Judge Theresa M. Traber, Case Number: 23STCV10907, Date: 2024-04-17 Tentative Ruling

Judge: Theresa M. Traber, Case: 23STCV10907, Date: 2024-04-17 Tentative Ruling

Case Number: 23STCV10907 Hearing Date: April 17, 2024 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: April 17, 2024 TRIAL DATE: NOT SET

CASE: Serop Bejanian v. Jamie Gao

CASE NO.: 23STCV10907

DEMURRER TO FIRST AMENDED CROSS-COMPLAINT; MOTION TO STRIKE PORTIONS OF FIRST AMENDED CROSS-COMPLAINT

MOVING PARTY: Plaintiff/Cross-Defendant Serop Bejanian

RESPONDING PARTY(S): Defendant/Cross-Complainant Jamie Gao

CASE HISTORY:

· 05/16/23: Complaint filed.

· 07/10/23: Cross-Complaint filed.

· 08/25/23: First Amended Cross-Complaint filed.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an action for breach of contract and fraud. Plaintiff alleges that Defendant agreed to sell all his rights and interests in a holding company that was jointly owned by the parties but failed to deliver the assets pursuant to the agreement.

Plaintiff/Cross-Defendant demurs to the First Amended Cross-Complaint and moves to strike portions of the Cross-Complaint.

TENTATIVE RULING:

Cross-Defendant’s Demurrer to the First Amended Cross-Complaint is SUSTAINED with leave to amend as to the first cause of action and otherwise OVERRULED.

Cross-Defendant’s Motion to Strike is GRANTED as to the request for attorney’s fees and otherwise DENIED as moot.

DISCUSSION:

Plaintiff/Cross-Defendant demurs to the First Amended Cross-Complaint and moves to strike portions of the Cross-Complaint.

Legal Standard

A demurrer tests whether the complaint or cross-complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.” (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” (Hahn, supra, 147 Cal.App.4th at p. 747.) The ultimate facts alleged in the [cross-] complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. (Marshall v. Gibson, Dunn & Crutcher (1995) 37 Cal.App.4th 1397, 1403; see also Shields v. County of San Diego (1984) 155 Cal.App.3d 103, 133 [stating, “[o]n demurrer, pleadings are read liberally and allegations contained therein are assumed to be true”].) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

Meet and Confer

Before filing a demurrer, the demurring party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the demurrer and file a declaration detailing their meet-and-confer efforts. (Code Civ. Proc., § 430.41(a).) However, an insufficient meet-and-confer process is not grounds to overrule or sustain a demurrer. (Code Civ. Proc., § 430.41(a)(4).)

The declaration of Matthew Eanet in support of the demurrer states that his office sent a letter to Cross-Complainant’s counsel on September 20, 2023 identifying the issues raised in this demurrer, but received no response. (Declaration of Matthew Eanet ISO Dem. ¶¶ 3-5, Exh. 1.) Cross-Defendant has therefore satisfied his statutory meet-and-confer obligations.

First Cause of Action: Conversion

Cross-Defendant demurs to the first cause of action for conversion for failure to state facts sufficient to constitute a 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.” (Lee v. Hanley (2015) 61Cal.4th 1225, 1240.) “‘Money cannot be the subject of a cause of action for conversion unless there is a specific, identifiable sum involved, such as where an agent accepts a sum of money to be paid to another and fails to make the payment.’ A ‘generalized claim for money [is] not actionable as conversion.’” (PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP (2007) 150 Cal.App.4th 384, 395 [internal citations omitted].)

Cross-Defendant contends that the First Amended Cross-Complaint does not allege sufficient facts because it merely alleges a generalized claim for money, not misappropriation of a specific sum of which Cross-Defendant was the custodian. The Cross-Complaint alleges that Cross-Defendant “has diverted profits from the operations of [Smash Me Baby Holdings, LLC] or arising from the use of the assets belonging to SMB and has retained them for himself. (FAXC ¶ 45.) Cross-Complainant argues that this allegation is sufficient because a 50% interest in the company is a specific, identifiable sum. Cross-Complainant attempts to analogize this case to Mendoza v. Continental Sales to argue that profits from a business venture are a specific sum for which a party may maintain a conversion claim. (Mendoza v. Continental Sales (2006) 140 Cal.App.4th 1395.) As Cross-Defendant argues in reply, this analogy is misplaced because Mendoza concerned crop consignment agreements in which a commission merchant sold crops entrusted to it and thereafter kept a specific, definite sum of the sale proceeds in excess of the agreement. (Mendoza, supra, 140 Cal.App.4th at 1405.) The Cross-Complaint does not allege such a definite sum, but rather makes a general claim for uncertain profits.

