Case Number: BC632331 Hearing Date: November 08, 2016 Dept: 20
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JUDGE DALILA C. LYONS
Hearing Date: Tuesday, November 08, 2016
Posted on CourtNet: November 4, 2016
Case Name: Taglyan, et al. v. Tekeyan Cultural Association, Inc., et al.
Case No.: BC632331
Motion: Demurrer to Complaint
Moving Party: Defendant Tekeyan Cultural Association, Inc.
Responding Party: Plaintiffs Petros Taglyan, Karine Taglyan, Martin Martirosian, Angela Martirosian, Hakop Semirdzhyan, and Seda Semirdzhyan
Ruling: Defendant Tekeyan Cultural Association, Inc.’s demurer is OVERRULED as to the First and Second Cause of Action.
Defendant Tekeyan Cultural Association, Inc.’s demurrer is SUSTAINED WITH LEAVE TO AMEND as to the Third Cause of Action. Must file amended complaint 10 days from this ruling.
On August 31, 2016 Plaintiffs Petros Taglyan (“Petros”), Karine Taglyan (“Karine”), Martin Martirosian (“Martin”), Angela Martirosian (“Angela”), Hakop Semirdzhyan (“Hakop”), and Seda Semirdzhyan (“Seda”) (collectively “Plaintiffs”) filed the Complaint against Defendants Tekeyan Cultural Association, Inc. (“TCA”), Artin Arzoumanian (“Arzoumanian”), Edmond Azadian (“Azadian”), George Mandossian (“Mandossian”), Nubar Berberian (“Berberian”), Maro Bedrosian (“Bedrosian”), Vatche Semerdjian (“Semerdjian”), Roupen Terzian (“Terzian”), Hagop Vartivarian (“Vartivarian”), Papken Megerian (“Megerian”), Arto Manoukian (“Manoukian”), Arshavir Gundjian (“Gundjian”), Panig Keshishian (“Keshishian”), Kevork Kueshkerian (“Kueshkerian”), and Does 1 through 100 for (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, and (3) fraudulent concealment. Plaintiffs allege the individual defendants (collectively the “Directors”) were members of and controlled the Board of Directors of TCA, a non-profit corporation. Plaintiffs allege TCA and the Directors jointly and severally owned and operated a not-for-profit Armenian school in Los Angeles known as Arshag Dickranian Armenian School (“Dickranian”).
Plaintiffs allege they were significant benefactors to Dickranian and were personally and financially involved in maintaining the visibility, viability, and stature of the school. Plaintiffs allege the defendants breached certain contracts and by defendants bad faith and self-dealing actions caused the unforeseen and sudden closure of Dickranian on June 30, 2015 and the sale of the Dickranian property for $14,750,000.00 on September 11, 2015. Plaintiffs allege such actions were taken contrary to the oral and written assurances that Dickranian would remain an outstanding institution for the benefit of the Armenian community.
TCA demurs to the Complaint and each cause of action within on the grounds each cause of action fails to allege facts sufficient to constitute a cause of action and the allegations are unclear. Plaintiffs oppose the demurrer on the grounds that each cause of action is sufficiently stated and it is clear the contracts are oral.
A demurrer for sufficiency tests whether the complaint states a cause of action. Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747. When considering demurrers, courts read the allegations liberally and in context. In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice. Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994; Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2011) ¶7:8. “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed (Code Civ. Proc., §§ 430.30, 430.70). The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.” Hahn 147 Cal.App.4th at 747. A complaint will be upheld against a demurrer if it pleads facts sufficient to place the defendant on notice of the issues sufficient to enable the defendant to prepare a defense. Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 549-50.
Demurrers for uncertainty are strictly construed, because discovery can be used for clarification, and apply where defendants cannot reasonably determine what issues or claims are stated. Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616; Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2011) ¶¶7:85-7:86. “A demurrer for uncertainty will not lie where the ambiguous facts alleged are presumptively within the knowledge of the demurring party.” Bacon v. Wahrhaftig (1950) 97 Cal.App.2d 599, 605. A failure to specify what aspects of a complaint are uncertain generally results in a demurrer being overruled as to such grounds. Fenton v. Groveland Community Services Dist. (1982) 135 Cal.App.3d 797, 809, overruled on other grounds by Katzberg v. Regents of the University of California (2002) 29 Cal.4th 300, 328; CCP §430.60 (demurrer shall distinctly specify grounds or may be disregarded); Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2011) ¶ 7:88-7:88.1; 7A-71 California Points & Authorities (MB 2008) § 71.86.
A. First Cause of Action for Breach of Contract
A cause of action for damages for breach of contract is comprised of the following elements: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1367. “[T]he complaint must indicate on its face whether the contract is written, oral, or implied by conduct.” Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-459. “If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference.” Id. at 459.
