Court Opinion

ID: 7646426
Source: CourtListenerOpinion
Date Created: 2022-07-29 23:01:38.040722+00
Date Added: 2024-06-11T16:25:29.808756
License: Public Domain

Filed 7/29/22 Taglyan v. Tekeyan Cultural Assn. CA2/3
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                                  DIVISION THREE

 PETROS TAGLYAN et al.,                                              B298882

          Plaintiffs and Appellants,                                 (Los Angeles County
                                                                     Super. Ct. No. BC632331)
          v.

 TEKEYAN CULTURAL
 ASSOCIATION, INC.,

          Defendant and Respondent.

     APPEAL from a judgment of the Superior Court of
Los Angeles County, Dalila Corral Lyons, Judge. Reversed.
     Diem Law and Robin L. Diem, for Plaintiffs and
Appellants.
     Freeman Mathis & Gary, Chad E. Weaver and Isis D.
Miranda, for Defendant and Respondent.
                 ‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗
       The present appeal is from a judgment of dismissal entered
after the trial court sustained a demurrer to a complaint alleging
breach of oral contracts. The trial court concluded that the
alleged contracts were barred by the statute of frauds because
they gave the plaintiffs an option to purchase a school. We
disagree: As we discuss, the option to purchase the school did not
necessarily include an option to purchase real property and, in
any event, the alleged option could be severed from the
remainder of the agreements. We therefore reverse the
judgment.
      FACTUAL AND PROCEDURAL BACKGROUND
      Plaintiffs Petros and Karine Taglyan, Martin and Angela
Martirosian, and Hakop and Seda Semirdzhyan (collectively,
plaintiffs) are members of Los Angeles’s Armenian–American
community. Defendant Tekeyan Cultural Association (TCA) is a
nonprofit corporation that operated the Arshag Dickranian
Armenian School (Dickranian or school), a prominent Armenian-
American school in Los Angeles.
      A.    Present action.
      Plaintiffs filed the present action against TCA in
August 2016.1 In July 2017, after several demurrers were
sustained in part, plaintiffs filed a third amended complaint,
which alleged as follows:

1     Plaintiffs initially asserted causes of action against
individual members of TCA’s Board of Directors, but the
individual defendants were eliminated from the action in
September 2017. Plaintiffs have not alleged error as to the
individual defendants, and they are not parties to this appeal.

                                 2
       Dickranian was founded in 1981 to teach students the
California state curriculum and Armenian language and culture.
All of plaintiffs’ children attended Dickranian, and plaintiffs
generously supported the school through financial and other
contributions.
       In 2003, TCA’s directors approached the Taglyans seeking
financial assistance to help expand the school and construct a
new school building. Between 2003 and 2008, the Taglyans and
TCA orally agreed that the Taglyans would make significant
financial contributions to the school pursuant to the following
terms: (1) the new school building would be named after the
Taglyans; (2) TCA’s directors would act in good faith to insure the
continued operation and success of the school; (3) if the school
experienced financial difficulty, TCA would notify the school’s
donors, including the Taglyans, to permit them to make
additional contributions to keep the school operational; (4) TCA’s
directors would not take any action to jeopardize the school’s
continued operation and would not close it before giving the
plaintiffs the opportunity to purchase the school and/or obtain
additional financing on the school’s behalf; and (5) if TCA’s
directors did not follow this protocol or unilaterally closed the
school, they would repay the Taglyans’s contributions with
interest. In exchange for these promises, the Taglyans made
conditional donations to Dickranian in excess of $1 million.
       In 2004 and 2006, the Martirosians orally agreed with TCA
and its directors to donate $25,000 ($10,000 in 2004 and $15,000
in 2006) to support the new campus. Those contributions were
made pursuant to oral agreements whose terms were identical to
TCA’s agreements with the Taglyans, except the Martirosians
would not receive naming rights.

                                 3
       In 1991, the Semirdzhyans orally agreed with TCA and its
directors to donate $20,000 to support the school. The
Semirdzhyans and TCA entered into an oral contract whose
terms were identical to TCA’s agreements with the Taglyans’s
except the Semirdzhyans were to receive naming rights to the
school’s 11th grade classroom.
       Plaintiffs duly performed all of their obligations under the
oral agreements. TCA breached the oral agreements by failing to
advise plaintiffs that the school was in financial difficulty, failing
to approach plaintiffs about buying the school or obtaining
additional financing, closing the school, selling the land on which
the school was situated, and failing to repay plaintiffs any portion
of their conditional gifts. Plaintiffs asserted these breaches by
TCA caused them damages in excess of $1 million and gave rise
to causes of action for breach of contract and breach of the
implied covenant of good faith.2
      B.    TCA’s motion for judgment on the pleadings.
      In November 2018, TCA filed a motion for judgment on the
pleadings. TCA contended that the alleged oral agreements were
barred by the statute of frauds (Civ. Code, § 1624) because they
contained an option to purchase the school, which was an option

2      The third amended complaint also alleged causes of action
for fraudulent concealment, fraud, and negligent
misrepresentation. The trial court sustained a demurrer to the
fraudulent concealment cause of action and struck the causes of
action for fraud and negligent misrepresentation. Plaintiffs do
not challenge these rulings on appeal.

                                  4
to purchase real property.3 TCA therefore urged that plaintiffs
could not recover damages for the alleged breaches of the
agreements as a matter of law.
       Plaintiffs opposed the motion. Among other things, they
urged that the alleged oral agreements were not barred by the
statute of frauds because they were memorialized in writings
that set forth the essential terms of the agreements and had been
fully performed by plaintiffs. Plaintiffs also asserted that TCA
was estopped to rely on the statute of frauds because plaintiffs
had seriously changed their positions in reliance on the oral
agreements.
       The trial court granted the motion for judgment on the
pleadings. It found that the alleged agreements between
plaintiffs and TCA were oral contracts pertaining to the sale of
real property, the alleged writings were insufficient to satisfy the
statute of frauds, plaintiffs had not pled that they seriously
changed their positions in reliance on the alleged oral
agreements, and payment of money under an alleged oral
agreement does not remove the agreement from the statute of
frauds. The court therefore found that judgment on the pleadings
was proper as to both contract causes of action, but it granted
plaintiffs leave to amend.

3     TCA also contended the alleged agreements violated the
statute of frauds because they could not be completed within one
year. TCA does not make this contention on appeal, and thus we
do not address it.

                                 5
      C.    Fourth amended complaint; demurrer;
            judgment of dismissal.
       Plaintiffs filed the operative fourth amended complaint in
January 2019. The fourth amended complaint was largely
identical to the third amended complaint, but it eliminated the
allegations that TCA had promised to give the Martirosians and
Semirdzhyans the opportunity to purchase the school before
closing it, and it alleged for the first time that TCA issued
memoranda noting the date, donation amount, and purpose
(“School Expansion Project”) of each of plaintiffs’ donations. The
fourth amended complaint continued to allege that TCA had
promised to offer the Taglyans the opportunity to purchase the
school before closing it.
       TCA demurred. It asserted that the fourth amended
complaint (1) was a “sham pleading” because it eliminated the
allegation that the Martirosians and Semirdzhyans had been
promised an opportunity to purchase the school, and
(2) continued to violate the statute of frauds because it alleged
that the Taglyans had been orally promised an option to purchase
the school.
       Plaintiffs opposed the demurrer. They urged that the
complaint was not a sham pleading because while it corrected
some minor errors, its allegations were not materially different
than those of the third amended complaint. Plaintiffs further
contended that the alleged payment receipts, checks, and naming
rights took the oral contracts out of the statute of frauds and, in
any event, the parties had valid breach of contract claims even if
the option to purchase the school was barred by the statute of
frauds.

