Case Number: 20STCV37664    Hearing Date: February 21, 2023    Dept: 40

On October 12, 2022, Defendants Classic Pallets, Inc. and Juan Perez filed this instant motion for judgment on the pleadings (“JMOP”), which Plaintiff opposed on February 3, 2023 and to which Defendants replied on February 14, 2023.

After review, the Court GRANTS Defendants’ motion as to the Seventh Cause of Action and DENIES Defendants’ motion as to the Third, Fourth, Fifth, and Sixth Causes of Action. 

Background Allegations

This case arises from a lease agreement between Plaintiff Luxe Holdings LLC and Defendant National Pallets, Inc.  The two parties entered into a commercial lease agreement to rent the real property located at 4851 S. Alameda St., Los Angeles, CA 90058 (“the Property”) on or about July 2017.  The lease was for a term of one year, after which the tenancy would become periodic from month to month.  The lease also had a clause charging Nationwide Pallets 150% of the base rent if it ever holds over on the tenancy.  Finally, the lease allegedly prohibited assignment of the lease or sublease by Nationwide Pallets unless prior permission from Luxe was first obtained. 

Luxe alleges that in or around April 2020, Nationwide Pallets assigned or sublet its lease in the Property to Classic Pallets, Inc. and its President, Juan Perez.  Luxe alleges neither Nationwide nor Classic Pallets and Juan Perez informed Plaintiff of the new arrangement for the Property.  Luxe further alleges that Nationwide was prohibited from assigning or subletting the Property to Classic Pallets without first obtaining permission from Luxe.  On July 29, 2020, Plaintiff served on Nationwide a 30-day termination notice, demanding Nationwide quit the property by August 29, 2020.  Nationwide did not respond and Classic Pallets allegedly remained in possession of the Property between August 2020 and at least October 1, 2020.

On October 1, 2020, Plaintiff Luxe filed a Complaint with this Court alleging counts of (1) breach of contract against Nationwide Pallets, (2) holding over against Nationwide Pallets, (3) intentional interference with prospective economic advantage against all defendants, (4) negligent interference with prospective economic advantage against all defendants, and (5) fraud against all defendants.  The causes of action are all premised on the foregoing facts and base damages against Classic Pallets and Juan Perez on the idea that Plaintiff Luxe could have engaged with unknown third parties to rent the Property had Luxe been informed of the assignment or sublease that took place between Nationwide Pallets and Classic Pallets in April 2020.

Motion

Timing for Judgment on the Pleadings

A motion for judgment on the pleadings may be made after the time to demur has expired, and an answer has been filed.  (Code Civ. Proc., § 438, subd. (f).)  However, “[n]o motion may be made pursuant to this [statutory] section if a pretrial conference order has been entered pursuant to Section 575, or within 30 days of the date the action is initially set for trial, whichever is later, unless the court otherwise permits.”  (Code Civ. Proc., § 438, subd. (e).)  Courts have discretion to consider late statutory motions for judgment on the pleadings, without any requirement of good cause.  (Burnett v. Chimney Sweep (2004) 123 Cal. App. 4th 1057, 1063.)  A non-statutory motion for judgment on the pleadings may be made any time before or during trial.  (Stoops v. Abbassi (2002) 100 Cal. App. 4th 644, 650; see also Sofias v. Bank of America (1985) 172 Cal.App.3d 583, 586 [the non-statutory motion for judgment on the pleadings can be made at any time, even during trial, since the grounds for a general demurrer are never waived].) 

Here, Defendants’ JMOP is made pursuant to Code of Civil Procedure sections 438 and 430.10, subdivision (e).  Plaintiff contends that the instant motion is untimely because the Court set the initial trial date for April 5, 2022 at the January 8, 2021 case management conference, and Defendants’ motion was filed more than seven months after the deadline for hearing the motion – on October 12, 2022, and the hearing on Defendants’ motion is currently set for February 21, 2023 – more than eleven months after the deadline for hearing the motion. However, the Court will consider the motion because it is based on Plaintiff’s Second Amended Complaint (“SAC”) which was filed on June 24, 2022, which is after both January 8, 2021 (case management conference) and March 7, 2022 (initial trial date).  Thus, at the time the initial trial date was set, the pleadings were not yet set.  Consequently, the motion is timely.

