Judge: Virginia Keeny, Case: 22STCV25707, Date: 2025-03-06 Tentative Ruling
Case Number: 22STCV25707 Hearing Date: March 6, 2025 Dept: 45
OSTROVSKIY v. siRETSKIY, et al.
demurrer to SECOND amended complaint with motion to
strike
Date of Hearing: 3/6/2025 Trial Date: None set
Department: 45 Case
No.: 22STCV25707
Moving Party: Defendant
Ronny Santana
Responding Party: Plaintiff Yevgeny Ostrovskiy
BACKGROUND
This action arises out of a contractual
agreement for real estate investment services. On August 9, 20222, Plaintiff Yevgeny
Ostrovskiy (“Plaintiff”) filed the operative Second Amended Complaint (“SAC”)
against Defendants Mikhail Siretskiy (“Siretskiy”); The Siretskiy Organization
(“TSO”); Siretskiy Real Estate Inc. (“SRE”); Big Block Realty, Inc. (“Big
Block”); and Ronny Santana (“Santana”) (collectively, “Defendants”), and DOES
6-50, inclusive for: (1) Breach of Contract; (2) Fraud; (3) Breach of Fiduciary
Duty; and (4) Theft.
The SAC alleges that Plaintiff and
Defendant Siretskiy entered into a Real Estate Investment Agreement. (SAC ¶13.)
On March 22, 2017, Defendants Siretskiy and Santana entered into an Independent
Contractor Agreement (“Santana Broker Agreement”), where Santana in his
capacity as a real estate broker was to supervise Siretskiy activities under
the Real Estate Investment Agreement. (Id.)
From September 13, 2019 through April 15, 2022, Defendant Siretskiy as agent
for Defendant Big Block, made several misrepresentations regarding non-existent
investment returns on Plaintiff’s investment amount of $100,000.00. (Id.
at ¶¶19, 25, Ex. C.) Plaintiff has only been repaid $60,000.00 with the
remaining balance being $40,000.00. (Id. at ¶27.)
On November 20, 2024, the Court
overruled Defendant Big Rock’s demurrer to the SAC and granted the motion to
strike punitive damages and attorney fees without leave to amend. On January
17, 2025, Defendant Big Rock filed its Answer.
Defendant Santana now demurs to the
first through fourth causes of action of the SAC and moves to strike the
request for punitive damages and attorneys’ fees. On February 19, 2025,
Plaintiff filed an Opposition to the demurrer and motion to strike, to which Defendant
Santana replied on February 27, 2025.
[Tentative] Ruling
1. Defendant
Ronny Santana’s Demurrer to the Second Amended Complaint is OVERRULED in its
entirety.
2. Defendant
Ronny Santana’s Motion to Strike is GRANTED in part without leave to amend as
to the entire Punitive Damages Claim and Attorney’s Fees Claim for the first,
second, and third causes of action, and DENIED in part as to the Attorneys’
Fees Claim for the fourth cause of action.
LEGAL
STANDARD
Demurrer
“The primary function of a pleading is
to give the other party notice so that it may prepare its case [citation], and
a defect in a pleading that otherwise properly notifies a party cannot be said
to affect substantial rights.” (Harris v. City of Santa Monica (2013) 56
Cal.4th 203, 240.)¿
“A¿demurrer¿tests the legal sufficiency
of the factual allegations in a complaint.” (Ivanoff v. Bank of America,
N.A.¿(2017) 9 Cal.App.5th 719, 725.) The Court looks to whether “the
complaint alleges facts sufficient to state a cause of action or discloses a
complete defense.” (Id.) The Court does not “read passages from a
complaint in isolation; in reviewing a ruling on a demurrer, we read the
complaint ‘as a whole and its parts in their context.’ [Citation.]” (West v.
JPMorgan Chase Bank, N.A. (2013) 214 Cal.App.4th 780, 804.) The Court
“assume[s] the truth of the properly pleaded factual allegations, facts that
reasonably can be inferred from those expressly pleaded and matters of which
judicial notice has been taken.” (Harris, supra, 56 Cal.4th p. 240.)
