Judge: Virginia Keeny, Case: 23STCV00314, Date: 2025-01-22 Tentative Ruling
Case Number: 23STCV00314 Hearing Date: January 22, 2025 Dept: 45
CAhuenga professional building, et al. v. emil akopian, et al.
demurrer AND MOTION TO STRIKE first amended complaint
Date of Hearing: 1/22/2025 Trial Date: 11/4/2025
Department: 45 Case No.: 23STCV00314
Moving Party: Defendants Emil Akopian, David Issaians, First Core Group, Inc., dba Keller William Real Estate Services, and Alliance Partners
Responding Party: Plaintiffs Cahuenga Professional Building, LLC and Narek Kazarian
BACKGROUND
On January 6, 2023, Plaintiffs Cahuenga Professional Building, LLC and Narek Kazarian (“Kazarian”) (together, “Plaintiffs”) initiated this action against Defendant 3623 Cahuenga LLC (“3623 Cahuenga”), Defendants Emil Akopian (“Akopian”), David Issaians (“Issaians”), Emil Akopian and David Raphael Issaians dba Alliance Partners (“Alliance Partners”), and First Core Group Inc. dba Keller William Real Estate Services (“FCG”) (together, the “Keller William Defendants”); Ming Sze Fong (“Fong”); Studio City Caregivers, Inc. (“SCC”); Ming Sze Fong dba Studio City Caregivers Cooperative, Inc. (“SCCC”) (together, the “Fong Defendants”); and DOES 1 through 20, inclusive (collectively, “Defendants”). The Complaint alleges causes of action for: (1) breach of contract, (2) breach of fiduciary duty, (3) aiding and abetting breaches of fiduciary duty, (4) breach of the duty to be honest and truthful, (5) negligence, (6) professional negligence, (7) fraud and deceit, (8) civil conspiracy, (9) equitable indemnity, (10) unfair and deceptive business practices in violation of Bus. & Prof. Code §§ 17200 et seq, (11) rescission of the purchase agreement, (12) intentional interference with contractual relations, (13) negligent interference with contractual relations, (14) intentional interference with economic advantage with contractual relations, and (15) negligent interference with economic advantage with contractual relations.
On February 7, 2024, Plaintiffs filed the operative First Amended Complaint (“FAC”) against Defendants, removing the previously alleged 6th cause of action for professional negligence. On February 27, 2024, the Court denied the demurrers to the Complaint as moot. The Keller Williams Defendants now demur to the FAC.
[Tentative] Ruling
The demurrer is sustained without leave to amend in part and overruled in part.
As to the entire FAC, based on the issue of standing, the demurrer to strike the entire FAC is overruled. As to the 1st cause of action, the demurrer is sustained without leave to amend. As to the 4th cause of action, the demurrer is sustained without leave to amend. As to the 7th cause of action, the demurrer is overruled.
The motion to strike is denied as moot.
LEGAL STANDARD
“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) 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. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967), but the Court does not “assume the truth of contentions, deductions, or conclusions of fact or law” (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125).
Further, the court may, upon 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. (Code Civ. Proc., § 436, subd. (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. (Code Civ. Proc., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)
Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
ANALYSIS
Keller Williams Defendants (Akopian, Issaians, Alliance Partners, and FCG) demur to Plaintiffs’ FAC in its entirety as well as to the 1st (breach of contract), 4th (breach of the duty to be honest and truthful), and 7th (civil conspiracy) causes of action – three of the nine causes of action Plaintiffs assert against Keller Williams Defendants. (Notice of Demurrer, pp. 2, 3.) As to the entire FAC, Keller Williams Defendants argue that (1) Plaintiffs fail to state any facts sufficient to constitute a cause of action and (2) the FAC, as articulated, is uncertain, leaving Keller Williams Defendants unable to respond. (Notice of Demurrer, p. 2.) Keller Williams Defendants also argue that (1) Plaintiffs fail to state facts to constitute a cause of action for the 1st and 7th causes of action alleged, (2) Plaintiffs allegations as to the 1st, 4th, and 7th causes of action are uncertain, leaving Keller Williams unable to respond, and (3) the 1st and 4th causes of action are duplicative of Plaintiffs’ 2nd cause of action (breach of fiduciary duty). (Notice of Demurrer, pp. 2, 3; Code Civ. Proc. § 430.10(e), (f); Palm Springs Villas II Homeowners Assn., Inc. v. Parth 2016 248 Cal.App.4th 268, 290. [citation])
On January 9, 2025, Plaintiffs filed an opposition, challenging the general demurrer as improper, given that Keller Williams Defendants only demurred to certain causes of action and arguing that the 1st, 4th and 7th causes of action are sufficiently pled to provide Keller Williams Defendants notice of the claims against them. (Opposition, p. 2.)
On January 13, 2025, Keller Williams Defendants filed a reply brief. Keller Williams Defendants also filed a motion to strike portions of Plaintiffs’ FAC.
Procedural Violations
Timeliness of Demurrer and Motion to Strike & Failure to Meet and Confer
Code Civ. Proc. §430.41(a) provides as follows, “Before 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(a)(2) provides as follows, “The parties shall meet and confer at least five days before the date the responsive pleading is due. If the parties are not able to meet and confer at least five days prior to the date the responsive pleading is due, the demurring party shall be granted an automatic 30-day extension of time within which to file a responsive pleading, by filing and serving, on or before the date on which a demurrer would be due, a declaration stating under penalty of perjury that a good faith attempt to meet and confer was made and explaining the reasons why the parties could not meet and confer. The 30-day extension shall commence from the date the responsive pleading was previously due, and the demurring party shall not be subject to default during the period of the extension. Any further extensions shall be obtained by court order upon a showing of good cause.” (Emphasis added.)
