Judge: Frank M. Tavelman, Case: 20BBCV00813, Date: 2022-08-12 Tentative Ruling

Case Number: 20BBCV00813    Hearing Date: August 12, 2022    Dept: A

ALLEGATIONS:

Susanna Yagubyan ("Yagubyan"); Central Medical Business Management, Inc., a California Corporation ("CMBM"); and Deepest Inner Core, Inc., a California Corporation ("DIC", and collectively, "Plaintiffs") filed suit against Defendants West Coast Urgent Care Clinics, Inc., a California Corporation ("WCUC"); Sona Sirounian ("Sirounian"); Brigeli Westerband ("Westerband"); and Vahe Gyulnazaryan ("Gyulnazaryan", and collectively, "Defendants").

Plaintiffs allege that Dr. Tigran Garabedyan ("Garabedyan") was the president, CEO, and a shareholder of WCUC at the time he made a job offer to Yagubyan, promising a monthly salary of $9,500 and a 49% ownership interest in WCUC, an urgent care clinic. Plaintiffs allege that WCUC further agreed to pay Yagubyan the fair market value of equipment necessary to outfit an urgent care clinic and took loans from Yagubyan, CMBM, and DIC to support its operations. Plaintiffs allege that Garabedyan passed away in an airplane accident on May 20, 2020, and that Sirounian, who subsequently gained ownership over WCUC, fired Yagubyan, repudiated all past agreements made between WCUC and Yagubyan, and attempted to ruin Yagubyan's professional reputation in the community. Plaintiffs allege that Yagubyan has not been paid the agreed-upon salary or ownership interest, that Plaintiffs have not been paid interest or principal on their loans to WCUC, and that WCUC has been and is currently using Yagubyan's equipment without payment.

Plaintiff filed a Complaint on November 12, 2020; a First Amended Complaint ("FAC") on November 15, 2021; a Second Amended Complaint ("SAC") on March 17, 2022; and a Third Amended Complaint (“TAC”) on June 13, 2022, alleging 14 causes of action: (1) Breach of Contract; (2) Breach of Contract; (3) Conversion; (4) Fraud and Intentional Deceit; (5) Negligent Misrepresentation; (6) Wrongful Termination; (7) Failure to Pay Overtime Compensation; (8) Failure to Provide Meal Breaks or Premium Pay in Lieu of Meal Breaks; (9) Failure to Provide Rest Breaks or Penalty in Lieu of Missed Rest Breaks; (10) Failure to Pay Wages Due at Termination; (11) Failure to Provide Itemized and Accurate Wage Statement; (12) Unlawful Retaliation; (13) Violation of Business and Professions Code §§ 17200 et seq.; and (14) Intentional Infliction of Emotional Distress (“IIED”).

PRESENTATION:

The Court received the Defendants’ Demurrer filed on July 14, 2022; the Plaintiff’s opposition filed on August 1, 2022; and the reply filed by Defendants on August 4, 2022.

The Court received the Motion to Strike filed by Defendants on July 14, 2022. The Court has not received any opposition or reply.

RELIEF REQUESTED:

Defendants demur to the second, third, fourth, fifth, and twelfth causes of action in the TAC.

Defendants move to strike all claims against Gyulnazaryan and Westerband, and the punitive damage allegations in the TAC.

ANALYSIS:

I.          LEGAL STANDARD

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.  (CCP § 430.30(a); Blank v. Kirwan (1985) 39 Cal. 3d 311, 318.) A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) The only issue involved in a demurrer hearing is whether the complaint states a cause of action. (Ibid.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at p. 318.) No matter how unlikely or improbable, the plaintiff’s allegations must be accepted as true for the purpose of ruling on the demurrer. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.  App. 3d 593, 604.) But this does not include contentions; deductions; conclusions of fact or law alleged in the complaint; facts impossible in law; or allegations contrary to facts of which a court may take judicial notice.  (Blank, supra, 39 Cal. 3d at p. 318.)

Pursuant to CCP §§ 430.10(e) and (f), the party against whom a complaint has been filed may demur to the pleading on the grounds that the pleading does not state facts sufficient to constitute a cause of action, or that the pleading is uncertain, ambiguous and/or unintelligible. It is an abuse of discretion to sustain a demurrer if there is a reasonable probability that the defect can be cured by amendment. (Schifando v. City of Los Angeles (2003) 31 Cal. 4th 1074, 1082, as modified (Dec. 23, 2003).)

