Demurrer to First Amended Complaint; Motion to Strike
Superior Court of the State of California County of Orange TENTATIVE RULINGS FOR DEPARTMENT N16
HON. Donald F. Gaffney
Counsel and Parties Please Note: Law and Motion in Department N16 is heard on Wednesdays at 9:00 a.m.
Date: May 27, 2026
Tentative Rulings will be posted on the Internet on the day before the hearing by 5:00 p.m. [or earlier] whenever possible. To submit on the tentative ruling, please contact the clerk at (657) 622-5616, after contacting opposing party/counsel. Prevailing party shall give notice of the Ruling and prepare the Order/Judgment for the Court’s signature if required.
NOTE: After posting of tentative rulings, the Court will not take the motion off calendar and will grant a continuance of the motion only upon stipulation of all affected parties.
If no appearances are made on the calendared motion date, then oral argument will be deemed to have been waived and the tentative ruling will become the Court’s final ruling.
# Case Name Tentative 1 Hong vs. OFF CALENDAR McDonald's Corporation 2 Marimed Inc. TENTATIVE RULING: vs. TUV Investments For the reasons set forth below, Defendant Jennifer Whalen’s LLC demurrer to the First Amended Complaint is SUSTAINED with leave to amend. Defendant’s motion to strike is DENIED as moot.
Defendant Jennifer Whalen (“Whalen”) demurs to Plaintiff Marimed, Inc.’s First Amended Complaint (“FAC”) on the ground that it fails to allege facts sufficient to state claims against her in her individual capacity. Specifically, Whalen contends that Plaintiff’s claims are based entirely on an alter ego theory, but the FAC alleges only conclusory assertions of unity of interest and inequitable result without sufficient supporting factual allegations.
Statement of Law
“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. [Citations.]” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) “[T]he
corporate form will be disregarded only in narrowly defined circumstances and only when the ends of justice so require.” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 301
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A unity-of-interest finding sufficient to impose liability against a corporate owner may be shown by a commingling of personal and corporate assets, using corporate assets for personal purposes, gross under-capitalization of the corporation, disregarding corporate formalities, and any other circumstances that might support the conclusion that no separation actually existed between the corporate owner and the corporation. (Kao v Joy Holiday (2020) 58 Cal.App.5th 199, 206–207 [sufficient showing that owners of closely held corporation were alter egos of corporation due to commingling of assets and unauthorized use of corporate assets to pay personal expenses; Eleanor Licensing LLC v Classic Recreations LLC, supra, 21 Cal.App.5th at 615–616 [insufficient showing in this case]; Misik v D'Arco (2011) 197 Cal.App.4th 1065, 1073 [identifying facts in prior court decisions supporting unity-of-interest finding]; A.J. Fistes Corp. v GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 696 [allegation that person owns all corporate stock and makes all management decisions is insufficient to cause court to disregard corporate entity].)
With regard to the second factor required for alter ego liability. a finding that there would be an inequitable result if the acts in question were treated as those of the corporation alone, when the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish another wrongful or inequitable purpose, courts will ignore the corporate entity and deem the corporation's acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. (Kao v Joy Holiday, supra, 58 Cal.App.5th at 207; Turman v Superior Court (2017) 17 Cal.App.5th 969, 981.)
FAC Allegations Against Whalen:
Whelan is the Chief Executive Officer (“CEO”) of Defendant TUV Investments LLC d/b/a Evergreen Gateway (“Evergreen”) and, at all relevant times, was a resident of Southern California and the signatory to the parties’ Terms and Conditions Agreement on behalf of Evergreen. (FAC, ¶ 3.)
Based on information and belief, Evergreen is and was wholly owned and controlled by Whelan and there is and was a unity of interest and ownership which existed between Whelan and Evergreen, such that the separateness of the individual and the entity never existed. Further, based on information and belief, denying the unity of interest between Whalen and Evergreen will result in fraud and inequity for Plaintiff. This alter ego should result in piercing the corporate veil because the corporate veil of Evergreen should be set aside so that Whelan may be held personally responsible and accountable for all acts and transactions of Evergreen. (FAC, ¶ 4.)
Merits
Although Plaintiff alleges, on information and belief, that Whalen wholly owned and controlled Evergreen and that recognizing the corporate form would result in fraud and inequity, the FAC does not allege supporting facts such as commingling of assets, misuse of corporate funds, undercapitalization, disregard of corporate formalities, or other conduct demonstrating that no meaningful separation existed between Whalen and Evergreen. Instead, the FAC essentially recites the elements of alter ego liability in conclusory fashion. The FAC likewise does not allege facts showing that the corporate form was used to perpetrate fraud or accomplish another inequitable purpose sufficient to justify piercing the corporate veil.
Accordingly, the demurrer is sustained with leave to amend.
In light of the Court’s ruling on the demurrer, the motion to strike is denied as moot.
Should Plaintiff wish to file an amended complaint that addresses the issues in this ruling, Plaintiff must file and serve it within 30 days of service of notice of ruling.
Defendant to give notice.
3 Shy Enterprises, TENTATIVE RULING: Inc. vs. Chung Defendants In Joo Chung, James Chung, and Defendant 121 Company, Inc., demur to the Complaint of Plaintiff Shy Enterprises, Inc. For the following reasons, the demurrer is SUSTAINED with leave to amend.