Judge: Stephen P. Pfahler, Case: 22CHCP00338, Date: 2023-08-10 Tentative Ruling

Case Number: 22CHCP00338    Hearing Date: September 25, 2023    Dept: F49

STRIKE

MOVING PARTY: Plaintiff/Cross-Defendant, Ararat Yousefi

RESPONDING PARTY: Defendant/Cross-Complainant, Armen Vardanyan

RELIEF REQUESTED:

Motion to Strike the Cross-Complaint

SUMMARY OF ACTION

Plaintiff Ararat Yousefi alleges the formation of a partnership with defendant Armen Vardanyan and a subsequent oral agreement for the purpose acquiring, renovating and reselling 10330 Eton Ave., Chatsworth. The agreement required the property purchased in the name of Defendant, with the later addition of Plaintiff to title upon the completion of renovations. Plaintiff further represents agreement to a one-half interest in the property at all relevant times.

The property was apparently acquired with funds provided by Plaintiff. Notwithstanding the agreement, Plaintiff alleges Defendant used some or all of said funds for purposes not related to the acquisition and/or renovations, plus allegedly committed “waste” at other properties owned by the parties

On September 28, 2022, plaintiff filed a complaint for Breach of Contract, Breach of Fiduciary Duty, Dissolution of Partnership, Quiet Title, and Declaratory Relief. On October 3, 2022, Plaintiff filed a notice of pending action. On April 17, 2023, the court sustained the demurrer with 30 days leave to amend as to the quiet title cause of action, and overruled as to the remainder. The court found the motion to strike is moot as to the quiet title cause of action, denied as to the challenges to the entire operative complaint, and granted the motion to strike as to the claims for punitive damages in the second cause of action.

On May 17, 2023, Plaintiff filed a verified first amended complaint for Breach of Contract, Breach of Fiduciary Duty, Dissolution of Partnership, Quiet Title, and Declaratory Relief. On July 18, 2023, Vardanyan filed a cross-complaint against Yousefi and Cheryl Balquiedra for Breach of Limited Partnership Agreement, Breach of Implied Covenant of Good Faith and Fair Dealing, Negligent Misrepresentation, Intentional Misrepresentation, Intentional Infliction of Emotional Distress, Breach of Fiduciary Duty, Conversion, Accounting, and Dissolution of Partnership.

On June 16, 2023, Defendant answered the complaint and filed a cross-complaint for Breach of Limited Partnership Agreement, Breach of Implied Covenant of Good Faith and Fair Dealing, Negligent Misrepresentation, Intentional Misrepresentation – Fraud, Intentional infliction of Emotional Distress, Breach of Fiduciary Duty, Conversion, Accounting, and Dissolution of Partnership.

RULING: Denied.

Plaintiff/Cross-Defendant Yousefi moves to strike the claim for punitive damages in the second cause of action for Breach of Implied Covenant of Good Faith and Fair Dealing (Paragraph 55). Yousefi challenges the ability of a party to recover punitive damages on a bad faith cause in a non-insurance context. Vardanyan in opposition maintains the cross-complaint sufficiently articulates facts in support of the claim for separate and independent conduct outside the contractual context. The court electronic filing system shows no reply at the time of the tentative ruling publication cutoff.

A “general rule” precluding tort recovery in the noninsurance context, absent a showing of an “independent duty,” bars recovery of punitive damages in a breach of implied covenant of good faith and fair dealing claim. (Freeman & Mills, Inc. v. Belcher Oil Co. (1995) 11 Cal.4th 85, 102.) Cross-Complainant acknowledges the rule and relies on the allegations of the separate fiduciary duty alleged within the same cause of action as a basis of merging with the challenging claim and creating a basis for tortious recovery of punitive damages. [Cross-Comp.,¶¶ 46, 49.]

“An act such as breach of fiduciary duty may be both a breach of contract and a tort. [¶] ‘Whether an action is based on contract or tort depends upon the nature of the right sued upon, not the form of the pleading or relief demanded. If based on breach of promise it is contractual; if based on breach of a noncontractual duty it is tortious. [Citation.] If unclear the action will be considered based on contract rather than tort. [Citation.] [¶] In the final analysis we look to the pleading to determine the nature of plaintiff's claim.’” (Kangarlou v. Progressive Title Co., Inc. (2005) 128 Cal.App.4th 1174, 1178–1179.)

The subject motion to strike requires consideration of unchallenged allegations for purposes of determining whether the cross-complaint sufficiently alleges a separate and independent basis of tortious conduct. The court declines to turn the subject motion into the functional equivalent of a demurrer. (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4th 1680, 1682-1683 [While a demurrer is not the exclusive means to challenge a cause of action, a motion to strike generally applies to parts of a cause of action, claim for damages, or where the cause of action or primary right is barred as a matter of law.]; Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281 [“Where a whole cause of action is the proper subject of a pleading challenge, the court should sustain a demurrer to the cause of action rather than grant a motion to strike”].) The court declines to make a determination regarding the validity of the claim based on bootstrapped allegation of a fiduciary duty.

The motion to strike is denied.  Cross-defendant is ordered to answer within 20 days from the date of this order.

Motion for Leave to Amend scheduled for January 30, 2024.

Cross-Defendant to give notice.