OPTIMUM CORP VS HILLHURST WORLDWIDE INVESTMENT, INC.

Tentative Rulings

Case Number: ****6079    Hearing Date: November 07, 2019    Dept: SEC

OPTIMUM CORP. v. HILLHURST WORLDWIDE INVESTMENT, INC.

CASE NO.: ****6079

HEARING: 11/07/19

JUDGE: RAUL A. SAHAGUN

#6

TENTATIVE ORDER

Defendants HILLHURST WORLDWIDE INVESTMENT, INC., RYUNG EUI PARK, and WILSON KIM’s Motion for Summary Judgment is DENIED. Defendants’ Motion for Summary Adjudication is GRANTED in part and DENIED in part. CCP ;437c.

Moving Party to give Notice.

This action was filed in January 2017. Plaintiff alleges the following facts: On or about July 25, 2013, Plaintiff entered into two agreements with Defendants. The first agreement was a written Investment Subscription Agreement (“Subscription Agreement”) to purchase 100,000 shares of Hillhurst Worldwide Investment, Inc. (“Hillhurst”) for $620,000.00 (SAC ¶12, Ex. A.) The second agreement was a written Investment Agreement (“Investment Agreement”) to purchase 10% shares of Hillhurst for $620,000.00. (See SAC ¶19, Ex. B.) Plaintiff alleges that Defendants failed to perform under either agreement.

Plaintiff’s SAC, filed October 17, 2017, asserts the following causes of action: (1) Breach of Contract (count I); (2) Breach of Contract (count II); (3) Fraud and Deceit; (4) Fraudulent Transfer; (6) Conversion; (7) Breach of Fiduciary Duty; and (8) Securities Fraud. (Defendants’ demurrer to Plaintiff’s fifth cause of action for unjust enrichment was sustained without leave to amend on January 11, 2018.)

Defendants argue that they are entitled to summary judgment or summary adjudication in their favor because, “Plaintiff cannot support its claim of two breaches of contract…. Defendants have provided evidence to Plaintiff that Plaintiff cancelled the transaction and demanded a return of the investment, to which Defendants complied. The remaining causes of action fail, as there are no facts to support them, and they rely upon the viability of the breaches of contract causes of action.” (Notice 2:4-8.)

In Opposition, Plaintiff argues that Defendants failed to shift the burden to Plaintiff, and summary judgment must be denied.

The elements for breach of contract are as follows: (1) the existence of a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendants’ breach (or anticipatory breach); and (4) resulting damage to plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

First Cause of Action – Breach of Investment Subscription Agreement

Defendants argue that they are entitled to summary adjudication of the first cause of action because Plaintiff cancelled the Investment Subscription Agreement, and as a result, Defendants returned Plaintiff’s $620,000.00 investment.

The motion for summary adjudication of the first cause of action is denied. It is undisputed that Plaintiff made a demand for the cancellation of the Investment Subscription Agreement. (See Kyung Soo Kim Decl., ¶7.) However, there exists triable issues of fact as to whether the full $620,000.00 investment was ever returned to Plaintiff prior to the filing of this lawsuit. In support of their Motion, Defendants argue that $586,790.35 was wired back to Plaintiff, and that Dohee Kim (an Officer of Optimum Corp.) made certain business expenses with the remaining $51,209.65. Defendants proffer the declarations of Sung Woo Choi and Wilson Kim to evidence that Defendants “returned all money in its possession through three wire transfers: 1): December 8, 2014, $186,000; 2) February 8, 2016, $283,945.85; 3) February 8, 2016, $98,844.50. [Citation] Dohee Kim made alleged business expenses in the approximate amount of $51,209.65 by providing checks or transfers….” (Motion 9:13-23.)

