Judge: Gail Killefer, Case: 23STCV15435, Date: 2025-04-22 Tentative Ruling
Case Number: 23STCV15435 Hearing Date: April 22, 2025 Dept: 37
HEARING
DATE: Tuesday, April 22,
2025
CASE
NUMBER: 23STCV15435
CASE NAME: Infinity Medical Alliance, Inc. v. A&G Management Services,
Inc., et al.
MOVING PARTY: Cross-Defendant Larisa Vinnitskaya
OPPOSING PARTY: Cross-Complainants
A&G Management Service, Inc. and Aram Sharnazyan
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Motion for Attorney’s
Fees
OPPOSITION: 25 February 2025
REPLY: 3
March 2025
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
(“CC”) against IMA, Larisa Vinnitskaya; Nikita Baranovskiy, Nixpro Inc.;
Konstantin Khlevnoy, Johnathan M. Quick, Jonathan Bohun, and Roes 1 to
50.
The
Cross-Complaint asserted the following thirteen causes of action:
1)
Breach
of Contract – against IMA and Roes 1 to 50;
2)
Breach
of Fiduciary Duty - against IMA, Vinnitskaya, and Roes 1 to 50;
3)
Intentional
Misrepresentation – against all Cross-Defendants;
4)
Negligent
Misrepresentation – against all Cross-Defendants;
5)
Breach
of Implied Covenant of Good Faith and Fair Dealing – against all
Cross-Defendants;
6)
Receipt
of Stolen Property (Pen. Code § 496(c)) – against all
Cross-Defendants;
7)
Conversion,
against all Cross-Defendants;
8)
Intentional
Interference with Contractual Relations - against all
Cross-Defendants;
9)
Intentional
Interference with Prospective Economic Relations – against all
Cross-Defendants;
10) Negligent Interference with Prospective
Economic Relations- against all Cross-Defendants;
11) Unfair Business Practices (Bus. &
Prof. Code § 17200, et seq.)- against all Cross-Defendants;
12) Unjust Enrichment - against all
Cross-Defendants;
13) Conspiracy – against all
Cross-Defendants.
Cross-Defendants IMA
and Larisa Vinnitskaya (“Vinnitskaya”) demurred to the Cross-Complaint (“CC”).
On December 15, 2023, the court sustained the demurrer to the Cross-Complaint
with leave to amend.
On January 16, 2024, Defendants/Cross-Complainants
A&G and Sharnazyan filed the First Amended Cross-Complaint (“FACC”) alleging
the following twelve causes of action:
1)
Breach
of Contract – against IMA and Roes 1 to 50;
2)
Intentional
Misrepresentation – against all Cross-Defendants;
3)
Negligent
Misrepresentation – against all Cross-Defendants;
4)
Breach
of Implied Covenant of Good Faith and Fair Dealing – against all
Cross-Defendants;
5)
Receipt
of Stolen Property (Pen. Code § 496(c)) – against all
Cross-Defendants;
6)
Conversion,
against all Cross-Defendants;
7)
Intentional
Interference with Contractual Relations – against Vinnitskaya, Baranovskiy,
Nixpro, Khlevnoy, Quick, Tran, and Bohun;
8)
Intentional
Interference with Prospective Economic Relations – against Vinnitskaya,
Baranovskiy, Nixpro, Khlevnoy, Quick, Tran, and Bohun;
9)
Negligent
Interference with Prospective Economic Relations - against Vinnitskaya,
Baranovskiy, Nixpro, Khlevnoy, Quick, Tran, and Bohun;
10) Unfair Business Practices (Bus. &
Prof. Code § 17200, et seq.) - against all Cross-Defendants;
11) Unjust Enrichment - against all
Cross-Defendants;
12) Conspiracy – against all
Cross-Defendants.
On March 21, 2024,
Cross-Complainants filed the Second Amended Cross-Complaint (“SACC”) alleging the
following eleven causes of action:
1)
Breach
of Contract – against IMA and Roes 1 to 50;
2)
Intentional
Misrepresentation – against all Cross-Defendants;
3)
Negligent
Misrepresentation – against all Cross-Defendants;
4)
Breach
of Implied Covenant of Good Faith and Fair Dealing – against IMA and Roes 1 to
50;
5)
Receipt
of Stolen Property (Pen. Code § 496(c)) – against all
Cross-Defendants;
6)
Conversion,
against all Cross-Defendants;
7)
Intentional
Interference with Contractual Relations - against Vinnitskaya, Baranovskiy,
Nixpro, Khlevnoy, Quick, Tran, and Bohun;
8)
Intentional
Interference with Prospective Economic Relations – against Baranovskiy, Nixpro,
Khlevnoy, Quick, Tran, and Bohun;
9)
Negligent
Interference with Prospective Economic Relations- against Baranovskiy, Nixpro,
Khlevnoy, Quick, Tran, and Bohun;
10) Unfair Business Practices (Bus. &
Prof. Code § 17200, et seq.)- against IMA, Vinnitskaya, Baranovskiy, and
Nixpro; and
11) Conspiracy – against all
Cross-Defendants.
