Judge: Ashfaq G. Chowdhury, Case: 25NNCV00967, Date: 2025-06-05 Tentative Ruling

Case Number: 25NNCV00967    Hearing Date: June 5, 2025    Dept: E

Case No: 25NNCV00967
Hearing Date:  06/05/2025 – 8:30am

Trial Date: UNSET

Case Name: JPMORGAN CHASE BANK, N.A.; v. TRIPLE A TRANS INC.; RAFFI KHAMISIAN; and DOES 1-20, inclusive

[TENTATIVE RULING ON DEMURRER]

RELIEF REQUESTED

“Defendants TRIPLE A TRANS INC and RAFFI KHAMISIAN (collectively referred to herein as “Defendants”) will and hereby bring this demurrer, pursuant to California Code of Civil Procedure §430.10 et. seq., and Rule 3.1320 of the California Rules of Court, to Plaintiff JPMORGAN CHASE BANK, N.A. (“Plaintiff”) Complaint, filed on February 13, 2025, as more specifically stated in the attached demurrer.

The grounds for Demurrer is that the causes of action do not allege facts sufficient to constitute causes of action against Defendants for Breach of Contract and Breach of Implied Covenant of Good Faith and Fair Dealing.

Prior to the filing of this Demurrer, counsel for Defendants met and conferred with counsel for Plaintiff, in an attempt to resolve the issues raised in this demurrer. See Declaration of Brianna Douzoglou. The parties were not able to come to a resolution, necessitating the filing of the instant demurrer.

This demurrer will be based on this Notice, the demurrer attached hereto, the supporting Memorandum of Points and Authorities, the Declaration of Brianna Douzoglou, Esq. in support thereof, the Court’s file and records, and any additional oral or documentary evidence or argument as may be presented at the hearing on this matter.”

(Def. Dem. p. 2.)

PROCEDURAL

Moving Party: Defendants, Triple A Trans Inc., and Raffi Khamisian (Defendants or Movants)

Responding Party: Plaintiff, JPMorgan Chase Bank, N.A. (Plaintiff or JPMorgan)

Proof of Service Timely Filed (CRC Rule 3.1300(c)): Ok

16/21 Court Days Lapsed (CCP § 1005(b)): Ok

Proper Address (CCP § 1013, § 1013a, § 1013b): Defendants served the instant demurrer on Plaintiff via electronic service and U.S. Mail. With respect to electronic service, Defendants served Plaintiff’s counsel at nabeel.zuber@mccalla.com; however, on eCourt, Plaintiff’s counsel’s email address is listed as nabeel.zuberi@mccalla.com. Although Defendants did not serve Plaintiff’s counsel at the proper email address, Plaintiff appears to have received this demurrer because Plaintiff submitted an opposition. At the hearing, the parties are to discuss what the proper e-service address for Plaintiff’s counsel is.

Moving Papers: Demurrer

Opposition Papers: Opposition

Reply Papers: Reply

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. (Id., § 430.41(a)(4).)

Defendants’ counsel alleges that a meet and confer occurred; however, counsel explains that the parties were unable to resolve the issues raised. (See Decl. Douzoglou, ¶¶ 2-3.)

BACKGROUND

Plaintiff, JPMorgan Chase Bank, N.A., filed the instant action on 2/13/2025 against Defendants, Triple A Trans Inc. and Raffi Khamisian.

Plaintiff’s Complaint alleges two causes of action – (1) Breach of Contract and (2) Breach of Implied Covenant of Good Faith and Fair Dealing.

Plaintiff alleges that on or about December 12, 2019, Borrower Defendant (Triple A Trans Inc.) executed a line of credit note and a credit agreement in favor of Chase, memorializing a revolving loan not to exceed $350,000. (Compl. ¶ 7.)

Plaintiff alleges that on or about December 12, 2019, Guarantor Defendant (Raffi Khamisian) executed a guaranty. (Compl. ¶ 8.)

Plaintiff alleges that despite written demand to Defendants, it has not received any payment on account of the loan, and as of January 28, 2025, the outstanding balance on the loan is $286,627.54, consisting of a principal balance in the amount of $265,961.74, accrued interest in the amount of $14,552.88, and late charge fees in the amount of $6,112.92. (Compl. ¶ 12.)

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.)

Demurrer – Uncertainty

A special demurrer for uncertainty, CCP section 430.10(f), is disfavored and will only be sustained where the pleading is so bad that defendant cannot reasonably respond—i.e., cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him/her. (Khoury v. Maly’s of Calif., Inc. (1993) 14 Cal.App.4th 612, 616.) Moreover, even if the pleading is somewhat vague, “ambiguities can be clarified under modern discovery procedures.” (Ibid.)

//

//

ANALYSIS

First Cause of Action – Breach of Contract

Defendants argue that Plaintiff does not allege facts sufficient to constitute a cause of action for breach of contract because Plaintiff did not allege facts that demonstrate Plaintiff performed all obligations under the terms of the loan.

To state a cause of action for breach of contract, Plaintiff must allege “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Second Element – Plaintiff’s Performance or Excuse for Nonperformance

Defendants attack only the second element of the breach-of-contract cause of action.

