Judge: Michael Small, Case: 24STCV00881, Date: 2024-05-13 Tentative Ruling
Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.
Case Number: 24STCV00881 Hearing Date: May 13, 2024 Dept: 57
Sammy Eghablieh and Wendy Ann Walker were in a fairly
long-term romantic relationship that fell apart before they were married. While Eghablieh and Walker were living together,
they jointly purchased real property in Los Angeles. Eghablieh sued Walker seeking to partition that
property. Walker filed a cross-complaint
against Eghbalieh asserting multiple cause of action. Pending
before the Court are (1) the demurrer of Eghablieh to the fifth cause of action
in Walker’s cross-complaint, which alleges a breach of fiduciary duty, and (2 )
Eghbalieh’s motion to strike Walker’s request for an award of punitive damages
in connection with the cause of action for breach of fiduciary duty. The Court is overruling the demurrer, but
granting the motion to strike with leave to amend. In light of the Court’s decision on the
motion to strike, Walker is directed to file and serve an amended cross-complaint
by May 31, 2024.
Demurrer
“The elements of a cause of action for breach of
fiduciary duty are the existence of a fiduciary relationship, its breach, and damage
proximately caused by that breach. ” (Hodges
v. County of Placer (2019) 41 Cal.App.5th 537, 546 [“Hodges”]). The precise contours of fiduciary relationship
are “difficult to enunciate.” (Oakland
Raiders v. National Football League (2005)
131 Cal.App.4th 621, 631.) As a
general rule, however, “[a] fiduciary relationship is any relation existing
between parties to a transaction wherein one of the parties is duty bound to
act with the utmost good faith for the benefit of the other party. Such a
relation ordinarily arises where a confidence is reposed by one person in the
integrity of another, and in such a relation the party in whom the confidence
is reposed, if he voluntarily accepts or assumes to accept the confidence, can
take no advantage from his acts relating to the interest of the other party
without the latter's knowledge or consent.”
(Hodges, supra, 41 Cal.App.5th at 546–547.)
Applying that standard, the allegations in Walker’s cross-complaint
are sufficient to establish that Eghablieh owed Walker a fiduciary duty based
on parties’ express “Domestic Partnership” agreement to pool their resources
for the purchase and maintenance of real property that they own as joint
tenants and Walker’s entrustment of property to Eghbalieh, including her money
in a joint account that Eghablieh was free to use. The allegations in the cross-complaint further
establish that the parties knowingly undertook to act on behalf of each other
through the agreement. And the
allegations establish that Eghbalieh breached the fiduciary duty he owed to Walker
by advancing his interests at the expenses of hers by denying that Walker is
entitled to a 50% share of the parties’ joint assets, and that this breach damaged
Walker.
Eghbalieh argues in his demurrer that the parties “Domestic
Partnership” agreement does not qualify as a true domestic partnership under California
law. That may be so. But that does not mean as a matter of law that
their agreement, whatever its proper nomenclature, fails to embody a fiduciary relationship.
Equally unavailing is Eghablieh’s
argument that Walker has merely alleged a “cohabitation” agreement, which
cannot form the basis of a fiduciary relationship. Walker’s allegations do more than that. She alleges that, while they were cohabitating,
the parties agreed to pool their resources to jointly own use, and manage assets,
including the real property that the purchased together. Nor does
Eghbalieh’s demurrer gain traction based on the notion that Walker did not
entrust him with any property because she did not relinquish control over the
property. The allegations in the cross-complaint
are sufficient to show that entrustment occurred because Walker permitted Eghbalieh
unfettered access to, and use of, Walker’s money that she placed in the joint
account per the parties’ agreement.
MOTION TO STRIKE
California Code of Civil Procedure section
436 authorizes the trial court on the motion of a party to “[s]trike out any
irrelevant, false, or improper matter inserted in any pleading” and “[s]trike
out all or any part of any pleading not drawn or filed in conformity with the
laws of this state, a court rule, or an order of the court. (Code Civ. Proc., §
436.). An “irrelevant matter” includes a
demand for judgment “requesting relief not supported by the allegations” of the
pleading. (Id. § 431.10(b).) A prayer for relief in the form of a request
for a punitive damages award may be the subject of a motion to strike. (Clauson
v. Sup.Ct. (Pedus Services, Inc.)
(1998) 67 Cal.App.4th 1253, 1255.)
Civil Code section 3294 authorizes the recovery of
punitive damages in cases alleging the defendant committed a tort where “the
defendant has been guilty of oppression, fraud, or malice . . . .” (Civ. Code §
3294(a).) “‘Malice’ means 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(c)(1).) “‘Oppression’” means despicable conduct that
subjects a person to cruel and unjust hardship in conscious disregard of that
person’s rights.” (Id., § 3294(c)(2).) “‘Fraud’” means an intentional
misrepresentation, deceit, or concealment of a material fact known to defendant
with the intention on the part of defendant of thereby depriving a person of
property or legal rights or otherwise causing injury.” (Id., §
3294(c)(3).) A motion to strike punitive damages
should be granted where the facts alleged do not rise to the level of “malice,
fraud or oppression” required to support a punitive damages award. (See Turman v. Turning Point of Central
Calif., Inc. (2010) 191 Cal.App.4th 53, 63-64.) At bottom, “[p]unitive damages are proper only when the tortious conduct
rises to levels of extreme indifference to the plaintiff's rights, a level
which decent citizens should not have to tolerate.” (Tomaselli v. Transamerica Ins. Co.
(1994) 25 Cal.App.4th 1269, 1287.)
Punitive damages may be awarded for a breach
of fiduciary duty, which is a tort, but not without a showing that the breach
was malicious, fraudulent, or oppressive within the meaning of Civil Code
Section 3294. (American Airlines,
Inc. v. Sheppard Mullin Richter & Hampton (2002) 96 Cal.App.4th 1017, 1050.)
Applying
these standards here, the allegations in the cross-complaint do not support an
award of punitive damages against Eghbalieh for breaching the fiduciary duty he
owed to Walker. Walker asserts in the
cross-complaint that Eghbalieh acted maliciously, oppressively, and
fraudulently. But that conclusory assertion
is insufficient. What matters are the allegations underlying that assertion. And here, the allegations do not establish that
Eghbalieh’s conduct rose to the level necessary to support an award of punitive
damages. At most, Walker has alleged that,
in the parties’ dispute over how much she is entitled to under the parties’
agreement to pool resources, Eghbalieh acted in his own interest in breach of his
fiduciary duty. Such conduct, in and of
itself, does not furnish the basis for a punitive damages award.