Preview
ELECTRONICALLY FILED
Saul Reiss, SBN 48528 Superior Court of California
1
reisslaw@verizon.net County of Santa Barbara
2 Fay Pugh, SBN 198708 Darrel E. Parker, Executive Officer
fay.pugh@outlook.com 7/6/2022 11:33 AM
3 11835 W. Olympic Blvd., Suite 415E By: Jazmine Killian, Deputy
Los Angeles, Ca 90064
4
Santa Monica, CA 90405
5 Tel.: 310-450-2888 Fax.: 310-450-2885
Attorney for Defendants ARA BALJIAN,
6 LE PHUQUE, LLC and BMI GROUP, INC.
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 FOR THE COUNTY OF SANTA BARBARA – COOK BRANCH
10
GARY E. HAUENSTEIN, an individual, ) Case No.: 20CV03544
11 )
GWEN J. HAUENSTEIN, an individual, [Assigned to the Honorable James F. Rigali –
)
12 ) Dept. SM 2]
Plaintiffs, )
13 ) NOTICE OF GENERAL AND SPECIAL
vs. ) DEMURRER AND GENERAL AND
14 )
) SPECIAL DEMURRER BY
15 ARA BALJIAN, an individual; LE ) DEFENDANTS ARA BALJIAN, LE
PHUQUE, LLC, a business entity; ) PHUQUE, LLC AND BMI GROUP, INC.
16 NATIONSTAR MORTGAGE CO., a ) TO PLAINTIFFS’ SECOND AMENDED
business entity, and DOES 1-50, inclusive, ) COMPLAINT; MEMORANDUM OF
17 )
) POINTS AND AUTHORITIES;
18 Defendants. ) DECLARATION OF FAY PUGH IN
) SUPPORT THEREOF
19 )
) [Concurrently filed with Motion to Strike and
20 )
) Request for Judicial Notice]
21 )
) Date: October 4, 2022
22 ) Time: 8:30 a.m.
) Place: Dept. SM 2
23 )
)
24 ) Complaint Filed: October 27, 2020
) Trial Date: None
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD HEREIN:
2 PLEASE TAKE NOTICE THAT on the 4th day of October, 2022, at the hour of 8:30
3 a.m. or as soon thereafter as the matter may be heard in Department SM 2 of the above-entitled
4 Court located at 312-C East Cook Street, Bldg. E., Santa Maria, California 93454, Defendants
5 ARA BALJIAN, LE PHUQUE, LLC and BMI GROUP, INC. (collectively “Defendants”)
6 will and hereby do demurrer to the First, Second, Third, Fourth, Fifth, Sixth, Seventh and
7 Eight Causes of Action of Plaintiffs GARY E. HAUENSTEIN and GWEN J.
8 HAUENSTEIN’s (“Plaintiffs”) Second Amended FAC (“FAC”).
9 This General and Special Demurrer is made on the grounds that Plaintiffs cannot assert
10 the First Cause of Action for Breach of Contract, the Second Cause of Action for Fraud, the
11 Third Cause of Action for Fraud in the Inducement, the Fourth Cause of Action for Fraud in
12 the Concealment, the Fifth Cause of Action for Quiet Title, the Sixth Cause of Action for
13 Declaratory Relief, the Seventh Cause of Action for “Exemplary Damages” and the Eighth
14 Causes of Action for “Attorney’s Fees as Provided” since the SAC fails to state sufficient
15 facts to constitute any cause of action against Defendants, the causes of action are vague,
16 ambiguous and uncertain and time barred. Code of Civil Procedure Sections 430.10(e)(f).
17 This Demurrer is based upon this Notice, the accompanying Memorandum of Points
18 and Authorities, the concurrently filed Motion to Strike and Request for Judicial Notice, the
19 Declaration of Fay Pugh, the entire records and files in this action, those additional matters
20 subject to judicial notice, and such oral and documentary evidence as may be presented at or
21 before the hearing on this Demurrer.
22
23 Dated: July 6, 2022 LAW OFFICES OF SAUL REISS, P.C.
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25
________________________________
26
Saul Reiss, Esq.
27 Fay Pugh, Esq.
Attorneys for Defendants ARA BALJIAN,
28 LE PHUQUE, LLC and BMI GROUP, INC.
NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 GENERAL AND SPECIAL DEMURRER
2 TO THE SECOND AMENDED COMPLAINT
3 1. Defendants demurrer to the First Cause of Action of the SAC for Breach of
4 Contract on the ground that itfails to state facts sufficient to constitute a cause of action
5 against Defendants and is time barred. Code of Civ. Proc. §430.10(e).
6 2. Defendants demurrer to the First Cause of Action of the SAC for Breach of
7 Contract on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc.
8 §430.10(f).
9 3. Defendants demurrer to the Second Cause of Action of the SAC for Fraud on
10 the ground that it fails to state facts sufficient to constitute a cause of action against Defendants
11 and is time barred. Code of Civ. Proc. §430.10(e).
12 4. Defendants demurrer to the Second Cause of Action of the SAC for Fraud on
13 the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. §430.10(f).
14 5. Defendants demurrer to the Third Cause of Action of the SAC for Fraud in the
15 Inducement on the ground that it fails to state facts sufficient to constitute a cause of action
16 against Defendants and is time barred. Code of Civ. Proc. §430.10(e).
17 6. Defendants demurrer to the Third Cause of Action of the SAC for Fraud in the
18 Inducement on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc.
19 §430.10(f).
20 7. Defendants demurrer to the Fourth Cause of Action of the SAC for Fraud in
21 the Concealment on the ground that it fails to state facts sufficient to constitute a cause of
22 action against Defendants and is time barred. Code of Civ. Proc. §430.10(e).
23 8. Defendants demurrer to the Fourth Cause of Action of the SAC for Fraud in
24 the Concealment on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc.
25 §430.10(f).
26 9. Defendants demurrer to the Fifth Cause of Action of the SAC for Quiet Title
27 on the ground that itfails to state facts sufficient to constitute a cause of action against
28 Defendants. Code of Civ. Proc. §430.10(e).
NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 10. Defendants demurrer to the Fifth Cause of Action of the SAC for Quiet Title
2 on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. §430.10(f).
3 11. Defendants demurrer to the Sixth Cause of Action of the SAC for Declaratory
4 Relief on the ground that it fails to state facts sufficient to constitute a cause of action against
5 Defendants. Code of Civ. Proc. §430.10(e).
6 12. Defendants demurrer to the Sixth Cause of Action of the SAC for Declaratory
7 Relief on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. §430.10(f).
8 13. Defendants demurrer to the Seventh Cause of Action of the FAC for
9 Exemplary Damages on the ground that it fails to state facts sufficient to constitute a cause of
10 action against Defendants. Code of Civ. Proc. §430.10(e).
11 14. Defendants demurrer to the Eighth Cause of Action of the FAC for Attorney’s
12 Fees as Provided on the ground that it fails to state facts sufficient to constitute a cause of
13 action against Defendants. Code of Civ. Proc. §430.10(e).
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Dated: July 6, 2022 LAW OFFICES OF SAUL REISS, P.C.
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18
________________________________
19 Saul Reiss, Esq.
Fay Pugh, Esq.
