Judge: David B. Gelfound, Case: 24CHCV01361, Date: 2024-10-11 Tentative Ruling

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Case Number: 24CHCV01361    Hearing Date: October 11, 2024    Dept: F49

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F49

DEMURRER

Motion filed: 7/25/24

MOVING PARTY: Defendant Viken Yazgulian

RESPONDING PARTY: Plaintiffs Christopher Yazgulian and Crystal Yazgulian 

NOTICE: OK.

RELIEF REQUESTED: An order sustaining Defendant’s Demurrer to Plaintiffs’ First Amended Complaint

TENTATIVE RULING: The Demurrer is OVERRULED.

BACKGROUND

This action arises from an alleged breach of an oral agreement regarding the parties’ interests in the real property located at 20456 Calhaven Drive, Santa Clarita CA 91390 (the “Subject Property”).

On April 16, 2024, Plaintiffs Christopher Yazgulian and Crystal Yazgulian (collectively, “Plaintiffs”) initiated this action. Subsequently, on June 25, 2024, Plaintiffs filed their operative First Amended Complaint (“FAC”) against Defendant Viken Yazgulian (“Defendant” or “Viken”), as well as all persons unknown claiming any legal or equitable right, title, estate, lien, or interest in the property described in this complaint which is adverse to Plaintiffs’ title, or create any cloud on Plaintiff’s title, and Does 1-10, alleging a single cause of action for breach of contract.

On July 25, 2024, Defendant filed the instant Demurrer to the FAC. Subsequently, Plaintiffs filed their Opposition on September 30, 2024, and Defendant replied on October 3, 2024.

ANALYSIS

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.)

At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against them. (Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 721.) “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 (Berkley).) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

A.    Request for Judicial Notice

Defendant requests that the Court take judicial notice of the following matters:

1.      Request for Judicial Notice (“RJN”) No. 1: The Grant Deed for the property 20456 Calhaven Drive, Santa Clarita, CA 91390 filed on October 21, 2011. (RJN Ex. “1.”)

2.      RJN No. 2: The Quit Claim Deed for the property 20456 Calhaven Drive, Santa Clarita, CA 91390 filed on March 1, 2024. (RJN Ex. “2.”)

3.      RJN No. 3: Viken Yazgulian’s Complaint for Unlawful Detainer, case number 24CHUD00296, filed against Christopher Yazgulian and Crystal Yazgulian, on February 21, 2024. (RJN Ex. “3.”)

4.      RJN No. 4: Viken Yazgulian’s First Amended Complaint for Unlawful Detainer, case number 24CHUD00296, filed against Christopher Yazgulian and Crystal Yazgulian, on March 7, 2024. (RJN Ex. “4.”)

5.      RJN No. 5: The Court’s Ruling on the Unlawful Detainer Case, 24CHUD00296, submitted on May 2, 2024. (RJN Ex. “5.”)

Evidence Code section 425 provides, in pertinent part, “Judicial notice may be taken of the following matters: ... (d) Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States....(h) Facts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.”

            Accordingly, the Court GRANTS Defendant’s RJN No. 1 pursuant to Evidence Code section 425, subdivision (h).

            The Court GRANTS Defendant’s RJN Nos. 2 and 5, but only to the extent that it accepts as true only that (1) they were filed, and (2) the assertions therein were made. The Court does not take notice of the truth of their contents. (See Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374-375; see also Day v. Sharp (1975) 50 Cal.App.3d 904, 916.)

B.     Meet and Confer

A party filing a demurrer “shall meet and confer in person or by telephone 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.” (Code Civ. Proc., section 430.41(a).) A failure to meet and confer does not constitute grounds to sustain or overrule a demurrer. (See Code Civ. Proc., sections 430.41 (a)(4).)

Here, Defendant’s good faith efforts to meet and confer were sufficient. (Zadeh Decl. ¶ 9, Ex. “3.”)

