Court Opinion

ID: 3183235
Source: CourtListenerOpinion
Date Created: 2016-03-07 22:14:09.283969+00
Date Added: 2024-06-11T09:36:33.532385
License: Public Domain

Filed 3/7/16 New Peking Buffet v. Lin CA2/1
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION ONE

NEW PEKING BUFFET, INC.,                                           B258842

         Plaintiff and Appellant,                                  (Los Angeles County
                                                                   Super. Ct. No. BC494420)
         v.

SHENG LI LIN et al.,

         Defendants and Respondents.

         APPEAL from a judgment of the Superior Court of Los Angeles County. Michael
M. Johnson, Judge. Affirmed.
         Ellis Law Group, Mark E. Ellis, Ronald R. Poirier and Steven T. Kelly for
Plaintiff and Appellant.
         Bryan Cave, John W. Amberg and Jonathan G. Fetterly for Defendants and
Respondents.

                                __________________________________
       New Peking Buffet, Inc. (New Peking), an Illinois corporation whose principal
place of business is in Los Angeles County, challenges a judgment of dismissal entered
after the trial court sustained the demurrer of defendants Sheng Li Lin, Jin Xing Yang,
Kiat Yeung, Xue Hua Zheng, Xiao Xia Ling (collectively Respondents), Ding He Chen,
and Jin Bin Chen without leave to amend the second amended complaint (SAC). New
Peking did not appeal the judgment in favor of defendants Ding He Chen and Jin Ben
Chen (collectively the Chens). New Peking argues the court erred in finding the act of
state doctrine barred its claims.1 We disagree and affirm.
                                      BACKGROUND
       According to New Peking’s SAC,2 in 2002 the government of the People’s
Republic of China (PRC) was looking for foreign investors to develop land in Jingdezhen
City, Jiangxi Province, into an industrial park (the Jingdezhen project). The Chens,
Chinese citizens, learned of this project and approached Tony Chen,3 an American citizen
and president and sole owner of New Peking, with this investment opportunity. New
Peking claims Tony Chen and the Chens entered into an oral joint venture agreement to
pursue investing in the Jingdezhen project. The terms of their oral agreement, allegedly,
were for (1) New Peking to act as the foreign investor, (2) New Peking to raise the capital
necessary for an initial investment, and (3) the parties to equally share in the profits, after
New Peking’s initial capital investment was repaid. New Peking alleges Tony Chen and

       1 “The judicially created act of state doctrine precludes the courts of this country
from inquiring into the validity of governmental acts of a recognized foreign sovereign
committed within its own territory.” (Black’s Law Dict. (6th ed. 1990) p. 34, col. 1; see,
e.g., Banco Nacional de Cuba v. Sabbatino (1964) 376 U.S. 398, 400–401 [84 S. Ct. 923]
(Banco Nacional).)
       2 When reviewing a demurrer, we “accept[] as true all facts properly pleaded in the
complaint in order to determine whether the demurrer should be overruled.” (Cryolife,
Inc. v. Superior Court (2003) 110 Cal. App. 4th 1145, 1152.)
       3
       It is unclear what relationship, if any, Ding He Chen and Jin Bin Chen have to
Tony Chen, and the parties did not explain the relationship, if any.

                                               2
all the defendants4 later orally further agreed to (1) sell the individual buildings
developed for the Jingdezhen project and (2) reinvest the profits from the buildings’ sales
back into the Jingdezhen project, minus New Peking’s initial capital contribution, which
was to be repaid. New Peking, and “investors,” then created Jiangxi Shengdu Zhi Yei
Company Ltd. (Shengdu), a Chinese corporation, to manage the Jingdezhen project. On
September 24, 2002, after an application process through the Ministry of Commerce
(MOFCOM), a branch of the PRC (the Administration for Industry and Commerce of
Jingdezhen City) issued Shengdu a business license, which listed New Peking as
Shengdu’s sole owner.5
       As agreed, New Peking raised capital and invested $5 million into the Jingdezhen
project. Under New Peking’s version of events, at some unspecified time after the
project began, the defendants conspired to breach the joint venture agreement between
Tony Chen and the Chens and divert the Jingdezhen project’s profits to themselves,
without repaying New Peking’s initial investment or reinvesting the profits. To
accomplish this, the defendants conspired to steal New Peking’s corporate records and
official seal in order to falsify documents necessary to fraudulently induce the PRC to
transfer ownership of Shengdu from New Peking to the defendants. New Peking alleges
sometime in 2011 or 2012, at the direction of defendants, Ding He Chen traveled to Los
Angeles and stole New Peking’s records and seal. After obtaining the records and seal,
the defendants used them to fraudulently induce the PRC to transfer ownership of
Shengdu to defendant and respondent Kiat Yeung (Yeung). With the power of this new

       4 “Defendants”   refers to Respondents and the Chens, the parties sued as
defendants below.
       5  We may properly consider allegations from prior pleadings that are omitted from
a later pleading when the allegations are omitted to conceal a flaw. (Vallejo Development
Co. v. Beck Development Co. (1994) 24 Cal. App. 4th 929, 946.) In its later pleadings,
New Peking characterized an official Chinese document evidencing its ownership of
Shengdu merely as a “stock certificate.” As the trial court recognized, however, a
“previous demurrer established that the ‘stock certificate’” was really “a business
certificate/license issued by the PRC through its [wholly foreign-owned enterprise] laws
and procedures.”

                                              3
ownership, the defendants then misappropriated funds from Shengdu to themselves in
violation of the joint venture agreement.
       On October 24, 2012, New Peking sued the defendants for conversion, fraud, and
negligence.6 The defendants filed a motion for judgment on the pleadings. In response,
New Peking submitted a first amended complaint (FAC). In the FAC, New Peking
abandoned its original causes of action and instead pleaded three new causes: (1)
declaratory relief, (2) accounting, and (3) violation of California’s Unfair Competition
Law (UCL) (Bus. & Prof. Code, § 17200 et seq.). On October 9, 2013, the court granted
the defendants’ motion for judgment on the pleadings with leave to amend, recognizing
the already submitted FAC as filed in response to the grant of leave to amend.
       On November 8, 2013, the defendants filed a demurrer to the FAC. The
defendants claimed each cause of action in the FAC was barred by the act of state
doctrine. The court sustained the demurrer with leave to amend, ruling that the causes of
action, as pleaded, were barred by the act of state doctrine. On April 1, 2014, New
Peking filed its SAC, asserting the FAC’s three causes of action (declaratory relief,
accounting, and violation of the UCL) and adding a fourth: breach of contract and breach
of the implied covenant of good faith and fair dealing. Once again, the defendants
demurred, in part, under the act of state doctrine. This time, the court sustained the
demurrer without leave to amend, invoking the act of state doctrine for all four counts.
The court did not grant leave to amend because New Peking “has had three opportunities
to allege sufficient causes of action, and there appears to be no reasonable probability that
[New Peking] can do so. E.g., Sprinkles v. Associated Indemnity (2010) 188 Cal. App. 4th
69, 76. Leave to amend should not be granted when amendment of the complaint would

       6 According to the record, New Peking had previously filed an administrative
complaint in China in December 2011 against the “Bureau of Investment Promotion and
Cooperation of Jingdezhen City,” the “Administration for Industry and Commerce of
Jingdezhen City,” and Yeung, requesting that the governing body revoke the approval of
the transfer of shares and ownership of Shengdu. The record does not reveal the outcome
of this administrative proceeding, but the record does show that Chinese authorities
arrested and detained the Chens.

