Judge: Shirley K. Watkins, Case: 21VECV00692, Date: 2022-10-24 Tentative Ruling

Case Number: 21VECV00692    Hearing Date: October 24, 2022    Dept: T

            [TENTATIVE] ORDER:[1]  Cross-Defendants Aliasghar Khatibi and Ebrahim Khatibi’s Demurrer to the Third Amended Cross-Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

Cross-Defendant Aliasghar Khatibi and Ebrahim Khatibi’s Motion to Strike Portions of the Third Amended Cross-Complaint is GRANTED WITHOUT LEAVE TO AMEND.

Cross-Defendant Ali Sepehr’s Demurrer to the Third Amended Cross-Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

Cross-Defendant Ali Sepehr’s Motion to Strike Portions of the Third Amended Cross-Complaint is GRANTED WITHOUT LEAVE TO AMEND.

            Cross-Defendants Aliasghar Khatibi, Ebrahim Khatibi, and Ali Sepehr are ordered to file an Answer within 20 days.

1.         INTRODUCTION

Cross-Defendants Aliasghar Khatibi (Ali[2]), Ebrahim Khatibi (Ebrahim) and Ali Sepehr (Sepehr) (collectively, Cross-Defendants) demurred to Cross-Complainant Richard Khatibi’s (Richard) Third Amended Cross-Complaint (TAXC) only.  Cross-Complainants Melica S. Khatibi (Melica) and Faezeh Afchehe’s (Faezeh) TAXC are not placed into issue, as identified in the Notice.  Ali and Ebrahim’s Demurrer placed into issue the First, and Third thru Fifth causes of action (COA.)  Sepehr’s Demurrer placed into issue the Third and Fifth COAs.  Cross-Defendants’ two Motions to Strike moved against the request for Punitive Damages and Attorneys’ Fees. 

            2.         DISCUSSION 

                        A.        First COA for promissory fraud alleged against Ali and Ebrahim                                             only: 

            Ali and Ebrahim argued that the COA is conclusory and failed to allege specific facts because facts are not alleged to show whether it was Ali or Ebrahim made the false promises.  However, the argument misconstrues the allegation because Richard is alleging that both Ali and Ebrahim made the false promises.  Further, the false promises are sufficiently alleged to be promises to share in profits and losses 50-50; promises to renegotiate terms; promises to pay Richard’s broker commissions; and promises to pay to Richard any initial tax refund due to changes in tax assessments.  (TAXC pars. 20 and 49.)  Ali and Ebrahim argued that Richard did not plead facts showing the properties involved.  However, Richard alleged that approximately 400 properties are at issue.  (TAXC pars. 29 and 58.)  Due to the large number of properties at issue, specific promises regarding each property are an issue better resolved at the discovery stage.  The pleading is sufficient to apprize Ali and Ebrahim of the false promises at issue. 

               As to the particularity requirement, Ali and Ebrahim asserted that Cross-Complainants failed to allege the how, when, where, and to whom the representations were made.  The Court’s ruling on the demurrer to the Second Amended Cross-Complaint (SAXC) held that that the pleading was insufficient as to the how, where, and by what means the false promise was made.  Richard’s TAXC now pleads that the false promises were made in person at Richard’s office, Richard, Ali, and Ebrahim’s residence and over the phone (TAXC pars. 19 and 48.)  These additional facts are sufficient to cure the defects identified at the prior demurrer.  Further, the Court previously ruled that the Cross-Complainants’ TAXC sufficiently alleged facts as to when the false promises were made.  The Court does not find the TAXC to be insufficiently pled as to the “when” since time was sufficiently alleged in the SAXC. 

            Ali and Ebrahim argue that the element of intent to defraud is not sufficiently pled.  The prior ruling as to the SAXC found the intent allegation lacking because there were insufficient facts to show a then-existing intent not to perform.  Richard again fails to plead facts to show lack of intent to perform.  There are no facts pled showing that Ali and Ebrahim did not intend to perform their promises at the time they were made.  Although it is alleged that there are multiple properties and multiple meetings conducted when the false promises were made, at minimum, Richard was to plead some summary of facts to show that Ali and Ebrahim lacked an intent to perform when they made the false promises.  Because Richard failed to plead specific facts to support this element of promissory fraud, the first COA is insufficiently pled.

            Ali and Ebrahim’s demurrer to the first COA is SUSTAINED WITHOUT LEAVE TO AMEND.

                        B.        Third COA for breach of the covenant of good faith and fair dealing                                                alleged against Cross-Defendants: 

            Cross-Defendants argued that the third COA seeks the same damages as the breach of contract COA and that the COA is limited to insurance contracts.  Richard argues that the damages are not the same because Richard is seeking punitive damages.  However, punitive damages are tort damages and not contractual damages.  Further, the Breach of the Covenant of Good Faith and Fair Dealing may not seek tort damages other than for insurance contracts.  (Chu v. Old Republic Home Protection Company, Inc. (2021) 60 Cal.App.5th 346, 354.)  As argued by Richard, these are the same arguments made in the demurrer to the SAXC.  However, Richard failed to cure the defective pleading.  Because Richard has not cured the previously identified defects, the demurrer is again found to be persuasive.

            The demurrer to the third COA is SUSTAINED WITHOUT LEAVE TO AMEND. 

            C.        Fourth COA for conversion alleged against Ali and Ebrahim only:   

At the prior demurrer hearing, the Court ruled that Richard failed to identify a specific sum of money and failed to identify the properties at issue.  Richard now alleged that the “properties” at issue are listed in TAXC Exhibits 1 and 2, which list real properties.  (TAXC par. 96.)  Real property is not a proper basis for conversion.  (Munger v. Moore (1970) 11 Cal.App.3d 1, 7.)  Richard’s reliance upon real property to support conversion is improper.  Richard’s opposition does not address this pleading defect. 

As to the sums of money, Richard asserted that his commissions, inheritance, and monies loaned to Ebrahim were converted.  (TAXC pars. 97-99, 101.)  However, the amounts identified are alleged to be approximations because Richard alleged phrases like “approximately” or “at least.”   Specific sums are not identified.  Because specific sums are not identified, the conversion claim is insufficiently pled.  This is the same defect identified previously.

Even though the argument regarding identification of a sum of money was argued previously, Richard failed to cure the defect in the TAXC.  The argument is properly re-asserted against the TAXC.

The demurrer to the fourth COA is SUSTAINED WITHOUT LEAVE TO AMEND.

            D.        Fifth COA for Unfair Business Practices (UCL) alleged against Cross-                                                Defendants:

Cross-Defendants argued that the UCL COA failed to allege facts to show an unfair, unlawful, or fraudulent business practice.  Richard does not dispute that the COA fails to allege a law that the UCL claim borrows.  The UCL COA is insufficiently pled as to the unlawful prong.  Richard argued that the UCL claim is sufficiently pled as to unfair and fraud prongs.  However, even if the claim is sufficiently pled as to the unfairness and fraud prongs, there is insufficient fact pleading to show unfairness or fraud that affects the general public or a consumer.  It is undisputable that this COA is grounded on disputes between family members in a business venture.  Because there are insufficient facts pled to show unfairness or fraud perpetrated against the general public or a consumer, Ali and Ebrahim’s arguments are persuasive. 

Even though this argument was asserted in the prior demurrer, Richard failed to cure the defect in the amendment. 

The demurrer to the fifth COA is SUSTAINED WITHOUT LEAVE TO AMEND. 

            E.        Punitive Damages: 

Preliminarily, Cross-Defendants’ Notice to the motion made incorrect references to the allegations.  However, the Court identifies the requests for punitive damages within the TAXC.

Richard has requested punitive damages under the first COA for false promise (TAXC par. 64), the third COA for breach of covenant of good faith and fair dealing (TAXC pars. 91-92), the ninth COA for breach of fiduciary duty (TAXC par. 139) and in the Prayer.  Because the demurrer to the first COA and the third COA are no longer viable claims, the punitive damages request made within the first and third COA are no longer viable.  The motion to strike punitive damages within the first and third COA is GRANTED WITHOUT LEAVE TO AMEND.

The claim for breach of fiduciary duty is preliminarily a claim grounded in negligence rather than intentional conduct.  Even if punitive damages are allowed under a breach of fiduciary duty claim, there are insufficient facts to show malice, oppression, or fraud – especially due to the sustaining of the false promise COA.  The allegations are conclusory and do not plead facts to show despicable conduct. 

The motion to strike punitive damages in the ninth COA and in the prayer is GRANTED WITHOUT LEAVE TO AMEND.

            F.         Attorneys’ Fees: 

Cross-Defendants argue that there are no allegations showing entitlement to attorneys’ fees under a contract or statute.  However, Richard now asserted that the oral Joint Venture Agreement contained an attorneys’ fees provision.  (TAXC par. 22.) Because Richard pleads facts to show an attorneys’ fees provision in a contract, the arguments as to attorneys’ fees is unpersuasive.

The motion to strike attorneys’ fees is DENIED.