Judge Bruce G. Iwasaki, Case Number: 22STCV39168, Date: 2023-05-10 Tentative Ruling

Tentative Ruling: The Demurrer to the Second Amended Complaint is overruled.

This case arises out of an alleged breach of an oral joint venture agreement to jointly purchase real estate. Plaintiffs Morad Ben Neman and Lancaster Eagle, LLC (Plaintiffs) filed suit against Defendants Payam Bahari, Freydoon “Fred” Bahari Moghadam, Haim Bahari, Tal Bahari, and three entities: (1) 114 Grand Cypress, LLC, (2) Cavalini, Inc., and (3) Caster Modelo, LLC (collectively, Defendants).

On December 16, 2022, Plaintiffs filed a Complaint. Defendants demurred to each cause of action. The Court sustained the demurrer in its entirety.

Thereafter, Plaintiffs filed a Second Amended Complaint, alleging causes of action for (1.) Breach of Joint Venture Agreement, (2.) Breach of Fiduciary Duty, (3.) Aiding and Abetting Breaches of Fiduciary Duty, and (4.) Fraudulent Conveyances

Defendants now demur to the first, second, third, and fourth causes of action in the Second Amended Complaint. Plaintiff opposes the demurrer.

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) 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.)

Defendants demur to the SAC on the grounds that Plaintiffs have failed to state a claim.

Defendants argue the first cause of action for breach of joint venture agreement is fatally uncertain and fails to state a claim. Defendants argue that despite the Court’s prior ruling as to this cause of action on demurrer, the SAC does not add any detail regarding the obligations of each party and is still vague as to when the agreement was made.

There are three elements to show the existence of a joint venture, which are similar to a general partnership: (1) joint interest in a common business; (2) with an understanding to share profits and losses; and (3) a right to joint control. (Jacobs v. Locatelli (2017) 8 Cal.App.5^th 317.) Facts showing the joining of funds, property, or labor in a common purpose to attain a result for the benefit of the parties in which each has a right in some measure to direct the conduct of the other through a fiduciary relation that must exist, will justify a finding that a joint venture exists. (Fitzgerald v. Provines (1951) 102 Cal.App.2d 529, 537.)

A joint venture is an agreement. An agreement is a manifestation of mutual assent on the part of two or more persons.

The Court sustained demurrers to the first cause of action because it was unclear what the parties’ obligations were under this agreement and when the agreement was to take place. The Complaint failed to allege who possesses the right to control or manage the property. On the FAC, the pleadings alleged that all the joint venturers “have an equal right to control and manage the joint venture and its properties,” but it also alleges that Plaintiffs have the “right to manage the day-to-day activities of each [property] and [make] the decisions about how to best monetize them.” (FAC, ¶ 19.) The Court found that these allegations were vague, conclusory and somewhat contradictory as pled such that the FAC continued to fail to adequately specify the partnership rights nor what is involved in the management control. Additionally, it remains unclear when these terms will apply and to which parties. Further, the pleadings still failed to allege the date of the agreement or the details. (FAC ¶¶ 18, 28.) For this reason, the FAC failed to allege the specific obligations of each party as it relates to joint control, management and duration.

Now, the SAC alleges that in “May 2021,” Defendant Payam and Plaintiffs discussed “Plaintiffs’ terms for venturing with others in the purchase of real property for mutual profit.” (SAC ¶ 17.) “Plaintiffs explained that they would locate and present lucrative investment opportunities to their partners; typically involving undervalued properties available for purchase at prices far less than their true value, and that these opportunities would be disclosed only to Plaintiffs' partners, who would be expected to maintain the opportunities in confidence and not seek to directly acquire them around Plaintiffs.” (SAC ¶ 17.)

“Although the parties would enjoy a joint right to manage and participate in management of the joint venture properties, Plaintiffs would perform the role of property manager, including overseeing the day-to-day management of the properties and would maintain a bank account for the parties' joint ventures through which the needs of parties' joint ventures would be timely paid, using funds supplied either by Defendants or the properties themselves.” (SAC ¶ 18(C).)

The prior allegations referencing a right to control the day-to-day management created confusion on the joint ownership and control issues. The SAC now alleged that “Plaintiffs would perform the role of property manager.” While the change may seem minor, it appears to be a proper delegation of the joint control authority enjoyed by both parties.

