Judge: David Sotelo, Case: 20STCV37664, Date: 2022-12-08 Tentative Ruling
Case Number: 20STCV37664 Hearing Date: December 8, 2022 Dept: 40
MOVING PARTY: Plaintiff Luxe Holdings,
LLC.
Plaintiff Luxe Holdings, LLC sues Defendants Nationwide
Pallets, Inc., Jose Reyes (alleged President of Nationwide), Classic Pallets,
Inc., Juan Perez (CEO, Secretary, and CFO of Classic Pallets), and Does 1
through 70 pursuant to claims of (1) Breach of Contract, (2) Holding Over, (3)
Intentional Interference with Economic Advantage, (4) Negligent Interference
with Economic Advantage, (5) Trespass, (6) Unjust Enrichment, and (7) Breach of
Contract (in the Alternative) on the grounds that between May 1, 2020 and June
30, 2021, the Defendants failed to compensate Luxe Holdings, Inc. for
possession of and trespassed on commercial property owned by the Plaintiff.
Now before the Court is Plaintiff Luxe Holdings, Inc.’s
opposed Motion for Summary Adjudication in favor of the operative Second
Amended Complaint’s third to sixth causes of action as directed at Defendant Classic
Pallets, Inc. alone.
Plaintiff Luxe Holdings, LLC owns the real property located
at 4851 S. Alameda St., Los Angeles, CA 90058 (the “Property”) and has owned it
since at least February 2016.
On or about July 31, 2017, Plaintiff Luxe Holdings, LLC
(“Luxe Holdings” or “Luxe”) and Nationwide Pallets, Inc. (“Nationwide”)
executed a written lease (“Lease”) pursuant to which Nationwide leased certain
portions (the “Subject Premises”) of the Property for a term of one year
expiring on July 31, 2018. The Lease established a base rent of $15,460. Luxe
argues that the Lease explicitly prohibited holding over and increased the rent
to 150% of the base rent in the event of holdover. The Lease also precluded
Nationwide from assigning or subletting “all or any part of [its] interest in
th[e] Lease or in the Premises without [Luxe’s] prior written consent.”
The one-year lease expired on July 31, 2018, for which
reason Luxe Holdings argues on motion that, as of August 1, 2018, the rent for
the Subject Premises was $23,190 per month.
Luxe Holdings next argues that unbeknownst to it, in October
2019, Classic Pallets, Inc. (“Classic Pallets”) moved into the Premises
pursuant to a purported sublease with Nationwide. (Classic Pallets refurbishes,
repairs, and delivers pallets for use in commercial shipping operations.) Luxe
Holdings claims that, at that time, it was giving Nationwide a discount on the
rent for the Subject Premises based on its ongoing relationship but would not
have given a new tenant such a discount. (It is unclear to the Court whether
the “discount” argued by Luxe Holdings connotes keeping Nationwide’s rent down
to $15,460 despite the holdover nature of the tenancy.)
Classic Pallets argues that it made every rent payment since
taking possession of the Subject Premises until shortly after the outbreak of
the COVID-19 pandemic in May 2020, at which time a sharp falloff in orders took
place for Classic Pallets.
(Luxe Holdings argues in hearsay fashion—for which reason
this ‘fact’ is not considered for the purposes of this Motion, but rather,
included solely for the purpose of clarifying the discussion infra—that in July
2020, it had secured Goevedy A. Cifuentes as a potential tenant for the Subject
Premises at a rate of $20,000 per month with Mr. Cifuentes willing to begin
tenancy immediately. Mr. Cifuentes is a commercial tenant of Luxe Holdings who,
at that time, leased the commercial space adjacent to the Subject Premises.)
On or about July 29, 2020, Tal Hassid, Luxe Holdings’
principal, visited the Premises, and met with Defendant Juan Perez. (Defendant
Perez CEO, Secretary, and CFO of Classic Pallets.) The parties dispute on
summary adjudication whether Tal Hassid knew Defendant Perez to be a representative
of Nationwide or a subletter through Classic Pallets.