20
Attorneys for Defendants ARA BALJIAN,
21 LE PHUQUE, LLC and BMI GROUP, INC.
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 TABLE OF CONTENTS
2 PAGE
3 I. STATEMENT OF FACTS AND PROCEDURAL HISTORY. 1
4 A. PROCEDURAL HISTORY. 1
5 B. SUMMARY OF PLAINTIFFS’ ALLEGATIONS. 1
6 C. MATTERS SUBJECT TO JUDICIAL NOTICE. 2
7 II. APPLICABLE LAW. 3
8 III. THE BREACH OF CONTRACT CLAIM IS DEFECTIVE. 4
9 A. THE FIRST ORAL AGREEMENT FAILS. 4
10 B. THE SECOND WRITTEN AGREEMENT FAILS. 6
11 IV. THE FRAUD CLAIMS LACK MERIT. 9
12 A. PLAINTIFFS’ CLAIMS ARE NOTHING BUT CONTRACT
13 CLAIMS AND SUFFER FROM THE SAME DEFECTS AS THE
14 BREACH OF CONTRACT CLAIM. 9
15 B. PLAINTIFFS HAVE NOT ALLEGED THEIR FRAUD
16 CLAIMS WITH THE REQUISITE SPECIFICITY. 9
17 C. THE FRAUD CLAIMS FAIL FOR OTHER REASONS AS
18 WELL. 10
19 V. PLAINTIFFS LACK STANDING TO BRING THE QUIET TITLE
20 AND DECLARATORY RELIEF CLAIMS. 12
21 VI. DEFENDANTS HAVE BEEN IMPROPERLY NAMED IN ALL
22 CAUSES OF ACTION. 13
23 VII. THE CAUSE OF ACTION FOR DECLARATORY RELIEF LACKS
24 MERIT. 14
25 VIII. PLAINTIFFS LIST NON-EXISTENT CAUSES OF ACTION. 15
26 IX. LEAVE TO AMEND SHOULD BE DENIED. 15
27 IX. CONCLUSION. 15
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 TABLE OF AUTHORITIES
2 PAGE
3 CASES
4 Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962 3
5 Brown v. Grimes (2011) 192 Cal.App.4th 265 8
6 Cansino v. Bank of America (2014) 224 Cal.App.4th 1462 3
7 Chao Fu, Inc. v. Chen (2012) 206 Cal.App. 4th 48 13
8 Clifford S. v. Sup. Ct. (1995) 38 Cal.App.4th 747 4
9 Codoni v. Codoni (2002) 103 Cal.App.4th 18, 21 3
10 Committee on Children's Television, Inc. v. General Foods Corp.
11 (1983) 35 Cal.3d 197 9
12 Cummins Corp. v. United States Fidelity & Guaranty
13 (2016) 246 Cal.App.4th 1484 14
14 Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593 3
15 Estate of Moss (2012) 204 Cal.App.4th 21 7
16 Friendly Village Community Assn., Inc. v. Silva & Hill Constr. Co.
17 (1973) 31 Cal.App.3d 220 8, 13
18 Guardian North Bay, Inc. v. Sup.Ct. (Myers) (2001) 94 Cal.App.4th 963 3, 7
19 Guido v. Koopman (1991) 1 Cal.App.4th 837 11
20 Heritage Pac. Fin'l, LLC v. Monroy (2013) 215 Cal.App.4th 972 15
21 Kline Hawkes v. Sup. Ct. (2004) 117 Cal.App.4th 183 3
22 Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336 3
23 Lazar v. Sup. Ct. (1996) 12 Cal. 4th 631 10
24 Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657 7
25 Serrano v. Priest (1971) 5 Cal.3d 584 3
26 Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167 9
27 Sprinkles v. Associated Indem. Corp. (2010) 188 Cal.App.4th 69 15
28 West v. JP Morgan Chase Bank (2013) 214 Cal.App.4th 780 9
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324 9
2
3 STATUTES
4 Civ. Code §1624 4
5 Code of Civ. Proc. §339(1) 5
6 Code of Civ. Proc. §338(d) 11
7 Code of Civ. Proc. §367 8, 13
8 Evid. Code §452 3
9 Evid. Code §453 3
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 MEMORANDUM OF POINTS AND AUTHORITIES
2 I. STATEMENT OF FACTS AND PROCEDURAL HISTORY.
3 A. PROCEDURAL HISTORY.
4 On October 27, 2020, Plaintiffs filed the Complaint against Defendants Ara Baljian,
5 Le Phuque LLC and Nationstar Mortgage Company alleging breach of oral contract, fraud,
6 fraud in the inducement, fraud in the concealment, quiet title and declaratory relief. Plaintiffs
7 voluntarily dismissed Defendant Nationstar Mortgage Company.
8 Baljian and Le Phuque’s demurrer was sustained with leave to amend as to all causes
9 of action. No leave was sought nor granted to add a new defendant.
10 On September 17, 2021, Plaintiffs filed their First Amended Complaint (“FAC”)
11 alleging the same causes of action and for the first time added BMI as a defendant, without
12 having sought or being granted leave to add a new party.
13 On February 4, 2022, Baljian, Le Phuque and BMI’s demurrers were sustained as to
14 all causes of action of the FAC, with leave to amend. No leave was sought nor granted to
15 add a new defendant. (Request for Judicial Notice (“RJN”), Exhibit 1).
16 Plaintiffs filed their Second Amended Complaint (the “SAC”) alleging the same
17 claims and added three new defendants for the first time consisting of David Agazaryan,
18 Mehran aka Mike Agazaryan and Arman Kakotsyan as DOES. Once again, no leave to
19 amend was sought nor granted to add new parties. In addition, no Amendment to Complaint
20 or Summons was issued as to these individuals.
21 More importantly, there is no basis for Plaintiffs’ failure to name these individuals as
22 Defendants in the SAC for the first time after this action has been pending for almost two
23 years. These new defendants will be seeking appropriate relief from the Court if and when
24 they are properly added to this action and served.
25 B. SUMMARY OF PLAINTIFFS’ ALLEGATIONS.
26 Plaintiffs claim to be the owners of three parcels of land, commonly known as 3333
27 Avena Road, Lompoc, California (collectively, the “Property”). According to Plaintiffs,
28 Defendants allegedly claim to own the Property. Defendants allegedly entered into oral and
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 written agreements, which they breached and they committed fraud. Based on these
2 allegations, Plaintiffs allege breach of oral and written contract, fraud, fraud in the
3 inducement, fraud in the concealment, quiet title and declaratory relief.
4 C. MATTERS SUBJECT TO JUDICIAL NOTICE.
5 As of June 2006, Plaintiffs were the owners of the Property, which were encumbered
6 with two loans in the amounts of $150,000 and $115,000 at the relevant times. As of
7 December 10, 2015, Plaintiffs were in default of one of the loans, which resulted in the lender
8 Defendant Nationstar Mortgage Co. recording a Notice of Default and Election to Sell Under
9 Deed of Trust. On March 18, 2016, the Notice of Trustee’s Sale was recorded. In response
10 to the Notice of Trustee’s Sale, on April 21, 2016, Plaintiffs filed a bankruptcy petition, which
11 was dismissed on June 10, 2016. On May 22, 2017, a second Notice of Trustee’s Sale was
12 recorded for sale on July 5, 2017. (RJN, Exhibits, 1-6, 14).
13 On or about June 22, 2017, Plaintiffs borrowed the sum of $168,500 from Le Phuque
14 pursuant to a Note secured by a Deed of Trust against the Property, which included the legal
15 description of all three parcels. The Note provided that Plaintiffs would repay the principal
16 sum with interest from June 26, 2017 until paid at the rate of five percent per annum payable
17 at maturity or upon sale whichever to occur first. (RJN, Exhibit 7-8).
18 On May 31, 2019, Plaintiffs executed a Grant Deed transferring the Property, legally
19 describing all three parcels, to their attorney, The Monterrosa Firm, Inc. (RJN, Exhibit 9).
