Judge: Gail Killefer, Case: 20STCV40408, Date: 2022-09-28 Tentative Ruling
Case Number: 20STCV40408 Hearing Date: September 28, 2022 Dept: 37
HEARING DATE: September 28, 2022
CASE NUMBER: 20STCV40408
CASE NAME: Vadim Levotman v. Alexander Tishelman
MOVING PARTY: Cross-Defendant, Vadim Levotman
OPPOSING
PARTY: Defendant,
Alexander Tishelman
TRIAL DATE: November 9, 2022
PROOF
OF SERVICE: OK
PROCEEDING: Cross-Defendant’s Demurrer
to Cross-Complaint
OPPOSITION: August 24, 2022
REPLY: September 21,
2022
Tentative: Levotman’s demurrer is sustained without leave to amend.
Levotman is to give notice.
MOTION: Plaintiff’s Motion for Leave to File
First Amended Complaint
OPPOSITION: August 24, 2022
REPLY: September 19,
2022
Tentative: Plaintiff’s motion is granted. Plaintiff is to file the proposed
FAC within 10 days. Plaintiff is to give notice.
Background
This action arises in connection with the sale of real
property located at 3943 Fredonia Drive, Los Angeles, California (the
“Property”). Plaintiff Vadim Levotman
(“Levotman”) alleges that Defendant Alexander Tishelman (“Tishelman”) failed to
perform on an Option Agreement dated August 16, 2019 (the “Agreement”) by failing
to put the Property on the market and disbursing 50 percent (50%) of the
profits to Plaintiff as agreed. The Complaint seeks a judgment granting sale of
the Property.
Plaintiff’s Complaint, filed October 21, 2020, alleges the
following causes of action: (1) breach of written contract; (2) specific
performance; and (3) declaratory relief with request for temporary, preliminary,
and permanent injunctive relief.
On November 17, 2021, Tishelman filed the First Amended
Cross-Complaint (“FACC”). Tishelman’s FACC alleges that Levotman breached his
fiduciary duties to Tishelman as his personal Certified Public Accountant
(“CPA”). The FACC alleges the following causes of action: (1) breach of
fiduciary duty; (2) constructive fraud; (3) unfair business practices in
violation of Business and Professions Code § 17200; and (4) declaratory relief.
On February 22, 2022, the court sustained Levotman’s demurrer to every cause of
action of the FACC.
On March 24, 2022, Tishelman filed the Second Amended
Cross-Complaint (“SACC”) alleging the same causes of action. On May 18, 2022,
the court sustained Levotman’s demurrer to every cause of action of the SACC.
On June 20, 2022, Tishelman filed the operative Third
Amended Cross-Complaint (“TACC”) alleging identical causes of action, except
the previous cause of action for unfair business practices.
Levotman now demurs to all causes of action of the TACC.
Tishelman opposes the demurrer.
Discussion
Request
for Judicial Notice
Levotman
requests judicial notice of the following in support of its demurrer:
Levotman
also requests judicial notice of the following in support of the reply:
Levotman’s
request is granted as to the first two requests, which Levotman has failed to
attach to his request but references this judicial record. The existence and
legal significance of these documents are proper matters for judicial notice.
(Evidence Code § 452(d), (h).) Levotman’s third request in support
of his reply is denied as Levotman seeks to introduce new evidence with his
reply brief and fails to correctly authenticate the document.
I.
Meet
and Confer Efforts
Levotman submits the declaration of his counsel, Blake J.
Lindemann (“Lindemann”) to demonstrate compliance with statutory meet and
confer requirements. Lindemann attests that on June 20, 2022, he sent a meet
and confer letter to Tishelman’s counsel addressing the issues raised in the
instant motion. (Lindemann Decl. ¶ 2.) Additionally, the parties met and
conferred telephonically on July 1, 2022 but did not reach an agreement.
(Lindemann Decl. ¶¶ 2-3.) The Lindemann Declaration is sufficient for purposes
of CCP § 430.41. The court
finds that the meet and confer efforts of both Defendants are sufficient prior
to filing the instant demurrers and motions to strike. (CCP § 430.41.)
II.
Legal
Standard
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. (CCP § 430.30(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.)
