INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al.

23CV005172: INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al. 06/14/2024 Hearing on Demurrer in Department 53

Tentative Ruling

NOTICE:

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23CV005172: INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al. 06/14/2024 Hearing on Demurrer in Department 53

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Tentative Ruling

Defendant Victoria Choi’s and Jeffrey Thoreson’s demurrer to Plaintiff Indong Advanced Materials, Inc.’s Complaint on the grounds that Plaintiff failed to state a cause of action, failed to join necessary parties, and lacks standing to seek relief is overruled.

In this action, Plaintiff Indong Advanced Materials, Inc. alleges that Defendant Green Energy Global, Inc. (“GEGI”) purported to assign Plaintiff mining rights to 900,000 metric tons of lithium in Bolivia. Plaintiff alleges that GEGI never had the mining rights, fraudulently induced the subject contracts and stole $10 million from Plaintiff. Plaintiff alleges causes of action against GEGI and numerous other defendants for breach of contract, fraud, unjust enrichment, professional negligence, and declaratory relief. In addition to GEGI, Plaintiff named GEC Exploration, Inc. (“GEC”), and Donald Demery as Trustee of Quantum Trust (“Quantum”), Muhammed Khan, moving Defendants, Lucia Kim, Rollie Peterson, Tae Joo Yi, Kwon Do Kang, and Bae, Kim & Lee, LLC (“BKL”) as defendants.

The breach of contract claim, which alleged a breach of a Mining License Agreement (“MLA”), is alleged against GEGI, GEC, and Quantum. The fraud claim is against all defendants except Yi, Kang, and BKL. The unjust enrichment claim is against all defendants. The professional negligence claim is against Kang and BKL, attorneys alleged to have represented Plaintiff in connection with the mining rights deal. The declaratory relief claim is against GEGI, GEC, and Quantum and seeks a declaration of rights with respect to the MLA and related amendments.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV005172: INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al. 06/14/2024 Hearing on Demurrer in Department 53

Plaintiff’s breach of contract claim is premised on an alleged breach of the MLA, and the associated amendments of the MLA. (Comp. ¶¶ 45-53.) The parties to the MLA and the related amendments are alleged to be Plaintiff, GEGI, GEC, and Quantum. (Id.) Plaintiff alleged that GEGI/GEC were to assign or license two mining rights to Plaintiff under the MLA but that they failed to do so and failed to provide proof that they have any rights despite claiming they had such rights. Plaintiffs alleged that after the parties entered into the MLA on July 27, 2022, Defendant Khan presented Plaintiff with an “Acuerdo de Empressa Conjunta Minera” (Mining Joint Venture Agreement).

The document which is in Spanish, is attached as exhibit C to the complaint. Plaintiff refers to Exhibit C as the ACUERDO in the complaint but Defendants refer to it in the instant motion as the JVA. The Court will do the same in this ruling. Plaintiff alleges that Defendant Khan presented it with the JVA in late August 2022, as “purported evidence” that GEGI/GEC actually had the lithium mining rights. (Comp. ¶¶ 24-29.) Plaintiff alleged that it wired $10 million to GEGI in reliance on the representations that GEGI/GEC had the mining rights but later learned that Yacimeintos de Litios Bolivianos (“YLB”), the Bolivian government agency in charge of mining activities, announced that the YLB did not have any signed agreements for lithium extraction in Bolivia. (Id. ¶¶ 33-35.)

Plaintiff alleges that its investigation revealed that the JVA was fabricated because certain signatures by the YLB were affixed to it without knowledge or consent. (Id. ¶ 41.) Plaintiff alleges that in January 2023, the President of Bolivia announced that the mining rights had been awarded to a Chinese consortium. (Id. ¶ 43.)

Here, Defendants Choi and Thoreson demur to the complaint’s second cause of action for intentional misrepresentation, third cause of action for unjust enrichment, and fifth cause of action for declaratory relief.

Second Cause of Action for Fraud

Choi and Thorenson demur to Plaintiff’s second cause of action for intentional misrepresentation on the grounds that it is uncertain and does not meet the specificity requirements required for pleading fraud.

Moving defendants posit, “In fraud complaints against a corporation, plaintiff must allege: (a) the names of those who made the misrepresentations; (b) their authority to speak for the corporation; (c) to whom they spoke; (d) what they said or wrote; and when it was said or written. [Lazar v. Sup.Ct. (Rykoff-Sexton, Inc.) (1996) 12 4th 631, 645, 49 CR2d 377, 385; Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 CA4th 153, 157, 2 CR2d 861, 862-863; Perlas v. GMAC Mortg., LLC (2010) 187 CA4th 429, 434, 113 CR3d 790, 794-795].” (Memo. Of Ps & As, 4:20-24.)

