Judge Gail Killefer, Case Number: 23STCV22726, Date: 2025-02-03 Tentative Ruling

MOVING PARTY: Defendants DSS Equity Holdings, Inc., Dorna Brown, Trent Brown, and DB Nevada Trust

TENTATIVE: Seller Defendants’ motion for judgment on the pleadings as to the first, fifth, and sixth cause of action is denied. The motion for judgment on the pleadings as to the second cause of action for breach of contract is granted with leave to amend. Plaintiff is granted 10 days leave to amend. The court sets the OSC RE: Amended Complaint for February 20, 2025, at 8:30 a.m. Defendants to give notice.

On September 19, 2023, DSS Risk Consultants, LLC (“Plaintiff”) filed a Complaint against ArentFox Schiff LLP (“ArentFox”); DSS Equity Holdings, Inc. (“DSS Equity”); DB Nevada Trust (“DBNT”); Dorna Brown, Trent Brown , and Does 1 to 50. This action arises out of a dispute regarding escrow funds alleged to have wrongfully been released by the escrow agent, ArentFox, to Dorna Brown and her affiliates, DSS Equity and DBNT in violation of the Membership Interest Purchase Agreement (“MIPA”) and the Escrow Agreement.

On March 7, 2024, the court granted Defendants DSS Equity Holdings, Inc., Dorna Brown, and Trent Brown’s demurrer to the Complaint.

The operative Second Amended Complaint alleges six causes of action for (1) conversion, (2) breach of contract, (3) breach of fiduciary duty, (4) violation of Fin. Code § 17414, (5) unjust enrichment, and (6) violation of Bus. & Prof. Code § 17200 et seq.

Defendants DSS Equity Holdings, Inc., Dorna Brown, and Trent Brown (collectively the “Seller Defendants”) now demurrer and move to strike the SAC. Plaintiff opposes the motions. The matter is now before the court.

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, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿(Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿

¿Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP, § 435(b)(1); CRC, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP, § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿¿

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿¿

Demurrer Turned motion for judgment on the pleadings[1]

Plaintiff asserts the demurrer is untimely, but Defendants assert that any delay in filing the demurrer is excused due Plaintiff failing to serve the SAC and other personal and administrative issues that prevented Defendants’ counsel from timely demurring to the SAC. (Boock Decl., ¶ 10.) Defendants correctly assert that the demurrer can be heard on the merits if treated like a motion for judgment on the pleadings. (See CCP, § 438(b)(2) [“The court may upon its own motion grant a motion for judgment on the pleadings.].) Code Civ. Proc. § 438(e) also gives the court discretion to consider the discretion to hear Defendant’s motion. (See Korchemny v. Piterman (2021) 68 Cal.App.5th 1032, 1054. [“section 438, subdivision (e) “authorizes the trial court to permit late filings of such motions and does not specify any grounds which might serve to limit its power to do so.”].)

Therefore, the court treats Defendants’ untimely demurrer as a motion for judgment on the pleadings. Defendants similarly take issue with Plaintiff’s late filed opposition because it was filed on day late, on January 9, 2024, without seeking leave of court and without providing an explanation for the late filing. (Reply, at p. 4:8-10.) Defendant’s assert that the late filed opposition in combination with the Los Angeles fires, which has directly affected defense counsel’s family, resulted in the Rely being filed on day late.

“No paper may be rejected for filing on the ground that it was untimely submitted for filing. If the court, in its discretion, refuses to consider a late filed paper, the minutes or order must so indicate.” (CRC, Rule 3.1300(d).) The court considers the opposition and reply on their merits.

In 2021, Paul Philips through his company DSS Risk Consultants, LLC (“Plaintiff”) bought the risk-management company, Development Solutions and Services Inc. from its former owner Dorna Brown (“Ms. Brown”), her two entities, DDS Equity and her living trust DBNT, and Charles W. Bates, a minority shareholder Development Solutions and Services, Inc. (SAC, ¶¶ 4, 5; Ex. A [Membership Interest Purchase Agreement (“MIPA”)].) Ms. Brown’s adult son, Trent Brown, a partner at Deloitte & Touche LLP, assisted with the purchase and was authorized to act on her behalf. (Id. ¶¶ 7, fn. 5, 20, 22, 47, 50.)

