Judge: Bruce G. Iwasaki, Case: 22STCV30638, Date: 2023-07-10 Tentative Ruling
Case Number: 22STCV30638 Hearing Date: January 29, 2024 Dept: 58
Hearing
Date: January 29, 2024
Case
Name: PM Andy’s Liquor
Inc. v. Jane Suong Tran-Bressler
Case
No.: 22STCV30638
Matter: (1.) Demurrer and Motion to Strike to Jane Suong Tran-Bresler’s Cross-Complaint
(2.) Demurrer and Motion to Strike to Eric Nhan Tran’s First
Amended Cross-Complaint
Moving Party: (1.) Cross-Defendants PM Andy’s Liquor Inc., Harbinder
Singh, and Melissa Aurora Singh
(2.)
Cross-Defendants PM Andy’s Liquor Inc., Harbinder Singh, and Melissa Aurora
Singh
Responding
Party: (1.) Cross-Complainant Jane
Tran-Bresler
(2.)
Cross-Complainant Eric Nhan Tran
Tentative Ruling: The
Demurrer to Jane Suong Tran-Bresler’s Cross-Complaint is sustained in its
entirety. The Motion to Strike Jane Suong Tran-Bresler’s Cross-Complaint is granted.
The Demurrer
to Eric Nhan Tran’s First Amended Cross-Complaint is sustained in its entirety.
The Motion to Strike Eric Nhan Tran’s First Amended Cross-Complaint is granted.
This is an
action for breach of contract of a commercial lease. In the Second Amended
Complaint, Plaintiff PM Andy’s Liquor alleges causes of action against
Defendants Jane Suong Tran-Bresler (Tran-Bresler) and Eric Nhan Tran (Tran) for
(1.) Breach of Contract (Business Purchase Agreement), (2.) Breach of Contract
(Lease Agreement), (3.) Fraud, (4.) Promissory Estoppel, and (5.) Declaratory
Relief.
Plaintiff
alleges that its predecessor, Harbinder Singh, executed a “Business Purchase
Agreement” (Purchase Agreement or BPA) to purchase “Kenny’s Liquor & Jr
Market” from Defendant Eric Nhan Tran (Eric). In relation to this Purchase
Agreement, Plaintiff entered into a 10-year commercial lease with Defendant Jane
Tran-Bresler (Jane) on September 2012 (Lease or CLA). The Lease was for
10-years and included a 10-year option to renew. The base rent was $2,500 per
month for the first year with 3% increase every year.
Defendant Jane demurred to the
Second Amended Complaint. The Court overruled the demurrer.
On May 12, 2023, Eric Nhan Tran filed
his Cross-Complaint against Cross-Defendants PM Andy’s Liquor, Inc., Harbinder
Singh, and Melissa Singh (collectively, Cross-Defendants). On July 31, 2023,
Eric Nhan Tran filed his First Amended Cross Complaint (FAXC) asserting claims
for (1.) Breach of Contract, (2.) Fraud – False Promise, (3.) Promissory
Estoppel and (4.) Declaratory Relief.
On August
1, 2023, Jane Tran-Bresler filed her Cross-Complaint (XC) against Cross-
Defendants asserting claims for (1.) Breach of Contract, (2.) Fraud – False
Promise, (3.) Promissory Estoppel, (3.) and Declaratory Relief.
Cross-Defendants
demur to both Eric Nhan Tran’s FAXC and Jane Tran-Bresler’s XC. The demurrers
do not challenge the FAXC and the XC’s fourth cause of action for declaratory
relief. Cross-Defendants also filed a motion to strike both pleadings. Eric and
Jane filed a joint opposition to the demurrers and a joint opposition to the motions
to strike.
On January
25, 2024, Cross-Defendants filed replies to the oppositions; the replies explain
that the Oppositions were untimely filed and served, causing the late replies.
The Court sustains
the demurrers to the XC and FAXC in their entirety; the corresponding motions
to strike are granted.
Legal Standard for
Demurrers
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.) In applying these standards, the court
liberally construes the complaint to determine whether a cause of action has
been stated. (Picton v. Anderson Union High School Dist. (1996) 50
Cal.App.4th 726, 733.)
