Judge: Virginia Keeny, Case: 22VECV01134, Date: 2023-03-17 Tentative Ruling

Case Number: 22VECV01134    Hearing Date: March 17, 2023    Dept: W

YOSEF COHEN, et al. v. KAMBIZ KAMANGAR, et al.

Defendants WORLD TECH TOYS, INC., WORLD TRADING 23, INC. and KEVORK KOUYOUMJIAN’s demurrer to the first amended complaint

Date of Hearing:        March 17, 2023                                 Trial Date:       None set.

Department:              W                                                        Case No.:        22VECV01134

Moving Party:            Defendants World Tech Toys, Inc., World Trading 23, Inc. and Kevork Kouyoumjian

Responding Party:     Plaintiffs Yosef Cohen and Vahe Ter-Galstanyan  

Meet and Confer:      Yes. (McKown Decl. ¶¶3-5.)   

BACKGROUND

On August 9, 2022, Plaintiffs Yosef Cohen and Vahe Ter- Galstanyan filed a complaint against Defendants World Tech Toys, Inc., World Trading 23, Inc., Kevork Kouyoumjian, Kambiz Kamangar, and Kamir Distribution, LLC asserting causes of action for (1) Breach of Oral Joint Venture Agreement; (2) Unlawful, Fraudulent & Unfair Business Practices; (3) Breach of Fiduciary Duty; and (4) Fraud. On January 12, 2023, Plaintiffs filed an amended complaint asserting two more causes of action for Breach of Partnership Agreement and Declaratory Relief.

Plaintiffs allege Defendant Kamangar made fraudulent representations to Plaintiff Cohen regarding a business opportunity arising from the Pandemic. Plaintiffs allege Defendant Kamangar represented to Plaintiff Cohen Defendant KOUYOUMJIAN had extensive contacts in China as a result of his companies, World Trading 23, Inc. and World Tech Toys, Inc., which were involved in importing goods from China for sale in the United States and actively encouraged Plaintiff Cohen and Plaintiff Ter-Galstanyan to order the gloves. Plaintiffs allege Defendants failed to perform in accordance with the term so of the Agreement as well as their fiduciary duty.

[Tentative] Ruling

Defendants’ Demurrer is OVERRULED; the motion to strike is denied. 

DISCUSSION

Defendants World Tech Toys, Inc., World Trading 23, Inc. and Kevork Kouyoumjian (collectively “WTT Defendants”) demur to the First Amended Complaint filed by Plaintiffs Yosef Cohen and Vahe Ter-Galstanyan on the grounds each cause of action fails to state facts sufficient to give rise to liability or constitute a cause of action against any of the WTT Defendants and Plaintiffs have impermissibly added new claims without leave of court.

Second and Sixth Causes of Action

WTT Defendants demur to the second cause of action for breach of partnership agreement and sixth cause of action for declaratory relief on the grounds the amended complaint exceeds the scope of the demurrer.

“Following an order sustaining a demurrer . . . with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court’s order.  [Citation.]  The plaintiff may not amend the compliant to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.  [Citation.]”  (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)

In opposition, Plaintiffs essentially argue they addressed the pleading deficiencies in their previous cause of action for breach of joint venture agreement by including an alternative cause of action for breach of partnership agreement in lieu of the joint venture agreement and a declaratory relief cause of action for the court to determine whether the relationship between Plaintiffs, Defendants, and the non-moving Defendants was a joint venture or partnership.

The court finds these two additional claims fall within the broad parameters of the order granting leave to amend and are not subject to demurrer on grounds that they were improperly added.

The court also overrules the demurrer on the merits to these two causes of action.  Plaintiffs have properly alleged that the defendants had  formed a partnership with plaintiffs by virtue of their statements and actions.  Plaintiffs have also adequately stated a claim for declaratory relief as to the parties’ rights and responsibilities under the alleged oral agreement, joint venture and/or partnership. 

