Judge Frank M. Tavelman, Case 22BBCV00461 2022-12-16 Tentative Ruling

TENTATIVE RULING

December 16, 2022

(Continued from December 9, 2022)

Los Angeles Superior Court Case # 22BBCV00461

Two demurrers are presently before the Court: (1) Cross-Defendant Mikayel Israyelyan (“Israyelyan”) demurs to certain causes of action asserted in the Cross-Complaint of Cross-Complainants Krikor Bardakjian (“Bardakjian”), Krikor Bardakjian, DDS, Inc. (“KB DDS”), Noho Dental Group by Bardakjian DDS, Inc. (“Noho Dental”), and Sherman Oaks Dental Group by Krikor Bardakjian DDS, Inc. (“Sherman Oaks Dental”) (collectively “Cross-Complainants”). (2) Cross-Defendant Muse Lifestyle Group, LLC (“Muse”) demurs to certain causes of action asserted in the same Cross-Complaint filed by Cross-Complainants.

Israyelyan demurs to the 2^nd (Conspiracy to Commit Fraud), 3^rd (Fraud), 4^th (Intentional Misrepresentation), 5^th (Forgery), and 10^th (Unjust Enrichment) causes of action in the Cross-Complaint. The Court notes Israylyan does not demur to the 1^st, 6^th, 7^th, 8^th, 9^th, 11^th, 12^th, 13^th, 14^th, or 15^th causes of action which are also asserted against Muse.

Israyelyan demurs on the grounds that Cross-Complainants fail to allege sufficient facts to constitute the causes of action. (Demurrer, pgs. II-IV.) Israyelyan further demurs to the fifth cause of action on the grounds that Forgery is not a civil cause of action and to the tenth cause of action on the grounds that Unjust Enrichment is not a cause of action, but only a remedy. (Id. at pgs. II-III.)

Muse demurs to the 2^nd (Conspiracy to Commit Fraud), 3^rd (Fraud), 4^th (Intentional Misrepresentation), 5^th (Forgery), 6^th (Theft by Embezzlement), 7^th (Theft by Receipt of Stolen Property), 8^th (Conversion), 10^th (Unjust Enrichment), 14^th (Intentional Infliction of Emotional Distress (“IIED”)), and 15^th (Negligent Infliction of Emotional Distress (“NIED”)) causes of action in the Cross-Complaint. The Court notes Muse does not demur to the 1^st, 9^th, 11^th, or 13^th causes of action. Muse demurs on the grounds that Cross-Complainants fail to allege sufficient facts to constitute the causes of action. (Demurrer, pgs. II-IV.) Muse further demurs to the fifth cause of action on the grounds that Forgery is not a civil cause of action and to the tenth cause of action on the grounds that Unjust Enrichment is not a cause of action, but only a remedy. (Id. at pgs. II-III.)

By way of background, on June 24, 2022, Israyelyan filed the initial complaint in this action against Defendants Bardakjian, KB DDS, Noho Dental, Sherman Oaks Dental, and 485 Cliff Dr. LLC (“485 Cliff”), alleging nine causes of action and seeking compensatory damages in excess of $3,000,000.00, general damages, punitive and exemplary damages, attorney’s fees and costs of suit. (Complaint, pgs. 17-18.) The nine causes of action are as follows: (1) Breach of Contract; (2) Breach of Covenant of Good Faith and Fair Dealing; (3) Intentional Interference with Prospective Economic Advantage; (4) Slander; (5) Unjust Enrichment; (6) Conversion; (7) Accounting; (8) Fraud; and (9) Theft. (Penal Code § 496).

Cross-Complainants filed their Cross-Complaint on August 2, 2022, against Israyelyan, Alina Bagasian (“Bagasian”), Liana Sahakyan (“Sahakyan”), Suren Minasyan (“Minasyan”), Irnes Okanovich (“Okanovich”), Muse, and Laureate Aesthetics Management (“LAM”) (collectively, “Cross-Defendants”) alleging 15 causes of action and seeking a jury trial. They seek general, special, actual and compensatory damages, exemplary and punitive damages, attorneys fees, cost of suit, restitution and disgorgement of all benefits and other undue compensation obtained by Cross-Defendants at the expense of Cross-Complainants, declaratory and punitive damages, interest, equitable and/or injunctive relief, nominal damages, and other relief that the Court deems proper. (Complaint, pg. 37.) The 15 causes of action are as follows: (1) Breach of Fiduciary Duty; (2) Conspiracy to Commit Fraud; (3) Fraud; (4) Intentional Misrepresentation; (5) Forgery; (6) Theft – Embezzlement (Penal Code §§ 484, 496); (7) Theft – Receipt of Stolen Property (Penal Code § 496); (8) Conversion; (9) Breach of the Covenant of Good Faith and Fair Dealing; (1) Unjust Enrichment; (11) Defamation – Slander; (12) Assault; (13) Battery; (14) IIED; and (15) Negligent Infliction of Emotional Distress.

