DIOS AZUL TEQUILA LLC VS. ROBERT STEVENSON LAIRD, III ET AL

Code of Civil Procedure §430.41(a)(3):

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The demurring party shall file and serve with the demurrer a declaration stating either of the following: (A) The means by which the demurring party met and conferred with the party who filed the pleading subject to demurrer, and that the parties did not reach an agreement resolving the objections raised in the demurrer. (B) That the party who filed the pleading subject to demurrer failed to respond to the meet and confer request of the demurring party or otherwise failed to meet and confer in good faith.

Dumas v. Los Angeles County Bd. of Supervisors (2020) 45 Cal. App. 5th 348 (“If, upon review of a declaration under section 430.41, subdivision (a)(3), a court learns no meet and confer has taken place, or concludes further conferences between counsel would likely be productive, it retains discretion to order counsel to meaningfully discuss the pleadings with an eye toward reducing the number of issues or eliminating the need for a demurrer, and to continue the hearing date to facilitate that effort”).

Based on the Declaration of Jennifer M. Oliver, counsel attempted to meet and confer with Plaintiff prior to filing, but the dispute could not be resolved.

Background

Plaintiff filed the Complaint on April 28, 2026, against Defendant and Does 1 through 25, for: 1) Breach of Operating Agreement and Company Expense Policies; 2) Breach of Contractual Indemnity Obligations; 3) Conversion; 4) Fraud and Intentional Misrepresentation; 5) Fraudulent Concealment; 6) Breach of the Implied Covenant of Good Faith and Fair Dealing; 7) Unjust Enrichment/Restitution; 8) Money Had and Received; 9) Accounting; 10) Declaratory Relief Regarding Non-Exculpation, Non-Indemnification, and Offset Rights; 11) Constructive Trust/Equitable Lien; 12) Civil Theft/Receipt, Concealment, or Withholding of Stolen Property, California Penal Code § 496(c), if filed in California and supported by forum and limitations analysis.

Plaintiff asserts that Defendant misappropriated, converted, or caused to be spent for his personal benefit while serving as the Company’s Chief Executive Officer, a member-owner of the Company, and a principal of the Company’s initial Manager, RSL-TWN Investments LLC, a Nevada limited liability company. Plaintiff alleged that Defendant was entrusted with access to the Company credit, payment systems, funds, and expense authority for the limited purpose of advancing the Company’s distilled spirits business.

Instead, Defendant used Company credit cards and funds for his own personal expenses totaling at least $694,123.55. // //

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Legal Principles [A] demurrer challenges only the legal sufficiency of the complaint, not the truth or the accuracy of its factual allegations or the plaintiff’s ability to prove those allegations.” (Amarel v. Connell (1998) 202 Cal.App.3d 137, 140.) A demurrer is directed at the face of the complaint and to matters subject to judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) All properly pleaded allegations of fact in the complaint are accepted as true, however improbable they may be, but not the contentions, deductions or conclusions of facts or law. (Blank v.

Kirwan (1985) 39 Cal.3d gives “the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank, supra, 39 Cal.3d at p. 318.) Discussion 1. Breach of Operating Agreement and Company Expense Policies Defendant argues that in applying Wyoming law as prescribed by the Operating Agreement, the Complaint does not allege facts sufficient to overcome the business judgment rule. The Operating Agreement vested management authority in Defendant to incur and approve expenditures and obligations on behalf of the Company, and to enter into transactions involving affiliates.

Plaintiff’s Complaint largely challenges the reasonableness of Defendant’s actions rather than alleging facts establishing misconduct outside the scope of that authority. Defendant also asserts that Plaintiff also fails to allege facts sufficient to establish improper self-dealing, as the characterizations of Defendant’s expenditures are conclusory and insufficient to overcome the business judgment rule. Certain individuals that Plaintiff alleges were “personal companions” are explicitly identified as “Affiliates” under section 1.3 of the Operating Agreement.

No facts have been alleged showing Defendant acted in bad faith or engaged in conduct outside the authority granted to him under the Operating Agreement. Defendant asserts that Plaintiff has alleged he breached the Company’s expense Policies, but Defendant does not possess a copy of those Policies due to Plaintiff removing his access to his Company email account. Defendant reserves the right to challenge Plaintiff’s allegations once those are provided. Plaintiff argues that the business judgment rule does not shield Defendant from liability for breach of the expense policies and therefore the demurrer should be overruled for failing to move to dismiss the entire cause of action.

