Judge Teresa A. Beaudet, Case 22STCV28387 2023-03-15 Tentative Ruling

On August 31, 2022, Plaintiff Central Elk Properties, LLC (“Plaintiff”) filed this action against Defendants FI Automotive Group, Inc. (“FI Automotive Group”), Arthur Bakharyan, aka Artur Bakharyan, and George Bakharyan, aka Gevork Bakharyan, aka G. Bakharyan. The Complaint asserts causes of action for (1) breach of lease, (2) conversion, (3) violation of Penal Code section 496, (4) breach of guaranty, and (5) common count.

On September 26, 2022, Plaintiff filed an amendment to the Complaint naming Formula Automotive Group, Inc. (“Formula Automotive Group”) in place of “Doe 1.”

FI Automotive Group, Arthur Bakharyan, George Bakharyan, and Formula Automotive Group (collectively, “Defendants”) now demur to each of the causes of action of the Complaint.[1] No opposition to the demurrer was filed.

A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff's proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.) A demurrer “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

In the Complaint, Plaintiff alleges that on July 1, 1992, Plaintiff’s predecessor-in-interest, Thomas C. Love, and defendant’s predecessors-in-interest Harry O. Evans, La Rue Evans, and William Evans, executed a Lease (the “Lease”) with respect to the premises located at 220-226 West Elk Avenue, Glendale, California 91204 (the “Premises”). (Compl., ¶ 13.) The Lease was for a term of twenty years, with two five-year options, for a total lease term commencing on July 1, 1992 and ending on June 30, 2022. (Compl., ¶ 13.)

The Lease provided for the original tenant to construct at its own cost and expense a first-class Midas Muffler Franchise Shop. (Compl., ¶ 13.) Pursuant to paragraph 5.11 of the Lease, title to all improvements to be constructed on the Premises by the tenant shall automatically become Plaintiff’s property at the expiration of the Lease. (Compl., ¶ 13.)

FI Automotive Group vacated the Premises on June 30, 2022. (Compl., ¶ 17.) Plaintiff alleges that the Lease states at paragraph 11.06 that “[o]n expiration or earlier termination of this lease, Tenant shall surrender the Premises and all improvements in or on the Premises to Landlord in as good, safe and clean condition as practicable, reasonable wear and tear excepted.” (Compl., ¶ 18.) Plaintiff alleges that Defendants breached the Lease by removing seven hydraulic lifts from the Premises when they vacated the Premises. (Compl., ¶ 19.) In addition, in the process of such removal, Defendants damaged the Premises by saw-cutting steel rods, which remained imbedded in the ground at the Premises. (Compl., ¶ 21.)

Defendants note that “[t]he elements of a breach of contract claim are that a contract was formed; that the plaintiff did everything required by the contract; that the defendant did not do something required by the contract; and that the plaintiff was harmed as a result.” (CSAA Ins. Exchange v. Hodroj (2021) 72 Cal.App.5th 272, 276.) Defendants assert that the first cause of action fails because Plaintiff fails to allege that Defendants “did not do something required by the contract.”

Plaintiff attaches as Exhibit 1 to the Complaint the subject Lease. (Compl., ¶ 13, Ex. 1.) Defendants assert that Section 5.11 of the Lease states, inter alia, “Title to all Improvements… shall be owned by Tenant until expiration of the term or earlier termination of this lease.” The Court notes that certain portions of the Lease attached as Exhibit 1 to the Complaint are illegible, including portions of Section 5.11. (Compl., ¶ 13, Ex. 1.) The text that is legible in the first sentence of Section 5.11 provides, “Title to all improvements to be const…the Premises by Tenant shall be owned by Tenant until expi…the term or earlier termination of this lease.” (Ibid.)

Defendants assert that “[u]nder the Lease, legal title reverted to the plaintiff-landlord upon expiration of the Lease; however, the Complaint fails to allege that legal title to improvements reverted to the plaintiff-landlord before defendant-lessees allegedly acted…Thus, the Complaint omits a necessary, material allegation that defendant-lessees removed their trade fixtures after title to improvements transferred to the plaintiff landlord.” (Demurrer at p. 4:4-9, emphasis in original.)

Indeed, Plaintiff alleges in paragraph 13 of the Complaint that “pursuant to paragraph 5.11 of the Lease title to all improvements to be constructed on the Premises by the tenant shall automatically become at the Expirations [sic] of the Lease plaintiff’s property.” (Compl., ¶ 13, emphasis added.) The Complaint also alleges that “[t]he Lease explicitly states at paragraph 11.06 that ‘On expiration or earlier termination of this lease, Tenant shall surrender the Premises and all improvements in or on the Premises to Landlord in as good, safe and clean condition as practicable, reasonable wear and tear excepted.” (Compl., ¶ 18, emphasis added.) Plaintiff alleges that “Defendants, and each of them, breached the Lease by removing the following improvements when they vacated the Premises: (a) seven (7) hydraulic lifts.” (Compl., ¶ 19.) As Defendants note, the Complaint does not specifically allege whether the improvements were

Plaintiff does not oppose the demurrer, which the Court construes as a concession of the foregoing arguments.

