Filed 8/5/26 HSG Trading Limited v. Vanilla Bay CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO

HSG (HK) TRADING LIMITED, B347996
Plaintiff and Respondent, Los Angeles County
Super. Ct. No. 23STCV27905
v.
VANILLA BAY et al.,
Defendants and Appellants.

APPEAL from a judgment of the Los Angeles County
Superior Court, Peter A. Hernandez, Judge. Affirmed in part,
reversed and remanded in part.

Law Offices of Frank N. Lee and Frank N. Lee for
Defendants and Appellants.

Jeong and Likens and C. Yong Jeong for Plaintiff and
Respondent.
___________________________________
 Defendants Vanilla Bay and Jong Gook Lee appeal the
judgment against them entered following the motion for
summary judgment or, alternatively, adjudication (the Motion)
filed by Plaintiff HSG (HK) Trading Limited (HSG). The trial
court found Vanilla Bay liable for breach of contract and fraud,
and found Lee liable for fraud.
Defendants first contend the trial court erred by granting
summary adjudication as to both parties because the Motion was
based on HSG’s initial complaint, and not its first amended
complaint (the FAC). We disagree because Defendants agreed the
court could consider the Motion as to the FAC, which was
substantively identical to the initial complaint.
Defendants also contend the trial court erred by granting
the Motion as to Lee. We agree HSG failed to show it was entitled
to judgment against Lee as a matter of law. We therefore affirm
the judgment as to Vanilla Bay and reverse the judgment as to
Lee.
BACKGROUND
HSG is a Hong Kong corporation engaged in garment
manufacturing and exporting.
Vanilla Bay is a California corporation which purchased
clothing from HSG for resale. Lee is the chief executive officer of
Vanilla Bay.
The business relationship between HSG and Vanilla Bay
began in or about 2019. They generally conducted business as
follows: Vanilla Bay would submit an order to HSG for clothing;
HSG would produce clothing for Vanilla Bay; and Vanilla Bay
would remit payment to HSG within 30 days thereafter. HSG
issued Vanilla Bay an invoice for each order, which invoices were
numbered consecutively. Subject to an exception not relevant

2
here,1 Vanilla Bay paid invoice Nos. 1 through 39. However,
beginning with invoice No. 40, dated October 2022, Vanilla Bay
did not pay. Nonetheless, HSG continued filling Vanilla Bay’s
orders through June 2023.
HSG sued Defendants in November 2023.2 It alleged
Vanilla Bay had over 20 unpaid invoices totaling more than
$300,000. It sought judgment based on seven theories: (1) breach
of contract; (2) fraud; (3) account stated; (4) open book account;
(5) unjust enrichment; (6) quantum valebant3; and (7) conversion.
HSG sought to hold Lee directly liable on the fraud and
conversion causes of action and liable as an alter ego on the other
five causes of action. In the caption of its initial complaint, HSG
identified itself as a Hong Kong corporation. In the body,
however, HSG erroneously alleged it was a California
corporation.
In August 2024, HSG filed the Motion, by which it sought
summary judgment or summary adjudication on its causes of
action for breach of contract (against Vanilla Bay only), fraud

1 Vanilla Bay initially sued on invoice No. 28-1 in the
amount of $2,794.80. It later dropped that invoice from the
litigation.

2 HSG also sued Derek Heo, a former employee of Vanilla
Bay. Heo is not a party to this appeal. We therefore omit further
reference to him as a defendant.

