2011-00103526-CU-CO

Irina Sheyko vs. Victor Tikhomirov

Nature of Proceeding: Hearing on Demurrer

Filed By: Gavrilov, Ognian

Defendants Oleysa Mysin, Sergi Mysin (Doe 1) and SM Financial Services, Inc.’s (Doe
2) Demurrer to Plaintiff’s Second Amended Complaint is OVERRULED.

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Plaintiff’s Second Amended Complaint sets forth 11 causes of action: the 1 for breach
of written contract, the 2nd for breach of the covenant of good faith and fair dealing, the

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3 for common count, the 4 for negligent misrepresentation, the 5 for intentional
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interference with economic advantage, the 6 for negligent interference with
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economic advantage, the 7 for constructively fraudulent transfer, the 8 for
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conspiracy to fraudulently transfer assets, the 9 for aiding and abetting fraudulent
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transfer of assets, the 10 for unjust enrichment, the 11 for Business & Professions
Code §17200, et seq.

Defendants Oleysa Mysin, Sergi Mysin (Doe 1) and SM Financial Services, Inc. demur
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to only the 5 through 11 causes of action, as the remainder are not alleged against
these defendants. Demurrer to the 5th cause of action Intentional Interference with Economic Advantage
is OVERRULED.

To proceed with a claim for intentional interference with economic advantage a Plaintiff
must allege: (1) an existing prospective business relationship; (2) Defendants’
knowledge of the existing prospective business relationship; (3) Defendants engaged
in an intentionally wrongful act; (4) Plaintiff suffered injury as a result of Defendants’
interference; and, (5) proximate cause. (Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal. 4th. 1134, 1158-1159, 1161, 1164-1165.)

Plaintiff must plead facts sufficient to show that Defendants “not only interfered with
the plaintiff’s expectancy, but [that they] engaged in conduct that was wrongful by
some legal measure other than the fact of interference itself” (Della Penna v. Toyota
Motor Sales, U.S.A. (1995) 11Cal.4th 376, 393.)

Moving parties assert that no cause of action is stated for intentional interference in
that plaintiff has failed to plead facts to show that defendants engaged in contract that
was wrongful by some legal measure other than the fact of interference itself.

In opposition, plaintiff cites Baldwin v. Marina City Properties, Inc. (1978) 79 Cal. App.
3d 393, 406 for the proposition that the tort of interference with a prospective economic
advantage includes the narrower tort of interference with a contractual relationship.

In Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 56 the Court
held that “Implicit in the Della Penna holding is a conclusion that this additional aspect
of wrongfulness is not an element of the tort of intentional interference with an
existing contract. “ (Id at 56, emphasis added.) If the complaint states a cause of
action under any theory, regardless of the title under which the factual basis for relief is
stated, that aspect of the complaint is good against a demurrer. Quelimane Co. v.
Stewart Title Guaranty Co. (1998) 19 Cal. 4th 26, 38.

The elements of the tort of interference with contract are (1) a valid contract between
the plaintiff and a third party; (2) the defendant’s knowledge of the 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 relationship; and (5)
resulting damage. Quelimane Co. v. Stewart Title Guaranty Co., supra, 19 Cal.4th 26,
55; Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.

Here, where a plaintiff has alleged that contract exists with co-defendant Tikhomirov,
which was knowingly disrupted by moving defendants, the holding of the California
Supreme Court suggests that sufficient facts are pleaded to support a cause of action,
and the demurrer is overruled.

Demurrer to the 6th cause of action Negligent Interference with Economic Advantage
is OVERRULED.

Negligent interference with economic advantage requires the following elements: (1)
plaintiff had an existing or prospective business relationship; (2) defendant owed
plaintiff a special duty of care; (3) defendant wrongfully interfered with
plaintiff’s business relationship; (4) proximate cause, and (5) damages. (Baldwin v.
Marina City Props., Inc. (1978) 79 Cal. App. 3d 393, 407; Lange v. TIG Ins. Co., (1998)
68 Cal.App.4th 1179, 1187.) Defendants assert that they owed no legal duty to Plaintiff and did not commit any
wrongful interference causing damage to Plaintiff.

However, the SAC has been amended to allege that “84. Because OLESYA MYSIN,
SERGEI MYSIN and SMF were aware of the previous contract between SERGEI
MYSIN’s father and PLAINTIFF, because they either prepared or assisted in the
preparation of the terms of the Contract, and because they knew of TIKHOMIROV’s
assurance of the availability of funds for repayment, OLESYA MYSIN, SERGEI MYSIN
and SMF owed PLAINTIFF a special duty of care.”

The Court finds that the allegations of the SAC meet plaintiff’s burden. The SAC
alleges a “borrow and transfer” scheme whereby Tikhomirov would be able to give the
funds he borrowed from Plaintiff to his daughter and son-in-law without having to pay
them back and in which the funds would be converted to another form and
untraceable. (SAC, 29-38.) It was foreseeable that such a scheme would result in
damage to Plaintiff. (SAC, 83-85.) Moreover, the scheme which Defendants are
alleged to have engaged was morally blameworthy and directly resulted in Plaintiff’s
inability to recover those funds. (SAC, 33-38, 87.) Tikhomirov’s default and transfer of
funds to Defendants evidences the close connection between the transfer and
resulting injury to Plaintiff. Plaintiff has pled sufficient facts to state a duty of care owed
the moving parties.

