Judge: Sarah J. Heidel, Case: 23BBCV01831, Date: 2025-02-19 Tentative Ruling
Case Number: 23BBCV01831 Hearing Date: February 19, 2025 Dept: V
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTHEAST DISTRICT
DEPARTMENT V
S.A. AEROSPACE, INC., a California corporation,
Plaintiff,
vs.
FORMIDABLE ENGINEERING TECHNOLOGIES, INC., a California
corporation; FOREMOST TECHNOLOGIES AND PRODUCTS, INC., a California
corporation; INGA HAKHUMYAN, an individual; LEONID AKHUMYAN, an individual; and
DOES 1 through 20, inclusive,
Defendants.
Case No.: 24GDCV00222
Related Lead Case No.: 23BBCV01831
Hearing Date: February 19, 2025 Time: 8:30 a.m.
[TENTATIVE] ORDER RE: DEMURRER TO AND MOTION TO STRIKE
PORTIONS OF PLAINTIFF S.A. AEROSPACE, INC.’S FIRST AMENDED COMPLAINT
MOVING PARTIES: Defendants FORMIDABLE ENGINEERING
TECHNOLOGIES, INC., FOREMOST TECHNOLOGIES AND PRODUCTS, INC., INGA HAKHUMYAN,
and LEONID HAKHUMYAN RESPONDING PARTY: Plaintiff S.A. AEROSPACE INC.
The court considered the moving papers, Opposition, and Reply.
BACKGROUND
Plaintiff S.A. Aerospace, Inc. brought this action against
defendants Formidable Engineering Technologies, Inc. (Formidable), Foremost
Technologies and Products, Inc. (Foremost), Inga Hakhumyan (Hakhumyan), and
Leonid Hakhumyan (Leonid) alleging the following causes of action: (1) breach
of contract against defendant Foremost; (2) fraud against defendant Leonid; and
(3) fraud against defendant Hakhumyan.
In the operative first amended complaint (FAC), filed June 17, 2024, Plaintiff alleges that on October 9, 2020, Foremost contracted with plaintiff to design and produce HPP bottle cap with a barrier (HPP Cap). Plaintiff fulfilled its contractual obligations and delivered the HPP Cap to Foremost who inspected and approved it upon delivery. Plaintiff and Foremost, through Leonid, then entered into an oral contract and agreed that plaintiff would produce 10 more HPP Caps (Product) in exchange for $250,000. Plaintiff designed and produced product from January 2021, and delivered the product to Foremost on February 2022. Foremost told plaintiff its payment would be issued by the end of the month. On March 1, 2022, plaintiff contacted Leonid regarding payment. Plaintiff and Leonid agreed that plaintiff would not file an action to recover monies owed if it was paid by the end of the week. Plaintiff told Leonid that it needed the payment to purchase product for another client that plaintiff expected to net $150,000. Leonid promised payment, but Foremost never paid.
In June 2022, defendant Hakhumyan approached plaintiff to retrofit workspace at a company called Formidable. According to the FAC, Hakhumyan is a principal at Formidable and Foremost. Plaintiff initially refused to do the work because Foremost still owed plaintiff for the manufacture and design of the HPP Caps. However plaintiff agreed to do the work after Hakhumyan allegedly promised to pay the outstanding balance owed by Foremost and the new fees for the retrofit. On July 2022, plaintiff finished retrofitting Formidable’s workspace and was paid for the retrofit, but the HPP Caps as promised. Plaintiff spoke with Hakhumyan and she guaranteed that plaintiff “would be paid” the outstanding balance. Hakhumyan indicated that she was unable to find skilled workers to manufacture the Ventures product and that was why she could not pay plaintiff. She asked plaintiff to manufacture Ventures for Formidable until Hakhumyan could hire and train a workforce. Plaintiff agreed and from July 2022 to July 2023, plaintiff manufactured every Venture produced by a joint venture between Formidable and Aero Space Works, Inc. Hakhumyan dissolved the joint venture and did not pay plaintiff for the manufacture of the Ventures.
This case was deemed related to Aero Space Works, Inc. v. Formidable Engineering Technologies, Inc. et al. filed on August 20, 2023, in the Los Angeles Superior Court case number 23BBCV01831 (ASW action), on August 9, 2024.
Defendants initially filed the demurrer on July 24, 2024. Plaintiff filed its opposition on August 9, 2024. After the matters were deemed related, defendants refiled the demurrer on August 19, 2024. Plaintiff did not refile its opposition. After the court heard the demurrer on December 16, 2024, the court sustained the demurrer to the second cause of action for fraud against defendant Leonid, and the third cause of action for fraud against defendants Inga and Formidable. At the January 24, 2025, ex parte hearing for an order dismissing the action for failure to amend complaint after demurrer was sustained with leave to amend, the court reset the hearing on the demurrer to the FAC due to plaintiff’s concerns that the court had not reviewed its papers. Defendants filed their reply on February 10, 2025.
REQUEST FOR JUDICIAL NOTICE
Defendants request judicial notice of all pleadings, documents and records on file for the case entitled Aero Space Works, Inc. v. Formidable Engineering Technologies, Inc. et al. filed on August 20, 2023, in the Los Angeles Superior Court case number 23BBCV01831. The court takes judicial notice of the pleadings, documents, and record on file for case number 23BBCV01831 pursuant to Evidence Code section 452(d).
LEGAL STANDARD
A party may object to a complaint or cross-complaint; the
party may file a demurrer, an answer, or both. (Code of Civ. Proc., § 430.30.)
The demurrer may be filed within 30 days after service of the complaint or
cross-complaint unless extended by stipulation or court order. (Code of Civ.
Proc. § 430.40(a).)
As a general matter, in a demurrer proceeding, the defects
must be apparent on the face of the pleading or via proper judicial notice.
(Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer
tests the pleading alone, and not the evidence or facts.” (E-Fab, Inc. v.
Accountants, Inc. Servs. (2007) 153 Cal.App.4th 1308, 1315.) As such, the court
assumes the truth of the complaint’s properly pleaded or implied factual
allegations. (Id.) The only issue a demurrer is concerned with is whether the
complaint, as it stands, states a cause of action. (Hahn v. Mirda (2007) 147
Cal.App.4th 740, 747.)
Before filing a demurrer, the demurring party is required to meet and confer with the party who filed the pleading demurred to for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code of Civ. Proc. § 430.41.) “Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof.” (Code Civ. Proc., § 435, subd. (b)(1).) A court may “[s]trike out any irrelevant, false, or improper matter inserted in any pleading.” (Code Civ. Proc. § 436, subd. (a).) A court may “[s]trike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code Civ. Proc., § 436, subd. (b).)
“In order to survive a motion to strike an allegation of
punitive damages, the ultimate facts showing an entitlement to such relief must
be pled by a plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253,
1255.) Civ. Code § 3294 authorizes punitive damages upon a showing of malice,
fraud, or oppression. Malice is defined as either “conduct which is intended by
the defendant to cause injury to the plaintiff,” or “despicable conduct which
is carried on by the defendant with a willful and conscious disregard of the
rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “Despicable
conduct is conduct which is so vile, base, contemptible, miserable, wretched or
loathsome that it would be looked down upon and despised by ordinary decent
people.” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306,
331.) Fraud under Civ. Code § 3294(c)(3) “means an intentional
misrepresentation, deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant of thereby depriving
a person of property or legal rights or otherwise causing injury.” Civ. Code §
3294(c)(2) defines oppression as “despicable conduct that subjects a person to
cruel and unjust hardship in conscious disregard of that person’s rights.”
Specific facts must be alleged in support of punitive damages. (Hillard v. A.H.
Robins Co. (1983) 148 Cal.App.3d 374, 391-392.) Facts must be pled to show that
a defendant “act[ed] with the intent to vex, injure or annoy, or with a
conscious disregard of the plaintiff’s rights.” (Silberg v. California Life
Ins. Co. (1974) 11 Cal.3d 452, 462.) Conduct that is merely negligent will not
support a claim for punitive damages. (Tomaselli v. Transamerica Ins. Co.
