Case Name: Richard C. Placone, Sr. v. Dixon Development Company, LLC, et al.
Case No.: 2015-1-CV-283832

Currently before the Court are the following matters: (1) the motion by defendant and cross-defendant Lev Moltyaner (“Moltyaner”) for leave to file an amended answer; (2) the motion by defendant and cross-complainant James M. Sagorac, Jr. (“Sagorac”) for summary judgment or, alternatively, summary adjudication; and (3) the motion by Moltyaner for summary judgment or, alternatively, summary adjudication.

Factual and Procedural Background

The underlying action in this case was brought by plaintiff Richard C. Placone, Sr. (“Placone”), in his capacity as the administrator of the Estate of Irene C. Placone and trustee of The Richard C. Placone, Sr. & Jeanne M. Placone Shared Revocable Living Trust, January 26, 2016, against defendant Dixon Development Company, LLC, Moltyaner, and Sagorac.

Subsequently, on March 22, 2017, Sagorac filed a cross-complaint against Moltyaner, alleging causes of action for: (1) breach of contract; (2) breach of contract; (3) breach of implied covenant of good faith and fair dealing; (4) breach of fiduciary duty; (5) intentional misrepresentation; (6) negligent misrepresentation; (7) conversion; (8) unjust enrichment; (9) accounting; and (10) indemnity.

According to the allegations of the cross-complaint, Sagorac “had an ownership interest and continuing right to participate in the profits relating to … real estate [located at] 780-782 Dixon Way, Los Altos, California, originally Santa Clara County Assessor Parcel Number 167-20-065.” (Cross-Complaint, ¶¶ 1 and 5.) The parcel was later subdivided, “becoming Santa Clara County Assessor Parcel Numbers 167-20-067 and 167-20-068 respectively (hereinafter referred to as ‘the Property’).” (Id. at ¶ 1.)

Sagorac purchased the Property with his partner Peter Vilkin (“Vilkin”). (Cross-Complaint, ¶ 6.) Vilkin “later dropped out of the project at the Property” and “is not owed any sums of any kind.” (Ibid.) In addition to his own funds, Sagorac “used funds from the plaintiffs to develop the Property.” (Id. at ¶ 7.)

In 2009, Sagorac agreed that Moltyaner would “take over the project provided [Moltyaner] pa[id] back [his] creditors, the Plaintiffs[,] and as long as [Moltyaner] shared in the profits.” (Cross-Complaint, ¶¶ 8 and 16.) Sagorac allegedly had a written agreement with Moltyaner, which was attached as “an exhibit to Plaintiffs’ Complaint.” (Id. at ¶ 9.) The contract allegedly provided that Sagorac would a “be paid after the second house [that was built on the Property] sold in 2014.” (Id. at ¶ 10.)

Sagorac alleges that “[Moltyaner] claimed he did not make the money from the project and/or he felt for some reason he did not have to pay the money he owes the creditors to our project that [they] developed together.” (Cross-Complaint, ¶ 11.) Moltyaner allegedly employed “bogus, improper accounting methodologies under the agreement in such a manner that [he] made sure there were insufficient funds to defray the repayment of Plaintiffs’ loans and the interest thereon.” (Id. at ¶¶ 29 and 38.) Sagorac further alleges that “[Moltyaner] still has not repaid the Plaintiffs even though [Moltyaner] knew [he] had creditors and [Moltyaner] knew those creditors were to [be] repaid and [Moltyaner] knew the money from the creditor Plaintffs [sic] [was] necessary and important funding to get the project to a place where the homes could be built.” (Id. at ¶¶ 13, 21, and 39.)

In response to these allegations, Moltyaner filed an answer on April 26, 2017.

On April 27, 2018, Moltyaner filed a motion for summary judgment or, in the alternative, summary adjudication.

Thereafter, Sagorac filed a motion for summary judgment or, in the alternative, summary adjudication on June 7, 2018.

On July 17, 2018, Moltyaner filed a motion for leave to file an amended answer. Later that month, Sagorac filed a notice of non-opposition to Moltyaner’s motion for leave to file an amended answer.

In August 2018, Moltyaner and Sagorac filed papers in opposition to each other’s motions for summary judgment or, in the alternative, summary adjudication. Subsequently, Moltyaner and Sagorac filed reply papers in support of their respective motions for summary judgment or, in the alternative, summary adjudication.

Discussion

I. Motion for Leave to File an Amended Answer

Moltyaner moves for leave to file an amended answer to the cross-complaint. By way of his amended answer, Moltyaner seeks to allege a setoff claim as his ninth affirmative defense.

“[A] motion to permit an amendment to a pleading to be filed is one addressed to the discretion of the court.” (Morgan v. Super. Ct. (1959) 172 Cal.App.2d 527, 530 (Morgan).) “[C]ourts are bound to apply a policy of great liberality in permitting amendments to [a pleading] at any stage of the proceedings, up to and including trial.” (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.) “[I]t is a rare case” in which a court will be justified in denying a party leave to amend his or her pleadings. (Morgan, supra, 172 Cal.App.2d at p. 530.) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.” (Ibid.)
Here, no party challenges the timeliness of the motion. In fact, Sagorac filed a notice of non-opposition in response to the instant motion. Furthermore, there is no indication that granting the motion would prejudice Sagorac.

Accordingly, Moltyaner’s motion for leave to file an amended answer is GRANTED.

II. Motions for Summary Judgment or, Alternatively, Summary Adjudication

A. Legal Standard

The pleadings limit the issues presented for summary judgment or adjudication and such a motion may not be granted or denied based on issues not raised by the pleadings. (See Government Employees Ins. Co. v. Super. Ct. (2000) 79 Cal.App.4th 95, 98 (Government); Laabs v. City of Victorville (2008) 163 Cal.App.4th 1242, 1258 (Laabs); Nieto v. Blue Shield of Calif. Life & Health Ins. (2010) 181 Cal.App.4th 60, 73 (Nieto).)

A motion for summary judgment must dispose of the entire action. (Code Civ. Proc., § 437c, subd. (a).) “Summary judgment is properly granted when no triable issue of material fact exists and the moving party is entitled to judgment as a matter of law.” (Madden v. Summit View, Inc. (2008) 165 Cal.App.4th 1267, 1272 (Madden), internal citations omitted.)

“A defendant moving for summary judgment bears the initial burden of showing that a cause of action has no merit by showing that one or more of its elements cannot be established or that there is a complete defense. Once the defendant has met that burden, the burden shifts to the plaintiff ‘to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.’ ‘There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.’ ” (Madden, supra, 165 Cal.App.4th at p. 1272, internal citations omitted.)

Where a plaintiff moves for summary judgment, the plaintiff bears the initial burden of showing that there is no defense to a cause of action by proving each element of the cause of action entitling the plaintiff to judgment. (Code Civ. Proc., § 437, subd. (p)(1); Paramount Petroleum Corporation v. Super. Ct. (2014) 227 Cal.App.4th 226, 241 (Paramount).) If the plaintiff makes such a showing, the burden then shifts to the defendant to show that a triable issue of one or more material facts exists as to a cause of action or a defense thereto. (Code Civ. Proc., § 437, subd. (p)(1); Paramount, supra, 227 Cal.App.4th at p. 241.)

“Summary adjudication works the same way, except it acts on specific causes of
action or affirmative defenses, rather than on the entire complaint. ([Code Civ. Proc.,] §
437c, subd. (f).) … Motions for summary adjudication proceed in all procedural respects as a motion for summary judgment.’ ” (Hartline v. Kaiser Foundation Hospitals (2005)
132 Cal.App.4th 458, 464.)

