoff'v. Bank Of America, N.A. (2017) 9 Cal.App.5th 719, 734, you continue to plead a cause of action for declaratory relief in violation of California law. The new Twelfth Cause Of Action for Common Count fails to state facts sufficient to constitute a cause of action. It is also subject to demurrer because it incorporates by reference paragraphs 1 through 57 of the FAC. [FAC, Y 58, page 12, lines 19-20]. In Zumbrun v. University Of Southern California (1972) 25 Cal.App.3d 1, 14, the court wrote: “This count is subject to the rule that ‘if plaintiff is not entitled to recover under one count in a complaint wherein all the facts upon which his demand is based are specifically pleaded, it is proper to sustain a demurrer to a common count set forth in the complaint, the recovery under which is obviously based on the set of facts specifically pleaded in the other count.’ (Hays v. Temple (1937) 23 Cal. App.2d 690, 695, 73 P.2d 1248, 1250; accord, e.g., Orloff v. Metropolitan Trust Co., Supra (1941) 17 Cal.2d 484, 489, 110 P.2d 396.)”. The Twelfth Cause Of Action must fail because it incorporates by reference all prior causes of action including the Second Cause Of Action for Breach Of Oral Contract. As a result, it is not a cause of action for common count. James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel April 10, 2020 Page 4 Also, in McBride v. Boughton (2004) 123 Cal. App.4th 379, 394-395, the court held: “When a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable. (See Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 459-460, 61 Cal.Rptr.2d 707; Zumbrun v. University of Southern California, supra, 25 Cal. App.3d at p. 14, 101 Cal.Rptr. 499; see 4 Witkin, Cal. Procedure, supra, Pleading, § 529, pp. 616-617.) Thus, in the present case, McBride's common count must stand or fall with his first cause of action, and we therefore uphold its dismissal for the same reasons.” For the very same reasons the prior causes of action fail, so must the Twelfth Cause Of Action for Common Count. Please let me know if you are willing to amend your FAC to fix these deficiencies. Otherwise, my clients will be filing a demurrer and motion to strike as to the FAC. The demurrer and motion to strike as to the FAC is due not later than April 14, 2020. Of course, I am willing to provide you with additional time to consider this letter and its contents prior to our telephonic meet and confer. If you want additional time to consider this letter, please extend the time that my clients have to file their response to a date certain in the future. Please let me know when you are available to discuss this matter. I look forward to speaking with you. cc: Foremax Investment, LLC and Lisa Liao (by4 PROOF OF SERVICE Nai Chi Hsu v. Foremax Investment, LLC, etc. et al. Los Angeles Superior Court, Case Number 19PSCV01026 STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I am employed in the County of Los Angeles, State of California. 1 am over the age of 18 and not a party to the within action; my business address is 1055 E. Colorado Blvd., 5" Floor, Pasadena, California 91106-2327. On April 15, 2020, I caused to be served the foregoing document described as: NOTICE OF HEARING ON DEMURRER AND DEMURRER TO FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES; DECLARATION OF JAMES W. BATES PURSUANT TO CODE OF CIVIL PROCEDURE §§ 430.41 on the interested parties in this action by placing a true copy thereof enclosed in a sealed envelope addressed as follows: James E. Klinkert, Esq. Paul J. Gutierrez, Esq. Kelly A. Neavel, Esq. Klinkert, Gutierrez & Neavel 1601 E. Orangewood Avenue, Suite 105 Anaheim, California 92805-6810 I deposited the envelope in the mail at Pasadena, California. The envelope was mailed with postage fully prepaid. I also caused the document to be delivered to the address by electronic mail. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
