Lingyi Zhang v. Lucina Egg Bank et al.

The operative first amended complaint (FAC) alleges five causes of action: (1) violation of the Consumer Legal Remedies Act (CLRA, Civ. Code, § 1750 et seq.); (2) false advertising (Bus. & Prof. Code, § 17500 et seq.); (3) unfair competition (Bus. & Prof. Code, § 17200 et seq.); (4) breach of written contract; and (5) fraud. There is a form complaint exemplary damages attachment attached to the FAC. There are also several documents attached to the FAC as exhibits 1-17, including a copy of the alleged written contract (exhibit 1).

At issue is a demurrer to the FAC by Lucina and RSMC (hereafter, Defendants), which Zhang opposes.

LEGAL STANDARDS FOR DEMURRERS

In ruling on a demurrer, the court accepts as true all properly pleaded material factual allegations but does not accept as true contentions, deductions or conclusions of fact or law. (Valero v. Spread Your Wings, LLC (2023) 88 Cal.App.5th 243, 253.) Code of Civil Procedure section 430.60 states that “[a] demurrer shall distinctly specify the grounds upon which any of the objections to the complaint, cross-complaint, or answer are taken. Unless it does so, it may be disregarded.” The California Rules of Court also require that the demurrer itself (distinct from a supporting memorandum) specify the target of any objection and the grounds. (See Cal.

Rules of Court, rules 3.1103(c), 3.1112(a), 3.1320(a) [“Each ground of demurrer must be in a separate paragraph and must state whether it applies to the entire complaint, cross-complaint, or answer, or to specified causes of action or defenses.”].)

The court cannot consider extrinsic evidence when ruling on a demurrer. This includes declarations. The court has considered the declaration from defense counsel Ashton Stine only to the extent that it describes the meet and confer efforts required by statute. Finally, “points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before.” (Proctor v. Vishay Intertechnology, Inc. (2013) 213 Cal.App.4th 1258, 1273.) The court has not considered arguments made for the first time in Defendants’ reply.

DISCUSSION

Defendants’ notice of demurrer states that they challenge the FAC “on the grounds that the First Amended Complaint is uncertain and fails to state sufficient facts to constitute a cause of action.” (Notice of Demurrer and Demurrer at p. 2:9-10.) The Demurrer itself more clearly specifies that Defendants challenge each cause of action on grounds of uncertainty and failure to state sufficient facts. (Id. at pp. 3:5-4:2.)

Uncertainty

“‘[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that defendant cannot reasonably respond.’ ‘A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.’” (A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 695 [internal citations omitted].)

Defendants’ demurrer based on uncertainty is overruled. Defendants’ arguments that each cause of action fails to state sufficient facts indicates that they understood each cause of action sufficiently to be able to respond. The FAC does not reach the level of incomprehensibility required to sustain a demurrer on this ground.

Failure to State Sufficient Facts

First Cause of Action

“Section 1750 et seq. constitute the CLRA. Its remedies are non-exclusive, and the Legislature intended that it be ‘liberally construed’ to promote its purposes, ‘which are to protect consumers against unfair and deceptive business practices and to provide efficient and economical procedures to secure such protection.’ According to the legislative history from 1970, the year of its enactment, the law was designed ‘to provide affirmative remedies for consumers which will protect them from unscrupulous business practices while insulating responsible businessmen from spurious or vexatious lawsuits.’” (Benson v. Southern California Auto Sales, Inc. (2015) 239 Cal.App.4th 1198, 1205 (Benson), internal citations omitted.)

Civil Code section 1770 lists several acts and practices made unlawful by the CLRA. “Section 1780, subdivision (a), sets out the remedies available to a consumer who has suffered damage as a result of an act declared unlawful in section 1770. These are (1) actual damages, (2) injunctive relief, (3) restitution of property, (4) punitive damages, and (5) any other relief the court deems proper.” (Benson, supra, 239 Cal.App.4th at p. 1211.) Civil Code section 1782, subdivision (a) “imposes a condition on a consumer’s ability to sue for damages under the CLRA.” (Benson, supra, 239 Cal.App.4th at p. 1206.)