Additionally, the business judgment rule does not shield Defendant from liability for breach of contract. The Complaint alleges that Defendant breached the terms of the Operating Agreement and acted outside of his contractual authority, which is outside the scope of the business judgment rule. Should the Court apply the business judgment rule, Plaintiff argues that the Company has alleged facts that rebut the presumption by showing Defendant engaged in fraud, bad faith, and self-dealing.

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A member in a member-managed limited liability company or a manager-managed limited liability company shall discharge the duties under this chapter or under the operating agreement and exercise any rights consistently with the contractual obligation of good faith and fair dealing. Wyo. Stat. Ann. § 17-29-409(d) The Operating Agreement provides, in part (emphasis added): 1.7 “Approved by the Manager,” “Approval of the Manager” or “Manager’ Approval” means that a majority of the Manager have consented to or are required to consent to a particular matter or action. 7.1.1 Management by the Manager.

The business, assets and affairs of the Company shall be managed exclusively by the Manager. Except for situations in which the Approval of the Members is expressly required by this Agreement, the Manager shall have full, complete and exclusive authority, power and discretion to manage and control the business, assets and affairs of the Company, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the Company’s business, assets and affairs.

In the management of the Company’s business, the Manager may delegate duties to such persons and entities as the Manager may deem appropriate. Without limiting the generality of the foregoing, the Manager shall have the power and authority, without the Approval of the Members, to: (a) incur expenditure(s) and obligation(s) on behalf of the Company;... 7.10 Reimbursement of the Members and the Manager. The Members, the Manager, the Officers and their respective Affiliates shall be entitled to reimbursement from the Company as Approved by the Manager for all reasonable out-of-pocket expenses incurred by them or their respective Affiliates, on behalf of the Company and/or its assets, in managing the business and affairs of the Company and/or its assets and in the formation and/or maintenance of the Company including, but not limited to, the Members’ and Manager’s expenses in preparation of this Agreement and related agreements, and any legal and accounting expenses incurred on behalf of the Company and/or its assets. (emphasis added) The Court finds that Plaintiff has alleged specific violations of the Operating Agreement wherein Defendant purportedly acted outside the scope of his contractual duties.

As such, these acts fall outside the scope of the business judgment rule. Taking these allegations as true, Plaintiff has adequately plead facts to survive demurrer. Defendant’s demurrer as to the cause of action for Breach of Operating Agreement and Company Expense Policies is overruled. //

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2. Conversion Defendant argues that Plaintiff’s conversion claim is barred by the economic loss rule, as it is premised upon the same alleged misconduct underlying its contract claims: alleged expenditures that Plaintiff contends were not authorized under the Operating Agreement. Plaintiff argues that the conversion claim is based on the same intentional misconduct that goes beyond the conduct contemplated by the Parties under the Operating Agreement, such as Defendant’s intentional misuse and misappropriation of Company assets.

Not all tort claims for monetary losses between contractual parties are barred by the economic loss rule. But such claims are barred when they arise from — or are not independent of — the parties’ underlying contracts. (See Robinson, supra, 34 Cal.4th at p. 991, 22 Cal.Rptr.3d 352, 102 P.3d 268 [holding that “the economic loss rule does not bar [the plaintiff's] fraud and intentional misrepresentation claims because they were independent of [the defendant's] breach of contract”]; Erlich, supra, 21 Cal.4th at pp. 551, 552, 87 Cal.Rptr.2d 886, 981 P.2d 978 [explaining that “[t]ort damages have been permitted in contract cases” when “the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm”].)

Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 923–924 [290 Cal.Rptr.3d 834, 843, 505 P.3d 625, 633]. “[A] tortious breach of contract ... may be found when (1) the breach is accompanied by a traditional common law tort, such as fraud or conversion; (2) the means used to breach the contract are tortious, involving deceit or undue coercion or; (3) one party intentionally breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.” (Freeman & Mills, supra, 11 Cal.4th at p. 105, 44 Cal.Rptr.2d 420, 900 P.2d 669 (conc. and dis. opn. of Mosk, J.).)

