Case Number: 19PSCV00856    Hearing Date: June 03, 2020    Dept: O

Defendant Living Essentials Corp.’s demurrer to the complaint is SUSTAINED with 30 days leave to amend.

A demurrer for sufficiency tests whether the complaint states a cause of action.  (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)  When considering demurrers, courts read the allegations liberally and in context.  (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.  (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”  (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.)  “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahnsupra, 147 Cal.App.4th at 747.)

Defendant Living Essentials Corp. (“Defendant”) demurs to the single cause of action in the Complaint for Open Book Account on the grounds that it fails to state facts sufficient to constitute any cause of action and uncertainty.

Uncertainty (Open Book Account – 1st Cause of Action)

A demurrer on based on uncertainty will not be sustained unless the complaint is so bad that the defendant cannot reasonably respond.  (Koury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)

While generally the Court disfavors uncertainty as a ground for sustaining a demurrer, it is appropriate here as to its single cause of action for open book account.

An open book account is a form of the common counts cause of action.  The elements are:  (1) A detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation; (2) Which shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made; (3) Entered in the regular course of business as conducted by such creditor or fiduciary; (4) Kept in a reasonably permanent form and manner; and (5) In a bound book, on a sheet or sheets fastened in a book or to backing but detachable therefrom, on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner.  (CCP § 337a; Tsemetzin v. Coast Federal Savings & Loan Assn. (1997) 57 Cal. App. 4th 1334, 1343.)

The Court has reviewed the complaint and finds that Plaintiff De Xin Industry H.K. Co. Ltd. (“Plaintiff”) failed to state when it entered into a contract for furniture goods with Defendant, presumably through a typographical error leaving out the date when the parties entered into this alleged contract.

Plaintiff contends in its Opposition that it does not need to allege the terms of its alleged contract with Defendant because its claim lies in Open Book Account.  The Court disagrees.  Plaintiff needs to allege the nature of the contract here because Plaintiff has alleged that a contract is the basis for Plaintiff’s open book account claim.  (See CCP § 430.10; Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-459; see also Robin v. Smith (1955) 132 Cal.App.2d 288, 291 (an open book account may be deemed to furnish the foundation for a suit in assumpsit).)  Plaintiff also failed to state the nature of the consideration agreed to by the parties, and even failed to allege that Plaintiff had fulfilled its obligation under the alleged contract, thus putting Defendant in debt to Plaintiff.

Demurrer is SUSTAINED.

Alter Ego

The Court also notes Defendant’s concern regarding alter ego theory of liability.  While the Court agrees with Defendant that the alter ego allegations in the Complaint are deficient, a demurrer is not the proper vehicle to challenge whether the alter ego allegations are true.  Thus, Harry Lee’s declaration is irrelevant at this stage of litigation.

Nonetheless, the alter ego allegations are insufficient in the Complaint.  As Defendant points out, this claim is only supported by an allegation that the Defendant was “the servant, agent, employee, and/or joint venture of each and every other defendant, or in the course, scope, purposed [sic] and authority of said allied interest, agency or employment, and that each Defendant ratified and approved the actions of the other.”  (Complaint, ¶ 4.)  Plaintiff has not alleged any unity of interest and ownership such that the separate personalities of the corporation and the individuals do not exist.  (Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749.)  Furthermore, there are no allegation of facts to show this unity of interest, such as commingling of funds, 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.  (See Roman Catholic Archbishop v. Superior Court (1971) 15 Cal.App.3d 406, 411.)

Thus, demurrer is SUSTAINED on the grounds that the complaint lacks sufficient facts to show alter ego as well.

Leave to Amend

Generally, leave to amend will only be granted if a plaintiff meets a burden of showing that it is reasonably possible to correct the defects by amendment.  (Goodman v. Kennedy (1976) 18 Cal.3d 335, 347.)  Plaintiff has suggested that an amendment can cure the defects in the pleading.  The Court will grant the Plaintiff leave to amend so it may plead additional facts that demonstrate that this case should move forward.

Therefore, Defendant’s demurrer to Plaintiff’s Complaint is SUSTAINED with leave to amend.  Plaintiff has 30 days to file an amended complaint.