Tentative Ruling: On N On LLC v. Hershel Mikaelian
Case Number
24CV06813
Case Type
Hearing Date / Time
Mon, 06/15/2026 - 10:00
Nature of Proceedings
Demurrer of Cross-Defendants to First Amended Cross-Complaint
Tentative Ruling
On N On LLC v. Hershel Mikaelian
Case No. 24CV06813
Hearing Date: June 15, 2026
HEARING: Demurrer of Cross-Defendants to First Amended Cross-Complaint
ATTORNEYS: For Plaintiff and Cross-Defendant On N On LLC, and Cross-Defendant Sharon Nunez: Marcus J. Kocmur, Natalie N. Mutz, Fauver Large Archbald & Spray LLP
For Defendant and Cross-Complainant Hersel Mikaelian: John J. Thyne III, Thyne Taylor Fox Howard, LLP
TENTATIVE RULING: The demurrer of cross-defendants On N On LLC and Sharon Lynn Nunez is sustained with leave to amend as to the second cause of action for constructive fraud and third cause of action for breach of fiduciary duty. The demurrer is overruled in all other respects. On or before June 30, 2026, cross-complainant Hersel Mikaelian may file a second amended cross-complaint.
Background:
On December 6, 2024, plaintiff On N On LLC (ONO) filed a verified complaint against defendant Hersel Mikaelian (Mikaelian) alleging four causes of action: (1) quiet title; (2) declaratory relief; (3) slander of title; and (4) cancellation of instruments. (Note: defendant’s first name appears to be misspelled in the caption of the complaint as “Hershel,” when it should be spelled, “Hersel”.)
As alleged in the complaint:
ONO is the owner in fee simple of real property (Property) located in the vicinity of Brosian Way in the County of Santa Barbara. (Compl., ¶ 1.) The basis of ONO’s title is a grant deed (the Deed). (Ibid.)
ONO acquired the Property through two transactions, both occurring on June 27, 2018, at 11:24 a.m. (See Compl., Ex. 1; March 7, 2025, Errata to Compl., Ex. 1.) First, the Property was conveyed by Sharon Nunez (Sharon), Surviving Trustor and Trustee of the Nunez Family Trust, dated September 4, 2015 (the Marital Trust) to Sharon Lynn Nunez, Trustee of The Sharon Lynn Nunez 2018 Living Trust, dated April 27, 2018 (the Living Trust). (See Compl., Ex. 1.) Second, the Property was conveyed by the Living Trust to ONO. (See March 7, 2025, Errata to Compl., Ex. 1.)
Prior to ONO’s ownership of the Property, there was litigation (Litigation) between Mikaelian and Oscar Nunez (Oscar), one of ONO’s predecessors in interest as to the Property. (Compl., ¶ 7 & Ex. 2.) The Litigation concerned a partnership pertaining to the acquisition and development of the Property. (Ibid.) The Litigation involved a demand for “the sale and partition of Mikaelian and [Oscar’s] interests in the above [P]roperty.” (Compl., Ex. 2 at p. 2.) On June 9, 2003, Mikaelian recorded a Notice of Pending Action (the NPA) of the Litigation. (Ibid.) Mikaelian litigated his claims against Oscar to judgment in July 2003. (Compl., ¶ 8.) Mikaelian took no valid steps to renew that judgment prior to its expiration in July 2013. (Compl., ¶ 10.)
On July 1, 2013, and again on June 30, 2023, Mikaelian recorded in the official records of Santa Barbara County copies of an “Order Of Dissolution Of Partnership And Partition And Sale Of Property” (the Order) which was filed in the Litigation on July 18, 2003. (Compl., ¶ 11 & Exhs. 3-4.) ONO has been prevented from completing a sale of the Property due to the cloud that Mikaelian placed on title by the recording of the NPA and the Order. (Compl., ¶ 13.)
Mikaelian has refused ONO’s request that Mikaelian clear title to the Property. (Compl., ¶ 14.) Mikaelian’s purpose in refusing to clear title is to force ONO to sell the Property to Mikaelian for less than its market value. (Ibid.)
On April 1, 2025, Mikaelian filed an answer to ONO’s complaint, and a verified cross-complaint against ONO and Sharon.
On September 29, 2025, the court sustained a demurrer to the original cross-complaint as to the second cause of action for conversion, third cause of action for constructive fraud, and fourth cause of action for breach of fiduciary duty, with leave to amend.
