Abdoush v. Dandana Café and Banquet, Inc., et al.

Case No. 25PSCV02589 ORDER ON DEMURRERS AND MOTIONS TO STRIKE 1. Plaintiff and Cross-Defendant Philip Abdoush's demurrer to Karam's Cross-Complaint is SUSTAINED with 30 days' leave to amend as to the first and second causes of action and SUSTAINED without leave to amend as to the third cause of action.

2. Plaintiff and Cross-Defendant Philip Abdoush's demurrer to Wardeh's Cross-Complaint is SUSTAINED with 30 days' leave to amend as to the first and second causes of action and SUSTAINED without leave to amend as to the third cause of action.

3. Defendant Deeb I. Deeb's demurrer to Plaintiff's First Amended Complaint is SUSTAINED, with 30 days' leave to amend as to the first, second, and fourth causes of action.

4. Defendant Deeb I. Deeb's motion to strike is denied as moot, in light of the ruling on demurrer.

Background

Plaintiff Philip Abdoush ("Plaintiff" or "Abdoush") alleges that Hani Karam ("Karam") and Rami Wardeh ("Wardeh") persuaded him to contribute $250,000 so they could buy the Dandana restaurant from Deeb I. Deeb ("Deeb"), promising Plaintiff a 25% ownership interest through their corporation, Dandana Café and Banquet, Inc. After receiving the funds, Karam and Wardeh abandoned the purchase, Deeb backed out of his escrow to purchase Dandana from DCB Food, Inc., and the escrow was cancelled. Abdoush later paid Karam another $75,000 for supposed renovation work, but ultimately received neither ownership nor a refund.

Cross-Complainants Karam and Wardeh allege they, along with Cross-Defendants Abdoush and Manjah, each held a 25% ownership interest in Dandana Café and Banquet, Inc., a California corporation formed to purchase and operate the Dandana Restaurant. Although Abdoush was a "silent partner," he allegedly knew of Manjah's conduct during the restaurant's operation in 2022-2023, including nonpayment of performers, diversion of restaurant funds, and disparaging comments to the escrow company that resulted in cancellation of the pending sale. Karam and Wardeh allege they lost their investments and business interests as a result.

Abdoush has filed a First Amended Complaint ("FAC" or the "Operative Complaint"), asserting fraud, conversion, breach of fiduciary duty, and money had and received. Karam and Wardeh have each filed separate, nearly identical cross-complaints alleging breach of fiduciary duty, fraud by concealment, intentional interference with contractual relations, and equitable indemnity.

1. Abdoush's Demurrer to Karam's Cross-Complaint Legal

Standard A demurrer tests the legal sufficiency of a pleading. The Court assumes the truth of properly pleaded factual allegations, but not contentions, legal conclusions, or allegations contradicted by judicially noticeable materials. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Vance v. Villa Park Mobilehome Estates (1995) 36 Cal.App.4th 698, 709.) A demurrer under Code Civ. Proc., Sec. 430.10(e) must be sustained only where the complaint fails to allege facts sufficient to constitute a cause of action. Leave to amend should be granted if there is a reasonable possibility the pleading can be cured. (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)

Discussion

Abdoush demurs, per Code of Civil Procedure section 430.10 et seq. to Karam's cross-complaint and the first, second, and third causes of action on the basis that they fail to state facts sufficient to constitute a cause of action for breach of fiduciary duty, fraud by concealment, and intentional interference with contractual relations.

First Cause of Action: Breach of Fiduciary Duty "The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages." (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.) The cross-complaint alleges the parties were equal 25% shareholders in a California corporation. Under Corporations Code section 16202(b), co-ownership of a corporation--even where informally described as a "partnership"--does not create a legal partnership or attendant fiduciary duties between shareholders.

Fiduciary duties are imposed on directors and officers, not merely shareholders. (Corp. Code, Sec. 309.) While Karam alleges Abdoush knew of and "approved" Manjah's conduct, he does not allege that Abdoush was a director, officer, or otherwise owed him fiduciary obligations. Nor does he allege a pre-incorporation partnership agreement sufficient to overcome the presumption that incorporation extinguishes any partnership. (Eng v. Brown (2018) 21 Cal.App.5th 675, 704.) Accordingly, the first cause of action fails to allege facts establishing a fiduciary relationship.

The demurrer to the breach of fiduciary duty cause of action is sustained, with 30 days' leave to amend.

Second Cause of Action: Fraud by Concealment "The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage." (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of "liberal construction" of the pleadings will not ordinarily be invoked. (Lazar v.

Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) Karam alleges only that Abdoush "knew" of and failed to disclose Manjah's conduct. He does not allege what Abdoush specifically concealed, when, under what circumstances, or how such concealment induced Karam to act.

