Demurrer to Complaint
The case management conference is continued to November 16, 2026 at 10:00 a.m. in Department C27.
Plaintiff is ordered to give notice.
109 2025-01532667 1. Demurrer to Complaint 2. Case Management Conference NeueHealth Advantage ACO The demurrer of Defendants MD Health, Inc., and MD Partners, Inc. to all three causes of LLC vs. MD Health action in Plaintiff NeueHealth Advantage ACO, LLC’s complaint is SUSTAINED with 15 days Inc leave to amend.
Discussion. Defendants demur generally to all three causes of action in the complaint, which are for breach of contract, breach of the implied covenant of good faith and fair dealing, and declaratory relief. Plaintiff opposes the demurrer.
Moving defendants contend that the first two causes of action for breach of contract and breach of the implied covenant of good faith and fair dealing fail to state any claim against them because neither is a party to the agreement alleged in the complaint, which is between Plaintiff and non-party MD Partners ACO. They further contend that Plaintiff does not set forth any factual allegations by which liability may be imposed on them as non-signatories to the agreement, e.g., alter ego theory, agency, or estoppel.
In fact, the agreement attached to the complaint as Exhibit A is between Plaintiff NeueHealth Advantage ACO, LLC (under its former name, Physicians Plus ACO, LLC) and non-party MD Partners ACO and states that it is effective as of May 10, 2022. In addition, Plaintiff alleges in several places in the complaint that the contract is between it and non- party MD Partners ACO. (See, e.g., paragraphs 15, 28, and 34, which are in the introductory portion of the complaint, the first cause of action, and the second cause of action, respectively.) Plaintiff does not allege that non-party MD Partners ACO was acting as an agent on behalf of a principal when it entered into the agreement.
In the first cause of action, Plaintiff alleges that non-party MD Partners ACO breached the agreement by failing to provide a financial guarantee in a form and substance satisfactory to Plaintiff as required by the agreement and that Plaintiff was damaged as a result. (Complaint, ¶¶ 30 and 31.) It then alleges that the moving defendants “are liable for the contractual obligations and duties of MD Partners ACO under the agreement.” (Complaint, ¶ 32.)
There are absolutely no facts in the complaint to support Plaintiff’s conclusion that moving defendants are liable to it for the non-party’s breach of contract. As pointed out in the moving papers, the introductory portion of the complaint contains only boilerplate and factually devoid allegations – made on information and belief -- that each named defendant is the agent, alter ego, servant, or employee of each of the other defendants and acting within the scope of the agency or employment. (Complaint, ¶ 6.)
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The introductory portion of the complaint also contains boilerplate allegations – again based on information and belief – that the named defendants, non-party MD Partners ACO, and fictitiously named defendants are the alter egos of each other. (Complaint, ¶¶ 7.) These allegations are insufficient to impose liability against the named defendants for a breach of the agreement by non-party MF Partners ACO.
In the second cause of action, Plaintiff alleges that non-party MD Partners ACO breached the covenant of good faith and fair dealing implicit in the agreement with Plaintiff and that Plaintiff was injured as a result. (Complaint, ¶¶ 36 and 37.) As with the first cause of action, Plaintiff alleges that the moving defendants “are liable for the contractual allegations and duties of [non-party] MD Partners ACO. (Complaint, ¶ 38.) Again, there are no facts in the complaint to support this conclusion.
The third cause of action is for declaratory relief, and the moving defendants contend that it is defective because it is derivative of the first two causes of action and seeks a declaration of rights to which Plaintiff is not legally entitled, citing Childhelp, Inc. v. City of Los Angeles (2023) 91 Cal.App.5th 225, 236. Plaintiff disagrees, citing the same case for the proposition that declaratory relief is appropriate if the complaint sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties and requests that the rights and duties be adjudged.