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.) “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.” (CCP § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the
plaintiff is entitled to reasonable inferences from the facts pled.” (Duval
v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)
The
general rule is that the plaintiff need only allege ultimate facts, not
evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a
matter of pleading, even as against a special demurrer, is that his complaint
set forth the essential facts of the case with reasonable precision and with
sufficient particularity to acquaint the defendant with the nature, source and
extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp.
(1945) 26 Cal.2d 149, 156-157.)
“[D]emurrers for uncertainty are disfavored and are granted only if the
pleading is so incomprehensible that a defendant cannot reasonably
respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th
841, 848, fn. 3, citing Lickiss v. Fin.
Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in
some respects uncertain, courts strictly construe a demurrer for uncertainty
“because ambiguities can be clarified under modern discovery procedures.” (Khoury
v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)
Demurrers do not lie as to only parts
of causes of action where some valid claim is alleged but “must dispose of an
entire cause of action to be sustained.”
(Poizner v. Fremont General Corp. (2007)
148 Cal.App.4th 97, 119.) “Generally it is an abuse of
discretion to sustain a demurrer without leave to amend if there is any
reasonable possibility that the defect can be cured by amendment.” (Goodman
v. Kennedy (1976) 18 Cal.3d 335, 349.)
III.
Analysis
A.
First Cause of Action: Breach of Fiduciary Duty
“The
elements of a cause of action for breach of fiduciary duty are: (1) the
existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage
proximately caused by the breach.” (Stanley v. Richmond (1995) 35
Cal.App.4th 1070, 1086.) (“[B]ecause
every contract to some extent requires each party to repose trust and
confidence in the other, one party’s right to contingent compensation, standing
alone, does not give rise to a fiduciary duty.” ( City of Hope Nat'l Med.
Ctr. v. Genentech, Inc. (2008), 43 Cal. 4th 375, 391(City of Hope).)
Levotman again contends that the
first cause of action is insufficiently pled because the TACC does not allege
that Levotman had a fiduciary duty to Tishelman. (Demurrer, 4-7.) According to Levotman,
an accountant-client relationship is again insufficient to establish a
fiduciary duty as allegations that Defendant acted within a confidential
relationship with “trust and confidence” or with “special knowledge and
professional skill” are insufficient to establish a fiduciary duty. (Id.)
Levotman again cites to Zumbrum v. University of Southern California
(1972) 25 Cal.App. 3d 1, 13 (Zumbrum) for this argument. Levotman again further
contends that Tishelman has not pled sufficient facts to show how Tishelman
acted as a fiduciary in controlling Levotman’s affairs. (Id.) Levotman
also contends that Tishelman’s SACC has amended allegations which contradict
this court’s ruling in the May 18, 2022 Minute Order. (Demurrer, 6-7.)
Levotman specifically contends
that despite the court ruling the SACC did not allege joint ownership until
after the Agreement was entered into, that Tishelman’s TACC now again alleges
an oral joint partnership to enter into a joint venture, “Starbridge,” was
created in January 2019. (Demurrer, 5-6; TACC ¶¶18, 65.) As such, Levotman
asserts the court should not consider this new allegation since it is
contradictory and a result of “unwarranted delay.” (Demurrer, 6-7.)
In opposition, Tishelman again contends
that the first cause of action is sufficiently pled because the parties’ joint
venture, and alternatively, their “confidential relationship,” gave rise to a
legally recognized fiduciary relationship. (Opposition, 10-14.) Tishelman again
cites to several cases, including Hasso v. Hapke
(2014) 227 Cal.App.4th 107, 140 (Hasso) for this argument. However,
Tishelman again fails to show how any of the cited authority provides support
for his claims. Namely, as this court has noted previously, Hasso
involves trust beneficiaries and the implication of the investment
adviser-client relationship. Therefore, the court does not recognize how that
case, or others cited, allow for this specific joint venture to impose
fiduciary duties onto Levotman.
Tishelman
further contends that the existence of a “confidential relationship” between Tishelman
and Levotman imposes a fiduciary duty. (Opposition, 13.) Tishelman contends “Paragraphs
13-15 of the TACC allege that a confidential relationship between Tishelman and
Cross-Defendant arose out of their CPA/client, business advisor/client, and
financial advisor/client relationships.” (Id.) As such, Tishelman
attempts to create a fiduciary duty from the accountant-client relationship by
first imposing a “confidential relationship” onto the parties, and then cites
to supporting authority for the imposition of fiduciary duties in confidential
relationships that are inapposite to the present case. (Opposition, 12-14.)