3 The Latin phrase “quantum valebant” means “as much as
they were worth.”

3
(against both Vanilla Bay and Lee), and unjust enrichment
(against both Vanilla Bay and Lee).4
Defendants opposed the Motion. Their primary argument
was that HSG was not entitled to maintain the action—i.e., that
the action had to be abated—under Corporations Code
section 2203, subdivision (c) and United Medical Management
Ltd. v. Gatto (1996) 49 Cal.App.4th 1732, 1739 because HSG is a
foreign corporation that had not received a certificate of
qualification to transact intrastate business in California from
the Secretary of State. As part of this argument, Defendants
noted HSG’s erroneous allegation that it is incorporated in
California.
On the merits, Defendants did not dispute Vanilla Bay’s
liability for breach of contract. Even though the Motion as to
breach of contract was directed only to Vanilla Bay, Defendants
argued only that Lee was not liable under this theory because he
was not a party to any contract with HSG and HSG failed in the
Motion to argue alter ego liability. Defendants argued HSG’s
fraud cause of action was barred by the economic loss rule5 and
failed also because HSG offered no evidence of Lee’s affirmative

4 The Motion included a request for summary judgment,
despite addressing fewer than all causes of action, because HSG
was apparently under the misconception it had dismissed the
other causes of action. As discussed below, it later dismissed
them.

5 Even though Defendants did not raise the economic loss
rule in their opening brief, HSG’s primary argument in its
respondent’s brief, spanning more than 10 pages, is that
Defendants cannot assert the economic loss rule as a defense.
This is a nonissue on appeal because Defendants did not raise it.

4
fraudulent misrepresentations as alleged in its initial complaint.
Finally, Defendants argued unjust enrichment is not a cause of
action in California. Defendants did not file a separate statement
opposing HSG’s undisputed material facts. They did file a
separate statement asserting additional facts they relied upon in
opposition, but this statement related primarily to the abatement
issue, and an accompanying declaration from Lee offered facts
directed to that issue only.
The trial court held a hearing on the Motion in October
2024. It continued the Motion for two reasons: first, because
Defendants had failed to file an opposing separate statement; and
second, because it wanted HSG to “address the issue of
abatement”—i.e., whether HSG was barred from maintaining the
action as an unregistered foreign corporation engaged in
intrastate business.
On December 2, 2024, Defendants filed a response to HSG’s
separate statement.
Though the parties’ stipulation is not in the record, a
December 11, 2024 minute order reflects the parties stipulated,
five days earlier, to HSG filing the FAC. The trial court declined
to sign the stipulation, stating it would “speak with the parties at
the next court hearing on 12/13/2024 to discuss whether an
amended complaint would moot the [Motion].” On December 9,
2024, HSG filed a brief addressing Defendants’ abatement
arguments.
The trial court held a further hearing on the Motion on
December 13, 2024. This hearing was unreported. The minute
order shows the court and parties discussed the proposed FAC
and its potential impact on the pending Motion. The court
ordered HSG to file the FAC within three days and stated, “The

5
parties are to file a stipulation informing the Court [they] wish to
have the Court rule on the [Motion] as it pertains to the [FAC].”
No such stipulation appears in the record, but later the same day
HSG filed the FAC. The FAC differs from the initial complaint in
only one material way: the erroneous allegation that HSG is a
California corporation is replaced with the allegation, consistent
with the caption in both complaints, that it is a Hong Kong
corporation. Every other allegation in the FAC is identical to the
corresponding allegations in the initial complaint.
The trial court held a further hearing on the Motion on
April 2, 2025, and took the matter under submission. This
hearing, too, was unreported. The court issued a written order
two days later.
By way of background for its decision, the trial court stated:
“On December 13, 2024, Plaintiff filed [the FAC] alleging the
same causes of action found in the [initial] complaint. On the
same day, the court continued the Motion . . . in order to
ascertain from the parties whether [they] wanted the court to
hear the Motion as to the FAC. The parties agreed to do so as the
FAC was identical to the [initial] [c]omplaint except for the
abatement issue.”
After rejecting the argument the action should be abated,
the trial court (1) granted the Motion as to the breach of contract
cause of action against Vanilla Bay, (2) granted the Motion as to
the fraud cause of action against Vanilla Bay and Lee, and
(3) denied the Motion as to the unjust enrichment cause of action
against Vanilla Bay and Lee.
The trial court ordered HSG to prepare a proposed
judgment if HSG dismissed its other causes of action. HSG did so
and the court entered judgment accordingly. The amount of the

