Judge: Monica Bachner, Case: 20STCV47514, Date: 2022-10-10 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 20STCV47514    Hearing Date: October 10, 2022    Dept: 71

 

 

 

 

 

Superior Court of California

County of Los Angeles

 

DEPARTMENT 71

 

TENTATIVE RULING

 

GASPER PETROSYAN, 

 

         vs.

 

ARSHAG J. BOHDJELIAN, et al.

 Case No.:  20STCV47514

 

 

 

 Hearing Date:  October 10, 2022

 

Defendants Arshag J. Bohdjelian’s and West Valley Plaza, Inc.’s general demurrer to the second amended complaint of Plaintiff Gasper Petrosyan and West Valley Plaza Inc, is sustained as to the 5th cause of action with leave to amend within 10 days, and overruled as to the 2nd,  3rd, 4th, and 6th causes of action is overruled.

 

Defendants Arshag J. Bohdjelian’s and West Valley Plaza, Inc.’s motion to strike is denied as moot.

 

A.   Demurrer

 

           Defendants Arshag J. Bohdjelian (“Arshag”) and West Valley Plaza, Inc. (“West Valley”) (collectively, “Defendants”) demur to the 1st (demand for surplus proceeds from foreclosure sale), 2nd (fraudulent misrepresentation), 3rd (fraud by omission), 4th (conversion), 5th (common count/quantum meruit), and 6th (breach of fiduciary duty) causes of action in the second amended complaint (“SAC”) of Plaintiff Gaspar Petrosyan (“Petrosyan”) (“Plaintiff”) and demur generally to Plaintiff’s SAC. Defendants demur on the grounds that the second through sixth causes of action fail to allege sufficient facts to constitute the causes of action (Notice of Demurrer, pg. 2.)  Defendant generally demurs to the SAC on the grounds that there is no contract between the parties, and Arshag is a misjoined/improper party. (Memorandum, pg. 8.)

 

            

 

This action arises out of an alleged “short sale” in 2013, when Arshag, a real estate agent and broker, approached Plaintiff with a plan to get Plaintiff’s residential property, located at 820 Arden Avenue, Glendale, California (the “Property”), out of foreclosure.  (SAC ¶¶2, 12.)  Arshag offered to represent Plaintiff in a “short sale” process whereby Arshag would negotiate a discounted payoff of Plaintiff’s loan, a deed of trust recorded on the Property, held by Countrywide Savings and Loan (“Countrywide”).  (SAC ¶¶10, 12.)  In turn, Plaintiff would be allowed to remain at the Property in exchange for Plaintiff’s agreed upon payments to Arshag’s company, Defendant BCA Holdings, LLC (“BCA”).  (SAC ¶12.)  As part of the “short sale” process, Plaintiff deeded the Property to BCA and Arshag negotiated the short sale with Countrywide on Plaintiff’s behalf.  (SAC ¶13.)  Arshag represented to Plaintiff that he found two lenders to pay off Countrywide’s deed of trust.  (Id.)  The first new trust deed holder was Kimo Chung Consulting, who allegedly loaned BCA approximately $460,000.00.  (Id.)  The successor to Kimo Chung Consulting is Equity Trust Company.  (Id.)  The second trust deed holder was West Valley, who allegedly loaned BCA approximately $120,000.00.  (Id.)  The loan to Countrywide was ultimately paid off as part of the short sale process.  (Id.)  Plaintiff alleges West Valley, an entity owned by Arshag, never loaned any money and it imposed a false second deed of trust against the Property.  (SAC ¶14.) 

 

Plaintiff alleges Defendants never offered any lease agreement, short sale agreement, or any other document memorializing the terms of the short sale transactions.  (SAC ¶15.)  Plaintiff alleges he relied on Arshag as his broker and agent for these formalities.  (Id.)  Plaintiff alleges Defendants represented to him that he was to pay BCA $4,500.00 per month; the payments would cover any amounts due to Defendants, the loan obligations to the new first and second trust deed holders, and taxes and insurance on the property.  (Id.)  Plaintiff agreed to this arrangement and made payments relying on Defendants’ representations.  (Id.)  Notwithstanding the original agreement, Defendants would typically approach Plaintiff at random intervals and request random amounts of money to avoid foreclosure.  (Id.)