                                             4
be futile. Long v. Century Indemnity (2008) 163 Cal. App. 4th 1460, 1468; Vaillette v.
Fireman’s Fund (1993) 18 Cal. App. 4th 680, 685.” New Peking appealed.7
                                        DISCUSSION
       On appeal, New Peking argues the trial court erred in sustaining the defendants’
demurrer because New Peking’s claims were not barred by the act of state doctrine and it
pleaded sufficient facts to support the complaint. We disagree.
       We review the sustaining of a demurrer de novo. (Martin v. Bridgeport
Community Assn., Inc. (2009) 173 Cal. App. 4th 1024, 1031.) That is, we determine
“whether, as a matter of law, the complaint states facts sufficient to constitute a cause of
action.” (Ibid.) In addition to considering the facts, we “may also consider . . . any
matter that is judicially noticeable under Evidence Code section . . . 452,” including the
PRC’s laws and regulations. (Cryolife, Inc. v. Superior Court, supra, 110 Cal.App.4th at
p. 1152.) “A judgment of dismissal after a demurrer has been sustained without leave to
amend will be affirmed if proper on any grounds stated in the demurrer, whether or not
the court acted on that ground.” (Carmon v. Alvord (1982) 31 Cal. 3d 318, 324.) We do
not consider whether New Peking will be able to prove its allegations at trial, but New
Peking has the burden of proving the court below erred in sustaining the demurrer.
(Ferrick v. Santa Clara University (2014) 231 Cal. App. 4th 1337, 1341; Vaughn v. LJ
Internat., Inc. (2009) 174 Cal. App. 4th 213, 219.)
       We review the decision denying leave to amend for abuse of discretion. (Dey v.
Continental Central Credit (2008) 170 Cal. App. 4th 721, 725–726; accord, Buller v.
Sutter Health (2008) 160 Cal. App. 4th 981, 985–986.) A plaintiff establishes an abuse of
discretion by showing it can effectively amend the complaint, consistent with its theory
of the case. (Dey, at p. 731.)

       7   Tony Chen and Kurt Miller, plaintiffs below, are not parties to this appeal.

                                               5
I.     The act of state doctrine bars relief for all of New Peking’s causes of action, as
they were pleaded
       The act of state doctrine prevents courts from assessing the validity of a foreign
government’s official acts made in its sovereign capacity. (Kirkpatrick Co. v.
Environmental Tectonics Corp. (1990) 493 U.S. 400, 409 [110 S. Ct. 701, 707]
(Kirkpatrick).) That is, “‘courts of one country will not sit in judgment on the acts of the
government of another, done within its own territory. Redress of grievances by reason of
such acts must be obtained through the means open to be availed of by sovereign powers
as between themselves.’” (In re Philippine Nat’l. Bank (9th Cir. 2005) 397 F.3d 768,
772, quoting Underhill v. Hernandez (1897) 168 U.S. 250, 252 [18 S. Ct. 83].) Under the
act of state doctrine, we are to presume other countries’ official acts are valid.
(Kirkpatrick, at p. 409.) This deference has constitutional separation of power
underpinnings and prevents the judiciary from improperly interfering with the executive’s
domain of foreign relations. (Kirkpatrick, at pp. 404–405, citing Banco Nacional, supra,
376 U.S. at p. 423.)
       Not every act of state is afforded deference under the act of state doctrine,
however. (Kirkpatrick, supra, 493 U.S. at p. 409.) For example, and of importance here,
mere ministerial official acts do not render a case nonjusticiable. (See ibid. [courts
ordinarily have the obligation to exercise their jurisdiction].) Ministerial acts are
generally those in which the state actor “‘“is left no choice of his own”’” and is merely
executing “a set task.” (Johnson v. State of California (1968) 69 Cal. 2d 782, 788
[rejecting definitively defining “ministerial” but quoting Morgan v. County of Yuba
(1964) 230 Cal. App. 2d 938, 942, as an example of how “ministerial” is commonly
understood]; Ne Casek v. City of Los Angeles (1965) 233 Cal. App. 2d 131, 134–135
[executing “a set task”].) In contrast, acts of state which require “‘“personal deliberation,
decision and judgment”’” are not ministerial and represent decisive state action.
(Johnson, at p. 788.) Using these general definitions, the kinds of state action the United
States Supreme Court has protected under the act of state doctrine have been deliberative.
(See, e.g., Underhill v. Hernandez, supra, 168 U.S. 250 [refusal to grant a passport];

