Jahangiri v. Vahidramezani

where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. . .” (Civ. Code § 3294.)

There are no facts alleged in the FAC which might support the oppression, fraud, or malice required for punitive damages under Civ. Code § 3294. Further, “[w]hen nondeliberate injury is charged, allegations that the defendant's conduct was wrongful, willful, wanton, reckless or unlawful do not support a claim for exemplary damages; such allegations do not charge malice. [Citations.]” (Smith v. Superior Ct. (1992) 10 Cal. App. 4th 1033, 1041.)

As there are no facts to support the requested punitive damages, the motion to strike is granted. Plaintiff is given leave to file an amended complaint within 14 days of written notice of the ruling.

Defendant to give notice. 12 Jahangiri v. The motion for judgment on the pleadings is DENIED. Vahidramezani “An accounting is an equitable proceeding which is proper where there is an unliquidated and unascertained amount owing that cannot be determined without an examination of the debits and credits on the books to determine what is due and owing. Equitable principles govern, and the plaintiff must show the legal remedy is inadequate. Generally, an underlying fiduciary relationship, such as a partnership, will support an accounting, but the action does not lie merely because the books and records are complex. Some underlying misconduct on the part of the defendant must be shown to invoke the right to this equitable remedy.”

Valley Landowners Assn. v. City of Vallejo (2015) 241 Cal.App.4th 425, 442-443 (Emphasis added.)

Here, as a shareholder with co-equal control over the KWS, Jahangiri owed Vahidramezani fiduciary duties, and the latter has alleged underlying misconduct. The 13th cause of action for accounting incorporates by reference each of the preceding allegations of the FAC, which include significant allegations that Jahangiri had breached his fiduciary duties to both KWS and Vahidramezani.

True, the non-accounting causes of action asserting these allegations were dismissed upon demurrer without leave to amend based on the fact they were derivative, rather than direct claims. But the Court did not pass on the truth of the allegations and indicated that its ruling on demurrer was without prejudice. More importantly, the Court held that the 13th cause of action was a direct, not derivative, cause of action.

A court has broad powers in an accounting to determine the amounts owed to shareholders in a close corporation upon its dissolution. “After hearing the court may decree a winding up and dissolution of the corporation if cause therefor is shown or, with or without winding up and dissolution, may make such orders and decrees and issue such injunctions in the case as justice and equity require.” Corp. Code § 1804.

‘In an action for an accounting, the court not only has the power, but is required, to take into account both sides of the ledger, the debits as well as the credits. Since the action is equitable in nature, a plaintiff may be required to do equity and credit the defendant with anything that may be found to be due him. Under the principle that wherever equity assumes jurisdiction it will award full relief, an action for accounting may constitute an exception to the general rule in equity that affirmative relief will not be granted a defendant unless he asks for it by cross bill or counterclaim.’

Chapin v. Gritton (1960) 178 Cal.App.2d 551, 568. The powers of the Court to do equity in connection with an accounting are particularly broad when an accounting cause of action is paired with a claim for dissolution. Indeed, in Howard v. Data Storage Assocs., Inc. (1981) 125 Cal.App.3d 689, the Court of Appeal recognized the authority of the trial court to order an accounting and surcharge a nonparty based upon a shareholder’s complaint seeking only dissolution of a corporation.

In Chapin, the plaintiff, one of three shareholders of a closely held corporation, filed an “Amended Complaint for Accounting and Injunction; for Appointment of Receiver; and to Dissolve a Corporation.” Id. at 554. After the parties stipulated to the facts supporting the dissolution, the Court issued its judgment, in which the Court dissolved the corporation and ordered the plaintiff to pay money to the defendants due to a finding that the plaintiff took improper distributions from the company and misdirected money intended for the company to himself. The plaintiff asserted that as the defendants had not filed a cross-complaint, the court could not hold the plaintiff liable to them. The Court of Appeal in Chapin disagreed, noting, “The court has inherent power in an accounting action to award full relief to all parties.” Id. at 568.

Citing Chapin for the proposition that the court has inherent power in a accounting action to award full relief to the parties, the Court of Appeal in Combs v. Haddock (1961) 190 Cal.App.2d 151, 175 observed:

‘Equity does nothing by halves, but gives full relief in such cases. When it undertakes to adjust the differences between partners, it adjusts them all. ‘The whole subject matter in controversy between the parties, which includes all the partnership transactions of each and all the partners, is the subject of the adjudication; and the account and decree must include all these matters, and

leave nothing open for future litigation or controversy. Equity will not adjudicate causes piecemeal.’'

