Judge: Frank M. Tavelman, Case: 23BBCV01483, Date: 2024-02-16 Tentative Ruling

Case Number: 23BBCV01483    Hearing Date: February 16, 2024    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

DEMURRER, MOTION TO STRIKE, & MOTION TO QUASH SERVICE

NOTICE:

The Court is not requesting oral argument on this matter.  Pursuant to California Rules of Court, Rule 3.1308(a)(1) notice of intent to appear is required.  Unless the Court directs argument in the Tentative Ruling, no argument will be permitted unless a “party notifies all other parties and the court by 4:00 p.m. on the court day before the hearing of the party’s intention to appear and argue.  The tentative ruling will become the ruling of the court if no notice of intent to appear is received.”  

Notice may be given either by email at BurDeptA@LACourt.org or by telephone at (818) 260-8412.

ALLEGATIONS:

Arman Yurman (Plaintiff) brings this action against Alek Orujyan (Orujyan) and Limitless Trade Academy, Inc. (Limitless)(collectively Defendants). Plaintiff alleges that he worked with Orujyan and Limitless to create an online educational company, of which both Plaintiff and Orujyan would be co-owners. Plaintiff alleges that Orujyan improperly removed Plaintiff from the Limitless filing with the California Secretary of State and barred Plaintiff’s access to the Limitless joint bank account. Plaintiff’s Complaint contains causes of action for (1) Breach of Fiduciary Duty, (2) Unfair Business Practice, (3) Constructive Fraud, (4) Fraud, (5) Unjust Enrichment, and (6) Declaratory Relief.

Before the Court is a demurrer and motion to strike brought by Limitless. Limitless demurs to the entire Complaint generally and to the third, fourth, and fifth causes of action specifically. Limitless also moves to strike Plaintiff’s requests for punitive damages. Plaintiff filed an opposition on February 13, 2024 which will be considered.

At the same time, the Court considers a motion to quash service of process brought by Orujyan. This motion is also unopposed.

ANALYSIS:

I.            LEGAL STANDARD

Demurrer

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (C.C.P. § 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. (Id.)

A demurrer assumes the truth of all factual, material allegations properly pled in the challenged pleading. (Blank v. Kirwan, supra, 39 Cal. 3d at 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 318.)

Pursuant to Code of Civil Procedure (“C.C.P.”) §§ 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 without leave to amend 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.)

Motion to Strike

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 C.C.P. §§ 435, 436, and 437.) The proper procedure to attack false allegations in a pleading is a motion to strike. (C.C.P. § 436(a).) In granting a motion to strike made under C.C.P. § 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.” (C.C.P. § 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. (C.C.P. § 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.” (C.C.P. § 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.)

Motion to Quash

“Service of process, under longstanding tradition in our system of justice, is fundamental to any procedural imposition on a named defendant.”  (AO Alfa-Bank v. Yakovlev (2018) 21¿Cal.App.5th 189, 202 [internal quotations marks and citation omitted].)  “To establish personal jurisdiction, compliance with statutory procedures for service of process is essential.”  (Kremerman v. White (2021) 71 Cal.App.5th 358, 371.)  Defendant’s knowledge of the action does not dispense with statutory requirements for service of summons.  (Kappel v. Bartlett (1988) 200 Cal.App.3d 1457, 1466.) 

“A defendant, on or before the last day of his or her time to plead or within any further time that the court may for good cause allow” may move “to quash service of summons on the ground of lack of jurisdiction of the court over him or her” that results from lack of proper service.  (C.C.P. § 418.10(a)(1).  A defendant has 30 days after the service of the summons to file a responsive pleading.  (C.C.P. § 412.20(a)(3).)  

“When a defendant challenges the court’s personal jurisdiction on the ground of improper service of process ‘the burden is on the plaintiff to prove the existence of jurisdiction by proving, inter alia, the facts requisite to an effective service.’” (Summers v. McClanahan¿(2006) 140 Cal.App.4th 403, 413.)

II.            MEET AND CONFER

C.C.P. §§ 430.41(a) and 435.5(a) requires that the moving party meet and confer with the party who filed the pleading that is subject to the demurrer and/or motion to strike. Upon review the Court finds the meet and confer requirements were met. (Kade Decl. ¶ 4.)

III.            MERITS

Demurrer

The Complaint in this matter was filed on August 30, 2023. Limitless generally demurs to the entire Complaint, arguing that each action is barred by the two-year statute of limitations which applies to an action for breach of oral contract. (See C.C.P. § 339(1).) Limitless argues that all six of Plaintiff’ causes of action are derived from an oral contract the parties supposedly entered into on December 15, 2019. (See Compl ¶ 9.) Limitless proceeds to argue that because this contract serves as the nexus for business interaction between Plaintiff, Limitless, and Orujyan, they should all be bound by the two-year statute of limitations. Limitless cites to no authority for this argument, instead relying on the statutory language that explicitly applies to a cause of action for breach of oral contract.