Based on the foregoing, the Court sustains the demurrer to the first cause of action.

“Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff’s ownership or right to possession of the property; (2) the defendant’s conversion by a wrongful act or disposition of property rights; and (3) damages.” (IIG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 650.)

Defendants assert that the Complaint fails to allege a cause of action for conversion, because it fails to allege either Plaintiff’s ownership or right to possession at the time of the alleged conversion. Defendants cite to Bastanchury v. Times-Mirror Co. (1945) 68 Cal.App.2d 217, 236, where the Court of Appeal noted that “[o]ne who holds property by virtue of a lien upon it may maintain an action for conversion if the property was wrongfully disposed of by the owner and without authority, in which case the measure of damages can be no greater than the amount secured by the lien and for loss of time and expenses in pursuit of the property. In such an action it is not essential that plaintiff shall be the absolute owner of the property converted but she must show that she was entitled to immediate possession at the time of conversion.” (Internal citations and emphasis omitted.)

In support of the second cause of action, Plaintiff alleges that “[w]hen Defendants, and each of them, vacated the Premises they intentionally removed the seven (7) hydraulic lifts from the Premises, knowing at all times that they were not entitled to same…” (Compl., ¶ 25.) Plaintiff alleges that it “did not consent to Defendants taking the seven (7) hydraulic lifts from

the Premises.” (Compl., ¶ 27.) However, Plaintiff does not specifically allege that it held ownership or right to possession of the subject hydraulic lifts at the time of the alleged conversion.

“Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170. However, if the value of the property does not exceed nine hundred fifty dollars ($950), the offense shall be a misdemeanor, punishable only by imprisonment in a county jail not exceeding one year, if such person has no prior convictions for an offense specified in clause (iv) of subparagraph (C) of paragraph (2) of subdivision (e) of Section 667 or for an offense requiring registration pursuant to subdivision (c) of Section 290.”

In support of the third cause of action, Plaintiff alleges that “[a]t all times Defendants, and each of them, intentionally acted to remove the seven (7) hydraulic lifts from the Premises knowing at all times that they were not entitled to same and that said seven (7) hydraulic lifts belonged to Plaintiff as landlord.” (Compl., ¶ 35.)

Defendants assert that the third cause of action fails to state a claim, because “[t]he Lease reveals that the tenant had: (A) legal title, (B) the right to immediate possession, and (C) a good

faith claim of right, to all improvements upon the Property for the entire duration of the Lease.” (Demurrer at p. 11:6-8.) As set forth above in connection with the first cause of action, the Complaint does not specifically allege whether the improvements were removed before or after the expiration of the Lease. Plaintiff alleges that “pursuant to paragraph 5.11 of the Lease title to all improvements to be constructed on the Premises by the tenant shall automatically become at the expirations [sic] of the Lease plaintiff’s property.” (Compl., ¶ 13, emphasis added.)

Plaintiff does not oppose the demurrer and thus does not dispute the foregoing points. Accordingly, the Court sustains the demurrer to the third cause of action.

In support of the fourth cause of action, Plaintiff alleges that Arthur Bakharyan and George Bakharyan “executed for valuable consideration, in writing, and delivered to Plaintiff, the Guaranty of Lease…whereby said guarantor agreed to pay to unconditionally and irrevocably guarantee the prompt payment by the lessee and the faithful and prompt performance by lessee of each and every one of the terms, conditions and covenants of the Lease.” (Compl., ¶ 41.)

Defendants assert that the fourth cause of action is uncertain as to whether a breach ever

occurred. (Demurrer at p. 6:16-18.) Indeed, the fourth cause of action does not allege any breach of the alleged Guaranty of Lease. In order to “[t]o prevail on a cause of action for breach of contract, the plaintiff must prove¿(1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Based on the foregoing, the Court sustains the demurrer to the fourth cause of action.

Defendants note that “[w]hen a common count is used as an alternative way of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the cause of action is demurrable.” (McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.)

In support of the fifth cause of action for common count, Plaintiff alleges that “within four years last past, Defendants became indebted to Plaintiff in the sum of not less than $140,000 for money owed.” (Compl., ¶ 45.) In support of the first cause of action for breach of lease, Plaintiff similarly alleges that “[a]s a result of said breach of the Lease by Defendants, and each of them, Plaintiff has been damaged in the sum of not less than $140,000.” (Compl., ¶ 21.) Defendants assert that since the Complaint alleges no new or different facts with respect to the

common count cause of action, the demurrer should be sustained to this cause of action. Indeed, the fifth cause of action appears to be used as an alternative way of seeking the same recovery demanded in the first cause of action, and does not allege any new facts. Thus, the Court sustains the demurrer to the fifth cause of action.

Based on the foregoing, Defendants’ demurrer to each of the causes of action of the Complaint is sustained, with leave to amend.

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this order. If no amended complaint is filed within 20 days, the Court orders Defendants to file and serve a proposed judgment of dismissal within 30 days of the date of this order.

[1]The Court notes that the demurrer references a “Motion to Strike…Filed Concurrently Herewith.” However, no such motion to strike appears to have been filed.

Superior Court of California

County of Los Angeles

Department 50