II.        MEET AND CONFER

CCP § 430.41(a) requires that the demurring party meet and confer with the party who filed the pleading that is subject to the demurrer at least 5 days before the date the responsive pleading is due, by telephone or in person, for the purpose of determining if the parties can resolve the objections to be raised in the demurrer. The demurring party must file and serve a declaration detailing their meet and confer efforts. Failure to meet and confer is not grounds to overrule or sustain a demurrer, or grant or deny a motion to strike. (CCP §§430.41(a)(4); CCP 435.5(a)(4).)

The Court finds that meet and confer requirements have been satisfied to code. (Decl. Mervis, ¶ 12.)

III.       MERITS

1. Claims against Gyulnazaryan and Westerband

    

   The TAC alleges liability against Gyulnazaryan and Westerband only as to the seventh, eighth, and ninth causes of action for labor code violation and the fourteenth cause of action for IIED.

    

   The Court first finds that the TAC does not state sufficient factual allegations to support liability for Gyulnazaryan and Westerband under the alter-ego doctrine. The alter-ego doctrine requires a party to show a unity of interest and ownership between the corporation and individual such that the corporation has no separate personality and inequity would result if the individual were not held liable. (See Leek v. Cooper (2011) 194 Cal.App.4th 399, 411.) The TAC alleges no facts supporting the application of the alter ego doctrine against Gyulnazaryan and Westerband except to include them with all other defendants in alleging labor code violations and so does not meet this standard.

    

   The TAC alleges that Gyulnazaryan and Westerband were officers and shareholders of WCUC and were personally responsible for Plaintiffs’ unpaid wages. (TAC, ¶¶ 11, 12, 70, 73, 74.) The Court notes that, although the opposition brief states that both Gyulnazaryan and Westerband were hired in July of 2020, Plaintiffs have again failed to expressly state when Gyulnazaryan was hired to replace Westerband in the pleading (TAC, ¶ 73); but this omission is not enough, on its own, to sustain the demurrer as to the individual defendants. Although Defendants raise the point that the TAC does not allege that either Gyulnazaryan or Westerband made any representations regarding payment, none of the Labor Code violations alleged include a requirement that an officer make an express representation regarding payment. (See Lab. Code §§ 510, 512, 226.7.) The factual allegations are sufficient regarding key dates: specifically, Plaintiffs allege that Gyulnazaryan and Westerband were hired in July of 2020, and that Yagubyan was fired in July of 2020.  Plaintiff then argues both Gyulnazaryan and Westerband were in office at the time Yagubyan was employed. (TAC, ¶¶ 58, 60, 70, 73; Oppo., 2:25-3:1.) While more specificity may be remedied in discovery, the TAC states sufficient facts to allege the seventh, eighth, and ninth labor code violation causes of action against Gyulnazaryan and Westerband at this pleading stage, and the Court will not sustain the demurrer on this basis.

    

2. Second Cause of Action (Breach of Oral Contract)

    

   “The standard elements of a claim for breach of contract are: ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom.’” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.) The plaintiff must attach the contract at issue to the complaint or plead the material terms to assert a breach of contract claim. (Construction Protective Servs., Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198–99; San Diego Housing Comm’n v. Indust. Indem. Co. (1998) 68 Cal.App.4th 526, 536.)

    

   Defendants again argue that the second cause of action is barred by the two-year statute of limitations applicable to an oral contract claim, as the SAC alleges that the oral agreement arose in 2016 and was immediately breached. Defendants also argue that the TAC newly alleges that Yagubyan’s employment contract was for a salary and that a separate offer of 49% ownership interest was accepted by Yagubyan, rather than for both the salary and ownership interest, as alleged in the SAC, which is improper under the sham pleading doctrine.

    

   In opposition, Plaintiffs argue that Garabedyan repeatedly promised Yagubyan that her compensation would be honored and that she would be paid at a later date, and that Yagubyan proceeded under this understanding until Sona’s breach in July of 2020. Plaintiffs also argue that the sham pleading doctrine does not apply, as the SAC’s allegation stating: “Specifically, WCUC offered Ms. Yagubyan a position at WCUC compensating Ms. Yagubyan $9,500.00 a month as well as awarding her a forty-nine percent stake in WCUC” was poorly worded and intended to convey that the salary compensation was separate from the ownership stake from the beginning. (SAC, ¶ 26.)

    

   A plaintiff must bring a cause of action within the limitations period applicable thereto after accrual of the cause of action. The general rule for defining the accrual of a cause of action sets the date as the time when the cause of action is complete with all its elements. The statute of limitations for an oral contract cause of action is two years. (CCP § 339(1).)

    

   Under the sham pleading doctrine, plaintiffs are precluded from amending the complaint to omit harmful allegations, without explanation, from prior complaints to avoid attacks raised in demurrers or motions for summary judgment. (Deveny v. Entropin, Inc. (2006) 139 Cal.App.4th 408, 425.) In addition, if a party files an amended complaint and attempts to avoid the defects of the prior pleading by either omitting facts or adding facts inconsistent with those in the prior pleadings, the court may take judicial notice of prior pleadings and may disregard inconsistent allegations. (Colapinto v. County of Riverside (1991) 230 Cal.App.3d 147, 151.) The sham pleading doctrine is not intended to prevent honest complainants from correcting erroneous allegations or to prevent correction of ambiguous facts. (Deveny, supra, 139 Cal.App.4th at 426.) Thus, the party who made the inconsistent pleading must be allowed to explain the changes. (Ibid.)

    

   The Court does not accept Plaintiffs’ explanation of the change in allegations. The Court takes sua sponte judicial notice of the SAC. First, the plain language of the allegation in the SAC included both the salary and the ownership interest as part of the job offer. The full passage reads:

    

   26. Dr. Garabedyan, acting on behalf of WCUC, presented Plaintiff Yagubyan a job offer. Specifically, WCUC offered Plaintiff Yagubyan a position at WCU compensating Plaintiff Yagubyan $9,500.00 a month as well as awarding her a forty-nine percent (49%) stake in WCUC.

   (SAC, ¶ 26.)

    

   There is no reason to include the ownership interest in the same passage as the salary offer under what is essentially a “job offer” heading, if both compensation methods were not included as part of the job offer. Further, immediately after this allegation, the SAC appears to sandwich the job offer section, alleging “Plaintiff Yagubyan accepted WCUC's offer presented by Dr. Garabedyan.” There is no discussion of separating the salary from the ownership interest. Further on in the pleading, the SAC also assumes that both the salary and the ownership interest were part of the contract:

    

   32. At the time Plaintiff Yagubyan agreed to these terms, she was not aware or apprised, by WCUC, Dr. Garabedyan or otherwise, that her equity interest which was offered was void or that she would never be paid for the monthly fees of $9500 as promised.

   (SAC, ¶ 32.)

    

   And the breach of oral contract section of the SAC also included the two methods of compensation without comment:

    

   93. In addition to being promised a monthly salary of $9,500 per month, 6 WCUC also promised Plaintiff Yagubyan an ownership stake of forty-nine (49%) in WCUC.

    

   96. Defendant WCUC was cash strapped initially and was dependent on not only Plaintiff Yagubyan's expertise, but also on Yagubyan lending WCUC money and deferring her monthly salary of $9,500.00 until WCUC was financially stable. On countless occasions WCUC promised to Plaintiff Yagubyan that her salary would be paid in full. Defendant WCUC never assigned, transferred or otherwise caused Plaintiff Yagubyan to become the rightful owner of the forty-nine (49%) percent equity interest which was promised.

   (SAC, ¶¶ 93, 96.)

    

   The Court thus finds that the allegation that Yagubyan was presented with only a salary offer is subject to the sham pleading doctrine as contradicting an earlier pleading. The Court will assume that Yagubyan was offered both the monthly salary and the ownership interest as consideration for the purposes of demurrer.

    

   The Court thus finds that the TAC again alleges that Yagubyan was promised a monthly salary and ownership stake, with no detail given as to the ownership stake; that Defendants hired Yagubyan on January 22, 2016 and immediately breached this agreement by failing to pay Yagubyan at least the ownership stake; and that the instant action was filed on November 12, 2020, more than two years after the initial hiring period, and exceeds the two-year statute of limitations. The TAC's third cause of action contains the same defects as the SAC.

    

   The Court thus sustains the demurrer as to the second cause of action as time-barred by the statute of limitations, without leave to amend.