                                              6
Oetjen v. Central Leather Co. (1918) 246 U.S. 297 [38 S. Ct. 309] [confiscation of hides];
Kirkpatrick, supra, 493 U.S. 400 [issuance of military contract].) These actions are the
kind which “‘constitute an exercise of governmental administration’” and “‘should
“‘remain beyond the range of judicial inquiry’”’” because “‘“judicial review . . . would
place the court in the unseemly position of determining the propriety of decisions
expressly entrusted to a coordinate branch of government.”’” (Masters v. San
Bernardino County Employees Retirement Assn. (1995) 32 Cal. App. 4th 30, 45–46,
quoting Johnson, at pp. 793–794.)
       The PRC’s act of approving the transfer of Shengdu’s ownership from New
Peking to Yeung was deliberative, not ministerial, and is therefore presumed valid under
the act of state doctrine. Under the PRC’s laws and regulations,8 a party petitioning for
change in corporate ownership must go through the same process necessary to establish a
corporate entity. (PRC, Law on Wholly Foreign-Owned Enterprises, Standing Com. Nat.
People’s Cong. (Oct. 31, 2000) art. 10  [as of Mar. 2, 2016].) The corporate
approval process requires more than the PRC’s ministerial “rubber-stamping” of
applications. It instead requires, for example, submission of documents containing
information on the “amount of environmental pollution likely to [be] caused and [the]
corresponding measures for solution”; “capital construction and capital, resources and
raw materials required for production and operations and supply measures”; the
“personnel framework, arrangements for employee recruitment, training, wages, welfare
benefits, insurance, labor protection”; and the “main types of production equipment to be
used and respective age of equipment, production technology, level of technology and
source of supply.” (PRC, Detailed Rules for Implementation of Law on Wholly Foreign-
Owned Enterprises, State Council (Apr. 12, 2001) art. 14  [as of

       8We take judicial notice under Evidence Code section 452 of the PRC’s relevant
laws and regulations.

                                             7
A.K. Marsh. 2, 2016].) Applicants must also submit documents establishing articles of
association and a “feasibility study report.” (Id., art. 10.) These documents must be
“examined and approved” by various “departments of the State.” (Regs. of the PRC,
Admin. of Co. Registration, State Council (Dec. 18, 2005) art. 22  [as of Mar. 2, 2016].) Without this
approval, a corporate entity cannot exist in the PRC. (Id., art. 25.)
       This kind of action is not merely a matter of the PRC’s paper recognition of a
change in corporate ownership as New Peking argues. Rather, it is the result of a
complex, deliberative process, indicating a choice on the PRC’s part to allow Shengdu to
operate within its jurisdiction. California courts should not be placed in a position of
judging the validity of such an act by the PRC or one of its constituent parts.
(Kirkpatrick, supra, 493 U.S. at p. 409.) If New Peking believes the PRC was
fraudulently induced into transferring ownership of Shengdu from New Peking to Yeung,
causing it to suffer damages, it needs to petition the appropriate Chinese authorities to
redress that harm. (See In re Philippine Nat’l. Bank, supra, 397 F.3d at p. 772.)
       It is possible New Peking could have argued that regardless of who owned
Shengdu, Respondents violated Tony Chen and the Chens’s oral joint venture agreement,
which Respondents were parties to by their ratification, by diverting funds from the
Jingdezhen project to themselves. This would have allowed New Peking, at a minimum,
to seek an accounting and damages for breach of contract without questioning the validity
of the PRC’s transfer of Shengdu to Yeung; such a pleading would question only whether
Respondents had misappropriated funds from New Peking through Shengdu, regardless
of who owned Shengdu. New Peking, however, did not plead its causes of action by
arguing ownership of Shengdu was irrelevant. In fact, each cause of action mentioned
and was tied to the transfer of ownership in Shengdu.
       To start, New Peking requested a “Declaration of Plaintiff NPB’s ownership
interest and rights in Shengdu, specifically an order confirming that NPB is the legal
owner of one hundred percent of Shengdu’s outstanding shares of stock.” Next, in the
accounting cause of action, New Peking states, “NPB and the Defendants disagree as to

