Judge: Virginia Keeny, Case: 23STCV25504, Date: 2025-01-15 Tentative Ruling
Case Number: 23STCV25504 Hearing Date: January 15, 2025 Dept: 45
stay awhile villas, llc v. silver
star ag ltd, et al.
demurrer to first amended complaint with motion to
strike
Date of Hearing: 1/15/2025 Trial
Date: None set
Department: 45 Case
No.: 23STCV25504
Moving Party: Defendants
Sprinter Van Technologies and Gleb Pavlov
Responding Party: Plaintiff Stay Awhile Villas, LLC
BACKGROUND
This action arises out of a contractual
agreement for the purchase and customization of a Mercedes-Benz Sprinter Van
(the “Vehicle”). On January 2, 2024, Plaintiff Stay Awhile Villas, LLC
(“Plaintiff”) filed the operative First Amended Complaint (“FAC”) against
Defendants Silver Star AG Ltd. (“Silver Star”), Sprinter Van Technologies, Inc.
(“SVT”), Gleb Pavlov (“Pavlov”), Youriy Iliev (“Iliev”) (collectively,
“Defendants”), and DOES 1 through 20, inclusive for: (1) Breach of Contract
(Silver Star); (2) Breach of Contract (SVT, Pavlov, DOEs 1-10); (3) Breach of
Covenant of Good Faith and Fair Dealing; (4) Conversion; and (5) Fraud –
Intentional Misrepresentation.
The FAC alleges that on May 14, 2022,
Plaintiff purchased the Vehicle from Defendant Silver Star through its manager
and agent Defendant Iliev. (FAC ¶18.) Defendant Iliev induced Plaintiff to
engage in customization of the Vehicle and to have the work performed by
Defendant SVT. (Id. at ¶21.) Defendant SVT did not return the “finished”
Vehicle until January 2023 despite a promise of completion by August 1, 2022. (Id.
at ¶26.) Once Plaintiff took possession of the Vehicle it discovered multiple
serious defects and safety issues plaguing the Vehicle. (Id. at ¶28.)
Defendants SVT and Pavlov (“Moving
Defendants”) now demur to the second through fifth causes of action of the FAC
and moves to strike the request for punitive damages. On January 5, 2025,
Plaintiff filed an Opposition to the demurrer and motion to strike, to which
Moving Defendants replied on January 8, 2025.
[Tentative] Ruling
1. Defendants
Sprinter Van Technologies, Inc. and Gleb Pavlov’s Demurrer to the First Amended
Complaint is OVERRULED in its entirety.
2. Defendants
Sprinter Van Technologies, Inc. and Gleb Pavlov’s Motion to Strike is GRANTED
in part with 20 days leave to amend as to Attorney’s Fees Claim and DENIED in
part as to the Punitive Damages Claim.
REQUEST
FOR JUDICIAL NOTICE
Plaintiff
requests judicial notice of (1) Defendant SVT’s “Certificate of Election to
Wind Up and Dissolve – CA Corporation,” filed on 3/13/23 with the California
Secretary of State (File No. BA20230426709) (and signed by Defendant Pavlov
with the following statement: “The undersigned is/are the: Sole director or a
majority of the directors no in office of the above-named corporation.”) attached as Ex. 1; and (2) Defendant SVT’s
“Certificate of Dissolution – California Corporation Termination,” filed on 8/4/23
with the California Secretary of State (File No. BA20231228759) attached as Ex.
2.
The request
for judicial notice is GRANTED pursuant to Evidence Code Section 452,
subdivision (h).
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).)¿
MEET AND CONFER
Prior to filing a demurrer or a motion
to strike, the demurring or moving party is required to meet and confer in
person, by telephone, or by videoconference with the party who filed the
pleading demurred to or the pleading that is subject to the motion to strike
for the purposes of determining whether an agreement can be reached through a
filing of an amended pleading that would resolve the objections to be raised in
the demurrer. (Code Civ. Proc., §§ 430.41 and 435.5.)¿¿¿¿
Counsel for Moving Defendants submits a
meet and confer declaration, which is insufficient. (Hom Decl., ¶¶3-4.) There
is no indication the parties met and conferred by telephone, in-person, or
videoconference. Nevertheless, insufficiency of the meet and confer process is
not grounds for overruling a demurrer or denying a motion to strike. (Code Civ.