As Levotman correctly
asserts in his Reply, the TACC makes conclusory allegations regarding the
imposition of a fiduciary duty from either a joint venture, or a confidential
relationship, without alleging sufficient facts to show operations of control
or that this present cross-complaint regarding the joint venture operates as a
derivative claim on the venture’s behalf. (Reply, 2-3; citing Sutter v.
General Petroleum Corp. (1946) 28 Cal.2d 525, 529-30.) Tishelman has
further not alleged that Levotman controlled the joint venture, such that a
fiduciary duty could be imposed. (Id.) “Tishelman has not pled
sufficiently how there was any partnership with particulars including the who
what, where, when, why, and how.... Tishelman has not plausibly pled how there
is a joint venture when the parties each owned stock of a separate company that
is not a party to this suit.” (Id.)
The
court again finds that the first cause of action is again insufficiently pled.
The court agrees with Levotman that accountants do not owe duties to their
clients by virtue of simply being their accountants, and Tishelman has failed
to allege sufficient facts to impose such liability for an accountant’s
confidential relationship. The court further agrees that Tishelman has failed
to allege sufficient facts to impose fiduciary duties onto Levotman on the
basis of there being a joint venture. Thus, the TACC’s allegations about
Levotman’s actions regarding the Agreement fail to plead a claim for breach of
fiduciary duty because the TACC fails to plead that Levotman had any fiduciary
duties by virtue of being Tishelman’s CPA, or through their alleged joint
venture.
For
these reasons, Levotman’s demurrer to the first cause of action is sustained.
B.
Second Cause of Action: Constructive Fraud
Civil Code § 1573 provides that constructive
fraud is any breach of duty where a defendant, “without an actually fraudulent
intent, gains an advantage to the person in fault, or any one claiming under
him, by misleading another to his prejudice, or to the prejudice of any one
claiming under him.” Constructive fraud is also any “act or omission as
the law specially declares to be fraudulent.” (Cal. Civ. Code § 1573.)
“Constructive fraud is a unique species of fraud
applicable only to a fiduciary or confidential relationship.” (Assilzadeh v.
California Federal Bank (2000) 82 Cal.App.4th 399, 415.) “Most
acts by an agent in breach of his fiduciary duties constitute constructive
fraud.” (Id.) “Elements of [a] constructive fraud cause of
action are: (1) a fiduciary or confidential relationship; (2)
nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4) reliance
and resulting injury.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014)
223 Cal.App.4th 1105, 1131.) Constructive fraud allows
conduct that falls short of actual fraud to be treated as such when the parties
are in a fiduciary relationship. (Estate of Gump (1991) 1
Cal.App.4th 582, 601.)
Levotman again contends that the second cause of
action is insufficiently pled because the TACC does not plead fraud with the
required specificity. (Demurrer, 8-9.) Levotman also contends that this cause
of action is insufficiently pled because the TACC does not allege causation and
justifiable reliance. (Demurrer, 9-10.)
In opposition, Tishelman again contends that the
second cause of action is pled with sufficiently particularity because “[m]ost
acts by an agent in breach of his fiduciary duties constitute constructive
fraud.” (Opposition, 17-19.) According to Tishelman, the second cause of action
is sufficiently pled because the TACC alleges that Levotman breached his
fiduciary duties to Tishelman, that Tishelman relied on Levotman’s
misrepresentations, and that Tishelman suffered harm as a result. (Id.)
As discussed above, the court again finds that the
first cause of action for breach of fiduciary duty is insufficiently pled.
Because constructive fraud requires the existence of a fiduciary relationship,
the court again finds that the second cause of action is insufficiently pled.
C.
