Legacy Capital Investment Group v. Legacy Investment Group I

willingness of Plaintiff’s counsel to address the concerns in this demurrer.

Demurrer is continued to September 21, 2026, at 9:00 a.m. in Department N14 for lead counsel to meet and confer per code via videoconference or telephone call. Nine (9) Court days prior to the continued hearing date, Defense counsel to submit a declaration in compliance with Code Civ. Proc., §430.41.

Court also sets an OSC re: Sanctions for failure to comply with Code Civ. Proc., §430.41 for September 21, 2026, at 9:00 a.m. in Department N14.

DEMURRER TO AMENDED COMPLAINT BY DEFENDANTS RANCHO FENG/DL VENTURE/LLL REAL ESTATE – SUSTAINED WITH 20 DAYS LEAVE TO AMEND IN PART AND OVERRULED IN PART

Defendants Rancho Feng LLC, DL Venture First, LLC, and LLL Real Estate Investment, LLC (the “Member Defendants”) demur to the 6th (breach of fiduciary duty), 7th (breach of contract), 8th (unjust enrichment), 9th (breach of fiduciary duty), 10th (breach of contract), and 12th (conspiracy) causes of action of the FAC. (ROA 102)

The 6th through 8th causes of action are pleaded derivatively under Corporations Code section 800. That section does not apply to LLCs, and these claims should have been pleaded under Corp. Code section 17709.02.

Additionally, these causes do not appear to be derivative claims. An action is derivative if (1) the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders. (Grosset v. Wenaas (2008) 42 Cal.4th 1100; Speirs v. BlueFire Ethanol Fuels, Inc. (2015) 243 Cal.App.4th 969) or (2) it seeks to recover assets for the corporation or to prevent the dissipation of its assets. (Grosset v. Wenaas, supra, 42 Cal. 4th 1100.) When lost profits are sought as damages, the gravamen of the complaint is injury to the corporation, not injury to an individual shareholder, and

thus, the action is derivative. (Reilly v. Greenwald & Hoffman, LLP (2011) 196 Cal.App.4th 891.)

The 6th through 8th causes of action do not sufficiently allege a harm to the company. Rather they allege the company paid off a loan that had matured through contributions from the members, some of whom used the process to benefit at the expense of the plaintiffs. (See FAC ¶¶24-31) Paying off a loan, or breach of the operating agreement by some members does not allege a harm to the company.

The demurrer to the 6th-8th causes of action is SUSTAINED with 20 days leave to amend.

The 9th cause of action for Breach of Fiduciary Duty, Plaintiffs allege the member defendants owed fiduciary duties to the member plaintiffs, which duties they breached. (FAC ¶¶102, 103.)

These defendants argue that because the Company is a “manager-managed LLC”, and they were not managers, they owe no fiduciary duties to Plaintiffs. (Corp. Code, § 17704.09, subd. (f); §2.1 of the Operating Agreement, attached to the FAC.)

Plaintiffs argue these defendants are liable for breach of fiduciary duty by virtue of aiding and abetting the breach. (American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451.)

The allegation that “MEMBER DEFENDANTS and each of them knowingly aided, encouraged, cooperated, conspired, agreed and/or participated in, and substantially assisted the other MEMBER DEFENDANTS in the breaches of their fiduciary duties” (FAC ¶ 83) is insufficient. Plaintiffs do not allege the Moving Defendants aided, encouraged, etc. the breach by Jing Ai, Xingcheng Li and Xue Fang Wang. More facts are needed to establish this theory of liability.

The demurrer to the 9th cause of action is SUSTAINED with 20 days leave to amend.

As to the 10th cause of action for Breach of Contract, Plaintiffs plead the member defendants breached the operating agreement by failing “to acquire unanimous decisions from the members of COMPANY for matters regarding the LOAN or any other indebtedness or financing of COMPANY.” (FAC ¶113.) Although Plaintiffs fail to indicate precisely which portion of the Operating Agreement Defendants allegedly breached, there are sufficient facts to put Defendants on notice of the claim. The court declines Defendants’ request to review the operating agreement and decide issues of contract interpretation as a matter of law on demurrer. The demurrer to the 10th cause of action is OVERRULED.

Finally, as to the 12th cause of action, conspiracy cannot be alleged as a separate cause of action unless it alleges it alleges the commission of a civil wrong that causes damage. A conspiracy may render additional parties liable for the wrong, but it is not actionable in and of itself without a wrong. (Okun v. Superior Court (1981) 29 Cal.3d 442, 454.)

Plaintiffs argue the Conspiracy is in connection with the 11th cause of action for Concealment. However, there is nothing in the FAC to establish that Plaintiffs seek to hold Defendants liable for the conspiracy in connection with concealment. Additionally, no facts are alleged to sufficiently plead conspiracy as a cause of action.

Plaintiffs allege: 127. Each MEMBER DEFENDANTS was aware of each other’s plan to breach their fiduciary duty and exclude MEMBER PLAINTIFFS by concealing material facts from them.

128. Each MEMBER DEFENDANTS agreed and intended that the harm to MEMBER PLAINTIFFS be committed.

129. MEMBER PLAINTIFFS allege that each MEMBER DEFENDANTS had more than mere knowledge of the wrongful act.

(FAC¶¶127-129.) This is insufficient. The Demurrer is SUSTAINED with 20 days leave to amend as to the 12th cause of action.

The request for judicial notice is denied. None of the exhibits is a proper matter for judicial notice.

Defendants to give notice.

109 Lopez v. Flores, 2024- MOTION FOR JUDGMENT ON THE PLEADINGS – 01435693 GRANTED WITH 10 DAYS LEAVE TO AMEND

Defendant/Cross-Complainant Mayra Isabel Flores Flores’ (“Flores”) Motion for Judgment on the Pleadings as to her Cross-Complaint is GRANTED with leave to amend. Although Plaintiff/Cross-Defendant Jocelynn Denise Lopez’s (“Lopez”) did not file opposition to the motion, her counsel submitted a late declaration explaining they intended to oppose the motion and seek leave to amend the answer to the cross-complaint.

The failure to oppose the motion is an admission that the motion for judgment on the pleadings has merit. (See Herzberg v. County of Plumas (2005) 133 Cal.App.4th 1, 20 [“Plaintiffs did not oppose the County's demurrer to this portion of their seventh cause of action and have submitted no argument on the issue in their briefs on appeal. Accordingly, we deem plaintiffs to have abandoned the issue”].) In addition, it is axiomatic the failure to challenge a contention in a brief results in the concession of that argument. (DuPont Merck Pharmaceutical Co. v.

Sup. Ct. (2000) 78 Cal.App.4th 562, 566 [“By failing to argue the contrary, plaintiffs concede this issue”]; Westside Center Associates v. Safeway Stores 23, Inc. (1996) 42 Cal.App.4th 507, 529 [“failure to address the threshold question ... effectively concedes that issue and renders its remaining arguments moot”]; Glendale Redevelopment Agency v. Parks (1993) 18 Cal.App.4th 1409, 1424 [issue is impliedly conceded by failing to address it].)

The court will, however, permit Lopez to file the first amended answer. The court rejects Flores’s arguments that the answer is incapable of amendment because the