C.    Demurrer

Defendant demurs to the FAC on the grounds of: (1) res judicata, (2) collateral estoppel, (3) the statute of frauds, (4) failure to sufficiently state a cause of action, and (5) uncertainty.

1)       Res Judicata

“Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Under the doctrine of res judicata, if a plaintiff prevails in an action, the cause of action is merged into the judgment and may not be asserted in a subsequent lawsuit; a judgment for the defendant serves as a bar to further litigation of the same cause of action.” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896–897.) Res judicata bars not only matters that were actually litigated but also those that could have been litigated in a prior suit, so long as they are part of the same cause of action finally resolved in that suit. (Busick v. Workmen's Comp. Appeals Bd. (1972) 7 Cal.3d 967, 975.)

The prerequisite elements for applying the doctrine are: (1) the decision in the prior proceeding is final and, on the merits, (2) the successor action is based on the same cause of action as the former one, and (3) the parties to the former proceeding are the parties in the successor action or are in privity with them. (Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82-83; Levy v. Cohen (1977) 19 Cal.3d 165, 171.)

In the demurrer, Defendant contends that Plaintiffs’ breach of contract claim is barred by res judicata because (1) the same parties were involved in a prior unlawful detainer case, case no. 24CHUD00296, which resulted in a final judgment; and (2) the final judgment in that case established Defendant as the unrefuted owner of the Subject Property. (Dem. at pp. 3-4.)

In their Opposition, Plaintiffs argue that the FAC involves a different cause of action than the prior unlawful detainer case. (Opp’n. at p. 3.) The Court agrees.

            Significantly, the proceeding of unlawful detainer is summary in character; that ordinarily, only claims bearing directly upon the right of immediate possession are cognizable (Knowles v. Robinson (1963) 60 Cal.2d 620, 625; Cheney v. Trauzettel (1937) 9 Cal.2d 158, 159.) A judgment in unlawful detainer usually has very limited res judicata effect and will not prevent one who is dispossessed from bringing a subsequent action to resolve questions of title (Byrne v. Baker (1963) 221 Cal.App.2d 1, 5-6; Bekins v. Trull (1924) 69 Cal.App. 40, 45), or to adjudicate other legal and equitable claims between the parties (Gonzales v. Gem Properties, Inc. (1974) 37 Cal.App.3d 1029; Haase v. Lamia (1964) 229 Cal.App.2d 654, 658.)

            By contrast, a cause of action for breach of contract includes distinct elements: (1) existence of contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s’ breach (or anticipatory breach), and (4) resulting damage to plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

            Furthermore, the FAC and the previous unlawful detainer action assert different primary rights. The unlawful detainer action was comprised of Viken’s primary right of immediate possession of the Subject Property. In contrast, the FAC alleges Plaintiffs’ primary rights under the contract, focusing on the obligation to perform as agreed.

Therefore, under the primary rights theory, Plaintiffs’ argument that the two proceedings involve different causes of action is persuasive, as they pertain to violations of different primary rights.

Accordingly, the Court finds that Viken’s argument that the Demurrer should be sustained on the grounds of res judicata fails because the unlawful detainer action and the FAC do not involve the same cause of action.

            Therefore, the Court OVERRULES the Demurrer on this basis.

2)      Collateral Estoppel

             Prior litigation by the same parties on a different cause of action has a collateral estoppel effect only as to those issues litigated and determined in the prior action. (Landeros v. Pankey (1995) 39 Cal.App.4th 1167, 1171.) (Emphasis in original.)

            The threshold requirements for collateral estoppel are: (1) the issue is identical to that decided in the former proceeding, (2) the issue was actually litigated in the former proceeding, (3) the issue was necessarily decided in the former proceeding, (4) the decision in the former proceeding is final and on the merits, and (5) preclusion is sought against a person who was a party or in privity with a party to the former proceeding. [Citation.]” (Castillo v. City of Los Angeles (2001) 92 Cal.App.4th 477, 481.)