Cross-Complainants allege that Bardakjian owns KB DDS, Noho Dental Group, and Sherman Oaks Dental. (XC, ¶¶5-8.) Cross-Complainants allege Muse is owned and controlled by Israyelyan. Cross-Complainants allege that Muse was the alter ego of Israyelyan, Bagasian, and Sahakyan. (XC, ¶20.) Cross-Complainants allege that in 2013, Bardakjian and Israyelyan became partners and Bardakjian obtained a $69,000 loan from East West Bank to buyout the ownership interest of his former partner, Dr. Boyajian. (XC, ¶25.) Cross-Complainants allege that Israyelyan, by and through his company Muse, offered brand development, marketing, and management services to Bardakjian. (XC, ¶27.) Cross-Complainants allege that Israyelyan and Dr. Bardakjian entered into an agreement to form a Letter of Intent (“LOI”) which promised that Israyelyan and Bardakjian would be partners, Israyelyan would manage brand development and marketing services for Bardakjian’s dental practices, Israyelyan would market and grow patients list for Cross-Complainants by 3,000 patients, and Israyelyan would form an internal insurance program to provide a 25% discount to all patients and his 3,000 employees working in his various business entities at the time, who would be referred by Israyelyan and his companies. (XC, ¶28.) Cross-Complainants allege that Israyelyan, through Muse, controlled all aspects of Bardakjian’s business and financial affairs between 2014 and 2022 and managed all business and financial accounts belonging to Cross-Complainants. (XC, ¶¶30-31.) Cross-Complainants allege that Muse controlled the business affairs of Bardakjian and KB DDS, comingled funds and assets between Cross-Defendants, Muse and KB DDS’s numerous hospice business, and Cross-Defendants failed to maintain arm’s length relationship between themselves, KB DDS Hospices, Muse and third parties. (XC, ¶¶20-21.)

Cross-Complainants allege that Israyelyan, in conspiracy with other cross-defendants, compensated himself through unaccounted distributions for sham services provided to Cross-Complainants and wrote numerous checks and wire transfers to his personal and business accounts and his businesses and/or family members. (XC, ¶32.) Cross-Complainants allege that Israyelyan, by and through Muse, and in collaboration and conspiracy with Bagasian, Sahakyan, Minasyan, and Okanovich, induced and engaged Bardakjian into questionable investments into fraudulent construction projects, hospice, and home healthcare businesses, as well as exposed him to potential criminal culpability. (XC, ¶¶33-34.) Cross-Complainants allege that between 2015 and 2018, Bardakjian’s Dental Practices and Hospice companies had its banking accounts with the Bank of the West. (XC, ¶35.) Cross-Complainants allege that the bank closed all bank accounts on the grounds of suspicious activities, improper money transferring, and allegedly fraudulent transactions. (Id.) Cross-Complainants allege that Israyelyan opened a new bank account for Cross-Complainants with City National Bank between 2018 to 2020. (XC, ¶36.) Cross-Complainants allege that the bank closed all bank accounts in the grounds of suspicious activities, improper money transferring, and allegedly fraudulent transactions. (XC, ¶37.) Cross-Complainants allege that in 2021, Israyelyan opened a new corporate bank account with Chase Bank and himself as a joint account holder and authorized user. (XC, ¶38.) Cross-Complainants allege that from 2019 to 2022, Israyelyan controlled all bank accounts belonging to Cross-Complainants and conducted numerous unauthorized transactions between Cross-Complainants and unrelated business accounts. (XC, ¶39.) Cross-Complainants allege that from 2016 to 2021, Israyelyan, through Muse and with co-conspirators, Bagasian, Sahakyan, Minasyan, Okanovich, Muse, and Laureate Aesthetic, applied for millions of unauthorized loans and diverted hundreds of thousands of dollars from Cross-Complainants’ accounts to Israyelyan’s personal accounts, Bagasian’s accounts, Muse’s accounts, Muse development, Sahakyan’s accounts, hospices, and to buy property for his son Gabriel Israyelyan (“Gabriel”) under the ownership of Sahakyan. (XC, ¶40.) Cross-Complainants allege that Israyelyan induced Bardakjian into transferring money from business accounts to Israyelyan’s accounts and accounts held by Bagasian, Sahakyan, Muse, and Laureate Aesthetics by intentionally misrepresenting material fact to Bardakjian which engaged him into improper and illegal money transactions and exposed him to potential criminal culpability. (XC, ¶41.)

Cross-Complainants allege that between 2019 and 2022, Bardakjian’s investments were lost when Cross-Defendants’ fraudulent conduct caused hospices to be subject to government investigation and closed. (XC, ¶42.) Cross-Complainants allege that between 2018 and 2022, Israyelyan, in conspiracy with his wife and Bardakjian’s attorney, Bagasian, opened numerous hospice care businesses under Bardakjian and his wife, Sahakyan, by misrepresenting a profit-sharing project. (XC, ¶45.) Cross-Complainants allege that Israyelyan involved Sahakyan and Bagasian in a conspiracy to commit fraud through numerous business accounts and transactions. (Id.) Cross-Complainants allege that Israyelyan forged Bardakjian’s signature for the past five years and used his access to Bardakjian’s financial and bank accounts and diverted money from Bardakjian’s business accounts for his benefit. (XC, ¶47.) Cross-Complainants allege that all bookkeeping and financial accounts and CPA work was directed and controlled by Israyelyan in conspiracy with Minasyan and Okanovich. (XC, ¶51.) Cross-Complainants allege that Okanovich was the owner of KSM accounting company that provide bookkeeping services and tax return filing services to Cross-Complainants and Israyelyan, in conspiracy with Minasyan and Okanovich, directed and controlled all bookkeeping and financial transactions involving Cross-Complainants and engaged in conspiracy to commit fraud, forgery, and fraudulent misrepresentation through their access and control over Cross-Complainants’ financial data and accounts which was used to mishandle and misreport Bardakjian’s financial accounts, bookkeeping, and taxes. (XC, ¶52.) Cross-Complainants allege that Israyelyan made statements to others that Bardakjian stole $700,000 and $1 million from him to transfer to others, as well as that Bardakjian was a thief, bi-polar, psychotic, and was having an extramarital affair. (XC, ¶¶57-59.)