Similarly, a motion to strike any pleading must be filed “within the time allowed to respond to a pleading”—e.g., 30 days after service of the complaint or cross-complaint unless extended by court order or stipulation. (Code Civ. Proc § 435(b)(1).)
Before filing a motion to strike, moving party's counsel must meet and confer, in person, by video conference, or by telephone with counsel for the party who filed the pleading in an attempt to reach an agreement that would resolve the objections to the pleading and obviate the need for filing a motion to strike. (Code Civ. Proc. § 435.5)
Code Civ. Proc. §430.41(a)(4) provides that, “A determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” In addition, an untimely demurrer may be considered by the Court in its discretion. (Jackson v. Doe (2011) 192 Cal.App.4th 742, 750.)
Plaintiffs filed the initial Complaint to this action on January 6, 2023. On February 7, 2024, Plaintiffs filed the operative FAC, and a proof of service indicating that Keller Williams Defendants were served with the FAC electronically. Accordingly, Keller Williams Defendants’ responsive pleadings were due on March 7, 2024. (Code Civ. Proc. § 430.40(a).) On March 4, 2024, three days prior said deadline, counsel for Keller Williams Defendants initiated meet and confer efforts with counsel for Plaintiffs by submitting a letter, and following up on April 8, 2024, to which Plaintiff’s counsel did not respond. (Declaration of Shannon B. Jones, (“Jones Decl.”) ¶ 2, Exh. 1.)
On April 10, 2024, Keller Williams Defendants filed a Motion to Strike portions of the FAC without a demurrer. On May 10, 2024, Keller Williams Defendants filed a Demurrer to the FAC. Prior to filing these motions, on April 8, 2024 Keller Williams Defendants “followed up with Plaintiff’s counsel and assistant” and received no response. (Jones Decl., ¶ 3.)
The Court notes that Keller Williams Defendants’ meet-and-confer efforts were insufficient as to moving to strike and demurring to the FAC. Defense counsel simply sent Plaintiffs’ counsel a letter, thereby frustrating the purpose of the meet-and-confer requirement, which is to determine whether the parties can reach an agreement as to the issues raised in the demurrer and motion to strike. Nonetheless, in the interest of judicial efficiency, the Court exercises its discretion to consider the merits of Defendant’s demurrer and motion to strike, but it notes that subsequent failures to comply with statutory obligations may result in a continuance of the hearing on the subject motion.
Background
The instant action is based on Kazarian and his investors’ attempt to purchase a multi-unit commercial property located 3623, 3625, 3629, 3631, Cahuenga Blvd., Los Angeles, CA 90064, APN 2425-005-10, 2425-005-009, 2425-005-008, and 2425-005-007 (the “Subject Property”). (FAC, ¶¶ 6, 13.) The Subject Property was owned by 3623 Cahuenga, and occupied by the Fong Defendants (Fong, SCC, and SCCC), as tenants. (FAC, ¶¶ 13-14.)
During the sale, Kazarian as buyer, and 3623 Cahuenga, as seller, were dually represented by the same agents (Akopian and Issaians) and the same brokers (FCG and Alliance Partners, (together with Akopian and Issaians, the “Keller Williams Defendants”) (FAC, ¶ 16.) Plaintiffs allege that when undertaking the dual representation, Keller Williams Defendants knew that Fong Defendants tendered a $3.1 million offer to 3623 Cahuenga. (FAC, ¶ 17.) Plaintiffs allege that the Keller Williams Defendants conspired to falsely inflate the offer price by $200,00.00 to enrich 3623 Cahuenga. (FAC, ¶ 31.) Specifically, Plaintiffs allege that Akopian misrepresented to Kazarian that “he would need to submit an offer that at least matched the pending offer of $3.3 million dollars”. (FAC, ¶ 32.) In June 2022, Kazarian, as represented by Akopian, tendered a $3.3 million dollar offer, which was accepted by 3623 Cahuenga by way of its trustee representative, Janet P. Huston, a trustee of the Janet P. Huston GST Trust (“Huston”). (FAC, ¶ 34.)
Plaintiffs allege that on or about June 22, 2022, Kazarian and Huston, on behalf of 3623 Cahuenga, entered into the “Standard Offer, Agreement and Escrow Instructions for Purchase of Keller Williams” (the “Purchase Agreement”). (FAC, ¶ 37; Exhibit A.) Plaintiffs also allege that on July 11, 2022 Plaintiffs and 3623 Cahuenga entered escrow, and despite 3623 Cahuenga’s failure to produce documents under the Purchase Agreement, Kazarian deposited $99,000 into escrow. (FAC, ¶¶ 41-42.) Plaintiff alleges that in the course of due diligence, on or around August 2022, Fong advised Kazarian of its $3.1 million previously offer to 3623 Cahuenga for the Subject Property. (FAC, ¶ 54.) Following numerous delays experienced between Fong and Kazarian, on about August 25, 2022, Kazarian’s investor withdrew his support to purchase the Subject Property. (FAC, ¶ 56.) In September 2022, 3635 Cahuenga sold the property to Fong and SCCC. (FAC, ¶ 57.)