Proc., §§ 430.41, subd. (a)(4) and 435.5, subd. (a)(4).) The Court will proceed
on the merits below.
ANALYSIS
Demurrer
Defendants SVT and Pavlov (“Moving
Defendants”) demur to the second, third, fourth, and fifth causes of action of
the FAC on the grounds that it fails to state sufficient facts to support a
cause of action against the Moving Defendants.
Second 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.)
Here, the FAC alleges that Defendant
SVT was a party to the alleged contract between Defendant Silver Star and
Plaintiff by way of Plaintiff paying Defendant SVT through Defendant Silver Star $111,471.00 for
customization work to be performed on the Vehicle by Defendant SVT. (FAC ¶58.)
The FAC also alleges that alternatively, Plaintiff was a third-party
beneficiary to the alleged contract between Defendants Silver Star and SVT,
wherein Defendant Silver Star presented to Plaintiff only Defendant SVT could perform
the customization work on the Vehicle to ensure that the warranty on the
Vehicle remained valid. (Id. at ¶59.) The FAC further alleges Defendant
Pavlov is a party to any alleged contracts between Plaintiff and Defendant SVT
because they are alter egos of each other. (Id. at ¶60.) Taking these
allegations and documents judicially noticed as true, a reasonable jury could
infer that a contractual relationship with Moving Defendants. The FAC also
alleges that Defendants SVT and Pavlov breached the alleged by failing and
refusing to provide a safe and operable Vehicle without defects, and failing to
address any of those deficiencies. The FAC alleges that Plaintiff performed
according to the alleged contracts and suffered damages in at least $250,000.00
due to Moving Defendants breaches. Such allegations support an inference that
Moving Defendants breach the contractual relationship with Plaintiff and caused
Plaintiff to suffer monetary damages as a result of the alleged breach.
Thus, the FAC states sufficient facts
to support the breach of contract claim against Moving Defendants.
Third Cause of Action for Breach of
Covenant of Good Faith and Fair Dealing
“A breach of the implied covenant of
good faith and fair dealing involves something beyond breach of the contractual
duty itself and it has been held that [b]ad faith implies unfair dealing rather
than mistaken judgment....” (Careau & Co. v. Security Pacific Business
Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394 (internal citations
omitted).) “If the allegations do not go beyond the statement of a mere
contract breach and, relying on the same alleged acts, simply seek the same
damages or other relief already claimed in a companion contract cause of
action, they may be disregarded as superfluous as no additional claim is
actually stated. Thus, absent those limited cases where a breach of a
consensual contract term is not claimed or alleged, the only justification for
asserting a separate cause of action for breach of the implied covenant is to
obtain a tort recovery.” (Id.)
Here, the FAC alleges that Defendants
materially breached the implied covenant of good faith and fair dealing by
failing and refusing to provide a safe and operable Vehicle without defects, to
honor the warranty of the Vehicle, to repurchase the Vehicle as promised. (FAC
¶66.) Such allegations if taken as true support an inference that Moving
Defendants acted unfairly by refusing to repurchase the purportedly
defected Vehicle as promised and
refusing to honor the warranty on the Vehicle. This goes beyond the alleged
breach of contract on the basis that Moving Defendants failed to provide a
vehicle without any defects.
Thus, the FAC states sufficient facts
to support the breach of the implied covenant of good faith and fair dealing
claim against Moving Defendants.
Fourth Cause of Action for Conversion
To state a claim for conversion,
plaintiff must show: “(1) the plaintiff's ownership or right to possession of
personal property; (2) the defendant's disposition of the property in a manner
that is inconsistent with the plaintiff's property rights; and (3) resulting
damages.” (Regent Alliance Ltd. v. Rabizadeh (2014) 231 Cal.App.4th
1177, 1181.)