                                              8
the control of and ownership interest in Shengdu.” Due in part to the allegedly fraudulent
transfer, New Peking requested an accounting to determine whether and, if so, how much
defendants owed New Peking. In the breach of contract and breach of the covenant of
good faith and fair dealing cause of action, New Peking alleges defendants “wrongfully
transferred ownership in Shengdu from NPB to themselves.” New Peking argued
defendants’ fraudulently induced transfer was part of a series of events which constituted
a breach of the joint venture agreement. Finally, under its UCL cause of action, New
Peking alleged, “Defendants’ scheme of transferring the ownership of Shengdu,” in
conjunction with other actions, constituted a violation of the UCL, and that “Defendants’
conduct” also “constitutes unfair competition resulting from Defendants’ ongoing
wrongful misappropriation and conversion of the ownership of Shengdu from NPB to
Defendants.” Although each cause of action mentioned other wrongs, including
Respondents’ failure to return New Peking’s initial capital contribution and distribute the
Jingdezhen project’s profits equally, each cause of action was also squarely premised on
the allegedly wrongful transfer of Shengdu. Allowing the trial court to adjudicate the
causes of action based in part upon the assumption or recognition that Shengdu was
fraudulently transferred would violate the act of state doctrine.
       New Peking also failed to propose on appeal an amendment to the pleadings that
would not require the court to pass judgment on the PRC’s transfer of Shengdu. Instead,
it argued the act of state did not apply because the PRC’s act was ministerial or, in the
alternative, the “commercial exception” applied. Under either scenario, New Peking is
admitting that the transfer of Shengdu required some government action. As described
above, based on the PRC’s approval process, the PRC’s level of state action was
significant enough to invoke the act of state doctrine; as described below, the commercial
exception does not apply.
       As a defense to the application of the act of state doctrine, New Peking argues that
the parties’ actions fell under the “commercial dispute” exception. The commercial
dispute exception, however, applies when a sovereign acts in a commercial capacity, not
when the parties act in a commercial capacity. (Alfred Dunhill of London, Inc. v.

                                              9
Republic of Cuba (1976) 425 U.S. 682, 695 [96 S. Ct. 1854].) That is, “the concept of an
act of state should not be extended to include the repudiation of a purely commercial
obligation owed by a foreign sovereign or by one of its commercial instrumentalities.”
(Id., italics added.) Here, the PRC was not acting in a commercial capacity, even though
its approval of Shengdu through MOFCOM related to commercial matters.9 Instead, it
was acting in its sovereign administrative and regulatory capacities, to which the act of
state applies. (Banco Nacional, supra, 376 U.S. 398, 445, fn. 3 (dis. opn. of White, J.)
[“‘The expression “act of State” usually denotes “an executive or administrative exercise
of sovereign power”’”].) Therefore, the commercial dispute exception does not bar
application of the act of state doctrine here.
II.    New Peking did not allege sufficient facts to show Respondents ratified the
joint venture agreement
       New Peking argues that if one of the causes of action were barred by the act of
state doctrine, the other causes of action could still be adjudicated. Although the cases
New Peking cites are from other jurisdictions and therefore not binding, we agree that
even if a claim is barred by the act of state doctrine, other properly pleaded claims are not
barred if they are severable. (Sun ’n Sand, Inc. v. United California Bank (1978) 21
Cal. 3d 671, 703 [allowing certain causes of action, but not others, to survive a
demurrer].) The trial court nevertheless properly sustained the demurrer as to all of New
Peking’s causes of action, however, because New Peking failed to state sufficient
supporting facts.