For purposes of establishing their respective burdens, the parties involved in a motion for summary judgment must present admissible evidence. (Saporta v. Barbagelata (1963) 220 Cal.App.2d 463, 468.) Additionally, in ruling on the motion, a court cannot weigh said evidence or deny summary judgment on the ground that any particular evidence lacks credibility. (See Melorich Builders v. Super. Ct. (1984) 160 Cal.App.3d 931, 935; see also Lerner v. Super. Ct. (1977) 70 Cal.App.3d 656, 660.) As summary judgment “is a drastic remedy eliminating trial,” the court must liberally construe evidence in support of the party opposing summary judgment and resolve all doubts concerning the evidence in favor of that party. (See Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389; see also Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717-18.)

B. Sagorac’s Motion

1. Scope and Nature of the Motion

As a preliminary matter, it is necessary to clarify the scope and nature of the instant motion before addressing the merits thereof because it is unclear from Sagorac’s presentation of the motion whether Sagorac is moving for summary judgment of the cross-complaint or summary adjudication of specific causes of action alleged therein.

In his notice of motion, Sagorac states that he is moving for “summary judgment as the Cross-Complaint herein filed on March 22, 2017 for the causes of action for breach of contract and equitable indemnification; and summary adjudication of his cause of action for conversion.” (Sic.) (Ntc. Mtn., p. 1:5-8.) He further states that the motion is made on the grounds that there is no triable issue of material fact as to the claims for breach of contract, conversion, and equitable indemnification. (Id. at p. 1:9-22.) Next, in his memorandum of points and authorities, Sagorac states that his “breach of contract claim is ripe for summary judgment”; his “conversion claim is ripe for summary adjudication”; and he “should be granted summary judgement [sic] as to his equitable indemnification claim.” (Mem. Ps. & As., pp. 6:22-16.) Additionally, Sagorac’s separate statement of undisputed material facts only addresses the first cause of action for breach of contract, the seventh cause of action for conversion, and the tenth cause of action for indemnity. In his papers, Sagorac does not present any argument with respect to claims alleged in his cross-complaint other than those for breach of contract, conversion, and indemnity.

Given that Sagorac’s motion is not directed at the cross-complaint in its entirety and, instead, only addresses the claims for breach of contract, conversion, and indemnity, the Court construes the instant motion as solely one for summary adjudication of the first cause of action for breach of contract, the seventh cause of action for conversion, and the tenth cause of action for indemnity. (See Code Civ. Proc., § 437c, subd. (a) [A motion for summary judgment must dispose of the entire action].)

2. Request for Judicial Notice

In connection with his opposition, Moltyaner asks the Court to take judicial notice of “all prior exhibits previously filed in [his] Motion for Summary Judgment Or in the Alternative, Summary Adjudication of Issues on the Cross-Complaint filed by James M. Sagorac, Jr. filed with this Court on May 23, 2018.” (RJN, p. 2:5-8.)

The subject court records are generally proper subjects of judicial notice under Evidence Code section 452, subdivision (d). Evidence Code section 452, subdivision (d) states that the court may take judicial notice of “[r]ecords of any court of this state.” That provision permits the trial court to “take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached—in the documents such as orders, statements of decision, and judgments—but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.” (People v. Woodell (1998) 17 Cal.4th 448, 455 (Woodell).) Consequently, Court will only take judicial notice of the existence of the subject documents and the truth of the results reached in any court order. The Court will not take judicial notice of the truth of hearsay statements in those documents.

Accordingly, Moltyaner’s request for judicial notice is GRANTED as to the existence of the subject documents and the truth of the results reached in any court order.

3. First Cause of Action

In the first cause of action for breach of contract, Sagorac alleges that he entered into an agreement with Moltyaner “to make sure Plaintiffs were repaid”; Moltyaner “failed to perform his/its/their obligations and responsibilities under the agreements we had”; “[d]uring all times pertinent herein, [he] performed all of [his] obligations by developing the Property for [Moltyaner] to take over the next phase as part of [their] partnership”; and “[a]s a direct and proximate result of the breach of contracts by [Moltyaner], Plaintiffs and [he] have suffered damages to be proved at trial.” (Cross-Complaint, ¶¶ 16-19.) Notably, in the general allegations of the cross-complaint, Sagorac specifically alleges that his agreement with Moltyaner regarding repayment to Placone was a written agreement attached as “an exhibit to Plaintiffs’ Complaint.” (Id. at ¶¶ 8-9.)

Sagorac argues that he is entitled to summary adjudication of the first cause of action because Moltyaner entered into a contract with him providing that Moltyaner would pay him the “remaining profit” from the project on the Property and his “invested funds” and Moltyaner failed to pay him those monies. (Mem. Ps. & As., pp. 7:25-11-13.)

As Moltyaner persuasively argues, Sagorac’s argument on summary adjudication is improper because it goes beyond the scope of the issues raised in the first cause of action. As previously stated, the pleadings limit the issues presented for summary adjudication and such a motion may not be granted or denied based on issues not raised by the pleadings. (See Government, supra, 79 Cal.App.4th at p. 98; Laabs, supra, 163 Cal.App.4th at p. 1258; Nieto, supra, 181 Cal.App.4th at p. 73.) As currently pleaded, the first cause of action for breach of contract is predicated upon and only alleges the existence of a contract between Moltyaner and Sagorac “to make sure Plaintiffs were repaid.” (Cross-Complaint, ¶¶ 8-9, 11, 13, 16.) The claim, as pleaded, does not allege that the parties had a contract whereby Moltyaner was to pay Sagorac “remaining profit” from the project on the Property and Sagorac’s “invested funds.” Consequently, Sagorac’s arguments regarding the existence and breach of such an agreement are not a basis on which the motion for summary adjudication may be granted.

Accordingly, Sagorac’s motion for summary adjudication of the first cause of action for breach of contract is DENIED.

4. Seventh Cause of Action

In the seventh cause of action for conversion, Sagorac alleges that “[p]ursuant to the terms and conditions of the above-alleged agreements, repayment of all creditors, especially Plaintiffs, was to be completed and made upon the completion of the project at the Property.” (Cross-Complaint, ¶ 50.) Moltyaner allegedly “completed the project at the Proerty [sic] and kept all of the money and did not pay Plaintiffs or [Sagorac] as [he] agreed and [was] otherwise obligatied [sic] to do and in so doing, deprived Plaintiffs and [Sagorac] from possession of the funds and converting said monies for [him] use.” (Id. at ¶ 51.) Sagorac alleges that “[a]s a direct and proximate result of [Moltyaner’s] conversion of the monies representing the repayment of the principal and all unpaid and accrued interest under the loan agreements with Plaintiffs, Plaintiffs have suffered damages to be proved at trial.” (Id. at ¶ 52.)

Sagorac argues that he is entitled to summary adjudication of the seventh cause of action because Moltyaner failed to pay him monies due and owing to him under an agreement and Moltyaner took those monies and used them for his exclusive advantage. (Mem. Ps. & As., pp. 6:24-28.) Specifically, Sagorac contends that Moltyaner “used the monies due [to him] from the Dixon Project for his own purposes thereafter, making a profit in excess of the specific amount due [to him] plus pre-judgment interest thereon.” (Id. at p. 12:12-14.) Sagorac also states that “[he] is not advised of the amount of monies earned by [Moltyaner] on the monies” that are due to him.” (Id. at pp. 6:28-7:1.) Sagorac states that he is “reserving for trial or other proceeding the establishment of the full amount of damages due [to him].” (Id. at pp. 7:4-6 and 12:18-20.) Nonetheless, Sagorac contends that the claim is ripe for summary adjudication.

