Judge: Gail Killefer, Case: 23STCV15435, Date: 2023-12-15 Tentative Ruling

Case Number: 23STCV15435    Hearing Date: December 15, 2023    Dept: 37

HEARING DATE:                 Friday, December 15, 2023

CASE NUMBER:                   23STCV15435

CASE NAME:                        Infinity Medical Alliance, Inc. v. A&G Management Services, Inc., et al.

MOVING PARTY:                 Cross-Defendants Infinity Medical Alliance, Inc. and Larisa Vinnitskaya

OPPOSING PARTY:             Cross-Complainants A&G Management Services, Inc. and Aram Sharnazyan

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer

OPPOSITION:                        28 November 2023

REPLY:                                  5 December 2023

TENTATIVE:                         Cross-Defendants’ demurrer is sustained with leave to amend. Cross-Complainants are granted 30 days to amend Cross-Complaint. Defendants to give notice.

Background

On July 3, 2023, Infinity Medical Alliance, Inc. (“Plaintiff” or “IMA”) filed a Complaint against A&G Management Services, Inc. (“A&G”); Aram Sharnazyan (“Sharnazyan”); and Does 1 to 50.  The Complaint alleges four causes of action: (1) Breach of Contract, (2) Declaratory Relief, (3) Trespass- Monetary and Injunctive Relief; and (4) Conversion.

On August 7, 2023, Defendants A&G and Sharnazyan filed a Cross-Complaint against IMA, Larisa Vinnitskaya (“Vinnitskaya”); Nikita Baranovskiy; Nixpro Inc.; Konstantin Khlevnoy;, Johnathan M. Quick, Dat C. Tran; Jonathan Bohun; and Roes 1 to 50.

On September 8, 2023, Cross-Defendants Vinnitskaya and IMA. (collectively “Cross-Defendants”) filed a demurrer to the Cross-Complaint. Defendants/Cross-Complainants A&G and Sharnazyan oppose the Motion.

Demurrer[1]

I.         Legal Standard

Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer tests the sufficiency of a pleading, and 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.) In evaluating a demurrer, the court accepts the complainant’s properly pled facts as true and ignores contentions, deductions, and conclusory statements. (Daar v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971) 5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff will be able to prove the allegations or the possible difficulty in making such proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.) 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿ The burden is on the complainant to show the Court that a pleading can be amended successfully. (Id.)

II.        Discussion

Cross-Defendants Lariza Vinnitskaya and IMA demur to all thirteen (13) causes of action alleged against them by Cross-Complainants A&G and Sharnazyan in the Cross-Complaint (“CC”) on the basis that the causes of action fail to state sufficient facts to constitute a cause of action. (CCP § 430.10(e).)

            A.        Summary of Allegations in Cross-Complaint

Cross-Defendant IMA is a cannabis company and owns a commercial adult-use cannabis business located in Torrence, CA (the “Business”). (CC ¶ 16.) Cross-Complainant A&G is a management and consulting service owned and operated by Aram Sharnazyan (“Sharnazyan”). (CC ¶ 17.) On September 25, 2019, IMA and A&G entered into an agreement (the “Agreement”) wherein A&G would be the exclusive manager and operator for the Business’s cannabis, retail, cultivation, and distribution activities. (CC ¶ 18, Ex. 1.) Per the Agreement, A&G was responsible for the day-to-day operations, direction, and management, including discretion to retain, employ, and control personnel. (CC ¶ 18.) Under the Agreement, A&G would pay IMA a fixed monthly fee of $60,000.00.

i.          A&G’s Partnership with Baranovskiy and Baranovskiy’s Schemes

In June 2022 Sharnazyan partnered with Nikita Baranovskiy (“Baranovskiy”) so that Baranovskiy could assist with the day-to-day operations of the Business. (Cross-Complaint (“CC”) ¶ 20.) Sharnazyan also retained longtime associates of Baranovskiy -- Konstantin Khlevnoy, Johnathan M. Quick, Dat C. Tran, and Johnathan Bohun -- as personnel to manage the Business’s day-to-day operations. (CC ¶ 21.) The Cross-Complaint alleges that on or about February 2023, Baranovskiy began to deposit monies from the cash register of the Business to a bank account belonging to Baranovskiy and/or Nixpro, Inc. (“Nixpro”). (CC ¶¶ 7, 22.) Baranovskiy also proposed installing an automated telling machine (“ATM”) on the Business’s premises for the customer’s ease and convenience.  The ATM was installed on or about February or March 2023. (CC ¶ 23.)

