TENTATIVE RULING

Calendar:    4

Date:          6/28/2024 

Case No: 22 GDCV00664 Trial Date: April 7, 2025  

Case Name: Tarakjian v. Assali, et al.

MOTION TO SEAL 

MOTION FOR SUMMARY JUDGMENT

(Or, in the Alternative, Summary Adjudication)

Moving Party:            Defendants George Assali and UASA, LLC        

Responding Party: Plaintiff Rafi Tarakjian 

RELIEF REQUESTED:

Motion to Seal

Motion for Summary Judgment

  Order granting summary judgment or alternatively summary adjudication in favor of George Assali and UASA, LLC 

CAUSES OF ACTION: from Second Amended Complaint   

1) Breach of Oral Agreement  

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

3) Breach of Fiduciary Duty 

4) Fraud and Deceit  

5) Unjust Enrichment 

6) Negligent Misrepresentation 

7) Open Book 

8) Account Stated 

9) Quantum Meruit 

SUMMARY OF FACTS:

Plaintiff Raffi Tarakjian alleges that in 2016, plaintiff met defendant George Assali, who represented to plaintiff that he was a licensed real estate agent, had been doing property flips for over twenty years, had never lost money flipping properties, and that defendant guaranteed that he would return a profit on plaintiff’s investment.  During several meetings, the parties agreed that plaintiff would provide funding for property from an auction and additional funding as needed to remodel the property after its purchase, and that defendant would be responsible for managing the remodeling of the purchased property. Once the remodeling was complete, the property would be sold by defendant Assali acting as the selling agent, or rented out, and plaintiff would receive the net profit from the sale of each property.  It was also agreed that invoices for all expenses would be provided to plaintiff, and that plaintiff could demand the return of his investment at any time.  

ANALYSIS:

Motion to Seal

Procedural

Unredacted Documents Filed on eCourt 

“(4) Lodging of record pending determination of motion or application

The party requesting that a record be filed under seal must lodge it with the court under (d) when the motion or application is made, unless good cause exists for not lodging it or the record has previously been lodged under (3)(A)(i). Pending the determination of the motion or application, the lodged record will be conditionally under seal.

(5) Redacted and unredacted versions

If necessary to prevent disclosure, any motion or application, any opposition, and any supporting documents must be filed in a public redacted version and lodged in a complete, unredacted version conditionally under seal. The cover of the redacted version must identify it as “Public--Redacts materials from conditionally sealed record.” The cover of the unredacted version must identify it as “May Not Be Examined Without Court Order--Contains material from conditionally sealed record.”

(6) Return of lodged record

If the court denies the motion or application to seal, the moving party may notify the court that the lodged record is to be filed unsealed. This notification must be received within 10 days of the order denying the motion or application to seal, unless otherwise ordered by the court. On receipt of this notification, the clerk must unseal and file the record. If the moving party does not notify the court within 10 days of the order, the clerk must (1) return the lodged record to the moving party if it is in paper form or (2) permanently delete the lodged record if it is in electronic form.

(c) References to nonpublic material in public records

A record filed publicly in the court must not disclose material contained in a record that is sealed, conditionally under seal, or subject to a pending motion or an application to seal.

(d) Procedure for lodging of records

(1) A record that may be filed under seal must be transmitted to the court in a secure manner that preserves the confidentiality of the records to be lodged. If the record is transmitted in paper form, it must be put in an envelope or other appropriate container, sealed in the envelope or container, and lodged with the court.

(2) The materials to be lodged under seal must be clearly identified as “CONDITIONALLY UNDER SEAL.” If the materials are transmitted in paper form, the envelope or container lodged with the court must be labeled “CONDITIONALLY UNDER SEAL.”

(3) The party submitting the lodged record must affix to the electronic transmission, the envelope, or the container a cover sheet that:

(A) Contains all the information required on a caption page under rule 2.111; and

(B) States that the enclosed record is subject to a motion or an application to file the record under seal.

(4) On receipt of a record lodged under this rule, the clerk must endorse the affixed cover sheet with the date of its receipt and must retain but not file the record unless the court orders it filed.” 

The electronic transmissions were not properly lodged and secured, as defendants have filed on eCourt the “unredacted” version of the subject Gallagher Declaration in support of the motion for summary judgment, which includes a full copy of the document, Exhibit F, which defendants seek to have filed under seal. Defendants have also filed on eCourt an “unredacted” version of defendants’ separate statement which includes the material at UMF Nos.  24-30.  Those materials are now in the public record, and it is not clear how that can be undone.  At best, the court could order the entire Gallagher Declaration and separate statement stricken, but it appears the system is unable to strike just one exhibit to an efiled document or interlineate a separate statement to make redactions.    Defendants would then be required to file another motion to obtain an order to have the properly lodged redacted declaration and material filed in the public record.     

Substantive

Relief is sought under CRC Rule 2.551, which provides, in pertinent part:

“(a) A record must not be filed under seal without a court order.  The court must not permit a record to be filed under seal based solely on the agreement or stipulation of the parties.

(b) (1)   A party requesting that a record be filed under seal must file a motion or an application for an order sealing the record.  The motion or application must be accompanied by a memorandum of points and authorities and a declaration containing facts sufficient to justify the sealing.   

(2) A copy of the motion or application must be served on all parties who have appeared in the case.   Unless the court orders otherwise, any party that already possesses copies of the records to be placed under seal must be served with a complete, unredacted version of all papers as well as a redacted version.”

Under Rule 2.550(c) “Unless confidentiality is required by law, court records are presumed to be open.”  

The rules for sealing records “do not apply to discovery motions and records filed or lodged in connection with discovery motions or proceedings.”  The rules “do apply to discovery materials that are used at trial or submitted as a basis for adjudication of matters other than discovery motions or proceedings.”    CRC Rule 2.550(a)(3); NBC Subsidiary, Inc.  v. Superior Court (1999) 20 Cal.4th 1178, 1208-1209 n. 25.   

Under Rule 2.550(d):

“The court may order that a record be filed under seal only if it expressly finds facts that establish:

(1) There exists an overriding interest that overcomes the right of public access to the record;

(2) The overriding interest supports sealing the record;

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4) The proposed sealing is narrowly tailored; and 

(5) No less restrictive means exist to achieve the overriding interest.”

With respect to the existence of an overriding interest, the Legislative Comment to CRC Rule 2.550 notes that the Rule is a codification of the standards set forth in the California Supreme Court opinion in NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178.   The comment notes that “NBC Subsidiary provides examples of various interests that courts have acknowledged may constitute ‘overriding interests’.  (See id., at p. 1222, fn. 46).” 

  This footnote in NBC Subsidiary reads:

“As observed, ante, 86 Cal. Rptr.2d at page 798, 980 P.2d at page 355, the court in Press–Enterprise II, supra, 478 U.S. 1, 14, 106 S.Ct. 2735, 92 L.Ed.2d 1, implied that an accused's interest in a fair trial constitutes an “overriding interest” supporting closure. We assume that the high court similarly would find that a civil litigant's right to a fair trial also constitutes an overriding interest supporting closure.

