WILLIAM ZHANG VS KEMI CAI, ET AL.

Tentative Rulings

Case Number: *******0467 Hearing Date: February 2, 2023 Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

I. INTRODUCTION

On July 15, 2022, plaintiff William Zhang (“Plaintiff”) filed this action against defendants Kemi Cai, Zexian Li, and Nick Chui (“Defendants”). On December 6, 2022, Plaintiff filed a first amended complaint (“FAC”). Trial is not set.

On December 13, 2022, Defendants Cai and Li filed a motion to quash service of summons.

On January 20, 2023, Plaintiff filed an opposition to Defendants’ motion.

On January 30, 2023, Defendants filed a reply.

II. LEGAL STANDARD

“An individual may be served by substitute service only after a good faith effort at personal service has first been made: the burden is on the plaintiff to show that the summons and complaint ‘cannot with reasonable diligence be personally delivered’ to defendants. [Citations.] Two or three attempts to personally serve a defendant at a proper place ordinarily qualifies as ‘reasonable diligence.’” (American Express Centurion Bank v. Zara (2011) 199 Cal.App.4th 383, 389.)

If the summons and complaint cannot be personally delivered with reasonable diligence, then a copy may be served at the person’s “dwelling house, usual place of abode, usual place of business, or usual mailing address other than a United States Postal Service post office box, in the presence of a competent member of the household or a person apparently in charge of his or her office, place of business, or usual mailing address other than a United States Postal Service post office box…who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and complaint by first class mail, postage prepaid, to the person to be served at the place where a copy of the summons and complaint were left. Service of a summons in this manner is deemed complete on the 10^th day after mailing.” (Code Civ. Proc., 415.20, subd. (b).)

“A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow, may serve and file a notice of motion for one or more of the following purposes to quash service of summons on the ground of lack of jurisdiction of the court over him or her.” (Code Civ. Proc., 418.10, subd. (a).)

III. DISCUSSION

Here, Plaintiff filed proofs of service demonstrating that Defendants were served by substitute service by a registered process server at their home address at 820 Muscatel Ave, Rosemead, CA 91770 on September 20, 2022 at 5:20 PM by leaving a copy of the summons and complaint with John Doe, a co-occupant of the home. (09/26/2022 Proofs of Service.) The proofs of service include a declaration of reasonable diligence indicating that the process server attempted to personally serve Defendants six times at their home address before substitute serving them on the seventh attempt. According to the declaration of reasonable diligence, on September 20, 2022, the process server stood behind the gate of Defendant’s home and spoke with co-occupant John Doe, who refused to give his name and told the process server to leave the documents. (Ibid.) The proofs of service also include proofs of service by mail indicating that the summons and complaint were mailed to Defendants at their home address on September 22, 2022. (Ibid.)

Defendants request an order quashing service of the summons and complaint on the ground that the process server failed to exercise reasonable diligence to effect personal service prior to substituted service. The motion is made pursuant to CCP 418.10(a)(1). In support, Defendants provide the declaration of Cai and Li. Both declarations provide that Defendants were allegedly served with the summons and complaint by substituted service on September 20, 2022 at 820 Muscatel Ave, Rosemead, CA 91770. (Declaration of Cai 2; Declaration of Li 2.) Further, at the time of service, Defendants were in northern California, the house was empty, and there was no “John Doe” present at that location. (Cai Decl., 2; Li Decl., 2.) The process server improperly left the summons and the complaint on Defendants’ gate. (Cai Decl., 2; Li Decl., 2.)

Plaintiff contends that there was proper substitute service and there are no facts that indicate any non-compliance or the incorrect address. Also, Plaintiff contends Defendants’ motion to quash is untimely because Defendants had until November 1, 2022 to service a responsive pleading, but the instant motion was filed on December 13, 2022. Defendants’ reliance on CCP 418.10(a)(1) is misplaced as that section only concerns the filing of a responsive pleading after the timely filing of a motion to quash.

Based on the foregoing, the Court agrees with Plaintiff and finds that service was effected properly and at a proper address and that Defendants have not shown good cause exists for Defendants’ untimely filed motion.

Accordingly, Defendants’ motion to quash service of summons is DENIED.

IV. CONCLUSION

Defendants’ motion to quash service of summons is DENIED.

Moving party to give notice.

