Judge: Anne Richardson, Case: 22STCV13653, Date: 2023-03-07 Tentative Ruling

Case Number: 22STCV13653    Hearing Date: March 7, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Plaintiff California Rent-a-Car, Inc. (“Cal Rent-a-Car”) sues Defendants Simon’s Caterers Inc. (briefed as “SCI”) and Simon Cohen—SCIS’s owner—pursuant to claims of (1) Breach of Contract against Simon’s Caterers Inc. and (2) Negligence against Simon’s Caterers Inc. and Simon Cohen. The claims are based on allegations that Cal Rent-a-Car made a written agreement with Simon Caterers Inc. for the rental of a vehicle—briefed by the Defendants as a cargo van used for commercial purposes—and that, “[w]hile last in possession of the Plaintiff’s vehicle …, defendant Simon Cohen, left the vehicle’s ignition key in the ignition, interior door, or trunk when the vehicle was unoccupied” and “failed to close all windows and lock all doors,” resulting in the “vehicle … [being] stolen by a third party …, causing damages [to Plaintiff] … [including] Property Damage to the vehicle in the amount of $25,361.17,” “Graphic Repair charges of $807.08, Lift Gate repair charges of $280.00, Towing and storage charges of $310.00, and loss of rental use of $7,425.00,” for “[t]otal [damages] of $34,183.25.”

Now before the Court are Defendants Simon’s Caterers Inc. and Simon Cohen’s opposed (1) Demurrer to Plaintiff’s First Amended Complaint and (2) Motion to Strike Portions of Plaintiff’s First Amended Complaint.

Demurrer: OVERRULED.

Legal Standard

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 (1985) 39 Cal.3d 311, 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.)

Second Cause of Action, Negligence [Defendant Cohen Only]: OVERRULED.

“‘The elements of a cause of action for negligence are … [:] “(a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.”’” (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917 [combining causation and damages].)

The FAC’s Negligence claim alleges that the Defendants are liable for negligence to Plaintiff Cal Rent-a-Car because Defendant Cohen, while acting on behalf of Defendant Simon’s Caterers, engaged in conduct that led to a third party stealing a vehicle rented by Cal Rent-a-Car to Simon’s Caterers. (FAC, p. 4.)  

The Defendants demur to the FAC’s Negligence action as directed at Defendant Cohen on the ground that the element of duty is not sufficiently pleaded against him. (Demurrer, 8:20.) More specifically, the Defendants argue that “Defendant Cohen rented the vehicle on SCI’s behalf, not his own behalf,” that Mr. Cohen “was not in privity of contract with the Plaintiff,” and that “[a]s the president of SCI, Mr. Cohen used the rental vehicle for SCI, and any duty he owed in that respect was to SCI—not the Plaintiff.” (Demurrer, 8:25-26.) The Defendants also argue that section 1714 of the Civil Code fails to impute liability of Defendant Cohen for actions taken in the course of agency of Simon’s Caterers because “Mr. Cohen is liable to SCI for damages incurred by SCI,” “owes no duty to the Plaintiff, and thus is not personally responsible for any injuries incurred by the Plaintiff.” (Demurrer, 9:1-17.)

In Opposition, Plaintiff Cal Rent-a-Car argues that “even though Defendant Cohen was not in contractual privity with Plaintiff, he still owed Plaintiff a duty of ordinary care when he was operating Plaintiff’s motor vehicle” in light of Civil Code section 1428 (imposing duty based on contract or operation of law) and Civil Code section 1714 (providing everyone is responsible for their intentional and negligent acts harming another). (Opp’n, 7:4-24.)

In Reply, the Defendants argue that “Civil Code § 1714 deals with proximate causation, not duty, and is thus inapposite,” citing to Rybicki v. Carlson (2013) 216 Cal.App.4th 758 to support this proposition. (Reply, 4:3-24.)

The Court finds that the FAC sufficiently pleads Negligence against Defendant Simon Cohen. “The threshold element of a cause of action for negligence is the existence of a duty to use care toward an interest of another that enjoys legal protection against unintentional invasion.” (Paz v. State of California (2000) 22 Cal.4th 550, 559.) “‘In the context of a negligence claim, the Supreme Court has held that, like any other person, “directors individually owe a duty of care, independent of the corporate entity’s own duty, to refrain from acting in a manner that creates an unreasonable risk of personal injury to third parties.”’”  (PMC, Inc. v. Kadisha (2000) 78 Cal.App.4th 1368, 1381 (emphasis added) [Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 505]; James v. Marinship Corp. (1944) 25 Cal.2d 721, 742-43 [“The true rule is, of course, that the agent is liable for his own act, regardless of whether the principal is liable or amenable to judicial action”].)