On October 14, 2025, Mikaelian filed a verified first amended cross-complaint (FACC) against ONO and Sharon. In the FACC, Mikaelian asserts six causes of action for: (1) quiet title; (2) constructive fraud; (3) breach of fiduciary duty; (4) unjust enrichment/restitution/implied contract; (5) equitable estoppel; and (6) accounting.
As alleged in FACC:
In 2000, Mikaelian and Oscar entered into a partnership to acquire, improve, and sell the Property as 50 percent owners with title taken in Oscar’s name. (FACC, ¶¶ 14-16.)
On June 9, 2003, Mikaelian initiated the Litigation to dissolve the partnership with Oscar and recorded the NPA. (FACC, ¶¶ 17-18.) Sharon, who at the time was dating Oscar, testified in the Litigation that she knew Mikaelian was a 50 percent owner of the Property. (FACC, ¶¶ 17, 25.) Sharon later married Oscar. (FACC, ¶ 3.)
Pursuant to the Order, which was entered in the Litigation on July 11, 2003, the court found that the partnership between Mikaelian and Oscar should be dissolved, that the Property should be sold, and that Mikaelian should receive an accounting and one-half of the proceeds from the Property’s sale. (FACC, p. 4, l. 25 – p. 5, l. 8 & ¶ 19.) The court further ordered the parties to work with Robert Egenolf (Egenolf), the partition referee who would oversee the transaction. (FACC at p. 5, ll. 2-3.)
When Mikaelian and Oscar met with Egenolf to arrange for the sale of the Property, Mikaelian and Oscar agreed not to dissolve the partnership and instead to continue to keep the Property as 50 percent owners with a plan to sell the Property and split the profits. (FACC at p. 5, ll. 4-8.) Mikaelian maintained the NPA and recorded the Order to put others on notice of the existence of the partnership between Mikaelian and Oscar. (FACC, ¶ 21.)
Mikaelian and Oscar applied as partners to the Assessment Appeals Board to challenge the assessment of the Property. (FACC, ¶ 22.) A January 23, 2006, summary of a meeting of the Santa Barbara Local Agency Formation Commission identifies Mikaelian and Oscar as owners of the Property. (FACC, ¶ 21.) Mikaelian, whom Oscar entrusted with Property records, engaged in efforts to begin the process of subdividing the Property and paid one-half of the taxes for the Property through 2008. (FACC, ¶ 23.) After Oscar failed to list and sell the Property, Oscar allowed Mikaelian to cease contributing towards the taxes because Oscar admitted that the delays in selling the Property were caused by Oscar. (FACC, ¶ 24.)
On September 4, 2015, Oscar transferred the Property by grant deed to the Marital Trust. (FACC, ¶ 26.) Mikaelian and Oscar continued to discuss the development of the Property. (FACC, ¶ 27.) At some point after Oscar transferred the Property to the Marital Trust, Oscar passed away. (FACC, ¶ 28.) Sharon did not contact Mikaelian or inform Mikaelian that Oscar had died. (Ibid.)
On June 12, 2018, and without consulting Mikaelian, Sharon transferred the Property from the Marital Trust to Sharon, and from Sharon to ONO, and recorded a grant deed on June 27, 2018. (FACC, ¶ 30.) Sharon is the owner of ONO. (FACC, p. 5, ll. 20-21.) Mikaelian asserts that these transfers did not affect Mikaelian’s 50 percent ownership because the Marital Trust owned only 50 percent of the Property. (Ibid.) Following the transfer of the Property to ONO, Mikaelian again recorded the Order to make others aware that Mikaelian remained in partnership with ONO or Sharon as a 50 percent owner of the Property. (FACC, ¶¶ 31, 32, 34.)
On December 17, 2025, ONO and Sharon filed a demurrer to the FACC on the grounds that the FACC fails to state facts sufficient to allege a claim for breach of fiduciary duty (third cause of action) and constructive fraud (fourth cause of action), and is barred by applicable statutes of limitations as to all causes of action. Mikaelian opposes the demurrer.
Analysis:
(1) Standard on Demurrer
“Because the function of a demurrer is to test the sufficiency of a pleading as a matter of law, we … assume the truth of the allegations in the complaint, but do not assume the truth of contentions, deductions, or conclusions of law. [Citation.] It is error for the trial court to sustain a demurrer if the plaintiff has stated a cause of action under any possible legal theory, and it is an abuse of discretion for the court to sustain a demurrer without leave to amend if the plaintiff has shown there is a reasonable possibility a defect can be cured by amendment.” (California Logistics, Inc. v. State of California (2008) 161 Cal.App.4th 242, 247). “The reviewing court gives the complaint a reasonable interpretation, and treats the demurrer as admitting all material facts properly pleaded.” (Payne v. National Collection Systems, Inc. (2001) 91 Cal.App.4th 1037, 1043.) “[I]n ruling on a demurrer the trial court may take into account in addition to the complaint itself any matter that may be properly considered under the doctrine of judicial notice.” (Cruz v. County of Los Angeles (1985) 173 Cal.App.3d 1131, 1133-1134.)