Defendants argue that Plaintiff’s allegation of “Plaintiff performed all obligations under the terms of the Loan,” is not sufficient because Plaintiff does not allege what specific obligations Plaintiff performed under the terms of the loan.

Here, when looking at the allegations of the Complaint, Defendants appear to be correct that Plaintiff does not allege the specific obligations Plaintiff performed under the terms of the loan.

In Opposition, Plaintiff argues that it alleges this element because it alleges that Plaintiff performed all obligations by advancing the loan funds to Defendants.

However, Plaintiff is incorrect to argue that its Complaint alleges that it advanced the loan funds to Defendants. Plaintiff’s Complaint did not actually allege that Plaintiff performed by “advancing the loan funds” to Defendants. Plaintiff’s Complaint only alleges that “Plaintiff performed all obligations under the terms of the Loan.” (Compl. ¶ 15.)

All this being said, the case law that Defendants cite do not support Defendants’ argument that the demurrer should be sustained for Plaintiff conclusorily alleging that “Plaintiff performed all obligations” without stating facts to support that Plaintiff performed the duties under the contract.

For example, Defendants cite to Salami v. Los Robles Regional Medical Center (2024) 103 Cal.App.5th 1023, 1027-28.

In relevant part, all that Salami stated was:

The elements of a breach of contract claim are: “(1) the existence of the contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821, 124 Cal.Rptr.3d 256, 250 P.3d 1115.) But here, Salami did not allege that he performed his duties under the COA or was excused from doing so, nor did he allege that Los Robles failed to substantially perform its duties under the contract. Without *1028 these elements his breach of contract claim fails. 

(Salami v. Los Robles Regional Medical Center (2024) 103 Cal.App.5th 1023, 1027-28.)

Salami did not state that plaintiff has to allege facts that support the allegation that “Plaintiff performed all obligations under the terms of Loan.”

In fact, Defendants appear to cite a case that directly undercuts their argument by citing to Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371.

In relevant part of Careau:

Where contractual liability depends upon the satisfaction or performance of one or more conditions precedent, the allegation of such satisfaction or performance is an essential part of the cause of action. (4 Witkin, Calif.Proc. (3d ed. 1985) Pleading, § 479 at pp. 515–516.) This requirement can be satisfied by allegations in general terms. It is sufficient for a plaintiff to simply allege that he has “duly performed all the conditions on his part.” (Code of Civ.Proc., § 457.) However, this rule is subject to two important caveats, both of which are applicable here.

First, where the condition is an event, as distinguished from an act to be performed by the plaintiff, a specific allegation of the happening of the condition is a necessary part of pleading the defendant's breach. (Clack v. State of California ex rel. Dept. Pub. Works (1969) 275 Cal.App.2d 743, 748, 80 Cal.Rptr. 274; Byrne v. Harvey (1962) 211 Cal.App.2d 92, 113, 27 Cal.Rptr. 110.) Second, general pleadings are controlled by specific allegations. Thus, a general allegation of due performance will not suffice if the *1390 plaintiff also sets forth what has actually occurred and such specific facts do not constitute due performance. (Willis v. Page (1937) 19 Cal.App.2d 508, 512, 65 P.2d 944.)

(Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1389-90.)

Careau seems to undercut Defendants’ argument because Careau states that it is sufficient for plaintiff to simply allege that he has “duly performed all the conditions on his part.”

Although Careau explains that there are two caveats to the rule that a plaintiff can simply allege that he has duly performed all the conditions on his part, the Court fails to understand how those two caveats are applicable here.

Further, the Court fails to see how Careau is applicable with respect to contractual liability depending upon satisfaction or performance of one or more conditions precedent. How is a condition precedent applicable in this scenario?

//

TENTATIVE RULING FIRST CAUSE OF ACTION

The Court tentatively plans to OVERRULE Defendants’ demurrer to the first cause of action for breach of contract.

Defendants argue that Plaintiff cannot conclusorily allege that “Plaintiff performed all obligations under the terms of the Loan.” However, the case law that Defendants cite do not appear to support Defendants’ argument.

Further, at the hearing, even if Defendants convince the Court that the Court should sustain the demurrer to this cause of action, the Court will likely grant leave to amend.

Plaintiff alleges that Borrower Defendant executed a line of credit note and a credit agreement in favor of Chase, memorializing a revolving loan not to exceed $350,000. (Compl. ¶ 7.) Further, Plaintiff alleges that Guarantor Defendant executed a Guaranty Agreement. (Compl. ¶ 8.) Further, Plaintiff alleges that Chase has not received payments on the Loan since July 22, 2024, and the loan remains due for the payment that came due on August 12, 2024. (Compl. ¶ 11.)

When reading the allegations in paragraph 15 that “Plaintiff performed all obligations under the terms of the Loan,” in context with the entire Complaint as a whole, it is clear that Plaintiff is alleging that it performed by providing the funds to Defendants.

Therefore, even if the Court were to sustain the demurrer, it would grant leave to amend.

Second Cause of Action – Breach of Implied Covenant of Good Faith and Fair Dealing

Defendants demur to the second cause of action for breach of the implied covenant of good faith and fair dealing.

