Case Name:   Vijay K. Lumba v. Michael H. Miroyan, et al.

Case No.:       1-14-CV-261280

Currently before the Court are the demurrers of defendants Vitoil Corporation (“Vitoil”) and Michael H. Miroyan (“Miroyan”) to the first amended complaint (“FAC”) of plaintiff Vijay K. Lumba (“Lumba”).  Vitoil demurs to each cause of action asserted in the FAC on the ground that Lumba fails to allege facts sufficient to constitute a cause of action.  (Code Civ. Proc.,
§ 430.10, subd. (e).) Miroyan demurs to each of the causes of action in the FAC on the grounds of uncertainty and failure to allege sufficient facts to constitute a cause of action. (See Code Civ. Proc., § 430.10, subds. (e), (f).)

Requests for Judicial Notice

 

In support of his oppositions to the demurrers, Lumba asks the Court to take judicial notice of the following: (1) a copy of a grant deed filed March 6, 2009 with the Santa Clara County Recorder’s Office reflecting the transfer of Assessor’s Parcel No. 624-26-008 from Sweet 140, LLC to Lumba and Martha I. Lumba, as trustees of the Lumba Family Trust; (2) a trial brief filed by Vitoil in case number BC399211 in the County of Los Angeles Superior Court; and (3) a complaint filed by Lumba in case number 114CV267302.

Lumba’s request for judicial notice is GRANTED. (See Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 264-265 [courts may take judicial notice of the existence and recordation of real property records, when the authenticity of the documents is not challenged]; Evid. Code, § 452, subd. (d) [courts may take judicial notice of court records].)

 

In support of his reply, Miroyan requests that the Court take judicial notice of the following: (1) a second amended cross-complaint filed December 6, 2013 in case number 111CV197767; (2) an interlocutory judgment in case number 111CV197767; (3) the fact that the interlocutory judgment is on appeal in Court of Appeal case number H040910; and (4) a complaint filed June 30, 3014 in case number 114CV267302.

 

Miroyan’s request for judicial notice is GRANTED. (See Evid. Code, § 452, subd. (d), (h)) [courts may take judicial notice of court records and facts not reasonably subject to dispute and capable of immediate determination by resort to sources of reasonably indisputable accuracy].)

Vitoil’s Demurrer

Vitoil contends that (1) Lumba fails to allege facts indicating that it is an alter ego of Sperry Road Business Center (“SRBC”), (2) the provisions of the note at issue require Lumba to seek recourse via the foreclosure of a piece of real property, and (3) Lumba’s action is barred by the “security first” rule contained in Code of Civil Procedure section 726.

 

With regard to Vitoil’s first contention, Lumba has alleged sufficient ultimate facts to support alter ego liability against Vitoil. (See Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 236 [party only required to allege ultimate rather than evidentiary facts in support of alter ego theory]; First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, 915 [“Courts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure.”].)

 

With regard to Vitoil’s argument that foreclosure is the exclusive remedy under the instrument at issue, the instrument can reasonably be interpreted as a guarantee of SRBC’s performance on the note by Sweet 140, LLC, rather than a provision requiring Lumba to foreclose prior to initiating an action for a personal judgment. (See

Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239 [general demurrer admits any meaning to which instrument reasonably susceptible].)

 

With regard to Vitoil’s affirmative defense for violation of Code of Civil Procedure section 726, it appears that Sweet 140, LLC did not possess the real property at the time of creation of the security interest and therefore, Lumba may bring an action to recover a personal judgment without first foreclosing on the property. (See Dyer Law & Collection Co. v. Abbott (1921) 52 Cal.App. 545, 547 [creditor may bring action to recover personal judgment without reference to security if security does not exist or is valueless]; Otto v. Long (1900) 127 Cal. 471, 477 [“One cannot by his contract create a lien upon property which he does not possess, and to which he has no title of any character whatever.”].) In addition, a reasonable reading of the instrument at issue indicates that only Sweet 140, LLC entered into the security agreement with Lumba. (See FAC, Ex. 1, p. 2.) Thus, Sweet 140, LLC is the only party that may assert a defense pursuant to Code of Civil Procedure section 726. (See Martin v. Becker (1915)

169 Cal. 301, 305-306 [affirmative defense under section 726 only available to party hypothecating real property as security for debt].) Accordingly, Vitoil’s demurrer to each cause of action is OVERRULED.

Miroyan’s Demurrer

 

Miroyan contends that Lumba’s second cause of action for money had and received is duplicative of his first cause of action for breach of promissory note, and the allegations of the FAC are uncertain.[1]

With regard to Miroyan’s demurrer for failure to state facts sufficient to constitute a cause of action, he asserts that the second cause of action is a recitation of a common count and adds nothing to the first cause of action for breach of promissory note. He relies on McBridge v. Boughton (2004) 123 Cal.App.4th 379, 394, for the proposition that when a common count is used as an alternative method of seeking the same recovery demanded in a specific cause of action, and is based on the same facts, the common count is demurrable if the specific cause of action is demurrable. While this proposition is correct, Miroyan fails to establish that Lumba’s first cause of action for breach of promissory note is subject to demurrer. Therefore, Miroyan’s demurrer on this ground is OVERRULED.

 

With regard to Miroyan’s demurrer for uncertainty, he contends that the allegations of the FAC are uncertain because they constitute general theories or legal conclusions, rather than specific facts. In particular, Miroyan asserts that paragraphs

8 and 9 in the complaint are boilerplate allegations that make little sense and are not applicable to this case. (See Miroyan Mem. Ps & As, p. 2:1-19.)

“A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for uncertainty will be sustained only where the complaint is so incomprehensible that a defendant cannot reasonably respond. (See Lickiss v. Financial Industry Regulatory Authority (2012) 208 Cal.App.4th 1125, 1135.)

 

Here, the allegations of the FAC are sufficient to allow Miroyan to reasonably determine what issues must be admitted or denied and what counts are directed against him. Accordingly, the demurrer on the ground of uncertainty is OVERRULED.