Ira Deitsch, from the law firm ArentFox , represented Ms. Brown and the Seller Defendants in the sale and served as the escrow agent pursuant to the Escrow Agreement. (SAC, ¶¶ 6, 10, 47, 55-58, Ex. B [Escrow Agreement p. 4, § 6(i)(3)].) ArentFox waived the Seller Defendant’s attorney-client privilege with ArentFox in communications relating to the escrow but continued representing them, communicating with them, and acting on their behalf. (Id. ¶ 10.) The Parties signed the Membership Interest Purchase Agreement (“MIPA”), which incorporated by reference the Escrow Agreement. (SAC, ¶¶ 2, 24, 25, Ex. A, B § 4(a)–(b).)

As part of the sale, Plaintiff agreed to put $1,169,950 in escrow (the “Escrow Funds”) until the one-year valuation was complete, allowing the final sale price to be calculated. (SAC, ¶¶ 9, 51-54, Ex. A pp. 12-13, § 3(h), [“Post Closing Purchase Price Adjustment”].) The Parties agreed to reduce the Escrow Funds to $1,005,000 in December 2021. (Id. ¶ 25, Ex. C.) “Brown and the other defendants never owned or had any claim to these funds; they belonged at all times to Plaintiff.” (Id. ¶¶ 9, 17.) After an uncontested evaluation showed that Plaintiff had overpaid for the company, Plaintiff was entitled to have all the Escrow Funds returned. (Id. ¶ 11.) The Defendants waived any rite to challenge the valuation as no challenge was made within the contractually set period. (Ibid.)

The Escrow Agreement provided that the Escrow Funds may be disbursed by ArentFox only by a court order or a joint payment instruction signed by both Plaintiff and Ms. Brown or their attorneys. (SAC, ¶ 25, Ex. B § 4(a)–(b).) In 2022 or 2023, Philips asked Brown to instruct ArentFox to disburse the Escrow Funds. (Id., ¶¶ 12, 28, 64.) Plaintiff learned in April 2023 that ArentFox had already disbursed the funds in violation of the Escrow Agreement and the Seller Defendants had absconded with the Escrow Funds, leaving the escrow empty. (Id. ¶¶ 12, 69.) ArentFox’s discovery responses admitted that it followed Brown’s instructions and disbursed the Escrow Funds in violation of both the MIPA and Escrow Agreement. (Id. ¶¶ 13, 18, 27, 51-63, 66, Ex. D.) Seller Defendants have refused to return the Escrow Funds to plaintiff. (Id. ¶ 71.)

Seller Defendants demurrer to the SAC on the basis that the alter ego allegations are insufficiently pled.

“To succeed on their alter ego claim, plaintiffs must be able to show: (1) such a unity of interest and ownership between the corporation and its equitable owner that no separation actually exists, and (2) an inequitable result if the acts in question are treated as those of the corporation alone.” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 417.) However, on demurrer, the court does not consider whether the plaintiff will be able to prove the allegations. (See Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610; Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.)¿¿

Instead, the court focuses on whether the complaint sets forth facts sufficient to put the defendant on notice about what the plaintiff is complaining of and what remedies are being sought. (Leek, supra, 194 Cal.App.4th at p. 415.) “The particularity required in pleading facts depends on the extent to which the defendant in fairness needs detailed information that can be conveniently provided by the plaintiff.” (Ludgate Ins. Co. v. Lockheed Martin Corp. (2000) 82 Cal.App.4th 592, 608.) Detailed pleading is not required to allege an alter ego theory of liability.¿Indeed, “[i]t is not even essential, apparently, that ... the alter ego doctrine always be specifically pleaded in the complaint in order for it to be applied in appropriate circumstances. [¶] ... [Citation.] ... [C]ourts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure. It is essential principally that a showing be made that both requirements, i.e., unity of interest and ownership, and the promotion of injustice by the fiction of corporate separate existence, exist in a given situation.”¿ (First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915 [italics omitted]; see Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236 [stating “only ‘ultimate rather than evidentiary facts' ” necessary to support alter ego theory].)¿¿

The SAC alleges that a unity of interest and ownership exists between Ms. Brown and the other Selling Defendants, DSS Equity, of which she is the Chief Executive Officer and Present, and DBNT, of which she is the trustor and sole beneficiary. (SAC, ¶¶ 4, 31, 32, 44, 88.) Ms. Brown is the sole manager and beneficiary of DSS Equity and DBNT and any individuality or separateness among these entities and Ms. Brown have ceased. . (Id. ¶¶ 41, 44.) Any adherence to the fiction that Ms. Brown and the other Seller Defendants are separate persons or entities would allow the abuse of the corporate privilege and sanction injustice because Ms. Brown uses the entities “solely to hold and funnel money to herself.” (Id. ¶¶ 41, 44.)

