Department 58

Hearing Date: December 20, 2022

Case Name: Claire P. Shetz v. Tyrone L. Hudson, et al.

Case No.: 22STCV22211

Motion: Demurrer to cross-complaint

Moving Party: Plaintiff Claire P. Shetz

Opposing Party: Defendant Tyrone L. Hudson

Tentative Ruling: The demurrer is overruled. Cross-defendants are ordered to answer the Cross-complaint within 10 days.

Background

This is an action for declaratory relief as to a tenancy. Claire P. Shetz (Shetz) sues Tyrone L. Hudson, Christine Hudson, Melissa Grace, and Jag Financial Investments Inc. for violations of the Fair Employment and Housing Act, Disabled Persons Act, Elder Abuse and Dependent Adult Civil Protection Act, and the Los Angeles Tenant Harassment Ordinance.

Shetz is a tenant living in a duplex (Property) owned by Tyrone L. Hudson (Hudson or Cross-complainant) and Christine Hudson. The Hudsons are trying to sell the duplex; however, because Shetz is elderly and immunocompromised, she alleges that they agreed to limit access to the Property for marketing purposes as a reasonable accommodation. The Complaint avers that Defendants breached this accommodation and allowed numerous individuals into the Property.

Hudson filed a cross-complaint for declaratory relief, injunctive relief, breach of lease, and interference with prospective economic advantage[1] against Shetz and Shetz’s daughter, Pamela Zane (Zane) (collectively, Cross-defendants). He alleges that he received numerous offers to purchase the Property, but that Shetz prevented the prospective buyers from inspection. This allegedly caused all potential buyers to withdraw their offers.

Shetz demurs to the Hudson Cross-complaint’s fourth cause of action for intentional interference with prospective economic advantage. She asserts that the Cross-complaint insufficiently pleads: (1) the existence of an economic relationship because the offers were not accepted; (2) that Shetz knew about any of the alleged economic relationships; (3) that Shetz actually disrupted any relationship because Hudson did not accept any of the offers; (4) that Shetz knew that her actions were “substantially certain” to interfere with the economic relationship; and (5) the existence of an independently wrongful act. Hudson opposed the demurrer, arguing that a completed contract is unnecessary. Shetz replied, reiterating her arguments and that Hudson’s claim fails to allege whether the alleged interference with prospective economic advantage was negligent or intentional.

The meet and confer requirements are not met because Shetz did not meaningfully discuss the allegations with Hudson prior to filing her demurrer. (Reply, p. 2:4-15.) Nonetheless, “[a] determination by the court that the meet and confer process was insufficient shall not be grounds to overrule or sustain a demurrer.” (Code Civ. Proc., § 430.41, subd. (a)(4).) Thus, the Court reaches the merits of the demurrer.

Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452.) The court “‘“treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law . . . .”’” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525.)

Discussion

Preliminarily, Hudson’s Cross-complaint does not label the fourth cause of action as negligent or intentional. These are two different claims. (Compare CACI 2202 [intentional interference with prospective economic relations] with CACI 2204 [negligent interference with prospective economic relations].)

The Cross-complaint does not pray for punitive damages, but simply “damages according to proof at trial in an amount of at least $500,000.00.” This is uninformative. In his opposition, Hudson cites to case law discussing “negligent interference with prospective economic advantage” and CACI No. 2204 for that same claim; however, he also argues that “Cross-Defendants “were actively trying to kill the deal for unreasonable motives.” (Opposition, p. 3:4-5.) This indicates that Hudson pleads that Shetz intentionally interfered with his prospective economic advantage. His opposition fails to clarify the matter; the Court will assume that he intended to plead an intentional tort.

Intentional interference with prospective economic advantage

“Intentional interference with prospective economic advantage has five elements: (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.) “[A] plaintiff that chooses to bring a claim for interference with prospective economic advantage has a more rigorous pleading burden since it must show that the defendant’s conduct was independently wrongful.”

Here, in considering the totality of the Complaint, the allegations are sufficient. First, Shetz’s argument that unaccepted offers do not constitute an economic relationship is unavailing. “[T]he basic principles underlying the tort of inducing breach of contract have been extended to impose liability for intentional interference with business relations or advantages which are merely prospective and not subject to an existing, legally binding agreement.” (Lowell v. Mother’s Cake & Cookie Co. (1978) 79 Cal.App.3d 13, 17, italics added.) There is no requirement that an offer be accepted, and the transaction completed, before this claim may be alleged.