“ ‘A joint venture ... is an undertaking by two or more persons jointly to carry out a single business enterprise for profit.’ [Citation.] ‘There are three basic elements of a joint venture: the members must have joint control over the venture (even though they may delegate it), they must share the profits of the undertaking, and the members must each have an ownership interest in the enterprise. [Citation.]’ [Citation.]’ ” (Unruh–Haxton v. Regents of the University of California (2008) 162 Cal.App.4th 343, 370.)

The SAC also provides greater detail generally to the terms of the Joint Venture Agreement and its breach. (SAC ¶¶ 18-29.)

A plaintiff must “ ‘ “set forth the essential facts of his case with reasonable precision and with particularity sufficient to acquaint a defendant with the nature, source and extent of his cause of action.” ’ ” (Doheny Park Terrace Homeowners Assn., Inc. v. Truck Ins. Exchange (2005) 132 Cal.App.4th 1076, 1099.) “ ‘ “The particularity required in pleading facts depends on the extent to which the defendant in fairness needs detailed information that can be conveniently provided by the plaintiff; less particularity is required where the defendant may be assumed to have knowledge of the facts equal to that possessed by the plaintiff.” ’ ” (Ibid.)

These allegations are sufficient – at the pleading stage – to address the terms of the Joint Venture Agreement, the nature of the joint control, the parties’ obligations and when the agreement was to take place. Based on the foregoing, Plaintiffs have adequately alleged a breach of the Joint Venture Agreement. Defendants’ demurrer for uncertainty fails.

Defendants argue that Plaintiff has failed to state a cause of action for breach of fiduciary duty because Plaintiffs cannot allege the existence of a fiduciary relationship in the absence of a joint venture.

“The elements of a claim for breach of fiduciary duty are (1) the existence of a fiduciary relationship, (2) its breach, and (3) damage proximately caused by that breach.” (Mendoza v. Continental Sales Co. (2006) 140 Cal.App.4th 1395, 1405.)

One element of the cause of action for breach of fiduciary duty is the existence of a fiduciary relationship. (Knox v. Dean (2012) 205 Cal.App.4th 417, 432.) A joint venture is an “undertaking by two or more persons jointly to carry out a single business enterprise for profit” (Nelson v. Abraham (1947) 29 Cal.2d 745, 749) and is a type of relationship upon which the law imposes fiduciary duties (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1339.)

The second cause of action relies on the existence of a joint venture agreement to create fiduciary relationship between the parties. (SAC ¶ 37.) Given the Court’s ruling on the first cause of action, the demurrer to the second cause of action is also overruled.

Defendants demur to the third cause of action on the grounds that claim is uncertain.

Liability for aiding and abetting another’s tort may be imposed upon a party where that party “(a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” (Casey v. U.S. Bank National Association (2005) 127 Cal.App.4th 1138, 1144 (Casey).)

“The elements of a claim for aiding and abetting a breach of fiduciary duty are: (1) a third party’s breach of fiduciary duties owed to plaintiff; (2) defendant’s actual knowledge of that breach of fiduciary duties; (3) substantial assistance or encouragement by defendant to the third party’s breach; and (4) defendant’s conduct was a substantial factor in causing harm to plaintiff.” (Nasrawi v. Buck Consultants LLC (2014) 231 Cal.App.4th 328, 343.)

On the Court’s prior ruling on the demurrer to the FAC, it noted that this cause of action was alleged against all Defendants. However, the FAC also alleged that “Payam and Fred, and each of them, owed fiduciary duties to Plaintiffs...” and that “the other Defendants actively and personally conspired with Fred and Payam and aided and abetted them in breaching their fiduciary duties…” (FAC ¶ 38.) Based on these allegations, it was unclear whether the FAC intended to allege this cause of action against all Defendants, or allege it against all Defendants to the exclusion of Fred Bahari and Payam Bahari who were the principals.

The Court also noted that for the same reasons the breach of fiduciary duty claim failed, the aiding and abetting claim also failed: there can be no aiding and abetting cause of action where there is no breach of a fiduciary duty cause of action.