Focusing on intentional conduct gives substance to the proposition that a breach of contract is tortious only when some independent duty arising from tort law is violated. (Applied Equipment, supra, 7 Cal.4th at p. 515, 28 Cal.Rptr.2d 475, 869 P.2d 454.) Erlich v. Menezes (1999) 21 Cal.4th 543, 553–554 [87 Cal.Rptr.2d 886, 893, 981 P.2d 978, 984]. When evaluating whether the parties' expectations and risk allocations bar tort recovery, the court must consider the alleged facts. First, applying standard contract principles, it must ascertain the full scope of the parties' contractual agreement, including the rights created or reserved, the obligations assumed or declined, and the provided remedies for breach.

Second, it must determine whether there is an independent tort duty to refrain from the alleged conduct. Third, if an independent duty exists, the court must consider whether the plaintiff can establish all elements of the tort independently of the rights and duties assumed by the parties under the contract. The guiding and distinguishing principle is this. If the alleged breach is based on a failure to perform as the contract provides, and the parties reasonably anticipated and allocated the risks associated with the breach, the cause of action will generally sound only in

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contract because a breach deprives an injured party of a benefit it bargained for. However, if the contract reveals the consequences were not reasonably contemplated when the contract was entered and the duty to avoid causing such a harm has an independent statutory or public policy basis, exclusive of the contract, tort liability may lie. Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 26 [324 Cal.Rptr.3d 433, 450–451, 553 P.3d 1213, 1228] (emphasis added). The Court finds that Plaintiff has alleged facts demonstrating that Defendant has intentionally misappropriated company assets, which is outside the scope of a breach of contract claim.

Defendant’s purported actions were not reasonably contemplated when the contract was entered. The Court finds that the claim is not merely restating a contractual obligation but rather rests on an independent absolute duty owed to the property owner, i.e., the Company. Defendant’s demurrer is overruled as to the cause of action for Conversion.

3. Fraud and Intentional Misrepresentation and Fraudulent Concealment Defendant argues that Plaintiff’s claims are barred by the economic loss rule, as Plaintiff failed to 1) allege the elements of the claim independently of the parties’ contractual obligations; and 2) allege tortious conduct exposing the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract. Additionally, as the Operating Agreement waived all duties, no independent duty existed to support the fraudulent concealment claim.

Plaintiff argues that the economic loss rule does not bar the fraud and intentional misrepresentation and fraudulent concealment claims. Plaintiff alleges that the fraud and intentional misrepresentation claims are rooted in Defendant’s intentional, affirmative, misrepresentations that his expenditure of Company funds was for a business purpose. As for fraudulent concealment, Defendant had an independent duty as an officer and fiduciary of the company which were independent to any obligations under the Operating Agreement to disclose his unauthorized use of company funds for personal use and for the benefit of his girlfriend, sons, friends, and companions.

Additionally, the Complaint alleges fraudulent concealment resulting in harm that was beyond the reasonable contemplation of the Parties. The economic loss rule does not bar fraud and intentional misrepresentation claims that are independent of breach of contract. Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 991 [22 Cal.Rptr.3d 352, 360, 102 P.3d 268, 274]. A breach of contract remedy assumes that the parties to a contract can negotiate the risk of loss occasioned by a breach. “ ‘[W]hen two parties make a contract, they agree upon the rules and regulations which will govern their relationship; the risks inherent in the agreement and the likelihood of its breach.

The parties to the contract in essence create a mini-universe for themselves, in which each voluntarily chooses his contracting partner, each trusts the other's willingness to keep his word and honor his commitments, and in which they define their

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respective obligations, rewards and risks. Under such a scenario, it is appropriate to enforce only such obligations as each party voluntarily assumed, and to give him only such benefits as he expected to receive; this is the function of contract law.’ ” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 517, 28 Cal.Rptr.2d 475, 869 P.2d 454.) However, “[a] party to a contract cannot rationally calculate the possibility that the other party will deliberately misrepresent terms critical to that contract.” (Tourek et al., Bucking the “Trend”: The Uniform Commercial Code, the Economic Loss Doctrine, and Common Law Causes of Action for Fraud and Misrepresentation (1999) 84 Iowa L.Rev. 875, 894.)