6
judgment was $363,188.35 against Vanilla Bay and Lee together,
which corresponds to $308,665.35 in unpaid invoices, less $5,000
disputed by Defendants, plus prejudgment interest of $56,576,
plus $2,947 in court costs.
Defendants timely appealed.
DISCUSSION
I. The Motion Was Properly Before the Trial Court
Defendants’ first argument is that the trial court should
have denied the Motion in its entirety because it was directed to
the initial complaint, not the FAC. This argument lacks merit.
Defendants cite State Compensation Ins. Fund v. Superior
Court (2010) 184 Cal.App.4th 1124 for the proposition that the
filing of an amended complaint moots any motion for summary
adjudication of the preceding complaint. That case is
distinguishable on multiple grounds, but we need address only
one: Defendants here agreed to have the trial court decide the
Motion as to the FAC. Defendants’ efforts to escape that
agreement are unavailing.
The trial court raised whether the FAC might moot the
Motion in December 2024 in denying the parties’ stipulation to
file the FAC. At the ensuing unreported hearing, the court
continued the matter “to ascertain from the parties whether
[they] wanted the court to hear the Motion as to the FAC” and
directed them to file a stipulation as to that issue. Though no
written stipulation is in the record, the record reflects that the
parties so stipulated. After a full hearing on the Motion in
April 2025, the court’s written order provides: “The parties
agreed to [the court hearing the Motion as to the FAC] as the
FAC was identical to the [initial] [c]omplaint except for the
abatement issue.”

7
 Defendants contend the trial court’s statement is
ambiguous and could simply mean the parties consented to the
filing of the FAC. This makes no sense. The court ordered HSG to
file the FAC in December 2024. At the same time, it sought the
parties’ stipulation as to hearing the Motion as to the FAC. Thus,
there was only one issue on which the court sought Defendants’
consent. Defendants cite no authority that their consent had to be
in writing. The court’s statement that they did consent following
an unreported hearing is presumed to correctly reflect that they
did, in fact, consent at that hearing. As explained in Hearn v.
Howard (2009) 177 Cal.App.4th 1193, 1201, in the absence of a
reporter’s transcript or settled statement, we must “presume that
what occurred at that hearing supports the judgment.”
II. The Trial Court’s Resolution of the Motion
A. Summary Judgment and/or Adjudication and
Standard of Review
A motion for summary judgment shall be granted “if all the
papers submitted show that there is no triable issue as to any
material fact and that the moving party is entitled to a judgment
as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) “Summary
adjudication works the same way, except it acts on specific causes
of action or affirmative defenses, rather than on the entire
complaint.” (Hartline v. Kaiser Foundation Hospitals (2005)
132 Cal.App.4th 458, 464.)
The moving party bears the initial burden to make a
“prima facie showing of the nonexistence of any genuine issue of
material fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th
826, 845 (Aguilar).) “A prima facie showing is one that is
sufficient to support the position of the party in question.” (Id. at
p. 851.) A plaintiff moving for summary judgment or adjudication