Now, on the SAC, the third cause of action is alleged only as to “Fred, Haim, Tai, Cavalini, Caster Modelo.” The SAC further states “Payam undeniably owed fiduciary duties to Plaintiffs” and “Defendants Fred, Haim, Tal, Cavalini, Caster Modelo” “were aware of Payam' s fiduciary duties, and of the fact Payam owed such duties to Plaintiffs and each sought to exploit the others' breach of these fiduciary duties for their own enrichment and benefit.” (SAC ¶¶ 42-43.)

Thus, the SAC now clearly alleges aiding and abetting liability as to Defendants Fred, Haim, Tal, Cavalini, Caster Modelo based on the breach of a fiduciary duty as to Defendant Payam. The fact that these Defendants are also alleged on the breach of fiduciary duty claim is not fatal where Plaintiff is allowed to allege alternative theories of liability in the event the Court finds that Defendants Fred, Haim, Tal, Cavalini, Caster Modelo does not have a fiduciary relationship with Plaintiffs. “While a complaint may not plead inconsistent facts, it may plead inconsistent legal theories or causes of action.” (Vichy Springs Resort, Inc. v. City of Ukiah (Cal. Ct. App., Mar. 29, 2024, No. A165345) 2024 WL 1340842, at *9 [citing Berman v. Bromberg (1997) 56 Cal.App.4th 936, 944–945].)

A fraudulent conveyance is “a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim.” (Yaesu Electronics Corp. v. Tamura (1994) 28 Cal.App.4th 8, 13, 33.) Pursuant to Civil Code section 3439.04(a)(1), “[a] transfer made...by a debtor is fraudulent as to a creditor, whether the creditor's claim arose before or after the transfer was made.... if the debtor made the transfer... [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.”

Here, Defendants argue that this cause of action fails because the claim is uncertain, fails to allege sufficient facts to state a claim and because Plaintiffs do not meet the definition of a creditor under California Civil Code section 3439.01.

As noted above, the SAC now adequately states causes of action for breach of a joint venture agreement, breach of a fiduciary duty and aiding and abetting a breach of fiduciary duty. Thus, in contrast to prior rulings, Plaintiff has now adequately pled causes of action against Defendants.

The Uniform Voidable Transactions Act (UVTA)[1] defines a debt as “liability on a claim”; a claim as “a right to payment”; and a creditor as “a person that has a claim.” (Civ. Code § 3439.01, subds. (b)–(d).) Specifically, the UVTA in section 3439.01, subdivision (b), defines the creditor's “[c]laim” as “a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured.”

“A key feature of the UFTA is that a creditor is permitted, but not required, to maintain an action to annul a fraudulent conveyance before his debt has matured. [Citations.] As stated in Weisenburg v. Cragholm (1971) 5 Cal.3d 892, 896 [citations], ‘it is no longer necessary that a creditor reduce his claim to judgment before seeking the benefit of the remedy. [Fn. omitted.]’ ” (Cortez v. Vogt (1997) 52 Cal.App.4th 917, 930, fn. 12.)

Thus, Plaintiff’s viable causes of action now render Plaintiff a creditor under the statute.

Moreover, Plaintiff alleges that Defendants have transferred “valuable property rights - including title in valuable real property and other property, including the 114 Grand Cypress Property - to each other and/or to third parties” “for the express purpose of attempting to render Payam, along with other Defendants, judgment-proof, or at least to try and insulate them from liability for the damages suffered by Plaintiffs by placing valuable property and property rights in the hands of third parties with the actual intent of hindering Plaintiffs' ability to collect its damages from Defendants.” (SAC ¶ 49.) Specifically, Defendant “usurped ownership of the Grand Cypress property for themselves” “which Defendants then sold for millions of dollars of profit that Defendants, and each of them, have concealed and fraudulently conveyed out of Plaintiffs’ reach.” (SAC ¶ 49.) The SAC then alleges that Defendants “did not receive reasonably equivalent value for the property transferred by them as set forth above.” (SAC ¶ 49.)

[1] The UVTA's former title is the “Uniform Fraudulent Transfer Act” or “UFTA;” the Legislature retitled the UFTA as the UVTA, effective January 1, 2016. (Nagel v. Westen (2021) 59 Cal.App.5th 740, 745.)