On motion, Luxe argues that during this meeting, Mr. Hassid
informed Defendant Perez that Luxe had a tenant ready to move into the Premises,
that the proposed tenant would be paying $20,000 per month in rent, and that because
the Lease had expired in June 2018 and rent had not been paid since April 2020,
Luxe needed the Premises cleared out immediately. Luxe also argues on motion
that during the visit, it delivered a 3-day notice to pay rent or quit to
Defendant Perez, which notice was also delivered to Nationwide, and that not
until after this meeting did Luxe Holdings find out Classic Pallets rather than
Nationwide was operating out of the Subject Premises. According to Classic
Pallets, on or about July 29, 2020, Mr. Hassid did deliver a Notice notifying
Classic Pallets that the lease had been terminated and that Classic Pallets had
30 days to vacate, but no 3-day notice to pay rent or quit.
Luxe Holdings next claims that on August 24, 2020, Tal
Hassid emailed Classic Pallets, notifying it, among other things, that Luxe had
not approved of any purported sublease between Classic and Nationwide, for
which reason Classic Pallets’ occupation of the Subject Premises was
unauthorized and amounted to trespassing. The communication also demanded that
Classic vacate the Premises no later than August 28, 2020. It is undisputed between
the parties on motion that Luxe never consented to Nationwide’s sublease to
Classic Pallets.
Classic Pallets nevertheless remained in possession of the
Subject Premises. (Possession lasted through May 13, 2021.)
On October 1, 2020, Luxe Holdings commenced an unlawful
detainer action against Nationwide and Classic Pallets. No 3-Day Notice to Pay
Rent or Quit was attached to the Complaint.
Also on October 1, 2020, Luxe Holdings filed the instant
lawsuit against Nationwide, Juan Perez, Classic Pallets, Jose Reyes, and Does 1
through 50 pursuant to claims of (1) Breach of Contract, (2) Hold Over, (3)
Intentional Interference with Economic Advantage, (4) Negligent Interference
with Economic Advantage, and (5) Fraud.
On May 13, 2021, Luxe and Classic Pallets entered a
stipulation in the unlawful detainer action, pursuant to which Classic Pallets was
allowed to remain on the Premises until August 31, 2021. Pursuant to that same
stipulation, Classic paid $30,000 to occupy the Premises for July and August
2021. The parties dispute whether all rent from June 2021 and earlier was left
unpaid and available as damages in this lawsuit.
On August 20, 2021, Classic Pallets and Juan Perez made an
opposed Motion for Judgment on the Pleadings against the original Complaint’s third
to fifth causes of action.
On or after September 1, 2021, Geovedy Cifuentes moved into
the Subject Premises after Classic Pallets vacated the same on August 31, 2021
and commenced paying rent of $24,000 per month.
On December 16, 2021, the Court granted the Motion for
Judgment on the Pleadings.
On January 4, 2022, Luxe Holdings filed a First Amended
Complaint (“FAC”) alleging (1) Breach of Contract, (2) Holding Over, (3)
Intentional Interference with Economic Advantage, (4) Negligent Interference
with Economic Advantage, (5) Trespass, (6) Quasi-Contract, and (7) Breach of
Contract (in the Alternative) against Nationwide, Jose Reyes, Classic Pallets,
Juan Perez, and Does 1 through 70.
On February 4, 2022, Classic Pallets and Juan Perez made an
opposed Demurrer to the FAC’s third to seventh causes of action and an opposed Motion
to Strike punitive damages and attorney’s fees allegations made in the FAC.
On June 9, 2022, the Court sustained the Demurrer as to the
third, fourth, sixth, and seventh causes of action, overruled the Demurrer as
to the fifth cause of action (Trespass), and granted the Motion to Strike as to
allegations of punitive damages and attorney’s fees in the FAC.
On June 24, 2022, Luxe Holdings filed the operative Second
Amended Complaint (“SAC”) against Nationwide, Jose Reyes, Classic Pallets, Juan
Perez, and Does 1 through 70 pursuant to claims of (1) Breach of Contract, (2)
Holding Over, (3) Intentional Interference with Economic Advantage, (4)
Negligent Interference with Economic Advantage, (5) Trespass, (6) Unjust
Enrichment, and (7) Breach of Contract (in the Alternative).
On September 21, 2022, Luxe Holdings made the instant and opposed
Motion for Summary Adjudication of the SAC’s third to sixth causes of action as
directed solely at Classic Pallets. This Motion is at issue at this hearing.
