Judge: Ashfaq G. Chowdhury, Case: 23GDCV00329, Date: 2024-01-19 Tentative Ruling
Case Number: 23GDCV00329 Hearing Date: April 11, 2024 Dept: E
Case No: 23GDCV00329
Hearing Date: 04/11/2024 – 8:30am
Trial Date: UNSET
Case Name: MELINE GALSTYAN, et
al. v. AVI GHAZARYAN, et al.
[TENTATIVE RULING ON DEMURRER & MOTION TO
STRIKE TAC]
Moving Party: Defendant, JPMorgan Chase Bank, N.A., a national banking
association sued herein erroneously as Chase Bank, N.A. (“Chase”)
Responding Party: Plaintiffs, Meline Galstyan and Andrey Pilikyan
Moving Papers: Demurrer; Proof of Service
Opposition Papers: Opposition
Reply Papers: Reply
RELIEF
REQUESTED
Defendant, Chase, demurs to the Third Amended Complaint (TAC) on the following
grounds:
1. The
First Cause of Action does not state a cause of action because the common law
negligence cause of action is displaced and preempted by the comprehensive
scheme of regulation in California's enactment of Division 11 of the California
Commercial Code applicable to wire transfers.
2. The
First and Ninth Causes of Action do not state a cause of action because as a
matter of law Plaintiffs have alleged no claims outside the scope of the
preclusion of common law causes of action under Commercial Code Article 11 and
as a matter of law a bank has no duty of care to supervise or oversee its
customer's account activity.
3. The Ninth
Cause of Action does not state a cause of action against Chase because the TAC
does not allege any deceptive or fraudulent act by Chase.
4. The Tenth
Cause of Action does not state a cause of action because the allegations of the
TAC show no violation of Article 11 by Chase and establish that Chase acted on
the Plaintiffs’ authorization, and the Electronic Funds Transfer Act does not
apply to wire transfers.
BACKGROUND
Plaintiffs filed a
Complaint on 02/17/2023.
On
06/05/2023, Plaintiffs filed a First Amended Complaint (FAC) alleging nine
causes of action – (1) Negligence, (2) Breach of Contract, (3) Breach of
Fiduciary Duty, (4) Breach of Covenant of Good Faith and Fair Dealing, (5)
Conversion, (6) Fraud, (7) Money Had and Received, (8) Unfair Business
Practices (Bus. & Prof Code §17200 et seq., and (9) Violation of California
Commercial Code §11101
On
07/21/2023 this Court overruled Chase’s demurrer to the first, eighth, and
ninth causes of action in the FAC.
On
08/04/2023, this Court heard Defendants, Avi Ghazaryan, Talin Torossian, and
RLG State Realty’s demurrer to the FAC. The demurrer was overruled as to the
first and third causes of action and sustained with leave to amend as to the
second, fourth, and eighth causes of action.
On
8/21/2023, Plaintiffs filed a Second Amended Complaint (SAC) which alleged nine
causes of action.
On
1/19/2024, the Court heard four demurrers. The Court sustained all four
demurrers and granted leave to amend.
On
02/22/2024, Plaintiffs filed a Third Amended Complaint (TAC) alleging eleven
causes of action.
PROCEDURAL
ANALYSIS
Proof of Service Timely Filed
(CRC Rule 3.1300):Ok
16/21 Court Days Lapsed (CCP 1005(b)): No – This
demurrer was not served with enough notice. Defendant served this demurrer via
email on March 19, 2024. The instant hearing is scheduled for April 11, 2024. Sixteen
court days before April 11, 2024 would be March 19, 2024. However, two calendar
days have to be added because the motion was served via email. Therefore, the
Defendant should have filed this motion two calendar days before March 19th
2024.
Proper Address (CCP §1013,
§1013a, §1013b): Ok
Meet
and Confer
A party filing a
demurrer “shall meet and confer in person or by telephone with the party who
filed the pleading that is subject to demurrer for the purpose of determining
whether an agreement can be reached that would resolve the objections to be
raised in the demurrer.” (Code Civ.
Proc., §430.41, subd. (a).) “The parties
shall meet and confer at least five days before the date the responsive
pleading is due. If the parties are not able to meet and confer at least five
days prior to the date the responsive pleading is due, the demurring party
shall be granted an automatic 30-day extension of time within which to file a
responsive pleading, by filing and serving, on or before the date on which a
demurrer would be due, a declaration stating under penalty of perjury that a
good faith attempt to meet and confer was made and explaining the reasons why
the parties could not meet and confer.”