    

3. Third Cause of Action (Conversion)

    

   To plead a cause of action for conversion, one must allege (1) the plaintiff’s ownership or right to possession of personal property; (2) defendant’s disposition of the property inconsistent with plaintiff’s rights; and (3) resulting damages. (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

    

   On the previous demurrer to the SAC, the Court sustained the demurrer to the conversion cause of action, finding that the SAC alleged an agreement between WCUC and Yagubyan for WCUC to purchase its own equipment or return Yagubyan’s medical equipment after WCUC could afford its own equipment; because the SAC did not allege that WCUC ever got to the stage where it could afford its own equipment, it did not allege that Defendants’ possession of the medical equipment constituted conversion. (May 13, 2022 Minute Order.)

    

   The TAC makes no substantial effort to remedy this issue. Plaintiffs point again to paragraph 62 of the TAC, which was also alleged as paragraph 52 of the SAC, and argue that they alleged Sona disavowed all agreements Yagubyan had with WCUC. This, again, does not address the Court’s issue: the TAC has not alleged that WCUC has satisfied the affordability provision, and thus, has not alleged that WCUC has acted in a manner inconsistent with Yagubyan’s property rights.

    

   The Court thus sustains the demurrer as to the third cause of action, without leave to amend.

    

    

4. Fourth and Fifth Causes of Action (Fraud and Negligent Misrepresentation)

    

   Causes of action for ‘fraud’ ‘concealment’ and ‘intentional misrepresentation’ are all causes of action sounding in “deceit based on intentional misrepresentation.” (Manderville v. PCG&S Group (2007) 146 Cal. App. 4th 1486, 1498, fn. 4.) The elements of fraud 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.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) Fraud allegations need not be liberally construed, general pleading of the legal conclusion of fraud is insufficient, and every element of the cause of action for fraud must be alleged fully, factually and specifically. (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal. App. 3d 1324, 1331; see also Quelimane Co., Inc. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 47) (Specific to fraud is the rule of particularity in pleading; fraud is the only remaining cause of action in which specific pleading is required to enable the court to determine, on the basis of the pleadings alone, whether a foundation exists for the cause.).

    

   Negligent misrepresentation requires assertion of an untrue fact that is believed by the defendant to be true, lack of reasonable ground for the belief, defendant’s intent to induce plaintiff’s reliance upon the representation, plaintiff’s justifiable reliance upon the representation, and resulting damage. (Moncada v. West Coast Quartz Corp. (2013) 221 Cal.App.4th 768, 781; Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) Negligent misrepresentation, like fraud, must be pled with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

    

   On review of the TAC, the Court finds that the fourth and fifth causes of action each again do not support their respective causes of action with facts sufficient to satisfy particularity requirements. The TAC makes no mention of the dates or specific incidents when the representations occurred. Plaintiffs cite to paragraphs 24, 25, and 60-62 as examples where this specificity has been met. These paragraphs do not meet the particularity requirements. Paragraph 24 and 25 allege nonspecific “recruiting efforts” and do not mention any specific representations. Paragraph 25 does not reference a date. And none of paragraphs 60-62 provide any detail on the alleged representations.

    

   The Court thus sustains the demurrer as to the fourth and fifth causes of action, without leave to amend.

    

5. Twelfth Cause of Action (Unlawful Retaliation)

    

   To establish a prima facie case of retaliation, a plaintiff must show that she engaged in protected activity, that she was thereafter subjected to adverse employment action by her employer, and there was a causal link between the two. (Guthrey v. State of California (1998) 63 Cal. App. 4th 1108, 1125, quoting Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal. App. 3d 590, 614.) The retaliatory motive is proved by showing that plaintiff engaged in protected activities, that his employer was aware of the protected activities, and that the adverse action followed within a relatively short time thereafter. (Jones v. Lyng (D.D.C. 1986) 669 F. Supp. 1108, 1121. The causal link may be established by an inference derived from circumstantial evidence, ‘such as the employer's knowledge that the [employee] engaged in protected activities and the proximity in time between the protected action and allegedly retaliatory employment decision. (Jordan v. Clark (9th Cir. 1988) 847 F.2d 1368, 1376.) Essential to a causal link is evidence that the employer was aware that the plaintiff had engaged in the protected activity. (Cohen v. Fred Meyer, Inc. (9th Cir. 1982) 686 F.2d 793, 796; Gunther v. Washington County (9th Cir. 1979) 623 F.2d 1303, 1316.)

    

   The TAC’s allegations supporting the retaliation claims remain bare, conclusory, and vague, and do not include any facts putting Defendants on notice as to the nature of the claim. 

    

   The Court thus sustains the demurrer as to the twelfth cause of action, without leave to amend.

    

   IV.       CONCLUSION

    

   The Court thus sustains the demurrer in its entirety without leave to amend.

    

   ---

    

   Motion to Strike

    

   I.          LEGAL STANDARD

    

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer, such as words, phrases, and prayers for damages. (See CCP §§ 435, 436, and 437.) The proper procedure to attack false allegations in a pleading is a motion to strike. (CCP § 436(a).) In granting a motion to strike made under CCP § 435, “[t]he court may, upon a motion made pursuant to Section 435 [notice of motion to strike whole or part of complaint], or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading.” (CCP § 436(a).) Irrelevant matters include immaterial allegations that are not essential to the claim or those not pertinent to or supported by an otherwise sufficient claim. (CCP § 431.10.) The court may also “[s]trike out 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.” (CCP § 436 (b).)

To succeed on a motion to strike punitive damages allegations, it must be said as a matter of law that the alleged behavior was not so vile, base, or contemptible that it would not be looked down upon and despised by ordinary decent people. (Angie M. v. Superior Court (1995) 37 Cal. App. 4th 1217, 1228-1229.)

II.        MEET AND CONFER

CCP § 435.5(a) provides that before filing a motion to strike, the moving party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to the motion to strike for the purpose of determining if an agreement can be reached that resolves the objections to be raised in the motion to strike.

The Court finds that meet and confer requirements have been satisfied to code. (Decl. Mervis, ¶ 12.)

III.       MERITS

1. Claims against Gyulnazaryan and Westerband

    

   As the Court has addressed this matter in the demurrer, it need not do so here.

    

2. Punitive Damage Claims

    

   Defendants argue that the TAC does not allege sufficient factual allegations to support malice, fraud, or oppression; and is based on a breach of contract claim, which is not eligible for punitive damages.

    

   In the absence of an independent tort, punitive damages may not be awarded for breach of contract even where the defendant's conduct in breaching the contract was willful, fraudulent, or malicious. (Cates Construction, Inc. v. Talbot Partners (1999) 21 Cal.4th 28, 61.) Although the action is primarily based on a breach of contract claim, the punitive damage claims alleged may be supported on the basis of the IIED claim only. The TAC sufficiently alleges that Sona fired Yagubyan, repudiated all of Yagubyan’s agreements, and informed Yagubyan that she would be paid “a rusty penny”, all in front of WCUC staff. (TAC, ¶ 62.) The TAC also alleges that WCUC and Sona publicly belittled and impersonated Yagubyan in both personal and professional contexts to ruin her reputation. (TAC, ¶¶ 61-69.) The Court does not find that any other cause of action includes sufficient factual allegations to support punitive damage claims.

    

   As the demurrer to the second, third, fourth, fifth, and twelfth causes of action has been sustained without leave to amend, the Court thus strikes the punitive damage claims as to the sixth, seventh, eighth, ninth, tenth, and eleventh causes of action.

    

   IV.       CONCLUSION

    

   The Court thus grants the motion to strike in part, as to the sixth, seventh, eighth, ninth, tenth, and eleventh causes of action; and denies the motion to strike in part, as to the fourteenth cause of action. The Court does not grant leave to amend.

    

   ---

    

RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants West Coast Urgent Care Clinics, Inc.; Sona Sirounian; Brigeli Westerband; and Vahe Gyulnazaryan's Demurrer and Motion to Strike came on regularly for hearing on August 12, 2022, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE DEMURRER IS SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE SECOND THROUGH FIFTH AND TWELFTH CAUSES OF ACTION

THE MOTION TO STRIKE IS GRANTED IN PART, AS TO THE SIXTH, SEVENTH, EIGHTH, NINTH, TENTH, AND ELEVENTH CAUSES OF ACTION; AND DENIED IN PART, AS TO THE FOURTEENTH CAUSE OF ACTION.

IT IS SO ORDERED.

DATE:  August 12, 2022                               _______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles