HONOR FINANCE, LLC vs. SPIREON, INC.

SPIREON, Holdings”) is overruled in part and sustained in part with leave to INC. amend.

As an initial matter, the Court notes Defendant’s proofs of service for the moving papers and reply once again did not include the server’s email address. (Code Civ. Proc., § 1013b, subd. (b)(1).) Plaintiffs opposed the motion without objecting to service. The Court reminds the parties of their obligation to comply with CCP section 1013b when electronically serving documents.

Second cause of action for aiding and abetting breaches of fiduciary duty, fourth cause of action for conspiracy, fifth cause of action for unlawful and unfair competition, and sixth cause of action for unjust enrichment alleged by Honor Holdings

“The directors of a foreign corporation transacting intrastate business are liable to the corporation, its shareholders, creditors, receiver, liquidator or trustee in bankruptcy for the making of unauthorized dividends, purchase of shares or distribution of assets or false certificates, reports or public notices or other violation of official duty according to any applicable laws of the state or place of incorporation or organization, whether committed or done in this state or elsewhere. Such liability may be enforced in the courts of this state.” (Corp.

Code, § 2116). “Because only one state should have the authority to regulate the affairs of a corporation, the ‘internal affairs doctrine’ generally requires application of the law of the state of incorporation to any dispute regarding relations between the corporation and its shareholders or officers and directors. (Grosset v. Wenaas (2008) 42 Cal.4th 1100, 1106, fn. 2, 72 Cal.Rptr.3d 129, 175 P.3d 1184, citing Edgar v. MITE Corp. (1982) 457 U.S. 624, 645, 102 S.Ct. 2629, 73 L.Ed.2d 269.)” (The Police Retirement System of St.

Louis v. Page (2018) 22 Cal.App.5th 336, 340.)

Plaintiffs have not shown Delaware law applies to determine standing in an action between Honor Holdings and Defendant, who is not alleged to be a shareholder, officer, or director. The current action is pending in a California court. California law applies in determining whether Honor Holdings has standing to bring this action against Defendant.

It is well-settled that a shareholder may not seek to recover on behalf of the corporation for injury done to the corporation by a defendant. (See, Jones v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 107.) Where a plaintiff alleges the value of her stock has been diminished by defendants’ actions, but she does not contend that the diminished value reflects an injury to the corporation and resultant depreciation in the value of the stock, the gravamen of her cause of

action is injury to herself and the other minority shareholders. (Id.) “If the injury is not incidental to an injury to the corporation, an individual cause of action exists.” (Id.)

A shareholder “does not have an ownership interest in corporate profits.” (Id., at 232.) A shareholder’s “out-of-pocket investment in the corporation is not the same as lost future corporate profits.” (Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 212, 232.) A shareholder may be able to recover the loss in value of the shareholder’s shares or diminution of the shareholder’s ownership interest in a corporation, but only if such losses were not part of an injury to the whole body of the corporation’s stock or merely incidental to the alleged harm suffered by the corporation and all its shareholders. (Id., at 233.)

Plaintiffs allege Honor Holdings is the sole member and owner of Honor Finance and Defendant caused Honor Finance to fail, resulting in Finance Holdings losing a total of $25 million in equity investments and debt investments in Honor Finance. (FAC, ¶¶ 5 and 29-31.) Plaintiffs allege Honor Holdings would not have made these investments if Honor Holdings had known about this fraudulent scheme. (Id., ¶ 31.) Plaintiffs also allege Honor Holdings would not have made these investments if DiMeo had not concealed this scheme with Defendant’s assistance. (Id.) Plaintiffs have not alleged sufficient facts to show Honor Holdings has standing to bring these causes of action against Defendant. Accordingly, the demurrer is sustained with 15 days leave to amend.

Fifth cause of action for unlawful and unfair competition

Business & Professions Code section 17200 prohibits “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.” Under the unlawful prong, a violation of law may be actionable as unfair competition under Business & Professions Code section 17200. (Lueras v. BAC Home Loans Servicing, LP, 221 Cal.App.4th 49, 81.) “An unfair business practice occurs when that practice offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers...An unfair business practice also means the public policy which is a predicate to the action must be tethered to specific constitutional, statutory or regulatory provisions.” (Id. [internal citations omitted].)

A fraudulent practice “require[s] only a showing that members of the public are likely to be deceived and can be shown even without allegations of actual deception, reasonable reliance and damage.” (Id. [internal citations omitted].)

“The UCL was enacted ‘to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.’” (Linear Technology Corp. v. Applied Materials, Inc. (2007) 152 Cal.App.4th 115, 135, citing Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 949.) In circumstances like in Linear Technology, “where a UCL action is based on contracts not involving either the public in general or individual consumers who are parties to the contract, a corporate plaintiff may not rely on the UCL for the relief it seeks.” (Linear Technology Corp. v. Applied Materials, Inc., 152 Cal.App.4th at 135.)

To establish standing, Plaintiff must allege facts that “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322.)

Plaintiffs allege “DiMeo insisted that every borrower install such a GPS device on a financed vehicle as part of the illicit scheme, which directly benefitted Spireon by increasing the volume of GPS devices sold. Further, on information and belief, Spireon was aware that DiMeo’s scheme requiring all Company-financed vehicles to have GPS devices installed was atypical.” (FAC, ¶ 16.) Plaintiffs also allege “unnecessary GPS equipment was being purchased” by Honor Finance and consumers, and the costs paid by consumers and Honor Finance were higher because of the higher charges for the equipment. (Id., ¶ 69.)