Prior to commencing an action for damages, the consumer “must give notice in writing of the particular CLRA violations and demand a correction, repair, replacement, or other rectification.” (Ibid.) And “no action for damages may be maintained ‘if an appropriate correction, repair, replacement, or other remedy is given, or agreed to be given within a reasonable time, to the consumer within 30 days after receipt of the notice.’ This section was added early in the legislative process to insure that ‘the consumer must give the merchant an opportunity to correct his mistake.’” (Ibid.)

The first cause of action seeks damages, but also admits that Zhang did not provide the required notice in writing before filing suit. It therefore fails to state sufficient facts supporting a claim for damages under the CLRA.

A plaintiff bears the burden of demonstrating that an amendment would cure the defect identified on demurrer. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081; Shaeffer v. Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1145 (Shaeffer) [“The onus is on the plaintiff to articulate the ‘specifi[c] ways’ to cure the identified defect, and absent such an articulation, a trial or appellate court may grant leave to amend ‘only if a potentially effective amendment [is] both apparent and consistent with the plaintiff’s theory of the case. [Citation.]’”].)

Zhang’s opposition does not meet this burden, as it argues that the demurrer should be overruled in its entirety and only requests leave to amend in a general fashion if the court desires additional detail. But Defendants’ suggestion that the first cause of action cannot be cured through amendment is unpersuasive. Zhang can seek injunctive relief under the CLRA.

Because it is not yet apparent to the court that granting further leave would be futile, Zhang is granted leave to amend the first cause of action. The amended complaint must be filed and served no later than July 7, 2026. The leave to amend is to allow Zhang to remove the request for damages (including punitive damages) and to remove any language suggesting that Zhang reserves the right to seek such damages. The court does not grant leave to add any additional parties or causes of action.

Second Cause of Action

The false advertising law bars “any advertising device . . . which is untrue or misleading.” (Bus. & Prof. Code, § 17500.) “Because this law and the fraudulent prong of the unfair competition law substantively overlap, the plaintiff’s burden under these provisions is the same: To prevail on a claim under the False Advertising Law, she must show that ‘members of the public are likely to be deceived’ and must do so as adjudged through the eyes of ‘the reasonable consumer.’” (Shaeffer v. Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1136.) A plaintiff must also allege an economic injury caused by the false advertising— advertising statements likely to deceive members of the general public under an objective reasonable consumer standard. (Id. at p. 1137.)

The general rule is that statutory causes of action must be pleaded with particularity. (Lopez v. Southern California Rapid Transit District (1985) 40 Cal.3d 780, 795; Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) When a statutory cause of action is alleged, “the plaintiff must set forth facts in his complaint sufficiently detailed and specific to support an inference that each of the statutory elements of liability is satisfied. General allegations are regarded as inadequate.” (Mittenhuber v. City of Redondo Beach (1983) 142 Cal.App.3d. 1, 5.)

Defendants’ suggestion that individuals do not have standing to bring a false advertising claim is incorrect. “[U]nder the false advertising law . . . standing extends to ‘any person who has suffered injury in fact and has lost money or property as a result of a violation of this chapter’ (§ 17535).” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 321-322.) Defendants’ assertion that Zhang cannot allege violations of Business and Professions Code section 17508 is an impermissible attempt to demur to only part of a cause of action. “[A] 13

general demurrer may not be sustained, nor a motion for judgment on the pleadings granted, as to a portion of a cause of action.” (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1167, overruled in part on other grounds in Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905.)

As presently alleged, the second cause of action is not alleged with sufficient particularity. It does not sufficiently allege that Defendants made false claims with the intent to induce reasonable consumers to purchase Defendants’ services. (Kasky v. Nike, Inc. (2002) 27 Cal.4th 939, 950.) It also does not sufficiently allege that Zhang suffered an economic injury from Defendants’ actions. The demurrer to the second cause of action on the ground that it fails to state sufficient facts is sustained with leave to amend.

Third Cause of Action

“Business and Professions Code section 17200 et seq. prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. The UCL covers a wide range of conduct.” It embraces anything that can properly be called a business practice and that at the same time is forbidden by law. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1143.) “By proscribing unlawful business practices, the UCL borrows violations of other laws and treats them as independently actionable. In addition, practices may be deemed unfair or deceptive even if not proscribed by some other law. Thus, there are three varieties of unfair competition: practices which are unlawful, or unfair, or fraudulent.” (Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 48.)