                                 6
      The trial court sustained the demurrer to the fourth
amended complaint without leave to amend in March 2019, and
entered a judgment of dismissal on April 22, 2019.4 Plaintiffs
timely appealed.
                          DISCUSSION
       Plaintiffs contend the trial court erred by finding that the
contract causes of action were barred by the statute of frauds
because (1) plaintiffs did not sue to enforce an option contract to
purchase real property, (2) the alleged option to purchase real
property was severable from the rest of the oral agreements,
(3) plaintiffs alleged the existence of memoranda signed by TCA’s
agents that established the terms of the alleged agreements, and
(4) TCA was estopped from invoking the statute of frauds because
plaintiffs had fully performed under the agreements.
I.    Standard of review.
      “ ‘ “On appeal from an order of dismissal after an order
sustaining a demurrer, the standard of review is de novo: we
exercise our independent judgment about whether the complaint
states a cause of action as a matter of law.” ’ (Villafana v. County
of San Diego (2020) 57 Cal.App.5th 1012, 1016.) In reviewing the
complaint, ‘we must assume the truth of all facts properly
pleaded by the plaintiffs, as well as those that are judicially
noticeable.’ (Howard Jarvis Taxpayers Assn. v. City of La Habra
(2001) 25 Cal.4th 809, 814.)” (Inns-by-the-Sea v. California
Mutual Ins. Co. (2021) 71 Cal.App.5th 688, 696–697.) If the
complaint states a cause of action on any possible legal theory, we

4     The trial court’s March 1, 2019 minute order does not
explain the basis for the court’s ruling.

                                 7
must reverse the trial court’s order sustaining the demurrer.
(Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1007.)
II.   The trial court erred by sustaining the demurrer to
      the first and second causes of action.
      A.    The statute of frauds does not bar plaintiffs’
            contract claims.
       The statute of frauds, as memorialized in Civil Code section
1624, sets forth several categories of contracts that “are invalid,
unless they, or some note or memorandum thereof, are in writing
and subscribed by the party to be charged or by the party’s
agent.” TCA contends, and the trial court apparently found, that
the oral agreements alleged here fall within the category
described in Civil Code section 1624, subdivision (a)(3), i.e.,
“agreement[s] . . . for the sale of real property, or of an interest
therein.”
       TCA asserts, and plaintiffs do not dispute, that options to
purchase real property have been held to be subject to the statute
of frauds. (E.g., Smyth v. Berman (2019) 31 Cal.App.5th 183, 197
[“Because they are a species of an option to purchase, rights of
first refusal to purchase real property must satisfy the statute of
frauds.”]; Pacific Southwest Development Corp. v. Western P. R.
Co. (1956) 47 Cal.2d 62, 66 [“In California an option to purchase
real property has been held to come within the statute of frauds
and so must be in writing.”].) We are not persuaded, however,
that the alleged promise not to close the school “before giving [the
Taglyans] and [the school’s] donors the opportunity to purchase
the school and/or obtain a loan or the necessary financing to
continue its success” constitutes an option to purchase real
property. As alleged in the complaint, the plaintiffs’ intent in

                                 8
entering the oral agreements was not to invest in real estate, but
to keep the school operational for the benefit of Los Angeles’s
Armenian–American community. The right to purchase “the
school,” therefore, did not necessarily give plaintiffs the right to
purchase the land on which the school buildings were located, but
might have been satisfied by selling the property to a third party
subject to an agreement to allow plaintiffs to continue to operate
the school on the property, or by transferring the school to the
plaintiffs to be operated at a different site.
       In any event, even if the alleged promise to allow plaintiffs
to purchase the school was within the statute of frauds, the trial
court erred in sustaining the demurrer. Where an oral
agreement is alleged to contain multiple discreet promises, only
some of which are subject to the statute of frauds, the agreement
may be enforced in part “if the court by reference to the terms of
the agreement can separate those promises of performance not
falling within the statute from those that do so.” (White Lighting
Co. v. Wolfson (1968) 68 Cal.2d 336, 341 (White Lighting);
Pollyanna Homes, Inc. v. Berney (1961) 56 Cal.2d 676, 678
(Pollyanna Homes).) For example, in Pollyanna Homes, the
plaintiff and defendants were alleged to have entered into an oral
contract by which the defendants agreed (1) to transfer title to
property to the plaintiff, and (2) to install offsite improvements
adjacent to that property. The defendants deeded the property to
the plaintiff but did not install the offsite improvements, and the
plaintiffs sued for breach of contract. (56 Cal.2d at p. 678.) Our
Supreme Court held that although the promise to transfer title
could not have been enforced under the statute of frauds, the
promise to install offsite improvements “was not within the
statute of frauds and was divisible from the promise for the sale of

