Judge Randolph M. Hammock, Case 20STCV47123 2022-07-25 Tentative Ruling

On December 10, 2020, Vista Land LLC (“Plaintiff”) filed the instant action against EIJ Inc., Chris Eskijian, Armen Eskijian, AWBCO, LLC, Gregory Royston, Claudia Cadena, and S.B.S. Trust Deed Network (collectively “Defendants”). Plaintiff alleges the following causes of action against Defendants: (1) Fraud, (2) Negligent Misrepresentation, (3) Conspiracy to Defraud, (4) Violation of Usury Laws, (5) Unfair Business Practices, (6) Cancellation of Instrument, (7) Abuse of Process, (8) Accounting, (9) Injunctive Relief, and (10) Declaratory Relief.

This action arises out of the sale of real property located at 5529 Vanalden Street in Tarzana, California. Plaintiff Vista Land (“Vista”) alleges it purchased the real property after being the highest bidder at a Trustee’s foreclosure sale on September 8, 2020, where it purchased the Second Deed of Trust on the property. Thereafter, Plaintiff alleges Defendants, who owned the First Deed of Trust on the property, engaged in a conspiracy to defraud Plaintiff. Plaintiff obtained a TRO on January 7, 2021, enjoining any non-judicial foreclosure action against the property.

It is further alleged that on October 6, 2021, Defendant AWBCO recorded a notice of Assignment of the Deed of Trust to R&R Real Properties, LLC (“R&R.”) Plaintiff alleges Defendant AWCBO’s attorney of record, Raymond Robinson “Robinson,” is the Managing Member of R&R and incorporated the company. R&R allegedly conducted a nonjudicial foreclosure of the property on October 21, 2021, and then entered into a Purchase and Sale Agreement with Frank Sillman (“Sillman.”) Accordingly, Plaintiff filed a Supplemental Complaint on February 23, 2022, containing an eleventh cause of action for Embezzlement against EIJ, a twelfth cause of action for wrongful foreclosure against Robinson and eighteen other Defendants, and a thirteenth cause of action for Criminal extortion against Robinson and four other defendants.

Pursuant to Plaintiff’s request, the court takes judicial notice of The Trustee Deed Upon Sale recorded with the County Recorder on September 22, 2020, bearing Los Angeles County Recorder No. 20201154475, executed on September 8, 2020, vesting title to Property at 5529 Vanalden Ave, Tarzana, CA, 91356, bearing Assessor Parcel Number of 2163-018-005. (Exh. A.)

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. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal. App. 4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (CCP § 430.30(a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal. App. 3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Id.) The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action. (Hahn, 147 Cal.App.4th at 747.)

Defendants demur to the third cause of action for accounting, arguing that “[t]he cause of action fails because 1) Plaintiff and Demurring Parties do not have a relationship warranting an accounting, and 2) Plaintiff admits it already has all the information it needs to perform an accounting.” (Mtn. 4: 4-6.)

“A cause of action for an accounting requires a showing that a relationship exists between the plaintiff and defendant that requires an accounting, and that some balance is due the plaintiff that can only be ascertained by an accounting.” (Teselle v. McLoughlin (2009) 173 Cal. App. 4th 156, 179.) “[T]he nature of a cause of action in accounting is unique in that it is a means of discovery. An accounting is a ‘species of disclosure, predicated upon the plaintiff's legal inability to determine how much money, if any, is due. [Citation.] Thus, the purpose of the accounting is, in part, to discover what, if any, sums are owed to the plaintiff, and an accounting may be used as a discovery device.” (Id. at 180.)

In support of the accounting cause of action, Plaintiff alleges that “Defendants have not provided any documentation of what was the basis of the credit bid in the amount of $682,767.00 by R & R Real Properties, L.L.C., the credit bid in the amount of $178,608.82 by the Instigators on September 8, 2020, and the basis of calculation of the $1,392,462.99 paid on February 11, 2021, to pay off the debt when the debt was overstated according to the Note it secured.” (FAC 76.)

First, Defendants argue that an accounting cause of action requires a fiduciary relationship, which does not exist here. Defendants misstate the law. In fact, “a fiduciary relationship between the parties is not required to state a cause of action for accounting. All that is required is that some relationship exists that requires an accounting.” (Teselle v. McLoughlin (2009) 173 Cal. App. 4th 156, 179 [emphasis added].)

Defendant next argues that Plaintiff has no standing to recoup any amounts that it believes were overcharged in the Trustee’s Sale. “Plaintiff is not entitled to an accounting of the extinguished debt for which Plaintiff was never a party.” (Dem. 9:6-7.) However, Defendants have not cited authority expressly stating that there is an insufficient “relationship” existing between the original holder of a deed of trust (in this case, Defendants) and the bidder at the non-judicial foreclosure sale (here, Plaintiff), such that the lack of a relationship would prevent Plaintiff from bringing a cause of action for accounting. Defendants have also cited no authority stating that the requirement of “some relationship” requires a direct flow of funds from one party to the other. And while Defendants may be correct that “the amount of the debt owed, and the bid price are two separate things,” they have again cited no authority that such a fact would preclude an accounting. (Dem. 9: 9-10). While the accounting claim may ultimately prove unfruitful for the reasons Defendants argue, that is the very purpose of the claim. An accounting is, after all, “a means of discovery.” (Teselle, 173 Cal. App. 4th at 180.)

