ROBERT PANOSIAN, ET AL. VS 4525 ROSEMEAD BOULEVARD, LLC, ET AL.

Tentative Rulings

Case Number: *******2779 Hearing Date: May 25, 2022 Dept: 39

Robert Panosian, et al. v. 4525 Rosemead Boulevard, LLC, et al.

Case No. *******2779

Demurrer

BACKGROUND

Plaintiffs Robert Panosian and South State Real Estate Management, Inc. (collectively, “Plaintiffs”) filed this action against 4525 Rosemead Boulevard, LLC, Green Automotive, Inc., Bahram Mashoud, and Victoria Papazian (collectively, “Defendants”) after their client’s purchase of Defendants’ property and business was canceled. Plaintiffs asserted two causes of action in the first amended complaint, intentional interference with prospective economic relations and fraud. Defendants demurred to the complaint and moved to strike allegations relating to Plaintiffs’ request for attorney’s fees. Then, Plaintiffs dismissed the cause of action for fraud without prejudice and oppose the demurrer and motion to strike. The Court sustains the demurrer without leave to amend.

PLAINTIFFS’ ALLEGATIONS

On August 30, 2021, Plaintiffs’ client, Michael Amini, and Defendants entered into two written agreements. (First Amended Complaint, 10.) One agreement was for Amini to purchase real property located at 4525 Rosemead Boulevard in Pico Rivera. (Ibid.) The second agreement was for the business at that location. (Ibid.) Plaintiffs had an economic relationship with Edwin Voskanian and Voskanian Real Estate Management, Inc. (collectively, “Voskanian”), the real estate broker and agent representing Defendants. (Id., 15.) Both Plaintiffs and Voskanian would derive an economic benefit from their representation of the parties “as they had an agreement to share the real estate commission arising from the sale of the subject property and business equally.” (Ibid.) The agreement, which is attached as Exhibit #4 to the first amended complaint, is a standard “Cooperating Broker Compensation Agreement and Escrow Instruction” in which the seller’s brokerage firm—identified as Voskanian—and the buyer’s brokerage firm—identified as Plaintiffs—agreed that the total commission from the sale would be 4.5% of the purchase price, and each would receive 2.25% of that commission. (Id., Exh. #4.) Defendants then breached the two written purchase agreements by canceling the escrow and sale of the property and business without cause. (Id., 16.) Plaintiffs allege “[t]hat by breaching and canceling the two written purchase agreements . . . [D]efendants, and each of them intended to disrupt the economic relationship” between the buyer’s agent and the sellers’ agent. (Id., 17.)

LEGAL STANDARD

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In ruling on a demurrer, the court must “liberally construe[]” the allegations of the complaint. (Code Civ. Proc., 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

DISCUSSION

In order to state a cause of action for interference with prospective economic advantage, Plaintiffs must allege facts establishing the following: (1) There was a relationship between the plaintiff and some third party with the probability of future economic benefit to the plaintiff; (2) The defendant had knowledge of the relationship; (3) There was a wrongful act, apart from the interference itself, by the defendant which was designed to disrupt the relationship; (4) There was actual disruption of the relationship; and (5) There was economic harm to the plaintiff proximately caused by the acts of the defendant. (Salma v. Capon (2008) 161 Cal.App.4th 1275, 1290.) Plaintiffs’ claim fails for several independent reasons.

First, there was not a sufficient economic relationship between Plaintiffs and Voskanian. Plaintiffs must plead facts establishing that the relationship itself would confer future economic benefits to Plaintiffs. In this case, however, the economic benefit did not flow from any relationship between Plaintiffs and Voskanian. Rather, the economic benefit flowed from each party’s work on the real estate transaction in which Plaintiffs represented the buyer and Voskanian represented the sellers. Indeed, each represented different parties in an arms’ length transaction, undermining Plaintiffs’ allegation that there was a relationship between the two. The contract at issue merely was an agreement how they would split the commission that each earned from their work on the transaction.

Second, Plaintiffs cannot identify a wrongful act. Plaintiffs allege that Defendants canceled the transaction, but that is not sufficient. Plaintiff must plead a “wrongful” act. (Korea Supply Company v. Lockheed Martin Corporation (2003) 29 Cal.4th 1134, 1159.) “[A] plaintiff that chooses to bring a claim for interference with prospective economic advantage has a more rigorous pleading burden since it must show that the defendant’s conduct was independently wrongful.” (Ibid.) Plaintiffs must plead facts showing that the act “is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Id., p. 1159.) Plaintiffs allege only that Defendants breached the agreement, which cost Plaintiffs their commission on the sale. This does not state a claim.

Third, Plaintiffs allege nothing suggesting that Defendants intended to disrupt the relationship. Plaintiffs merely allege that they canceled the sale. Plaintiffs must allege that they undertook some action “designed” to deprive them of their commission. In fact, Plaintiffs allege the opposite. Plaintiffs attach a letter to the first amended complaint stating that Defendants canceled the transaction not to deprive Plaintiffs of their commission, but rather because Amini did not comply with the terms of the agreement:

The buyer has failed to remove the loan contingencies within the 60 days allotted by the agreement. No extension will be granted. Please be advised that I am cancelling the sale of 4525 Rosemead Blvd. for failure to perform as per the Escrow Instructions.

(First Amended Complaint, Exh. #5.)

Based upon the foregoing, the Court sustains the demurrer. The Court does not afford leave to amend. It does not appear that Plaintiffs can resolve the legal defects in their complaint, and Plaintiffs proffer no facts suggesting that an amendment would be successful. The motion to strike is denied as moot.

CONCLUSION AND ORDER

The tort of interference with prospective economic advantage is intended to address a situation in which a third party uses wrongful means with the intent of sabotaging an ongoing relationship that produces economic benefits to the plaintiff. The tort was not intended as a means for a real estate agent to recover a lost commission from a failed real estate transaction. In this case, Plaintiffs cannot allege any relationship with the selling agent since each represented a separate party in the transaction; any wrongful act independent of the sellers’ breach of contract; or any intent by the sellers to deprive Plaintiffs of their commission. Therefore, the Court orders as follows:

1. The demurrer is sustained without leave to amend.

2. The motion to strike is denied as moot.

3. This case is dismissed with prejudice.

4. Defendants’ counsel shall provide notice and file proof of such with the Court.