TIME OF SWISS, INC. VS GOLD'N TIME, INC., ET AL.

Tentative Rulings

Case Number: 19STLC07541    Hearing Date: August 03, 2020    Dept: 25

HEARING DATE: Mon., August 3, 2020 JUDGE /DEPT: Blancarte/25

CASE NAME: Time of Swiss, Inc. v. Gold’n Time, Inc., et al.

CASE NUMBER: 19STLC07541 COMP. FILED: 08-13-19

NOTICE: OK DISC. C/O: 01-10-21

MOTION C/O: 01-25-21

PROCEEDINGS: DEFENDANTS’ DEMURRER TO FIRST AMENDED COMPLAINT

MOVING PARTY: Defendants Gold’n Time, Inc. and Mahmoud Mourtban

RESP. PARTY: Plaintiff Time of Swiss, Inc.

DEMURRER

(CCP § 430.10, et seq.)

TENTATIVE RULING:

Defendants Gold’n Time, Inc. and Mahmoud Mourtban’s Demurrer to Plaintiff’s First Amended Complaint is OVERRULED as to the first cause of action, SUSTAINED WITHOUT LEAVE TO AMEND as to the third and fourth causes of action, and SUSTAINED WITH LEAVE TO AMEND as to the second and fifth causes of action. Plaintiff is granted 20 DAYS’ LEAVE TO AMEND.

SERVICE:

[X] Proof of Service Timely Filed (CRC, rule 3.1300) OK

[X] Correct Address (CCP §§ 1013, 1013a) OK

[X] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b)) OK

OPPOSITION: Filed on March 9, 2020 [ ] Late [ ] None

REPLY: None filed as of July 29, 2020 [ ] Late [X] None

ANALYSIS:

1. Background

On August 13, 2019, Plaintiff Time of Swiss, Inc. (“Plaintiff”) filed an action for breach of contract, fraud, unjust enrichment, violation of Penal Code section 350, and conspiracy to commit fraud against Defendants Gold’n Time, Inc. (“Gold’n Time”), Mahmoud Mourtban (“Mourtban”), Mike Mourtban (“Mike”), Zakaria Mourtban (“Zarakia”), and Bilal Mourtban (“Bilal”). On September 17, 2019, Defendants Mike, Zakaria, and Bilal were dismissed from the action. (9/17/19 Request for Dismissal.)

Also on September 17, 2019, Defendants Gold’n Time and Mourtban each filed a demurrer to the Complaint. On November 7, 2019, the Court continued the hearing on the demurrer due to deficiencies in Defendants’ meet and confer declaration. (11/7/19 Minute Order.)

On December 9, 2019, Plaintiff filed a First Amended Complaint (“FAC”) for breach of contract, fraud, unjust enrichment, violation of penal code section 350, and conspiracy to commit fraud against Defendants Gold’n Time and Mourtban.

On January 24, 2020, Defendants filed the instant Demurrer to Plaintiff’s First Amended Complaint (the “Demurrer”). On March 9, 2020, Plaintiff filed an Opposition. To date, no reply brief has been filed.

1. Legal Standard

“The primary function of a pleading is to give the other party notice so that it may prepare its

case [citation], and a defect in a pleading that otherwise properly notifies a party cannot be said to

affect substantial rights.” (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.)

“A demurrer tests the legal sufficiency of the factual allegations in a complaint.” (Ivanoff v. Bank of

America, N.A. (2017) 9 Cal.App.5th 719, 725.) The Court looks to whether “the complaint alleges

facts sufficient to state a cause of action or discloses a complete defense.” (Id.) The Court does not

“read passages from a complaint in isolation; in reviewing a ruling on a demurrer, we read the

complaint ‘as a whole and its parts in their context.’ [Citation.]” (West v. JPMorgan Chase Bank,

N.A. (2013) 214 Cal.App.4th 780, 804.) The Court “assume[s] the truth of the properly pleaded

factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of

which judicial notice has been taken.” (Harris, supra, 56 Cal.4th p. 240.) “The court does not,

however, assume the truth of contentions, deductions or conclusions of law. [Citation.]” (Durell v.

Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)

A general demurrer may be brought under Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts are stated to support the cause of action asserted or under section 430.10, subdivision (a), where the court has no jurisdiction of the subject of the cause of action alleged in the pleading. Special demurrers are not allowed in limited jurisdiction courts. (Code Civ. Proc., § 92, subd. (c).)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)

Finally, Code of Civil Procedure section 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41, subd. (a).) The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc., § 430.41, subd. (a)(2).) Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 430.41, subd. (a)(3).)

1. Discussion

As an initial matter, the Court notes the Demurrer is accompanied by a meet and confer declaration as required by Code of Civil Procedure section 430.41, subdivision (a). (Dem., Khan Decl., ¶¶ 3-4.)