Breach of Oral Joint Venture Agreement

WTT Defendants first demur to the breach of oral joint venture agreement cause of action on the grounds none of the WTT Defendants entered into the oral agreement directly. WTT contends as made clear by Plaintiffs’ allegation, none of the WTT Defendants ever discussed the terms of the alleged oral agreement with Plaintiffs at any time before the purported oral agreement was formed.

In opposition, Plaintiffs point to Paragraph 29 where Plaintiffs allege there was a conference call wherein Plaintiffs were at Kamangar’s dental office with Kouyoumjian on the telephone during which Kouyoumjian told Plaintiffs that everything was pre-sold, they did not need to worry about being able to sell the gloves, but that they needed to put in another order soon because Plaintiffs would be missing the opportunity because Kouyoumjian expected the factory to close or shut down in February. (FAC ¶29c.) Plaintiffs further allege Kouyoumjian represented to Plaintiffs that the purchase price of the gloves were increasing. (FAC ¶29i.)

The court finds these allegations are sufficient to demonstrate Kouyoumijan entered into an agreement with plaintiffs on behalf of WTT, as to which it is alleged Kouyoumijan was an officer and controlling person.   A joint venture “may be assumed as a reasonable deduction from the acts and declarations of the parties.” (Scottsdale Ins. Co. v. Essex Ins. Co. (2022) 98 Cal. App. 4th 86, 91.) In fact, “the conduct of the parties may create a joint venture despite an express declaration to the contrary.” (Apr. Enterprises, Inc. v. KTTV (1983) 147 Cal. App. 3d 805, 820 (citing Universal Sales Corp. v. California Press Mfg. Co. (1942) 20 Cal. 2d 751, 765).) “[W]here evidence is in dispute, the existence or nonexistence of a joint venture is a question of fact to be determined by the jury.” (Id.) The allegations above show that although Kouyoumjian may not have been there at the initial conversation of the business venture, Kouyoumjian, by his conduct, showed he and the other WTT Defendants had a joint interest in selling the gloves and he participated In making statements to plaintiffs, intending to lure them into the deal. 

Defendants also demur to the first cause of action on the grounds Plaintiffs’ agency allegations are not sufficiently pled. The court disagrees.  Paragraph 26 includes Plaintiffs' allegations of what Kamangar told them what the basics of the business arrangement would be between Plaintiffs, WTT Defendants and Kamangar, and that Kamangar was acting on Defendants' behalf in explaining the terms of their business arrangement. Specifically, Plaintiffs argue WTT Defendants directed Kamangar to find other people to provide capital to WTT Defendants in order to increase the amount of gloves they could purchase. (FAC ¶26e.) Whether Kamanger was acting as an agent or WTT or in a joint venture with WTT will need to be determined by a jury; the allegations are sufficient to plead a claim against WTT for breach of an oral joint venture. 

Next, Defendants demur to the first cause of action on the grounds conspiracy allegations do not apply to breach of contract claims, Plaintiffs admit Kamangar was not an alter ego of the WTT Defendants, the cause of action is barred by the Sham Pleading Doctrine, Plaintiffs admit there was no agreement to share losses, and Plaintiff admit there was no joint control.

First, the court notes the complaint does not allege Kamangar was an alter ego of any of the WTT Defendants. Plaintiffs do not dispute this. Plaintiffs also do not dispute one cannot conspire to breach an agreement. Although Plaintiffs allege Defendants were co-conspirators, the complaint does not allege the Defendants conspired to breach the agreement. The complaint alleges WTT Defendants and non-moving Defendants conspired to misrepresent the genuineness of the gloves they were purchasing and that WTT Defendants were authorized distributors.   

