Judge Daniel M. Crowley, Case Number: 23STCV14485, Date: 2024-02-26 Tentative Ruling

Cross-Defendant David Hayrapetian’s demurrer to Cross-Complainants Narek Eric Kazarian’s and Genesis Investments Group, LLC’s Cross-Complaint is overruled as to the 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th causes of action.

Cross-Defendant David Hayrapetian (“Hayrapetian”) (“Cross-Defendant”) demurs to Cross-Complainants Narek Eric Kazarian’s (“Kazarian”) and Genesis Investments Group, LLC’s (“Genesis”) Cross-Complaint (“CC”). (Notice of Demurrer, pgs. 1-2.) Cross-Defendant also moves to strike portions of the CC. (Notice of MTS, pgs. 1-3.)

Cross-Complainants’ 2/9/24 request for judicial notice of (1) the Preliminary Injunction Order and Minute Order entered against Cross-Defendant’s associates, including his counsel of record the Dijulio Law Group on January 26, 2023, in the matter of Babloyan v. Kazarian, et al., County of Riverside Case No. CVRI2203223 (CC-RJN, Exh. A); (2) the 8/29/22 Minute Order denying Cross-Defendant’s associates, including his counsel of record the Dijulio Law Group, a Preliminary Injunction against Cross-Complainant Kazarian in the matter of Babloyan v. Kazarian, et al., County of Riverside Case No. CVRI2203223 (CC-RJN, Exh. B); (3) the Complaint filed on July 17, 2023, Cross-Defendant’s associates, including his counsel of record the Dijulio Law Group, in the matter of Berkibekyan v. Kazarian, et al., Los Angeles County Case No. 23STCV16584 (CC-RJN, Exh. C); (4) the Ex Parte Application for Temporary Restraining Order and Order to Show Cause re: Preliminary Injunction filed on July 18, 2023, by Cross-Defendant’s associates, including his counsel of record the Dijulio Law Group, in the matter of Berkibekyan v. Kazarian, et al., Los Angeles County Case No. 23STCV16584 (CC-RJN, Exh. D); (5) Cross-Complainant Kazarian’s Opposition to the Ex Parte Application for Temporary Restraining Order and Order to Show Cause re: Preliminary Injunction filed on July 19, 2023, against Cross-Defendant’s associates, including his counsel of record the Dijulio Law Group, in the matter of Berkibekyan v. Kazarian, et al., Los Angeles County Case No. 23STCV16584 (CC-RJN, Exh. E); and (6) the 7/20/23 Minute Order entered by Hon. Judge James C. Chalfant denying the Ex Parte Application for Temporary Restraining Order and Order to Show Cause re: Preliminary Injunction filed on July 18, 2023, by Cross-Defendant’s associates, including his counsel of record the Dijulio Law Group, in the matter of Berkibekyan v. Kazarian, et al., Los Angeles County Case No. 23STCV16584 (CC-RJN, Exh. F), is granted.

Cross-Complainants filed the operative CC against Cross-Defendant on October 2, 2023 alleging eight causes of action: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) unjust enrichment- restitution; (4) fraud and deceit- intentional misrepresentation; (5) negligent misrepresentation; (6) fraud and deceit- promise made without intention to perform; (7) injunctive relief; and (8) declaratory relief.

This action arises out of Cross-Defendant, as borrower, and Cross-Complainants, as lender, entering into a promissory note (“Promissory Note”) on November 5, 2021, for a $400,000.00 loan secured by a Deed of Trust against Cross-Defendant’s Real Property located at 11985 Rexbon Road, Granada Hills, CA 91344. (CC ¶10, Exh. 1.) Cross-Complainants allege pursuant to the Promissory Note, the entire principal balance was due on December 1, 2021, and the balance remains unpaid. (CC ¶10d.)

On October 17, 2023, Cross-Defendant filed the instant demurrer and motion to strike. On February 9, 2024, Cross-Complainants filed their oppositions. As of the date of this hearing no reply has been filed.

Cross-Defendant demurs on the basis that Cross-Complainants’ 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th causes of action fail state facts sufficient to constitute causes of action. (Demurrer, pgs. 3-6; C.C.P. §430.10(e).)

