CAVIGLIA vs ROMAGNESI, et al.

STANDING

A derivative action requires the plaintiff to allege that they were a shareholder of record or 25CV155253: CAVIGLIA vs ROMAGNESI, et al. 07/30/2026 Hearing on Demurrer to Complaint; filed by Ricci Romagnesi (Defendant) CRS# 245540819181 in Department 518 beneficially at the time of the transaction and the plaintiff must allege with particularity their efforts to secure the desired action from the board, or the reasons for not making such effort. (Cal. Corp. Code § 800.)

The case at hand is the “rare case[where] a transaction may be so egregious on its face that board approval cannot meet the test of business judgment, and a substantial likelihood of director liability therefore exists” because the complaint alleges that Defendant has admitted to embezzlement which removes any question of wrongdoing. (Bader v. Anderson (2009) 179 Cal.App.4th 775, 798 [internal citation omitted].)

However, the plaintiff must still plead the futility with particularity. (Shields v. Singleton (1993) 15 Cal.App.4th 1611, 1613 [“Bare allegations of director wrongdoing without factual support cannot excuse the failure to make a demand.”].)

Here, Plaintiff alleges that that the defendant-shareholder admitted to embezzling corporate funds and that even though Defendant claimed that he would repay CAG, no repayment has been made to date. (Complaint ¶¶ 16 & 19.)

Further, in a two-person 50/50 corporation where the only other shareholder and director is the alleged embezzler, this standard is readily met. Here, the defendant has a personal financial interest in defeating any claim regarding his own embezzlement and plainly "cannot be expected to exercise his or her independent business judgment without being influenced by the adverse personal consequences resulting from the decision." (Kanter v. Reed (2023) 92 Cal.App.5th 191, 206 [internal citation omitted].)

Thus, Defendant’s alleged admission of embezzlement provides strong factual support for a compelling futility argument. The Court is satisfied that Plaintiff has sufficiently pled futility and therefore has standing to bring this lawsuit.

Breach of Fiduciary Duty

The complaint pleads that Plaintiff discovered Defendant was embezzling funds in December of 2022 and confronted Defendant. Thereafter, Defendant admitted that he embezzled funds and promised to repay CAG.

California law clearly recognizes that officers and directors owe fiduciary duties to corporations and stockholders. (See Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d93, 109-110.) Thus, in the current situation, Defendant would have a duty to CAG and fellow shareholder, Plaintiff.

Further, the admitted embezzlement of client funds would establish the causation and damages elements of breach of fiduciary duty. (See Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 933 [holding that a firm's alleged misappropriation of client funds would establish causation and damages elements of breach of fiduciary duty].)

SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

25CV155253: CAVIGLIA vs ROMAGNESI, et al. 07/30/2026 Hearing on Demurrer to Complaint; filed by Ricci Romagnesi (Defendant) CRS# 245540819181 in Department 518

Thus, Plaintiff has alleged all the necessary facts to support this cause of action, for the sake of the demurrer, since Defendant allegedly admitted breaching his duty to CAG.

For this reason, Defendant’s demurrer as to the cause of action for breach of fiduciary duty is OVERRULED.

Fraud

Under California law, fraud requires five elements: (1) misrepresentation of a material fact, (2) knowledge of falsity (scienter), (3) intent to induce reliance, (4) justifiable reliance, and (5) resulting damages. (See Williams v. Wraxall (1995) 33 Cal.App.4th 120 at fn 9.)

Defendant’s admission of embezzlement satisfies the scienter element but would fail to satisfy the reliance elements. “In California, fraud must be pled specifically; general and conclusory allegations do not suffice.” (Small v. Fritz Companies, Inc. (2003) 30 Cal. 4th 167, 184.) “[T]he policy of liberal construction of the pleadings . . . will not ordinarily be invoked to sustain a pleading defective in any material respect. This particularity requirementnecessitatespleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” (Id. (quoting Lazar v. Super. Ct. (Rykoff-Sexton, Inc.) (1996) 12 Cal.4th 631, 645).)

A general allegation of reliance on fair dealing duties lacks the concrete specificity required. “[A]ctual reliance occurs when a misrepresentation is an immediate cause of [a plaintiff's] conduct, which alters his legal relations, and when, absent such representation, the plaintiff would not, in all reasonable probability, have entered into the contract or other transaction. To allege actual reliance with the requisite specificity, the plaintiff must plead that he believed the representations to be true ... and that in reliance thereon (or induced thereby) he entered into the transaction.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062–1063 [internal citations and quotation marks omitted].)

Here, Plaintiff generally alleges that Defendant embezzled funds which cut against CAG’s interests and thus all shareholders’ interests including Plaintiff. However, Plaintiff needs to connect the reliance to specific undisclosed facts or misrepresentations rather than just a broad expectation of good faith. The complaint fails to allege facts upon which Plaintiff relied.

Thus, as to the cause of action for fraud, the Court SUSTAINS the demurrer WITH LEAVE TO AMEND. Plaintiff must allege specific facts to support this claim.

Plaintiff may amend the complaint to allege addition facts to support the fraud cause of action. The first amended complaint must be filed and served on or before August 21, 2026.

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SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

25CV155253: CAVIGLIA vs ROMAGNESI, et al. 07/30/2026 Hearing on Demurrer to Complaint; filed by Ricci Romagnesi (Defendant) CRS# 245540819181 in Department 518

PLEASE NOTE: Pursuant to California Rule of Court 3.1308, subdivision (a)(1), this tentative ruling will become the order of the Court unless it is contested before 4:00 PM on the court day preceding the noticed hearing.

To contest a tentative ruling, a party should do the following:

First, the party must notify Department 518, by email at Dept518@alameda.courts.ca.gov and copy all counsel of record and self-represented parties. The contesting party must state in the subject line of the email the case name, case number and motion.

Second, the party shall log into the eCourt Public Portal, search for this case (e.g., by case number), select the case name, select the "Tentative Rulings" tab, click the "Click to Contest this Ruling" button, enter the party's name and a brief statement of the party's reason for contesting the tentative, and click "Proceed."

Please note the Court does not permit remote appearances for motions for summary judgment that are contested. If you contest a Motion for Summary Judgment, you must appear in person.

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SUPERIOR COURT OF CALIFORNIA COUNTY OF ALAMEDA

25CV155253: CAVIGLIA vs ROMAGNESI, et al. 07/30/2026 Hearing on Demurrer to Complaint; filed by Ricci Romagnesi (Defendant) CRS# 245540819181 in Department 518