A. First Cause of Action – Breach of Contract

Defendants demur to the first cause of action for breach of contract on the basis that it fails to state facts sufficient to constitute a cause of action and on the basis of uncertainty. (Dem., p. 3:6-11.) However, the Court is unable to consider demurrers on the basis of uncertainty. Demurrers for failure to state a cause of action or for lack of subject matter jurisdiction are “general” demurrers. (McKenney v. Purepac Pharmaceutical Co. (2008) 167 Cal.App.4th 72, 77.) All other grounds listed in Code of Civil Procedure section 430.10 are “special” demurrers. Special demurrers are not allowed in limited jurisdiction courts. (Code Civ. Proc., § 92, subd. (c).) Thus, the Court cannot consider the demurrer on grounds of uncertainty.

“To establish a cause of action for breach of contract, the plaintiff must plead and prove (1) the existence of the contract, (2) the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4) resulting damages to the plaintiff. [Citation.] ‘In an action based on a written contract, a plaintiff may plead the legal effect of the contract rather than its precise language.’ [Citation.]” (Maxwell v. Dolezal (2014) 231 Cal.App.4th 93, 97-98.)

Here, Plaintiff does not allege what the terms of the parties’ agreement were but does attach an invoice dated June 27, 2019 alleged to be a copy of their contract. (FAC, p. 3, ¶ BC-1, Exh. A.) The invoice indicates that Defendant Gold’n Time agreed to sell Plaintiff a “Rolex Green Sub Hulk” watch (the “Rolex”) for $13,000.00 in cash. (Id.) The invoice contains the signature of the purchaser or the purchaser’s authorized representative. (Id.) Plaintiff further alleges that Defendants breached the contract by selling a counterfeit Rolex watch, that Plaintiff performed its end of the bargain, and that Plaintiff suffered damages in the amount of $13,000 as a result of Defendants’ breach. (FAC, ¶¶ BC-2 – BC-4.) Thus, Plaintiff has sufficiently pleaded a breach of contract cause of action.

Plaintiff also includes alter ego allegations as to Defendant Mourtban. (FAC, pp. 9-10.) Defendants argue that Plaintiff cannot invoke the alter ego doctrine as to the breach of contract action absent any evidence of wrongdoing by either corporation or a person exercising control. (Mot., p. 3:26-28.) Defendants further argue that Plaintiff failed to allege any of the factors courts consider to determine whether a corporate veil has been pierced. (Dem., p. 4:12-15.) The Court disagrees.

Plaintiff alleges (1) that a unity of interest existed between Defendants Gold’n Time and Mourtban such that any individuality and separateness between them ceased to exist, (2) that Defendant Gold’n Time was a mere shell and insolvent corporation used by Defendant Mourtban to avoid individual liability, (3) that Defendant Mourtban used corporate assets for personal use, transferred corporate assets to himself without adequate consideration, and withdrew corporate funds for his personal use, (4) that Defendant Mourtban controlled the corporate entity without abiding by corporate formalities, and (5) that recognizing Defendant Gold’n Time as a separate entity would result in injustice and inequitable results. (FAC., pp. 9-10, ¶¶ 1-10.) These allegations are sufficient to survive a demurrer. (See Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235-36; First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915-16.)

Thus, Defendants’ demurrer as to the first cause of action is OVERRULED.

B. Second Cause of Action – Fraud

“Fraud has five elements: a misrepresentation; the knowledge the misrepresentation is false; the intent to induce another’s reliance on the misrepresentation; justifiable reliance; and damages.” (Cohen v. Kabbalah Centre Internat., Inc. (2019) 35 Cal.App.5th 13, 20.) To allege a claim for negligent misrepresentation, a plaintiff must allege “(1) the misrepresentation of a past or existing material fact, (2) without reasonable grounds for believing it to be true, (3) with intent to induce another’s reliance on the fact misrepresented, (4) justifiable reliance on the misrepresentation, and (5) resulting damage.” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1239.) A cause of action for fraud must be alleged with specificity such that Plaintiff pleads facts that “show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Here, Plaintiff alleges that on June 27, 2019, Defendants Gold’n Time and Mourtban represented that the Rolex Plaintiff purchased was authentic, that Defendants knew that representation was false because they knew the Rolex was counterfeit, that Defendants made the representation and concealed that the Rolex was a counterfeit with the intent to defraud and induce Plaintiff to purchase the watch, that in justifiable reliance, Plaintiff purchased the counterfeit Rolex, and that Plaintiff suffered damages in the amount of $13,000 as a result of its reliance on Defendants’ representations. (FAC, pp. 4-5, ¶¶ FR-1 – FR-6.) However, these allegations are not sufficiently specific. Plaintiff does not allege who made the representation (i.e., Defendant Mourtban himself or a different employee or agent of Defendant Gold’n Time), how the allegations were made (i.e., verbally or in writing), where the representations were made (i.e., at Defendant Gold’n Time’s store or some other location), or to whom the representations were made. (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.)