On March 2023, A&G’s accountant, Emilio Amparan, discovered discrepancies in the amount of reported sales tax and A&G began to investigate.  A&G discovered theft, fraud, and embezzlement of the Business’s profits by Baranovskiy and his co-conspirators. (CC ¶ 24.) The Cross-Complaint states the scheme involved Baranovskiy and his associates using the point-of-sale system software used by the Business, called “Meadow,” to sell “accessories” marked as $0.1 each when in reality the transactions were cannabis products. (CC ¶ 25.) Baranovskiy and his associates would then retain the cash received from clients for their own gains and avoid paying the applicable cannabis sales tax. (CC ¶ 25.) When A&G confronted Baranovskiy, he could not provide proof of purchase of any apparel or accessories to A&G. (CC ¶ 26.)

After the confrontation, the Cross-Complaint alleges that Baranovskiy and his associates devised a new fraudulent scheme whereby they would input a fifty percent (50%) discount for a sale to a customer into Meadow but, in reality, charge the customer the full, undiscounted price while they retained the other half of the actual sales price. (CC ¶ 27.) Baranovskiy and his associates would also deposit cash from the register, including money from their scheme, into the ATM at the Business.  When the ATM was full, they would deposit the cash into a bank account belonging to Baranovskiy and/or Nixpro twice each business day (CC ¶ 28.) In June 2023, A&G and Sharnazyan discovered this scheme.  They terminated the partnership and ordered Baranovskiy and his associates to cease all services and contact with the Business.

                        ii.         Breakdown of IMA and A&G’s Relationship

On or about April 2022, A&G became aware that the Business owed taxes to the California Department of Tax and Fee Administration (“CDTFA”) since about 2021, when A&G was not the manager of the Business. (CC ¶ 10.) The Cross-Complaint alleges that IMA concealed the tax liabilities before and after the execution of the Agreement. Although A&G was ready and willing to make payments to CDTFA, IMA instructed Cross-Complainants and its accountant to not make the payments on the outstanding tax liabilities until after IMA entered into an installment plan with CDTFA. (CC ¶ 30.)

In June 2022, A&G incurred costs for electrical system upgrades made to the Business.  In consideration, IMA orally agreed to reimburse A&G in the form of a monthly fee reduction from $60,000 to $45,000 for a period of a year (“Reduced Monthly Fee”). (CC ¶ 31.) IMA drafted the amendment to the Agreement, provided a copy to A&G, which A&G signed and returned to IMA, and IMA accepted the Reduced Monthly Fee for nearly a year without any issue or dispute. (CC ¶ 31.) The Reduced Monthly Fee did not become an issue until A&G terminated its partnership with Baranovskiy. (CC ¶ 32.) On or about June 2023, IMA began to allege A&G breached the Agreement due to nonpayment of the taxes and Reduced Monthly Fee. (CC ¶ 33.) On or about July 4, 2023, Cross-Complainants vacated the Business and ceased all activity regarding the Business and IMA. (CC ¶ 34.)

Upon information and belief, Cross-Complainants allege that IMA and/or Vinnitskaya received proceeds from Baranovskiy’s embezzlement and benefited from Baranovskiy’s schemes. (CC ¶ 35.) By instructing Cross-Complainants to pay taxes to the CDTFA and conspiring with Baranovskiy and his schemes, IMA intended to fraudulently induce a breach of the Agreement and early termination of the Agreement so that IMA and Baranovskiy could form a business relationship together. (CC ¶¶ 36-38.) In this manner, IMA, Baranovskiy, and his associates acted together to deceive, defraud, and conspire against Cross-Complainants by converting the Business funds for their own gain and fraudulently induce termination of the Agreement. (CC ¶ 39.)

            B.        (1st)-Breach of Contract

The elements of a claim for breach of contract are “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 821.)

Cross-Complainants assert that if they had a duty to pay taxes to CDTFA for the Business, that duty was waived or excused by IMA who instructed Cross-Complainants to delay payment to CDTFA. (CC ¶ 43.) Cross-Complainants further allege they incurred costs for upgrading the electrical systems, and in consideration, IMA agreed to reimburse A&G by reducing the Monthly Fee from $60,00.00 to $45,000.00. (CC ¶¶ 31, 44.) Therefore, any duty A&G had to pay the $60,000 Monthly Fee was waived and/or excused by IMA as it accepted the Reduced Monthly Fee from A&G for nearly a year without issue. (CC ¶ 44.)