            Here, Defendant argues that the breach of contract cause of action is also barred by collateral estoppel because (1) the issues are similar in the prior case, 24CHUD00296, (2) the issue of ownership of the Subject Property was already litigated, (3) Viken’s unrefuted ownership of the Subject Property was decided in the previous final judgment, and (4) the final judgment was decided on the merits. (Dem. at pp. 4-5.)

            The Court finds this argument unpersuasive.

i)                   The Issues Are Not Identical.

In their Opposition, Plaintiffs argue that there are no identical issues because the causes of action are completely different. (Opp’n. at p. 4.)

Established case law has outlined that the “‘identical issue’ requirement addresses whether ‘identical factual allegations’ are at stake in the two proceedings, not whether the ultimate issues or dispositions are the same. [Citation.]” (Hernandez v. City of Pomona (2009) 46 Cal.4th 501, 511–512.) “[T]he factual predicate of the legal issue decided in the prior case must be sufficient to frame the identical legal issue in the current case, even if the current case involves other facts or legal theories that were not specifically raised in the prior case.” (Textron Inc. v. Travelers Casualty & Surety Co. (2020) 45 Cal.App.5th 733, 747 (Textron).)

In the prior unlawful detainer action, Viken alleged that “[Viken’s] interest in the premises is as owner.” (RJN No. 4, ¶ 4.) “Christopher Yazgulian [and] Crystal Yazgulian ... agreed to rent the premise as a month-to-month tenancy[.]” (Id. ¶ 6a.) “... Christopher Yazgulian[,] Crystal Yazgulian[,] All Unknown Occupants was served the following notice on the same date and in the same manner: ... (3) 60-day notice to quit.” (Id. ¶ 9a.) Additionally, “[t]he fair rental value of the premises is $70.00 per day.” (Id. ¶ 13.)

In contrast, the FAC in the current case assert distinct factual allegations, including, in relevant party, that “[Viken] agreed to put the down payment in and qualify for the necessary loan to complete the purchase.” (FAC ¶ 11.) “Plaintiffs agreed that they would make all monthly mortgage, tax, and insurance payments on time and maintain the [Subject] Property in good condition. Plaintiffs would be responsible for normal repairs and upkeep. They would also have exclusive rights to possession of the Property as their family home as long as they wanted it.” (Id. ¶ 12.) “[Viken] said that if [Plaintiffs] did want to sell it [down the road], [Viken] felt he should get half the profits in addition to getting his deposit repaid.” (Id. ¶ 15.)

It is clear that the factual predicate of the legal issues in the two proceedings are framed completely different, leading the Court to conclude that there are no identical issues. This conclusion aligns with the legal principles regarding the “identical issue” requirement, as outlined in Textron, supra.

ii)                 The Issue Was Not Actually Litigated or Necessarily Decided in the Previous Proceeding.

Defendant posits that the issue of Plaintiffs’ interest in the Subject Property was already decided in the previous unlawful detainer action, citing the ruling of the previous unlawful detainer action, which states, in pertinent part, “As to the first element, [Viken] has established that he owns the property. The unrefuted testimony is that the deed bears [Viken’s] name. Defendants argue that they are co-owners or have an ownership interest in the property based on them making monthly mortgage payments as well as an oral agreement Defendants claim they had with [Viken] wherein the property was purchased for them and would ultimately be sold to them. While it appears that the intention was for Defendants to take title to the property, this was not accomplished. Moreover, there is no written agreement evidencing the oral discussion the parties had with one another about who would ultimately own the property. [Citations.]” (RJN No. 5.)

Plaintiffs contend that in the previous proceeding, they tried to testify about the oral agreement but the court sustained Viken’s evidentiary objections based on irrelevance and therefore did not consider the facts and testimony. (Opp’n. at p. 4.)

            The Court notes that unlawful detainer proceeding is summary in character and ordinarily only claims bearing directly on right of immediate possession are cognizable. Cross complaints and affirmative defenses, legal or equitable, are permissible only insofar as they would, if successful, preclude removal of tenant from premises. (Vella v. Hudgins (1977) 20 Cal.3d 251, 255.)

