Judge: Daniel S. Murphy, Case: 21STCV35157, Date: 2023-10-30 Tentative Ruling

Case Number: 21STCV35157    Hearing Date: February 14, 2024    Dept: 32

BACKGROUND

            On September 23, 2021, Plaintiff General Industrial Repair filed a complaint against Defendants Per Partners Limited LP, David B. Rosenfield, and Angelina A. Rosenfield alleging the following causes of action: (1) breach of contract; (2) breach of the implied covenant of good faith and fair dealing; (3) breach of the covenant of quiet enjoyment; (4) intentional misrepresentation; and (5) negligent misrepresentation.

            The dispute arises from a lease agreement between Plaintiff and Defendant Per Partners Limited LP. Defendant David Rosenfield is allegedly a general partner of Per Partners. Plaintiff leased a business premises from Per Partners starting in October 2007. The lease was a five-year lease, but the parties agreed to a five-year extension in October 2012, extending the lease to October 2017. Plaintiff alleges that around September 2017, the parties entered into another five-year extension that extended the lease to October 2022. Defendants did not sign this second extension agreement, but Plaintiff alleges that Defendant Angie Rosenfield assured Plaintiff that if Plaintiff became current on rent payments and made certain repairs, the lease would be extended to 2022. Plaintiff allegedly relied on this representation to continue paying rent and making additional improvements to the premises.

            In June 2021, Defendant David Rosenfield notified Plaintiff that Defendant Per Partners was terminating the lease. Per Partners apparently deemed the lease to be a month-to-month contract despite the alleged extension to 2022. Plaintiff’s breach of contract and fraud claims stem from the premature termination of the lease and Defendants’ misrepresentations that the lease would be extended to 2022.

            On February 10, 2022, Per Partners filed a cross-complaint against Plaintiff and its principal, alleging breach of contract, damage to real property, conversion, negligence, private nuisance, and declaratory relief.  

            On July 12, 2023, Plaintiff filed amendments to the complaint adding Armistead & Companies, Ltd. and Romac Supply Co., Inc. as defendants. Armistead and Romac filed a motion to quash the Doe amendments, but the Court denied this motion on October 30, 2023.

            On December 29, 2023, Armistead and Romac filed separate but identical demurrers to the complaint. Plaintiff filed its opposition on January 31, 2024. Armistead and Romac filed their reply on February 6, 2024.

LEGAL STANDARD

A demurrer for sufficiency tests whether a pleading states a cause of action or defense. (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.) When considering demurrers, courts read the allegations liberally and in context. (Taylor v. City of Los Angeles Dept. of Water and Power (2006) 144 Cal.App.4th 1216, 1228.) In a demurrer proceeding, the defects must be apparent on the face of the pleading or by proper judicial notice. (Code Civ. Proc., § 430.30, subd. (a).) A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. (SKF Farms v. Superior Court (1984) 153 Cal.App.3d 902, 905.) Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. (Ibid.) The only issue involved in a demurrer hearing is whether the pleading, as it stands, unconnected with extraneous matters, states a cause of action or defense. (Hahn, supra, 147 Cal.App.4th at 747.)

MEET AND CONFER

Before filing a demurrer or a motion to strike, the demurring or moving party is required to meet and confer with the party who filed the pleading demurred to or the pleading that is subject to the motion to strike for the purposes of determining whether an agreement can be reached through a filing of an amended pleading that would resolve the objections to be raised in the demurrer. (Code Civ. Proc., §§ 430.41, 435.5.) The Court notes that Defendants have complied with the meet and confer requirement. (See Bubman Decl.)

DISCUSSION

            Armistead and Romac demur to the fourth and fifth causes of action for intentional and negligent misrepresentation, the only causes of action asserted against Doe defendants. Armistead and Romac argue that there are no facts alleged pertaining specifically to them and that the agency allegations in the complaint are deficient. The complaint alleges that “[a]t all relevant times herein, each of the Defendants was the agent or employee of each of its co-defendants, and in doing the things mentioned, was acting in the course and scope of their authority as an agent or employee and with the authorization, permission and consent of their co-defendants.” (Compl. ¶ 8.)

                        1. Agency

“Agency exists when a principal engages an agent to act on the principal's behalf and subject to its control. The essential elements necessary to establish an agency relationship are manifestation of consent by one person to another that the other shall act on his [or her] behalf and subject to his [or her] control, and consent by the other so to act.” (Church Mutual Ins. Co., S.I. v. GuideOne Specialty Mutual Ins. Co. (2021) 72 Cal.App.5th 1042, 1062, internal citations omitted.) Armistead and Romac argue that the complaint does not allege any facts establishing these elements. However, “the existence of an agency relationship is typically a question of fact.” (Ibid.) “Generally, an allegation of agency is an allegation of ultimate fact and is, of itself, sufficient to avoid a demurrer.” (Garton v. Title Ins. & Trust Co. (1980) 106 Cal.App.3d 365, 376.) The allegations contained in paragraph 8 of the complaint are sufficient to support a reasonable inference that each of the defendants acted as an agent of the others. The particular facts evidencing an agency relationship between any two defendants may be ascertained in discovery. Plaintiff is not required to prove anything at the pleading stage.

Armistead and Romac do not dispute that liability for fraud may be established through agency. The complaint alleges fraud in relation to specific statements made by Defendants David and Angie Rosenfield. Armistead and Romac do not contend that the allegations are insufficient to state a claim for fraud; they only argue that the allegations are insufficient to demonstrate they committed fraud. But because the complaint must be read as a whole and interpreted liberally, it may be reasonably inferred that the Rosenfields were speaking on behalf of Armistead and Romac when they made the purported misrepresentations. (See Compl. ¶ 8.) The fraud claims incorporate all prior allegations, which includes the agency allegation. (Id., ¶¶ 45, 56.)

            2. Doe Amendment

Armistead and Romac argue that it is impossible for the complaint to state sufficient facts against them because they were Does, and Plaintiff had previously claimed that it was ignorant of the facts giving rise to liability against them. Armistead and Romac argue that this means the complaint’s facts can only relate to the other defendants who were named at the outset—David and Angie Rosenfield, and Per Partners.

However, the facts pertaining to the fraud itself were already adequately pled in the complaint and clearly asserted against all defendants, including Does. Therefore, those allegations do not need to be amended. Plaintiff is entitled to allege that the Rosenfields were speaking on behalf of all defendants, including Does, even before it discovers which Does should be included in the fraud claims. On a demurrer, the allegations are assumed true, no matter how improbable. Once Plaintiff discovered the facts connecting Armistead and Romac to the other defendants and executed the Doe amendments, it was free to maintain the existing fraud allegations if it believed that Armistead and Romac are liable through the same purported misrepresentations. Plaintiff’s claim of ignorance in support of its Doe amendment does not equate to an admission that the fraud claims are inadequately pled. Therefore, the fraud claims have been adequately pled against Armistead and Romac.      

CONCLUSION

            The demurrers filed by Defendants Armistead & Companies, Ltd. and Romac Supply Co., Inc. are OVERRULED.