Case Name: Ali Akbar Kalbali v. Amir Kalbali, et al.

Case No.: 2015-1-CV-288039

Defendant’s Demurrer to Plaintiff’s First Amended Complaint

Factual and Procedural Background

Plaintiff Ali Akbar Kalbali (“Plaintiff”) and defendant Amir Kalbali (“Defendant”) are members of an extended family. Other siblings include Mahin Adeeb (“Mahin”) and Asghar Kalbali (“Asghar”). (First Amended Complaint (“FAC”), ¶8.) Asghar is a real estate developer and had the idea to purchase a piece of property and develop on it a commercial building. (FAC, ¶9.) To that end, in 2004 or 2005, Asghar formed an LLC called Rumi Group (“LLC”) with the four siblings as members. (Id.) Each member was required to make an initial capital contribution based on his or her percentage of ownership. (FAC, ¶10.) Neither Plaintiff, Defendant, nor Mahin had sufficient cash to pay their respective capital contributions, but Plaintiff owned two residential properties each with significant equity. (FAC, ¶11.) Plaintiff obtained a home equity line of credit (“HELOC”) as to each of the two properties to generate cash for his, Defendant’s, and Mahin’s capital contributions. (Id.)

Pursuant to a verbal agreement, Plaintiff loaned Defendant $148,722. (FAC, ¶¶12 and 14.) There was no set date for repayment and no interest was charged on the amount borrowed. (Id.) It was anticipated that the LLC would develop and sell the commercial property and Plaintiff would be paid back from the proceeds of sale. (Id.) The only real term was that Defendant would repay Plaintiff what he borrowed and, until then, Defendant would contribute proportionately toward the monthly payments necessary to service the two HELOCs. (Id.) Defendant made monthly payments beginning in or about mid-2006 and continuing into at least early 2011. (FAC, ¶15.) At some point, all three siblings stopped making payments on one of the HELOCs after it was decided that plaintiff would short-sell that particular property. (Id.)

Asghar underestimated or misrepresented the amount of money the LLC would need to complete the project and initiated a series of capital calls. (FAC, ¶16.) Neither Plaintiff nor Mahin had the money needed to satisfy those capital calls and, in or about June 2013, the LLC stripped Plaintiff and Mahin of their interests. (Id.) Asghar treated Defendant preferentially by assisting Defendant to make the capital calls or relieving Defendant of the obligation to do so. (FAC, ¶17.) Rather than selling the commercial property after it was developed, Asghar and Defendant decided to keep it. (FAC, ¶19.)

Despite repeated demand, Defendant has failed and refused, and continues to fail and refuse, to repay his loan from Plaintiff, or any part thereof. (FAC, ¶21.)

On November 13, 2015, Plaintiff filed a Judicial Council form complaint against Defendant asserting causes of action for:

(1) Breach of Contract
(2)
(3) Common Counts
(4)

On July 18, 2019, Plaintiff filed the operative FAC which now asserts causes of action for:

(1) Breach of Contract
(2)
(3) Conspiracy
(4)

On December 13, 2019, Defendant filed the motion now before the court, a demurrer to Plaintiff’s FAC.

I. Defendant’s demurrer to Plaintiff’s FAC is SUSTAINED.
II.

A. Breach of Contract.
B.

Defendant argues initially that the first cause of action is barred by the statute of limitations. “When a ground for objection to a complaint, such as the statute of limitations, appears on its face or from matters of which the court may or must take judicial notice, a demurrer on that ground is proper.” (Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 746.) The statute of limitations for breach of an oral contract is two years. (See Code Civ. Proc., §339.)

Defendant points to paragraph 15 of the FAC where Plaintiff alleges, “Defendant (as well as Plaintiff and Mahin) made monthly payments beginning in or about mid-2006 into at least early 2011; at some point, after it was decided that Plaintiff would short-sell Hounslow, all three siblings stopped making payments as the Hounslow HELOC.” “The cause of action for breach of contract ordinarily accrues at the time of breach, and the statute begins to run at that time regardless of whether any damage is apparent or whether the injured party is aware of his right to sue.” (3 Witkin, California Procedure (4th ed. 1996) Actions, §486, p. 611; see also Ram’s Gate Winery, LLC v. Roche (2015) 235 Cal.App.4th 1071, 1084.) Defendant apparently contends the failure to make payments on the HELOC amounted to a breach at which point the cause of action for breach of contract begins to accrue and since Plaintiff did not file this complaint until 2015, the cause of action is barred.

In opposition, Plaintiff contends the breach is Defendant’s failure to repay the loan and the FAC does not specify a date when that occurred. “The running of the statute must appear ‘clearly and affirmatively’ from the dates alleged. It is not sufficient that the complaint might be barred. If the dates establishing the running of the statute of limitations do not clearly appear in the complaint, there is no ground for general demurrer. The proper remedy ‘is to ascertain the factual basis of the contention through discovery and, if necessary, file a motion for summary judgment.’” (Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 324 – 325; internal citations omitted.)

The court is persuaded by Plaintiff’s position. The FAC alleges Plaintiff decided to short sell one of his properties and that all of the siblings stopped making payments as to the HELOC on that particular property. Plaintiff does not appear to seek any damage relating to the short-sale and a reasonable inference can be drawn that the short sale was consensual. The breach which is expressly alleged in the FAC is Defendant’s failure to pay back the full loan amount or any part thereof, not Defendant’s failure to service the HELOC. (See FAC, ¶27.)

Defendant argues additionally that the FAC alleges a breach occurred no later than June 24, 2013. Defendant points to paragraph 28 of the FAC which alleges, “As a direct and proximate result of Defendant’s breach of the Agreement, Plaintiff has suffered damages in the amount of $148,722.00 together with interest at 10% per annum from at least June 24, 2013.” Since Plaintiff did not commence this action until November 13, 2015, the cause of action for breach of contract is barred.

In opposition, Plaintiff contends this allegation is taken from paragraphs 38 and 39 which are found in the second cause of action. Plaintiff has misread his own complaint. Paragraph 28 is a part of the first cause of action and is cited verbatim above. By alleging that he suffered damages for breach from at least June 24, 2013, the face of the pleading discloses a statute of limitations bar.

Accordingly, Defendant’s demurrer to the first cause of action in Plaintiff’s FAC 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 breach of contract is SUSTAINED with 10 days’ leave to amend.

C. Conspiracy.
D.

In Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510 – 511, the court wrote, “Conspiracy is not a cause of action, but 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.” “Conspiracy itself is not a separate cause of action. Rather, it is a theory of vicarious liability under which certain defendants may be held liable for torts committed by others. I.e., all parties to a conspiracy are jointly liable for tortious acts committed by any of them pursuant to the conspiracy.” (Weil & Brown et al., CAL. PRAC. GUIDE: CIV. PROC. BEFORE TRIAL (The Rutter Group 2018) ¶6:154, p. 6-56 citing Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 823, et al.) “The complaint must allege acts that would have given rise to a tort cause of action without the conspiracy. Absent such allegations, the conspiracy allegations are meaningless.” (Id. citing Kenne v. Stennis (2014) 230 Cal.App.4th 953, 968-969.)

In the second cause of action, Plaintiff apparently seeks to hold Defendant liable on a conspiracy theory for a breach of fiduciary duty by Asghar. Plaintiff has not asserted a claim for breach of fiduciary duty against Asghar in this action. Since there is no underlying cause of action properly asserted against Asghar in this action, the court will not allow Plaintiff to assert a claim for conspiracy against Defendant independently.

Accordingly, Defendant’s demurrer to the second cause of action in Plaintiff’s FAC 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 conspiracy is SUSTAINED with 10 days’ leave to amend.