DEMURRER
Plaintiffs’ Standing
Keller Williams Defendants move for an order sustaining their demurrer to the FAC in its entirety, on the grounds that Plaintiffs lack standing. Specifically, Keller Williams Defendants argue that Plaintiffs have failed to allege that compensable damages were suffered because the sale of the Subject Property from 3632 Cahuenga to Kazarian was never completed because Kazarian’s investor withdrew, and the property was ultimately sold to a third party. (Demurrer, p. 4; Civ. Code § 3343.)
Plaintiffs argue that Civil Code section 3343 does not expressly require that a purchase be completed for recovery. (Opposition, p. 4; Civ. Code Proc. § 3343(a)(1).) Alternatively, Plaintiffs rely on Civil Code sections 1709 and 3333, for bases to recover under a theory of benefit-of-the-bargain damages. (Opposition, p. 5; Fragale v. Faulkner (2003) 110 Cal.App.4th 229, 236-237.)
In reply, Keller Williams Defendants maintain that Plaintiffs lack standing because Plaintiffs did not purchase the Subject Property and cannot allege that Keller Williams Defendants were a party to the Purchase Agreement, any oral agreement, and thus cannot recover under Civil Code sections 3343, 1709, and 3333. (Reply, p. 3.)
In order to recover damages for fraud under Civil Code section 3343, a transaction must be completed, as the measure of damages is based on the amounts exchanged in the transaction. Civil Code section 3343 provides that one defrauded in the purchase, sale, or exchange of property is entitled to recover the difference between the actual value of what the defrauded person parted with and the actual value of what they received, along with any additional damages arising from the particular transaction. (Civ. Code § 3343.) The court has applied Civil Code section 3343 to calculate damages based on the difference between the value of the property, the purchase price and additional expenses related to the property. (Garret v. Perry, (1959) 53 Cal.2d 178, 184.) The court has also applied Civil Code section 3343 to compensate for expenditures made in reliance of fraud and compensated for loss of use or anticipated property. (Stout v. Turney, 22 Cal.3d 718, 723.) Both cases presuppose that the property transaction was completed.
Under California Civil Code section 3333, a transaction does not need to be completed in order to recover damages. Section 3333 provides that for the breach of an obligation not arising from contract, the measure of damages is the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not. (Civ. Code § 3333.)
Under California Civil Code Section 1709, a transaction does not need to be completed to recover for deceit. Section 1709 states that "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.)
It is undisputed that Plaintiffs did not purchase the Subject Property, as Plaintiffs allege that in September 2022, 3623 Cahuenga sold the property to Fong and SCCC. (FAC, ¶ 58.) Given that Plaintiffs did not complete the $3.3 million purchase of the Subject Property, Civil Code section 3343 will not provide an appropriate basis for the calculation of damages. Nonetheless, Civil Code section 3333 provides a means to recover damages proximately caused by wrongful acts, regardless of whether a transaction was completed. Plaintiffs also argue that the transaction was incomplete due to Keller Williams Defendants’ misrepresentations and breach of fiduciary duty, which caused the transaction to fail. (Opposition p. 5; citing FAC ¶¶ 54-58.) Civil Code section 1709 also indicates that liability arises from the act of deceit and resulting damages, not necessarily from the completion of a transaction. Plaintiffs argue that compensable damages were sufficiently alleged in the FAC and point to the $99,000.00 Kazarian deposited into escrow based on Keller Williams Defendants’ alleged misrepresentations, the attorneys’ fees to pursue this action, and lost opportunity costs from entering and being unable to complete the transaction. (Opposition, p. 4; citing FAC ¶¶ 42, 97.) Under sections 3333 and 1709, Plaintiffs have sufficiently alleged their claims as recoverable damages.
Accordingly, the demurrer to the FAC is overruled as to Plaintiff’s standing.
1st Cause of Action (Breach of Contract)
Keller Williams Defendants demur to the 1st cause of action on the grounds that it fails to state sufficient facts to constitute a cause of action. (Notice of Demurrer, p. 3; Code Civ. Proc. § 430.10(e).)
“The standard elements of a claim for breach of contract are ‘(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) damage to plaintiff therefrom. [Citation.]’ [Citation]” (Wall Street Network, Ltd. v. New York Times Co. (2008) 164 Cal.App.4th 1171, 1178.)
“The elements of a breach of oral contract claim are the same as those for a breach of written contract: a contract; its performance or excuse for nonperformance; breach; and damages.” (Stockton Mortgage, Inc. v. Tope (2014) 233 Cal.App.4th 437, 453.) A claim for breach of contract is subject to demurrer if it cannot be determined from the pleading whether the alleged contract was oral, written, or implied by conduct. (Code Civ. Proc. §430.10(g).)
Plaintiffs’ breach of contract cause of action is based on the following allegations: (1) prior to executing the Purchase Agreement and through the escrow period, Plaintiffs and Keller Williams Defendants entered into an oral agreement for Keller Williams Defendants to dually represent Plaintiffs and seller 3623 Cahuenga to purchase the Subject Property and pay Keller Williams Defendants a commission upon completion of the sale; (2) Plaintiffs performed all obligations pursuant to the oral agreement, except as where excused from performance; (3) Keller Williams Defendants breached their oral agreement with Plaintiffs by (i) concealing information material to the transaction (see FAC, ¶¶ 24-59), knowing the representations made were false and/or omissions were deceptive, (ii) failing to advise Plaintiffs and counsel of Plaintiffs, as required of California-licensed realtors and brokers; and (4) proximately causing Plaintiffs damages to be determined according to proof at trial. (FAC, ¶¶ 60-67.)
