Case Name: Michael Dorian, et al. v. San Jose Towers, LLC, et al.

Case No.: 18CV325729

Defendants San Jose Towers, LLC, Gregory Bock, Arnold Kamrin, Al Haimsen, Richard Kamrin, and 545 South Second St. LLC’s Demurrer to Third Amended Complaint for Breach of Contract, Breach of Fiduciary Duty, Accounting, Declaratory Relief, Concealment, Conversion, Intentional Interference with Contract, Trade Libel, Assault, Civil Conspiracy, Intentional Infliction of Emotional Distress, Request for Permanent Injunction, Dissolution of Limited Liability Company, Intentional Interference with Contractual Relations, and Inducing Breach of Contract

Factual and Procedural Background

Plaintiff Michael Dorian (“Dorian”) has been the sole member of plaintiff Briand Properties, LLC (“Briand”) since December 15, 2006. (Third Amended Complaint (“TAC”), ¶28.) Plaintiff Briand owned several assets including 540 S. First Street and 545 S. Second Street in San Jose (collectively, “Property”). (TAC, ¶29.) In or about January 6, 2016, plaintiff Briand filed a voluntary bankruptcy petition under Chapter 11 of the Bankruptcy Code. (TAC, ¶30.) The Bankruptcy Court converted the case to one under Chapter 7 on July 7, 2016 and appointed Kari Bowyer (“Bowyer”) as the Chapter 7 trustee of the estate. (Id.)

On or about August 12, 2016, Bowyer, as trustee of the bankruptcy estate, entered into a Real Property Purchase Agreement (“Agreement”) with defendant San Jose Towers, LLC (“SJ Towers”) whereby Bowyer would sell and defendant SJ Towers would purchase the Property. (TAC, ¶31 and Exh. A – B.)

Paragraph 4 of the Agreement states:

The Buyer asserts that, immediately after Buyer acquires ownership of the Property, it is obligated to enter into a binding, separate agreement with Mr. Dorian pursuant to which it will, among other things, transfer title to the Property to an [sic] new limited liability corporation to develop the Property (“New LLC”). The New LLC agreement will provide for, among other things, that Mr. Dorian shall (i) have an equal ownership interest in the New LLC, and (ii) be entitled to receive FORTY-FIVE PERCENT (45%) of the net profits generated from the New LLC. The Trustee, Debtor, and the Debtor’s estate shall have no interest, whatsoever, in the New LLC.

Months before execution of the Agreement, one or more of the individual defendants repeatedly attempted to persuade plaintiff [Dorian] to agree to jointly develop the Property by combining their adjacent parcels. (TAC, ¶33.) The only reason plaintiff Dorian agreed to the Agreement was because defendants represented to plaintiff Dorian that they were developers and had extensive experience and expertise in property development and because plaintiff Dorian was going to maintain a significant ownership interest in the Property. (TAC, ¶34.)

In the past year, plaintiff Dorian discovered the representations were false and defendants had no experience developing properties. (TAC, ¶35.) Defendants did not have any intention of allowing plaintiff Dorian the 50% ownership interest and right to profits they agreed to. (TAC, ¶35.)

During the pendency of the bankruptcy proceedings, plaintiff Dorian lost his mother. (TAC, ¶37.) As a result, plaintiff Dorian became extremely ill and hospitalized. (Id.) Plaintiff Dorian was on heavy medications when defendants cornered plaintiff Dorian into signing various documents. (Id.) Under undue influence and duress, plaintiff Dorian may have signed the various documents including an Agreement Regarding 545 South Second Street, A Limited Liability Company (“Second Agreement”). (TAC, ¶¶37 – 38.) Only a few months prior to the filing of this action did plaintiff Dorian learned he had signed the Second Agreement. (TAC, ¶38.) Dorian also recently discovered defendants filed several documents in the bankruptcy proceeding including a declaration which purports to attach a purchase offer (“Purchase Offer”) approved by plaintiff Dorian when, in fact, plaintiff Dorian never saw or approved such Purchase Offer. (TAC, ¶¶39 – 40.) Plaintiff Dorian was surprised because, among other things, the purported Purchase Offer gave defendant Arnold Kamrin the authority to settle disputes between members of the contemplated LLC and gave defendant Arnold Kamrin authority to select an independent third party manager to represent plaintiffs Dorian and Briand’s interests. (TAC, ¶¶42 – 44.) Defendants failed to provide plaintiff Dorian with any information relative to the Property and the status of development. (TAC, ¶46.) Defendants failed and refused to allow plaintiff Dorian to participate in the New LLC, drafting of its operating agreement, or to physically come near the Property. (Id.)