The court finds that Plaintiff has sufficiently pled facts to show that DSS Equity and DBNT (along with its trustee, Preservation Trust Company), are the alter egos of Plaintiff. (SAC, ¶ 5.) Ms. Brown has superior knowledge as to her ownership interest in the Seller Defendant entities as well as their capitalization such that Plaintiff does not need to provide more specified allegations. “Less particularity is required when it appears that defendant has superior knowledge of the facts, so long as the pleading gives notice of the issues sufficient to enable preparation of a defense.” (Okun v. Superior Court (1981) 29 Cal.3d 442, 458

The motion for judgment on the pleadings on the basis that the alter ego allegations are insufficiently pled is denied.

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.) In addition, the complaint must demonstrate damages proximately caused by the breach. (St. Paul Ins. v. American Dynasty (2002) 101 Cal.App.4th 1038, 1060.) Furthermore, “the complaint must [also] indicate on its face whether the contract is written, oral, or implied by conduct.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-59 citing CCP, § 430.10(g).)

“If the action is based on alleged breach of written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 308.) 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.)

The SAC alleges that Defendants Preservation Trust Company, DSS Equity, and Charles Bates, along with ArentFox, breached Escrow Agreement, and the MIPA, which refrences the Escrow Agreement, when Mr. Brown instructed ArentFox to disburse the Escrow Funds. (SAC, ¶¶ 27, 55.) Mr. Brown was acting on behalf of Ms. Brown, DSS Equity and DBNT when it instructed ArentFox, as the Escrow Agent, to transfer the Escrow Funds. (Id. ¶ 66.)

(a) Appointment and Functions. The Purchaser and the Seller hereby appoint the Escrow Agent, and the Escrow Agent hereby accepts such appointment, to act as the escrow agent as set forth in this Agreement and to observe all of the procedures set forth in this Agreement relating to its role as Escrow Agent.

(a) Promptly after the execution of this Agreement, the Purchases will deliver the Escrow Amount to the Escrow Agent by wire transfer of immediately available funds or in such other manner as shall be mutually acceptable to the parties hereto.

(b) The Escrow Agent will hold the Escrow Deposit in escrow pending disbursement as provided for in this Agreement and in the Purchase Agreement.

(a) Any written notice delivered to the Escrow Agent singed by both the Seller and the Purchaser, or by their counsel on their behalf will be referred to generically in this Agreement as “Joint Written Instructions.”

(b) The Escrow Agent will continue to hold the Escrow Deposit and will disburse the amounts from the Escrow Deposit only in accordance with (1) Joint Written Instructions instructing the Escrow Agent as to the disposition of the Escrow Deposit or any portion thereof, or (ii) a final order of court of competent jurisdiction.

Seller Defendants assert the breach of contract cause of action fails because the only ArentFox, as the Escrow Agent, owed a contractual obligation to the disbursement the Escrow Funds in accordance with the Escrow Agreement.

The SAC fails to identify which contractual provision of the MIPA and Escrow Agreement prohibited the Seller Defendants or Plaintiff from communicating with ArentFox or inquiring about the Escrow Funds. Both Plaintiff and Seller Defendants could ask for the disbursement of the Escrow Funds, but only ArentFox was obligated to follow the “Joint Written Instructions.” (SAC, Ex. B at p. 2, § 4 subds. (a)-(b).)

The Escrow Agreement provides that if ArentFox did not receive the “Joint Written Instructions” signed by both Parties, the Escrow Funds could only be released by court order. (SAC, Ex. B at p. 2, § 4 subds. (a)-(b).) As a court order was an alternative method for disbursing the Escrow Funds, neither Plaintiff nor Seller Defendants were obligated to sign the “Joint Written Instructions.” In other words, the contractual provisions related to the disbursement of the Escrow Funds only imposed contractual obligations on ArentFox as the Escrow Agent and not on Plaintiff or the Seller Defendants.