Cross-Defendants assert that Cross-Complainants admit they Breached the Agreement. The parties do not dispute the existence of the Agreement or its terms. Section 2.7 of the Agreement, attached as Exhibit 1 to the Cross-Complaint, states that A&G is responsible for paying all costs and expenses for managing and operating the Business, including all property taxes, and federal, state, and/or city taxes. (CC Ex. 1 at Art. III, § 2.7.) Section 4.1 further states that the Monthly Fee is $60,000.00. (CC Ex. 1 at Art. IV, § 4.1.) Section 10.9 of the Agreement states that the Agreement represents the entire agreement of the parties. (CC Ex. 1 at Art. X, § 10.9.) Section 10.12 states that the Agreement may only be amended or modified in writing and signed by the parties and “[n]o waiver by either party of any of the provisions hereto shall be effective unless explicitly set forth in writing and signed by the waiving party.” (CC Ex. 1, Art. X, § 10.12.)

Based on the terms of the Agreement, the court agrees that Cross-Complainants fail to allege a breach of contract because any waivers by Cross-Defendants are invalid unless signed in writing by the party waiving the right. Furthermore, Cross-Complainants alleges that “IMA drafted an amendment to the Agreement and provided a copy to A&G, which A&G promptly signed and returned the amendment to IMA.” (CC ¶ 31.) “If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452.459 [internal citations omitted].)

Here, Cross-Complainants fail to include a copy of the amendment reducing the monthly term. Alternatively, “a plaintiff may plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)¿¿“[A]ll essential elements of a breach of contract cause of action [] must be pleaded with specificity.”¿(Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150 Cal.App.4th 1, 5.) Cross-Complainants fail to plead the legal effect of the amendment and what the terms and conditions of the alleged amendment are. Without such facts, the first cause of action is deficient as the parties' Agreement expressly prohibits oral modifications.

The demurrer to the first cause of action is sustained with leave to amend.

C.        (2)-Breach of Fiduciary Duty

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach.” (Meister v. Mensinger (2014) 230 Cal.App.4th 381, 395.)

The fact that the parties entered a contract does not alone create a fiduciary relationship. “‘[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’ ” (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386 (City of Hope).)

The Cross-Complaint states in a conclusory manner that “Cross-Defendants had a fiduciary duty and obligation to exercise due care to Cross-Complainants. Cross-Defendants failed to act in good faith, in the best interests of Cross-Complainants, and with such an ordinarily prudent person in a like position would use under similar circumstances as alleged herein.” (CC ¶ 51.)

Cross-Complainants fail to show that under the Agreement, Cross-Defendants entered a contract acting primarily for the benefit of Cross-Complainants rather than entering into a mutually beneficial business relationship. (City of Hope, supra, 43 Cal.4th at p. 386 [“These contractual provisions indicate that the parties's common goal was to achieve a mutually beneficial arrangement, not that Genentech had undertaken a fiduciary obligation ‘to act on behalf of and for the benefit of another.’ [Citation]”].)

Absent such facts, the second cause of action fails, and the demurrer is sustained with leave to amend.

D.        (5) Breach of Implied Covenant of Good Faith & Fair Dealing and (8) Intentional Interference with Contractual Relations

“The invocation of conspiracy does not alter this fundamental allocation of duty. Conspiracy is not an independent tort; it cannot create a duty or abrogate an immunity. It allows tort recovery only against a party who already owes the duty and is not immune from liability based on applicable substantive tort law principles. [Citations.] Because a party to a contract owes no tort duty to refrain from interference with its performance, he or she cannot be bootstrapped into tort liability by the pejorative plea of conspiracy.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514 (Applied Equipment).) “Conduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law.” (Id. at p. 515.)

Cross-Defendants assert that the second, fifth, and eighth through thirteenth causes of action fail because a party cannot be held liable for inducing a breach of its own contract. “‘[T]he implied covenant of good faith and fair dealing is limited to assuring compliance with the express terms of the contract, and cannot be extended to create obligations not contemplated by the contract.’” (Ragland v. U.S. Bank Nat. Assn. (2012) 209 Cal.App.4th 182, 206 [italics original] quoting Pasadena Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1094).)