8
“who would bear the burden of proof by a preponderance of
evidence at trial . . . must present evidence that would require a
reasonable trier of fact to find any underlying material fact more
likely than not—otherwise, he would not be entitled to judgment
as a matter of law, but would have to present his evidence to a
trier of fact.” (Ibid.)
If the plaintiff meets this burden, the burden then shifts to
the defendant to show the existence of a triable issue of material
fact. (Code Civ. Proc., § 437c, subd. (p)(1).) But if the plaintiff
does not, the defendant bears no burden and the motion must be
denied. (Hawkins v. Wilton (2006) 144 Cal.App.4th 936, 940
[“ ‘Where the evidence presented by the [moving party] does not
support judgment in his favor, the motion must be denied
without looking at the opposing evidence, if any.’ ”].) A defendant
may defeat summary judgment without producing any evidence
simply by showing the moving plaintiff’s evidence raises a triable
issue. (See Fisher v. Gibson (2001) 90 Cal.App.4th 275, 286 [“A
party opposing summary judgment may be able to demonstrate
the existence of a triable issue of material fact through the
moving party’s own evidence or witnesses.”].) It is ordinarily
insufficient to defeat summary judgment that a trier of fact might
disbelieve the movant’s evidence. (See Aguilar, supra, 25 Cal.4th
at pp. 846–847.) But evidence that is ambiguous as to a material
fact does not entitle a movant to summary judgment. (See id. at
p. 847.)
We review rulings on motions for summary judgment and
summary adjudication de novo and decide independently whether
the undisputed facts warrant judgment for the movant as a
matter of law. (DiCarlo v. County of Monterey (2017)
12 Cal.App.5th 468, 488–489.) In so doing, we liberally construe

9
the evidence in support of the nonmovant and resolve any doubts
as to the propriety of granting the motion in favor of that party.
(Quidel Corp. v. Superior Court (2020) 57 Cal.App.5th 155, 164.)
B. Analysis
Defendants dispute the trial court’s summary adjudication
of HSG’s fraud cause of action as against Lee only. They argue it
fails because HSG did not present evidence as to certain elements
of fraud.
As an initial matter, Defendants place special emphasis on
shortcomings in HSG’s separate statement and note “ ‘the Golden
Rule of summary adjudication [that] if [a material fact] is not set
forth in the separate statement, it does not exist.’ ” (Quoting
United Community Church v. Garcin (1991) 231 Cal.App.3d 327,
337.)
While we agree with Defendants that HSG’s separate
statement is deficient, the trial court had discretion to, and did,
consider the record directly. (See San Diego Watercrafts, Inc. v.
Wells Fargo Bank (2002) 102 Cal.App.4th 308, 315–316.)
Defendants do not attempt to show an abuse of that discretion.
Accordingly, we consider the record directly as guided by HSG.
Defendants submit, and HSG does not dispute, that the
elements of promissory fraud are: “ ‘ “(1) a promise made
regarding a material fact without any intention of performing it;
(2) the existence of the intent not to perform at the time the
promise was made; (3) intent to deceive or induce the promisee to
enter into a transaction; (4) reasonable reliance by the promisee;
(5) nonperformance by the party making the promise; and
(6) resulting damage to the promise[e].” ’ ” (Missakian v.
Amusement Industry, Inc. (2021) 69 Cal.App.5th 630, 654
(Missakian).)

10
 Defendants particularly assert HSG failed to show Lee
made a promise without an intent to perform or that HSG
reasonably relied on anything Lee said.
As to the alleged promises, HSG points only to statements
Lee made in text messages to HSG’s president. The trial court
relied on text messages to find Lee “kn[ew] of Vanilla Bay’s
inability to pay [HSG] despite communicating to [HSG] the
opposite.” The three statements HSG identifies as fraudulent are
as follows:
• In an undated message, which precedes a March 2,
2023 message, Lee stated: “I sent $40,000 today and
I’ll send the rest of the balance. It’s the Presidents’
Day here today.” We infer this undated message was
sent on February 20, 2023—the day Washington’s
Birthday (commonly known as Presidents’ Day) was
observed in the United States in 2023.
• On March 2, 2023, Lee stated: “My apologies. I will
send it quickly.” This was in response to a text from
HSG’s president which said “the payment is getting
too late. We also need operating fund [text cut off].”
(Original brackets.)
• Then, Lee stated: “I will try get together to send at
least 20-30 thousand dollars first this week.” This
text is undated but falls between texts dated
March 25 and March 30, 2023.
As an initial matter, Lee’s oldest statement was made on
February 20, 2023. Vanilla Bay’s unpaid invoices which served as
the basis for calculating the judgment against Lee date back to
October 2022. It is impossible for HSG to have relied on Lee’s
statements in filling Vanilla Bay orders relating to the