The statute of frauds does apply to oral broker agreements for the sale of real property. Under California Civil Code § 1624(a)(4), an agreement authorizing or employing an agent, broker, or any other person to purchase or sell real estate, or to procure, introduce, or find a purchaser or seller of real estate for compensation or a commission, must be in writing to be valid. (Civ. Code § 1624.)
Accordingly, the demurrer as to the 1st cause of action is sustained without leave to amend.
4th Cause of Action (Breach of the Duty to be Honest and Truthful)
Keller Williams Defendants demur to Plaintiffs’ 4th causes of action on the ground the actions are uncertain because they are duplicative of the 2nd asserted cause of action (breach of fiduciary duty).
Plaintiffs’ 4th cause of action cites Civ. Code § 3517’s prohibition on “tak[ing] advantage of his own wrong” and Ward v. Taggart, for the proposition that as a real estate broker, Keller Williams Defendants had the duty to be honest and truthful in their dealings. (FAC, ¶ 83; Ward v. Taggart (1959) 51 Cal.2d 736, 741.)
The 4th cause of action is based on the following allegations: (1) as Plaintiffs’ agent(s) and/or broker(s) Keller Williams Defendants “breached their duty to be honest and truthful to Plaintiffs” by [making] misrepresentations to better the interests of their other client, 3623 Cahuenga, to Plaintiffs’ detriment and “to further their own pecuniary interest by increasing their own commission”; (2) Keller Williams Defendants owed Plaintiffs a fiduciary duty, requiring them to represent accurately the submitted offer, (3) Keller Williams Defendants knew that the Fong Defendants’ offer was for $3.1 million, and concealed facts, by which Plaintiffs would not have submitted a $3.3 million offer, and (4) Keller Williams Defendants’ misrepresentation proximately caused Plaintiffs injury, allowing for punitive damages. (FAC, ¶¶ 81-90.)
Specifically, Keller Williams Defendants argue that the 4th cause of action is duplicative of the 2nd cause of action for breach of fiduciary duty because Plaintiffs’ allegations that Keller Williams Defendants claim arises out of their duty owed as fiduciaries. (Demurrer, p. 7; citing FAC ¶¶ 19, 67-72, and 82.)
Here, the allegations of the 4th cause of action are duplicate of the FAC’s breach of fiduciary duty cause of action and seek the same damages for Plaintiffs’ costs incurred in relying on the representations of Keller Williams Defendants, as fiduciaries. (See FAC ¶¶ 19, 67-72, 82, and 85-88.) No additional harm or damages are alleged in connection with Plaintiffs’ breach of the duty to be honest and truthful. Accordingly, in the FAC, Plaintiffs do not allege the existence of a duty that arises independent of any contractual duty or any independent injury to Plaintiffs.
Accordingly, the demurrer to the 4th cause of action is sustained without leave to amend.
7th Cause of Action (Civil Conspiracy)
Keller Williams Defendants do not dispute the facts alleged, and instead, contend that conspiracy is not a separate tort or cause of action recognized by California law. (Demurrer, p. 7; HG Wireless, Inc. v. Yi (2018) 22 Cal.App.5th 630, 652; Applied Equip. Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511, 513.)
“Civil conspiracy is not an independent tort. Instead, it is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration.” (City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 211-212, quotation marks omitted.)
To the extent Plaintiffs seek to hold Keller Williams Defendants liable on a theory of civil conspiracy, Plaintiffs must plead factual allegations establishing the elements of conspiracy. “The elements of a civil conspiracy are (1) the formation of a group of two or more persons who agreed to a common plan or design to commit a tortious act; (2) a wrongful act committed pursuant to the agreement; and (3) resulting damages.” (id. at p. 212.)
Plaintiffs seek to hold Keller Williams Defendants’ agents and brokers jointly liable for agreeing to misrepresent and inflate the sole offer price tendered by Fong Defendants to 3632 for the Subject Property from $3.1 million to $3.3 million, directly and proximately causing a loss of funds in “pursuing a doomed transaction” and entitling them to punitive damages. (FAC, ¶¶ 119-125.)
Accordingly, the 7th cause of action is overruled.
MOTION TO STRIKE
In light of the Court’s ruling on the demurrer, Keller Williams Defendants’ motion to strike is moot.
CONCLUSION
The demurrer is sustained without leave to amend in part and overruled in part.
As to the entire FAC, based on the issue of standing, the demurrer to strike the entire FAC is overruled. As to the 1st cause of action, the demurrer is sustained without leave to amend. As to the 4th cause of action, the demurrer is sustained without leave to amend. As to the 7th cause of action, the demurrer is overruled.
The motion to strike is denied as moot.
CAhuenga professional building, et
al. v. emil akopian, et al.
demurrer to first amended complaint
Date of Hearing: 1/22/2025 Trial
Date: 11/4/2025
Department: 45 Case No.: 23STCV00314
Moving Party: Defendant
Studio City Caregivers, Inc.
Responding Party: None
BACKGROUND
On
January 6, 2023, Plaintiffs Cahuenga Professional Building, LLC and Narek
Kazarian (“Kazarian”) (together, “Plaintiffs”) initiated this action against Defendant
3623 Cahuenga LLC (“3623 Cahuenga”); Defendants Emil Akopian (“Akopian”), David
Issaians (“Issaians”), Emil Akopian and David Raphael Issaians dba Alliance
Partners (“Alliance Partners”), First Core Group Inc. dba Keller William Real
Estate Services (“FCG”) (together, the “Keller Williams Defendants”); Ming Sze
Fong (“Fong”), Studio City Caregivers, Inc. (“SCC”), and Ming Sze Fong dba
Studio City Caregivers Cooperative, Inc. (“SCCC”) (together, the “Fong Defendants”);
and DOES 1 through 20, inclusive (collectively, “Defendants”). The Complaint
alleges causes of action for: (1) breach of contract, (2) breach of fiduciary
duty, (3) aiding and abetting breaches of fiduciary duty, (4) breach of the
duty to be honest and truthful, (5) negligence, (6) professional negligence,
(7) fraud and deceit, (8) civil conspiracy, (9) equitable indemnity, (10)
unfair and deceptive business practices in violation of Bus. & Prof. Code
§§ 17200 et seq, (11) rescission of the purchase agreement, (12) intentional
interference with contractual relations, (13) negligent interference with
contractual relations, (14) intentional interference with economic advantage
with contractual relations, and (15) negligent interference with economic
advantage with contractual relations.
On
March 24, 2023 and April 17, 2023, SCC and SCCC filed Demurrers to the
Complaint.
On
February 7, 2024, Plaintiffs filed the operative First Amended Complaint
(“FAC”) against the same Defendants, removing the previously alleged 6th
cause of action for professional negligence. On February 27, 2024, the Court
denied the demurrers to the Complaint as moot.
On
March 6, 2024, SCC filed the instant demurrer to Plaintiffs’ FAC. The hearing has
been continued from February 27, 2024, to January 22, 2025. As of January 16,
2025, no opposition has been filed.
[Tentative] Ruling
The
demurrer is overruled in part and sustained with leave to amend in part.
As
to the 11th cause of action, the demurrer is overruled. As to the 12th cause of
action, the demurrer is sustained without leave to amend. As to the 13th
and 14th causes of action, the demurrer is sustained with leave to
amend.
LEGAL
STANDARD
“[A] demurrer tests the legal
sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc.
(2015) 235 Cal.App.4th 385, 388.) 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. (See Donabedian v.
Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer,
a court may not consider declarations, matters not subject to judicial notice,
or documents not accepted for the truth of their contents].) For purposes of
ruling on a demurrer, all facts pleaded in a complaint are assumed to be true (Aubry
v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967), but the Court does not
“assume the truth of contentions, deductions, or conclusions of fact or law” (Moore
v. Regents of University of California (1990) 51 Cal.3d 120, 125).
Further, the court may, upon 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. (Code Civ. Proc., § 436, subd. (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. (Code
Civ. Proc., § 436.) The grounds for moving to strike must appear on the face of
the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)
Leave to amend must be allowed where
there is a reasonable possibility of successful amendment. (See Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer
without leave to amend if there is any reasonable possibility that the defect
can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment
Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be
sustained without leave to amend if the complaint, liberally construed, can
state a cause of action under any theory or if there is a reasonable
possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman
(1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a
complaint is capable of cure, the court should allow leave to amend.”].) The
burden is on the complainant to show the Court that a pleading can be amended
successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
ANALYSIS
Studio City Caregivers Inc. (“SCC”) demurs to the 11th (intentional
interference with contractual relations), 12th (negligent
interference with contractual relations), 13th (intentional
interference with prospective economic advantage and contractual relations),
and 14th (intentional interference with prospective economic
advantage and contractual relations) causes of action in the FAC of Cahuenga
Professional Building, LLC and Kazarian (“Plaintiffs”), the only causes of action
asserted against Fong, SCC, and SCCC (collectively, the “Fong Defendants”). The
Court notes that SCC is omitted from the heading of the 11th, 12th,
13th and 14th causes of action, and that Plaintiffs name
the Fong Defendants in each allegation of such causes of action. (FAC, ¶¶ 114-192.) SCC argues that (1) Plaintiffs
failed to allege sufficient facts to constitute a cause of action against SCC
because the FAC lacks any allegation that SCC committed an independently
wrongful act against Plaintiffs, and (2) Plaintiffs 11-14th causes
of action against SCC are uncertain because they are legally conclusory, duplicative,
and unclear in scope. (Notice of Demurrer, pp. 1-2.)
Any
papers opposing the demurrer were due on or before January 7, 2025. (Civ. Code
Proc. § 1005(b).) On January 9, 2025, SCC filed a notice of Plaintiffs’ non-opposition
to the demurrer. As of January 16, 2025, Plaintiffs have not filed an
opposition.
Procedural
Violations
Timeliness of Demurrer & Failure to Meet and Confer
Code Civ. Proc. §430.41(a) provides as
follows, “Before 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(a)(2) provides
as follows, “The parties shall meet and confer at least five days before
the date the responsive pleading is due. If the parties are not able to meet
and confer at least five days prior to the date the responsive pleading is due,
the demurring party shall be granted an automatic 30-day extension of time
within which to file a responsive pleading, by filing and serving, on or
before the date on which a demurrer would be due, a declaration stating under
penalty of perjury that a good faith attempt to meet and confer was made
and explaining the reasons why the parties could not meet and confer. The
30-day extension shall commence from the date the responsive pleading was
previously due, and the demurring party shall not be subject to default during
the period of the extension. Any further extensions shall be obtained by court
order upon a showing of good cause.” (Emphasis added.)
