Judge: Armen Tamzarian, Case: 23STCV15058, Date: 2023-11-15 Tentative Ruling
Case Number: 23STCV15058 Hearing Date: January 25, 2024 Dept: 52
Plaintiff/Cross-Defendant
Natalya Vydrug’s (1) Motion to Strike Answer; (2) Demurrer and Motion to Strike
Portions of First Amended Cross-Complaint
Motion to Strike Answer
Plaintiff Natalya Vydrug moves to strike the entire
answer by defendants Nelli Khlebnikova and Karolina Khlebnikova and moves to
strike 24 portions of it. Defendants did
not oppose the motion but instead filed a “notice of errata re correct
verifications.” Vydrug replied that the
new verifications are improper for several reasons, including that they were
signed electronically instead of by hand.
Electronic signatures are permitted—even for documents signed under
penalty of perjury. (Cal. Rules of
Court, rule 2.257(b).) The new
verifications are sufficient.
Apart from the verifications, Vydrug presents
valid grounds to strike all 24 challenged portions of the answer. Code of Civil Procedure section 431.30(b)
provides, “The answer to a complaint shall contain: (1) The general or
specific denial of the material allegations of the complaint controverted by
the defendant. (2) A statement of
any new matter constituting a defense.” Several
portions of the answer object to the complaint for “contain[ing] a legal
conclusion.” Whether the complaint
alleges legal conclusions may be an appropriate argument when demurring to it. It is not a proper allegation in an
answer.
Vydrug also shows grounds for striking the
first and second affirmative defenses.
An affirmative defense asserts “new matter constituting a defense” that
would defeat the plaintiff’s claims.
(CCP § 431.30(b)(2); accord FPI Development, Inc. v. Nakashima (1991)
231 Cal.App.3d 367, 383-385.)
Defendants’ first affirmative defense is
“failure to state a cause of action.”
(Answer, p. 4.) That is not new
matter constituting a defense. It is a
“ground for objection to a complaint” that “appears on the face thereof,” and
therefore “the objection on that ground may be taken by a demurrer to the
pleading.” (CCP § 430.30(a).)
Defendants’ second affirmative defense merely
reserves the right to assert additional defenses. That is not new matter constituting a
defense. It is superfluous. Defendants’ ability to assert additional
defenses does not depend on stating that they reserve the right to do so. Code of Civil Procedure section 473(a)(1)
liberally permits amendments to pleadings.
Demurrer to First Amended Cross-Complaint
Cross-defendant Natalya Vydrug demurs to the third,
fourth, and sixth causes of action alleged in the first amended cross-complaint
by cross-complainants Nelli Khlebnikova and Karolina Khlebnikova (Karolina). Vydrug also demurs to the entire first
amended cross-complaint by Karolina.
Karolina Khlebnikova
Vydrug
argues Karolina is misjoined as a party because she does not seek damages. Vydrug contends Karolina must move to
intervene in this action. Not so. She is a party to the action. Vydrug named her as a defendant. Any defendant may file a cross-complaint. (CCP § 428.10.)
Karolina does not, however, allege sufficient
facts to constitute any cause of action. The first amended cross-complaint includes her
name as a party in the caption, the footer, under counsel’s signature (p. 12),
and in a verification. But it includes
no substantive or factual allegations about her. The first amended cross-complaint repeatedly
and almost exclusively uses the singular “cross-complainant.” It only uses the plural “cross-complainants”
four times. (¶¶ 4, 5, 37, & p. 12
[after counsel’s signature].) The first
amended cross-complaint therefore does not allege sufficient facts to
constitute any cause of action by Karolina Khlebnkova.
3rd & 4th Causes of Action for
Involuntary Dissolution
Cross-complainant
Nelli Khlebnikova alleges sufficient facts to constitute the third and fourth
causes of action. Vydrug demurs on the
basis that her complaint already petitions to dissolve the same two corporations:
Kumbum, Inc. and Kumbum-8, Inc. At most,
that may make “involuntary dissolution” a misnomer. It does not mean the first amended
cross-complaint fails to state sufficient facts to constitute a cause of
action. Filing a cross-complaint for the
same relief may ultimately serve a purpose.
(See Guttman v. Guttman (2021) 72 Cal.App.5th 396, 414-415
[plaintiff could not voluntarily dismiss action to dissolve partnership because
defendants sought affirmative relief].)
