URP California, LLC vs. Kohr

2. The plaintiff’s claim is probably valid.

3. The attachment is not sought for any purpose other than securing the creditor’s claim.

4. The amount secured by the attachment is greater than zero. (Code Civ. Proc. §§ 483.010, 484.090(a)(1)-(4).)

In addition, “[w]here the defendant is a natural person, the description of the property shall be reasonably adequate to permit the defendant to identify the specific property sought to be attached.” (Code Civ. Proc. § 484.020(e).)

Initially, the property that Plaintiff seeks to attach are two rea l properties owned by Khor located in Orange County: 126 Cinnamon Teal, Aliso Viejo, California 92656, and 16 Clearbrook, Irvine, CA 92614.

Plaintiff contends that its claim for breach of contract is one upon which an attachment may be issued and that Plaintiff’s claim arises out of Defendant, Paul Khor’s conduct of a trade, business, or profession.

The operative First Amended Complaint (“FAC”) includes a claim for breach of contract for payment of services pursuant to a Management Services Agreement entered into between Plaintiff and Defendant California Behavioral Healthcare, LLC (“CBH”) in December 2022, and an amended Management Services Agreement entered into between Plaintiff and Defendant RSM Mission Recovery aka Recovery Services Management, LLC (“RSM”) in December 2022 (together, the “MSAs”). (FAC, ¶¶ 15 -17, 20-24.)

Both MSAs authorize Plaintiff, a corporation that specializes in operation and management to use Defendants CBH and RSM’s licenses to operate and manage their rehabilitation and detox care facilities for alcohol and substance abuse for an initial period of six months, and the MSAs could be renewed for another year. (FAC, ¶ 20.)

Defendant Paul Khor (“Khor”) is the Manager, Member and/or Chief Executive Officer of Defendants CBH and RSM, and signed the MSAs on behalf of Defendants CBH and RSM. (FAC, ¶¶ 15, 18.) These allegations are also stated in the Declaration of Gina Petersin filed in support of the Request for Entry of Default Judgment. (ROA 276, Declaration of Jessica Taran (“Taran Decl.”), ¶ 3, Ex. A, Declaration of Gina Petersin, ¶¶ 13-22.)

Defendant Khor does not dispute that the FAC includes a claim for breach of contract that arises out of the conduct by Defendant Khor of a trade, business, or profession. Thus, the FAC includes a claim for breach of contract upon which attachment may be issued. (Code Civ. Proc. § 483.010(a)-(c).)

Readily ascertainable amount. Plaintiff contends that the total amount of the breach of contract claim is for a fixed readily ascertainable amount of $127,729.52. Defendant Khor contends that Plaintiff has not shown a fixed or readily ascertainable amount as Plaintiff’s own default prove-up declaration states that a later reconciliation showed $109,643.25, not $127,729.52. Defendant Khor also contends that Plaintiff’s FAC confirms that the amount allegedly due is not fixed or presently ascertainable as the FAC alleges that Plaintiff requires an accounting to determine the amount owed. Defendant Khor further provides that he disputes Plaintiff’s performance disputes the amount owed, and identifies damages and offset arising from billing problems, audit issues, and accreditation-related problems.

To be a readily ascertainable amount, the damages need not be liquidated, but they must be measurable by reference to the contract itself and the basis for computation must be reasonable and certain. (CIT Group/Equipment Financing, Inc. v. Super DVD, Inc. (2004) 115 Cal.App.4th 537, 540.)

Here, Plaintiff has not provided the basis for the calculation for damages for breach of contract in the amount of $127,729.52. Additionally, while the Declaration of Gina Petersin filed in support of the Request for Entry of Default Judgment (“Petersin Declaration”) provides that Defendants, Paul Khor, CBH, and RSM owed a sum of at least $127,729.52 in fees to Plaintiff for services Plaintiff provided prior to the termination of the MSAs in July 2023, said declaration also provides that a reconciliation of the bank account statements for Chase Bank belonging to Defendants CBH and RSM were done after the return of the subpoena was received in January 2025, and that the reconciliation confirmed that the amounts due and owing to Plaintiff is $109,643.25. (ROA 276, Declaration of Jessica Taran (“Taran Decl.”), ¶ 3, Ex. A, Declaration of Gina Petersin (“Petersin Decl.”), ¶¶ 22, 26.)

Based on the foregoing, it is not shown that the damages of $127,729.52 is a fixed or readily ascertainable amount. Even assuming that the damages could be shown to be a readily ascertainable amount, Plaintiff has not shown the probability validity of a breach of contract claim against Defendant Khor, as discussed below.

Probable validity. Plaintiff contends that it is more likely than not to prevail on its first cause of action for breach of contract against Khor as the existence and validity of the MSAs are not at issue, there is no dispute that Defendants did not pay Plaintiff its fees under the MSAs, Khor’s alter ego liability based on the default judgment against the corporate defendants, and that Plaintiff is likely to prove alter ego liability given the Government’s allegations against Khor in the criminal proceeding against him, and statements in Petersin’s Declaration.