       9 In OBB Personenverkehr AG v. Sachs (2015) ___ U.S. ___ [136 S. Ct. 390], the
Supreme Court held that a railroad operated by Austria could not be hauled into an
American court as a defendant in a personal injury case under the commercial exception
doctrine of the Foreign Sovereign Immunities Act. This decision represents the Court’s
continuing commitment to respect the sovereignty of foreign governments and the need
for American citizens to redress harms done by foreign governments within those
governments’ jurisdiction, even when the governments’ actions have some relationship to
or bearing on commercial activity.

                                                 10
       A.     Breach of contract and of the covenant of good faith and fair dealing
and declaration of conclusions premised on the breach
       New Peking argues Respondents breached their contractual duties to New Peking
under an alleged oral joint venture agreement. In the SAC under a section entitled,
“General Allegations,” however, New Peking admits that Tony Chen, on behalf of New
Peking, initially entered into the oral joint venture agreement with only the Chens, who
are not parties to this appeal. Their agreement was “for the purpose of investing in,
financing, and managing the Chinese development project” and they were to “share
equally [in] the profits after return of paid in capital.” New Peking does not allege
Respondents were involved in this initial agreement and it appears from the SAC that, of
Respondents, only Sheng Li Lin (Lin) and Jin Xing Yang (Yang) became involved at this
time when they joined Shengdu’s board. New Peking does not allege that Lin or Yang
even knew of the joint venture agreement allegedly agreed to by Tony Chen and the
Chens when they joined Shengdu’s board, let alone agreed with it or became parties to it.
Lin’s and Yang’s board membership after the formation of the alleged joint venture
agreement is insufficient alone to demonstrate they knew of or ratified that agreement.
Nor does New Peking allege when the board was formed the other Respondents knew of
the joint venture agreement or became parties to it. In fact, New Peking does not
describe the relationship between Xue Hua Zheng (Zheng) and Xiao Xia Ling (Ling) to
New Peking or Shengdu at all in the SAC.10 If Zheng and Ling were not parties to the
joint venture agreement, were not Shengdu board members, and never initially or
eventually had an interest in Shengdu, it is unclear how they were involved with New
Peking, Shengdu, or the Jingdezhen Project. These facts do not allege Respondents were
parties to the joint venture agreement.

       10 In the FAC, New Peking originally alleged that Defendants, not only the Chens,
had become aware of the Jingdezhen project and it was Defendants, not only the Chens,
who entered into the original joint venture agreement with New Peking. We do not
consider these allegations, which connect Respondents to the joint venture agreement,
however, because New Peking omitted them in the SAC.

                                             11
       Other subsequent language regarding the agreement is confusing at best, and fails
to coherently allege facts demonstrating Respondents were parties to it. For example,
New Peking also alleged that, after the formation of Shengdu, it “and all of the
Defendants subsequently agreed that the parties would sell off each building of the
development project upon its completion. The parties further agreed that initially any
profits from the sale of the individual units would be reinvested in the project. However,
it was agreed the initial capital contributions would be repaid earlier.” New Peking
makes no mention of the joint venture in this allegation. New Peking then alleged,
“Following the commencement of the project and contrary to their prior agreement, . . .
Defendants . . . decided to pay themselves out of the project, even prior to the completion
of the project, and in derogation of the joint venture agreement.” (Italics added.) New
Peking’s allegations make it sound as if the alleged “subsequent” agreement between
New Peking and Defendants was separate from the joint venture agreement; if this were
true, it would confirm that Respondents were, indeed, not parties to the joint venture
agreement.
       Adding confusion to the nature of the agreement, if any, between Respondents and
New Peking, under a section entitled, “Third Cause of Action for Breach of Contract and
of the Covenant of Good Faith and Fair Dealing,” New Peking again admits that the
original joint venture agreement was made by New Peking, acting through Tony Chen,
and the Chens; again, Respondents are not mentioned as being part of this agreement.
New Peking then specifically states: “Defendants Din He Chen[] and Jin Bin Chen have
breached the agreement by depriving NPB of the expected benefits of the bargain by
wrongfully usurping the interest previously held by NPB in Shengdu, by preventing it
from being reimbursed for some or all of the initial seed money contributed, and by
preventing it from sharing in the profits, which . . . Plaintiff NPB believes the other
Defendants have siphoned from the corporate opportunity, and wrongfully divided
among themselves.” (Italics added.) Much like the general allegation language, this
language, again, makes it appear as if New Peking concedes that Respondents were not
parties to the joint venture agreement.

