Judge: Andrew E. Cooper, Case: 23CHCV02207, Date: 2023-11-29 Tentative Ruling

Case Number: 23CHCV02207    Hearing Date: November 29, 2023    Dept: F51

DEMURRER WITH MOTION TO STRIKE

Demurrer with Motion to Strike Filed: 8/31/23

MOVING PARTY: Defendants/Cross-Complainants Carol Demirjian and Steve Demirjian (collectively, “Moving Defendants”)

RESPONDING PARTY: Plaintiff/Cross-Defendant Maurice Portnoy (“Plaintiff”)

NOTICE: OK 

RELIEF REQUESTED: Moving Defendants demur to the eighth cause of action in Plaintiff’s complaint. Moving Defendants also move to strike various provisions contained therein.

TENTATIVE RULING: The demurrer is overruled, and the motion to strike is denied. Moving Defendants shall file and serve an answer to Plaintiff’s complaint within 30 days.

BACKGROUND 

This is a contractual fraud action in which Plaintiff alleges that he and nonmoving defendant Sam Churukian were the sole shareholders of nonmoving defendant American Cigar Smoke, LLC (the “Company”). (Compl. ¶¶ 1–2.) On 4/27/18, Plaintiff and Churukian entered into an operating agreement for the Company, which stated that Churukian was to be the sole managing member thereof. (Id. at ¶¶ 13–14.) “In accordance with the Operating Agreement, Plaintiff Portnoy, as a non-managing member, had limited to no involvement in the operation of American Cigar Smoke. Rather, Plaintiff’s only role in American Cigar Smoke was to provide funding.” (Id. at ¶ 15.)

On 4/4/18, Plaintiff, Churukian, and the Company, as lessees, entered into a five-year lease agreement with Moving Defendants, as lessors, to lease a commercial property located at 8935 Reseda Blvd., Northridge, California 91324. (Id. at ¶ 17.) “Despite signing the Lease as a lessee, Plaintiff never occupied or had a key to the Premises. Plaintiff is informed and believes, and thereon alleges, that Defendants American Cigar Smoke and Churukian had Plaintiff sign the Lease as a lessee so that he would be personally liable for any unpaid rent or debts accrued by them.” (Id. at ¶ 18.)

On 3/3/21, Plaintiff received a letter from Moving Defendants stating that Churukian and the Company had failed to pay rent since March 2020 and it was due and owing. (Id. at ¶ 21.) On 3/23/21, Plaintiff informed Moving Defendants that he was no longer involved in the Company, and the parties continued their correspondence regarding the rent dispute. (Id. at ¶ 22.) “The DeMirjians, while aware that Plaintiff Portnoy was not in possession of the Premises and was no longer involved in American Cigar Smoke, continued to threaten Plaintiff that he would be liable for all rent owed by Defendants American Cigar Smoke and Churukian. … Plaintiff continued to make requests to Defendants American Cigar Smoke and Churukian to vacate the Premises so that it could be relet, and for the DeMirjians to take steps to mitigate their damages. However, all of Plaintiff’s requests were ignored or denied by Defendants. The DeMirjians continued to send invoices to Plaintiff for the unpaid rent.” (Id. at ¶¶ 26–27.) “Plaintiff is informed and believes, and thereon alleges, that Defendants American Cigar Smoke and Churukian are still in possession of the Premises and the DeMirjians have not taken any steps to evict them.” (Id. at ¶ 35.)

On 7/25/23, Plaintiff filed his complaint, alleging against all Defendants the following causes of action: (1) Breach of Fiduciary Duty; (2) Rescission for Fraud and Restitution; (3) Breach of Various Provisions of Corporations Code; (4) Financial Elder Abuse; (5) Unjust Enrichment and Constructive Trust; (6) Money Had and Received; (7) Accounting; and (8) Declaratory Relief. Only the eighth cause of action is alleged against Moving Defendants.

On 8/21/23, Moving Defendants filed a cross-complaint for breach of contract against Plaintiff, Churukian, and the Company. On 9/25/23, Plaintiff filed his answer thereto.

On 8/31/23, Moving Defendants filed the instant demurrer and motion to strike. On 11/14/23, Plaintiff served his opposition thereto. On 11/20/23, Moving Defendants filed their reply.

DEMURRER

“A demurrer tests the pleading alone, and not the evidence or facts alleged.” (E-Fab, Inc. v. Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court assumes the truth of the complaint’s properly pleaded or implied factual allegations. (Ibid.) The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) 

Here, Moving Defendants demur to Plaintiff’s eighth cause of action on the bases that Plaintiff fails¿to allege facts sufficient to¿state¿a cause of action for declaratory relief, and the complaint is therefore uncertain.