(2) Third Cause of Action for Breach of Fiduciary Duty
“The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932.) “A fiduciary duty is a duty to act with the utmost good faith for the benefit of the other party. It can arise from a recognized legal relationship such as guardian and ward, trustee and beneficiary, principal and agent, or attorney and client or from a ‘confidential relationship’ ... founded on a moral, social, domestic, or merely personal relationship. The ‘essential elements’ of a confidential relationship have been described as 1) The vulnerability of one party to the other which 2) results in the empowerment of the stronger party by the weaker which 3) empowerment has been solicited or accepted by the stronger party and 4) prevents the weaker party from effectively protecting itself.” (Thomas v. Regents of University of California (2023) 97 Cal.App.5th 587, 629 (Thomas).)
“Partnership is a fiduciary relationship, and partners are held to the standards and duties of a trustee in their dealings with each other. ‘[I]n all proceedings connected with the conduct of the partnership every partner is bound to act in the highest good faith to his copartner and may not obtain any advantage over him in the partnership affairs by the slightest misrepresentation, concealment, threat or adverse pressure of any kind.’ [Citation.] ‘[A] partner who seeks a business advantage over another partner bears the burden of showing complete good faith and fairness to the other’ (i.e., that the advantage was not procured by misrepresentation, concealment, threat or adverse pressure). [Citation.]” (Agam v. Gavra (2015) 236 Cal.App.4th 91, 112-113, internal quotation marks omitted.)
“The rights and liabilities of joint adventurers, as between themselves, are governed by the same rules which apply to partnerships.” (Boyd v. Bevilacqua (1966) 247 Cal.App.2d 272, 288.) “[T]here are only three elements to show the existence of a joint venture, which are similar to a general partnership: (1) joint interest in a common business; (2) with an understanding to share profits and losses; and (3) a right to joint control.” (Jacobs v. Locatelli (2017) 8 Cal.App.5th 317, 328, fn. 10 (Jacobs).)
Here, based on a reasonable reading of the FACC, the FACC alleges that Oscar and Mikaelian were partners beginning in 2000 pertaining to the development and sale of the Property. (FACC, p. 4, ll. 16-20.) Oscar took title to the property in 2000 for purposes pertaining to this partnership. (Ibid.) Although this partnership was ordered dissolved by the court as part of the Litigation, Oscar and Mikaelian decided to keep the Property as 50 percent owners and their partnership continued. (FACC at p. 5, ll. 4-8.) The title of the Property remained in Oscar’s name. (FACC, p. 4, ll. 16-18.)
On September 4, 2015, Oscar transferred the Property into his and Sharon’s Marital Trust. (FACC, ¶ 26.) At some point after September 4, 2015, Oscar passed away. (FACC, ¶ 28.) Sharon did not inform Mikaelian of Oscar’s death. (Ibid.) Sharron knew of Mikaelian’s 50 percent interest. (FACC, ¶ 25.) Unbeknownst to Mikaelian and without his consent, on June 12, 2018, Sharon transferred the Property from the Marital Trust to Sharon and then to ONO (of which Sharon is the 100 percent owner). (FACC, ¶¶ 1, 29-30.) On this basis, the FACC alleges that Sharon, as the successor in interest to her late husband Oscar, remains in partnership with Mikaelian as to the Property and thus owes Mikaelian fiduciary duties. (FACC, ¶ 32.)
Accepting these facts as true, there are no factual allegations in the FACC that Sharon ever agreed to be partners with Mikaelian or to enter into any joint venture with Mikaelian. “A partnership is defined by statute, as it was at common law, as an association of two or more persons to carry on as co-owners a business for profit....” (Persson v. Smart Inventions, Inc. (2005) 125 Cal.App.4th 1141, 1157; see Corp. Code, § 16202, subd. (a).) “The question of the existence of a partnership depends primarily upon the intention of the parties ascertained from the terms of the agreement and from the surrounding circumstances. [Citations.] Ordinarily the existence of a partnership is evidenced by the right of the respective parties to participate in the profits and losses and in the management of the business. [Citations.] In ascertaining the intention of the parties, where they have entered into a written agreement, such intention should be determined chiefly from the terms of the writing. [citation]. While the question of whether a partnership exists is to be determined from the nature of the relation agreed upon rather than the name which the parties have given to it, some weight must be given to the language of the parties themselves. [Citations.] It is the intention as evidenced by the terms of the agreement, and not the subjective or undisclosed intention of the parties, that controls.” (Eng v. Brown (2018) 21 Cal.App.5th 675, 694 (Eng).)
