Judge: Teresa A. Beaudet, Case: 25STCV00582, Date: 2025-05-20 Tentative Ruling

Case Number: 25STCV00582    Hearing Date: May 20, 2025    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Mohamadreza Yazdi, D.D.S. filed this action on January 9, 2025, against Defendant Art Hovanessian and Does 1 through 25 for (1) fraud, (2) breach of contract, and (3) common counts.

On February 24, 2025, Defendant filed the instant Demurrer to the first through third causes of action and Motion to Strike parts of the Complaint.  Plaintiff filed an Opposition on April 17, 2025, and Defendant filed a Reply on April 23, 2025.

On April 30, 2025, the Court continued the hearing on the Demurrer with Motion to Strike to May 20, 2025.

Allegations of the Complaint

            Plaintiff alleges that he is an orthodontist who formerly owned a practice in West Los Angeles and Defendant is a tax preparer residing in Glendale, CA.  (Complaint, ¶¶ 1-2.)  Plaintiff hired Defendant to prepare his personal and business taxes, including payroll taxes, for the tax years 2013 to 2021.  (Id. at ¶ 3.)  Defendant only filed the 2014 tax returns correctly and did not prepare or file tax returns for any other year despite informing Plaintiff that he had done so.  (Id. at ¶¶ 4, 6.)  Plaintiff alleges that the return prepared for the tax year 2015 contained many errors and sparked an audit by the Internal Revenue Service (“IRS”) and California Franchise Tax Board (“FTB”).  (Id. at ¶ 5.)  These errors included advising Plaintiff not to deduct property taxes for many years and overstating Plaintiff’s income by over $100,000 in one year.  (Ibid.)  As a result of Defendant’s errors, Plaintiff had to pay more taxes than necessary.  (Ibid.)

            Plaintiff also alleges that Defendant was hired to prepare payroll taxes and documentation for his business.  (Compl., ¶ 7.)  Defendant failed to do so and prepared false documentation, including fabricated Form 1009s[1] and W-2 forms, to convince Plaintiff that payroll had been accounted for and submitted to the government.  (Id. at ¶ 7.)  According to Plaintiff, Defendant never performed any payroll services for Plaintiff; thus, Plaintiff’s employees did not have proper records filed with the IRS and Plaintiff owed more in taxes.  (Ibid.)  Moreover, Plaintiff became ineligible for Employee Retention Tax Credits or payments during COVID and his employees became ineligible for COVID relief.  (Ibid.)  Defendant also misclassified Plaintiff’s employees as 1099 workers.  (Id. at ¶ 8.)

            Plaintiff alleges that Defendant, based on his knowledge and experience, advised him to wait instead of taking action.  (Compl., ¶ 9.)  After paying Defendant tens of thousands of dollars for his services, Plaintiff had to retain a tax attorney, which cost him approximately $50,000.  (Id. at ¶ 10.)  Plaintiff estimates the damages sustained to be no less than $350,000.  (Id. at ¶ 11.)

            Based on these allegations, Plaintiff brings forth the following claims.  For the first cause of action for fraud, Plaintiff alleges that, “Defendant engaged in a concerted pattern of misrepresentation and concealment of relevant information” during the eight-year period that he was retained by Plaintiff for his services.  (Compl., ¶ 13.)  The misrepresentation and lack of disclosure included information about Plaintiff’s tax returns, Defendant’s preparation and submission of documents which Defendant did not complete, and fabrication of IRS and FTB forms.  (Id. at ¶ 13.)  Plaintiff relied on the false information provided by Defendant as “defendant assured plaintiff that things were fine, and that it was better to wait” and “that he knew what he was doing” whenever Plaintiff asked questions or suggested consulting a new tax preparer.  (Id. at ¶ 14.)  In 2022, Defendant failed to communicate regarding Plaintiff’s 2021 taxes.  (Id. at ¶ 15.)  When Plaintiff retained a tax attorney, he learned “the truth of what was going on.”  (Ibid.)  Plaintiff alleges that “Defendant’s conduct was oppressive, fraudulent, and malicious,” which entitles him to exemplary damages in addition to damages of no less than $350,000.  (Id. at ¶¶ 16-17.)

