*1008Appellant, James C. Hilliard, now 78 years of age, filed a complaint making the sole claim that Kevin R. Harbour (Harbour)
On January 26, 2015, Wells Fargo demurred to the first amended complaint. The demurrer was sustained without leave to amend on the grounds that Hilliard lacked standing to sue for the alleged harm to his ownership interest in the property assertedly taken from him by Wells Fargo, and that his complaint fails to state facts sufficient to constitute a cause of action.
FACTS AND PROCEEDINGS BELOW
As the appeal is from the sustaining of a demurrer, we accept as true the facts as stated in the complaint.
Hilliard owned a controlling interest in the James Crystal Companies (the Companies) which owned and operated radio stations.
On November 16, 2010, Wells Fargo proposed that if Hilliard sold his interest in Crystal Springs Ranch and Wells Fargo received the proceeds before December 31, 2010, in the "estimated amount of $6,650,000, along with the "net cash proceeds" of a home equity loan of "approximately $1,100,000" and a non-interest bearing note secured by two radio stations in *1009the approximate amount of $750,000, Wells Fargo would deem payment "as settlement in full of the debt." Hilliard states in his complaint that he agreed to the terms of the proposal despite knowing that the Crystal Springs Ranch was worth "substantially more than the fire sale price demanded by Wells Fargo," and that the Bank's demand that payment of the proceeds of the sale of the ranch before January 1, 2011, would cause it "to be sold at a fraction of what it was worth." Hilliard sold the ranch and the proceeds, which were $5.5 million and were received by Wells Fargo on or about December 31, 2010. This payment did not, however, fulfill the terms of Wells Fargo's November 16, 2010 proposal.
In 2011 and 2012, Wells Fargo, through Harbour, made several written proposals to settle the Companies' outstanding debt. Finally, on February 6, 2012, Harbour sent Hilliard an email stating that if Wells Fargo received $2 million in cash by March 31, 2012, from the proceeds of the sale of two radio stations, it would deem the loan repaid in full. Hilliard accepted that proposal.
*615However, as stated in the complaint, Harbour had "no reasonable grounds for believing" Wells Fargo would consider the loan "repaid in full" if Hilliard made the $2 million cash payment; he made the proposal "in order to cause [Hilliard] to sell WLVJ, a radio station owned by the ... [Companies], and part of the collateral for the loan, for cash, at a fraction of its value, in a short period of time, which [Hilliard] did, in justifiable reliance on [Harbour's] email of February 6, 2012."
Hilliard "was ready, willing and able" to pay $2 million in cash to settle the loan, but he was unable to obtain government approvals necessary to sell one of the radio stations by March 31, 2012, which would delay completion of the Bank's settlement proposal. Harbour never told Hilliard that the March 31, 2012, date was important or non-negotiable; and if Harbour "had so indicated, directly or indirectly," Hilliard, would have paid the $2 million in cash before March 31, 2012, to insure the loan to the Companies was fully repaid.
On April 9, 2012, without notice to Hilliard, Wells Fargo sold the loan to Atalaya Capital Finance (Atalaya), and warranted that the principal balance thereof was $15,811,472.86.
After Atalaya purchased the loan it commenced a civil action in New York against the Companies
Wells Fargo claims that the Companies, relying on an affidavit by Hilliard, made the same arguments in the New York action that Hilliard has made here. In 2013, the New York court entered judgment against the Companies for $17,498,875 as a result of the Companies' default on the loan, and Atalaya used the judgment to credit bid the purchase of the Companies in a bankruptcy proceeding.
The complaint in the present case alleges that Wells Fargo "took, appropriated, obtained and retained" Hilliard's property, the James Crystal Companies, for a wrongful use and with the intent to defraud in violation of the Act, specifically section 15610.30, subdivision (a)(1), because the Bank and its agents knew or should have known their acts and omissions described in the first amended complaint were likely to be harmful to him, and were the proximate cause of the "loss of enjoyment of life, inconvenience, anxiety, humiliation and emotional distress" he has suffered.
