Judge: Anne Richardson, Case: 22STCV03819, Date: 2023-05-03 Tentative Ruling

Case Number: 22STCV03819    Hearing Date: May 3, 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 a brief 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 April 5, 2023, Madison and Marzwell filed a motion to strike various punitive damages and attorney’s fees allegations/prayers from the Complaint.

On April 18, 2023, Plaintiffs opposed the motion.

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

Motion to Strike

Legal Standard

The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (Code Civ. Proc. § 436, subds. (a)-(b).) For the purposes of a motion to strike pursuant to Sections 435 to 437 of the Code of Civil Procedure, the term “pleading” means a demurrer, answer, complaint, or cross-complaint, (Code Civ. Proc., § 435, subd. (a)), and an immaterial allegation or irrelevant matter in a pleading entails (1) an allegation that is not essential to the statement of a claim or defense, (2) an allegation that is neither pertinent to nor supported by an otherwise sufficient claim or defense, or (3) a demand for judgment requesting relief not supported by the allegations of the complaint or cross-complaint (Code Civ. Proc., § 431.10, subds. (b)(1)-(3).)

Striking of Punitive Damages: DENIED as to Madison; GRANTED as to Marzwell.

In the notice accompanying their motion, Madison and Marzwell identify two punitive damages allegations/prayers they wish to have stricken from the Complaint: (1) the punitive damages allegations/prayer in paragraph 102 of the Complaint—located in the ninth cause of action for IIED; and (2) the punitive and exemplary damages prayer in page 24 of the Complaint. (Mot., p. 2.) Yet, in their points and authorities, Madison and Marzwell argue, in essence, that all the Complaint’s punitive damages allegations/prayers are not supported by pleadings beyond conclusory statements devoid of the specificity required for oppression, fraud, or malice within the meaning of Civil Code section 3294. (See Mot., pp. 5-8.)

The Court reads the motion as challenging all punitive damages prayers and allegations in the Complaint because the parties’ briefing encompasses this scope.

In opposition, Plaintiffs (1) argue that the Complaint sufficiently pleads grounds for punitive damages in paragraphs 18-21, 24, 26, 33-34, 37-43, and 48-49 and (2) compare the alleged facts here to those supporting punitive damages via intentional tort in Stoiber v. Honeychuck (1980) 101 Cal.App. 3d 903, 918-919. (Opp’n, pp. 3-8.)

In reply, Madison and Marzwell reiterate their arguments on motion. (See Reply, pp. 2-4.)

Punitive damages are alleged in the Complaint’s second, third, sixth, and ninth causes of action, as well as in the Prayer for Relief. (Complaint, ¶¶ 65, 69, 88, 102, Prayer for Relief, ¶ 3.) The second and ninth causes of action rely on fraud, oppression, and malice grounds for punitive damages, as defined in Civil Code section 3294. (See Complaint, ¶¶ 65, 102.) The third cause of action relies on Civil Code section 1942.5 as its basis for punitive damages, which provides that “[a]ny lessor or agent of a lessor who violates th[at] section shall be liable to the lessee in a civil action for … [p]unitive damages in an amount of not less than one hundred dollars ($100) nor more than two thousand dollars ($2,000) for each retaliatory act where the lessor or agent has been guilty of fraud, oppression, or malice with respect to that act.” (Complaint, ¶ 69; Civ. Code, § 1945.2, subd. (h)(2).) Civil Code section 1945.2 thus also relies on the fraud, oppression, and malice grounds for punitive damages defined in section 3294 of the Civil Code. The ninth cause of action relies on Government Code section 12989.2 as its basis for punitive damages, which provides that “[i]n a civil action brought under Section 12981 or 12989.1, if the court finds that a discriminatory housing practice has occurred or is about to occur, the court may award the plaintiff actual and punitive damages and may grant other relief, including ….” (Complaint, ¶ 88, Gov. Code, § 12989.2.) Thus, an award of punitive damages pursuant to Government Code section 12989.2 is not tied to oppression, fraud, or malice within the meaning of Civil Code section 3294.

First, the Court finds that the Complaint sufficiently pleads punitive damages as to Madison. “When the defendant is a corporation, ‘[a]n award of punitive damages … must rest on the malice of the corporation’s employees’” specifically, “the oppression, fraud, or malice perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the corporation,” where a managing agent “include[s] only those corporate employees who exercise substantial independent authority and judgment in their corporate decisionmaking so that their decisions ultimately determine corporate policy.’” (Wilson v. Southern California Edison Co. (2015) 234 Cal.App.4th 123, 164, citations omitted.) Here, the pleaded conduct supporting all ten causes of action does not specifically identify who, as an agent of Madison, perpetrated the tortious and statutorily violative conduct alleged in the Complaint. (See Complaint, ¶¶ 33-49.)

