Judge: Alison Mackenzie, Case: 24STCV04040, Date: 2024-08-02 Tentative Ruling
Case Number: 24STCV04040 Hearing Date: August 2, 2024 Dept: 55
NATURE OF PROCEEDINGS:
Hearing on Demurrer – with Motion to Strike (CCP 430.10).
BACKGROUND
This is a commercial lease dispute. Plaintiffs Rosalin
and Jeremy Rothstein, as Trustees of the Rothstein Family Trust; Richard
Memsic; Peter Wurzburger; and Rebecca Wurzburger sued defendants Steve and
Shlomo Rechnitz on February 16, 2024, asserting causes of action for breach of
written guaranty, open book account, account stated, and breach of written
contract.
Defendants demurred to and moved to strike portions of
Plaintiffs’ complaint. Plaintiffs oppose both the demurrer and motion to strike.
LEGAL STANDARD
Demurrer
Where pleadings are defective, a party may raise the
defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257,
262.) A demurrer for sufficiency tests whether the complaint alleges facts
sufficient to constitute a cause of action. (Cal. Code Civ. Proc. § 430.10; Young
v. Gannon (2002) 97 Cal.App.4th 209, 220.)
When considering a demurrer, a court reads the
allegations stated in the challenged pleading liberally and in context, and
“treat[s] the demurrer as admitting all material facts properly pleaded, but
not contentions, deductions or conclusions of fact or law.” (Serrano v.
Priest (1971) 5 Cal.3d 584, 591.) Put differently: for purposes of
demurrer, the court treats all facts alleged – but only the facts alleged
– in the complaint as true. (Picton v. Anderson Union High School District
(1996) 50 Cal.App.4th 726, 732.) “The only issue involved in a demurrer hearing is whether the
complaint, as it stands, unconnected with extraneous matters, states a cause of
action.” (Hahn v. Mirda (2007) 147
Cal.App.4th 740, 747.)
Motion to Strike
“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. § 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., § 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. § 436 (b).)
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REQUEST FOR JUDICIAL
NOTICE
Defendants request
judicial notice of (1) a copy of what purports to be a private contract between
the parties; (2) a printout of a business’s website from the Internet; (3) the
results of a search in the Secretary of State’s website on June 4, 2024; (4) a
Certificate of Dissolution filed with the California Secretary of State; and
(5) an report from the Department of Building and Safety.
The Court grants
Defendants’ fourth request and denies the rest; the noticed exhibit does not
affect the Court’s analysis.
MEETING AND CONFERENCE
“Before filing a demurrer
... , the demurring party shall meet and confer in person or by telephone with
the party who filed the pleading that is subject to demurrer for the purpose of
determining whether an agreement can be reached that would resolve the
objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41(a).) An
equivalent requirement applies to motions to strike. (Id., § 435.5.)
Defendants’ Counsel
attests she sent a detailed meet and confer email to Plaintiff’s counsel, who was
not persuaded by her arguments. (Nashon Decl., ¶ 2 and Exh. A.) The sections
require a meeting and conference by phone or in person, so this does not
strictly satisfy their terms. But Counsel’s detailed email more than satisfies
the spirit of these sections. The Court turns to the merits.
ANALYSIS - DEMURRER
Defendants demur to all causes of action, arguing
Plaintiffs have misjoined the parties and failed to state facts sufficient to
constitute a cause of action. Defendants also argue the first and fourth causes
of action, for breach of guaranty and written contract, are fatally uncertain.
All of Defendants’ arguments improperly rely on
material from outside the four corners of the complaint.
1. Breach of Written
Guaranty and Breach of Contract
Defendants contend “Plaintiffs are not the party that
entered into [the] written agreement” on which their action is based, and which
is attached to the complaint. Thus, all the causes of action should fail
because Plaintiffs are not the real parties in interest. Defendants also
contend the primary lessor of the Property, Congregation Basi Gavriel, is an
indispensable party, so the complaint fails for misjoinder. And Defendants
contend their own personal guaranty terminated “when the lease expired in 2016,
or at the latest, on April 1, 2020, when a new lease was executed.” (Dem.,
10:17-18.)
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a. Plaintiffs have pled
they are the real parties in interest, even though the parties’ written
contract raises ambiguities.
Defendants’ first argument is well-taken, but the
Court is not persuaded. A third-party entity, “Rothstein, Memsic, &
Wurzburger”, appears as the signatory on the contracts underlying this dispute.
This could create problems for Plaintiffs at a later stage. For pleading
purposes, however, the complaint sufficient implies that the entity executed
the contract with Defendants on Plaintiffs’ behalf or Plaintiffs succeeded to
the interest of Rothstein, etc., which appears to be a pass-through entity that
bore Plaintiffs’ names. The contract does not contradict the pleading, so the
pleading states a claim.
b.
There is no basis for Defendant to argue misjoinder.
Defendants’ second argument is legally unsupported.
None of Defendants’ case law suggests that a party may not sue on a guaranty
without joining the party to the underlying contract. The Court is aware of no
case law holding as much.
c. The signatory’s
purported dissolution, and Plaintiffs’ succession to its interest in the
contract, are questions of fact not for resolution on the pleading.
Defendants’ third argument fails for the same reason
as the first. Even if Rothstein, etc. is dissolved, that does not mean
Plaintiffs have not succeeded to its interest in the contract. Plaintiffs’
status as real parties in interest must be resolved on the facts.
d.
Defendants’ merits arguments are misplaced.
Defendants also argue that the guaranty is
“long-expired” (Dem., 3:21); this is not apparent from the face of the
complaint. They contend “no principal obligation is owed”, which goes directly
to the merits of the case rather than the sufficiency of the pleading.
e.
Defendants’ remaining arguments misconstrue the contract.
Defendants also argue they “have no direct liability
under the lease”; Plaintiffs sue on the guaranty. Defendants then argue
Plaintiffs cannot state claims for common counts because any contract with
Defendants was oral. Not as pled; the written agreement is attached to the
complaint.
f. The claims do not fail
in their entirety based on a few time-barred allegations.
Finally, Defendants argue Plaintiffs’ claims are
“barred, in whole or in part”, by the statute of limitations. Defendants in
fact argue the claims are barred in part. An entire cause of action does
not fail simply because some of its facts are time-barred.
The demurrer is overruled.
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ANALYSIS -
MOTION TO STRIKE
Defendants contend Plaintiffs cannot claim attorneys’
fees because the personal guaranty is “expired”. For reasons discussed above,
the question of “expiration” is a matter of fact that cannot be considered in a
pleading challenge. And the written guaranty contains a fees clause.
The motion is denied.
CONCLUSION
The demurrer is overruled. The motion to strike is
denied. Twenty days to answer.