11
eight invoices predating Lee’s oldest statement. The judgment
against Lee is manifestly defective for that reason.
Moreover, there is no evidence any of Lee’s statements
identified as fraudulent were actually false. For example, the
most concrete statement of fact—“I sent $40,000 today”—is not
disproven in the record. There is evidence Vanilla Bay did not
pay 20 invoices. But HSG admits Vanilla Bay paid at least
another 38 invoices. We are directed to no evidence showing the
$40,000 was not actually sent and applied to earlier invoices.
Notably, HSG does not argue the $40,000 was never sent and the
declaration of its president it filed in support of the Motion does
not assert such a fact. Indeed, that declaration acknowledges:
“When HSG was asking about payments, [Vanilla Bay] continued
to make other excuses and asked for more waiting time while
giving HSG only partial payments for prior invoices.” (Italics
added.)
Similarly, the statement “I’ll send the rest of the balance”
lacks context of what balance Lee was referring to. The preceding
text messages from HSG’s president to which Lee was responding
are incomplete (e.g., the translation appears to begin mid-chain
and without any date) and the texts that are reproduced contain
multiple “[text cut off]” notations in the translation. Likewise, the
text “My apologies. I will send it quickly” is undated and follows
another text from HSG’s president which, in the translation, ends
“[text cut off].” Finally, we are skeptical that the statement “I will
try get together to send at least 20-30 thousand dollars first this
week” constitutes a promise to pay at all. (Cf. Koop v. Cook (1913)
67 Ore. 93, 101 [“The words, ‘I will try and pay,’ mean only that
the writer will make an effort to pay, or that he will pay, if he is
able to do so.”].)

12
 Even if these statements were construed as promises to
make some payment, HSG’s evidence at best sets up triable
issues as to Lee’s intent not to perform and the reasonableness of
HSG’s purported reliance.
As to intent not to perform, HSG argues this element is
satisfied based on evidence Lee knew at the time of his
statements that Vanilla Bay could not pay the invoices.
Specifically, HSG points to Lee’s admission in a 2024 deposition
that “ ‘Vanilla Bay became unable to pay its bills and invoices
since the Summer of 2022.’ ”
But HSG itself offered evidence that Vanilla Bay did
continue to make payments even after it started having money
problems. Again, HSG submitted a declaration from its president
that “[w]hen HSG was asking about payments”—presumably6
after Vanilla Bay stopped paying on time—Vanilla Bay made
excuses and asked for more time to pay “while giving HSG only
partial payments for prior invoices.” (Italics added.) Lee’s
purportedly fraudulent statements indicated an intent to make
partial payments during the same period of financial difficulty in
which HSG itself says Vanilla Bay was making partial payments.
Thus, at the very least, there is a question of fact as to whether
Lee knew Vanilla Bay lacked the ability to make the partial
payments he represented it would.
Finally, HSG’s evidence did not show its reliance on Lee’s
statements was reasonable as a matter of law.
HSG argues it had no burden to produce evidence its
reliance was “reasonable.” For the proposition, it cites Code of

6 Again, we construe the evidence most favorably to the
nonmovant. (Quidel Corp. v. Superior Court, supra,
57 Cal.App.5th at p. 164.)