                                             12
          Without explaining how or when Respondents became parties to the joint venture
agreement, New Peking states in the next paragraph of the breach of contract cause of
action: “Under this contract, the Defendants owed a duty to do all the things necessary to
ensure that NPB was reimbursed for its seed money and was able to share in the profits.
As part of the agreement, Defendants were subject to the implied covenant of good faith
and fair dealing which obligated them to act in all ways which would not frustrate NPB’s
rights to receive the benefits of the agreement.” Without specific facts alleging how
Respondents became parties to the alleged joint venture agreement, New Peking’s
statements that Respondents owed them a duty under it are conclusory and insufficient to
establish the necessary contractual relationship giving rise to remediable breaches of
duties.
          New Peking again perpetuates the confusion by alleging that “[b]y the acts
described above, Defendants Din He Chen, Jin Bin Chen, and the other Defendants in
aiding and abetting them, have deprived NPB of the benefits of the agreement and have
frustrated and interfered with the purpose of the agreement.” (Italics added.) To the
extent the clause refers to Respondents’ alleged ratification of the original joint venture
agreement, it still does not describe how Respondents became parties to the joint venture
agreement and, in fact, again, makes it sound as if Respondents were not parties to the
joint venture agreement and their subsequent actions merely assisted the Chens in
breaching their joint venture agreement. The use of the phrase “the agreement” also
suggests New Peking entered into only one agreement, and that agreement was with the
Chens. (Italics added.)
          New Peking tries to avoid these defects by alleging in a conclusory fashion “that at
all times mentioned herein Defendants, individually and jointly acted as the agents,
employees, partners, principles, representatives and/or affiliates of each of the remaining
Defendants and were, at all times herein mentioned, acting within the course and scope of
such relationship . . . . [E]ach of the Defendants did confirm, consent to, affirm, direct,
authorize, acknowledge, and ratify the acts of each and every of the Defendants herein.”
Such boilerplate language, even in conjunction with conclusory allegations such as

                                               13
Respondents “aided and abetted” the Chens, fails to provide sufficient specific facts to
show Respondents were parties to the joint venture agreement, knew of it, ratified it, or
breached it. (See, e.g., Moore v. Regents of University of California (1990) 51 Cal. 3d
120, 134, fn. 12 (Moore).)11 Because “[s]pecific factual allegations modify and limit
consistent general statements” (B & P Development Corp. v. City of Saratoga (1986) 185
Cal. App. 3d 949, 953), an absence of any specific facts supporting a boilerplate general
statement may be construed as the general statement lacking any factual basis. We will
not assume such a bare conclusion of law is true, and we therefore disregard this
allegation. (Moore, at p. 125 [conclusions of law are not assumed as fact].)
       Although it is possible New Peking could have alleged its facts and pleaded its
causes of action to support a theory that Respondents and New Peking were parties to a
joint venture agreement and Respondents breached the agreement, it did not. New
Peking has had three opportunities to plead such facts and three opportunities to
comprehensibly amend its pleadings, but failed to do so. We will not construe New
Peking’s pleadings to marshal potential facts and craft coherent arguments to support an
agreement and breach theory.
       Without an underlying contractual obligation, Respondents could not breach any
contractual obligations to New Peking or violate the duty of good faith and fair dealing.
Likewise, Respondents cannot be declared to have any contractual duties to an agreement

