GARRY A. JONES & ASSOCIATES vs CPARTNERS RECRUITING, CO., et al.

Thompson (1946) 75 Cal.App.2d 687, 690; Taliaferro v. Salyer (1958) 162 Cal.App.2d 685, 688.)

2025CUBC052582: GARRY A. JONES & ASSOCIATES vs CPARTNERS RECRUITING, CO., et al.

Here, the claimed uncertainties are the use of a collective “Defendants” without indicating what each individual defendant did, and whether they did so in a representative capacity, and use of “and/or” allegations. Defendants argue that the allegations are impermissibly generalized. Although the FAC does lack some clarity, particularly as to the role each Defendant played in the allegations and whether they were acting in a specific capacity, the complaint is not so unintelligible as to prevent Defendants from reasonably responding thereto.

The claimed uncertainties are more appropriately raised and analyzed in the context of a general demurrer, considering whether the allegations of each cause of action are sufficient as to the Defendants individually. The Court OVERRULES the Demurrer to the FAC for uncertainty. 5th cause of action – Alter Ego/Piercing the Corporate Veil Alter Ego/Piercing the Corporate Veil is not a valid standalone cause of action. (Hennessey’s Tavern, Inc. v. American Air Filter Co. (1988) 204 Cal.App.3d 1352, 1359.)

Instead, alter ego is a procedural theory of liability, i.e. “to disregard the corporate entity as a distinct defendant and to hold the alter ego individuals liable on the obligations of the corporation where the corporate form is being used by the individuals to escape personal liability, sanction a fraud, or promote injustice.” (Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 1189, 1198.) The Court SUSTAINS the Demurrer to this cause of action, without leave to amend.

The Court separately analyzes the allegations supporting this cause of action to determine whether Plaintiff has alleged sufficient facts to support alter ego liability for purposes of its other causes of action. Alter ego liability exists where there is: (1) a “unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist”; and (2) “an inequitable result if the acts in question are treated as those of the corporation alone” (Shaoxing, supra, at p. 1198, citing Sonora Diamond Corp. v.

Superior Court (2000) 83 Cal.App.4th 523, 538.) “Courts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure.” (First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915.) In making this determination, the court looks at all the circumstances, including the following factors, although no one factor controls: commingling of funds and other assets, holding out one entity that is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, use of one as a mere shell or conduit for the affairs of the other, disregard of corporate formalities, identical directors and officers, inadequate capitalization, and lack of segregation of corporate records.

In Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235–36, the court found allegations sufficient to withstand demurrer where they included that the alter-ego defendant: “dominated and controlled [defendant]; that a unity of interest and ownership existed between [alter-ego defendant] and [defendant]; that [defendant] was a mere shell and conduit for [alter-ego defendant’s] affairs; that [defendant] was inadequately capitalized; that [defendant] failed to abide by the formalities of corporate existence; that [alter-ego

2025CUBC052582: GARRY A. JONES & ASSOCIATES vs CPARTNERS RECRUITING, CO., et al.

defendant] used [defendant’s] assets as her own; and that recognizing the separate existence of [defendant] would promote injustice.” While the defendants in Rutherford argued that the plaintiffs “failed to allege specific facts to support an alter ego theory,” the court held that plaintiffs were “required to allege only ‘ultimate rather than evidentiary facts.’” The Court is aware of other authorities that are critical of pleading just the ultimate fact of alter ego liability. (E.g., Dos Pueblos Ranch & Improvement Co. v.

Ellis (1937) 8 Cal.2d 617, 621; Meadows v. Emett & Chandler (1950) 99 Cal.App.2d 496, 498-499.) However, Plaintiff has alleged more than just a blanket statement that some defendants are alter egos of others; Plaintiff has alleged a factual basis for this allegation and the Court finds this is sufficient for purposes of pleading. 1st cause of action – breach of oral contract Defendant Lisa Knupp demurs on grounds that the FAC does not allege facts establishing that she entered into the alleged agreement in her personal capacity or otherwise assumed personal liability.