            For the second cause of action for breach of contract, Plaintiff alleges that the parties entered into an oral and implied in fact contract, whereby Defendant agreed to perform tax preparation services for Plaintiff, personally and for his business, for the tax years 2013 to 2021, in return for payment.  (Compl., ¶ 19.)  Plaintiff performed his obligations, including paying for Defendant’s services, while Defendant breached the contract by either failing to perform the services required or making numerous errors.  (Id. at ¶¶ 20-21.)  As a result, Plaintiff suffered damages of no less than $350,000.  (Id. at ¶ 22.)

            For the third cause of action, Plaintiff alleges that within the past four years, Defendant has become indebted to him for money had and received and funds paid for services that were not performed.  (Compl., ¶ 24.)

Demurrer

A.    Legal Standard

A demurrer is a pleading that may be used to test the legal sufficiency of the factual allegations in the complaint.  ((Code Civ. Proc., § 430.10.)  There are two types of demurrers – general demurrers and special demurrers.  (See McKenney v. Purepac Pharmaceutical Co. (2008) 167 Cal.App.4th 72, 77.)

General demurrers can be used to attack pleadings for failure to state facts sufficient to constitute a cause of action or for lack of subject matter jurisdiction.  ((Code Civ. Proc., § 430.10, subd. (e)); McKenney, 167 Cal.App.4th at 77.)  Such demurrers can be used only to challenge defects that appear on the face of the pleading or from matters outside the pleading that are judicially noticeable; evidence or extrinsic matters are not considered.  ((Id., sections 430.30, 430.70); ((Blank v. Kirwan (1985) 39 Cal.3d 311, 318); ((Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  For the purpose of testing the sufficiency of the cause of action, the Court admits “all material facts properly pleaded” and “matters which may be judicially noticed,” but does not consider contentions, deductions, or conclusions of fact or law. [Citation].”  (Blank, 39 Cal.3d at 318.)  It gives these facts “a reasonable interpretation, reading it as a whole and its parts in their context.”  (Ibid.)  At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him.  (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.)  The face of the complaint includes exhibits attached to the complaint.  ((Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.)  "If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence."  (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447(superseded by statute on other grounds).)

Special demurrers can be used to attack the pleadings on grounds that the pleading is uncertain, ambiguous, and unintelligible, or in a contract case, for failure to allege whether a contract is oral or written.  ((Code Civ. Proc., § 430.10, subd. (f).)  A demurrer for uncertainty will be sustained only where the pleading is so unclear that the responding party cannot reasonably determine what issues to admit or deny or what counts and claims are directed toward the responding party.  ((A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019) 38 Cal.App.5th 677, 695.)

Moreover, Code of Civil Procedure section 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.”  (Code Civ. Proc., § 430.41, subd. (a).)  The parties are to meet and confer at least five days before the date the responsive pleading is due.  (Code Civ. Proc., § 430.41, subd. (a)(2).)  Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts.  (Code Civ. Proc., § 430.41, subd. (a)(3).)

When a demurrer is sustained, the Court determines whether there is a reasonable possibility that the defect can be cured by amendment.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)  When a plaintiff “has pleaded the general set of facts upon which his cause of action is based,” the court should give the plaintiff an opportunity to amend his complaint, since plaintiff should not “be deprived of his right to maintain his action on the ground that his pleadings were defective for lack of particulars.”  ((Reed v. Norman (1957) 152 Cal.App.2d 892, 900.)  Generally, the court will allow leave to amend on at least the first try, unless there is absolutely no possibility of overcoming the issue.  (See Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227 ("Denial of leave to amend constitutes an abuse of discretion unless the complaint shows on its face it is incapable of amendment. [Citation.]  Liberality in permitting amendment is the rule, if a fair opportunity to correct any defect has not been given.").)

B.    Meet and Confer Requirement

Defense counsel states that he met and conferred with Plaintiff’s counsel to discuss the Complaint’s deficiencies; however, Plaintiff has refused to amend or dismiss the Complaint.  (Powell Decl., ¶ 2.)  The Court finds that Defendant has satisfied the meet and confer requirement.

C.    First Cause of Action – Fraud

Defendant demurs to the first cause of action for fraud on the grounds that the allegations do not state facts sufficient to constitute a cause of action for fraud.  Defendant argues that the Complaint fails to plead the required elements with the requisite specificity and merely states that Defendant exhibited a pattern of misrepresentation and concealment in the eight-year period he was retained.  (Demurrer, p. 7.)  The rest of the allegations are “vague and generalized statements, and lack any facts to support the claim.”  (Ibid.)