Here, the FAC’s third cause of action is expressly based on the first and second causes of action. As those causes of action currently fail to state sufficient facts, the third cause of action likewise fails. Defendants’ demurrer to the third cause of action on the ground that it fails to state sufficient facts is sustained with leave to amend.

Fourth Cause of Action

“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.)

The FAC’s fourth cause of action is expressly based on the written contract attached as exhibit 1. Defendants’ sole argument in support of the demurrer to this cause of action is that it is barred by release language in the contract. “‘[A] demurrer based on an affirmative defense will be sustained only where the face of the complaint discloses that the action is necessarily barred by the defense.’” (Stella v. Asset Management Consultants, Inc. (2017) 8 Cal.App.5th 181, 191.) Although exhibit 1 to the FAC contains the release language Defendants rely on, Defendants have not shown that this language necessarily bars the claim.

The fourth cause of action is expressly based on an alleged breach of a “complementary cohort” promise in attachment A to the contract that Zhang alleges was breached. It is not apparent from the face of the FAC (including exhibit 1) that the release language necessarily bars the fourth cause of action.

Defendants’ demurrer to the fourth cause of action on the ground that it fails to state sufficient facts is overruled.

Fifth Cause of Action

“The elements of fraud are (1) the defendant made a false representation as to a past or existing material fact; (2) the defendant knew the representation was false at the time it was made; (3) in making the representation, the defendant intended to deceive the plaintiff; (4) the plaintiff justifiably relied on the representation; and (5) the plaintiff suffered resulting damages.” (West v. JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 792, citation omitted.) Fraud must be pleaded with specificity.

General or conclusory allegations are insufficient. A plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. In the case of a corporate defendant, the plaintiff must allege the names of the persons who made the representations, their authority to speak on behalf of the corporation, to whom they spoke, what they said or wrote, and when the representation was made. (Id. at p. 793.) The specificity requirement serves two purposes. The first purpose is to give notice to the defendant with sufficiently definite charges.

The second is to permit a court to weed out meritless fraud claims on the basis of the pleadings; thus, the pleading should be sufficient to enable the court to determine whether, on the facts pleaded, there is any foundation, prima facie at least, for the charge of fraud. (Ibid.)

The fifth cause of action is not alleged with sufficient particularity. It refers to misrepresentations, but does not describe them in detail. It also seeks punitive damages from defendants (both of whom are corporate entities), but the only individual identified as making statements to Zhang is an alleged “Mandarin-speaking marketing agent” named “Vivian.” To seek punitive damages against a corporation, a complaint must allege that an officer, director, or managing agent of the corporation was either personally responsible for the allegedly despicable conduct or that an officer, director; or managing agent of the corporation: (1) had advanced knowledge of the despicable conduct and consciously disregarded it; or (2) authorized or ratified the despicable conduct. (Civ.

Code, § 3294, subd. (b).) A managing agent is someone who, like a corporate officer or director, exercises “substantial discretionary authority over significant aspects of a corporation’s business” and policies. (White v. Ultramar, Inc. (1999) 21 Cal.4th 563, 577-78.) “An individual must be in a corporate policymaking position in order to be considered a managing agent for purposes of imposing punitive damages liability on the employer.” (Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1437.)

The FAC does not sufficiently allege that “Vivian” or anyone else was an officer, director, or managing agent.

Defendants’ demurrer to the fifth cause of action on the ground that it fails to state sufficient facts is sustained with leave to amend.

CONCLUSION

Defendants’ demurrer to the FAC based on uncertainty is overruled.

Defendants’ demurrer to the fourth cause of action on the ground that it fails to state sufficient facts is overruled. Defendants’ demurrer to the first, second, third, and fifth causes of action on the ground that they fail to state sufficient facts is sustained with leave to amend.

An amended complaint must be filed and served no later than July 7, 2026. The court does not grant leave to add any additional parties or causes of action.

The court will prepare the order.

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