Judge: Daniel S. Murphy, Case: 21STCV45709, Date: 2022-08-24 Tentative Ruling

Case Number: 21STCV45709    Hearing Date: August 24, 2022    Dept: 32

BACKGROUND

            On December 15, 2021, Plaintiffs Kostiv & Associates and Petro R. Kostiv filed this action against various Defendants, asserting 16 causes of action stemming from an alleged conspiracy to embezzle money from Plaintiffs. The allegations mainly revolve around the actions of Defendant Diego Gonzalez (“Diego”), the former finance director for Plaintiff Kostiv & Associates, who fraudulently entered into contracts with Defendants Ezlawpay and Payink on behalf of Plaintiff, resulting in false invoices charged to Plaintiff. Beyond Ezlawpay, Payink, and Diego, Plaintiffs also bring this suit against Diego’s wife (allegedly the owner of Ezlawpay), two corporate officers of Payink, and various employees who worked under Diego at Plaintiff’s finance department.

            On April 11, 2022, the Court partially sustained a demurrer filed by Ezlawpay, Diego, Diego’s wife, and the employees of the finance department, granting leave to amend. Plaintiffs filed the operative First Amended Complaint on May 2, 2022. On June 3, 2022, the above Defendants filed the instant demurrer and motion to strike against the FAC.

LEGAL STANDARD

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.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) 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, 147 Cal.App.4th at p. 747.)

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part of that pleading. (Code Civ. Proc., § 435, subd. (b).) The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike (1) any irrelevant, false, or improper matter inserted in any pleading and (2) all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id., § 437.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court finds that Defendant has satisfied the meet and confer requirement. (See Hefner Decl. ¶¶ 3-5.)

DISCUSSION

a. Demurrer

            I. Petro Kostiv’s Individual Claims

            Defendants’ first contention is that Plaintiff Petro Kostiv cannot assert any of the claims because the complaint alleges that Defendants embezzled from the company Kostiv & Associates, not Kostiv as an individual. (Dem. 6:21-7:16.) Plaintiffs do not explain how the individual Kostiv can maintain claims for harm done to the company. The emotional distress claims are individual claims, but cannot be maintained for the reasons stated below. Therefore, the demurrer is SUSTAINED without leave to amend as to all claims asserted by Petro Kostiv against the moving Defendants.  

            II. Fraud

“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, quoting Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) Fraud must be pleaded with specificity rather than with general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege facts showing how, when, where, to whom, and by what means the representations were made. (Lazar, supra, 12 Cal.4th at p. 645.)

Defendants demur to the second through fourth causes of action, arguing that the complaint only vaguely alleges that Defendants stole money and other assets from Plaintiffs without alleging the specific facts necessary to establish fraud or justifiable reliance. (Dem. 8:7-9:7.) Plaintiffs argue that they have adequately alleged the elements of fraud:

“(a) misrepresentation-present as Defendant DIEGO making 800 improper charges to

Plaintiffs and not informing them, when there is a fiduciary duty to disclose financial matters and any and all relevant matters thereof; (b) the knowledge of falsity is evident from the fact Defendant DIEGO did not inform Plaintiffs that Defendant EZLAWPAY was registered under his wife or partner, Defendant PADILLA'S name; (c) the intent to defraud is evident from the fact that other Defendants in this Lawsuit (i.e. PA YINK, LTD) intend to rely on an unauthorized novation agreement, of which there was no valid contractual agreement, as Defendant DIEGO exceeded the scope of his authority in the finance department, along with the other defendants; (d) plaintiff justifiably relied on finances; and (e) plaintiff was directly damaged by defendants' conduct in the loss of over $255,917.00, and unknown cash amounts as is specifically pleaded in the FAC (para. 106,119,130).”

(Opp. 4:8-19.)

            This argument is not well-taken. The false charges made by Diego simply consist of Diego stealing money from Kostiv & Associates. While this may be conversion and breach of fiduciary duty, fraud requires specific statements or omissions upon which a plaintiff relies on “to take a detrimental course of action.” (Beckwith v. Dahl (2012) 205 Cal.App.4th 1039, 1062.) Plaintiffs do not articulate how Kostiv & Associates took a detrimental course of action in reliance on Diego’s misrepresentations or omissions regarding the improper charges. It is not enough to simply allege that the company relied on Diego as its financial director. (See FAC ¶ 118.) Furthermore, no specific statements or omissions are attributed to the other Defendants. It is not enough that they merely worked under Diego at the finance department. Therefore, the demurrer is SUSTAINED without leave to amend as to the second through fourth causes of action.