                                 9
the land.” (Id. at p. 679, italics added.) It therefore concluded
that the statute of frauds did not bar plaintiff’s cause of action.
(Ibid.)
       The Supreme Court similarly concluded in White Lighting,
supra, 68 Cal.2d at p. 336. There, an employee alleged that his
former employer had breached an oral severance agreement to
repurchase the employee’s shares of the company’s stock for
$15,000 and to pay the employee a severance payment, a share of
gross receipts, and moving expenses. (Id. at p. 345.) The
Supreme Court held that the promise to purchase the employee’s
shares of stock was unenforceable under the “sale of goods”
provision of the statute of frauds (former Civ. Code, §§ 1624a,
subd. (1), 1724, subd. (1)), but that the employee could state a
claim for breach of the other alleged promises. It explained: “If a
claimant alleges two or more promises of performance ‘that can
easily be distinguished and separated by the court by reference to
the agreement itself’ (2 Corbin on Contracts, § 313, at pp. 127–
128), only that promise of performance which falls clearly within
the statute of frauds cannot be enforced. . . . [¶] Here, by
reference to the alleged agreement itself, the ‘repurchase’ promise
can be clearly distinguished and separated from the promises to
pay one month’s salary, traveling expenses, and [the employee’s]
share of the gross receipts accrued during his period of
employment as vice president. Any other construction of the
alleged oral termination of employment contract would
transgress the policy of restricting the application of the statute
of frauds exclusively to those situations which are precisely
covered by its language.” (White Lighting, at pp. 345–346.)
       The present case is analogous to Pollyanna Homes and
White Lighting. Here, plaintiffs allege that the Taglyans agreed

                                10
to donate money to the school in exchange for TCA’s oral
promises to (1) name a new building after the Taglyans, (2) make
best efforts to ensure the continued operation of the school,
(3) notify the school’s donors of any future financial difficulties
and allow them to make additional contributions, (4) before
closing the school, give the school’s donors the opportunity to
purchase the school and/or obtain a loan to keep the school open,
and (5) return the Taglyans’s donations, with interest, if TCA
closed the school or removed the Taglyans’s name from the school
building. In other words, plaintiffs alleged that TCA made five
separate promises, only one of which arguably ran afoul of the
statute of frauds. Because that promise “can be clearly
distinguished and separated from” the remaining promises
(White Lighting, supra, 68 Cal.2d at p. 346), the trial court erred
by relying on the statute of frauds to sustain demurrers to the
entirety of the contract claims.
       Citing Texaco v. Ponsoldt (9th Cir. 1991) 939 F.2d 794
(Texaco), TCA asserts that the alleged promise to allow plaintiffs
to purchase the school cannot be severed from the other promises
because plaintiffs did not “allege separate consideration for the
fourth promise.” We do not agree. While the rule articulated in
Texaco––that the test of whether a contract is divisible is
whether “the consideration is single” (id. at p. 801)––has been
applied to some contracts in which a party has promised to take
several actions, only some of which are enforceable, a different
rule applies to contracts containing alternative promises. Our
Supreme Court has explained: “[W]here a contract contains two
promises which are in the alternative, rather than being merely
divisible, one of which is within the statute of frauds and the
other not, recovery may be had for a breach of the latter.” (Roy v.

