I. BACKGROUND 

On May 1, 2024, plaintiff Sarkis Minasyan (“Plaintiff”) filed his First Amended Complaint (“FAC”) against defendants Trusted Advisors Network, LLC (“TAN”), Atlantic Insurance Brokerage, Inc. (“Atlantic”), KSKJ Life (“KSKJ”), and Does 1 through 20 (collectively, “Defendants”). Plaintiff alleges that from 2015 to February 12, 2019, Plaintiff sold life insurance on behalf of various insurers as an agent for TAN and Atlantic selling primarily KSKJ products. (FAC ¶ 11.) In February 2019, a dispute arose over unpaid insurance commissions due under the parties’ contract, in which Plaintiff allegedly discovered that Defendants schemed to deny their agents their full earned commissions by interfering with the agents’ clients and relationship by undercutting their own agents. (Id. ¶ 12.)  

The FAC sets forth four causes of action for (1) breach of contract against TAN and Atlantic, (2) breach of the duty of good faith and fair dealing against TAN and Atlantic, (3) fraud against all Defendants, and (4) unfair business practices against all Defendants. 

KSKJ now demurs to the third and fourth causes of action, and additionally moves to strike the prayer for exemplary damages.  

Any opposition was due on or before August 13, 2024; none has been filed to date. 

II. PROCEDURAL REQUIREMENT 

Before filing a demurrer and/or motion to strike, the moving party is required to meet and confer with the party who filed the pleading demurred to for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. (CCP §§ 430.41(a); 435.5(a).)¿¿¿ 

Counsel for KSKJ attests that on May 20, 2024, he sent an email to Plaintiff’s counsel requesting a call to discuss the contents of the FAC and that he specifically pointed out the deficiencies. (Weiner Decl. ¶ 3.) However, KSKJ did not receive a response. (Id. ¶ 4.) On June 14, 2024, KSKJ’s counsel filed a Declaration for Automatic Extension. (Id. ¶ 5.) Plaintiff’s counsel did not respond to KSKJ’s counsel’s last attempt to contact him on July 6, 2024 regarding the FAC. (Id. ¶ 6.) 

The Court finds KSKJ fulfilled the meet and confer requirement prior to filing the demurrer and motion to strike. 

III. LEGAL STANDARD 

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)¿¿ 

“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. (Code Civ. Proc., §§ 430.30, 430.70.) At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) A “demurrer does not, however, admit contentions, deductions or conclusions of fact or law alleged in the pleading, or the construction of instruments pleaded, or facts impossible in law.” (S. Shore Land Co. v. Petersen (1964) 226 Cal.App.2d 725, 732 (internal citations omitted).) 

IV. DISCUSSION 

KSKJ argues that the only allegation against it is that “KSKJ was fully aware of and ratified this conduct,” in reference to the specific conduct of TAN and Atlantic. Since KSKJ’s last demurrer and motion to strike, which was sustained/granted with leave to amend, KSKJ argues that Plaintiff’s only changes to the amended complaint are: (1) removing Exhibit 1 from the complaint, (2) adding the language “In fact, KSKJ, made this clear in emails” to ¶ 28 of the FAC, and (3) adding the language “these emails were sent by Defendants” to ¶ 29. 

The third cause of action alleges, in pertinent part, that “A representative from TAN and/or Atlantic, which are related entities and sister companies, would contact Minasyan’s clients, promising a “One Year Free Premium” insurance policy. The client would sign up for the policy so that the clients remained customers for only one year. TAN and Atlantic would collect the 140% commission that KSKJ and other would pay. TAN and Atlantic then used 100% of the commission to pay for the policy’s premium and pocketed the remaining 40% commission. At the same time, it would poach these customers from agents like Minasyan, claim there were false chargebacks from these poached customers to deny Minasyan his earned commissions. KSKJ was fully aware of and ratified this conduct. In fact, KSKJ, made this clear in emails.” (FAC ¶ 28.) The FAC further alleges that “Defendants, including KSKJ, misrepresented to Minasyan in emails and orally that they would pay him commissions for every policy he sold when in fact it was part of Defendants’ scheme to then take the newly acquired customer’s information, contact them directly with the promise of a One Year Free Premium scheme.” (FAC ¶ 29.) 

Ordinarily, “fraud must be pleaded specifically; general and conclusory allegations do not suffice.” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.). “This particularity requirement necessitates pleading facts which show how, where, to whom, and by what means” the alleged fraud occurred. (Id.) The purpose of the particularity requirement is to “separate meritorious and nonmeritorious cases, if possible in advance of trial.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) 

However, some cases conclude that this standard is less stringent when the defendant already has “ ‘full information concerning the facts of the controversy.’ ” (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 217, superseded by statute on other grounds as stated in Californians for Disability Rights v. Mervyn's, LLC (2006) 39 Cal.4th 223, 227.) Relaxation of the specificity requirement is particularly appropriate in a¿concealment¿case.¿ Unlike intentional misrepresentation, which requires some affirmative representation or promise, a fraudulent¿concealment¿is the absence of something, the suppression of a fact. (Civ. Code, section 1710.) 

Nonetheless, Plaintiff did not oppose the demurrer to provide any argument or information as to whether the heightened pleading standard for fraud should be relaxed in this case. A failure to oppose a motion may be deemed a consent to the granting of the motion. (CRC, Rule 8.54.) Therefore, the demurrer to the third cause of action is sustained. 

Like the third cause of action, the fourth cause of action similarly alleges “A representative from TAN and/or Atlantic, which are related entities and sister companies, would contact Minasyan’s clients, promising a “One Year Free Premium” insurance policy. The client would sign up for the policy so that the clients remained customers for only one year. TAN and Atlantic would collect the 140% commission that KSKJ and other would pay. TAN and Atlantic then used 100% of the commission to pay for the policy’s premium and pocketed the remaining 40% commission. At the same time, it would poach these customers from agents like Minasyan, claim there were false chargebacks from these poached customers to deny Minasyan his earned commissions. KSKJ was fully aware of and ratified this conduct.” (FAC ¶ 37.)  

Because Plaintiff did not oppose the motion, the demurrer to the fourth cause of action is sustained. 

Because the prayer for exemplary damages is premised upon the fraud claim (FAC ¶ 31), which has already been sustained, the motion to strike must necessarily be granted. However, the Court intends to sustain the demurrer without leave to amend; as such, the motion to strike is moot. 

V. CONCLUSION 

This is the second time Plaintiff has failed to file an opposition to KSKJ’s demurrer and motion to strike. Because this is the second time Plaintiff has failed to oppose the motion against his complaint, and there is no indication that Plaintiff’s counsel ever responded to KSKJ’s attempts to meet and confer on the issue, the demurrer is SUSTAINED without leave to amend. The motion to strike is therefore MOOT. 

Moving Party is ordered to give notice. 

DATED: August 23, 2024 

__________________________ 

Hon. Michelle C. Kim 

Judge of the Superior Court 

PLEASE TAKE NOTICE: