Judge Lynne M. Hobbs, Case Number: 24STCV18886, Date: 2025-01-22 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 24STCV18886, Date: 2025-01-22 Tentative Ruling

Case Number: 24STCV18886 Hearing Date: January 22, 2025 Dept: 61

B4YM LEGACY LLC vs INTREPID INVESTMENT BANKERS, LLC, et al.

Tentative

Defendants Intrepid Investment Bankers, LLC and Eduard Bagdasarian’s Demurrers to the First Amended Complaint are CONTINUED to permit additional briefing on the question of the potential jurisdiction of the federal court, in Case No. 2:22-bk-10994-BB, over the claims now asserted against Bagdasarian in the present matter.

Judicial Assistant is to calendar.

Plaintiff to provide notice.

Analysis:

I. DEMURRER

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) In particular, as is relevant here, a court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) 39 Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 [“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. [Citation.]”) “In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.) “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

Defendants Intrepid Investment Bankers, LLC and Eduard Bagdasarian (collectively Defendants) demurrer to the First Amended Complaint (FAC) filed by Plaintiff BFY Winddown, Inc. (Plaintiff) on several grounds. Defendants argue that Plaintiff has filed an action asserting identical claims against Defendant Intrepid Bankers in a bankruptcy proceeding in the Central District of California. (Defendants RJN Exh. 8.) They argue that Plaintiff’s claims are subject to an arbitration agreement. (Bagdasarian Demurrer at pp. 5–7.) They argue that Plaintiff’s claims here were not disclosed as assets to the bankruptcy court, and thus the claims are barred by judicial estoppel. (Intrepid Demurrer at pp. 11–13.) And Defendants argue that the claims fail to state essential elements, such as Plaintiff’s performance of the contract, a basis for alleging breach of the covenant of fair dealing separate from the breach of contract, and the existence of a fiduciary duty. (Intrepid Demurrer at pp. 13–16.)

Among these arguments, that based on the already-pending bankruptcy proceeding is of particular priority. It is true, as Defendants argue, that Plaintiff earlier filed an action in the bankruptcy court alleging the same causes of action against Defendant Intrepid, based on the same facts relating to Defendants’ non-performance of their contract to find a buyer for Plaintiff’s company. (RJN Exh. 8 [Second Amended Complaint in In re: Better 4 You Breakfast, Inc., C.D. Cal., Case No. 2:22-bk-10994-BB.) Adjudicating questions relating to the legal sufficiency and arbitrability of Plaintiffs’ claims thus risks the prospect of conflicting rulings on identical issues by courts hearing essentially the same case. The doctrine of “exclusive concurrent jurisdiction is designed to prevent these issues from arising. That doctrine holds that, “when two superior courts have concurrent jurisdiction over the subject matter and all parties involved in litigation, the first to assume jurisdiction has exclusive and continuing jurisdiction over the subject matter and all parties involved until such time as all necessarily related matters have been resolved.” (Plant Insulation Co. v. Fibreboard Corp. (1990) 224 Cal.App.3d 781, 786–787.) “The rule is based upon the public policies of avoiding conflicts that might arise between courts if they were free to make contradictory decisions or awards relating to the same controversy, and preventing vexatious litigation and multiplicity of suits.” (People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4th 760, 769–70.)

Unlike the statutory plea [in] abatement, the rule of exclusive concurrent jurisdiction does not require absolute identity of parties, causes of action or remedies sought in the initial and subsequent actions. [Citations.] If the court exercising original jurisdiction has the power to bring before it all the necessary parties, the fact that the parties in the second action are not identical does not preclude application of the rule. Moreover, the remedies sought in the separate actions need not be precisely the same so long as the court exercising original jurisdiction has the power to litigate all the issues and grant all the relief to which any of the parties might be entitled under the pleadings. (Shaw v. Superior Court of Contra Costa County (2022) 78 Cal.App.5th 245, 256.)

The doctrine may well apply here. Plaintiff initiated its claims in the bankruptcy court against Intrepid on June 21, 2023, thus prior to the filing of the present case on July 30, 2024. The bankruptcy complaint initially sought only declaratory relief against Intrepid’s bankruptcy claims, but were subsequently amended on August 28, 2023, to assert claims for breach of contract and unfair dealing. (Intrepid Demurrer at p. 4; Plaintiff RJN Exh. 4..) The complaint was further amended in September 27, 2024, to assert a claim for breach of fiduciary duty. (RJN Exh. 8.) The subject matter of the two complaints is thus functionally identical. *

But Plaintiff in opposition argues that the proceedings are different in one key respect: this matter involves Defendant Bagdasarian, who is not a defendant in the bankruptcy action. (Opposition at p. 10.) Plaintiff argues that the federal court lacks diversity or federal question jurisdiction over Bagdasarian, and that he has furthermore declined to stipulate to the court’s exercise of jurisdiction over him. (Opposition at p. 10.)

This argument is ill-explained and under-briefed. It is true that the doctrine of exclusive concurrent jurisdiction requires the priority court to have “the power to bring before it all the necessary parties” (Shaw, supra, 78 Cal.App.5th at p. 256), but the sole basis Plaintiff offers against the federal court’s subject matter jurisdiction is the conclusory statement that it is lacking. Nor is there any indication that Bagdasarian’s consent to jurisdiction would fix matters, since “[t]he parties have no power to confer jurisdiction on the district court by agreement or consent.” (Morongo Band of Mission Indians v. California State Bd. of Equalization (9th Cir. 1988) 858 F.2d 1376, 1380.) Thus the court has little basis to make any conclusion on the federal court’s jurisdiction over Plaintiff’s claims against Bagdasarian.

Accordingly, before any ruling can be made on the present demurrers, this court requires additional briefing on the question of the potential jurisdiction of the federal court, in Case No. 2:22-bk-10994-BB, over the claims now asserted against Bagdasarian in the present matter.

___________
* The bankruptcy complaints are asserted by Better 4 You Breakfast, Inc., while the present action is brought by B4Y Winddown, Inc., which alleges it is the successor of Better 4 You Breakfast, Inc., and thus the owner of all of its claims. (RJN Exh. 8; FAC ¶ 2.) The actions are brought by the same counsel. No explanation has been offered to explain how Plaintiff can own claims derived from the entity that is simultaneously prosecuting the same claims by the same counsel. Plaintiff does not argue that this difference in party identity defeats the doctrine of exclusive concurrent jurisdiction, as identical causes of action are at issue.