Although Plaintiff does not dispute that $586,790.35 was returned to Plaintiff, Plaintiff does dispute whether the remaining $51,209.65 was ever returned to Plaintiff. Plaintiff contends that any claimed expenses that Plaintiff and/or its officers accrued on behalf of Plaintiff, cannot be attributed to any portion of the initial investment that should have been returned to Plaintiff. Indeed, whether the $51,209.65 in business expenses was intended by the parties to satisfy the remainder of money owed back to Plaintiff as part of the cancellation of the Subscription Investment Agreement raises a triable issue of fact. (See Plaintiff’s SMF Nos. 5-6.)

Second Cause of Action – Breach of Investment Agreement

Defendants argue that they are entitled to summary adjudication of the second cause of action for Breach of Investment Agreement because there is only one Agreement for the purchase of shares in existence between the parties. Defendants argue that the Investment Subscription Agreement and the Investment Agreement are two documents which reflect one overarching agreement for the purchase of 100,000 shares in Hillhurst for the sum of $620,000.00 Consequently, the issue presented is whether the parties executed a second written contract for an additional 100,000 shares in Hillhurst for the additional sum of $620,000.00.

The evidence before the Court demonstrates that both agreements at issue were signed on the same date—July 25, 2013. Both agreements reference 100,000 shares, a 10% ownership in Hillhurst, and a $620,000.00 investment. (Kyung Soo Kim. Decl., Exs. A and B.) In Opposition to the Motion, Plaintiff does not rebut Defendants’ contention that only one investment in the amount of $620,000.00 was ever effectuated. The evidence submitted by Plaintiff in Opposition to the Motion makes no reference to any second investment in the sum of $620,000.00. Moreover, the Investment Agreement itself, expressly states that “[Optimum Corp.] shall own ten (10%) and [Hillhurst] shall own ninety percent (90%) of the total issued and outstanding Shares….” (Kyung Soo Kim Decl., Ex. B.) The Investment Agreement does not indicate that Plaintiff is entitled to an additional 10% interest in Hillhurst, or a 20% total interest in Hillhurst. Based on the state of the evidence, the Court cannot find that there exists a second written contract for a second distribution of 100,000 shares in exchange for a second investment of $620,000.

The motion for summary adjudication of the second cause of action for Breach of the Investment Agreement is GRANTED.

Third, Fourth, Sixth, Seventh, and Eighth Causes of Action

The motion for summary adjudication of the third, fourth, sixth, seventh, and eighth causes of action is denied. Defendants argue that the third, fourth, sixth, seventh, and eighth causes must fail because they rely upon the viability of Plaintiff’s two breaches of contract claims. As indicated above, Plaintiff has one remaining viable breach of contract claim.

Defendants also argue that they are entitled to summary adjudication of the third, fourth, sixth, seventh, and eighth causes of action because “there are no facts to support them.” (Notice 2:7-8.) It is not enough for a defendant to show merely that Plaintiff “has no evidence” on key elements of Plaintiff’s claims. Defendants must also produce evidence showing that Plaintiff cannot reasonably obtain evidence to support their claims. (Gaggero v. Yura (2003) 108 Cal.App.4th 884, 891.) Defendants have not met this burden. Consequently, summary adjudication of the third, fourth, sixth, seventh, and eighth causes of action is denied on this basis as well.

Defendants’ Evidentiary Objections to Plaintiff’s Opposition to Defendants’ Motion for Summary Judgment/Adjudication

Objections to the Declaration of Kyung Soo Kim:

No. 1. Sustained

No. 2. Overruled

No. 3. Sustained

No. 4. Sustained

No. 5. Sustained

No. 6. Sustained

No. 7. Sustained

No. 8. Sustained

No. 9. Sustained

Objections to the Declaration of Calvin Park:

No. 1. Sustained

No. 2. Sustained

Objections to Exhibit E – March 22, 2017 Email by Wilson Kim:

No. 1 – Sustained

Objections to Exhibit G – Transcript of Dohee Kim

No. 1. – Sustained

Objections to Exhibit H – Deposition Transcript of Wilson Kim

No. 1 - Sustained