Defendant Khor contends that Plaintiff cannot establish the probable validity of a claim for breach of contract against him personally as he is not party to the underlying MSAs, signed the MSAs on behalf of Defendants CBH and RSM, did not sign in his individual capacity, did not give a guaranty, and did not execute any promissory note, indemnity, side letter, settlement agreement, or other writing agreeing to be personally liable to Plaintiff. Khor also contends that Plaintiff’s Application lacks any competent evidence to support alter ego liability.

A claim has probable validity if it is more likely than not that the plaintiff will obtain a judgment against the defendant on that claim. (Code Civ. Proc., § 481.190.) The probable validity determination requires the court to consider the relative merits of the positions of the respective parties and make a determination as to the probable outcome of the litigation. (Loeb & Loeb v. Beverly Glen Music (1985) 166 Cal.App.3d 1110, 1120.)

The court has the power to determine disputed facts on the basis of a preponderance of the evidence as disclosed in the affidavits and declarations. (Hobbs v. Weiss (1999) 73 Cal.App.4th 76, 80 —court must “consider the relative merits of the positions of the respective parties and make a determination of the probable outcome of the litigation.”) All facts stated in each declaration must be set forth with particularity. (Code Civ. Proc. § 482.040.) “This means that the affiant or declarant must show actual, personal knowledge of the relevant facts, rather than the ultimate facts commonly found in pleadings, and such evidence must be admissible and not objectionable.” (Lydig Construction, Inc. v. Martinez Steel Corp. (2015) 234 Cal.App.4th 937, 944.)

The trial court is not required to accept as true the sworn testimony of any witness or undisputed affidavit testimony. It may make contrary findings based on inferences drawn from other evidence. (Bank of America v. Salinas Nissan, Inc. (1989) 207 Cal.App.3d 260, 273.) “[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Here, Plaintiff does not attempt to argue that Khor is a party to the MSAs. Khor submits a declaration stating that he signed the MSAs on behalf of CBH and RSM, that he did not sign the MSAs in his personal capacity, and that he did not sign any personal guaranty, promissory note, personal indemnity, side letter, settlement agreement, or other writing agreeing to be personally liable to URP for either entity’s obligations. (ROA 295, Declaration of Paul Khor (“Khor Decl.”), ¶¶ 3 -5.) Khor states that no one from URP asked him to become personally liable for either entity’s obligations, that URP did not extend credit to him personally, and did not invoice him personally, and that he did not negotiate or enter into either MSAs as a personal transaction. (Khor Decl., ¶¶ 6-7.) Plaintiff argues that Khor is liable through alter ego liability.

“The ‘single enterprise,’ or alter ego, doctrine is an equitable doctrine: ‘ A corporate identity may be disregarded —the “corporate veil” pierced— where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation. [Citation.] Under the alter ego doctrine, then, when the corporate form is used to perpetuate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporation’s acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. [Citations.] . . . .’ [Citation.]” (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1341.)

“Alter ego liability is not limited to the parent-subsidiary corporate relationship; rather, ‘under the single enterprise rule, liability can [also] be found between sister [or affiliated] companies.’ [Citation.]” (Ibid.)

“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. [Citation.] An allegation that a person owns all of the corporate stock and makes all of the management decisions is insufficient to cause the court to disregard the corporate entity. [Citation.]” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 415.)

Plaintiff first relies on the default judgment that was entered against all defendants, including Defendant Khor. California accords collateral estoppel effect to default judgments, where the judgment contains an express finding on the allegations. (Gottlieb v. Kest (2006) 141 Cal.App.4th 110, 149.) “ ‘ “[A] default judgment conclusively establishes, between the parties so far as subsequent proceedings on a different cause of action are concerned, the truth of all material allegations contained in the complaint in the first action, and every fact necessary to uphold the default judgment; but such judgment is not conclusive as to any defense or issue which was not raised and is not necessary to uphold the judgment.” ’ [Citations.]” (Ibid.)

Here, the default judgment did not render any express finding as to alter ego liability or piercing the corporate veil. (See Ex. B to Taran Decl., Default Judgment.) In addition, the FAC asserts other causes of action, in addition to the claim for breach of contract, against Khor for conversion (second cause of action), fraudulent concealment (fourth cause of action), constructive fraud (fifth cause of action), unjust enrichment (ninth cause of action), negligent misrepresentation (tenth cause of action). Thus, the default judgment does not support any basis for alter ego liability, and/or collateral estoppel on that issue.

Even assuming that the fact that default judgment was entered against Khor could imply a possible finding of alter ego liability, default and default judgment has been set aside as against Defendant Khor. (See Ex. D to Taran Decl., Notice of Ruling Re Motion to Set Aside and Vacate Entry of Default and Any Default Judgment.)

