Case Number: BC519792    Hearing Date: April 22, 2014    Dept: 58

JUDGE ROLF M. TREU
DEPARTMENT 58
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Hearing Date: Tuesday, April 22, 2014
Calendar No: 10
Case Name: Boyko v. Hadid, et al.
Case No.: BC519792
Motion: Demurrer and Motion to Strike
Moving Party: Cross-Defendants Kamran Nahai, Rouben Khachatoorian, and Nahai Insurance Services, Inc.
Responding Party: Cross-Complainant Oleg Boyko
Notice: OK

Tentative Ruling: Demurrer is sustained as to the 2nd and 4th COAs to the extent asserted against Kamran Nahai with 15 days leave to amend, and is otherwise overruled.

The motion to strike is granted as to the claim for attorney fees without leave to amend, and is otherwise denied.
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Background –
On 8/28/143, Oleg Boyko filed this action (“Boyko Complaint”) against Mohamed A. Hadid and Bel Air Project, LLC arising out of the alleged failure to refund a security deposit for the lease of residential property located at 904 N. Crescent Dr., Beverly Hills, CA 90210.

On 10/29/13, Bel Air Project filed a cross-complaint (“Bel Air Project Cross-Complaint”) against Boyko, Natalie Burn aka Natalie Gustlistaya, and 7Heaven Productions, LLC alleging damages to the property as a result of their occupation and their holding of a party(ies) at the property. The Bel-Air Project Cross-Complaint asserts causes of action for (1) breach of lease agreement, (2) negligence, and (3) implied equitable indemnity.

On 12/3/13, Boyko filed a cross-complaint (“Boyko Cross-Complaint”) against Kamran Nahai, Rouben Khachatoorian, and Nahai Insurance Services, Inc. arising out of the alleged failure to pay on an insurance policy for coverage of an event held at the property.

Nahai, Khachatoorian, and Nahai Insurance (“Moving Parties”) have filed a demurrer to, and a motion to strike, Boyko’s Cross-Complaint. Trial is set for 11/3/14; FSC for 10/16/14.

Factual Allegations of the Boyko Cross-Complaint –
On 11/5/12, Boyko contacted Nahai, an independent insurance broker, to procure a special event policy covering any damages in connection with an event to be held on 11/9/12 at the Property. ¶¶ 8-9. On 11/6/12, Khachatoorian emailed Boyko an insurance proposal which did not list any exclusions for damage to the property (¶ 10): that same day, Boyko’s legal counsel spoke with Khachatoorian on the phone whereby Khachatoorian made specific representations that Boyko would be insured for any damages to the property. ¶ 11. On 11/7/12, Boyko made a full payment of $1,175 for the requested policy. ¶ 12. On 11/8/12, Khachatoorian emailed Boyko a certificate of liability insurance with Riverport Insurance Company. ¶ 13.

The event took place on 11/9/12 (¶ 14); and on 11/19/12, Boyko learned of alleged damages to the property caused by the event and contacted Nahai (¶ 15). Nahai submitted a claim on Boyko’s behalf to Riverport, which denied coverage on the grounds that the policy contained an exclusion for damage to the property. ¶ 16.

The Boyko Cross-Complaint asserts causes of action for (1) breach of contract, (2) negligence, (3) fraudulent misrepresentation, and (4) breach of fiduciary duty.

Demurrer –

1. Request for Judicial Notice
Moving Parties request judicial notice of the Boyko Complaint and the Bel Air Project Cross-Complaint: the RJN is granted.

2. 1st COA, Breach of Contract
The 1st COA is based on an alleged oral agreement to procure a special event insurance policy to cover any damages to the property. ¶ 19. Moving Parties demur to the 1st COA for breach of contract on the ground that there are insufficient facts alleged as to the existence of such an oral agreement. The Court disagrees.

Boyko’s Cross-Complaint alleges facts that Boyko requested Nahai to procure a special event insurance policy to cover any damages to the property, which agreement is supported by the insurance proposal, full payment, and the certificate of liability insurance. Boyko Cross-Complaint ¶¶ 8-13. This is sufficient to allege facts as to mutual assent (see, e.g., Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 270-71 (consisting of an offer and an acceptance which depends on the surrounding circumstances)) as to the material particulars of the oral contract (see, e.g., Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 209). Moving Parties fail to cite to any authorities that suggests that the participation of Boyko’s legal counsel in the parties’ communication defeats Boyko’s claim of an oral contract. The demurrer is overruled as to the 1st COA.

