Case Number: BC541761 Hearing Date: February 09, 2015 Dept: 50
SAFA INVESTMENTS, LLC v. KOLAHI, ET AL.
CASE NO. BC541761

DEMURRER BY DEFENDANTS RAY KOLAHI AND SHEILA KOLAHI TO FIRST AMENDED COMPLAINT

The demurrer to the first cause of action for declaratory relief is overruled. Defendants argue that the first cause of action is barred by Article 9 of the UCC because the loan agreement for the $465,000 loan was a security interest and SAFA did not comply with the UCC provisions governing foreclosure on collateral. (See Demurrer, 5:1-7:2.) SAFA argues that the loan agreement was a modification of the operating agreement. (Opposition, 8:13-15.) The documentation of the $465,000 loan to Ray Kolahi, which is attached as Exhibit D to the first amended complaint, does have certain aspects of a security agreement. It is entitled “Resolution of SAFA Investment LLC to lend funds and agreement with [Ray] Kolahi to repay or transfer ownership interest.” It states that Ray Kolahi “agrees to repay to the LLC the entire loan amount of $465,000 free of any interest on or before 180 days from the date of this agreement and has irrevocably and unconditionally pledges [sic] his entire ownership interest in SADA Investment LLC.” Sounds like a loan secured by pledged collateral. But the agreement also states that “any provision, term and condition herein agreed shall supersede any of the terms or conditions of Article VIII paragraphs 8.1 through 8.10” of the LLC’s operating agreement “and more specifically paragraphs 8.2, 8.3(a), 8.3(b), and 8.3(c) of the operating agreement.” Sounds like a modification or amendment to the operating agreement. Because this ambiguous and internally inconsistent document is reasonably susceptible to both sides’ proposed interpretations, the issue cannot be decided on the pleadings. (See Palacin v. Allstate Ins. Co. (2004) 119 Cal.App.4th 855, 862 (demurring party “must establish conclusively that [the contract] language unambiguously negates beyond reasonable controversy the construction alleged in the body of the complaint,” and absent a showing that the contract “language supporting its position is so clear that parol evidence would be inadmissible to refute it . . . the court must overrule the demurrer and permit the parties to litigate the issue in a context that permits the development and presentation of a factual record, e.g., summary judgment or trial”].)

The demurrer by Soheila Kolahi to the second cause of action for unjust enrichment is sustained without leave to amend. Putting aside that unjust enrichment is not a cause of action (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 231), the allegations of the complaint do not state a claim against Soheila, as opposed to Ray, Kolahi. SAFA does not argue otherwise.

The demurrer to the third cause of action for breach of contract is overruled. Although it is true that SAFA has not alleged whether the contract was written, oral, or implied, the court, Hon. Joseph Kalin, overruled the demurrer to this cause of action on this ground. The matter will have to be resolved by form interrogatory.

The demurrer to the fourth cause of action for money had and received is overruled. In sustaining the demurrer to the original complaint, the court, Hon. Joseph Kalin, gave SAFA “leave for plaintiff to allege what ‘certain sum’ of money is at issue.” (Opposition, Exh. B, p. 2.) SAFA did that: it’s $1,208,689.26. (First Amended Complaint, ¶¶ 46-50.) Whether Ray Kolahi’s claim for some of this amount is barred by the statute of limitations cannot be decided on the pleadings.

The demurrer to the fifth cause of action for conversion is overruled. In sustaining the demurrer to the original complaint, the court, Hon. Joseph Kalin, gave SAFA leave “to allege what specific and identifiable sum of money is at issue.” (Opposition, Exh. B, pp. 2-3.) SAFA did that: it’s $1,208,689.26. (First Amended Complaint, ¶ 53.) Although Ray Kolahi argues that “the allegations include alleged acts by Ray going back to 1996” that may be barred by the applicable three-year statute of limitations, the court cannot make that determination on the pleadings.

