Judge Bruce G. Iwasaki, Case Number: 23STCV28800, Date: 2024-05-02 Tentative Ruling

Tentative Ruling: The demurrer to the Second Amended Complaint is sustained.

Plaintiff H Mart Ktown Plaza, LLC (Plaintiff) filed its Complaint against Defendant Korean Shopping Center, Inc. (KSC) on November 27, 2023. Upon learning that the Shopping Center had been sold to INI Investment Corp. on September 9, 2022, Plaintiff filed its First Amended Complaint on December 20, 2023 to add INI Investment Corp. as a defendant. Defendant INI Investment Corp. filed its Answer to the First Amended Complaint on February 6, 2024.

On February 21, 2024, Defendant KSC filed a demurrer to the First Amended Complaint. The demurrer was set to be heard on April 12, 2024.

Thereafter, Plaintiff moved for leave to file a Second Amended Complaint (SAC). No opposition was filed. The Court granted the motion and allowed Plaintiff leave to file a Second Amended Complaint. Because of the minimal changes to the pleading – specifically with respect to demurring Defendant KSC – the Court permitted the demurrer to the FAC to apply to the SAC. Only the first cause of action for breach of the lease is alleged against Defendant KSC.

On March 21, 2024, the Court re-set the hearing on KSC’s demurrer to the FAC/SAC to May 2, 2024. No opposition has been filed.

The Court’s tentative ruling is to sustain the demurrer to the Second Amended Complaint with leave to amend. Because no opposition was filed, the Court wishes to hear from Plaintiff. Because there may have been confusion about when an opposition was due to the demurrer, the Court may consider continuing the hearing to permit an opposition memorandum.

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.)

Defendant KSC demurs to the first cause of action for breach of the lease contract.

To prevail on a cause of action for breach of contract, the plaintiff must allege and prove (1) the existence of a contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff. (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1388; Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.)

Both the FAC and the SAC allege that Defendants failed to comply with their maintenance obligations under Section 16.2 of the Lease; as result, on October 26, 2022, water leakage from the ceiling damaged the electrical bus bar, resulting in a power outage affecting significant portions of the Shopping Center, including where Plaintiff was renting space. (FAC ¶ 24; SAC ¶ 28.)

The pleadings also allege that Defendant INI Investment Corp., referred to in the pleadings as Landlord, asked the Plaintiff to use the generator to supply power to all of the affected areas of the Shopping Center, during repairs; in exchange, the Landlord agreed to cover all generator rental expenses. (FAC ¶ 25; SAC ¶ 29.) The pleadings allege that the Landlord did not timely complete the repairs until January 19, 2023 – in violation of Article 16.2 and Article 20 of the Lease. (FAC ¶ 26; SAC ¶ 30.) The Landlord further breached the Lease by failing to reimburse Plaintiff for its costs and expenses incurred in renting the generator. (FAC ¶ 30; SAC ¶ 34.)

Defendant KSC argues the breach of lease cause of action fails as to it because when the alleged breach involving the leak occurred – October 26, 2022 – KSC was no longer the landlord and no longer in a contractual relationship with Plaintiff.

Plaintiff alleges that KSC and Plaintiff entered into a Retail Lease Agreement on October 15, 2018. Then, on September 9, 2022, KSC sold the building to INI Investments, which opted to continue the existing lease with Plaintiff as the new landlord. (FAC ¶¶ 8, 11; SAC ¶¶ 8, 11.)

The FAC and the SAC fail to allege a contractual relationship between Defendant KSC and Plaintiff that resulted in a breach. The demurrer on this ground is well taken.[1]

The demurrer to the first cause of action as to Defendant KSC is sustained with leave to amend. Because Plaintiff has filed no opposition, the Court will inquire how it wishes to proceed. The options include continuing the hearing to permit opposition, submitting on the tentative and amending the first cause of action, or dismissing KSC from the action.

[1] Defendant KSC also argues that Plaintiff failed to provide notice as required under Paragraph 16.2 of the Lease. (Dem., 5:9-6:8.) This argument is outside the scope of the pleadings and is not a grounds for demurrer.