Judge: Melvin D. Sandvig, Case: 24CHCV02454, Date: 2025-03-26 Tentative Ruling

Case Number: 24CHCV02454    Hearing Date: March 26, 2025    Dept: F47

Dept. F47

Date: 3/26/25

Case #24CHCV02454

 

DEMURRER & MOTION TO STRIKE TO THE SECONDN AMENDED COMPLAINT

 

Demurrer & Motion to Strike filed on 1/10/25.

 

MOVING PARTY: Defendants Zareh Abkarian and Jade Aviation LLC

RESPONDING PARTY: Plaintiff Pro Polish, LLC

NOTICE: ok

 

Demurrer is to the 3rd and 4th causes of action:

            1.  Breach of Contract

            2.  Breach of Implied Covenant of Good Faith and Fair Dealing

            3.  Fraudulent Concealment

            4.  Fraudulent Misrepresentation

            5.  Conversion

 

RELIEF REQUESTED IN MOTION TO STRIKE: An order striking portions of the Second Amended Complaint regarding Plaintiff’s claim for punitive damages in relation to the 3rd and 4th causes of action. 

 

RULING: The demurrer is overruled and the motion to strike is denied.  Answer is due within 20 days.

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of a contractual relationship between Defendants Zareh Abkarian and Jade Aviation LLC (Defendants) on the one hand and Plaintiff Pro Polish LLC (Plaintiff) on the other hand.  Plaintiff provides aircraft windshields and aircraft window repair services.  (SAC ¶12).  In or around late 2019, Plaintiff and Defendants began negotiations regarding an independent contractor relationship whereby Defendants would provide aircraft windshield and window repair services to Plaintiff’s customers at the Van Nuys Airport in California.  (SAC ¶13).   In return, Plaintiff would provide the materials, equipment, back office services including all quote generation, invoicing, billing, and collections for Defendants’ work, required regulatory licenses, and insurance necessary to perform the work.  Id.  Plaintiff agreed to share a portion of the revenue it received from its customers Defendants serviced.  Id.  Ultimately, the parties entered a written agreement.  (SAC ¶14, Ex.1).

 

Plaintiff alleges that it noticed a downward trend in total revenues generated by Defendants’ work.  (SAC ¶21).  In or around March of 2021, during monthly phone audits, Plaintiff began asking Abkarian about the decrease in revenue.  (SAC ¶22).  Abkarian informed Plaintiff that the decrease in revenue was due to decreased customer demand.  (SAC ¶22).  Plaintiff alleges that it later learned that the decrease in revenue was the result of Defendants directly billing and collecting from customers.  (SAC ¶¶24-25). 

On 7/3/24, Plaintiff filed this action against Abkarian.  On 9/30/24, Plaintiff filed its First Amended Complaint against Abkarian and Jade Aviation.  On 12/11/24, pursuant to a stipulation and order, Plaintiff filed the operative Second Amended Complaint alleging causes of action against Defendants for: (1) Breach of Contract, (2) Breach of Implied Covenant of Good Faith and Fair Dealing, (3) Fraudulent Concealment, (4) Fraudulent Misrepresentation and (5) Conversion.  After meet and confer efforts failed to resolve the issues Defendants had with the 3rd and 4th causes of action in the Second Amended Complaint and the claim for punitive damages, on 1/10/25, Defendants filed and served the instant demurrer to the 3rd and 4th causes of action and motion to strike which seeks to strike portions of the Second Amended Complaint regarding Plaintiff’s claim for punitive damages in relation to the 3rd and 4th causes of action. (See Vescera Decl.).  Plaintiff has opposed the demurrer and motion to strike and Defendants have filed replies to the oppositions. 

 

ANALYSIS 

 

DEMURRER

 

A party may demurrer to a complaint on the grounds, among others, that the complaint fails to allege sufficient facts to state a particular cause of action and/or because the pleading is uncertain.  See CCP 430.10(e), (f).

 

Elements of a fraudulent concealment cause of action: (1) the defendant concealed or suppressed a material fact, (2) the defendant had a duty to disclose the fact to the plaintiff, (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff was unaware of the fact and would not have acted as the plaintiff did if the plaintiff had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff sustained damage.  Boschma (2011) 198 CA 4th 230, 248; Kaldenbach (2009) 178 CA4th 830, 850. 

 

The elements of a fraudulent misrepresentation cause of action are: (1) the defendant represented to the plaintiff that an important fact was true; (2) that representation was false; (3) the defendant knew that the representation was false when the defendant made it, or the defendant made the representation recklessly and without regard for its truth; (4) the defendant intended that the plaintiff rely on the representation; (5) the plaintiff reasonably relied on the representation; (6) the plaintiff was harmed; and (7) the plaintiff's reliance on the defendant's representation was a substantial factor in causing that harm to the plaintiff.  Graham (2014) 226 CA4th 594, 605-606; Manderville (2007) 146 CA4th 1486, 1498. 

 

Each element of a fraud-based cause of action must be pled with particularity with facts showing how, when, where, to whom and by what means the representations were made.  Chapman (2013) 220 CA4th 217, 231; West (2013) 214 CA4th 780, 793.

 

Contrary to Defendants’ assertion, Plaintiff has pled the fraudulent concealment and fraudulent misrepresentation claims with sufficient particularity and has sufficiently alleged Defendants intentionally concealed or suppressed and/or misrepresented material facts.  Plaintiff alleges that it and Defendants entered into an agreement whereby Defendants would perform window repair services for Plaintiff’s customers and that the parties would split the resulting revenue – 55 percent to Defendants and 45 percent to Plaintiff (the Agreement).  (SAC ¶¶13, 14).  Additionally, Plaintiff alleges after entering the Agreement Plaintiff noticed a downward trend in the revenues from Defendants’ work.  (SAC ¶21).  As a result, during the monthly calls that Plaintiff and Abkarian would conduct to audit the work done by Defendants, Plaintiff inquired as to why revenues were trending down.  (SAC ¶22).  In response to Plaintiff’s inquiries, Abkarian responded that the downward trend in revenue was based on a decrease in customer demand.  Id.  Plaintiff alleges that Abkarian repeated this alleged misrepresentation month after month on these audit calls and if Plaintiff had known the truth, it would have taken steps to prevent further harm.  (SAC ¶¶22-23, 57).  Plaintiff goes on to allege that one of its customers eventually informed it that Defendants had been performing the window repair work on their own and were directly billing the clients and retaining the entire payment without Plaintiff’s knowledge.  (SAC ¶24).

 

MOTION TO STRIKE

 

Fraud itself is a basis for a claim for punitive damages.  See Civil Code 3294(a), (c)(2)  As noted above, Plaintiff has sufficiently alleged its fraud-based causes of action against Defendants.  As such, Plaintiff has also alleged a sufficient basis to support the claim for punitive damages. 

 

CONCLUSION

 

The demurrer is overruled and the motion to strike is denied.  Answer is due within 20 days.