In his Opposition, Plaintiff argues that the allegations set forth for the fraud cause of action meet the heightened standard of pleading.  The allegations state that the false statements were made by Defendant in the course of preparing Plaintiff’s taxes and related documents from 2013 to 2022.  (Opposition, pp. 1-2.)  These false statements and concealment of information took place in West Los Angeles, Glendale, Sacramento, and Washinton D.C.  (Id. at p. 2.)

In his Reply, Defendant reiterates that the “allegations consist of generalized assertions spanning an eight-year period without the specificity required by law.”  (Reply, p. 2.)  Defendant adds that the Complaint does not reference the locations where the fraud allegedly took place and only lists West Los Angeles and Glendale as places of residence for the parties.  (Id. at pp. 2-3.)  These vague allegations do not reference any specific misrepresentations made by Defendant and fail to adequately allege any intent to defraud.  (Id. at p. 3.)  The Complaint also fails to allege how Plaintiff relied on these misrepresentations and suffered the claimed damages of $350,000 as a result.  (Ibid.)

“One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers.”  ((Civ. Code, § 1709.)  A claim for fraud must plead all of the following elements: (1) misrepresentation; (2)¿knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage.  (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 128; (Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324, 1332.)  Fraud actions are subject to strict requirements of particularity in pleading.  (Committee on Children’s Television, Inc. v. General Foods Corp. (1983) 35 Cal.3d 197, 216 (superseded by statute on other grounds).)  Particularity requires facts that show how, when, where, to whom, and by what means the representations were tendered.  (Lazar v. Superior Court (1996) 12¿Cal.4th 631, 645.)

The Court finds that the Complaint fails to allege the elements for a fraud cause of action with the requisite specificity.  Although Plaintiff refers to general misrepresentations made by Defendant, the Complaint lacks sufficient detail regarding how, when, and where the alleged misrepresentations took place.  Furthermore, the Complaint fails to present allegations regarding Defendant’s intent to induce Plaintiff’s reliance on these misrepresentations, which is a central element of a fraud cause of action.

The Court finds that there is a reasonable possibility that Plaintiff can cure this deficiency and sustains the demurrer to the first cause of action for fraud with leave to amend.

D.    Second Cause of Action – Breach of Contract

Defendant demurs to the second cause of action on the basis that the allegations do not state sufficient facts to constitute a cause of action for breach of contract.  Defendant argues that the Complaint does not specify the parties who entered into the contract, the terms of the agreement, the provisions that were breached, and when they were breached.  (Demurrer, p. 8.)

In Opposition, Plaintiff argues that Paragraph 18 and 19 of the Complaint set forth which parties entered into the oral and implied in fact contract “by which defendant agreed to perform tax preparation services for plaintiff, both for him personally and for his business, for tax years 2013 to 2021, in return for payment from plaintiff."  (Opposition, p. 2; Complaint, ¶¶ 18-19.)  The allegations also demonstrate the obligations set forth by the agreement.

In his Reply, Defendant reiterates that the Complaint fails to articulate the essential terms of the alleged contract with requisite specificity, including the specific services to be performed, the standards and time for performance, and compensation terms.  (Reply, pp. 3-4.)  Without these terms, Defendant cannot ascertain what obligations were breached.  (Ibid.)

“To 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.)

“A written contract may be pleaded either by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect. [Citations.]  In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” ((McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.) “The elements of a breach of oral contract are the same as those for breach of a written contract. [Citations.]” (Stockton Mortgage, Inc. v. Tope (2014) 223 Cal.App.4th 437, 453.)

“‘While an express contract is defined as one, the terms of which are stated in words (Civil Code, § 1620), an implied [in fact] contract is an agreement, the existence and terms of which are manifested by conduct (Civ. Code, § 1621)…[B]oth types of contract are identical in that they require a meeting of minds or an agreement [citation]. Thus, it is evident that both the express contract and contract implied in fact are founded upon an ascertained agreement or, in

other words, are consensual in nature, the substantial difference being in the mode of proof by which they are established [citation].’ [Citation.]”  (Pacific Bay Recovery, supra, 12 Cal.App.5th at 215-16.)