Judge Bruce G. Iwasaki

Department 58

Tentative Ruling: The two cases are not ordered related.

Plaintiffs Morad Ben Neman and Lancaster Eagle LLC filed a notice of related case, indicating that case number 22STCV39168 (Neman v. Bahari) in Department 58 is related to case number 23STCV18073 (Lancaster Eagle LLC v. Batz-Altadonna Community) in Department 50.

If all the related cases have been filed in one superior court, as it is here, “[w]here the cases listed in the notice are unlimited civil cases, the judge who has the earliest filed case must determine whether the cases should be ordered related and assigned to his or her department.” (Cal. Rules of Court, rule 3.300(h)(1)(A).)

As 22STCV39168 is the earlier case, Department 58 shall determine whether the cases are related.

The notice of related case must be filed in all pending cases listed in the notice and must be served on all parties in those cases. (Cal. Rules of Court, rule 3.300(d).) Plaintiffs Morad Ben Neman and Lancaster Eagle LLC filed a notice of related case in both cases.

A party may respond to a notice of related cases within five days of service on the party. (Cal. Rule of Court 3.300(g).) No party responded to the notice of related cases.

The inquiry on a notice of related cases is whether the cases at issue (1) involve the same parties and are based on the same or similar claims; (2) arise from the same or substantially identical transactions, incidents, or events requiring the determination of the same or substantially identical questions of law or fact; (3) involve claims against, title to, possession of, or damages to the same property; or (4) are likely for other reasons to require substantial duplication of judicial resources if heard by different judges. (Cal. Rules of Court, rule 3.300(a)(1)-(4).)

The 22STCV39168 case arises out of an alleged breach of an oral joint venture agreement to jointly purchase real estate. Plaintiffs Morad Ben Neman and Lancaster Eagle, LLC (Plaintiffs) filed suit against Defendants Payam Bahari, Freydoon “Fred” Bahari Moghadam, Haim Bahari, Tal Bahari, and three entities: (1) 114 Grand Cypress, LLC, (2) Cavalini, Inc., and (3) Caster Modelo, LLC (collectively, Defendants). The pleadings allege that Plaintiffs Morad Ben Neman and Lancaster Eagle, LLC entered into a joint venture agreement with Defendant to purchase real property located at 114 Grand Cypress A venue, in Palmdale California (114 Grand Cypress). However, “Defendants went behind Plaintiffs' back and purchased the 114 Grand Cypress Property without Plaintiffs, in breach of their oral agreement to venture in the purchase of the 114 Grand Cypress Property with Plaintiff.”

In the 23STCV18073 action, Plaintiff Lancaster Eagle, LLC alleges that it is a tenant in common with non-party Caster Modelo, LLC for real property located at 42933 Business Center Parkway, Lancaster, CA 93535 (Lancaster Property). The Complaint arises from allegations that Plaintiffs entered into a Purchase and Sales Agreement wherein Plaintiff agreed to sell the Lancaster Property to Defendant Bartz-Altadonna Community Health Center. The Complaint alleges that Defendant Bartz-Altadonna Community Health Center breached the Purchase and Sales Agreement and now seeks damages and specific performance on this contract.

The cases involve the different parties, different underlying contractual obligations, different transactions, and different real property. The only overlap of issues appears to be the allegation in 22STCV39168 action wherein Plaintiff mentions the purchase of the Lancaster Property with Bahari Defendants and alleges its Tenants in Common (TIC) Agreement with the Bahari Defendants “was consistent with the parties' joint venture agreement, as set forth above.” (SAC ¶ 23.) However, the fact that this TIC Agreement may “serve[] to evidence the parties' joint venture agreement and also evidence[] part performance of the parties' oral agreement” does not make the cases related. Therefore, the Court finds the cases are not related under California Rule of Court 3.300(a).

Plaintiffs Morad Ben Neman and Lancaster Eagle LLC to give notice of this order in both 22STCV39168 and 23STCV18073.

Case Name	Case Number	Filing Date	Dept.
1. Neman v. Bahari	22STCV39168	12/16/22	58
2. Lancaster Eagle LLC v. Batz-Altadonna Community	23STCV18073	8/1/23	50