Judge: Cherol J. Nellon, Case: 25STCV05238, Date: 2025-06-11 Tentative Ruling
Case Number: 25STCV05238 Hearing Date: June 11, 2025 Dept: 14
#8
Case Background
This action arises out of an alleged breach of
contract. Plaintiffs allege their residential leases were breached by
Defendants, the new subject property owners, when they failed to properly evict
Plaintiffs or give them notice of the foreclosure sale.
On February 25, 2025, Plaintiffs Connie Kim (“Connie”),
Hyenwoo Kim (“Hyenwoo”), and Manrique Ortiz (“Ortiz”) filed a Complaint against
Defendants Open Bank, Min J. Kim, Jeff Kim, Eric Jiang, Dream Realty &
Investments Inc. and Does 1 through 20. The Complaint alleges causes of action
for (1) breach of contract, (2) breach of implied covenant of good faith and
fair dealing, (3) violation of California law, and (4) preliminary and
permanent injunction.
On May 7, 2025, the Court found that the following
cases, 24STCV06929 and 25STCV05238, are related.
On May 9, 2025, Defendants filed the instant demurrer
and motion to strike.
As of June 6, no opposition has been filed.
Instant Pleading
Defendants demur and move to strike each cause of
action in the Complaint.
Decision
Defendants’ demurrer is SUSTAINED as to the first,
second, and third causes of action and OVERRULED as to the fourth cause of
action.
Defendants’ motion to strike the Complaint is
GRANTED.
The Court awards Plaintiff 20 days leave to
amend.
Judicial Notice
The
Court GRANTS Defendants’ request for judicial notice of a (1) deed of trust recorded in the official
records of Los Angeles County, California on October 26, 2021, as Instrument
Number 20211608832 and (2) a Trustee’s Deed Upon Sale recorded on February 16,
2024, as Instrument Number 20240104779.
Discussion
1.
Demurrer
Defendants demur to each cause of action alleged in the
Complaint on the grounds that they fail to state facts sufficient to constitute
a cause of action, pursuant to section 430.10(e).
a.
First Cause of Action – Breach of Contract
“Establishing [a claim for breach of contract] requires
a showing of ‘(1) the existence of the contract, (2) plaintiff’s performance or
excuse for nonperformance, (3) defendant’s breach, and (4) the resulting
damages to the plaintiff.’” (D’Arrigo Bros. of California v. United
Farmworkers of America (2014) 224 Cal.App.4th 790, 800, citations
omitted.)
“A trustee's deed conveys the absolute legal title to
the purchaser, as against all claims subordinate to the deed of trust, but
subject to all prior rights, interests, and titles. [Citations]. [W]here a
trust deed to secure a loan is taken without notice of a lease of the premises
… the lessee’s interest under such lease is foreclosed by the foreclosure of
the deed of trust.” (R-R Ranch Markets #2, Inc. v. Old Stone Bank (1993)
16 Cal.App.4th 1323, 1327.) “When property is sold under a trust deed, the purchasers
acquire title free and clear of all encumbrances subsequent to the deed of
trust.” (Id. at 1328.)
Defendants assert there is no contractual relationship
between them and Plaintiffs. “Because Plaintiffs and Online Edugo entered into
the leases after the [deed of trust] was recorded, the foreclosure sale of the [Subject]
Property extinguished the leases. The Bank therefore could not have breached
the leases. Nor is there any allegation of a contractual relationship between
Plaintiffs and any Defendant other than the Bank.” (Demurrer p. 2:15-18.)
Defendants submit the deed of trust, dated October 5, 2021, whereby Online
Edugo Inc. granted, transferred, and assigned, in trust with power of sale for Defendant
Open Bank’s benefit, all of Online Edugo Inc.’s right, title, and interest in
and to the property located at 2823 West 8th Street, Los Angeles, CA 90005
(“subject property”). (RJN, Ex. 1.) Defendants submit the Trustee’s Deed Upon
Sale which transferred title to Defendant Open Bank, the foreclosing
beneficiary, after a foreclosure sale. (RJN, Ex. 2.)
The Complaint alleges “The plaintiffs entered into
lease agreements with the former landlord, ONLINE EDUGO, a business entity, as
a tenant for the purpose of primary residence. Then, sometime on or about the
earlier month of 2024, the ownership of the above leased premise changed to a
new owner, defendant, OPEN BANK, through the foreclosure process.” (Compl., ¶¶
5-6.) The Lease Agreement between Online Edugo Inc. and Plaintiff Ortiz is
dated December 12, 2022, for the subject property. (Compl., Ex. A.) The Lease Agreement
between Online Edugo Inc. and Plaintiff Connie for the subject property is
dated December 1, 2021. (Ibid.) The Lease Agreement between Online Edugo
Inc. and Plaintiff Hyenwoo for the subject property is dated May 31, 2023. (Ibid.)