Code Civ. Proc. §430.41(a)(4) provides
that, “A determination by the court that the meet and confer process was
insufficient shall not be grounds to overrule or sustain a demurrer.” In
addition, an untimely demurrer may be considered by the Court in its discretion.
(Jackson v. Doe (2011) 192 Cal.App.4th 742, 750.)
Plaintiffs
initiated the instant action on January 6, 2023. Counsel for SCC declares that a
copy of the Summons and Complaint were received on February 8, 2023. (Declaration
of Giandominic Vitiello (“Vitiello Decl.”), ¶ 3.) Accordingly, SCC’s responsive
pleadings were due on March 8, 2024. (Code Civ. Proc. § 430.40(a).) On February
10, 2023, the parties met by teleconference to discuss the merits of the Complaint,
and Plaintiffs’ counsel asserted that “further meet and confer” would be held.
(Vitiello Decl., ¶ 5.) Despite numerous calls and emails to confer further, SCC
received no responses from Plaintiffs’ counsel and filed a declaration regarding
its hindered meet and confer efforts, entitling SCC to a 30-day extension under
Code Civ. Proc. section 430.41(a)(2). On March 24, 2023, SCC filed a demurrer
to the Complaint, which the Court denied as moot on February 27, 2024, because
Plaintiffs filed the operative FAC alleging the same causes of action, except
for professional negligence. Prior to filing the instant demurrer to the FAC,
counsel for SCC declares to have written to Plaintiff’s counsel an invitation
to meet and confer “on _” and received no response. (Vitiello Decl., ¶¶ 12-13.)
The Court notes that Defendant SCC’s
meet-and-confer efforts were insufficient as to demurring to the FAC. Defense
counsel simply sent Plaintiffs’ counsel a letter, thereby frustrating the
purpose of the meet-and-confer requirement, which is to determine whether the
parties can reach an agreement as to the issues raised in the demurrer and
motion to strike. Nonetheless, in the interest of judicial efficiency, the
Court exercises its discretion to consider the merits of Defendant’s demurrer
and motion to strike, but it notes that subsequent failures to comply with
statutory obligations may result in a continuance of the hearing on the subject
motion.
Background
The
instant action is based on Kazarian and his investors’ attempt to purchase a
multi-unit commercial property from 3623 Cahuenga, located at 3623, 3625, 3629,
3631, Cahuenga Blvd., Los Angeles, CA 90064, APN 2425-005-10, 2425-005-009,
2425-005-008, and 2425-005-007 (the “Subject Property”). (FAC, ¶¶ 6, 13.) The
Subject Property was owned by 3623 Cahuenga, and occupied by the Fong
Defendants (Fong, SCC, and SCCC), as tenants. (FAC, ¶¶ 13-14.)
Sale of 3623 Cahuenga
During the
sale, Kazarian as buyer, and 3623 Cahuenga, as seller, were dually represented
by the same agents (Akopian and Issaians) and the same brokers (FCG and
Alliance Partners, (together with Akopian and Issaians, the “Keller Williams
Defendants”) (FAC, ¶ 16.) Plaintiffs allege that when Keller Williams
Defendants undertook the dual representation, Keller Williams Defendants knew
that 3623 Cahuenga received a $3,100,00.00 offer from its tenants, the Fong
Defendants. (FAC, ¶ 17.) According to Plaintiffs, the Keller Williams Defendants
conspired to falsely inflate the offer price by $200,00.00 to enrich 3623
Cahuenga. (FAC, ¶ 31.) Plaintiffs allege that Akopian misrepresented to
Kazarian that “he would need to submit an offer that at least matched the
pending offer” of $3,300,000.00. (FAC, ¶ 32.) In June 2022, Kazarian, as
represented by Akopian tendered the offer, which was accepted by 3623 Cahuenga
by way of its trustee representative, Janet P. Huston, a trustee of the Janet
P. Huston GST Trust (“Huston”). (FAC, ¶ 34.)
Plaintiffs
allege that on or about June 22, 2022, Kazarian and Huston, on behalf of 3623
Cahuenga, entered into the “Standard Offer, Agreement and Escrow
Instructions for Purchase of Real Estate” (the “Purchase Agreement”). (FAC, ¶
37; Exhibit A.) Plaintiffs also allege that on Jule 11, 2022 Plaintiffs and
3623 Cahuenga entered escrow, and despite 3623 Cahuenga’s failure to produce
documents under the Purchase Agreement, Kazarian deposited $99,000 into escrow.
(FAC, ¶¶ 41-42.) Plaintiff alleges that in August 2022, Fong advised Kazarian
of the $3,100,00.00 previously tendered offer to 3623 Cahuenga. (FAC, ¶ 54.) following
numerous delays experienced between Fong and Kazarian, n or about August 25,
2022, Kazarian’s investor withdrew his purchase of the Subject Property. (FAC,
¶ 56.) Plaintiff further alleges that in September 2022, 3635 Cahuenga sold the
property to Fong and SCCC. (FAC, ¶ 57.)