First
Cause of Action in Jane Tran-Bresler’s XC and First Cause of Action in Eric Nhan Tran’s FAXC:
Cross-Defendants
demur to the first cause of action for breach of the Commercial Lease Agreement
(CLA) on the grounds that the pleadings fail to state a claim.
To state a
claim for breach of contract, a plaintiff must allege sufficient facts to
establish: (1) a contract between the parties; (2) plaintiff’s performance or
excuse for nonperformance; (3) defendant’s breach; and (4) damages to plaintiff
from the breach. (Wall Street Network, Ltd. v. New York Times Co.
(2008) 164 Cal.App.4th 1171, 1178.)
Here, the XC
and FAXC both allege Cross-Defendants breached the CLA by refusing to renegotiate the new rent
for the renewal rental period and refusing to pay a new rental rate for the
renewal period at the previously agreed 3% increase amount. (XC ¶ 30; FAXC ¶¶ 15,
22, 25.) The FAXC also alleges that Cross-Defendants attempted to “arbitrarily
decrease the square footage of the business by approximately 1,000 square foot
[sic]” by building a barrier in the storage area of the business in an
attempt to lower their renewal rent payments. (FAXC ¶ 27.)
First, Cross-Defendants
argue that Eric is not a party to the CLA and thus cannot bring a breach of
contract claim on the CLA in the FAXC. In response,
Eric argues he has standing to enforce the CLA as a current owner of the
Premises and thus a “successor in interest” under Paragraph 24 of the CLA.
(FAXC ¶¶ 19-20.) In the absence of any legal argument by Cross-Defendants that
the owner of real property does not automatically assume the rights and duties
under a pre-existing lease, these allegations are sufficient for pleading
purposes.
Second, in
demurring to this cause of action, Cross-Defendants also argue that it is
unclear whether the breach of the CLA is based on a written, oral, or implied
agreement. This argument is not well taken where the allegations specifically reference
certain paragraphs of the CLA and quotes language from the CLA; liberally
construing these allegations, the Court can ascertain that the contract is
written. (XC ¶ 18.) Moreover, the Opposition concedes that the CLA refers to the
same agreement attached to the SAC as Exhibit 3. (Opp. 3, 20-23; compare XC ¶
18 with SAC, Ex. 3.)
However, the
demurrer is ultimately well taken on the grounds that it is unclear which
specific term of the CLA was breached. That is, Cross-Complainants fail to
allege any specific, express provision imposing a duty to negotiate the rental
rate increase amount upon the exercise of the option to renew on Cross-Defendants.
Thus, the allegations that Cross-Defendant “abruptly” ceased to negotiate the
new rental rates for the renewal period does not state a breach of the CLA.
The Opposition also represents that
their first cause of action relies on an oral contract in addition to this
written CLA contract. Specifically, Cross-Complainants argue there was “an oral
contract through the promises made by Cross Defendants during the negotiations
of the CLA.” (Opp., 3:16-17). These allegations do not support the existence of
an oral contract and only reflect pre-contract representations during negotiations
– not a separate contract.
As
discussed below, these representations or promises may support a claim for
promissory fraud. (Riverisland Cold Storage, Inc. v. Fresno-Madera
Production Credit Assn. (2013) 55 Cal.4th 1169, 1181 [citing Langley v.
Rodriguez (1898) 122 Cal. 580]; Continental Airlines, Inc. v. McDonnell
Douglas Corp. (1989) 216 Cal.App.3d 388, 427–428 [“[T]he clear mandate of
our [L]egislature [is] that, when fraud is alleged, the parol evidence rule
does not apply, and evidence of precontract representations which vary or contradict
the terms of an integrated contract [is] admissible. [Citations.] [¶] The
theory of the exception is that such evidence does not contradict the terms of
an effective integration, since it shows the purported instrument has no legal
effect. [Citation.]”].)
Thus, the demurrer is sustained as to the
first cause of action in the XC and FAXC on this ground.
