Judge: John J. Kralik, Case: 24BBCV00136, Date: 2025-01-24 Tentative Ruling

Case Number: 24BBCV00136    Hearing Date: January 24, 2025    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations in the Second Amended Complaint

This action (the “Fraud Action”) involves a commercial lease agreement between Plaintiff Vigan Sardariani (“Sardariani”) and Defendant Roland Markarian (“Markarian”). 

The operative Second Amended Complaint (“SAC”) alleges the following, among other things.  On or about May 1, 2002, Markarian leased to Sardariani the property located at 7139 Foothill Boulevard, Tujunga, California (the “Property”) under a 10-year lease agreement (the “Lease”).  (SAC ¶ 1.)  The Lease gave Sardariani the first option to purchase the Property if Markarian decided to sell the Property.  (SAC ¶ 2.)  On June 8, 2016, Markarian transferred ownership of the Property to Defendant RRRM Holding Company, LLC (“RRRM”) and intentionally concealed that transfer from Sardariani in order to interfere with Sardariani’s right to purchase the Property.  (SAC ¶ 4.)  Markarian had made several false representations to Sardariani, including that he will provide Sardariani with a right of first refusal to purchase the Property option, and only charge the rent that was in place at the time of the expiration of the first lease term.  (SAC ¶ 20.)  Markarian knew those statements were false when he made them or, alternatively, made them recklessly and with disregard of their truth.  (SAC ¶ 21.) 

On October 15, 2024, Sardariani and V&S Complete Auto Repairs, Inc. (“V&S”) (collectively, “Plaintiffs”) filed the SAC against Defendants Markarian, RRRM, Ara Ohanjanyan (“Ohanjanyan”), Arman Arutyunyan (“Arutyunyan”), Rejina Mehdian (“Mehdian”), and Does 2 to 50, inclusive, asserting the following causes of action: (1) fraud; (2) intentional concealment; (3) negligent misrepresentation; (4) breach of duty of good faith and fair dealing; (5) breach of contract; (6) tortious interference with prospective economic advantage; (7) negligent interference with prospective economic advantage; (8) intentional interference with contractual relations; and (9) inducing breach of contract.

B.     Related Cases

On March 6, 2024, this Fraud Action (24BBCV00136) was deemed related to three other cases: 23BBCV03087 (RRRM v. Sardariani), 23PDUD04099 (V&S v. Ohanjanyan, et al.), and 24PDUD00343 (RRRM v. V&S, et al.).  The Court designated 23BBCV03087 as the lead case.

On April 26, 2024, 23BBCV03087 and 24PDUD00343 were consolidated, and 23BBCV03087 deemed the lead case.

On September 9, 2024, the Court granted RRRM’s motion for summary judgment in 23BBCV03087, finding that RRRM was entitled to possession of the Property.  That ruling was limited to determining “only the question of possession of the [Property].”  (Court’s Order re: Motion for Summary Judgment, filed on September 9, 2024, p. 11, the bottom of the page.)  The Court did not adjudicate the issue of title in that action.  (Ibid.)

C.     Demurrers to the First Amended Complaint

On August 16, 2024, in this Fraud Action, Defendants Markarian, RRRM, Ohanjanyan, and Arutyunyan filed four (4) identical demurrers to the first cause of action for fraud, second cause of action for intentional concealment, and third cause of action for negligent misrepresentation in the First Amended Complaint (“FAC”).

On September 9, 2024, Plaintiffs filed a single opposition to the FAC demurrers. 

On September 13, 2024, the demurring defendants filed a joint reply.

            On September 20, 2024, the Court issued an order sustaining the FAC demurrers with leave to amend (the “FAC Demurrer Ruling”).

D.    Demurrers on Calendar

            There are five (5) identical demurrers before the Court (the “SAC Demurrers”).  Defendants Markarian, RRRM, and Mehdian filed their demurrers on November 18, 2024, and Arutyunyan and Ohanjanyan filed their demurrers on November 27, 2024.

            On December 27, 2024, Plaintiffs filed one opposition to the SAC Demurrers.

            On January 17, 2025, Markarian, RRRM, Mehdian, Arutyunyan, and Ohanjanyan (collectively, “Defendants”) filed a single reply to the opposition.

DISCUSSION

            Defendants demur the first cause of action for fraud, second cause of action for intentional concealment, and third cause of action for negligent misrepresentation in the SAC, arguing that they all fail to state facts sufficient to constitute a cause of action.

A.    1^st Cause of Action for Fraud

The first cause of action for fraud in the SAC is brought by Plaintiff Sardariani against Markarian only.