Accordingly, Cross-Defendant’s demurrer to the first cause of action is SUSTAINED.

Uncertainty

Cross-Defendant also demurs to the cross-complaint in its entirety as uncertain.

Demurrers¿for uncertainty are disfavored, because discovery can be used for clarification, and they apply only where defendants cannot reasonably determine what issues or claims are stated.¿(Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822; Khoury v. Maly's of Cal., Inc.¿(1993) 14 Cal.App.4th 612, 616.) If the complaint is sufficiently comprehensible that Defendant can reasonably respond, the complaint is not uncertain. (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848 n.3.)

Cross-Defendant argues that the Cross-Complaint is uncertain because it conflates two different corporate entities regarding dividend distributions, does not specify the terms of the Asset Purchase Agreement at issue, does not set forth the circumstances of dividend distributions, and does not specify damages. "The objection of uncertainty does not go to the failure to allege sufficient facts." (Brea v. McGlashan (1934) 3 Cal.App.2d 454, 459.) These arguments, which go to the failure to allege sufficient facts, are not sufficient to demonstrate uncertainty.

Accordingly, Cross-Defendant’s Demurrer to the second cause of action is OVERRULED.

Leave to Amend

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 party “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 the cross-complainant 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.) Accordingly, California law imposes the burden on the cross-complainant to demonstrate the manner in which they can amend their pleadings to state their claims against a cross-defendant. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.) “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." (Angie M. v. Superior Court (1995) 37 Cal.App.4th 1217, 1227.)

Here, Cross-Complainant has not shown how the Cross-Complaint might be amended to cure this defect. However, in deference to the policy strongly in favor of amendment, the Court will exercise its discretion to grant leave to amend.

Conclusion

Accordingly, Cross-Defendant’s Demurrer to the First Amended Cross-Complaint is SUSTAINED with leave to amend as to the first cause of action and otherwise OVERRULED.

Motion to Strike Portions of First Amended Cross-Complaint

Cross-Defendant moves to strike portions of the First Amended Cross-Complaint pertaining to treble damages and attorney’s fees.

Legal Standard

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(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., § 436(b). The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. Id.§ 436. The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. Id.§ 437. “When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.” Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768. A motion to strike can be used where the complaint or other pleading has not been drawn or filed in conformity with applicable rules or court orders. Code Civ. Proc., § 436(b). This provision is for "the striking of a pleading due to improprieties in its form or in the procedures pursuant to which it was filed." Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 528 (emphasis in original).

Meet and Confer

Before filing a motion to strike, the moving party shall meet and confer in person or by telephone with the party who has filed the pleading subject to the motion to strike and file a declaration detailing their meet-and-confer efforts. (Code Civ. Proc., § 435.5(a).) However, an insufficient meet-and-confer process is not grounds to grant or deny a motion to strike. (Code Civ. Proc., § 435.5(a)(4).)

The declaration of Matthew Eanet in support of the motion states that his office sent a letter to Cross-Complainant’s counsel on September 20, 2023 identifying the issues raised in this demurrer, but received no response. (Declaration of Matthew Eanet ISO Mot. ¶¶ 3-5, Exh. 1.) Cross-Defendant has therefore satisfied his statutory meet-and-confer obligations.

Analysis

Cross-Defendant moves to strike portions of the First Amended Cross-Complaint pertaining to treble damages and attorney’s fees.

With respect to the prayer for treble damages, Cross-Complainant argues in opposition that this request is justified by the first cause of action for conversion. As the Court has sustained the demurrer to that cause of action with leave to amend, the motion to amend is moot as to this prayer for relief and must be denied on that basis.

As to the request for attorney’s fees, Cross-Defendant argues that the Cross-Complaint discloses no basis for attorney’s fees. Such fees are only recoverable when authorized by contract, statute, or other law. (Code Civ. Proc. § 1033.5(a)(10).) In opposition, Cross-Complainant argues that this request is “premature.” It is not. Nothing in the Cross-Complaint demonstrates entitlement to attorney’s fees, and Cross-Complainant offers no argument demonstrating why those fees are proper. The request for attorney’s fees must therefore be stricken.

Conclusion

Accordingly, Cross-Defendant’s Motion to Strike is GRANTED as to the request for attorney’s fees and otherwise DENIED as moot.

CONCLUSION:

Accordingly, Cross-Defendant’s Demurrer to the First Amended Cross-Complaint is SUSTAINED with leave to amend as to the first cause of action and otherwise OVERRULED.

Cross-Defendant’s Motion to Strike is GRANTED as to the request for attorney’s fees and otherwise DENIED as moot.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: April 17, 2024 ___________________________________

Theresa M. Traber

Judge of the Superior Court

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.