Here, Cross-Complainants cannot allege as a matter of law that Cross-Defendants breached a duty by inducing Cross-Complainants to breach the Agreement. (Applied Equipment, supra, 7 Cal.4th at p. 54.) Moreover, Cross-Defendants are permitted to sue for breach of contract and enforce the express terms of the Agreement. The Cross-Complainant also failed to plead a breach of contract claim.

Therefore, the demurrer to the fifth cause of action is sustained with leave to amend.

“The elements of a cause of action for intentional interference with contractual relations are ‘(1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.’ ” (Redfearn v. Trader Joe's Co. (2018) 20 Cal.App.5th 989, 997, citing Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1148.)

Here, Cross-Complainants’ allegations that IMA “fraudulently induce[d] a breach of the Agreement” fails because IMA cannot be charged with breaching its own contract as a tort. (CC ¶¶ 128, 129.) “Conduct amounting to a breach of contract becomes tortious only when it also violates an independent duty arising from principles of tort law.” (Applied Equipment, supra, 7 Cal.4th 503, 515.) Moreover, a claim for intentional interference with contractual relations requires that Cross-Complainants have a valid contract with a third party that is not Cross-Defendants. Here, the eighth cause of action is devoid of facts alleging the existence of a contract with a third party.

Therefore, the demurrer to the eighth cause of action is sustained with leave to amend.

E.        Thirteenth Cause of Action-Conspiracy

“The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 212.)

Cross-Complainants allege that IMA received proceeds from Baranovskiy’s embezzlement and benefited from his schemes. (CC ¶ 172.) IMA also instructed Cross-Complainants to not pay taxes to CDTFA and did not fully execute the Reduced Monthly Fee in order to fraudulently induce a breach of the Agreement. (CC ¶ 175.) However, as explained in Applied Equipment by the California Supreme Court, a party to a contract does not owe a duty to refrain from interfering with its own contract. Here, the conspiracy claim fails because the Cross-Complaint fails to allege what independent duty the Cross-Defendants violated.

Therefore, the demurrer to the thirteenth cause of action is sustained with leave to amend.

F.        (3) Intentional Misrepresentation and (4) Negligent Misrepresentation

“The essential elements of a count for intentional misrepresentation are (1) a misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance, (4) actual and justifiable reliance, and (5) resulting damage. [Citations.] The essential elements of a count for negligent misrepresentation are the same except that it does not require knowledge of falsity but instead requires a misrepresentation of fact by a person who has no reasonable grounds for believing it to be true. [Citations.] Each element of a fraud count must be pleaded with particularity so as to apprise the defendant of the specific grounds for the charge and enable the court to determine whether there is any basis for the cause of action, although less specificity is required if the defendant would likely have greater knowledge of the facts than the plaintiff. [Citation.]” (Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230–231.)

Cross-Defendants argue that the third and fourth causes of action for intentional and negligent misrepresentation fail because Cross-Complainants cannot plead actual and justifiable reliance since the written Agreement expressly states that any modifications to the Agreement had to be in writing. (CC Ex. 1, Art. X, § 10.2.) Moreover, Cross-Complainants fails to plead the claims with the requisite specificity because they fail to state who instructed Cross-Complainants not to pay taxes to CDTFA, when the instruction was given, and how such an instruction was provided and to whom.

Furthermore, California law does not permit a party to recover tort damages for contract claims. As explained by the California Supreme Court, “the economic loss rule prevents the law of contract and the law of tort from dissolving into the other.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal. 4th 979, 989.) “In general, there is no recovery in tort for negligently inflicted ‘purely economic losses,’ meaning financial harm unaccompanied by physical or property damage.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922.) Here, Cross-Complainants' damages remain purely economical and appear to be barred by the economic loss rule.

Based on the above, the demurrer to third and fourth causes of action is sustained with leave to amend.

G.        (9) Intentional Interference with Prospective Economic Relations, and (10) Negligent Interference with Prospective Economic Relations

To state a claim for the tort of intentional interference with prospective economic advantage (IIPEA), the claimant must allege: (1) an economic relationship between the claimant and some third party, with the probability of future economic benefit to the claimant; (2) the defendant or cross-defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant or cross-defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the claimant proximately caused by the acts of the defendant.¿(Marsh v. Anesthesia Services Medical Group, Inc. (2011) 200 Cal.App.4th 480, 504.) 

