Clapp v. ARA Properties, LLC, et. al.

TENTATIVE RULINGS

DEPARTMENT N17

Judge Craig L. Griffin

Date: August 24, 2026 Time: 2:00 PM

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# 1 Clapp v. ARA Before the Cout is a Demurrer by defendants ARA Properties, LLC, Properties, Anita Varela, Ralph Varela and Lisa Varela to the complaint filed by LLC, et. al. plaintiff Elizabeth Clapp. The demurrer is SUSTAINED with 14 days leave to amend as to the 1st, 2nd, 4th-16th, and 18th – 20th causes of action. The demurrer is SUSTAINED without leave to amend as to the 3rd and 17th causes of action.

The role of a demurrer is “to test the legal sufficiency of a complaint.” (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994, citations omitted.) A demurrer challenges the defects appearing on the face of the pleading or from other matters properly subject to judicial notice. (See Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) A demurrer challenges only the legal sufficiency of the affected pleading, not the truth of the factual allegations in the pleading or the pleader’s ability to prove those allegations. (Cundiff v. GTE Cal., Inc. (2002) 101 Cal.App.4th 1395, 1404-1405.)

1st & 2nd Causes of Action: Corp. Code §17704.09

Corp. Code §17704.09(a) provides: “(a) The fiduciary duties that a member owes to a member-managed limited liability company and the other members of the limited liability company are the duties of loyalty and care under subdivisions (b) and (c).” Here, plaintiff does

not allege she is a member of the LLC. Instead, plaintiff alleges that as of April 2025, Angel Varela, Ralph Varela and Lisa Varela were one third owners of the ARA Properties, LLC (LLC). Then after Angel Varela’s death in April 2025, his 33.3% interest was bequeathed to plaintiff and Anita Varela, with each receiving a 16.65 interest. Plaintiff alleges she is an Interest Holder in the LLC who has an “economic interest” which Article 1 of the Operating Agreement (OA) defines as a person who has a right to share in income but does not have any other rights as a member. (Complaint ¶¶22, 69, 70)

As plaintiff does not allege she was a member of the LLC, she does not have the right to assert violation of Section 17704.09.

Accordingly, the demurrer is SUSTAINED with leave to amend.

3rd Cause of Action: Involuntary Dissolution – Corp. Code §17707.03

In the Opposition, plaintiff states “Plaintiff will remove this cause of action for Dissolution.” (Complaint at 4:21) Accordingly the demurrer to the 3rd cause of action is SUSTAINED without leave to amend.

Fraud Causes of Action: 4th - Intentional Misrepresentation; 5th - Negligent Misrepresentation and 6th – Fraud

The elements of fraud are: "(a) [a] misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or "scienter"); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage." (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638; see also Engalla v. Permanente Medical Grow, Inc. (1997) 15 Cal.4th 951, 974.) The particularity requirement for fraud requires the pleading of facts showing how, when, where, to whom, and by what means the representations were made. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) This is to provide the defendant with notice and to give the court enough information to assess whether there is a foundation for the charge of fraud. (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216.)

Here, the fraud causes of action are alleged without distinction against four defendants, and without detail as to the specific fraudulent conduct. The allegations fall well short of the specificity required for pleading fraud. Accordingly, the demurrer is SUSTAINED as to the 4th-6th causes of action, with leave to amend.

7th – 16th Causes Of Action – Breach of Contract

The 7th -16th causes of action are all titled “breach of written contract” and assert a breach of the LLC’s Operating Agreement (OA).

“To prevail on a cause of action for breach of contract, the plaintiff must prove (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.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) “If the action is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.)

Here, rather than attach the OA and assert a single cause of action for breach of the OA, plaintiff has cited select portions of the OA in the complaint and then drafted a separate cause of action for ten different allegations as to how the OA was breached. Notwithstanding, the court notes the similarity in each cause of action in that each repeats many of the same allegations.

