Judge: Craig Griffin, Case: Obnibene v. Ognibene, Date: 2022-12-12 Tentative Ruling
The Demurrer by Defendants Peter Sabatino Ognibene and Lido Shipyard Sausage Company to the First Amended Complaint by plaintiff James Sabatino Ognibene is SUSTAINED with 20 days leave to amend as to the 7th Cause of Action for Injunctive Relief and OVERRULED as to all other causes of action.
This action arises out of a dispute between a father and son regarding a written partnership agreement regarding operation of an Italian restaurant in Newport Beach. Plaintiff is a 10% owner and his father, the defendant, owns the remaining 90%. Defendants demur to the causes of action for Breach of Contract, Breach of Fiduciary Duty, Fraud, Conversion, Dissolution and Injunctive Relief.
1st Cause of Action for Breach Of Contract
“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)
Defendants contend that the breach of contract action is barred by the 4 year statute of limitations. (CCP §337) The FAC contains numerous allegations of the partnership agreement being breached during the past four years including failing to distribute quarterly profits, conveying title to assets/inventory to a separate entity and borrowing money without consent of partner. “When an obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful act occurs, triggering a new limitations period.” (Hogar Dulce Hogar v. Community Development Commission (2003) 110 Cal.App.4th 1288, 1295.) Defendants argue that some of the alleged breaches occurred more than 4 years ago and therefore the cause of action fails. Defendants essentially demur to a part of the cause of action. However, “a demurrer does not lie to a portion of a cause of action.” (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682.) “A demurrer must dispose of an entire cause of action to be sustained.”(Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)
Defendants also assert that the cause of action is not sufficiently pled and is uncertain. However, the complaint contains numerous factual allegations of breach of the partnership agreement and is not uncertain.
2nd Cause of Action for Breach Of Fiduciary Duty
“‘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.’ [Citation].” (O'Neal v. Stanislaus County Employees' Retirement Assn. (2017) 8 Cal.App.5th 1184, 1215) Additionally, “[t]he allegation of a fiduciary relationship must be supported by either a contract, or a relationship that imposes it as a matter of law.” (Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544, 1558).
Defendants make similar arguments regarding Breach of Fiduciary Duty as were made with the Breach of Contract claim. Defendants assert the breach occurred outside the SOL, the claims are uncertain, and there is no breach alleged. The FAC alleges misappropriating funds and using assets for defendant’s own personal use, among other things, that occurred within the four year statute of limitation period set forth in CCP §343. (FAC at ¶¶29, 41-42) The plaintiff has sufficiently stated a claim for breach of fiduciary duty.
3rd Cause of Action for Fraud
The elements of a fraud cause of action are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. [Citation.]” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173, internal quotation marks omitted.) “Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made.” Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 73. This “strict requirement” of pleading “necessitates pleading facts which ‘show how, when, where, to whom, and by what means the representations were tendered.’” Id.
The verified FAC alleges that each quarter Peter made certain representations about funds being generated and concealed information about encumbrances. The FAC sufficiently pleads facts to get past the Demurrer stage.
4th Cause of Action for Conversion
The elements of a conversion claim are: (1) plaintiff owned, possessed, or had a right to possess personal property; (2) defendant intentionally took possession of the property for a significant period of time, prevented plaintiff from having access to the property for a significant period of time, or destroyed the property; (3) plaintiff did not consent; (4) causation; (5) damages. (CACI 2100; Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.)
The FAC alleges that Peter “converted Partnership money, inventory, property, assets and labor for his own personal benefit and gain.” (FAC at ¶55) The FAC provides defendants sufficient notice of the claims against them such that they can conduct discovery for their defense.
5th Cause of Action for Dissolution
California Corporations Code § 16801 (“Conditions of dissolution or winding up of partnership business”) states in pertinent part as follows: “A partnership is dissolved, and its business shall be wound up, only upon the occurrence of any of the following events: … (5) On application by a partner, a judicial determination that any of the following apply: (A) The economic purpose of the partnership is likely to be unreasonably frustrated. (B) Another partner has engaged in conduct relating to the partnership business that makes it not reasonably practicable to carry on the business in partnership with that partner. (C) It is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement.”
Defendants assert that plaintiff has not pled the requirements of Corp. Code §16801. The FAC alleges that “Peter has engaged in conduct relating to Partnership business that makes it not reasonably practicable to carry on the business in the Partnership” and “it is not possible to carry on the economic purpose of the Partnership.” (FAC at 13:17-18 and 13:9-10) Plaintiff has sufficiently pled a cause of action for Dissolution under Corporations Code §16801(5)(B) & (C).
7th Cause of Action for Injunctive Relief
Plaintiff’s seventh cause of action is a stand-alone claim for “Injunctive Relief.” Injunctive relief is a remedy, not a cause of action. (See, City of S. Pasadena v. Dep't of Transportation (1994) 29 Cal. App. 4th 1280, 1293; see also, Shell Oil Co. v. Richter (1942) 52 Cal. App. 2d 164, 168, 125 P.2d 930, 932 (1942) - “Injunctive relief is a remedy and not, in itself, a cause of action, and a cause of action must exist before injunctive relief may be granted”; see also, Wong v. Jing (2010) 189 Cal. App. 4th 1354, 1361, fn. 2- “specific performance and injunctive relief are equitable remedies and not causes of action for injuries.”) Defendants demur to this cause of action on this ground and plaintiff did not respond in his opposition, presumably because plaintiff’s counsel concedes the point.
The Court orders moving party to give notice of this ruling.