Defendants next argue that the accounting is “moot” because Plaintiff is already aware of the amounts received. This court cannot say conclusively based on the pleading whether the sum in dispute is certain or not. (See Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179 (“An action for accounting is not available where the plaintiff alleges the right to recover a sum certain or a sum that can be made certain by calculation.”) Though it appears Plaintiff knows the amounts of the credit bids in dispute, what Plaintiff seeks is “the basis of the credit bid.” (FAC 76.) Plaintiff also states in opposition that it seeks “the underlying notes and the expenses honestly incurred.” (Opp. 9: 18-19.) The court finds this sufficient to maintain the cause of action.

Finally, Defendants argue that the claims against Chris and Armen Eskijian as individuals fail because they were never parties to the subject loan. (Dem. 11: 4-5.) This argument would be better taken if Plaintiff was attempting to hold Defendants personally liable for the alleged torts of EIJ, Inc. Indeed, in the original Complaint, that was the case: Plaintiff had asserted causes of action against EIJ and the Eskijians for multiple tort and contract causes of action. However, in the FAC, the accounting is the only remaining claim against these Defendants. It is reasonable to believe that the Eskijians, in their capacity as principals of EIJ, Inc., may be in possession of funds that Plaintiff is entitled to discover. Thus, the argument fails.

A motion to strike lies either (1) to strike any irrelevant, false or improper matter inserted in any pleading; or (2) to strike any pleading or part thereof not drawn or filed in conformity with the laws of this state, a court rule or order of court. (CCP § 436.)

Defendants first argue that Plaintiff has not alleged any conduct amounting to emotional distress, and that a corporate entity cannot recover damages for emotional distress. Plaintiff does not address this point in its opposition. Defendants’ argument is well taken. The Plaintiff here is Vista Land only, and there is nothing to suggest that an entity can recover damages for emotional distress. (See Civic W. Corp. v. Zila Indus., Inc. (1997) 66 Cal. App. 3d 1, 19 [stating “we know of no authority suggesting that a corporate entity may recover for the emotional distress of its officers].”)

Accordingly, the motion to strike emotional distress damages is GRANTED. No leave to amend is granted, as there is no reasonable possibility that a successful amendment could be made as to this particular item of damages. Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.

Defendants next argue that Plaintiff is not entitled to recover attorney’s fees. Courts are given “broad discretion” when ruling on a motion to strike. (Camenisch v. Superior Court (1996) 44 Cal.App.4th 1689, 1699). Courts need not strike a prayer for attorney’s fees before a party “has had a full opportunity to determine, through discovery, whether a basis for recovery exists.” (Id.) Thus, the court is not inclined to strike claims for attorney’s fees at this stage.

Of course, when and if ANY party in this case believes it is a “prevailing party” and is somehow entitled to an award of attorney’s fees, a noticed motion must be made, and that party must then prove its legal and factual right, if any, to such an award at that time.

Civil Code section 3294, subdivision (a) permits an award of punitive damages “for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice.”

Civil Code Section 3294, subdivision (c), defines malice as follows: “(1) Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others. Oppression is “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id. at § 3294(c)(2).) “Fraud means an intentional misrepresentation, deceit or concealment of a material known fact to the defendant with the intention of depriving a person of legal rights otherwise causing injury.” (Id. at § 3294(c)(3).)

To survive a motion to strike a prayer for punitive damages, a plaintiff must plead ultimate facts showing its entitlement to such relief. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.) Allegations devoid of any factual assertions are insufficient to support a conclusion that parties acted with oppression, fraud, or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.) “Mere negligence, even gross negligence, is not sufficient to justify an award” for punitive damages. (Kendall Yacht Corp. v. United California Bank (1975) 50 Cal.App.3d 949, 958.) With respect to a corporate employer, the advance knowledge and conscious disregard, authorization, ratification and act of oppression, fraud or malice must be on the part of an officer, director, or managing agent of the corporation.” (CCP § 3294(b).)

Here, there are no facts alleged showing oppression, fraud, or malice by the moving defendants. Though Plaintiff argues—and this court agrees—that a Plaintiff may recover punitive damages in an action for fraud or deceit, that is not the case here. The only cause of action against the moving Defendants is one for accounting.

Generally speaking, leave to amend must be allowed where there is a reasonable possibility of successful amendment. Goodman v. Kennedy (1976) 18 Cal.3d 335, 348. Plaintiff must demonstrate this possibility at the hearing. If it doesn’t, no leave to amend will be given as to this claim for damages as to these moving parties.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.