Before filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person, by telephone, or by video conference 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. (C.C.P. §430.41(a), emphasis added.) A declaration must be filed with a demurrer regarding the results of the meet and confer process. (C.C.P. §430.41(a)(3).)

Cross-Defendants’ counsel’s declaration states that on October 4, 2023, she sent email correspondence to Cross-Complainants’ counsel outlining the deficiencies in the CC. (Decl. of Krog ¶2, Exh. 1.) Cross-Defendant’s counsel’s declaration is not sufficient under C.C.P. §430.41(a) because she did not meet and confer with Cross-Complainants’ counsel in person, by telephone, or by video conference. However, failure to sufficiently meet and confer is not grounds to overrule or sustain a demurrer. (C.C.P. §430.41(a)(4).) Therefore, the Court will consider the instant demurrer.

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Insurance Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hospital District (1992) 2 Cal.4th 962, 967.)

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) plaintiff’s performance of the contract or excuse for nonperformance, (3) defendant’s breach, and (4) resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Cross-Complainants sufficiently each of the elements for breach of contract in CC ¶¶10-15: (1) The existence of a contract is the $400,000 Promissory Note (CC ¶10, Exh. 1) and Deed of Trust (CC ¶10, Exh. 2); (2) Cross-Complainants’ performance thereunder is the delivery of the $400,000.00 to Cross-Defendant on or about November 5, 2021 (CC ¶11); (3) Cross-Defendant’s breach of the contract by failing to pay the loan back by December 2, 2021 as agreed (CC ¶12); and (4) damages in the form of the loss of that income by Cross-Complainants (CC ¶¶14-15).

Cross-Defendant’s argument that the CC fails to specify whether the agreement was written, oral, or implied is not well taken. The CC sufficiently alleges facts that the agreement was in writing (i.e., a written DOT and Promissory Note), and copies of the Promissory Note and DOT are attached as Exhibits 1 and 2 to the CC.

Nonetheless, Cross-Defendant’s argument that Kazarian was not a party to the loan between Genesis and Cross-Defendant is well taken. The CC alleges Kazarian is Genesis’ principle and that Genesis lent Cross-Defendant $400,000.00. (CC at 2:12-13; ¶¶10-15.) Kazarian is neither a party to the promissory note nor a beneficiary of the Deed of Trust attached as exhibits to the CC. Given that, the Court finds that Kazarian has not standing to cross-complain and the cross-complaint cannot be amended to give him standing. Therefore, the Court sustains the demurrer as to Kazarian without leave to amend.

Accordingly, Cross-Defendant’s demurrer to Cross-Complainants’ 1st cause of action is overruled, except as to Kazarian, for whom the demurrer is sustained without leave to amend.

The elements for alleging a cause of action for breach of the covenant of good faith and fair dealing are (1) that plaintiff and defendant entered into a contract; (2) that plaintiff did all, or substantially all of the significant things that the contract required him or her to do, or that he or she was excused from having to do those things; (3) that all conditions required for defendant’s performance had occurred; (4) that defendant prevented plaintiff from receiving the benefits under the contact; (5) that by doing so, defendant did not act fairly and in good faith; and (6) that plaintiff was harmed by defendants’ conduct. (Comunale v. Traders & Generals Insurance Co. (1958) 50 Cal.2d 654, 658.)

A breach of the implied covenant is necessarily a breach of contract but may be pleaded as a separate count. (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 885.)

Cross-Complainants sufficiently allege a cause of action for breach of the implied covenant separate and apart from the cause of action for breach of contract. The gravamen of the breach of contract count is Cross-Defendant failed to comply with his express contractual obligations specified in CC ¶10 (and Exhibits 1 and 2) when Cross-Defendant failed to pay Cross-Complainants the $400,000.00 he borrowed by December 1, 2021.

In contrast, the gravamen of the count for breach of the implied covenant of good faith and fair dealing is Cross-Defendant’s alleged efforts to undermine or prevent Cross-Complainants from receiving the benefits due under contract by fraudulently claiming Cross-Defendant had not received the $400,000.00 and by Cross-Defendant seeking to cancel the DOT securing that debt. (CC ¶¶22-24.)