(Code Civ. Proc., §430.41, subd. (a)(2).)
Failure to
sufficiently meet and confer is not grounds to overrule or sustain a demurrer.
(Code Civ. Proc., §430.41(a)(4).)
Here,
moving party alleged it met and conferred but an agreement was not reached.
(Beebe Decl. ¶¶3-4.)
LEGAL
STANDARDS FOR DEMURRERS
Demurrer –
Sufficiency
A demurrer for
sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda, (2007) 147 Cal.App.4th
740, 747.) When considering demurrers,
courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of
Water and Power (2006) 144 Cal.App.4th 1216, 1228.) The court “treat[s]
the demurrer as admitting all material facts properly pleaded, but not
contentions, deductions or conclusions of fact or law ….” (Berkley v. Dowds (2007) 152
Cal.App.4th 518, 525.) In a demurrer
proceeding, the defects must be apparent on the face of the pleading or via
proper judicial notice. (Donabedian
v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer tests the pleadings alone and
not the evidence or other extrinsic matters; therefore, it lies only where the
defects appear on the face of the pleading or are judicially noticed. (Code Civ. Proc., §§ 430.30, 430.70.) The only issue involved in a demurrer hearing
is whether the complaint, as it stands, unconnected with extraneous matters,
states a cause of action. (Hahn, supra, 147 Cal.App.4th at
747.)
The
general rule is that the plaintiff need only allege ultimate facts, not
evidentiary facts. (Doe v. City of
Los Angeles (2007) 42 Cal.4th 531, 550.)
“All that is required of a plaintiff, as a matter of pleading … is that
his complaint set forth the essential facts of the case with reasonable
precision and with sufficient particularity to acquaint the defendant with the
nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp.
(1945) 26 Cal.2d 149, 156-157.)
On
demurrer, a trial court has an independent duty to “determine whether or not
the … complaint alleges facts sufficient to state a cause of action under any
legal theory.” (Das v. Bank of
America, N.A. (2010) 186 Cal.App.4th 727, 734.) Demurrers do not lie as to only parts of
causes of action, where some valid claim is alleged but “must dispose of an
entire cause of action to be sustained.”
(Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97,
119.) “Generally
it is an abuse of discretion to sustain a demurrer without leave to amend if
there is any reasonable possibility that the defect can be cured by
amendment.” (Goodman v. Kennedy
(1976) 18 Cal.3d 335, 349.)
TENTATIVE RULING
Both Defendant and Plaintiffs’ counsel continue to submit papers to the
Court that misstate case law, are obfuscatory in nature, confusingly written,
and often assert arguments without legal authority or with legal authority that
is not binding.
As an
example, the caption of the TAC lists 11 causes of action as follows: (1)
Damages for Negligence; (2) Damages for Breach of Contract; (3) Damages for
Breach of Contract; (4) Damages for Breach of Contract; (5) Damages for Breach
of Fiduciary Duty; (6) Conversion; (8) Damages for Fraud; (9) Money Had and
Received; (10) Restitution and Injunctive Relief for Violation of Business And
Prof. Code, Sections 17200 et seq.; and (11) Damages for Violation of Statute
(Commercial Code, Section 11101).
As can be
seen in the caption, after listing their sixth cause of action for conversion,
Plaintiffs skipped the seventh cause of action and went straight to labeling an
eighth cause of action. However, in the body of the TAC, the seventh cause of action
is not skipped, and the seventh cause of action in the body is labeled as fraud
and deceit, whereas in the caption the fraud cause of action is labeled as the
eighth cause of action. This results in the eighth, ninth, tenth, and eleventh
causes of action in the caption now being labeled in the body as the seventh,
eighth, ninth, and tenth, respectively.
Defendant now
demurs to the first, ninth, and tenth causes of action, but Defendant fails to
note that it is demurring to the first, ninth, and tenth causes of action as
labeled in the body of the TAC, not as labeled in the caption.