 

Plaintiff alleges since 2013, he paid BCA over $300,000.00 by check and in cash, at all times believing the sum would be sufficient to pay all amounts due to Defendants, mortgage holders, property taxes, and insurance.  (SAC ¶16.)  Plaintiff alleges BCA failed to timely pay the mortgages and property taxes for the property, and property taxes for the Property were delinquent since at least 2017.  (SAC ¶¶17-18.) 

 

On September 3, 2019, Plaintiff and BCA allegedly entered into a binding agreement for the sale of the Property from BCA to Plaintiff in the form of certain Escrow Instructions with Oak Escrow, Inc. (the “Agreement”), in which Defendant agreed to sell and Plaintiff agreed to purchase the Property for $811,000.00.  (SAC ¶22, Exh. 1.)  Pursuant to the Amendment to Escrow Instructions, the date for the closing of the sale was to be November 17, 2020.  (Id.)

 

Because BCA failed to pay the monthly mortgage payments on the Property to Equity Trust Company, the Property went into foreclosure.  (SAC ¶19.)  Equity Trust Company, through its trustee, Defendant S.B.S. Trust Deed Network (“SBS”), recorded a Notice of Default against the Property on May 11, 2020.  (Id.)  A Notice of Trustee’s Sale was recorded against the Property on August 19, 2020, with a foreclosure sale scheduled to occur on September 17, 2020.  (Id.)  Defendants allegedly approached Plaintiff and assured him the foreclosure sale would be postponed upon payment of the sum of $34,500.00, which Plaintiff paid.  (SAC ¶20.)  Plaintiff alleges BCA worked with Equity Trust Company to coerce money from Plaintiff by continuing to send foreclosure sale notices regardless of the amount Plaintiff paid.  (SAC ¶21.)

 

Plaintiff alleges BCA failed and refused to cooperate in the sale of the Property to Plaintiff pursuant to the Agreement.  (SAC ¶23.)  Plaintiff alleges BCA admitted it could not proceed with the sale because its powers and privileges in the State of California were suspended by the California Franchise Tax Board, and BCA took no action to cure the suspension in a reasonable and timely fashion.  (Id.) 

 

Plaintiff filed his original complaint on or about December 14, 2020.  (SAC ¶26.)   Equity Trust proceeded with the foreclosure sale on December 16, 2020, which wiped out the interests of BCA and alleged junior lienholder West Valley.  (SAC ¶27.)  A third party acquired the Property as a result of the foreclosure sale, and the third party paid sufficient funds to pay off first lienholder Equity Trust with a surplus available of approximately $140,000.00.  (SAC ¶28.)  Plaintiff and Arshag both made demands on SBS for the surplus funds that resulted from the foreclosure sale.  (SAC ¶29.)  

 

On April 7, 2021, Plaintiff filed his first amended complaint (“FAC”).  On September 20, 2021, SBS filed a cross-complaint in interpleader against Plaintiff, Defendants, BCA, and Chris J. Bohdjelian. On February 15, 2022, Plaintiff filed the operative SAC. Defendants filed the instant demurrer and accompanying motion to strike on April 1, 2022.  Plaintiff filed his oppositions to the demurrer and motion to strike on September 27, 2022.  Defendants filed their replies on October 6, 2022.

 

Summary of Demurrer

 

           In support of their general demurrer to the SAC, Defendants argue the SAC should be dismissed in its entirety because there is no contract between the parties and Arshag is a misjoined/improper party.  (Memorandum, pg. 8.)  In support of their demurrer to the second cause of action, Defendants argue Plaintiff failed to allege facts showing Defendants knowingly intended to defraud Plaintiff by making a misrepresentation and fails to specifically plead the elements of fraud.  (Memorandum, pg. 10.)  Defendants argue Plaintiff’s allegations in his third cause of action are vague and insufficient to the same extent indicated by this Court regarding Plaintiff’s FAC.  (Memorandum, pg. 12.) Defendants argue Plaintiff’s fourth cause of action fails to sufficiently plead “that Defendants knowingly or intentionally act of disposition of property rights.”  (Memorandum, pg. 15.)  Defendants argue Plaintiff’s fifth cause of action does not allege factually specific instances to demonstrate a cause of action for quantum meruit.  (Memorandum, pg. 17.)  Finally, Defendants argue Plaintiff’s sixth cause of action fails to allege that Arshag owed Plaintiff a fiduciary duty.  (Memorandum, pg. 19.)