Fong Defendants’ Tenancy
On
information and belief, Plaintiffs allege that Fong and SCCC entered three commercial
lease agreements with 3623 Cahuenga. The first lease, dated on or about April
1, 2015, for retail buildings located at 3621-2631 Cahuenga Blvd., West, Los
Angeles, CA 90068” (“Lease”), was entered between Fong and SCCC and John Park,
as trustee of the Park Legacy Trust, and contained a 5-year initial term, with
a 3-year option to extend until March 31, 2022. (FAC, ¶ 38.) The second lease,
dated on or about December 29, 2016, for the premises located at 3626 Fredonia
Drive, Los Angeles, CA 90068 (“3626 Fredonia Lease”), was entered between Fong
and SCCC and John Park, as trustee of the Park Legacy Trust, and contained a
39-month initial term, and 3-year option to end the lease on March 31, 2023.
(FAC, ¶ 39.) The third lease, dated on or about June 22, 2017, for the premises
located at 3628 Fredonia Drive, Los Angeles, CA 90068 (“3628 Fredonia Lease”),
and contained a 33-month initial term, and 3-year option to end the lease on
March 31, 2023. (FAC, ¶ 39.)
Plaintiffs
allege that in the course of due diligence, on or around July 12, 2022, they
discovered that Fong and SCCC had delinquent rent payments of $49,200.00 in at
3621-2631 Cahuenga Blvd., and an overdue amount of $42,300.00, per a lease
ledger received from 3623 Cahuenga. (FAC, ¶¶ 41-43.) When Kazarian contacted
Fong to inquire about the overdue amounts, Fong stated that the rent was not
paid due to noticed and un-repaired roofing issues. (FAC, ¶ 45.) Kazarian then
communicated his intent to proceed with the transaction as long as the rent
payments were current and the roof dispute was resolved, extending the due
diligence period to August 15, 2022, for Kazarian to negotiate a new lease with
Fong Defendants. (FAC, ¶¶ 50-53.)
Intentional
Interference with Contractual Relations (11th Cause of Action) and Negligent Interference
with Contractual Relations (12th Cause of Action)
SCC demurs
to the 11th cause of action on the grounds that it fails to state
sufficient facts to constitute a cause of action. (Notice of Demurrer, p. 3;
Code Civ. Proc. § 430.10(e).)
“To prevail on a cause of action for
intentional interference with contractual relations, a plaintiff must plead and
prove (1) the existence of a valid contract between the plaintiff and a third
party; (2) the defendant’s knowledge of that contract; (3) the defendant’s
intentional acts designed to induce a breach or disruption of the contractual
relationship; (4) actual breach or disruption of the contractual relationship;
and (5) resulting damage. To establish the claim, the plaintiff need not prove
that a defendant acted with the primary purpose of disrupting the contract but
must show the defendant’s knowledge that the interference was certain or
substantially certain to occur as a result of his or her action.” (Reeves v.
Hanlon (2004) 33 Cal.4th 1140, 1148 (Citations omitted).)
Plaintiffs’ 11th cause of
action is based on allegations that they entered into the Purchase Agreement with
3623 Cahuenga, of which, Fong Defendants were fully aware because Plaintiffs
spoke with Fong Defendants to negotiate a new lease, and Fong Defendants engaged
in conduct intended to interfere with Plaintiffs’ ability to purchase the
Subject Property by delaying negotiations and withholding material documents.
(FAC, ¶¶148-155.) Plaintiffs allege Fong Defendants intended to disrupt and did
disrupt Plaintiffs’ purchase of the Subject Property, which did not proceed,
causing Plaintiffs to suffer damages according to proof at trial. (FAC, ¶¶
155-162.)
SCC demurs to Plaintiffs’ 12th
cause of action on two grounds; that Plaintiffs fail to state sufficient facts
to constitute a cause of action, and that the 12th cause of action
is uncertain due to ambiguity and unintelligibility. (Notice of Demurrer, p. 3;
Code Civ. Proc. § 430.10 (e), (f).)
Plaintiffs’ 12th cause of
action is based on allegations that they entered into the Purchase Agreement
with 3623 Cahuenga, of which, Fong Defendants knew or should have known of the
contract due to their conversations with Plaintiffs to negotiate a new lease,
and Fong Defendants failed to act with reasonable care, disrupting the
relationship between Plaintiffs and 3623 Cahuenga. (FAC, ¶¶ 167-174.)
Plaintiffs also allege that through Fong Defendant’s wrongful conduct,
Plaintiffs suffered damages. (FAC, ¶¶ 174-176.)
In California there is no cause of
action for negligent interference with contractual relations. While there
exists a cause of action for negligent interference with prospective
economic advantage (J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799), the
California Supreme Court in Fifield Manor v. Finston (1960) 54 Cal.2d
632, has rejected a cause of action for negligent interference with contract.
As to both the 11th and 12th
causes of action, SCC argues that Plaintiffs have failed to that SCC’s alleged
tortious conduct was “independently wrongful” because they have failed to “cite
any ‘constitutional, statutory, regulatory, common law, or other determinable
legal standard” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29
Cal. 4th 1134, 1159).)
The Court notes that the element independently
wrongful is not necessary to proving the 11th and 12th
COAs. A plaintiff does not need to establish an independently
wrongful act to establish a cause of action for intentional interference with
contractual relations. This requirement applies specifically to claims of
intentional interference with prospective economic advantage, not to claims
involving existing contracts. The Supreme Court of California in Korea
Supply Co. v. Lockheed Martin Corp., clarified that intentionally
interfering with an existing contract is "a wrong in and of itself" (Korea
Supply Co. v. Lockheed Martin Corp., at p. 1134.) This principle was
reaffirmed in Ixchel Pharma, LLC v. Biogen, Inc. where the court
distinguished between interference with existing contracts and prospective
economic advantage, emphasizing that the former does not require an
independently wrongful act (Ixchel Pharma, LLC v. Biogen, Inc., (2020) 9
Cal.5th 1130.)