Accordingly, Cross-Defendant’s demurrer to Cross-Complainants’ 2nd cause of action is overruled.

The elements of a cause of action for unjust enrichment are the receipt of a benefit and the unjust retention of the benefit at the expense of another. (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593; see also Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.)

Cross-Complainants sufficiently allege a cause of action for unjust enrichment. Cross-Complainants allege Cross-Defendant received a benefit under the Promissory Note and unjustly retained the benefit at the expense of Cross-Complainants. (CC ¶¶29-30.)

Accordingly, Cross-Defendant’s demurrer to Cross-Complainants’ 3rd cause of action is overruled.

Fraud and Deceit- Intentional Misrepresentation, Negligent Misrepresentation, & Promise Made without Intent to Perform (4th, 5th, & 6th COAs)

“[F]raud must be pled specifically” by “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, internal quotes omitted.)

“The elements of fraud that will give rise to a tort action for deceit 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.’” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974, internal quotation marks omitted.)

“Negligent misrepresentation requires an assertion of fact, falsity of that assertion, and the tortfeasor's lack of reasonable grounds for believing the assertion to be true. It also requires the tortfeasor's intent to induce reliance, justifiable reliance by the person to whom the false assertion of fact was made, and damages to that person. An implied assertion of fact is ‘not enough’ to support liability.” (SI 59 LLC v. Variel Warner Ventures, LLC (2018) 29 Cal.App.5th 146, 154, internal citation omitted.)

“[I]n a promissory fraud action, to sufficiently allege[] defendant made a misrepresentation, the complaint must allege (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise, and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1060.)

Cross-Complainants sufficiently allege all three fraud causes of action with the requisite specificity: In summary, the “how” is in-person, orally and in writing. The “when” is on November 5, 2021. The “where” is at 1915 W. Glenoaks Blvd., Suite 101, Glendale, CA 91201. The “to whom” is to Cross-Complainants.

Cross-Complainants allege all elements of fraudulent misrepresentation: (1) a misrepresentation of fact (CC ¶32); (2) knowledge of falsity (CC ¶33); (3) an intent to defraud (CC ¶33); (4) justifiable reliance (CC ¶35); and (5) damages (CC ¶36).

Cross-Complainants allege all elements of negligent misrepresentation: (1) the misrepresentation of a past or existing material fact (CC ¶39); (2) without reasonable ground for believing it to be true (CC ¶41); (3) with intent to induce another’s reliance on the fact misrepresented (CC ¶41); (4) justifiable reliance on the misrepresentation (CC ¶42); and (5) resulting damage (CC ¶43).

Cross-Complainants allege all elements of promissory fraud: (1) the defendant made a representation of intent to perform some future action, i.e., the defendant made a promise (CC ¶49); and (2) the defendant did not really have that intent at the time that the promise was made, i.e., the promise was false (CC ¶47).

Accordingly, Cross-Defendant’s demurrer to Cross-Complainants’ 4th, 5th, and 6th causes of action is overruled.

Injunctive relief requires two elements (1) Wrongful act stating a cause of action; and (2) basis for equitable relief (e.g., ordinarily irreparable harm must be threatened, or a remedy at law is inadequate). (Brownfield v. Daniel Freeman Marina Hospital (1989) 208 Cal.App.3d 405, 410.)

Cross-Complainants sufficiently allege each element for injunctive relief in CC ¶¶53-61. Cross-Complainants allege they have a real property interest pursuant to the DOT. (CC ¶54.) That includes the right to foreclose in the event the $400,000 loan money is not paid back by Cross-Defendant to Cross-Complainants. (CC ¶54.) Real Property Rights are inherently irreparable harm and injury, and the loss of Real Property Rights cannot be adequately compensated in money damages.

Accordingly, Cross-Defendant’s demurrer to Cross-Complainants’ 7th cause of action is overruled.

Declaratory relief has two elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the party’s rights or obligations. (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872.)