On October 12, 2022, Classic Pallets and Juan Perez made a
Motion for Judgment on the Pleadings, which is currently set for hearing on
February 7, 2023.
Trial is scheduled in this matter for January 31, 2023.
Per Plaintiff Luxe Holdings’ request, the Court TAKES
Judicial Notice of the Stipulation for Entry of Judgment in LASC Action No. 20STUD03435,
an Unlawful Detainer Action for the Subject Premises. (Mot., RJN, p. 2 &
Hassid Decl., Ex. 3; see Evid. Code, § 452, subds. (d), (h).) The Court
OVERRULES the Objection thereto by Defendant Classic Pallets. (See infra.)
Per Defendants Classic Pallets’ request, the Court TAKES
Judicial Notice of (1) the Complaint in LASC Action No. 20STUD03435 (Opp’n,
RJN, Ex. 1; see Evid. Code, § 452, subd. (d)) and (2)-(4) County of Los Angeles
COVID-19 Moratorium dated June 3, 2020, Moratorium Extension dated June 30,
2020, and Los Angeles City Municipal Code Section 49.99.3 (Opp’n, Supp. RJN,
Exs. 2-4; see Evid. Code, § 452, subds. (b), (c).) The Court OVERRULES the
Objection thereto by Plaintiff Luxe Holdings. (See infra.)
Defendant Classic Pallets’ Objections
Obj. to Plaintiff’s Request for Judicial Notice: OVERRULED.
Hassid Decl., ¶¶ 6, 18: OVERRULED and ¶ 11: SUSTAINED.
Plaintiff Luxe Holdings’ Objections
Obj. Nos. 1-2, 6, 8, 15-24: OVERRULED.
Obj. Nos. 3-5, 7, 9-14: SUSTAINED.
Third Cause of Action, Intentional Interference with Economic
Prospective, Against Classic Pallets, Inc. Only [Issue No. 1]: DENIED.
“Intentional interference with prospective economic advantage
[requires a pleading alleging]: (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.)
The Third cause of action alleges Intentional Interference
with Economic Prospective against Classic Pallets, Juan Perez, and Does 31
through 40 on the grounds that: (1) as of July 2020, Luxe Holdings had secured Geovedy
Cifuentes as a tenant wishing to immediately rent the Subject Premises; (2)
Classic was informed of this desire through Juan Perez on July 29, 2020, when
Luxe’s Principal—Tal Hassid—visited the Subject Premises and informed Defendant
Perez of the same; (3) despite this knowledge, Classic Pallets and Perez
refused to vacate the Subject Premises; (4) the potential relationship with
Geovedy Cifuentes was disrupted between August 1, 2020 and June 30, 2021; and
(5) Luxe has been damaged in an amount to be determined at trial, but no less
than $23,190 per month from August 1, 2020, to June 30, 2021. (SAC, ¶¶ 32-38.)
Luxe Holdings repeats these grounds in its Motion for
Summary Adjudication. (Mot., 7:1-17.) In support of first element of this claim
(economic relationship with a third party), Luxe Holdings presents two pieces
of evidence.
The first of these is the Declaration of Hal Tassid—Luxe’s
Principal—which provides in relevant part that “[a]s of July 2020, another Luxe
tenant, Geovedy A. Cifuentes (the ‘New Tenant’), advised [Hassid] that he
wished to lease the [Subject] Premises at a rate of $20,000 per month starting
immediately, and [Hassid] agreed (on behalf of Luxe) to rent the Premises to
him as soon as it was vacated.” (Mot., 2:27-3:2 [referencing Mot., Separate
Statement, UMF No. 10]; Mot., Separate Statement, UMF No. 10 [referencing Mot.,
Evidence, Hassid Decl., ¶ 11 (containing the quote statements)].)
The Court, however, has Sustained an Objection to this piece
of evidence (Evidentiary Objections supra; see Opp’n, Objections to Hassid
Decl., 2:1-6) based on hearsay because this statement is an out of court
statement provided for the truth of the matter asserted—i.e., that Geovedy
Cifuentes was willing to rent the Subject Premises as of July 2020, therefore
comprising a third party amounting to a prospective economic relationship in
favor of Luxe Holdings.
The case law and statutory arguments advanced by Luxe
Holdings against this objection are unavailing. (See Reply, Reply to Objections
to Hassid Decl., 3:10-24.)