None of Plaintiff’s six causes of action are for breach of oral contract. While the contract is incorporated by reference into many of the causes of action, each cause of action states a theory of recovery and facts which are distinct from a breach of contract action. The Court notes the relevant statute of limitations for each cause of action below. The Court will also discuss Limitless’ additional arguments with respect to the specific demurrer to the third, fourth, and fifth causes of action.

First Cause of Action – Breach of Fiduciary Duty – Overruled

Plaintiff alleges that Defendants breached their fiduciary duty to him on June 26, 2020, when they filed a statement with the California Secretary of State wrongfully removing him from his role in Limitless. (Compl. ¶ 11.)

“The statute of limitations for breach of fiduciary duty is four years. (§ 343.)” (Stalberg v. Western Title Ins. Co. (1991) 230 Cal.App.3d 1223, 1230 [internal citation omitted].) As such, this cause of action is not barred by the two-year statute of limitations.

Second Cause of Action – Unfair Competition – Overruled

Plaintiff alleges that Defendant’s removing him from the joint bank account they shared on July 3, 2020 was unfair competition within the meaning of the UCL. (Compl. ¶ 18.)

A cause of action for unfair competition under California’s Unfair Competition Law is four years (Cal. Bus. & Prof. Code § 17208.) As such, this cause of action is not barred by the two-year statute of limitations.

Third & Fourth Causes of Action – Fraud & Constructive Fraud– Overruled

Pursuant to Code of Civil Procedure § 338(d), there is a three-year statute of limitations for actions “for relief on the ground of fraud or mistake.” As such, these causes of action are not barred by the two-year statute of limitations.

Further, the Court finds the allegations in the Complaint are sufficient to sustain his cause of action for fraud.

The facts constituting an alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of “liberal construction” of the pleadings will not ordinarily be invoked. (Lazar v. Super. Ct. (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157

Plaintiff alleges that the representation to him by Defendants of equal co-ownership constituted ordinary fraud. (Compl. ¶ 29.) Plaintiff alleges the misrepresentations were made to him on March 20, 2022 by an agent of Limitless, Alek Orujyan. (Compl. ¶ 3, 29.) The Court finds this adequately alleges the who, what, when, where, and why of the alleged fraud such that Limitless is on notice of Plaintiff’s claim.

Fifth Cause of Action – Unjust Enrichment– Overruled

Plaintiff alleges that as a result of the previous breaches, Defendants have deprived him of benefit to which he would otherwise be entitled. (Compl. ¶ 35.)

“An unjust enrichment or quasi-contract action in the form of a common count to recover money or other benefit obtained by mistake is governed by the three-year statute of limitations for actions based on fraud or mistake.” (Federal Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 348.) As such, this cause of action is not barred by the two-year statute of limitations.

The Court notes there is a split of authority on whether unjust enrichment is a cause of action. “The phrase ‘Unjust Enrichment’ does not describe a theory of recovery, but an effect: the result of a failure to make restitution under circumstances where it is equitable to do so.” (Lauriedale Associates, Ltd. v. Wilson (1992) 7 Cal. App. 4th 1439, 1448.) “Unjust enrichment is ‘a general principle, underlying various legal doctrines and remedies,’ rather than a remedy itself.” (Melchior v. New Line Cinema (2003) 106 Cal. App. 4th 779, 793.)

“[A]s a matter of law, a quasi-contract action for unjust enrichment does not lie where, as here, express binding agreements exist and define the parties’ rights.” (California Medical Ass’n, Inc. v. Aetna U.S. Healthcare of California, Inc. (2001) 94 Cal.App.4th 151, 172; see also Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 650) Here, Plaintiff has alleged rights and obligations extending beyond the contract between the parties. While Plaintiff’s other causes of action may concern the contract between the parties, they implicate rights which flow from sources other than the contract.

Conclusion

The general demurrer to the entire Complaint is OVERRULED.

The specific demurrer to the third, fourth, and fifth causes of action is OVERRULED.

Motion to Strike

Limitless additionally moves to strike Plaintiff’s requests for punitive damages.

A claim for punitive damages must also be pled with specificity; conclusory allegations unsupported by facts showing malicious, fraudulent, or oppressive intentions will not suffice. (G.D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 32-33; Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1041-42.) An improper claim for punitive damages can be stricken. (Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 163-64.)