As Moltyaner persuasively argues, Sagorac is not entitled to summary adjudication of the seventh cause of action because he has not established that there is no triable issue of material fact regarding the amount of damages. Summary adjudication is inappropriate where issues of the calculation of damages remain to be determined (See Dept. of Indus. Relations v. UI Video Stores, Inc. (1997) 55 Cal.App.4th 1084, 1097; see also Paramount, supra, 227 Cal.App.4th at p. 241.) A plaintiff must prove each element of the cause of action entitling the party to judgment on that cause of action. (See Paramount, supra, 227 Cal.App.4th at p. 241 [as damages are an element of a breach of contract cause of action, a plaintiff cannot obtain judgment on a breach of contract cause of action in an amount of damages to be determined later].) “The elements of conversion are the plaintiff’s ownership or right to possession of the property at the time of the conversion; the defendant’s conversion by a wrongful act or disposition of property rights; and damages.” (Oakland Village Group v. Fong (1996) 43 Cal.App.4th 539, 543-44.) As damages are an element of a conversion claim and Sagorac indicates that the calculation of the total amount of damages allegedly sustained by him remains to be determined, summary adjudication of the seventh cause of action is inappropriate.

Accordingly, Sagorac’s motion for summary adjudication of the seventh cause of action for conversion is DENIED.

5. Tenth Cause of Action

In the tenth cause of action for indemnity, Sagorac alleges that Placone’s first amended complaint “alleges, among other things, conduct entitling [Placone] to damages against [him]”; “[he] contends that [he] is not liable for the events and occurrences described” in Placone’s pleading; “[Moltyaner] is responsible, in whole or in part, for the damages, if any suffered by [Placone]”; if he “is judged liable to plaintiffs, [Moltyaner] should be required to pay Plaintiffs’ judgment for causing Plaintiffs’ damages and to reimburse [him] for any payment [he] make to Plaintiffs”; and “[a]s a direct and proximate result of the above, [he] has been damaged by reason of investigation, expenses, attorneys’ fees, and costs that have been, and will be, incurred, in a sum not currently known.” (Cross-Complaint, ¶¶ 65-69.)

Sagorac argues that he is entitled to summary adjudication of the tenth cause of action because Moltyaner was his “successor in the Dixon Project” and “assumed the obligations under the [Placone] loans to the Dixon Project.” (Mem. Ps. & As., pp. 12:28-13:2) Sagorac states that Moltyaner purchased his “interest in the Dixon project” and Moltyaner’s “purchase of the Dixon project venture was a mere continuation of [his] Dixon Project venture.” (Id. at p.13:7-10.) In support of his successor liability argument, Sagorac cites Ray v. Alad Corp. (1977) 19 Cal.3d 22 (Ray). Sagorac contends that his settlement agreement with Placone “obligates [him] to defray [Moltyaner’s] obligation to pay the [Placone] loan obligations” and, therefore, “[he] is entitled to be equitably indemnified for being put in a position ‘to make good’ on [Moltyaner’s] obligation to [Placone’s] loans to the Dixon Project.” (Id. at p. 13:2-6.)

Indemnity “refers to the obligation resting on one party to make good a loss or damage another party has incurred.” (Jocer Enterprises, Inc. v. Price (2010) 183 Cal.App.4th 559, 573 (Jocer), internal citations and quotation marks omitted.) There are two types of indemnity: express and equitable. (Ibid.) Express indemnity relies on an express contract providing for indemnification, whereas equitable indemnification requires no contractual relationship between the parties. (Ibid.) “The purpose of equitable indemnification is to avoid the unfairness, under joint and several liability theory, of holding one defendant liable for the plaintiff’s entire loss while allowing another responsible defendant to escape scot free.” (Platt v. Coldwell Banker Residential Real Estate Services (1990) 217 Cal.App.3d 1439, 1444 (Platt), internal citations and quotation marks omitted.) An action for equitable indemnity is premised on a joint legal obligation to the plaintiff; thus, if the court determines a defendant or cross-defendant is not liable for the injuries, another defendant may not properly pursue an indemnity claim against that defendant. (Children’s Hospital v. Sedgwick (1996) 45 Cal.App.4th 1780, 1787 (Sedgwick).) In other words, “an essential element” of an indemnity claim is “common liability.” (Ibid.; Major Clients Agency v. Diemer (1998) 67 Cal.App.4th 1116, 1131 (Major) [“The basis for an action for equitable indemnity is a joint legal obligation to another for damages. As we previously stated, ‘there can be no indemnity without liability’, meaning that if the record does not establish that a defendant is a concurrent tortfeasor responsible in some measure for the injuries suffered by the plaintiff, that defendant is not subject to a claim for indemnity by another defendant.”], internal citations omitted.)

Here, as Moltyaner persuasively argues, Sagorac fails to meet his initial burden to show that Moltyaner had a joint legal obligation to Placone to repay the subject loans. As articulated above, Sagorac contends that he and Moltyaner had a joint legal obligation to repay the subject loans because Moltyaner is his successor and Moltyaner’s “purchase of the Dixon project venture was a mere continuation of [his] Dixon Project venture.” (Mem. Ps. & As., p.13:7-10.) The only legal authority cited in support of Sagorac’s contention is Ray.

Ray involved one corporation purchasing the principal assets of another corporation. (Ray, supra, 19 Cal.3d at pp. 26 and 28.) In that case, the California Supreme Court opined that under California law “a purchaser does not assume the seller’s liabilities unless (1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts.” (Id. at p. 28.) It further opined that “California decisions holding that a corporation acquiring the assets of another corporation is the latter’s mere continuation and therefore liable for its debts have imposed such liability only upon a showing of one or both of the following factual elements: (1) no adequate consideration was given for the predecessor corporation’s assets and made available for meeting the claims of its unsecured creditors; (2) one or more persons were officers, directors, or stockholders of both corporations.” (Id. at p. 29.)

This case is readily distinguishable from Ray. First, this case is not one involving a corporation purchasing the principal assets of another corporation. Sagorac does not provide any reasoned argument or legal authority indicating that the principles articulated in Ray apply to individuals as opposed to corporations. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-85 (Badie); see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 (Schaeffer) [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Second, Sagorac does not present any argument or evidence showing that: (1) no adequate consideration was given for the purchased assets and made available for meeting the creditor claims; or (2) one or more persons were officers, directors, or stockholders of both the predecessor and successor entity. Consequently, Sagorac fails to demonstrate that Moltyaner’s alleged business was a mere continuation of his business such that Moltyaner had a joint legal obligation to repay Placone’s loans.

Accordingly, Sagorac’s motion for summary adjudication of the tenth cause of action for indemnity is DENIED.

C. Moltyaner’s Motion

Moltyaner moves for summary judgment of the cross-complaint or, in the alternative, summary adjudication of each and every cause of action alleged therein.

1. Request for Judicial Notice

Moltyaner asks the Court to take judicial notice of: the cross-complaint; a grant deed recorded on October 30, 2009; requests for admission propounded on Sagorac and Sagorac’s responses to the same; two declarations executed by Sagorac in 2011; a grant deed recorded on November 30, 2011; a grant deed recorded on January 28, 2014; the notices of entry of order filed on August 14, 2017 and January 8, 2018; the notice of settlement between Placone and Sagorac filed on February 16, 2018; and the requests for production of documents propounded on Sagorac and his supplemental responses to the same.