A.    Meet-and-Confer 

Moving Defendants’ counsel declares that on 8/14/23, he sent Plaintiff’s counsel a meet and confer email regarding the issues raised in the instant demurrer and motion to strike. (Decl. of Aren Kavcioglu ¶ 2.) Counsel for the parties met and conferred by email and telephone but were unable to come to a resolution. (Id. at ¶¶ 2–3.) Therefore, counsel has satisfied the preliminary meet and confer requirements of Code of Civil Procedure section 430.41, subdivision (a).

B.     Declaratory Relief

Plaintiff’s eighth cause of action is for declaratory relief against all defendants. Code of Civil Procedure section 1060 authorizes any person who desires a declaration of his or her rights or duties with respect to another regarding property, a contract, or a written instrument (other than a will or trust) to bring an action for declaratory relief. (Code Civ. Proc. § 1060.) “A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the parties under a written instrument or with respect to property and requests that the rights and duties of the parties be adjudged by the court.” (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 606.)

A “general demurrer is usually not an appropriate means of testing the merits of the controversy of a declaratory relief action, because the plaintiff is entitled to a declaration of rights even if it is adverse to the plaintiff’s interest.” (Qualified Patients Assn. v. City of Anaheim (2010) 187 Cal.App.4th 734, 751.) Nevertheless, the court may sustain a demurrer against a declaratory relief cause of action “in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” (Code Civ. Proc. § 1061.) “California trial courts may consider in their section 1061 analysis whether the timing of the declaratory relief action suggests litigation strategy motivated the filing rather than a concern that judicial guidance was needed and would not be forthcoming absent the filing of a declaratory relief action.” (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 376.)

Here, Moving Defendants “are named in the Eighth Cause of Action for Declaratory Relief relating to: (a) whether Plaintiff’s obligations regarding the Premises and/or Lease, if any, ceased on March 23, 2021, when he advised the DeMirjians he was no longer involved in American Cigar Smoke; (b) whether the rent the DeMirjians received from the ACS Defendants after March 23, 2021 should be applied to any rental shortage before that date; and (c) whether rescission of the Operating Agreement of American Cigar Smoke operates as a rescission of Plaintiffs obligations under the Lease.” (Pl.’s Opp. 7:11–17; Compl. ¶¶ 77, 79.)

1.      Sufficiency of Factual Allegations

Moving Defendants argue that here, “there are no facts alleged supporting the conclusion that the disputes between the lessees warrant the relief requested by Plaintiff against the DeMirjians. Stated another way, an internal dispute between co-lessees does not provide relief from the obligation to pay the landlord rent.” (Dem. 4:3–6.)

In opposition, Plaintiff argues that he has sufficiently alleged facts to constitute a cause of action for declaratory relief. “In paragraphs 77(b), (d), and (e), and 78(b), (d), and (e) of the Eighth Cause of Action in the Complaint, Plaintiff alleges that an actual controversy exists between Plaintiff and the DeMirjians regarding their obligations regarding the Premises and/or Lease.” (Pl.’s Opp. 16:1–4.)

The Court agrees with Plaintiff and finds it sufficient at the demurrer stage that Plaintiff has alleged facts to show that an actual controversy that exists concerning the parties’ respective rights and duties under the lease agreement. Accordingly, the demurrer is overruled on this basis.

2.      Necessary and Proper Judicial Determination

Moving Defendants, relying on Osseus, further contend that the issues presented in Plaintiff’s declaratory relief cause of action are embraced by the Moving Defendants’ cross-complaint for breach of contract, and are therefore not “necessary and proper” for judicial determination in connection with a declaratory relief cause of action. (Dem. 3:7–15; Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357.)

In Osseus, a potential breach of contract defendant filed a declaratory relief action to  determine its rights under the agreement, and the Court of Appeal affirmed the trial court’s dismissal of the plaintiff’s declaratory relief action because “(1) an adequate remedy exists for the parties to resolve their dispute ([the defendant] could bring a breach of contract action); and (2) there are no allegations suggesting declaratory relief will regulate future conduct by the parties (rather than simply arriving at a determination of whether the contract was breached and, if so, the amount of damages).” (191 Cal.App.4th at 374.)

In holding that the trial court did not abuse its discretion to dismiss, the Court of Appeal summarized that “it is likely the ultimate outcome of the current litigation between the parties will be a single judgment fully and finally resolving the parties’ dispute without any impact on future conduct … There is no allegation of an ongoing contractual relationship between [the parties]. There is an alternative remedy for adjudication of the parties' dispute ([the defendant’s] breach of contract claim). The future impact of any declaratory relief on the parties' behavior is speculative. And the timing of [the plaintiff’s] complaint suggests [the plaintiff] may have filed the declaratory action for strategic purposes (forum selection).” (Id. at 376–377.)