III. RICO

RICO (18 U.S.C. §§ 1961 et seq.) allows treble damages when a defendant has engaged in a “pattern of racketeering activity” through use of a criminal “enterprise.” (Rosenthal v. Vogt (1991) 229 Cal.App.3d 69, 76.) Here, Plaintiffs have not alleged any activity that would fall under the definition of “racketeering” set forth in RICO. (See 18 U.S.C. § 1961(1).) Plaintiffs argue that they have alleged the predicate acts of wire fraud and obstruction of justice. (Opp. 6:20-7:6.)

            Wire fraud consists of utilizing wire, radio, or television to effectuate an interstate transmission of writings, signs, signals, pictures, or sounds in furtherance of a fraudulent scheme. (18 U.S.C. § 1943.) Obstruction of justice under 18 U.S.C. § 1503 consists of using threats or force against a juror or judicial officer to influence or obstruct the due administration of justice in a federal proceeding. Plaintiffs do not allege any interstate wire communications or attempt to influence jurors or officers in a federal proceeding. (See FAC ¶ 176.) The fact that Kostiv & Associates’ Bank of America and Chase debit cards were charged does not constitute an interstate transmission. Diego’s alleged deletion of computer files does not constitute threatening or influencing a juror or officer, nor is there any indication that such was done in a federal proceeding. Therefore, the demurrer is SUSTAINED without leave to amend as to the ninth cause of action.  

IV. Emotional Distress

To state a cause of action for intentional infliction of emotional distress, a plaintiff must establish: (1) outrageous conduct by the defendant; (2) the defendant’s intention of causing, or reckless disregard of the probability of causing, emotional distress; (3) the plaintiff’s suffering severe or extreme emotional distress; and (4) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct. (Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832.) To establish a claim for negligent infliction of emotional distress, Plaintiff must demonstrate the same elements required for a negligence cause of action, but “serious emotional distress” is the essential element for the cause of action. (Kelly v. General Telephone Co. (1982) 136 Cal.App.3d 278, 286.) Additionally, where a plaintiff does not personally suffer physical injury, an NIED claim is limited to instances where the plaintiff contemporaneously observes injury inflicted upon a close relative. (See Thing v. La Chusa (1989) 48 Cal.3d 644, 666.)   

“For conduct to be outrageous, it must be so extreme as to exceed all bounds of that usually tolerated by a civilized community.” (Faunce v. Cate (2013) 222 Cal.App.4th 166, 172.) It is not enough that a defendant acts with tortious or even criminal intent, or that he intends on inflicting emotional distress. (McMahon v. Craig (2009) 176 Cal.App.4th 1502, 1517.) “Severe emotional distress [is] emotional distress of such substantial quantity or enduring quality that no reasonable man in a civilized society should be expected to endure it.” (Fletcher v. Western Life Insurance Co. (1970) 10 Cal.App.3d 376, 397.)

Here, the complaint does not allege IIED or NIED. Stealing money, even if it constitutes an intentional tort, is insufficient to be outrageous conduct. (See McMahon, supra, 176 Cal.App.4th at p. 1517.) Plaintiff does not articulate with “great specificity” the acts which he believes are so extreme as to exceed the bounds of civilized society. (See Vazquez, supra, 222 Cal.App.4th at pp. 832-33.) As for NIED, Plaintiff Petro Kostiv is not alleged to have suffered any physical injury or observed injury inflicted upon a close relative. Plaintiff argues that Diego was practically his family because Diego was his friend and financial director. (Opp. 8:6-9.) However, an NIED claim is limited to actual relatives even if two individuals have another type of close relationship. (See Thing, supra, 48 Cal.3d at p. 666.) Additionally, Plaintiff does not allege that he contemporaneously observed physical harm being inflicted upon Diego. Rather, Diego is the one allegedly causing the harm in this case.

Lastly, Plaintiff allegedly suffered “severe emotional distress in the form of fear, nervousness, anxiety, worry, and indignity.” (FAC ¶ 190.) This is insufficient. (See Hughes v. Pair (2009) 46 Cal.4th 1035, 1051 [“discomfort, worry, anxiety, upset stomach, concern, and agitation” do not satisfy the severity standard].) Therefore, the demurrer is SUSTAINED without leave to amend as to the tenth and eleventh causes of action.

b. Motion to Strike

I. New Defendants and Allegations

“Following an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court's order.” (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) “[L]eave to amend complaint does not constitute leave to amend to add new defendant.” (Ibid.)

