Michele Nasatir v. David Arakelyan, et al.

Defendant made "institutional decisions" that disregard Plaintiff's property rights in a manner that amounts to malice or oppression.

C. Reply filed Septmber 1, 2026. Plaintiff's opposition fails to identify facts in his pleading sufficient to demonstrate malice or oppression, and his "institutional decision" argument is unsupported by law.

III. LEGAL STANDARDS

"The court may, upon a motion made pursuant to Section 435 [notice of motion to strike whole or part of complaint], 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." (Id. Sec. 436 (a).)

Irrelevant matters include immaterial allegations that are not essential to the claim or those not pertinent to or supported by an otherwise sufficient claim. (Id., Sec. 431.10.)

The court may also "[s]trike 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." (Id. Sec. 436 (b).)

A motion to strike is also the proper procedure to attack a purportedly improper remedy such as unjustified punitive damages. (Venice Town Council, Inc. v. City of Los Angeles (1996) 47 Cal.App.4th 1547, 1561-1562.)

A complaint including a request for punitive damages must also include allegations showing that the plaintiff is entitled to such an award. (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)

IV. DISCUSSION

The motion is granted. Plaintiff's complaint fails to identify decision-makers within Defendant's management structure that had advance knowledge sufficient to act with malice, etc., and he fails to plead facts showing Defendant ratified an employee's torts after the fact.

To the extent Plaintiff alleges Defendant has dragged its feet after the alleged nuisance was brought to Defendant's attention, Plaintiff fails to allege specific facts showing malice, etc. sufficient for punitive damages.

V. CONCLUSION

Based on the foregoing, Defendant's motion is GRANTED WITH LEAVE TO AMEND. Plaintiff is ordered to file an amended pleading within 30 days or to stand on his operative pleading subject to this order.

v. David Arakelyan, et al. Thursday, September 10, 2026 TENTATIVE ORDER SUSTAINING DEFENDANT OSCAR CASTILLO'S DEMURRER TO THE FIRST AMENDED COMPLAINT [Res. No. -4388]

I. BACKGROUND

The first amended complaint alleges that Defendant David Arakelyan ("Arakelyan") fraudulently obtained Plaintiff's quarterly tax payment check for $118,600.00 sometime between September 1 to 10, 2024.

Arakelyan then "washed" the check, altering the payee and making the check payable to "David Arakelian (Arakelyan) - Od Exotic Rental [sic] LLC."

Arakelyan and Defendant Oscar Castillo ("Castillo") are members of Od Exotic Rentals LLC. Plaintiff alleges 4 causes of action for conversion, fraudulent misrepresentation, violation of Penal Code section 496, and negligence.

II. LEGAL STANDARD

Where pleadings are defective, a party may raise the defect by demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.)

A demurrer tests the legal sufficiency of the pleading; the Court accepts properly pleaded material facts as true, but not contentions, deductions, or conclusions of fact or law. (CCP, Sec. 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)

The Court does not determine whether the plaintiff can ultimately prove properly pleaded allegations. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)

¿ The burden is on the complainant to show the Court that a pleading can be amended successfully. (Ibid.)

Allegations on information and belief are permitted as to matters outside a plaintiff's personal knowledge where the plaintiff has information leading to a belief that the allegations are true.

But the label "information and belief" does not permit a plaintiff simply to plead the missing element of a cause of action.

A plaintiff may plead matters not within his or her personal knowledge on information and belief, and ordinarily need plead ultimate rather than evidentiary facts.

But an allegation made on information and belief must rest upon some information that leads the plaintiff to believe the allegation is true; a bare assertion of the ultimate fact, without any alleged basis for that belief, does not itself supply the missing factual predicate. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550-551 & fn. 5; Pridonoff v. Balokovich (1951) 36 Cal.2d 788, 792.)

III. DISCUSSION

Castillo demurs to Plaintiff's first and third causes of action on the grounds that the FAC fails to sufficiently plead a claim against Castillo.

A. First Cause of Action: Conversion

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.)

