1)Defendant William G Ayyad and Harry R Bigham’s Demurrer to Fourth Amended Complaint

2)Status Conference

Defendants’ demurrer is based on the premise that they were nothing more than investors in the project and had neither sufficient control nor involvement to establish liability on Plaintiff’s claims.  Plaintiff responds by arguing that the complaint includes sufficient alter ego and/or joint venture allegations to support the four causes of action against Ayyad and Bigham.

The alter ego/joint venture allegations appear in ¶¶ 12 and 13 of the Fourth Amended Complaint:

  1. Plaintiff is informed and believes, and thereon alleges, that the Developer Defendants created a number of corporate entities that all share a series of characteristics that define them all as alter egos of one another, as they were all formed to avoid debts and obligations.
  2. Plaintiff is informed and believes, and thereon alleges, that there exists, and at all times herein mentioned there existed, a unity of interests and ownership between and among WILLIAMSBURG SQUARE 52, LLC; WS MGR 52, LLC; CESN CONSTRUCTION, INC.; WALID E. ROMAYA; WS CAPITAL, LLC; PWRG COMMUNITIES, LLC; WILLIAM G. AYYAD; and HARRY R. BIGHAM such that any individuality and separateness between them has ceased, and all of these corporate entities and individuals are the alter egos of each other.

A joint venture “requires an agreement under which the parties have (1) a joint interest in a common business, (2) an understanding that profits and losses will be shared, and (3) a right to joint control.”  Oakland Raiders v. National Football League (2005) 131 Cal.App.4th 621, 637-638.   The existence of a joint venture may be established through the written agreement, or by specifying those facts showing a sharing of commercial interests, and an intent to engage in an enterprise in furtherance of those interests. Allegations that the aggrieved joint venturer parted with value, made transfers of money or property, and provided services for the venture, and that coventurers have benefited by those actions but have excluded the aggrieved joint venturer by, for example, refusing

 to account to him or her for profits, should be sufficient to withstand demurrer.  Hillman v. Hillman Land Co. (1947) 81 Cal. App. 2d 174.  Here, Plaintiff makes no factual allegations to support a claim of joint venture vis-à-vis the moving defendants.

“To recover on an alter ego theory, a plaintiff need not use the words ‘alter ego,’ but must allege sufficient facts to show a unity of interest and ownership, and an unjust result if the corporation is treated as the sole actor.”  Leek v. Cooper (2011) 194 Cal.App.4th 399, 415.  Various factors may be considered in applying the doctrine of alter ego including: “commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other. . . . inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers.”  Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538-539.  Here, Plaintiff makes no factual allegations to support an assertion of alter ego vis-à-vis the moving defendants.

Because the complaint does not sufficiently allege either alter ego or joint venture allegations as against the moving defendants, the demurrer is sustained with leave to amend.  Plaintiff has 20 days in which to amend the 1st-4th causes of action as against Defendant Ayyad and Bigham.

Moving party to give notice.