Here, Plaintiff argues that Osseus should be distinguished because the “declaratory relief cause of action embraces issues beyond the DeMirjians’ breach of contract claim and involves an ongoing dispute regarding the parties’ ongoing relationship, and it is proper and necessary.” (Id. at 17:24–27.) Specifically, “the DeMirjians’ Cross-Complaint … does not fully capture the issues raised … such as whether the rescission of the Operating Agreement operates as a rescission of Plaintiff’s obligations under the Lease and that rent received after March 23, 2021 should be applied to rental shortage before that date. … Further, the Complaint alleges that the ACS Defendants continue to occupy the Premises. … Therefore, the disputes and relationships between the parties are ongoing and properly determined by declaratory relief rather than the DeMirjians’ breach of contract cause of action.” (Id. at 17:2–10.)

On reply, Moving Defendants maintain that “the Declaratory Relief action seeks an adjudication on issues that should be alleged as defenses/denials to the DeMirjians’ breach of lease action.” (Defs.’ Reply 2:20–22.) “There is no reason for the trier of fact to separately adjudicate the claim for declaratory relief of the lease outside the context of the breach of lease claim.” (Id. at 7:8–10.)

Based on the foregoing, the Court exercises its discretion under Osseus to overrule the instant demurrer. While the Osseus court affirmed the trial court’s dismissal of the declaratory relief cause of action, in doing so, the Court of Appeal also noted that “there is little support for the proposition that a trial court abuses its discretion by refusing to dismiss a declaratory relief action that amounts to a mere breach of contract action.” (191 Cal.App.4th at 374–375.) The Court therefore finds that Osseus does not mandate the dismissal of declaratory relief causes of action in these cases but allows trial courts with the discretion to do so. Accordingly, the demurrer is overruled on this basis.

            The Court notes that Moving Defendants further argue that “the Declaratory Relief claim here does not seek prospective relief” because it was filed after the expiration of the lease. (Defs.’ Reply 3:8–9.) However, this argument is raised for the first time on reply, and the Court therefore declines to consider it. “Points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before. To withhold a point until the closing brief deprives the respondent of the opportunity to answer it or requires the effort and delay of an additional brief by permission.” (Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn.3; Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010; Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8; Alcazar v. LAUSD (2018) 29 Cal.App.5th 86, fn. 5.)

C.    Uncertainty

Generally speaking, “demurrers for uncertainty are disfavored and thus are strictly construed because ambiguities can reasonably be clarified under modern rules of discovery. Such demurrers are granted only if the pleading is so incomprehensible that defendant cannot reasonably respond.” (Cal.Jur.3d § 137.) “Where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.” (Williams v. Beechnut Nutrition Corp. (2011) 185 Cal.App.3d 135, 139 fn.2.)

Here, Moving Defendants argue that Plaintiff’s complaint is uncertain pursuant to Code of Civil Procedure section 430.10, subdivision (f). In applying the stringent standard for demurrers filed on this ground, the Court finds that the complaint is not “so incomprehensible” that Moving Defendants cannot respond, especially given the extensive analysis they have argued against the pleading. Accordingly, the demurrer is overruled on this basis.

MOTION TO STRIKE

A.    Improper Matter

Here, Moving Defendants argue that “Paragraph 77(b), (d) and (e), and 79(b), (d) and (e) of the Complaint [and the respective relief sought therein] should be stricken because they allege matters that are not drawn in conformity with the pleading requirements, namely, there are no facts supporting the allegations in these paragraphs.” (MTS 5:13–15.) As Plaintiff observes, “similar to the Demurrer, the Motion to Strike (which repeats verbatim portions of the Demurrer) is based on the claim that the Complaint failed to state facts sufficient to state a cause of action for declaratory relief.” (Pl.’s Opp. 18:23–25.)

“A motion to strike generally does not lie against a defect or objection that may be raised by demurrer. But a ‘motion to strike’ for failure to state a cause of action (ground for general demurrer) may be treated by the court as a motion for judgment on the pleadings … and granted accordingly.” (Cal. Prac. Guide Civ. Pro. Before Trial Ch. 7(I)-B, citing Pierson v. Sharp Memorial Hosp., Inc. (1989) 216 Cal.App.3d 340, 342–343.)

Here, where Moving Defendants bring the instant motion to strike on the same bases as their demurrer, which the Court overrules, the Court likewise denies the motion to strike.

CONCLUSION 

The demurrer is overruled, and the motion to strike is denied. Moving Defendants shall file and serve an answer to Plaintiff’s complaint within 30 days.

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  “The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at CHAdeptF51@LACourt.org or by telephone at (818) 407-2233.