Court Opinion

ID: 1035822
Source: CourtListenerOpinion
Date Created: 2013-07-31 00:02:14.298728+00
Date Added: 2024-06-11T11:38:21.789307
License: Public Domain

Filed 7/30/13 Kim v. Lee CA2/4
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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 FOUR

JUHEE KIM,                                                          B245447

         Plaintiff and Respondent,                                   (Los Angeles County
                                                                     Super. Ct. No. BC449490)

         v.

YONG TAI LEE,

         Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of Los Angeles County, Michael
Johnson, Judge. Affirmed.
         Kim, Park, Choi & Yi and Michael Y. Yi for Defendant and Appellant.
         Law Offices of Frank N. Lee and Frank N. Lee for Plaintiff and Respondent.

                          _________________________________________
       Appellant Yong Tai Lee appeals from the judgment in favor of Juhee Kim after a
bench trial. He claims Kim failed to state any causes of action, and that the court erred in
finding their agreement enforceable and finding fraud. We affirm the judgment.

                    FACTUAL AND PROCEDURAL SUMMARY
       In August 2003, appellant Lee, a physician, hired respondent Kim as program
director for his newly-started adult daycare center, Young Again Daycare Center, Inc.
(YADC). In October 2005, Ms. Kim received a $200,000 inheritance, and told Dr. Lee
that she planned to leave his employment to start her own business. He convinced her to
use her $200,000 to buy a 20 percent share in YADC.
       According to Ms. Kim, Dr. Lee promised she would receive a dividend at the end
of 2006. The dividend was not paid, but Dr. Lee told her he would give it to her “next
time.” When Ms. Kim prepared the financial report for 2006, she saw a significant
amount of money had been taken from the business by Dr. Lee and his mother for
personal use. She asked him about it, and he assured her “he would take care of that” and
she would receive the dividend soon.
       In 2007, the business was thriving, with an increase in daily participants. In April
2008, Ms. Kim examined the financial report for 2007 and saw the same pattern of
personal use of company funds that had occurred in 2006. She was upset and told Dr.
Lee she would leave YADC if he did not pay her the promised dividend.
       On August 11, 2008, Ms. Kim submitted her resignation. Dr. Lee told her if she
stayed on longer, he would buy her share of the business. The two discussed price over
the next two months, and on October 21, 2008, reached an agreement. Based on Dr.
Lee’s expressed belief that YADC was by then worth $2 million, they agreed he would
purchase her 20 percent share for $400,000. On October 21, 2008, Dr. Lee dictated, Ms.
                                              1
Kim typed, and they both signed a document which provides that Dr. Lee would pay Ms.

1
       The document was prepared in Korean. We quote the certified translation which
was attached as an exhibit to the first amended complaint and introduced into evidence at
trial.
                                             2
Kim $400,000 “($200,000 in cash, $200,000 in Young Again ADHC check)” for her 20
percent share of stock. Until the completion of the exchange, $7,000 in interest was to be
paid each month in two installments. At Dr. Lee’s request, Ms. Kim continued to work at
YADC after the execution of the agreement.
       Ms. Kim gave Dr. Lee the original stock certificate for her shares of YADC. She
expected to be paid $200,000 on October 31, 2008, but Dr. Lee said he was looking for
the money and he could not pay her the $200,000 in cash as promised in the contract. He
told her he would get the $400,000 at one time at the end of 2008 from a prospective
buyer. Instead he paid her $7,000 interest as provided in the agreement. She met with
Dr. Lee again at the end of 2008 to ask about the money. He told her he had a deal for
the sale of the business and asked her to wait another two or three months to finish the
escrow. That sale was never completed and at the end of March 2009, Ms. Kim again
asked about the $400,000. Dr. Lee told her there was another buyer, but Ms. Kim later
discovered that was not the case.
       On June 30, 2009, Ms. Kim gave notice that she would leave YADC in one
month. At Dr. Lee’s request, she stayed on until August 31, 2009.
       Dr. Lee did not pay any portion of the $400,000 purchase price, but made several
interest payments, totaling $119,000. Other checks he gave Ms. Kim were returned for
insufficient funds. Ms. Kim and her attorney met with Dr. Lee in December 2009 and
asked about the money owed. Dr. Lee insisted he could not pay her, and told her she
would have to sue him. YADC closed in August 2010.
       In November 2010, Ms. Kim brought this action against Dr. Lee for breach of
contract, fraud and promissory fraud. Dr. Lee’s demurrer to the original complaint was
sustained, and his demurrer to the first amended complaint was overruled. The case was
tried to the court. Ms. Kim testified; the defense called no witnesses.
       The court found the October 2008 contract was enforceable and had been breached
by Dr. Lee. The court rejected Dr. Lee’s argument that the 20 percent rate of interest was
usurious, concluding that the usury laws do not apply to a sales transaction such as this
stock purchase. Nevertheless, the court converted the obligation to prejudgment interest