Parties who intend to submit on this tentative must send an email to the Court at alhdept3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Case Number: *******0467 Hearing Date: November 17, 2022 Dept: 3

Superior Court of California

County of Los Angeles – NORTHEAST District

Department 3

MOVING PARTY: Defendant Nick Chui

RESPONDING PARTY: Plaintiff William Zhang

Defendants’ Demurrer to Plaintiff’s Complaint

The court considered the moving papers, opposition, and reply papers filed in connection with this motion.

BACKGROUND

Plaintiff William Zhang (“Plaintiff”) filed this action on July 15, 2022 against Defendants Kemi Cai, Zexian li, Nick Chui, and Does 1 through 25. The operative Complaint asserts causes of action for (1) fraud (intentional misrepresentation), (2) fraud (concealment), (3) fraud (false promise), (4) conversion, (5) breach of written contract, (6) breach of oral contract, (7) breach of implied-in-fact contract, (8) breach of fiduciary duty, (9) breach of implied covenant of good faith and fair dealing, (10) conspiracy to commit fraud, (11) declaratory relief, and (12) accounting.

Defendant Chui demurs as to the fourth and tenth causes of action.

LEGAL STANDARD

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

DISCUSSION

Allegations of the Complaint

In or around April 2015, Defendants induced Plaintiff to invest in and purchase an auto repair services business for $27,000. (Complaint, 6.) Plaintiff and Defendant Cai agreed to be co-owner in C&W William Auto Repair, Inc. (“C&W”), which was to be a newly-formed corporation to operate the auto repair services business. (Complaint, 7.) Plaintiff and Defendant Cai agreed to split the investment and profits equally. (Id.) Defendant Chui was a Certified Public Accountant who assisted with the formation and incorporation of C&W. (Complaint, 8.) Plaintiff and Defendant Cai entered into a written contract to purchase Ideal Auto Service as co-partners on June 2, 2015. (Complaint, 9.) As part of the escrow, Plaintiff signed a Statement of Information identifying Plaintiff as the CEO, CFO, and President and Defendant Cai as the Secretary of C&W. (Complaint, 11.) Plaintiff was informed this Statement of Information would be filed with the California Secretary of State, but Defendants Cai and Chui instead drafted and filed a different Statement of Information with the California Secretary of State that listed Cai as CEO, CFO, Secretary, President, and sole Director of C&W. (Complaint, 13.) On August 27, 2015, Plaintiff and Defendant Cai each deposited $3,000 to open a business account, but without Plaintiff’s knowledge, Defendant Cai withdrew and embezzled Plaintiff’s deposit. (Complaint, 16.) In August 2020, Plaintiff was informed that Defendant Cai had sold the business, including the furniture and fixtures, without his consent. (Complaint, 30.)

Demurrer

Conversion

Defendant Chui contends the Complaint fails to state a cause of action for conversion against Chui. (Mtn. p. 6.) Confessing the cause of action for conversion “erroneously includes” Chui, Plaintiff concedes Chui’s point. (Oppn. 2:19-21.) Accordingly, the court sustains Chui’s demurrer without leave to amend.

Conspiracy to Commit Fraud

The Complaint alleges Chui helped prepare a false Statement of Information in August 2015 as part of a scheme to defraud Plaintiff. (Complaint, 8.) The statute of limitations for fraud is three years. (Code Civ. Proc. 338, subd. (d).) The statute of limitations began to run when Plaintiff discovered the fraud or, with reasonable diligence, should have discovered the fraud. (Stueve Bros. Farms LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 321.) Here, Plaintiff alleges he discovered the fraud in August 2020. (Complaint, 30.) Thus, Plaintiff argues, the Complaint filed less than two years later in July 2022 was timely. But Plaintiff does not additionally allege that with reasonable diligence he could not have discovered the fraud earlier. The court therefore sustains the demurrer with leave to amend to permit Plaintiff to allege delayed discovery and equitable tolling.

CONCLUSION

The court sustains Defendant Chui’s demurrer to the fourth cause of action (conversion) without leave to amend.

The court sustains Defendant Chui’s demurrer to the tenth cause of action (conspiracy to commit fraud) with leave to amend.

The court orders Plaintiff to file an amended complaint within 20 days of this order.

The court orders Defendant Chui to file his response to the amended complaint within 30 days of this order.

Defendant Chui is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED: November 17, 2022

Colin Leis

Judge of the Superior Court