Background
Ara Bagdasaryan and Siranush Zohrabyan owned and lived in a Glendale home. After defaulting on their mortgage, they sought help in March 2018 from Naira Valian, a real estate agent and chief executive of A&D Consulting Group, Inc. Their complaint alleged that Valian advised them to convey the property to A&D in an oral express and implied-in-fact trust so it could be managed for their benefit. The Court of Appeal construed those allegations liberally and inferred that the homeowners continued living there after the conveyance.
The complaint alleged that Valian and A&D subsequently obtained loans of $840,000 and $880,000 secured by the property, refinanced it, incurred allegedly phantom fees, and arranged its sale. It alleged that Bagdasaryan’s signature on the sale agreement was forged or obtained through deception, that commissions were paid to the agents, and that Valian retained net proceeds of $51,808.33. The homeowners also alleged that Valian bought and financed a vehicle in Bagdasaryan’s name and allowed its repossession, and claimed total damages exceeding $600,000.
The December 2024 complaint asserted eight causes of action: breach of fiduciary duty, constructive trust, conversion, violation of the Foreclosure Consultants Act, intentional misrepresentation, suppression of facts, negligent misrepresentation, and negligence. The superior court sustained the defendants’ demurrer to the entire complaint with leave to amend. When the homeowners did not amend within the allotted time, the action was dismissed with prejudice, and they appealed.
The Court’s Holding
Reviewing the dismissal de novo, the Court of Appeal reversed as to the first, second, fourth, and eighth causes of action. It found a sufficiently pleaded common-law fiduciary relationship because the homeowners entrusted Valian with their interests and conveyed legal title to A&D for management on their behalf. That gave the defendants control over another’s property and left the homeowners dependent on their integrity. The court therefore did not decide the parties’ separate dispute over whether Valian’s status as a real estate agent itself created the alleged duty.
The constructive-trust claim also survived because the complaint identified the equity funds obtained by the defendants, supported an inference that the homeowners’ equity exceeded the property’s encumbrances, and alleged that the defendants wrongfully retained borrowing and sale proceeds. The Foreclosure Consultants Act claim was adequate as well: seeking advice while in default and being persuaded to convey the home supported allegations of covered foreclosure-related services, while the absence of a written agreement and A&D’s acquisition of title supported statutory violations. The negligence claim sufficiently alleged that the management arrangement created a duty and that borrowing against and selling the home for the defendants’ own benefit breached it.
The court affirmed dismissal of the remaining claims. Conversion did not extend to the asserted intangible equity interest in real property. The intentional-misrepresentation, concealment, and negligent-misrepresentation claims failed fraud’s heightened specificity requirement because they referred generally to earlier representations without identifying a particular misrepresentation or concealed material fact. The proposed theory that the defendants falsely promised future management concerned future conduct rather than an existing fact, and constructive fraud could not rescue the pleading because the complaint neither named nor specifically pleaded that theory. The court directed the trial court to enter an order overruling the demurrer to the four revived claims, affirmed the demurrer ruling on the other four, and ordered each side to bear its own appellate costs.
Key Takeaways
- Control over another person’s property, accepted confidence, and dependence on the controlling party’s integrity can adequately plead a common-law fiduciary relationship.
- A constructive-trust claim may target traceable equity funds rather than requiring recovery of the real property itself.
- Allegations of foreclosure-related advice, an oral rather than written arrangement, and acquisition of the homeowner’s title were sufficient to proceed under the Foreclosure Consultants Act.
- California conversion law did not cover the homeowners’ asserted intangible equity interest in their residence.
- General references to earlier allegations did not satisfy fraud’s particularity requirement, and the complaint did not specifically plead constructive fraud.
Why It Matters
The decision illustrates how liberal construction at the demurrer stage can preserve claims arising from an informal distressed-property arrangement even when the complaint leaves transactional details unclear. The court treated the alleged trust and continuing occupancy as important indicators of the homeowners’ retained beneficial interest, while separately analyzing fiduciary duty, equitable recovery, statutory protection, and negligence.
The partial affirmance also marks the limits of that approach. Liberal construction did not make real-estate equity convertible personal property or substitute for the specific allegations required for fraud. The ruling determines pleading sufficiency only; it does not establish the alleged forgery, deception, or damages, and further proceedings are limited to the four revived causes of action.
Read the full opinion (PDF) · Court docket