As to the second element, Hudson has pled Shetz’s knowledge of the potential economic relationships. He informed Shetz of his intention to put the property up for sale and provided her with various California Association of Realtors forms that he would need access to the Property for marketing and inspection purposes. (Cross-complaint, ¶ 8.) And Hudson pleads there was actual disruption of the potential economic relations as the offers were withdrawn because of the inability to inspect the Property. (Id. at ¶ 23.)

It is true that Hudson has not pled that the Cross-defendants were “substantially certain” that her acts would injure his economic interests. (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1154 [A plaintiff may plead defendant’s specific intent to interference with prospective economic advantage or “may alternatively plead that the defendant knew that the interference was certain or substantially certain to occur as a result of [her] action”].) However, despite the absence of these words, a fair reading of the Cross-complaint demonstrates that Cross-defendants knew that their actions would undermine the economic relationship. For example, during an inspection, Zane informed the prospective buyer that Shetz was demanding $300,000 to vacate the Property. (Cross-Complaint, ¶ 21.) A reasonable inference of this allegation is that Zane informed the prospective buyer of that requested amount with the intent to block the transaction. (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517 [“The complaint must be construed liberally by drawing reasonable inferences from the facts pleaded”].) Indeed, the next allegation is that despite the request for payment, the prospective buyer was still willing to purchase; however, Zane “then advised that she would not allow any further inspections at all for [the] buyer.” (Id. at ¶ 22.)

As to an “independently wrongful” act, this too is not explicitly alleged, but inferred from the other allegations.

Our Supreme Court explained that an “independently wrongful” act is sufficiently alleged “if it is unlawful, that is, if it is proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard.” (Korea Supply, supra, 29 Cal.4th at p. 1159.) In Korea Supply, for example, the alleged wrongdoer “engaged in bribery and offered sexual favors to key Korean officials in order to obtain” a contract, which interfered with the plaintiff’s business expectancy and was unlawful under the Foreign Corrupt Practices Act. (Ibid; see also Tri-Growth Centre City, Ltd. v. Silldorf, Burdman, Duignan & Eisenberg (1989) 216 Cal.App.3d 1139, 1153–1154 [defendant “acquired and used the confidential information from [plaintiffs],” thus breaching a fiduciary duty]; PMC, Inc. v. Saban Entertainment, Inc. (1996) 45 Cal.App.4th 579, 603 [independently actionable violations include “violations of federal or state law or unethical business practices, e.g., violence, misrepresentation, unfounded litigation, defamation, trade libel or trade mark infringement”]; Packaging Sys. v. PRC-Desoto Int'l, Inc. (C.D.Cal. 2017) 268 F. Supp. 3d 1071, 1091 [defendant’s alleged monopolization constitutes independent, wrongful act].)

Here, the violation is of Civil Code section 1954. (Cross-complaint, ¶¶ 6, 26, 32.) Again, while the Cross-complaint does not explicitly state that this is the wrongful act, Hudson does allege that he provided notice to Shetz of a possible pending sale on January 29, 2022. (Id. at ¶ 8.) This created the 120-day window for Hudson to provide reasonable oral notice to Shetz before the inspection. Twenty-four hours is deemed a reasonable period of notice. (Civ. Code, § 1954, subd. (d)(2).) On March 1, Hudson then requested that Zane make the Property available for inspection on March 3 at noon. (Cross-complaint, ¶ 16.) She refused. (Ibid.) Similarly, on May 9, Zane again refused a prospective buyer from inspecting the Property. (Id. at ¶ 22.) As alleged, this is sufficient to show a violation of Civil Code section 1954. (Korea Supply, supra, 29 Cal.4th at p. 1159 [“an act is independently wrongful . . . if it is proscribed by some . . . statutory . . . legal standard”].)

Accordingly, the demurrer to the Hudson Cross-complaint is overruled. Cross-defendant Shetz is ordered to serve and file her Answer on or before December 30, 2022.

[1] The caption states “Interference with Prospective Contractual Relationship.”