"It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to ¿ his own use. " ¿ (Farmers Ins. Exchange v. Zerin ¿ (1997) 53 Cal.App.4th 445, 452.) ¿

Conversion is a strict liability tort; thus, ¿ intent is not a necessary ¿ component. (See ¿ Burlesci ¿ v. Petersen ¿ (1998) 68 ¿ Cal.App.4th 1062, 1066 [" [A]ction rests neither in the knowledge nor the ¿ intent ¿ of the defendant. . . . ¿ Therefore, questions of the defendant's good faith, lack of knowledge, and motive are ordinarily immaterial. "].) ¿

Money can be the subject ¿ of an action for conversion if ¿ there is ¿ a specific ¿ sum ¿ capable of identification. (See ¿ Farmers Ins. Exchange v. Zerin ¿ (1997) 53 Cal.App.4th 445, 452.)

Castillo argues that the FAC does not allege facts showing that he personally took the check or actually exercised dominion over the $118,600.00.

He emphasizes that the new allegation that he was an authorized signatory establishes only authority to access the LLC account, not that he knew of this deposit or exercised control over these particular funds. (Mot., at pp. 6-9.)

He further argues that personal liability cannot rest merely on LLC membership or account authority.

Plaintiff responds that the allegations of signatory authority, control over the company's finances, and the suspicious nature of the check permit an inference of Castillo's participation and knowledge. (Opp., at pp. 5-9.)

The FAC alleges that Plaintiff mailed a check for $118,600.00 to the United States Treasury, with "2024 Form 1041-ES" on the memo line; that Arakelyan stole and washed the check; and that the altered check was deposited into a BOA account associated with Od Exotic. (FAC P.P. 10, 12-13, 17-18.)

Arakelyan and Castillo allegedly were the only authorized signatories on that account and therefore had authority to access, withdraw, transfer, and direct the disposition of funds deposited into it. (FAC P.P. 18-19.)

The FAC then alleges that Castillo was "not a passive or nominal participant," exercised control over the company's finances and banking activities, "knew or had reason to know" the $118,600.00 was not derived from a legitimate transaction, and "authorized, ratified, or permitted" its retention and use. (FAC P. 29.)

It further alleges that Castillo "knowingly retained, controlled, and exercised dominion" over Plaintiff's funds. (FAC P. 30.)

Those latter allegations state the required conclusions, but the FAC does not plead the facts that support them as to Castillo.

The distinction is important on demurrer. The Court accepts properly pleaded facts, not a conclusion merely because it is introduced on "information and belief" or expressed in the language of an element. (Doe v. City of Los Angeles, supra, 42 Cal.4th at pp. 550-551 & fn. 5.)

The FAC identifies facts supporting Arakelyan's participation: he allegedly stole and altered the check and caused it to be deposited.

By contrast, as to Castillo, the pleaded facts establish only his status as a member or principal of Od Exotic and his authority as one of two signatories on the company account.

The FAC does not allege that Castillo saw or endorsed the check, knew when or by whom it was deposited, withdrew or transferred any portion of the proceeds, directed their use, received a distribution, concealed the funds, refused a demand for their return, or otherwise took an identified act with respect to the $118,600.00.

Authority to exercise control is not itself an allegation that control was actually exercised.

Corporations Code section 17703.04 confirms the same distinction. An LLC's liabilities do not become the liabilities of a member or manager merely because of that status, although a member remains liable for his or her own participation in tortious conduct. (Corp. Code, Sec. 17703.04, subds. (a)(2), (c); People v. Pacific Landmark, LLC (2005) 129 Cal.App.4th 1203, 1216.)

Thus, the issue is not whether Castillo theoretically could have controlled the account, but whether facts are alleged showing his own participation in the asserted conversion.

In Holistic Supplements, LLC v. Stark (2021) 61 Cal.App.5th 530, 544, the individual defendants were alleged to have personally participated in the conduct constituting conversion.

Here, the FAC supplies no comparable factual allegations as to Castillo.

Plaintiff's contrary argument effectively asks the Court to infer actual dominion from the combination of Castillo's status, signatory authority, and the fact that the funds entered the LLC account.

That inference does not follow from the facts pleaded. Two people having authority over an account does not mean that both knew of, much less exercised dominion over, every deposit into it.

Nor does the allegation that no legitimate transaction justified the payment establish what Castillo personally knew or did.

Without facts connecting Castillo to the particular deposit or its subsequent disposition, the allegations that he "authorized," "ratified," "retained," or "controlled" the funds remain unsupported conclusions.