Courts have acknowledged various other overriding interests. (Globe, supra, 457 U.S. 596, 607, 102 S.Ct. 2613, 73 L.Ed.2d 248 [protection of minor victims of sex crimes from further trauma and embarrassment]; accord, Press–Enterprise II, supra, 478 U.S. 1, 9, fn. 2, 106 S.Ct. 2735, 92 L.Ed.2d 1; Press–Enterprise I, supra, 464 U.S. 501, 512, 104 S.Ct. 819, 78 L.Ed.2d 629 [privacy interests of a prospective juror during individual voir dire]; Rovinsky, supra, 722 F.2d 197, 200 [protection of witnesses from embarrassment or intimidation so extreme that it would traumatize them or render them unable to testify]; Publicker, supra, 733 F.2d 1059, 1073 [protection of trade secrets, protection of information within the attorney-client privilege, and enforcement of binding contractual obligations not to disclose]; Comment, The First Amendment Right of Access to Civil Trials After Globe Newspaper Co. v. Superior Court, supra, 51 U. Chi. L.Rev. at pp. 299–310 [safeguarding national security, ensuring the anonymity of juvenile offenders in juvenile court]; Fenner & Koley, supra, 16 Harv. C.R.-C.L. L.Rev. at pp. 440–444 [ensuring the fair administration of justice, and preservation of confidential investigative information].)

Quite apart from questions relating to closure based upon the content of information, it is recognized that courtroom access may be denied or regulated by reasonable “time, place, and manner restrictions” in order to maintain dignity and decorum, or when courtroom capacity precludes entry by every person who wishes to attend. (Richmond Newspapers, supra, 448 U.S. 555, 581, fn. 18, 100 S.Ct. 2814, 65 L.Ed.2d 973 (lead opn.); Fenner & Koley, supra, 16 Harv. C.R.-C.L. L.Rev. at pp. 444–446.)”

NBC Subsidiary, at 1222, n. 46.  

Defendants argue that if the IED is not sealed, it is likely that economic harm, such as a loss of competitive advantage, and unnecessary exposure of private information will occur.  

As an initial matter, it would appear that the IED has already been filed in the family law matter in the Superior Court of the County of Los Angeles, by file stamp dated March 5, 2021, so that the IED is already a matter of public record.  There is no indication in the motion that the document was subject to a sealing order in the other matter, and presumably if it had been, that sealing order would have been included in the moving papers.  This fact undermines any argument that there would be any expectation of privacy in the materials which defendants now seek to have sealed.     

Moreover, it is unclear how the IED prepared by plaintiff would include private financial information which would impact defendants’ financial privacy in this matter.  The declaration in support of the motion to seal is made by counsel for defendants and states broadly:

“3. I have reviewed the Income and Expense Declaration (IED) produced by the plaintiff RAFI TARAKJIAN in this matter and determined that it contains sensitive financial information that is also materially relevant to defendants’ motion for summary judgment/adjudication [sic].

 4. Public disclosure of the information would be improper.”

[Gallagher Decl., paras. 3, 4]. 

It does not appear that plaintiff is arguing that the information is private, as he evidently produced the document in discovery, without requesting a protective order, and has not filed any joinder to this motion to seal explaining how the information is protected.   

With respect to the interest of defendants in what they broadly argue is sensitive business information, it is generally the burden of the party seeking to protect sensitive business information from public disclosure to establish that the information is subject to such protection.  See Bridgestone/Firestone, Inc. v. Superior Court (1992) 7 Cal.App.4th 1348, 1390.  

Here, there is no explanation by defendants, for example, that competitors would have access to the information, causing undue competitive harm, or that the information is proprietary, or part of a confidential settlement agreement.

In addition, as discussed above, defendants by their conduct in efiling the unredacted documents, and failing to follow the procedures to protect the records, have themselves disclosed the allegedly private material, and would under the circumstances have difficulty establishing that the materials have been subject to reasonable efforts to maintain their private confidential nature.  

The current showing in the moving papers with respect to the sealing serving an important overriding interest which would be prejudiced is not sufficient, and the motion to seal is denied.  

As noted above, the records sought to be sealed are already a matter of public record and will remain so.    

Motion for Summary Judgment/Adjudication 

Procedural

Adjudication Issues Not Set Forth in Notice 

The motion is entitled a motion for summary judgment, or in the alternative summary adjudication.  However, the notice of motion does not clearly set forth the issues to be summarily adjudicated.

Under CRC Rule 3.1350(b):

“If summary adjudication is sought, whether separately or as an alternative to the motion for summary judgment, the specific cause of action, affirmative defense, claims for damages, or issues of duty must be stated specifically in the notice of motion and be repeated, verbatim, in the separate statement of undisputed facts.” 

Subdivision (h) provides a format for separate statements which “must” be followed, and shows the statement set forth with respect to stated causes of action or affirmative defenses.  

This requirement is not clearly done in the notice of motion, which seeks, “an order granting summary judgment or alternatively summary adjudication [sic] in favor of GEORGE ASSALI and UASA, LLC and against RAFI TARAKJIAN (“plaintiff”) on the grounds that there is no triable issue of material fact, and that Defendants are entitled to judgment as a matter of law.”  No issues or causes of action are specified.  

The separate statement does set forth several headings, most of which appear to be issues, and appear directed to specific causes of action.   Such headings/issues are also addressed in subparts of the memorandum.   

This approach is not ideal, as the issues should have been set forth in the notice of motion, as it is held a court may not summarily adjudicate claims or defenses unless requested in the notice of motion.   Homestead Savings v. Superior Court (1986) 179 Cal. App.3d 494, 498.  

The court could consider denying the motion for summary adjudication on this ground, but the court elects not to do so.   

However, the court is mindful that the notice here does at least mention summary adjudication, and plaintiff in opposition does not object on this ground or appear to have been unable to address the issues on their merits due to any lack of specific notice.  

Summary Judgment 

It appears from the issues as framed in the separate statement that the motion is directed only to the first cause of action for breach of oral contract, and fourth cause of action for fraud and deceit.  According to the headings in the Memorandum, the motion is also directed to the second cause of action for breach of implied covenant of good faith and fair dealing, and third cause of action for breach of fiduciary duty.  

This recitation is only four of the nine causes of action asserted in the SAC.  In fact, the motion expressly concedes, “plaintiff may have some claim for an Open Book on his seventh or eighth account…”  [Memorandum, p. 9:  7-8].

CCP section 437c(c) provides:

“The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law.”

Substantive 

Under CCP § 437c(p)(2) a defendant “has met his or her burden of showing that a cause of action has no merit if the party has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.  Once the defendant... has met that burden, the burden shifts to the plaintiff... to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.”

CCP § 437c(f)(1) provides that “A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty.”