On July 12, 2024, the court
overruled the demurrer to the SACC filed by Cross-Defendants IMA and Larisa
Vinnitskaya as to the first cause of action, and sustained without leave to
amend as to the second, third, fourth fifth, sixth, seventh, eighth, ninth,
tenth, and eleventh causes of action.
On July 24, 2024,
Defendant/Cross-Complainant A&G filed the operative Third Amended
Cross-Complaint (“TACC”) alleging the following seven causes of action:
1)
Breach of Contract against IMA and
Vinnitskaya;
2)
Intentional Misrepresentation against
Baranovsky, Nixpro, Khlevnoy, Quick, Tran, and Bohan;
3)
Negligent Misrepresentation against
Baranovsky, Nixpro, Khlevnoy, Quick, Tran, and Bohan;
4)
Breach of Implied Covenant of Good
Faith and Fair Dealing against Baranovsky, Nixpro, Khlevnoy, Quick, Tran, and
Bohan;
5)
Intentional Interference with
Contractual Relations against Baranovsky, Nixpro, Khlevnoy, Quick, Tran, and
Bohan;
6)
Intentional Interference with
Prospective Economic Relations against Baranovsky, Nixpro, Khlevnoy, Quick,
Tran, and Bohan; and
7)
Negligent Interference with Prospective
Economic Relations against Baranovsky, Nixpro, Khlevnoy, Quick, Tran, and
Bohan.
On July 25, 2024, IMA
voluntarily dismissed the first cause of action as to Defendant Vinnitskaya
only.
Cross-Defendants
Nixpro Inc. (“Nixpro”), Nikita Baranovskiy (“Baranovskiy”) and Jonathan Bohun
(“Bohun”) (collectively “Nixpro Cross-Defendants”) and Cross-Defendants Dat
Tran (“Tran”), Konstantin Khlevnoy (“Khlevnoy”), and Jonathan Quick (“Quick”) filed
demurrers to the TACC. On November 5, 2024, the court sustained the demurrer to
the TACC with leave to amend.
On December 6, 2024,
Cross-Defendants Baranovskiy, Nixpro, Khlevnoy, Quick, Tran and Bohan were dismissed
with prejudice per the Parties’ stipulation.
On January 21, 2025
Cross-Defendant Vinnitskaya filed a Memorandum of Costs and a Motion for
Attorney’s fees and costs. Cross-Complainants A&G and Sharnazyan oppose the
Motion. The matter is now before the court.
I. Legal Standard
A prevailing party is entitled to recover costs, including attorneys’
fees, as a matter of right.¿ (CCP §§ 1032(a)(4), 1032(b), 1033.5.)¿Attorney
fees may be recovered as costs when authorized by contract, statute, or law.
(CCP § 1033.5(a)(10).)¿The prevailing party on a contract, which specifically
provides for attorney fees and costs incurred to enforce the agreement, is
entitled to reasonable attorney fees in addition to other costs.¿ (Civ. Code, §
1717(a); CCP, §§ 1032, 1033.5(a)(10)(A).)¿ The court, upon notice and motion by
a party, shall determine the prevailing party and shall fix, as an element of
the costs of the suit, the reasonable attorney fees.¿ (Civ. Code, § 1717(a),
(b).)¿¿¿¿
II. Discussion
Cross-Defendant Vinnitskaya moves
for attorney’s fees in the sum of $21,992.67[1]
and costs in the sum of 2,158.93 pursuant to Civ. Code § 1717 and CCP § 1033
incurred in defending the tort causes of action alleged against them. In
addition, Cross-Defendant’s Motion requests $18,906.50 in fees incurred
initially in bringing this Motion. (Motion at pp. 2:11; 7:10; 13:18; 14:18;
Hill Decl., ¶¶ 8, 9.) However, counsel for Vinnitskaya filed a supplemental declaration
stating that only $12,806.50 was incurred initially in preparing the initial
fee motion with an additional $8,025 spent reviewing the opposition,
researching, drafting, preparing, and appearing for the hearing. (Supp. Hill
Decl., ¶¶ 4, 5.)
There appears to be some
discrepancy as to whether the total attorney fee request is $48,924.17 or $42,824.17.