As for WTT Defendants’ sham pleading contention, the court finds the allegations are no so inconsistent to invoke the sham pleading doctrine. Plaintiffs initially alleged Kamangar and Kouyoumjian stood to make a profit off Plaintiffs’ “investment”. (Compl. ¶32.) In Plaintiffs’ amended complaint, Plaintiffs allege WTT Defendants and Kamangar Defendants would share profits by bringing Plaintiffs into the joint venture. (FAC ¶54.)

Accordingly, WTT Defendants’ demurrer to the first cause of action is OVERRULED.

Breach of Fiduciary Duty

WTT Defendants argue none of the WTT Defendants owed a fiduciary duty to either Plaintiff. Specifically, WTT Defendants contend by Plaintiffs’ own admission, the purported fiduciary relationship between Plaintiffs and the WTT Defendants are dependent entirely on the existence of an oral joint venture or oral partnership agreement and because Plaintiffs’ pleading confirms that none of WTT Defendants entered into any kind of oral agreement, none of the WTT Defendants owe Plaintiffs a fiduciary duty.

Plaintiff has now alleged a partnership agreement existed between plaintiff and all defendants.  (First Amended Complaint, ¶¶58-63.)  While technically this is a new cause of action for which plaintiffs did not receive express approval to add to the complaint, the allegations of a partnership fall within the broad instructions given by the court on the last demurrer in order to cure previous deficiencies. 

Partners stand as fiduciaries to each other.  Plaintiffs have adequate alleged breach of fiduciary duty by these alleged partners. 

Accordingly, WTT Defendants’ demurrer to the third cause of action is OVERRULED. 

Fraud

WTT Defendants demur to the fourth cause of action for fraud on the grounds Plaintiffs allege no basis for direct liability for fraud. WTT Defendants contend the cause of action alleges no misrepresentations by any of the WTT Defendants that Plaintiffs relied upon in paying $700,000.00 for the gloves at issue, and no basis for asserting such a claim against any of them. Instead, Plaintiffs allege all of the purported misrepresentations were made exclusively by Kamangar.

The court disagrees.  In opposition, Plaintiffs contend WTT Defendants made three significant misrepresentations including all of the gloves were pre-sold, the purchase price for Plaintiffs to buy the gloves was increasing, and the gloves had been purchased with Plaintiffs’ money, but the sales price had decreased dramatically.   Plaintiffs also alleged that they relied on these misrepresentations in deciding to wire $700,000 to the WTT defendants at Kouyoumijan’ s instruction. 

Plaintiffs also contend WTT Defendants are liable for fraud of their agent Kamangar. As noted above, Plaintiffs have sufficiently state facts sufficient to support a claim for agency. As for Plaintiffs’ conspiracy theory, “[w]here fraud is alleged to be the object of the conspiracy, the claim must be pleaded with particularity.” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1136.) The court agrees that plaintiffs’ conspiracy claim is pleaded with sufficient particularity. 

Accordingly, WTT Defendants’ demurrer to the fourth cause of action is  OVERRULED.

Violation of Business and Professions Code 17200

WTT Defendants demur to the fifth cause of action for violation of Business and Professions Code section 17200 on the grounds the claim is derivative of the other claims. (See Prachasaisoradej v. Ralphs Grocery Co., Inc. (2007) 42 Cal.4th 217, 244.)

WTT Defendants also argue the cause of action is not alleged with reasonable particularity. (Khoury v. Maly's of California, Inc. (1993) 14 Cal.App.4th 612, 619.) The court disagrees. Plaintiff has alleged fraudulent business practices which would support a restitution claim under Section 17200.    

Motion to Strike

WTT Defendants move to strike the following allegations in support of Plaintiffs’ second and sixth causes of action on the grounds that the addition of two new causes of action after the court sustained WTT Defendants’ demurrer to the original Complaint was improper as the court’s order did not authorize Plaintiffs to add either cause of action

As stated above, the court finds it was not improper for plaintiffs to add a claim for breach of partnership and declaratory relief.   The allegations to support such causes were well within the additional allegations contemplated by the court when it previously sustained the demurrer with leave to amend.