No rational party would enter into a contract anticipating that they are or will be lied to. Id. at 992-993. A plaintiff may assert a tort claim for fraudulent concealment based on conduct occurring in the course of a contractual relationship, if the elements of the cause of action can be established independently of the parties' contractual rights and obligations and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the agreement.

Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 38 [324 Cal.Rptr.3d 433, 461, 553 P.3d 1213, 1236–1237]. The Court finds that Plaintiff has alleged facts demonstrating that Defendant made misrepresentations that his use of Company funds was for a business purpose, which is outside the scope of a breach of contract claim. Defendant’s purported actions were not reasonably contemplated when the contract was entered. Additionally, a duty exists independent of the Operating Agreement. Although the Operating Agreement waived all duties, the Wyoming LLC Act expressly prohibits an Operating Agreement from eliminating the contractual obligation of good faith and fair dealing.

Acorn v. Moncecchi (Wyo. 2016) 386 P.3d 739, 754. As such, the fraud claims are not barred by the economic loss rule. Defendant further alleges that the fraud claims fail because they are not pled with particularity. Defendant asserts that Plaintiff’s identification of numerous expenditures it contends were improper, personal, unauthorized, or lacking a legitimate business purpose are conclusory and unsupported by any specifically alleged representation. Defendant asserts the Complaint does not identify what Defendant supposedly represented, to whom at the Company the representation was made, or when these alleged misrepresentations occurred.

Plaintiff asserts that the Complaint clearly alleges the “how, when, where, to, who, and by what means” fraudulent misrepresentations were made. Plaintiff argues that each time Defendant misused the Company credit card, he represented to the Company that the charge served a business purpose. Defendant’s argument that the Complaint does not allege when the alleged misrepresentations occurred is false, as the Complaint alleges the date of each expense fraudulently incurred purportedly on Company’s behalf.

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When affirmative misrepresentation fraud is alleged, “This particularity requirement necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” Rattagan v. Uber Technologies, Inc. (2024) 17 Cal.5th 1, 43 [324 Cal.Rptr.3d 433, 465, 553 P.3d 1213, 1240]. California courts apply the same specificity standard to evaluate the factual underpinnings of a fraudulent concealment claim at the pleading stage, even though the focus of inquiry shifts to the unique elements of the claim.

Id. The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would have acted differently if the concealed or suppressed fact was known; and (5) plaintiff sustained damage as a result of the concealment or suppression of the material fact. (Graham v.

Bank of America, N.A. (2014) 226 Cal.App.4th 594, 606, 172 Cal.Rptr.3d 218; see also CACI No. 1901.) A duty to disclose a material fact can arise if (1) it is imposed by statute; (2) the defendant is acting as plaintiff's fiduciary or is in some other confidential relationship with plaintiff that imposes a disclosure duty under the circumstances; (3) the material facts are known or accessible only to defendant, and defendant knows those facts are not known or reasonably discoverable by plaintiff (i.e., exclusive knowledge); (4) the defendant makes representations but fails to disclose other facts that materially qualify the facts disclosed or render the disclosure misleading (i.e., partial concealment); or (5) defendant actively conceals discovery of material fact from plaintiff (i.e., active concealment). (Civ.

Code, § 1710, subd. (3); Warner Constr. Corp. v. City of Los Angeles (1970) 2 Cal.3d 285, 294, 85 Cal.Rptr. 444, 466 P.2d 996; LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 336, 60 Cal.Rptr.2d 539; see generally, 5 Witkin, Summary of Cal. Law (11th ed. 2023) Torts §§ 913−919.) Circumstances (3), (4), and (5) presuppose a preexisting relationship between the parties, such as “between seller and buyer, employer and prospective employee, doctor and patient, or parties entering into any kind of contractual agreement. [Citation.]

All of these relationships are created by transactions between parties from which a duty to disclose facts material to the transaction arises under certain circumstances.” (LiMandri, at p. 337, 60 Cal.Rptr.2d 539.) “Such a transaction must necessarily arise from direct dealings between the plaintiff and the defendant; it cannot arise between the defendant and the public at large.” (Bigler-Engler v. Breg, Inc. (2017) 7 Cal.App.5th 276, 312, 213 Cal.Rptr.3d 82.). Id. at 40-41. A misrepresentation need not be oral; it may be implied by conduct.