3. 3rd COA, Fraudulent Misrepresentation
The 3rd COA is based on Khachatoorian emailing an insurance proposal to Boyko on 11/6/12, making specific representations to Boyko’s legal counsel in a phone conversation on 11/6/12, and emailing a certificate of liability insurance to Boyko on 11/8/12. Boyko Cross-Complaint ¶¶ 31-33. Boyko alleges that Khachatoorian’s conduct was taken on behalf of Nahai and Nahai Insurance. See id.

Moving Parties argue that Boyko fails to allege facts with particularity of fraudulent conduct and reliance. See, e.g., Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 72-73; Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184 (requiring pleading facts which “show how, when, where, to whom, and by what means the representations were tendered); Tarmann v. State Farm Mutual Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157 (requiring a plaintiff to “allege the names of the persons making the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written.”). The Court disagrees.

Moving Parties argue that Boyko fails to allege fraudulent intent as to Nahai on the ground that it is inconsistent with the allegation that Nahai assured Boyko of coverage (Boyko Cross-Complaint ¶ 15) and filed a claim with Riverport (id. ¶ 16). Moving Parties also argue that Boyko’s claim is based on alleged representations made to Boyko’s legal counsel, which raises issues of miscommunications or misunderstandings. These arguments improperly attempt to dispute the merits of Boyko’s claim at the pleading stage. See also Reply [Dem.] p. 4:17-5:3 (asserting that Moving Parties would have no reason to attempt to deceive Boyko, one of the richest men in the Soviet Union). The demurrer is overruled as to the 3rd COA.

4. 2nd and 4th COAs, Negligence and Breach of Fiduciary Duty
Nahai and Khachatoorian demur to the 2nd and 3rd COAs on the ground that Boyko fails to allege facts as to a duty owed by them.

a. Nahai
Nahai argues that Plaintiff’s alter ego allegations (Boyko Cross-Complaint ¶ 7 (alleging that Nahai is the “dominating shareholder and/or officer” of Nahai Insurance) is insufficient. The Court agrees. Boyko only alleges he conclusion of alter ego liability and fails to allege any facts to support such liability (see, e.g., Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1285; First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 914-15). Notably, though the parties refer to undercapitalization of Nahai Insurance, this is not alleged in the Boyko Cross-Complaint. The demurrer is sustained as to the 2nd and 4th COAs to the extent asserted against Nahai.

b. Khachatoorian
Khachatoorian argues that he is only alleged to be an agent of Nahai and Nahai Insurance (id. ¶ 5), which raises the doctrine of respondeat superior (see Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 296-97). However, this argument only addresses the vicarious liability of Khachatoorian’s employer, Nahai and/or Nahai Insurance. Khachatoorian fails to cite to any authorities that this also results in Khachatoorian being absolved of any liability. The demurrer is overruled as to Khachatoorian.

c. Breach of Fiduciary Duty
Moving Parties argue that the 4th COA cannot be maintained against them because they, as insurance brokers, are not in a fiduciary relationship. See, e.g., Hydro-Mill Co., Inc. v. Hayward, Tilton and Rolapp Ins. Associates, Inc. (2004) 115 Cal.App.4th 1145, 1158-59. However, this argument was first-raised in the reply and is not considered. See Campos v. Anderson (1997) 57 Cal.App.4th 784, 794 n.3.

5. Ruling
The demurrer is sustained as to the 2nd and 4th COAs to the extent asserted against Nahai, and is otherwise overruled. Because this is the first challenge to the pleadings, leave to amend is granted.

Motion to Strike –
Moving Parties move to strike Boyko’s claim for punitive damages and attorney fees.

1. Punitive Damages
Consistent with the Court’s ruling on the demurrer, Boyko sufficiently alleges fraud to support punitive damages. See Civil Code § 3294(a), (c); Lehto v. Underground Constr. Co. (1977) 69 Cal.App.3d 933, 944. Boyko alleges that Nahai and Nahai Insurance authorized and/or ratified the conduct of Khachatoorian. Cross-Complaint ¶ 40. At the pleading stage, this is sufficient to allege facts to support the imposition of punitive damages against Nahai Insurance. See Civil Code § 3294(b); Grieves v. Superior Court (1984) 157 Cal.App.3d 159, 167. Therefore, the motion to strike punitive damages is denied.

2. Attorney Fees
Moving Parties argue that Boyko fails to allege whether attorney fees are authorized by statute or contract. See CCP § 1021; Pac. Custom Pools, Inc. v. Turner Constr. Co. (2000) 79 Cal.App.4th 1254, 1267. Boyko failed to respond to this argument. Therefore, the motion to strike is granted as to Boyko’s claim for attorney fees without leave to amend.