Judge: Jon R. Takasugi, Case: 22SMCV02125, Date: 2023-03-22 Tentative Ruling

Case Number: 22SMCV02125    Hearing Date: March 22, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendants’ demurrer is SUSTAINED IN PART, OVERRULED IN PART. Defendants’’ demurrer is SUSTAINED, WITH 20 DAYS LEAVE TO AMEND, as to the claims against Ashley Gagnon and as Plaintiff’s individual conversion claim. Defendants’ demurrer is OVERRULED in all other regards. 

            On 10/25/2022, Plaintiff Arsalan Hamidi (Plaintiff) filed suit against Brett Gagnon, George B. Gagnon, Geminon Properties, LLC, and Ashley R. Gagnon (collectively, Defendants), alleging: (1) violation of Georgia Code section 14-11-313; (2) fraud; (3) negligent misrepresentation; (4) breach of operating agreement; (5) breach of operating agreement; (6) breach of fiduciary duties; (7) constructive fraud; (8) unjust enrichment; (9) conversion; (10) cessation/withdrawal of memberships and management; and (11) cancellation of written instruments. 

            Now, Defendants demur to Plaintiff’s Complaint.

Factual Background

            Plaintiff alleges that on 9/30/2020, he entered into an agreement with Brett Gagnon (who is also known as George Gagnon) to open a real estate company, Geminon. The purpose of the agreement was to purchase and resell real estate for a profit. Plaintiff alleges that he was defrauded by Defendants into believing that the property at issue here (the Property) was being remodeled for the purpose of resale. Plaintiff alleges that, in reality, Defendants were using Plaintiffs’ capital infusions to develop the property for their own personal use, and ultimately took title to the property without authority or authorization.

Discussion

            Defendants argue that Plaintiff’s Complaint fails to allege sufficient facts to state a claim because: (1) Plaintiff’s Complaint is devoid of any facts which could show Ashley Gagnon’s liability; (2) the fraud causes of action are not alleged with the requisite specificity; (3) Plaintiff has failed to allege a valid contract; (4) Plaintiff has not alleged facts which could show a breach of fiduciary duty; (5) Plaintiff has not alleged facts to show a right to the funds; and (6) Plaintiff has not alleged, for purposes of his conversion claim, that he rightfully had a claim of title/possession of funds.

            The Court addresses these arguments in turn.

            As to the first point, the Court agrees the allegations are uncertain as to Ashley Gagnon. Plaintiff alleges that he and Brett Gagnon formed the subject Agreement, yet asserts causes of action like breach of contract and breach of fiduciary duty against Ashley Gagnon based on that Agreement. Plaintiff also includes Ashley Gagnon in the fraud causes of action, yet the alleged misrepresentations concern the statements about the execution of the agreement to renovate and sell the Property which Ashley is not alleged to have been a party to. Plaintiff must allege facts which could show Ashley Gagnon’s liability. While in opposition Plaintiff argues that he alleges Ashley was a co-conspirator, Plaintiff has not alleged any facts, or cited any case law, which could show that this would extend contractual liability to her or give rise to a fiduciary duty. 

            As to the second point, the Court disagrees that the fraud causes of actions are not alleged with the requisite specificity. Plaintiff alleges that between September 2020 and October 28, 2020, he and Brett Gagnon had conversations wherein “Gagnon orally and in emails represented to Hamidi on multiple occasions that, if each member of Geminon (meaning Gagnon and Hamidi) infused additional capital of $275,000 in Geminon, then (a) the funds would be used to purchase and remodel the Property; (b) the remodeling of the Property would take at most 6-8 months; and (c) the Property would be sold to a third party for a substantial profit.” (Complaint ¶ 11.) Plaintiff alleges that Brett Gagnon knew these representations were false and were made “with the intent to deceive and lull Hamidi into infusing the additional capital of $275,000 to purchase and remodel the Property, not for the eventual sale of the Property to a third party, but instead, so that Gagnon and Ashley (who is Gagnon’s wife) could personally reside in the Property at a substantial detriment to Geminon and Hamidi (especially since, on information and belief, the material and finishings Gagnon selected for Gagnon and Ashley’s personal residence were higher than what would be used for investment purposes).” (Complaint ¶ 12.) These allegations set forth the what, how, when, where, to whom, and by what means the representations were made. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) As such, these allegations are sufficiently specific at the pleading stage to state claims for fraud as to Brett Gagnon.

            As for the third point, the Court disagrees that Plaintiff has not alleged facts which could state a claim for breach of contract as to Brett Gagnon. Plaintiff’s Complaint sets forth the material terms of the contract, alleges performance of the contract by way of capital investments, and alleges breach of that contract. (See Complaint ¶ 9.) Whether or not the material terms are so vague as to preclude actual enforcement is a factual determination not properly decided at this stage. Accepted as true at the pleading stage, Plaintiff’s allegations are sufficient to state a claim for breach of contract as to Brett Gagnon. To the extent Defendants challenge the request for attorney fees, that is properly challenged through a motion to strike, not a demurrer.

            As for the fourth point, the Court disagrees that Plaintiff has not alleged facts which could state a claim for breach of fiduciary duty. Plaintiff alleges that he and Brett Gagnon entered into a partnership, and that Brett Gagnon breached that duty by misdirecting funds meant to serve the interests of the partnership. A partnership is a fiduciary relationship. (Jones v. Wells Fargo Bank (2003) 112 Cal. App. 4th 1527.)

            As for the fifth point, the Court disagrees that Plaintiff has not alleged facts to show unjust enrichment. As noted by Defendants, the following must be shown for the Court to impose a constructive trust: “(1) the existence of a res (property or some interest in property)’ (2) the right of a complaining party to that res; and (3) some wrongful acquisition or detention of the res by another party who is not entitled to it.” (Communist Party v Valencia, Inc. (1995) 35 CA4th 980, 990.) Here, as set forth above, the Court found Plaintiff alleged sufficient facts to state a claim for fraud and breach of fiduciary duty. As such, Plaintiff has alleged facts which could show an interest in partnership property that was wrongfully misappropriated by Brett Gagnon, and thus has alleged sufficient facts at the pleading stage to support the unjust enrichment cause of action.

            As for the sixth point, the Court agrees only in part that Plaintiff has not alleged sufficient facts to state a claim for conversion. Plaintiff brings the claim individually and on behalf of Geminon.

            Plaintiff’s allegations are sufficient to state a claim on behalf of Geminon. Plaintiff alleges that Geminon’s funds and assets were misappropriated by Brett Gagnon without authorization. While Defendants argue that money cannot be the basis of a conversion claim, this is not the case. A conversion claim can be stated based on money as long as there is a specific, identifiable sum involved. (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384.) Here, Plaintiff alleges specific sums as part of the claim.

            However, Plaintiff has not alleged facts which could show that his personal funds, separate and apart from Geminon’s funds, were misappropriated. Leave will be afforded to provide Plaintiff an opportunity to show conversion of his personal funds, in addition to Geminon’s funds.

            Based on the foregoing, Defendants’ demurrer is sustained in part, overruled in part. Defendants’’ demurrer is sustained, with 20 days leave to amend, as to the claims against Ashley Gagnon and as Plaintiff’s individual conversion claim. Defendants’ demurrer is overruled in all other regards. 

It is so ordered.

Dated:  March     , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

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