Here, the FAC alleges that Plaintiff is
the rightful owner and has right to possession of all funds maintained din its
bank accounts. (FAC ¶69.) The FAC also alleges that Defendants have
intentionally and substantially interfered with Plaintiff’s ownership and possessory
rights to those funds by requesting and receiving from Plaintiff $111,471.00 of
those funds in exchange for purchasing materials and performing labor related
to the customization of the Vehicle. (Id. at ¶70.) Reviewing the FAC as
a whole and taking the allegations as true, a reasonable jury could infer that
Plaintiff has a possessory right to the funds that exist in its banking
accounts. Moreover, the FAC alleges that these funds are presently in the
possession of some or all the Defendants including the Moving Defendants. (Id.)
The further alleges that Moving Defendants have refused to return the funds to
Plaintiff despite promising to do so. (Id. at ¶71.) Additionally, the
FAC alleges that Plaintiff did not consent to the taking of the funds without
receipt of the completed, safe and operational Vehicle and has suffered by
being deprived of such funds. (Id. at ¶¶72-73.) Such allegations support
the inference that Moving Defendants are disposing of Plaintiff’s personal
property in a manner inconsistent with Plaintiff’s property rights, which has
resulted in damages.
Thus, the FAC states sufficient facts
to support a conversion claim against Moving Defendants.
Fifth Cause of Action for Fraud –
Intentional Misrepresentation
“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.) The elements of intentional misrepresentation are the same as for
general fraud. (See Aton Center, Inc. v. United Healthcare Ins. Co.
(2023) 93 Cal.App.5th 1214, 1245.)
Here, the FAC alleges that Defendant
Pavlov, individually and on behalf of Defendant SVT represented to Plaintiff
that the customization of the Vehicle would be completed by August 2022. (FAC
¶77.) The Vehicle was delivered to Plaintiff in January 2023 with several
material defects. (Id.) The FAC further alleges that Defendant Pavlov,
individually and on behalf of Defendant SVT represented that Defendant SVT
would repurchase the Vehicle for the full amount expended by Plaintiff. (Id.)
The FAC also alleges that these representations were false, Defendants knew
they were false when they were made, and were made with the intent to induce
Plaintiff’s reliance of purchasing the Vehicle with the customization work, and
to continue to make loan payments on the Vehicle. These allegations raise an
inference that Moving Defendants misrepresented to Plaintiff when the
customization of the Vehicle would be completed and promising to repurchase the
Vehicle, knew these representations to be false, and intended to induce Plaintiff’s
reliance in purchasing the Vehicle with the customization work. These facts are
specific as to who made the representation and what was said. Furthermore,
through allegations of alter ego and the judicially noticed documents, the FAC
sufficiently alleges fraud against Defendant Pavlov as the then operating
director of Defendant SVT. (FAC ¶¶7-10.)
Thus, the FAC states sufficient facts
to support the fraud claim against Moving Defendants.
Motion to Strike
Moving
Defendants also move to strike Plaintiff’s request for punitive damages on the
grounds that the FAC does not plead sufficient, specific facts to support a
claim for punitive damages.
“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).)
Specifically,
Moving Defendants seek to strike the allegations set forth in Paragraphs 8 and
84 of the FAC and Prayer for Relief as to Paragraphs 3 and 4.
As discussed
above, the FAC alleges sufficient facts to support the fraud -intentional
misrepresentation claim against the Moving Defendants. Thus, Plaintiff has
plead sufficient facts to support its request for punitive damages. As to the
claim for attorney’s fees and costs, the FAC is vague as to facts supporting
recovery of attorney’s fees. To the extent Plaintiff argues the alleged
contract allows for attorney’s fees the FAC does not allege such fact.
Thus, the FAC
does not allege sufficient facts to support the claim for attorney’s fees.
CONCLUSION
Based on the
foregoing, Defendants Sprinter Van Technologies, Inc. and Gleb Pavlov’s
Demurrer to the First Amended Complaint is OVERRULED in its entirety.
Defendants Sprinter Van Technologies,
Inc. and Gleb Pavlov’s Motion to Strike is GRANTED in part with 20 days
leave to amend as to Attorney’s Fees Claim and DENIED in part as to the
Punitive Damages Claim.