Hilliard filed the first amended complaint in the San Francisco Superior Court on April 24, 2015. The Bank and Harbour demurred to the financial elder abuse claim on three grounds: (1) Hilliard lacks standing because the claim is derivative of that of the Companies; (2) his claim attempts to relitigate an issue decided against the Companies by New York courts and is barred by collateral estoppel; and (3) the complaint fails to allege a "wrongful" act.
On July 22, 2015, the trial court ordered respondents' demurrer to the first amended complaint sustained without leave to amend on the ground "Hilliard lacks standing to sue for the alleged harm to his ownership interest in companies he owns"
*616and "[t]he complaint fails to state facts sufficient to constitute a cause of action. Judgment was entered on September 11, 2015, and timely notice of appeal was filed that day.
DISCUSSION
The Standard of Review
As a demurrer tests the sufficiency of the complaint as a matter of law, it raises only an issue of law (Code Civ. Proc., § 589, subd. (a) ), as to which our review is de novo. (Gerawan Farming, Inc. v . Lyons (2000)
The Act
"The Legislature enacted the Act to protect elders by providing enhanced remedies to encourage private civil enforcement of laws against elder abuse and neglect." (Intrieri v. Superior Court (2004)
"The Act broadly defines financial abuse as occurring 'when a person or entity ... [¶] ... [t ]akes , secretes, appropriates, obtains, or retains real or personal property of an elder ... for a wrongful use or with intent to defraud, or both (§ 15610.30, subd. (a)(1) ), italics added) or 'by undue influence.' (§ 15610.30, subd. (a)(3).) Further, a person or entity that assists in the foregoing conduct is also liable for elder abuse. (§ 15610.30, subd. (a)(2).)
"A taking is for a 'wrongful use' when a party 'knew or should have known that [its] conduct is likely to be harmful to the elder ... adult.' (§ 15610.30, subd. (b).)" (Bounds v. Superior Court (2014)
*1012The core dispute in this case is whether, as Hilliard claims, Harbour's February 6, 2012, offer, on behalf of the Bank, to settle the debts of the Companies for $2 million if Hilliard paid Wells Fargo that amount in cash by March 31, 2012, was a binding offer, and Hilliard was individually harmed *617within the meaning of section 15610.30, subdivision (a)(1) when the Companies were held liable for an amount larger than $2 million.
The Positions of the Parties
The factors Hilliard relies upon as establishing that Wells Fargo appropriated his property for a wrongful use or with intent to defraud him are quinary: (1) Harbour knew of the existence of the $2 million settlement that he proposed on February 6, 2012, (2) Harbour knew that the March 31, 2012 deadline for payment was "nonconsequential" in Hilliard's mind, as previous dates "that had come and gone over the years" for payments against his line of credit had never been rigorously enforced by the Bank, (3) Harbour knew Hilliard "had the ability to immediately pay the $2 million from sources other than the two radio stations the Bank identified, (4) Harbour warranted to Atalaya that the line of credit was worth almost $16 million and (5) Harbour did not inform Hilliard that it had been negotiating the sale of his debt to Atalaya until after the March 31, 2012 payment date had passed.