Here, the pleadings sufficiently allege that Defendant Simon Cohen did not refrain from acting in a manner that created an unreasonable risk of injury to Cal Rent-a-Car by leaving keys to the subject vehicle inside the automobile, with the windows down and doors unlocked, thus allowing a third party to steal the vehicle. (FAC, p. 4.)

The Demurrer is thus OVERRULED on this ground.

First and Second Causes of Action, Damage Waiver Coverage: OVERRULED.

The Defendants argue, in part, that the entire complaint is defectively pleaded because the rental agreement for the subject vehicle—attached to the FAC as Exhibit A—contains a Collision Damage Waiver (“CDW”) showing that the Defendants could not be held liable for any “portion of any damage or loss related to the rented vehicle, any loss of the rented vehicle, or any storage, impound, towing, or administrative charges” made thereon. (Demurrer, 10:14-11:10.) The Defendants also argue that Plaintiff’s conduct in marketing and selling the CDW coverage to the Defendants—something not alleged in the pleadings— for the rental of a cargo van (hereafter, the ‘commercial hire exclusion argument’) either precludes the Plaintiff from arguing that the waiver coverage does not fall into the ambit of Civil Code section 1939 or amounts to waiver of the terms of the Rental Agreement, for which reason the Defendants are not, based on the allegations in the FAC, liable to Cal Rent-a-Car for damages arising from the theft of the subject vehicle. (Demurrer, 11:11-24, 12:15-25.) The Defendants last argue that the ‘reckless conduct’ exception to the CDW in the Rental Agreement does not apply to the allegations in the pleadings because, pursuant to case law cited by the Defendants, leaving keys in an automobile resulting in the vehicle’s theft constitutes negligence and not recklessness. (Demurrer, 11:25-12:14.)

In Opposition, Plaintiff Cal Rent-a-Car argues that the CDW coverage in the Rental Agreement—attached as Exhibit A to the FAC—does not, by its very terms, apply to theft of the subject vehicle or conduct leading to its theft, and that the FAC pleads that Defendant Cohen engaged in conduct leading to theft of the vehicle—leaving the keys inside of the car, with the windows down and doors unlocked—for which reason any argument that the CDW protects the Defendants is incorrect. (Opp’n, 8:19-9:10.)

In Reply, the Defendants reiterate their arguments related to commercial hire exclusion, waiver, unclean hands (discussed infra), and failure to lock the car not being an exclusionary act under the CDW in the Rental Agreement. (Reply, 5:13-8:18.)

The Court agrees with Plaintiff Cal Rent-a-Car and finds that the CDW in the Rental Agreement does not contradict the pleadings such that the causes of action for Breach of Contract and Negligence are insufficiently pleaded. The face of the complaint includes exhibits attached to the complaint. (Frantz v. Blackwell, supra, 189 Cal.App.3d at p. 94.) If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence. (Holland v. Morse Diesel Intern., Inc., supra, 86 Cal.App.4th at p. 1447.)

Exhibit A to the FAC is a copy of the Rental Agreement underlying the rental of the subject vehicle by Simon’s Caterer. The “Collision Damage and Theft” terms of the “Additional Terms & Conditions” in the Rental Agreement indicate that:

If the Vehicle is not returned to [Plaintiff] in the same condition as when received by [Simon’s Caterer] for any reason, including theft or vandalism, [Simon’s is] responsible … for the full fair market value of the Vehicle, cost of repairs, loss of use …, diminished value, towing, storage, impound fees, an administrative fee …, and all other costs and fees authorized by law.

(FAC, Ex. A, Additional Terms, Collision Damage and Theft.)

Based on this contractual clause (FAC, Ex. A), and the pleadings alleging that the subject vehicle was stolen based on Defendant Simon Cohen’s conduct (FAC, pp. 3-4 [leaving keys inside the car with the windows down and doors unlocked]), the Court finds that the CDW coverage purchased by Simon’s Caterers (FAC, Ex. A) does not act as a shield against a pleading of damages to Cal Rent-a-Car arising from the subject vehicle’s theft precipitated by Defendant Cohen’s conduct.

The Demurrers is thus OVERRULED on these grounds.

First and Second Causes of Action, Unclean Hands: OVERRULED.