20 On November 27, 2019, The Monterrosa Firm Inc. executed a Grant Deed transferring the
21 Property, legally describing all three parcels, to Golden Phoenix, LLC. (RJN, Exhibit 10).
22 In December 2019, Le Phuque, LLC caused to be recorded a Notice of Default and
23 Election to Sell Under Deed of Trust. (RJN, Exhibit 11). On or about April 30, 2020, Notice
24 of Trustee’s Sale provided that the sale would take place on June 3, 2020. (RJN, Exhibit 12).
25 After the Notice of Trustee’s Sale was recorded on April 30, 2020, Plaintiffs filed
26 several bankruptcy petitions, which were all dismissed, as follows: (1) filing date of June 3,
27 2020 dismissed on June 22, 2020; (2) filing date of June 30, 2020 dismissed on July 20, 2020;
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 (3) filing date of August 4, 2020 dismissed on August 24, 2022; (5) filing date of September
2 2, 2020 dismissed on September 21, 2020. (RJN, Exhibits 15-18).
3 On November 11, 2020, the Trustee’s Deed Upon Sale was recorded by which Le
4 Phuque became the owner of the Property. (RJN, Exhibit 13).
5 II. APPLICABLE LAW.
6 A demurrer admits the truth of all material facts properly pleaded, i.e., all ultimate
7 facts alleged, but not contentions, deductions or conclusions of fact or law. Aubry v. Tri-City
8 Hosp. Dist. (1992) 2 Cal.4th 962, 966-967; Serrano v. Priest (1971) 5 Cal.3d 584, 591.
9 The allegations of the complaint are not accepted as true if they contradict or are
10 inconsistent with facts judicially noticed by the court. In ruling on a demurrer, the court may
11 consider matters outside the complaint if they are judicially noticeable under Evid. Code
12 §§452 and 453. See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1474.
13 In ruling on a demurrer, a court may take judicial notice of admissions or inconsistent
14 statements by plaintiff in earlier pleadings in the same lawsuit, in prior similar lawsuits that
15 plaintiff had voluntarily dismissed, or in discovery documents, and may disregard conflicting
16 factual allegations in the complaint. Del E. Webb Corp. v. Structural Materials Co. (1981)
17 123 Cal.App.3d 593, 604. “Thus, a pleading valid on its face may nevertheless be subject to
18 demurrer when matters judicially noticed by the court render the complaint meritless”; Larson
19 v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 344.
20 A demurrer can be utilized where the complaint itself is incomplete or discloses some
21 defense that would bar recovery, e.g., dates pleaded in complaint show statute of limitations
22 has run. Guardian North Bay, Inc. v. Sup.Ct. (Myers) (2001) 94 Cal.App.4th 963, 971-972.
23 Plaintiff must allege sufficient facts in the complaint to establish standing to
24 sue. Codoni v. Codoni (2002) 103 Cal.App.4th 18, 21. On a matter as fundamental as a
25 party's standing to sue, allegations should be direct and unequivocal, not inferential. Kline
26 Hawkes v. Sup. Ct. (2004) 117 Cal.App.4th 183. Standing inquiry requires a careful judicial
27 examination of the allegations of the complaint to determine whether the particular plaintiff
28 is entitled to an adjudication of asserted claims. Whether a plaintiff has standing generally
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 revolves around the question of whether plaintiff has rights that may suffer some actual or
2 threatened injury. Clifford S. v. Sup. Ct. (1995) 38 Cal.App.4th 747, 751.
3 III. THE BREACH OF CONTRACT CLAIM IS DEFECTIVE.
4 In November of 2015, Plaintiffs’ daughter, Karin, introduced and negotiated with
5 David and Mike Agazaryan (“Agazaryans”) who expressed interest in developing the
6 Property as a commercial cannabis business. Arman Karkotsyan was introduced as
7 Agazaryans’ investor and partner. On or about January 5, 2016, Plaintiffs entered into a five
8 year lease agreement with “Agazaryans/Karkotsyan” with two five-year lease extensions for
9 $10,000 a month.
10 Between January 2016 and May of 2017, “Lessees Agazaryans/Karkotsyan” operated
11 the business but did not pay rent totaling $110,000. In early 2017, Plaintiffs declared
12 “Agazaryans/Karkotsyan lease” breached and terminated. Agazaryan allegedly introduced
13 Baljian as a new investor in the business in early 2017 by investing $165,000 ($138,000
14 payable to Plaintiffs’ first trust deed holder (Nationstar Mortgage) and +/- $28,600). Based
15 on Plaintiffs’ allegations, there were two separate agreements between Baljian and Plaintiffs.
16 A. THE FIRST ORAL AGREEMENT FAILS.
17 There was an oral agreement for Baljian to pay the rental obligations of
18 Agazaryans/Karkotsyan by paying the amount due to Plaintiffs’ first trust deed holder
19 (Nationstar Mortgage) and post a sum with Plaintiffs to secure against future delinquencies
20 as an incentive for withdrawal of the lease termination and to permit the lease to continue.
21 First, that claim is barred by the Statute of Frauds since there is no writing evidencing
22 that Baljian agreed to pay the obligation of Agazaryans and become their guarantor. The
23 Statute of Frauds provides that specified contracts “are invalid, unless they, or some note or
24 memorandum thereof, are in writing and subscribed by the party to be charged or by the
25 party’s agent.” Civ. Code §1624(a). Such contracts include (1) “an agreement to answer for
26 the debt of another.” Civ. Code §1624.
27 Second, the claim lacks consideration. According to Plaintiffs, Baljian entered into
28 the subject oral agreement, e.g., to invest $165,000 “as incentive for withdrawal of the lease
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 termination and to permit the lease to continue uninterrupted”, referring to
2 Agazaryan/Karkotsyan’s lease. (SAC, ¶¶18, 19). Plaintiffs’ obligations (their consideration
3 for Baljian’s performance) was the withdrawal of the lease termination and permitting the
4 Agazaryan/Karkotsyan’s lease to continue.
5 Plaintiffs failed to perform and provided no consideration for Baljian’s performance
6 because there is no allegation that Plaintiffs withdrew the lease termination and permitted the
7 Agazaryan/Karkotsyan’s lease to continue. In fact, the allegations of the SAC point to the
8 contrary. Plaintiffs allege under oath that in 2017, Baljian required Plaintiffs to enter into the
9 “new Land Lease Agreement” with him. Accordingly, the execution of the “Land Lease
10 Agreement” created a new tenancy relationship and cancelled the Agazaryan/Karkotsyan’s
11 lease. As such, Plaintiffs provided no consideration for Baljian’s oral promises.
12 Although Plaintiffs allege an oral agreement to reinstate the prior lease with
13 Agazaryan/Karkotsyan, Plaintiffs contradict that claim by their allegation that they did not
14 reinstate the prior lease but substituted a new lease with Baljian that they are now attempting
15 to enforce. That entire oral agreement that allegedly related to an investment with the prior
16 tenant (Agazaryan/Karkotsyan) ceased to exist contemporaneously when Plaintiffs entered
17 into a new lease as to which the prior tenants were no longer involved.
18 The execution of the Land Lease Agreement renders Plaintiffs’ claim time barred. At
19 the moment that the Land Lease Agreement was executed in 2017, Baljian breached the
20 alleged oral agreement. Accordingly, the statute of limitation began to run in 2017. The
21 statute of limitation for an oral agreement is two years. Code of Civ. Proc. §339(1). As such,
22 the statute of limitation expired in 2019, before this action was filed in October of 2020.