“The court does not, however, assume the truth of contentions, deductions or
conclusions of law. [Citation.]” (Durell v. Sharp Healthcare (2010) 183
Cal.App.4th 1350, 1358.)¿¿¿
¿
A general demurrer may be brought under
Code of Civil Procedure section 430.10, subdivision (e) if insufficient facts
are stated to support the cause of action asserted or under section 430.10,
subdivision (a), where the court has no jurisdiction of the subject of the
cause of action alleged in the pleading. All other grounds listed in Section
430.10, including uncertainty under subdivision (f), are special demurrers.
Special demurrers are not allowed in limited jurisdiction courts. (Code Civ.
Proc., § 92, subd. (c).)¿¿¿
¿
Leave to amend must be allowed where
there is a reasonable possibility of successful amendment. (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the complainant to
show the Court that a pleading can be amended successfully. (Id.)¿¿
Motion to Strike
“Any party, within the time allowed to
respond to a pleading may serve and file a notice of motion to strike the whole
or any part thereof, but this time limitation shall not apply to motions
specified in subdivision (e).” (Code Civ. Proc., § 435, subd. (b)(1).)¿¿
“The court may, upon a motion made
pursuant to Section 435, or at any time in its discretion, and upon terms it
deems proper: (a) Strike out any irrelevant, false, or improper matter inserted
in any pleading.” (Code Civ. Proc., § 436, subd. (a).)¿
ANALYSIS
Demurrer
Defendant Santana demurs to the first, second,
third, and fourth causes of action of the SAC on the grounds that it fails to
state sufficient facts to support a cause of action against him.
First Cause of Action for Breach of
Contract
To establish a claim for breach of
contract, plaintiff must prove: “(1) the existence of the contract, (2)
plaintiff's performance or excuse for nonperformance, (3) defendant's breach,
and (4) the resulting damages to the plaintiff.” (D'Arrigo Bros. of
California v. United Farmworkers of America (2014) 224 Cal.App.4th 790, 800.) If the claim is based upon a written
contract, the complaint must set out the contract’s terms verbatim or the
plaintiff must attach a copy of the written contract to the complaint and
incorporate it by reference. (Otworth v. Southern Pacific Transportation Co. (1985)
166 Cal.App.3d 452, 459.)
The court finds that the facts alleged
in the SAC are sufficient to state a cause of action for breach of contract
against Defendant Santana.
Here, the SAC alleges that Defendant
Siretskiy is a licensed California real estate agent and has been a licensed
agent of Defendant Santana. (SAC ¶2.) Defendant Siretskiy was subject to
Defendant Santana’s supervision when Santana became Siretskiy’s Responsible
Broker, under Business and Professions Code section 10015.1. (Id.) The
SAC further alleges that Defendant Santana was Defendant Siretskiy’s
Responsible Broker from the periods of March 22, 2017 through January 26, 2018,
which includes the day the Real Estate Investment Agreement was executed. (Id.
at ¶¶6-7.) Defendant Santana’s supervision as Siretskiy’s Responsible Broker
during this period made him a constructive party to any licensed contract
including the Real Estate Investment Agreement. (Id.) Defendant
Siretskiy’s misrepresentations also occurred during March 27, 2018 though July
7, 2020, which is another period where Defendant Santana was Siretskiy’s
Responsible Broker. (Id.)
Therefore, the demurrer to the first
cause of action is OVERRULED.
Second Cause of Action for Fraud
“The essential elements of fraud,
generally, are (1) a misrepresentation; (2) knowledge of falsity; (3) intent to
induce reliance; (4) justifiable reliance; and (5) resulting damage.” (City
of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211 [129
Cal.Rptr.3d 433, 450], as modified (Aug. 24, 2011).) “Each element must be
pleaded with particularity so as to apprise the defendant of the specific
grounds for the charge and enable the court to determine whether there is any
basis for the cause of action, although less specificity is required if the
defendant would likely have greater knowledge of the facts than the plaintiff.”
(Id.)
“A person may not ordinarily recover in
tort for the breach of duties that merely restate contractual obligations.
Instead, courts will generally enforce the breach of a contractual promise
through contract law, except when the actions that constitute the breach
violate a social policy that merits the imposition of tort remedies.
(Citation)” (Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical
Group (2006) 143 Cal.App.4th 1036, 1041 [internal quotations
omitted].)