Therefore, the finding in the prior ruling, as cited by Defendant, aligns with this principle: the court found that Plaintiffs’ claim of interest impermissible in the unlawful detainer action because it was not sufficient to preclude the removal of Plaintiffs from the Subject Property. In other words, the unlawful detainer court did not consider the issue of Plaintiffs’ future or contingent contractual interest in the Subject Property, as alleged in the FAC. This conclusion is further supported by Plaintiffs’ assertion that evidence regarding their interest, based on the oral agreement, was excluded in the unlawful detainer proceeding on the grounds of irrelevance in the unlawful detainer action.

            Accordingly, the Court finds that the issues raised in the FAC were not actually litigated or necessarily decided in the prior proceeding.

            Based on the above, the Court OVERRULES the Demurrer on this ground.

3)      Statute of Frauds

An agreement for the sale of real property or an interest in real property comes within the statute of frauds. (Civ. Code, § 1624, subd. (a)(3).) (Underlines added.)

However, the statute of frauds is not absolute. For example, under the doctrine of part performance, the oral agreement for the transfer of an interest in real property is enforced when the buyer takes possession of the property and, in reliance on and pursuant to the terms of the oral agreement, makes valuable and substantial improvements to the property such that application of the statute of frauds would result in unjust or unconscionable loss. (Sutton v. Warner (1993) 12 Cal.App.4th 415, 422.) A similar, broader exception is provided under the equitable estoppel doctrine that applies when an unconscionable injury would result from denying enforcement of a contract after one party has been induced to make a serious change of position in reliance on the contract. (Byrne v. Laura (1997) 52 Cal.App.4th 1054, 1068, 1072.)

            Plaintiffs assert that the FAC alleges the oral agreement that upon the eventual sale of Subject Property to a third party, the parties would split the proceeds, arguing that this case does not involve the sale of real property or an interest therein. (Opp’n. at p. 5.)

However, the Court finds that this argument is not supported by the pleadings in the FAC.

            At the outset, the FAC states, “The real property at issue in this case is located at 20456 Calhaven Drive, Santa Clarita CA 91390...” (FAC ¶ 1.) As to the terms of the oral agreement, the FAC alleges, “Defendant agreed to put the down payment in and qualify for the necessary loan to complete the purchase. Defendant said he had up to $100,000 for the purchase.” (Id. ¶ 11.) “Plaintiffs agreed that they would make all monthly mortgage, tax, and insurance payments on time and maintain the Property in good condition. Plaintiffs would be responsible for normal repairs and upkeep. They would also have exclusive rights to possession of the Property as their family home as long as they wanted it.” (Id. ¶ 12.)

Further, the FAC alleges, “During the search for a property, defendant Viken Yazgulian further discussed the details of the agreement with plaintiffs. He told the plaintiffs that although the Property didn’t need to be sold, he expected plaintiffs would likely want to sell the Property down the road in order to buy their next house. He said that if they did want to sell it, he felt he should get half the profits in addition to getting his deposit repaid.” (Id. ¶ 14.) “The plaintiffs agreed, which led to a modification of the agreement. In addition to splitting the profits, plaintiffs and defendant agreed to split the cost of any major repairs or improvements at the real property 50/50.” (Id. ¶ 15.) (Underlines added.)

            It is evident that the investment or financial aspect of the agreement constitutes only “a modification” of the oral agreement, which primarily concerns Plaintiffs’ “exclusive rights to possession of the Property as their family home as long as they wanted it.” (FAC ¶ 12.) 

Accordingly, the Court finds that the breach of contract cause of action involves a dispute over the parties’ interests in the Subject Property. Therefore, it is subject to Statute of Frauds unless any recognized exceptions apply.

            Nevertheless, the Court determines that the factual pleadings in the FAC are sufficient to demonstrate an exception to the Statute of Frauds.

