Judge: John J. Kralik, Case: 24NNCV04054, Date: 2025-02-21 Tentative Ruling
Case Number: 24NNCV04054 Hearing Date: February 21, 2025 Dept: NCB
North
Central District
|
LASZLO
LAKATOS, Plaintiff, v. HOVIK
KOCHINIAN, et al., Defendants. |
Case No.:
24NNCV04054 Hearing Date: February 21, 2025 [TENTATIVE] order RE: DEMURRER |
BACKGROUND
A.
Allegations of Complaint
Plaintiff Laszlo Lakatos (“Plaintiff”)
alleges that he has been a dealer of antiques and gems, including fine art, for
the past 38 years. (Compl., ¶ 10.) Plaintiff is the owner of painting by
well-known American artist Edward Hopper. (Compl., ¶ 10.) The oil on canvas
painting, approximately 43 ½ inches by 26 inches in size, is known by the title
“Edward Hopper’s ‘Hotel’,” and the complaint refers to such painting as the
“Hotel Painting.” (Compl., ¶ 11.) The Hotel Painting is valuable and unique,
and as such, is worth millions of dollars. (Compl., ¶ 11.) Plaintiff is
sight-impaired and suffers from numerous health issues. (Compl., ¶ 12.)
Plaintiff is unable to carry on his work as he was in the past. (Compl., ¶ 12.)
Plaintiff therefore decided to sell the Hotel Painting. (Compl., ¶ 12.)
Plaintiff entered into an agreement with
Defendants to sell the Hotel Painting. (Compl., ¶ 13.) Defendants agreed to
sell the Hotel Painting for a percentage of the purchase price. (Compl., ¶ 13.)
Defendants took possession of the Hotel Painting to help with sale and
authentication efforts. (Compl., ¶ 13.) Defendants informed Plaintiff on two
occasions that they had buyers lined up for the purchase of the Hotel Painting;
however, on each occasion a meeting was scheduled for Plaintiff to meet a buyer
to effectuate the sale, the purported buyer never showed. (Compl., ¶ 14.) The
parties thereafter entered into a contract; however, Plaintiff subsequently
learned several offers were made from potential buyers. (Compl., ¶ 19.)
Defendants failed to present the offers to Plaintiff, or otherwise took actions
or inactions which thwarted these opportunities to sell the Hotel Painting.
(Compl., ¶ 19.)
Plaintiff demanded return of the Hotel
Painting and Defendants agreed to return the Hotel Painting if Plaintiff would
give Defendants the contractual documents related to the contract. (Compl., ¶ 21.)
Plaintiff turned over such documents and Defendants refused to return the Hotel
Painting. (Compl., ¶ 22.) Plaintiff was able to negotiate a potential sale of
the Hotel Painting, which was contingent on the buyer being able to inspect and
authenticate the Hotel Painting. (Compl., ¶ 23.) Defendants, again, refused
Plaintiff’s request to return the Hotel Painting and indicated they would
return the painting after Plaintiff paid them $70,000.00. (Compl., ¶ 23.)
Plaintiff alleges that Defendants failed
and refused to produce the Hotel Painting to the potential buyer located by
Plaintiff, or any other potential buyer, and have refused to return the Hotel
Painting to Plaintiff. (Compl., ¶ 27.) Defendants have also failed to present
any bona fide potential buyers of the Hotel Painting to Plaintiff. (Compl., ¶
27.) To date, Defendants remain in possession of Plaintiff’s Hotel Painting and
refuse to return the painting to Plaintiff, its rightful owner. (Compl., ¶ 28.)
The complaint, filed on September 6,
2024, alleges causes of action for breach of contract, conversion, intentional
interference with contractual relations, negligent interference with
contractual relations, intentional interference with prospective business
advantage, negligent interference with prospective business advantage,
declaratory judgment, fraud, breach of fiduciary duty, breach of covenant of
good faith and fair dealing, unjust enrichment, constructive trust, unfair
competition, breach of duties of loyalty and care, replevin, specific
performance, and civil conspiracy. The complaint is asserted against Defendants
Hovik Kochinian (“Kochinian”), Hovik’s Fine Art (“HFA”), Richard M. Foster
(“Foster”), Law Offices of Richard M. Foster (“Law Offices”), and DOES 1
through 100, inclusive.