The general rule is that an agent may not be held liable for a breach of a disclosed principal’s contract. (Sackett v. Wyatt (1973) 32 Cal.App.3d 592, 597-598.) While the FAC alleges that Knupp made representations and that Plaintiff retained Defendants Recruiting, Knupp, and Whisnant, ¶¶ 12-13, the allegations fail to specify the role that Knupp played specifically. However, because the Court finds the alter ego allegations sufficient to plead liability against Knupp individually, the Court finds that this claim is adequately pled. 2nd cause of action – promissory estoppel California has adopted the Restatement Second of Contract, section 90’s view on promissory estoppel claims. (Kajima/Ray Wilson v.

Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310).) The elements of a promissory estoppel claim are: (1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.” (Laks v. Coast Federal Savings & Loan Assn. (1976) 60 Cal.App.3d 885, 890.) Contract and promissory estoppel claims are not only distinct or alternative theories of recovery, but also are mutually exclusive.

Hence, “promissory estoppel is distinct from contract in that the promisee's justifiable and detrimental reliance on the promise is regarded as a substitute for the consideration required as an element of an enforceable contract.” (Douglas E. Barnhart v. CMC Fabricators (2012) 211 Cal.App.4th 230, 242-243.) A plaintiff can plead both breach of a properly pleaded contract supported by consideration, and promissory estoppel which is premised on a lack of consideration, based upon the same set of facts. (Fleet v.

Bank of America N.A. (2014) 229 Cal.App.4th 1403, 1413.) There is no dispute about this. Defendants again take issue, however, with Plaintiff’s failure to specify each defendant’s role in the promise. Because, as set forth above, the Court finds the alter ego allegations are adequate for purposes of pleading, the Court overrules the demurrer to this cause of action.

2025CUBC052582: GARRY A. JONES & ASSOCIATES vs CPARTNERS RECRUITING, CO., et al.

3rd cause of action – Negligence “To state a cause of action for negligence, a plaintiff must allege (1) the defendant owed the plaintiff a duty of care, (2) the defendant breached that duty, and (3) the breach proximately caused the plaintiff’s damages or injuries.” (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 62.) “The existence of a duty to use due care is ‘[t]he threshold element of a cause of action for negligence.’ [Citations.]” (Southern California Gas Leak Cases (2017) 18 Cal.App.5th 581, 587.)

Defendant Knupp argues that the economic loss rule bars this claim, and Plaintiff does not meaningfully address its application. The economic loss rule “itself is deceptively easy to state: In general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage. [Citations.]” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) “[T]he rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties.” (Ibid.) “Because it involves parties who are in contractual privity, this strand of the economic loss rule is sometimes referred to as the ‘contractual economic loss rule,’ ‘contractual rule,’ or ‘consensual paradigm.’ [Citations.]” (Id. at p. 923.)

Here, the FAC fails to allege facts sufficient to show that the claimed breach of duty - duty to provide a qualified candidate and to properly vet that candidate - was not a risk that was contemplated as part of the agreement. No duty independent of the contract is alleged. Moreover, there is no claim of personal injury or physical property damage alleged; only economic harm. Under these circumstances, it appears that Plaintiff’s negligence claim as to moving Defendants is barred by the economic loss rule and by the failure to sufficiently allege the existence of any applicable duty of care against Knupp.

The Court sustains the demurrer to this claim with leave to amend. 4th cause of action – Fraudulent Transfer Civil Code §3439.04(a) provides that: “(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows: (1) With actual intent to hinder, delay, or defraud any creditor of the debtor. (2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either: (A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction. (B) Intended to incur, or believed or reasonably should have believed that he or she would incur, debts beyond his or her ability to pay as they became due.” The general rule is that fraud-based claims must be pleaded with particularity.

Defendants argue that this claim does not identify each defendant’s role in the alleged fraudulent transfer. In light of the heightened pleading standard, Plaintiff’s alter ego allegations do not save this claim. Additionally, even the necessary specific ultimate facts are not currently pled in the

2025CUBC052582: GARRY A. JONES & ASSOCIATES vs CPARTNERS RECRUITING, CO., et al.

FAC. The actual transfer(s) at issue is not identified with any specificity; broad categories of “business,” “goodwill,” and “customer relationships,” “opportunities,” and “other assets” are too vague to state a claim. Moreover, no dates are alleged, no specific transferor/transferee, no value is alleged, there is no allegation as to what consideration was exchanged, and none of the particular entities or individual Defendants are distinguished. The Court sustains the demurrer to this cause of action with leave to amend.

5