23 Plaintiffs’ claim suffers from additional defects. Based on the documents, which the
24 Court can judicially notice, a loan of $168,500 loan was made on June 22, 2017. (RJN,
25 Exhibits 7-8). Any obligation that Baljian had to pay off or bring current Plaintiffs’ first
26 mortgage arose at the time this loan was made on June 22, 2017 or shortly thereafter. If
27 Baljian had not paid off Plaintiffs’ firstmortgage, or had not brought itcurrent before the
28 scheduled trustee’s sale on July 5, 2017 (RJN, Exhibit 6), the Property would have been sold.
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Accordingly, by no later than July 5, 2017, Plaintiffs were aware whether Baljian had
2 performed his obligation or breached the same. As such, the statute of limitation expired in
3 July of 2019.
4 Moreover, there was no breach since if Baljian had not paid the first mortgage, the
5 lender would have foreclosed on the Property. Since there was no foreclosure by the lender
6 and Plaintiffs do not allege any foreclosure or non-payment of the money due to their first
7 lender, the only conclusion is that Baljian paid the first mortgage as agreed.
8 Plaintiffs would have also known in 2017 whether Baljian had brought the prior
9 tenants’ past due rent of $110,000 current and whether he had taken some of the proceeds of
10 the loan or investment for himself. Accordingly, any breach by Baljian took place in 2017,
11 or shortly thereafter, and the statute of limitations expired two years later in July of 2019.
12 Finally, the Land Lease Agreement renders Plaintiffs’ oral agreement claim meritless.
13 Although, they do not attach a copy of this agreement to the SAC, a copy was provided to
14 Defendants’ counsel during meet and confer. A copy of that agreement is attached hereto as
15 Exhibit A. Paragraph 9.13 of the Agreement provides in relevant part “This Lease contains
16 the entire agreement between Landlord and Tenant.” This provision contradicts and negates
17 any claim of existence of an oral agreement with different or additional terms.
18 B. THE SECOND WRITTEN AGREEMENT FAILS.
19 Plaintiffs allege that Baljian breached the Land Lease Agreement in various ways,
20 e.g., promise not to enforce or perfect the “lien”, improve the infrastructure of the Property,
21 obtain permits to grow cannabis, not allow a mechanic’s lien to be recorded, paying rent and
22 taxes, indemnify Plaintiffs and recoup the $168,500 loan from the profits of the business
23 operating at the Property within five years, i.e., June of 2022. (SAC, ¶¶24, 26, 27a, 29).
24 First, the Land Lease Agreement does not provide that Baljian would not enforce or
25 perfect the lien or recoup the $168,500 loan from the profits of the business at the Property
26 within five years.
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NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 Second, these allegations are contradicted by the Note and Deed of Trust. In the Note,
2 Plaintiffs promised to repay the loan with interest. (RJN, Exhibit 7). Accordingly, the
3 allegations to the contrary are improper and should be disregarded.
4 Plaintiffs’ own unclean hands, which is an affirmative defense, renders their claim
5 subject to a demurrer. A demurrer can be utilized where the complaint itself is incomplete
6 or discloses some defense that would bar recovery. Guardian North Bay, Inc. v. Sup.Ct.
7 (Myers) (2001) 94 Cal.App.4th 963, 971-972; Estate of Moss (2012) 204 Cal.App.4th 21,
8 535 (citing text). Plaintiffs entered into the Note and Deed of Trust secured by their Property
9 with no intention of ever paying the Note and pursuant to some alleged oral agreement that
10 the Deed of Trust would never be foreclosed on. Plaintiffs are alleging under oath, that they
11 entered into the Note with no intention of ever performing it. This the classic definition of
12 unclean hands, which is an absolute defense to be decided by the Court as a matter of law,
13 i.e., where a party asserts that it entered into a transaction never intending to perform.
14
“ ‘The defense of unclean hands arises from the maxim, “ ‘ “He who comes into
15 Equity must come with clean hands.” ’ “ [Citation.] The doctrine demands that
a plaintiff act fairly in the matter for which he seeks a remedy. He must come
16 into court with clean hands, and keep them clean, or he will be denied relief,
regardless of the merits of his claim.” (Kendall-Jackson Winery, Ltd. v.
17
Superior Court (1999) 76 Cal.App.4th 970, 978, 90 Cal.Rptr.2d 743 (Kendall-
18 Jackson).)”
19 Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657, 685.
20 Plaintiffs’ hands were further unclean because they breached the terms of the Note
21 and Deed of Trust, which provide
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“Should the Trustor or his successors in interest, without the consent in writing
23 of the beneficiary, sell, transfer or convey or permit to be sold, transferred or
conveyed, his interest in the property, or any part thereof, then the beneficiary
24 may, at his option, declare all sums secured hereby immediately due and
25 payable.” (RJN, Exhibits 7, 8).
Once Plaintiffs sold their interest in the Property to a third party in May of 2019 (RJN,
26
Exhibit 9), they breached the terms of the Note and Deed of Trust, which was their obligation
27
28
7
NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE,
LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT
1 under the agreement between the parties. Their breach relieved Defendants from their
2 performance of the alleged agreement not to enforce and perfect the lien.
3
“When a party’s failure to perform a contractual obligation constitutes a
4 material breach of the contract, the other party may be discharged from its duty
to perform under the contract. (1 Witkin, Summary of Cal. Law (10th ed. 2005)
5 Contracts, §§ 813, 814, p. 906 (Witkin) [‘Material failure of consideration
discharges the other party’s duty’]; De Burgh v. De Burgh (1952) 39 Cal.2d
6
858, 863, 250 P.2d 598 [‘in contract law a material breach excused further
7 performance by [an] innocent party’]; … [‘Ordinarily the issue of materiality is
a mixed question of law and fact, involving the application of a legal standard
8 to a particular set of facts. However, if reasonable minds cannot differ on the
9 issue of materiality, the issue may be resolved as a matter of law’”.
10 Brown v. Grimes (2011) 192 Cal.App.4th 265, 277-278.
11 According to Plaintiffs’ own verified allegations, the agreement was that the loan
12 would be recouped from the profits of the business operation at the Property within five years,
13 namely June of 2022. Once Plaintiffs sold their interest in the Property to a third party, they
14 breached the agreement for the recoupment of the loan and left Le Phuque with no avenue to
15 recoup its loan except by foreclosing on the Property.
16 Finally, by selling their interest in the Property to a third party in 2019, Plaintiffs
17 transferred all their interests in the Property, including all rights under the Land Lease
18 Agreement to the buyer, The Monterrosa Firm, Inc. (RJN, Exhibit 9), which in turn sold the
19 Property to Golden Phoenix, LLC (RJN, Exhibit 10). This includes all past and future claims
20 as to the terms of the Land Lease Agreement. Accordingly, Plaintiffs have no standing and
21 are not the real party in interest to enforce the Land Lease Agreement.
22 Unless a statute provides otherwise, every action must be prosecuted in the name of
23 the real party in interest. Code of Civ. Proc. §367. “A real party in interest is one who has
24 `an actual and substantial interest in the subject matter of the action and who would be
25 benefited or injured by the judgment in the action.’” Friendly Village Community Assn., Inc.
26 v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 225.