            The Court finds that the allegations in the Complaint are sufficient for a breach of contract cause of action.  The allegations demonstrate that Plaintiff and Defendant entered into an agreement whereby Plaintiff would compensate Defendant for his professional services as a tax preparer between the years 2013 and 2022.  Plaintiff alleges that he compensated Defendant; however, Defendant breached the agreement by failing to perform the services promised.  As a result, Plaintiff incurred monetary damages.  These allegations sufficiently plead the material terms of the agreement, Plaintiff’s performance, Defendant’s breach, and resulting damages.

            Accordingly, Defendant’s demurrer to the second cause of action for breach of contract is overruled.

E.     Third Cause of Action – Common Counts

Defendant demurs to the third cause of action on the ground that the allegations do not state sufficient facts to constitute a cause of action for common counts.  Defendant argues that because the breach of contract claim is insufficiently pleaded, the common count claim will also fail.  (Demurrer, p. 9.)

In Opposition, Plaintiff states that “the California Judicial Council has set the "check-the-box" standard for pleading” a common counts cause of action, which has been met in this case.  (Opposition, p. 2.)

In his Reply, Defendant reiterates that the common counts claim is based on the same facts as the fraud and breach of contract claims and is also deficient.  (Reply, p. 4.)

“A common count is not a specific cause of action, however; rather, it is a simplified form of pleading normally used to aver the existence of various forms of monetary indebtedness, including that arising from an alleged duty to make restitution under an assumpsit theory.” ((McBride v. Boughton (2004) 123 Cal.App.4th 379, 394.)  “When 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.” (Ibid.)

Here, it appears that Plaintiff is bringing a common counts claim on the same basis and facts as the breach of contract cause of action.  Given that the Court overrules Defendant’s demurrer to the breach of contract cause of action, the demurrer to the common counts cause of action is also overruled.

            Motion to Strike

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading.  (Code Civ. Proc., § 436, subd. (a).)  The court may also strike 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.  (Id. at § 436, subd. (b).)  The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice.  (Id. at § 437.)

Moreover, Code of Civil Procedure section 435.5 requires that “[b]efore filing a motion to strike pursuant to this chapter, the moving party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to the motion to strike for the purpose of determining whether an agreement can be reached that resolves the objections to be raised in the motion to strike.”  (Code Civ. Proc., § 435.5, subd. (a).)

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.”  (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146 (internal quotations omitted).)  The burden is on the complainant to show the court that a pleading can be amended successfully.  ((Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)

“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.)  A request for punitive damages may be made pursuant to Civil Code section¿3294, subdivision (a), which provides that “[i]n an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”

Under the statute, malice is defined as “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” and oppression is defined as “despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.”  (Code Civ. Proc., § 3294, subd. (c)(1), (c)(2).)  Although not defined by the statute, despicable conduct refers to circumstances that are base, vile, or contemptible.  (College Hospital, Inc. v. Superior Court (1994) 8 Cal.4th 704, 725.)  Also, “[u]nder the statute, malice does not require actual intent to harm…Conscious disregard for the safety of another may be sufficient where the defendant is aware of the probable dangerous consequences of his or her conduct and he or she willfully fails to avoid such consequences…. [Citation.]”  ((Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.)

Here, Defendant moves to strike Paragraph 17 of the Complaint, which states that “Defendant’s conduct was oppressive, fraudulent, and malicious, entitling plaintiff to an amount of exemplary damages to be proven at trial” and Paragraph 2 of the prayer for relief, which seeks to recover exemplary damages.  Defendant argues that the allegations in the Complaint are insufficient to support an award of exemplary damages.

Given that the Court sustains Defendant’s demurrer to the first cause of action for fraud, the Motion to Strike is denied as moot.

Conclusion

For the foregoing reasons, the Court sustains Defendant’s Demurrer to the first cause of action for fraud with twenty days leave to amend.  The Court overrules Defendant’s demurrer to the second cause of action for breach of contract and third cause of action for common counts.

Furthermore, the Court denies Defendant’s Motion to Strike as moot.

If Plaintiff does not amend the Complaint, within thirty days from the date of this Order, Defendant must answer the Complaint.

Defendant is ordered to give notice of this Order.¿

DATED:  May 20, 2025                                 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court