Plaintiffs
also continue to misrepresent case law as well. Plaintiffs state that on
7/21/2023, this Court already overruled Defendant’s demurrer to the first,
eighth, and ninth causes of action in the FAC; therefore, this Court cannot
revisit these issues based on Berg & Berg Enterprises, LLC v. Boyle (2009)
178 Cal.App.4th 1020, 1036. Plaintiffs argue that Berg states that a
defendant may not demur again on the same grounds to the portions of an amended
pleading as to which the prior demurrer was overruled. However, as noted in the
Reply, Berg states the opposite of what Plaintiffs assert. “[W]e have
previously concluded that a party is within its rights to successively demur to
a cause of action in an amended pleading notwithstanding a prior unsuccessful
demurrer to that same cause of action.” (Berg & Berg Enterprises, LLC v.
Boyle (2009) 178 Cal.App.4th 1020, 1036 citing Pavicich v. Santucci (2000)
85 Cal.App.4th 382, 389.)
First
Cause of Action – Negligence
“To state a cause of
action for negligence, a plaintiff must allege (1) the defendant owed the
plaintiff a duty of care, (2) the defendant breached that duty, and (3) the
breach proximately caused the plaintiff's damages or injuries. [Citation
omitted.] Whether a duty of care exists is a question of law to be determined
on a case-by-case basis. [Citation omitted.]” (Luceras v. BAC Home
Loans Servicing, LP (2013) 221 Cal.App.4th 49, 62.)
Further,
as stated in Parsons:
Some of the
considerations that courts have employed in various contexts to determine
the existence and scope of duty are: “the foreseeability of harm to the
plaintiff, the degree of certainty that the plaintiff suffered injury, the
closeness of the connection between the defendant's conduct and the injury
suffered, the moral blame attached to the defendant's conduct, the policy of
preventing future harm, the extent of the burden to the defendant and
consequences to the community of imposing a duty to exercise care with
resulting liability for breach, and the availability, cost, and prevalence of
insurance for the risk involved.
(Parsons v. Crown
Disposal Co. (1997) 15 Cal.4th 456, 472-73.)
The only
element that Defendant attacks is the element of duty. Defendant argues there
can be no duty because negligence is preempted by the comprehensive scheme of
regulation in California’s enactment of Division 11 of the California
Commercial Code applicable to wire transfers. Defendant cites to Zengen,
Inc. v. Comerica Bank (2007) 41 Cal.4th 239, 250.
Determining
whether or not Plaintiffs sufficiently alleged facts for the Court to determine
if the element of duty has been successfully alleged is difficult for several
reasons.
First,
Plaintiffs’ TAC is written in a confusing manner: there are 85 paragraphs of general
allegations, and the first cause of action doesn’t start until the 86th
paragraph; the 86th paragraph incorporates the prior 85 paragraphs.
While paragraphs
87-89 appear to be how Plaintiffs intend to allege a duty against Defendant, it
is difficult to decipher what else in the prior 85 paragraphs Plaintiffs are
alleging to be a basis for the duty to arise.
This
confusion is highlighted by Defendant’s demurrer because Defendant appears to
obfuscate or possibly misrepresent the TAC. Defendant frames the TAC in a very
narrow manner in which it argues that all of the conduct in the TAC alleged against
Defendant is preempted under Zengen, and thus a duty has not been
alleged.
However, the
Opposition argues that Defendant ignores several allegations in the TAC that
are in fact not preempted.
In the
7/21/2023 Minute Order on page 4, the Court previously noted:
However, as noted in the Opposition, Zengen allows for the
possibility of a duty beyond those stated in the Commercial Code, and that is
what Plaintiffs have alleged. “This is not to say that the Uniform Commercial
Code necessarily displaces all common law actions based on all activities
surrounding funds transfers. One court has explained that ‘[t]he exclusivity of
Article 4-A is deliberately restricted to ‘any situation covered by particular
provisions of the Article.’ Conversely, situations not covered are not the
exclusive province of the Article.” (Zengen, Inc. v. Comerica Bank (2007)
41 Cal.4th 239, 254.)
Min. Order 7/21/2023, p. 4.)
At the
hearing, if Defendant believes that all of the conduct in the TAC is preempted,
it should point the Court to the exact conduct that is preempted, where the
conduct is alleged in the TAC, and controlling case law to support its
argument. If Plaintiffs believe there are several allegations that Defendant
failed to point out that are not preempted, Plaintiffs should also point this
out to the Court, as well as any controlling case law it would need to support
their arguments.