Here, the FAC adds the following: (1) two new defendants, Brianda Diaz and Lorena Jurado; (2) new facts under causes of action that survived the previous demurrer; (3) new defendants on the UCL claim; and (4) a new fourteenth cause of action for aiding and abetting. This is plainly disallowed. (See Harris, supra, 185 Cal.App.4th at p. 1023.) The Court only granted leave to amend as to the causes of action that were insufficient and required amendment. This was not a blanket authorization to add any new facts as Plaintiffs see fit. Nor did the Court authorize Plaintiffs to add new defendants or causes of action. Therefore, the motion to strike is GRANTED as to the new defendants, allegations, and cause of action.  

II. Constructive Trust

“Three conditions must be shown to impose a constructive trust: (1) a specific, identifiable property interest, (2) the plaintiff’s right to the property interest, and (3) the defendant’s acquisition or detention of the property interest by some wrongful act.” (Higgins v. Higgins (2017) 11 Cal.App.5th 648, 659.)

Defendants allegedly colluded to embezzle money from Kostiv & Associates. The money is identifiable, rightfully belongs to Plaintiff, and was acquired and detained wrongfully by Defendants. It is not dispositive that the FAC does not attribute particularized actions to each individual Defendant. (See Mtn. 6:26-28.) The FAC alleges that all of the Defendants conspired to steal the money, and no heightened pleading requirement is necessary for pleading entitlement to constructive trust. Therefore, the motion to strike is DENIED as to constructive trust.

III. Punitive Damages

“In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.” (Civ. Code, § 3294, subd. (a).) “‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Id., subd. (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id., subd. (c)(2).)  

Here, the complaint contains more than mere conclusory allegations. Defendants are alleged to have intentionally conspired to embezzle money from Plaintiffs, exploiting their access to Plaintiffs’ finances and then concealing certain facts and erasing evidence to cover up their wrongdoing. This constitutes conduct designed to harm Plaintiffs and in conscious disregard of Plaintiffs’ rights. Therefore, the motion to strike is DENIED as to punitive damages.

            IV. Attorneys’ Fees

“Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties . . . .” (Code Civ. Proc., § 1021.) Thus, a plaintiff must set forth a statutory or contractual basis for attorney’s fees in order to recover such fees. Plaintiff does not do so here. Therefore, the motion to strike is GRANTED as to attorneys’ fees.

CONCLUSION

            Defendants’ demurrer is SUSTAINED without leave to amend. The motion to strike is GRANTED in part as set forth above.  

BACKGROUND

            On December 15, 2021, Plaintiffs
Kostiv & Associates and Petro R. Kostiv filed this action against various
Defendants, asserting 16 causes of action stemming from an alleged conspiracy
to embezzle money from Plaintiffs. The allegations mainly revolve around the
actions of Defendant Diego Gonzalez (“Diego”), the former finance director for
Plaintiff Kostiv & Associates, who fraudulently entered into contracts with
Defendants Ezlawpay and Payink on behalf of Plaintiff, resulting in false invoices
charged to Plaintiff. Beyond Ezlawpay, Payink, and Diego, Plaintiffs also bring
this suit against Diego’s wife (allegedly the owner of Ezlawpay), two corporate
officers of Payink, and various employees who worked under Diego at Plaintiff’s
finance department.

            On April 11, 2022, the Court
partially sustained a demurrer filed by Payink, granting leave to amend.
Plaintiffs filed the operative First Amended Complaint on May 2, 2022. On June 2,
2022, Payink filed the instant demurrer against the FAC.

LEGAL STANDARD

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.) In a demurrer proceeding, the defects must be
apparent on the face of the pleading or by proper judicial notice. (Code Civ.
Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the
evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984)
153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on
the face of the pleading or are judicially noticed. (Id.) 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,
147 Cal.App.4th at p. 747.)

MEET AND CONFER

Before filing a demurrer or a motion to
strike, the demurring or moving party is required to meet and confer with the
party who filed the pleading demurred to or the pleading that is subject to the
motion to strike for the purposes of determining whether an agreement can be
reached through a filing of an amended pleading that would resolve the objections
to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court
finds that Defendant has satisfied the meet and confer requirement. (See Barton
Decl. ¶ 2.)