“[A] principal is responsible to third
persons for the negligence of his agent in the transaction of the business of
the agency, including wrongful acts committed by such agent in and as a part of
the transaction of such business, and for his willful omission to fulfill the
obligations of the principal.” (Civ. Code, § 2338.) “When a final judgment is
obtained in a civil action against any real estate licensee upon grounds of
fraud, misrepresentation, or deceit with reference to any transaction for which
a license is required under this division, the commissioner may, after hearing
in accordance with the provisions of this part relating to hearings, suspend or
revoke the license of such real estate licensee.” (Bus. & Prof. Code, §
10177.5.)
The court finds that the facts alleged
in the SAC are sufficient to state a cause of action for fraud against
Defendant Santana.
Here, the SAC alleges that the breach
of contract claim arise from Defendant Siretskiy’s failing to repay Plaintiff’s
invest money as promised. (SAC ¶¶17, 34.) The SAC also alleges that Defendant
Siretskiy made a series of specific false representations to induce Plaintiff
to enter into the Real Estate Investment Agreement and remain in said agreement,
which occurred during the periods that Defendant Santana was Siretskiy’s
Responsible Broker. (SAC ¶¶17, 19A-J.) Defendant Siretskiy told Plaintiff “Your
money is safe with me and will be returned in one year, guaranteed.” (Id.
at ¶18A.) Defendant Siretskiy also told Plaintiff
“Your investments will be maturing
earlier then [sic] expected.” (Id. at ¶19C.) The SAC further alleges
Plaintiff’s reliance on these misrepresentations in deciding to invest $100,000,
and the resulting damages of only receiving $60,000.00 of his investment back.
(SAC ¶¶26-27.)
Therefore, the demurrer to the second
cause of action is OVERRULED.
Third Cause of Action for Breach of
Fiduciary Duty
“The elements of a claim for breach of
fiduciary duty are (1) the existence of a fiduciary relationship, (2) its
breach, and (3) damage proximately caused by that breach.” (O'Neal v.
Stanislaus County Employees' Retirement Assn. (2017) 8 Cal.App.5th 1184,
1215.)
The court finds that the facts alleged
in the SAC are sufficient to state a cause of action for breach of fiduciary
duty against Defendant Santana.
As discussed above, the SAC alleges
that the Real Estate Investment Agreement was executed during the periods that
Defendant Santana was Defendant Siretskiy’s Responsible Broker. (SAC ¶¶7, 13,
19A-J.) The SAC also alleges that Defendant Santana was Defendant Siretskiy’s
Responsible Broker at the time of the purported misrepresentations that induced
Plaintiff to remain in the Real Estate Investment Agreement. (Id.) The
SAC further alleges that Defendant Santana was a constructive party to the Real
Estate Investment Agreement pursuant to his Broker Agreement, wherein he would
be compensated for the Real Estate Investment Agreement and permitted to pursue
remedies against Plaintiff for any breach of said agreement. (SAC ¶14.)
Therefore, the demurrer to the third
cause of action is OVERRULED.
Fourth Cause of Action for Theft
“To prove theft, a plaintiff must
establish criminal intent on the part of the defendant beyond ‘mere proof of
nonperformance or actual falsity.’ [Citation] This requirement prevents
‘[o]rdinary commercial defaults’ from being transformed into a theft. [Citation]
If misrepresentations or unfulfilled promises ‘are made innocently or
inadvertently, they can no more form the basis for a prosecution for obtaining
property by false pretenses than can an innocent breach of contract.’
[Citation]” (Siry Investment, L.P. v. Farkhondehpour (2022) 13
Cal.5th 333, 361-362.)
“Every person . . . who shall
fraudulently appropriates property which has been entrusted to him or her, or
who shall knowingly and designedly, by any false or fraudulent representation
or pretense, defraud any other person of money, labor or real or personal
property, or who causes or procures others to report falsely of his or her
wealth or mercantile character and by thus imposing upon any person, obtains
credit and thereby fraudulently gets or obtains possession of money, or
property or obtains the labor or service of another, is guilty of theft.”
(Penal Code, § 484, subd. (a).)
The court finds that the facts alleged
in the SAC are sufficient to state a cause of action for theft against
Defendant Santana.
