Judge: Michael Shultz, Case: 21CMCV00048, Date: 2023-01-05 Tentative Ruling
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If this procedure is followed, when the case is called the Court will enter its ruling on the motion in accordance with its tentative ruling. If any party declines to submit on the tentative ruling, then no telephone call is necessary, and all parties should appear at the hearing. If there is neither a telephone call nor an appearance, then the matter may either be taken off calendar or ruled on.
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Case Number: 21CMCV00048 Hearing Date: January 5, 2023 Dept: A
[TENTATIVE]
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO STRIKE
PORTIONS OF THE PLAINTIFF’S THIRD AMENDED COMPLAINT
I.
FACTUAL
AND PROCEDURAL BACKGROUND
The
Second Amended Complaint (SAC) alleges that Plaintiff and Defendant, Mohammed
Ansari (Ansari), together agreed to purchase Main Street Gas & Food Mart
(Mart). Defendants, Mohammed Ali (Ali) and Eagles Mortgage, Inc. (Eagles)
collectively “Broker Defendants,” served as agents/brokers on behalf of
Plaintiff and Ansari in the purchase of the Mart.
Plaintiff
alleges that Defendants tricked Plaintiff into signing amended escrow
instructions in which the buyer for the Mart would be Defendant, RHDM Oil, Inc.
(RHDM) instead of Monem and Ansari, with Plaintiff holding a 2/3 ownership
interest in RHDM. Plaintiff alleges that he has not received any shares of RHDM
and has been working for RHDM as an employee. On
December 10, 2021, Plaintiff filed the Third Amended Complaint (“TAC”) alleging
claims for:
1.
Theft by False Pretenses,
2.
Breach of fiduciary duty,
3.
Conversion,
4.
Accounting, and
5.
Appointment of receiver.
II.
ARGUMENTS
Defendants move to strike portions
of the TAC relating to alleged misconduct of Defendants who have since been
dismissed, Mohammed Ali and Eagles Mortgage , Inc., and are now irrelevant.
Defendants also move to strike Plaintiff’s request for treble damages since
Plaintiff did not transfer his funds to Ansari. The prayer for punitive damages
is not supported by the facts, and Plaintiff does not allege a basis for
attorney’s fees.
Plaintiff concedes that portions
of the TAC are no longer relevant as it relates to now-dismissed Defendants, Ali,
and Eagles. However, the prayer for punitive damages should not be stricken
because Defendants’ intentional acts of deceit. Defendants do not offer a basis
for striking the prayer for an order that Ansari and or RHDM be ordered to
transfer to Plaintiff all shares and/or interest in RHDM Oil.
In reply, Defendants argue that
the remaining causes of action that have survived demurrer do not support
relief for punitive damages or injunctive relief. Plaintiff otherwise concedes
that irrelevant allegations should be stricken.
III.
LEGAL STANDARDS
The
court may, upon motion or at any time in its discretion and upon terms it deems
proper: (1) strike out any irrelevant, false, or improper matter inserted in
any pleading; or (2) strike out all or any part of the pleading not drawn or
filed in conformity with the laws of California, a court rule, or an order of
the Court. Code Civ. Proc., § 436 subd (a)-(b). Grounds for the motion
to strike are limited to matters that appear on the face of the pleading or on
any matter which the court shall or may take judicial notice. Code Civ. Proc., § 437.
IV.
DISCUSSION
A. TAC, Page 5, ¶ 18: “Ali and Ansari have known each other and conducted
business with one another, in at least one capacity. Monem was not aware of
this fact when he agreed to use Ali and Eagles to represent both Ansari and
himself.”
Even if the claims against Ali have been dropped, this
allegation is relevant to Plaintiff’s claim for fiduciary duty against Ansari which
survived demurrer. Plaintiff alleges that he and Defendant as business
partners, entered into an agreement for the purchase of a gas station. TAC ¶¶ 5,
13-15.