Dismissing Hilliard's allegations of its culpability as irrelevant, Wells Fargo claims Hilliard lacks standing to make his elder abuse claim. As the Bank sees it, the primary harm Hilliard complains of is not his personal right under the elder abuse statute, but a derivative right belonging to the Companies, a limited liability corporation not protected by that statute, and Hilliard has no right to sue individually. The Bank argues that an individual action cause of action exists only where, as is not here the case, the claimed injury " ' "resulted from the violation of some special duty owed the stockholder by the wrongdoer and having its origin in circumstances independent of the plaintiff's status as a shareholder. " ' " (Nelson v. Anderson (1999)
*1013Hilliard Lacks Standing to Sue Individually for Elder Abuse
Hilliard expressly "acknowledges the fundamental precepts that (1) the distinction between derivative and individual actions applies to limited liability companies as well as corporations, (2) that 'in determining whether an individual action as opposed to a derivative action lies a court looks at the gravamen of the wrong alleged in the pleadings,' and (3) that the principle that a shareholder may not recover individually for injury to the corporation applies equally to claims against third persons," citing PacLink Communications Intern. v. Superior Court (2001)
The case Hilliard chiefly relies upon for the proposition that he may elect to pursue an individual claim-Sutter v. General Petroleum Corp . (1946)
The defendants in Sutter , the General Petroleum Corporation, Pauson Bros. Inc., and J.W, Pauson, owned stock in Rincon Oil Company (Rincon), which held an oil and gas lease from the state of tide and submerged lands in Ventura County. In 1932, Rincon constructed a steel island and derrick off shore and on the leased property for drilling and prospecting for oil, and maintained tanks and drilling equipment on the leased property. In 1938, the defendants, knowing that Sutter was interested in projects for the development of oil land in the same area as the leased land, "entered into 'a common plan and conspiracy, for the purpose, by fraudulent means, of persuading and inducing' " Sutter to abandon the projects in which he was interested and instead form a corporation for the purpose of acquiring Rincon and its lease and purchasing its steel structure and derrick and the machinery and equipment situated on the leased premises. (Sutter , supra ,
In support of the trial court's conclusion that Sutter stated no cause of action, the defendants maintained that Sutter suffered no injury and the only injury suffered was by the Development Company, and that Sutter's causes of action were not derivative or representative actions, in which stockholders are suing on behalf of the corporation. The Supreme Court rejected those arguments and reversed the judgment of the trial court, explaining that "ordinarily a stockholder may not sue individually for impairment of a corporation's assets rendering the stock worthless, yet here that result is merely one method of ascertaining the amount of damages suffered by Sutter." (Sutter , supra ,
So too here. The fraudulent misrepresentations of Harbour and Wells Fargo alleged in the complaint were not designed to induce Hilliard to create a corporate entity, but to induce conduct on the part of the James Crystal Companies-a limited liability company he controlled that already existed, whose assets consisted of corporations and limited liability companies that also already existed-to act in a manner inimical to its corporate interests. Sutter does not show that, as Hilliard claims, "the fraud committed by Harbour and Wells Fargo was directed only to him and affected him directly."
As we have said, Hilliard's circular argument-that the duty breached by the Bank is owed to him personally, and not just as a shareholder, because he is an elder and elder abuse is by definition a personal claim-simply ignores the obvious fact that his claim does not originate in circumstances independent of his status as a shareholder in the Companies, and his claim therefore cannot be deemed personal. (Nelson, supra ,
It is one thing to say that financial agreements entered into by elders should be "subject to special scrutiny" (Bounds v. Superior Court, supra ,
Because we conclude Hilliard lacked standing to bring this individual action, and the trial court therefore did not err in sustaining the demurrer without leave to amend, we need not address Hilliard's argument that his claim is not barred by collateral estoppel.
The judgment is affirmed. Respondents are awarded costs.
We concur:
Richman, J.
Stewart, J.
Notes
Harbour is described in the complaint as an officer and the managing agent of Wells Fargo and the "person subject to the duties enumerated in the California Elder Abuse and Dependent Adult Protection Act ... including the duty to not take financial advantage of elders, including plaintiff."
All statutory references are to the Welfare and Institutions Code unless otherwise indicated.
The James Crystal Companies were named after Hilliard's two children, James and Crystal.
The defendants named in the New York action were nine corporations and four limited liability companies, the names of which all contained the phrase "James Crystal," which were incorporated in either Delaware, Florida, New Mexico or Arizona. The principal place of business of all of the defendants were in Pompano Beach Florida.
Hilliard obliquely advanced this argument in the trial court. In opposing the Bank's demurrer, he stated that he "invokes the heightened protection for elders contained in the California Elder Abuse and Dependent Adult Civil Protection Act" because "[ w]hen applied to this action, heightened protections mean that " the Banks' "taking " was " 'for a wrongful use ' " and " 'with intent to defraud, ' when he was not told before March 31, 2012 of the importance of that date and of the pending sale of the loans. " (Italics added.) Hilliard also maintains that "Wells Fargo is subject to the special scrutiny of the financial abuse provisions of the Act" despite the fact "he is not mentally incompetent, physically impaired or of limited financial means," and therefore does not suffer the infirmities warranting special scrutiny of the treatment of elders.