ISSUE 1 (Memorandum): PLAINTIFF’S BREACH OF ORAL AGREEMENT (FIRST AND SECOND CAUSES OF ACTION) ARE BARRED BY THE STATUTE OF LIMITATIONS

(Separate Statement)  PLAINTIFF’S FIRST CAUSE OF ACTION FAILS BECAUSE IT IS BARRED BY THE STATUTE OF LIMITATIONS

The first cause of action is for breach of oral contract.   The second cause of action is for alleged breach of the implied covenant of good faith and fair dealing, a covenant alleged to have arisen from the same Agreement which is the subject of the first cause of action.   

CCP section 339 sub. 1 provides a two-year statute of limitations for liability not founded on an instrument in writing:

“Within two years:  1.  An action upon a contract, obligation or liability not founded upon an instrument of writing…” 

As the Second District has recognized, “A cause of action for breach of contract accrues at the time of breach, which then starts the limitations period running.” Cochran v. Cochran (1997) 56 Cal.App.4th 1115, 1120, citing Whorton v. Dillingham (1988) 202 Cal.App.3d 447, 456.   

Defendants argue that plaintiff here alleges defendants breached the oral agreement by failing to provide proper accounting as early as April of 2017.  [UMF No. 6].  Defendants argue that the very latest the breach could have occurred was February 2018, upon the sale of the last jointly purchased property.   [UMF Nos. 11, 17, 18].   Defendants argue that under the two year statute of limitations, plaintiff was accordingly required to file suit by February 2020, but did not commence this action until October 6, 2022, over two years too late.  [UMF No. 12].

This argument, and the references to evidence in the separate statement for the facts concerning the sale of the last jointly purchased property, consists of reference to allegations in the SAC.  The SAC here, which is not even verified, is not evidence for purposes of a motion for summary judgment.     

Under CCP § 437c(c): 

“(c) The motion for summary judgment shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. In determining whether the papers show that there is no triable issue as to any material fact the court shall consider all of the evidence set forth in the papers, except the evidence to which objections have been made and sustained by the court, and all inferences reasonably deducible from the evidence, except summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact.”

(Emphasis added). 

Under CCP section 437c(b)(1), in connection with motions for summary judgment:

“The motion shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken.” 

The argument in support of this issue is not supported by any affidavit, declaration, discovery responses, or depositions.  The moving papers include a request that the court take judicial notice of the SAC, and the allegations at paragraphs 16-20 pursuant to Evidence Code section 452(d).  [RFJN, para. 1].

Under Evidence Code § 452 (d), judicial notice may be taken of   “Records of (1) any court of this state or (2) any court of record of the United States or any state of the United States.” 

However, with respect to judicial notice of court records, it is held:

“A court cannot take judicial notice of hearsay allegations as being true, just because they are part of a court record or file.   A court may take judicial notice of the existence of each document in a court file, but can only take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments.”

Day v. Sharp (1975) 50 Cal.App.3d 904, 914, quoting Jefferson, Cal.Evid. Benchbook (1972) Judicial Notice § 47.3, p. 840 (italics in original).    

The allegations at paragraphs 16-20 of the SAC in the first place pertain to the background and terms of the alleged oral agreement to purchase properties to be remodeled and resold for a profit, and do not address any conduct which would be considered to be a breach of that agreement, so are irrelevant to the argument, and cannot even be construed to have admitted any relevant fact.  In addition, the court could not in any case take judicial notice of the truth of such allegations, and no argument is made based on any other allegations. 

  

Defendants have accordingly failed to meet their initial burden on this issue, and the motion is denied. 

Even if the burden had shifted, plaintiff in opposition submits evidence that as of February 2019, defendant Assali continued to list properties for plaintiff and continued to assure plaintiff that plaintiff’s funds were being used for the purchase and sale of other investment properties, and that plaintiff’s funds were tied up in flips.  [Additional Facts Nos. 43, 44, 45, 48, and evidence cited].   Plaintiff submits his own declaration, as well as text messages from Assali showing their continued partnership, Assali suggesting they “move to the next one,” and “keep the momentum going.”  [Tarakjian Decl., paras. 33-36, Ex. Z].  Plaintiff states, “Assali continued to encourage me to further invest into flipping properties.”  [Tarakjian Decl., para. 36]. 

Plaintiff also submits evidence that in May of 2020 and August of 2020, Assali repaid plaintiff $50,000 and $125,000, with the last payment being made on October 6, 2020.  [Additional Fact No. 49, and evidence cited].  Plaintiff states:

“In late 2019, I demanded the return of my funds from Assali. Assali claimed that my funds were tied up in flips. On or about May 17, 2020, I was repaid $50,000. On or about August 10, 2020, I was repaid $125,000, and then $80,000 on or about October 6, 2020. True and correct copies of the May 17, 2020, August 10, 2020, and October 6, 2020 checks are attached hereto as Exhibits “BB,” “CC,” and “DD.””

[Tarakjian Decl., para. 38]. 

As noted above, plaintiff filed his complaint on October 6, 2022, within the two-year period following the breach.  

Plaintiff also argues that the matter was subject to a six month extension pursuant to California Rules of Court Appendix 1 Emergency Rule 9, adopted by the Judicial Council on April 6, 2020, which provides, in pertinent part, “(a) Notwithstanding any other law, the statutes of limitations and repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.”  

Rule 9, subdivision (c), effective March 11, 2022, provides, 

“This rule will sunset on June 30, 2022 unless otherwise amended or repealed by the Judicial Council.  This sunset does not nullify the effect of the tolling of the statutes of limitations and repose under the rule.” 

Advisory Committee comments on Emergency Rule 9 indicate that Rule 9 is “intended to apply broadly” and provides an example showing how the tolling period is tacked onto the end of the statute of limitations period. 

Plaintiff argues that this extended the statute of limitations for this case from October 6, 2022 to April, 2023.  However, plaintiff is arguing here that the cause of action did not accrue until October 6, 2020, which was beyond the tolling period which applied until October 1, 2020.  

In any case, plaintiff has submitted evidence supporting a reasonable inference that the two-year statute was satisfied regardless of any extension. 

Triable issues of fact have been raised with respect to the defense that the causes of action are barred by the applicable statute of limitations, and the motion on this issue is denied. 

ISSUE 2 (Memorandum): PLAINTIFF’S BREACH OF ORAL CONTRACT CLAIM VIOLATES THE STATUTE OF FRAUDS

(Separate Statement)  PLAINTIFF’S BREACH OF ORAL AGREEMENT CLAIM VIOLATES THE STATUTE OF FRAUDS

Under Civil Code § 1622:

“All contracts may be oral, except such as are specially required by statute to be in writing.” 

Defendants rely on Civil Code section 1624 (a)(1) and (3), which provides:

(a) The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent:

(1) An agreement that by its terms is not to be performed within a year of the making thereof...

(3) An agreement... for the sale of real property, or of an interest therein...”

With respect to the one-year portion of the statute of frauds, this does not appear to be a case where the alleged oral agreement, in effect, to purchase, remodel, and sell real property, is an agreement that by its terms could not have been performed within a year of the making of the alleged promise.    