Thrifty-Tel, Inc. v. Bezenek (1996) 46 Cal.App.4th 1559, 1567 [54 Cal.Rptr.2d 468, 473]... For example, in State v. Hamm (Mo.Ct.App.1978) 569 S.W.2d 289, the defendant used the bank card and personal

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identification number (PIN) of another person to steal cash at an automatic teller machine. Rejecting the assertion he made no misrepresentation, the court noted defendant's use of the card and confidential PIN was an implied misrepresentation as to his identity. (Id. at pp. 290– 291.) The same logic applies here. Id. The Court finds that Plaintiff has provided numerous specific examples outlining transactions Defendant has engaged in that provide the requisite “how, when, where, to whom, and by what means the representations were tendered.”

Although no verbal representations were made by Defendant regarding these expenditures, by using the Company’s funds for a personal purpose, Defendant made an implied misrepresentation as to the legitimacy of the expense. Additionally, as abovementioned, Defendant owed a duty to Plaintiff despite the waiver in the Operating Agreement. Defendant’s demurrer is overruled as to the causes of action for Fraud and Intentional Misrepresentation and Fraudulent Concealment.

4. Unjust Enrichment/Restitution and Money Had and Received Defendant argues that Plaintiff’s claim for unjust enrichment fails because there is no standalone cause of action for unjust enrichment. Additionally, Plaintiff’s claim for unjust enrichment is inconsistent with and precluded by the Operating Agreement. Defendant also asserts that Plaintiff’s claim for money had and received fails because Plaintiff alleges that Defendant’s authority to incur expenses, use Company funds, and seek reimbursement arose from and was governed by the Operating Agreement and related Company policies, which therefore bars recovery under quasi-contract theories.

Plaintiff argues that the Company may plead unjust enrichment and money had and received claims as an alternative to its contract claims in the event the court were to find that the operative contracts do not govern the misconduct alleged in the Complaint. There is no cause of action in California for unjust enrichment. “The phrase ‘Unjust Enrichment’ does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so.” (Lauriedale Associates, Ltd. v.

Wilson (1992) 7 Cal.App.4th 1439, 1448, 9 Cal.Rptr.2d 774.) Unjust enrichment is “ ‘a general principle, underlying various legal doctrines and remedies,’ ” rather than a remedy itself. (Dinosaur Development, Inc. v. White (1989) 216 Cal.App.3d 1310, 1315, 265 Cal.Rptr. 525.) It is synonymous with restitution. (Id. at p. 1314, 265 Cal.Rptr. 525.).) Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793 [131 Cal.Rptr.2d 347, 357]. A plaintiff may plead inconsistent claims that allege both the existence of an enforceable agreement and the absence of an enforceable agreement.

Klein v. Chevron U.S.A., Inc. (2012) 202 Cal.App.4th 1342, 1389 [137 Cal.Rptr.3d 293, 331–332], as modified on denial of reh'g (Feb. 24, 2012). In Klein, the court found that plaintiffs' breach of contract claim pleaded the existence of an enforceable agreement and their unjust enrichment claim did not deny the existence or

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enforceability of that agreement. Id. Plaintiffs were therefore precluded from asserting a quasicontract claim under the theory of unjust enrichment. Id. Similarly here, Plaintiff’s breach of the operating agreement claim pleaded the existence of an enforceable agreement and their unjust enrichment/restitution and money had and received claims do not deny the existence or enforceability of that agreement. As such, Plaintiff is precluded from asserting a quasi-contract claim under the theory of unjust enrichment/restitution or money had and received. Defendant’s demurrer as to the cause of action for Unjust Enrichment/Restitution and Money Had and Received is granted with leave to amend.

5. Accounting Defendant argues that a cause of action for accounting is not appropriate when Plaintiff has already asserted other claims which seek monetary damages for the same harm. Plaintiff does not allege these legal remedies are inadequate and the information sought is discoverable. The Complaint also undermines the accounting claim by alleging detailed knowledge regarding the challenged transactions, including dates, venues, account numbers, and estimated amounts owed. Plaintiff argues an accounting is warranted because the amount of Company funds owed by Defendant cannot be determined without an accounting of all charges, receipts, travel records, card statements, reimbursements, etc. which charges and account transfers were used for nonbusiness purposes and are subject to reimbursement.