Luxe cites to Jazayeri v. Mao (2009) 174 Cal.App.4th
301, 316 for the position that “the words forming an agreement” “are not
hearsay.” (Reply, Reply to Objections to Hassid Decl., 3:14-15). However, a
review of Jazayeri shows that the expanded quote cited to by Luxe is “documents
containing operative facts, such as the words forming an agreement, are not
hearsay,” implicating the operative facts/verbal acts exception to hearsay,
which provides that “[w]here ‘“the very fact in controversy is whether certain
things were said or done and not ... whether these things were true or false,
... in these cases the words or acts are admissible not as hearsay[,] but as original
evidence.”’” (Jazayeri v. Mao, at p. 316 [citation omitted]; see People
v. Dell (1991) 232 Cal.App.3d 248, 258 [words spoken by defendant to
solicit prostitution are operative facts or “‘verbal acts’”].) However, the
controversy here is not whether “certain things were [said by Geovedy Cifuentes]”
as to form a contract between Cifuentes and Luxe Holdings (Jazayeri v. Mao,
at p. 316), the type of controversy that might be contemplated in a breach of
contract action between the two. Rather, the controversy here is whether Classic
Pallets interfered with an economic prospective of Luxe Holdings. As such, the
verbal acts exception does not apply. The proper form of evidence to advance
the statements attributed for Mr. Cifuentes is instead a declaration from Mr.
Cifuentes himself, which the record fails to reflect.
Luxe’s second and final argument against the objection to
paragraph 11 of the Declaration of Tal Hassid that is the statements attributed
to Mr. Cifuentes are not offered for their truth, but rather, “offered to show
that Classic had the necessary prior notice of Luxe’s prospective business
relationship.” (Reply, Reply to Objections to Hassid Decl., 3:16-17.) The Court
does not find merit to this position. The statements attributed to Mr.
Cifuentes at paragraph 11 of the Tal Hassid Declaration are advanced to satisfy
the first element of Intentional Interference with Economic Prospective
(economic relationship with third party), whereas the statements at paragraph
12 of the same Declaration are advanced to satisfy the prior notice element of
this claim. (Mot., Evidence, Hassid Decl., ¶ 12 [“On or about July 29, 2020,
when [Hassid] visited the Premises …, [Hassid] informed [Defendant Perez] that
Luxe had a business that was prepared to rent the Premises for $20,000 per
month, and as such, [Hassid] needed the Premises vacated”].)
the Court reiterates that it has Sustained the Objection to
paragraph 11 of the Tal Hassid Declaration and does not consider the statements
attributed to Geovedy Cifuentes as evidence advancing the first element of the
tort of Intentional Interference with Economic Prospective.
The only other piece of evidence presented by Luxe Holdings
to meet the first element of the tort of Intentional Interference with Economic
Prospective is the Deposition of Juan Perez. (Mot., 2:27-3:2 [citing to Mot.,
Evidence, Hassid Decl., ¶ 11 & Mot., Evidence, Zohar Decl., Ex. 6, Perez
Depo., 41:13-42:9].) However, a review of Exhibit 6 to the Zohar Declaration
(1) fails to include a copy of page 42 of the Perez Deposition and (2) fails to
show that Juan Perez testified to receiving notice that Geovedy Cifuentes was
ready to rent the Subject Premises in July 2020 specifically, as claimed by Luxe
Holdings’ Motion. (Mot., Evidence, Zohar Decl., Ex. 6, Perez Depo., 41:13-22.) The
page included as evidence prior to page 41 of the Perez Deposition is page 32
of the same Deposition and the page following page 41 in evidence is page 47 of
the Deposition, thereby depriving this Court of the context of the pages
immediately preceding and following Juan Perez’s testimony at page 41 of his
Deposition. Last, even if Juan Perez were shown to have acknowledged that Tal
Hassid informed Defendant Perez in July 2020 that Mr. Cifuentes was ready and
able to rent the Subject Premises immediately, such evidence would not amount
to a prima facie showing that Mr. Cifuentes in fact had made this
representation to Tal Hassid.
As a result, at this hearing, Luxe Holdings fails to present
any evidence to show “the existence, between the plaintiff and some third
party, of an economic relationship that contain[ed] the probability of future
economic benefit to the plaintiff,” Luxe Holdings. (Roy Allan Slurry Seal,
Inc. v. American Asphalt South, Inc., supra, 2 Cal.5th at p. 512.)
The Motion is DENIED as to the Third cause of action.
Fourth Cause of Action, Negligent Interference with Economic
Prospective, Against Classic Pallets, Inc. Only [Issue No. 2]: DENIED.
The tort of Negligent Interference with Economic Prospective—fourth
cause of action in the SAC—shares the first element of an Intentional Interference
with Economic Prospective claim: “(1) the existence of an economic relationship
between the plaintiff and a third party containing the probability of future economic
benefit to the plaintiff ….” (Redfearn v. Trader Joe’s Co. (2018) 20 Cal.App.5th
989, 1005.)
The SAC premises this claim on
Luxe Holdings’ alleged relationship with Geovedy Cifuentes as of July 2020.
(SAC, ¶¶ 41-42.) The evidence cited for such a relationship in the summary
adjudication motion is the same as that discussed ante. (See Mot., 2:27-3:2, 7:18-8:15
[citing to Mot., Evidence, Hassid Decl., ¶ 11 & Mot., Evidence, Zohar
Decl., Ex. 6, Perez Depo., 41:13-42:9]; compare Mot., Separate Statement, UMF
No. 10 with UMF No. 36 [citing to Mot., Evidence, Hassid Decl., ¶ 11].)
Therefore, for the same
reasons cited in the discussion ante as to Intentional Interference with
Economic Prospective, the Court DENIES the Motion for Summary Adjudication as
to the fourth cause of action pleaded in the SAC.
The Motion
is DENIED as to this Fourth cause of action.
Fifth Cause of Action, Trespass, Against Classic Pallets,
Inc. Only [Issue No. 3]: DENIED.
“Generally, landowners and tenants have a right to exclude
persons from trespassing on private property; the right to exclude persons is a
fundamental aspect of private property ownership.” (Ralphs Grocery Co. v.
Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 258.) “‘Trespass is an
unlawful interference with possession of property.’ The elements of trespass
are: (1) the plaintiff’s ownership or control of the property; (2) the
defendant’s intentional, reckless, or negligent entry onto the property; (3)
lack of permission for the entry or acts in excess of permission; (4) harm; and
(5) the defendant’s conduct was a substantial factor in causing the harm. (See
CACI No. 2000.)” (Ibid. at pp. 261-62 [citation omitted].)
The SAC’s Fifth cause of action alleges that (1) Luxe
Holdings owns the Subject Premises, (2)-(3) Classic Pallets, Juan Perez, and
Does 41 to 50 entered the property by assuming the leasehold thereof without
the consent of Luxe, and (4) Classic’s trespass damaged Luxe in an amount to be
proven at trial, but in no case less than $347,850, thus amounting to (5)
Classic, Perez, and Does being a substantial factor in Luxe’s harm. (SAC, ¶¶ 48-51.)
On motion, Luxe Holdings reiterates these grounds for
Trespass against Classic Pallets but limits the trespass window from May 1,
2020 (the date on which Luxe first failed to receive rent for the Subject
Premises at a time when Classic Pallets had assumed possession of the Subject
Premises) to May 13, 2021 (when Luxe and Classic Pallets/Juan Perez entered a
stipulation in the unlawful detainer action guaranteeing the vacatur of the
Subject Premises by the end of August 2021). (See Mot., 5:7-10, 6:5-26.)
To support this claim, Luxe provides a variety of evidence, including:
(1) evidence that Luxe owns the Subject Premises (see Mot., Separate Statement,
UMF No. 53); (2) evidence that Classic Pallets entered the property in October
2019 pursuant to a sublease with Nationwide (see Mot., Separate Statement, UMF
No. 57); (3) evidence that Luxe never consented to such sublease (see Mot.,
Separate Statement, UMF No. 61; and (4)-(5) unpaid rent damages substantially
caused by Classic Pallets and Juan Perez at $20,000 per month between May 1,
2020 and May 13, 2021 (see Mot., Separate Statement, UMF Nos. 60 [May 1, 2020],
65 [May 13, 2021], 69 [$20,000 per month].)