Punitive damages are available only in non-contract actions “where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” (C.C.P. § 3294(a).) Facts that, if true, would demonstrate mere negligence or only recklessness do not warrant an award of punitive damages. (Johns-Mansville Sales Corporate Private Carriage v. Workers Comp. Appeals Bd. (1979) 96 Cal.App.3d 923, 931.) Even gross negligence is not sufficient. (Lackner v. North (2006) 135 Cal.App.4th 1188, 1210-11.)

Here, Plaintiff’s Complaint contains the requisite specific, non-conclusory factual allegations of reprehensible conduct that might support a claim for punitive damages. Limitless argues that the Complaint’s reference to the alleged acts of Limitless are conclusory in that they simply allege the acts of Limitless to be “intentional, malicious, fraudulent and oppressive”. The Court finds that the allegations of fraudulent misrepresentation specifically qualify as the type of allegations which qualify for punitive damages. Whether Plaintiff can evidence these damages remains to be seen, but it is improper to strike them from the Complaint.

Accordingly, the motion to strike punitive damages is DENIED.

Motion to Quash

Orujyan moves to quash service of the summons, arguing service was invalid. Plaintiff did not timely file an opposition but has requested a continuance due to a calendaring error.  The continuance was requested as to the motion to quash only, and not any other motions.   The request for a continuance is denied.

“Evidence Code section 647 provides that a registered process server’s declaration of service establishes a presumption affecting the burden of producing evidence of the facts stated in the declaration.” (American Express Centurion Bank v. Zara (2011) 199¿Cal.App.4th 383, 390 [internal citation omitted]; Evid. Code § 647.) 

Here, Plaintiff has provided the sworn affidavit of a process server which shows the summons was effectuated on July 18, 2023. The proof of service reflects substituted service on a Manvel Chuckmanyan at 328 Griswold St Apt 102 Glendale, CA 91205-1966. The proof of service also reflects that a copy of the summons and complaint were mailed to this same address thereafter. This sworn affidavit creates a presumption of valid service, which Orujyan must rebut with evidence that the service was invalid. 

In opposition, Orujyan submits a declaration that he did not live at the Griswold St. address at the time of service. (Orujyan Decl. ¶ 3.) Orujyan states that he is unable to provide his current address because Plaintiff has previously assaulted him and Orujyan fears for his safety. (Orujyan Decl. ¶ 4.)

While the Court understands Orujyan’s concerns for his safety, the fact remains that his declaration is not accompanied by any evidentiary showing which may rebut the process server’s affidavit. Orujyan attaches no proof of address at the time of service or any other documents upon which he may base his declaration. To the extent that Orujyan has omitted these documents for fear of revealing his location, Orujyan was within his rights to seek a protective order from this Court and has not done so. The declaration of Gevork Chakmanian also lacks foundation. This declaration does not endeavor to explain who the declarant is or why he is qualified to make this declaration.

Further, even if Orujyan has provided such evidence, it is clear that Plaintiff substantially complied with the code. It is axiomatic that strict compliance with the code's provisions for service of process is not required. (Ramos v. Homeward Residential, Inc., 223 Cal. App. 4th 1434, 1443.) “[I]n deciding whether service was valid, the statutory provisions regarding service of process should be liberally construed to effectuate service and uphold the jurisdiction of the court if actual notice has been received by the defendant.” (Gibble v. Car-Lene Research, Inc. (1998) 67 Cal.App.4th 295, 313.) In essence, substantial compliance with the code’s requirements for service of process is sufficient. (Id.) 

Here, despite the representations of Orujyan of never having received service, it is clear that he received actual notice of the suit such that a timely motion to quash service could be filed. In accordance with the liberal construction rule, the Court finds Plaintiff substantially complied with the service requirements such as to give Orujyan actual notice of this action.

Accordingly, the motion to quash is DENIED.  Orujyan has 30 calendar days to file a responsive pleading.

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RULING:

In the event the parties request 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

Limitless Trade Academy, Inc.’s Demurrer and Motion to Strike and Alek Orujyan’s Motion to Quash came on regularly for hearing on February 16, 2024 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 GENERAL DEMURRER TO THE ENTIRE COMPLAINT IS OVERRULED.

THE SPECIFIC DEMURRER TO THE THIRD, FOURTH, AND FIFTH CAUSES OF ACTION IS OVERRULED.

THE MOTION TO STRIKE PUNITIVE DAMAGES IS DENIED.

THE MOTION TO QUASH SERVICE OF PROCESS IS DENIED.

DEFENDANT HAS 30 DAYS TO FILE A RESPONSIVE PLEADING.

CASE MANAGEMENT CONFERENCE IS SET FOR MAY 23, 2024 AT 9:00 A.M.

UNLESS ALL PARTIES WAIVE NOTICE, PLAINTIFF TO GIVE NOTICE.

IT IS SO ORDERED.

DATE:  February 16, 2024                                

_______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles