Judge: Stephen P. Pfahler, Case: 21CHCV00423, Date: 2023-01-11 Tentative Ruling

Case Number: 21CHCV00423    Hearing Date: January 11, 2023    Dept: F49

Dept. F-49

Date: 1-11-23

Case #21CHCV00423

Trial Date: Not Set

 

DEMURRER

 

MOVING PARTY:                Defendants, Azniv Kouyoumjian, et al.

RESPONDING PARTY:       Plaintiff, Win Partners, LLC

 

RELIEF REQUESTED

Demurrer to the Second Amended Complaint

1st Cause of Action: Breach of Contract

2nd Cause of Action: Unfair Business Practices

3rd Cause of Action: Beach of Fiduciary Duties

4th Cause of Action: Fraud

 

 

SUMMARY OF ACTION

Plaintiff Win Partners, LLC alleges a January 24 or 25, 2021, oral agreement, whereby defendants World Tech Toys, Inc., World Trading 23, Inc., and/or Kevork Kouyoumjian, agreed to deliver certain personal protective equipment (PPE) described as “medical grade disposable seamless rubber gloves.” Plaintiff alleges payment of five million dollars ($5,000,000), but only received non-medical grade, non-FDA approved, “counterfeit” equipment, which lacks any resale value. 

 

On June 2, 2021, Plaintiff filed a complaint for Breach of Contract, Unfair Business Practices, Breach of Fiduciary Duties, and Fraud. On February 18, 2022, the court granted Plaintiff’s motion for leave to amend. On February 28, 2022, Plaintiff substituted in Jacques Kouyoumjian for Doe 3. On March 2, 2022, Plaintiff filed a first amended complaint for Breach of Contract, Unfair Business Practices, Breach of Fiduciary Duties, and Fraud.

 

On August 4, 2022, the court granted Plaintiff leave to file a second amended complaint. On August 5, 2022, Plaintiff filed the second amended complaint for Breach of Contract, Unfair Business Practices, Beach of Fiduciary Duties, and Fraud. On September 7, 2022, World Tech Toys, Inc., et al. filed a cross-complaint against Win Partners, LLC, et al. for Breach of Contract, Fraud/Deceit, Negligent Misrepresentation, and Quantum Meruit.

 

RULING: Sustained with Leave to Amend.

Request for Judicial Notice: Denied.

Objection to the Reply: Overruled.

 

Defendants Jacques Kouyoumjian, Azniv Kouyoumjian, and Vicken Kouyoumjian submit the subject demurer to the entire second amended complaint on grounds of failure to submit a claim against these specific defendants and uncertainty. Defendants specifically challenge the lack of any alleged factual basis for the finding of an underlying contractual or fiduciary relationship with Plaintiff, and challenge any reliance on the alter ego or conspiracy claims as a basis of liability.

 

Plaintiff in opposition contends the demurrer sufficiently articulates all claims both individually and via conspiracy and alter ego liability. Plaintiff repeatedly states that it may “generally” allege conspiracy. Plaintiff also challenges the substantive arguments of Defendants, and alternatively requests leave to amend.

 

Defendant in a reply exceeding the 10 page points and authorities limit reiterates the uncertainty claims. The court, in its discretion, considers the demurrer up to the page limit, and disregards the excessive pages.

 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “ ‘ “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .” ’ ” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.) In applying these standards, the court liberally construes the complaint to determine whether a cause of action has been stated.  (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4th 726, 733.)

 

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 616; Williams v. Beechnut Nutrition Corp. (1986) 185 Cal.App.3d 135, 139 [“[U]nder our liberal pleading rules, where the complaint contains substantive factual allegations sufficiently apprising defendant of the issues it is being asked to meet, a demurrer for uncertainty should be overruled or plaintiff given leave to amend.]

 

“There is no litmus test to determine when the corporate veil will be pierced; rather the result will depend on the circumstances of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow (internal citation omitted).’” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300.) “Because it is not a substantive claim that has been decided, we do not necessarily rule out the possibility that Plaintiff could still recover … individually if they obtain a judgment that the corporation is unable to satisfy.” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 419.) The operative complaint sufficiently articulates the elements supporting this threshold requirement. [Sec. Amend. Comp., ¶¶ 23-24.].

 

“Conspiracy is not a cause of action, but a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510–511.) The conspiracy “must be activated by the commission of an actual tort.” (Id. at 511.)

 

“A party seeking to establish a civil conspiracy ‘must show that each member of the conspiracy acted in concert and came to a mutual understanding to accomplish a common and unlawful plan, and that one or more of them committed an overt act to further it. [Citation.] It is not enough that the [conspirators] knew of an intended wrongful act, they must agree—expressly or tacitly—to achieve it.’ (Citation omitted.) It must be recognized, however, that because of the very nature of a conspiracy, ‘its existence must often be inferentially and circumstantially derived from the character of the acts done, the relations of the parties and other facts and circumstances suggestive of concerted action.’ (Citation omitted.) While a complaint must contain more than a bare allegation the defendants conspired, a complaint is sufficient if it apprises the defendant of the ‘character and type of facts and circumstances upon which she was relying to establish the conspiracy.’ (Citations omitted.)” (Arei II Cases (2013) 216 Cal.App.4th 1004, 1022.)

 

A conspiracy claim requires three elements: “(1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct.” (Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1581.) The operative complaint provides reference to the elements of a conspiracy presumably in order to link moving defendants into all claim without any specific facts. [Sec. Amend. Comp., ¶¶ 16-22.]

 

Overall, the operative complaint itself alleges any and all transactions and representations occurred with defendant Kevork Kouyoumjian. The alter ego and conspiracy liability sections comprise general allegations of the formulaic elements/requirements of the subject claims without any specific identification of the conduct of moving parties. Even under the general standard of pleading argued by Plaintiff, the lack of any operative facts undermines the claims. Pro forma pleading without factual support will not constitute a basis for keeping defendants in a case that otherwise lack a substantial relationship to any claim in this dispute with Kevork Kouyoumjian.

 

On this basis, the court sustains the demurrer. The court additionally considers the individual claims.

 

1st Cause of Action: Breach of Contract

Defendants challenge the subject cause of action on grounds of the lack of any basis for the formation of the contract between the parties.

 

“To state a cause of action for breach of contract, [a plaintiff] must plead the contract, his performance of the contract or excuse for nonperformance, [defendant’s] breach and the resulting damage. (Citation.) Further, the complaint must indicate on its face whether the contract is written, oral, or implied by conduct. (Citation.)” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458–59.) In examining a breach of contract claim, the court is required to examine the terms, or at least the legal effect of the contract. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318 [“we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context”].) Formation of a contract requires four elements: The parties capable of contracting, the parties consent, the contract is for a lawful object, and sufficient consideration is given. (Civ. Code, § 1550.) Consent of the parties must be free, mutual and communicated by each to the other. (Civ. Code, § 1565.)

 

For the reasons stated above, the court finds no basis for the formation of a contract between Plaintiff and moving defendants.

 

2nd Cause of Action: Unfair Business Practices

Defendants challenge the subject cause of action on grounds of the lack of any basis for a fiduciary duty between the parties.

 

“The UCL does not proscribe specific acts, but broadly prohibits ‘any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising....’” [¶] “‘A private plaintiff must make a twofold showing: he or she must demonstrate injury in fact and a loss of money or property caused by unfair competition.’ (Citation.)” (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1359.) Fact specific pleading is not required in order to allege an unfair business practice. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 46–47.

 

An “unlawful” practice “means any practices forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory, or court-made.… ‘Unfair’ simply means any practice whose harm to the victim outweighs its benefits. (Citation.) ‘Fraudulent,’ as used in the statute, does not refer to the common law tort of fraud but only requires a showing members of the public ‘“are likely to be deceived.”’” (Saunders v. Superior Court (1994) 27 Cal.App.4th 832, 838–839.) “[A]n unfair business practice also means” the relied upon public policy provision is “tethered” to a specific regulatory provisions. (Lueras v. BAC Home Loans Servicing, LP (2013) 221 Cal.App.4th 49, 81.)

 

For the reasons stated above, the court finds no basis of support for the subject cause of action.

 

3rd Cause of Action: Beach of Fiduciary Duties

Defendants challenge the subject cause of action on grounds of the lack of any basis for a fiduciary duty between the parties.

 

To plead a cause of action for breach of fiduciary duty, a plaintiff must allege facts showing the existence of a fiduciary duty owed to that plaintiff, a breach of that duty and resulting damage. (Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524.) A fiduciary duty is founded upon a special relationship imposed by law or under circumstances in which “confidence is reposed by persons in the integrity of others” who voluntarily accept the confidence. (Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1150.) “A fiduciary or confidential relationship can arise when confidence is reposed by persons in the integrity of others, and if the latter voluntarily accepts or assumes to accept the confidence, he or she may not act so as to take advantage of the other's interest without that person's knowledge or consent.” (Pierce v. Lyman (1991) 1 Cal.App.4th 1093, 1101–02.)  

 

For the reasons stated above, the court finds no basis of support for the subject cause of action.

 

4th Cause of Action: Fraud

Defendants challenge the subject cause of action on grounds of the lack of any basis of fraud.

 

“‘The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’” (Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) “‘Promissory fraud’ is a subspecies of the action for fraud and deceit. A promise to do something necessarily implies the intention to perform; hence, where a promise is made without such intention, there is an implied misrepresentation of fact that may be actionable fraud.” (Ibid.) “‘Active concealment or suppression of facts by a nonfiduciary “is the equivalent of a false representation, i.e., actual fraud.” [Citation.] (Citation).)’ A fraud claim based upon the suppression or concealment of a material fact must involve a defendant who had a legal duty to disclose the fact. (Civ.Code, § 1710, subd. (3) [a deceit includes “[t]he suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact”]; Citation.)” (Hoffman v. 162 North Wolfe LLC (2014) 228 Cal.App.4th 1178, 1186.)

 

For the reasons stated above, the court finds no basis of support for the subject cause of action.

 

Plaintiff is granted 30 days leave to amend. “In response to a demurrer and prior to the case being at issue, a complaint or cross-complaint shall not be amended more than three times, absent an offer to the trial court as to such additional facts to be pleaded that there is a reasonable possibility the defect can be cured to state a cause of action. The three-amendment limit shall not include an amendment made without leave of the court pursuant to Section 472, provided the amendment is made before a demurrer to the original complaint or cross-complaint is filed.” (Code Civ. Proc., § 430.41, subd. (e)(1).) Plaintiff is granted leave to file their third amended complaint, given the first amended complaint was filed under section 472, and the second amended complaint was the result of a motion to leave not following a demurrer. The potential future pleading therefore only constitutes the first pleading following consideration of a demurrer.

 

Plaintiff may only add facts in support of the existing claims. Plaintiff may NOT add any new causes of action. (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.) If Plaintiff declines or fails to file a third amended complaint, moving defendants may seek their dismissal from the action. Any new causes of action may also be addressed via a motion to strike.

 

Demurrers to the answer and cross-complaint set for February 1, 2023, February 22, 2023, and March 16, 2023, respectively.

 

Moving Defendants to give notice.