The Court finds this evidence could convince a reasonable
factfinder that no triable issues exist as to whether Classic Pallets
trespassed on the Subject Premises between May 1, 2020 and May 13, 2021 based
on non-payment of rents during that period, carrying Luxe’s burden on summary
adjudication.
On Opposition, and in relevant part, Classic Pallets points
to case law and statutes providing that restraints on transferability of a
lease may not be strictly construed. (Opp’n, 4:19-25 [citing to Kendall v.
Ernest Pestana, Inc. (1985) 40 Cal.3d 488, 494; Chapman v. Great Western
Gypsum Co. (1932) 216 Cal. 420, 426; Cal. Civ. Code, §1995.220 [ambiguity
in restriction on transfer of a commercial tenant’s interest shall be construed
in favor of transferability].) Such argument relates to consent, the third
element in a Trespass claim.
Kendall found that “both the policy against
restraints on alienation and the implied contractual duty of good faith and
fair dealing militate in favor of adoption of the rule that where a commercial
lease provides for assignment only with the prior consent of the lessor, such
consent may be withheld only where the lessor has a commercially reasonable
objection to the assignee or the proposed use.” (Kendall v. Ernest Pestana,
Inc. (1985) 40 Cal.3d 488, 506-07.) Of particular importance, in
recognizing the minority rule regarding the restraint of alienation on
subleases, the Court highlighted that “[d]enying consent [of subleasing] solely
on the basis of personal taste, convenience or sensibility is not commercially
reasonable,” “[n]or is it reasonable to deny consent ‘in order that the
landlord may charge a higher rent than originally contracted for.’” (Ibid.
at p. 501.)
The relief requested on summary adjudication as to the
Trespass claim is $20,000 per month for rent from May 1, 2021 through May 13,
2021, i.e., $20,000 per month times 12 and 12/31 months, totaling $247,741.94.
(Mot., 9:16-21 & n. 4; compare SAC, ¶¶ 50 [“Classic’s trespass damaged Luxe
in an amount to be proven at trial, but in no case less than $347,850”], Prayer
for Relief, ¶¶ 1-2 [calculated at holdover rent rate of $23,190 times 15 months
between April 2020 and June 2021].) Luxe Holdings advances the $20,000 per
month figure as “the reasonable fair market value” of the Subject Premises from
May 2020 to August 2021 as based on the figure Mr. Cifuentes was allegedly
willing to pay in July 2020 and based on Tal Hassid’s experience in calculating
fair market value based on his professional experience. (Mot., 9:1-6.)
On Reply, and in relevant part, Luxe argues that “[t]his is
not a case where a landlord refused to consent to a sublease” because “neither
Nationwide nor Classic sought Luxe’s consent to the sublease” and that “there
is not only no evidence before the Court that consent was ever sought, but also
no evidence that consent was unreasonably withheld.” (Reply 4:22-5:8.)
Based on the representations by Luxe in its Motion and Reply,
the Court finds merit to the Opposition. While it is accepted that between May
2020 and some undisclosed point in time on or after July 29, 2020, Luxe claims
not to have been aware of Classic Pallets’ sublease (Mot., Evidence, Hassid
Decl., ¶¶ 4-8), questions of material fact remain as to whether Luxe Holdings thereafter
reasonably declined an implicit request to permit Classic Pallets to sublease
the Subject Premises after Luxe was informed by Nationwide as to Classic
Pallets’ possession of the Subject Premises, which began in October 2019. While
Luxe argues that the Defendants never requested consent for the sublease and
Luxe never consented to the sublease (Reply 4:22-5:8), this position is overly
rigid insofar as a reasonable factfinder could determine that Nationwide
requested implicit consent for the sublease when it informed Luxe of the
sublease sometime on or after July 19, 2020, i.e., after the transfer had
already taken place. (See Mot., Evidence, Hassid Decl., ¶ 6.) Further, any
refusal by Luxe to sublease the Subject Premises to Classic Pallets after
finding out about the sublease appears unreasonable when juxtaposed against the
third and fourth causes of action for interference with economic prospective,
which could lead a reasonable factfinder to determine that Luxe wanted Classic
Pallets out of the Subject Premises as to raise or collect rent therefrom. This
‘refusal to consent to sublessee to secure new tenant on which rent could be
raised or collected from’ conclusion is further reinforced where Classic
Pallets was unable to make rent payments beginning May 2020 and Luxe was allegedly
attempting to secure a new tenant for the Subject Premises at a rate of $20,000
per month beginning in or around July 2020, as against the backdrop of the Los
Angeles County Board of Supervisors imposing a moratorium on the collection of rent
payments on commercial properties between March 4, 2020 and (ultimately)
January 31, 2022. (Opp’n, Separate Statement, AMF No. 13 [referencing Opp’n,
Perez Decl., ¶ 12 (inability to pay rent as of May 2020)]; Mot., Separate
Statement, UMF No. 69 [referencing Mot., Evidence, Hassid Decl., ¶ 18 (new
tenant willing to pay $20,000 allegedly secured in July 2020)]; see Los Angeles
County, Consumer & Business Affairs, About L.A. County’s COVID-19 Tenant
Protections Resolution, p. 8, § IV.J & p.10, § VI.A.1. & p. 17, §
VI.C.5. (2022) <https://dcba.lacounty.gov/wp content/uploads/2022/02/Resolution_1.25.2022.pdf>
[as of Dec. 7, 2022] [non-payment of rent permissible between March 4, 2020 and
January 31, 2022].)