            The FAC states, “The escrow for the Property closed in October of 2011. Christopher and Crystal received the keys directly from the Realtor in order to get the Property ready for moving in. The first thing plaintiffs did was spend a considerable amount of their own time and money to re-carpet and paint the interior of the Property.” (FAC ¶ 20.) “Since then, for more than 12 years, the plaintiffs have at all times maintained the Property in good condition and made every single mortgage, tax, and insurance payment directly as agreed.” (Id. ¶ 22.) “Along the way, there were several large improvements needed at the Property, such as a kitchen remodel, exterior window replacement, and exterior paint, among other things. Plaintiffs and defendant shared the costs for these property improvements 50/50 as agreed.” (Id. ¶ 23.)

            Based on these allegations, the Court finds a sufficient factual showing of Plaintiffs’ part performance – specifically, making valuable and substantial improvements to the property and paying mortgage, tax, and insurance – pursuant to the oral agreement, thereby invoking an exception to the Statute of Fraud.

            The Court does not need to determine whether an alternative exception to the statute of frauds exists.

            Accordingly, the Court OVERRULES the Demurrer on this basis.

4)      Sufficiency in Stating a Cause of Action

A plaintiff must plead the following elements for a breach of contract cause of action: (1) existence of contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s’ breach (or anticipatory breach), and (4) resulting damage to plaintiff. (Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 830.)

Defendant argues that Plaintiffs fail to allege the specific date on which the oral contract was formed, as well as the specific date of Defendant’s breach. Defendant also contends that the FAC contains only conclusory allegation regarding Defendant’s actions constituting the breach. (Dem. at p. 8.)

The Court notes that the dates of the formation and breach are not required elements for a cause of action for breach of contract.

Moreover, the Court finds that the FAC sufficiently pleads Defendant’s breach of contract. The FAC asserts that “the defendant has not done what he agreed to do. The defendant attempting to evict the plaintiffs and take 100% control (and equity) of the Property[.]” (FAC ¶ 47.) This allegation, combined with the claim that the agreement granted Plaintiffs “exclusive rights to possession of the Property as their family home as long as they wanted it,” (FAC ¶ 12), adequately demonstrates Defendant’s breach of the oral agreement.

For the same reasons, the Court rejects Defendant’s argument in the Reply that the breach is unripe.

Accordingly, the Court OVERRULES the Demurrer on this ground.

5)      Uncertainty

An oral contract may be pleaded generally as to its effect, because it is rarely possible to allege the exact words. (Khoury v. Maly’s of California (1993) 14 Cal.App.4th 612, 616.)

A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures. (Ibid.)

Defendant does not effectively contest that the breach of contract claim is uncertain or subject to speculation. Instead, Defendant argues that the FAC is vague and uncertain regarding the references to “Quiet Title” and “Constructive Trust” found on the first page of the FAC and in the bottom header of each page. (Dem. at p. 7.)

Plaintiffs assert that “Quiet Title” and “Constructive Trust” are alternative remedies requested in connection with the breach of contract cause of action. (Opp’n. at p. 5.)

It is a well-established legal principle that a constructive trust is not a cause of action; but rather a remedy. (Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 277, fn. 4; see also PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 398 [“[a] constructive trust ... is an equitable remedy, not a substantive claim for relief”])

Additionally, a demurrer tests the legal sufficiency of factual allegations in a complaint (Title Ins. Co. v. Comerica Bank–California (1994) 27 Cal.App.4th 800, 807.) (Underlines added.) Even assuming that the FAC contains improper labeling, such irrelevant, false, or improper matters are reserved for a motion to strike, not a demurrer, as they do not constitute “factual allegations”.

Accordingly, the Court does not consider this argument when ruling on a demurrer.

Based on the foregoing, the Court OVERRULES the Demurrer to the FAC.

CONCLUSION

Defendant Viken Yazgulian’s Demurrer to the First Amended Complaint is OVERRULED.

Defendant Viken Yazgulian is ordered to serve and file an Answer to the First Amended Complaint or any other applicable responsive pleadings within 30 days.

Moving party to give notice.