A. The
Attorneys’ Fee Provision in the Management Service Agreement (“MSA”) and
Applicability of Civ. Code § 1717
Cross-Defendant’s Motion refers
the court to the Management Service Agreement (“MSA”) attached as Exhibit A to
the Complaint. Cross-Defendant asserts
that section 10.18 of the MSA entitles Vinnitskaya to all of her attorney’s
fees as the prevailing party to a contract:
Section 10.18 Attorneys’ Fees. In the event that any claim, suit, action,
or proceeding is instituted or commenced by either party hereto against the
other party arising out of or related to this Agreement, the prevailing party
shall be entitled to recover its reasonable attorneys’ fees and court costs
from the nonprevailing party.
(Compl., Ex. A.)
While Cross-Complainants asserted
tort causes of action against Cross-Defendant Vinnitskaya, Vinnitskaya asserts she is entitled
to recover attorney fees in defending those claims because the torts claims
arise out of and relate to the MSA. However, Vinnitskaya is mistaken in
believing she can rely on Civ. Code § 1717 to recover the attorney’s fees for
all tort claims.
The California
Supreme Court has made it clear that section 1717 does not apply to tort
claims: “this action is outside the ambit of section 1717 insofar as it asserts
tort claims.”
(Santisas v.
Goodin (1998) 17 Cal.4th 599, 615 (Santisas).) In Santisas,
the California Supreme Court explained as follows:
The operative language of section 1717 states
that it applies “[i]n any action on a contract, where the contract
specifically provides that attorney's fees and costs, which are incurred to
enforce that contract, shall be awarded either to one of the parties or to
the prevailing party....” (§ 1717, subd. (a), italics added.) Consistent with
this language, this court has held that section 1717 applies only to actions
that contain at least one contract claim. [Citations.] If an action asserts
both contract and tort or other noncontract claims, section 1717 applies only
to attorney fees incurred to litigate the contract claims. [Citation.]
(Id. at p. 615
[italics original].) “[T]he Legislature did not act to expand the scope of
section 1717 to encompass tort and other noncontract claims arising from
contracts containing broadly worded attorney fee provisions, nor did it enact
separate legislation to address such claims or otherwise articulate public
policy as permitting or precluding attorney fee awards as costs for such
claims.” (Id. at p. 621.)
Here, Cross-Defendant
Vinnitskaya cannot claim attorney’s fees under section 1717 because
Cross-Complainants voluntarily dismissed the breach of contract claim:
(2) Where an action has been
voluntarily dismissed . . . there shall be no prevailing party for purposes of
this section.
(Civ. Code, §
1717(b)(2).) Therefore, Vinnitskaya cannot be a prevailing party under section
1717 and cannot seek attorney’s fees under this section.
B. Civ. Code §
1717 is a Reciprocal Statute But Its Application Does Not Extend to Tort
Actions
Civ. Code § 1717
states that “[i]n any action on a contract, where the contract specifically
provides that attorney’s fees and costs, which are incurred to enforce that
contract, shall be awarded either to one of the parties or to the prevailing
party, then the party who is determined to be the party prevailing on the
contract, whether he or she is the party specified in the contract or not,
shall be entitled to reasonable attorney’s fees in addition to other costs.”
(Civ. Code, § 1717(a) [emphasis added].)
Due to Section 1717’s
reciprocity, Cross-Defendant Vinnitskaya would be entitled to attorney’s fees if
she could show she is the prevailing party on a contract claim even if she is
not a party to the MSA. “‘Its purposes require section 1717 be interpreted to
further provide a reciprocal remedy for a nonsignatory defendant, sued on a
contract as if he were a party to it, when a plaintiff would clearly be
entitled to attorney's fees should he prevail in enforcing the contractual
obligation against the defendant.’” (Dell Merk, Inc. v. Franzia (2005)
132 Cal.App.4th 443, 450 citing Reynolds Metals Co. v. Alperson (1979)
25 Cal.3d 124, 128.)
In Santisas, the
California Supreme Court specified that attorney’s fees and costs could be
awarded pursuant to CCP §§ 1021, 1032, and 1033.5 if the attorney’s fees
provision is broad enough to cover tort claims. (See Santisas, supra,
17 Cal.4th at p. 619 [“Because section 1717 does not apply to those claims
[citations], it does not bar recovery of attorney fees that were incurred in
litigation of those claims and that are otherwise recoverable as a matter of
contract law.”].) In other words, an attorney fee provision “depending upon
its wording, may afford the defendant a contractual right, not
affected by section 1717, to recover attorney fees incurred in litigating the
[noncontractual] causes of action.” (Id. at p. 618 [italics added].)
