Judge Bruce G. Iwasaki, Case 22STCV11954 2023-05-03 Tentative Ruling

Tentative Ruling: The court overrules cross-defendant’s demurrer and denies its motion to stay.

The court finds case number 22STCV25442 is not related to this action.

On April 8, 2022, plaintiff Michael Laguerre and several dozen of his fellow tenants sued defendants Manhattan Loft LLC (Manhattan Loft), Erica Rivera, Pam Pham-Le, and Does 1 through 100 for alleged violations of landlord-tenant laws and related causes of action. The following month, plaintiffs amended their complaint to add four new corporate defendants: SBDTLA1, LLC; SBDTLA2, LLC; SBDTLA3, LLC; and SBDTLA4, LLC (collectively “the SB Entities”). Plaintiffs’ causes of action arise from their tenancies in an apartment building located at 215 West Sixth Street, Los Angeles CA 90014 (the Building).

The SB Entities allege they only owned the Building for two days before plaintiffs filed their complaint. (Cross-compl., ¶ 10.) The SB Entities’ purchase of the building from Manhattan Loft was governed by a purchase and sale agreement (PSA) the companies executed in November 2021. As alleged by the cross-complainant SB Entities, when Manhattan Loft executed the PSA, it warranted there was no litigation pending related to the Building, and it agreed to indemnify the SB Entities for liabilities arising from breaches of the PSA warranties or from pre-existing breaches of the leases that Manhattan Loft assigned to the SB Entities upon the purchase. (Id., ¶¶ 12-15.)

On June 21, 2022, the SB Entities cross-complained against Manhattan Loft for contractual indemnity, equitable indemnity, declaratory relief, and equitable contribution.

The SB Entities also sued Manhattan Loft separately in August 2022 in case number 22STCV25442, SBDTLA 1, LLC et al. v. Manhattan Loft, LLC, et al. (hereafter “the SB Lawsuit”). In that suit, the SB Entities assert seven causes of action (breach of contract, fraud, etc.) arising from the SB Entities’ purchase of five rental properties from Manhattan Loft LLC and its affiliates. Those five properties (referred to as “the Project” in the SB Lawsuit) include the Building at issue here; the SB Entities purchased all five buildings in the same transaction.

Manhattan Loft now demurs to the SB Entities’ cross-complaint based on Code of Civil Procedure section 430.10, subdivision (c), arguing another proceeding is pending between the two entities based on the same cause of action. Manhattan Loft requests that the cross-complaint be dismissed or, alternatively, stayed until resolution of the SB Lawsuit.

Manhattan Loft requests the court take judicial notice of the SB Entities’ first amended complaint in case number 22STCV25442, SBDTLA 1, LLC et al. v. Manhattan Loft, LLC et al. (hereafter “the SB Lawsuit”).

Evidence Code section 452, subdivision (d) permits the court in its discretion to take judicial notice of the records of any court in this state. The court grants Manhattan Loft’s request for judicial notice.

The grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code Civ. Proc. § 430.30, subd. (a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The statutory grounds for demurrer to a complaint or cross-complaint appear in Code of Civil Procedure section 430.10. Subdivision (c) of that section codifies the common law “plea in abatement.” (People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4th 760, 770.)

“A plea in abatement pursuant to section 430.10, subdivision (c), may be made by demurrer or answer when there is another action pending between the same parties on the same cause of action.” (Plant Insulation Co. v. Fibreboard Corp. (1990) 224 Cal.App.3d 781, 787 (“Plant Insulation”).) “Abatement . . . is recognized to prevent a multiplicity of suits and unnecessary vexatious litigation. (Hamm v. San Joaquin & Kings River Canal Co. (1941) 44 Cal.App.2d 47, 56.)

Abatement “is based in part upon the practical supposition that the first suit is effective and affords an ample remedy to the party and hence that the second action is unnecessary and vexatious.” (Hilton v. Reed (1941) 46 Cal.App.2d 449, 454.) Thus, “[a]batement is not appropriate where the first action cannot afford the relief sought in the second.” (Plant Insulation, supra, 224 Cal.App.3d at p. 787.) “It must also be borne in mind that the plea of another action pending is in its nature a dilatory plea, and is not favored.” (Hilton v. Reed, supra, 46 Cal.App.2d at p. 454.)

Manhattan Loft’s plea in abatement against SB Entities is misconceived. The SB Lawsuit is not between the same parties and does not rely on the same causes of action, as those in the cross-complaint. The SB Entities filed their complaint in the SB Lawsuit against six corporate entities, including Manhattan Loft, and three individuals. The cross-complaint here is against only Manhattan Loft. Nor have the SB Entities raised the same causes of action in the SB Lawsuit. Their cross-complaint here relies only on theories of indemnity and shared fault. The SB Lawsuit seeks to establish Manhattan Loft and others’ direct liability to the SB Entities for breaching the PSA.

Granting Manhattan Loft the relief it seeks would also not serve the underlying purpose of the plea in abatement. The SB Entities’ cross-complaint was filed after plaintiffs added them to the suit by amendment. The cross-complaint does not afford an “ample remedy” compared with the relief sought in the SB Lawsuit. If the SB Entities prevail on their cross-complaint, they will only succeed in shifting any liability to Manhattan Loft if plaintiffs prevail. If the SB Entities prevail in the SB Lawsuit, on the other hand, they will be entitled to damages directly from Manhattan Loft for separate, though related, wrongs.

Code of Civil Procedure section 430.10, subdivision (c) does not apply. The court overrules Manhattan Loft’s demurrer and denies its motion to stay proceedings on the cross-complaint.

This case is a habitability case brought by numerous plaintiffs alleging more than two dozen of causes of action against Manhattan Loft. Based on the time of ownership, the SB Entities’ exposure is limited. Under the California Rules of Court, the two cases do not have the same parties and claims, and there are not substantially identical questions of law and fact to relate the cases. “A pending civil case is related to another pending civil case . . . if the cases: (1) Involve the same parties and are based on the same or similar claims; (2) Arise from the same or substantially identical transactions, incidents, or events requiring the determination of the same or substantially identical questions of law or fact; . . . [or] (4) Are likely for other reasons to require substantial duplication of judicial resources if heard by different judges.” (Cal. R. Ct. 3.300, subd. (a).)

The SB Lawsuit involves disputes over five buildings, including the Building here, referred to collectively as “the Project.” Manhattan Loft and the other defendants, alleged to be affiliates of one another, sold the Project to the SB Entities in a single transaction consummated in November 2021. While the SB Lawsuit and the claims in the SB Entities’ cross-complaint here rely on the same purchase and sale agreement, the indemnity claim in the cross-complaint is merely parallel to the SB Lawsuit and has nothing to do with the proof that will emerge from the tenants’ suit about living conditions. Accordingly, the Court declines to relate this case to case number 22STCV25442.

The court overrules cross-defendant Manhattan Loft’s demurrer to the cross-complaint and denies its motion to stay the cross-complaint.

Department 58