“The elements of fraud are (1) misrepresentation, (2) knowledge of falsity, (3) intent to induce reliance on the misrepresentation, (4) justifiable reliance on the misrepresentation, and (5) resulting damages.”  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469 (“Cansino”).)

“Fraud allegations ‘involve a serious attack on character’ and therefore are pleaded with specificity.  [Citation.]  General and conclusory allegations are insufficient.”  (Cansino, supra, 224 Cal.App.4th at p. 1469.)

Here, the SAC alleges that Markarian made eight (8) types of “misrepresentations.  (SAC ¶ 20 (a)-(h).)

The first four (4) misrepresentations were that the defendant would abide by the terms of the lease (SAC ¶ 20(a), provide this Plaintiff with a right of first refusal to purchase the property that is subject to the Lease (SAC ¶ 20(b)), charge only the amount of rent at the time of the expiration of  the first lease term on a month-to-month holdover tenancy (SAC ¶ 20(c)), and permit this Plaintiff to sublet the property (SAC ¶ 20(d)).

However, “[t]he particularity requirement demands that a plaintiff plead facts which ‘“‘show how, when, where, to whom, and by what means the representations were tendered.’”’ [Citation.]”  (Cansino, supra, 224 Cal.App.4th at p. 1469.)

Here, Sardariani has not specified how, when, where, to whom, and by what means those first four (4) alleged misrepresentations were made.  In addition, “[a] plaintiff asserting fraud by misrepresentation is obliged to plead and prove actual reliance, that is, to ‘“establish a complete causal relationship” between the alleged misrepresentations and the harm claimed to have resulted therefrom.’  [Citations.]”  (OCM Principal Opportunities Fund, L.P. v. CIBC World Markets Corp. (2007) 157 Cal.App.4th 835, 864.)  Here, Sardariani has failed to specify the causal relationship between the first four (4) alleged misrepresentations and the harm he claims resulted from them.  In addition, “[a]fter establishing actual reliance, the plaintiff must show that the reliance was reasonable by showing that (1) the matter was material in the sense that a reasonable person would find it important in determining how he or she would act [citation]; and (2) it was reasonable for the plaintiff to have relied on the misrepresentation.”  (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1194.)  Here, Sardariani has not alleged facts satisfying those requirements with regard to the first four (4) misrepresentations.

As Defendants argue in their demurrers, the fifth and sixth misrepresentations in Paragraph 20 of the SAC do not attribute any specific false statement to Markarian.  (SAC Demurrers, p. 7:1-8; see SAC ¶¶ 20(e) [“The original lease agreement between Plaintiff and this Defendant evidences the foregoing false statements of the Defendants that were false at the time they were made or were made with reckless disregard for their falsity”]; 20(f) [“The subtenants and their site manager were advised to stop rent payments to this Plaintiff and to start issuing sublease rent checks to this Defendant.  Furthermore, this Defendant induced the subtenants, through his counsel, to sign a new lease agreement directly with this Defendant or Defendant RRRM”].)

The seventh misrepresentation alleging that “[i]n 2018, [Markarian] falsely claimed the rent for April 2018 was not paid” fails to specify how, when, where, to whom, and by what means that false statement was made.  The SAC also fails to plead facts showing justifiable reliance (i.e., actual reliance on that statement and that his reliance was reasonable). 

The eighth misrepresentation (SAC ¶ 20(h)) alleges that Markarian falsely represented on May 11, 2022, that he was the owner of the Property when he sued Plaintiff Sardariani in Case Number 22PDUD00815.  However, Sardariani fails to plead facts that satisfy the element justifiable reliance with regard to that alleged false statement.

Finally, the eighth misrepresentation also alleges that Markarian intentionally concealed the transfer of the Property to RRRM with the intention of depriving Sardariani of his right to purchase the Property.

“‘The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.  [Citation.]’  [Citation.]”  (Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162.)  “[T]he requirement that ‘[f]raud must be pleaded with specificity’ applies equally to a cause of action for fraud and deceit based on concealment.”  (Cansino, supra, 224 Cal.App.4th at p. 1472.)