Cross-Complainants allege that Israyelyan misrepresented to Bardakjian that Bardakjian was a 50% shareholder and partner in Laureate Aesthetics Medical Spa, along with Bagasian, Israyelyan, and Sahakyan. (XC, ¶¶64-65.) Cross-Complainants allege that between 2019 and 2022, Laureate Aesthetics, a company opened by Sahakyan and Israyelyan, successfully operated in Bardakjian’s dental office at 3808 West Riverside Drive, #307 without paying rent or financial responsibility to Bardakjian. (XC, ¶¶61-63.) Cross-Complainants allege that Bardakjian provided medical equipment, loan payments, the physical premises, and other services to Laureate Aesthetics and to Israyelyan, Bagasian, and Sahakyan. (XC, ¶63.) In February 2022, Bardakjian learned that he was deprived of his 50% ownership completely. (XC, ¶65.)

The Court received the Israyelyan’s Demurrer to Cross-Complainants’ Cross-Complaint on September 30, 2022. Cross-Complainants’ opposition was filed on November 28, 2022. Defendant Israyelyan filed a reply on December 2, 2022.

The Court received the Muse’s Demurrer to Cross-Complainants’ Cross-Complaint on October 24, 2022. Cross-Complainants’ opposition was filed on November 28, 2022. Defendant Muse filed a reply on December 2, 2022.

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.)

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).)

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.)

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. (CCP § 430.41.) 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) & 435.5(a)(4).)

The Court finds that Israyelyan satisfied the meet and confer requirements to code. (Demurrer, Decl. Yacoubian, ¶¶ 2-5.)

Cross-Complainants’ conspiracy cause of action is based on allegations that Israyelyan, Bagasian, Sahakyan, Minassian, and Okanovich (collectively, “Individual Cross-Defendants”) entered a conspiracy to defraud Bardakjian. (XC, ¶80.) Cross-Complainants allege that Individual Cross-Defendants applied for several small business loans in 2020 and applied for a loan for dental office equipment through misrepresentation and fraud without Bardakjian’s consent. (XC, ¶¶82-83.) Cross-Complainants allege that on June 3, 2020, Israyelyan and Bagasian signed a purchase agreement for medical spa equipment by forging Bardakjian’s signature and financial information, which made Bardakjian responsible for $131,000 financial debt. (XC, ¶83(i).) Cross-Complainants allege that on September 9, 2021, Israyelyan and Sahakyan forged Bardakjian’s signature when signing a customer purchase agreement for M8 Body Optimus Triton System medical spa equipment. (XC ¶83(ii).) Cross-Complainants allege that on July 6^th, year not stated, Individual Cross-Defendants took equipment from Bardakjian’s Dental Office without his knowledge and authorization. (XC, ¶83(iii).)

“Liability for civil conspiracy generally requires three elements: (1) formation of a conspiracy (an agreement to commit wrongful acts); (2) operation of a conspiracy (commission of the wrongful acts); and (3) damage resulting from operation of a conspiracy. [Citation]” (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4^th 257.)

“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. (Citation.) By participation…, a co-conspirator effectively adopts as his or her own the torts of other co-conspirators within the ambit of the conspiracy. In this way, a co-conspirator incurs tort liability co-equal with the immediate tortfeasors. Standing alone, a conspiracy does no harm and engenders no tort liability. It must be activated by the commission of an actual tort. A civil conspiracy, however atrocious, does not per se give rise to a cause of action unless a civil wrong has been committed resulting in damage. (Citation.) A bare agreement to harm a third person cannot injure the latter unless and until acts are performed pursuant to the agreement. Therefore, it is the acts done and not the conspiracy to do them which should be regarded as the essence of the civil action. (Citation.)” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4^th 503, 511.) (See also Wyatt v. Union Mortgage Co. (1979) 24 Cal. 3d 773, 784-786 [conspiratorial agreements may be circumstantially inferred from circumstances including the nature of the acts, the relations of the parties (e.g., family business, or corporate officers or directors), and the interests of the alleged conspirators].)

Cross-Complainants have not sufficiently alleged facts for a conspiracy cause of action. Cross-Complainants argue that Individual Cross-Defendants, all working as co-conspirators and agents of Israyelyan, entered a conspiracy to defraud Bardakjian. (Opposition, pg. 6; XC, ¶80.) It is alleged that Bardakjian and Israyelyan had a partnership in which Bardakjian’s relied on Israyelyan for brand development, marketing, and management services. (XC, ¶24,27.) Bardakjian surrendered to Israyelyan all control of Cross-Complainants’ development, expansion, management and finances. (XC, ¶27.) However, while Cross-Complainants assert conspiracy including applying for loans without Bardakjian consent and purchasing equipment under his name and forged signature, Cross-Complainants do not provide facts as to how Israyelyan conducted a conspiracy against the other Cross-Complainants. The fraudulent actions do not address how the other Cross-Complainants are impacted by the conspiracy other than the general assertion of damage. (XC, ¶¶79-87.) The Cross-Complaint only alleges that damages were suffered by Cross-Complainants but does not provide context as to the damages sustained. (XC, ¶86.) As there are no facts to address how Israyelyan’s conduct affects the other Cross-Complainants other than Bardakjian in this action, Cross-Complainants do not sufficiently allege facts for a conspiracy cause of action.

Based on the foregoing, Israyelyan’s demurrer to the 2^nd cause of action is sustained with leave to amend.

Cross-Complainants’ fraud and intentional misrepresentation causes of action are based on allegations that Individual Cross-Defendants fraudulently induced Bardakjian to receive business loans on multiple occasions. (XC, ¶89.) Cross-Complainants allege Individual Cross-Defendants threatened, intimidated, induced, and misrepresented facts to Bardakjian and arranged for the unlawful transfer of the subject funds from Bardakjian’s dental practice accounts to their personal and business accounts; furthermore, it is alleged that Individual Cross-Defendants took medical equipment by fraud and misrepresentation. (XC, ¶¶90-94.)

Cross-Complainants allege that Individual Cross-Defendants fraudulently obtained title to Bardakjian’s properties, including, but not limited to 445 Cliff Drive and 485 Cliff Drive. Bardakjian asserts that Bardakjian did not and could not have reasonable discovered the fraud until February 2022. (XC, ¶¶95-96.) It is further alleged that Individual Cross-Defendants made false misrepresentations to Bardakjian concerning the business and financial accounts of his companies, including Israyelyan misrepresenting the amount of money transfers from loans to his business, personal, and family accounts, Israyelyan misrepresenting the diversion of money from Bardakjian’s DDS bank account to pay for car payments, and Individual Cross-Defendants defrauding Cross-Complainants into signing agreements/waivers in which they used Bardakjian’s signature, driver’s license number, and social security number. (XC, ¶¶101-102, 104.)

“Fraud, concealment, and intentional misrepresentation are causes of action based on “deceit from an 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.)

A cause of action for fraud must be alleged with specificity. Plaintiff must plead facts showing “how, when, where, to whom, and by what means the representations were tendered. [Citation]” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) 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.)

Israyelyan argues that Cross-Complainants do not allege facts sufficient to sustain a fraud claim. They fail to allege a misrepresentation of material fact, knowledge of falsity, intent to deceive and induce reliance, justifiable reliance on misrepresentation, and resulting damage. (Demurrer, pg. 3.) Further, Israyelyan argues that the Cross-Complaint is devoid as to how, when, where, to whom, and by what means the vague representations were made as required by law. (Demurrer, pg. 6.) Specifically, Israyelyan argues that no distinction is made between the Cross-Defendants, no allegations were provided regarding what misrepresentations were made, Cross-Complaint is silent as to how, when, to who and what money was transferred, and there are no allegations as to when and what type of agreement and waivers were signed by Bardakjian or how and for what purpose he was induced into signing the agreements. (Demurrer, pg. 6.)

Cross-Complainants respond arguing that Individual Cross-Defendants intended to deceive Bardakjian into believing that they were reputable businessmen, and the property, loans, and funds were properly managed – argued that was not the case. (Opposition, pg. 8.) Cross-Complainants allege in their Cross-Complaint that Bardakjian and Israyelyan had a partnership in which Bardakjian’s relied on Israyelyan for brand development, marketing, and management services. (XC, ¶24,27.) Cross-Complainants also allege that Bardakjian surrendered to Israyelyan all control of Cross-Complainants’ development, expansion, management and finances. (XC, ¶27.)

The Court finds that Cross-Complainants has sufficiently alleges facts establishing a relationship and reliance. Cross-Complainants further argues that Israyelyan misrepresented the amount of money transfers from the loans transferred to his accounts, Israyelyan bought a car with money from Bardakjian’s DDS bank account by misrepresentation, and Israyelyan continued to make payments out of the DDS account totaling $3,600. (Opposition, pg. 8; XC, ¶102.) Cross-Complainants asserts that Israyelyan used his access to KB’s financial and bank accounts and diverted money from Bardakjian’s business accounts for his benefit by gaining maximum control over Bardakjian’s Dental Practice and financial account to the point where he added himself as a joint account holder of the City Capital bank business account with access to all funds and without authority, made financial transfers to himself and to other business accounts. (XC, ¶48.)