       11  In Moore, the court found the certain “secondary-liability allegations,” similar
to New Peking’s ratification allegations, as “egregious examples of generic boilerplate.”
(51 Cal.3d at p. 134, fn. 12.) The language stated: “‘each of the defendants was the
agent, joint venturer and employee of each of the other remaining defendants, and is
jointly liable for the acts of every other defendant and in doing the things hereinafter
alleged, each was acting within the course and scope of said agency, employment,
partnership and joint venture with the advance knowledge, acquiescence or subsequent
ratification of each and every remaining defendant, and that each defendant joined
together with every other defendant . . . had a fiduciary duty to the plaintiff, and each
acted in concert with every other defendant in violating their [sic] duties to plaintiff.’”
(Ibid.) The court noted that “[n]owhere in the third amended complaint does Moore
specifically allege that any defendant other than Golde knew that Moore had not received
adequate disclosures.” (Ibid.)

                                            14
to which they were not parties. (See Racine & Laramie, Ltd. v. Department of Parks &
Recreation (1992) 11 Cal. App. 4th 1026, 1031 [“The implied covenant of good faith and
fair dealing rests upon the existence of some specific contractual obligation”].)
       B.     Violation of the UCL
       New Peking alleged three wrongs under the UCL: (1) fraudulent transfer of
Shengdu’s ownership, (2) failure to pay back New Peking’s initial capital contribution,
and (3) failure to distribute New Peking’s share of the project’s profits. All of these
wrongs, however, are either barred by the act of state doctrine or tied to an agreement
New Peking did not sufficiently plead. To start, and again, ruling on whether
Respondents fraudulently transferred Shengdu’s ownership would require a California
court to pass judgment on the validity of the PRC’s transfer of Shengdu’s ownership. For
the reasons discussed above, California courts are prevented from doing so by the act of
state doctrine. As to Respondents’ failure to return New Peking’s initial capital
contribution or distribute the Jingdezhen project’s profits to New Peking, again, New
Peking did not plead sufficient facts to demonstrate that Respondents were parties to the
joint venture agreement; therefore, without the underlying contractual agreement, New
Peking cannot show Respondents owed it any duties.
III.   Accounting
       New Peking also asks the court to order an accounting of Shengdu’s finances
because “NPB and the Defendants disagree as to the control of and ownership interest in
Shengdu, including what amount should be paid to each of the parties upon the
dissolution of Shengdu,” and “NPB is entitled to know whether funds exist so it may be
reimbursed its initial contribution as agreed to by the parties, and whether or not profits
exist which should have been distributed to NPB, but for the wrongful acts, fraud and
conversion of these profits by the Defendants for their own purposes.”
       Based on the grounds it presented, New Peking’s request for an accounting is
unwarranted. To the extent that an accounting rests on the grounds of Shengdu’s
fraudulent transfer, we may not allow an accounting under the act of state doctrine. To
the extent it rests on the grounds of Respondents’ alleged agreement with Tony Chen,

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New Peking failed to allege sufficient facts to demonstrate Respondents joined the
agreement. In light of the fact that there are no justiciable issues against Respondents, an
accounting claim cannot proceed.
IV.    Conclusion
       The court did not abuse its discretion by denying leave to amend. New Peking
submitted three complaints where all the causes of actions were barred by the act of state
doctrine or failed to coherently show Respondents were parties to the joint venture
agreement. New Peking did not argue on appeal it could amend the SAC to state viable
causes of action. In light of this, we agree with the trial court that granting further leave
to amend would be “‘futile.’” (Long v. Century Indemnity Co., supra, 163 Cal.App.4th at
p. 1468; Vaillette v. Fireman’s Fund Ins. Co., supra, 18 Cal.App.4th at p. 685.)
                                      DISPOSITION
       The judgment is affirmed. Respondents are awarded their costs on appeal under
California Rules of Court, rule 8.278.
       NOT TO BE PUBLISHED.

                                                   LUI, J.

We concur:

       ROTHSCHILD, P. J.

       JOHNSON, J.

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