As explained above, the SAC contains
several factual allegations regarding misrepresentations made by Defendant
Siretskiy’s during the period that Defendant Santana was his Responsible
Broker, where Siretskiy promised to repay Plaintiff the $100,000 invested with
substantial profit. (SAC ¶18B, E-F.) Defendant Santana told Plaintiff “I will
make you a millionaire.” (Id. at ¶18C.) The SAC further alleges that
only $60,000 of Plaintiff’s money was returned. (Id. at ¶27.)
Therefore, the demurrer to the fourth cause
of action is OVERRULED.
Motion to Strike
Punitive
Damages
Defendant
Santana moves to strike the following references to punitive damages from the
SAC:
Paragraph 36, page 19, lines 12-13, which states “…
reasonable attorneys’ fees; and punitive damages for their intentional and/or
wantonly negligent behavior.”
Paragraph 43, page 20, lines 9-16, which states:
“The conduct of Defendants, and each of them, was intentional, wanton,
fraudulent, malicious, oppressive, and/or done with reckless and in conscious
disregard for the rights and welfare of Plaintiff, and designed and intended to
unjustly benefit and enrich said Defendants and to gain improper advantages for
them at the expense of Plaintiff, and such conduct was knowingly directed,
ratified, condoned, and accepted by Defendants, such that an award of punitive and
exemplary damages is justified against said Defendants, and each of them, in an
amount according to proof, and sufficient to make an example of their
reprehensible conduct.”
Paragraph 44, page 20, lines 17-18, which states:
“Because of the conduct of Siretskiy …, punitive damages should be awarded
against them in a sufficient amount to punish this despicable conduct.”
Demand for Relief As To The Second Cause of Action,
Letter C, page 22, lines 3-5, “For punitive damages according to proof at trial
in an amount sufficient to punish and make an example of Defendants for their
wrongful conduct;”
Demand for Relief As To The Third Cause of Action,
Letter C, page 22, lines 12-14, “For punitive damages according to proof at
trial in an amount sufficient to punish and make an example of Defendants for
their wrongful conduct;”
“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.) The California Civil
Code Section 3294, subdivision (a)
authorizes punitive damages upon a showing of malice, fraud, or oppression.
Malice is
defined as either “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.”
(Civ. Code, § 3294, subd. (c)(1).) “Despicable conduct is conduct which is so
vile, base, contemptible, miserable, wretched or loathsome that it would be
looked down upon and despised by ordinary decent people.” (Mock v. Michigan
Millers Mutual Ins. Co. (1992) 4 Cal. App. 4th 306, 331.) Fraud under
California Civil Code Section 3294, subdivision (c)(3) “means an intentional
misrepresentation, deceit, or concealment of a material fact known to the
defendant with the intention on the part of the defendant of thereby depriving
a person of property or legal rights or otherwise causing injury.” (Civ. Code,
§ 3294, subd. (c)(3).) The California Civil Code Section 3294, subdivision (2)
defines oppression as “despicable conduct that subjects a person to cruel and
unjust hardship in conscious disregard of that person’s rights.” (Civ. Code, §
3294, subd. (2).)
Punitive
damages thus require more than the mere commission of a tort. (Taylor v. Superior Court (1979) 24
Cal.3d 890, 894-95.) Specific facts must be pled in support of punitive
damages. (Hillard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374,
391-392.) A “conclusory characterization of [a] defendant’s conduct as
intentional, wilful and fraudulent [is] [a] patently insufficient statement of
oppression, fraud, or malice.” (Brousseau v. Jarrett (1977) 73
Cal.App.3d 864, 865.) Facts must be pled to show that a defendant “act[ed] with
the intent to vex, injure or annoy, or with a conscious disregard of the
plaintiff’s rights.” (Silberg v. California Life Ins. Co. (1974) 11
Cal.3d 452, 462.) “When nondeliberate injury is charged, allegations that the
defendant’s conduct was wrongful, willful, wanton, reckless or unlawful do not
support a claim for exemplary damages; such allegations do not charge malice.”
(G.D. Searle & Co. v. Superior Court (1975) 49 Cal.App.3d 22, 29.)
Conduct that is merely negligent will not support a claim for punitive damages.
(Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269,
1288.)