                                11
Salisbury (1942) 21 Cal.2d 176, 183 (Roy), italics added.) For
example, in Roy, the plaintiff alleged that he had agreed to care
for a decedent’s dog, for a fee, “ ‘if [the decedent] ever became
unable to care said dog, or, if he should die.’ ” (Id. at p. 183) The
court held that although the promise to care for the dog upon
decedent’s death was barred by the statute of frauds because it
could not be performed within the decedent’s lifetime (Civ. Code,
§ 1624, subd. (a)(5)), the alternative promise to care for the dog if
decedent became unable to do so during his lifetime was not
barred. Accordingly, because one of the two alternative promises
was not within the statute of frauds, “the contract may not be
condemned.” (Id. at p. 183; see also Civ. Code, § 1451 [“If one of
the alternative acts required by an obligation is such as the law
will not enforce, or becomes unlawful, or impossible of
performance, the obligation is to be interpreted as though the
other stood alone.”]; Rosenthal v. Perkins (1898) 123 Cal. 240, 243
[“ ‘If an agreement is in the alternative, and one branch of the
alternative cannot by law be performed, the party is bound to
perform the other.’ ”].)
        The present case is analogous to Roy. As in that case, the
parties did not intend TCA to take all the actions alleged in the
oral agreement—instead, the plaintiffs allege that in exchange
for their donations to the school, TCA promised either to continue
operating the school with existing funding, or to allow its donors
to raise additional funds to keep the school operational, or to
allow the donors to purchase the school, or to return the
donations to the plaintiffs with interest. There thus was no need
to apportion the consideration because TCA’s obligation under
the contract could be satisfied by any one of the alternative

                                 12
promises. Plaintiffs’ contract causes of action, therefore, were not
barred by the statute of frauds.
      B.    The fourth amended complaint is not a sham
            pleading.
      In the alternative to its statute of frauds claim, TCA
asserts that the fourth amended complaint was a “sham
pleading” because it omitted the allegations that the
Martirosians and Semirdzhyans (but not the Taglyans) had been
promised an opportunity to purchase the school. We do not
agree. “Under the sham pleading doctrine, a plaintiff cannot
avoid allegations that are determinative to a cause of action
simply by filing an amended complaint which omits the
problematic facts or pleads facts inconsistent with those alleged
in the original complaint. The doctrine precludes a plaintiff from
amending a complaint to omit harmful allegations, without
explanation, from previous complaints to avoid attacks raised in
demurrers.” (Tindell v. Murphy (2018) 22 Cal.App.5th 1239,
1248; see also Smyth v. Berman, supra, 31 Cal.App.5th at
pp. 195–196 [plaintiff “may not ‘omit harmful allegations . . . from
previous complaints’ ” unless the plaintiff provides a “ ‘plausible’ ”
explanation for dropping them].) Here, we have concluded that
the alleged option to purchase the school did not render the
alleged oral agreements unenforceable under the statute of
frauds, and thus the omitted allegations were not “harmful” to
plaintiffs’ ability to continue this action. The sham pleading
doctrine therefore does not apply. (See, e.g., Dones v. Life Ins. Co.
of North America (2020) 55 Cal.App.5th 665, 688 [sham pleading
doctrine did not apply because facts initially pled were not fatal

                                 13
to plaintiff’s cause of action and the amendment did not alter the
fundamental facts upon which the claim was based].)5
                         DISPOSITION
       The judgment of dismissal is reversed, and the trial court is
directed to reinstate the fourth amended complaint and to allow
TCA to file an answer. Plaintiffs are awarded their appellate
costs.
  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                           EDMON, P. J.

We concur:

                  LAVIN, J.

                  ADAMS, J.*

5     Having so concluded, we need not address TCA’s
contentions that the alleged donation receipts do not satisfy the
statute of frauds’ writing requirement or that plaintiffs failed to
allege an unconscionable injury or unjust enrichment sufficient to
invoke equitable estoppel.
*     Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California
Constitution.

                                14