Accordingly, the demurrer to the 11th
cause of action is overruled, and the 12th cause of action is
sustained without leave to amend.
Intentional
Interference with Economic Prospective Advantage and Contractual Relations (13th
Cause of Action) and Negligent Interference with Prospective Economic Advantage
and Contractual Relations (14th Cause of Action)
SCC demurs to Plaintiffs’ 13th
and 14th causes of action on the ground the actions are uncertain
because they are duplicative and unclear in scope. (Demurrer, p. 10; Code Civ.
Proc. §430.10(f); Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.
App. 5th 279, 292.)
“The tort of
intentional or negligent interference with prospective economic advantage
imposes liability for improper methods of disrupting or diverting the business
relationship of another which fall outside the boundaries of fair competition.”
(Settimo Associates v. Environ Systems, Inc. (1993) 14 Cal.App.4th 842,
845.)
“The elements of the tort of
interference with prospective economic advantage are ‘(1) a relationship
between the plaintiff and some third party with the probability of future
economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship;
(3) a wrongful act, apart from the interference itself, by the defendant
designed to disrupt the relationship; (4) actual disruption of the
relationship; and (5) economic harm to the plaintiff proximately caused by the
acts of the defendant.’” (Salma v. Capon (2008) 161 Cal.App.4th 1275,
1290 (Citations Omitted).)
The 13th
cause of action is based on the following allegations: (1) Plaintiffs had an
economic relationship with 3623 Cahuenga and a probability of some future
economic benefit from that relationship; (2) Fong Defendants had knowledge of
this relationship; (3) Fong Defendants engaged in intentional acts designed to
disrupt the relationship to cause the Subject Property to fall out of escrow in
hopes of reviving Fong Defendants’ offer to purchase the Subject Property,
including but not limited to stalling material document production as well as
other intentional acts; (4) Fong Defendants did disrupt Plaintiff’s business
relationship and Plaintiffs have been harmed as a result. (FAC, ¶¶ 177-183.)
As to the 13th
cause of action, SCC asserts that Plaintiffs insufficiently allege a cause of
action because the alleged relationship disrupted is the Purchase Agreement; duplicative
of the complaints alleged in Plaintiffs’ 11th cause of action. (Demurrer,
pp. 10-11.)
As discussed
above, Plaintiffs have sufficiently alleged the existence of an economic
relationship with 3623 Cahuenga based on the Purchase Agreement, which created
a likelihood of economic benefit by which Plaintiffs could collect rent from
commercial tenants, including Fong Defendants, who were aware of the economic
relationship. (FAC, ¶¶ 178-179.) The Court acknowledges that as articulated,
Plaintiff’s 13th cause of action for intentional interference of
prospective economic advantage and
contractual relations is
duplicative because the 11th cause of action asserts interference
for contractual relations.
Accordingly,
the 13th cause of action is sustained with leave to
amend.
“The tort of negligent interference with
prospective economic advantage is established where a plaintiff demonstrates
that (1) an economic relationship existed between the plaintiff and a third
party which contained a reasonably probable future economic benefit or
advantage to plaintiff; (2) the defendant knew of the existence of the
relationship and was aware or should have been aware that if it did not act
with due care its actions would interfere with this relationship and cause
plaintiff to lose in whole or in part the probable future economic benefit or
advantage of the relationship; (3) the defendant was negligent; and (4) such
negligence caused damage to plaintiff in that the relationship was actually
interfered with or disrupted and plaintiff lost in whole or in part the
economic benefits or advantage reasonably expected from the relationship.” (North American Chemical Co. v. Superior
Court (1997) 59 Cal.App.4th 764, 786.)
In the 14th
cause of action, Plaintiffs allege: (1) Plaintiffs had an economic relationship
with 3623 Cahuenga and a probability of some future economic benefit from that
relationship; (2) Fong Defendants knew or should have known of this contractual
relationship; (3) Fong
Defendants failed to act with reasonable care and engaged in conduct to slow
down or stall the escrow process; (4) Fong Defendants did disrupt
Plaintiffs’ contractual relationship with 3623 Cahuenga and Plaintiffs have
been harmed as a result. (FAC, ¶¶ 185-193.)
SCC argues
that the 14th cause of action is duplicative as its allegations are
based on the same negligent conduct and resulting harm alleged in the 12th
cause of action. (Demurrer, p. 11.)
As to the final cause of action asserted against
Fong Defendants, Plaintiffs existence of an economic relationship, the Court
acknowledges that as articulated, Plaintiff’s 14th cause of action
for negligent interference of prospective economic advantage and contractual
relations is duplicative because the 12th cause of action asserts
interference for contractual relations. Given that Plaintiff’s 12th
cause of action for negligent interference with contractual relationships is
not cognizable, the 14th cause of action for negligent interference
with prospective economic advantage is sustained with leave to amend.
Accordingly,
the 14th cause of action is sustained with leave to
amend.
CONCLUSION
The
demurrer is overruled in part and sustained in part.
As
to the 11th cause of action, the demurrer is overruled. As to the 12th cause of
action, the demurrer is sustained without leave to amend. As to the 13th
and 14th causes of action, the demurrer is sustained with leave to
amend.