Baljeu v. Wheeler, et al.

Having construed this as a motion for judgment on the pleadings, however, analysis must be limited to “the face of the challenged pleading or...any matter of which the court is required to take judicial notice.” (Code Civ. Proc., § 438, subd. (d).) Consequently, the Court must decline to consider all evidence submitted by the parties, for which judicial notice was neither sought nor granted. Similarly, Defendants’ evidentiary objections are MOOT. (See ROA No. 138.)

Plaintiff’s unopposed Request for Judicial Notice (ROA No. 131) is GRANTED, pursuant to Evidence Code section 452, subdivision (c).

Within this motion, Defendants assert Plaintiff lacks standing to bring claims against them as Plaintiff is attempting to assert derivative claims on behalf of WSFS, Inc., without complying with Corporations Code section 800.

“[A] derivative suit is one in which the shareholder seeks ‘redress of the wrong to the corporation.” (Bader v. Anderson (2009) 179 Cal.App.4th 775, 793.) “Thus, an action is derivative, i.e., in the corporate right, if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets.” (Ibid. [internal quotations omitted].) “On the other hand, a direct individual suit by a stockholder ‘is a suit to enforce a[]right against the corporation which the stockholder possesses as an individual.’” (Ibid.) “A direct (as opposed to a derivative) action is maintainable ‘only if the damages [are] not incidental to an injury to the corporation.’” (Ibid.)

A derivative action cannot be maintained unless “[t]he plaintiff alleges in the complaint with particularity plaintiff’s efforts to secure from the board such action as plaintiff desires, or the reasons for not making such effort, and alleges further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file.” (Corp. Code, § 800, subd. (b)(2).)

Following a review of the First Amended Complaint, the Court GRANTS the motion, with respect to the Third, Sixth, Seventh and Eighth causes of action, with 30 days leave to amend.

Initially, while it appears undisputed Plaintiff asserted direct claims against Defendants Walter Wheeler and WSFS, Inc., the instant motion is brought solely on behalf of Defendants Joe Philip, Michael McClare and Brandon Musselman.

While the Motion indicates an intent to challenge the Fourth Cause of Action, this request is denied, as the Fourth Cause of Action is asserted solely against Defendant Walter Wheeler, who is not a party to this motion. (See FAC [ROA No. 8].)

As against the moving Defendants, the Complaint alleges the same “conspired to surreptitiously sequester, convert, and wrongfully transfer all of the assets of WSFS into Wheeler Steel without the knowledge and consent of Plaintiff.” (¶18 of FAC [ROA No. 8].) This

allegation is repeated, within the Third Cause of Action (¶42 of FAC), the Sixth Cause of Action (¶60 of FAC) and the Seventh Cause of Action (¶66-¶67 of FAC) and consequently forms the gravamen of the claims against moving Defendants.

As noted by moving Defendants, the alleged damages are directed towards the corporation WSFS. (See PacLink Communications Inern., Inc. v. Superior Court (2001) 90 Cal.App.4th 958, 964 [“[T]he essence of plaintiffs’ claim is that the assets of PacLink-1 were fraudulently transferred without any compensation being paid to the LLC. This constitutes an injury to the company itself.”])

Plaintiff asserts his claims are direct arguing: “The gravamen of Plaintiff’s claims alleges injury to Plaintiff personally, not to WSFS, Inc. Plaintiff claims that Wheeler breached an oral contract to compensate Plaintiff for labor and investment...Plaintiff alleges that Wheeler failed to honor a personal contractual obligation to Plaintiff.” (Opposition: 5:23-28.)

Plaintiff does not, however, address the claims asserted against moving Defendants or otherwise establish a direct injury, attributed to these parties.

While the claims directed towards moving Defendants include references to “conspiracy,” to the extent Plaintiff intends to allege the moving Defendants are vicariously liable for the direct injuries caused by Wheeler and WSFS, Inc., any such intention has not been clearly communicated in the First Amended Complaint.

Indeed, the opposition suggests conspiracy is not the bases of the claims against moving Defendants, as Plaintiff asserts “[e]ach of the causes of action subject to the motion to dismiss is couched in terms of the individual defendant’s personal action....” (Opposition: 7:7-8.)

In opposing this motion, Plaintiff asserts he is unable to allege a derivative action, as he was “never made an officer, director, or issued stock in WSFS, Inc.” (Opposition: 3:19-20.)

Pursuant to Corporations Code section 800, a derivative action can only be maintained where “[t]he plaintiff alleges in the complaint that plaintiff was a shareholder, of record or beneficially, or the holder of voting trust certificates at the time of the transaction or any part thereof of which plaintiff complains....” (Corp. Code, § 800, subd. (b)(1).)

While Plaintiff asserts he was never issued formal stock, the Complaint alleges “Plaintiff was an investment owner of WSFS....” (¶16 of FAC.)

Regardless, however, the possible unavailability of a derivative action, does not cure the fundamental standing issue identified by Defendants: “Every action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.” (Code Civ. Proc., § 367.) Where, as here, the sole damage is alleged to have been inflicted on WSFS, Inc., WSFS, Inc. is the real party in interest.

With respect to the Eighth Cause of Action, “[a]n action for an accounting has two elements: (1) ‘that a relationship exists between the plaintiff and defendant that requires an accounting’ and (2) ‘that some balance is due the plaintiff that can only be ascertained by an accounting.’” (Sass v. Cohen (2020) 10 Cal.5th 861, 869.)

It remains the case that the sole basis for an accounting alleged against the moving Defendants is the alleged injury to WSFS, Inc., which Plaintiff lacks standing to pursue

Based on all the above, the Motion for Judgment on the Pleadings is granted, as against the Third, Sixth, Seventh and Eighth Causes of Action; however, as Plaintiff’s intentions are unclear and as it’s possible Plaintiff can clarify and allege a direct injury, leave to amend is provided.

Should Plaintiff desire to file an amended complaint that addresses the issues in this ruling, Plaintiff shall file and serve the amended complaint within 30 days of service of the notice of ruling.

Moving Defendants to give notice.

7 Camara vs. Irvine Sensors TENTATIVE RULING: Corporation Motion 1. Motion to Tax or Strike Costs

Defendant Irvine Sensors Corporation moves to tax or strike costs claimed by Plaintiffs Betty Camara, David Hughes, Sharon Anderson, Daniel Berger, Daniel DeBlasio, Jr., Timothy Dicus, Anthony Mastrangelo, David Peter, Raul Ramirez, Grant Yamaguchi, and James Yamaguchi. For the following reasons, the motion is GRANTED.