Fourth Cause of Action: Declaratory Relief
California courts have recognized
that “[t]he existence of an ‘actual controversy relating to the legal rights
and duties of the respective parties,’ suffices to maintain an action for
declaratory relief.”¿ (Ludgate Ins. Co. v. Lockheed Martin Corp.¿(2000)
82 Cal.App.4th 592, 605 (Ludgate).)¿ “Any person interested under a
written instrument, ... or under a contract, or who desires a declaration of
his or her rights or duties with respect to another, or in respect to, in, over
or upon property,¿ ... may, in cases of actual controversy relating to the
legal rights and duties of the respective parties, bring an original action or
cross-complaint in the superior court ... for a declaration of his or her
rights and duties in the premises, including a determination of any question of
construction or validity arising under the instrument or contract."¿ (Ibid.,
quoting CCP § 1060.)¿¿¿
Levotman again contends that the third cause of action,
incorrectly referenced as the fourth cause of action, is insufficiently pled
because the first two causes of action are insufficiently pled. (Demurrer, 12.)
The court agrees.
Having found that the TACC’s first and second causes of
action are insufficiently pled, the court now finds that the TACC’s third cause
of action is insufficiently pled.
Conclusion
Levotman’s demurrer is sustained without leave to amend.
Levotman is to give notice.
LEVOTMAN’S MOTION FOR
LEAVE TO FILE FIRST AMENDED COMPLAINT
Discussion
I.
Legal Standard
California
law holds that leave to amend is to be granted liberally, to accomplish substantial
justice for both parties. (CCP § 473(a); Hirsa v. Superior Court (1981)
118 Cal.App.3d 486, 488-489 (Hirsa)) “Assuming proper notice, the trial
court has wide discretion in determining whether to allow the amendment, but the
appropriate exercise of that discretion requires the trial court to consider a
number of factors: ‘including the conduct of the moving party and the belated
presentation of the amendment.
The law
is well settled that a long-deferred presentation of the proposed amendment
without a showing of excuse for the delay is itself a significant factor to
uphold the trial court's denial of the amendment.” (Leader v. Health
Ind. of America, Inc. (2001) 89 Cal.App.4th 603, 613.) “If the
motion to amend is timely made and the granting of the motion will not
prejudice the opposing party, it is error to refuse permission to
amend….” (Morgan v. Sup. Ct. (1959) 172 Cal.App.2d 527,
530.) Prejudice includes “delay in trial, loss of critical evidence, or
added costs of preparation.” (Solit v. Tokai Bank, Ltd. New York
Branch (1999) 68 Cal.App.4th 1435, 1448.) “The power to permit
amendments is interpreted very liberally as long as the plaintiff does not
attempt to state facts which give rise to a wholly distinct and different legal
obligation against the defendant.” (Herrera v. Superior Court (1984)
158 Cal.App.3d 255, 259.) The court, however, has the discretion to
deny an amendment that fails to state a cause of action or defense. (Foxborough
v. Van Atta (1994) 26 Cal.App.4th 217, 230.)
II.
Analysis
A. Procedural Considerations
A party requesting leave to amend must comply with California
Rules of Court, rule 3.1324. A motion to amend a pleading
before trial must state which allegations were deleted from and which
allegations were added to the previous pleading and identify the changes “by
page, paragraph, and line number.” (Cal. Rules of Court, rule
3.1324(a).)
Plaintiff’s
proposed FAC seeks to add a cause of action for violation of Penal Code § 496(c) and
a new party, “TF Trust,” as well as attorney fees for the suit and treble
damages for the business tort dispute. (Motion, 4-5; Lindemann Decl. ¶2, Exh.
1-2.) Plaintiff also attached a redlined copy of the proposed amendments to the
Declaration of Blake J. Lindemann as Exhibit 2.
Thus,
Plaintiff has demonstrated compliance with the requirements of California Rules
of Court, rule 3.1324(a).
Additionally, “[a] separate declaration must accompany the
motion and must specify: (1) The effect of the amendment; (2) Why the amendment
is necessary and proper; (3) When the facts giving rise to the
amended allegations were discovered; and (4) The reasons why the request
for amendment was not made earlier.” (Cal. Rules of Court, rule
3.1324(b).)
Plaintiff
submits a declaration from his counsel, Blake J. Lindemann in support of this
motion. Lindemann attests that the facts and circumstances supporting the FAC
were “discovered the night before the deposition of Tishelman,” and as a result
of new supporting authority. (Lindemann Decl. ¶ 2.) Specifically, Lindemann
declares it was discovered that Tishelman had transferred the Subject Property
to the new entity, and new authority, Siry Investment, L.P. v.