Judgment on the Pleadings Analysis

Either prior to trial or at the trial—and barring statutory provisions otherwise—the plaintiff or the Defendants may move for judgment on the pleadings where the appropriate ground for such a motion is the same as that arguable by general demurrer, namely, the failure to state a cause of action or defense.  (Dobbins v. Hardister (1966) 242 Cal.App.2d 787, 791.)  Here, Defendants moved for judgment on the pleadings “pursuant to California Code of Civil Procedure Section 438(c)(1)(B)(ii)” and a general inability to state sufficient facts to state a cause of action. 

A demurrer for sufficiency tests whether the complaint states a cause of action.  (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747; see Code Civ. Proc., § 430.10, subd. (e).)  When considering demurrers, courts read the allegations liberally and in context.  (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.)  In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice.  (Code Civ. Proc., § 430.30, subd. (a).)  A demurrer challenges only legal sufficiency of complaint, not truth or accuracy of its factual allegations or plaintiff's ability to prove those allegations.  (Assurance Co. of Am. v. Haven (1995) 32 Cal.App.4th 78, 82.)  Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.  (Code Civ. Proc., § 430.30, subd. (a).)  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, supra, 147 Cal.App.4th at p. 747.)  The face of the complaint includes exhibits attached to the complaint.  (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.)  If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence.  (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447.)

Here, Defendants were only charged as defendants in the for the third, fourth, fifth, sixth, and seventh causes of action in the SAC.  Consequently, Defendants’ JMOP is analyzed only as to the intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, trespass, unjust enrichment, and breach of contract [in the alternative] claims therein.

Third Cause of Action, Intentional Interference with Prospective Economic Advantage: DENIED.

“Intentional interference with prospective economic advantage [requires a pleading alleging]: (1) the existence, between the plaintiff and some third party, of an economic relationship that contains the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant’s action.”  (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)

“[T]he alleged interference must have been wrong by some measure beyond the fact of the interference itself.  [Citation.]  For an act to be independently wrongful, it must be ‘unlawful, that is, …it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.’  [Citation.]  The independently wrongful act must be the act of interference itself, but such act must itself be independently wrongful.  That is, ‘[a] plaintiff need not allege the interference and a second act independent of the interference.  Instead, the plaintiff must plead and prove that the conduct alleged to constitute interference was independently wrongful, i.e., unlawful for reasons other than that it interfered with a prospective economic advantage.  [Citations.]’  [Citation.]”  (Crown Imports, LLC v. Superior Court (2014) 223 Cal.App.4th 1395, 1404.) 

The SAC’s third cause of action alleges Intentional Interference with Economic Prospective against Classic Pallets, Juan Perez, and Does 31 through 40 on the grounds that: (1) as of July 2020, Luxe Holdings had secured Geovedy Cifuentes as a tenant wishing to immediately rent the Subject Premises; (2) Classic was informed of this desire through Juan Perez on July 29, 2020, when Luxe’s Principal—Tal Hassid—visited the Subject Premises and informed Defendant Perez of the same; (3) despite this knowledge, Classic Pallets and Perez refused to vacate the Subject Premises; (4) the potential relationship with Geovedy Cifuentes was disrupted between August 1, 2020 and June 30, 2021; and (5) Luxe has been damaged in an amount to be determined at trial, but no less than $23,190 per month from August 1, 2020, to June 30, 2021. (SAC, ¶¶ 32-38.)

Here, Plaintiff alleges sufficient facts to support each of these elements.  Contrary to Defendants’ contention that the SAC does not allege Defendants’ knowledge of the relationship, the SAC provides that Plaintiff’s Principal, Tal Hassid, informed Defendants of a specific tenant, Geovedy Cifuentes, wished to immediately rent the Subject Premises.  Thus, Plaintiff sufficiently identifies a specific third party in which there was a likely future business relationship.  Plaintiff’s lack of awareness of Defendants’ existence at the time Hassid communicated to Defendants on July 29, 2020, does not prevent this element from being satisfied because the issue is whether Defendants had knowledge of a third-party relationship.  Additionally, Plaintiff sufficiently alleges that Defendants engaged in intentionally wrongful acts designed to disrupt the relationship by stating that they “refused to vacate the Property.”  (SAC ¶ 35.)  The Court finds this allegation sufficient to constitute an act independently wrongful in itself given that this act also supports Plaintiff’s claims of trespass and unjust enrichment against Defendants. 