Here, while the Complaint does reference the “breach of certain oral and written contracts”, the only allegations pertain to oral contracts and a heading in the Complaint addresses such oral contracts. Compl. ¶¶ 13-14. Plaintiffs allege Petros and Karine (collectively the “Taglyans”) entered into a series of oral agreements during the years of 2003 through 2004 and made conditional monetary donations on the terms that (1) a new campus building would be named after the Taglyans, (2) the defendants would act in good faith to ensure the continued expansion, operation, and success of the school, (3) if the school experienced financial difficulty the defendants would notify the school’s donors, including the Taglyans, to permit them to make additional contributions to ensure Dickranian’s continued existence and viability, (4) the defendants would not take any actions that would jeopardize the continued operation of the school and would not close it before giving the donors, including the Taglyans, the opportunity to purchase the school or make arrangements to obtain loans or financing necessary to continue operating the school, (5) if the defendants exhausted the means outlined then the school could be closed, and (6) but if the defendants did not follow the protocol or unilaterally closed the school they would be required to repay the Taglyans’ money with interest at 10% per annum. Compl. ¶ 15. And Plaintiffs allege Martin and Angela (collectively the “Martirosians”) in June 2004 and June 2006 orally agreed with TCA and the defendants to provide funds on the same terms as the Taglyans, except for receiving naming rights, and Hakop and Seda (collectively the “Semirdzhyans”) orally agreed with TCA and the defendants to provide funds in 1991 except the Semirdzhyans would receive naming rights as to Dickranian’s eleventh grade classroom. Compl. ¶¶ 16-19. Plaintiffs allege the oral agreements were breached as the defendants (1) did not appraise Plaintiffs of the financial difficulty of the school or that it needed funds to continue; (2) the defendants did not approach the Plaintiffs about selling the school or obtaining more funding; and (3) the defendants sold the property upon which the school was situated without notifying Plaintiffs and closed the school and kept the funds for themselves and have since refused to repay Plaintiffs any of the conditional gifts provided. Compl. ¶ 21.
Thus, despite some initial unclear language, the Complaint is clearly based upon oral contracts. And while TCA argues the agreements are nothing more than future agreements to agree, on the face of the Complaint and the allegations within the agreements at the least provided Plaintiffs an option as to what to do when approached if additional funds were needed. Los Angeles Soda Works v. Southern California Aquazone Co. (1930) 103 Cal.App. 105 (a promise may be sufficiently definite when it contains an option given to the promisor or promisee). And from the face of the Complaint it appears the donations were conditional gifts. L.B. Research and Education Foundation v. The UCLA Foundation (2005) 130 Cal.App.4th 171 (property given “upon condition” to be applied for charitable purposes is especially likely to be construed as having been given in a charitable trust and the questions are whether (1) the donor intended to provide that if the property were not used for the charitable purposes it would revert to the donor or the donor or a contingent designee; or (2) the donor intended to impose an enforceable obligation on the donees to devote it to those purposes. Courts favor the construction of a gift as a trust over a conditional gift because forfeiture is a harsh remedy, the transferor’s objective is to confer a benefit on the public). The Court can only be considered with what appears on the allegations at this stage and cannot consider extrinsic matters at this time as this is not an evidentiary hearing.
Accordingly, TCA’s demurrer to the First Cause of Action is OVERRULED.
B. Second Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing
“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party’s right to receive the benefits of the agreement actually made.” Guz v. Bechtel Nat. Inc. (2000) 24 Cal. 317, 349 (emphasis in original). “The covenant thus cannot be endowed with an existence independent of its contractual underpinnings.” Id. “It cannot impose substantive duties or limits on the contracting parties beyond those incorporated in the specific terms of their agreement.” Id. at 349-50. “Because the covenant is a contract term, however, compensation for its breach has almost always been limited to contract rather than tort remedies.” Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 684.
TCA argues if the breach of contract claim fails, so must this claim.
As stated above, the breach of contract claim is properly alleged.
Accordingly, TCA’s demurrer to the Second Cause of Action is OVERRULED.
C. Third Cause of Action for Fraudulent Concealment
“The required elements for fraudulent concealment are (1) concealment or suppression of a material fact; (2) by a defendant with a duty to disclose the fact to the plaintiff; (3) the defendant intended to defraud the plaintiff by intentionally concealing or suppressing the fact; (4) the plaintiff was unaware of the fact and would not have acted as he or she did if he or she had known of the concealed or suppressed fact; and (5) plaintiff sustained damage as a result of the concealment or suppression of the fact.” Hambrick v. Healthcare Partners Medical Group, Inc. (2015) 238 Cal.App.4th 124, 162. As it is a species of fraud and deceit, such claim must be plead with specificity, which means pleading the who, where, when, what, and how. Lazar v. Superior Court (1996) 12 Cal.4th 631, 645. “The requirement of specificity in a fraud action against a corporation requires the plaintiff to allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.” Tarmann v. State Farm Mut. Auto Ins. Co. (1991) 2 Cal.App.4th 153, 157.
Here, Plaintiffs have not sufficiently pled fraudulent concealment. Plaintiffs have not alleged TCA was in a fiduciary relationship or that the duty to make disclosures otherwise arose or that there was any duty to the parties outside of the alleged oral contract. See Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 666 (without a fiduciary duty present, the duty to disclose arises when the defendant makes a representation but fails to disclose additional facts which materially qualify the facts disclosed or render the disclosure likely to mislead). This is not an instance such as when the seller of property has a duty to disclose. See Reed v. King (1983) 145 Cal.App.3d 261, 265. Plaintiffs allege the defendants developed a plan, starting in 2012 to close the school in 2015. Compl. ¶ 22-25. But Plaintiffs have not alleged what duty, outside of the contract, TCA had to make any disclosures. And notably Plaintiffs are not alleging they were induced to enter into the oral contracts and that TCA concealed its secret plan to close the school to gain Plaintiffs conditional donations. Such donations, according to Plaintiffs’ allegations, occurred many years before the defendants developed the secret plot to close the school and sell the property for their benefit.
Accordingly, the demurrer to the Third Cause of Action is SUSTAINED WITH LEAVE TO AMEND.