Thus, Defendants’ demurrer as to the second cause of action is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.

C. Third Cause of Action – Unjust Enrichment

Defendants argue that Plaintiff’s unjust enrichment cause of action fails because several California courts do not recognize it as a cause of action. (Dem., p. 7:19-24.)

While some California courts recognize unjust enrichment as a cause of action, it is not recognized in the second appellate district. (De Havilland v. FX Networks, LLC (2018) 21 Cal.App.5th 845, 870.) Rather, unjust enrichment is a “general principle, underlying various legal doctrines and remedies” and is “synonymous with restitution.” (McBride v. Boughton (2004) 13 Cal.App.4^th 379, 387; see also Levine v. Blue Shield of California (2010) Cal.App.4th 1117, 1138.) Restitution can be awarded in lieu of damages when an express contract exists but is void because it was procured by fraud or is unenforceable for some other reason or was rescinded. (Rutherford Holdings, LLC v. Plaza Del Rey, supra, 233 Cal.App.4th at p. 231.) “A claim for restitution is permitted even if the party inconsistently pleads a breach of contract claim that alleges the existence of a contract.” (Ibid.)

However, because restitution is a remedy and not a cause of action (Reid v. City of San Diego (2018) 24 Cal.App.5th 343, 362), Defendants’ demurrer to the third cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.

D. Fourth Cause of Action – Violation of Penal Code § 350

Plaintiff alleges that because Defendants sold a counterfeit watch, they violated Penal Code section 350 and should be punished “by a fine of not more than $10,000 or by imprisonment in a county jail for not more than one year, or by both that fine and imprisonment…” (FAC, p. 7, ¶¶ 1-4.) Defendants demur to this cause of action on the basis that Penal Code section 350 does not create a civil action upon which Plaintiff can recover and because a civil court does not have the jurisdiction to enforce a criminal penalty. (Dem., p. 8:1-4.) Notably, Plaintiff does not address this in its Opposition.

The Court agrees with Defendants. A civil court does not have jurisdiction to impose a criminal penalty. Thus, Defendants’ demurrer as to the fourth cause of action is SUSTAINED WITHOUT LEAVE TO AMEND.

E. Fifth Cause of Action – Conspiracy to Commit Fraud

Defendants argue that Plaintiff did not sufficiently plead an action for conspiracy. (Dem., p. 6:18-21.)

“There is no separate tort of civil conspiracy and no action for conspiracy to commit a tort unless the underlying tort is committed and damage results therefrom.” (Prakashpalan v. Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1137.) The elements of a civil conspiracy are “(1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct.” (Contreras v. Dowling (2014) 5 Cal.App.5th 394, 417.) “Where fraud is alleged to be the object of the conspiracy, the claim must be pleaded with particularity.” (Prakashpalan v. Lipscomb & Lack, supra, 223 Cal.App.4th at p. 1137.)

Plaintiff alleges that Defendant Mourtban and Defendant Gold’n Time agreed and intended to sell Plaintiff a counterfeit Rolex, that Defendants were each aware of the plan and intentionally sold Plaintiff the counterfeit Rolex, and that Plaintiff suffered damages in the amount of $13,000.00 as a result. (FAC, p. 8, ¶¶ 1-5.) However, as noted above, Plaintiff has not alleged the cause of action for fraud with sufficient specificity. Because civil conspiracy to commit fraud is dependent on the underlying fraud cause of action, Defendants’ demurrer is SUSTAINED WITH 20 DAYS’ LEAVE TO AMEND.

1. Conclusion & Order

For the foregoing reasons, Defendants Gold’n Time, Inc. and Mahmoud Mourtban’s Demurrer to Plaintiff’s First Amended Complaint is OVERRULED as to the first cause of action, SUSTAINED WITHOUT LEAVE TO AMEND as to the third and fourth causes of action, and SUSTAINED WITH LEAVE TO AMEND as to the second and fifth causes of action. Plaintiff is granted 20 DAYS’ LEAVE TO AMEND.

Moving party is ordered to give notice.

Case Number: 19STLC07541    Hearing Date: November 07, 2019    Dept: 94

DEMURRER

(CCP §§ 430.31, et seq.)

TENTATIVE RULING:

Counsel of record for Plaintiff Time of Swiss, Inc. and Defendants Gold N’Time, Inc. and Mahmoud Mourtban are ordered to personally appear for the hearing on Moving Defendants’ Demurrers to Complaint as scheduled on November 7, 2019 at 10:30 am in Department 94.

Defendants Gold N’Time, Inc. and Mahmoud Mourtban’s Demurrers are CONTINUED TO JANUARY 9, 2020 AT 10:30 AM IN DEPARTMENT 94.

MOTION: The Complaint fails to allege sufficient facts and is uncertain.

OPPOSITION: If the Court finds the Complaint defective, it should give Plaintiff leave to amend to add alter ego allegations.

REPLY: None filed as of November 4, 2019.