Although the Complaint alleges numerous improper charges, an accounting is needed to determine which expenses are legitimate business costs and which are not. The nature of a cause of action in accounting is unique in that it is a means of discovery. An accounting is a “species of disclosure, predicated upon the plaintiff's legal inability to determine how much money, if any, is due.” (1A Corpus Juris Secundum, supra, Accounting, § 6, pp. 7–8, fn. omitted.) Thus, the purpose of the accounting is, in part, to discover what, if any, sums are owed to the plaintiff, and an accounting may be used as a discovery device. (1A Corpus Juris Secundum, supra, Accounting, § 26, p. 26.).

Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 180 [92 Cal.Rptr.3d 696, 716]. An 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.” (Teselle, supra, 173 Cal.App.4th at p. 179, 92 Cal.Rptr.3d 696; see also 5 Witkin, Cal. Procedure, supra, Pleading, § 820.) The action carries with it an inherent limitation; an accounting action “is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.” (Teselle, at p. 179, 92 Cal.Rptr.3d 696; see also St.

James Church of Christ Holiness v. Superior

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Court of Los Angeles County (1955) 135 Cal.App.2d 352, 359, 287 P.2d 387.) Sass v. Cohen (2020) 10 Cal.5th 861, 869 [272 Cal.Rptr.3d 836, 842, 477 P.3d 557, 562]. There is no dispute that a relationship exists between the Parties that requires an accounting. Despite the Complaint providing detailed estimations of the purported damages which are recoverable under the separate causes of action, Plaintiff alleges the exact amount owed can only be ascertained with an accounting, as Defendant has access to records unavailable to Plaintiff. Without an accounting, Plaintiff cannot affirmatively calculate their damages. Defendant’s demurrer as to the Accounting cause of action is overruled.

6. Declaratory Relief Regarding Non-Exculpation, Non-Indemnification, and Offset Rights Defendant argues that Plaintiff seeks a declaration that he improperly used Company funds and a determination regarding redemption of shares and indemnity; however, whether Defendant breached the Operating Agreement or improperly used funds relates to prior conduct that is already addressed in Plaintiff’s other causes of action which will determine the Parties’ rights and obligations upon resolution, making declaratory relief unnecessary.

Additionally, Plaintiff has failed to allege Defendant has asserted a claim for indemnity or that Plaintiff has issued a notice of redemption which would give rise to a ripe dispute regarding those issues. Plaintiff argues declaratory relief is available because the Company seeks a declaration that Defendant is not protected by the Operating Agreement’s liability limitations based on his fraudulent misconduct, and that the Company may, in exercising its right to redeem Defendant’s shares in the Company, offset any amounts Defendant owes the Company.

Plaintiff’s claim is not only based upon Defendant’s past conduct, but also ongoing disputes over the Company’s right to redeem his units without offset. California Code of Civil Procedure § 1060 permits any person to bring an action for a declaration of rights or duties in cases of actual controversy relating to the legal rights and duties of the respective parties, and the declaration may be had before there has been any breach of the obligation in respect to which said declaration is sought.

However, under § 1061, the court may refuse to exercise the power granted by the declaratory relief chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances. In Dominguez v. Bonta, the court affirmed that declaratory relief is not appropriate where it merely restates issues already addressed by other causes of action and no additional facts are alleged in the declaratory relief cause of action. (2022) 87 Cal.App.5th 389, 418 [303 Cal.Rptr.3d 115, 140], as modified (Jan. 6, 2023).

Here, Plaintiff seeks declaratory relief not only regarding past conduct relating to the breach of the Operating Agreement, but also continuing rights under the Operating Agreement. This includes whether Defendant is entitled to invoke the Operating Agreement’s duty waiver, limited-liability provisions, exculpation provisions, indemnity provisions, or reimbursement

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provisions, whether the Company has the contractual right to redeem Defendant's membership interest, and whether the Company may offset damages against redemption proceeds. As such, Plaintiff’s claim is not duplicative of other causes of action. The two-pronged test for ripeness has also been described as follows: “(1) whether the dispute is sufficiently concrete so that declaratory relief is appropriate; and (2) whether the parties will suffer hardship if judicial consideration is withheld.” (City of Santa Monica v.

Stewart (2005) 126 Cal.App.4th 43, 64 [24 Cal.Rptr.3d 72].) Dominguez v. Bonta (2022) 87 Cal.App.5th 389, 418 [303 Cal.Rptr.3d 115, 140], as modified (Jan. 6, 2023). Plaintiff plead that it is authorized to exercise its right of redemption of Defendant’s membership interest in and to the Company pursuant to the Operating Agreement and First Amendment to the Operating Agreement, which it intends to do and will offset all amounts payable to Defendant. In addition, Plaintiff plead that Defendant contends he is 1) protected by the Operating Agreement’s duty waiver, limited-liability provisions, exculpation provision, indemnity provisions, or reimbursement provisions; 2) his conduct does not constitute a breach of the Operating Agreement, breach of Company policies, fraud, bad faith, gross negligence, willful misconduct, conversion, and/or personal use; 3) he is entitled to indemnity defense, reimbursement, exculpation, or advancement for the challenged conduct; 4) the Company is not entitled to redeem Defendant’s membership interest in and to the Company; and 5) the Company is not entitled to offset any amounts owed to him by the Company.

Accepting these allegations as true, the Court finds that the Complaint sufficiently alleges a ripe dispute. Defendant’s demurrer as to the Declaratory Relief Regarding Non-Exculpation, Non-Indemnification, and Offset Rights cause of action is overruled.

7. Constructive Trust/Equitable Lien Defendant argues that the allegations merely restate factual assertions underlying Plaintiff’s other causes of action, as the alleged property which Plaintiff seeks to impose a constructive trust or equitable lien consists of the same Company funds, benefits, and other value that form the basis of Plaintiff’s contracts and tort claims. No separate legal duty, independent wrongful act, or distinct basis for liability to support a standalone claim is identified in the Complaint.

Plaintiff seeks a remedy that is derivative to the underlying causes of action. Plaintiff argues that the Company has not asserted constructive trust and equitable lien claims as standalone theories of liability, but rather as remedies attached to the underlying claims. The Complaint asserts an “Eleventh Cause of Action – Constructive Trust/Equitable Lien.” The imposition of a constructive trust or equitable lien are remedies, not claims for relief. Plaintiff’s Prayer for Relief seeks the imposition of a constructive trust/and or equitable lien which is an appropriate basis of relief to be requested.

As such, Defendant’s demurrer as to the Constructive

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Trust/Equitable Lien cause of action is sustained without leave to amend, finding the requested relief is duplicative in Plaintiff’s prayer for relief.

8. Civil Theft/Receipt, Concealment, or Withholding of Stolen Property Under California Penal Code § 496(c) Defendant argues the Complaint does not allege facts sufficient to establish theft because California’s civil theft statute requires more than allegations that property was obtained, retained, or used without authorization. Plaintiff must allege facts establishing the elements of theft, including the requisite felonious intent, which it fails to do. Plaintiff argues that the Complaint details how Defendant acted with intent to obtain company property through theft, which can be inferred from his pattern of misconduct over several years where he used company resources for personal use based on the false pretense that his expenses were for business purposes.

Such allegations reflect an intent to steal company property. Defendant further alleges that Plaintiff’s request for treble damages pursuant to Penal Code § 496(c) are time barred by a one-year statute of limitations to the extent any claim for treble damages accrued prior to April 28, 2025. To the extent the Court concludes that Defendant’s challenge to Plaintiff’s claims for treble damages are more appropriately raised by motion to strike than demurrer, Defendant requests the Court construe his Demurrer as a Motion to Strike.

Plaintiff asserts that the issue of whether certain damages are time-barred is a question of fact not appropriate for demurrer and as the Complaint alleges the conduct occurred within the limitations period, the cause of action cannot be dismissed in whole or in part. [T]o sustain a conviction for receiving stolen property, the prosecution must prove (1) the property was stolen; (2) the defendant knew the property was stolen; and, (3) the defendant had possession of the stolen property.” (People v.