Plaintiff also argues that it is likely to prove alter ego liabi lity given the Government’s allegations against Khor in the criminal proceeding against him, and statements in Petersin’s Declaration. The Court declines to take judicial notice of the indictment of Khor filed in the criminal action. Even if the Court were to take judicial notice of this court record, the Court declines to take judicial notice of the truth of hearsay statements contained therein. (Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 882 [“[W]hile courts are free to take judicial notice of the existence of each document in a court file, including the truth of results reached, they may not take judicial notice of the truth of hearsay statements in decisions and court files ”].)

Therefore, any allegations in the criminal action against Khor does not support alter ego liability.

To the extent that the reply contends that the criminal proceedings are relevant to the need for attachment, Plaintiff already provides that the attachment is not sought for any purpose other than securing its claim.

What remains is Plaintiff’s reliance on statements made in the Petersin Declaration. Petersin, as Controller of URP, declares, upon information and belief, that Khor has used the funds owed to Plaintiff to pay for personal debts and expenses of Defendants CBH, RSM, Hillside Mission, Hillside Mission LLC, Medical Concierge LLC, and Steele Canyon, LLC, that Defendant Khor has failed to maintain adequate financial practices in the operation and management of their corporations, that their failure to maintain corporate formalities warrant piercing the corporate veil of each of the Defendant entities as there was no real separation between the company and its owners, and that their actions were wrongful and fraudulent such that maintaining a separate corporate existence of each of the Defendant entities would lead to an injustice or inequitable result. (Ex.

A to Taran Decl., Petersin Decl., ¶¶ 27- 28.)

Petersin also declares that Khor’s negligent operation of Defendant entities included a failure to maintain adequate financial practices, resulting in over $100,000 in checks being delivered to the wrong facilities, mailboxes, and persons, without knowledge to Khor and other parties who may be owed funds; that upon information and belief, Khor did not inquire with any entity regarding the checks or attempt to locate or retrieve said checks; and that at all times relevant and prior to entering into the MSAs with Plaintiff, Khor misrepresented that the Defendant entities were in good standing and clear of any audits. (Ex. A to Taran Decl., Petersin Decl., ¶¶ 29-30, 32.)

Based on the foregoing, Petersin does not have actual, personal knowledge of the facts concerning Khor’s use of funds owed to Plaintiff to pay personal debts and expenses of Defendants CBH or RSM, that Khor failed to maintain adequate financial practices in the operation and management of their corporations, and that Khor did not inquire with any entity regarding the checks or attempt to locate or retrieve the checks that were delivered to the wrong facilities.

Petersin declares that over $100,000 in checks were delivered to the wrong facilities, mailboxes, and persons, without knowledge to Khor, CBH, and RSM, and other parties who may be owed funds. Even if this supports a failure to segregate funds, the evidence does not show that it is more likely than not that Khor used the corporate form and used funds mean for CBH and RSM for Khor’s own wrongful or inequitable purpose.

The reply argues that Khor is not merely an officer of CBH and RSM but is the Manger, Member and/or Chief Executive Officer of Defendants CBH and RSM, among the other entities (Ex. A to Taran Decl., Petersin Decl., ¶ 13), and that this supports an inference of a unity of interest. An inference is insufficient to establish that it is more likely than not that Plaintiff will prevail on a breach of contract claim based on alter ego liability.

Additionally, Khor directly refutes pertinent statements made by Petersin. Khor declares that CBH and RSM maintained separate Chase bank accounts during the MSA period and maintained accounting records, including QuickBooks records maintained by bookkeepers; that URP had authorized signatory access to the CBH and RSM bank accounts during the MSA period, as well as to banking information; that Khor did not use CBH or RSM funds from URP patients or URP operations to pay personal expenses for himself or Gwyneth Khor; and that Khor did not transfer disputed URP-related proceeds from CBH or RSM into his personal bank account. (Khor Decl., ¶¶ 9, 10, 12, 13.)

The reply argues that there is a conflict in evidence as to URP’s access to CBH and RSM bank accounts, but there is not. Petersin states that both MSAs were terminated in July 2023. (Ex. A to Taran Decl., Petersin Decl., ¶ 21.) Thus, that URP was removed from the accounts and were blocked from access in August 2023 do not appear conflicting.

Based on the evidence submitted, Plaintiff does not show that it is more likely than not that it will obtain a judgment against Defendant Khor for its claim of breach of contract. As such, Plaintiff fails to show the probable validity of its claim for breach of contract against Defendant Khor.

The Court OVERRULES all objections (Objection Nos. 1-6) made by Defendant Khor.

The Court DENIES Plaintiff’s request for judicial notice filed with the moving papers as the material are not relevant to the determination of the issues on this Application. A court may deny a request for judicial notice on the ground that the material is not relevant to the determination of the issues. (State Compensation Ins. Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 442-443.)

The Court GRANTS Plaintiff’s request for judicial notice filed with the reply as to the California Secretary of State Statements Information pursuant to Evidence Code section 452(h).

Defendant Khor to give notice.

110 American Express National Bank vs. Chien

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