First, the cross-complaint, notices of entry of order, and notice of settlement are proper subjects of judicial notice because the documents are court records relevant to material issues raised in connection with the pending motion. (See Evid. Code, § 452, subd. (d) [permitting judicial notice of court records]; see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2 (Lockyer) [“There is … a precondition to the taking of judicial notice in either its mandatory or permissive form—any matter to be judicially noticed must be relevant to a material issue.”]; Woodell, supra, 17 Cal.4th at p. 455 [“Evidence Code sections 452 and 453 permit the trial court to ‘take judicial notice of the existence of judicial opinions and court documents, along with the truth of the results reached-in the documents such as orders, statements of decision, and judgments-but [the court] cannot take judicial notice of the truth of hearsay statements in decisions or court files, including pleadings, affidavits, testimony, or statements of fact.’ ”].)

Second, the grant deeds are proper subjects of judicial notice as they are recorded real property documents. (See Evid. Code, § 452, subd. (h); see also Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 [disapproved on other grounds in Yvanova v. New Century Morg. Corp. (2016) 62 Cal.4th 919] [court may take judicial notice of the existence and recordation of real property records]; Evans v. California Trailer Court, Inc. (1994) 28 Cal.App.4th 540, 549 [court may take judicial notice of recorded deeds].)

Third, with respect to the discovery requests, Sagorac’s responses thereto, and the two declarations executed by Sagorac in 2011, Moltyaner does not present any reasoned argument or legal authority demonstrating that those documents are proper subjects of judicial notice. (See Badie, supra, 67 Cal.App.4th 779, 784-85; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) The law is clear that a court may not take judicial notice of documents such as sworn declarations, discovery requests, and responses thereto unless those documents contain statements of the plaintiff or his agent that are inconsistent with the allegations in the pleading. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604-605.) No such argument is made here. Therefore, the Court declines to take judicial notice of the subject documents.

Accordingly, Moltyaner’s request for judicial notice is DENIED IN PART and GRANTED IN PART. The request is DENIED as to the discovery requests, Sagorac’s responses thereto, and the two declarations executed by Sagorac in 2011. The request is GRANTED as to the remaining documents.

2. First Cause of Action

Moltyaner argues that the first cause of action for breach of contract has no merit because he never had an agreement with Sagorac to repay the loans made to Placone. (Mem. Ps. & As., pp. 7:4-8:20.) In support of his argument, Moltyaner first points out that the first cause of action is based on the allegation that Sagorac had an agreement with him to make sure that Placone was repaid. (Id. at p. 7:6-9.) Moltyaner then asserts that he was not a party or signatory to the two promissory notes between Sagorac and Placone dated January 1 and April 1, 2012, as the court previously stated in its order dated August 4, 2017. (Id. at p. 7:17-27.) Similarly, the undisputed material facts (“UMF”) proffered by Moltyaner with respect to the first cause of action only attempt to demonstrate that Moltyaner was not a party or signatory to the promissory notes. (UMF Nos. 1-5.)

Generally, a claim for breach of contract cannot be asserted against one who is not a party to the contract. (Tri-Continent Internat. Corp. v. Paris Sav. & Loan Assn. (1993) 12 Cal.App.4th 1354, 1359; see Burnett v. Chimney Sweep (2004) 123 Cal.App.4th 1057, 1071 [no cause of action for breach of contract where the plaintiff company was not a party to the lease].)

Here, Moltyaner fails to meet his burden as to first cause of action because he fails to establish the two promissory notes between Placone and Sagorac are the contracts that form the basis of the claim. Nowhere in the cross-complaint does Sagorac allege that the first cause of action is based on an alleged breach of the promissory notes. As currently pleaded, the claim is predicated a written contract between Moltyaner and Sagorac “to make sure Plaintiffs were repaid” that was attached as “an exhibit to Plaintiffs’ Complaint.” (Cross-Complaint, ¶¶ 8-9, 11, 13, 16.) Attached to Placone’s pleadings, in addition to the two promissory notes, was an August 29, 2010 contract between Sagorac and Moltyaner. (Moltyaner’s Index of Exs., Ex. C.) It is possible that the contract referred to in the cross-complaint is the August 29, 2010 agreement between Sagorac and Moltyaner, particularly in light of the allegation the financial issues that led Sagorac to enter into the agreement arose in 2009. (Cross-Complaint, ¶ 8.) Because the August 29, 2010 contract may form the basis of the first cause of action and Moltyaner does not address that agreement, Moltyaner does not meet his burden with respect to the first cause of action.

Accordingly, Moltyaner’s motion for summary judgment of the cross-complaint and summary adjudication of the first cause of action is DENIED.

3. Second Cause of Action

In the second cause of action for breach of contract based on third-party liability, Sagorac alleges that: Moltyaner “knew that Plaintiffs were to be repaid and were to benefit from our partnership agreement and/or contract to complete the next phase of the Property”; “[u]nder the contract, [Moltyaner was] to pay back all of the money borrowed to get the Property developed and this included Plaintiffs”; Moltyaner “failed to perform his/its/their obligations and responsibilities under the contracts”; he “performed [his] obligations to [Moltyaner]”; and “[a]s a direct and proximate result of the breach of contract between all of the defendants to which Plaintiffs are third party beneficiaries, Plaintiffs have suffered damages to be proved at trial and such damages are owed by [Moltyaner].” (Cross-Complaint, ¶¶ 21-25.)

Moltyaner argues that the second cause of action has no merit because Placone was not a third party beneficiary to the August 20, 2010 contract between him and Sagorac; Sagorac lacks standing to assert and third party beneficiary claim on behalf of Placone; and Sagorac himself was not a third party to the August 20, 2010 contract. (Mem. Ps. & As., p. 9:10-27.)

Moltyaner’s argument regarding standing is well-taken and he meets his initial burden as to the second cause of action. Standing is the right of a party to obtain relief in court and goes to the existence of a cause of action. (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1604; Pillsbury v. Karmgard (1994) 22 Cal.App.4th 743, 757.) A plaintiff must assert her own legal rights and interests, and cannot rest her claim to relief on the legal rights or interests of third parties. (Property Owners of Whispering Palms, Inc. v. Newport Pacific, Inc. (2005) 132 Cal.App.4th 666, 672.) The second cause of action, as currently pleaded, alleges that Placone was a third-party beneficiary of the subject agreement and Placone sustained damages as a result of Moltyaner’s alleged breach. (Cross-Complaint, ¶¶ 21-25.) Sagorac does not plead any facts, or present any argument in his opposition papers, demonstrating that he has standing to assert a claim for breach of contract based on damages allegedly sustained by Placone as a third-party beneficiary to the subject agreement. As the allegations of the cross-complaint, in and of themselves, demonstrate that Sagorac lacks standing to bring the second cause of action, as pleaded, Sagorac fails to establish that there is a triable issue of material fact as a matter of law.

Accordingly, Moltyaner’s motion for summary adjudication of the second cause of action is GRANTED.

4. Third Cause of Action

In the third cause of action for breach of implied covenant of good faith and fair dealing, Sagorac alleges that Moltyaner “consciously and deliberately sought to frustrate the purpose of the contracts and/or partnership agreement.” (Cross-Complaint, ¶ 28.)
Specifically, Sagorac alleges that Moltyaner frustrated “the purpose of the contracts by employing bogus, improper accounting methodologies under the agreement in such a manner that [Moltyaner] made sure there were insufficient funds to defray the repayment of Plaintiffs’ loans and the interest thereon.” (Id. at ¶ 29.) Sagorac further alleges that he performed all of his obligations and he suffered damages as a result of Moltyaner’s conduct. (Id. at ¶¶ 30-31.)

In support of his motion with respect to the third cause of action, Moltyaner presents the same arguments that he made with respect to the first cause of action. Specifically, Moltyaner argues that the third cause of action for breach of implied covenant of good faith and fair dealing has no merit because he never had an agreement with Sagorac to repay the loans made to Placone. (Mem. Ps. & As., pp. 7:4-8:20.) Moltyaner points out that the third cause of action is based on the allegation that he employed improper accounting methodologies in order to make sure that there were insufficient funds to repay Placone. (Id. at p. 7:9-12.) Moltyaner then asserts that he was not a party or signatory to the two promissory notes between Sagorac and Placone dated January 1 and April 1, 2012, as the court previously stated in its order dated August 4, 2017. (Id. at p. 7:17-27.) Similarly, the UMF proffered by Moltyaner with respect to the third cause of action only attempt to demonstrate that Moltyaner was not a party or signatory to the promissory notes. (UMF Nos. 1-3, 5, and 7.)

As with the first cause of action, Moltyaner fails to meet his burden as to third cause of action because he fails to establish the two promissory notes between Placone and Sagorac are the contracts that form the basis of the claim. Nowhere in the cross-complaint does Sagorac allege that the third cause of action is based on an alleged breach of the promissory notes. As currently pleaded, the claim incorporates the general allegations of the cross-complaint regarding a written contract between Moltyaner and Sagorac “to make sure Plaintiffs were repaid” that was attached as “an exhibit to Plaintiffs’ Complaint.” (Cross-Complaint, ¶ 32.) In addition, the third cause of action alleges that the implied covenant of good faith and fair dealing allegedly breach by Defendant was in various “contracts and/or [a] partnership agreement.” (Cross-Complaint, ¶ 28.) Thus, it is possible that one of the contracts referred to in the third cause of action is the August 29, 2010 agreement between Sagorac and Moltyaner. Because the August 29, 2010 contract may form the basis of the third cause of action and Moltyaner does not address that agreement, Moltyaner does not meet his burden with respect to the third cause of action.

Accordingly, Moltyaner’s motion for summary adjudication of the third cause of action is DENIED.

5. Fourth Cause of Action

In the fourth cause of action for breach of fiduciary duty, Sagorac alleges that “[t]he agreements [he] had with [Moltyaner] is a partnership or other similar joint venture agreement which created a trust relationship between” him and Moltyaner. (Cross-Complaint, ¶ 33.) Moltyaner allegedly “owed [him] and the Plaintiffs a fiduciary obligation and an associated fiduciary duty of care.” (Ibid.) Sagorac alleges that “[t]he acts described [in the preceding causes of action and general allegations of the cross-complaint] constituted a breach of [Moltyaner’s] fiduciary obligations owed, but not limited to, failing to act with the utmost good faith and candor.” (Id. at ¶ 34.) “In particular, [Moltyaner] failed to act with the utmost good faith and candor by failing to repot [sic] the sale of the Dixon 2 Project home and thereafter employing accounting methodologies contrary to the terms and conditions articulated in the agreement.” (Ibid.)
As a result of Moltyaner’s conduct, Sagorac and Placone allegedly suffered damages. (Id. at ¶ 35.)

Moltyaner argues that the fourth cause of action lacks merit because (1) Sagorac cannot establish, as a matter of law, that a fiduciary relationship existed between the two of them and (2) the claim is time-barred by the applicable statute of limitations.

a. Fiduciary Relationship

Moltyaner asserts that Sagorac cannot establish that there was a fiduciary relationship between them, as a matter of law, because Sagorac admitted that “he was not Moltyaner’s partner and that Moltyaner was only a lender to Sagorac.” (Mem. Ps. & As., p. 8:21-27.) In support of this assertion, Moltyaner proffers UMF No. 1 and exhibits D and E of his index of exhibits. Moltyaner contends that because “no fiduciary duty exists between a borrower of a lender in an arms[-]length transaction,” Sagorac cannot establish that they had a fiduciary relationship. (Id. at pp. 8:27-9:9.)

“In order to plead a cause of action for breach of fiduciary duty, there must be shown the existence of a fiduciary relationship, its breach, and damage proximately caused by that breach. The absence of any one of these elements is fatal to the cause of action.” (Brown v. California Pension Administrators & Consultants, Inc. (1996) 45 Cal.App.4th 333, 347-48; see also CACI, No. 605.) “While breach of fiduciary duty is a question of fact, the existence of legal duty in the first instance and its scope are questions of law.” (Kirschner Brothers Oil, Inc. v. Natomas Co. (1986) 185 Cal.App.3d 784, 790.)

Here, Moltyaner does not adequately demonstrate that he did not owe Sagorac a fiduciary duty as a matter of law. Moltyaner’s argument is predicated on the assertion that Sagorac previously admitted that Moltyaner was not his partner and was only his lender. While Moltyaner’s UMF and evidence show that Sagorac admitted Moltyaner was never his partner (see UMF No. 1; see also Moltyaner’s Index of Exs., Ex. E, pp. 1:29-2:6), Moltyaner’s evidence does not establish that Moltyaner was solely Sagorac’s lender with respect to the transactions that form the basis of the cross-complaint.

Moltyaner submits a declaration executed by Sagorac in connection with a separate and distinct legal action. (See Moltyaner’s Index of Exs.,Ex. E.) In that declaration, Sagorac states:

I engaged in the business of acquiring, improving, and reselling property. In the course of my business, in or about 2005[,] I was introduced to [Moltyaner] by a mutual friend. On various occasions thereafter, [Moltyaner] loaned funds to me for my real estate ventures. My relationship with [Moltyaner] was one of borrower/lender in these transactions … .

(See Moltyaner’s Index of Exs.,Ex. E, ¶ 2.)

However, Sagorac does not identify by date, or any other identifiable feature, the “various occasions” on which Moltyaner acted as his lender. Similarly, Sagorac does not identify by date, or any other identifiable feature, the specific “transactions” in which Moltyaner served as his lender. Furthermore, Sagorac does not conclusively state that the only relationship he ever had with Moltyaner was that of borrower and lender. Additionally, Sagorac does not declare that he was never a joint venturer with Moltyaner. Notably, later in his declaration, Sagorac indicates that with respect to the Property, his relationship with Moltyaner was not one of borrower and lender, but one of seller and buyer. (See Moltyaner’s Index of Exs.,Ex. E, ¶ 6.)

Because the evidence relied upon by Moltyaner in his moving papers does not establish that Moltyaner was solely Sagorac’s lender with respect to the transactions that form the basis of the cross-complaint, Sagorac alleges—among other things—that the parties were joint venturers, and Moltyaner does not argue, or attempt to show, in his moving papers that he was not a joint venturer with Sagorac, Moltyaner fails to demonstrate that he did not owe Sagorac a fiduciary duty as a matter of law. (See Pellegrini v. Weiss (2008) 165 Cal.App.4th 515, 524 (Pellegrini) [joint venturers have a fiduciary duty to act with the highest good faith towards each other regarding affairs of the joint venture].)

b. Statute of Limitations

Moltyaner asserts that the fourth cause of action is time-barred by the three-year statute of limitations set forth in Code of Civil Procedure section 338, subdivision (d). (Mem. Ps. & As., p. 5:16-26.) Moltyaner contends that claim accrued, at the latest, on January 28, 2014, when one of the parcels that made up part of the Property was sold. (Id. at p. 5:19-24.) Moltyaner points out that the cross-complaint was filed more than three years after that date, on March 22, 2017. (Id. at p. 5:21-24.) Moltyaner concludes that the claim is, therefore, time-barred by the three-year statute of limitations. (Id. at p. 5:24-26.)

To substantiate his statute of limitations argument, Moltyaner must demonstrate (1) which statute of limitations applies and (2) when the cause of action accrued. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315-16 (E-Fab).)

Moltyaner fails to meet his initial burden with respect to the fourth cause of action. Moltyaner does not provide any reasoned argument or legal authority supporting his conclusory assertion that the three-year statute of limitations set forth in Code of Civil Procedure section 338, subdivision (d) applies to the fourth cause of action. (See Badie, supra, 67 Cal.App.4th 779, 784-85; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) In general, the statute of limitations for a breach of fiduciary duty claim is four years. (See, e.g., Thomson v. Canyon (2011) 198 Cal.App.4th 594, 607 (Thomson) [applying four-year statute of limitations to breach of fiduciary duty claim].) The statute of limitations for breach of fiduciary duty may be three years if the gravamen of the claim is fraud. (See id. at pp. 606-07; see also American Master Lease LLC v. Idanta Partners, Ltd. (2014) 225 Cal.App.4th 1451, 1479.) Here, Moltyaner neither demonstrates that the gravamen of the fourth cause of action is fraud nor provides any explanation for why the four-year statute of limitations should not apply in this case. Notably, if the four-year statute of limitations was applicable and the claim accrued, as Moltyaner asserts, on January 28, 2014, the fourth cause of action would not be time-barred. For these reasons, Moltyaner fails to establish that the claim is time-barred by the applicable statute of limitations.

Accordingly, Moltyaner’s motion for summary adjudication of the fourth cause of action is DENIED.

6. Fifth, Sixth, and Seventh Causes of Action

Moltyaner argues that the fifth cause of action for intentional misrepresentation, the sixth cause of action for negligent misrepresentation, and the seventh cause of action for conversion have no merit because they are time-barred by the three-year statute of limitations set forth in Code of Civil Procedure section 338, subdivisions (c)(1) and (d).

To substantiate his statute of limitations argument, Moltyaner must demonstrate (1) which statute of limitations applies and (2) when the cause of action accrued. (E-Fab, supra, 153 Cal.App.4th at pp. 1315-16.)

a. Fraud Claims

With respect to the fifth cause of action for intentional misrepresentation, Moltyaner acknowledges that the claim is predicated on his alleged misrepresentation regarding his intention to abide by the terms of his agreement with Sagorac. Moltyaner points out that Sagorac allegedly relied on his representations by agreeing to allow him to take over the project. Moltyaner then states that “the ‘780 and 782 Dixon Agreement’ was executed in August 2010, so that any representations which [he] made to Sagorac in order to induce Sagorac to enter into that agreement[ ] were barred by the three (3) year Statute of Limitations before the cross-complaint was filed on March 22, 2017.” (Mem., Ps. & As., p. 6:4-8.)

Regarding the sixth cause of action for negligent misrepresentation, Moltyaner acknowledges that the claim is based on the allegation that he knew, or should have known, that he would be unable to adhere to the terms of the parties’ agreements. Moltyaner points out that Sagorac allegedly relied on his representations regarding his intention to abide by the agreements by agreeing to allow him to take over the project. Moltyaner then states that “[a]gain, the ‘780 and 782 Dixon Agreement’ was executed in August 2010 … more than six (6) years [prior] to the filing of the Cross-Complaint.” (Mem., Ps. & As., p. 6:15-18.) Moltyaner concludes that the sixth cause of action is, therefore, time-barred.

It is well-established that the statute of limitations for fraud is three years. (See Alfaro v. Comm. Housing Improvement System & Planning Assn., Inc. (2009) 171 Cal.App.4th 1356, 1391, citing Code Civ. Proc., § 338, subd. (d).)

The limitations period commences when a cause of action accrues. (Code Civ. Proc., § 312; Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806 (Fox).) “Generally speaking, a cause of action accrues at the time when the cause of action is complete with all of its elements.” (Fox, supra, 35 Cal.4th at p.806.)

An exception to the foregoing general rule, and of importance in this action, is the so-called “discovery rule,” which “postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.” (Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 397.) This rule can be “expressed by the Legislature or implied by the courts.” (Ibid.) In the case of fraud in particular, the rule applies by statute, with Code of Civil Procedure section 338, subdivision (d), providing that a cause of action on the ground of fraud “is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud … .”

“Literally interpreted, this language would give the plaintiff an unlimited period to sue if [it] could establish ignorance of the facts. But courts have read into the statute a duty to exercise diligence to discover the facts …. Under this rule constructive and presumed notice or knowledge are equivalent to knowledge. So, when the plaintiff has notice or information of circumstances to put a reasonable person on inquiry, or has the opportunity to obtain knowledge from sources open to [its] investigation (such as public records or corporation books), the statute commences to run.” (Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1525, internal citations omitted.)

Here, Moltyaner does not provide any argument or evidence regarding when Sagorac discovered, or should have discovered, the facts constituting the alleged fraud. Instead, Moltyaner simply asserts, in a conclusory manner, that the contract between him and Sagorac was executed on August 29, 2010, and, therefore, the claims must have accrued as of that date. Notably, Moltyaner submits nothing which suggests that anything occurred more than three years prior to the filing of the cross-complaint was sufficient to excite Sagorac’s suspicion, or put Sagorac on inquiry notice that his alleged representations were false. Moltyaner makes no showing that the mere execution of the agreement with Sagorac would have provided Sagorac notice that the alleged representations were false. Because the statute of limitations is an affirmative defense (Minton v. Cavaney (1961) 56 Cal.2d 576, 581), Sagorac has no burden demonstrate that his fraud claims are timely. It is Moltyaner’s burden to demonstrate when the claims accrued and that the statute of limitations has run. As he has not done so, he fails to meet his initial burden with respect to the fifth and sixth causes of action.

Accordingly, Moltyaner’s motion for summary adjudication of the fifth and sixth causes of action is DENIED.

b. Conversion Claim

With respect to the seventh cause of action for conversion, Moltyaner acknowledges that the claim is predicated on the allegations that: “repayment of all creditors,” including Placone, “was to be completed and made upon the completion of the project at the Property”; Moltyaner completed the project at the Property and “kept all of the money and did not pay Plaintiffs or [Sagorac] as … agreed”; and in doing so, Moltyaner deprived Placone and Sagorac of said funds and converted them to his own use. (Cross-Complaint, ¶¶ 50-52.) Moltyaner asserts that the parcels that made up the Property were sold on November 30, 2011 and January 28, 2014. (UMF Nos. 9-10; RJN, Exs. G and H.) He concludes that because both parcels “sold and sales proceeds disbursed more than three (3) years before the Cross-Complaint was filed on March 22, 2017,” the conversion claim is time-barred. (Mem. Ps. & As., p. 6:24-28.)

It is well-establish that the statute of limitations for conversion is three years and a cause of action for conversion accrues when the defendant wrongfully takes the plaintiff’s property. (Code Civ. Proc., § 338, subd. (c)(1); AmerUS Life Ins. Co. v. Bank of America, N.A. (2006) 143 Cal.App.4th 631, 639.)

Here, Sagorac expressly alleges that the funds were due upon completion of the project and Moltyaner failed to pay the funds when they became due. (Cross-Complaint, ¶¶ 50-52.) Consequently, based on the allegations of the cross-complaint, the wrongful taking occurred upon completion of the project, i.e., the sale of the homes on the two parcels. (Id. ¶¶ at 10 and 50-52.) Furthermore, Moltyaner’s UMF and evidence establish that the sale of the homes occurred on November 30, 2011 and January 28, 2014. (UMF Nos. 9-10; RJN, Exs., G and H.) Thus, Moltyaner adequately demonstrates that the conversion claim accrued, at the latest, on January 28, 2014. As the cross-complaint was filed more than three years after the date of accrual, on March 22, 2017, Moltyaner meets his initial burden to show that the cause of action for conversion it time-barred by the applicable statute of limitations.

In opposition, Sagorac agrees that the statute of limitations for conversion claims is three years. Additionally, Sagorac does not dispute that the homes were sold on November 30, 2011 and January 28, 2014. Instead, Sagorac argues that the delayed discovery rule applies and tolls accrual of the conversion cause of action. Specifically, Sagorac contends that he “has never been apprised by [Moltyaner ] that he … was not entitled any monies under the ‘780 and 782 Dixon Agreement.’ ” (Mem. Ps. & As., p. 11:25-27.) He asserts that “following reasonable inquiry to [Moltyaner] after he … was advised that the Dixon Project had been completed ( … by [Placone]), [he] was put on constructive notice that [Moltyaner] maintained that he … was not entitled to any monies under the ‘780 and 782 Dixon Agreement’ when [Moltyaner’s] lawyer wrote to [Placone’s] attorney in April 2014 … .” (Id. at pp. 11:26-12:3.)

In support of this argument, Sagorac presents his declaration, which states that he first learned from Placone in February 2014, that the second home had sold. (Sagorac Dec., ¶¶ 24-27.) He further declares that Moltyaner confirmed the sale and “advised that after he had completed his accounting, he would advise me as to the monies I would be paid under the Agreement.” (Ibid.) Sagorac states that he attempted to obtain an accounting from Moltyaner, but he did not receive one. (Id. at ¶¶ 28-29 and 33.) Sagorac declares that he was advised in early April 2014, that Moltyaner claimed that no money was due and owing to him. (Id. at ¶¶ 31-32.) Based on the foregoing, Sagorac asserts that he could not have made earlier discovery of the alleged conversion.

Sagorac’s evidence is sufficient to raise a triable issue of material fact as to whether the delayed discovery rule applies and tolls the applicable statute of limitations. Specifically, Sagorac contends that even though he was aware of the sale of the second home sometime in February 2014, he was not aware of the alleged conversion because Moltyaner represented to him that an accounting would be done and then Moltyaner would advise him as to the monies he would be paid under the agreement.

Moltyaner contends that Sagorac may not rely on the delayed discovery rule in opposition to his motion because Sagorac did not plead any facts in the cross-complaint that give rise to the delayed discovery rule with respect to the seventh cause of action for conversion. In support of this position, Moltyaner cites Fox. The court in Fox opined that “a plaintiff whose complaint shows on its face that the claim would be barred without benefit of the discovery rule, must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.” (Fox, supra, 35 Cal at p. 808.) In this case, the principle articulated in Fox does not apply because the cross-complaint did not show on its face that the conversion claim would be barred without the benefit of the discovery rule. Rather, the cross-complaint merely alleges that the sale of the second home took place sometime in 2014. (Cross-Complaint, ¶ 10.) Because the cross-complaint did not expressly allege a specific date of sale, it cannot be said that the allegations of the cross-complaint, in and of themselves, showed that the claim was time-barred without application of the discovery rule. Therefore, Sagorac was not required to plead facts regarding the manner of discovery and inability to have made the discovery earlier.

For these reasons, Moltyaner’s motion for summary adjudication of the seventh cause of action is DENIED.

7. Eighth Cause of Action

In the eighth cause of action for unjust enrichment, Sagorac alleges that Moltyaner was unjustly enriched “[b]y failing to disclose in a timely manner the sale and close of escrow on the home built in the Dixon 2 Project; employing accounting methodology to preclude the repayment of Plaintiffs’ loan agreements and interest thereon and [his] share of profits; and/or distributing the proceeds from said sale/close of escrow before repaying Plaintiffs’ loans and/or sums [he is] owed.” (Cross-Complaint, ¶ 55.) Sagorac further alleges that it would be inequitable for Moltyaner to “enjoy the benefits of such actions without being held accountable for the resulting detriment to Plaintiffs and [him], and accordingly, the value of [Moltyaner’s] unjust enrichment at Plaintiffs’ or [his] expense should be awarded according to proof.” (Id. at ¶ 56.)

“The elements of an unjust enrichment claim are the ‘receipt of a benefit and [the] unjust retention of the benefit at the expense of another.’ ” (Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593.)

Initially, Moltyaner argues that the eighth cause of action has no merit because the court previously determined that (1) he was not a signatory to Sagorac’s promissory notes with Placone and (2) Placone did not allege sufficient facts in his operative second amended complaint (“SAC”) to support a claim for restitution.

These arguments fail to show that there is no triable issue of material fact with respect to the eighth cause of action. First, Moltyaner does not establish that the claim is predicated upon obligations set forth in the promissory notes. Thus, the fact that Moltyaner is not a party to the notes is not dispositive. Notably, the cause of action is based, in part, on Moltyaner’s alleged failure to pay Sagorac a share of the profits from the sale allegedly due and owing to Sagorac under a contract between him and Moltyaner. In his moving papers, Moltyaner fails to address whether the obligations allegedly owed to Sagorac under this agreement, the August 29, 2010 contract, are adequate to support the claim for unjust enrichment.

Second, the fact that the Court determined Placone did not allege sufficient facts to support a claim for restitution in the SAC is irrelevant. Moltyaner fails to explain why the Court’s prior determination with respect to Placone and the allegations of the SAC has any bearing on the adequacy of the eighth cause of action. (See Badie, supra, 67 Cal.App.4th 779, 784-85; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Notably, Sagorac is a separate and distinct party, and the allegations of the cross-complaint are not identical to the allegations of the SAC.

Next, Moltyaner argues that the eighth cause of action has no merit because Sagorac admitted that the purpose of the sale was to repay loans that he previously made to Sagorac. Specifically, Moltyaner contends that Sagorac admitted to owing him, $856,800 as of July 26, 2011. Because Sagorac allegedly owed him $856,800, Moltyaner asserts that he was not unjustly enriched by the alleged retention of Sagorac’s share of the sale proceeds.

This argument is not well-taken. Moltyaner does not attempt to establish that Sagorac’s share of the sale proceeds would have been equal to, or less than, $856,800. Because Moltyaner does not demonstrate that the amount he was purportedly owed covered all of Sagorac’s share of the sale proceeds, he fails to demonstrate that he was not unjustly enriched by the alleged retention of Sagorac’s share of the sale proceeds.

Accordingly, Moltyaner’s motion for summary adjudication of the eighth cause of action is DENIED.

8. Ninth Cause of Action

In the ninth cause of action for accounting, Sagorac alleges that Moltyaner refused to provide an accounting to Placone or him and an accounting is necessary to determine the amount of profit from the sale and whether there were sufficient funds to compensate him and Placone. (Cross-Complaint, ¶¶ 61-63.)

Moltyaner argues that the ninth cause of action lacks merit because (1) he was not a party or signatory to the promissory notes between Sagorac and Placone; (2) Placone’s first amended complaint (“FAC”) did not allege facts that would justify an accounting from Moltyaner to Placone; and (3) and Sagorac cannot allege the existence of a fiduciary relationship between them.

These arguments fail to show that there is no triable issue of material fact with respect to the ninth cause of action. First, Moltyaner does not establish that the claim is predicated upon obligations set forth in the promissory notes. Thus, the fact that Moltyaner is not a party to the notes is not dispositive. Notably, the cause of action is based, in part, on Moltyaner’s alleged failure to pay Sagorac monies owed directly to him. In his moving papers, Moltyaner fails to address whether the obligations allegedly owed to Sagorac under the August 29, 2010 contract, are adequate to support the claim for accounting.

Second, the fact that the Court determined Placone did not allege sufficient facts to support a claim for accounting in the FAC is irrelevant. Moltyaner fails to explain why the Court’s prior determination with respect to Placone and the allegations of the FAC has any bearing on the adequacy of the ninth cause of action. (See Badie, supra, 67 Cal.App.4th 779, 784-85; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Notably, Sagorac is a separate and distinct party, and the allegations of the cross-complaint are not identical to the allegations of the FAC.

Third, the absence of a fiduciary relationship is not fatal to a claim for an accounting. An action for an accounting maybe brought even where there is no fiduciary relationship; the plaintiff need only show that there is some type of relationship that requires an accounting, and that some balance is due to the plaintiff that can only be ascertained from such an accounting. (Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 910; Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) As Moltyaner’s argument only addresses the existence of a fiduciary relationship, it fails to dispose of the accounting cause of action.

Furthermore, as explained above, the evidence relied upon by Moltyaner in his moving papers does not establish that Moltyaner was solely Sagorac’s lender with respect to the transactions that form the basis of the cross-complaint; Sagorac alleges—among other things—that the parties were joint venturers; and Moltyaner does not argue, or attempt to show, in his moving papers that he was not a joint venturer with Sagorac. Because joint venturers owe one another fiduciary duties, Moltyaner fails to demonstrate that he did not owe Sagorac a fiduciary duty as a matter of law. (See Pellegrini, supra, 165 Cal.App.4th at p. 524 [joint venturers have a fiduciary duty to act with the highest good faith towards each other regarding affairs of the joint venture].)

For these reasons, Moltyaner’s motion for summary adjudication of the ninth cause of action is DENIED.

9. Tenth Cause of Action

In the tenth cause of action for indemnity, Sagorac alleges that Placone’s first amended complaint “alleges, among other things, conduct entitling [Placone] to damages against [him]”; “[he] contends that [he] is not liable for the events and occurrences described” in Placone’s pleading; “[Moltyaner] is responsible, in whole or in part, for the damages, if any suffered by [Placone]”; if he “is judged liable to plaintiffs, [Moltyaner] should be required to pay Plaintiffs’ judgment for causing Plaintiffs’ damages and to reimburse [him] for any payment [he] make to Plaintiffs”; and “[a]s a direct and proximate result of the above, [he] has been damaged by reason of investigation, expenses, attorneys’ fees, and costs that have been, and will be, incurred, in a sum not currently known.” (Cross-Complaint, ¶¶ 65-69.)

Among other things, Moltyaner argues that the tenth cause of action lacks merit because: the Court previously determined he was not a signatory or party to the promissory notes between Sagorac and Placone; the Court previously determined that the agreement between him and Sagorac does not require him to confer a benefit on any third party, such as Placone; and he does not have a joint legal obligation to repay the promissory notes. In support of his argument, Moltyaner offers UMF Nos. 1-7 and 13-14.

Moltyaner’s argument is well-taken and supported by his UMF and evidence. Indemnity “refers to the obligation resting on one party to make good a loss or damage another party has incurred.” (Jocer, supra, 183 Cal.App.4th at p. 573, internal citations and quotation marks omitted.) There are two types of indemnity: express and equitable. (Ibid.) Express indemnity relies on an express contract providing for indemnification, whereas equitable indemnification requires no contractual relationship between the parties. (Ibid.) “The purpose of equitable indemnification is to avoid the unfairness, under joint and several liability theory, of holding one defendant liable for the plaintiff’s entire loss while allowing another responsible defendant to escape scot free.” (Platt, supra, 217 Cal.App.3d at p. 1444, internal citations and quotation marks omitted.) An action for equitable indemnity is premised on a joint legal obligation to the plaintiff; thus, if the court determines a defendant or cross-defendant is not liable for the injuries, another defendant may not properly pursue an indemnity claim against that defendant. (Sedgwick, supra, 45 Cal.App.4th at p. 1787.) In other words, “an essential element” of an indemnity claim is “common liability.” (Ibid.; Major, supra, 67 Cal.App.4th at p. 1131 [“The basis for an action for equitable indemnity is a joint legal obligation to another for damages. As we previously stated, ‘there can be no indemnity without liability’, meaning that if the record does not establish that a defendant is a concurrent tortfeasor responsible in some measure for the injuries suffered by the plaintiff, that defendant is not subject to a claim for indemnity by another defendant.”], internal citations omitted.)

In its August 14, 2017 order, the Court previously held that Moltyaner was is not a party to either of the 2012 promissory notes executed by Sagorac and Placone, and Moltyaner was not required to repay the loans under the terms of those agreements. (UMF Nos. 4 and 6; RJN, Ex. I, pp. 5-7.) In that order, the Court also held the August 29, 2010 contract between Sagorac and Moltyaner did not obligate Moltyaner to convey any benefit on a third-party, such as Placone. (UMF Nos. 4 and 6; RJN, Ex. I, pp. 5-7.) The Court noted that the contract states: “[Sagorac] is responsible to pay the neighbors a total of $100,000 per house of which $100,000 has already been paid.” But the Court opined, “To the extent the document’s reference to ‘the neighbors’ could be construed as an ambiguous reference to third party beneficiaries,” such as Placone, “only [Sagorac] is ‘responsible’ for making the designate payment.” (Ibid.) Thus, Moltyaner’s evidence demonstrates that the promissory notes and the August 29, 2010 contract did not create a legal obligation whereby Moltyaner was required to repay the loans made by Placone.

In opposition, Sagorac fails to raise a triable issue of material fact. Sagorac contends that he and Moltyaner had a joint legal obligation to repay the subject loans because Moltyaner is his successor and Moltyaner’s purchase of the Dixon project venture was a mere continuation of his Dixon Project venture. The only legal authority cited in support of Sagorac’s contention is Ray.

As previously articulated, Ray involved one corporation purchasing the principal assets of another corporation. (Ray, supra, 19 Cal.3d at pp. 26 and 28.) In that case, the California Supreme Court opined that under California law “a purchaser does not assume the seller’s liabilities unless (1) there is an express or implied agreement of assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts.” (Id. at p. 28.) It further opined that “California decisions holding that a corporation acquiring the assets of another corporation is the latter’s mere continuation and therefore liable for its debts have imposed such liability only upon a showing of one or both of the following factual elements: (1) no adequate consideration was given for the predecessor corporation’s assets and made available for meeting the claims of its unsecured creditors; (2) one or more persons were officers, directors, or stockholders of both corporations.” (Id. at p. 29.)

This case is readily distinguishable from Ray. First, this case is not one involving a corporation purchasing the principal assets of another corporation. Sagorac does not provide any reasoned argument or legal authority indicating that the principles articulated in Ray apply to individuals as opposed to corporations. (See Badie, supra, 67 Cal.App.4th at pp. 784-85; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Second, Sagorac does not present any argument or evidence showing that: (1) no adequate consideration was given for the purchased assets and made available for meeting the creditor claims; or (2) one or more persons were officers, directors, or stockholders of both the predecessor and successor entity. Consequently, Sagorac fails to demonstrate that Moltyaner’s alleged business was a mere continuation of his business such that Moltyaner had a joint legal obligation to repay Placone’s loans.

Accordingly, Moltyaner’s motion for summary adjudication of the tenth cause of action is GRANTED.