(1994) 25 Cal.App.4th 1269, 1288.)
DISCUSSION
Defendant Leonid
demurs to the second cause of action for fraud on the grounds that it fails to
state facts sufficient to constitute a cause of action. Formidable and
Hakhumyan demur to the third cause of action for fraud on the grounds that it
fails to state facts sufficient to constitute a cause of action.
A Meet and Confer
On July 12, 2024, defendants’ counsel called plaintiff’s
counsel, Mr. Zreik at his office and his cellphone and left him a message
requesting they meet and confer regarding the defects in the first amended
complaint. (Douzoglou Decl., ¶ 2.) That same day, defendant’s counsel emailed
Mr. Zreik following up on his calls and message; to which Mr. Zreik replied
stating they can meet and confer on Monday, and defendants’ counsel agreed
asking Mr. Zriek to call at his convenience. (Douzoglou Decl., ¶ 3.) As of the
date of filing the demurrer, defendant’s counsel never receive a return call to
meet and confer. (Douzoglou Decl., ¶ 4.) The court finds that defendants
attempted to meet and confer, therefore fulfilled the requirement.
B Second Cause of Action: Fraud Against Defendant Leonid Hakhumyan
The elements of fraud
are “(1) a misrepresentation, (2) with knowledge of its falsity, (3) with the
intent to induce another's reliance on the misrepresentation, (4) justifiable
reliance, and (5) resulting damage.” (Conroy v. Regents of Univ. of Cal. (2009)
45 Cal.4th 1244, 1255.) “In California, fraud must be pled specifically;
general and conclusory allegations do not suffice. [Citations.]” (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 645.) “This particularity requirement
necessitates pleading facts which 'show how, when, where, to whom, and by what
means the representations were tendered.’ [Citations.]” (Id.)
Defendants argue that plaintiff fails to allege (1) specific
facts regarding Leonid’s representation in March 2022, (2) that when the
representation was made it was false, and (3) a causal link between Leonid’s
March 2022 representation and plaintiff’s alleged $150,000 in damages.
Plaintiff argues that it sufficiently alleged when, how and where defendant
Leonid’s statements were made.
Plaintiff alleges that it entered into the agreement with
Foremost to manufacture the HPP Caps in exchange for $250,000 in January 2021.
After supplying the product to Foremost in February 2022, the FAC alleges that
“on or around March 2022 . . . Defendant Leonid had represented to Plaintiff
that Plaintiff would receive $250,000 for the design and manufacture” of the
HPP Caps at the end of the month. (FAC, ¶¶ 38, 41.) Plaintiff told Leonid that
if Foremost did not make immediate payment “that Plaintiff would file an action
to recover monies owed by the end of the week.” (FAC ¶40). The FAC further
alleges that “Leonid knew at the time he told Plaintiff that payment would not
be made by the end of the week, as he had promised.” (FAC ¶43).
The court agrees that the allegations lack the requisite specificity. As defendants note, plaintiff fails to allege to whom Leonid made the alleged statement. Additionally, plaintiff fails to allege reliance on the alleged representation. In the complaint, plaintiff alleged that if Leonid failed to make the payment by the end of the week, plaintiff would bring an action against Foremost. Plaintiff alleges that in reliance on Leonid’s statement it did not file a complaint. Plaintiff has not pled justifiable reliance. Leonid did not pay by the end of the week, and it was Plaintiff’s choice whether to file a lawsuit. Plaintiff chose not to. That is not justifiable reliance.
Defendant also argues that plaintiff has failed to establish resulting damages. The court agrees. Plaintiff’s theory of damages is that it needed the payment from the Foremost project to pay for materials on a new project and that when the payment did not come through it was unable to perform, and profit, on the new project. The court agrees that the alleged damages do not flow from the alleged fraud. As defendant points out, even if plaintiff had known that the alleged statement was false at the time it was made, plaintiff still would not have been able to purchase the materials it needed to fulfill its next order. The damages would have occurred either way.
