Laurel Hardware Market, LLC v. Alan Wawryk, et al.

Mullin that induced delay in filing the Federal Action. · COVID-19 tolling from April 6, 2020 to October 1, 2020 would not make Plaintiff's claims timely. The tolling would only have extended the deadline to file the fraudulent transfer claims to March 16, 2024. The statute of limitations began to run on the fraud claim on, at the latest, February 21, 2019, and any action had to be brought by February 21, 2022. Appling the tolling under Emergency Rule 9(a), the deadline for Plaintiff to file his fraud claim was August 18, 2022.

Conclusion

Sheppard Mullin's demurrer to first, second, fourth and sixth causes of action alleged against it in the FAC is sustained without leave to amend. Sheppard Mullin is to file a proposed order of dismissal.

Ruling Laurel Hardware Market, LLC v. Alan Wawryk, et al., Case No. 26SMCV00012 Wawryck's Demurrer Hearing Date: September 3, 2026

Background

Plaintiff Laurel Hardware Market, LLC sues Defendants Alan Wawryk ("Wawryk") and Nalakuf Investments, LLC ("Nalakuf") for (1) breach of contract; (2) disgorgement; (3) fraud; (4) diversion of funds/conversion; and (5) accounting, alleging that Defendants fraudulently agreed to make Plaintiff custom cabinets and other wood structures but instead took Plaintiff's money and purchased real property for their own benefit.

On January 5, 2026, Plaintiff filed the complaint. On February 19, 2026, Plaintiff entered default against Nalakuf. On May 6, 2026, Wawryk filed this demurrer. On August 20, 2026, Plaintiff filed opposition. On August 27, 2026, Wawryk replied. On August 27, 2026, Nalakuf filed a stipulation to set aside default.

Arguments

Wawryk demurs to Plaintiff's breach of contract, conversion, and accounting claims. Wawryk argues that the complaint fails to state a claim for breach of contract against him because it does not allege that he was a party to the contract in his individual capacity and because Plaintiff's alter ego allegations are insufficient. (Demurrer, p. 5.)

Wawryk next argues that Plaintiff's conversion claim fails as a matter of law because it does not allege that Wawryck held a specific, identifiable sum, but rather states that he misused funds under the contract, which is duplicative of Plaintiff's breach of contract claim. (Id. at p. 6.)

Wawryk then argues that Plaintiff's claim for accounting fails because there is no fiduciary relationship alleged. Finally, Wawryk argues that the complaint is uncertain because it refers to "defendants" collectively. (Id. at p. 7.)

In opposition, Plaintiff argues that the demurrer is procedurally improper because the notice of motion mis-states the content of the demurrer and because Wawryk's attorney lied about meeting and conferring with Plaintiff. (Opposition, p. 1.)

Plaintiff argues that the pleading adequately claims alter ego liability on its breach of contract claim, that it identifies the exact sum converted in its conversion claim, and that it alleges a fiduciary relationship to support its claim for accounting. Plaintiffs also argue that the complaint is not uncertain. (Id. at pp. 7-9.)

In reply, Wawryk argues that the complaint's allegations are conclusory and not sufficiently supported by factual allegations and that the complaint is uncertain.

Demurrer

In a demurrer proceeding, the defects in the complaint must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) "A demurrer tests the pleading alone, and not the evidence or facts alleged." (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint's properly pleaded or implied factual allegations. (Ibid.)

The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) Where a demurrer is sustained, leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)

The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Id.; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) However, "[i]f there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend." (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245). Before filing a demurrer, parties must meet and confer in person or by phone. (Code Civ. Proc. Sec. 430.41.)

Analysis

Procedure

a. Meet and Confer

Plaintiff contends that Defendants' attorney lied in her meet and confer declaration, representing that the parties met and conferred on May 6, 2026, when, in fact, Defendant's counsel emailed Plaintiff on that date about a demurrer, only two hours before she filed the motion. Defendants' declaration states only that Defendants' attorney attempted to meet and confer with Plaintiff's attorney on May 6, 2026.

While failure to meet and confer is not grounds for overruling a demurrer, lying in a sworn statement to the Court is grounds for sanctions. After reviewing the Skelton Declaration, the Court finds that it does not contain clear factual misrepresentations, though it is somewhat misleading. Counsel is cautioned that similar behavior in the future will result in sanctions.

Demurrer

a. Breach of contract and alter ego

To plead alter ego liability, a complaint must allege facts showing "that there is such a unity of interest and ownership that the individuality of the one corporation and the owner or owners of its stock has ceased, and further, that the observance of the fiction of separate existence would under the circumstances sanction a fraud or promote injustice." (Hennessy's Tavern, Inc. v. American Air Filter Co. (1988) 204, Cal.App.3d 1351, 1358.)

All Defendants alleged to be alter egos of each other are liable for claims stated against one alter ego entity. (See Hennesy's Tavern Inc. v. American Air Filter Co., supra, 204 Cal.App.3d at 1358 ["An alter ego defendant has no separate primary liability to the plaintiff. Rather, plaintiff's claim against the alter ego defendant is identical with that claimed by plaintiff against the already-named defendant"].)