The California Supreme Court has observed that the one-year provision of the statute of frauds is narrowly construed, noting:

“‘In its actual application, however, the courts have been perhaps even less friendly to this provision [the ”one year“ section] than to the other provisions of the statute [of frauds]. They have observed the exact words of this provision and have interpreted them literally and very narrowly. ... To fall within the words of the provision, therefore, the agreement must be one of which it can truly be said at the very moment it is made, 'This agreement is not to be performed within one year'; in general, the cases indicate that there must not be the slightest possibility that it can be fully performed within one year.” (Italics added.) (2 Corbin on Contracts, § 444, at pp. 534—535.)”

White Lighting, at 343, n. 2, italics in original.   

With respect to the statute of frauds provision pertaining to real property, the moving papers rely on plaintiff’s responses to Special Interrogatories, arguing that plaintiff cannot specify his monetary contributions, claim damages, or produce witnesses that the properties allegedly funded by the December 2017 investment were so funded, or assurances were made, and is unable to provide written documentation or signed contracts.  [UMF Nos. 19, 20, and evidence cited].  

However, it appears that the alleged agreement was not one for the sale of real property, or of an interest therein, but for the parties to work together to purchase, remodel, and resell real property.  There is no claim made in the pleading that there was an oral agreement that plaintiff would obtain title to or an interest in any real property.  Discovery responses establishing the absence of a writing would accordingly not establish that the cause of action is barred by this subdivision of the statute of frauds if there is no requirement for a writing in the first instance.  

The alleged agreement between the parties to operate an investment enterprise is in the nature of a partnership agreement, and it has long been held that the statute of frauds does not apply to a partnership which acquires real property for partnership uses, or which has as its object to deal in real property.  See Bates v. Babcock (1892) 95 Cal.479, 486-488;  Koyer v. Willmon (1907) 150 Cal. 785, 787 (“It is settled by the decisions in this state that a partnership for the purposes of buying, holding, and selling lands may be formed by an agreement resting in parol only, and that such parol agreement is valid”);  Simpson v. Winkelman (1964, 2nd Dist.) 225 Cal.App.2d 746, 750-751. 

Without evidence that there was some agreement for the sale of property or an interest therein sought to be enforced between these parties, defendants have failed to meet their initial burden to establish each element of their affirmative defense on this ground. 

Even had the burden shifted, plaintiff in opposition argues that the agreement between plaintiff and defendants was not for purchase and sale of specific real property, but for the parties to work together for purposes of purchasing, remodeling, and selling real property, and the funds given by plaintiff to Assali were regarded as an investment.  [Response to UMF Nos. 19, 20, and evidence cited; Additional Facts Nos. 5-7 51, 52, and evidence cited].  

Plaintiff relies on his own declaration in which he indicates that in 2016 he was looking to invest in real estate and was introduced to defendant Assali.  [Tarakjian Decl., para. 2].  Plaintiff states:

“3. Before making a decision, I spoke with and met with Assali. Assali represented to me that he was a licensed real estate agent, that he had been doing property flips for over twenty years, and that he had never lost money flipping properties.

4. Assali also told me that it was easy to profit from doing real estate “flips” and if I invested with him, I would make money on my investment.

5. After several meetings, I agreed to begin doing business with Assali. We did not have a written agreement but we both agreed through extensive discussions that I would be providing funding for the purchase of a property from an auction for which Assali would charge a $5,000 fee, and additional funding, as needed, to remodel the property after its purchase. We agreed that Assali would be responsible for managing the remodeling of the purchased property, and once the remodeling was completed, the property would be listed and sold by Assali as the selling agent. After the sale, I would receive the net profits from each property. 

6. We also agreed that Assali would be providing invoices for all expenses incurred in connection with the properties. It was mutually agreed that I could demand the return of my investment at any time from Assali.”  

[Tarakjian Decl., paras. 3-6]. 

Plaintiff also submits deposition testimony of defendant Assali in this case, in which, in response to questioning, Assali indicated that defendant’s company, defendant UASA, LLC, was a joint venturer, and 33 per cent partner with “Investors” in that venture.  [Yacoubian Decl., Ex. HH, Assali Depo., pp. 120-121].  Assali also testified concerning one property that he told plaintiff, “when you’re ready to invest that—if you want your money to be transferred into that, I’m willing to do that,” and otherwise spoke of the relationship as involving this type of investment.  [Assali Depo., pp. 146, 165].  

This showing is sufficient to raise triable issues of fact with respect to application of the statute of frauds, and the motion is denied on this issue.  

ISSUE 3 (Memorandum): PLAINTIFF’S FRAUD AND DECEIT CLAIM FAILS FOR LACK OF EVIDENCE OF MISREPRESENTATION

(Separate Statement)  PLAINTIFF’S FOURTH CAUSE OF ACTION FOR FRAUD AND DECEIT FAILS BECAUSE PLAINTIFF HAS NO EVIDENCE OF MATERIAL MISREPRESENTATION

To establish a cause of action for fraud, plaintiff must plead and prove the following elements: A false representation, actual or implied, or concealment of a matter of fact material to the transaction which defendant had a duty to disclose, or defendant’s promise made without intention to perform; defendant’s knowledge of the falsity; defendant’s intent to deceive; plaintiff’s justifiable reliance thereon; and resulting damage to plaintiff.  Pearson v. Norton (1964) 230 Cal.App.2d 1.

Defendants argue that plaintiff here will be unable to establish the element of plaintiff’s fraud claim that defendants made any actionable misrepresentation.  Defendants argue that plaintiff premises his fraud claim on defendants’ alleged guarantee of a 20% annual return on investment, but when asked to produce evidence supporting this claim, could only point to documents produced by defendants, rather than anything in his own possession.  [UMF Nos. 21, 22, and evidence cited].  The request for production at issue requested:

“All DOCUMENTS CONCERNING YOUR allegation that GEORGE ASSALI misrepresented material facts to YOU during the RTP.” 

[Gallagher Decl., Ex. E, RFP No. 18, p. 15]. 

However, it appears that this approach was a pattern in the previous responses.  [Ex. E, Supplemental Responses]. 

In any case, it is difficult to understand how the production of documents Bates’ stamped and produced by defendants forecloses that plaintiff has any evidence of a misrepresentation, without an analysis of the content of those documents.  It may well be that those documents include written misrepresentations by defendants supporting plaintiff’s claim in this matter, or facts showing the alleged fraud.  This showing is not sufficient to meet defendants’ initial burden on this motion. 

  

Defendants also argue that plaintiff’s interrogatory responses conflate the fraud claim with the alleged breach of contract without identifying any specific misrepresentations.   [UMF No. 23, and evidence cited]. 

Defendants rely on Special Interrogatory No. 16, which asked, “Identify all facts CONCERNING YOUR claim that GEORGE ASSALI defrauded YOU.”  [Gallagher Decl., Ex. D, p. 22; See also, Tarakjian Decl., para. 40, Ex. EE].  Defendants argue that plaintiff responded to this interrogatory in a meandering fashion and seem to rely on plaintiff’s assertions that defendant “would not sell unless a profit was made” and that there was some promise to provide plaintiff with an accounting after each flip.   This assertion that Assali “would provide Plaintiff with an accounting of each flip,” if a false promise, appears to be a misrepresentation sufficient to support a fraud claim.    