The first cause of action therefore does not sufficiently allege Castillo's personal participation in the conversion.

The problem here is not that Plaintiff pleads on information and belief, nor that Plaintiff fails to plead evidentiary detail.

The problem is that the pleaded facts do not provide a factual basis from which Castillo's knowledge or personal exercise of dominion may reasonably be inferred.

The FAC alleges that Castillo was a member of the LLC and an authorized signatory with access to the account, and then alleges that he "knew," "authorized," "ratified," and "knowingly retained" the funds.

But it alleges no facts showing that Castillo saw the check, knew of the deposit, communicated with Arakelyan about it, directed any transfer or use of the funds, received any portion of them, or otherwise personally participated in their disposition.

Pleading those ultimate conclusions on information and belief does not cure the absence of alleged facts supplying a basis for the inference. (Doe v. City of Los Angeles, supra, 42 Cal.4th at pp. 550-551 & fn. 5; Pridonoff v. Balokovich, supra, 36 Cal.2d at p. 792.)

Accordingly, the Court sustains Castillo's demurrer to the first cause of action with leave to amend.

B. Third Cause of Action: Violation of Penal Code section 496

"Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished..." (Pen. Code, Sec. 496 subd. (a).)

"To prove theft, a plaintiff must establish criminal intent on the part of the defendant beyond "mere proof of nonperformance or actual falsity." [Citation.] This requirement prevents "'[o]rdinary commercial defaults'" from being transformed into a theft." (Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 361-362.)

Castillo argues that the section 496 claim suffers from the same defect and an additional one: the FAC does not plead facts showing that he actually knew the funds were stolen. (Mot., at pp. 10-11.)

Plaintiff responds that knowledge may be inferred circumstantially from Castillo's role in the company, his signatory authority, the absence of a legitimate transaction, and the facial irregularities on the washed check. (Opp., at pp. 7-9.)

The FAC alleges that Arakelyan stole and washed the check and rerouted the proceeds by depositing the check into Od Exotic's BOA account. (FAC P.P. 40-41.)

It then alleges that Castillo, as a principal and authorized signatory, "received and exercised dominion and control" over the stolen funds and "directly participated in and controlled" their disposition and use. (FAC P. 42.)

As to knowledge, the FAC alleges that Castillo "knew or had reason to know" the deposit was derived from theft because he was one of only two persons operating and controlling the business, no legitimate transaction justified the payment, and the altered payee was inconsistent with the tax-payment notation on the check. (FAC P. 43.)

These allegations do not sufficiently plead actual knowledge.

Penal Code section 496 requires knowledge that the property was stolen or obtained by theft; constructive notice, negligence, or facts showing only that a person "should have known" are not substitutes for that element.

Plaintiff is correct that actual knowledge may be established by circumstantial evidence.

But at the pleading stage there still must be facts from which the inference of Castillo's actual knowledge reasonably arises.

The FAC alleges none showing that Castillo ever saw the washed check or its memo line, learned of the deposit, reviewed the account activity, discussed the funds with Arakelyan, participated in a withdrawal or transfer, or otherwise encountered circumstances from which his actual knowledge of the theft can be inferred.

The asserted irregularities on the face of the check cannot support an inference of Castillo's knowledge absent a factual allegation that he saw or was otherwise made aware of the check.

The information-and-belief allegations do not cure that omission.

The FAC does not identify information upon which Plaintiff's belief in Castillo's knowledge is founded beyond his status, account authority, and the absence of a legitimate transaction.

Those circumstances may support suspicion or a theory that Castillo should have discovered the deposit, but they do not supply facts showing actual knowledge.

Nor may Arakelyan's alleged knowledge simply be imputed to Castillo because both were members, principals, or signatories of the same LLC.

The FAC alleges no agency, communication, participation, or other factual basis from which Arakelyan's knowledge of his own alleged theft can be attributed to Castillo personally.

The section 496 claim therefore rests on speculation rather than pleaded facts supporting the required knowledge and personal receipt, withholding, concealment, or control of stolen property.

Accordingly, the Court sustains Castillo's demurrer to the third cause of action with leave to amend.

CONCLUSION

Based on the foregoing, Castillo's demurrer as to the first and third causes of action in the FAC is SUSTAINED with 30 days leave to amend. | Home -->)" -->