Judge: Jon R. Takasugi, Case: 21STCV47140, Date: 2023-03-03 Tentative Ruling

Case Number: 21STCV47140    Hearing Date: March 3, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s demurrer is OVERRULED.

On 12/28/2021, Plaintiffs Zohar and Leeron Regev (collectively, Plaintiffs) filed suit against Matthew Wilkie, Cal Developers, Inc., Angel Wayhang Kou, and Umro Realty Corp. On 7/26/2022, Plaintiffs filed a first amended complaint (FAC). On 11/14/2022, Plaintiffs filed a second amended complaint (SAC) alleging: (1) intentional misrepresentation; (2) negligent misrepresentation; (3) breach of fiduciary duty; and (4) breach of contract.

            On 10/10/2022, Plaintiffs dismissed Angel Wayhang Kou and Umro Realty Group from the action.

            Now, Defendant Matthew Wilkie (Defendant) demurs to Plaintiff’s third cause of action.

Discussion

            Defendant argues that Plaintiff’s SAC still fails to allege facts which could show he owed any fiduciary duty to Leeron Regev, or that he breached any such duty.

            The Court disagrees.

In its previous ruling, the Court wrote that Plaintiff would be afforded one final opportunity to allow facts which could show Defendant here owed, and breached, and fiduciary due to Plaintiff.

            The Court now concludes that he has. Plaintiffs allege that Wilkie and Leeron entered into a partnership to purchase the subject property. (SAC ¶ 36.) Plaintiff Zohar loaned the partnership $67,500.00 for the sole and express purpose of purchasing the subject property. (Ibid.)  Leeron alleges that Defendant breached his fiduciary duty to the partnership by diverting those funds and using them for his own use and benefit rather than for the purpose of the subject property:

Wilkie breached his fiduciary duties owed to Leeron by acting in his own best interests by retaining and controlling all proceeds from Zohar for his own use and benefit. Wilkie has taken such actions in order to divert all funds from the partnership to himself that should have been used for the purchase of the Subject Property. Moreover, Wilkie has further breached his fiduciary duty by failing to account for the use of these funds and failed to close on the purchase of the Subject Property in order to benefit himself.

            (SAC ¶ 37.)

            In his motion, Defendant concedes that a partnership is among the relationships which can rise to a fiduciary duty, but he argues “there are no facts indicating the formation or existence of a partnership or like relationship of trust and confidence between Leeron and Wilkie.” (Demurrer, 8: 5-7.) However, at the pleading stage, the Court accepts well-pled allegations as true. Thus, whether or not Defendant and Leeron, in fact, entered into a partnership and formed a fiduciary relationship is not properly decided at this stage. Rather, it is sufficient that Plaintiffs allege that Defendant and Leeron entered into a business partnership giving rise to a fiduciary duty, and that Defendant breached a fiduciary duty owed to Leeron by virtue of their partnership by misdirecting funds meant to serve the interests of the partnership. This misdirection in funds resulted in the failure to close on the property which in turn resulted in an alleged $100,000 in lost profits. This is sufficient at this stage to allege damages.  

            Based on the foregoing, Defendant’s demurrer is overruled.

It is so ordered.

Dated:  March     , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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