In fact, Childhelp, Inc. v. City of Los Angeles, supra, 91 Cal.App.5th 225 states the following at pp. 235-236:
Section 1060 of the Code of Civil Procedure provides: “Any person interested under a written instrument ... or who desires a declaration of his or her rights or duties with respect to another, or in respect to, in, over or upon property ... may, in cases of actual controversy relating to the legal rights and duties of the respective parties, bring an original action ... for a declaration of his or her rights and duties in the premises, including a determination of any question of construction or validity arising under the instrument ... .” To allege facts sufficient to state a cause of action for declaratory relief, the plaintiff must allege “two essential elements: ‘(1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party.’ ” [Citation.]
“It is the general rule that in an action for declaratory relief the complaint is sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the respective parties ... and requests that the rights and duties be adjudged. [Citation.] If these requirements are met, the court must declare the rights of the parties whether or not the facts alleged establish that the plaintiff is entitled to a favorable declaration.” [Citations.] “‘[A] general demurrer is usually not an appropriate method for testing the merits of a declaratory relief action, because the plaintiff is entitled to a declaration of rights even if it is adverse to the plaintiff's interest.’ ” [Citation.]
Nevertheless, “a trial court may properly sustain a general demurrer to a declaratory relief action without leave to amend when ... the controversy presented can be determined as a matter of law.” [Citations.] Allowing the plaintiff to proceed on a cause of action for declaratory relief “can often lead to a waste of court and litigant resources when it is clear the plaintiff seeks a declaration of rights to which he or she is not legally entitled. It would seem unnecessary to reverse a judgment sustaining a demurrer simply because an ‘actual controversy’ has been alleged. [Citation.] Although the sustaining of the demurrer might be technically incorrect, reversing ‘would merely provoke further appellate recourse since the record discloses that the trial court dismissed the case on the merits and the legal issues are clearly presented by the pleadings.’ ” [Citation.]
Here, in the third cause of action, Plaintiff alleges a controversy has arisen between it and the named defendants in relation to their respective legal rights and duties with respect to the agreement. (Complaint, ¶ 40.) It alleges that it seeks a judicial determination of the rights and duties of the parties with respect to the agreement and a declaration that one or both of the named defendants is obligated to compensate Plaintiff for the financial guarantee requirements under the agreement. (Complaint, ¶ 42.)
Given these allegations, moving defendants are correct to the extent that they contend that the cause of action is derivative of the cause of action for breach of contract. Specifically, the first cause of action for breach of contract is defective because the defendants are not parties to the contract and Plaintiff has not pled any facts or theories showing that they can be held liable for the non-party’s alleged breach. As non-parties to the agreement, they have no interests or obligations under that agreement and Plaintiff has not shown otherwise. Declaratory relief would not be appropriate as a matter of law.
Thus, the Court sustains the demurrer to all three causes of action with 15 days leave to amend.
The case management conference is continued to November 16, 2026 at 10:00 a.m. in Department C27.
Moving party is ordered to give notice.
110 2025-01496315 1. Motion to Compel Arbitration 2. Case Management Conference Nguyen vs. Able Financial Corp. Defendants Nathan Nguyen’s and Thuy Dao’s motion to compel arbitration of Plaintiff Stacey Nguyen’s claims against them is granted.
The parties do not dispute the existence of an arbitration agreement that Plaintiff signed as part of the Business Purchase Agreement dated 2/1/24.
This agreement is attached to both Plaintiff’s initial Complaint and her First Amended Complaint as Ex. D. and states in part:
42. ARBITRATION OF DISPUTES A. The Parties agree that any dispute or claim in Law or equity arising between them out of this Agreement or any resulting transaction, which is not settled through mediation, shall be decided by neutral, binding arbitration...
While the agreement was technically between Plaintiff and 1988 TL Group, Plaintiff alleges that the moving Defendants were the "sole owners" and "alter egos" of the seller. (FAC, ¶¶ 4-10.)
The court in Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614 held that “when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement, the defendant may enforce the agreement even though the defendant is not a party thereto.” Based on this, Defendants have standing to compel arbitration.
Plaintiff argues in opposition that her fraud and deceit causes of action are not related to the purchase agreement and thus not arbitrable. The Court disagrees. Plaintiff’s fraud claim is based on alleged misrepresentations in connection with the sale (e.g., that the