Again, by Luxe’s own admission, it never consented to the
sublease, even after finding out about Classic Pallets’ possession of the
Subject Premises from Nationwide. (Mot., Separate Statement, UMF No. 61
[referencing Mot., Evidence, Hassid Decl., ¶ 8 & Mot., Evidence, Zohar
Decl., Ex. 6, Perez Depo., 48:19-22 (recognizing Luxe “[n]ever g[a]ve its
written consent for Classic Pallets to sublease or use the premises)].) Such
disputed facts give rise to questions as to whether consent was unreasonably
denied to Classic Pallets to sublease the Subject Premises during a time when
Classic Pallets was not paying rent for the Premises, which was permissible due
to the COVID-19 moratorium in Los Angeles County, thus carrying Classic Pallets’
burden on summary adjudication.
The Motion is DENIED as to the Fifth cause of action.
Sixth Cause of Action, Unjust Enrichment, Against Classic
Pallets, Inc. Only [Issue No. 4]: GRANTED.
California law is unclear as to whether Unjust Enrichment in
and of itself is a claim on which relief can be granted. The Court of Appeal
for the First District has held that “[u]njust enrichment is not a cause
of action, [but rather, is] just a restitution claim.” (Hill v. Roll Int’l
Corp. (2011) 195 Cal.App.4th 1295, 1307 [quoting to McKell v. Washington
Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1490 [quotations omitted]; see
also McKell, 142 Cal.App.4th at p. 1490 [“[t]here is no cause of action
for unjust enrichment”; “[r]ather, unjust enrichment is a basis for obtaining
restitution based on quasi-contract or imposition of a constructive trust”].) By
contrast, the Court of Appeal for the Second District has held that the
elements of a cause of action for unjust enrichment are simply stated as
receipt of a benefit and unjust retention of the benefit at the expense of
another where “[t]he term ‘benefit’ ‘denotes any form of advantage’” and which
“may take any form, direct or indirect” or “consist of services as well as property,”
where “[a] saved expenditure or a discharged obligation is no less beneficial
to the recipient than a direct transfer.” (Professional Tax Appeal v.
Kennedy-Wilson Holdings, Inc. (2018) 29 Cal.App.5th 230, 238 [citing Ghirardo
v. Antonioli (1996) 14 Cal.4th 39, 51].)
For the purposes of this discussion, the Court adopts the
elements stated in Professional Tax Appeal v. Kennedy-Wilson Holdings, Inc.,
supra.
The SAC’s Sixth cause of action alleges Unjust Enrichment
against Classic Pallets, Juan Perez, and Does 61 through 70 based on these parties’
failure to pay rent on the premises from April 2020 to May 2021 for total
damages of $347,850, i.e., $23,190 for rent from April 2020 to June 2021. (SAC,
¶¶ 55-60.)