A joint venture relationship is fiduciary in nature. April Enterprises, Inc. v. KTTV (1983) 147
Cal.App.3d 805 fn. 11, ["Indeed, during the existence of such
fiduciary relationship [of joint venture] any transaction by which one of the
co-adventurers secures an advantage over the other or others is presumptively
fraudulent and casts a burden on such party gaining the advantage to show
fairness and good faith in all respects."]. The TAC alleges that Defendant
breached his fiduciary duty by essentially engaging a former business partner
to further Defendant’s plan to get Plaintiff to deposit funds into escrow and
amending the instructions. TAC ¶ 34.A - D. Accordingly, the allegations are
relevant.
B. Page 11, Prayer for Relief, Paragraph 2: “That Ansari and/or RHDM Oil
be ordered to transfer to Plaintiff all shares and/or interest in RHDM Oil,
Inc. Alleged herein, … .”
This prayer is proper as a remedy for the breach of
fiduciary duty claim against Ansari. Plaintiff alleges that he and Defendant
were shareholders in RHDM, but Defendant failed to provide Plaintiff with his
stock certificates in breach of that duty. TAC, ¶ 32.
C. Page 11, Prayer for Relief, Paragraph 5: “For an award of punitive
damages against Ansari and DOES 1-5, as authorized by law, according to proof.”
To recover exemplary damages,
Plaintiff must establish “by clear and convincing evidence that the defendant
has been guilty of oppression, fraud, or malice.” Civ. Code, § 3294 subd. (a). The predicate acts to support a claim for
punitive damages must be intended to cause injury or must constitute
“malicious” or “oppressive” conduct as defined by statute. “Malice” is defined
as “conduct which is intended by the defendant to cause injury to the plaintiff
or despicable conduct which is carried on by the defendant with a willful and
conscious disregard of the rights or safety of others.”
Civ. Code, §
3294 subd. (c)(1); College
Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 725 ["malice involves awareness of dangerous
consequences and a willful and deliberate failure to avoid them"].
"Oppression" is defined as “despicable conduct that subjects a person
to cruel and unjust hardship in conscious disregard of that person's rights.” Civ. Code, § 3294 subd. (a) subd. (c)(2).
Absent an intent to injure the
plaintiff, the conduct must be “despicable” which is defined as “base, vile, or
contemptible.” College Hospital Inc. at 725. Plaintiff must demonstrate that “the defendant
acted in such an outrageous and reprehensible manner that the jury could infer
that he knowingly disregarded the substantial certainty of injury to
others." Dawes v. Superior Court (1980) 111 Cal.App.3d
82, 90. Conduct constituting
negligence, gross negligence or recklessness is insufficient to support a claim
for punitive damages. Dawes at 87.
Plaintiff
alleged facts sufficient for a jury to infer that Defendant’s conduct was
despicable and constituted malice or oppression by engaging in a scheme with
the Broker Defendants to accept Plaintiff’s deposit, concealing his
relationship with one of the brokers from Plaintiff, and allegedly amending the
escrow instructions without explaining the basis and effect of it to Plaintiff,
resulting in the divestment of Plaintiff’s interest in the property. TAC ¶ 34 A
– D.
The
claim for conversion also alleges intentional conduct by Defendant who divested
Plaintiff of his ownership interest and converted Plaintiff’s funds and
rightful interests for Defendant’s sole benefit. TAC ¶ 38 – 41. The prayer is
adequately supported.
V.
CONCLUSION
Plaintiff concedes that
certain portions of the TAC should be stricken. Accordingly, the motion is
GRANTED in part as to page 4, paragraph 14; page 5, paragraph 19; page 5, paragraph
20; page 5, paragraph 22; page 6, paragraph 28; page 6, paragraph 29, page 11,
prayer for treble damages; page 11, prayer for attorney’s fees; all as
specifically set forth in Plaintiff’s opposition at page 3:9 – 4:16.
In all other respects, and
based on the foregoing, the motion to strike is DENIED with respect to page 5,
paragraph 9 (Defendant’s relationship with Ali); page 11, paragraph 2 (prayer
for transfer of shares to Plaintiff); and page 11, paragraph 5 (prayer for
punitive damages).