The fact that ArentFox did comply with the disbursement instructions in the Escrow Agreement does not mean that Seller Defendants breached the Agreements by requesting and obtaining disbursement of the Escrow Funds, as nothing in the Escrow Agreement obligated them to submit a “Joint Written Instructions” or prohibited Seller Defendants from unilaterally requesting disbursement of the funds. The obligation to follow the Escrow Instructions related to the disbursement of the Escrow Funds fell on ArentFox as the Escrow Agent alone, and not Plaintiff or the Seller Defendants.

The court agrees that the breach of contract claim fails against the Seller Defendants because the SAC fails to allege which provisions of the Agreements prohibited Seller Defendants from unilaterally requesting disbursement of the Escrow Funds from the Escrow Agent.

The motion for judgment on the pleadings as to the second cause of action is granted with leave to amend.

“Generally, one who is unjustly enriched at the expense of another is required to make restitution. [Citations.] The elements of a cause of action for unjust enrichment are simply stated as ‘receipt of a benefit and unjust retention of the benefit at the expense of another.’ ” (Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238.)

The SAC alleges that the Escrow Funds were placed by Plaintiff and that Seller Defendants “never owned or had any claim to these funds; they belonged at all times to Plaintiff.” (SAC, ¶¶ 9, 17.) SAC asserts that ArentFox admitted it did not follow the Escrow Agreement instructions relating to disbursing the Escrow Funds and disbursed the funds to Seller Defendants without Plaintiff’s knowledge or consent. (Id. ¶ 13.) Plaintiff was and remains entitled to the Escrow Funds, in full, because Plaintiff overpaid for the Company and the Escrow Funds were not needed. (Id. ¶ 11.) Seller Defendants never contested the evaluation, which entitled Plaintiff to the full Escrow Funds. (Id., ¶¶ 11, 64.) Although Plaintiff was entitled to the full Escrow Funds under the terms of the Parties Agreements, Seller Defendants were unjustly enriched when they requested and obtained the Escrow Funds, despite not being entitled to said funds. (Id., ¶¶ 109, 113, 114.)

The court finds that the above allegations sufficiently allege a claim for unjust enrichment against Ms. Brown and her alter-ego Defendants. Moreover, at the pleading stage, Plaintiff is not required to prove that all alter-egos received the Escrow Funds.

The motion for judgment on the pleadings as to the firth cause of action is denied.

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.)¿“Money may be the subject of conversion if the claim involves a specific, identifiable sum . . . .” (WelcoElectronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 209.)¿

Seller Defendants demur to the first cause of action on the bases that a request for disbursement is not actionable conversion. However, Plaintiff’s allegations are premised not only on the request for reimbursement but also on the fact that Seller Defendants did receive the Escrow Funds, in knowing violation of the terms for disbursement outlined in the Escrow Agreement. (SAC, ¶¶ 54, 69.) Seller Defendants acted wrongfully because they were unjustly enriched and were never entitled to the Escrow Funds. The fact ArentFox wrongfully disbursed the funds does not absolve Seller Defendants of liability because Seller Defendants knowingly and wrongfully exercise dominion over the Escrow Funds when they accepted the funds and refused to return them to Plaintiff. (Id., ¶¶ 1, 11, 19.)

Ms. Brown and Mr. Brown further assert that they are not liable for any conversion of the Escrow Funds that were disbursed only to Defendant Preservation Trust Company as the sole trustee of DBNT. (SAC, ¶ 14.) However, Ms. Brown is liable for conversion as the alter-ego of DBNT (along with its trustee, Preservation Trust Company) and DSS Equity. (Id., ¶ 5.) Ms. Brown and the other Seller Defendants are also vicariously liable for the actions of her agent, Mr. Brown, who received and distributed the Escrow Funds. Moreover, Mr. Brown, as the Seller Defendants’ agent, can be held personally liable for conversion even if he was acting under the authority of his Principal. (See Peredia v. HR Mobile Services, Inc. (2018) 25 Cal.App.5th 680, 691–692.)

Based on the above, the motion for judgment on the pleadings as to the first cause of action is denied.