In addition, Cross-Complainants claims that all bookkeeping and financial accounts and CPA work involving Cross-Complainants was directed and controlled by Israyelyan in conspiracy with Minasyan and Okanovich who controlled, mishandled, and misreported Bardakjian’s financial accounts, bookkeeping, and taxes as well as engaged in conspiracy to commit fraud, forgery, and fraudulent misrepresentation against Bardakjian and his Dental practice through their access and control over Cross-Complainants’ financial data and accounts. (XC, ¶¶51-54.) Cross-Complainants allege they justifiably relied on misrepresentations and inducements, which caused Cross-Complainants great economic and non-economic injuries. (XC, ¶¶103.) While Cross-Complainants do not go into detail regarding the agreements and waivers, Cross-Complainants do sufficiently allege that Cross-Complainants signed documents that were used to obtain Bardakjian’s signature, social security and driver’s license number. (XC, ¶104.)

On review of the Complaint, the Court finds that Cross-Complainants sufficiently alleges facts concerning the fraud regarding business loans, the unlawful transfer of funds from the Dental Practice to personal and business accounts, the taking of medical equipment, and the taking of titles to Bardakjian’s properties, including 445 Cliff Drive and 485 Cliff Drive properties.

The Court thus overrules the demurrer as to the third and fourth cause of action.

Forgery is not a civil cause of action. Cross-Complainants asserts in its Opposition that they concede that the fifth cause of action is not a civil cause of action and subject to a demurrer. (Opposition, pg. 9.)

Given the concession, the Court thus sustains the demurrer as to the 5^th cause of action, without leave to amend.

Cross-Complainants’ unjust enrichment cause of action is based on Cross-Defendants Israyelyan, Bagasian, and Sahakyan transferring money from Bardakjian’s Dental Practice account to accounts managed, controlled, and maintained by Israyelyan, Bagasian, and Sahakyan. (XC, ¶146.)

A cause of action for unjust enrichment requires the following elements: (1) receipt of a benefit; (2) unjust or wrongful retention of the benefit; and (3) at the expense of another. (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593.)

Strictly speaking, there is no cause of action for unjust enrichment; rather, unjust enrichment is a basis for obtaining restitution based on quasi-contract or imposition of a constructive trust. (McKell v. Washington Mutual, Inc. (2006) 142 Cal. App. 4th 1457, 1490.) Nevertheless, one can plead and prove a cause of action based on a theory of unjust enrichment. (See, e.g., Ghirardo v. Antonioli (1996) 14 Cal. 4th 39, 44.) Moreover, as long as the essential facts of some valid claim is stated, when construed with a view to substantial justice between the parties, a demurrer cannot be sustained. (Gruenberg v. Aetna Ins. Co. (1973) 9 Cal. 3d 566, 572.)

Cross-Complainants alleged sufficient facts to constitute a cause of action for unjust enrichment. Cross-Complainants allege not only that Israyelyan, Bagasian, and Sahakyan’s alter ego is Muse, but that they had taken money from Bardakjian and Bardakjian’s Dental Practice and benefitted from it by putting it into personal accounts. ((XC, ¶¶20-22, 146.)

Based on the foregoing, Israyelyan’s demurrer to the 10^th CoA is overruled.

Israyelyan’s Demurrer is overruled as to the 3^rd, 4^th, and 10^th cause of action and sustained as to the 2^nd cause of action (with leave to amend) and as to the 5^th cause of action (without leave to amend). The Court grants the Cross-Complainants 20 days’ leave to amend.

The Court incorporates by reference the above discussion of the legal standard on a demurrer.

The Court finds that Muse satisfied the meet and confer requirements to code. (Demurrer, Decl. Yacoubian, ¶¶ 2-5.)

Cross-Complainants’ conspiracy cause of action is based on allegations that Individual Cross-Defendants entered a conspiracy to defraud Bardakjian. (XC, ¶80.) Cross-Complainants alleges that Israyelyan, Bagasian, Sahakyan, Minassian, and Okanovich applied for several small business loans in 2020 and applied for a loan for dental office equipment through misrepresentation and fraud without Bardakjian’s consent. (XC, ¶¶82-83.) Cross-Complainants allege that on June 3, 2020, Cross-Defendants Israyelyan and Bagasian signed a purchase agreement for medical spa equipment by forging Bardakjian’s signature and financial information, which made Bardakjian responsible for $131,000 financial debt. (XC, ¶83(I).) On September 9, 2021, Cross-Defendants Israyelyan and Sahakyan forged Bardakjian’s signature when signing a customer purchase agreement for M8 Body Optimus Triton System medical spa equipment. (XC ¶83(ii).) Cross-Complainants allege that on July 6, Israyelyan, Bagasian, Sahakyan, Minassian, and Okanovich took equipment from his Dental Office without his knowledge and authorization. (XC, ¶83(iii).)

Muse argues that conspiracy is not a cause of action. (Demurrer, pg.4.) Cross-Complainants argue in response that because of the alleged fraud and conspiracy to commit fraud, there is a cause of action. (Opposition, pg. 11.) Cross-Complainants claim that Muse was the alter ego of Israyelyan, Bagasian, and Sahakyan. (Opposition pg,10; XC, ¶20-22.) There was a unity of interest in ownership that the individuality of Muse and the Cross-Defendants, Israyelyan, Bagasian, and Sahakyan ceased. (XC, ¶22.) Cross-Complainants argues that Muse was used to engage in numerous fraudulent bank transactions, diverted funds from Bardakjian Dental Practices to Muse without Bardakjian’s authorization, and wrote numerous checks to Muse by forging Bardakjian’s signature. (Opposition, pg. 10; XC, ¶40-54.)