Cross-Defendant Vinnitskaya relies on GoTek Energy, Inc. v.
SoCal IP Law Group, LLP (2016) 3 Cal.App.5th 1240, to assert that the
attorney’s fees provision in the MSA is broad and extends to tort claims.
However, GoTek awarded attorney’s fees under CCP § 1021, not Civ. Code §
1717. (Id. at p. 1250.) Similarly, the attorney fee provision in Khan
v. Shim (2016) 7 Cal.App.5th 49 was interpreted broadly as applying to both
contract and tort claims, and awarded attorney’s fees pursuant to CCP § 1032(b),
awarding costs to a prevailing party, including attorney’s fees when authorized
by contract under CCP § 1033.5(a)(10(A). (Id. at pp. 61-63.) Even
if the court interpreted the MSA broadly as applying to tort claims, the court
cannot interpret the MSA broadly as applying to all Cross-Defendants. In other
words, Cross-Defendant does not argue or show that they are a party to the MSA
entitled to recover attorney’s fees for any claims “arising out of or relating
to” the MSA. (Compl., Ex. A.)
Vinnitskaya
was sued because she is the Chief Executive Officer of IMA. (Cross-Compl., ¶
5.) Section 10.18 applies “any
claim, suit, action, or proceeding is instituted or commenced by either party
hereto,” meaning IMA or A&G. (Compl., Ex. A. The court fails to find, and
Vinnitskaya fails to show, that the MSA extends the term “party” to any officer
or agent of the MSA. Vinnitskaya also fails to show that section 10.18 was
intended to be interpreted broadly as applying to any officer or agent of IMA.
Therefore, Vinnitskaya fails to show they can recover fees under another
statutory provision other than Civ. Code § 1717.
Cross-Defendant
Vinnitskaya asserts that she is entitled to attorney’s fees for her tort and
fraud claims because they sound in contract, but such a proposition has been
extended only to certain torts and not to fraud claims. In Stout v. Turney
(1978) 22 Cal.3d 718, the California
Supreme Court made clear that “[a] tort action for fraud arising out of a
contract is not, however, an action ‘on a contract’ within the meaning of”
section 1717. (Id. at p. 730.) This means that Vinnitskaya cannot rely
on the reciprocal or equitable considerations of section 1717 to assert that she
is a party to the MSA entitled to attorney’s fees for the fraud-based causes of
action. The court acknowledges that attorney’s fees pursuant to Section 1717
have been awarded to claims sounding in contract such as breach of fiduciary
duty (Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th
1174, 1178) and breach of the implied covenant of good faith and fair dealing (Schoolcraft
v. Ross (1978) 81 Cal.App.3d 75, 82.) But no court has found that fraud
claims sound in contract; to do so would be in contravention of the economic
loss rule.
As to Vinnitskaya’s
tort claims that have been recognized to sound in contract, only the
Cross-Complaint and FACC alleged claims for breach of fiduciary duty and breach
of the implied covenant of good faith and fair dealing. The court requires
further briefing as to whether Vinnitskaya can recover attorney’s fees for
these claims under section 1717’s reciprocal provision. The court also requires
that Vinnitskaya apportion her fees only as to those claims. Moreover, the
reductions to the subject matter of the billing entries make it impossible for
the court to discern if the fee is related to these two claims and if they were
reasonably incurred. (Hill Decl. Ex. 2.)
C. Request for Costs
Cross-Defendant Vinnitskaya requests costs
under CCP § 1032(b):
Except as otherwise expressly provided by
statute, a prevailing party is entitled as a matter of right to recover costs
in any action or proceeding.
“For the purpose of determining entitlement
to recover costs, Code of Civil Procedure section 1032 defines ‘prevailing
party’ as including, among others, ‘a defendant in whose favor a dismissal is
entered.’” (Santisas, supra, 17 Cal.4th at p. 606.) Cross-Complainants
fails to show that Cross-Defendant Vinnitskaya is not a prevailing party
entitled to recover under CCP § 1032.
Vinnitskaya filed a Memorandum of Costs on
January 21, 2025 seeking $2,158.93 in costs. Cross-Complainants have not moved
to strike or tax the Memorandum of Costs. Cal. Rules of Court, rule
3.1700(b)(1) requires a motion to strike or tax costs to be filed and served
within 15 days after service of the memorandum of costs.
In the absence of a motion to tax or strike
costs, the court grants Cross-Defendants request for costs in the sum of $2,158.93.
Conclusion
Lastly, Cross-Defendant’s request for costs is granted in the sum
of $2,158.93.
[1]
$21,992.67 represents half of the total fees
incurred by Cross-Defendants Vinnitskaya and IMA in connection with the
demurrers.