Case Number: TC028479    Hearing Date: September 08, 2016    Dept: B

# 9. E&W Immigration Consulting, LLC v. James Han Kim

Case No.: TC028479

Matter on calendar for: Demurrer to Complaint

I. Background

This is an action for conversion. Defendant James Han Kim is the owner of real property located at 1110 S. Long Beach Blvd., Unit 1, Compton, CA. Unit 1 was rented to Eric Southivongnorat, who operated a restaurant at this location. Plaintiff E&W Immigration Consulting, LLC contends Southivongnorat sold the restaurant and all of its assets to Plaintiff before Southivongnorat’s lease expired with Defendant. Plaintiff claims Defendant has been agreeable to leasing the unit to Plaintiff and has even accepted several rent payments from Plaintiff on behalf of Southivongnorat, but has insisted that the restaurant assets, including a stove, deep fryer, sinks, etc., belong to Defendant rather than Plaintiff. Plaintiff maintains that the equipment belongs to it because the prior lease between Defendant and Southivongnorat did not make any reference to the restaurant equipment (rather, the lease stated that Unit 1 would be used for “medical services” despite Defendant’s knowledge that a restaurant was being operated on the premises) and the purchase agreement between Southivongnorat and Plaintiff specifically lists all of the restaurant assets as part of the purchase.

On 6/29/16, Plaintiff E&W Immigration Consulting, LLC initiated this action against Defendant James Han Kim for (1) conversion and (2) money had and received.

On 7/28/16, Defendant filed the present demurrer to the Complaint. Defendant has provided a meet and confer declaration in compliance with CCP § 430.41(a).

II. Analysis

As a preliminary matter, the Court notes that the notice of demurrer incorrectly states the date of the hearing as both September 8, 2016 and September 16, 2016, as noted in the Opposition papers. Plaintiff claims this is a violation of its right to due process, but has nonetheless filed a timely Opposition to the demurrer. Absent any showing of prejudice, the Court will consider the papers filed by the parties.

Defendant generally demurs to the Complaint on two grounds. First, Defendant argues the Complaint admits that Plaintiff “is a Delaware limited liability company residing within Los Angeles County” (Complaint, ¶ 2), but Plaintiff has not qualified to do business in California. (Corp. Code § 2203(c); Rev. & Tax Code § 23101(a); RJN, Exs. A-B; see also Complaint, Ex. A.) Second, Defendant contends Plaintiff has failed to allege facts sufficient to constitute a cause of action for money had and received.

Defendant’s request for judicial notice is granted as to Exhibits A and B. The Court declines to take judicial notice of Exhibit C, as it does not appear a website printout from is a proper subject from judicial notice under Evidence Code § 452.

In Opposition, Plaintiff argues it does not do business in California and is not domiciled in California. Plaintiff maintains it is actually domiciled in China, and argues that merely purchasing property in California does not mean that Plaintiff is doing business in California. (Rev. & Tax Code §§ 23101(b)(3), 23101.5(a)(1).) In this regard, Plaintiff contends the address listed on the purchase agreement (Complaint, Ex. A) is only a mailing box address. (Plaintiff’s RJN, Exs. A-B.) Plaintiff also contends both causes of action are sufficiently pled.

Plaintiff’s request for judicial notice is denied. Even if the Court were inclined to take judicial notice of a Google Maps image printout and the Yelp page printout (both of which appear to be improper under Evidence Code § 452), the Yelp page printout pertains to 333 W. Garvey Ave. Suite B, not 333 W. Garvey Ave. Unit #1 as stated on the purchase agreement. The printouts do not appear to have any relevance to this demurrer.

Foreign (out-of-state) corporations are prohibited from transacting intrastate business in California without obtaining a “certificate of qualification” from the Secretary of State. (Corp. Code § 2105.) Foreign corporations that transact intrastate business but have not “qualified” may not “maintain any action or proceeding” upon such business that was “commenced prior to compliance with Section 2105.” (Corp. Code § 2203(c).) “Doing business” means actively engaging in any transaction for the purpose of financial or pecuniary gain or profit. (Rev. & Tax Code § 23101(a).) Revenue and Tax Code § 23101(b) provides, in pertinent part, that a “taxpayer is doing business in this state for a taxable year if any of the following conditions has been satisfied: (1) The taxpayer is organized or commercially domiciled in this state… (3) The real property and tangible personal property of the taxpayer in this state exceed the lesser of fifty thousand dollars ($50,000) or 25 percent of the taxpayer’s total real property and tangible personal property…”

Here, the Complaint and purchase agreement attached to the Complaint unambiguously state that Plaintiff is residing within Los Angeles; there is no indication that Plaintiff is domiciled in China as stated in the Opposition papers. (Complaint, ¶ 2, Ex. A.) Plaintiff also acknowledges in its Complaint that it is transacting business in California: Plaintiff purchased the subject restaurant in California, Plaintiff paid rent for the restaurant, and Plaintiff availed itself of the benefits of California law in that the purchase agreement was to be governed under California law. (Complaint, ¶¶ 7, 10, Ex. A, § 4(iv).) In view of the foregoing, the Court abates the action by dismissing it without prejudice. The objective of the lawsuit suspension enforcement mechanism is to encourage qualification rather than to penalize the failure to qualify earlier. Thus, the action may be refiled provided Plaintiff also files proof that it is qualified to do business in California. ( See United Medical Mgmt. v. Gatto (1996) 49 Cal. App. 4th 173.)

With respect to Plaintiff’s second cause of action for money had and received, a cause of action for money had and received is stated if it is alleged that the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. (Avidor v. Sutter’s Place, Inc. (2013) 212 Cal.App.4th 1439, 1454.) The claim is viable “wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter.” (Id. [citations omitted].) The Complaint alleges that Plaintiff paid rent under Southivongnorat’s lease for the months of August 2015 to January 2016 so that Plaintiff could receive an assignment of the lease, but despite Defendant accepting these rent payments, Defendant would not let Plaintiff operate. (Complaint, ¶¶ 10-11.) Did Defendant refuse to allow Plaintiff possession of the premises during the time that Plaintiff was paying rent? The Complaint ambiguously alleges only that “Defendant prevented the Plaintiff from operating in November 2015.” (Complaint, ¶ 11.) Because the Court has already determined that the action will be abated, the general demurrer to the second cause of action is moot. If, however, Plaintiff re-files the action, it should specify the basis for any claim for money had and received. It also should consider appropriate causes of action such as declaratory relief.

III. Conclusion

Pursuant to Corp. Code § 2203 (c), Plaintiff may not maintain this action, and abatement is appropriate. Therefore, the case is dismissed without prejudice. It may be refiled with proof that Plaintiff has qualified to do business in this state.

Next dates: None

Notice: Defendant