Judge: Curtis A. Kin, Case: 21STCV39020, Date: 2022-08-23 Tentative Ruling
Case Number: 21STCV39020 Hearing Date: August 23, 2022 Dept: 72
DEMURRER AND MOTION TO STRIKE
Date: 8/23/22
(9:30 AM)
Case: Kingsly Apts., et al. v.
Travelers Casualty Ins., et al. (21STCV39020)
TENTATIVE RULING:
Defendants Prime Remediation Services and Mike Kaputikyan’s
Demurrer to Complaint is OVERRULED.
Defendants Prime Remediation Services and Mike Kaputikyan’s
Motion to Strike Portions of Complaint is GRANTED IN PART.
I.
DEFENDANTS PRIME REMEDIATION SERVICES, INC. AND
MIKE KAPUTIKYAN’S DEMURRER TO COMPLAINT
Defendants Prime Remediation Services (“Prime”) and Mike
Kaputikyan demur to the fourth cause of action for negligent misrepresentation
and the fifth cause of action for intentional misrepresentation.
The basis for the demurrers to both causes of action are
that: (1) plaintiffs fail to allege a misrepresentation of fact, as opposed to
an opinion: (2) plaintiffs fail to allege with specificity how defendants knew
their representations were false; and (3) plaintiffs fail to sufficiently
allege defendants intended to defraud plaintiff.
With respect to the first ground, plaintiffs allege that
Kaputikyan, owner of Prime, told plaintiffs that co-defendant Travelers
Casualty Insurance of America (“Travelers”) would cover all remediation and
storage costs. (Compl. ¶¶ 13(a), 23, 26, 28, 29, 77, 79, 80.) Plaintiffs also
allege that Kaputikyan’s representations were false, as Travelers did not cover
$120,000 in remediation and storage costs. (Compl. ¶¶ 33-35.) For pleading
purposes, plaintiffs allege a misrepresentation of fact. It is a question for
the trier of fact to determine whether Kaputikyan’s representations constitute
actionable fact or nonactionable opinion. (Hobart v. Hobart Estate Co.
(1945) 26 Cal.2d 412, 431 [“[W]here there is a reasonable doubt as to whether a
particular statement is an expression of opinion or the affirmation of a fact,
the determination rests with the trier of the facts”].)
With respect to the second ground, plaintiffs allege that
defendants had no reasonable grounds to believe their representations were true
(Compl. ¶ 81 [negligent misrepresentation cause of action]) or knew that their
representations were false (Compl. ¶ 96 [intentional misrepresentation cause of
action]). These are ultimate facts that the Court treats as true at the
pleading stage. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550
[“[T]he complaint ordinarily is sufficient if it alleges ultimate rather than
evidentiary facts”].)
With respect to the third ground, plaintiffs sufficiently allege
that defendants made the misrepresentations to induce plaintiffs to hire their
services. (Compl. ¶¶ 84, 99.)
Because the grounds for demurrer have no merit, even though
unopposed, the demurrers to the fourth and fifth causes of action are OVERRULED.
II.
DEFENDANTS PRIME REMEDIATION SERVICES, INC. AND
MIKE KAPUTIKYAN’S MOTION TO STRIKE PORTIONS OF COMPLAINT
Defendants Prime Remediation Services, Inc. (“Prime”) and
Mike Kaputikyan move to strike the allegations supporting and prayers for
punitive damages.
With respect to page 19, line 26 to page 20, line 1; page
20, lines 1-2; and page 20, lines 2-7, all corresponding to paragraph 87 of the
Complaint, and page 24, lines 21-22, corresponding to paragraph 19 of the
prayer for relief, these allegations correspond to the fourth cause of action
for negligent misrepresentation. The fourth cause of action is based on
defendants’ lack of reasonable grounds to believe their representations were
true. (Compl. ¶ 81.) Negligence is insufficient to support punitive damages. (Ebaugh
v. Rabkin (1972) 22 Cal.App.3d 891, 894.) Accordingly, the motion as to
paragraph 87 of the Complaint and paragraph 19 of the prayer for relief is GRANTED.
With respect to the other allegations and prayer for
punitive damages, which correspond to the fifth cause of action for intentional
misrepresentation, the motion is DENIED, because the fifth cause of action
sounds in fraud, for which punitive damages are available. (Compl. ¶ 96; Civ.
Code § 3294(c)(3).)
With respect to the alter ego allegations, disregarding a
corporate entity has two requirements: (1) there must be such unity of interest
and ownership that the separate personalities of the corporation and the
individual no longer exist; and (2) it must be demonstrated that “the facts are
such that an adherence to the separate existence of the corporation would,
under the particular circumstances, sanction a fraud or promote injustice.” (Minifie v. Rowley (1921) 187 Cal. 481,
487.)
Here, plaintiff sufficiently alleges a unity of interest
because Kaputikyan purportedly dominated and controlled Prime, used Prime for
his exclusive benefit, operated Prime as a shell, commingled Prime’s assets
with his assets, operated Prime without observing corporate formalities,
inadequately capitalized Prime, and held out himself as liable for the
obligations of Prime. (Compl. ¶ 13; Associated
Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-40
[factors to be considered in making alter ego determination].) Plaintiff also
alleges that adhering to the separate existence of Prime would promote
injustice. (Compl. ¶ 14.) These are ultimate facts which, if true, are
sufficient to hold Prime liable on a theory of alter ego liability. (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236.) The motion as to the
alter ego allegations is DENIED.
The motion is GRANTED IN PART. Paragraph 87 of the Complaint
and paragraph 19 of the prayer for relief are STRICKEN.
Ten (10) days to answer.