In reviewing the portions of the OA cited in the complaint for each of the causes of action, the court does not find the ten breach of contract causes of action sufficiently pled. For example, the 7th cause of action points to a part of Article 1 which discusses how a capital account is to be managed but there is no citation to a requirement that a capital account be created for an interest holder who receives an interest by way of transfer from a member. There is also no allegation as to which of the defendants would have that obligation.

The 8th cause of action does not actually cite to provision in the OA which would give rise to a cause of action for failing to “recognize plaintiff’s economic interest.” The 9th and 10th causes of action do not allege distributions were made to which she would be entitled.

In the 11th cause of action, plaintiff asserts the four defendants failed to value her economic interests at fair market value and points to Article 1 which again discusses the capital account. However, plaintiff does not allege sufficient facts showing she had a capital account or that the defendants were obligated to create one for her.

In the 12th cause of action, plaintiff alleges the defendants made distributions to themselves that exceeded their ownership percentages. The complaint quotes section 6.4.2 of the OA which discusses the obligations of a member when the member receives a distribution in excess of his percentage but this does not discuss rights of an interest holder.

In the 13th cause of action, plaintiff alleges the defendants failed to properly value Angel Varela’s interest in the LLC. The 16th cause of action alleges the defendants refuse to value the plaintiff’s interest. The complaint cites to section 7.2.2 which discusses how a withdrawn member’s membership interest is valued but there is no citation to the portion of the OA authorizing an interest holder to contest such a valuation.

The 14th cause of action alleges the defendants are failing to take action to allow her to enjoy her rights. There is no citation to the portion of the OA which gives rise to this breach of contract claim. The 15th cause of action alleges the four defendants are not

recognizing her as an interest holder and quotes a portion of the OA relating to arbitration. There is no section of the OA cited which obligates the defendants to recognize the plaintiff.

In addition to failing to quote the portion of the OA giving rise to each cause of action (or attaching the actual OA), the allegation in each cause of action that plaintiff “has been harmed” by the breach is lacking detail as to the nature of the damages claimed. (See, Complaint ¶¶222, 236, 251, 269, 285, 299, 312, 328, 344, 358.)

Accordingly, the demurrer to the 7th -16th causes of action for breach of written contract are SUSTAINED, with leave to amend.

17th Cause of Action: Arbitration

Plaintiff states in the opposition: “Plaintiff will remove the cause of action for Arbitration.” (Opp. at 7:28) Therefore, the demurrer is SUSTAINED as to the 17th cause of action without leave.

18th -20th Causes of Action (18 - Intentional Interference with Contract, 19 -Intentional Interference With Prospective Economic Advantage, 20 -Negligent Interference With Prospective Economic Advantage)

One of the requirements for pleading these three causes of action is “an economic relationship between the plaintiff and some third party.” (Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404; see also, North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.) Here, the only agreement alleged in the complaint is the Operating Agreement for the LLC. There is no contract or economic relationship with a third party alleged. Accordingly, the demurrer is SUSTAINED as to the 168th – 20th causes of action, with leave to amend.

21st – 23rd Causes of Action: Specific Performance

In these three causes of action, plaintiff seeks orders that the defendants “determine the fair market value of plaintiff’s interest” in the LLC, “determine the book value of plaintiff’s interest” in the LLC and “make any distribution to plaintiff for her interest” in the LLC. (Complaint ¶¶476, 489 and 502)

“There are no separate causes of action for specific performance or injunctive relief, which are instead remedies. (See, e.g., Wong v. Jing (2010) 189 Cal.App.4th 1354, 1360, fn. 2, 117 Cal.Rptr.3d 747 [specific performance and injunctive relief are equitable remedies and not causes of action for injuries]; Marlin v. Aimco Venezia, LLC (2007) 154 Cal.App.4th 154, 162, 64 Cal.Rptr.3d 488 [injunctive relief].)” (Green Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal. App. 4th 425, 433, Fn. 8)

Accordingly, the demurrer to the 21st -23rd Causes of Action is SUSTAINED, with leave to amend.