13
Civil Procedure section 437c, subdivision (p)(1). But this
provision obligates a moving plaintiff to “prove[] each element of
the cause of action entitling the party to judgment on the cause of
action,” (ibid.) and reasonable reliance is an element of
promissory fraud (Missakian, supra, 69 Cal.App.5th at p. 654).
By failing to argue their evidence showed reasonable reliance at
all, much less as a matter of law, HSG effectively concedes
summary adjudication against Lee was improper. Nevertheless,
we review the record to confirm this was the case.
“ ‘Except in the rare case where the undisputed facts leave
no room for a reasonable difference of opinion, the question of
whether a plaintiff’s reliance is reasonable is a question of fact.’ ”
(Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.)
HSG’s evidence plainly leaves room for a difference of opinion
about whether HSG reasonably relied on Lee’s purported
promises. A plaintiff’s reliance is not reasonable when he
“ ‘ “put[s] faith in representations . . . which are shown by facts
within his observation to be so patently and obviously false that
he must have closed his eyes to avoid discovery of the truth.” ’ ”
(Boeken v. Philip Morris, Inc. (2005) 127 Cal.App.4th 1640, 1667.)
Here, a reasonable trier of fact could conclude HSG could
not have reasonably relied on Lee’s purported promises of
payment. First, by the time Lee started communicating directly
with HSG in February 2023, Vanilla Bay was at least five months
behind in payments. A reasonable trier of fact could conclude
from this that HSG knew Vanilla Bay was in financial trouble
and might be unable to pay for future orders.
Second, Lee did not hide Vanilla Bay’s financial troubles
from HSG at all. Indeed, he disclosed them. In between the

14
uncertain assurances of payment HSG cites as fraudulent, Lee
sent the following text messages to HSG’s president:
• Sometime between March 25 and March 30, 2023,
Lee wrote: “President it seems like it would be still
very difficult after coming out and seeing it today.
I will try get together to send at least 20-30 thousand
dollars first this week. I’m sorry.”
• On March 30, 2023, in response to HSG’s plea for
payment, Lee wrote: “I will do my best. It’s hard to
guarantee because the cash flow is worse than in
January and February. I’m sorry.”
• Three days later, in response to another plea for at
least “some payment,” Lee wrote: “My apologies.
We’re looking around, so please wait a little bit.”
• Perhaps on April 21, 2023, or sometime thereafter,
Lee wrote: “You’re not picking up. I’ll even get
together little amounts at a time and send it to you.
I’m contacting places where we’re due to receive
money, so please wait just a little. Sorry.” A minute
later, he added: “Places [Vanilla Bay] need[s] to get
paid from are not nearby but they are in places like
Dallas, so when they don’t pay, there’s no other way.
I’m very sorry.”
Vanilla Bay’s overdue balance as of February 2023 and the
foregoing messages would permit a trier of fact to find HSG knew
Vanilla Bay was unable to pay its bills as they came due
throughout the period HSG’s president was communicating with
Lee. Rather than believing Vanilla Bay was solvent and would
surely pay future invoices, a reasonable trier of fact could
conclude HSG knew full well Vanilla Bay was insolvent but took

15
a calculated risk in continuing to deal with Vanilla Bay in hopes
that its financial condition would improve and save HSG from its
own dire financial circumstances. As HSG’s president confided to
Lee, “[HSG’s] financial situation is not good so there are problems
with the factory. Not only your goods, but production of other
products are also being affected, so I am in an urgent situation,
so I ask you to please make the payment. I know it’s difficult for
you, but please do me a favor.” (Italics added.) A day or more
later, HSG’s president added: “It’s hard to make the goods
[Vanilla Bay ordered] and we also need funds to proceed with the
goods, but [HSG’s] financial situation is very bad. We need to
have some breathing room to make the goods and send them to
you again.”
For the foregoing reasons, HSG failed to meet its burden on
its Motion as to Lee. Judgment against Lee must therefore be
reversed.
III. Purported Failure to Plead Fraud Cause of Action
Against Lee
For the first time on appeal, Defendants assert HSG failed
to allege a cause of action for fraud against Lee. As we have
already concluded the trial court erred in granting summary
adjudication against Lee, the resolution of this issue does not
affect the outcome of the appeal. We decline to address the issue
for that reason.

16
 DISPOSITION
The judgment is affirmed as to Vanilla Bay. The judgment
is reversed as to Lee. The matter is remanded to the trial court
for further proceedings consistent with this opinion. Each party is
to bear its own costs on appeal.

RICHARDSON, J.

WE CONCUR:

CHAVEZ, Acting P. J.

GOORVITCH, J.

17