The full response refers to the response to Interrogatory No. 15, not mentioned in the moving papers, in which the facts stated include that there were promises and guarantees based on representations of Assali “before very successfully flipping properties,” that Assali, “would not lose money,” and that despite owing plaintiff a fiduciary duty, Assali concealed profits from plaintiff’s investment. 

The response to Interrogatory No. 16 itself also states, among other things, that “George Assali approached Plaintiff with promises and guarantees in order to gain Plaintiff’s trust to feel comfortable,” that “George Assali also committed fraud by accepting to pay his friend Alex Hamaci a $500 commission for every property George Assali and Plaintiff flipped” and that “[h]ad Plaintiff been informed this deal took place behind his back, Plaintiff would never have agreed to invest his hard earned money with George Assali,” that Assali misrepresented the reason Assali requested of plaintiff that checks be written under his name, as opposed to proceeding with cashier’s checks, and that in 2017 Assali requested funds for a porch add-on for the Janice property in Long Beach, when there was no porch ever constructed, rebuilt or added on to the property before it was sold.  [Id].  

CCP § 437c(c) provides that “summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact.”   See also Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 718.

Even if the burden had shifted to plaintiff, plaintiff argues that plaintiff can establish his fraud cause of action.  Plaintiff claims that before he entered into the agreement, Assali represented to plaintiff that he had never lost money flipping properties, and that if plaintiff invested his money with him, he would make money on his investment.  [Additional Facts Nos. 3, 4, and evidence cited].  

Plaintiff again relies on plaintiff’s declaration in this matter, as quoted above, which affirmatively states that before entering the oral agreement with defendants, Assali represented to plaintiff that if plaintiff invested, he would make money on his investment.  [Tarakjian Decl., paras. 3, 4]. 

Plaintiff also submits evidence that Assali promised to but did not provide a full accounting, until after the lawsuit was filed.  [Additional Facts Nos. 19, and evidence cited; Tarakjian Decl., paras. 6, 14, 30; Assali Depo. pp. 140-141].  Plaintiff also argues that during the time Assali bought and sold properties with plaintiff’s money, he inflated the costs of remodeling over which Assali had exclusive control.  [Additional Facts Nos. 18, 19, and evidence cited].  Specifically, plaintiff submits evidence concerning the request for funds for a porch add on at the Janice property in Long Beach, Assali’s receipt of those funds, and the fact that no add on was constructed. [Additional Facts Nos. 34, 35, and evidence cited, Tarakjian Decl., paras. 27, 28, Exs. U, V; Assali Depo., pp. 135].    

ISSUE 4 (Memorandum) THE ECONOMIC LOSS RULE BARS PLAINTIFF’S FOURTH CAUSE OF ACTION 

(Separate Statement) (Not Set Forth)

As an initial matter, this issue is not set forth in defendants’ separate statement.   As discussed above, the issue is also not presented in the notice of motion.  The issue is not presented in the separate statement at all, and so fails to follow the required format, and fails to state to what cause of action, defense or duty it is addressed.  As discussed above, the motion on this issue could be denied for failure to comply with CRC Rule 3.1350(b) and (h), but the court elects not to do so. 

     

However, as pointed out in the opposition, the cause of action is based on fraud in the inducement of the contract.  Conduct amounting to a breach of contract becomes tortious when it violates an independent duty arising from principles of tort law.  Erlich v. Menezes (1999) 21 Cal.4th 543, 551.

The Supreme Court in Erlich noted that several breaches of duty independent of the contract have been recognized:

“Tort damages have been permitted in contract cases where a breach of duty directly causes physical injury (Fuentes v. Perez (1977) 66 Cal. App. 3d 163, 168, fn. 2 [136 Cal. Rptr. 275]); for breach of the covenant of good faith and fair dealing in insurance contracts (Crisci v. Security Ins. Co. (1967) 66 Cal. 2d 425, 433 434 [58 Cal. Rptr. 13, 426 P.2d 173]); for wrongful discharge in violation of fundamental public policy (Tameny v.Atlantic Richfield Co. (1980) 27 Cal. 3d 167, 175 176 [164 Cal. Rptr. 839, 610 P.2d 1330, 9 A.L.R.4th 314]); or where the contract was fraudulently induced.  (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App. 3d 1220, 1238 1239 [1 Cal. Rptr. 2d 301].) In each of these cases, the duty that gives rise to tort liability is either completely independent of the contract or arises from conduct which is both intentional and intended to harm. (See, e.g., Christensen v. Superior Court (1991) 54 Cal. 3d 868, 885 886 [2 Cal. Rptr. 2d 79, 820 P.2d 181].)”

Erlich, at 551-552 (emphasis added).

ISSUE 5 (Memorandum) JUDICIAL ESTOPPEL BARS PLAINTIFF’S CLAIMS BASED UPON CONTRADICTORY EVIDENCE FROM HIS INCOME AND EXPENSE STATEMENT

(Separate Statement) PLAINTIFF’S BREACH OF ORAL AGREEMENT CLAIM SHOULD BE BARRED UNDER JUDICIAL ESTOPPEL DUE TO CONTRADICTORY INCOME AND EXPENSE DECLARATION 

The doctrine of judicial estoppel was set forth by the California Supreme Court in MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, as follows:

“Judicial estoppel precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position. [Citations.] …” ’ [Citation.]  The doctrine [most appropriately] applies when: ‘(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.’ ” ( Aguilar v. Lerner (2004) 32 Cal.4th 974, 986–987 [12 Cal. Rptr. 3d 287, 88 P.3d 24] (Aguilar); see Scripps Clinic v. Superior Court (2003) 108 Cal.App.4th 917, 943 [134 Cal. Rptr. 2d 101]; Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183 [70 Cal. Rptr. 2d 96] (Jackson).)”

The doctrine's dual goals are to maintain the integrity of the judicial system and to protect parties from opponents' unfair strategies. [Citation.]” ’ ” ( Aguilar, supra, 32 Cal.4th 974, 986.) Consistent with these purposes, numerous decisions have made clear that judicial estoppel is an equitable doctrine, and its application, even where all necessary elements are present, is discretionary.

MW Erectors, at 422, italics in original. 

It is also recognized that judicial estoppel has harsh consequences and should be invoked with caution and only if necessary to avoid a miscarriage of justice.   Gottlieb v. Kest (2006) 141 Cal.App.4th 110.   

Defendants do not set forth these elements, or indeed cite any legal authority in support of this argument.   This position appears to be an argument that an affirmative defense applies, so that defendants have the burden of proving each element of that defense.  The Second District recognizes that “A defendant moving for summary judgment based on an affirmative defense must present evidence that supports each element of its affirmative defense, which would also be its burden at trial.”  Acosta v. Glenfed Development Corp.  (2005) 128 Cal.App.4th 1278, 1292-1293, italics in original, citation omitted.   