To state a claim for the tort of negligent interference with prospective economic advantage (NIPEA), the plaintiff must allege that “(1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefit or advantage reasonably expected from the relationship.” (North American Chemical Co. v. Sup. Ct. (1997) 59 Cal.App.4th 764, 788.) 

Cross-Complainants IIPEA and NIPEA claim fail because the Cross-Complaint fails to allege that Cross-Complainants had an economic relationship with a third party that was not the relationship with Cross-Defendants. IIPEA and NIPEA claims also seek to recover for purely economic losses such that they appeared to be barred by the economic loss rule. Moreover, Cross-Complainants fail to allege an independent wrong. For both IIPEA and NIPEA, the interference must be wrongful by some legal measure other than the fact of the interference itself. (Della Penna v. Toyota Motor Sales, U.S.A. (1995) 11 Cal.4th 376, 378. “[A]n act is independently wrongful if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159.) 

Therefore, the demurrer to the ninth and tenth causes of action is sustained with leave to amend.

H.       (6) Receipt of Stolen Property in Violation of Penal Code § 496(c) and (7) Conversion

Penal Code § 496(a), in the relevant part, states:

Every 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.

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.) “A plaintiff must specifically identify the amount of money converted, not that a specific, identifiable amount of money has been entrusted to the defendant.” (Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 216.)

Cross-Defendants maintain they cannot be held liable under the sixth and seventh causes of action because the money allegedly “embezzled” belonged to them and Cross-Complainants fail to identify the amount of money converted.

The Cross-Complaint alleges that the “instruction [was] to deposit all monies into IMA’s bank account.” (CC ¶ 22.) Where Cross-Defendants were the rightful owners of the monies, the fact that Cross-Complainants allege they “had a right to possess all profits, funds, and monies under the terms of the Agreement” does not override Cross-Defendants superior right of ownership. Cross-Complainants fail to cite case law that permits them to maintain a claim for violation of Pen. Code section 496(c) and conversion against a party who is the rightful owner of the property. (CC ¶¶ 99, 112.)

Therefore, the demurrer to the sixth and seventh causes of action is sustained with leave to amend.

I.         Twelfth Cause of Action - Unjust Enrichment.

“[T]he elements for a claim of unjust enrichment [are] receipt of a benefit and unjust retention of the benefit at the expense of another.” (Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726.)

The Cross-Complaint alleges that Cross-Defendants benefited from Baranovskiy’s embezzlement and benefited from his schemes. (CC ¶ 165.) Cross-Defendants are similarly accused of fraudulently incusing breach of the Agreement. (CC ¶¶ 167, 168, 169.) However, as explained above, the monies belong to IMA, accordingly IMA cannot be liable for unjust enrichment when it was entitled to receive the funds Baranovskiy allegedly embezzled. (CC ¶ 22.) In other words, Cross-Complainant fails to allege it was entitled to retain the monies Baranovskiy embezzled.

Therefore, the demurrer to the twelfth cause of action is sustained with leave to amend.

J.         Eleventh Cause of Action – Unfair Competition Law

Bus. & Prof. Code section 17200 (“UCL”) prohibits “any unlawful, unfair or fraudulent business act or practice.”¿(Bus. & Prof. Code, § 17200;¿see Clark v. Superior Court¿(2010) 50 Cal.4th 605, 610.) To plead this statutory claim, the pleadings must state with reasonable particularity the facts supporting the statutory elements of the violation. (Khoury v. Maly's of California, Inc.¿(1993) 14 Cal.App.4th 612, 619.) In a private unfair competition law action, the remedies are “‘generally limited to injunctive relief and restitution.’”¿(Kasky¿v. Nike, Inc.¿(2002) 27¿Cal.4th¿939, 950, 119; see¿Bus. & Prof. Code, § 17203.) 

The court agrees that the eleventh cause of action is not pled with reasonable particularity as it fails to allege if the UCL claim is premised under the unlawful, unfair, or fraudulent prong. Moreover, the Cross-Complaint alleges that the monies Baranovskiy allegedly embezzled belonged to IMA. (CC ¶ 22.) Cross-Complainants fail to allege how was it unlawful, unfair, or fraudulent for Cross-Defendants to retain their own property.

The demurrer to the eleventh cause of action is sustained with leave to amend.

Conclusion

Cross-Defendants’ demurrer is sustained with leave to amend. Cross-Complainants are granted

30 days to amend Cross-Complaint.  Defendants to give notice.