27 Plaintiffs cannot assert the rights of the transferee of the lease because they transferred
28 their rights away. They sold all their interest in the Property, including their rights as a
Preview
ELECTRONICALLY FILED Saul Reiss, SBN 48528 Superior Court of California 1 reisslaw@verizon.net County of Santa Barbara 2 Fay Pugh, SBN 198708 Darrel E. Parker, Executive Officer fay.pugh@outlook.com 7/6/2022 11:33 AM 3 11835 W. Olympic Blvd., Suite 415E By: Jazmine Killian, Deputy Los Angeles, Ca 90064 4 Santa Monica, CA 90405 5 Tel.: 310-450-2888 Fax.: 310-450-2885 Attorney for Defendants ARA BALJIAN, 6 LE PHUQUE, LLC and BMI GROUP, INC. 7 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 FOR THE COUNTY OF SANTA BARBARA – COOK BRANCH 10 GARY E. HAUENSTEIN, an individual, ) Case No.: 20CV03544 11 ) GWEN J. HAUENSTEIN, an individual, [Assigned to the Honorable James F. Rigali – ) 12 ) Dept. SM 2] Plaintiffs, ) 13 ) NOTICE OF GENERAL AND SPECIAL vs. ) DEMURRER AND GENERAL AND 14 ) ) SPECIAL DEMURRER BY 15 ARA BALJIAN, an individual; LE ) DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC, a business entity; ) PHUQUE, LLC AND BMI GROUP, INC. 16 NATIONSTAR MORTGAGE CO., a ) TO PLAINTIFFS’ SECOND AMENDED business entity, and DOES 1-50, inclusive, ) COMPLAINT; MEMORANDUM OF 17 ) ) POINTS AND AUTHORITIES; 18 Defendants. ) DECLARATION OF FAY PUGH IN ) SUPPORT THEREOF 19 ) ) [Concurrently filed with Motion to Strike and 20 ) ) Request for Judicial Notice] 21 ) ) Date: October 4, 2022 22 ) Time: 8:30 a.m. ) Place: Dept. SM 2 23 ) ) 24 ) Complaint Filed: October 27, 2020 ) Trial Date: None 25 26 27 28 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 TO ALL PARTIES AND TO THEIR ATTORNEYS OF RECORD HEREIN: 2 PLEASE TAKE NOTICE THAT on the 4th day of October, 2022, at the hour of 8:30 3 a.m. or as soon thereafter as the matter may be heard in Department SM 2 of the above-entitled 4 Court located at 312-C East Cook Street, Bldg. E., Santa Maria, California 93454, Defendants 5 ARA BALJIAN, LE PHUQUE, LLC and BMI GROUP, INC. (collectively “Defendants”) 6 will and hereby do demurrer to the First, Second, Third, Fourth, Fifth, Sixth, Seventh and 7 Eight Causes of Action of Plaintiffs GARY E. HAUENSTEIN and GWEN J. 8 HAUENSTEIN’s (“Plaintiffs”) Second Amended FAC (“FAC”). 9 This General and Special Demurrer is made on the grounds that Plaintiffs cannot assert 10 the First Cause of Action for Breach of Contract, the Second Cause of Action for Fraud, the 11 Third Cause of Action for Fraud in the Inducement, the Fourth Cause of Action for Fraud in 12 the Concealment, the Fifth Cause of Action for Quiet Title, the Sixth Cause of Action for 13 Declaratory Relief, the Seventh Cause of Action for “Exemplary Damages” and the Eighth 14 Causes of Action for “Attorney’s Fees as Provided” since the SAC fails to state sufficient 15 facts to constitute any cause of action against Defendants, the causes of action are vague, 16 ambiguous and uncertain and time barred. Code of Civil Procedure Sections 430.10(e)(f). 17 This Demurrer is based upon this Notice, the accompanying Memorandum of Points 18 and Authorities, the concurrently filed Motion to Strike and Request for Judicial Notice, the 19 Declaration of Fay Pugh, the entire records and files in this action, those additional matters 20 subject to judicial notice, and such oral and documentary evidence as may be presented at or 21 before the hearing on this Demurrer. 22 23 Dated: July 6, 2022 LAW OFFICES OF SAUL REISS, P.C. 24 25 ________________________________ 26 Saul Reiss, Esq. 27 Fay Pugh, Esq. Attorneys for Defendants ARA BALJIAN, 28 LE PHUQUE, LLC and BMI GROUP, INC. NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 GENERAL AND SPECIAL DEMURRER 2 TO THE SECOND AMENDED COMPLAINT 3 1. Defendants demurrer to the First Cause of Action of the SAC for Breach of 4 Contract on the ground that itfails to state facts sufficient to constitute a cause of action 5 against Defendants and is time barred. Code of Civ. Proc. §430.10(e). 6 2. Defendants demurrer to the First Cause of Action of the SAC for Breach of 7 Contract on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. 8 §430.10(f). 9 3. Defendants demurrer to the Second Cause of Action of the SAC for Fraud on 10 the ground that it fails to state facts sufficient to constitute a cause of action against Defendants 11 and is time barred. Code of Civ. Proc. §430.10(e). 12 4. Defendants demurrer to the Second Cause of Action of the SAC for Fraud on 13 the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. §430.10(f). 14 5. Defendants demurrer to the Third Cause of Action of the SAC for Fraud in the 15 Inducement on the ground that it fails to state facts sufficient to constitute a cause of action 16 against Defendants and is time barred. Code of Civ. Proc. §430.10(e). 17 6. Defendants demurrer to the Third Cause of Action of the SAC for Fraud in the 18 Inducement on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. 19 §430.10(f). 20 7. Defendants demurrer to the Fourth Cause of Action of the SAC for Fraud in 21 the Concealment on the ground that it fails to state facts sufficient to constitute a cause of 22 action against Defendants and is time barred. Code of Civ. Proc. §430.10(e). 23 8. Defendants demurrer to the Fourth Cause of Action of the SAC for Fraud in 24 the Concealment on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. 25 §430.10(f). 26 9. Defendants demurrer to the Fifth Cause of Action of the SAC for Quiet Title 27 on the ground that itfails to state facts sufficient to constitute a cause of action against 28 Defendants. Code of Civ. Proc. §430.10(e). NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 10. Defendants demurrer to the Fifth Cause of Action of the SAC for Quiet Title 2 on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. §430.10(f). 3 11. Defendants demurrer to the Sixth Cause of Action of the SAC for Declaratory 4 Relief on the ground that it fails to state facts sufficient to constitute a cause of action against 5 Defendants. Code of Civ. Proc. §430.10(e). 6 12. Defendants demurrer to the Sixth Cause of Action of the SAC for Declaratory 7 Relief on the ground that it is vague, ambiguous and uncertain. Code of Civ. Proc. §430.10(f). 8 13. Defendants demurrer to the Seventh Cause of Action of the FAC for 9 Exemplary Damages on the ground that it fails to state facts sufficient to constitute a cause of 10 action against Defendants. Code of Civ. Proc. §430.10(e). 11 14. Defendants demurrer to the Eighth Cause of Action of the FAC for Attorney’s 12 Fees as Provided on the ground that it fails to state facts sufficient to constitute a cause of 13 action against Defendants. Code of Civ. Proc. §430.10(e). 14 15 Dated: July 6, 2022 LAW OFFICES OF SAUL REISS, P.C. 16 17 18 ________________________________ 19 Saul Reiss, Esq. Fay Pugh, Esq. 20 Attorneys for Defendants ARA BALJIAN, 21 LE PHUQUE, LLC and BMI GROUP, INC. 22 23 24 25 26 27 28 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 TABLE OF CONTENTS 2 PAGE 3 I. STATEMENT OF FACTS AND PROCEDURAL HISTORY. 1 4 A. PROCEDURAL HISTORY. 1 5 B. SUMMARY OF PLAINTIFFS’ ALLEGATIONS. 1 6 C. MATTERS SUBJECT TO JUDICIAL NOTICE. 2 7 II. APPLICABLE LAW. 3 8 III. THE BREACH OF CONTRACT CLAIM IS DEFECTIVE. 