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at the legal rate from the date of maturity, and gave Dr. Lee an offset for the $119,000 he
had paid. The court also ruled in favor of Ms. Kim on the fraud and promissory fraud
causes of action. Ms. Kim was awarded $400,000 on the contract, plus prejudgment
interest of $155,397.57, with an offset of $119,000, for a total of $436,397.57. Dr. Lee
filed this timely appeal from the judgment.

                                      DISCUSSION
                                               I
       Dr. Lee argues the court erred in overruling his demurrer to the first cause of
action for breach of contract. “An order overruling a demurrer is not directly appealable,
but may be reviewed on appeal from the final judgment.” (Casterson v. Superior Court
(2002) 101 Cal.App.4th 177, 182.) In our de novo review, we accept as true all facts
properly pleaded in the complaint to determine whether the complaint states facts
sufficient to constitute a cause of action. (Id. at pp. 182-183; McKell v. Washington
Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1469.)
       A cause of action for breach of contract requires the following elements: (1) the
contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant’s
breach, and (4) resulting damage to plaintiff. (Durell v. Sharp Healthcare (2010)
183 Cal.App.4th 1350, 1367.)
       In the first amended complaint, Ms. Kim alleged that on October 21, 2008, she
entered into a written agreement with Dr. Lee in which he agreed to buy back her 20
shares of stock in YADC. The price was $400,000, of which $200,000 was to be paid in
cash and $200,000 was to paid by check. The agreement was attached to and
incorporated into the pleading. It provides:
       “Hereunder, it is to refer Dr. Yong Tae Lee as A, and Juhee Kim as B.
       “1. The mutual exchange between A and B regarding the 20% of Young Again
       ADHC stocks shall be for $400,000 ($200,000 in cash, $200,000 in Young Again
       ADHC check), and until the mutual exchange is wrapped up, the interest for

                                               4
       which, $7,000, shall be split up and paid every 15th and 30th of each month.”
       (Italics omitted.)
       While the document is brief and not elegant, it is sufficient to constitute a contract.
The parties each agree to do something—Ms. Kim will sell her stock and Dr. Lee will
pay her for it. (Civ. Code, § 1549.) Although the document does not provide a specific
time for performance, under Civil Code section 1657, “a reasonable time is allowed.”
       Dr. Lee argues uncertainty is created by the final phrase of the agreement, which
provides that “until the mutual exchange is wrapped up,” interest shall be split up and
paid each month. Read in context, this language shows the parties’ intent that Dr. Lee
pay interest until the payment of principal for the stock was completed. There is no fatal
uncertainty in the terms of the agreement.
       Dr. Lee next argues that Ms. Kim failed to allege her performance, or excuse for
nonperformance. In paragraph 12 of the first amended complaint, Ms. Kim alleged: “On
or about October 21, 2008 plaintiff and defendant agreed that defendant Yong Tai Lee
would purchase from plaintiff her 20% share of the stock of YADC. The agreed price
was for the sum of $400,000 ($200,000 in cash and $200,000 in check). Based on this
agreement, plaintiff sold her 20% interest in YADC and relinquished all of her rights and
interest to the business as of the date of the agreement.” (Italics added.) This allegation
should have been placed in the first cause of action for breach of contract, rather than in
the second cause of action for fraud, but under a liberal construction of the complaint,
Ms. Kim has adequately alleged her performance of the contract.
       Dr. Lee next claims Ms. Kim’s allegation that he failed to pay $400,000 “by the
end of 2008” as agreed to by the parties was not an allegation of breach since the written
agreement did not provide for payment by the end of 2008. As we have noted, when a
contract does not specify a time for performance, “a reasonable time is allowed.” (Civ.
Code, § 1657.) The allegation suffices under this construction.
       Finally, Dr. Lee argues the allegation that he failed to pay the $7,000 per month
interest could not constitute a breach of the contract because it is a usurious interest rate.
Assuming, without deciding, that the usury laws apply to this transaction, that allegation