Cross-Complaint alleges that Individual Defendants entered into a conspiracy to defraud Bardakjian. (XC, ¶80.) Cross-Complainants provides that through misrepresentation and inducement, Israyelyan, through Muse, with the help of Bagasian, Sahakyan, Minasyan, Okanovich, Muse, and Laureate Aesthetics applied for millions of unauthorized loans and diverted hundreds of thousands of dollars from Cross-Complainants’ accounts to Israyelyan’s personal accounts and Muse accounts. (XC, ¶40.) While Cross-Complainants asserts that the loans were done through the Cross-Defendants whose alter ego is Muse, Cross-Complainants do not sufficiently show that the purchases of the medical spa equipment or the M8 Body Optimus Triton System medical spa through forged signature or the taking of equipment from Bardakjian’s dental Office were done by Muse. The Court construes that this action was committed by Israyelyan and another Co-Cross-Defendant, as Muse is not mentioned in these actions. Cross-Complainants has not sufficiently alleged facts to support a cause of action for conspiracy against Muse. Furthermore, Cross-Complainants do not assert how the actions by the Cross-Defendants impacted or damaged the other Cross-Complainants other than Bardakjian.

Based on the foregoing, Muse’s demurrer to the 2^nd cause of action is sustained with leave to amend.

Fraud and Intentional Misrepresentation (3^rd and 4^th CoA) – sustained with leave to amend

Cross-Complainant’s fraud and intentional misrepresentation causes of action are based on allegations that the Individual Cross-Defendants fraudulently induced Bardakjian to receive business loans on multiple occasions. (XC, ¶89.) The Individual Cross-Defendants threatened, intimidated, induced, and misrepresented facts to Bardakjian and arranged for the unlawful transfer of the subject funds from Bardakjian’s dental practice accounts to their personal and business accounts and took medical equipment by fraud and misrepresentation in July 2022. (XC, ¶¶90-94.)

Cross-Complainants allege that the Individual Cross-Defendants fraudulently took the title to Bardakjian’s properties, including, but not limited to 445 Cliff Drive and 485 Cliff Drive and Bardakjian did not and could not have reasonable discovered the fraud until February 2022. (XC, ¶¶95-96.) Cross-Complainants further allege that Individual Cross-Defendants made false misrepresentations to Bardakjian concerning the business and financial accounts of his companies, including Israyelyan misrepresenting to Bardakjian the amount of money transfers from loans to be transferred to his business, personal, and family accounts, Israyelyan misrepresenting the diversion of money from Bardakjian’s DDS bank account to pay for car payments , and Individual Cross-Defendants’ conduct in defrauding Cross-Complainants into signing agreements/waivers in which they used Bardakjian’s signature, driver’s license number, and social security number. (XC, ¶¶101-102, 104.)

Muse argues that Cross-Complainants do not allege facts sufficient to sustain a fraud claim, in that they fail to allege a misrepresentation of material fact, knowledge of falsity, intent to deceive and induce reliance, justifiable reliance on misrepresentation, and resulting damage. (Demurrer, pg. 3.) Further, Muse argues that the Cross-Complaint is devoid as to specificity regarding Muse’s actions. (Demurrer, pg. 4.) Cross-Complainants responds in stating that Muse as the Alter Ego of Cross Defendants Israyelyan, Bagasian, Sahakyan who used Muse to engage in the fraudulent bank transactions and divert funds to Muse without authorization and by forging Bardakjian’s signature. (XC, ¶¶20-22, 34,40-54.) Cross-Complainants provide in the XC that there was a unity of interest in ownership that the individuality of Muse and Israyelyan, Bagasian, and Sahakyan ceased. (XC, ¶22.)

On review of the Cross-Complaint, the Court finds that Cross-Complainants have not sufficiently alleged facts concerning the fraud regarding business loans, the unlawful transfer of funds from the Dental Practice to personal and business accounts, the taking of medical equipment, and the taking of titles to Bardakjian’s properties, including 445 Cliff Drive and 485 Cliff Drive properties with regard to Muse. While Cross-Complainants assert Muse’s involvement in the fraudulent actions of applying for millions of unauthorized loans and diverting hundreds of thousands of dollars from Cross-Complainants accounts to Israyelyan’s personal accounts as well as Muse’s accounts, Cross-Complainants only generally assert misrepresentation but does not provide further detail or information. (XC, ¶40.) While Cross-Complainants allege that Israyelyan also fraudulently induced Bardakjian into transferring money by intentionally misrepresenting material facts, the Court notes that this allegation addresses Israyelyan’s actions, not Muse’s actions. (XC, ¶41.)

The Court thus sustains Muse’s demurrer as to the third and fourth cause of action with leave to amend.

Forgery is not a civil cause of action. Cross-Complainants assert in its Opposition that they concede that the fifth cause of action is not a civil cause of action and subject to a demurrer. (Opposition, pg. 14.)