The demurrer to the sixth cause of action for fraud is sustained with ten days leave to amend. “In order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the 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.’ [Citation.] In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence’; ‘conclusory allegations will not withstand demurrer.’” [Citation.] “Simply put, in order to employ the discovery rule to delay accrual of a cause of action, a potential plaintiff who suspects that an injury has been wrongfully caused must conduct a reasonable investigation of all potential causes of that injury. If such an investigation would have disclosed a factual basis for a cause of action, the statute of limitations begins to run on that cause of action when the investigation would have brought such information to light. In order to adequately allege facts supporting a theory of delayed discovery, the plaintiff must plead that, despite diligent investigation of the circumstances of the injury, he or she could not have reasonably discovered facts supporting the cause of action within the applicable statute of limitations period.” (Nguyen v. Western Digital Corp. (2014) 229 Cal.App.4th 1522, 1533, quoting Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808-809.) SAFA has alleged (1) the time and manner of discovery in 2012 (see First Amended Complaint, ¶ 62), but not (2) the inability to have made earlier discovery despite reasonable diligence. Indeed, SAFA has not alleged any reasonable diligence or why it was unable to discover Ray Kolahi’s allege fraud earlier. Again, SAFA does not argue otherwise. (See Opposition, 11:3-9.)

In addition, as Ray Kolahi argues, SAFA has not alleged facts stating a fraud claim beyond a breach of contract(s). (See Demurrer, 10:8-9.) In order to state a cause of action for promissory fraud based on a failure to perform contractual obligations, , like the claim here, “‘something more than nonperformance is required to prove the defendant’s intent not to perform his promise.’ [Citations.]” (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.) For example, fraudulent intent may be inferred “from such circumstances as defendant’s insolvency, his hasty repudiation of the promise, his failure even to attempt performance, or his continued assurances after it was clear he would not perform. [Citation.] However, if plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury.” (Id. at pp. 30-31; see Riverisland Cold Storage, Inc. v. Fresno–Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1183 [“the intent element of promissory fraud entails more than proof of an unkept promise or mere failure of performance”].)

The demurrer to the seventh cause of action for breach of fiduciary duty is overruled. The court, Hon. Joseph Kalin, previously overruled the demurrer to this cause of action.

The demurrer by Soheila Kolahi to the ninth cause of action breach of written contract is essentially unopposed sustained without leave to amend. (See Opposition, 12:23-13:1.) Soheila Kolahi is not a party to the alleged written contract.

The demurrer by Soheila Kolahi to the eleventh cause of action for “civil conspiracy as to breach of fiduciary duty” is essentially unopposed and sustained without leave to amend. (See Opposition, 13:9-26 [not addressing the argument in support of Soheila Kolahi’s demurrer].) Soheila Kolahi may owe fiduciary duties to Ray Kolahi, but she was not a member of SAFA and does not owe fiduciary duties to the members of the limited liability company.

The demurrer to the twelfth cause of action for declaratory relief is essentially unopposed and sustained without leave to amend. (See Opposition, 9:21-10:20 [arguing that SAFA “sufficiently pled” the cause of action but not addressing until the last sentence the statute of limitations argument].) SAFA alleges in its twelfth cause of action that Ray Kolahi received a membership interest in the limited liability company in 2002 but did not “make a capital contribution to receive his membership shares” and “has failed to date to make his capital contribution to SAFA after demand thereof.” (First Amended Complaint, ¶¶ 120, 122.) Because this cause of action seeks declaratory relief regarding the breach of a written contractual obligation, the four-year statute of limitations for breach of written contract applies, and the statute ran in 2006. (See Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 324 [“the statute of limitations governing a request for declaratory relief is the one applicable to an ordinary legal or equitable action based on the same claim”]; United Pacific–Reliance Ins. Co. v. DiDomenico (1985) 173 Cal.App.3d 673, 676 [“if declaratory relief is sought with reference to an obligation which has been breached and the right to commence an action for ‘coercive’ relief upon the cause of action arising therefrom is barred by statute, the right to declaratory relief is likewise barred”]; accord, Mangini v. Aerojet–General Corp. (1991) 230 Cal.App.3d 1125, 1155.) The court cannot envision how SAFA could not have known in 2002, and in any event long before 2006, that Ray Kolahi had not paid for his interest by making a capital contribution, or how SAFA can amend this cause of action to state an unbarred claim.

Defendants are to give notice.