It is not clear what portion of the IED defendants are relying on or what position plaintiff is taking in this action upon which the defendants are relying.  This confusion makes it difficult to determine if there are contrary positions being taken by plaintiff here. 

The argument seems to be that in the previous proceeding, a family law matter, plaintiff did not disclose any interest in real property or the business activities of the property corporation under which he was conducting business with defendants, so was taking the position he had no income or assets from those sources.  However, it is not clear how this conflicts with plaintiff’s position in this case, which has been fairly consistently that (1) plaintiff was an investor in a joint venture, not a purchaser or seller of any of the real property at issue, and (2) plaintiff’s corporation was created at the suggestion of defendant, but that after the second flip, well before the IED was filed in March of 2021, Assali was insisting that the funds be transferred and managed in Assali’s name and through his corporation, so that plaintiff’s corporation did not own real property at that time. [Additional Fact No. 30, and evidence cited]. It is not clear how the IED reflects two positions or inconsistent positions.   

Plaintiff in opposition points out that plaintiff did in fact disclose as an asset, “personal” property in the sum of “$1,200,000.00.”  [Ex. F, para. 11].   Without more evidence, this disclosure could well be consistent with plaintiff disclosing that he had non-real property interests in business ventures or personal property of some other nature in an amount exceeding what is sought in this lawsuit.  The assumption by defendants seems to be that plaintiff was required to break down the personal property he owned in the family law matter.  Plaintiff argues that there was no obligation for plaintiff to break down the personal property he owned.  Defendant has cited no legal authority under which there was such an obligation.  There has accordingly been no sufficient showing that plaintiff has taken two inconsistent positions in the two matters.   

In any case, there is no attempt in the moving papers to satisfy the required element of judicial estoppel that plaintiff was successful in asserting first position, that is, that the family law court adopted plaintiff’s position or accepted it as true.  No evidence on this is submitted at all. 

It is held that a trial court may summarily adjudicate that an affirmative defense is without merit under CCP § 437c (f), and to meet its initial burden “plaintiff must negate an essential element of the defense or establish the defendant does not possess and cannot reasonably obtain evidence needed to support the defense.”   See’s Candy Shops v. Superior Court (2012) 210 Cal.App.4th 889, 900, citations omitted.   “If the plaintiff does not make this showing, ‘it is unnecessary to examine the [defendant’s] opposing evidence and the motion must be denied.’” See’s Candy Shops, at 900, internal citations, citations omitted.  

 

Here, defendants have failed to meet their initial burden on this issue, and an examination of both the moving and opposing evidence supports a finding that the motion must be denied.    The motion on this issue is denied.

ISSUE 6: (Memorandum) PLAINTIFF’S THIRD CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY FAILS AGAINST DEFENDANT BECAUSE PLAINTIFF CLAIMS THAT THEY WERE ALLEGEDLY MERE ‘LOANS’

(Separate Statement) PLAINTIFF’S BREACH OF ORAL AGREEMENT FOR PROPERTY FLIPPING FAILS BECAUSE PLAINTIFF CLAIMS THAT THE MONEY ALLEGEDLY GIVEN TO DEFENDANTS WERE ‘LOANS’ 

(1) the contract, 

(2) the plaintiff's performance of the contract or excuse for nonperformance, 

(3) the defendant's breach, and 

(4) the resulting damage to the plaintiff.” 

Richman v. Hartley (2014, 2nd Dist.) 224 Cal.App.4th 1182, 1186.  

The moving papers argue that to the extent plaintiff alleges that he was promised a 20% return on his investment, this would be barred as usury.   This contention appears to be an argument that an affirmative defense applies, with no discussion of the elements of such an affirmative defense.  

In any case, as conceded in the moving papers, plaintiff has claimed in sworn discovery responses that he invested in defendants’ business. [UMF No. 23, and evidence cited].  

There is no coherent legal argument about how plaintiff has legally foregone any opportunity to present evidence supporting his investment theory in this action.  Defendants have failed to meet their initial burden on their motion for summary adjudication on this ground.   

Even had this burden been met, as discussed in detail in connection with Issue No. 2, above, plaintiff has submitted evidence supporting a reasonable inference that the transaction involved an investment in a joint venture, giving rise to contractual duties as well as fiduciary duties between the parties as partners or joint venturers.   [Response to UMF Nos. 19, 20, and evidence cited; Additional Facts Nos. 5-7 51, 52, and evidence cited; Tarakjian Decl., paras. 2-6; Yacoubian Decl., Ex. HH, Assali Depo., pp. 120-121, 146, 165].

It is held that traditional examples of fiduciary relationships in the commercial context include business partners and joint adventurers.     Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29-30, citing April Enterprises, Inc. v. KTTV (1983) 147 Cal.App.3d 805, 818–819, 195 Cal.Rptr. 421 [joint adventurers]; See also Corporations Code section 16404(b). 

Triable issues of fact remain with respect to entitlement to relief under the first and third causes of action.  The motion on this issue is denied. 

RULING:

Motion to Seal Exhibit ‘F’ to Declaration of Thomas F. Gallagher and Portions of Separate Statement in Support of Defendants’ Motion for Summary Judgment is DENIED, procedurally and on its merits. 

Procedurally, the motion fails to comply with the mandatory requirements set forth in CRC Rule 2.551 section (b)(4), et seq., and the material has been submitted to the Court in a manner such that the materials are now part of the public record.  On its merits, defendants have failed to establish that an overriding interest would be prejudiced if the records are not filed under seal.  

Defendant George Assali and UASA, LLC’s Motion for Summary Judgment; or in the Alternative Summary Adjudication:

Motion for Summary Judgment is DENIED.   The motion does not seek to adjudicate or address all causes of action alleged in the Second Amended Complaint.  The Court accordingly cannot find under CCP section 437c(c) that moving parties are entitled to judgment as a matter of law.  The motion is also denied for the reasons stated in connection with each issue separately addressed above and below.      

Motion for Summary Adjudication is DENIED, procedurally and on its merits. 

Procedurally, the motion fails to comply with CRC Rule 3.1350 (b) which requires, “If summary adjudication is sought, whether separately or as an alternative to the motion for summary judgment, the specific cause of action, affirmative defense, claims for damages, or issues of duty must be stated specifically in the notice of motion…” 

This is not done in the notice of motion, which seeks, “an order granting summary judgment or alternatively summary adjudication [sic] in favor of GEORGE ASSALI and UASA, LLC and against RAFI TARAKJIAN (‘plaintiff’) on the grounds that there is no triable issue of material fact, and that Defendants are entitled to judgment as a matter of law.”  No specific causes of action, affirmative defenses, claims for damages or issues of duty are stated specifically in the notice of motion. 