Farkhondehpour, (July 21, 2022) (2022 WL 2840312), supported the imposition
for claims under Penal Code § 496
for moneys taken during a business dispute. (Id.)
The
Lindemann Declaration meets the requirements of California Rules of Court rule
3.1324(b). The declaration states the effects of the proposed amendments and why
they are necessary and proper.
B. Substantive Considerations¿
Generally, motions for leave to amend will be granted unless the
party seeking to amend has been dilatory in bringing the proposed amendment
before the court and the delay in seeking leave to amend will cause prejudice
to the opposing party.¿ (See¿Atkinson v. Elk Corp.¿(2003)¿109 Cal.App.4th
739, 761 [“ ‘[I]t is an abuse of discretion to deny leave to amend where the
opposing party was not misled or prejudiced by the amendment.’ [Citations.]¿
Furthermore, ‘it is irrelevant that new legal theories are introduced as long
as the proposed amendments “relate to the same general set of facts.”
[Citation.]’ ”];¿Hirsa,¿supra,¿118 Cal.App.3d at p. 490.)¿
Indeed, “courts are much more critical of proposed amendments ... when offered
after long unexplained delay or on the eve of trial [citations], or where there
is a lack of diligence, or there is prejudice to the other party [citations].”¿
(Permalab-Metalab¿Equipment Corp. v. Maryland¿Cas. Co.¿(1972) 25
Cal.App.3d 465, 472.)¿¿¿
Plaintiff contends that leave to amend should be granted because Levotman
now seeks to amend the Complaint following efforts for early resolution of this
matter and the new discovery of information and supporting authorities. (Id.;Motion,
4-5.) According, Plaintiff contends that filing of the FAC is necessary (Id.)
Additionally, Plaintiff contends that the motion should be granted because the
FAC only seeks to add a new cause of action “relates back” to the facts pled in
the Complaint, none of which are untimely. (Motion, 2-5.)
In opposition, Tishelman contends that leave to amend should be
denied because there has been a significant delay in seeking to amend the
Complaint, which “prejudices Defendant.” (Opposition, 2-3.) In addition,
Defendants contend that Plaintiff’s proposed FAC causes prejudice as it comes
nearly four months after the deposition of Tishelman, and on the eve of the
original trial date. (Opposition, 3-4.) Tishelman contends he “undeniably” has
a right to bring an attack on the claim by a demurrer or summary adjudication
motion, which Levotman can now avoid by seeking to file the FAC so close to the
original trial date. (Id.) Tishelman also contends that the increase of
costs will prejudice Defendant here as well. (Opp., 4-5.) Lastly, Tishelman
contends the new cause of action seeks “to transform every contract dispute in
which it is alleged that there was no intent to perform, into a Penal Code
violation carrying an award of attorneys’ fees and treble damages.” (Opp., 5.)
In reply, Levotman correctly explains that the “validity” of
proposed claims are not considered when deciding whether to grant leave to
amend. (Reply, 2.) Levotman further contends there can be no prejudice to
Defendant here since the Subject Property was transferred after this action was
filed, and this transfer was not discovered until May 12, 2022. (Reply, 3.)
Also, Levotman contends that the California Supreme Court’s ruling in Siry
Investment, L.P. v. Farkhondehpour, (2022) 13 Cal.5th 333 gave further clarification
to Plaintiff regarding the use of Section 496 in a civil suit before seeking
leave to amend. (Id.) Lastly, Levotman affirms that the amended pleading
here relates to the same set of general facts, and “Tishelman cannot assert
equitable grounds such as prejudice when he has unclean hands for requiring the
amendment.” (Reply, 4-5.) The court agrees.
The court has reviewed Plaintiff’s proposed FAC and finds that the
FAC relates to the same general set of facts alleged in the original Complaint.
The transfer of the Subject Property, and the disbursement of rents and monies
relating to the Subject Property, remain the foundation for claims brought in
this action. Additionally, Tishelman has also failed to articulate how they
will be prejudiced by Plaintiff’s proposed FAC.
For these reasons, Plaintiff’s motion is granted.
Conclusion
Plaintiff’s motion is granted. Plaintiff is to file the proposed
FAC within 10 days. Levotman is to give notice.