Given the concession, the Court thus sustains the demurrer as to the 5^th cause of action without leave to amend.

Theft- Embezzlement and Receipt of Stolen Property (Penal Code §§484, 496) (6^thand 7^th CoA) – sustained with leave to amend.

Cross Complainants’ statutory violation causes of action are based on allegations that Israyelyan, Bagasian, and Sahakyan transferred money from Bardakjian’s business accounts to Israyelyan’s business and personal accounts for personal use, that Israyelyan bought a Mercedes Benz with a down payment made from Bardakjian’s DDS corporate bank account, Israyelyan used money from Bardakjian’s DDS corporate bank account to pay for monthly payments for a car, and Israyelyan, Bagasian, and Sahakyan presented false and misleading financial information to Bardakjian and diverting funds from Bardakjian’s Dental Practice bank accounts without Bardakjian’s authorization and approval. (XC, ¶¶121-130.)

Penal Code §484(a) provides, as follows: Every person who shall steal, take, carry, lead, or drive away the personal property of another, or who shall fraudulently appropriate property which has been entrusted to him or her, or who shall knowingly and designedly, by any false or fraudulent representation or pretense, defraud any other person of money, labor or real or personal property, or who causes or procures others to report falsely of his or her wealth or mercantile character and by thus imposing upon any person, obtains credit and thereby fraudulently gets or obtains possession of money, or property or obtains the labor or service of another, is guilty of theft.

Penal Code § 496(a) provides that “[e]very person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170.” “[W]hen the Legislature enacted section 496(c), it presumably understood the phrase ‘a violation of subdivision (a)’ would include theft by false pretense.” (Bell v. Feibush (2013) 212 Cal.App.4th 1041, 1048.)

The wording of the receiving stollen property statute indicates that a person who steals the property and the person who receives the stolen property must be two separate people: “Every person who buys or receives any property that has been stolen …” (Penal Code §¿496(a) (emphasis added).) If the same party performs both actions, this represents a theft claim, rather than a violation of Penal Code §¿496.

Muse argues that the Cross-Complaint fail to allege fraud as to Muse and that the allegations do not contain the requisite specificity to support their claim for Theft and receipt of Stolen Property. (Demurrer, pg. 6.) As previously mentioned, Cross-Complainants have argued that Muse is the alter ego of Israyelyan, Bagasian, and Sahakyan. (XC, ¶¶20-22.) Cross-Complainants allege there was a unity of interest in ownership that the individuality of Muse and the Israyelyan, Bagasian, and Sahakyan, ceased. (XC, ¶22.)

On review of the Cross-Complaint, the Court finds that Cross-Complainants have not sufficiently alleged facts to constitute a cause of action for statutory violations. Cross-Complainants alleged facts showing Israyelyan, Bagasian, and Sahakyan through their alter ego, Muse, obtained property and money at issue. Cross-Complainants argue that different parties were at issue as Israyelyan not only embezzled and stole funds through numerous bank wire transfer and fraudulently signed checks payable to Muse, but also wrote numerous checks to Muse by forging Bardakjian’s signature which was shown on copies of checks and wire transfers. (Opposition, pg. 15.) Cross-Complainants have provided facts to allege that Israyelyan utilized Muse to divert funds from Cross-Complainants accounts to Israyelyan and Muse accounts. (XC, ¶¶ 34, 40.) Furthermore, Cross-Complainants provided facts to allege that Muse’s alter egos, Israyelyan, Bagasian, and Sahakyan, utilized fraudulent misrepresentation to transfer money from Bardakjian’s business accounts to Israyelyan’s business and personal accounts for personal benefit and use, converted Bardakjian’s money and property to their personal use including, but not limited to hundreds of thousands of dollars and medical spa equipment. (XC, ¶¶120-130.)

However, Cross-Complainants only allege that Israyelyan had diverted and stole money from Bardakjian’s DDS corporate bank account to pay for monthly car payments totaling $36,000, and repossessing the car to the lawful title owner, Bardakjian. (XC, ¶¶124, 134.) Because Cross-Complainants do not allege Muse’s involvement in the purchasing of the car and diversion of money for car payments, Cross-Complainants have not sufficiently alleged sufficient facts to constitute a cause of action.

The Court thus sustains Muse’s demurrer as to the 6^th and 7^th causes of action with leave to amend.

Cross-Complainants’ conversion cause of action is based on allegations that Israyelyan, Bagasian, and Sahakyan converted Bardakjian’s money under false pretenses and fraud. (XC, ¶133.)

“‘A cause of action for conversion requires allegations of plaintiff’s ownership or right to possession of property; defendant’s wrongful act toward or disposition of the property, interfering with plaintiff’s possession; and damage to plaintiff. [Citation.] Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.’ [Citations]” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395.)