Substantively, the motion is DENIED as follows:

ISSUE 1 (Memorandum): PLAINTIFF’S BREACH OF ORAL AGREEMENT (FIRST AND SECOND CAUSES OF ACTION) ARE BARRED BY THE STATUTE OF LIMITATIONS

(Separate Statement) PLAINTIFF’S FIRST CAUSE OF ACTION FAILS BECAUSE IT IS BARRED BY THE STATUTE OF LIMITATIONS

Defendants have failed to meet their initial burden to establish the elements of the affirmative defense that the first and/or second causes of action are barred by the applicable statute of limitations.  The motion in support of this issue relies entirely on facts alleged in the allegations of plaintiff’s unverified Second Amended Complaint, which allegations have been requested to be judicially noticed, but the Court may not judicially notice the truth of the facts stated in those allegations.  [See UMF Nos. 6, 11, 17, 18, and evidence cited; CCP § 437c(c); CCP section 437c(b)(1), (a motion for summary judgment, “shall be supported by affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken”); Day v. Sharp (1975) 50 Cal.App.3d 904, 914 (“A court cannot take judicial notice of hearsay allegations as being true, just because they are part of a court record or file”).  The allegations cited in fact do not clearly show a date on which a breach occurred to establish that the statute of limitations began to run and expired before this action was filed.  

Even if defendants had met their burden, shifting the burden to plaintiff to raise triable issues of material fact, plaintiff has submitted evidence in the opposition which would support a reasonable inference that the breach occurred at a time which brings the filing of this action within the two-year statute of limitations. Specifically, plaintiff submits evidence that defendant Assali continued to list properties for plaintiff and continued to assure plaintiff that plaintiff’s funds were being used for the purchase and sale of other investment properties, and that plaintiff’s funds were tied up in flips.  [Additional Facts Nos. 43, 44, 45, 48, and evidence cited; Tarakjian Decl., paras. 33-36, Ex. Z].  Plaintiff also submits evidence that in May of 2020 and August of 2020, Assali repaid plaintiff $50,000 and $125,000, with the last payment being made on October 6, 2020.  [Additional Fact No. 49, and evidence cited; Tarakjian Decl., para. 38, Exs. AA, BB, CC]. This evidence is sufficient to support a reasonable inference that the agreement was not breached until sometime after the last payment on October 6, 2020, when it became clear that no further payments were forthcoming, and that plaintiff’s filing of his complaint on October 6, 2022, was within the two-year period following the breach.  

ISSUE 2 (Memorandum): PLAINTIFF’S BREACH OF ORAL CONTRACT CLAIM VIOLATES THE STATUTE OF FRAUDS

(Separate Statement) PLAINTIFF’S BREACH OF ORAL AGREEMENT CLAIM VIOLATES THE STATUTE OF FRAUDS

Motion is DENIED. 

Defendants have failed to meet their initial burden to establish the defense that the action is barred by the statute of frauds.  Defendants argue that the cause of action for breach of oral contract fails in reliance on the subdivisions of Civil Code section 1624 (a) which provide that a writing is required for: 

“(1) An agreement that by its terms is not to be performed within a year of the making thereof...

(3) An agreement... for the sale of real property, or of an interest therein...”

With respect to the one-year portion of the statute of frauds, defendants again rely entirely on the allegations of the SAC and fail to cite to any facts or evidence which would suggest that there was not the slightest possibility that the agreement could have been performed in one year.  

With respect to the statute of frauds provision pertaining to real property, the moving papers rely on plaintiff’s responses to Special Interrogatories, arguing that plaintiff cannot specify his monetary contributions, claim damages or produce witnesses that the properties allegedly funded by the December 2017 investment were so funded, or assurances were made, and is unable to provide written documentation or signed contracts.  [UMF Nos. 19, 20, and evidence cited].  However, it appears from the evidence relied on that there is a reasonable inference that the oral agreement was not one for the sale of real property, or of an interest therein, but for the parties to work together to purchase, remodel, and resell real property.  It has long been held that the statute of fraud does not apply to a partnership which acquires real property for partnership uses, or which has as its object to deal in real property.  See Bates v. Babcock (1892) 95 Cal.479, 486-488; Koyer v. Willmon (1907) 150 Cal. 785, 787 (“It is settled by the decisions in this state that a partnership for the purposes of buying, holding, and selling lands may be formed by an agreement resting in parol only, and that such parol agreement is valid”). Simpson v. Winkelman (1964, 2nd Dist.) 225 Cal.App.2d 746, 750-751. There is no claim made in the pleading that there was an oral agreement that plaintiff would obtain title to or an interest in any real property.  Discovery responses establishing the absence of a writing would accordingly not establish that the cause of action is barred by this subdivision of the statute of frauds if no writing was required.  Without evidence that there was some agreement for the sale of property, or an interest therein sought to be enforced between these parties, defendants have failed to meet their initial burden to establish each element of their affirmative defense on this ground. 

Even if defendants had met their burden, shifting the burden to plaintiff to raise triable issues of material fact, plaintiff in opposition has submitted evidence, including his own declaration and deposition testimony of defendant Assali, supporting plaintiff’s allegations that the agreement between plaintiff and defendants was not for purchase and sale of specific real property, but for the parties to work together for purposes of purchasing, remodeling, and selling real property, and the funds given by plaintiff to Assali were regarded as an investment.  [Response to UMF Nos. 19, 20, and evidence cited; Additional Facts Nos. 5-7 51, 52, and evidence cited; Tarakjian Decl., paras. 2-6; Yacoubian Decl., Ex. HH, Assali Depo., pp. 120-121, 146, 165].  

This showing is sufficient to raise triable issues of fact with respect to application of the statute of frauds.

ISSUE 3 (Memorandum): PLAINTIFF’S FRAUD AND DECEIT CLAIM FAILS FOR LACK OF EVIDENCE OF MISREPRESENTATION

(Separate Statement) PLAINTIFF’S FOURTH CAUSE OF ACTION FOR FRAUD AND DECEIT FAILS BECAUSE PLAINTIFF HAS NO EVIDENCE OF MATERIAL MISREPRESENTATION

Defendants argue that plaintiff here will be unable to establish the element of plaintiff’s fraud claim that defendants made any actionable misrepresentation.  Defendants in support of this argument rely on responses to discovery which either do not support a claim that plaintiff lacks evidence of any misrepresentation or include facts identified in that discovery which would support a competing reasonable inference that defendants engaged in one or more acts of misrepresentation, concealment, or false promise.  [See UMF Nos. 21, 22, and evidence cited; Gallagher Decl., Ex. E, RFP No. 18 and Response thereto, p. 15 (there is no p. 1); Ex. D, Special Interrogatory No. 16 and Response thereto, pp. 22, Response to Special Interrogatory No. 15]. 

CCP § 437c(c) provides that “summary judgment shall not be granted by the court based on inferences reasonably deducible from the evidence if contradicted by other inferences or evidence that raise a triable issue as to any material fact.”  The evidence submitted with the motion supports a competing reasonable inference that plaintiff has facts showing one or more misrepresentations occurred, so that defendants have failed to meet their initial burden.