 

Legal Standard

 

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)  A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable.  (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].)  For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true, but the reviewing court does not assume the truth of conclusions of law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)

 

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”].)  The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

 

Misjoinder or Improper Party

 

C.C.P. §430.10 provides, “The party against whom a complaint . . . has been filed may object[ ] by demurrer . . . as provided in Section 430.30[ ] to the pleading on . . . [the] grounds . . . [t]here is a defect or misjoinder of parties.” (C.C.P. §430.10(d).)  

 

Citing Stephens v. Berry (1967) 249 Cal.App.2d 474, 479, Defendants argue they are mis-joined/improper parties because Plaintiff fails to prove privity of contract and “name the right parties for Defendants.”  (Memorandum, pg. 9.) However, unlike the parties in Stephens v. Berry, Plaintiff names BCA Holdings, LLC, as a party to this action.  Moreover, contrary to Defendants’ arguments, Plaintiff alleges causes of action against Defendants Arshag and West Valley for fraud, conversion, quantum meruit, and breach of fiduciary duty, causes of action that do not require the element of a written contract between parties.  Therefore, there is neither a misnomer in the description of the party or “a substitution or entire change of parties.” (Thompson v. Palmer Corporation (1956) 138 Cal.App.2d 387, 290.) 

 

Accordingly, Defendants’ general demurrer to the SAC for misjoinder of parties is overruled.

 

Fraudulent Misrepresentation (2nd COA)

 

The elements of fraud are: “(a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 974.)  A cause of action for fraud must be alleged with factual specificity.  Plaintiff must plead facts showing “how, when, where, to whom, and by what means the representations were tendered. [Citation]” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)

 

Plaintiff does not allege sufficient facts to constitute the fraudulent misrepresentation cause of action.  Plaintiff’s cause of action is based on the allegation of Arshag’s purported misrepresentations that he would be acting as Plaintiff’s real estate agent and broker and that in his capacity as CEO and owner of BCA and West Valley that the companies would collect money from Plaintiff to service the loans on the Property, pay all property taxes, and pay for insurance.  (SAC ¶¶40-41.)  Plaintiff alleges facts with specificity as to how, when, and to whom the representations were tendered. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.)  Plaintiff alleges Arshag made the representations to him in 2013 when he “approached Plaintiff . . . that he would be acting as Plaintiff’s real estate agent and broker,” when “he was discussing the ‘short sale’ scheme with Plaintiff.”  (SAC ¶¶40-41.)  Plaintiff also alleges West Valley made representations to him in 2013 when it misrepresented to Plaintiff “that it had loaned money to pay off the Countrywide loan . . . through West Valley’s CEO and owner, Arshag, with the intent of inducing Plaintiff to engage in the ‘short sale’ scheme.’” (SAC ¶42.) Plaintiff sufficiently alleges reliance and damages. (SAC ¶ ¶ 42-44.)

 

Based on the foregoing, Defendants’ demurrer to the 2nd cause of action is overruled.

 

Fraud by Omission (3rd COA)

 

The elements of an action for fraud based on concealment are: “‘(1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage.’ [Citation]” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 868.)

 

Plaintiff alleges sufficient facts to constitute a fraud based on concealment cause of action. Plaintiff alleges Defendants and BCA collected payments from Plaintiff through Arshag “individually and as CEO and owner of the other Defendants” and “[s]tarting on 11/1/18, Defendant BCA omitted and failed to inform Plaintiff that its rights and privileges in the State of California were suspended by the California Franchise Tax Board.”  (SAC ¶¶47-48.)  Further, Plaintiff alleges “this omission was intentionally made by [BCA] so that Plaintiff would continue to make loan payments even though Defendant was not legally able to conduct business in the state of California.”  (SAC ¶47.)  Here, Defendants merely argue that the allegations as to material misrepresentations are vague.  (Demurrer, pg. 12.)  However, these allegations are not vague.

 

Based on the foregoing, Defendants’ demurrer to the 3rd cause of action is overruled.