Muse argues the absence of any allegation that Muse expressly converted any property, and the Cross-Complaint fails to allege wrongful acts by Muse or what money, property rights and damages were incurred from Muse’s conduct. (Demurrer, pg. 7.) Cross-Complainants argue in response that the Muse was the alter ego of Israyelyan, Bagasian, and Sahakyan and controlled the business affairs of Bardakjian and the Krikor Bardakjian DDS, Inc. Dental Practice, comingled the funds and assets between Muse, other Co-Defendants, and Krikor Bardakjian DDS, Inc. (Opposition, pg. 16; XC, ¶20-21.) Cross-Complainants allege there was a unity of interest in ownership that the individuality of Muse and Israyelyan, Bagasian, and Sahakyan ceased. (XC, ¶22.) While Muse argues that the Cross-Complaint is uncertain, Muse does not provide facts or argument as to the uncertainty.

In reviewing the cross-complaint, the Court notes that the pleading simply alleges conversion of funds, but fails to identify a special identifiable converted sum. (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, supra, 150 Cal.App.4th 384, 395.) Although the Cross-Complainants discuss the car purchase, conversion of car title, and the car monthly payments which total up to $36,000, the Court does not construe these actions conducted by Muse or Israyelyan, Bagasian, and Sahakyan collectively, but an action conducted only by Israyelyan. (XC, ¶134.)

The Court thus sustains Muse’s demurrer as to the 8^th cause of action, with leave to amend.

Cross-Complainants’ unjust enrichment cause of action is based on allegations that Israyelyan, Bagasian, and Sahakyan transferred money from Bardakjian’s Dental Practice account to accounts managed, controlled, and maintained by Israyelyan, Bagasian, and Sahakyan. (XC, ¶146.)

Cross-Complainants alleged sufficient facts to constitute a cause of action as the Cross-Complaint alleges not only is Israyelyan, Bagasian, and Sahakyan’s alter ego Muse, but that they had taken money from Bardakjian and Bardakjian’s Dental Practice and benefitted from it by putting it into their individual personal accounts. ((XC, ¶¶20-22, 146.)

“‘[T]o state a cause of action for intentional infliction of emotional distress a plaintiff must show: (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.’ [Citation] ‘Conduct, to be ‘outrageous’ must be so extreme as to exceed all bounds of that usually tolerated in a civilized society.’ [Citation]” (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1259.)

Cross-Complainants’ Opposition asserts they will accept the ruling of the Court sustaining the Demurrer with respect to Muse. (Opposition, pg. 17.)

Given the concession, the Court thus sustains Muse’s demurrer as to the 14th cause of action without leave to amend.

Negligent Infliction of Emotional Distress (15^th CoA) – sustained without leave to amend

Cross-Complainants’ NIED cause of action is based on allegations that Israyelyan, Bagasian, and Sahakyan owed Bardakjian various duties of care which were breached to by committing extreme acts and omissions with reckless disregard for the probability of causing emotional distress to Bardakjian. (XC, ¶¶186-191.)

“NIED is a tort in negligence, and the plaintiff must establish the elements of duty, breach of duty, causation, and damages.” (Moon v. Guardian Postacute Services, Inc. (2002) 95 Cal.App.4th 1005, 1009.) Negligent infliction of emotional distress “is in actuality not a tort separate and apart from the tort of negligence.” (Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 795, fn. 4.) To properly plead a claim for NIED, a plaintiff must show the existence of a duty imposed by law, assumed by the defendant, or existing through a special relationship between plaintiff and defendant. (Potter v. Firestone Tire & Rubber Co. (1993) 6 Cal.4th 965, 985-86.)

Muse argues that Cross-Complainants do not, and cannot, plead that Muse owed Cross-Complainants a legal duty. (Opposition, pg., 9.) Muse also argues that Cross-Complainants do not plead any fiduciary relationship with Muse or that Israyelyan committed acts in an agency relationship with Muse. (Id.)

Cross-Complainants assert in their Opposition that they will accept the ruling of the Court sustaining the Demurrer with respect to Muse. (Opposition, pg. 17.)

Given the concession, the Court thus sustains Muse’s demurrer as to the fifteenth cause of action without leave to amend.

Based on the foregoing, Muse’s demurrer is sustained with 20 days’ leave to amend as to the 2^nd, 3^rd, 4^th, 6^th, 7^th, and 8^th causes of action and sustained without leave to amend as to the 5^th, 14^th, and 15^th cause of action. Muse’s demurrer is overruled as to the 10^th cause of action.

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.

Cross-Defendant Mikayel Israyelyan’s Demurrer and Cross-Defendant Muse Lifestyle Group’s Demurrer came on regularly for hearing on December 9, 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:

MIKAYEL ISRAYELYAN’S DEMURRER IS OVERRULED AS TO THE 3^rd, 4^th, AND 10^TH CAUSES OF ACTION.

SUSTAINED WITH LEAVE TO AMEND AS TO THE 2^nd CAUSE OF ACTION, AND SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE 5^th CAUSE OF ACTION.

MUSE LIFESTYLE GROUP’S DEMURRER IS SUSTAINED WITH LEAVE TO AMEND AS TO THE 2^ND, 3^RD, 4^TH, 6^TH, 7^TH, AND 8^TH CAUSES OF ACTION AND SUSTAINED WITHOUT LEAVE TO AMEND AS TO THE 5^th, 14^TH, AND 15^TH CAUSES OF ACTION.

PLAINTIFF WILL HAVE 20 DAYS’ TO AMEND THOSE CAUSES OF ACTIONS SUSTAINED WITH LEAVE TO AMEND.