Defendants argue that Plaintiff fails to state a cause of action because Plaintiff does nothing more than allege a mere breach of contract that is based on the same acts as the first cause of action, and Defendants argue that Plaintiff seeks the same damages sought in the first cause of action.

In Opposition, Plaintiff argues that the alleged conduct goes beyond the contract breach.

Plaintiff also argues that the Defendants failed to respond to Plaintiff’s written demand for payment as alleged in paragraph 12 of the Complaint, and Plaintiff argues that Khamisian refused to acknowledge his unconditional guaranty of payment.

TENTATIVE RULING SECOND CAUSE OF ACTION

The Court will hear argument as to the second cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing.

First, to the extent that Plaintiff argues that it alleges that Defendants failed to respond to Plaintiff’s written demand for payment as alleged in paragraph 12 of the Complaint, Plaintiff is incorrect. Plaintiff does not allege that Defendants failed to respond to Plaintiff’s written demand for payment.

What paragraph 12 alleges is as follows:

Despite written demand to Borrower Defendant and Guarantor Defendant (collectively “Defendants”), Chase has not received any payment on account of the Loan. As of January 28, 2025, the outstanding balance on the Loan is $286,627.54, consisting of a principal balance in the amount of $265,961.74; accrued interest in the amount of $14,552.88; and late charges and fees in the amount of $6,112.92. The Loan will continue to accrue late charges and interest at the rate of 2.20% per annum above the Prime Rate.

(Compl. ¶ 12.)

If Plaintiff is arguing that it alleges more than a mere breach of the contract, the Court would like Plaintiff to explain how the Complaint is alleging more than a mere breach of the contract. Paragraph 12 simply appears to allege that Chase has not received payment. How is paragraph 12 alleging anything more than a mere breach of the agreement?

Second, to the extent that Plaintiff is arguing that Khamisian refused to acknowledge his unconditional guaranty of payment despite Plaintiff’s demand, the Court fails to see where the Complaint alleges that “Khamisian refused to acknowledge his unconditional guaranty of payment despite Plaintiff’s demand.” Plaintiff does not cite to any allegations in the Complaint where this is alleged. Plaintiff cites to Exhibit B, page 26 of the Complaint as the location of where Plaintiff alleges that Khamisian refused to acknowledge his unconditional guaranty of payment. However, the Court has no idea what Plaintiff is referring to with respect to Exhibit B page 26. Exhibit B in the Complaint does not have a page 26.

Third, the Court will hear argument because the case law that Defendants and Plaintiff cited with respect to this cause of action is unfortunately less than clear with respect to what the pleading standard is. Both parties seem to predominantly rely on Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371 to support their argument.

However, based on the Court’s reading of Careau, it appears that Defendants’ argument is more persuasive that a breach of the implied covenant of good faith and fair dealing is not alleged here.

Plaintiff’s Complaint alleges:

21. Plaintiff re-alleges and incorporates by this reference paragraphs 1 through 20 of the Complaint as though fully set forth herein.

22. Plaintiff and Defendant entered into an express written agreement, the Loan. Guarantor Defendant guaranteed Borrower Defendant’s payment under the terms of the Loan.

23. Plaintiff performed all obligations to Defendant in accordance with the terms of the Loan.

24. All conditions required for Defendant’s performance have occurred.

25. Defendants has unfairly interfered with Plaintiff’s right to receive the benefits of the Loan.

26. Guarantor Defendant has failed to fulfill its obligations under the terms of the Guaranty, in that it has failed to remit payment under the Loan, given Borrower Defendant’s failure to perform thereunder.

27. As a result of Defendants’ breach of the Loan and Guaranty, Plaintiff has been harmed in an amount no less than $286,627.54, plus additional attorneys’ fees and costs, and interest to be determined at the time of issuance of judgment.

(Compl. ¶¶ 21-27.)

In relevant part of Careau :

If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated. Thus, absent those limited cases where a breach of a consensual contract term is not claimed or alleged, the only justification for asserting a separate cause of action for breach of the implied covenant is to obtain a tort recovery.

…

However, whether such a concept has any application in noninsurance cases appears to be increasingly problematic. Indeed, the proposition that *1396 tort damages might be allowed for a breach of the implied covenant in noninsurance cases is barely ten years old and is based entirely on dicta from two earlier opinions which the Supreme Court has recently questioned.

…

From this history, it seems clear to us that the recognition of a tort remedy for a breach of the implied covenant in a noninsurance contract has little authoritative support. In fact, with but one arguable exception (see fn. 25) and apart from decisions disapproved by Foley, every case which has considered the issue has rejected the recognition of a special relationship between specific contracting parties. However, as the Foley court did not see fit to specifically reject the Seaman's consideration of the noninsurance special relationship, or the Wallis criteria for determining its existence, we decline to do so. Indeed, the Foley court's discussion of why the employment relationship was dissimilar to that of insurer and insured essentially relied upon a Wallis analysis. (Foley, supra, 47 Cal.3d at p. 692, 254 Cal.Rptr. 211, 765 P.2d 373.)

(Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395, & 1399.)

The Court to hear argument.