Case Number: 22STCV03817    Hearing Date: April 30, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiffs Leslie Herrera, Guillermo Garcia, Ana Maria Garcia, and Maria Ponce de Leon—four separate tenants living in the residential real property located at 1155 N. Madison Ave., Los Angeles, CA, 90029 (Subject Property), with Ana Maria Garcia and Maria Ponce de Leon both over the age of 65 years old—sue Defendants/Cross-Complainants/Cross-Defendants 1155 N. Madison Ave, LLC (Madison) and Aaron Marzwell (Marzwell), Defendants/Cross-Defendants/Cross-Complainants Karpel Investment Group Inc. (Karpel), and Does 1 through 100 pursuant to a January 31, 2022 Complaint alleging claims of (1) Breach of Quiet Enjoyment, (2) Nuisance, (3) Violation of Civil Code § 1942.5, (4) Violation of Los Angeles Municipal Code § 151.10, (5) Violation of Los Angeles Municipal Code § 45.30, et seq., (6) Violation of Fair Employment and Housing Act, (7) Violation of Unruh Civil Rights Act – Cal Civ. Code §§ 51, et seq., (8) Violation of the California Disabled Persons Act – Cal Civ. Code §§ 54-55.2, (9) Intentional Infliction of Emotional Distress (IIED), and (10) Violation of Business & Professions Code § 17200.

The claims arise from allegations that after acquiring ownership of the Subject Property, Madison, through its agents, engaged in unlawful practices to remove long-term Latino tenants from the building, including misrepresentations that the building was going to be demolished coupled with statements that buyout offers would not be extended to tenants that did not vacate the Subject Property before demolition, as well as retaliation against tenants refusing buyout offers—e.g., reduced services to rental units, intimidation by informing Plaintiffs they were allegedly breaching their leases for trivial reasons like maintenance of an emotional support animal, attempts to raise rent during times of COVID-19 protections, removal of Plaintiffs’ storage units, removal of Plaintiffs’ parking space allotment (including for disabled Ana Maria), requirements to obtain renter’s insurance, failure to maintain functioning laundry room services on the property, failure to make timely repairs in Plaintiffs’ units, and refusal to allow pets to urinate in common areas such that pets have been urinating near Ana Maria’s unit. Defendant Marzwell is tied to these claims through allegations that he is the managing member of Madison, is responsible for the establishment, implementation, enforcement, and effect of the unlawful housing practices alleged in the Complaint, and is personally involved and responsible in managing the Property and in instructing agents in the establishment, implementation, enforcement, and effects of the unlawful housing practices alleged in the Complaint. Marzwell is also tied to Madison through an alter ego allegation.

On March 7, 2022, Madison and Marzwell filed a Cross-Complaint against Karpel and Roes 1 to 50, with their operative First Amended Cross-Complaint (FAXC) alleging claims of (1) Indemnification, (2) Apportionment of Fault, and (3) Declaratory Relief.

On June 23, 2022, Karpel filed its own Cross-Complaint against Madison, Marzwell, and Roes 1 through 100 pursuant to claims of (1) Implied Indemnity, (2) Contribution and Apportionment, (3) Declaratory Relief, (4) Negligence, and (5) Express Indemnity.

On March 30, 2023, Madison and Marzwell filed a motion for judgment on the pleadings as to Plaintiffs’ Complaint’s ninth and tenth causes of action.

On April 18, 2023, Plaintiffs opposed the motion.

On April 24, 2023, Madison and Marzwell replied to the opposition.

Motion for Judgment on the Pleadings: GRANTED in Part; DENIED in Part.

Legal Standard

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.) 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).) This device can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan, supra, 39 Cal.3d at p. 318.) “To survive a [general] demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.” (C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.) In testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-67.) A demurrer, however, “does not admit contentions, deductions or conclusions of fact or law.” (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.) 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, disapproved on other grounds, Jones v. Lodge at Torrey Pines Partnership (2008) 42 Cal.4th 1158, 1162.) 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, superseded by statute on other grounds as stated in White v. Cridlebaugh (2009) 178 Cal.App.4th 506, 521.)

Ninth Cause of Action, IIED: DENIED, as to Madison; GRANTED, With Leave to Amend, as to Marzwell.

“A cause of action for intentional infliction of emotional distress exists when there is ‘(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff’s suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant’s outrageous conduct.’ A defendant’s conduct is ‘outrageous’ when it is so ‘extreme as to exceed all bounds of that usually tolerated in a civilized community.’ And the defendant’s conduct must be ‘intended to inflict injury or engaged in with the realization that injury will result.’” (Hughes v. Pair (2009) 46 Cal.4th 1035, 1050-1051.)