Moving defendants argue that Plaintiff alleges that GEGI and GEG, through Khan, Choi, Kim, Thoreson and Peterson represented to Indong repeatedly that GEGI was the owner of two (2)

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV005172: INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al. 06/14/2024 Hearing on Demurrer in Department 53

mining claims in Uyuni, Bolivia, but failed to plead how, when, where, to whom, and by what means the representations were tendered. Plaintiffs fail to plead how each of the named defendents knew the fact was not true. They also argue that Plaintiff did not plead the detriment proximately caused by the alleged fraud. They also argue that because the JVA is attached to the Complaint in Spanish without an English translation, Plaintiff’s allegation that the JVA does not provide GEGI with mining rights does not state with specificity the whom, what, or why of the alleged misrepresentation.

In its opposition, Plaintiff argues that the Complaint adequately alleges facts that show how, when, where, to whom, and by what means the alleged misrepresentations were tendered, as required by Favilaa v. Katten Muchin Rosenman LLP (2010) 188 Cal.App.4th 189. Plaintiff points to paragraphs 19-30 of the Complaint, which specify the dates, locations and specific people involved, details the story of the defendants’ misrepresentations to Plaintiff’s agents. Plaintiff argues that the specificities of the misrepresentation claim are contained in the allegations as follows:

“1. How? GEGI’s representatives met with the head of Indong and others at Indong and verbally transmitted the representation that GEGI owned two licenses from the Bolivian government to mine lithium in Bolivia. (¶¶19, 20, 22, 23.) The misrepresentation about mining licenses was then embodied in a Memorandum of Understanding. (¶22 & Exh. “A”.) The misrepresentation was then amplified with Khan’s delivery to Indong of the so-called Acuerdo, which purported to prove that GEGI had the mining licenses. (¶29 & Exh. “C”.)

2. When? Meetings where the verbal misrepresentations were made took place on May 22 and 23, 2022. (¶¶19, 20, 22, 23) A Memorandum of Understanding, containing the misrepresentation, was signed on June 22, 2022. (¶22.) Defendants bolstered their misrepresentation by having Khan deliver the Acuerdo to Indong in late August 2022. (¶29.)

3. Where? Meetings where the verbal misrepresentations were made took place in Seoul, Korea. (¶¶19, 20, 22, 23) A Memorandum of Understanding, containing the misrepresentation, was signed on June 22, 2022, in Seoul, Korea. (¶22.)

4. To Whom? Defendants communicated the misrepresentation to Mr. Yoo, to Mr. Yoo’s brother, to C.H. Lee and Jaeho Ahn on May 22, 2022. (¶¶19, 20.) To Mr. Yoo on May 23, 2022. (¶21.) To Mr. Yoo on June 2, 2022, when he received and signed the MOU. (¶22.)

5. By What Means? Verbally on May 22, 2022 and May 23, 2022; and in writing on June 2, 2022.”

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV005172: INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al. 06/14/2024 Hearing on Demurrer in Department 53

(Opposition, 7:5-27.)

The Court concludes that these allegations are sufficient to fulfill the specificity required in a fraud cause of action. As a result, Choi and Thorenson’s demurrer to the Complaint’s second cause of action for fraud is overruled.

Third Cause of Action for Unjust Enrichment

Plaintiff’s demurrer as to the third cause of action for unjust enrichment is made on the grounds that it fails to state sufficient facts to constitute a cause of action as it is based on the fraud cause of action and that it is uncertain.

As the Court finds the facts plead in Plaintiff’s fraud cause of action sufficient, as expressed above, the Court also finds Plaintiff’s claim for unjust enrichment to be sufficiently plead.

Choi and Sorenson’s demurrer as to the third cause of action for unjust enrichment is overruled.

Fifth Cause of Action for Declaratory Relief

Choi and Thorenson’s demurrer as to the fifth cause of action for declaratory relief is on the grounds that Plaintiff has failed to include certain indispensable parties. (Demurrer, 2:26 – 3:2.) However, the memorandum of points and authorities in support of the demurrer does not address this argument. In addition, moving defendants have already brought a motion to dismiss the complaint for failure to include indispensable parties. On June 6, 2024 the Court denied moving defendants’ motion to dismiss the complaint for failure to join indispensable parties, finding that the defendants had not shown that the non-named parties were necessary.

Plaintiff’s demurrer as to the fifth cause of action for declaratory relief is overruled.

Additionally, as noted by Plaintiff in its opposition, though moving defendants make arguments in their moving papers about the insufficiency of Plaintiff’s allegations of conspiracy in the eighteenth cause of action, Plaintiff’s complaint contains neither a cause of action for conspiracy, nor an eighteenth cause of action.

Lastly, Choi and Thorenson’s final argument that the Complaint at page 7, paragraph 28, alleges a “business plan” as a contract but does not allege if the business plan is in writing or is an oral argument, arguing that a complaint is subject to demurrer if a complaint does not allege the nature of a contract with certainty. Choi and Thorenson do not demur to the first case of action for breach of contract. The Court fails to see the relevance or merit to this argument.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV005172: INDONG ADVANCED MATERIALS, INC vs GREEN ENERGY GLOBAL, INC, AN ARIZONA CORPORATION, et al. 06/14/2024 Hearing on Demurrer in Department 53

Choi and Thorenson’s demurrer is overruled in its entirety.

Choi and Thorenson must file and serve an answer to the Complaint to later than July 1, 2024.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or other notice is required.