B.
Relevant Background
On January 24, 2025, this Court took
Plaintiff’s request for possession of the Hotel painting under submission. Later that day, this Court ruled that pending
further court order:
“1. The painting should not be moved from
its present location.
2. The painting must be kept in
safekeeping, and cannot be sold, transferred or otherwise alienated pending the
trial in this matter.
3. Plaintiff and prospective buyers may
have access to the painting for inspection in a commercially reasonable manner
on 24 hours’ notice to Defendant Kochinian.”
C.
Motion on Calendar
On January 24, 2025, Defendant Richard M.
Foster and the Law Offices of Richard M. Foster filed a demurrer to Plaintiff’s
first, second, third, fourth, fifth, sixth, eighth, ninth, tenth, eleventh,
twelfth, thirteenth, fourteenth, fifteenth, sixteenth, and seventeenth causes
of action.
DISCUSSION
Legal Standard
“[A] demurrer tests the legal sufficiency of
the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235
Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that
appear on the face of the pleading under attack or from matters outside the
pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co.
(2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not
consider declarations, matters not subject to judicial notice, or documents not
accepted for the truth of their contents].) For purposes of ruling on a
demurrer, all facts pleaded in a complaint are assumed to be true, but the
reviewing court does not assume the truth of conclusions of law. (Aubry v.
Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)
D. Analysis
First Cause of Action – Breach of
Contract
To state a cause of action for breach of
contract, Plaintiff must be able to establish “(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.) Defendant Foster argues that Plaintiff has
failed to allege the terms of the contract or provide a copy of the written
contract. Plaintiff alleges that he
entered into a contract with Defendant Foster, whereby Foster would facilitate
the sale of the painting in exchange for a 10% fee. (Compl., ¶ 26.) Defendants failed and refused
to produce the Hotel Painting to the potential buyer located by Plaintiff, or
any other potential buyer, and have refused to return the Hotel Painting to
Plaintiff. (Compl., ¶ 27.) Defendants have also failed to present any bona fide
potential buyers of the Hotel Painting to Plaintiff. (Compl., ¶ 27.) Here, Plaintiff has alleged the material terms
of the contract, Plaintiff’s performance, and Defendant’s breach of that
contract. Defendant’s demurrer as to
this cause of action is OVERRULED.
Second Cause of
Action – Conversion
“Conversion is the
wrongful exercise of dominion over the property of another. The elements of a
conversion claim are: (1) the plaintiff’s ownership or right to possession of
the property; (2) the defendant’s conversion by a wrongful act or disposition of
property rights; and (3) damages.” (Lee v. Hanley (2015) 61 Cal.4th
1225, 1240.) Defendant Foster demurs on
the ground that Plaintiff did not provide specific factual allegations,
pursuant to California law, to prove that Defendants have custody or control
over the painting. Here, it appears that
Plaintiff transferred possession of the painting to Defendants Kochinian and
Hovik’s in regard to the first contract (Compl., ¶ 13), Plaintiff does not
allege that Defendant Foster took possession of the painting in relation to his
agreeing to the “Second Contract.” (Compl., ¶ 26.) The demurrer as to the second cause of action
is SUSTAINED with leave to amend.
Third Cause of
Action – Intentional Interference with Contractual Relations
The elements of a
cause of action for intentional interference with contractual relations are
“(1) a valid contract between plaintiff and a third party; (2) defendant’s
knowledge of this contract; (3) 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.” (I-CA
Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257,
289.) As Plaintiff has failed to sufficiently
plead with specific facts the existence of a contractual relationship between
Plaintiff and a third party, the demurrer as to this cause of action is SUSTAINED
with leave to amend.
Fourth Cause of Action Negligent
Interference with Contractual Relations
Defendant demurs to this cause of action
on the grounds that there is no cause of action for Negligent Interference with
Contractual Relations in California. The
demurrer as to this cause of action is SUSTAINED without leave to amend.