Nevertheless, the Complaint sufficiently pleads that the party that stands to benefit from the eviction or vacatur of Plaintiffs from the Subject Property is Madison itself, i.e., by attracting new tenants willing to pay higher rents. (See Complaint, ¶¶ 33-49.) The Court is therefore satisfied that the Complaint sufficiently alleges, at the pleadings stage, that some director, officer, or managing agent of Madison ratified the conduct of its unnamed agents pleaded in paragraphs 33 to 49 of the Complaint. The Court also finds that paragraphs 33 to 49 of the Complaint allege a sustained and concerted effort to harass Plaintiffs in order to effect their removal from lawful tenancy of units at the Subject Property. Whatever protestations Madison and Marzwell may make, such paragraphs allege outrageous conduct with the intent of harassing individuals to relinquish their tenancy in the Subject Property for the profit of Madison, which the Court finds fits the definition of oppression or malice against Plaintiffs. (Civ. Code, § 3294, subds. (c)(1)-(2).)

Next, the Court finds that punitive damages are not properly alleged against Marzwell because the Complaint does not attribute any tortious or statutorily violative conduct to him. (See Complaint, ¶¶ 33-49; see also Complaint, ¶¶ 6-7 [only paragraphs naming Marzwell].)

Madison and Marzwell’s motion is thus DENIED as to Madison, but GRANTED as to Marzwell, for which reason the Court STRIKES paragraphs 65, 69, 88, 102, and Prayer for Relief, ¶ 3 of the Complaint, as directed at Marzwell only.

Striking of Attorney’s Fees: GRANTED as to Tenth Cause of Action, ¶ 108.

In the notice accompanying their motion, Madison and Marzwell identify the attorney’s fees allegation/prayer in paragraph 69 of the Complaint—located within the third cause of action—as the attorney’s fee request Madison and Marzwell seek to strike from Plaintiffs’ Complaint. (Mot., p. 2:8-11.) However, the motion’s points and authorities instead argue that the attorney’s fees allegations/prayer in the tenth cause of action for Violation of the Business and Professions Code is improper because only restitution and injunctive relief are recoverable for this claim, for which reason such allegations/prayers should be struck from the tenth cause of action. (Mot., p. 8; see Complaint, ¶ 108.)

The Court reads the motion as challenging attorney’s fees allegations/prayers only in the tenth cause of action because the parties’ briefing limits itself to this scope. (See Mot. at pp. 8-9, Opp’n generally.)

In opposition, Plaintiffs argue that attorney’s fees are recoverable (1) based on Plaintiffs’ rental agreements insofar as any unilateral attorney’s fees provision therein is applicable, by law, to both sets of parties, and (2) as restitution for violation of the Business and Professions Code. (Opp’n, pp. 8-10.) The latter point is not elaborated in any detail. (See Opp’n, pp. 8-10.)

In reply, Madison and Marzwell argue that (1) no lease agreement is attached to the Complaint and no attorney’s fees provision is pleaded in the Complaint to support such an award and (2) restitution within the meaning of the Business and Professions Code is limited to restoration of money or property wrongfully taken by means of unfair business practices, and here, the Complaint and opposition fail to plead or address what money or property was acquired in such a manner. (Reply, pp. 4-5.)

The Court finds that the attorney’s fees allegations/prayers in the tenth cause of action are not sufficiently supported by incorporated pleadings or allegations made in that claim. No lease agreement is attached to the Complaint showing an attorney’s fees clause between the parties, unilateral or otherwise. Neither does the Complaint cite a specific contractual attorney’s fees provision between the parties.

Last, as a matter of law, under the circumstances pleaded in the Complaint, courts have held that attorney fees awards are not restitution for the purposes of Business and Professions Code section 17200 et seq. (See America Online, Inc. v. Superior Court (2001) 90 Cal.App.4th 1, 15, fn. 10 [attorney fees not restitution for purposes of Bus. & Prof. Code, §§ 17200 et seq.]; Shadoan v. World Savings & Loan Assn. (1990) 219 Cal.App.3d 97, 107-108, fn. 7 [same for Bus. & Prof. Code, § 17203]; see also Walker v. Countywide Home Loans, Inc. (2002) 98 Cal.App.4th 1158, 1180 [“If a plaintiff prevails in an unfair competition law claim, it may seek attorney fees as a private attorney general pursuant to Code of Civil Procedure section 1021.5”].)

Madison and Marzwell’s motion is thus GRANTED as to the attorney’s fees allegations/prayers in paragraph 108 regarding the 10th cause of action for violation of §17200 of the Complaint, which are hereby STRICKEN.

Conclusion

Defendants/Cross-Complainants/Cross-Defendants 1155 N. Madison Ave, LLC and Aaron Marzwell’s Motion to Strike Portions of Complaint[] is GRANTED in Part and DENIED in Part:

(1) DENIED as to striking paragraphs 65, 69, 88, 102, and Prayer for Relief, ¶ 3 from the Complaint insofar as they allege or pray for punitive damages against Madison;

(2) GRANTED as to striking paragraphs 65, 69, 88, 102, and Prayer for Relief, ¶ 3 from the Complaint insofar as they allege or pray for punitive damages against Marzwell;

(3) GRANTED as to striking paragraph 108 from the Complaint insofar as it alleges or prays for attorney’s fees against both Madison and Marzwell under the 10th cause of action for violation of Bus & Prof. Code § 17200.