Thus, the Court DENIES Defendants’ motion as to the third cause of action.

Fourth Cause of Action, Negligent Interference with Economic Prospective: DENIED.

The tort of Negligent Interference with Economic Prospective—fourth cause of action in the SAC—shares the first element of an Intentional Interference with Economic Prospective claim: “(1) the existence of an economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff ….”  (Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th 989, 1005.)

The SAC premises this claim on Luxe Holdings’ alleged relationship with Geovedy Cifuentes as of July 2020.  (SAC, ¶¶ 41-42.) 

For the same reasons cited in the discussion ante as to Intentional Interference with Economic Prospective, the Court DENIES the Defendants’ motion as to the fourth cause of action.

Sixth Cause of Action, Unjust Enrichment: DENIED.

Plaintiff claims that Defendant’s motion as to the sixth cause of action is moot because on December 8, 2022, the Court granted Plaintiff’s motion for summary adjudication as to the sixth cause of action for unjust enrichment.  However, this only moots the motion as to Defendant Classic Pallets, Inc. only, and not Defendant Perez since the motion for summary adjudication was only granted as to Defendant Classic Pallets, Inc.

California law is unclear as to whether Unjust Enrichment in and of itself is a claim on which relief can be granted.  The Court of Appeal for the First District has held that “[u]njust enrichment is not a cause of action, [but rather, is] just a restitution claim.”  (Hill v. Roll Int’l Corp. (2011) 195 Cal.App.4th 1295, 1307 [quoting to McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1490 [quotations omitted]; see also McKell, 142 Cal.App.4th at p. 1490 [“[t]here is no cause of action for unjust enrichment”; “[r]ather, unjust enrichment is a basis for obtaining restitution based on quasi-contract or imposition of a constructive trust”].)  By contrast, the Court of Appeal for the Second District has held that the elements of a cause of action for unjust enrichment are simply stated as receipt of a benefit and unjust retention of the benefit at the expense of another where “[t]he term ‘benefit’ ‘denotes any form of advantage’” and which “may take any form, direct or indirect” or “consist of services as well as property,” where “[a] saved expenditure or a discharged obligation is no less beneficial to the recipient than a direct transfer.”  (Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238 [citing Ghirardo v. Antonioli (1996) 14 Cal.4th 39, 51].) 

For the purposes of this discussion, the Court adopts the elements stated in Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc., supra.

The SAC’s sixth cause of action alleges Unjust Enrichment against Classic Pallets, Juan Perez, and Does 61 through 70 based on these parties’ failure to pay rent on the premises from April 2020 to May 2021 for total damages of $347,850, i.e., $23,190 for rent from April 2020 to June 2021.  (SAC, ¶¶ 55-60.)

In the December 8, 2022 Minute Order, the Court stated there was sufficient evidence to “convince a reasonable factfinder that Classic Pallets was unjustly enriched when it received a benefit in the form of a saved expenditure between May 1, 2020 and June 30, 2021, thus carrying Luxe’s burden on summary adjudication.”  (12/8/22 Minute Order p. 13.)  Given that the SAC also alleges that Plaintiff is informed and believes that Defendant Perez is the president and/or owner of Classic, the Court finds that Defendant Perez would also have received any benefit that Classic would have received. 

Thus, the Court DENIES Defendants’ motion as to the sixth cause of action.

Seventh Cause of Action, Breach of Contract: GRANTED.

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff’s performance of the contract or excuse for nonperformance, (3) the defendant’s breach, and (4) the resulting damage to the plaintiff.”  (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) 

Here, the Court finds there to be insufficient facts to support this cause of action because Plaintiff fails to specify which duties it performed under the lease or how it has been excused from performance.

Accordingly, the Court GRANTS Defendants’ motion as to the seventh cause of action.

Conclusion

Defendants Classic Pallets, Inc. and Juan Perez’ Motion for Judgment on the Pleadings is GRANTED as to the Seventh Cause of Action and DENIED as to the Third, Fourth, Fifth, and Sixth Causes of Action.