DISCUSSION

a.
Demurrer

            I. Petro Kostiv’s Individual
Claims

            Payink argues that Plaintiff Petro
Kostiv cannot assert any of the claims because the complaint alleges that Defendants
embezzled from the company Kostiv & Associates, not Kostiv as an
individual. With the exception of the emotional distress and appropriation of
image claims, all causes of action assert harm on behalf of the company. Plaintiffs
do not explain how the individual Kostiv can maintain claims under those causes
of action. The appropriation of image claim is not at issue in this motion, and
the emotional distress claims are defective for the reasons stated below. Therefore,
the demurrer is SUSTAINED without leave to amend as to all claims asserted by
Petro Kostiv against Payink except right of publicity.

            II. Fraud

“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, quoting Lazar v.
Superior Court (1996) 12
Cal.4th 631, 638.) Fraud must be pleaded with specificity rather than with
general and conclusory allegations. (Small v. Fritz Companies, Inc. (2003)
30 Cal.4th 167, 184.) The specificity requirement means a plaintiff must allege
facts showing how, when, where, to whom, and by what means the representations
were made. (Lazar, supra, 12 Cal.4th at p. 645.)

Though the fraud
claims (first through fourth causes of action) are asserted against all
Defendants, no specific statements or omissions are attributed to Payink. In
fact, Plaintiffs disavow any relationship or even knowledge of Payink. (See FAC
¶¶ 42, 48.) If this is the case, it is unclear how Payink could have defrauded Plaintiffs.
If Payink made specific statements to Plaintiffs that Plaintiffs relied on,
then Plaintiffs would have been aware of Payink, contrary to their assertion. Similarly,
Payink would not have a duty to disclose certain facts unless a relationship
existed requiring a duty to disclose. Because Plaintiffs deny any such relationship
or knowledge of Payink, no valid fraud claim can be stated. (See FAC ¶¶ 42, 48;
Opp. 3:21-25, 5:12-17.) Therefore, the demurrer is SUSTAINED without leave to
amend as to the first through fourth causes of action.

III.
Breach of Fiduciary Duty

The elements of a breach of fiduciary duty
claim are the existence of a fiduciary relationship giving rise to a duty, breach
of the duty, causation, and damage proximately caused by that breach. (Knox
v. Dean (2012) 205 Cal.App.4th 417, 432-33.)

Here, the only purported relationship
Kostiv & Associates has with Payink is an allegedly improper contract that
Diego signed without the firm’s permission. Plaintiffs deny even being aware of
Payink’s existence and allege that there is no contractual relation with
Payink. (FAC ¶ 42, 48.) Thus, it is apparent on the face of the complaint that
there was no relationship between Plaintiff and Payink giving rise to fiduciary
duties. The demurrer is SUSTAINED without leave to amend as to the fifth cause
of action.

IV. Conversion

The elements of conversion are: (1) the plaintiff's
ownership or right to possession of personal property; (2) the defendant's
disposition of property in manner inconsistent with the plaintiff's property
rights; and (3) resulting damages. (Lee v. Hanley (2015) 61 Cal.4th
1225, 1240.) “[M]oney cannot be the subject of a conversion action unless a
specific sum capable of identification is involved.” (Software Design &
Application v. Hoefer & Arnett (1996) 49 Cal.App.4th 472, 485.) Here,
Plaintiffs allege that Payink conspired with Diego to falsely charge bills to
Kostiv & Associates. (FAC ¶ 42.) This constitutes an unconsented taking of Plaintiff’s
property.

Payink argues that the economic loss rule
bars tort recovery because Plaintiff admits it had a contract with Payink. (Dem.
10:3-11.) “[C]onduct amounting to a breach of contract becomes tortious only
when it also violates a duty independent of the contract arising from
principles of tort law. An omission to perform a contract obligation is never a
tort, unless that omission is also an omission of a legal duty.” (Erlich v.
Menezes (1999) 21 Cal.4th 543, 551, internal citations omitted.) However,
Plaintiff denies any contract with Payink and does not assert any contract
claim. (See FAC ¶¶ 65.) Payink relies on FAC ¶ 42 as a purported admission that
Plaintiff entered into a contract with Payink. (Dem. 10:3-6.) However, that paragraph
states that Diego “fraudulently entered into a business relationship with
PAYINK to bill KOSTIV without Plaintiffs’ knowledge, consent, or authorization.”
(FAC ¶ 42.) This is hardly an admission that Payink and Kostiv & Associates
had a contractual relationship. In fact, it is the opposite. Therefore, the
demurrer is OVERRULED as to the seventh cause of action.