This position is reiterated on motion with a damages window
of May 1, 2020 through June 30, 2021 calculated at a rental rate of $20,000 per
month for damages of $280,000. (Mot., 4:21-24, 5:11-22, 9:7-9.) To support this
position on motion, Luxe Holdings points to the Declaration of Luxe Principal
Tal Hassid and the Deposition of Juan Perez, CEO/Secretary/CFO of Classic
Pallets, which both show that Luxe Holdings ceased to receive rent from Classic
Pallets beginning in May 2020. (Mot., 2:24-26 [referencing UMF No. “X,” which
review finds touches upon UMF No. 78]; Mot., Separate Statement, UMF No. 78
[referencing Mot., Evidence, Hassid Decl., ¶ 3 (no rent payments received after
April 2020) & Mot., Evidence, Zohar Decl., Ex. 6, Perez Depo., 31:15-18,
32:14-18 (last check from Classic Pallets to Luxe Holdings on April 1, 2020)].)
Luxe also provides evidence that pursuant to a stipulation in the unlawful
detainer action, Luxe Holdings received $30,000 in rent from Classic Pallets
for the purpose of occupying the Subject Premises for the months of July and
August 2021. (Mot., 3:25-4:1 [referencing UMF No. 22, identical to UMF No. 81];
Mot., Separate Statement, UMF No. 81 [referencing Mot., Evidence, Hassid Decl.,
¶ 16 & Ex. 3, p. 2, ¶ 7.) Last, Luxe provides evidence of a new tenant
commencing tenancy over the Subject Premises after August 2021 following
Classic Pallets’ vacatur thereof. (Mot., 4:1-3 [referencing UMF No. 23]; Mot.,
Separate Statement, UMF No. 82 [referencing Mot., Evidence, Hassid Decl., ¶ 17
& Ex. 4 (rental agreement)].)
This evidence could convince a reasonable factfinder that
Classic Pallets was unjustly enriched when it received a benefit in the form of
a saved expenditure between May 1, 2020 and June 30, 2021, thus carrying Luxe’s
burden on summary adjudication.
On opposition, Classic Pallets argues that (1) California
does not recognize Unjust Enrichment as a viable cause of action (Opp’n,
10:7-24) and (2) Luxe Holdings fails to present any evidence that Classic
Pallets was unjustly enriched at the expense of Luxe Holdings because the
$20,000 per month fair market value figure provided by Luxe and evidence
supporting it (a) is self-serving, (b) contradicts affirmations made by Luxe
Holdings as to according lower rent to Nationwide, and (c) lacks expert
evidence, as well as because the evidence (d) does not show deceit or attempt
at deceit by Classic Pallets, (e) fails to distinguish between benefits
received by Classic Pallets over any other tenant leasing like commercial
property, (f) does not show the tenancy agreement was terminated before the end
of the unlawful detainer action, and (g) contradicts the permission granted to
Classic Pallets through the unlawful detainer settlement (Opp’n, 11:1-12:27).
The first position is unavailing on summary adjudication
because the Court has explained ante how the Court of Appeal for the Second
District has permitted causes of action for Unjust Enrichment.
The second position fails on summary adjudication in all
respects because in no way do these seven grounds explain how Classic Pallets’
possession of the Subject Premises—from which it operated a business for
profit—does not comprise a benefit in the form of a saved expenditure to the
detriment of the landlord, Luxe Holdings, which did not receive any rental
income from May 1, 2020 to June 30, 2021.
Classic Pallets thus fails to carry its burden on summary
adjudication as to the Sixth cause of action, for which reason the Motion is
GRANTED as to the SAC’s Unjust Enrichment claim, specifically as alleged
against Defendant Classic Pallets, Inc.
Plaintiff Luxe Holdings, LLC’s Motion for Summary Adjudication
is GRANTED in Part and DENIED in Part:
(1) DENIED as to the Second Amended Complaint’s Third and Fourth
causes of action for Intentional and Negligent Interference with Economic
Prospective because Luxe Holdings failed to carry its burden on summary
adjudication of these claims;
(2) DENIED as to the Second Amended Complaint’s Fifth cause
of action for Trespass because Classic Pallets, Inc. was able to carry its
burden on rebuttal as to summary adjudication of this claim; and
(3) GRANTED as to the Second Amended Complaint’s Sixth cause
of action for Unjust Enrichment because Classic Pallets, Inc. failed to
properly rebut Luxe Holdings’ carrying of its burden on summary adjudication as
to this claim.