Land (1994) 30 Cal.App.4th 220, 223, 35 Cal.Rptr.2d 544; see also CALCRIM No. 1750.) Lacagnina v. Comprehend Systems, Inc. (2018) 25 Cal.App.5th 955, 970 [236 Cal.Rptr.3d 641, 653], as modified (Aug. 14, 2018). A fraudulent intent can be inferred from the circumstances surrounding the transactions. People v. Selivanov (2016) 5 Cal.App.5th 726, 750 [210 Cal.Rptr.3d 117, 140], as modified on denial of reh'g (Dec. 13, 2016). In Selivanov, the court found that the defendants’ use of their employer’s credit cards for personal charges which were documented as business expenses were sufficient to establish fraudulent intent.

Id. at 751-751. The Court finds that Plaintiff adequately plead the required elements of theft. Plaintiff’s cause of action realleges and incorporates its allegations regarding Defendant’s alleged misuse of company funds for personal expenditures. Such allegations are sufficient to infer fraudulent intent. Additionally, Plaintiff’s cause of action limits treble damages “subject to applicable limitations and proof.” Defendant’s demurrer as to the Civil Theft/Receipt, Concealment, or

July 31, 2026 Dept. 9 Civil Tentative Rulings

Withholding of Stolen Property Under Penal Code § 496(c) is denied. Defendant’s request to construe his Demurrer as a Motion to Strike treble damages is denied, finding the request for treble damages is requested subject to the statute of limitations. TENTATIVE RULING #15: DEFENDANT’S DEMURRER IS OVERRULED AS TO THE CAUSES OF ACTION FOR BREACH OF OPERATING AGREEMENT AND COMPANY EXPENSE POLICIES, CONVERSION, FRAUD AND INTENTIONAL MISREPRESENTATION, FRAUDULENT CONCEALMENT, ACCOUNTING, DECLARATORY RELIEF, CIVIL THEFT/RECEIPT, CONCEALMENT, OR WITHHOLDING OF STOLEN PROPERTY UNDER PENAL CODE § 496(C).

DEFENDANT’S DEMURRER IS SUSTAINED WITH LEAVE TO AMEND AS TO THE CAUSES OF ACTION OF UNJUST ENRICHMENT/RESTITUTION AND MONEY HAD AND RECEIVED. DEFENDANT’S DEMURRER IS SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE CAUSE OF ACTION FOR CONSTRUCTIVE TRUST/EQUITABLE LIEN. DEFENDANT’S REQUEST TO TREAT DEFENDANT’S DEMURERR AS A MOTION TO STRIKE TREBLE DAMAGES IS DENIED. NO HEARING ON THIS MATTER WILL BE HELD UNLESS A REQUEST FOR ORAL ARGUMENT IS TRANSMITTED ELECTRONICALLY THROUGH THE COURT’S WEBSITE OR BY TELEPHONE TO THE COURT AT (530) 621-6551 BY 4:00 P.M.

ON THE DAY THE TENTATIVE RULING IS ISSUED. CAL. RULE CT. 3.1308; LOCAL RULE 8.05.07; SEE ALSO LEWIS V. SUPERIOR COURT, 19 CAL.4TH 1232, 1247 (1999). NOTICE TO ALL PARTIES OF A REQUEST FOR ORAL ARGUMENT AND THE GROUNDS UPON WHICH ARGUMENT IS BEING REQUESTED MUST BE MADE BY TELEPHONE OR IN PERSON BY 4:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. CAL. RULE CT. 3.1308; EL DORADO COUNTY LOCAL RULE 8.05.07. PROOF OF SERVICE OF SAID NOTICE MUST BE FILED PRIOR TO OR AT THE HEARING. LONG CAUSE HEARINGS MUST BE REQUESTED BY 4:00 P.M.

ON THE DAY THE TENTATIVE RULING IS ISSUED AND THE PARTIES ARE TO PROVIDE THE COURT WITH THREE MUTUALLY AGREEABLE DATES ON FRIDAY AFTERNOONS AT 2:30 P.M. LONG CAUSE ORAL ARGUMENT REQUESTS WILL BE SET FOR HEARING ON ONE OF THE THREE MUTUALLY AGREEABLE DATES ON FRIDAY AFTERNOONS AT 2:30 P.M. THE COURT WILL ADVISE THE PARTIES OF THE LONG CAUSE HEARING DATE AND TIME BY 5:00 P.M. ON THE DAY THE TENTATIVE RULING IS ISSUED. PARTIES MAY PERSONALLY APPEAR AT THE HEARING.

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