When plaintiff Dorian went to retrieve jewelry left in a safe at the Property, the individual defendants called police claiming plaintiff Dorian was trespassing subjecting plaintiff Dorian to wrongful arrest for six days during which he lost more than $5,000 from his wallet and $1,500 in clothes. (TAC, ¶47.)

Defendants did not immediately transfer title in the Property to the New LLC despite their contractual obligation to do so. (TAC, ¶48.) Instead, defendant SJ Towers held title to the Property for two years after it purchased the Property from the bankruptcy trustee. (Id.) Defendants only agreed to transfer title to the Property to New LLC after plaintiff Dorian commenced a quiet title action and recorded a lis pendens against the Property. (Id.)

On March 28, 2018, plaintiff Dorian filed a complaint against defendants SJ Towers, Gregory Bock (“Bock”), Robert A. Johnston (“Johnston”), Arnold Kamrin (“A. Kamrin”), Al Haimsen (“Haimsen”), Richard R. Kamrin (“R. Kamrin”), and Doe defendants.

On June 18, 2018, plaintiff filed a first amended complaint (“FAC”) adding a defendant and other causes of action.

On July 12, 2018, defendants SJ Towers, Bock, A. Kamrin, Haimsen, and R. Kamrin filed a demurrer to plaintiff’s FAC.

On July 26, 2018, defendant Johnston filed an answer to the complaint.

On November 13, 2018, plaintiff filed a second amended complaint (“SAC”).

After receiving leave from the court, plaintiffs Dorian and Briand filed the operative TAC on April 9, 2019. The TAC asserts causes of action for:

(1) Breach of Contract
(2)
(3) Breach of Fiduciary Duty
(4)
(5) Accounting
(6)
(7) Declaratory Relief
(8)
(9) Concealment
(10)
(11) Conversion
(12)
(13) Intentional Interference with Contract
(14)
(15) Trade Libel
(16)
(17) Assault
(18)
(19) Civil Conspiracy
(20)
(21) Intentional Infliction of Emotional Distress
(22)
(23) Request for Permanent Injunction
(24)
(25) Dissolution of Limited Liability Company
(26)
(27) Intentional Interference with Contractual Relations
(28)
(29) Inducing Breach of Contract
(30)

On May 28, 2019, defendants SJ Tower, Bock, A. Kamrin, Haimsen, R. Kamrin, and 545 South Second St., LLC (“Demurring Defendants”) filed the motion now before the court, a demurrer to the TAC.

Discussion

I. Demurring Defendants’ demurrer to the TAC is OVERRULED.
II.

A. Jurisdiction.
B.

Initially, the Demurring Defendants demur to the first, fourth, seventh, twelfth, and thirteenth causes of action in the TAC on the ground that, “The court has no jurisdiction of the subject of the cause of action alleged in the pleading.” (Code Civ. Proc., §430.10, subd. (a).) Demurring Defendants direct the court’s attention to paragraph 20 of the Agreement, attached as Exhibit A to the TAC, which states, in part, “Any disputes over the terms of this Agreement shall be resolved by the Bankruptcy Court.”

“ ‘The principle of “subject matter jurisdiction” relates to the inherent authority of the court involved to deal with the case or matter before it.’ [Citation.] Thus, in the absence of subject matter jurisdiction, a trial court has no power ‘to hear or determine [the] case.’ [Citation.]” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 196.) “There are limited exceptions to a superior court’s general subject matter jurisdiction.” (Long v. Forty Niners Football Co., LLC (2019) 33 Cal.App.5th 550, 556, fn. 7.)

For instance, superior courts lack subject matter jurisdiction in cases within the exclusive jurisdiction of federal courts. Here, however, Demurring Defendants rely on what is, in essence, a forum selection clause.

The issues relating to a forum selection clause are distinct from the questions of subject matter jurisdiction. The existence of a forum selection clause does not mean that another forum lacks subject matter jurisdiction, and therefore a party seeking to enforce a forum selection clause cannot do so by means of a demurrer asserting lack of subject matter jurisdiction. Instead, two other procedures exist for that purpose. (Cal–State Business Products & Services, Inc. v. Ricoh (1993) 12 Cal.App.4th 1666, 1670, 16 Cal.Rptr.2d 417.)

First, a party may move to stay or dismiss the action on the ground of inconvenient forum. (§ 418.10, subd. (a)(1).) The failure to make such a motion at the time of filing a demurrer constitutes a waiver of the inconvenient forum issue. (§ 418.10, subd. (e)(3).)

Second, and particularly applicable, is section 410.30, subdivision (a), which provides: “When a court upon motion of a party or its own motion finds that in the interest of substantial justice an action should be heard in a forum outside this state, the court shall stay or dismiss the action in whole or in part on any conditions that may be just.”

(Miller-Leigh LLC v. Henson (2007) 152 Cal.App.4th 1143, 1149–1150 (Miller); emphasis added.)

Miller is directly on point. Accordingly, Demurring Defendants’ demurrer to the first, fourth, seventh, twelfth, and thirteenth causes of action in the TAC on the ground that the court has no jurisdiction of the subject of the cause of action alleged in the pleading [Code Civ. Proc., §430.10, subd. (a)] is OVERRULED.

C. Misjoinder.
D.

Demurring Defendants also demur to the fourth cause of action on the ground that “There is a defect or misjoinder of parties.” (Code Civ. Proc., §430.10, subd. (d).) This ground lies where “plaintiffs lack sufficient unity of interest; or there is no common question of law or fact as to the defendants.” (Weil & Brown et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2019) ¶7:81, p. 7(I)-40 citing Code Civ. Proc., §§378 – 379.)

The fourth cause of action in the TAC is for declaratory relief by plaintiff Dorian against all of the defendants. Demurring Defendants contend misjoinder applies here because only defendant SJ Towers and plaintiff Dorian are parties to the Agreement. Demurring Defendants misread the allegations of the fourth cause of action as seeking declaratory relief regarding just the Agreement when the claim encompasses more. Plaintiff Dorian also alleges the existence of an actual controversy with regard to “[SJ Towers’] fiduciary duty to the New LLC and its members as the New LLC’s named managing member, Dorian’s right to be involved in the New LLC as 50% owner thereof and his entitlement to 45% of the profits of the New LLC, the rights and obligations of the Defendants to Dorian relative to the New LLC, the rights and obligations of Haimsen towards Dorian, the enforceability of the Purchase Offer that Defendants attached to Dorian’s Declaration filed with the court without his knowledge and permission, the enforceability and effect of any agreement Defendants now contend Dorian agreed to (other than the Agreement which Dorian admits he executed), the effectiveness and enforceability of the Operating Agreement for the New LLC that contains provisions that are intended to be in violation of Dorian’s rights and against his interests including a provision appointing Haimsen as Dorian’s trustee to represent Dorian’s interest in the New LLC, and Dorian’s right to be involved in the negotiations and drafting of the Operating Agreement given that it impacts his 50% ownership interest and 45% profits in the New LLC.” (See TAC, ¶72.)

Demurring Defendants have not persuasively demonstrated that there is no common question of law or fact as to the defendants. Accordingly, Demurring Defendants’ demurrer to the fourth cause of action on the ground that there is a defect or misjoinder of parties [Code Civ. Proc., §430.10, subd. (d)] is OVERRULED.

E. Intentional Infliction of Emotional Distress.
F.

Demurring Defendants contend the eleventh cause of action of the TAC for intentional infliction of emotional distress fails to state a cause of action. “The tort of intentional infliction of emotional distress is comprised of three elements: (1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff suffered severe or extreme emotional distress; and (3) the plaintiff’s injuries were actually and proximately caused by the defendant’s outrageous conduct.” (Cochran v. Cochran (1998) 65 Cal.App.4th 488, 494; see also Ross v. Creel Printing & Publishing Co., Inc. (2002) 100 Cal.App.4th 736, 744 – 745; see also CACI, Nos. 1600 and 1602.)

Demurring Defendants contend plaintiff Dorian has not identified the underlying conduct which supports his claim for intentional infliction of emotional distress. In opposition, plaintiff notes that the eleventh cause of action incorporates by reference earlier allegations which would include allegations found at paragraph 47: “Individual Defendants … called the police claiming that Dorian was trespassing and got him wrongfully arrested. … As a result of this conduct, Dorian was confined to jail for about six days and until a bond was issued, not to mention the extreme emotional distress he has been suffering from the continuing conduct of Defendants.” Further, plaintiff points to paragraph 113 where it alleges, “Defendants further conspired to harass Dorian by hiring third parties to push Dorian or hit him from behind or attack and threaten him every time he came close to the Subject Property knowing that would take away his confidence to protect his rights … Defendants further conspired to lure Dorian to the Subject Property knowing that when he did so, they would get him arrested as a trespasser because … they could lie to the police and public authorities that Dorian had no legal interest in the Subject Property.”

These factual allegations suffice to allege extreme and outrageous conduct. Accordingly, Demurring Defendants’ demurrer to the eleventh cause of action on the ground that the pleading does not state facts sufficient to constitute a cause of action [Code Civ. Proc., §430.10, subd. (e)] for intentional infliction of emotional distress is OVERRULED.