Moreover, the demurrer argument by the
individual Cross-Defendants to this cause of action is also well taken. Both
the XC and FAXC suggest that these individual Cross-Defendants were parties to CLA
such that they are liable on the contract. (See XC ¶ 15; FAXC ¶ 21.) However,
these allegations are contradicted by Exhibit 3 to the SAC wherein the only
party to the CLA was Cross-Complainant Jane and Cross-Defendant PM Andy’s
Liquor Inc. (United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1
Cal.3d 586, 595 [“Directors and officers are not personally liable on contracts
signed by them for and on behalf of the corporation unless they purport to bind
themselves individually.”].) Further, for the reasons discussed below, there are
insufficient allegations of alter ego in the pleadings to attach liability to individual
Cross-Defendants on the contract.
Second
Cause of Action in Jane Tran-Bresler’s XC and Second Cause of Action in Eric Nhan Tran’s FAXC:
Cross-Defendants argue that the fraud
case of action lacks specificity and other elements necessary to state a claim.
The elements
of fraud are (a) a misrepresentation (false representation, concealment, or
nondisclosure); (b) scienter or knowledge of its falsity; (c) intent to induce
reliance; (d) justifiable reliance; and (e) resulting damage. (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 638.)
“Fraud in
the inducement is a subset of the tort of fraud.” (Hinesley v. Oakshade Town
Center (2005) 135 Cal.App.4th 289, 294.) It “occurs when ‘ “the promisor
knows what he is signing but his consent is induced by fraud, mutual assent is
present and a contract is formed, which, by reason of the fraud, is voidable.”
’ ” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th
394, 415 [quoting Ford v. Shearson Lehman American Express, Inc. (1986)
180 Cal.App.3d 1011, 1028].)
Further,
“fraud must be pleaded specifically;
general and conclusory allegations do not suffice.” (Lazar v. Superior Court
(1996) 12 Cal.4th 631, 645.) “This particularity requirement necessitates
pleading facts which show how, where, to whom, and by what means” the alleged
fraud occurred. (Id.) The purpose of the particularity requirement is to
“separate meritorious and nonmeritorious cases, if possible in advance of
trial.” (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167,
184.)
The
demurrer for lack of specificity is well taken. Cross-Complainants’ causes of action
for fraud fail to allege the “who, what, where, when or how” of the allegedly
false representation; this lack of particularity is fatal to the claim. (XC ¶¶ 33-34;
FAXC ¶¶ 33-34.)
However,
Cross-Defendants argument as to the reliance and detriment are not well taken
where the Cross-Complainant Jane entered in the CLA purportedly based on the
false representations. The damages resulting from the false representations was
a contract that was left open to renegotiate at the end of 10 years and now forces
Cross-Complainants to accept rent in an amount less than the fair market value;
thus, Jane’s damages are the difference in rent between the
new rental rate minus the amount Cross-Defendants are currently paying. (XC ¶ 39.)
In contrast,
the resulting damages as they pertain to Eric are less clear as he was not an original
party to the CLA and could not have relied on the representations to enter
into the CLA. Further, it is not clear how these representations as to the
CLA would have induced Eric to enter into the BPA to his detriment, either. (FAXC
¶¶ 32-40.)
The
demurrers to the second causes of action in the XC and FAXC are also sustained.
Third
Cause of Action in Jane Tran-Bresler’s XC and Third Cause of Action in Eric Nhan Tran’s FAXC:
Cross-Defendants
argue that the third cause of action for promissory estoppel fails because the promise
is uncertain and the allegations fail to plead detrimental reliance.
A claim for
promissory estoppel consists of four elements: “ ‘[1] A promise [2] which the
promisor should reasonably expect to induce action or forbearance on the part
of the promisee or a third person and [3] which does induce such action or
forbearance ... [and 4] injustice can be avoided only by enforcement of the
promise.’ ” (Kajima/Ray Wilson v. Los Angeles County Metropolitan Transp.
Authority (2000) 23 Cal.4th 305, 310.) Further, the promise must be one
that is “clear and unambiguous in its terms.” (Laks v. Coast Fed. Sav. &
Loan Assn. (1976) 60 Cal.App.3d 885, 890.)
The doctrine
of promissory estoppel “make[s] a promise binding under certain circumstances,
without consideration in the usual sense of something bargained for and given
in exchange.” (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240,
249.) “Under this doctrine a promisor is bound when he should reasonably expect
a substantial change of position, either by act or forbearance, in reliance on
his promise, if injustice can be avoided only by its enforcement.” (Ibid.)
The
XC alleges that “Jane
detrimentally relied upon the promises of Cross Defendants in honoring the
terms of CLA and the promise made during the negotiations of the CLA that the
rent for the renewal period would be renegotiated at a later future if Cross
Defendant exercised their Option to Renew.” (XC ¶ 44.)
Here, as with
the fraud claim, the promise allegedly made is too vague and unclear to satisfy
the pleading requirements for promissory estoppel. Further, like with the fraud
claim, Eric cannot show detrimental reliance on the statements based on the execution
of the CLA or BPA.
The
demurrers are sustained to these causes of action, as well.
Cross-Claims against Individual Cross-Defendants:
Cross-Defendants
argue that the XC and FAXC also fail to allege liability against individual
Cross-Defendants Harbinder Singh and Melissa Aurora Singh.
As noted
above, the demurrer on behalf of individual Cross-Defendants on the contract
claims are well taken. These individuals are not parties to the agreement and the
alter ego allegations – which are only alleged in the FAXC – are conclusory and
inadequate. (FAXC ¶¶ 43-46.)
However, the
fraud and promissory estoppel allegations are for the specific actions undertaken
by the individual Cross-Defendants (and not on behalf of Cross-Defendant PM
Andy’s). (Jacobs v. Freeman (1980) 104 Cal.App.3d 177, 193 [explaining “an agent
who knowingly participates in a fraudulent transaction is equally responsible
with his principal . . ..”].) Thus, the demurrers on this ground to these causes of action are
not well taken. (XC ¶ 33; FAXC ¶ 33.)
Legal Standard for
Motions to Strike
“The court may, upon a
motion made pursuant to Section 435, or at any time in its discretion, and upon
terms it deems proper: (a) Strike out any irrelevant, false, or improper matter
inserted in any pleading. (b) Strike out all or any part of any pleading not
drawn or filed in conformity with the laws of this state, a court rule, or an
order of the court.”¿(Code Civ. Proc., § 436.) “Immaterial” or “irrelevant”
matters include allegations not essential to the claim, allegations neither
pertinent to nor supported by an otherwise sufficient claim or a demand for
judgment requesting relief not supported by the allegations of the complaint.
(Code Civ. Proc., § 431.10, subds. (b)(1)-(3).)
Discussion
Finally,
Cross-Defendants move to strike the request for punitive damages from the XC
and FAXC.
Punitive
damages are recoverable where the defendant has been guilty of oppression,
fraud, or malice, express or implied. (Civ. Code, § 3294.) “Something more than
the mere commission of a tort is always required for punitive damages. There
must be circumstances of aggravation our outrage, such as spite or malice, or a
fraudulent or evil motive on the part of the defendant, or such a conscious and
deliberate disregard of the interests of others that his conduct may be called
willful or wanton.” (Taylor v. Superior
Court (1979) 24 Cal.3d 890, 894.) Specific intent to injure is not
necessary for a showing of malice—it is sufficient that the defendant’s conduct
was so “wanton or so reckless as to evince malice or conscious disregard of
others’ rights.” (McConnell v. Quinn (1925)
71 Cal. App. 671, 682.)
A request
for punitive damages that is not supported with specific allegations of
oppression, fraud, or malice is subject to a motion to strike. Conclusory
allegations that defendants acted “willfully,” “maliciously,” or with
“oppression, fraud, or malice” are not, without more, sufficient to give rise
to a claim for punitive damages, but such language is permissible where the
complaint contains sufficient factual support for the conclusions. (Perkins v. Superior Court (1981) 117
Cal.App.3d 1, 6-7.)
As result of
the Court’s ruling on the demurrers, only the declaratory relief claim remains.
As such, Cross-Complainants have failed to sufficiently state a claim to
support the request for punitive damages. Accordingly, the motion to strike is granted
as to punitive damages.
Conclusion
The demurrers are sustained. The motions
to strike are granted. Cross-Complainants shall have leave to amend. Amended pleadings
shall be filed and served by February 23, 2024.
Given the overlapping
allegations and claims in the pleadings, Cross-Complainants should file a
single cross-complaint.