Business and Professions 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.)¿

“An unlawful business practice or act is an act or practice, committed pursuant to business activity, that is at the same time forbidden by law.” (Klein v. Earth Elements, Inc. (1997) 59 Cal.App.4th 965, 969.) “A business practice is unfair within the meaning of the¿UCL¿if it violates established public policy or if it is immoral, unethical, oppressive or unscrupulous and causes injury to consumers which outweighs its benefits.” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1473.) Lastly, a fraudulent business practice claim under section 17200 “is not based upon proof of the common law tort of deceit or deception, but is instead premised on whether the public is likely to be deceived.” (Pastoria¿v. Nationwide Ins. (2003) 112 Cal.App.4th 1490, 1499.)¿

Seller Defendants assert that the UCL claim is not pled with the request particularity. (Khoury, supra, 14 Cal.App.4th at 612.) The SAC states the UCL is premised on the causes of action alleged above. (SAC, ¶ 116.) This includes not disclosing the fact that the Escrow Funds had been disbursed months earlier and “[u]nfairly and unlawfully taking over $1 million in Plaintiffs’ funds when they had no claim to those funds, then refusing to return them” (Id. ¶ 118.) The court finds that the allegation that Seller Defendants wrongfully obtained and converted Plaintiff’s Escrow Funds is an unlawful and unfair business practice under the UCL.

The motion for judgment on the pleadings as to the sixth cause of action is granted.

· Each of the Defendants is guilty of malice, fraud, and oppression: o Seller Defendants: Seller Defendants committed the act of conversion with malice and fraud. They purposefully hid the fact that the funds were being released — not seeking Phillips’ consent or including him on the disbursement instructions — because they knew Phillips would object. Instead, Trent Brown, at the behest of Dorna Brown, DSS Equity Holdings, Inc., and DB Nevada Trust, deceived and defrauded Phillips and pretended the funds were still in escrow while they were actually trying to move the funds out of Phillips’ reach and had their attorney wire them from the escrow account into Dorna’s trust.” SAC, ¶ 77.

· “Punitive damages” (as against Defendants) (SAC, Claim for Relief, ¶ 120);

To state a claim for punitive damages under Civ. Code section 3294, a plaintiff must allege specific facts showing that the defendant has been guilty of malice, oppression or fraud. (Smith v. Superior Court (1992) 10 Cal. App. 4th 1033, 1042.)¿ The basis for punitive damages must be pled with specificity; conclusory allegations devoid of any factual assertions are insufficient. (Ibid.)¿¿“Malice” is defined in Civ. Code § 3294 (c)(1) as “conduct which is intended by the defendant to cause injury” or “despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” “Oppression” is defined as “despicable conduct subjecting a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Civ. Code § 3294(c)(2).) The term “despicable” has been defined in the case law as actions that are “base,” “vile,” or “contemptible.” (Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 891.) Fraud means “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Civ. Code § 3294(c)(3).¿)

While the SAC alleges that Mr. Brown acted as an agent of Ms. Brown, DSS Equity, and DBNT, the SAC does not allege that Mr. Brown was an officer, director, or managing agent of the Seller Defendant Entities. When the defendant is a¿corporation, “the oppression, fraud, or malice must be perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the¿corporation.” (Wilson v. Southern California Edison Company (2015) 234 Cal.App.4th 123, 164; see Civ. Code, § 3294(b).)

The SAC alleges that Ms. Brown, as the owner of the Seller Entities, ratified the conversion by receiving the Escrow Funds and refusing to return them despite having no claim to the funds. (SAC, ¶ 88.) While the conversion and refusal to return the Escrow Funds to Plaintiff may be in conscious disregard of Plaintiff’s rights, Plaintiff fails to show how he was subjected to unjust hardship due to the conversion. (Civ. Code, § 3294(c)(2).)

Therefore, the motion to strike punitive damages is granted with leave to amend.

As the motion for judgment on the pleadings as to the breach of contract claim has been sustained with leave to amend, the motion to strike the request for attorney’s fees is granted with leave to amend. Moreover, Plaintiff fails to show that the MIPA and/or Escrow Agreement permit it to recover attorney’s fees for breaches by the Escrow Agent, ArentFox.

Seller Defendants’ motion for judgment on the pleadings as to the first, fifth, and sixth cause of

action is denied. The motion for judgment on the pleadings as to the second cause of action for

breach of contract is granted with leave to amend. Plaintiff is granted 10 days leave to amend.

The court sets the OSC RE: Amended Complaint for February 20, 2025, at 8:30 a.m. Defendants

[1] Pursuant to CCP §§ 430.41 and 435.5(a), the meet and confer requirement has been met. (Boock Decl., ¶ 11.)