Judge: Malcolm Mackey, Case: 21STCV44630, Date: 2022-08-02 Tentative Ruling


Case Number: 21STCV44630    Hearing Date: August 2, 2022    Dept: 55

KANCILIA v. LAPSHUK                                                   21STCV44630 

Hearing Date:  8/2/22,  Dept. 55

#7:   

1.      DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT FOR DAMAGES.

2.      MOTION TO STRIKE PORTIONS OF PLAINTIFF’S FIRST AMENDED COMPLAINT.

3.      DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT FOR DAMAGES.

4.      MOTION TO STRIKE PORTIONS OF PLAINTIFF’S FIRST AMENDED COMPLAINT.

 

Notice:  Okay

Opposition

 

MP:  

1.      Defendants ROMAN LAPSHUK and WD LABS.

2.      Defendants ROMAN LAPSHUK and WD LABS.

3.      Defendants VITALINA KANCILIA and OLHA KUKSHYN.

4.      Defendants VITALINA KANCILIA and OLHA KUKSHYN.

 

RP:  

 

1 – 4.  Plaintiff.

 

Summary

 

On 12/7/21, Plaintiff DIRK H. KANCILIA filed a Complaint against defendants ROMAN LAPSHUK, et al.

On 2/28/22, Plaintiff filed a First Amended Complaint alleging:  Defendant ROMAN LAPSHUK induced Plaintiff to loan him and W.D. LABS monies, in exchange for 25 percent of the revenue or profits that W.D. would generate by manufacturing, distributing, and selling Cannabis, and/or lab testing of substances and marijuana.  Additionally,  as a result of misrepresentations regarding Plaintiff’s inability to purchase real property in Ukraine, Plaintiff delivered $71,000.00 to Ms. Kukshyn that was to be used to purchase property in Ukraine.

The causes of action are:

1. PROMISSORY FRAUD

2. NEGLIGENT MISREPRESENTATION

3. BREACH OF ORAL CONTRACT

4. UNJUST ENRICHMENT

5. MONEY HAD AND RECEIVED

6. FRAUD

7. NEGLIGENT MISREPRESENTATION

8. CIVIL CONSPIRACY.

 

 

MP Positions

 

Moving parties request an order sustaining the demurrers to the First Amended Complaint, and granting the motions to strike punitive damages, on grounds including the following:

 

·         Standing:  None of the alleged “various entities” Plaintiff made loans through, are named as plaintiffs.  Plaintiff individually lacks standing to sue.

·         Sham:  The FAC is a sham pleading because it differs drastically from the original Complaint. The original Complaint contained no allegations of fraud, deceit, or misrepresentations by Defendants.

·         Misjoinder:  The allegations against Mr. Lapshuk and WD are related to a purported loan Plaintiff gave Mr. Lapshuk and WD, which Plaintiff alleges was never paid back. The allegations against Ms. Kancilia and Ms. Kukshyn derive from a separate transaction and circumstance, and specifically $71,000.00 wired to Ms. Kukshyn that  was to be used to purchase property in Ukraine.

·         Misrepresentation:  The FAC simply reveals a proposed business plan and optimistic projections for success.  Plaintiff’s Negligent Misrepresentation cause of action fails on the same grounds, as the FAC contains no facts that show Defendants misrepresented a past or existing material fact without reasonable ground for believing it to be true and with the intent in induce Plaintiff’s reliance on the same ignorance.  Reliance must be pled beyond conclusions.

·         Contract:  Plaintiff’s Breach of Oral Contract claim is uncertain, because the FAC does not specify which Defendant the cause of action is being pled against. The contract claim fails because it is barred by the statute frauds.  The statute of frauds requires any contract, promise, or commitment to loan money in excess of $100,000.00 to be in writing. (Civ. Code, § 1624, subd. (a), subs. (7).)

·         Unjust Enrichment:  Unjust Enrichment is not any cause of action that exists under California law.

·         Money Had and Received:  The FAC does not provide a certain and precise sum owed to Plaintiff by Defendants.

·         Conspiracy:  Conspiracy is not a stand-alone cause of action.  Plaintiff has not allege facts establishing that Ms. Kancilia and Ms. Kukshyn owed him any duty relevant to the subject matter of this lawsuit.

·         Punitive Damages:  The statements contained in Plaintiff’s FAC in support of Plaintiff’s punitive damages claims are boilerplate and conclusory, and do not demonstrate that Defendants acted with malice, oppression, or fraud.