The Complaint’s ninth cause of action alleges IIED against all Defendants based on incorporated pleadings and a recitation of the elements for IIED. (See Complaint, ¶¶ 98-102.) The incorporated pleadings at issue appear to be the allegations of misrepresentations as to demolition and retaliation against Plaintiffs. (See Complaint, ¶¶ 33-49 [misrepresentations that the building was going to be demolished coupled with statements that buyout offers would not be extended to tenants that did not vacate the Subject Property before demolition, as well as retaliation against tenants refusing buyout offers—e.g., reduced services to rental units, intimidation by informing Plaintiffs they were allegedly breaching their leases for trivial reasons like maintenance of an emotional support animal, attempts to raise rent during times of COVID-19 protections, removal of Plaintiffs’ storage units, removal of Plaintiffs’ parking space allotment (including for disabled Ana Maria), requirements to obtain renter’s insurance, failure to maintain functioning laundry room services on the property, failure to make timely repairs in Plaintiffs’ units, and refusal to allow pets to urinate in common areas such that pets have been urinating near Ana Maria’s unit].)

In their motion, Madison and Marzwell argue that this claim is not sufficiently pleaded because the allegations in the Complaint are not outrageous and do not connote the requisite intent for IIED claims, where this action involves a simple landlord-tenant dispute. (MJOP, pp. 6-7.) Madison and Marzwell also distinguish the alleged facts in this case from those in a different landlord-tenant case where courts found IIED was present. (MJOP, pp. 7-8.)

In opposition, Plaintiffs argue that the IIED claim is sufficiently pleaded and point to paragraphs 33 to 49 of the Complaint in support. (Opp’n, pp. 4-7.)

In reply, Madison and Marzwell reiterate their argument that the Complaint insufficiently pleads outrageous conduct and the intent necessary for IIED claims. (Reply, pp. 2-4.)

The Court finds that viewed in the light most favorable to the pleadings, the ninth cause of action is sufficiently stated as to Madison alone.

The Court does not rely on any one of the allegations raised in paragraphs 33 to 49 of the Complaint to come to this conclusion, but instead finds that in combination, these pleadings allege a sustained and concerted effort to harass Plaintiffs in order to effect their removal from their lawful tenancy of units at the Subject Property. Whatever protestations Madison and Marzwell may make, such paragraphs show outrageous conduct with the intent of harassing tenants to relinquish their tenancy in the Subject Property for the profit of Madison.

However, the Court finds that the Complaint only sufficiently pleads IIED against Madison. Marzwell is an individual and is not liable for IIED unless it is pleaded that he himself engaged in outrageous conduct or that Madison is properly the alter ego of Marzwell. The former ground is not pleaded in the Complaint because the Complaint does not name Marzwell as the agent that made misrepresentations or otherwise engaged in outrageous conduct against Plaintiffs. (See Complaint, ¶¶ 33-49; see also Complaint, ¶¶ 6-7 [only paragraphs naming Marzwell].) The latter ground is not sufficiently pleaded in the Complaint because the alter ego allegations made therein are made as conclusions of law and fact without proper pleadings detailing how or why the alter ego liability theory should permit the piercing of Madison to reach Marzwell personally. (See Complaint, ¶ 11.)

Madison and Marzwell’s motion for judgment on the pleadings is thus DENIED as to the ninth cause of action insofar as it is directed at Madison.

However, Madison and Marzwell’s motion for judgment on the pleadings is GRANTED, With Leave to Amend, as to the ninth cause of action insofar as it is directed at Marzwell.

Tenth Cause of Action, Violation of Business and Professions Code § 17200: DENIED, as to Madison; GRANTED, With Leave to Amend, as to Marzwell.

“The California unfair competition law (UCL) (§ 17200) defines ‘“unfair competition” as “any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising.”’ [Citation.] A UCL action ‘“is not an all-purpose substitute for a tort or contract action.” [Citation.] Instead, the act provides an equitable means through which both public prosecutors and private individuals can bring suit to prevent unfair business practices and restore money or property to victims of these practices. … [T]he “overarching legislative concern [was] to provide a streamlined procedure for prevention of ongoing or threatened acts of unfair competition.”’ [Citation.] As a result, the remedies available to private individuals for violation of the UCL are limited to restitution and injunctive relief; damages cannot be recovered. [Citation.]” (Graham v. Bank of America, N.A. (2014) 226 Cal.App.4th 594, 609.)

“Because the statute ‘“is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices which are unlawful, or unfair, or fraudulent.”’ [Citation.]” (Ibid.)

“‘By proscribing “any unlawful” business act or practice [citation], the UCL “‘borrows’” rules set out in other laws and makes violations of those rules independently actionable.’ [Citation.] A ‘violation of another law is a predicate for stating a cause of action under the UCL’s unlawful prong.’ [Citation.]” (Ibid.)

An individual has standing to maintain a section 17200 claim if he or she “has suffered injury in fact and has lost money or property as a result of the unfair competition.” (Bus. & Prof. Code, § 17204.) “[A] party who has lost money or property generally has suffered injury in fact. Consequently, the plain language of these clauses suggests a simple test … a party must now (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322, superseded by statute on other grounds as stated in Citizens of Humanity, LLC v. Haas (2020) 46 Cal.App.5th 589, 594 fn. 2.)

The Complaint’s tenth cause of action alleges violation of the Business and Professions Code against all Defendants based on incorporated pleadings and a recitation of the elements for this claim. (See Complaint, ¶¶ 103-108; see also Complaint, ¶¶ 33-49 [incorporated allegations supporting this cause of action].) As relief, the claim seeks a monetary judgment against Defendants equal to all the rent and other monies paid to Defendants by Plaintiffs during the terms of their tenancies, as well as attorney’s fees and costs per the parties’ rental agreements and/or applicable law. (Complaint, ¶¶ 107-108.)

In their motion, Madison and Marzwell argue that the tenth cause of action is not sufficiently pleaded for various reasons. First, they argue that the claim is not tethered to any specific constitutional, statutory, or regulatory provisions as to Madison and Marzwell. (MJOP, p. 10.) Second, they argue that the claim fails to allege any violation of law, unfair competition, or fraudulent representation to the public. (MJOP, p. 10.) Third, they argue that the allegations in the Complaint involve past rather than remediable ongoing conduct by Defendants. (MJOP, p. 10.) Last, they argue that the claim fails to distinguish between Madison and Marzwell as to sufficiently plead the claim against them where no vicarious liability exists as to unfair competition. (MJOP, p. 10.)

In opposition, Plaintiffs argue that “Defendants have gained financial benefit at Plaintiffs’ expense, including those of the children” and that “Defendants’ conduct is harmful and the consequences are plainly and substantially injurious, and are otherwise offensive to established public policy.” (Opp’n, p. 8.)

In reply, Madison and Marzwell argue several points. First, they argue that Plaintiffs’ opposition fails to address that unfair competition focuses on ongoing rather than past conduct. (Reply, p. 5.) Second, they argue that the Complaint fails to distinguish between the conduct of one defendant as opposed to another, where no vicarious liability exists for unfair competition. (Reply, p. 5.) Last, they argue that the tenth cause of action is generally not sufficiently pleaded as to conduct amounting to unfair competition. (Reply, p. 5.)

The Court finds that at the pleadings stage, the Complaint sufficiently alleges against Madison unlawful business practices directed at forcing lawful tenants to give up their leaseholds in the Subject Property, where the underlying supporting causes of action are any of the first nine claims alleged in the Complaint. Indeed, the Complaint’s allegations are taken as true for the purposes of this hearing. (Aubry v. Tri-City Hospital Dist., supra, 2 Cal.4th at p. 966-967 [demurrer].) Madison and Marzwell only challenge the ninth and tenth causes of action, and do not challenge the first through eighth causes of action in the Complaint. Such circumstances permit the Court to find that more than enough underlying claims support the tenth cause of action and that sufficient unfair conduct has been alleged against Madison in support thereof. Further, the Complaint does not allege that the retaliatory conduct against Plaintiffs has stopped, undercutting their argument that the Complaint does not allege ongoing UCL violations. (See Complaint, ¶¶ 33-49 [underlying allegations], 103 [incorporation into tenth cause of action].)

However, the Court concludes that unfair competition is not properly alleged against Marzwell. Again, Marzwell is an individual and is not liable for the conduct alleged in the Complaint unless it is pleaded that he himself engaged in conduct resulting in individual liability for any of the Complaint’s first nine causes of action or that Madison is properly the alter ego of Marzwell. The former ground is not pleaded in the Complaint because the Complaint does not name Marzwell as the individual engaging in the conduct complained of in the first nine causes of action. (See Complaint, ¶¶ 33-49; see also Complaint, ¶¶ 6-7 [only paragraphs naming Marzwell].) The latter ground is not sufficiently pleaded in the Complaint because the alter ego allegations made therein are made as conclusions of law and fact without proper pleadings detailing how or why the alter ego liability theory should permit the piercing of Madison to reach Marzwell personally. (See Complaint, ¶ 11.)

Madison and Marzwell’s motion for judgment on the pleadings is thus DENIED as to the tenth cause of action insofar as it is directed at Madison.

However, Madison and Marzwell’s motion for judgment on the pleadings is GRANTED, With Leave to Amend, as to the tenth cause of action insofar as it is directed at Marzwell.

Conclusion

Defendants/Cross-Complainants/Cross-Defendants 1155 N. Madison Ave, LLC and Aaron Marzwell’s Motion for Judgment on the Pleadings is:

(1) DENIED as to the ninth and tenth causes of action insofar as they are directed at Madison because both claims are sufficiently pleaded against the Delaware LLC; and

(2) GRANTED, With Leave to Amend, as to the ninth and tenth causes of action insofar as they are directed at Marzwell because Marzwell is not sufficiently pleaded as the operative actor underlying the conduct supporting these causes of action and because the Complaint does not sufficiently plead Madison as Marzwell’s alter ego.

Plaintiffs are given 14 DAYS LEAVE TO AMEND their Complaint.