Cross-Complaints sufficiently allege a cause of action for declaratory relief in that (1) an actual controversy has arisen and now exists between Cross-Complainants and Cross-Defendant concerning their respective rights and duties under the DOT and the Agreements in that Cross-Defendants demand reconveyance and cancellation of the DOT despite Cross-Defendants having not paid the full loan amount of $400,000 to Cross-Complainants (CC ¶63); and (2) Cross-Complainants request a judicial determination of their rights and duties under the DOT and the Agreements, and a declaration that the DOT and Agreement are valid and enforceable (CC ¶64).

Accordingly, Cross-Defendant’s demurrer to Cross-Complainants’ 8th cause of action is overruled.

Cross-Defendant’s demurrer to Cross-Complainants’ CC is overruled as to the 1st, 2nd, 3rd, 4th, 5th, 6th, 7th, and 8th causes of action, except the demurrer is sustained in its entirety as to Kazarian, without leave to amend.

Cross-Defendant moves to strike the following language from the CC: (1) “The aforementioned conduct of Cross-Defendant Mr. Hayrapetian was a bad faith intentional misrepresentation, deceit, or concealment of a material fact known to Cross-Defendant with the intention on the part of the Cross-Defendant of thereby depriving Cross-Complainants of property or legal rights or otherwise causing injury, and was despicable conduct that subjected Cross-Complainants to a cruel and unjust hardship in conscious disregard of the Cross- Complainants’ rights, so as to justify an award of exemplary and punitive damages.” (CC 9:7-12); (2) “The aforementioned conduct of Cross-Defendant Mr. Hayrapetian was a bad faith intentional misrepresentation, deceit, or concealment of a material fact known to Cross-Defendant with the intention on the part of the Cross-Defendant of thereby depriving Cross-Complainants of property or legal rights or otherwise causing injury, and was despicable conduct that subjected Cross-Complainants to a cruel and unjust hardship in conscious disregard of the Cross- Complainants’ rights, so as to justify an award of exemplary and punitive damages.” (CC 12:8-13); (3) “The aforementioned conduct of Cross-Defendant Mr. Hayrapetian was a bad faith intentional misrepresentation, deceit, or concealment of a material fact known to Cross-Defendant with the intention on the part of the Cross-Defendant of thereby depriving Cross-Complainants of property or legal rights or otherwise causing injury, and was despicable conduct that subjected Cross-Complainants to a cruel and unjust hardship in conscious disregard of the Cross- Complainants’ rights, so as to justify an award of exemplary and punitive damages.” (CC 13:24-27); (4) “The aforementioned conduct of Cross-Defendant Mr. Hayrapetian was a bad faith intentional misrepresentation, deceit, or concealment of a material fact known to Cross-Defendant with the intention on the part of the Cross-Defendant of thereby depriving Cross-Complainants of property or legal rights or otherwise causing injury, and was despicable conduct that subjected Cross-Complainants to a cruel and unjust hardship in conscious disregard of the Cross- Complainants’ rights, so as to justify an award of exemplary and punitive damages.” (CC 15:11-16); and (5) “For punitive and exemplary damages” (CC 19:11). (Notice of MTS, pgs. 1-3.) Cross-Defendant moves on the basis Cross-Complainants have failed to state facts sufficient to support their claim for punitive damages. (Notice of MTS, pg. 3.)

A motion to strike lies either to strike any “irrelevant, false or improper matter inserted in any pleading”; or to strike any pleading or part thereof “not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (C.C.P. §436.)

Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression. (Civ. Code §3294(a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Turman v. Turning Point of Central California, Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Id.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Id.) Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.)

Cross-Complainants sufficiently allege facts supporting a prayer for punitive damages based on their allegations Cross-Defendant defrauded Cross-Complainants. (CC ¶¶27, 33-35, 37, 39-42, 44, 46-50, 52, 54-59.) These facts are articulated with regard to Cross-Defendant’s demurrer to Cross-Complainants’ fraud causes of action.

Accordingly, Cross-Defendant’s motion to strike allegations pertaining to punitive damages is denied.

Hon. Daniel M. Crowley

Judge of the Superior Court