C Third Cause of Action: Fraud Against Defendant
Inga Hakhumyan
Hakhumyan and
Formidable argue that the third cause of action fails to state facts sufficient
to constitute a fraud cause of action. Hakhumyan argues that plaintiff should
have alleged the third cause of action in a compulsory cross-complaint in the
related case and therefore, this cause of action here is barred. “Except as
otherwise provided by statute, if a party against whom a complaint has been
filed and served fails to allege in a cross-complaint any related cause of
action which (at the time of serving his answer to the complaint) he has
against the plaintiff, such party may not thereafter in any other action assert
against the plaintiff the related cause of action not pleaded.” (Code Civ.
Proc., § 426.30(a).) “‘Related cause of action’ means a cause of action which
arises out of the same transaction, occurrence, or series of transactions or
occurrences as the cause of action which the plaintiff alleges in his
complaint.” (Code Civ. Proc., § 426.10(c).)
The third cause of action arises out of plaintiff’s agreements with Hakhumyan to (1) retrofit Formidable’s workspace in exchange for $30,000 and for payment of the outstanding $250,000 and (2) manufacture Ventures for the joint venture between Formidable and ASW.
Like the fraud claim against Leonid, Hakhumyan argues that plaintiff failed to plead specific facts showing how, to whom, and by what means her representations were tendered; that the complaint fails to allege any facts that her representation was false at the time it was made; and that she and Formidable are the same entity. Plaintiff argues that plaintiff’s complaint clearly established that plaintiff has not been paid and that he is owed by defendants and that plaintiff does not plead the fraud cause of action as an alternative cause of action to breach of contract, but rather that plaintiff was misled by defendants in order to prevent plaintiff from being able to recover in court for defendants’ material breach of contract.
The FAC alleges that “[o]n or about June 2022, Plaintiff orally agreed with Hakhumyan to retrofit Formidable’s workspace in exchange for the bargained for consideration of $30,000.00 and for payment of the $250,000.00 outstanding balance owed to Plaintiff by Foremost, an entity owned and operated by Hakhumyan. Hakhumyan acknowledged and understood that without a promise to pay monies owed to Plaintiff by Foremost for the design and manufacture of Product, Plaintiff would not retrofit Formidable’s workspace.” (FAC ¶ 55.) Plaintiff alleges it completed the retrofit of Formidable workspace in July 2022 and plaintiff was paid for those services, but was not paid for the design and manufacture of Produce as Hakhumyan promised. (FAC ¶ 56.) “Plaintiff spoke with Hakhumyan over the phone on around July of 2022 and demanded she, as owner and operator of Foremost, pay Foremost’s outstanding $250,000.00 debt as she had promised. Plaintiff reminded Hakhumyan that he would not have retrofitted Formidable’s workspace if that promise was not made.” (FAC ¶ 57.)
The FAC further alleges that “Hakhumyan, or about July of 2022, guaranteed Plaintiff that the outstanding balance ‘would be paid’ as soon as she was able to get the venture up and running. Hakhumyan then asked if Plaintiff could manufacture Ventures for Formidable. Hakhumyan cited that on or about July of 2022 at Plaintiff business address in Sunland, her inability to find skilled employees to manufacture the Ventures as to why she was unable to pay Plaintiff as agreed upon.” Additionally, on or about July of 2022, Hakhumyan told Plaintiff that if it “were to help manufacture Ventures for Formidable then [Plaintiff]s would be paid the outstanding balance owed by Foremost” and for the manufacture of the Ventures. Plaintiff, based on Hakhumyan’s promises, agreed to manufacture the Ventures. (FAC ¶¶ 58-59.) Plaintiff manufactured the Ventures from July 2022 to July 2023, and on July 2023, Hakhumyan terminated the joint venture but not pay plaintiff for the manufacture of Ventures. (FAC ¶¶ 60- 61.)