 

Conversion (4th COA)

 

“Conversion is the wrongful exercise of dominion over the property of another.  The elements of a conversion are: (1) the plaintiff’s ownership or right to possession of the property at the time of the conversion; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages. It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to his own use.”  (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 451-452; see also Prakashpalan v. Engstrom, Lipscomb and Lack (2014) 223 Cal.App.4th 1105, 1135; PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395, 397 [determining money cannot be the subject of a cause of action for conversion unless there is an identifiable sum, and dictum that, “plaintiffs may have stated a cause of action for conversion by alleging, in effect, an amount of cash ‘capable of identification.’ ”]; Fischer v. Machado (1996) 50 Cal.App.4th 1069, 1072; Weiss v. Marcus (1975) 51 Cal.App.3d 590, 599 [“While money cannot be the subject of an action for conversion unless a specific sum capable of identification is involved, it is not necessary that each coin or bill be earmarked.”].)

 

           Plaintiff alleges sufficient facts to constitute his conversion cause of action.  Plaintiff alleges specific sums of money he paid to Defendants and BCA and the dates Arshag collected the specific sums from him based on the allegations in paragraphs 1 through 29 inclusive.  (SAC ¶¶50-51.) 

 

Based on the foregoing, Defendant’s demurrer to the 4th cause of action is overruled.

 

Quantum Meruit (5th COA)

 

The elements of a cause of action for quantum meruit include: (1) plaintiff’s performance of services, work, or labor; (2) at defendant’s request; and (3) circumstances inferring defendant’s promise to pay a reasonable value.  (Maglica v. Maglica (1998) 66 Cal.App.4th 442, 449-450; Palmer v. Gregg (1967) 65 Cal.2d 657, 660; see also MKB Management, Inc. v. Melikian (2010) 184 Cal.App.4th 796, 805 [“Even if the entire contract was illegal and unenforceable, a plaintiff may recover the reasonable value of services rendered provided that those particular services were not legally prohibited.”].) Here Plaintiff fails to allege sufficient facts for a cause of action for quantum meruit.  Plaintiff alleges “Arshag approached Plaintiff with a plan to get the Property out of foreclosure,” in exchange for Plaintiff agreeing to make payments to Arshag’s Company, Defendant BCA, and “in turn, Plaintiff would be allowed to remain at the Property.”  (SAC ¶12.)  However, plaintiff does not allege that Plaintiff performed services work or labor. 

 

Based on the foregoing, Defendant’s demurrer to the 5th cause of action is sustained without leave to amend.

 

           Breach of Fiduciary Duty (6th COA)

 

A cause of action for breach of fiduciary duty includes (1) the existence of a fiduciary duty; (2) breach of that duty; and (3) damage caused by the breach. (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932 [citing Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086].)  To plead a cause of action for breach of fiduciary duty, a plaintiff must allege facts showing the existence of a fiduciary duty owed to that plaintiff, a breach of that duty and resulting damage. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524.)  A fiduciary duty is founded upon a special relationship imposed by law or when “confidence is reposed by persons in the integrity of others” who voluntarily accept the confidence. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1150; see CACI 4100, et seq.)

 

           Plaintiff alleges sufficient facts for a cause of action for breach of fiduciary duty. Plaintiff alleges he retained the services of Arshag to act as his real estate agent and broker for the purposes of accomplishing a short sale of the Property, negotiating a settlement of the Countrywide loan, and obtaining new loans for the Property.  (SAC ¶60.)  Plaintiff further alleges Arshag had a fiduciary duty of undivided loyalty to Plaintiff, and Arshag breached this duty by making repeated misrepresentations and omissions regarding use of Plaintiff’s payments.  (SAC ¶¶61-63.)  Although Defendants generally argue Plaintiff failed to allege Arshag owed Plaintiff a fiduciary duty, Defendants acknowledge the types of job roles that owe a fiduciary duty to a client include real estate agent and real estate broker.  (Memorandum, pg. 19 citing CACI No. 4100.)  (See Thomson v. Canyon (2011) 198 Cal.App.4th 594, 607 [“The fiduciary duties of a real estate agent include the duties to obey the instructions of the client, and to provide diligent and faithful service. (2 Miller & Starr, Cal. Real Estate (3d ed. 2000) Agency § 3.25, p. 119.)”].) 

 

Based on the foregoing, Defendant’s demurrer to the 6th cause of action is overruled.

 

B.   Motion to Strike

 

Considering the Court’s ruling on the demurrer, Defendant’s motion to strike is moot. 

 

 

Dated:  October _____, 2022

                                                                                                                               

Hon. Monica Bachner

Judge of the Superior Court