To state a claim for breach of contract, a plaintiff must show (1) the existence of a contract, (2) plaintiff's performance or excuse for nonperformance; (3) defendants' breach; and (4) resulting damage. (Wall Street Network, Ltd. v. N. Y. Times Co. (2008) 164 Cal.App.4th 1171, 1178.)

Plaintiffs allege that Wawryk is Nalakuf's alter ego: Plaintiffs are informed, believe and thereon allege that there exists, and at all times herein mentioned there existed, a unity of interest and ownership between Defendant WAWRYK and Defendant NALAKUF, such that any individuality and separateness between defendants have ceased, and Defendant NALAKUF is are the alter ego of Defendant WAWRYK including by not limited to the following: Defendant NALAKUF was a mere shell and sham without adequate capital, assets, stock or stockholders, and it entered into a contract to fabricate and install millwork, shelving and other products while not possessing a contractor's license as required by Business and Professions Code section 7031(a); Plaintiff is informed and believes and thereon alleges that Defendant WAWRYK used assets of the corporation including payments made by Plaintiff herein, for his own personal uses including purchasing real property concurrent with the receipt of substantial sums of Plaintiff's funds, which is evidence that WAWRYK caused assets of the corporation to be transferred to his own devices without adequate consideration, and withdrew funds from the corporations bank accounts for his personal use; and/or Defendant NALAKUF is and was controlled, dominated, and operated by Defendant WAWRYK as his individual business and alter ego, in that the activities and business of the Defendant NALAKUF were carried out illegally, without a license, and without observing any of the corporate formalities; and Defendant WAWRYK acted as Defendant NALAKUF's agent in fraudulently inducing a substantial construction contract without having a contractor's license or the intention to perform the work. (Complaint, P. 5.)

Wawryk contends that these are allegations of ultimate legal conclusions, not facts. The Court disagrees. Plantiff's legal conclusions are supported by sufficient factual allegations. For example, Plaintiff alleges that Nalakuf was a shell and support that claim with factual allegations that Wawryk dominated the business and withdrew funds from Nalakuf's bank accounts for personal use. (Ibid.) These allegations are sufficiently specific to state a claim for alter ego. As such, Plaintiffs properly allege a unity of interest, and misconduct.

Plaintiff also states a claim for breach of contract against Nalakuf, and thereby against Wawryk, because it alleges that it entered into a contract for Nalakuf to build custom cabinets, shelving, and planters; that Nalakuf breached the contract by failing to produce those products, and that Plaintiff was injured because it had to procure substitute products and lost business. (Complaint, P.P. 20-23.) Wawryk's demurrer to Plaintiff's Breach of Contract claim is OVERRULED.

b. Conversion

A complaint states a claim for conversion if it alleges (1) a plaintiff's ownership or right to possession of personal property, including money; (2) defendant's disposition of the property inconsistent with plaintiff's rights; and (3) resulting damages. (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395, 397 [money cannot be the subject of a cause of action for conversion unless there is an identifiable sum, and dictum that, "plaintiffs may have stated a cause of action for conversion by alleging, in effect, an amount of cash 'capable of identification.'"]

Wawryk argues that Plaintiff does not specifically allege an identifiable sum and is duplicative of Wawryk's breach of contract claim. (Demurrer, p. 4.) Plaintiff alleges that it paid Nalakuf $231,230 at Defendants' request, which Defendants kept without delivering the promised cabinets and used the funds improperly to purchase land. (Complaint, P.P. 58, 64.)

Plaintiff's conversion claim is distinct from its breach of contract claim because Plaintiff alleges fraud. (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 452.) Wawryk's demurrer to Plaintiff's conversion claim is OVERRULED.

c. Accounting

A complaint states a claim for an accounting if it alleges facts showing (1) the existence of a relationship requiring an accounting, (2) some unliquidated and unascertained balance is owed. (St. James Church of Christ Holiness v. Superior Court (1955) 135 Cal.App.2d 352, 359.)

Wawryk contends that Plaintiffs do not allege a fiduciary relationship. Not so. Plaintiffs allege that a fiduciary or quasi-fiduciary relationship arose when Defendants wrongfully obtained Plaintiffs' funds and made Plaintiff an involuntary trustee over the property purchased with the wrongfully obtained funds. (Complaint, P. 77.) Plaintiff also specifically describes the funds over which it seeks an accounting. (See Complaint, P. 76.)

In reply, Wawryk argues that Plaintiff cannot seek an accounting of the funds alleged because it already knows how much money Wawryk allegedly misappropriated. Plaintiffs allege that Wawryk took a specific sum, but they also allege that Wawryk used that money to buy property, so the funds are unliquidated and unascertained. (See Complaint, P.P. 73-75.) Plaintiff also alleges that Wawryk fraudulently obtained the funds--a substantive allegation that supports its claim for accounting. (Id. at P. 73.) Defendants' demurrer to Plaintiff's accounting claim is OVERRULED.

Conclusion

Defendants' Demurrer is OVERRULED. | Home -->)" -->