 

 

RP Positions

 

Opposing party advocates overruling and denying, for reasons including the following:

 

·         Mr. Kancilia has standing to maintain this action because the claims and damages asserted in the FAC are specific and only relate to him. The FAC clearly refers to the representations and promises that Lapshuk made to Mr. Kancilia (FAC ¶7), with a breakdown of dates, amounts and sums that Mr. Kancilia gave for which he alone has been damaged. (FAC ¶ ¶ 11, 12).

·         FAC ¶12 indicates that Mr. Kancilia’ s damages are $97,000.00 for monies he tendered or loaned to Defendants from September to December 2020 and was induced to give to them based upon Lapshuk’s misrepresentations of claiming that he and WD were creating a cannabis company that would specialize in distributing, manufacturing, and testing marijuana products. Instead, the monies were used for personal expenses to support Lapshuk’s lifestyle (FAC ¶ 8).

·         There is nothing contradictory between the initial Complaint and FAC, or how it could be conceivably a “sham pleading”. The FAC has distinct and different causes of action.

·         Plaintiff's Fraud and Deceit and Negligent Misrepresentation causes of action contain the requisite specificity because each particularize the misrepresentations Lapshuk made to Mr. Kancilia and material facts concealed from him (FAC . ¶ 6-8, ¶ 16); that Mr. Kancilia actually and reasonably relied upon the representations, he could not have discovered the misrepresentations in the exercise of reasonable diligence, and was damaged (FAC ¶ ¶ 11-12, 19-20.).

·         The Breach of Oral Contract cause of action is not barred by California Civil Code §1624, because the amount of funds loaned are less than $100,000.00, and so no writing is required. (California Civil Code§1624(a)(7).

·         At least one court has aptly stated, “[u]njust enrichment is synonymous with restitution.” Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370.

·         There is no misjoinder of parties. Vitalina and Kukshyn are part of the same fact pattern and shared the same intent as Lapshuk. All individual Defendants were engaged in the same conduct during the same time period of time, resulting in one singular and significant financial injury to Mr. Kancilia.

·         Plaintiff's civil conspiracy cause of action contain the requisite specificity¿because Mr.Kancilia successfully alleges both Fraud and Deceit and Negligent Misrepresentation as torts independent of conspiracy.

·         Fraud and Malice support a punitive damage claim under Civil Code §3294, for defendants’ wrongful solicitation and intentional misrepresentations to Mr. Kancilia, to induce him to tender monies to them.

 

Tentative Ruling

 

Both demurrers are overruled.

Both motions are denied.

Twenty days to answer.

 

            Sham Pleading

 

Adding new fraud-type causes of action in the First Amended Complaint, does not constitute a sham pleading.  Cf.,  Leasequip, Inc. v. Dapeer (2002) 103 Cal. App. 4th 394, 404 (“Here, the allegations in the second amended complaint amplified, but did not contradict, those in the first amended complaint. We cannot conclude the second amended complaint was a sham.”).  Where a pleading contradicts, or omits facts pled in, prior complaints, then judges have discretion to take judicial notice of the earlier allegations and disregard inconsistent ones, absent the pleader’s satisfactory explanation. State of Cal. ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal. App. 4th 402, 412;  Holland v. Morse Diesel Internat. (2001) 86 Cal. App. 4th 1443, 1447;  Berman v. Bromberg  (1997) 56 Cal.App.4th 936, 946 (perceiving no inconsistency or sham pleading). 

Although opposing papers did not cite such authorities, “[i]n considering a demurrer, the court is not required to ignore controlling law merely because the plaintiff does not rely on it.”  Dey v. Continental Central Credit (2008) 170 Cal. App. 4th 721, 730.

 

            Standing

 

Paragraph 7 of the pleading alleges partly a personal loan, and is unspecific as to how Plaintiff loaned through corporations, such that a lack of standing is not revealed, as to any entire cause of action.

The real party in interest must have an actual and substantial interest in the case subject matter and stand to be benefited or injured by a judgment.  Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 54-55;  Connerly v. Schwarzenegger (2007)146 Cal. App. 4th 739, 748.  “The existence of standing generally requires that the plaintiff be able to allege injury, i.e., an invasion of his legally protected interests.”  Surrey v. TrueBeginnings, LLC (2008)168 Cal. App. 4th 414, 417, disapproved on other grounds by  White v. Square, Inc. (2019) 7 Cal. 5th 1019, 1032.

Demurrers do not lie as to only parts of causes of action, where some valid claim is alleged.  Poizner v. Fremont General Corp.  (2007) 148 Cal.App.4th 97, 119 (“A demurrer must dispose of an entire cause of action to be sustained.”);  Kong v. City of Hawaiian Gardens Redev. Agency (2003) 108 Cal.App.4th 1028, 1046;  Caliber Bodyworks, Inc. v. Sup. Ct.  (2005) 134 Cal.App.4th 365, 384-85,  disapproved on other grounds by  ZB, N.A. v. Sup.Ct. (2019) 8 Cal. 5th 175, 196 n. 8.