The allegations are conclusory and lack the particularity required for fraud. Accordingly, the demurrer to the fraud by concealment cause of action is sustained, with 30 days' leave to amend.

Third Cause of Action: Intentional Interference with Contractual Relations The elements of a cause of action for intentional interference with contractual relations are "(1) a valid contract between plaintiff and a third party; (2) defendant's knowledge of this contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage." (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 289.)

The Court sustains the demurrer as to this cause of action for two independent reasons. First, there is no alleged contract between Karam and a third party. The contract alleged is between Fedail and Dandana, not Karam individually. A shareholder is not a party to the corporation's contract. Second, even if Karam were the contracting party, Abdoush is not a stranger to the contract. As a 25% shareholder of Dandana, Abdoush is part of the contracting entity. Parties to the contract cannot be liable for interfering with it.

Karam concedes in opposition that his pleading is defective and requests leave to amend to cure the deficiencies. However, Karam has not demonstrated how the deficiencies can be cured by an amendment. Accordingly, the demurrer to the intentional interference with contractual relations cause of action is sustained, without leave to amend.

2. Abdoush's Demurrer to Wardeh's Cross-Complaint The allegations in Wardeh's cross-complaint materially mirror those in Karam's. The analysis above applies equally.

First Cause of Action: Breach of Fiduciary Duty The demurrer is sustained as to the first cause of action for breach of fiduciary duty for the same reasons stated with respect to Karam: shareholders do not owe each other fiduciary duties absent director/officer status or a surviving partnership agreement. Accordingly, the demurrer to the breach of fiduciary duty cause of action is sustained, with 30 days' leave to amend.

Second Cause of Action: Fraud by Concealment Wardeh alleges concealment but does not plead facts with specificity nor allege clear resulting damages. The allegations are conclusory and insufficient under Lazar and Tarmann. Accordingly, the demurrer to the fraud by concealment cause of action is sustained, with 30 days' leave to amend.

Third Cause of Action: Intentional Interference with Contractual Relations Wardeh alleges the same contract between Fedail and Dandana. As discussed above, he is not a party to the contract and Abdoush is not a stranger to it. Wardeh identifies no facts showing how amendment could cure these defects. Accordingly, the demurrer is sustained as to the cause of action for intentional interference with contractual relations, without leave to amend.

3. Deeb's Demurrer to Plaintiff's First Amended Complaint Deeb demurs, per Code of Civil Procedure section 430.10, subdivision (e) to the first, second, and fourth causes of action in the Operative Complaint on the basis that they each fail to state facts sufficient to constitute causes of action. Deeb also demurs, per Code of Civil Procedure section 430.10, subdivision (f) to the first, second, and fourth causes of action on the basis that they are uncertain.

First Cause of Action: Fraud "The elements of fraud are (a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e) resulting damage." (Hinesley v. Oakshade Town Ctr. (2005) 135 Cal.App.4th 289, 294.) The facts constituting the alleged fraud must be alleged factually and specifically as to every element of fraud, as the policy of "liberal construction" of the pleadings will not ordinarily be invoked. (Lazar v.

Superior Court (1996) 12 Cal.4th 631, 645.) To properly allege fraud against a corporation, the plaintiffs must plead the names of the persons allegedly making the false representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. (Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157.) Deeb asserts that the pleading lacks specific factual allegations as to Deeb's alleged fraudulent actions or false statements. (Mot., at p. 4 ["[T]here is only one, single mention of Deeb in the entire Fraud cause of action."].)

Plaintiff has alleged that Deeb was in escrow to purchase the Restaurant from DCB on May 23, 2022. (FAC, P. 15.) Karam and Wardeh sought to assume Deeb's position as a buyer prior to the escrow's closing and pursued his ownership interest in the Restaurant. (Id.)

On September 26, 2022, amended escrow instructions replaced Deeb with Wardeh, the president and secretary of Dandana. (Id., P. 22.) The total consideration for the Restaurant in the amended escrow was $159,976.57. (Id.) However, the escrow was later cancelled because of Karam and Wardeh, in coordination with Deeb and Fedail, without Plaintiff's knowledge and without reimbursement of his investment. (Id., P. 27.) As to the fraud cause of action, and to Deeb specifically, Plaintiff merely alleges that in June or July 2022, Karam and Wardeh, acting on behalf of themselves and the Dandana parties, represented to Plaintiff and Manjah that "they needed Plaintiff's financial participation to complete the purchase of the Restaurant from Deeb." (FAC, P. 41.)