V. Unjust Enrichment

Unjust enrichment is a theory of
restitution that involves: (1) receipt of a benefit; and (2) unjust retention
of the benefit at the expense of another. (Elder v. Pacific Bell Telephone
Co. (2012) 205 Cal.App.4th 841, 857.) Courts have construed unjust
enrichment claims as quasi-contract claims seeking restitution. (Rutherford
Holdings LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231.)

As discussed above, Plaintiffs allege that
Payink conspired with Diego to falsely charge Kostiv & Associates, in
effect stealing the company’s money. (See FAC ¶ 42.) Thus, Payink has allegedly
obtained a benefit at Plaintiff’s expense, and it would be unjust for Payink to
retain that benefit. The demurrer is OVERRULED as to the eighth cause of
action.

VI. RICO

RICO (18 U.S.C. §§ 1961 et seq.) allows
treble damages when a defendant has engaged in a “pattern of racketeering
activity” through use of a criminal “enterprise.” (Rosenthal v. Vogt (1991)
229 Cal.App.3d 69, 76.) Here, Plaintiffs have not alleged any activity that
would fall under the definition of “racketeering” set forth in RICO. (See 18
U.S.C. § 1961(1).) Plaintiffs argue that they have alleged the predicate acts
of wire fraud and obstruction of justice. (Opp. 11:27-12:3.)

            Wire fraud consists of utilizing wire,
radio, or television to effectuate an interstate transmission of writings,
signs, signals, pictures, or sounds in furtherance of a fraudulent scheme. (18
U.S.C. § 1943.) Obstruction of justice under 18 U.S.C. § 1503 consists of using
threats or force against a juror or judicial officer to influence or obstruct
the due administration of justice in a federal proceeding. Plaintiffs do not
allege any interstate wire communications or attempt to influence jurors or
officers in a federal proceeding. (See FAC ¶ 176.) The fact that Kostiv &
Associates’ Bank of America and Chase debit cards were charged does not
constitute an interstate transmission. Diego’s alleged deletion of computer
files does not constitute threatening or influencing a juror or officer, nor is
there any indication that such was done in a federal proceeding. Therefore, the
demurrer is SUSTAINED without leave to amend as to the ninth cause of action.  

VII. Emotional Distress

To state a cause
of action for intentional infliction of emotional distress, a plaintiff must
establish: (1) outrageous conduct by the defendant; (2) the defendant’s
intention of causing, or reckless disregard of the probability of causing,
emotional distress; (3) the plaintiff’s suffering severe or extreme emotional
distress; and (4) actual and proximate causation of the emotional distress by
the defendant’s outrageous conduct. (Vasquez v. Franklin Management Real
Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 832.) To establish a
claim for negligent infliction of emotional distress, Plaintiff must demonstrate
the same elements required for a negligence cause of action, but “serious
emotional distress” is the essential element for the cause of action. (Kelly
v. General Telephone Co. (1982) 136 Cal.App.3d 278, 286.) Additionally,
where a plaintiff does not personally suffer physical injury, an NIED claim is
limited to instances where the plaintiff contemporaneously observes injury
inflicted upon a close relative. (See Thing v. La Chusa (1989) 48 Cal.3d
644, 666.)   

“For conduct to
be outrageous, it must be so extreme as to exceed all bounds of that usually
tolerated by a civilized community.” (Faunce v. Cate (2013) 222 Cal.App.4th
166, 172.) It is not enough that a defendant acts with tortious or even
criminal intent, or that he intends on inflicting emotional distress. (McMahon
v. Craig (2009) 176 Cal.App.4th 1502, 1517.) “Severe emotional distress [is] emotional distress of such substantial
quantity or enduring quality that no reasonable man in a civilized society should
be expected to endure it.” (Fletcher v. Western Life Insurance Co.
(1970) 10 Cal.App.3d 376, 397.)