Like the second cause of action, these allegations fail to
state a cause of action for fraud. Among other things, plaintiff fails to
specify to whom the statements were made. More fundamentally, plaintiffs cannot
establish a link between the damages alleged (the non-payment for the HPP Caps)
and the alleged statements made by Hakhumyan. Plaintiff alleges that Hakhumyan
had a “secret intention to not perform on her promise.” (FAC ¶63). But the
allegations suggest Hakhumyan had been upfront with plaintiffs and had told
them that “her inability to find skilled employees to manufacture the Ventures”
was why she had not been able to pay Plaintiff earlier. (FAC ¶58).
Plaintiffs also allege damages from the non-payment of the work it did manufacturing Ventures. Plaintiffs alleges that Hakhumyan promised to pay for this work but secretly intended to not perform. (FAC ¶63). Plaintiff has not alleged specific facts that establish that Hakhumyan never intended to perform on the Ventures work. Indeed, it appears that Hakhumyan acknowledged the difficulty that she had experienced in finding skilled workers and the resulting difficulty in paying plaintiff. The demurrer to the third cause of action is sustained.
D.
Motion to Strike
Defendants move to strike plaintiff’s request for attorney’s fees, found in paragraph 35; punitive damages found in paragraphs 53 and 68; and punitive and exemplary damages on line 3 page 13.
1.
Attorney’s Fees
Defendants argue that plaintiff seeks attorney fees in
connection with its first cause of action for breach of an oral contract
without setting forth any statute or contract that entitles plaintiff to
attorney’s fees. “Except as attorney's fees are specifically provided for by
statute, the measure and mode of compensation of attorneys and counselors at
law is left to the agreement, express or implied, of the parties….” (Code Civ.
Proc., § 1021.) Here, attorney’s fees are neither provided for by the terms of
the contract nor by an applicable statute. Accordingly, the court strikes the
following phrase from paragraph 35: “including an award of attorney’s fees.”
2.
Punitive and Exemplary Damages
Defendants allege
that plaintiff has not pled sufficient specific facts to recover punitive and
exemplary damages. “In order to survive a motion to strike an allegation of
punitive damages, the ultimate facts showing an entitlement to such relief must
be pled by a plaintiff.” (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253,
1255.) Civ. Code § 3294 authorizes punitive damages upon a showing of malice,
fraud, or oppression.
Malice is defined as either “conduct which is intended by
the defendant to cause injury to the plaintiff,” or “despicable conduct which
is carried on by the defendant with a willful and conscious disregard of the
rights or safety of others.” (Civ. Code, § 3294, subd. (c)(1).) “Despicable
conduct is conduct which is so vile, base, contemptible, miserable, wretched or
loathsome that it would be looked down upon and despised by ordinary decent
people.” (Mock v. Michigan Millers Mutual Ins. Co. (1992) 4 Cal.App.4th 306,
331.) Fraud under Civ. Code § 3294(c)(3) “means an intentional
misrepresentation, deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant of thereby depriving
a person of property or legal rights or otherwise causing injury.” Civ. Code §
3294(c)(2) defines oppression as “despicable conduct that subjects a person to
cruel and unjust hardship in conscious disregard of that person’s rights.”
Specific facts must be alleged in support of punitive damages. (Hillard v. A.H.
Robins Co. (1983) 148 Cal.App.3d 374, 391-392.) Facts must be pled to show that
a defendant “act[ed] with the intent to vex, injure or annoy, or with a
conscious disregard of the plaintiff’s rights.” (Silberg v. California Life
Ins. Co. (1974) 11 Cal.3d 452, 462.) Conduct that is merely negligent will not
support a claim for punitive damages. (Tomaselli v. Transamerica Ins. Co.
(1994) 25 Cal.App.4th 1269, 1288.)
As discussed above, plaintiff has not sufficiently pleaded
fraud. For the same reasons, the plaintiff has failed to support allegations
for punitive damages. The court grants the motion to strike paragraphs 53 and
68 and line 3 on page 13.
Based on the foregoing, the court SUSTAINS the demurrer to the second and third causes of action with leave to amend within 20 days.
The court GRANTS defendants’ motion to strike in part and
the phrase “including an award of attorney’s fees” is stricken from paragraph
35 and references to punitive and exemplary damages in paragraphs 53, 68 and
line 3, at page 13.