The Court agrees with Deeb that the FAC fails to allege sufficient facts to state a fraud claim against him. Plaintiff does not allege specific facts as to the elements of a fraud claim against Deeb other than conclusory allegations that clump the named Defendants together. (FAC, P. 47.) Plaintiff does not allege that Deeb made any misrepresentation to him, let alone with the requisite particularity required to sustain a fraud cause of action. The only mention of Deeb in the fraud cause of action concerns a statement made by Karam and Wardeh, not Deeb.

Accordingly, the demurrer to the fraud cause of action is sustained, with 30 days' leave to amend.

Second Cause of Action: Conversion [FN] "Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion claim are: (1) the plaintiff's ownership or right to possession of the property; (2) the defendant's conversion by a wrongful act or disposition of property rights; and (3) damages." (Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.) Deeb asserts that Plaintiff's conversion cause of action fails because the FAC only alleges that the Defendants have wrongfully retained monies owed to him under the contract, without a specific, identifiable sum, which cannot be the subject of a conversion claim. (Mot., at pp. 6-7.)

Plaintiff incorporates the allegations set forth above. As to the second cause of action and Deeb specifically, Plaintiff alleges he has a right to possession of the $250,000 Dandana Payment and the $75,000 Improvement Funds (collectively, "Payments") (FAC, P. 50.) Plaintiff alleges that he provided the Dandana Payment to Karam and Wardeh as his agents to secure his 25% ownership interest in the Restaurant through escrow. (FAC, P. 51.) However, Karam and Wardeh, in coordination with Deeb and Fedail, caused the escrow to be cancelled prior to securing Plaintiff's ownership interest. (Id.)

Plaintiff alleges that Deeb and the Dandana parties wrongfully exercised control over his Dandana Payment. (Id., P. 54.) The Court finds that this cause of action is deficiently pled. Plaintiff offers only conclusory allegations as to Deeb's "coordination" with the other defendants to cause the escrow's cancellation. Plaintiff also alleges that the Dandana Payment was given to Karam and Wardeh only, not Deeb. It is therefore unclear what specific sum of money Plaintiff alleges Deeb wrongfully exercised dominion over.

Accordingly, the demurrer to the conversion cause of action is sustained, with 30 days' leave to amend.

Fourth Cause of Action: Money Had & Received "A cause of action for money had and received is stated if it is alleged [that] the defendant is indebted to the plaintiff in a certain sum for money had and received by the defendant for the use of the plaintiff. . . . The claim is viable wherever one person has received money which belongs to another, and which in equity and good conscience should be paid over to the latter." (Farmers Insurance Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460 [cleaned up].)

Deeb argues that the fourth cause of action fails because Plaintiff does not allege any facts as to Deeb pertaining to the elements of a money and received claim. (Mot., at p. 7.) Plaintiff incorporates the allegations set forth above. As to the fourth cause of action, Plaintiff alleges that Defendants collectively have received from Plaintiff: $250,000 on August 7, 2022; $50,000 on December 27, 2022; and $25,000 on January 22, 2023 (total: $325,000). (FAC, P. 62.) Plaintiff alleges that Defendants retained these funds without providing him an ownership interest in the Restaurant, investment returns, or a refund. (Id., P. 63.)

Thus, it would be "unjust and inequitable" for Defendants to retain the funds. (Id., P. 64.) The Court determines that the FAC is unclear regarding each defendant's responsibility. Plaintiff joins all defendants together even though other portions of the FAC imply that all defendants are not implicated for each payment. Based on the FAC, the Court cannot determine whether Deeb received the total sums and/or how much Deeb is alleged to have improperly retained. Accordingly, the demurrer to the money had and received cause of action is sustained, with 30 days' leave to amend.

4. Deeb's Motion to Strike Legal Standard Pursuant to Code of Civil Procedure section 436, "the court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court." The grounds for a motion to strike must "appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice." (Code Civ. Proc., Sec. 437.)

Discussion

Deeb moves to strike the following portions of Plaintiff's FAC: (1) First Cause of Action Prayer 6: "For punitive and exemplary damages"; (2) First Cause of Action Prayer 5: "For costs of suit incurred herein"; (3) Second Cause of Action Prayer 3: "For costs of suit incurred herein"; (4) Third Cause of Action Prayer 6: "For punitive and exemplary damages"; (5) Third Cause of Action Prayer 5: "For costs of suit incurred herein"; and (6) Fourth Cause of Action Prayer 3: "For costs of suit incurred herein."

In light of the Court's ruling on Deeb's demurrer, the motion to strike is denied as moot. [FN] The Court notes that Deeb's heading references the money had and received cause of action rather than conversion. However, the body of the analysis speaks to the conversion claim. Thus, the Court determines that the reference in the heading is a Scrivener's error and considers the demurrer to the second cause of action on its merits. Case Number: 25PSCV02987 Hearing Date: August 24, 2026 Dept: H Diaz v.

American Honda Motor Co., Inc., et al.,