The FACC does not allege that Mikaelian and Sharon ever had any discussions with one another about the Property, or any agreements or understandings pertaining to the Property. “[B]efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.” (Thomas, supra, 97 Cal.App.5th at p. 629.) There are no allegations that Sharon knowingly entered into a partnership, joint venture, or confidential relationship with Mikaelian.
Mikaelian also cites no law supporting the theory that because Mikaelian was a partner with Oscar when Oscar passed away, Mikaelian by operation of law becomes partners or coventurers with Oscar’s surviving spouse, Sharon. Mikaelian cites Kimball v. Baxter (1924) 67 Cal.App. 635, 638 (Kimball), but this case addresses the obligations of a surviving partner when one partner dies. The Kimball case, as well as the other authorities Mikaelian cited pertaining to surviving partners, are inapposite because Sharon is not alleged to be a surviving partner. Rather, Sharon is alleged to be a surviving spouse.
This is the second attempt by Mikaelian to allege a fiduciary relationship between Sharon and Mikaelian. The FACC fails to allege sufficient facts to support the theory that Sharon intended to act with Mikaelian and Oscar to operate an enterprise and split the profits from the sale of the Property as partners or coventurers at or after the time the Property was transferred by Oscar into his and Sharon’s Marital Trust. (See Eng, supra, 21 Cal.App.5th at p. 694; Jacobs, supra, 8 Cal.App.5th at p. 328, fn. 10.) The court will sustain the demurrer to the third cause of action for breach of fiduciary duty with leave to amend. It appears that Michaelian may be able to allege facts to support this theory and the court will provide one more opportunity.
(3) Constructive Fraud
“The elements of the cause of action for constructive fraud are: (1) fiduciary relationship; (2) nondisclosure (breach of fiduciary duty); (3) intent to deceive, and (4) reliance and resulting injury (causation).” (Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 517, fn. 14.) As with actual fraud, a cause of action for constructive fraud must be pleaded with specificity. (Schauer v. Mandarin Gems of Cal., Inc. (2005) 125 Cal.App.4th 949, 960-961.)
“Constructive fraud ‘is a unique species of fraud applicable only to a fiduciary or confidential relationship.’ [Citation.] Constructive fraud ‘arises on a breach of duty by one in a confidential or fiduciary relationship to another which induces justifiable reliance by the latter to his prejudice.’ [Citation.] Actual reliance and causation of injury must be shown. [Citations.] ‘In its generic sense, constructive fraud comprises all acts, omissions and concealments involving a breach of legal or equitable duty, trust, or confidence, and resulting in damages to another. [Citations.] Constructive fraud exists in cases in which conduct, although not actually fraudulent, ought to be so treated—that is, in which such conduct is a constructive or quasi fraud, having all the actual consequences and all the legal effects of actual fraud.’ [Citation.] ‘[W]hether a fiduciary duty has been breached, and whether [conduct] constitutes constructive ... fraud, depends on the facts and circumstances of each case.’ ” (Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 223 Cal.App.4th 1105, 1131.)
Because the FACC does not allege a fiduciary relationship between Mikaelian and Sharon, the FACC also fails to allege a basis for constructive fraud. The court will sustain the demurrer to the second cause of action for constructive fraud with leave to amend.
(4) Statute of Limitations
“[I]t is difficult for demurrers based on the statute of limitations to succeed because (1) trial and appellate courts treat the demurrer as admitting all material facts properly pleaded and (2) resolution of the statute of limitations issue can involve questions of fact. Furthermore, when the relevant facts are not clear such that the cause of action might be, but is not necessarily, time-barred, the demurrer will be overruled. [Citation.] Thus, for a demurrer based on the statute of limitations to be sustained, the untimeliness of the lawsuit must clearly and affirmatively appear on the face of the complaint and matters judicially noticed.” (Schmier v. City of Berkeley (2022) 76 Cal.App.5th 549, 554.) The court previously addressed the statute of limitations issues at length in its ruling on the demurrer to the initial cross-complaint. (See Minute Order, Sept. 29, 2025.) The new allegations in the FACC do not change the court’s analysis. The court will overrule the demurrer as to the statute of limitations.