Demurrers to the 7th, 8th and 9th causes of action for fraudulent transfer are
OVERRULED.

Civil Code § 3439.04 provides in relevant part:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a creditor,
whether the creditor’s claim arose before or after the transfer was made or the
obligation was incurred, if the debtor made the transfer or incurred the
obligation as follows: (1) With actual intent to hinder, delay, or defraud any
creditor of the debtor. * * *
(b) In determining actual intent under paragraph (1) of subdivision (a), consideration
may be given, among other factors, to any or all of the following: (1) Whether
the transfer or obligation was to an insider…. (3) Whether the transfer or
obligation was disclosed or concealed….(5) Whether the transfer was of
substantially all the debtor’s assets ….(8) Whether the value of the
consideration received by the debtor was reasonably equivalent to the value of
the asset transferred or the amount of the obligation incurred. (9) Whether the
debtor was insolvent or became insolvent shortly after the transfer was made
or the obligation was incurred…. (11) Whether the debtor transferred the
essential assets of the business to a lienholder who transferred the assets to
an insider of the debtor.

Here, the transfer alleged was to insiders (SAC, 17-19, 33, 42, and 44.) The transfer
was not disclosed to plaintiff, but was concealed. (SAC 33-38, 97-102) The transfer
turned over substantially all of Tikhomirov’s assets, based on subsequent Chapter 7
bankruptcy petition. (SAC 95) Tikhomirov received nothing in exchange for their
receipt of the $88,000. (SAC 92.)

The Court finds that the facts alleged are sufficient to state causes of action, including
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the 8 for conspiracy.
Demurrer to the 10 for unjust enrichment is OVERRULED.

Moving parties assert that this is not a cause of action in California, but the Third
District Court of Appeals has held that restitution may be awarded where the
defendant obtained a benefit from the plaintiff by fraud, duress, conversion, or similar
conduct. In such cases, the plaintiff may choose not to sue in tort, but instead to seek
restitution on a quasi-contract theory. In such cases, where appropriate, the law will
imply a contract (or rather, a quasi-contract), without regard to the parties’ intent, in
order to avoid unjust enrichment. Civic Partners Stockton, LLC v. Youssefi (2013) 218
Cal. App. 4th 1005, 1013. An unjust enrichment claim may be grounded in equitable
principles of restitution. An individual is required to make restitution when he or she
has been unjustly enriched at the expense of another. (Rest., Restitution, § 1, p. 12;
Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51.) A person is enriched if he or she
receives a benefit at another’s expense. (Rest., Restitution, § 1, com. a, p. 12;
Ghirardo v. Antonioli, supra, 14 Cal.4th at p. 51.) The term “benefit” connotes any type
of advantage. (Rest., Restitution, § 1, com. b, p. 12; Ghirardo v. Antonioli, supra, 14
Cal.4th at p. 51.)

Even so, while there are cases stating that unjust enrichment is not a stand alone
cause of action (e.g., Melchior v. New Line Productions, Inc. (2003) 106 Cal.App.4th
779, 794) there are cases that indicate that there is a cause of action for unjust
enrichment (e.g., Lectrodryer v. Seoul Bank (2000) 77 Cal.App.4th 723, 726.) It has
been noted that Courts have observed “a split of authority in California as to whether a
claim for unjust enrichment is recognized as an independent cause of action.” (
Concorde Equity II, LLC v. Miller (N.D. Cal. 2010) 732 F. Supp. 2d 990, 1001.)
California courts agree that ‘unjust enrichment’ is in effect, ‘the result of a failure to
make restitution under circumstances where it is equitable to do so.’” (Concorde Equity
II, LLC v. Miller, 732 F. Supp. 2d 990, 1001 (N.D. Cal. 2010), quoting Melchior v. New
Line Prods., Inc., (2003) 106 Cal. App. 4th 779, 793.) As noted, unjust enrichment is
synonymous with the term “restitution.” Dinosaur Development, Inc. v. White (1989)
216 Cal.App.3d 1310, 1314. However, even the cases indicating that there is such a
cause of action recognize that it must be premised on an underlying wrong. (
Lectrodryer, supra, 77 Cal.App.4th 723.)

The Court declines to sustain a demurrer to this cause of action based upon the label
attached to it. Plaintiff has alleged sufficient facts to state a claim for restitution.

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Demurrer to the 11 for Business & Professions Code §17200, et seq. is
OVERRULED.

As the demurrers to the other causes of action have been overruled, sufficient facts
have been stated for this derivative claim to survive.

Defendants shall file and serve their Answer to the SAC not later than Friday, June 20,
2014.

The minute order is effective immediately. No formal order pursuant to CRC Rule
3.1312 or further notice is required.