However, “An
employer shall not be liable for damages pursuant to subdivision (a), based
upon acts of an employee of the employer, unless the employer had advance
knowledge of the unfitness of the employee and employed him or her with a conscious
disregard of the rights or safety of others or authorized or ratified the
wrongful conduct for which the damages are awarded or was personally guilty of
oppression, fraud, or malice. With respect to a corporate employer, the
advance knowledge and conscious disregard, authorization, ratification or act
of oppression, fraud, or malice must be on the part of an officer, director, or
managing agent of the corporation.” (Civ. Code § 3294, subd. (b) (emphasis
added).)
“When
reviewing award of punitive damages in favor of employee based on acts
committed by managing agent of corporate employer, [courts] must determine
whether substantial evidence supports finding, by clear and convincing
evidence, that actions were malicious or oppressive.” (Colucci v.
T-Mobile USA, Inc. 48 Cal.App.5th 442, 443 [citing
Civ. Code, § 3294, subds. (a), (b), (c)].)
The court
finds that the SAC fails to state sufficient facts to support a claim for
punitive damages.
Here, the
SAC alleges that Defendant Santana was the Responsible Broker for Defendant
Siretskiy from March 22, 2017 through January 26, 2018, and March 27, 2018
through July 7, 2020. (SAC ¶6.) The SAC further alleges that Defendant
Siretskiy made false representations to Plaintiff between September 13, 2019
through June 4, 2020, when Defendant Santana was Siretskiy’s Responsible
Broker. (Id. at ¶19A-J.) However, the SAC does not allege that
Defendant Santana knew of Siretskiy’s alleged unfitness as a real estate agent
and consciously disregarded such information in hiring him. Similarly, the SAC
is devoid of any facts that Defendant Santana knew of Siretskiy’s fraudulent
conduct, authorized such conduct, or ratified the conduct. Plaintiff fails to
show that this defect can be reasonably cured by amendment but merely suggest
that discovery may reveal more facts.
Therefore, the
motion to strike punitives damages from the SAC is GRANTED without leave to
amend.
Attorney
Fees
Defendant
Santana also moves to strike the following references to attorneys’ fees from the
SAC:
Paragraph 32, page 18, lines 14-15, which states “…
and reasonable attorneys’ fees according to the Real Estate Investment
Agreement.”
Paragraph 49, page 21, lines 17-18, which states:
“… together with Plaintiff’s attorney’s fees.”
Demand for Relief As To The First Cause of Action,
Letter C, page 21, line 25, “For attorneys' fees as permitted by law;”
Demand for Relief As To The Second Cause of Action,
Letter D, page 22, line 6, “For attorneys' fees as permitted by law;”
Demand for Relief As To The Third Cause of Action,
Letter D, page 22, line 15, “For attorneys' fees as permitted by law;”
Demand for Relief As To The Fourth Cause of Action,
Letter D, page 22, line 22, “For attorneys' fees provided for by §496(c) of the
Penal Code.”
Attorneys’
fees are not available unless authorized by statute or an agreement between the
parties. (Code Civ. Proc., § 1021.)
The court
finds that the SAC fails to allege facts to support a claim for attorneys’ fees
via statute or the purported Real Estate Investment Agreement as to the first,
second and third causes of action. Plaintiff raises the same argument from the
previous demurrer that the Real Estate Investment Agreement contains a
typographical error or is another attempt by Defendant Siretskiy to defraud
Plaintiff. These arguments are unavailing as Real Estate Investment Agreement
incorporated by reference into the SAC makes no mention of attorneys’ fees
recoverable by Plaintiff for any breach of said agreement and there is no
statutory basis pled for attorneys’ fees on a fraud or breach of fiduciary duty
claim. As for the fourth cause of action, Plaintiff sufficiently pleads facts
to support this cause of action as Penal Code Section 496, subdivision (c)
authorizes recovery of reasonable attorneys’ fees.
Therefore,
the motion to strike attorneys’ fees is GRANTED without leave to amend as to
the first, second, and third causes of action and DENIED as to the fourth cause
of action.
CONCLUSION
Based on the
foregoing, Defendant Ronny Santana’s Demurrer to the Second Amended
Complaint is OVERRULED in its entirety.
Defendant Ronny Santana’s Motion to
Strike is GRANTED in part without leave to amend as to the entire
Punitive Damages Claim and Attorney’s Fees Claim for the first, second, and
third causes of action, and DENIED in part as to the Attorneys’ Fees Claim for
the fourth cause of action.