Fifth Cause of Action - Intentional
Interference with Prospective Business Advantage
The elements of a
claim for intentional interference with prospective economic advantage include
“(1) an economic relationship between the plaintiff and some third party, with
the probability of future economic benefit to the plaintiff; (2) the defendant’s
knowledge of the relationship; (3) intentional or negligent acts on the part of
the defendant designed to disrupt the relationship; (4) actual disruption of
the relationship; and (5) economic harm to the plaintiff proximately caused by
the acts of the defendant.” (Crown Imports, LLC v. Superior Court (2014)
223 Cal.App.4th 1395, 1404, citations, brackets, and quotation marks omitted.)
Further, “the alleged interference must have been wrongful by some measure
beyond the fact of the interference itself. For an act to be sufficiently
independently wrongful, it must be unlawful, that is, it is proscribed by some
constitutional, statutory, regulatory, common law, or other determinable legal
standard.” (Ibid., citation, ellipsis, and quotation marks omitted.) Here, Defendant notes that Plaintiff failed
to plead sufficient facts to constitute this cause of action. As Plaintiff has failed to sufficiently plead
with specific facts the existence of a contractual relationship between
Plaintiff and a third party, the demurrer as to this cause of action is SUSTAINED
with leave to amend.
Sixth Cause of
Action - Negligent Interference with Prospective Economic Advantage
“The elements of
negligent interference with prospective economic advantage are (1) the
existence of an economic relationship between the plaintiff and a third party
containing the probability of future economic benefit to the plaintiff; (2) the
defendant’s knowledge of the relationship; (3) the defendant’s knowledge
(actual or construed) that the relationship would be disrupted if the defendant
failed to act with reasonable care; (4) the defendant’s failure to act with
reasonable care; (5) actual disruption of the relationship; and (6) economic
harm proximately caused by the defendant’s negligence.” (Redfearn v. Trader
Joe’s Co. (2018) 20 Cal.App.5th 989, 1005.)
The demurrer as to this cause of action is SUSTAINED for the same
reasoning as to the Third and Fifth Causes of Action, above.
Eighth
Cause of Action – Fraud
“The
elements of fraud are (a) a misrepresentation (false representation,
concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c)
intent to induce reliance; (d) justifiable reliance; and (e) resulting damage.”
(Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The
facts constituting the alleged fraud must be alleged factually and specifically
as to every element of fraud, as the policy of “liberal construction” of the
pleadings will not ordinarily be invoked. (Lazar v. Superior Court
(1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation,
the plaintiffs must plead the names of the persons allegedly making the false
representations, their authority to speak, to whom they spoke, what they said
or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto.
Ins. Co. (1991) 2 Cal.App.4th 153, 157.)
Defendant argues that Plaintiff provides generalized assertions about
false representations but does not identify specific statements, when and where
they were made, or the circumstances surrounding them. Due to Plaintiff’s failure to plead this
cause of action with specificity, the demurrer is SUSTAINED with leave
to amend.
Ninth
Cause of Action – Breach of Fiduciary Duty
“The elements of a
cause of action for breach of fiduciary duty are the existence of a fiduciary
relationship, breach of fiduciary duty, and damages.” (Oasis West Realty, LLC
v. Goldman (2011) 51 Cal.4th 811, 820.) Defendant
demurs to this cause of action on the grounds that Plaintiff does not clearly
articulate the alleged breach of Defendants.
Plaintiff alleges that Defendant breached his duty to Plaintiff by “refusing
to present offers, failing to provide relevant information, and falsely
claiming ownership of the Hotel Painting.” (Compl., ¶ 65.) However, as
Plaintiff has not alleged that Defendant Foster took possession of the
painting, it is not clear which of these allegations specifically apply to
Defendant Foster. The demurrer as to this
cause of action is SUSTAINED with leave to amend.