                                               5
is not crucial to breach of contract in light of the alleged breach for failure to pay the
principal due under the contract. The court did not err in overruling the demurrer to the
cause of action for breach of contract.

                                              II
       Dr. Lee claims there was insufficient evidence to support the judgment in favor of
Ms. Kim on the contract cause of action. We disagree.
       The October 2008 agreement was introduced into evidence; it established that Dr.
Lee would pay Ms. Kim $400,000 for her 20 percent of stock, $200,000 in cash,
$200,000 by company check. Ms. Kim testified that after Dr. Lee signed the October
2008 agreement, she gave him the original stock certificate for her share of the company.
By doing so, she completed her performance of the agreement.
       Ms. Kim testified that Dr. Lee paid no portion of the $400,000 promised in the
October 2008 agreement. She requested payment at the end of 2008, but Dr. Lee asked
her to wait two or three months to conclude the sale of the business. When that sale
failed, Ms. Kim again asked for payment, and Dr. Lee again asked her to wait for another
two or three months because he had another buyer. One and a half months later, Ms. Kim
discovered there was no buyer and she demanded her $400,000 “right away.” He told her
to wait. She left her employment with the company in August 2009, without having
received any portion of the principal owed, nor had she been paid when she filed her
action in November 2010. The court could properly conclude from this evidence that
payment was not made within a reasonable time, as provided by Civil Code section 1657.
All the elements of breach of contract are supported by this evidence—the existence of a
contract, performance by Ms. Kim, failure to perform by Dr. Lee, resulting damage to
Ms. Kim.
       Dr. Lee argues that the interest rate provided for in the contract is usurious, and
thus cannot be a basis for the breach of contract claim. If we assume for the purpose of
this decision that the rate is usurious, the interest provision would be void, but would not
affect Ms. Kim’s right to recover the principal when due, together with interest at the

                                               6
legal rate. (Epstein v. Frank (1981) 125 Cal.App.3d 111, 122-123.) “[T]he payee of a
note with a usurious interest provision would be entitled to damages in the nature of
interest at the legal rate for that period of time which the obligor on the note withheld the
principal beyond the date of maturity.” (Id. at p. 123.)
         At trial, Ms. Kim’s counsel expressly asked the court to calculate prejudgment
interest at the legal rate and to apply the $119,000 that was paid as interest to offset that
amount. That is what the court did, imposing interest at the legal rate from October 21,
2008, when Ms. Kim transferred her stock and Dr. Lee became obligated to pay her
$400,000, to the date of the judgment, with an offset for the $119,000 Dr. Lee had
already paid as interest. This was appropriate.

                                              III
         Dr. Lee also challenges the overruling of his demurrer and the judgment in favor
of Ms. Kim on the causes of action for fraud and promissory fraud. At trial, Ms. Kim
abandoned her claim for punitive damages. Instead she sought only the actual amount
she would have been paid under the agreement. We have concluded that the evidence
supports the court’s award of those damages under the breach of contract cause of action.
In the absence of punitive damages, Ms. Kim’s fraud and promissory fraud causes of
action would have yielded the same damages. Thus we need not consider whether those
causes of action are supported by the evidence.

                                              IV
         Ms. Kim asks that we impose sanctions against Dr. Lee for bringing a frivolous
appeal and for violating various rules of appellate procedure in his brief. Under the
standards set out in In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650, we decline to
do so.

                                               7
                                  DISPOSITION
     The judgment is affirmed. Ms. Kim is to have her costs on appeal.

     NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                          EPSTEIN, P. J.

We concur:

WILLHITE, J.

SUZUKAWA, J.

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