4 9 A. THE FIRST ORAL AGREEMENT FAILS. 4 10 B. THE SECOND WRITTEN AGREEMENT FAILS. 6 11 IV. THE FRAUD CLAIMS LACK MERIT. 9 12 A. PLAINTIFFS’ CLAIMS ARE NOTHING BUT CONTRACT 13 CLAIMS AND SUFFER FROM THE SAME DEFECTS AS THE 14 BREACH OF CONTRACT CLAIM. 9 15 B. PLAINTIFFS HAVE NOT ALLEGED THEIR FRAUD 16 CLAIMS WITH THE REQUISITE SPECIFICITY. 9 17 C. THE FRAUD CLAIMS FAIL FOR OTHER REASONS AS 18 WELL. 10 19 V. PLAINTIFFS LACK STANDING TO BRING THE QUIET TITLE 20 AND DECLARATORY RELIEF CLAIMS. 12 21 VI. DEFENDANTS HAVE BEEN IMPROPERLY NAMED IN ALL 22 CAUSES OF ACTION. 13 23 VII. THE CAUSE OF ACTION FOR DECLARATORY RELIEF LACKS 24 MERIT. 14 25 VIII. PLAINTIFFS LIST NON-EXISTENT CAUSES OF ACTION. 15 26 IX. LEAVE TO AMEND SHOULD BE DENIED. 15 27 IX. CONCLUSION. 15 28 i NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 TABLE OF AUTHORITIES 2 PAGE 3 CASES 4 Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962 3 5 Brown v. Grimes (2011) 192 Cal.App.4th 265 8 6 Cansino v. Bank of America (2014) 224 Cal.App.4th 1462 3 7 Chao Fu, Inc. v. Chen (2012) 206 Cal.App. 4th 48 13 8 Clifford S. v. Sup. Ct. (1995) 38 Cal.App.4th 747 4 9 Codoni v. Codoni (2002) 103 Cal.App.4th 18, 21 3 10 Committee on Children's Television, Inc. v. General Foods Corp. 11 (1983) 35 Cal.3d 197 9 12 Cummins Corp. v. United States Fidelity & Guaranty 13 (2016) 246 Cal.App.4th 1484 14 14 Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593 3 15 Estate of Moss (2012) 204 Cal.App.4th 21 7 16 Friendly Village Community Assn., Inc. v. Silva & Hill Constr. Co. 17 (1973) 31 Cal.App.3d 220 8, 13 18 Guardian North Bay, Inc. v. Sup.Ct. (Myers) (2001) 94 Cal.App.4th 963 3, 7 19 Guido v. Koopman (1991) 1 Cal.App.4th 837 11 20 Heritage Pac. Fin'l, LLC v. Monroy (2013) 215 Cal.App.4th 972 15 21 Kline Hawkes v. Sup. Ct. (2004) 117 Cal.App.4th 183 3 22 Larson v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336 3 23 Lazar v. Sup. Ct. (1996) 12 Cal. 4th 631 10 24 Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657 7 25 Serrano v. Priest (1971) 5 Cal.3d 584 3 26 Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167 9 27 Sprinkles v. Associated Indem. Corp. (2010) 188 Cal.App.4th 69 15 28 West v. JP Morgan Chase Bank (2013) 214 Cal.App.4th 780 9 ii NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Wilhelm v. Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324 9 2 3 STATUTES 4 Civ. Code §1624 4 5 Code of Civ. Proc. §339(1) 5 6 Code of Civ. Proc. §338(d) 11 7 Code of Civ. Proc. §367 8, 13 8 Evid. Code §452 3 9 Evid. Code §453 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 I. STATEMENT OF FACTS AND PROCEDURAL HISTORY. 3 A. PROCEDURAL HISTORY. 4 On October 27, 2020, Plaintiffs filed the Complaint against Defendants Ara Baljian, 5 Le Phuque LLC and Nationstar Mortgage Company alleging breach of oral contract, fraud, 6 fraud in the inducement, fraud in the concealment, quiet title and declaratory relief. Plaintiffs 7 voluntarily dismissed Defendant Nationstar Mortgage Company. 8 Baljian and Le Phuque’s demurrer was sustained with leave to amend as to all causes 9 of action. No leave was sought nor granted to add a new defendant. 10 On September 17, 2021, Plaintiffs filed their First Amended Complaint (“FAC”) 11 alleging the same causes of action and for the first time added BMI as a defendant, without 12 having sought or being granted leave to add a new party. 13 On February 4, 2022, Baljian, Le Phuque and BMI’s demurrers were sustained as to 14 all causes of action of the FAC, with leave to amend. No leave was sought nor granted to 15 add a new defendant. (Request for Judicial Notice (“RJN”), Exhibit 1). 16 Plaintiffs filed their Second Amended Complaint (the “SAC”) alleging the same 17 claims and added three new defendants for the first time consisting of David Agazaryan, 18 Mehran aka Mike Agazaryan and Arman Kakotsyan as DOES. Once again, no leave to 19 amend was sought nor granted to add new parties. In addition, no Amendment to Complaint 20 or Summons was issued as to these individuals. 21 More importantly, there is no basis for Plaintiffs’ failure to name these individuals as 22 Defendants in the SAC for the first time after this action has been pending for almost two 23 years. These new defendants will be seeking appropriate relief from the Court if and when 24 they are properly added to this action and served. 25 B. SUMMARY OF PLAINTIFFS’ ALLEGATIONS. 26 Plaintiffs claim to be the owners of three parcels of land, commonly known as 3333 27 Avena Road, Lompoc, California (collectively, the “Property”). According to Plaintiffs, 28 Defendants allegedly claim to own the Property. Defendants allegedly entered into oral and 1 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 written agreements, which they breached and they committed fraud. Based on these 2 allegations, Plaintiffs allege breach of oral and written contract, fraud, fraud in the 3 inducement, fraud in the concealment, quiet title and declaratory relief. 4 C. MATTERS SUBJECT TO JUDICIAL NOTICE. 5 As of June 2006, Plaintiffs were the owners of the Property, which were encumbered 6 with two loans in the amounts of $150,000 and $115,000 at the relevant times. As of 7 December 10, 2015, Plaintiffs were in default of one of the loans, which resulted in the lender 8 Defendant Nationstar Mortgage Co. recording a Notice of Default and Election to Sell Under 9 Deed of Trust. On March 18, 2016, the Notice of Trustee’s Sale was recorded. In response 10 to the Notice of Trustee’s Sale, on April 21, 2016, Plaintiffs filed a bankruptcy petition, which 11 was dismissed on June 10, 2016. On May 22, 2017, a second Notice of Trustee’s Sale was 12 recorded for sale on July 5, 2017. (RJN, Exhibits, 1-6, 14). 13 On or about June 22, 2017, Plaintiffs borrowed the sum of $168,500 from Le Phuque 14 pursuant to a Note secured by a Deed of Trust against the Property, which included the legal 15 description of all three parcels. The Note provided that Plaintiffs would repay the principal 16 sum with interest from June 26, 2017 until paid at the rate of five percent per annum payable 17 at maturity or upon sale whichever to occur first. (RJN, Exhibit 7-8). 18 On May 31, 2019, Plaintiffs executed a Grant Deed transferring the Property, legally 19 describing all three parcels, to their attorney, The Monterrosa Firm, Inc. (RJN, Exhibit 9). 20 On November 27, 2019, The Monterrosa Firm Inc. executed a Grant Deed transferring the 21 Property, legally describing all three parcels, to Golden Phoenix, LLC. (RJN, Exhibit 10). 22 In December 2019, Le Phuque, LLC caused to be recorded a Notice of Default and 23 Election to Sell Under Deed of Trust. (RJN, Exhibit 11). On or about April 30, 2020, Notice 24 of Trustee’s Sale provided that the sale would take place on June 3, 2020. (RJN, Exhibit 12). 25 After the Notice of Trustee’s Sale was recorded on April 30, 2020, Plaintiffs filed 26 several bankruptcy petitions, which were all dismissed, as follows: (1) filing date of June 3, 27 2020 dismissed on June 22, 2020; (2) filing date of June 30, 2020 dismissed on July 20, 2020; 28 2 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 (3) filing date of August 4, 2020 dismissed on August 24, 2022; (5) filing date of September 2 2, 2020 dismissed on September 21, 2020. (RJN, Exhibits 15-18). 