Even if defendants had met the burden, shifting the burden to plaintiff to raise triable issues of material fact, plaintiff has submitted evidence with supports a reasonable inference that defendants engaged in one or more acts which would satisfy the element of misrepresentation, concealment, or false promise to establish a fraud cause of action.  Specifically, plaintiff submits evidence that Assali made misrepresentations to induce plaintiff to enter the agreement, promised that defendant would make accountings, and made representations or concealments concerning the need for, and costs for, repairs to induce plaintiff to pay for repairs and construction which never occurred.  [Additional Facts Nos. 3, 4, 19, 34, 35, and evidence cited, Tarakjian Decl., paras. 3, 4 6, 14, 27, 28, 30, Exs. U, V; Assali Depo. pp. 135, 140-141].  Triable issues of material fact have been raised. 

ISSUE 4 (Memorandum) THE ECONOMIC LOSS RULE BARS PLAINTIFF’S FOURTH CAUSE OF ACTION 

(Separate Statement) (Not Set Forth)

Motion is DENIED. 

This issue is not set forth in defendants’ separate statement, so that there has been a complete failure to comply CRC Rule 3.1350(b) and (h), either in the notice or in the separate statement. 

Defendants have also failed to meet their initial burden of establishing that the economic loss rule bars the fraud cause of action, as the cause of action includes allegations that the contract was fraudulently induced.  See Erlich v. Menezes (1999) 21 Cal.4th 543, 551(“Tort damages have been permitted in contract cases…where the contract was fraudulently induced…”). 

As discussed above in connection with Issue No. 3 and the fourth cause of action, defendants have submitted discovery responses which disclose facts concerning the claim that the oral contract was fraudulently induced, and plaintiff has submitted affirmative evidence in the form of his declaration supporting the claim of fraudulent inducement.  [See UMF No. 23, and evidence cited; Gallagher Decl., Ex. D, Response to Special Interrogatory Nos. 15, 16; Additional Facts Nos. 3, 4, and evidence cited, Tarakjian Decl., para. 40, Ex. EE; paras. 3, 4, 6, 14, 30.]

Triable issues of fact remain with respect to the application of the economic loss rule based on a fraudulent inducement theory.  

ISSUE 5 (Memorandum) JUDICIAL ESTOPPEL BARS PLAINTIFF’S CLAIMS BASED UPON CONTRADICTORY EVIDENCE FROM HIS INCOME AND EXPENSE STATEMENT

(Separate Statement) PLAINTIFF’S BREACH OF ORAL AGREEMENT CLAIM SHOULD BE BARRED UNDER JUDICIAL ESTOPPEL DUE TO CONTRADICTORY INCOME AND EXPENSE DECLARATION 

Motion is DENIED.

Defendants argue that on March 5, 2021, plaintiff filed an Income and Expense Declaration (IED) in his Los Angeles County marital dissolution case but did not disclose any of his alleged real estate holdings and business activity.  [UMF Nos. 24-27, and evidence cited; Gallagher Decl., Ex. F].  Defendants argue that plaintiff’s property corporation, CARP Property LLC, has remained open and active since 2016, and that the IED directly conflicts with plaintiff’s allegations in this matter. [UMF No. 30].  The argument and evidence fail to establish that the doctrine of judicial estoppel applies in this matter.  The doctrine applies when “(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” Aguilar v. Lerner (2004) 32 Cal.4th 974, 986–987. 

Defendants do not set forth these elements, or indeed cite any legal authority in support of this argument and have failed to meet their burden of showing that the doctrine applies.  It is not clearly articulated what portion of the IED defendants are relying on or what position plaintiff is taking in this action defendants are relying on, so that it cannot be determined if such positions are totally inconsistent, and there is no showing at all that the other tribunal, the family law court, adopted plaintiffs’ position or accepted it as true.  Plaintiff has also persuasively argued that plaintiff has not taken inconsistent positions, but disclosed on his IED substantial personal property assets, and has fairly consistently taken the position in this matter, as discussed in detail above, that (1) plaintiff was an investor in a joint venture, not a purchaser or seller of any of the real property at issue, and (2) plaintiff’s corporation was created at the suggestion of defendant, but that after the second flip, well before the IED was filed in March of 2021, Assali was insisting that the funds be transferred and managed in Assali’s name and through his own corporation, so that plaintiff’s corporation did not own real property in March of 2021. [Ex. F, para. 11; Additional Fact No. 30, and evidence cited]. 

ISSUE 6: (Memorandum) PLAINTIFF’S THIRD CAUSE OF ACTION FOR BREACH OF FIDUCIARY DUTY FAILS AGAINST DEFENDANT BECAUSE PLAINTIFF CLAIMS THAT THEY WERE ALLEGEDLY MERE ‘LOANS’

(Separate Statement) PLAINTIFF’S BREACH OF ORAL AGREEMENT FOR PROPERTY FLIPPING FAILS BECAUSE PLAINTIFF CLAIMS THAT THE MONEY ALLEGEDLY GIVEN TO DEFENDANTS WERE ‘LOANS’ 

Motion is DENIED. 

It is not clear from the moving papers what legal argument is being made here.  Defendants argue that plaintiff cannot sustain his breach of fiduciary duty claims because he has characterized the alleged investment as “loans.”  It is not clear what element of any cause of action defendants are attempting to defeat.  There is no authority under which a breach of contract cause of action could not be brought for the breach of an alleged loan agreement.

As conceded in the moving papers, plaintiff has claimed in sworn discovery responses that he invested in defendants’ business.  [UMF No. 23, and evidence cited].  There is no coherent legal argument about how plaintiff has legally foregone any opportunity to present evidence supporting his investment theory but is bound by either inadvertent or alternative characterizations of having made loans to defendants.  Defendants have failed to meet their initial burden on their motion for summary adjudication on this ground.   

Even had this burden been met, as discussed in detail in connection with Issue No. 2, above, plaintiff has submitted evidence supporting a reasonable inference that the transaction involved an investment in a joint venture, giving rise to contractual duties as well as fiduciary duties between the parties as partners or joint venturers.   [Response to UMF Nos. 19, 20, and evidence cited; Additional Facts Nos. 5-7 51, 52, and evidence cited; Tarakjian Decl., paras. 2-6; Yacoubian Decl., Ex. HH, Assali Depo., pp. 120-121, 146, 165].  Triable issues of material fact have been raised.    

Defendants George Assali and UASA, LLC’s [UNOPPOSED] Request for Judicial in Support of Motion for Summary Judgment; or in the Alternative Summary Adjudication:

Request No. 1 is GRANTED to the extent permitted by Day v. Sharp (1975) 50 Cal.App.3d 904, 914 (e.g., the court takes judicial notice of the existence of court records, but not the truth of hearsay allegations contained therein, except in connection with certain exceptions enumerated in that case.). 

Request No. 2 is GRANTED. The Court takes judicial notice of the fact that CARP Property, LLC was registered with the California Secretary of State as a limited liability company and remains active through 3/19/2024. 

DEPARTMENT D IS CONTINUING TO CONDUCT AND ENCOURAGE 

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