Here, the Court finds that the SAC has failed to plead facts sufficient to constitute a cause of action for fraudulent concealment against Markarian.  With regard to the second element of fraudulent concealment (i.e., defendant had a duty to disclose the fact to the plaintiff), the SAC suggests that Markarian’s duty to disclose to Plaintiff the Property transfer arose from the Lease.  (SAC ¶ 2(c) [“The Lease provided for an option to purchase, which is partially interlineated and initialed, stating: ¶ Landlord hereby promises and agrees that should Landlord decide to sell the rental property, which is the subject of this agreement, the Tenant shall have the FIRST OPTION to PURCHASE the said property for the reasonable market value of the property.  For the purposes of this agreement the term ‘sell’ includes any transfer of ownership of said property. Landlord promises to give Tenant at least ninety days (90) advance notice of Landlord’s intention to sell the property”].)  However, “conduct amounting to a breach of contract becomes tortious only when it also violates a duty independent of the contract arising from principles of tort law.”  (Erlich v. Menezes (1999) 21 Cal.4th 543, 551.)  Here, the SAC suggests that Markarian’s duty to disclose came from his contractual obligation; Sardariani has not alleged a duty independent of the Lease requiring Markarian to disclose the transfer.  Therefore, Sardariani has failed to plead the second element of fraudulent concealment.  Sardariani has also failed to allege the damage he suffered as a result of the alleged concealment of the transfer (i.e., the fifth element of fraudulent concealment). Mr. Sardariani has not alleged that he had the ability to purchase the property and would have done so.

            For those reasons, the Court finds the first cause of action for fraud fails to state facts sufficient to constitute a cause of action. 

The Court already gave Plaintiffs the opportunity to amend the first cause of action for fraud after finding that the claim “fails to allege the misrepresentation(s) with the requisite specificity.”  (FAC Demurrer Ruling, filed on September 20, 2024, p. 4:21-22.) 

Therefore, Defendants’ demurrer to the first cause of action for fraud is sustained without leave to amend.

B.     2^nd Cause of Action for Intentional Concealment

The SAC’s intentional concealment claim is brought by Sardariani against Markarian and RRRM only.

      As suggested above, “[f]raudulent concealment requires the ‘suppression of a fact, by one who is bound to disclose it.’  (Civ. Code, § 1710, subd. 3.)  Plaintiff must show that defendant had a duty to disclose.”  (Huy Fong Foods, Inc. v. Underwood Ranches, LP (2021) 66 Cal.App.5th 1112, 1121–1122.)

      Here, Sardariani has not pleaded any facts showing that RRRM had a duty to disclose the transfer of the Property to him.  As for Markarian, the plaintiff has failed to plead a duty independent from the Lease as explained above.  Therefore, the Court finds that the second cause of action fails to state facts sufficient to constitute a cause of action for intentional concealment. 

This Court gave Plaintiffs the opportunity to amend the second cause of action to “allege additional facts [and] to plead the elements with the requisite specificity.”  (FAC Demurrer Ruling, p. 6:11-13.)

      Plaintiffs did not make any amendments to the second cause of action.

Therefore, the Court sustains Defendants’ demurrer to the second cause of action for intentional concealment without leave to amend.

C.     3^rd Cause of Action for Negligent Misrepresentation

The third cause of action is brought by Sardariani against Markarian and RRRM.

To allege a cause of action for negligent misrepresentation, the requisite elements are: (1) a misrepresentation of a past or existing material fact; (2) without reasonable grounds for believing it to be true; (3) with intent to induce another's reliance on the fact misrepresented; (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed; and (5) damages.  (B.L.M. v. Sabo & Deitsch (1997) 55 Cal. App. 4th 823, 834.)  Negligent misrepresentation, unlike fraud, does not require knowledge of falsity.  (Apollo Capital Fund, LLC v. Roth Capital Partners, LLC (2007) 158 Cal.App.4th 226, 243.)  However, like fraud, “[e]ach element in a cause of action for. . . negligent misrepresentation must be factually and specifically alleged.”  (Cadlo v. Owens-Illinois, Inc. (2004) 125 Cal.App.4^th 513, 519.)

The Court previously sustained demurrers to the third cause of action for negligent misrepresentation, stating that “the misrepresentations should be pled with the requisite specificity and the ‘certain facts’ Sardariani alleges in the FAC should be identified and alleged.”  (FAC Demurrer Ruling, p. 7:8-10.)

Like the second cause of action, Plaintiffs did not make any amendments to the third cause of action; the SAC still alleges in a conclusory manner that Markarian and RRRM “negligently misrepresented certain facts …” (SAC  ¶¶ 36, 37), without identifying and alleging those “certain facts” as the Court ordered.

Therefore, the Court sustains Defendants’ demurrer to the third cause of action for negligent misrepresentation, without leave to amend.

CONCLUSION AND ORDER

Defendants Roland Markarian, RRRM Holding Company, LLC, Ara Ohanjanyan, Arman Arutyunyan, and Rejina Mehdian’s five demurrers to the first three causes of action are sustained without leave to amend. 

Defendants shall provide notice of this order.

DATED: January 24, 2025                                         ___________________________

                                                                              John J. Kralik

                                                                              Judge of the Superior Court