3 On November 11, 2020, the Trustee’s Deed Upon Sale was recorded by which Le 4 Phuque became the owner of the Property. (RJN, Exhibit 13). 5 II. APPLICABLE LAW. 6 A demurrer admits the truth of all material facts properly pleaded, i.e., all ultimate 7 facts alleged, but not contentions, deductions or conclusions of fact or law. Aubry v. Tri-City 8 Hosp. Dist. (1992) 2 Cal.4th 962, 966-967; Serrano v. Priest (1971) 5 Cal.3d 584, 591. 9 The allegations of the complaint are not accepted as true if they contradict or are 10 inconsistent with facts judicially noticed by the court. In ruling on a demurrer, the court may 11 consider matters outside the complaint if they are judicially noticeable under Evid. Code 12 §§452 and 453. See Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1474. 13 In ruling on a demurrer, a court may take judicial notice of admissions or inconsistent 14 statements by plaintiff in earlier pleadings in the same lawsuit, in prior similar lawsuits that 15 plaintiff had voluntarily dismissed, or in discovery documents, and may disregard conflicting 16 factual allegations in the complaint. Del E. Webb Corp. v. Structural Materials Co. (1981) 17 123 Cal.App.3d 593, 604. “Thus, a pleading valid on its face may nevertheless be subject to 18 demurrer when matters judicially noticed by the court render the complaint meritless”; Larson 19 v. UHS of Rancho Springs, Inc. (2014) 230 Cal.App.4th 336, 344. 20 A demurrer can be utilized where the complaint itself is incomplete or discloses some 21 defense that would bar recovery, e.g., dates pleaded in complaint show statute of limitations 22 has run. Guardian North Bay, Inc. v. Sup.Ct. (Myers) (2001) 94 Cal.App.4th 963, 971-972. 23 Plaintiff must allege sufficient facts in the complaint to establish standing to 24 sue. Codoni v. Codoni (2002) 103 Cal.App.4th 18, 21. On a matter as fundamental as a 25 party's standing to sue, allegations should be direct and unequivocal, not inferential. Kline 26 Hawkes v. Sup. Ct. (2004) 117 Cal.App.4th 183. Standing inquiry requires a careful judicial 27 examination of the allegations of the complaint to determine whether the particular plaintiff 28 is entitled to an adjudication of asserted claims. Whether a plaintiff has standing generally 3 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 revolves around the question of whether plaintiff has rights that may suffer some actual or 2 threatened injury. Clifford S. v. Sup. Ct. (1995) 38 Cal.App.4th 747, 751. 3 III. THE BREACH OF CONTRACT CLAIM IS DEFECTIVE. 4 In November of 2015, Plaintiffs’ daughter, Karin, introduced and negotiated with 5 David and Mike Agazaryan (“Agazaryans”) who expressed interest in developing the 6 Property as a commercial cannabis business. Arman Karkotsyan was introduced as 7 Agazaryans’ investor and partner. On or about January 5, 2016, Plaintiffs entered into a five 8 year lease agreement with “Agazaryans/Karkotsyan” with two five-year lease extensions for 9 $10,000 a month. 10 Between January 2016 and May of 2017, “Lessees Agazaryans/Karkotsyan” operated 11 the business but did not pay rent totaling $110,000. In early 2017, Plaintiffs declared 12 “Agazaryans/Karkotsyan lease” breached and terminated. Agazaryan allegedly introduced 13 Baljian as a new investor in the business in early 2017 by investing $165,000 ($138,000 14 payable to Plaintiffs’ first trust deed holder (Nationstar Mortgage) and +/- $28,600). Based 15 on Plaintiffs’ allegations, there were two separate agreements between Baljian and Plaintiffs. 16 A. THE FIRST ORAL AGREEMENT FAILS. 17 There was an oral agreement for Baljian to pay the rental obligations of 18 Agazaryans/Karkotsyan by paying the amount due to Plaintiffs’ first trust deed holder 19 (Nationstar Mortgage) and post a sum with Plaintiffs to secure against future delinquencies 20 as an incentive for withdrawal of the lease termination and to permit the lease to continue. 21 First, that claim is barred by the Statute of Frauds since there is no writing evidencing 22 that Baljian agreed to pay the obligation of Agazaryans and become their guarantor. The 23 Statute of Frauds provides that specified contracts “are invalid, unless they, or some note or 24 memorandum thereof, are in writing and subscribed by the party to be charged or by the 25 party’s agent.” Civ. Code §1624(a). Such contracts include (1) “an agreement to answer for 26 the debt of another.” Civ. Code §1624. 27 Second, the claim lacks consideration. According to Plaintiffs, Baljian entered into 28 the subject oral agreement, e.g., to invest $165,000 “as incentive for withdrawal of the lease 4 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 termination and to permit the lease to continue uninterrupted”, referring to 2 Agazaryan/Karkotsyan’s lease. (SAC, ¶¶18, 19). Plaintiffs’ obligations (their consideration 3 for Baljian’s performance) was the withdrawal of the lease termination and permitting the 4 Agazaryan/Karkotsyan’s lease to continue. 5 Plaintiffs failed to perform and provided no consideration for Baljian’s performance 6 because there is no allegation that Plaintiffs withdrew the lease termination and permitted the 7 Agazaryan/Karkotsyan’s lease to continue. In fact, the allegations of the SAC point to the 8 contrary. Plaintiffs allege under oath that in 2017, Baljian required Plaintiffs to enter into the 9 “new Land Lease Agreement” with him. Accordingly, the execution of the “Land Lease 10 Agreement” created a new tenancy relationship and cancelled the Agazaryan/Karkotsyan’s 11 lease. As such, Plaintiffs provided no consideration for Baljian’s oral promises. 12 Although Plaintiffs allege an oral agreement to reinstate the prior lease with 13 Agazaryan/Karkotsyan, Plaintiffs contradict that claim by their allegation that they did not 14 reinstate the prior lease but substituted a new lease with Baljian that they are now attempting 15 to enforce. That entire oral agreement that allegedly related to an investment with the prior 16 tenant (Agazaryan/Karkotsyan) ceased to exist contemporaneously when Plaintiffs entered 17 into a new lease as to which the prior tenants were no longer involved. 18 The execution of the Land Lease Agreement renders Plaintiffs’ claim time barred. At 19 the moment that the Land Lease Agreement was executed in 2017, Baljian breached the 20 alleged oral agreement. Accordingly, the statute of limitation began to run in 2017. The 21 statute of limitation for an oral agreement is two years. Code of Civ. Proc. §339(1). As such, 22 the statute of limitation expired in 2019, before this action was filed in October of 2020. 23 Plaintiffs’ claim suffers from additional defects. Based on the documents, which the 24 Court can judicially notice, a loan of $168,500 loan was made on June 22, 2017. (RJN, 25 Exhibits 7-8). Any obligation that Baljian had to pay off or bring current Plaintiffs’ first 26 mortgage arose at the time this loan was made on June 22, 2017 or shortly thereafter. If 27 Baljian had not paid off Plaintiffs’ firstmortgage, or had not brought itcurrent before the 28 scheduled trustee’s sale on July 5, 2017 (RJN, Exhibit 6), the Property would have been sold. 5 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Accordingly, by no later than July 5, 2017, Plaintiffs were aware whether Baljian had 2 performed his obligation or breached the same. As such, the statute of limitation expired in 3 July of 2019. 