 

            Misrepresentation

 

The pleading is sufficiently specific as to misrepresentations and concealment, and Defendant’s intent to use loaned funds for personal living expenses and lifestyle, instead of a promised business startup and financial investment  (e.g., First Amended Complaint, ¶¶ 6 – 7).  Further, the pleading alleges fraudulent inducement of loans with contemporaneous intent not to repay loans or share profits  (e.g., First Amended Complaint, ¶ 14).

Similarly, the pleading alleges fraud as to real estate transactions  (e.g., First Amended Complaint, ¶ 40  (“when Vitalina and Kyukshyn made the foregoing representations to Kancilia, they knew the statements were false, and that being resident or citizen of the Ukraine/Kyiv was not necessary, as someone living in the United States like Kancilia, could purchase real estate in his own name.”)). 

Such allegations support at least one type of duty.  See, e.g.,  Linear Technology Corp. v. Applied Materials, Inc.  (2007) 152 Cal.App.4th 115, 132  (“‘a duty supporting a cause of action for non-disclosure of material facts may arise in at least three instances: (1) the defendant makes representations but does not disclose facts which materially qualify the facts disclosed….”).

Fraudulent inducement occurs where a promisor consents to a contract, but  it was induced by fraud.  Hinesley v. Oakshade Town Center  (2005) 135 Cal.App.4th 289, 294-95. Misrepresentation of  future events may form the basis of promissory fraud claim.   Miles v. Deutsche Bank Nat’l Trust Co. (2015) 236 Cal.App.4th 394, 402-03.  “A promise of future conduct is actionable as fraud only if made without a present intent to perform.”  Magpali v. Farmers Group (1996) 48 Cal. App. 4th 471, 481.

As for negligent misrepresentation, the pleading sufficiently alleges that specific representations of predicted profitability of the business were stated without any reasonable basis for believing they were true  (e.g., First Amended Complaint, ¶¶ 6 – 8, 15 - 17).  See generally  Melican v. Regents of Univ. of Cal. (2007) 151 Cal. App. 4th 168, 182;  County of Kern v. Sparks  (2007) 149 Cal.App.4th 11, 20   (elements of negligent misrepresentation).

Facts regarding justifiable reliance are sufficiently alleged, including trusting his wife’s son  (e.g., First Amended Complaint, ¶ 17).  Facts must be alleged that would indicate actual reliance on misrepresentations.  Small v. Fritz Companies, Inc. (2003) 30 Cal. 4th 167, 184.

 

            Contract

 

The label of the claim for breach of oral contract sufficiently alleges it addresses “defendants,” with no stated exclusion of any defendant.

The failure to identify claims and parties by labeling causes of action may render a complaint uncertain, except where the complaint contains allegations sufficiently apprising defendants of the issues, in which case a demurrer should be overruled.  Williams v. Beechnut Nutrition Corp. (1986) 185 Cal. App. 3d 135, 139. 

A  demurrer should not be sustained on the ground of uncertainty regarding which defendant committed the alleged conduct, where the pleading alleged that all defendants were responsible. Dillard v. County of Kern (1943) 23 Cal. 2d 271, 279  (“The complaint charges all the defendants and their agents and servants with having negligently operated . . . the truck. Liberality in pleading compels the conclusion that the demurrer should not have been sustained. Defendants were in a superior position to know….”).

Also, the Statute of Frauds is not revealed, as to the contract claim, where the pleading alleges loans approximating $97,000, which does not necessarily admit the $100,000 limit for oral agreements.

“A general demurrer may be interposed when the complaint shows on its face that the agreement sued on is within the statute of frauds and does not comply with its requirements.”  Parker v. Solomon  (1959) 171 Cal.App.2d 125, 136.

Moreover, Plaintiff’s alleged, past performance of oral contracts relates to exceptions to the Statute of Frauds.

“[T]he statute of frauds does not apply to an executed contract.”  Lee v. Lee (2009) 175 Cal.App.4th 1553, 1557.  “Part performance allows enforcement of a contract lacking a requisite writing in situations in which invoking the statute of frauds would cause unconscionable injury…. In addition to part performance, the party seeking to enforce the contract must have changed position in reliance on the oral contract to such an extent that application of the statute of frauds would result in an unjust or unconscionable loss, amounting in effect to a fraud.”  Secrest v. Security Nat’l Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 555.  “‘Where the contract is unilateral, or, though originally bilateral, has been fully performed by one party, the remaining promise is taken out of the statute [of frauds], and the party who performed may enforce it against the other.’”  Secrest v. Security Nat’l Mortgage Loan Trust 2002-2 (2008) 167 Cal.App.4th 544, 556.

 

            Unjust Enrichment

 

Under some case law, unjust enrichment is a cognizable claim.  E.g.,  Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593;  Lectrodryer v. SeoulBank (2000) 77 Cal. App. 4th 723, 726;  Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal. App. 3d 122, 134;  Hirsch v. Bank of Amer. (2003) 107 Cal.App.4th 708, 716, 722.  ).  But see  Jogani v. Sup. Ct. (2008) 165 Cal.App.4th 901, 911 (“[U]njust enrichment is not a cause of action.”);  Melchior v. New Line Prods., Inc. (2003) 106 Cal.App.4th 779, 794 (defining it as a remedy);   McBride v. Boughton (2004) 123 Cal.App.4th 379, 387 (“Unjust enrichment is not a cause of action … or even a remedy….” ).

Where there is a split of authority, trial courts have discretion to choose between the decisions.  Auto Equity Sales, Inc.  v.  Sup.  Ct.  (1962) 57 Cal.2d 450, 456.  Where there is a split of authority, “[a]s a practical matter, a superior court ordinarily will follow an appellate opinion emanating from its own district even though it is not bound to do so.”  McCallum v. McCallum  (1987) 190 Cal.App.3d 308, 316 n.4.

 

            Money Had and Received

 

The First Amended Complaint specifies certain sums for which defendants are indebted  (e.g., First Amended Complaint, ¶¶ 11 (“comprised of $28,000.00 on November 8, 2020, $24,000.00 on October 20, 2020, $15,000.00 on September 28, 2020, and $30,000.00 on| December 22, 2020.), 33, 37 ).  See generally  Farmers Ins. Exchange v. Zerin (1997) 53 Cal. App. 4th 445, 460;  First Interstate Bank v. State of Cal.  (1987) 197 Cal.App.3d 627, 635.

 

            Conspiracy

 

The separate conspiracy claim is viable, because it incorporates by reference other claims, via paragraph 52.  See  Douglas v. Sup. Ct. (1989) 215 Cal. App. 3d 155,159 ("second cause of action for conspiracy to defraud incorporates the allegations of the first cause of action, the demurrer to that cause of action should also have been overruled.").

Additionally, the element of duty is not a required element of alleging conspiracy.  The elements  are:

  1. Defendants’ agreement to the objective and course of action to injure;
  2. wrongful act pursuant to such agreement;  and
  3. resulting damage.

Berg & Berg Ent., LLC v. Sherwood Partners, Inc. (2005) 131 Cal. App. 4th 802, 823;  State of Cal. ex rel. Metz v. CCC Information Services, Inc. (2007) 149 Cal. App. 4th 402, 419.  See also  Quelimane Co., Inc. v. Stewart Title Guar. Co. (1998) 19 Cal.4th 26, 47 (general allegations are permitted as to the pleading of conspiracy).

 

            Misjoinder

 

The First Amended Complaint alleges connections between the defendants, including being relatives, agents, coconspirators, targeting Plaintiff via separate incidents of fraudulent inducement of payments   (e.g.,  First Amended Complaint, ¶¶ 5, 11, 38, 39, 41, 56).

"Demurrers on the ground of misjoinder lie only when the defect appears on the face of the complaint or matters judicially noticed..." and demurring parties are prejudiced.   Royal Surplus Lines Ins. Co. v. Ranger Ins. Co. (2002) 100 Cal. App. 4th 193, 198.  Accord  Harboring Villas Homeowners Assn. v. Sup. Ct. (1998) 63 Cal.App.4th 426, 429 (misjoinder must be revealed by allegations);  Anaya v. Sup. Ct. (1984) 160 Cal.App.3d 228, 231 (prejudice must be suffered or interests must be affected by misjoinder).

 

            Punitive Damages

 

The sufficient allegations of fraud (analyzed above) also support punitive damages.

“‘Although punitive damages may not ordinarily be given for breach of contract, whether the breach be intentional, willful or in bad faith…, such damages may be awarded where a defendant fraudulently induces the plaintiff to enter into a contract.’”  Las Palmas Assocs. v. Las Palmas Ctr. Assocs. (1991) 235 Cal. App. 3d 1220, 1239 (quoting Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal. App. 3d 101, 135).

“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff.”  Clauson v. Sup. Ct. (1998) 67 Cal. App. 4th 1253, 1255.  Accord Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal. App. 4th 1004, 1055;  Blegen v. Sup. Ct.  (1981) 125 Cal.App.3d 959, 962.