Defendants Simon’s Caterers and Simon Cohen last argue that the causes of action stated in the FAC are barred by the doctrine of unclean hands because “Plaintiff took money from the Defendant for a service”—the Collision Damage Waiver—that Cal Rent-a-Car “knew, or should

have known, did not apply to the transaction,” amounting to “fraudulent, dishonest, and unethical

act[ions]” that are “barred by the doctrine of unclean hands.” (Demurrer, 13:3-11; see also Reply, 6:22-26.)

In Opposition, Plaintiff Cal Rent-a-Car argues that unclean hands is not a proper ground for demurring to the FAC’s causes of action because the unclean hands argument advanced by the Defendants relies on facts beyond the face of the complaint that cannot (a) serve as basis for challenging the sufficiency of the pleadings or (b) be judicially noticed to the same effect. (Opp’n, 9:15-28.)

The Court agrees with Plaintiff Cal Rent-a-Car. The FAC’s pleadings do not contain the Collision Damage Waiver allegations underlying the Defendants’ unclean hands argument. (See FAC, pp. 3-4, Ex. A; see Blank v. Kirwan, supra, 39 Cal.3d at p. 318 [demurrer 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]; contra. Reply, 8:20-9:14.) Further, even if the pleadings did contain factual allegations stating that Cal Rent-a-Car marketed and sold to Simon’s Caterers a Collision Damage Waiver for the rental of the subject vehicle, unclean hands would not bar the FAC’s causes of action because the Court has already determined that, when the pleadings are read in conjunction with the Rental Agreement attached to the FAC, they compel a conclusion that, at the pleadings stage, the Collision Damage Waiver did not cover the theft of the subject vehicle, exposing the Defendants to liability for damages to Cal Rent-a-Car arising therethrough.

The Demurrer is thus OVERRULED on these grounds.

Motion to Strike: GRANTED.

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)).

Interest on Damages:

Defendants Simon’s Caterers and Simon Cohen’s Motion to Strike seeks to strike from the FAC paragraph 10.b. of the Prayer to the Complaint, Page 2, on the ground that such relief is improperly pleaded because case law holds that where “the amount of damages claimed in [an] action is disputed, and not fixed by agreement, the Plaintiff is entitled to zero prejudgment interest.” (Mot., 6:15-22.) Instead, the Defendants argue, 7% prejudgment interest is the proper interest rate, as set by the California Constitution. (Mot., 6:23-24.)

In Opposition, Plaintiff Cal Rent-a-Car argues that a prejudgment interest of 10% is properly pleaded in the FAC pursuant to Civil Code section 3287, subdivision (a)—permitting prejudgment interest where damages are certain—and based on default interest rates provided in Civil Code section 3289, subdivision (b)—10% prejudgment interest for breach of contract actions—where the FAC specifically pleads $34,183.25 in damages “based on the actual damages suffered by Plaintiff, … calculated under a readily ascertainable market value.” (Opp’n, 5:13-7:2.)

In Reply, Cal Rent-a-Car argues that section 3287, subdivision (a) is inapplicable to the factual allegations in the FAC because case law is specific in providing that damages are only “certain” “‘where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable but when their dispute centers on the issue of liability giving rise to damage,’” such that “‘factual issues preclude certainty, but a dispute over legal issues does not,’” and where the damages claimed in the FAC are a “purely a factual issue” based on the fact that they are not “fixed by any contract or law,” such as, for example, liquidated damages. (Reply, 2:5-18 [quoting State of Calif. v. Continental Ins. Co. (2017) 15 Cal.App.5th 1017, 1038].)

The Court agrees with the Defendants and therefore STRIKES paragraph 10.b. The FAC does not plead a contract or a statute fixing damages in this action. Instead, Cal Rent-a-Car acknowledges that damages in this action are based on “market value” valuations calculated by the Plaintiff. (Opp’n, 6:4-7.) As such, the damages at issue are a factual dispute not capable of certainty for the purposes of Civil Code section 3287, subdivision (a).

Conclusion

Defendants Simon’s Caterers Inc. and Simon Cohen’s Demurrer to Plaintiff’s First Amended Complaint is OVERRULED in its entirety because the FAC properly pleads grounds supporting claims of Breach of Contract and Negligence against both Defendants, with any Exhibits attached to the FAC failing to contradict such pleadings.

Defendants Simon’s Caterers Inc. and Simon Cohen’s Motion to Strike Portions of Plaintiff’s First Amended Complaint is GRANTED because the 10% prejudgment interest advanced in the Complaint is not supported by allegations of certain damages as based on contract between the parties or set by statute.