Judge: Thomas Falls, Case: 22PSC00559, Date: 2023-05-11 Tentative Ruling

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Case Number: 22PSC00559    Hearing Date: May 11, 2023    Dept: O

HEARING DATE:                 May 11, 2023

RE:                                          STEVEN PEREZ vs ARTURO HERNANDEZ, et al. (22PSCV00559)

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Plaintiff’s APPLICATION FOR DEFAULT JUDGMENT

Tentative Ruling

Plaintiff’s APPLICATION FOR DEFAULT JUDGMENT is DENIED without prejudice.

Background

This is a contracts case. Plaintiff Steven Perez (“Plaintiff”) alleges the following against Defendants Arturo Hernandez and Evelyn Hernandez (collectively, “Defendants”): In 2018, Plaintiff loaned Defendants $60,000. Defendants were to repay the loan in 6 months, in addition to $36,000 in interest. To date, Defendants have not paid Plaintiff $96,000. 

On June 9, 2022, Plaintiff filed the instant suit.

On June 9, 2022, Defendants were served via personal service (POS filed on 07/14).

On July 14, 2022, default was entered against Defendants.

On October 17, 2022, the court denied Plaintiff’s application.

On February 17, 2023, the court again denied Plaintiff’s application.

On February 22, 2023, Plaintiff filed a ‘Statement of the Case.’

Discussion

Plaintiff seeks entry of default judgment in the total amount of $134,319.10. The break-down is as follows:

Demand of complaint: $96,000

Interest: $38,319.10.

Previously, the court denied the application for four reasons. Then, after Plaintiff’s second application, the court again denied the application for the following reason: Plaintiff seeks to hold individual Defendants liable even though the contract was signed on behalf of an LLC. It is well-established that absent certain circumstances such as fraud, a LLC, is a “separate legal entity, distinct” from its members and managers. (See Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 220.) Therefore, absent the legal authority to hold the individual Defendants liable for the act of Primera Avocados, LLC, Plaintiff’s application fails. (February 17, 2023 Tentative Ruling.)

Now, though Plaintiff has filed a statement of the case explaining that it attempts to pierce the corporate veil, the legal explanation and allegation fall short. Plaintiff attempts to pierce the corporate veil because Defendants did not repay the loan, which Plaintiff argues amounts to fraud. Not so. The mere failure to make a payment does not amount to fraud or false representations. (See Yield Dynamics, Inc. v. TEA Systems Corp. (2007) 154 Cal.App.4th 547, 576 [“Mere nonperformance of a promise does not establish that the promise was fraudulent when made.”].) And as entry of default judgment requires that there be well-pleaded allegations that set forth the ultimate facts constituting the cause of action, a conclusory allegation will not suffice. (See Carlsen v. Koivumaki (2014) 227 Cal. App. 4 879, 899-900 [For discussion on well-pleaded allegations in alter ego context].)

Conclusion

Based on the foregoing—notably that Plaintiff has not made a sufficient allegation of fraud and/or misrepresentations by Defendants—the application is again denied without prejudice.