The Complaint alleges “Ever since entering into the written contract, the
plaintiffs have performed all of the terms and conditions in accordance with
the contract. Defendants breached the terms and conditions of the contract by
failing to provide a residential space appropriate for the purpose of the lease
without any hindrance, among others, from having their leasing people barging
into the premises and causing disruptions in the residential living. As a
result…plaintiffs have suffered economic losses in an amount of $15,000.00 per
person, for a total of $45,000.00.” (Compl., ¶¶ 12-14.)
The Court finds that the Complaint does not allege that
there is an existing contractual relationship between Plaintiffs and Defendants
Min J. Kim, Jeff Kim, Eric Jiang, and Dream Realty & Investments Inc. The
Court finds that the Complaint does not allege that there is an existing
contract between Plaintiffs and Defendant Open Bank following the foreclosure
sale of the subject property. Because Plaintiffs’ leases postdate the trust
deed, Plaintiffs’ leases were foreclosed by the foreclosure of the trust deed.
The Complaint fails to allege facts sufficient to constitute a cause of action
for breach of contract against Defendants.
Defendants’ demurrer to the first cause of action is
SUSTAINED.
b.
Second Cause of Action – Breach of Implied Covenant of
Good Faith and Fair Dealing
“The prerequisite for any action for breach of the
implied covenant of good faith and fair dealing is the existence of a
contractual relationship between the parties, since the covenant is an implied
term in the contract.” (Smith v. City and County of San Francisco (1990)
225 Cal.App.3d 38, 49.)
As discussed above, the Court finds there is no
existing contractual relationship between Plaintiffs and Defendants. Thus, the
Complaint fails to allege facts sufficient to constitute a cause of action for
breach of implied covenant of good faith and fair dealing against Defendants.
Defendants’ demurrer to the second cause of action is
SUSTAINED.
c.
Third Cause of Action – Violation of California Law
The Complaint alleges “As the tenant, according to the
California law, specifically SB 1079, plaintiffs have the right to purchase the
leased building at the bidding price from the new owner bank, not through an
open auction price. Pursuant to the foregoing California State law, the new
owner must provide the tenants with the notice of foregoing right to purchase
at the sales bid from the new owner bank.” (Compl., ¶ 21.) “However, to date,
the defendant, OPEN BANK, failed to give such a notice to any of the tenants,
including plaintiffs.” (Compl., ¶ 24.)
Defendants assert that Plaintiffs lack standing to
bring a cause of action for violation of SB 10179, which is codified at Civ.
Code section 2924m, because there is no private right of action under this
section.
Civ. Code section 2924m(c) provides that a trustee’s
sale of property under a power of sale contained in a deed of trust or mortgage
on real property containing one to four residential units shall not be deemed
final until (1) if a prospective owner-occupant is the last and highest bidder
at the trustee's sale, the date upon which the conditions set forth in¿Section
2924h¿for the sale to become final are met or (2) fifteen days after the
trustee's sale unless at least one eligible tenant buyer or eligible bidder
submits to the trustee either a bid pursuant to paragraph (3) or (4) or a
nonbinding written notice of intent to place such a bid, whichever is
earlier. (Code Civ. Proc., § 2924m, subd. (c).) Section 2924m(a) defines
prospective owner-occupant, eligible tenant buyer, and eligible bidder. (Code
Civ. Proc., § 2924m, subds. (a)(1)-(a)(3).) “The Attorney General, a county
counsel, a city attorney, or a district attorney may bring an action for
specific performance or any other remedy at equity or at law to enforce this
section.” (Code Civ. Proc., § 2924m, subd. (j).)
“A violation of a state statute does not necessarily
give rise to a private cause of action…Instead, whether a party has a right to
sue depends on whether the Legislature has ‘manifested an intent to create such
a private cause of action’ under the statute.” (Lu v. Hawaiian Gardens
Casino, Inc. (2010) 50 Cal.4th 592, 596.) “A statute creates a private
right of action only if the enacting body so intended.” (Farmers Ins.
Exchange v. Superior Court (2006) 137 Cal.App.4th 842, 849-50, quoting Moradi–Shalal
v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 305.)¿ “If the
Legislature intended a private right of action, that usually ends the inquiry.
If the Legislature intended there be no private right of action, that usually
ends the inquiry. If we determine the Legislature expressed no intent on the
matter either way, directly or impliedly, there is no private right of action…,
with the possible exception that compelling reasons of public policy might
require judicial recognition of such a right.” (Animal Legal Defense Fund v.
Mendes (2008) 160 Cal.App.4th 136, 142.)¿¿
The Complaint also alleges “[a]s the tenant, according
to the Los Angeles Housing Department, plaintiffs have the right and falls
under Just Cause For Eviction Ordinance (JCO) to receive relocation assistance
when the eviction process is taken into place.” (Compl., ¶ 23.)