24th Cause of Action: Violation of Corp. Code §309

Defendants argue Corp. Code §309 applies to corporations and not LLC’s. Plaintiff does not dispute this but instead argues she will be able to amend. Accordingly, the demurrer to the 24th cause of action is SUSTAINED, with leave to amend.

25th Cause of Action: Accounting

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting. An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation. (St. James Church of Christ Holiness v. Superior Court (1955) 135 Cal.App.2d 352, 359.) A plaintiff need not state facts that are peculiarly within the knowledge of the opposing party. (Brea v. McGlashan, supra, 3 Cal.App.2d at p. 460)” (Teselle v. McLaughlin (2009) 173 Cal.App.4th 156, 179.)

Defendant argues plaintiff has failed to sufficiently allege a relationship requiring them to provide plaintiff an accounting. In the opposition, plaintiff argues Section 17704.10 permits non-members to seek an accounting. That is not what section 17704.10 says.

Plaintiff also argues that “in member-managed LLCs, members owe a statutory duty of loyalty to the LLC, which includes a duty ‘to account to the limited liability company’ and hold as trustee any property, profit, or benefit derived in the conduct of LLC activities. (Corp. Code §17704.09.) (Opp. at 10:11-13) As discussed above, section 17704.09 relates to members.

In the opposition, plaintiff argues “California law recognizes multiple bases for an interest holder to bring suit against an LLC, such as those contained in the Complaint. Transferees and interest holders are explicitly granted the right to receive information reasonably related to their interest. (Corp. Code §17704.10)” (Opp. at 3:21-24)

Regarding a transferee’s right to inspect the books and records of the LLC, Section 17704.10, subd. (b) provides:

(b) Each member, manager, and transferee has the right, upon reasonable request, for purposes reasonably related to the interest of that person as a member, manager, or transferee, to each of the following:

“(1) To inspect and copy during normal business hours any of the records required to be maintained pursuant to Section 17701.13.

“(2) To obtain in writing from the limited liability company, promptly after becoming available, a copy of the limited liability company's federal, state, and local income tax returns for each year.“

Among the records required to be maintained under Section 17701.13, subd. (d) are:

“(4) Copies of the limited liability company's federal, state, and local income tax or information returns and reports, if any, for the six most recent fiscal years.

...

“(6) Copies of the financial statement of the limited liability company, if any, for the six most recent fiscal years.

“(7) The books and records of the limited liability company as they relate to the internal affairs of the limited liability company for at least the current and past four fiscal years.”

Regarding a transferee’s rights to receive distributions, Section 17705.02, subd. (b) provides:

“(b) A transferee has the right to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled; provided, however, that the pledge or granting of a security interest, lien, or other encumbrance in or against any or all of the transferable interest of a transferor shall not cause the transferor to cease to be a member or grant to the transferee or to anyone else the power to exercise any rights or powers of a member, including, without limitation, the right to receive distributions to which the member is entitled.”

However, plaintiff does not specifically allege violations of Section 17704.10 or 17705.02; indeed, these code sections are not mentioned in the complaint.

Accordingly, the demurrer to the 25 causes of action is SUSTAINED, with leave to amend.

Defendants shall give notice. 2 Ignatius vs. Pro per plaintiff Christina M. Ignatius’s unopposed Motion to Modify Shune Subpoenas (“Motion”) is DENIED.

The Motion requests a modification of depositions subpoenas to 1) Planned Parenthood; 2) United Medical Imaging Healthcare; and 3) United Medical Imaging Healthcare. None of those subpoenas were presented to the court. As such, the court is unable to ascertain what the subpoenas request and whether a modification is appropriate.

The Motion was not properly served on any of the allegedly subpoenaed entities. The proof of service of the Motion indicates it was electronically served on the entities; however they are not