6th Cause of Action for Breach of Fiduciary
Duty
Cross-complainant
Nelli Khlebnikova alleges sufficient facts to constitute a cause of action for
breach of fiduciary duty. Vydrug argues
otherwise because this claim can only be brought as a shareholder derivative
action. (See Schrage v. Schrage
(2021) 69 Cal.App.5th 126, 149.) But Vydrug’s own complaint alleges a cause of
action against Nelli Khlebnikova for breach of fiduciary duty. That claim arises from allegations of the same
sort of conduct: mismanaging the corporations.
(Compare Comp., ¶¶ 58-71 with FACC, ¶¶ 51-59.) If Nelli Khlebnikova must bring this cause of
action as a derivative suit, the same is true for Vydrug. Vydrug cannot have it both ways.
Moreover, the Court of Appeal has allowed
greater leeway in applying the rule on shareholder derivative actions to
closely held corporations. “The
objective of preventing a multiplicity of lawsuits and assuring equal treatment
for all aggrieved shareholders does not arise at all when there is only one
minority shareholder. The objective of
encouraging intracorporate resolution of disputes and protecting managerial
freedom is entirely meaningless where the defendants constitute the entire
complement of the board of directors and all the corporate officers.” (Jara v. Suprema Meats, Inc. (2004)
121 Cal.App.4th 1238, 1259.)
Vydrug’s complaint alleges she and Nelli
Khlebnikova each own 50% of Kumbum, Inc.
(Comp., ¶¶ 7-9.) The typical rule
serves no purpose when the corporation’s only two shareholders sue each other
for breach of fiduciary duty. Vydrug’s
complaint also alleges she and Nelli Khlebnikova each own 45% of Kumbum-8, Inc.,
while each of them has a child who owns 5%.
(Id., ¶¶ 14-18.) One of the
5% owners is Karolina Khlebnikova, who is also a party to the action. As in Jara, the nature of this dispute
in two closely held corporations justifies an exception to the general rule.
Motion to Strike Portions of First Amended Cross-Complaint
Cross-defendant Natalya Vydrug moves to
strike 10 portions of the cross-complaint by Nelli Khlebnikova and Karolina
Khlebnikova. Vydrug also moves to strike
the entire first amended cross-complaint based on a purportedly improper verification. Cross-complainants’ notice of errata included
updated verifications.
Vydrug argues several portions are improper as
argumentative or conclusions of law. She
argues, “Conclusions of law have no place in a pleading.” She relies on archaic authority that does not
support that proposition. These
purported conclusions of law are material to the first amended
cross-complaint’s causes of action.
Vydrug argues several other portions are
immaterial. They are material.
Vydrug moves to strike the prayer for
punitive damages for breach of fiduciary duty.
(FACC, p. 12, line 14.) As
discussed above with respect to the cause of action for breach of fiduciary
duty, Vydrug herself seeks punitive damages for what amounts to the mirror
image of the same sort of conduct.
(Comp., prayer, ¶ 10.) The court
again will not permit her to have it both ways.
Cross-defendant moves to strike two portions
referring to Karolina because she is not a party to the cross-complaint. She is a party to the cross-complaint because
the pleading says she is. Whether she
alleges sufficient facts to constitute a cause of action is a separate issue.
Finally, Vydrug moves to strike the prayer
for attorney fees on all causes of action.
(FACC, p. 12, line 17.) A prevailing party
may only recover attorney fees when authorized by contract, statute, or other
law. (CCP § 1033.5(a)(10).) The first amended cross-complaint separately
prays for attorney fees on the first three causes of action. (FACC, p. 12, lines 1 & 4.) Cross-complainants do not allege a basis for
recovering attorney fees on all causes of action.
Disposition
Plaintiff Natalya Vydrug’s motion to strike
portions of defendants Nelli Khlebnikova and Karolina Khlebnikova’s answer is granted
in part with 20 days’ leave to amend.
The court hereby strikes the 24 portions of the answer listed in
Vydrug’s notice of motion to strike, with leave to amend.
Cross-defendant Natalya Vydrug’s demurrer to
the entire first amended cross-complaint by Karolina Khlebnikova is sustained
with 20 days’ leave to amend.
Cross-defendant Natalya Vydrug’s demurrer to Nelli Khlebnikova’s first
amended cross-complaint is overruled.
Cross-defendant Natalya Vydrug’s motion to
strike portions of cross-complainants Nelli Khlebnikova and Karolina
Khlebnikova’s first amended cross-complaint is granted in part with 20
days’ leave to amend. The court hereby strikes
the following portion of the first amended cross-complaint: “Attorneys fees” at
page 12, line 17, with leave to amend.