Tenth
Cause of Action – Breach of Covenant of Good Faith and Fair Dealing
“A
breach of the implied covenant of good faith and fair dealing involves
something beyond breach of the contractual duty itself and it has been held
that bad faith implies unfair dealing rather than mistaken judgment.” (Careau
& Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d
1371, 1394.) “If the allegations do not go beyond the statement of a mere
contract breach and, relying on the same alleged acts, simply seek the same
damages or other relief already claimed in a companion contract cause of
action, they may be disregarded as superfluous as no additional claim is
actually stated … [T]he only justification for asserting a separate cause of
action for breach of the implied covenant is to obtain a tort recovery.” (Id.
at pp. 1394-1395.) To recover in tort for breach of the implied covenant, the
defendant must “have acted unreasonably or without proper cause.” (Id.
at p. 1395, citations and italics omitted.)
Plaintiff’s complaint fails to allege any additional specific facts beyond
what was alleged in the first cause of action.
The demurrer to this cause of action is SUSTAINED as superfluous.
Eleventh
Cause of Action – Unjust Enrichment
“The elements for
a claim of unjust enrichment are receipt of a benefit and unjust retention of
the benefit at the expense of another. The theory of unjust enrichment requires
one who acquires a benefit which may not justly be retained, to return either the
thing or its equivalent to the aggrieved party so as not to be unjustly
enriched.” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 769,
quotation marks and citations omitted.) However, “[u]njust enrichment is not a
cause of action”; it is simply “a restitution claim.” (Hill v. Roll
International Corp. (2011) 195 Cal.App.4th 1295, 1307; see also Melchior
v. New Line Productions, Inc. (2003) 106 Cal.App.4th 779, 793 [“there is no
cause of action in California for unjust enrichment”].) Because Plaintiff did not plead that
Defendant Foster has possession of the painting, the demurrer as to this cause
of action is SUSTAINED with leave to amend.
Twelfth Cause of
Action – Constructive Trust
As Defendant
Foster notes, a constructive trust is a remedy.
To the extent that Plaintiff brought this as a cause of action, the
demurrer is SUSTAINED.
Thirteenth Cause
of Action – Unfair Competition
To set forth a
claim for a violation of Business and Professions Code section 17200 (“UCL”),
Plaintiff must establish Defendant was engaged in an “unlawful, unfair or
fraudulent business act or practice and unfair, deceptive, untrue or misleading
advertising” and certain specific acts. (Bus. & Prof. Code, § 17200.) A
cause of action for unfair competition “is not an all-purpose substitute for a
tort or contract action.” (Cortez v. Purolator Air Filtration Products Co.
(2000) 23 Cal.4th 163, 173.) Here, Plaintiff
alleges no specific facts as to Defendant’s alleged unlawful, unfair, or
fraudulent business act or practice and nothing at all regarding unfair,
deceptive, untrue, or misleading advertising.
The demurrer to this cause of action is SUSTAINED with leave to
amend.
Fourteenth Cause
of Action – Breach of the Duties of Loyalty and Care
The elements to
establish a breach of the duty of loyalty are: (1) the existence of a
relationship giving rise to a duty; (2) the defendant’s breach of that duty;
and (3) damages to the plaintiff proximately caused by the defendant’s breach.
(Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 410.) Plaintiff’s claim for breach of the duty of
loyalty is duplicative of his cause of action for breach of fiduciary duty.
Both causes of action are predicated on the same underlying allegations: that a
person in a position of trust acted in a manner prioritizing their own
interests over those of the Plaintiff. As this cause of action is superfluous, the
demurrer is SUSTAINED with leave to amend.
Fifteenth Cause of
Action for Replevin
One of the
elements required for replevin is actual possession of the item. (Stockton Morris Plan Co. v. Mariposa
County (1950) 99 Cal.App.2d 210, 213.)
Plaintiff has not alleged that Defendant Foster is in possession of the
painting, and therefore the demurrer as to this cause of action is SUSTAINED
with leave to amend.
Sixteenth Cause of
Action for Specific Performance
Although a breach
of contract may be redressed in various ways, such as by rescission, specific
performance, declaratory relief, the payment of damages, or injunctive relief,
the remedy is not the cause of action, but rather, there is a single cause of cause
of action for breach of contract; otherwise stated, the “‘seeking of different
kinds of relief does not establish different causes of action.’” (Marden v.
Bailard (1954) 124 Cal.App.2d 458, 465.)
This matter is superfluous and therefore the demurrer is SUSTAINED
with leave to amend.
Seventeenth Cause
of Action for Civil Conspiracy
“Civil conspiracy
is not an independent tort. Instead, it is ‘a legal doctrine that imposes
liability on persons who, although not actually committing a tort themselves,
share with the immediate tortfeasors a common plan or design in its
perpetration. [Citation.] By participation in a civil conspiracy, a
coconspirator effectively adopts as his or her own the torts of other
coconspirators within the ambit of the conspiracy. [Citation.] In this way, a
coconspirator incurs tort liability co-equal with the immediate tortfeasors.” (City
of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211-212, quoting
Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503,
510-511; see City of Industry v. City of Fillmore, supra, at p. 212
[“constru[ing] the fifth count for fraud and the tenth count for conspiracy
together as a single count for fraud”].) Because the demurrer for Plaintiff’s cause of
action for fraud was sustained with leave to amend, this cause of action is
also SUSTAINED with leave to amend.
MOTION
TO STRIKE
Further, the court
may, upon motion, or at any time in its discretion, and upon terms it deems
proper, strike any irrelevant, false, or improper matter inserted in any
pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or
any part of any pleading not drawn or filed in conformity with the laws of this
state, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd.
(b).) The grounds for a motion to strike are that the pleading has irrelevant,
false, or improper matter, or has not been drawn or filed in conformity with
laws. (Code Civ. Proc., § 436.) The grounds for moving to strike must appear on
the face of the pleading or by way of judicial notice. (Code Civ. Proc., §
437.)
Punitive damages
may be recovered upon a proper showing of malice, fraud, or oppression. (Civ.
Code, § 3294, subd. (a).) “Malice” is defined as conduct intended to cause
injury to a person or despicable conduct carried on with a willful and
conscious disregard for the rights or safety of others. (Turman v. Turning
Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression”
means despicable conduct subjecting a person to cruel and unjust hardship, in
conscious disregard of the person’s rights. (Ibid.) “Fraud” is an
intentional misrepresentation, deceit, or concealment of a material fact known
by defendant, with intent to deprive a person of property, rights or otherwise
cause injury. (Ibid.) Conclusory allegations, devoid of any factual
assertions, are insufficient to support a conclusion that parties acted with
oppression, fraud or malice. (Smith v. Superior Court (1992) 10
Cal.App.4th 1033, 1042.) Here, Plaintiff has not alleged facts sufficient
to show that Defendant has acted with oppression, fraud, or malice, and the
Court strikes the portions of the complaint requesting punitive damages.
An award of
attorney’s fees is proper when authorized by contract, statute, or law. (Code
Civ. Proc., §§ 1032, subd. (b), 1033.5, subd. (a)(10).) Defendant requests that Plaintiff’s requests
for attorney’s fees be stricken as not authorized by contract, statute or
law. That request is GRANTED.
Defendant Foster
requests that the Plaintiff’s Seventh Cause of Action for Declaratory Relief
also be stricken, on the basis that Plaintiff fails to allege sufficient facts
to establish the existence of an actual controversy and that the assertion that
“a dispute has arisen between Plaintiff and Defendants concerning the rightful
ownership of the Painting” is vague and conclusory. However, this Court finds that Plaintiff has
alleged facts sufficient to allege that Plaintiff’s ownership of the painting
and that there was a contract between Plaintiff and Defendant regarding that
painting, and there is currently a controversy between the parties regarding
possession and ownership of the painting.
The request to strike the Seventh Cause of Action for Declaratory Relief
is DENIED.
CONCLUSION AND ORDER
Defendant’s
demurrer is sustained as to all but the First Cause of action. Defendant’s motion to strike is granted as to
the requests for punitive damages and attorney’s fees but denied as to the
Seventh Cause of Action. Defendant shall
provide notice of this order.
DATED:
February 21, 2025 ___________________________
John
Kralik
Judge of
the Superior Court