Contrary to Defendant’s contention, this cause of action is not solely a contractual dispute between the two parties. Plaintiffs alleged Defendant aided and abetted, and conspired with, DiMeo to defraud Plaintiffs. Plaintiffs did not dispute whether sufficient facts were alleged to support these causes of action against Honor Finance. Demurrer to this cause of action as to Honor Finance is overruled.

Sixth cause of action for unjust enrichment

“As the forum state, California will apply its own law ‘unless a party litigant timely invokes the law of a foreign state.’” (Chen v. Los Angeles Truck Centers, LLC (2019) 7 Cal.5th 862, 867.) Plaintiffs commenced this action in 2021. In Plaintiffs’ Complaint, Plaintiffs cited to a California case to support this cause of action. (Complaint, ¶ 53.) Plaintiffs did not attempt to invoke Illinois law on this cause of action until Plaintiffs filed their opposition to Defendant’s Motion for Judgment on the Pleadings on June 25, 2025. Even considering the stay in the action, Plaintiffs have not shown they timely invoked Illinois law on this cause of action. In

addition, even if the Court considered whether Illinois law should apply, Plaintiffs did not show Illinois law should apply.

“To determine which jurisdiction’s law will govern, a trial court applies the governmental interest test, which sets out a three-step inquiry: ‘First, the court determines whether the relevant law of each of the potentially affected jurisdictions with regard to the particular issue in question is the same or different. Second, if there is a difference, the court examines each jurisdiction’s interest in the application of its own law under the circumstances of the particular case to determine whether a true conflict exists.

Third, if the court finds that there is a true conflict, it carefully evaluates and compares the nature and strength of the interest of each jurisdiction in the application of its own law ‘“to determine which state’s interest would be more impaired if its policy were subordinated to the policy of the other state”’ [citation], and then ultimately applies ‘“the law of the state whose interest would be the more impaired if its law were not applied.”’” (Chen v. Los Angeles Truck Centers, LLC, 7 Cal.5th at 867–868.)

“[T]he mere fact that two states have differing laws with regard to a general subject area is not a sufficient basis on which to conclude that there is an actual conflict of law that would preclude the forum state from applying its own law.” (People ex rel. DuFauchard v. U.S. Financial Management, Inc. (2009) 169 Cal.App.4th 1502, 1520.)

Plaintiff contends Illinois recognizes unjust enrichment as an independent cause of action, citing to O’Malley v. Adams, 2023 IL App (5th) 210381. (Opposition, ROA No. 375, 19:14-16.) The Illinois Court did recognize that the Illinois Supreme Court “has recognized unjust enrichment as an independent cause of action.” (O'Malley as Trustee Under Trust Agreement Dated January 1, 2006 v. Adams as Trustee of Almyra M. Prather Revocable Trust Agreement dated December 15, 1967 (Ill. App. Ct. 2023) 227 N.E.3d 800, 815.) However, the Court also note that “the only ‘substantive basis for the claim’ was restitution to prevent unjust enrichment.” (Id.) This does not necessarily differ from California.

In California, there is no standalone cause of action for unjust enrichment. The Court of Appeal for the First District, Second Division, has held that “[u]njust enrichment is not a cause of action, however, or even a remedy, but rather a general principle, underlying various legal doctrines and remedies. It is synonymous with restitution.... Unjust enrichment has also been characterized as describing the result of a failure to make restitution....” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 387.) A party to an express contract can assert a claim for restitution based on unjust enrichment by alleging in that cause of

action that the express contract is void (because it was procured by fraud or is unenforceable or ineffective for some reason) or was rescinded. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.) Under the law of restitution, “an individual is required to make restitution if he or she is unjustly enriched at the expense of another. A person is enriched if the person receives a benefit at another’s expense. Benefit means any type of advantage.... The person receiving the benefit is required to make restitution only if the circumstances are such that, as between the two individuals, it is unjust for the person to retain it.” (First Nationwide Savings v. Perry (1992) 11 Cal.App.4th 1657, 1662- 1663.)

Plaintiffs have not shown Illinois’ interest in applying Illinois law under the circumstances of this case or how Illinois’ interest may be impaired if Illinois law was not applied. The Court declines to consider this cause of action under Illinois law.

Even if the Court considered this a claim for restitution based on unjust enrichment, Plaintiffs have not alleged sufficient facts to state this cause of action. Accordingly, the demurrer is sustained with 15 days leave to amend.

Defendant shall give notice.

4. 2025-1491645 The Court sustains Defendant General Motors LLC’s Demurrer to Salazar vs. the fourth and fifth causes of action for breach of the implied General warranty and fraud, respectively, in Plaintiff David Salazar’s First Motors, LLC Amended Complaint (FAC). Plaintiff has 15 days leave to amend the fraud claim only.

Facts The FAC alleges that on February 17, 2019, Plaintiff entered into a warranty contract with Defendant GM regarding a 2019 Chevrolet Silverado 1500 (i.e. “Subject Vehicle.”) (FAC, ¶ 6.) The Plaintiff “purchased the Vehicle from Defendant GM’s authorized retail dealership Chevrolet of Montebello” (Id. at ¶ 8.) The FAC alleges that “Plaintiff discovered Defendant’s wrongful conduct alleged herein shortly before the filing of the complaint, as the Vehicle continued to exhibit symptoms of defects following GM’s unsuccessful attempts to repair them. However, Defendant failed to provide restitution pursuant to the Song-Beverly Consumer Warranty Act.” (Id. at ¶ 31.) The Complaint was filed on 6/23/25.

4th Cause of Action for Breach of Implied Warranty

The four-year statute of limitations articulated in Commercial Code section 2725 applies to claims brought pursuant to the Song-Beverly