Here, the
complaint does not allege IIED or NIED. Stealing money, even if it constitutes
an intentional tort, is insufficient to be outrageous conduct. (See McMahon,
supra, 176 Cal.App.4th at p. 1517.) Plaintiff does not articulate with “great
specificity” the acts which he believes are so extreme as to exceed the bounds
of civilized society. (See Vazquez, supra, 222 Cal.App.4th at pp.
832-33.) As for NIED, Plaintiff Petro Kostiv is not alleged to have suffered
any physical injury or observed injury inflicted upon a close relative.
Plaintiff argues that Diego was practically his family because Diego was his
friend and financial director. (Opp. 13:18-22.) However, an NIED claim is limited
to actual relatives even if two individuals have another type of close
relationship. (See Thing, supra, 48 Cal.3d at p. 666.) Additionally, Plaintiff
does not allege that he contemporaneously observed physical harm being
inflicted upon Diego. Rather, Diego is the one allegedly causing the harm in
this case.

Lastly, Plaintiff
allegedly suffered “severe emotional distress in the form of fear, nervousness,
anxiety, worry, and indignity.” (FAC ¶ 190.) This is insufficient. (See Hughes v. Pair (2009) 46 Cal.4th
1035, 1051 [“discomfort, worry, anxiety, upset stomach, concern, and agitation”
do not satisfy the severity standard].)
Therefore, the demurrer is SUSTAINED without leave to amend as to the tenth and
eleventh causes of action.

VIII. Accounting

“A cause of
action for an accounting requires a showing that a relationship exists between
the plaintiff and defendant that requires an accounting, and that some balance
is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal.App.4th
156, 179.)

Here, there is no relationship alleged
necessitating an accounting. The complaint disavows any relation to Payink.
(See FAC ¶¶ 42, 65.) Payink’s only connection seems to be working with Diego to
steal money from Kostiv & Associates. Payink is not alleged to owe any
duties to Plaintiffs or be in a position of trust. Therefore, the demurrer is
SUSTAINED without leave to amend as to the thirteenth cause of action.

IX. Aiding and Abetting

Payink argues that aiding and abetting is not
an independent cause of action and that Plaintiffs in any case fail to allege
any facts showing aiding and abetting by Payink. (Dem. 13:23-28.) Additionally,
this cause of action was asserted without leave to amend by the Court. (See Harris
v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) Plaintiffs
make no attempt to defend this claim in their opposition, thus conceding it.
Therefore, the demurrer is SUSTAINED without leave to amend as to the
fourteenth cause of action.

X. Constructive Trust

“Three conditions must be shown to impose
a constructive trust: (1) a specific, identifiable property interest, (2) the
plaintiff’s right to the property interest, and (3) the defendant’s acquisition
or detention of the property interest by some wrongful act.” (Higgins v.
Higgins (2017) 11 Cal.App.5th 648, 659.)

Defendants allegedly colluded to embezzle
money from Kostiv & Associates. The money is identifiable, rightfully belongs
to Plaintiff, and was acquired and detained wrongfully by Defendants. Whether
Kostiv & Associates had a valid contract with Payink that justified the payments
is a factual issue not reachable on demurrer. Thus, Plaintiff is entitled to
seek constructive trust as a remedy. The demurrer is OVERRULED as to
constructive trust.

XI. Punitive Damages

“In an action for the breach of an
obligation not arising from contract, where it is proven by clear and
convincing evidence that the defendant has been guilty of oppression, fraud, or
malice, the plaintiff, in addition to the actual damages, may recover damages
for the sake of example and by way of punishing the defendant.” (Civ. Code, §
3294, subd. (a).) “‘Malice’ means conduct which is intended by the
defendant to cause injury to the plaintiff or despicable conduct which is
carried on by the defendant with a willful and conscious disregard of the
rights or safety of others.” (Id., subd. (c)(1).) “‘Oppression’ means
despicable conduct that subjects a person to cruel and unjust hardship in
conscious disregard of that person’s rights.” (Id., subd. (c)(2).)  

Here, the complaint contains more than
mere conclusory allegations. Defendants are alleged to have intentionally conspired
to embezzle money from Plaintiffs, exploiting their access to Plaintiffs’
finances and then concealing certain facts and erasing evidence to cover up
their wrongdoing. This constitutes conduct designed to harm Plaintiffs and in
conscious disregard of Plaintiffs’ rights. Payink’s “demurrer” in this regard
is treated as a motion to strike the prayer for punitive damages, which is
denied.  

CONCLUSION

            Defendant Payink’s demurrer is
SUSTAINED in part as set forth above without leave to amend. The motion to
strike punitive damages is DENIED.