4 Moreover, there was no breach since if Baljian had not paid the first mortgage, the 5 lender would have foreclosed on the Property. Since there was no foreclosure by the lender 6 and Plaintiffs do not allege any foreclosure or non-payment of the money due to their first 7 lender, the only conclusion is that Baljian paid the first mortgage as agreed. 8 Plaintiffs would have also known in 2017 whether Baljian had brought the prior 9 tenants’ past due rent of $110,000 current and whether he had taken some of the proceeds of 10 the loan or investment for himself. Accordingly, any breach by Baljian took place in 2017, 11 or shortly thereafter, and the statute of limitations expired two years later in July of 2019. 12 Finally, the Land Lease Agreement renders Plaintiffs’ oral agreement claim meritless. 13 Although, they do not attach a copy of this agreement to the SAC, a copy was provided to 14 Defendants’ counsel during meet and confer. A copy of that agreement is attached hereto as 15 Exhibit A. Paragraph 9.13 of the Agreement provides in relevant part “This Lease contains 16 the entire agreement between Landlord and Tenant.” This provision contradicts and negates 17 any claim of existence of an oral agreement with different or additional terms. 18 B. THE SECOND WRITTEN AGREEMENT FAILS. 19 Plaintiffs allege that Baljian breached the Land Lease Agreement in various ways, 20 e.g., promise not to enforce or perfect the “lien”, improve the infrastructure of the Property, 21 obtain permits to grow cannabis, not allow a mechanic’s lien to be recorded, paying rent and 22 taxes, indemnify Plaintiffs and recoup the $168,500 loan from the profits of the business 23 operating at the Property within five years, i.e., June of 2022. (SAC, ¶¶24, 26, 27a, 29). 24 First, the Land Lease Agreement does not provide that Baljian would not enforce or 25 perfect the lien or recoup the $168,500 loan from the profits of the business at the Property 26 within five years. 27 28 6 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 Second, these allegations are contradicted by the Note and Deed of Trust. In the Note, 2 Plaintiffs promised to repay the loan with interest. (RJN, Exhibit 7). Accordingly, the 3 allegations to the contrary are improper and should be disregarded. 4 Plaintiffs’ own unclean hands, which is an affirmative defense, renders their claim 5 subject to a demurrer. A demurrer can be utilized where the complaint itself is incomplete 6 or discloses some defense that would bar recovery. Guardian North Bay, Inc. v. Sup.Ct. 7 (Myers) (2001) 94 Cal.App.4th 963, 971-972; Estate of Moss (2012) 204 Cal.App.4th 21, 8 535 (citing text). Plaintiffs entered into the Note and Deed of Trust secured by their Property 9 with no intention of ever paying the Note and pursuant to some alleged oral agreement that 10 the Deed of Trust would never be foreclosed on. Plaintiffs are alleging under oath, that they 11 entered into the Note with no intention of ever performing it. This the classic definition of 12 unclean hands, which is an absolute defense to be decided by the Court as a matter of law, 13 i.e., where a party asserts that it entered into a transaction never intending to perform. 14 “ ‘The defense of unclean hands arises from the maxim, “ ‘ “He who comes into 15 Equity must come with clean hands.” ’ “ [Citation.] The doctrine demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come 16 into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim.” (Kendall-Jackson Winery, Ltd. v. 17 Superior Court (1999) 76 Cal.App.4th 970, 978, 90 Cal.Rptr.2d 743 (Kendall- 18 Jackson).)” 19 Meridian Financial Services, Inc. v. Phan (2021) 67 Cal.App.5th 657, 685. 20 Plaintiffs’ hands were further unclean because they breached the terms of the Note 21 and Deed of Trust, which provide 22 “Should the Trustor or his successors in interest, without the consent in writing 23 of the beneficiary, sell, transfer or convey or permit to be sold, transferred or conveyed, his interest in the property, or any part thereof, then the beneficiary 24 may, at his option, declare all sums secured hereby immediately due and 25 payable.” (RJN, Exhibits 7, 8). Once Plaintiffs sold their interest in the Property to a third party in May of 2019 (RJN, 26 Exhibit 9), they breached the terms of the Note and Deed of Trust, which was their obligation 27 28 7 NOTICE OF DEMURRER AND DEMURRER BY DEFENDANTS ARA BALJIAN, LE PHUQUE, LLC AND BMI GROUP, INC. TO PLAINTIFFS’ SECOND AMENDED COMPLAINT 1 under the agreement between the parties. Their breach relieved Defendants from their 2 performance of the alleged agreement not to enforce and perfect the lien. 3 “When a party’s failure to perform a contractual obligation constitutes a 4 material breach of the contract, the other party may be discharged from its duty to perform under the contract. (1 Witkin, Summary of Cal. Law (10th ed. 2005) 5 Contracts, §§ 813, 814, p. 906 (Witkin) [‘Material failure of consideration discharges the other party’s duty’]; De Burgh v. De Burgh (1952) 39 Cal.2d 6 858, 863, 250 P.2d 598 [‘in contract law a material breach excused further 7 performance by [an] innocent party’]; … [‘Ordinarily the issue of materiality is a mixed question of law and fact, involving the application of a legal standard 8 to a particular set of facts. However, if reasonable minds cannot differ on the 9 issue of materiality, the issue may be resolved as a matter of law’”. 10 Brown v. Grimes (2011) 192 Cal.App.4th 265, 277-278. 11 According to Plaintiffs’ own verified allegations, the agreement was that the loan 12 would be recouped from the profits of the business operation at the Property within five years, 13 namely June of 2022. Once Plaintiffs sold their interest in the Property to a third party, they 14 breached the agreement for the recoupment of the loan and left Le Phuque with no avenue to 15 recoup its loan except by foreclosing on the Property. 16 Finally, by selling their interest in the Property to a third party in 2019, Plaintiffs 17 transferred all their interests in the Property, including all rights under the Land Lease 18 Agreement to the buyer, The Monterrosa Firm, Inc. (RJN, Exhibit 9), which in turn sold the 19 Property to Golden Phoenix, LLC (RJN, Exhibit 10). This includes all past and future claims 20 as to the terms of the Land Lease Agreement. Accordingly, Plaintiffs have no standing and 21 are not the real party in interest to enforce the Land Lease Agreement. 22 Unless a statute provides otherwise, every action must be prosecuted in the name of 23 the real party in interest. Code of Civ. Proc. §367. “A real party in interest is one who has 24 `an actual and substantial interest in the subject matter of the action and who would be 25 benefited or injured by the judgment in the action.’” Friendly Village Community Assn., Inc. 26 v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 225. 27 Plaintiffs cannot assert the rights of the transferee of the lease because they transferred 28 their rights away. They sold all their interest in the Property, including their rights as a