American Express National Bank v. Michael Li, et al.

(West Covina Courthouse: Dept. 6) August 20, 2026 DEPARTMENT 6 LAW AND MOTION RULINGS

NAME: American Express National Bank v. Michael Li, et al. Defendant Michael Li's Demurrer to First Amended Complaint

The Court SUSTAINS Defendant Michael Li's Demurrer to First Amended Complaint with 20 days' leave to amend. Defendant Michael Li is ordered to give notice of the Court's ruling within five calendar days of this order. BACKGROUND This is a lending dispute. On March 9, 2026, plaintiff American Express National Bank (Plaintiff) filed this action against defendants Michael Li (Li), Option Motor Cars Inc aka Option Motor Cars In (Option Motor Cars) (collectively, Defendants) and Does 1 to 10, alleging one cause of action for breach of contract.

On June 18, 2026, the Court sustained Defendant Li's demurrer to Plaintiff's Complaint with leave to amend. On July 8, 2026, Plaintiff filed the operative First Amended Complaint (FAC) against Defendants and Does 1 to 10, alleging one cause of action for breach of contract. On July 27, 2026, Li demurred to the FAC. On August 7, 2026, Plaintiff opposed the Demurrer. Li did not reply to Plaintiff's Opposition. LEGAL STANDARD A demurrer is a pleading used to test the legal sufficiency of other pleadings.

It raises issues of law, not fact, regarding the form or content of the opposing party's pleading (complaint, answer or cross-complaint). (Code Civ. Proc., Sec. 422.10; see Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 (Donabedian).) It is not the function of the demurrer to challenge the truthfulness of the complaint; and for purposes of ruling on the demurrer, all facts pleaded in the complaint are assumed to be true. (Id. at pp. 993-994.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v.

Kirwan (1985) 39 Cal.3d 311, 318; Donabedian, supra, 116 Cal.App.4th at p. 994.) No other extrinsic evidence can be considered. (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881 [error for court to consider facts asserted in memorandum supporting demurrer]; see also Afuso v. United States Fid. & Guar. Co. (1985) 169 Cal.App.3d 859, 862, disapproved on other grounds in Moradi-Shalal v. Fireman's Fund Ins. Cos. (1988) 46 Cal.3d 287 [error to consider contents of release not part of court record].)

A

demurrer can be utilized where the "face of the complaint" itself is incomplete or discloses some defense that would bar recovery. (Guardian North Bay, Inc. v. Superior Court (2001) 94 Cal.App.4th 963, 971-972.) The "face of the complaint" includes material contained in attached exhibits that are incorporated by reference into the complaint, or in a superseded complaint in the same action. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94; see also Barnett v. Fireman's Fund Ins. Co. (2001) 90 Cal.App.4th 500, 505 ["[W]e rely on and accept as true the contents of the exhibits and treat as surplusage the pleader's allegations as to the legal effect of the exhibits"].)

A demurrer can only be sustained when it disposes of an entire pleading, cause of action, or affirmative defense. (See Cal. Rules of Court, rule 3.1320, subd. (a); Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119; Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046-1047.) DISCUSSION Meet and Confer The Court finds Li's efforts to meet and confer before bringing this Demurrer sufficient. (Li Decl., P.P. 2-4; Code Civ. Proc., Sec. 430.41, subd. (a).) First Cause of Action - Breach of Contract To state a cause of action for breach of contract, the plaintiff must allege facts demonstrating "(1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff. [Citation.]" (Richman v.

Hartley (2014) 224 Cal.App.4th 1182, 1186.) "A cause of action for breach of contract requires pleading of a contract, plaintiff's performance or excuse for failure to perform, defendant's breach and damage to plaintiff resulting therefrom. [Citation.] A written contract may be pleaded either by its terms--set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference--or by its legal effect. [Citation.]" (McKell v. Washington Mut., Inc. (2006) 142 Cal.App.4th 1457, 1489 (McKell).)

Defendant Li demurs to the FAC's sole cause of action for breach of contract under Code of Civil Procedure section 430.10, subdivisions (e) and (f), contending that it fails to state facts sufficient to establish his personal liability and is uncertain as to the capacity in which he is sued. Li argues that the pleading alleges no facts showing that he applied for, signed, used, or guaranteed the account, and pleads no alter ego theory, resting instead on the conclusory recital that the agreement "was made between" American Express, Li, and Option Motor Cars Inc.

Li contends that Exhibit A does not supply the missing facts because it is unsigned and states on its face that it speaks "As of: 10/18/2025", i.e., after both the alleged June 30, 2023 formation and the March 1, 2025 breach, and identifies the account as a business account of Option Motor Cars Inc. Li further argues that the agreement's joint-and-several liability clause binds only the "Basic Card Member," defined as the person who applied for the account or to whom billing statements are addressed, and that the pleading alleges neither as to him.

In opposition, Plaintiff argues that the FAC adequately states a breach of contract claim and that a demurrer must be overruled where a cause of action is stated on any possible legal theory. Plaintiff contends that the attached Card Member Agreement defines "you" as the Basic Card Member and the Company, that the only two names on the agreement are Michael Li and Option Motor Cars Inc., and that Li is therefore the Basic Card Member and Option Motor Cars Inc. the Company. Plaintiff argues that the agreement makes the Basic Card Member and the Company jointly and severally liable and each individually responsible for the account, allowing recovery of the $43,998.13 balance from either or both.

Plaintiff further contends that it now possesses an application printout identifying Li as the applicant, account statements in both names, and a Secretary of State Statement of Information identifying Li as the Chief Financial Officer and Secretary of Option Motor Cars Inc., which information can be added by amendment. The Court finds the FAC fails to allege sufficient facts to state a cause of action for breach of contract. First, Li correctly contends that the contract attached to the FAC does not match that alleged in the FAC. "While the allegations [of a complaint] must be accepted as true for purposes of demurrer, the facts appearing in exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence." (Moran v.

Prime Healthcare Mgmt., Inc. (2016) 3 Cal.App.5th 1131, 1145-1146, internal quotations marks and citations omitted.) Whereas paragraphs BC-1 and BC-2 of the FAC alleges the contract was formed on June 30, 2023, and that the breach occurred on March 1, 2025, respectively, the contract attached to the FAC is dated "10/18/25," i.e., after the formation and alleged breach. (FAC, P.P. BC-1-BC-2, Ex. A.) As for the undifferentiated allegations between the Defendants, the Court finds the FAC remedies the defects identified in the original Complaint.

The main problem in the original Complaint was that it alternated inconsistently between use of the term "Defendant" and "Defendant(s)." (Order Re: Court Ruling (6/18/26).) That is not a problem with the FAC. (See FAC, P. BC-1.) Nevertheless, the FAC still fails for the reasons set forth above. Plaintiff also made an offer of proof to address some of the defects in the FAC. (Opp., 3:17-22.) Accordingly, the Court SUSTAINS the Demurrer with leave to amend. CONCLUSION The Court SUSTAINS Defendant Michael Li's Demurrer to First Amended Complaint with 20 days' leave to amend.

Defendant Michael Li is ordered to give notice of the Court's ruling within five calendar days of this order. | Home -->)" -->