Defendants assert that to the extent that this cause of
action is based on a violation of the JCO’s requirement for relocation
assistance, codified at Los Angeles Municipal Code section 165.06, Plaintiffs do
not allege any of the grounds required under this section.
Los Angeles Municipal Code section 165.06 provides, in
relevant part that “If the termination of tenancy is based on any of the
grounds set forth in Sections 165.03 H. through 165.03 N.,
then the landlord shall pay relocation assistance to the tenant as follows…” Sections 165.03 H.
through 165.03 N state as follows: “The landlord seeks in good faith
to recover possession of residential real property for use and occupancy as a
primary place of residence by: (1) The landlord; or (2) The
landlord’s spouse, domestic partner, grandchildren, children, parents, or
grandparents; or (3) A resident manager when a residential manager,
janitor, housekeeper, caretaker, or other responsible person is required to
reside upon the premises by law or under the terms of an affordable housing
covenant or regulatory agreement.” (L.A. Mun. Code, § 165.03, subd. H.) “The
landlord seeks in good faith to recover possession of residential real property
under the following circumstances: (1) to demolish the residential real
property. (2) to substantially remodel the residential real property…(3) to
withdraw the residential real property permanently from rental housing use when
the landlord is withdrawing from rent or lease all residential real property on
the same parcel of land.” (L.A. Mun. Code, § 165.03, subd. I.) “The landlord seeks
in good faith to recover possession of residential real property to comply with
a court order or governmental agency’s order to vacate, order to comply, order
to abate...” (L.A. Mun. Code, § 165.03, subd. J.) “The Secretary of
Housing and Urban Development seeks to recover possession to vacate the
property prior to sale...” (L.A. Mun. Code, § 165.03, subd. K.) “The
residential real property is in a Residential Hotel, and the landlord seeks to
recover possession to Convert or Demolish the unit...” (L.A. Mun. Code, §
165.03, subd. L.) “The landlord seeks to recover possession of residential real
property for conversion to affordable housing accommodations.” (L.A. Mun. Code,
§ 165.03, subd. M.) “The landlord seeks to recover possession of residential
real property for conversion to non-residential use.” (L.A. Mun. Code, §
165.03, subd. N.)
Here, as to an alleged violation of Civ. Code section
2924m, the Court finds that the language of subdivision (j) does not include
private individuals. If the legislature intended the section to include a
private right of action, it would have stated so. Because the language of
subdivision (j) does not include private individuals, the statute does not
manifest an intent to create a private cause of action for violation of Civ.
Code, section 2924m. As to an alleged violation of Los Angeles Municipal
Code section 165.06, the Court finds that the Complaint does not allege any
facts that Plaintiffs’ termination of tenancy is based on any of the grounds
set forth in Sections 165.03 H. through 165.03 N. Thus, the
third cause of action for violation of California Law fails to state facts
sufficient to constitute a cause of action against Defendants.
Defendants’ demurrer to the third cause of action is
SUSTAINED.
d.
Fourth Cause of Action – Preliminary and Permanent
Injunction
Defendants demur to the fourth cause of action for
preliminary injunction. However, a remedy is not the proper subject of a
demurrer. (Caliber Bodyworks, Inc. v. Superior Court (2005) 134
Cal.App.4th 365, 384-85; see PH II, Inc. v. Superior Court¿(1995) 33
Cal.App.4th 1680, 1682-83.) Therefore, this cause of action is not the proper
subject of a demurrer.
Defendants’ demurrer to the fourth cause of action is
OVERRULED.
2.
Motion to Strike
Any party, within the time allowed to respond to a
pleading may serve and file a notice of motion to strike the whole or any part
thereof. (Code Civ. Proc., section 435, subd. (b)(1); Cal. Rules of Court, rule
3.1322, subd. (b).) 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. section 436, subd.
(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782.)
Defendants move to strike each cause of action in the
Complaint on the grounds that Plaintiff fails to specifically state the party
or parties against whom each cause of action is directed at in violation of
Cal. Rules of Court, Rule 2.112.
Plaintiffs did not file an opposition to the motion to
strike.
Here, the motion to strike is GRANTED because the Complaint
fails to conform with Cal. Rules of Court, Rule 2.112 and the motion is
unopposed. The lack of an opposition amounts to a concession that the
motion is meritorious. (See California Rules of Court Rule 3.1113(a); see also
Rule 3.1320(f); Herzberg v. County of Plumas (2005) 133 Cal.App.4th 1,
20 (the party who fails to argue an issue abandons that issue).)
3.
Leave to Amend
There is no request for leave to amend. Nevertheless,
the Court GRANTS Plaintiffs 20 days leave to amend.
Conclusion
Defendants’ demurrer is SUSTAINED as to the first,
second, and third causes of action and OVERRULED as to the fourth cause of
action.
Defendants’ motion to strike the Complaint is
GRANTED.
The Court awards Plaintiff 20 days leave to
amend.