Accordingly, although Vahidramezani may not collect damages on behalf of the corporation absent a derivative action, the Court may consider all of the facts and circumstances in equitably determining how much is owed to each of the parties in the winding up the corporation.

Janhangiri argues that an accounting cause of action cannot stand alone:

“The right to an accounting is derivative and depends on the validity of a plaintiff's underlying claims.” Duggal v. G.E. Capital Communications Services, Inc. (2000) 81 Cal.App.4th 81, 95. If the underlying claims of fail, the reliant accounting claims must also fail. Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 834.”

But the cases Jahangiri cites are distinguishable from the present situation. In Dugai, the court had expressly found that the underlying claims of wrongdoing were meritless, as follows:

“The right to an accounting is derivative and depends on the validity of a plaintiff's underlying claims. Because the only other cause of action against ATT and GE was barred by the filed rate doctrine, appellants' 12th cause of action for an accounting must fail. (Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 833-834 [80 Cal.Rptr.2d 549].).

Duggal v. G.E. Cap. Commc'ns Servs., Inc., (2000) 81 Cal.App.4th 81, 95 (Emphasis added.). Similarly, in Janis v. California State Lottery Com. (1998) 68 Cal.App.4th 824, 833-834, the Court of Appeal held:

“Janis's sole remaining cause of action was for an accounting. A right to an accounting is derivative; it must be based on other claims. (Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 593-594 [37 Cal.Rptr.2d 653].) Here, because all of Janis's other claims fail, so too does the one for an accounting.”

Iin reaching this conclusion, the Court of Appeal in Janis had determined that each of the other claims upon which the accounting was based failed on the grounds of, respectively, immunity, standing, and the failure to exhaust administrative remedies.

As apparent above, Dugai relies on Janis, and Janis relies on Union Bank v. Superior Ct. (1994) 31 Cal. App. 4th 573, 593. Union Bank is instructive. Rather than holding that a standalone cause of action for accounting cannot exist, it recognized that with proper

allegations, it may be pleaded in a complaint with no other causes of action, as follows:

“The sole remaining cause of action was for an accounting. The grounds alleged in the accounting cause of action were that: there was a breach of fiduciary duty; the accounts were complicated; and fraud. These are proper grounds for an accounting. (Smith v. Blodget (1921) 187 Cal. 235, 242 [201 P 584] [fiduciary relationship]; Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal.App.3d 1, 14 [135 Cal.Rptr. 915] [complicated accounts when there is a dispute as to whether money is owed]; Fairbairn v. Fairbairn (1961) 194 Cal.App.2d 501, 513 [15 Cal.Rptr. 548] [fraud].)”

But the accounting claim in Union Bank failed because it had been conclusively proven that the defendant did not commit fraud or breach of fiduciary duty. As noted above, this Court has not made any factual determination regarding the merits of Vahidramezani’s claims of self-dealing and breach of fiduciary duty on the part of Jahangiri. Accordingly, the 13th cause of action for accounting may stand.

Clerk to give notice of this ruling. 13 Cornejo v. Cont. Schoolsfirst Federal Credit union 14 Padilla v. O/C Strawn 15 Kashani v. no tentative Huntington 16 Catanzarite v. Before the Court are the following motions: (1) demurrer of City of respondents City of Newport Beach and City Council of the City of Newport Newport Beach (collectively, City) directed to the verified petition for Beach writ of mandate and for writ of administrative mandamus (Petition) filed by petitioners Kenneth J. Catanzarite and Kim E. Catanzarite (collectively, Petitioners); and (2) demurrer of real parties in interest FPV II Partnership, Lawry’s Restaurants, Inc., and Ryan O. Wilson (collectively, Real Parties) directed to the Petition. For the reasons set forth below, the demurrers are OVERRULED.

The City and Real Parties are ordered to file their answers to the Petition within 20 days.

City’s Demurrer (ROA 58)

The City argues the Petition is moot because the limited term permit (LTP) at issue in this lawsuit was voluntarily surrendered by Real Parties, and the City accepted that surrender effective December 10, 2025.

“A case is considered moot when the question addressed was at one time a live issue in the case but has been deprived of life because of