Tentative
Ruling First Cause of Action
The Court
will hear from the parties. The Court would ask the parties to address the
effect of the other demurrers currently on calendar. Should the Court rule on
this current demurrer, or handle all of the demurrers at once?
Tentative
Ruling on Ninth and Tenth Causes of Action (As labeled in the body of the TAC)
As to the
ninth cause of action pertaining to unfair business practices, Defendant makes
arguments without providing any legal authority. As to the tenth cause of
action, Defendant’s argument is unclear, and Defendant doesn’t provide any
persuasive legal authority, much less mandatory authority, to support its
argument.
Defendant’s
demurrer to the ninth and tenth causes of action as labeled in the body of the
TAC are OVERRULED.
MOTION TO STRIKE
Moving Party: Defendant, JPMorgan Chase Bank, N.A., a national banking
association sued herein erroneously as Chase Bank, N.A. (Chase)
Responding Party: Plaintiffs did not submit an
Opposition
Moving Papers: Motion to Strike; Proof of
Service
Opposition Papers: No Opposition
Reply Papers: No Reply
Proof of Service Timely Filed
(CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): No – This motion to strike was not
served with enough notice. Defendant served this motion via email on March 19,
2024. The instant motion is scheduled to be heard on April 11, 2024. Sixteen
court days before April 11, 2024 would be March 19, 2024. However, two calendar
days have to be added because the motion was served via email. Therefore, the
Defendant should have filed this motion two calendar days before March 19th
2024.
Proper Address: Ok
RELIEF
REQUESTED
“Defendant, JPMorgan Chase Bank, N.A., a
national banking association sued herein erroneously as Chase Bank, N.A.
(“Chase”) moves the Court for an Order striking the following portions of the Third
Amended Complaint (TAC):
1. Paragraph 141 – ‘Plaintiffs are entitled to treble damages against
the BANKS.’
2. Paragraph 4 in the Prayer For Relief – ‘For treble damages according
to statute as to the BANKS.’”
Meet and Confer
Before filing a motion to strike
pursuant to this chapter, the moving party shall meet and confer in person or
by telephone with the party who filed the pleading that is subject to the
motion to strike for the purpose of determining if an agreement can be reached
that resolves the objections to be raised in the motion to strike. If an
amended pleading is filed, the responding party shall meet and confer again
with the party who filed the amended pleading before filing a motion to strike
the amended pleading. (CCP §435.5(a).)
This analysis is the same as the
analysis under the demurrer tentative ruling for the meet-and-confer
requirement.
The grounds for moving to strike must appear on the face of
the pleading or by way of judicial notice. (Code. Civ. Proc. § 437; Turman
v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63
[“judges read allegations of a pleading subject to a motion to strike as a
whole, all parts in their context, and assume their truth”].)
Further, CCP § 431.10(a)-(c) states as follows:
(a) A material allegation in
a pleading is one essential to the claim or defense and which could not be
stricken from the pleading without leaving it insufficient as to that claim or
defense.
(b) An immaterial allegation
in a pleading is any of the following:
(1) An allegation that is
not essential to the statement of a claim or defense.
(2) An allegation that is
neither pertinent to nor supported by an otherwise sufficient claim or defense.
(3) A demand for judgment
requesting relief not supported by the allegations of the complaint or
cross-complaint.
(c) An “immaterial
allegation” means “irrelevant matter” as that term is used in Section 436.
(CCP § 431.10(a)-(c).)
TENTATIVE RULING
Defendant states that the two portions of the
TAC it wishes to strike are the requests for treble damages in ¶141 of the
tenth cause of action (as labeled in the body of the TAC) and in ¶4 of the
Prayer for Relief. Defendant argues that the TAC never cites any statute that
would authorize treble damages, so it is a matter of pure conjecture to try to
figure out what, if any, statute is intended. The Court will hear argument
because Defendant’s argument
·
is borderline
incomprehensible,
·
fails to cite
authority for its argument that the authority for treble damages must be alleged
in the complaint,
·
cites to non-binding
authority, and
·
cites a California case
in which the Court is unclear how it pertains to Defendant’s argument.
Further, Defendant fails to
consider that although Defendant argues these damages cannot apply to itself,
there is also another bank in the action. Therefore, to strike these requests seems
improper if these requests for treble damages were applicable to WellsFargo,
since the request for treble damages applies to both banks, not just Chase.